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Law on Public Corporation - Finals

GLCD

VII.

NUISANCE

Estate of Grogoria Francisco v. CA FACTS: Basilan Municipal Mayor Benjamin Valencia summarily ordered the demolition of an antiquated and dilapidated quonset warehouse situated in Port Area, Strong Boulevard, Isabela, Basilan, outside the zone for warehouses. The legal possessor of the quonset sought the prohibition of the Order but was denied by the RTC. The CA originally overturned the RTC but subsequently reversed itself. In question in this case is the validity of such order by the Municipal Mayor, which was in effect an abatement of nuisance, without prior judicial authority. ISSUE: Whether or not Respondent Mayor could summarily and extra-judicially order the demolition of petitioner's quonset building. HELD: NO Ordinance No. 147 relied upon by Respondents should not be interpreted as authorizing the summary removal of a nonconforming building by the municipal government. For if it does, it must be struck down for being in contravention of the requirements of due process, as originally held by the Court of Appeals. Moreover, the enforcement and administration of the provisions of the Ordinance resides with the Zoning Administrator. It is said official who may call upon the City Fiscal to institute the necessary legal proceedings to enforce the provisions of the Ordinance. And any person aggrieved by the decision of the Zoning Administrator regarding the enforcement of the Ordinance may appeal to the Board of Zoning Appeals. Violation of a municipal ordinance neither empowers the Municipal Mayor to avail of extra-judicial remedies. On the contrary, the Local Government Code imposes upon him the duty "to cause to be instituted judicial proceedings in connection with the violation of ordinances" (Local Government Code, Sec. 141 [2] [t]). Respondents cannot seek cover under the general welfare clause authorizing the abatement of nuisances without judicial proceedings, which applies only to a nuisance per se or one which affects the immediate safety of persons and property and may be summarily abated under the undefined law of necessity (Monteverde v. Generoso, 52 Phil. 123 [1982]). The storage of copra in the quonset building is a legitimate business. By its nature, it cannot be said to be injurious to rights of property, of health or of comfort of the community. If it be a nuisance per accidens it may be so proven in a hearing conducted for that purpose. It is not per se a nuisance warranting its summary abatement without judicial intervention.

The provincial governor, district engineer or district health officer is not authorized to destroy private property consisting of dams and fishponds summarily and without any judicial proceedings whatever under the pretense that such private property constitutes a nuisance. A dam or a fishery constructed in navigable rivers is not a nuisance per se. A dam or fishpond may be a nuisance per accidens where it endangers or impairs the health or depreciates property by causing water to become stagnant. (Monteverde v. Generoso, supra). While the Sangguniang Bayan may provide for the abatement of a nuisance (Local Government Code, Sec. 149 [ee]), it can not declare a particular thing as a nuisance per se and order its condemnation. The nuisance can only be so adjudged by judicial determination. [Municipal councils] do not have the power to find as a fact that a particular thing is a nuisance when such thing is not a nuisance per se nor can they authorize the extra judicial condemnation and destruction of that as a nuisance which, in its nature, situation or use is not such. These things must be determined in the ordinary courts of law. In the present case, . . . the ice factory of the plaintiff is not a nuisance per se. It is a legitimate industry . . . . If it be in fact a nuisance due to the manner of its operation, that question cannot be determined by a mere resolution of the board. The petitioner is entitled to a fair and impartial heating before a judicial tribunal. (Iloilo Cold Storage v. Municipal Council, 24 Phil. 47 [1913]). Petitioner was in lawful possession of the lot and quonset building by virtue of a permit from the Philippine Ports Authority (Port of Zamboanga) when demolition was effected. It was not squatting on public land. Its property was not of trifling value. It was entitled to an impartial hearing before a tribunal authorized to decide whether the quonset building did constitute a nuisance in law. There was no compelling necessity for precipitate action. It follows then that respondent public officials of the Municipality of Isabela, Basilan, transcended their authority in abating summarily petitioner's quonset building. They had deprived petitioner of its property without due process of law. The fact that petitioner filed a suit for prohibition and was subsequently heard thereon will not cure the defect, as opined by the Court of Appeals, the demolition having been a fait accompli prior to hearing and the authority to demolish without a judicial order being a prejudicial issue. **Nuisances are of two classes: Nuisances per se and per accidens. As to the first, since they affect the immediate safety of persons and property, they may be summarily abated under the undefined law of necessity. But if the nuisance be of the second class, even the municipal authorities, under their power to declare and abate nuisances, would not have the right to compel the abatement of a particular thing or act as a nuisance without reasonable notice to the person alleged to be maintaining or doing the same of the time and place of hearing before a tribunal authorized to decide whether such a thing or act does in law constitute a nuisance. (Monteverde v.
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Generoso, 52 Phil. 123 (1982), citing Iloilo Ice and Cold Storage Co. vs. Municipal Council of Iloilo [{1913}, 24 Phil., 471]) Petitioner's business could not be considered a nuisance which respondent municipality could summarily abate in the guise of exercising its police powers. The abatement of a nuisance without judicial proceedings is possible only if it is a nuisance per se. A gas station is not a nuisance per se or one affecting the immediate safety of persons and property,17 hence, it cannot be closed down or transferred summarily to another location. (PARAYNO v. JOVELLANOS, G.R. No. 148408, 14 July 2006 citing Monteverde v. Generoso, 52 Phil. 123 (1982)

Technology Developers v. CA Facts: TD received a letter from acting mayor Cruz, ordering the full cessation of the operation of its plant located at Guyong, Sta. Maria, Bulacan, until further order. The letter likewise requested its plant manager to bring with him to the office of the mayor the following: a) Building permit; b) Mayor's permit; c) Region III-Pollution of Environment and Natural Resources Anti-Pollution Permit. In compliance with said undertaking, petitioner commenced to secure "Region IIIDepartment of Environmental and Natural Resources AntiPollution Permit," although among the permits previously secured prior to the operation of petitioner's plant was a "Temporary Permit to Operate Air Pollution Installation" issued by the then National Pollution Control Commission (now Environmental Management Bureau) and is now at a stage where the Environmental Management Bureau is trying to determine the correct kind of anti-pollution devise to be installed as part of petitioner's request for the renewal of its permit. TD's attention having been called to its lack of mayor's permit, it sent its representatives to the office of the mayor to secure the same but were not entertained. On April 6, 1989, without previous and reasonable notice upon petitioner, respondent acting mayor ordered the Municipality's station commander to padlock the premises of petitioner's plant, thus effectively causing the stoppage of its operation. RTC: action for certiorari, prohibition, mandamus with preliminary injunction. Closure order was issued in grave abuse of discretion. Judge issued of the writ of preliminary mandatory injunction. MR: RTC issued an order (a) setting aside the order which granted a Writ of Preliminary Mandatory Injunction, and (b) dissolving the writ consequently issued. CA: certiorari and prohibition with preliminary injunction. In due course the petition was denied for lack of merit. MR: denied. Issue: WON the appellate court committed a grave abuse of discretion in rendering its question decision and resolution. NO. Held:

The authority of the local executive to protect the community from pollution is the center of this controversy. The following circumstances militate against the maintenance of the writ of preliminary injunction sought by petitioner: 1. No mayor's permit had been secured. While it is true that the matter of determining whether there is a pollution of the environment that requires control if not prohibition of the operation of a business is essentially addressed to the then National Pollution Control Commission of the Ministry of Human Settlements, now the Environmental Management Bureau of the Department of Environment and Natural Resources, it must be recognized that the mayor of a town has as much responsibility to protect its inhabitants from pollution, and by virtue of his police power, he may deny the application for a permit to operate a business or otherwise close the same unless appropriate measures are taken to control and/or avoid injury to the health of the residents of the community from the emissions in the operation of the business. 2. The Acting Mayor, in a letter of February 16, 1989, called the attention of petitioner to the pollution emitted by the fumes of its plant whose offensive odor "not only pollute the air in the locality but also affect the health of the residents in the area," so that petitioner was ordered to stop its operation until further orders and it was required to bring its permits (see facts) 3. This action of the Acting Mayor was in response to the complaint of the residents of Barangay Guyong, Sta. Maria, Bulacan, directed to the Provincial Governor through channels. 4. The closure order of the Acting Mayor was issued only after an investigation was made by Marivic Guina who in her report of December 8, 1988 observed that the fumes emitted by the plant of petitioner goes directly to the surrounding houses and that no proper air pollution device has been installed. 5. Petitioner failed to produce a building permit from the municipality of Sta. Maria, but instead presented a building permit issued by an official of Makati on March 6,1987. 6. While petitioner was able to present a temporary permit to operate by the then National Pollution Control Commission on December 15, 1987, the permit was good only up to May 25, 1988. Petitioner had not exerted any effort to extend or validate its permit much less to install any device to control the pollution and prevent any hazard to the health of the residents of the community. TD: huge investment. SC: such is concomitant with the need to promote investment and contribute to the growth of the economy is the equally essential imperative of protecting the health, nay the very lives of the people, from the deleterious effect of the pollution of the environment. Laguna Lake Development Authority v. CA Facts: RA 4850 was enacted creating the "Laguna Lake Development Authority." This agency was supposed to accelerate the development and balanced growth of the Laguna Lake area and the surrounding provinces, cities and towns, in the act,
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within the context of the national and regional plans and policies for social and economic development. PD 813 amended certain sections RA 4850 because of the concern for the rapid expansion of Metropolitan Manila, the suburbs and the lakeshore towns of Laguna de Bay, combined with current and prospective uses of the lake for municipal-industrial water supply, irrigation, fisheries, and the like. To effectively perform the role of the Authority under RA 4850, the Chief Executive issued EO 927 further defined and enlarged the functions and powers of the Authority and named and enumerated the towns, cities and provinces encompassed by the term "Laguna de Bay Region". Also, pertinent to the issues in this case are the following provisions of EO 927 which include in particular the sharing of fees: Sec 2: xxx the Authority shall have exclusive jurisdiction to issue permit for the use of all surface water for any projects or activities in or affecting the said region including navigation, construction, and operation of fishpens, fish enclosures, fish corrals and the like. SEC. 3. Collection of Fees. The Authority is hereby empowered to collect fees for the use of the lake water and its tributaries for all beneficial purposes including but not limited to fisheries, recreation, municipal, industrial, agricultural, navigation, irrigation, and waste disposal purpose; Provided, that the rates of the fees to be collected, and the sharing with other government agencies and political subdivisions, if necessary, shall be subject to the approval of the President of the Philippines upon recommendation of the Authority's Board, except fishpen fee, which will be shared in the following manner: 20 percent of the fee shall go to the lakeshore local governments, 5 percent shall go to the Project Development Fund which shall be administered by a Council and the remaining 75 percent shall constitute the share of LLDA. However, after the implementation within the threeyear period of the Laguna Lake Fishery Zoning and Management Plan the sharing will be modified as follows: 35 percent of the fishpen fee goes to the lakeshore local governments, 5 percent goes to the Project Development Fund and the remaining 60 percent shall be retained by LLDA; Provided, however, that the share of LLDA shall form part of its corporate funds and shall not be remitted to the National Treasury as an exception to the provisions of Presidential Decree No. 1234. Then came Republic Act No. 7160. The municipalities in the Laguna Lake Region interpreted the provisions of this law to mean that the newly passed law gave municipal governments the exclusive jurisdiction to issue fishing privileges within their municipal waters because R.A. 7160 provides: "Sec. 149. Fishery Rentals; Fees and Charges (a) Municipalities shall have the exclusive authority to grant fishery privileges in the municipal waters and impose rental fees or charges therefor in accordance with the provisions of this Section. Municipal governments thereupon assumed the authority to issue fishing privileges and fishpen permits. Big fishpen operators took advantage of the occasion to establish fishpens and fishcages to the consternation of the Authority. Unregulated fishpens and fishcages occupied almost one-third the entire lake water surface area, increasing the occupation

drastically from 7,000 ha in 1990 to almost 21,000 ha in 1995. The Mayor's permit to construct fishpens and fishcages were all undertaken in violation of the policies adopted by the Authority on fishpen zoning and the Laguna Lake carrying capacity. In view of the foregoing circumstances, the Authority served notice to the general public that: 1. All fishpens, fishcages and other aqua-culture structures in the Laguna de Bay Region, which were not registered or to which no application for registration and/or permit has been filed with Laguna Lake Development Authority as of March 31, 1993 are hereby declared outrightly as illegal. 2. All fishpens; fishcages and other aqua-culture structures so declared as illegal shall be subject to demolition which shall be undertaken by the Presidential Task Force for illegal Fishpen and Illegal Fishing. 3. Owners of fishpens, fishcages and other aqua-culture structures declared as illegal shall, without prejudice to demolition of their structures be criminally charged in accordance with Section 39-A of Republic Act 4850 as amended by P.D. 813 for violation of the same laws. Violations of these laws carries a penalty of imprisonment of not exceeding 3 years or a fine not exceeding Five Thousand Pesos or both at the discretion of the court. All operators of fishpens, fishcages and other aqua-culture structures declared as illegal in accordance with the foregoing Notice shall have one (1) month on or before 27 October 1993 to show cause before the LLDA why their said fishpens, fishcages and other aqua-culture structures should not be demolished/dismantled." One month, thereafter, the Authority sent notices to the concerned owners of the illegally constructed fishpens, fishcages and other aqua-culture structures advising them to dismantle their respective structures within 10 days from receipt thereof, otherwise, demolition shall be effected. The fishpen owners filed injunction cases against the LLDA. The LLDA filed motions to dismiss the cases against it on jurisdictional grounds. The motions to dismiss were denied. Meanwhile, TRO/writs of preliminary mandatory injunction were issued enjoining the LLDA from demolishing the fishpens and similar structures in question. Hence, the present petition for certiorari, prohibition and injunction. The CA dismissed the LLDAs consolidated petitions. It ruled that (A) LLDA is not among those quasi-judicial agencies of government appealable only to the Court of Appeals; (B) the LLDA charter does vest LLDA with quasi-judicial functions insofar as fishpens are concerned; (C) the provisions of the LLDA charter insofar as fishing privileges in Laguna de Bay are concerned had been repealed by the Local Government Code of 1991; (D) in view of the aforesaid repeal, the power to grant permits devolved to respective local government units concerned. Issue: Which agency of the Government - the LLDA or the towns and municipalities comprising the region - should exercise jurisdiction over the Laguna Lake and its environs insofar as the issuance of permits for fishery privileges is concerned? Held: LLDA
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Ratio: Section 4 (k) of RA 4850, the provisions of PD 813, and Section 2 of EO 927, specifically provide that the LLDA shall have exclusive jurisdiction to issue permits for the use or all surface water for any projects or activities in or affecting the said region, including navigation, construction, and operation of fishpens, fish enclosures, fish corrals and the like. On the other hand, RA 7160 has granted to the municipalities the exclusive authority to grant fishery privileges in municipal waters. The Sangguniang Bayan may grant fishery privileges to erect fish corrals, oyster, mussels or other aquatic beds or bangus fry area within a definite zone of the municipal waters. The provisions of RA7160 do not necessarily repeal the laws creating the LLDA and granting the latter water rights authority over Laguna de Bay and the lake region. The Local Government Code of 1991 does not contain any express provision which categorically expressly repeal the charter of the Authority. It has to be conceded that there was no intent on the part of the legislature to repeal Republic Act No. 4850 and its amendments. The repeal of laws should be made clear and expressed. It has to be conceded that the charter of the LLDA constitutes a special law. RA 7160 is a general law. It is basic is basic in statutory construction that the enactment of a later legislation which is a general law cannot be construed to have repealed a special law. It is a well-settled rule in this jurisdiction that "a special statute, provided for a particular case or class of cases, is not repealed by a subsequent statute, general in its terms, provisions and application, unless the intent to repeal or alter is manifest, although the terms of the general law are broad enough to include the cases embraced in the special law." Where there is a conflict between a general law and a special statute, the special statute should prevail since it evinces the legislative intent more clearly that the general statute. The special law is to be taken as an exception to the general law in the absence of special circumstances forcing a contrary conclusion. This is because implied repeals are not favored and as much as possible, given to all enactments of the legislature. A special law cannot be repealed, amended or altered by a subsequent general law by mere implication. Considering the reasons behind the establishment of the Authority, which are enviromental protection, navigational safety, and sustainable development, there is every indication that the legislative intent is for the Authority to proceed with its mission. We are on all fours with the manifestation of LLDA that "Laguna de Bay, like any other single body of water has its own unique natural ecosystem. The 900 km lake surface water, the 8 major river tributaries and several other smaller rivers that drain into the lake, the 2,920 km2 basin or watershed transcending the boundaries of Laguna and Rizal provinces, constitute one integrated delicate natural ecosystem that needs to be protected with uniform set of policies; if we are to be serious in our aims of attaining sustainable development. This is an exhaustible natural resource-a very limited one-which requires judicious management and optimal utilization to ensure renewability and preserve its ecological integrity and balance. Managing the lake resources would mean the implementation of a national policy geared towards the protection, conservation, balanced growth and sustainable

development of the region with due regard to the intergenerational use of its resources by the inhabitants in this part of the earth. The authors of Republic Act 4850 have foreseen this need when they passed this LLDA law-the special law designed to govern the management of our Laguna de Bay lake resources. Laguna de Bay therefore cannot be subjected to fragmented concepts of management policies where lakeshore local government units exercise exclusive dominion over specific portions of the lake water. The implementation of a cohesive and integrated lake water resource management policy, therefore, is necessary to conserve, protect and sustainably develop Laguna de Bay." The power of the LGUs to issue fishing privileges was clearly granted for revenue purposes. This is evident from the fact that Section 149 of the New Local Government Code empowering local governments to issue fishing permits is embodied in Chapter 2, Book II, of Republic Act No. 7160 under the heading, "Specific Provisions On The Taxing And Other Revenue Raising Power of LGUs. On the other hand, the power of the Authority to grant permits for fishpens, fishcages and other aqua-culture structures is for the purpose of effectively regulating and monitoring activities in the Laguna de Bay region and for lake quality control and management. 6 It does partake of the nature of police power which is the most pervasive, the least limitable and the most demanding of all State powers including the power of taxation. Accordingly the charter of the Authority which embodies a valid exercise of police power should prevail over the Local Government Code of 1991 on matters affecting Laguna de Bay. There should be no quarrel over permit fees for fishpens, fishcages and other aqua-culture structures in the Laguna de Bay area. Section 3 of Executive Order No. 927 provides for the proper sharing of fees collected. In respect to the question as to whether the Authority is a quasi-judicial agency or not, it is our holding that, considering the provisions of Section 4 of Republic Act No. 4850 and Section 4 of Executive Order No. 927, series of 1983, and the ruling of this Court in Laguna Lake Development Authority vs. Court of Appeals, there is no question that the Authority has express powers as a regulatory a quasi-judicial body in respect to pollution cases with authority to issue a "cease a desist order" and on matters affecting the construction of illegal fishpens, fishcages and other aqua-culture structures in Laguna de Bay. The Authority's pretense, however, that it is co-equal to the Regional Trial Courts such that all actions against it may only be instituted before the Court of Appeals cannot be sustained. On actions necessitating the resolution of legal questions affecting the powers of the Authority as provided for in its charter, the Regional Trial Courts have jurisdiction. In view of the foregoing, this Court holds that Section 149 of RA 7160, otherwise known as the Local Government Code of 1991, has not repealed the provisions of the charter of the LLDA, Republic Act No. 4850, as amended. Thus, the Authority has the exclusive jurisdiction to issue permits for the enjoyment of fishery privileges in Laguna de Bay to the exclusion of municipalities situated therein and the authority to exercise such powers as are by its charter vested on it.
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VIII. POWER TO GENERATE AND APPLY RESOURCES Medina v. City of Baguio Doctrine: It is settled that a municipal corporation, unlike a sovereign state, is clothed with no inherent power of taxation. The charter or statue must plainly show an intent to confer that power or the municipality cannot assume it. And the power when granted is to be construed strictissimi juris. Any doubt or ambiguity arising out of the term used in granting that power must be resolved against the municipality. Inferences, implications, deductions, all these, have no place in the interpretation of the taxing power of a municipal corporation. Facts: Plaintiffs Medina and de la Rosa, owners and operators of movie houses in the City of Baguio, paid, under protest, the amounts of P1,200 and P1,800, respectively, for municipal license pursuant to Ordinance no. 99. Further, Medina and plaintiff Santamaria, also an owner and operator of a movie house in the city of Baguio, paid for additional taxes under Ordinance no. 62. On the other hand, plaintiff Benguet Development Co., Inc., paid under Ordinance No. 100 the amount of P3,554.44 as specific tax for gasoline and oil. Thereafter, Plaintiffs brought an action in the Court of First Instance of Baguio seeking to nullify Ordinances Nos. 62, 99 and 100 of the City Council of Baguio on the ground that they were enacted without authority or power, and are oppressive, unjust and unreasonable, and to recover the taxes and fees they had paid as itemized in the complaint. After trial, the court rendered decision declaring Ordinances Nos. 99 and 100 valid and legal but rendering Ordinance No. 62 null and void while denying the claim of the plaintiffs for reimbursement of the different amounts paid by them. From this decision only the plaintiffs appealed assigning from errors as committed by the lower court. Issues: 1. Whether or not respondent City of Baguio has the power to levy a tax upon theaters and gasoline stations which are operated within its limits. 2. Whether or not respondent City of Baguio has the power to levy a tax upon articles used in businesses which are operated within its limits. Held: 1. Appellants apparently have in mind section 2553, paragraph (c) of the revised Administrative Code, which empowers the city of Baguio merely to impose a license fee for purpose of regulating the business that may be established in the city. The power as thus conferred is indeed limited, as it does not include the power to levy a tax. But on July 15, 1948, Republic Act No. 329 was enacted amending the charter of said city and adding to its power to license the power to tax and to regulate. And it is precisely having in view this amendment

that Ordinance No. 99 was approved in order to increase the revenues of the city. In our opinion, the amendment above adverted to empowers the city council not only to impose a license fee but also to levy a tax for purposes of revenue, more on when in amending section 2553(b), the phrase "as provided by law" has been removed by section 2 of Republic Act No. 329. The city council of Baguio therefore, has now the power to tax, to license and to regulate provided that the subjects affected be one of those included in the charter. 2. It is settled that a municipal corporation, unlike a sovereign state, is clothed with no inherent power of taxation. The charter or statue must plainly show an intent to confer that power or the municipality cannot assume it. And the power when granted is to be construed strictissimi juris. Any doubt or ambiguity arising out of the term used in granting that power must be resolved against the municipality. Inferences, implications, deductions, all these, have no place in the interpretation of the taxing power of a municipal corporation. An examination of section 2553 (c), of the revised Administrative Code, as amended, will reveal that the power given to the city of Baguio to tax, to license and to regulate only refers to the business of the taxpayer and not to the articles used in said business. This is clearly inferred from a reading of said section and from the concluding sentence appearing therein, to wit, "and such other businesses, trade and occupations as may be established or practiced in the city". Wherefore, the decision appealed from is hereby affirmed, with the only modification as to Ordinance No. 100, which is hereby declared null and void. Defendant is hereby ordered to return to the Benguet Development Co., Inc., the amount of P3,544.44 it has paid as specific tax. No pronouncement as to costs.

Basco vs. PAGCOR Facts: The Philippine Amusements and Gaming Corporation (PAGCOR) was created by virtue of P.D. 1067-A dated January 1, 1977 and was granted a franchise under P.D. 1067-B also dated January 1, 1977 "to establish, operate and maintain gambling casinos on land or water within the territorial jurisdiction of the Philippines." Petitioners filed an instant petition seeking to annul the Philippine Amusement and Gaming Corporation (PAGCOR) Charter PD 1869, because it is allegedly contrary to morals, public policy and order. Petitioners claim that P.D. 1869 constitutes a waiver of the right of the City of Manila to impose taxes and legal fees; that the exemption clause in P.D. 1869 is in violation of the principle of local autonomy. Section 13 par. (2) of P.D. 1869 exempts PAGCOR, as the franchise holder from paying any "tax of any kind or form, income or otherwise, as well as fees, charges or levies of whatever nature, whether National or Local." Issue: Does the local Government of Manila have the power to impose taxes on PAGCOR?
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Held: No, the court rules that The City government of Manila has no power to impose taxes on PAGCOR. Reason: The principle of Local autonomy does not make local governments sovereign within the state; the principle of local autonomy within the constitution simply means decentralization. It cannot be an Imperium in imperio it can only act intra sovereign, or as an arm of the National Government. PAGCOR has a dual role, to operate and to regulate gambling casinos. The latter role is governmental, which places it in the category of an agency or instrumentality of the Government. Being an instrumentality of the Government, PAGCOR should be and actually is exempt from local taxes. The power of local government to "impose taxes and fees" is always subject to "limitations" which Congress may provide by law. Since PD 1869 remains an "operative" law until "amended, repealed or revoked" (Sec. 3, Art. XVIII, 1987 Constitution), its "exemption clause" remains as an exception to the exercise of the power of local governments to impose taxes and fees. It cannot therefore be violative but rather is consistent with the principle of local autonomy.

Philippine Petroleum Corp. v. Municipality of Pililia, Rizal Facts: PPC is engaged in the manufacture of lubricated oil basestock which is a petroleum product with its refinery plant in Malaya, Pililia, Rizal. Sec. 142 (NIRC of 1939): Manufactured oils and other fuels are subject to specific tax. PD 231: Local Tax Code: Municipality may impose taxes on business, except those for which fixed taxes are provided on manufacturers, importers or producers of any article of commerce of whatever kind or nature, including brewers, distillers, rectifiers, and compounders of liquors, distilled spirits, and/ or wines. Finance Secretary issued Provincial Circular No. 26-73 which directed all LGU treasurers to refrain from collecting any local tax imposed in old or new ordinances in the business of manufacturing, wholesaling, retailing or dealing in petroleum products subject to specific tax under the NIRC; and Provincial Circular No. 26 A-73: Instructed treasurers to stop collecting any local tax imposed on the businesses of manufacturing, wholesaling, retailing, or dealing in, petroleum products subject to the specific tax under the NIRC pursuant to ordinances enacted before or after the effectivity of the Local Tax Code on 1 July 1973. Municipality of Pililia imposed Municipal Tax Ordinance No. 1 (Pililia Tax Code) Sec 9&10 imposed a tax on business, except for those which fixed taxes are provided in the LTC on manufacturers, importers or producers of any article of commerce of whatever kind or nature, including brewers, distillers, rectifiers, and compounders of liquors, distilled spirits, and/ or wines as well as mayors permit, sanitary inspection fee and storage permit fee for flammable, combustible, or explosive substances On April 13, 1974, P.D. 436 was promulgated increasing the specific tax on lubricating oils, gasoline, bunker fuel oil, diesel

fuel oil and other similar petroleum products levied under Sections 142, 144 and 145 of the NIRC, as amended, and granting provinces, cities and municipalities certain shares in the specific tax on such products in lieu of local taxes imposed on petroleum products. The questioned Municipal Tax Ordinance No. 1 was reviewed and approved by the Provincial Treasurer of Rizal on January 13, 1975 (Rollo, p. 143), but was not implemented and/or enforced by the Municipality of Pililla because of its having been suspended up to now in view of Provincial Circular Nos. 26-73 and 26 A-73. Provincial Circular No. 6-77 dated March 13, 1977 was also issued directing all city and municipal treasurers to refrain from collecting the so-called storage fee on flammable or combustible materials imposed under the local tax ordinance of their respective locality, said fee partaking of the nature of a strictly revenue measure or service charge. On June 3, 1977, P.D. 1158 otherwise known as the NIRC of 1977 was enacted, Section 153 of which specifically imposes specific tax on refined and manufactured mineral oils and motor fuels. Enforcing the provisions of the abovementioned ordinance, the respondent filed a complaint against PPC for the collection of the business tax from 1979 to 1986; storage permit fees from 1975 to 1986; mayor's permit and sanitary inspection fees from 1975 to 1984. PPC, however, have already paid the last-named fees starting 1985. RTC: PPC to pay business tax, storage permit fee, mayors permit fee, sanitary inspection fee, as well as costs of suit. MR denied. Issue: WON PPC whose oil products are subject to specific tax under the NIRC, is still liable to pay tax on business and storage fees, and mayor's permit and sanitary inspection fee unto Pililla based on Municipal Ordinance No. 1. Held: PPC: (a) Provincial Circular No. 2673 declared as contrary to national economic policy the imposition of local taxes on the manufacture of petroleum products as they are already subject to specific tax under the NIRC; (b) the above declaration covers not only old tax ordinances but new ones, as well as those which may be enacted in the future; (c) both Provincial Circulars (PC) 26-73 and 26 A-73 are still effective, hence, unless and until revoked, any effort on the part of the respondent to collect the suspended tax on business from the petitioner would be illegal and unauthorized; and (d) Section 2 of P.D. 436 prohibits the imposition of local taxes on petroleum products. PC No. 26-73 and PC No. 26 A-73 suspended the effectivity of local tax ordinances imposing a tax on business under Section 19 (a) of the Local Tax Code (P.D. No. 231), with regard to manufacturers, retailers, wholesalers or dealers in petroleum products subject to the specific tax under the NIRC NIRC, in view of Section 22 (b) of the Code regarding nonimposition by municipalities of taxes on articles, subject to specific tax under the provisions of the NIRC. There is no question that Pililla's Municipal Tax Ordinance No. 1 imposing the assailed taxes, fees and charges is valid especially Section 9 (A) which according to the trial court "was lifted in toto and/or is a literal reproduction of Section 19 (a) of the Local Tax Code as amended by P.D. No. 426." It conforms with the mandate of said law. But P.D. No.
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426 amending the Local Tax Code is deemed to have repealed Provincial Circular Nos. 26-73 and 26 A-73 issued by the Secretary of Finance when Sections 19 and 19 (a), were carried over into P.D. No. 426 and no exemptions were given to manufacturers, wholesalers, retailers, or dealers in petroleum products. Well-settled is the rule that administrative regulations must be in harmony with the provisions of the law. In case of discrepancy between the basic law and an implementing rule or regulation, the former prevails. As aptly held by the court a quo: Necessarily, there could not be any other logical conclusion than that the framers of P.D. No. 426 really and actually intended to terminate the effectivity and/or enforceability of Provincial Circulars Nos. 26-73 and 26 A-73 inasmuch as clearly these circulars are in contravention with Sec. 19 (a) of P.D. 426-the amendatory law to P.D. No. 231. That intention to terminate is very apparent and in fact it is expressed in clear and unequivocal terms in the effectivity and repealing clause of P.D. 426 Furthermore, while Section 2 of P.D. 436 prohibits the imposition of local taxes on petroleum products, said decree did not amend Sections 19 and 19 (a) of P.D. 231 as amended by P.D. 426, wherein the municipality is granted the right to levy taxes on business of manufacturers, importers, producers of any article of commerce of whatever kind or nature. A tax on business is distinct from a tax on the article itself. Thus, if the imposition of tax on business of manufacturers, etc. in petroleum products contravenets a declared national policy, it should have been expressly stated in P.D. No. 436. The exercise by local governments of the power to tax is ordained by the present Constitution. To allow the continuous effectivity of the prohibition set forth in PC No. 2673 (1) would be tantamount to restricting their power to tax by mere administrative issuances. Under Section 5, Article X of the 1987 Constitution, only guidelines and limitations that may be established by Congress can define and limit such power of local governments. Thus: Each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees, and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy . . . Provincial Circular No. 6-77 enjoining all city and municipal treasurers to refrain from collecting the so-called storage fee on flammable or combustible materials imposed in the local tax ordinance of their respective locality frees petitioner PPC from the payment of storage permit fee. The storage permit fee being imposed by Pililla's tax ordinance is a fee for the installation and keeping in storage of any flammable, combustible or explosive substances. Inasmuch as said storage makes use of tanks owned not by the municipality of Pililla, but by petitioner PPC, same is obviously not a charge for any service rendered by the municipality as what is envisioned in Section 37 of the same Code. Section 10 (z) (13) of Pililla's Municipal Tax Ordinance No. 1 prescribing a permit fee is a permit fee allowed under Section 36 of the amended Code. As to the authority of the mayor to waive payment of the mayor's permit and sanitary inspection fees, the trial court

did not err in holding that "since the power to tax includes the power to exempt thereof which is essentially a legislative prerogative, it follows that a municipal mayor who is an executive officer may not unilaterally withdraw such an expression of a policy thru the enactment of a tax." The waiver partakes of the nature of an exemption. It is an ancient rule that exemptions from taxation are construed in strictissimi juris against the taxpayer and liberally in favor of the taxing authority. Tax exemptions are looked upon with disfavor. Thus, in the absence of a clear and express exemption from the payment of said fees, the waiver cannot be recognized. As already stated, it is the law-making body, and not an executive like the mayor, who can make an exemption. Under Section 36 of the Code, a permit fee like the mayor's permit, shall be required before any individual or juridical entity shall engage in any business or occupation under the provisions of the Code. However, since the Local Tax Code does not provide the prescriptive period for collection of local taxes, Article 1143 of the Civil Code applies. Said law provides that an action upon an obligation created by law prescribes within ten (10) years from the time the right of action accrues. The Municipality of Pililla can therefore enforce the collection of the tax on business of petitioner PPC due from 1976 to 1986, and NOT the tax that had accrued prior to 1976. PREMISES CONSIDERED, with the MODIFICATION that business taxes accruing PRIOR to 1976 are not to be paid by PPC (because the same have prescribed) and that storage fees are not also to be paid by PPC (for the storage tanks are owned by PPC and not by the municipality, and therefore cannot be a charge for service by the municipality), the assailed DECISION is hereby AFFIRMED.

Floro Cement Corp. vs. Gorospe Facts: The municipality of Lugait filed with the SC a verified complaint for collection of taxes against the defendant Floro Cement Corporation. The taxes sought to be collected by the plaintiff refers to "manufacturers" and' exporter's "taxes for the period from January 1, 1974 to September 30, 1975, inclusive, in the total amount of P161,875.00 plus 25% thereof as surcharge. Plaintiff alleged that the imposition and collection of these taxes" is based on its Municipal Ordinance No. 5, otherwise known as the Municipal Revenue Code of 1974, which was passed pursuant to PD 231 and also Municipal Ordinance No. 10 passed pursuant PD 426,amending PD 231. Petitioner set up the defense that it is not liable to pay manufacturer's and exporter's taxes alleging among others that the plaintiffs power to levy and collect taxes, fees, rentals, royalties or charges of any kind whatsoever on defendant has been limited or withdrawn by Section 52 of PD 463. It also contended that the defendant was granted by the Secretary of Agriculture and Natural Resources a Certificate of Qualification for Tax Exemption, entitling defendant to exemption for a period of 5 years from April 30,1969 to April 29, 1974 from payment of all taxes, except income tax, and which Certificate was amended on November 5, 1974 CQTE
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P.D. 463-22), entitling defendant to exemption from all taxes, duties and fees except income tax, for five (5) years from the first date of actual commercial production of saleable mineral products that is from May 17, 1974 to January 1, 1978; and that RA 3823, as implemented by Mines Administrative Order No. V-25, and P.D. No. 463 which are the basis for the exemption granted to defendant are special laws whereas, the municipal ordinance mentioned in the complaint which are based on P.D. No. 231 and P.D No. 426, respectively, are general laws; and that it is axiomatic that a special law can not be amended and/or repealed by a general law unless there is an express intent to repeal or abrogate the provisions of the special law. The trial court rendered a decision ordering defendant to pay the amount of P161,875 as manufacturers and exporters taxes and surcharges. Issue: WON Ordinances Nos. 5 and 10 of Lugait apply to Floro Corporation notwithstanding the limitation on the taxing power of local government as provided for in Sec. 52 of P.D. 231 and Sec. 52 of P.D. 463. Held: Ratio: Floro Cement Corporation holds that since Ordinances Nos. 5 and 10 were enacted pursuant to P.D. No. 231 and P.D. No. 426, respectively, said ordinances do not apply to its business in view of the limitation on the taxing power of local government provided in Sec. 5m of P.D. No. 231 [(m) Taxes on mines, mining operations and mineral products and their by-products when sold domestically by the operator.]. Petitioner likewise contends that cement is a mineral product, relying on the case of Cebu Portland Cement Company vs. CIR. Petitioner further contends that the partial exemption was rendered absolute by Sec. 52 of P.D. No. 463, which expressly prohibits the province, city municipality, barrio and municipal district from levying and collecting taxes, fees, rentals, royalties or charges of any kind whatsoever on mines, mining claims and mineral products, any law to the contrary notwithstanding. On other hand, while respondent municipality admits that petitioner undertakes exploration, development and exploitation of mineral products, the taxes sought to be collected were not imposed on these activities in view of the mentioned prohibition under Sec. 52 of P.D. No. 463. Said taxes were levied on the corporation's business of manufacturing and exporting cement. The business of manufacturing and exporting cement does not fall under exploration, development nor exploitation of mineral resources as defined in Sec. 2 of P.D. No. 463, hence, it is outside the scope of application of Sec. 52 of said decree. On the question of whether or not cement is a mineral product, this Court has held that it is not a mineral product but rather a manufactured product. While cement is composed of 80% minerals, it is not merely an admixture or blending of raw materials, as lime, silica, shale and others. It is the result of a definite process-the crushing of minerals, grinding, mixing, calcining adding of retarder or raw gypsum In short, before cement reaches its saleable form, the minerals had already undergone a chemical change through manufacturing process. Yes

It appears that the foregoing cases overruled the case of Cebu Portland Cement Company vs. CIR which was cited by petitioner. On the exemption claimed by petitioner, this Court has laid down the rule that as the power of taxation is a high prerogative of sovereignty, the relinquishment is never presumed and any reduction or diminution thereof with respect to its mode or its rate, must be strictly construed, and the same must be coached in clear and unmistakable terms in order that it may be applied. More specifically stated, the general rule is that any claim for exemption from the tax statute should be strictly construed against the taxpayer. He who claims an exemption must be able to point out some provision of law creating the right; it cannot be allowed to exist upon a mere vague implication or inference. It must be shown indubitably to exist, for every presumption is against it, and a well-founded doubt is fatal to the claim. The petitioner failed to meet this requirement. As held by the lower court, the exemption mentioned in Sec. 52 of P.D. No. 463 refers only to machineries, equipment, tools for production, etc., as provided in Sec. 53 of the same decree. The manufacture and the export of cement does not fall under the said provision for it is not a mineral product. It is not cement that is mined only the mineral products composing the finished product. Furthermore, by the parties' own stipulation of facts submitted before the court a quo, it is admitted that Floro Cement Corporation is engaged in the manufacturing and selling, including exporting of cement. As such, and since the taxes sought to be collected were levied on these activities pursuant to Sec. 19 of P.D. No. 231, Ordinances Nos. 5 and 10, which were enacted pursuant to P.D. No. 231 and P.D. No. 426, respectively, properly apply to petitioner.

Tuzon and Mapagu vs. CA Facts: The Sangguniang Bayan of Camalaniugan, Cagayan adopted Resolution No. 9 which solicits a 1% donation from thresher operators who apply for a permit to thresh within the municipalitys jurisdiction to help finance the construction of the municipalitys Sports and Nutrition Center. Such 1% shall come from the value of the palay threshed by them in the area. To implement the resolution, Municipal Treasurer Mapagu prepared an agreement to donate for signature of all thresher/owner/ operators applying for a mayors permit. Jurado sent his agent to the Treasurers office to pay the license fee for thresher operators. Mapagu refused to accept payment and required Jurado to first secure a mayors permit. Mayor Tuzon said that Jurado should first comply with Res 9 and sign the agreement before the permit could be issued. Jurado ignored the requirement and sent his license fee payment through postal money order. His payment was returned on the ground that he failed to comply with Res 9. Jurado filed a special civil action for mandamus w/ damages to compel the issuance of the mayors permit and license and a petition for declaratory judgment against Res 9 and the implementing agreement for being illegal either as a donation/tax measure
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RTC: Upheld Res 9 and implementing agreement, and dismissed claims for damages CA: Affirmed validity of Res 9 and implementing agreement, but found Mayor Tuzon and Treasurer Mapagu to have acted maliciously and in bad faith when they denied Jurados application. Issue: WON the tax measure contravenes the limitations on the taxing powers of LGUs under Sec 5 of the LGC. Held: SC will not rule on validity of Res 9 and the implementing agreement because the issue has not been raised as an assigned error. However, it observes that that CA said no more than Res 9 was passed by the Sangguniang Bayan in the lawful exercise of its legislative powers in pursuance to (1) Art. XI, Sec. 5 1973 Consti subject to such limitation as may be provided by law and (2) Art. 4, Sec. 29 of PD 231 the barrio council may solicit monies, materials, and other contributions from private agencies and individuals. The SC said that this was an oversimplification. The CA failed to offer any explanation for its conclusion nor does it discuss its own concept of the nature of the resolution. If Res. 9 is claimed to be a solicitation: Implementing agreement makes the donationobligatory and a condition precedent to the issuance of a mayors permit. Therefore, it goes against the nature of a donation. If it is to be considered as a tax ordinance, it must be shown to have been enacted in accordance with the requirements of the Local Tax Code. It would include the holding of a public hearing on the measure, its subsequent approval by the Secretary of Finance, in addition to the requisites for publication of ordinances in general.

Subsequently, Congress granted in favor of Globe Mackay Cable and Radio Corporation (Globe) and Smart Information Technologies, Inc. (Smart) franchises which contained in leiu of all taxes provisos. In 1995, it enacted RA 7925, or the Public Telecommunication Policy of the Philippines, Sec. 23 of which provides that any advantage, favor, privilege, exemption, or immunity granted under existing franchises, or may hereafter be granted, shall ipso facto become part of previously granted telecommunications franchises and shall be accorded immediately and unconditionally to the grantees of such franchises. The law took effect on March 16, 1995. In January 1999, when PLDT applied for a mayors permit to operate its Davao Metro exchange, it was required to pay the local franchise tax which then had amounted to P3,681,985.72. PLDT challenged the power of the city government to collect the local franchise tax and demanded a refund of what had been paid as a local franchise tax for the year 1997 and for the first to the third quarters of 1998. Issue: Whether or not by virtue of RA 7925, Sec. 23, PLDT is again entitled to the exemption from payment of the local franchise tax in view of the grant of tax exemption to Globe and Smart. Held: Petitioner contends that because their existing franchises contain in lieu of all taxes clauses, the same grant of tax exemption must be deemed to have become ipso facto part of its previously granted telecommunications franchise. But the rule is that tax exemptions should be granted only by a clear and unequivocal provision of law expressed in a language too plain to be mistaken and assuming for the nonce that the charters of Globe and of Smart grant tax exemptions, then this runabout way of granting tax exemption to PLDT is not a direct, clear and unequivocal way of communicating the legislative intent. Nor does the term exemption in Sec. 23 of RA 7925 mean tax exemption. The term refers to exemption from regulations and requirements imposed by the National Telecommunications Commission (NTC). For instance, RA 7925, Sec. 17 provides: The Commission shall exempt any specific telecommunications service from its rate or tariff regulations if the service has sufficient competition to ensure fair and reasonable rates of tariffs. Another exemption granted by the law in line with its policy of deregulation is the exemption from the requirement of securing permits from the NTC every time a telecommunications company imports equipment. Tax exemptions should be granted only by clear and unequivocal provision of law on the basis of language too plain to be mistaken. City Government of QC vs. BAYANTEL FELS Energy vs. Province of Batangas Facts: On January 18, 1993, NPC entered into a lease contract with Polar Energy, Inc. over 3x30 MW diesel engine
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FRANCHISES PLDT vs. City of Davao Facts: PLDT paid a franchise tax equal to three percent (3%) of its gross receipts. The franchise tax was paid in lieu of all taxes on this franchise or earnings thereof pursuant to RA 7082. The exemption from all taxes on this franchise or earnings thereof was subsequently withdrawn by RA 7160 (LGC), which at the same time gave local government units the power to tax businesses enjoying a franchise on the basis of income received or earned by them within their territorial jurisdiction. The LGC took effect on January 1, 1992. The City of Davao enacted Ordinance No. 519, Series of 1992, which in pertinent part provides: Notwithstanding any exemption granted by law or other special laws, there is hereby imposed a tax on businesses enjoying a franchise, a rate of seventy-five percent (75%) of one percent (1%) of the gross annual receipts for the preceding calendar year based on the income receipts realized within the territorial jurisdiction of Davao City.

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power barges moored at Balayan Bay in Calaca, Batangas. The contract, denominated as an Energy Conversion Agreement, was for a period of five years. Article 10 states that NPC shall be responsible for the payment of taxes. (other than (i) taxes imposed or calculated on the basis of the net income of POLAR and Personal Income Taxes of its employees and (ii) construction permit fees, environmental permit fees and other similar fees and charges. Polar Energy then assigned its rights under the Agreement to Fels despite NPCs initial opposition. FELS received an assessment of real property taxes on the power barges from Provincial Assessor Lauro C. Andaya of Batangas City. FELS referred the matter to NPC, reminding it of its obligation under the Agreement to pay all real estate taxes. It then gave NPC the full power and authority to represent it in any conference regarding the real property assessment of the Provincial Assessor. NPC filed a petition with the LBAA. The LBAA ordered Fels to pay the real estate taxes. The LBAA ruled that the power plant facilities, while they may be classified as movable or personal property, are nevertheless considered real property for taxation purposes because they are installed at a specific location with a character of permanency. The LBAA also pointed out that the owner of the bargesFELS, a private corporationis the one being taxed, not NPC. A mere agreement making NPC responsible for the payment of all real estate taxes and assessments will not justify the exemption of FELS; such a privilege can only be granted to NPC and cannot be extended to FELS. Finally, the LBAA also ruled that the petition was filed out of time. Fels appealed to the CBAA. The CBAA reversed and ruled that the power barges belong to NPC; since they are actually, directly and exclusively used by it, the power barges are covered by the exemptions under Section 234(c) of R.A. No. 7160. As to the other jurisdictional issue, the CBAA ruled that prescription did not preclude the NPC from pursuing its claim for tax exemption in accordance with Section 206 of R.A. No. 7160. Upon MR, the CBAA reversed itself. Issue: Held WON the petition is time barred Yes

The remedy of appeal to the LBAA is available from an adverse ruling or action of the provincial, city or municipal assessor in the assessment of the property. It follows then that the determination made by the respondent Provincial Assessor with regard to the taxability of the subject real properties falls within its power to assess properties for taxation purposes subject to appeal before the LBAA. We fully agree with the rationalization of the CA, citing the case of Callanta v. Office of the Ombudsman, where we ruled that under Section 226 of R.A. No 7160, the last action of the local assessor on a particular assessment shall be the notice of assessment; it is this last action which gives the owner of the property the right to appeal to the LBAA. The procedure likewise does not permit the property owner the remedy of filing a motion for reconsideration before the local assessor. To reiterate, if the taxpayer fails to appeal in due course, the right of the local government to collect the taxes due with respect to the taxpayers property becomes absolute upon the expiration of the period to appeal. It also bears stressing that the taxpayers failure to question the assessment in the LBAA renders the assessment of the local assessor final, executory and demandable, thus, precluding the taxpayer from questioning the correctness of the assessment, or from invoking any defense that would reopen the question of its liability on the merits. In fine, the LBAA acted correctly when it dismissed the petitioners appeal for having been filed out of time; the CBAA and the appellate court were likewise correct in affirming the dismissal. Elementary is the rule that the perfection of an appeal within the period therefor is both mandatory and jurisdictional, and failure in this regard renders the decision final and executory. Issue: taxes Held: WON the petitioner may be assessed real property

Yes

Ratio: Section 226 of R.A. No. 7160, otherwise known as the Local Government Code of 1991, provides: SECTION 226. Local Board of Assessment Appeals. Any owner or person having legal interest in the property who is not satisfied with the action of the provincial, city or municipal assessor in the assessment of his property may, within sixty (60) days from the date of receipt of the written notice of assessment, appeal to the Board of Assessment Appeals of the province or city by filing a petition under oath in the form prescribed for the purpose, together with copies of the tax declarations and such affidavits or documents submitted in support of the appeal. We note that the notice of assessment which the Provincial Assessor sent to FELS on August 7, 1995, contained a reiteration of Section 226. Instead of appealing to the Board of Assessment Appeals (as stated in the notice), NPC opted to file a motion for reconsideration of the Provincial Assessors decision, a remedy not sanctioned by law.

Ratio: The CBAA and LBAA power barges are real property and are thus subject to real property tax. This is also the inevitable conclusion, considering that G.R. No. 165113 was dismissed for failure to sufficiently show any reversible error. Tax assessments by tax examiners are presumed correct and made in good faith, with the taxpayer having the burden of proving otherwise. [48] Besides, factual findings of administrative bodies, which have acquired expertise in their field, are generally binding and conclusive upon the Court; we will not assume to interfere with the sensible exercise of the judgment of men especially trained in appraising property. Where the judicial mind is left in doubt, it is a sound policy to leave the assessment undisturbed. We find no reason to depart from this rule in this case. In Consolidated Edison Company of New York, Inc., et al. v. The City of New York, et al., a power company brought an action to review property tax assessment. On the citys motion to dismiss, the Supreme Court of New York held that the barges on which were mounted gas turbine power plants designated to generate electrical power, the fuel oil barges which supplied fuel oil to the power plant barges, and the
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accessory equipment mounted on the barges were subject to real property taxation. Moreover, Article 415 (9) of the New Civil Code provides that [d]ocks and structures which, though floating, are intended by their nature and object to remain at a fixed place on a river, lake, or coast are considered immovable property. Thus, power barges are categorized as immovable property by destination, being in the nature of machinery and other implements intended by the owner for an industry or work which may be carried on in a building or on a piece of land and which tend directly to meet the needs of said industry or work. Petitioners maintain nevertheless that the power barges are exempt from real estate tax under Section 234 (c) of R.A. No. 7160 because they are actually, directly and exclusively used by petitioner NPC, a government- owned and controlled corporation engaged in the supply, generation, and transmission of electric power. We affirm the findings of the LBAA and CBAA that the owner of the taxable properties is petitioner FELS, which in fine, is the entity being taxed by the local government. As stipulated under Section 2.11, Article 2 of the Agreement: OWNERSHIP OF POWER BARGES. POLAR shall own the Power Barges and all the fixtures, fittings, machinery and equipment on the Site used in connection with the Power Barges which have been supplied by it at its own cost. POLAR shall operate, manage and maintain the Power Barges for the purpose of converting Fuel of NAPOCOR into electricity. It follows then that FELS cannot escape liability from the payment of realty taxes by invoking its exemption in Section 234 (c) of R.A. No. 7160. Indeed, the law states that the machinery must be actually, directly and exclusively used by the government owned or controlled corporation; nevertheless, petitioner FELS still cannot find solace in this provision because Section 5.5, Article 5 of the Agreement provides: OPERATION. POLAR undertakes that until the end of the Lease Period, subject to the supply of the necessary Fuel pursuant to Article 6 and to the other provisions hereof, it will operate the Power Barges to convert such Fuel into electricity in accordance with Part A of Article 7. It is a basic rule that obligations arising from a contract have the force of law between the parties. Not being contrary to law, morals, good customs, public order or public policy, the parties to the contract are bound by its terms and conditions. Time and again, the Supreme Court has stated that taxation is the rule and exemption is the exception. The law does not look with favor on tax exemptions and the entity that would seek to be thus privileged must justify it by words too plain to be mistaken and too categorical to be misinterpreted. Thus, applying the rule of strict construction of laws granting tax exemptions, and the rule that doubts should be resolved in favor of provincial corporations, we hold that FELS is considered a taxable entity. The mere undertaking of petitioner NPC under Section 10.1 of the Agreement, that it shall be responsible for the payment of all real estate taxes and assessments, does not justify the exemption. The privilege granted to petitioner NPC cannot be extended to FELS. The covenant is between FELS and NPC and does not bind a third person not privy thereto, in this case, the Province of Batangas. It must be pointed out that

the protracted and circuitous litigation has seriously resulted in the local governments deprivation of revenues. The power to tax is an incident of sovereignty and is unlimited in its magnitude, acknowledging in its very nature no perimeter so that security against its abuse is to be found only in the responsibility of the legislature which imposes the tax on the constituency who are to pay for it. The right of local government units to collect taxes due must always be upheld to avoid severe tax erosion. This consideration is consistent with the State policy to guarantee the autonomy of local governments and the objective of the Local Government Code that they enjoy genuine and meaningful local autonomy to empower them to achieve their fullest development as selfreliant communities and make them effective partners in the attainment of national goals. In conclusion, we reiterate that the power to tax is the most potent instrument to raise the needed revenues to finance and support myriad activities of the local government units for the delivery of basic services essential to the promotion of the general welfare and the enhancement of peace, progress, and prosperity of the people.

Digitel vs. Province of Pangasinan Facts: The present petition stemmed from a Complaint for Mandamus, Collection of Sum of Money and Damages instituted by the Province of Pangasinan against Digital Telecommunications Philippines, Inc. Section 137 LGC withdrew any exemption from the payment of franchise tax by authorizing the LGUs to impose a franchise tax on businesses at a rate not exceeding 50% of 1% of the gross annual receipts of the business. Section 232 lso authorizes the imposition of an ad valorem tax on real property by the LGUs within the Metropolitan Manila Area wherein the land, building, machinery and other improvement not thereinafter specifically exempted. Digitel was granted, under Provincial Ordinance No. 18-92, a provincial franchise to install, maintain and operate a telecommunications system within Pangasinan. Under the Sec 6 of the provincial franchise, the grantee is required to pay franchise and real property taxes. The Sangguniang Panlalawigan also enacted Provincial Tax Ordinance 1 (Real Property Tax Ordinance of 1992). Section 4, however, expanded the application of Sec. 6 of the provincial franchise of Digitel to include machineries and other improvements, not thereinafter exempted,. Provincial Tax Ordinance No 4 was then enacted. Sections 4, 5 and 6 positively imposed a franchise tax on businesses enjoying a franchise within the province of Pangasinan. Thereafter, Digitel was granted by RA 7678 a legislative franchise. Under its legislative franchise, particularly Sec. 5 thereof, petitioner DIGITEL became liable for the payment of a franchise tax as may be prescribed by law of all gross receipts of the telephone or other telecommunications businesses transacted under it by the grantee, as well as real property tax on its real estate, and buildings exclusive of this franchise. Later, the Province of
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Pangasinan found that Digitel had a franchise tax deficiency for the years of 1992, 1993 and 1994. In the interregnum, on 16 March 1995, Congress passed RA 7925, otherwise known as The Public Telecommunications Policy Act of the Philippines. Section 23 of this law entitled Equality of Treatment in the Telecommunications Industry, provided for the ipso facto application to any previously granted telecommunications franchises of any advantage, favor, privilege, exemption or immunity granted under existing franchises, or those still to be granted, to be accorded immediately and unconditionally to earlier grantees. Thereafter, Digitel opposed Pangasinans claim on the ground that prior to the approval of its legislative franchise, its operation of a telecommunications system was done under a Facilities Management Agreement it had previously executed with the DOTC. It clarified that since the facilities in Pangasinan are just part of the government owned facilities awarded to DIGITEL, not only did the DOTC retain ownership of said facilities, the latter likewise provided for the budget for) expenses under its allocation from the government; hence, all revenues generated from the operation of the facilities inured to the DOTC; and all the fees received by petitioner DIGITEL were purely for services rendered. Further, it argued that under its legislative franchise, the payment of a franchise tax to the BIR would be in lieu of all taxes on said franchise or the earnings therefrom. The Pronvince of Pangasinan filed a Complaint for Mandamus, Collection of Sum of Money and Damages before Branch 68 of the RTC of Lingayen, Pangasinan. The trial court decided the Province. It ruled that Digitels legislative franchise does not work to exempt the latter from payment of provincial franchise and real property taxes. It ruled that provincial and legislative franchises are separate and distinct from each other. Moreover, it pointed out that LGH already withdrew any exemption granted to anyone. On the other hand, Digitel maintains that its legislative franchise being an earlier enactment, by virtue of Section 23 of Republic Act No. 7925, the ipso facto, immediate and unconditional application to it of the tax exemption found in the franchises of Globe, Smart and Bell. Stated simply, Section 23 of Republic Act No. 7925, in relation to the pertinent provisions of the legislative franchises of Globe, Smart and Bell, the national franchise tax for which Digitel is liable to pay shall be in lieu of any and all taxes of any kind, nature or description levied, established or collected by any authority whatsoever, municipal, provincial, or national, from which the grantee is hereby expressly granted. Issue: WON Digitel is exempt from the payment of provincial franchise tax in view of Section 23 of RA 7925 in relation to the exemptions enjoyed by other telcos. Held: No

The case at bar is actually not one of first impression. Indeed, as far back as 2001, this Court has had the occasion to rule against the claim for tax exemption under RA 7925. In the case of PLDT v. City of Davao, we already clarified the confusion brought about by the effect of Section 23 of Republic Act No. 7925 that the word exemption as used in the statute refers or pertains merely to an exemption from regulatory or reporting requirements of the DOTC or the NTC and not to the grantees tax liability. In said case, the Court ruled that Congress did not intend Section 23 to operate as a blanket tax exemption to all telcos. Moreover, tax exemptions must be expressed in the statute in clear language that leaves no doubt of the intention of the legislature to grant such exemption. And, even if it is granted, the exemption must be interpreted in strictissimi juris against the taxpayer and liberally in favor of the taxing authority. Moreover, it ruled that PLDTs theory will leave the Government with the burden of having to keep track of all granted telecommunications franchises, lest some companies be treated unequally. It is different if Congress enacts a law specifically granting uniform advantages, favor, privilege, exemption, or immunity to all telecommunications entities. R.A. No. 7925 is thus a legislative enactment designed to set the national policy on telecommunications and provide the structures to implement it to keep up with the technological advances in the industry and the needs of the public. The thrust of the law is to promote gradually the deregulation of the entry, pricing, and operations of all public telecommunications entities and thus promote a level playing field in the telecommunications industry. There is nothing in the language of 23 nor in the proceedings of both the House of Representatives and the Senate in enacting R.A. No. 7925 which shows that it contemplates the grant of tax exemptions to all telecommunications entities, including those whose exemptions had been withdrawn by the LGC. The issue is then settled, the Court has no recourse but to deny Digitels claim for exemption from payment of provincial franchise tax. The foregoing pronouncement notwithstanding, in view of the passage of RA 7716 abolishing the franchise tax imposed on telecommunications companies effective 1 January 1996 and in its place is imposed a 10% VAT, the in-lieu-of-all-taxes clause/provision in the legislative franchises of Globe, Smart and Bell, among others, has now become functus officio, made inoperative for lack of a franchise tax. Therefore, taking into consideration the above, from 1 January 1996, Digitel ceased to be liable for national franchise tax and in its stead is imposed a 10% VAT in accordance with Section 108 of the Tax Code. Issue: WON Digitel is exempt from payment of real estate tax under its legislative franchise. Held: Yes

Ratio: Prior to the enactment of its legislative franchise, Digitel did not enjoy and exemption from the payment of franchise and real property taxes. In fact the provincial franchise made Digitel liable for the payment of such taxes.

Ratio; Pertinent Provision: SECTION 5. Tax Provisions. The grantee shall be liable to pay the same taxes on its real estate, buildings, and personal property exclusive of this franchise as other persons or corporations are now or hereafter may be required by law to pay x x x.
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Owing to the phrase exclusive of this franchise, petitioner DIGITEL stands firm in its position that it is equally exempt from the payment of real property tax. It maintains that said phrase found in Section 5 qualifies or delimits the scope of its liability respecting real property tax that real property tax should only be imposed on its assets that are actually, directly and exclusively used in the conduct of its business pursuant to its franchise. According to the Province, however, the phrase exclusive of this franchise in the legislative franchise of Digitel did not specifically or categorically express that such franchise grant intended to provide privilege to the extent of impliedly repealing RA 7160. Thus, the question is, whether or not petitioner DIGITELs real properties located within the territorial jurisdiction of respondent Province of Pangasinan are exempt from real property taxes by virtue of Section 5 of Republic Act No. 7678. We rule in the affirmative. However, it is with the caveat that such exemption solely applies to those real properties actually, directly and exclusively used by the grantee in its franchise. The present issue actually boils down to a dispute between the inherent taxing power of Congress and the delegated authority to tax of the local government borne by the 1987 Constitution. In the PLDT v. City of Davao, we already sustained the power of Congress to grant exemptions over and above the power of the local governments delegated taxing authority notwithstanding the source of such power. Had Congress intended to tax each and every real property of Digitel, regardless of whether or not it is used in the business or operation of its franchise, it would not have incorporated a qualifying phrase, which such manifestation admittedly is. And, to our minds, the issue in this case no longer dwells on whether Congress has the power to exempt Digitels properties from realty taxes by its enactment of RA 7678 which contains the phrase exclusive of this franchise, in the face of the mandate of the Local Government Code. The more pertinent issue to consider is whether or not, by passing Ra7678, Congress intended to exempt Digitels real properties actually, directly and exclusively used by the grantee in its franchise. The fact that Republic Act No. 7678 was a later piece of legislation can be taken to mean that Congress, knowing fully well that the Local Government Code had already withdrawn exemptions from real property taxes, chose to restore such immunity even to a limited degree. In view of the unequivocal intent of Congress to exempt from real property tax those real properties actually, directly and exclusively used by petitioner DIGITEL in the pursuit of its franchise, respondent Province of Pangasinan can only levy real property tax on the remaining real properties of the grantee located within its territorial jurisdiction not part of the above-stated classification. Said exemption, however, merely applies from the time of the effectivity of petitioner DIGITELs legislative franchise and not a moment sooner. In fine, petitioner DIGITEL is found accountable to respondent Province of Pangasinan for the following tax liabilities: 1) as to provincial franchise tax, from 13 November 1992 until actually paid; and 2) as to real property tax, for the period starting from

13 November 1992 until 28 December 1992, it shall be imposed only on the lands and buildings of petitioner DIGITEL located within the subject jurisdiction; for the period commencing from 29 December 1992 until 16 February 1994, in addition to the lands and buildings aforementioned, it shall similarly be imposed on machineries and other improvements; and, by virtue of the National Franchise of petitioner DIGITEL or Republic Act No. 7678, in accordance with the Courts ruling in the abovementioned Bayantel case, from the date of effectivity on 17 February 1994 until the present, it shall be imposed only on real properties NOT actually, directly and exclusively used in the franchise of petitioner DIGITEL. In addition to the foregoing summary, pertinent provisions of law respecting interests, penalties and surcharges shall also be made to apply to herein subject tax liabilities.

REAL PROPERTY TAXATION & SPECIAL EDUCATION FUND TAX

Sec. of Finance vs. Ilarde & Cipriano Cabaluna Facts: Cabaluna failed to pay land taxes. A breakdown of the computation of the delinquent taxes and penalties on his lots and residential house as reflected in the various receipts issued by the City Treasurer's Office of Iloilo City, shows that more than twenty-four percent (24%) of the delinquent taxes were charged and collected by way of penalties. Cabaluna paid his land taxes and the corresponding receipts were issued to him by the City Treasurer's Office with the notation "paid under protest." Cabaluna filed a formal letter of protest with the City Treasurer of Iloilo City wherein he contends that the City Treasurer's computation of penalties was erroneous since the rate of penalty applied exceeded twenty-four percent (24%) in contravention of Section 66 of P.D. No. 464, otherwise known as the Real Property Tax Code, as amended. In response, however, Assistant City Treasurer Tulio, for and in behalf of the City Treasurer of Iloilo, turned down private respondent's protest, citing Sec. 4(c) of Joint Assessment Regulations No. 1-85 and Local Treasury Regulations No. 2-85 of the then Ministry (now Department) of Finance. which reads: Sec. 4. Computation of Penalties on Delinquent Real Property Taxes. (a) Unless condoned, wholly or partially, in a duly approved resolution of the Local Sanggunian, delinquent real property taxes shall be subject to penalty at the rate of two per cent (2%) for every month of delinquency, provided that the total penalty for one tax year shall not exceed twenty-four percent (24%). (b) Failure to pay on time at least the first quarter installment of the real property tax shall constitute a waiver on the part of the property owner or administrator to avail of the privilege granted by law for him to pay without penalty his annual realty tax obligation in four (4) equal installment on or before the end of every quarter of the tax year. Accordingly, if the portion of the real property tax due for the first quarter of tax year is not paid on or before the thirty-first day of March of the same year, the penalty shall be
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reckoned from the first day of January at the rate of two per cent (2%) for every month of delinquency on the basis of the total amount due for the entire year and not only on the amount due for the said first quarter of the tax year. (c) The penalty of two percent (2%) per month of delinquency, or twenty-four percent (24%) per annum, as the case may be, shall continue to be imposed on the unpaid tax from the time the delinquency was incurred up to the time that it is paid for in full. Cabaluna filed a Petition for Declaratory Relief with Damages on 06 July 1993 before the sala of respondent Judge, assailing Joint Assessment Regulations No. 1-85 and Local Treasury Regulations No. 2-85 which, according to him, flouted Section 66 of P.D. No. 464 which fixed the maximum penalty for delinquency in the payment of real estate taxes at 24% of the delinquent tax. RTC: Section 4(c) of Joint Assessment Regulation No. 1-85 and Local Treasury Regulation No. 2-85 null and void. Penalty that should be imposed for delinquency in the payment of real property taxes should be two per centum on the amount of the delinquent tax for each month of delinquency or fraction thereof, until the delinquent tax is fully paid but in no case shall the total penalty exceed twenty-four per centum of the delinquent tax as provided for in Section 66 of P.D. 464 otherwise known as the Real Property Tax Code. Issue: WON Joint Assessment Regulations No. 1-85 and Local Treasury Regulations No. 2-85 are valid. NO. Held: The subject Regulations must be struck down for being repugnant to Section 66 of P.D. No. 464 or the Real Property Tax Code, which provides: That in no case shall the total penalty exceed twenty-four per centum of the delinquent tax. The rate of penalty for tax delinquency fixed herein shall be uniformly applied in all provinces and cities. Upon the other hand, Section 4(c) of the challenged Joint Assessment Regulations No. 1-85 and Local Treasury Regulations No. 2-85 issued by respondent Secretary (formerly Minister) of Finance provides that "the penalty of two percent (2%) per month of delinquency or twenty-four percent (24%) per annum as the case may be, shall continue to be imposed on the unpaid tax from the time the delinquency was incurred up to the time that the delinquency is paid for in full." As adeptly observed by the trial court, the penalty imposed under the assailed Regulations has no limit inasmuch as the 24% penalty per annum shall be continuously imposed on the unpaid tax until it is paid for in full unlike that imposed under Section 66 of the Real Property Tax Code where the total penalty is limited only to twenty-four percent of the delinquent tax. * The secretary anchors his claim on EO73 "The Minister of Finance shall promulgate the necessary rules and regulations to implement this Executive Order." E.O. No. 73 did not touch at all on the topic of amendment of rates of delinquent taxes or the amendment of rates of penalty on delinquent taxes. Neither did E.O. No. 1019 directly or indirectly vest upon the Department of Finance the right to

fiddle with the rates of penalty to be assessed on delinquency taxes as contained in the Real Property Tax Code. Despite the promulgation of E.O. No. 73, P.D. No. 464 in general and Section 66 in particular, remained to be good law. NO repeal by implication itcab! Assuming argumenti that E.O. No. 73 has authorized the petitioner to issue the objected Regulations, such conferment of powers is void for being repugnant to the well-encrusted doctrine in political law that the power of taxation is generally vested with the legislature. The power delegated to the executive branch, in this case the Ministry of Finance, to lay down implementing rules must, nevertheless, be germane to the general law it seeks to apply. The implementing rules cannot add to or detract from the provisions of the law it is designed to implement. * the fact that private respondent Cabaluna was responsible for the issuance and implementation of Regional Office Memorandum Circular No. 04-89 which implemented Joint Assessment Regulations No. 1-85 and Local Treasury Regulations No. 2-85 does not put him in estoppel from seeking the nullification of said Regulations at this point.

Benguet Corporation v. Central Board of Assessment Appeals Facts: BC seeks to annul and set aside the Decision of the CBAA of May 28, 1991, as well as the Resolution of July 1, 1991, denying its motion for reconsideration, which affirmed the decision of respondent Local Board of Assessment Appeals of the Province of Benguet declaring as valid the tax assessments made by the Municipal Assessor of Itogon, Benguet, on the bunkhouses of petitioner occupied as dwelling by its rank and file employees based on Tax Declarations Nos. 8471 and 10454. The Provincial Assessor of Benguet, through the Municipal Assessor of Itogon, assessed real property tax on the bunkhouses of petitioner Benguet Corporation occupied for residential purposes by its rank and file employees under Tax Declarations Nos. 8471 (effective 1985) and 10454 (effective 1986). According to the Provincial Assessor, the tax exemption of bunkhouses under Sec. 3 (a), P.D. 745 (Liberalizing the Financing and Credit Terms for Low Cost Housing Projects of Domestic Corporations and Partnerships) , was withdrawn by P.D. 1955 (Withdrawing, Subject to Certain Conditions, the Duty and Tax Privileges Granted to Private Business Enterprises and/or Persons Engaged in Any Economic Activity, and Other Purposes). Petitioner appealed the assessment on Tax Declarations Nos. 8471 and 10454 to the Local Board of Assessment Appeals (LBAA) of the Province of Benguet, docketed as LBAA Cases Nos. 42 and 43, respectively. Both were heard jointly. Meanwhile, the parties agreed to suspend hearings in LBAA Cases Nos. 42 and 43 to await the outcome of another case, LBAA Case No. 41, covering Tax Declaration No. 3534 (effective 1984), which involved the same parties and issue until the appeal was decided by the Central Board of Assessment Appeals (CBAA). On July 15, 1986, CBAA handed down its decision in LBAA Case No. 41 holding that the buildings of petitioner used as dwellings by its rank and file employees were exempt from real property tax
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pursuant to P.D. 745. Thereafter, the proceedings in LBAA Cases Nos. 42 and 43 proceeded after which a decision was rendered affirming the taxability of subject property of petitioner. On appeal, CBAA sustained the decision holding that the realty tax exemption under P.D. 745 was withdrawn by P.D. 1955 and E.O. 93, so that petitioner should have applied for restoration of the exemption with the Fiscal Incentives Review Board (FIRB) The decision of CBAA clarified that Case No. 41 was different because it was effective prior to 1985, hence, was not covered by P.D. 1955 nor by E.O. 93. Petitioner moved for reconsideration but was denied with CBAA holding that petitioner's "classification" of P.D. 745 is unavailing because P.D. 1955 and E.O. 93 do not discriminate against the so-called "social statutes". Hence, this petition. SC: should be read in connection with Ministry Order No. 3984, Sec. 1 (d), of the then Ministry of Finance, which took effect October 15, 1984, states: "Section 1. The withdrawal of exemptions from, or any preferential treatment in, the payment of duties, taxes, fees, imposts and other charges as provided for under Presidential Decree No. 1955, does not apply to exemptions or preferential treatment embodied in the following laws: . . . (d) The Real Property Tax Code . . ." Executive Order No. 93, promulgated December 17, 1986, is also to the same effect. Both P.D. 1955 and F.O. 93 operate as wholesale withdrawal of tax incentives granted to private entities so that the government may re-examine existing tax exemptions and restore through the "review mechanism" of the Fiscal Incentives Review Board only those that are consistent with declared economic policy. Thus wise, the chief revenue source of the government will not be greatly, if not unnecessarily, eroded since tax exemptions that were granted on piecemeal basis, and which have lost relevance to existing programs, are eliminated. Issues: 1. WON respondent Assessors may validly assess real property tax on the properties of petitioner considering the proscription in The Local Tax Code (P.D 231) and the Mineral Resources Development Decree of 1974 (P.D. 463) against imposition of taxes on mines by local governments. YES. Held: On the first issue, petitioner contends that local government units are without any authority to levy realty taxes on mines pursuant to Sec. 52 of P.D. 463, which states: Sec. 52. Power to Levy Taxes on Mines Mining Operations and Mineral Products. Any law to the contrary notwithstanding, no province, city, municipality, barrio or municipal district shall levy and collect taxes, fees, rentals, royalties or charges of any kind whatsoever on mines, mining claims, mineral products, or any operation, process or activity connected, therewith, and Sec. 5 (m) of The Local Tax Code, as amended by P.D. 426 (reiterated in Secs. 17 [d] and 22 [c], same Code), which provides: Sec. 5. Common limitations on the taxing powers of local governments. The exercise of the taxing powers of provinces, cities, municipalities and barrios shall not extend to the imposition of the following: . . . (m) Taxes on mines, mining operations; and minerals, mineral products, and their by-products when sold domestically by the operator.

The Solicitor General observes that the petitioner is estopped from raising the question of lack of authority to issue the challenged assessments inasmuch as it was never raised before, hence, not passed upon by, the municipal and provincial assessors, LBAA and CBAA. This observation is well taken. The rule that the issue of jurisdiction over subject matter may be raised anytime, even during appeal, has been qualified where its application results in mockery of the tenets of fair play, as in this case when the issue could have been disposed of earlier and more authoritatively by any of the respondents who are supposed to be experts in the field of realty tax assessment. As We held in Suarez v. Court of Appeals: . . . It is settled that any decision rendered. without jurisdiction is a total nullity and may be struck down at any time, even on appeal before this Court. The only exception is where the party raising the issue is barred by estoppel. Tijam v. Sibonghanoy: While petitioner could have prevented the trial court from exercising jurisdiction over the case by seasonably taking exception thereto, they instead involved the very same jurisdiction by filing an answer and seeking affirmative relief from it. What is more, they participated in the trial of the case by cross-examining respondent. Upon the premises, petitioner cannot now be allowed belatedly to adopt an inconsistent posture by attacking the jurisdiction of the court to which they had submitted themselves voluntarily Aguinaldo Industries Corporation v. Commissioner of Internal Revenue and the Court of Tax Appeals:"To allow a litigant to assume a different posture when he comes before the court and challenge the position he had accepted at the administrative level, would be to sanction a procedure whereby the court which is supposed to review administrative determinations would not review, but determine and decide for the first time, a question not raised at the administrative forum. This cannot be permitted, for the same reason that underlies the requirement of prior exhaustion of administrative remedies to give administrative authorities the prior opportunity to decide controversies within its competence, and in much the same way that, on the judicial level, issues not raised in the lower court cannot be raised for the first time on appeal." Besides, the special civil action of certiorari is available to pass upon the determinations of administrative bodies where patent denial of due process is alleged as a consequence of grave abuse of discretion or lack of jurisdiction, or question of law is raised and no appeal is available. In this case, petitioner may not complain of denial of due process since it had enough opportunity, but opted not, to raise the issue of jurisdiction in any of the administrative bodies to which the case may have been brought. BC: realty taxes are local taxes because they are levied by local government units; citing Sec. 39 of P.D. 464, which provides: Sec. 39. Rates of Levy. The provincial, city or municipal board or council shall fix a uniform rate of real property tax applicable to their respective localities . . . While local government units are charged with fixing the rate of real property taxes, it does not necessarily follow from that authority the determination of whether or not to impose the tax. In fact, local governments have no alternative but to collect taxes as mandated in Sec. 38 of the Real Property
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Tax Code, which states: Sec. 38. Incidence of Real Property Tax. There shall be levied, assessed and collected in all provinces, cities and municipalities an annual ad valorem tax on real property, such as land, buildings, machinery and other improvements affixed or attached to real property not hereinafter specifically exempted." It is thus clear from the foregoing that it is the national government, expressing itself through the legislative branch, that levies the real property tax. Consequently, when local governments are required to fix the rates, they are merely constituted as agents of the national government in the enforcement of the Real Property Tax Code. The delegation of taxing power is not even involved here because the national government has already imposed realty tax in Sec. 38 abovequoted, leaving only the enforcement to be done by local governments. The challenge of petitioner against the applicability of Meralco Securities Industrial Corporation v. Central Board of Assessment Appeals, et al., 3 is unavailing, absent any cogent reason to overturn the same. Thus "Meralco Securities argues that the realty tax is a local tax or levy and not a tax of general application. This argument is untenable because the realty tax has always been imposed by the lawmaking body and later by the President of the Philippines in the exercise of his lawmaking powers, as shown in Sections 342 et seq. of the Revised Administrative Code, Act No. 3995, Commonwealth Act No 470 and Presidential Decree No. 464. "The realty tax is enforced throughout the Philippines and not merely in a particular municipality or city but the proceeds of the tax accrue to the province, city, municipality and barrio where the realty taxed is situated (Sec. 86, P.D. No. 464). In contrast, a local tax is imposed by the municipal or city council by virtue of the Local Tax Code, Presidential Decree No. 231, which took effect on July 1, 1973 (69 O.G. 6197)." Consequently, the provisions of Sec. 52 of the Mineral Resources Development Decree of 1974 (P.D. 463), and Secs. 5 (m), 17 (d) and 22 (c) of The Local Tax Code (P.D. 231) cited by petitioner are mere limitations on the taxing power of local government units, they are not pertinent to the issue before Us and, therefore, cannot and should not affect the imposition of real property tax by the national government. Issue: 2. WON the real tax exemption granted under P.D. 745 (promulgated July 15, 1975) was withdrawn by P.D. 1955 (took effect October 15, 1984) and E.O. 93. YES. Held: Court held that it has no recourse but to apply the express provision of P.D. No. 1955 and rule in favor of the withdrawal of the real property tax exemption provided under P.D. No. 745. As regards the second issue, petitioner, which claims that E.O. 93 does not repeal social statutes like P.D. 745, in the same breath takes refuge in Sec. 1 (e) of the same E.O. 93, to wit: Section 1. The provisions of any general or special law to the contrary notwithstanding, all tax and duty incentives granted to government and private entities are hereby withdrawn except: . . . (e) those conferred under the four basic codes, namely: . . . (iv) the Real Property Tax Code, as

amended . . . in relation to Sec. 40 of the Real Property Tax Code, which provides: Sec. 40. Exemptions from Real Property Tax. The exemption shall be as follows: . . . (g) Real property exempt under other laws, and concluding that P.D. 745 is one of the "other laws" referred to. We do not agree. If We are to sanction this interpretation, then necessarily all real properties exempt by any law would be covered, and there would be no need for the legislature to specify "Real Property Tax Code, as amended", instead of stating clearly "realty tax exemption laws". Indubitably, the intention is to limit the application of the "exception clause" only to those conferred by the Real Property Tax Code. This is not only a logical construction of the provisions but more so in keeping with the principle of statutory construction that tax exemptions are construed strictly against taxpayers, hence, they cannot be created by mere implication but must be clearly provided by law. Nonexemption, in case of doubt, is favored. Quite obviously, the exception in Sec. 1 (e), (iv), of E.O. 93, refers to "those conferred under . . . Real Property Tax Code, as amended", and that the exemption claimed by petitioner is granted not by the Real Property Tax Code but by P.D. 745. When Sec. 40 (g) of the Property Tax Code provides that "[T]he exemption shall be as follows: . . . Real Property exempt under other laws". the Code merely recognizes realty tax exemptions provided by other laws, otherwise, it may unwittingly repeal those "other laws". The argument of petitioner that P.D. 745 is a social statute to give flesh to the Constitutional provisions on housing, hence, not covered by P.D. 1955, was squarely met by respondent CBAA in its Resolution of July 1, 1991, to which We fully agree "The phrase 'any special or general law' explicitly indicates that P.D. No. 1955 did not distinguish between a social statute and an economic or tax legislation. Hence, where the law does not distinguish, we cannot distinguish. In view thereof, we have no recourse but to apply the express provision of P.D. No. 1955 and rule in favor of the withdrawal of the real property tax exemption provided under P.D. No. 745. We also find without merit the contention of Petitioner-Appellan t that B.P. No. 391 (Investment Incentives Policy Act of 1983) is the source and reason for the existence of P.D. No. 1955; therefore, the scope of P.D. No. 1955 is limited to investment incentives. Although Section 20 of said B.P. which authorizes the President to restructure investment incentives systems/legislation s to align them with the overall economic development objectives is one of the declared policies of P.D. No. 1955, its primary aim is the formulation of national recovery program to meet and overcome the grave emergency arising from the current economic crisis. Hence, it cannot be maintained that its provisions apply only to investment incentives. Besides, even granting that its scope is limited, it is noted that P.D. No. 745 also speaks of investment incentives in Sections 2 and 3 thereof . . ."

National Development Co. v. Cebu City Facts:


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Proclamation No. 430 was issued by the President which reserved Block no. 4, Reclamation Area No. 4, of Cebu City, consisting of 4,599 square meters, for warehousing purposes under the administration of National Warehousing Corporation. Subsequently, a warehouse with a floor area of 1,940 square meters more or less, was constructed thereon. NWC dissolved, NDC took over. Commencing 1948, Cebu assessed and collected from NDC real estate taxes on the land and the warehouse thereon. By the first quarter of 1970, a total of P100,316.31 was paid by NDC of which only P3,895.06 was under protest. On 20 March 1970, NDC wrote the City Assessor demanding full refund of the real estate taxes paid claiming that the land and the warehouse standing thereon belonged to the Republic and therefore exempt from taxation. Cebu did not acquiesce in the demand, hence, the present suit filed 25 October 1972 in the Court of First Instance of Manila. CFI: Cebu to refund the real estate taxes paid by NDC for the parcel of land covered by Presidential Proclamation No. 430 of August 10, 1939, and the warehouse erected thereon from and after October 25, 1966 CA: certified the case to SC as one involving pure questions of law, pursuant to Sec. 17, R.A. 296. Issue: WON NDC is exempted from payment of the real estate taxes on the land reserved by the President for warehousing purposes as well as the warehouse constructed thereon, and in the affirmative, whether NDC may recover in refund unprotested real estate taxes it paid from 1948 to 1970. Held: Section, 3 par. (a), of the Assessment Law, on which NDC claims real estate tax exemption, provides Section 3. Property exempt from tax. The exemptions shall be as follows: (a) Property owned by the United States of America, the Commonwealth of the Philippines, any province, city, municipality at municipal district . . . The same opinion of NDC was passed upon in National Development Co. v. Province of Nueva Ecija where We held that its properties were not comprehended in Sec. 3, par (a), of the Assessment Law. In part, We stated: 1. Commonwealth Act No. 182 which created NDC contains no provision exempting it from the payment of real estate tax on properties it may acquire . . . There is justification in the contention of plaintiff-appellee that . . . [I]t is undeniable that to any municipality the principal source of revenue with which it would defray its operation will came from real property taxes. If the National Development Company would be exempt from paying real property taxes over these properties, the town of Gabaldon will be deprived of much needed revenues with which it will maintain itself and finance the compelling needs of its inhabitants 2. Defendant-appellant NDC does not come under classification of municipal or public corporation in the sense that it may sue and be sued in the same manner as any other private corporations, and in this sense, it is an entity different from the government, defendant corporation may be sued without its consent, and is subject to taxation. In the case NDC vs. Jose Yulo Tobias, 7 SCRA 692, it

was held that . . . plaintiff is neither the Government of the Republic nor a branch or subdivision thereof, but a government owned and controlled corporation which cannot be said to exercise a sovereign function. it is a business corporation, and as such, its causes of action are subject to the statute of limitations. . . . That plaintiff herein does not exercise sovereign powers and, hence, cannot invoke the exemptions thereof but is an agency for the performance of purely corporate, proprietary or business functions, is apparent from its Organic Act (Commonwealth Act 182, as amended by Commonwealth Act 311) pursuant to Section 3 of which it "shall be subject to the provisions of the Corporation Law insofar as they are not inconsistent" with the provisions of said Commonwealth Act, "and shall have the general powers mentioned in said" Corporation Law, and, hence, "may engage in commercial, industrial, mining, agricultural, and other enterprises which may be necessary or contributory to the economic development of the country, or important in the public interest," as well as "acquire, hold, mortgage and alienate personal and real property in the Philippines or elsewhere; . . . make contracts of any kind and description" , and "perform any and all acts which a corporation or natural persons is authorized to perform under the laws now existing or which may be enacted hereafter." We find no compelling reason why the foregoing ruling, although referring to lands which would eventually be transferred to private individuals, should not apply equally to this case. NDC cites Board of Assessment Appeals, Province of Laguna v. Court of Tax Appeal and National Waterworks and Sewerage Authority (NWSA). In that case, We held that properties of NWSA, a GOCC, were exempt from real estate tax because Sec. 3, par (c), of R.A. 470 did not distinguish between those possessed by the government in sovereign/governmen tal/political capacity and those in private/proprietary /patrimonial character. The conflict between NDC v. Nueva Ecija, supra, and BAA v. CTA and NWSA, supra, is more superficial than real. The NDC decision speaks of properties owned by NDC, while the BAA ruling concerns properties belonging to the Republic. The latter case appears to be exceptional because the parties therein stipulated 1. That the petitioner National Waterworks and Sewerage Authority (NAWASA) is a public corporation created by virtue of Republic Act. No. 1383, and that it is owned by the Government of the Philippines as well as all property comprising waterworks and sewerage systems placed under it (Emphasis supplied). There, the Court observed: "It is conceded, in the stipulation of facts, that the property involved in this case "is owned by the Government of the Philippines. " Hence, it belongs to the Republic of the Philippines and falls squarely within letter of the above provision." In the case at bar, no similar statement appears in the stipulation of facts, hence, ownership of subject properties should first be established. For, while it may be stated that the Republic owns NDC, it does not necessary follow that properties owned by NDC, are also owned by Republic in the same way that stockholders are not ipso factoowners of the properties of their corporation. The Republic, like any individual, may form a corporation with personality and existence distinct from its
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own. The separate personality allows a GOCC to hold and possess properties in its own name and, thus, permit greater independence and flexibility in its operations. It may, therefore, be stated that tax exemption of property owned by the Republic of the Philippines "refers to properties owned by the Government and by its agencies which do not have separate and distinct personalities (unincorporated entities). The foregoing discussion does not mean that because NDC, like most GOCC's engages in commercial enterprises all properties of the government and its unincorporated agencies possessed in propriety character are taxable. Similarly, in the case at bar, NDC proceeded on the premise that the BAA ruling declared all properties owed by GOCC's as properties in the name of the Republic, hence, exempt under Sec. 3 of the Assessment Law. To come within the ambit of the exemption provided in Art. 3, par. (a), of the Assessment Law, it is important to establish that the property is owned by the government or its unincorporated agency, and once government ownership is determined, the nature of the use of the property, whether for proprietary or sovereign purposes, becomes immaterial. What appears to have been ceded to NWC (later transferred to NDC), in the case before Us, is merely the administration of the property while the government retains ownership of what has been declared reserved for warehousing purposes under Proclamation No. 430. Incidentally, the parties never raised the issued the issue of ownership from the court a quo to this Court. A reserved land is defined as a "[p]ublic land that has been withheld or kept back from sale or disposition. " The land remains "absolute property of the government." The government "does not part with its title by reserving them (lands), but simply gives notice to all the world that it desires them for a certain purpose." Absolute disposition of land is not implied from reservation; it merely means "a withdrawal of a specified portion of the public domain from disposal under the land laws and the appropriation thereof, for the time being, to some particular use or purpose of the general government." As its title remains with the Republic, the reserved land is clearly recovered by the tax exemption provision. Cebu: reservation of the property in favor of NWC or NDC is a form of disposition of public land which, subjects the recipient (NDC ) to real estate taxation under Sec. 115 of the Public Land Act. as amended by R.A. 436. As We view it, the effect of reservation under Sec. 83 is to segregate a piece of public land and transform it into nonalienable or non-disposable under the Public Land Act. Section 115, on the other hand, applies to disposable public lands. Clearly, therefore, Sec. 115 does not apply to lands reserved under Sec. 83. Consequently, the subject reserved public land remains tax exempt. As regards the warehouse constructed on a public reservation, a different rule should apply because "[t]he exemption of public property from taxation does not extend to improvements on the public lands made by pre-emptioners, homesteaders and other claimants, or occupants, at their own expense, and these are taxable by the state . . ." Consequently, the warehouse constructed on the reserved land by NWC (now under administration by NDC), indeed, should properly be

assessed real estate tax as such improvement does not appear to belong to the Republic. Since the reservation is exempt from realty tax, the erroneous tax payments collected by Cebu should be refunded to NDC. This is in consonance with Sec. 40, par. (a) of the former Real Property Tax Code which exempted from taxation real property owned by the Republic of the Philippines or any of its political subdivisions, as well as any GOCC so exempt by its charter. As regards the requirement of paying under protest before judicial recourse, CEBU argues that in any case NDC is not entitled to refund because Sec. 75 of R.A. 3857, the Revised Charter of the City of Cebu, requires paymentunder protest before resorting to judicial action for tax refund; that it could not have acted on the first demand letter of NDC of 20 May 1970 because it was sent to the City Assessor and not to the City Treasurer; that, consequently, there having been no appropriate prior demand, resort to judicial remedy is premature; and, that even on the premise that there was proper demand, NDC has yet to exhaust administrative remedies by way of appeal to the Department of Finance and/or Auditor General before taking judicial action. NDC exempt from real estate tax on the reserved land but liable for the warehouse erected thereon.

Province of Tarlac v. Judge Alcantara Facts: Tarlac Enterprises is the owner of a parcel of land, an ice drop factory, a machinery shed all located at Mabini, Tarlac, Tarlac, machinery of Diesel Elect.. Sets. Real estate taxes of the aforesaid properties from 1974 to December 31, 1982, in the total amount of P532,435.55 including principals and penalties has not been paid. Tarlac now prays for payment as well as damages and costs of suit. TE moved to dismiss. LC denied. MR denied. Thereafter, Tarlac set the auction sale of TE's properties to satisfy the real estate taxes due. This prompted TE to file a motion praying that petitioner be directed to desist from proceeding with the public auction sale. LC: issued an order granting said motion to prevent mootness of the case considering that the properties to be sold were the, subjects of the complaint. TEs answer: demands for the payment of, real property taxes had been made but it refused to pay the same for the reason that under Sec. 40, paragraph (g) of PD 464 in relation to P.D. No.. 551, as amended, it was exempt from paying said tax. It also raised as affirmative defenses that the complaint stated no cause of action and that the claims had been waived, abandoned or otherwise extinguished or barred by the statute of limitations. LC: dismissed the complaint. It ruled that P.D. No. 551 expressly exempts private respondent from paying the real property taxes demanded, it being a grantee of a franchise to generate, distribute and sell electric current for light. The court held that in lieu of said taxes, private respondent had been required to pay two percent (2%) franchise tax in line with the intent of the law to give assistance to operators such as the
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private respondent to enable the consumers to enjoy cheaper rates. Butuan Sawmill, Inc. v. City of Butuan: the court ruled that local-governments are without power to tax the electric companies already subject to franchise tax unless their franchise allows the imposition of additional tax. MR: denied. ISSUE: WON TE is exempt from the payment of real property tax under Sec. 40 (g) of P.D. No. 464 in relation to P.D. No. 551, as amended. NO. Held: Sec. 40(g) of P.D. No. 464, the Real Property Tax Code: SEC. 40. Exemptions from Real Property Tax. - The exemption shall be as follows:(g) Real property exempt under other laws. TE contends that the "other laws" referred to in this Section is P.D. No. 551 (Lowering the Cost to Consumers of Electricity by Reducing the Franchise Tax Payable by Electric Franchise Holders and the Tariff on Fuel Oils for the Generation of Electric Power by Public Utilities). Its pertinent provisions state: SECTION 1. Any provision of law or local ordinance to the contrary notwithstanding, the franchise tax payable by all grantees of franchises to generate, distribute and sell electric current for light, heat and power shall be two (2%) of their gross receipts received from the sale of electric current and from transactions incident to the generation, distribution and sale of electric current. Such franchise tax shall be payable to the Commissioner of Internal Revenue or his duly authorized representative on or before the twentieth day of the month following the end of each calendar quarter or month as may be provided in the respective franchise or pertinent municipal regulation and shall, any provision of the Local Tax Code or any other law to the contrary notwithstanding, be in lieu of all taxes assessments of whatever nature imposed by any national or authority on earnings, receipts, income and privilege of generation, distribution and sale of electric current." P.D. No. 551 was amended on December 19. 1975 by P.D. No. 852 10 with the insertion of the phrase "and for the manufacture, distribution and sale of city gas" between the phrases ". . . light, heat and power" and "shall be two (2%) . . . ." We do not agree with the lower court that the phrase "in lieu of all taxes and assessments of whatever nature" in the second paragraph of Sec. 1 of P.D. No. 551 expressly exempts private respondent from paying real property taxes. As correctly observed by the petitioner, said proviso is modified and delimited by the phrase "on earnings, receipts. income and privilege of generation, distribution and sale" which specifies the kinds of taxes and assessments which shall not be collected in view of the imposition of the franchise tax. Said enumerated items upon which taxes shall not be imposed, have no relation at all to, and are entirely different from. real properties subject to tax. If the intention of the law is to exempt electric franchise grantees from paying real property tax and to make the two (2%) percent franchise tax the only imposable tax, then said enumerated items would not have been added when P.D. No. 852 was enacted to amend P.D. No. 551. The legislative authority would have simply stopped after the phrase "national or local authority" by putting therein a period. On the

contrary, it went on to enumerate what should not be subject to tax thereby delimiting the extent of the exemption. We likewise do not find merit in private respondent's contention that the real properties being taxed, viz., the machinery for the generation and distribution of electric power, the building housing said machinery, and the land on which said building is constructed, are necessary for the operation of its business of generation, distribution and sale of electric current and, therefore, they should be exempted from taxation. Private respondent apparently does not quite comprehend the distinction among the subject matters or objects of the taxes involved. It bears emphasis that P.D. No. 551 as amended by P.D. No. 852 deals with franchise tax and tariff on fuel oils and the "earnings, receipts, income and privilege of generation, distribution and sale of electric current" are the items exempted from taxation by the imposition of said tax or tariff duty. On the other hand, the collection complaint filed by petitioner specified only taxes due on real properties. While P.D. No. 551 was intended to give "assistance to the franchise holders by reducing some of their tax and tariff obligations, " to construe said decree as having granted such franchise holders exemption from payment of real property tax would unduly extend the ambit of exemptions beyond the purview of the law. The annexes attached to private respondent's comment on the petition to prove by contemporaneous interpretation its claimed tax exemption are not of much help to it. Department Order No. 35-74 dated September 16, 1974 regulating the implementation of P.D. No. 551 merely reiterates the "in lieu of all taxes" proviso. Local Tax Regulations 3-75 12 issued by then Secretary of Finance Cesar Virata and addressed to all Provincial and City Treasurers enjoins strict compliance with the directive that "the franchise tax imposed under Local Tax Ordinances pursuant to Section 19 of the Local Tax Code, as amended, shall be collected from business holding franchises but not from establishments whose franchise contains the in lieu of all taxes' proviso," thereby clearly indicating that said proviso exempts taxpayers like private respondent from paying the franchise tax collected by the provinces under the Local Tax Code. Lastly, the letter of the then BIR Acting Commissioner addressed to the Matic Law Office granting exemption to the latter's client from paying the "privilege tax which is an excise tax on the privilege of engaging in business" clearly excludes realty tax from such exemption. We also find misplaced the lower court's and the private respondent's reliance on Butuan Sawmill. v. City of Butuan. In that case, the questioned tax is a tax on the gross sales or receipts of said sawmill while the tax involved herein is a real property tax. The City of Butuan is categorically prohibited therein by Sec. 2(j) of the Local Autonomy Act from imposing "taxes of any kindon person paying franchise tax." On the other hand, P.D. No. 551 is not as all-encompassing as said provision of the Local Autonomy Act for it enumerates the items which are not taxable by virtue of the payment of franchise tax. It has always been the rule that "exemptions from taxation are construed in strictissimi juris against the taxpayer and liberally in favor of the taxing authority" primarily because "taxes are the lifeblood of government and their
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prompt and certain availability is an imperious need." Thus, to be exempted from payment of taxes, it is the taxpayer's duty to justify the exemption "by words too plain to be mistaken and too categorical to be misinterpreted. Private respondent has utterly failed to discharge this duty. Lower court erred in exempting TE from paying real property tax on its properties which are enumerated in the complaint. However, in its decision, the lower court found that private respondent owns only three real properties consisting of the parcel of land, machinery shed and machinery, noticeably omitting the ice drop factory mentioned in its complaint by the petitioner. In view, however, of the petitioner's failure to assign such omission as an error, the same should be considered waived.

XI. PROPERTY OF LGU City of Manila v. Garcia FACTS: Plaintiff is the owner of certain parcels of land. Without the knowledge and consent of plaintiff, defendants occupied the property and built their houses. Having discovered, plaintiff through its mayor gave each defendant written permits, each labeled as lease contract to occupy specific areas. For their occupancy, defendants were charged nominal rentals. After sometime, plaintiff, through its treasurer, demanded payment of their rentals and vacate the premises for the Epifanio de los Santos Elementary Schools expansion. Despite the demand, defendants refused to vacate the said property. Hence, this case was filed for recovery of possession. The trial court ruled in favor of plaintiff taking judicial notice of Ordinance 4566 appropriating P100k for the construction of additional building of Epifanio De Los Santos Elementary School. Defendants appealed. ISSUE: WON the trial court properly found that the city needs the premises for school purposes HELD: YES The trial court ruled out the admissibility of the documentary evidence presented by plaintiff Certification of the Chairman, Committee on Appropriations of the Municipal Board which recites the amount of P100k had been set aside in Ordinance 4566 for the construction of additional building of the said school. But then the decision under review, the trial court revised his views. He there declared that there was a need for defendants to vacate the premises for school expansion; he cited the very document. Because of the courts contradictory stance, defendants brought this case on appeal. However, the elimination of the certification as evidence would not profit defendants. For, in reversing his stand, the trial judge could well have taken because he was duty bound to take judicial notice5 of Ordinance 4566. The reason being that the city charter of Manila requires all courts sitting therein to take judicial notice of all ordinances passed by the municipal board of Manila.6 And, Ordinance 4566 itself confirms the certification aforesaid that an appropriation of P100,000.00 was set aside for the "construction of additional building" of the Epifanio de los Santos Elementary School. Further defendants entry to the said property is illegal. Their constructions are as illegal, without permits. The city mayor doesnt have the authority to issue permits. The permits issued are null and void.

SHARE OF LGU IN NATIONAL TAXES Pimentel vs. Aguirre FACTS: This is a petition for certiorari and prohibition seeking to annul Section 1 of Administrative Order No. 372, issued by the President, insofar as it requires local government units to reduce their expenditures by 25% of their authorized regular appropriations for non-personal services and to enjoin respondents from implementing Section 4 of the Order, which withholds a portion of their internal revenue allotments. HELD: Section 1 of the AO does not violate local fiscal autonomy. Local fiscal autonomy does not rule out any manner of national government intervention by way of supervision, in order to ensure that local programs, fiscal and otherwise, are consistent with national goals. AO 372 is merely directory and has been issued by the President consistent with his powers of supervision over local governments. A directory order cannot be characterized as an exercise of the power of control. The AO is intended only to advise all government agencies and instrumentalities to undertake cost-reduction measures that will help maintain economic stability in the country. It does not contain any sanction in case of noncompliance. The Local Government Code also allows the President to interfere in local fiscal matters, provided that certain requisites are met: (1) an unmanaged public sector deficit of the national government; (2) consultations with the presiding officers of the Senate and the House of Representatives and the presidents of the various local leagues; (3) the corresponding recommendation of the secretaries of the Department of Finance, Interior and Local Government, and Budget and Management; and (4) any adjustment in the allotment shall in no case be less than 30% of the collection of national internal revenue taxes of the third fiscal year preceding the current one. Section 4 of AO 372 cannot be upheld. A basic feature of local fiscal autonomy is the automatic release of the shares of LGUs in the national internal revenue. This is mandated by the Constitution and the Local Government Code. Section 4 which orders the withholding of 10% of the LGUs IRA clearly contravenes the Constitution and the law.

Espiritu v. Municipal Council of Pozorrubio This is an appeal from the decision of the Court of First Instance of Pangasinan of April 28, 1956, dismissing the petition for prohibition filed by appellants, lifting the
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preliminary injunction against the appellees and ordering the removal of appellants stalls from the public plaza of appellee municipality, within ten days from notice. Pending appeal, counsel for the appellees filed a Manifestation on September 16, 1957, copy of which was duly served on appellants, that several months after the oral argument held before this Tribunal on January 25, 1957, appellants had voluntarily vacated the public plaza of Pozorrubio by transferring and removing their buildings and therefrom to private lots fronting the plaza; and that the municipality had already begun the construction of concrete fences in the premises, formerly occupied by appellants, without any complaint whatsover from them or their counsel; and that consequently, the present case has become moot and academic, and asking that the present appeal be dismissed. By resolution of this Court of October 21, 1957, appellants were required to comment on this Manifestation and petition for dismissal, within ten days from notice. Despite notice of his resolution, appellants failed to file their required comment. For this reason, we could well summarily dismiss this appeal by resolution. However, for the satisfaction of the parties and for possible guidance of town officials and residents, we havre deemed it convenient and necessary to decide the case by formal decision. The facts are not disputed. In fact, no evidence was submitted at the hearing before the trial court, the parties having petitioned that the case be decided on the pleadings. During the last world war, the market building of the town of Pozorrubio was destroyed, and after Liberation, the market vendors began constructing temporary and make-shifts stalls,, even small residences, on a portion of the town plaza. The Municipal Treasurer collected from these stall owners fees at the rate of P.25 per square meter a month. In time, the whole municipal market was rehabilitated, but the owners of the structures on the plaza failed and refused to transfer to said market place. The Municipal Council of Pozorrubio received petitions from civic organizations like the Womens Club and the Puericulture Center, for the removal of the market stalls on the plaza, which were being used not only as stalls, but also for residence purposes, said organization desiring to convert said portion of the plaza into a childrens park. The Provincial Board of Pangasinan had also presented to the Council the petition of another civic organization of Pozorrubio, asking for the removal of the stalls from the plaza, and the attention of the COuncil was also called to the latter-circular of the Secretary of the Interior about the existence of these stalls on the public plaza, said to be illegal. As a result, the Municipal Council of Pozorrubio No. 20, Series of 1951, stating that the public market had already been rehabilitated, and ordering the occupants and owners of the structures on the plaza to remove their buildings within sixty days from receipt of the resolution. In answer to this resolution, eight of the market stall building owners filed a petition for prohibition in the Cour of First Instance of Pangasinan against the Municipal Council, the Municipal

Mayor, and the Chief of Police of Pozorrubio. Pending hearing, the trial court issued a writ of preliminary injunction. The trial court found that the fee of P.25 per square meter collected by the Municipal Tresurer, was not for the rent of the portion of the public plaza occupied by the market stalls, as claimed by appellants, but rather the market stall fees charges on all market vendors in a public market; and that there was absolutely no contract or agreement between the appellants on one side and the municipality on the other, about renting of the Plaza to the former. There is reason to believe that the occupation of the plaza and the construction of temporary buildings thereon by appellants mostly for market, even residence purposes, was merley tolerated by the municipality, because of the destruction of the public market during thewar, but the trouble is that appellants, even after the rehabilitationof the old market, refused to transfer to said market place, perhaps to save the trouble and expense of transferring their buildings, or possibly to continue enjoying the benefits from the strategic position of their stalls at the plaza. There is absolutely no question that the town plaza cannot be used for the construction of market stalls, specially of residences, and that such structures constitute a nuisance subject to abatement according to law. Town Plazas are properties of public dominion, to be devoted to public use and to be made available to the public in general. They are outside the commerce of man and cannot be disposed of or even leased by the municipality to private parties.1 While in case of war or during an emergency, town plazas may be occupied temporarily by private individuals, as was done and as was tolerated by the Municipality of Pozorrubio, when the emergency has ceased, said temporary occupation or use must also cease, and the town officials should see to it that the town plazas should ever be kept open to the public and free from encumbrances or illegal private constructions. Appellants must have realized the absolute lack of merit in their stand and the futility of their appeal because they voluntarily removed their buildings on the plaza. As a matter f fact, after the filing of the prohibition with the trial court, two out of the eight petitioners informed the trial court that they were included as petitioners without their consent, and so asked that they be excluded from the case. In view of the foregoing, the decision appealed from is hereby affirmed. With costs against appellants. Villanueva v. Castaneda FACTS Petitioners are owners of stalls in a talipapa located in a land owned by the municipal government. They were ed to lease the said land through a municipal council resolution in 1961. The municipal government demolished the the stalls and subsequently issued a new resolution revoking the right previously granted to the vendor. Said resolution indicated that the said area will be a parking space for the town plaza. Petitioners brought an action against the municipal government alleging that they have the right to use the said lang because the resolution allowing them to use the area
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constitutes a contract between them (vendors) and the municipal government. CFI dismissed the petition and ordered the petitioners to be evicted from the area. But such eviction was not enforced and the number of stall owners even grew. After a few years, the municipal again resolved to demolish the stalls ISSUE: 1. Whether or not the resolution in 1961 conferred contractual rights to the stall owners making them lawful lessees of the land 2. Whether or not the said area are dedicated for public use HELD: 1. There was no dispute that the land occupied by the petitioners was previously used as a town plaza and being such it is considered as beyond the commerce of man and cannot be the subject of lease or any contractual undertaking. The petitioners had no right in the first place to occupy the disputed premises. 2. The proliferation of the stalls caused several repercussions to the area such as the makeshift and flammable materials has made the area susceptible of fire endangering public safety, said stalls have obstructed the way going to the real public market, the filthy conditions of the stalls has aggravated health and sanitation problems, the area has contributed to the obstruction of the flow of traffic. 3. Assuming that there was a valid contract (and that the land is not for public use), the petitioners must yield to the police power exercised by the municipal government. It is a well settled rule that any valid contract may be cancelled if it causes danger to the public.

supplementary complaint, the Court on 5 November 1956, rendered decision holdingthat the waterworks system of the City of Baguio falls within the category of private property, ascontemplated by our Constitution and may not be expropriated without just compensation. NAWASA filed amotion for reconsideration, and upon its denial, it took the present appeal. Issue: Whether the Baguio Waterworks partakes of the nature of public property or private/patrimonial propertyof the City. Held: The Baguio Waterworks System is not like any public road, park, street or other public property held intrust by a municipal corporation for the benefit of the public but it is rather a property owned by the City in its proprietary character. While the cases may differ as to the public or private character of waterworks, the weightof authority as far as the legislature is concerned classes them as private affairs. (sec. 239, Vol. I, Revised,McQuillin Municipal Corporations, p. 239; Shrik vs. City of Lancaster, 313 Pa. 158, 169 Atl. 557). And in this jurisdiction, this Court has already expressed the view that a waterworks system is patrimonial property of thecity that has established it. (Mendoza vs. De Leon, 33 Phil. 509). And being owned by a municipal corporationin a proprietary character, waterworks cannot be taken away without observing the safeguards set by our Constitution for the protection of private property. The State may, in the interest of National welfare, transfer to public ownership any private enterprise upon payment of just compensation. At the same time, one has to bear in mind that no person can be deprived of his property except for public use and upon payment of justcompensation. Unless the City is given its due compensation, the City cannot be deprived of its property even if NAWASA desires to take over its administration in line with the spirit of the law (Republic Act 1383). The law,insofar as it expropriates the waterworks in question without providing for an effective payment of justcompensation, violates our Constitution. Zamboanga del Norte vs. City of Zamboanga FACTS: After the incorporation of the Municipality of Zamboanga as a chartered city, petitioner province contends that facilities belonging to the latter and located within the City of Zamboanga will be acquired and paid for by the said city. However, respondent city avers that pursuant to RA No. 3039 providing for the transfer free of charge of all buildings, properties and assets belonging to the former province of Zamboanga and located within the City of Zamboanga to the said City. ISSUE: Whether or not facilities which the province shall abandon will be acquired by the city upon just compensation. HELD: Yes, If the property is owned by the municipality in its public and governmental capacity, the property is public and
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City of Baguio v. Nawasa Facts: The City of Baguio filed on 25 April 1956, in the Court of First Instance of Baguio, a complaint for declaratory relief against the National Waterworks and Sewerage Authority (NAWASA), a public corporationcreated by Republic Act 1383, contending that said Act does not include within its purview the BaguioWaterworks System; that assuming that it does, said Act is unconstitutional because it has the effect of depriving the City of the ownership, control and operation of said waterworks system without compensation andwithout due process of law, and that it is oppressive, unreasonable and unjust to plaintiff and other cities,municipalities and municipal districts similarly situated. On 22 May 1956, NAWASA filed a motion to dismiss. On 21 June 1956, the Court, acting on the motion to dismiss as well as on the answer and rejoinder filed by both parties, denied the motion and ordered NAWASA to file its answer to the complaint. On 6 July 1956, NAWASA filed its answer reiterating and amplifying the grounds already advanced in its motion to dismiss. On14 August 1956, the parties submitted a written stipulation of facts and filed written memoranda. And after allowing the City to file a

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can be transferred free of charge. But if the property is owned in its private or proprietary capacity, then it is patrimonial and can be expropriated upon payment of just compensation.

Lot No. 1303 of Pechueco Sons Company to the municipality of San Jose, and, as a consequence, TCT No. N-5169 was issued in the name of said municipal corporation. Lot. No. 1611, however, remained registered in the name of the municipality, the owner's title thereto not having been as yet reconstituted. While the case was pending in court, the Provincial Board passed Resolution No. 57, dated 2 February 1965, conditionally approving the contract of exchange between the municipality of San Jose and the Pechueco Sons Company, provided the Pechueco lot should be acceptable to the Rural Electrification Administration, the Secretary of Finance and the Executive Secretary as site of the proposed electric plant. Apparently, the condition thus imposed was not met by the parties, for on 16 February 1965 the Provincial Board approved another resolution passed by the municipal council of San Jose, this time requesting the Provincial Governor to donate to the municipality a 10,000-square meter piece of land to be used as site of the electric plant to be constructed. In a letter dated 12 October 1965, the Provincial Governor formally informed the municipal council of San Jose of the disapproval of the deed of exchange entered into by the municipality with Pechueco Sons Company. On 13 October 1965, the said Governor entered appearance as intervenor in the declaratory relief proceeding, which intervention was allowed by the court on 24 November 1965. On 30 August 1966, on the basis of the stipulation of facts by the parties, the court rendered judgment in favor of the respondents, as stated at the beginning of this opinion. Hence, this appeal interposed by petitioner Pechueco Sons Company. Upon the aforestated facts, the issue clearly revolves around the effect of the disapproval by the Provincial Board of Antique of the contract of exchange of land between the municipality and herein appellant authorized by Resolution No. 64, series of 1965, of the municipal council of San Jose. In this connection, Section 2196 of the Revised Administrative Code provides: SECTION 2196. Execution of deeds.When the government of a municipality is party to a deed or an instrument which conveys real property or any interest therein or which creates a lien upon the same, such deed or instrument shall be executed on behalf of the municipal government by the mayor, upon resolution of the council, with the approval of the provincial governor.

XII. POWER TO CONTRACT, ULTRA VIRES CONTRACT, RATIFICATION, NON-IMPAIRMENT

Acuna v. Municipality of Iloilo (p.102) Pecheco Sons v. Prov. Board of Antique Appeal from the decision of the Court of First Instance of Antique (Special Civil Case No. 418) declaring as invalid a contract of exchange of land entered into by the municipality of San Jose, Antique, and the Pechueco Sons Company for lack of approval by the Provincial Governor. Insofar as pertinent to the issue in this proceeding, the facts of the case, as stipulated by the parties, are as follows: In a resolution dated 23 July 1963 (No. 64, series of 1963), the Municipal Council of San Jose, Antique approved the exchange of its Lot No. 1611, with an area of 1,122 square meters and assessed at P1,120.00, for the lot owned by Pechueco Sons Company1 to be used as site of an electric plant projected by the municipality. In another resolution passed on the same day (No. 65), the municipal mayor was authorized to sign the necessary contract for and in behalf of the municipality. On 4 December 1963 the municipal mayor, representing the municipality of San Jose, Antique, and the representative of Pechueco Sons Company signed the deed, by virtue of which the municipality conveyed to the latter its Lot No. 1611 by way of exchange for Lot No. 1303 belonging to the company. This deed was duly presented to the Office of the Register of Deeds for registration on 10 December 1963, but not definitively recorded until 25 January 1965. On 11 February 1964, however, the Provincial Board of Antique, by its Resolution No. 122, series of 1964, disapproved Resolution No. 64 of the Municipal Council of San Jose relative to the exchange of lots, on the ground that the Pechueco lot, being located in the poblacion, is an unsuitable site for the proposed electric plant, since the exhaust, noise and hazards accompanying the operation of the plant machinery would be dangerous to public safety and health. On 18 February 1964, the San Jose Municipal Council passed another resolution urging reconsideration of the action taken by the Provincial Board. Apparently because no action by the board seemed to be forthcoming, on 25 January 1965 Pechueco Sons Company instituted declaratory relief proceedings in the Court of First Instance of Antique (Special Civil Case No. 418) to secure nullification of Resolution No. 122 of the Provincial Board of Antique, for a declaration of its ownership of Lot No. 1611, and to restrain therein respondent, municipality from asserting the latter's supposed right of ownership over the said lot. On the same day 25 January 1965, the deed of exchange was finally registered with the Register of Deeds as regards the transfer of

... The approval by the provincial governor of contracts entered into and executed by a municipal council, as required in section 2196 of the Revised Administrative Code, is part of the system of supervision that the provincial government exercises over the municipal governments. It is not a prohibition against municipal councils entering into contracts regarding municipal properties subject of municipal administration or control. It does not deny the power, right or capacity of municipal councils to enter into such contracts; such power or capacity is
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recognized. Only the exercise thereof is subject to supervision by approval or disapproval, i.e., contracts entered in pursuance of the power would ordinarily be approved if entered into in good faith and for the best interests of the municipality, they would be denied approval if found illegal or unfavorable to public or municipal interest. The absence of the approval, therefore, does not per se make the contracts null and void. In other words, as regards the municipal transactions specified in Section 2196 of the Revised Administrative Code, the Provincial Governor has two courses of action to take either to approve or disapprove the same. And since absence of such approval does not necessarily render the contract entered into by the municipality null and void, the transaction remains voidable until such time when by subsequent unfavorable action of the governor, for reasons of public intrest,3 the contract is thereby invalidated. Undisputably, the resolution of the municipal council authorizing the transaction involved herein was disapproved by the Provincial Board on 11 February 1964 on the ground of unsuitability of the selected lot as site of the electric plant to be erected. In short, the disapproval of the resolution by the Provincial Board was for reasons of public interest, health and safety. It is claimed for appellant company, however, that such disapproval is ultra vires and did not prevent its acquisition of the ownership of the municipality's Lot No. 1611, for the Provincial Board can declare a resolution of the municipal council invalid only on one ground lack of authority of said body to pass the same.4 In the present case, it is added, there is no question that the resolution authorizing the exchange of lots is within the competence of the municipal council of San Jose to enact. If the board should in any case find that any resolution ordinance, or order, as aforesaid, is beyond the powers conferred upon the council or mayor making the same, it shall declare such resolution, ordinance, or order invalid entering its action upon the minutes and advising the proper municipal authorities thereof. The effect of such action shall be to annul the resolution, ordinance, or order in question, subject to action by the Secretary of the Interior (now Executive Secretary) as hereinafter provided. Not only is the provision in question couched in general terms, but were such power not limited to ultra vires municipal action, the result would be that the provincial board would be running the affairs of the municipalities under its supervision. By contrast, Section 2196 of the Revised Administrative Code (heretofore quoted) expressly speaks of the execution of deeds of conveyance of real property and is unmistakably limited to that class of transactions Wherefore, the pronouncement made in the Manantan and Gabriel cases, construing the latter provision, cannot be invoked nor applied to action taken by the provincial Governor under Section 2196 of the Administrative Code, that requires approval by the Governor of conveyances of municipal real estate without limiting or specifying the reasons for his refusal to concur therein.

Considering that the contract between the municipality of San Jose and appellant was finally registered only on 25 January 1965, or after its disapproval by the Provincial Board, it is beyond doubt that such registration did not confer any right at all on appellant. By then, the municipal council was without authority to contract with appellant on the lots subject of exchange. Likewise, the fact that the municipality accepted appellant's payment of real estate tax on Lot No. 1611 for 1964 and 1965, or that it has expended some amount in reconstituting the title of said Lot No. 1611, does not work to estop the municipality from maintaining its claim of ownership over the property. As this Court aptly stated: The doctrine of estoppel cannot be applied as against a municipal corporation to validate a contract which it has no power to make, or which it is authorized to make only under prescribed conditions, within prescribed limitations, or in a prescribed mode or manner, although the corporation has accepted the benefits thereof and the other party has fully performed his part of the agreement, or has expended large sums in preparation for performance. A reason frequently assigned for this rule is that to apply the doctrine of estoppel against a municipality in such case would be to enable it to do indirectly what it cannot do directly. ... (San Diego vs. Municipality of Naujan, L-9920, 29 February 1960, cited in Favis vs. Municipality of Sabangan L-26522, 27 February 1969, 27 SCRA 92; see also City of Manila vs. Tarlac Development Corporation, L-24557, L-24469 & L-24481, 31 July 1968, 24 SCRA 466). WHEREFORE, finding no error in the judgment of the lower court, in so far as it declares the exchange of lots invalid, the same is hereby affirmed, with costs against the appellant. Province of Cebu v. IAC City of Manila v. Tarlac Development Corp. XIII. SUABILITY AND LIABILITY

Torio v. Fontanilla (p.109) Municipality of Moncada v. Cajuigan (p. 101) City of Manila v. Teotico (p.106) XIV. INTERGOVERNMENTAL RELATIONS

Carpio vs. Executive Secretary FACTS: Petitioner Antonio Carpio as citizen, taxpayer and member of the Philippine Bar, filed this petition, questioning the constitutionality of RA 6975 with a prayer for TRO. RA 6875, entitled AN ACT ESTABLISHIGN THE PHILIPPINE NATIONAL POLICE UNDER A
24

Law on Public Corporation - Finals

GLCD

REORGANIZED DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT, AND FOR OTHER PURPOSES, allegedly contravened Art. XVI, sec. 6 of the 1986 Constitution: The State shall establish and maintain one police force, which shall be national in scope and civilian in character, to be administered and controlled by a national police commission. The authority of local executives over the police units in their jurisdiction shall be provided by law. ISSUEs: Whether or not RA 6975 is contrary to the Constitution Whether or not Sec. 12 RA 6975 constitutes an encroachment upon, interference with, and an abdication by the President of, executive control and commander-in-chief powers HELD: Power of Administrative Control NAPOLCOM is under the Office of the President. SC held that the President has control of all executive departments, bureaus, and offices. This presidential power of control over the executive branch of government extends over all executive officers from Cabinet Secretary to the lowliest clerk. In the landmark case of Mondano vs. Silvosa, the power of control means the power of the President to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former with that of the latter. It is said to be at the very heart of the meaning of Chief Executive. As a corollary rule to the control powers of the President is the Doctrine of Qualified Political Agency. As the President cannot be expected to exercise his control powers all at the same time and in person, he will have to delegate some of them to his Cabinet members. Under this doctrine, which recognizes the establishment of a single executive, all executive and administrative organizations are adjuncts of the Executive Department, the heads of the various executive departments are assistants and agents of the Chief Executive, and, except in cases where the Chief Executive is required by the Constitution or law to act in person or the exigencies of the situation demand that he act personally, the multifarious executive and administrative functions of the Chief Executive are performed by and through the executive departments, and the acts of the Secretaries of such departments, performed and promulgated in the regular course of business, unless disapproved or reprobated by the Chief Executive, are presumptively the acts of the Chief Executive. Thus, the Presidents power of control is directly exercised by him over the members of the Cabinet who, in turn, and by his authority, control the bureaus and other offices under their respective jurisdictions in the executive department. The placing of NAPOLCOM and PNP under the reorganized DILG is merely an administrative realignment that would bolster a system of coordination and cooperation among the

citizenry, local executives and the integrated law enforcement agencies and public safety agencies. Power of Executive Control Sec. 12 does not constitute abdication of commander-in-chief powers. It simply provides for the transition period or process during which the national police would gradually assume the civilian function of safeguarding the internal security of the State. Under this instance, the President, to repeat, abdicates nothing of his war powers. It would bear to here state, in reiteration of the preponderant view, that the President, as Commander-in-Chief, is not a member of the Armed Forces. He remains a civilian whose duties under the Commander-inChief provision represent only a part of the organic duties imposed upon him. All his other functions are clearly civil in nature. His position as a civilian Commander-in-Chief is consistent with, and a testament to, the constitutional principle that civilian authority is, at all times, supreme over the military. Powers of Local Chief Executives over the PNP Provincial Relations with Component Cities and Municipalities Review of Executive Orders City and Municipal Supervision over Barangays Role of People's and Nongovernmental Organizations Linkages and Assistance to People's and Nongovernmental Organizations

City of QC v. Bayantel Respondent Bayan Telecommunications, Inc.[3] (Bayantel) is a legislative franchise holder under Republic Act (Rep. Act) No. 3259[4] to establish and operate radio stations for domestic telecommunications, radiophone, broadcasting and telecasting. Of relevance to this controversy is the tax provision of Rep. Act No. 3259, embodied in Section 14 thereof, which reads: SECTION 14. (a) The grantee shall be liable to pay the same taxes on its real estate, buildings and personal property, exclusive of the franchise, as other persons or corporations are now or hereafter may be required by law to pay. (b) The grantee shall further pay to the Treasurer of the Philippines each year, within ten days after the audit and approval of the accounts as prescribed in this Act, one and onehalf per centum of all gross receipts from the business transacted under this franchise by the said grantee (Emphasis supplied).

On January 1, 1992, Rep. Act No. 7160, otherwise known as the Local Government Code of 1991 (LGC), took effect. Section 232 of the Code grants local government units within the Metro Manila Area the power to levy tax on real properties, thus: 25

Law on Public Corporation - Finals SEC. 232. Power to Levy Real Property Tax. A province or city or a municipality within the Metropolitan Manila Area may levy an annual ad valorem tax on real property such as land, building, machinery and other improvements not hereinafter specifically exempted.

GLCD Conformably with the Citys Revenue Code, new tax declarations for Bayantels real properties in Quezon City were issued by the City Assessor and were received by Bayantel on August 13, 1998, except one (Tax Declaration No. 124-01013) which was received on July 14, 1999. Meanwhile, on March 16, 1995, Rep. Act No. 7925,[6] otherwise known as the Public Telecommunications Policy Act of the Philippines, envisaged to level the playing field among telecommunications companies, took effect. Section 23 of the Act provides: SEC. 23. Equality of Treatment in the Telecommunications Industry. Any advantage, favor, privilege, exemption, or immunity granted under existing franchises, or may hereafter be granted, shall ipso facto become part of previously granted telecommunications franchises and shall be accorded immediately and unconditionally to the grantees of such franchises: Provided, however, That the foregoing shall neither apply to nor affect provisions of telecommunications franchises concerning territory covered by the franchise, the life span of the franchise, or the type of service authorized by the franchise.

Complementing the aforequoted provision is the second paragraph of Section 234 of the same Code which withdrew any exemption from realty tax heretofore granted to or enjoyed by all persons, natural or juridical, to wit: SEC. 234 - Exemptions from Real Property Tax. The following are exempted from payment of the real property tax: xxx xxx xxx

Except as provided herein, any exemption from payment of real property tax previously granted to, or enjoyed by, all persons, whether natural or juridical, including government-owned-or-controlled corporations is hereby withdrawn upon effectivity of this Code (Emphasis supplied).

On July 20, 1992, barely few months after the LGC took effect, Congress enacted Rep. Act No. 7633, amending Bayantels original franchise. The amendatory law (Rep. Act No. 7633) contained the following tax provision: SEC. 11. The grantee, its successors or assigns shall be liable to pay the same taxes on their real estate, buildings and personal property, exclusive of this franchise, as other persons or corporations are now or hereafter may be required by law to pay. In addition thereto, the grantee, its successors or assigns shall pay a franchise tax equivalent to three percent (3%) of all gross receipts of the telephone or other telecommunications businesses transacted under this franchise by the grantee, its successors or assigns and the said percentage shall be in lieu of all taxes on this franchise or earnings thereof. Provided, That the grantee, its successors or assigns shall continue to be liable for income taxes payable under Title II of the National Internal Revenue Code . xxx. [Emphasis supplied] In 1993, the government of Quezon City, pursuant to the taxing power vested on local government units by Section 5, Article X of the 1987 Constitution, infra, in relation to Section 232 of the LGC, supra, enacted City Ordinance No. SP-91, S-93, otherwise known as the Quezon City Revenue Code (QCRC),[5] imposing, under Section 5 thereof, a real property tax on all real properties in Quezon City, and, reiterating in its Section 6, the withdrawal of exemption from real property tax under Section 234 of the LGC, supra. Furthermore, much like the LGC, the QCRC, under its Section 230, withdrew tax exemption privileges in general, as follows: SEC. 230. Withdrawal of Tax Exemption Privileges. Unless otherwise provided in this Code, tax exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including government owned or controlled corporations, except local water districts, cooperatives duly registered under RA 6938, non-stock and non-profit hospitals and educational institutions, business enterprises certified by the Board of Investments (BOI) as pioneer or non-pioneer for a period of six (6) and four (4) years, respectively, are hereby withdrawn effective upon approval of this Code (Emphasis supplied).

On January 7, 1999, Bayantel wrote the office of the City Assessor seeking the exclusion of its real properties in the city from the roll of taxable real properties. With its request having been denied, Bayantel interposed an appeal with the Local Board of Assessment Appeals (LBAA). And, evidently on its firm belief of its exempt status, Bayantel did not pay the real property taxes assessed against it by the Quezon City government.

On account thereof, the Quezon City Treasurer sent out notices of delinquency for the total amount of P43,878,208.18, followed by the issuance of several warrants of levy against Bayantels properties preparatory to their sale at a public auction set on July 30, 2002 Whether or not Bayantels real properties in Quezon City are exempt from real property taxes under its legislative franchise; This brings the Court to the more weighty question of whether or not Bayantels real properties in Quezon City are, under its franchise, exempt from real property tax. The lower court resolved the issue in the affirmative, basically owing to the phrase exclusive of this franchise found in Section 11 of Bayantels amended franchise, Rep. Act No. 7633. To petitioners, however, the language of Section 11 of Rep. Act No. 7633 is neither clear nor unequivocal. The elaborate and extensive discussion devoted by the trial court on the meaning and import of said phrase, they add, suggests as much. It is petitioners thesis that Bayantel was in no time given any express exemption from the payment of real property tax under its amendatory franchise. There seems to be no issue as to Bayantels exemption from real estate taxes by virtue of the term exclusive of the franchise qualifying the phrase same taxes on its real estate, buildings and personal property, found in Section 14, supra, of its franchise, Rep. Act No. 3259, as originally granted. The legislative intent expressed in the phrase exclusive of this franchise cannot be construed other than distinguishing between two (2) sets of properties, be they real or personal, owned by the franchisee, namely, (a) those actually, directly and exclusively used in its radio or telecommunications business, and (b) those properties which are not so used. It is worthy to note that the properties 26

Law on Public Corporation - Finals subject of the present controversy are only those which are admittedly falling under the first category. To the mind of the Court, Section 14 of Rep. Act No. 3259 effectively works to grant or delegate to local governments of Congress inherent power to tax the franchisees properties belonging to the second group of properties indicated above, that is, all properties which, exclusive of this franchise, are not actually and directly used in the pursuit of its franchise. As may be recalled, the taxing power of local governments under both the 1935 and the 1973 Constitutions solely depended upon an enabling law. Absent such enabling law, local government units were without authority to impose and collect taxes on real properties within their respective territorial jurisdictions. While Section 14 of Rep. Act No. 3259 may be validly viewed as an implied delegation of power to tax, the delegation under that provision, as couched, is limited to impositions over properties of the franchisee which are not actually, directly and exclusively used in the pursuit of its franchise. Necessarily, other properties of Bayantel directly used in the pursuit of its business are beyond the pale of the delegated taxing power of local governments. In a very real sense, therefore, real properties of Bayantel, save those exclusive of its franchise, are subject to realty taxes. Ultimately, therefore, the inevitable result was that all realties which are actually, directly and exclusively used in the operation of its franchise are exempted from any property tax. Bayantels franchise being national in character, the exemption thus granted under Section 14 of Rep. Act No. 3259 applies to all its real or personal properties found anywhere within the Philippine archipelago. However, with the LGCs taking effect on January 1, 1992, Bayantels exemption from real estate taxes for properties of whatever kind located within the Metro Manila area was, by force of Section 234 of the Code, supra, expressly withdrawn. But, not long thereafter, however, or on July 20, 1992, Congress passed Rep. Act No. 7633 amending Bayantels original franchise. Worthy of note is that Section 11 of Rep. Act No. 7633 is a virtual reenacment of the tax provision, i.e., Section 14, supra, of Bayantels original franchise under Rep. Act No. 3259. Stated otherwise, Section 14 of Rep. Act No. 3259 which was deemed impliedly repealed by Section 234 of the LGC was expressly revived under Section 14 of Rep. Act No. 7633. In concrete terms, the realty tax exemption heretofore enjoyed by Bayantel under its original franchise, but subsequently withdrawn by force of Section 234 of the LGC, has been restored by Section 14 of Rep. Act No. 7633. The Court has taken stock of the fact that by virtue of Section 5, Article X of the 1987 Constitution,[8] local governments are empowered to levy taxes. And pursuant to this constitutional empowerment, juxtaposed with Section 232[9] of the LGC, the Quezon City government enacted in 1993 its local Revenue Code, imposing real property tax on all real properties found within its territorial jurisdiction. And as earlier stated, the Citys Revenue Code, just like the LGC, expressly withdrew, under Section 230 thereof, supra, all tax exemption privileges in general. This thus raises the question of whether or not the Citys Revenue Code pursuant to which the city treasurer of Quezon City levied real property taxes against Bayantels real properties located within the City effectively withdrew the tax exemption enjoyed by Bayantel under its franchise, as amended. Bayantel answers the poser in the negative arguing that once again it is only liable to pay the same taxes, as any other persons or corporations on all its real or personal properties, exclusive of its franchise. Bayantels posture is well-taken. While the system of local government taxation has changed with the onset of the 1987 Constitution, the

GLCD power of local government units to tax is still limited. As we explained in Mactan Cebu International Airport Authority:[10] The power to tax is primarily vested in the Congress; however, in our jurisdiction, it may be exercised by local legislative bodies, no longer merely be virtue of a valid delegation as before, but pursuant to direct authority conferred by Section 5, Article X of the Constitution. Under the latter, the exercise of the power may be subject to such guidelines and limitations as the Congress may provide which, however, must be consistent with the basic policy of local autonomy. (at p. 680; Emphasis supplied.)

Clearly then, while a new slant on the subject of local taxation now prevails in the sense that the former doctrine of local government units delegated power to tax had been effectively modified with Article X, Section 5 of the 1987 Constitution now in place, .the basic doctrine on local taxation remains essentially the same. For as the Court stressed in Mactan, the power to tax is [still] primarily vested in the Congress. This new perspective is best articulated by Fr. Joaquin G. Bernas, S.J., himself a Commissioner of the 1986 Constitutional Commission which crafted the 1987 Constitution, thus: What is the effect of Section 5 on the fiscal position of municipal corporations? Section 5 does not change the doctrine that municipal corporations do not possess inherent powers of taxation. What it does is to confer municipal corporations a general power to levy taxes and otherwise create sources of revenue. They no longer have to wait for a statutory grant of these powers. The power of the legislative authority relative to the fiscal powers of local governments has been reduced to the authority to impose limitations on municipal powers. Moreover, these limitations must be consistent with the basic policy of local autonomy. The important legal effect of Section 5 is thus to reverse the principle that doubts are resolved against municipal corporations. Henceforth, in interpreting statutory provisions on municipal fiscal powers, doubts will be resolved in favor of municipal corporations. It is understood, however, that taxes imposed by local government must be for a public purpose, uniform within a locality, must not be confiscatory, and must be within the jurisdiction of the local unit to pass.[11] (Emphasis supplied). In net effect, the controversy presently before the Court involves, at bottom, a clash between the inherent taxing power of the legislature, which necessarily includes the power to exempt, and the local governments delegated power to tax under the aegis of the 1987 Constitution. Now to go back to the Quezon City Revenue Code which imposed real estate taxes on all real properties within the citys territory and removed exemptions theretofore previously granted to, or presently enjoyed by all persons, whether natural or juridical .,[12] there can really be no dispute that the power of the Quezon City Government to tax is limited by Section 232 of the LGC which expressly provides that a province or city or municipality within the Metropolitan Manila Area may levy an annual ad valorem tax on real property such as land, building, machinery, and other improvement not hereinafter specifically exempted. Under this law, the Legislature highlighted its power to thereafter exempt certain realties from the taxing power of local government units. An interpretation denying Congress such power to exempt would reduce the phrase not hereinafter specifically exempted as a pure jargon, without meaning whatsoever. Needless to state, such absurd situation is unacceptable. For sure, in Philippine Long Distance Telephone Company, Inc. (PLDT) vs. City of Davao,[13] this Court has upheld the power of 27

Law on Public Corporation - Finals Congress to grant exemptions over the power of local government units to impose taxes. There, the Court wrote: Indeed, the grant of taxing powers to local government units under the Constitution and the LGC does not affect the power of Congress to grant exemptions to certain persons, pursuant to a declared national policy. The legal effect of the constitutional grant to local governments simply means that in interpreting statutory sprovisions on municipal taxing powers, doubts must be resolved in favor of municipal corporations. (Emphasis supplied.)

GLCD the Provincial Board enacted Resolution No. 188, donating to the City of Cebu 210 province. owned lots all located in the City of Cebu, with an aggregate area of over 380 hectares, and authorizing the ViceGovernor to sign the deed of donation on behalf of the province. The deed of donation was immediately executed in behalf of the Province of Cebu by Vice-Governor Almendras and accepted in behalf of the City of Cebu by Mayor Sergio Osmea, Jr. The document of donation was prepared and notarized by a private lawyer. The donation was later approved by the Office of the President through Executive Secretary Juan Cancio. According to the questioned deed of donation the lots donated were to be sold by the City of Cebu to raise funds that would be used to finance its public improvement projects. The City of Cebu was given a period of one (1) year from August 15, 1964 within which to dispose of the donated lots. Upon his return from Manila, Governor Espina denounced as Legal and immoral the action of his colleagues in donating practically all the patrimonial property of the province of Cebu, considering that the latter's income was less than one. fourth (1/4) of that of the City of Cebu. To prevent the sale or disposition of the lots, the officers and members of the Cebu Mayor's League (in behalf of their respective municipalities) along with some taxpayers, including Atty. Garcia, filed a case seeking to have the donation declared illegal, null and void. It was alleged in the complaint that the plaintiffs were filing it for and in behalf of the Province of Cebu in the nature of a derivative suit. Named defendants in the suit were the City of Cebu, City Mayor Sergio Osmea, Jr. and the Cebu provincial officials responsible for the donation of the province-owned lots. The case was docketed as Civil Case No. R-8669 of the Court of First Instance of Cebu and assigned to Branch VI thereof. Defendants City of Cebu and City Mayor Osmea, Jr. filed a motion to dismiss the case on the ground that plaintiffs did not have the legal capacity to sue. Subsequently, in an order, dated May, 1965, the court dismissed Case No. R-8669 on the ground that plaintiffs were not the real parties in interest in the case. Plaintiffs filed a motion for reconsideration of the order of dismissal. This motion was denied by the Court. Meanwhile, Cebu City Mayor Sergio Osmea, Jr. announced that he would borrow funds from the Philippine National Bank (PNB) and would use the donated lots as collaterals. In July, 1965, the City of Cebu advertised the sale of an the lots remaining unsold. Thereupon, Governor Espina, apprehensive that the lots would be irretrievably lost by the Province of Cebu, decided to go to court. He engaged the services of respondent Garcia in filing and prosecuting the case in his behalf and in behalf of the Province of Cebu. Garcia filed the complaint for the annulment of the deed of donation with an application for the issuance of a writ of preliminary injunction, which application was granted on the same day, August 6, 1965. The complaint was later amended to implead Cebu City Mayor Carlos P. Cuizon as additional defendant in view of Fiscal Numeriano Capangpangan's manifestation stating that on September 9, 1965, Sergio Osmea, Jr. filed his certificate of Candidacy for senator, his position/office having been assumed by City Mayor Carlos P. Cuizon. Sometime in 1972, the Provincial Board passed a resolution authorizing the Provincial Attorney, Alfredo G. Baguia, to enter his appearance for the Province of Cebu and for the incumbent Governor, Vice-Governor and members of the Provincial Board in this case. 28

As we see it, then, the issue in this case no longer dwells on whether Congress has the power to exempt Bayantels properties from realty taxes by its enactment of Rep. Act No. 7633 which amended Bayantels original franchise. The more decisive question turns on whether Congress actually did exempt Bayantels properties at all by virtue of Section 11 of Rep. Act No. 7633. Admittedly, Rep. Act No. 7633 was enacted subsequent to the LGC. Perfectly aware that the LGC has already withdrawn Bayantels former exemption from realty taxes, Congress opted to pass Rep. Act No. 7633 using, under Section 11 thereof, exactly the same defining phrase exclusive of this franchise which was the basis for Bayantels exemption from realty taxes prior to the LGC. In plain language, Section 11 of Rep. Act No. 7633 states that the grantee, its successors or assigns shall be liable to pay the same taxes on their real estate, buildings and personal property, exclusive of this franchise, as other persons or corporations are now or hereafter may be required by law to pay. The Court views this subsequent piece of legislation as an express and real intention on the part of Congress to once again remove from the LGCs delegated taxing power, all of the franchisees (Bayantels) properties that are actually, directly and exclusively used in the pursuit of its franchise. WHEREFORE, the petition is DENIED.

G.R. No. 72841

January 29, 1987

PROVINCE OF CEBU, petitioner, vs. HONORABLE INTERMEDIATE APPELLATE COURT and ATTY. PABLO P. GARCIA, respondents.

GUTIERREZ, JR., J.: This is a petition to review the decision of the respondent Intermediate Appellate Court in A.C. G.R. CV No. 66502 entitled "Governor Rene Espina, et. at v. Mayor Sergio Osmea, Jr., et. al, Atty. Pablo P. Garcia v. Province of Cebu" 1 affirming with modification the order of the Court of First Instance of Cebu, Branch VII, granting respondent Pablo P. Garcia's claim for compensation for services rendered as counsel in behalf of the respondent Province of Cebu. The facts of the case are not in dispute. On February 4, 1964, while then incumbent Governor Rene Espina was on official business in Manila, the Vice-Governor, Priscillano Almendras and three (3) members of

Law on Public Corporation - Finals On January 30, 1973, Alfredo G. Baguia, Provincial Attorney of the Province of Cebu, entered his appearance as additional counsel for the Province of Cebu and as counsel for Governor Osmundo Rama, ViceGovernor Salutario Fernandez and Board Members Leonardo Enad, Guillermo Legazpi, and Rizalina Migallos. On January 31, 1973, Atty. Baguia filed a complaint in intervention stating that intervenors Province of Cebu and Provincial Board of Cebu were joining or uniting with original plaintiff, former Governor of Cebu, Rene Espina. They adopted his causes of action, claims, and position stated in the original complaint filed before the court on August 6, 1965. On June 25, 1974, a compromise agreement was reached between the province of Cebu and the city of Cebu. On July 15, 1974, the court approved the compromise agreement and a decision was rendered on its basis. On December 4, 1974, the court issued an order directing the issuance of a writ of execution to implement the decision dated July 15, 1974, to wit: 1. Ordering the City of Cebu to return and deliver to the Province of Cebu all the lots enumerated in the second paragraph hereof; 2. Ordering the Province of Cebu to pay the amount of One Million Five Hundred Thousand Pesos (P1,500,000.00) to the City of Cebu for and in consideration of the return by the latter to the former of the aforesaid lots; 3. Declaring the retention by the City of Cebu of the eleven (11) lots mentioned in paragraph No. 1 of the compromise agreement, namely, Lot Nos. 1141, 1261, 1268, 1269, 1272, 1273, 917, 646-A, 646A-40 and 10107-C; 4. Ordering the City of Cebu or the City Treasurer to turn over to the Province of Cebu the amount of P187948.93 mentioned in Annex "A" of the defendants manifestation dated October 21, 1974; 5. Declaring the City of Cebu and an its present and past officers completely free from liabilities to third persons in connection with the aforementioned lots, which liabilities if any, shall be assumed by the Province of Cebu; 6. Ordering the Register of Deeds of the City of Cebu to cancel the certification of titles in the name of the City of Cebu covering the lots enumerated in the second paragraph of this order and to issue new ones in lieu thereof in the name of the Province of Cebu. For services rendered in Civil Case no. 238-BC, CFI of Cebu, respondent Pablo P. Garcia filed through counsel a Notice of Attorney's Lien, dated April 14, 1975, praying that his statement of claim of attorney's lien in said case be entered upon the records thereof, pursuant to Section 37, Rule 138 of the Rules of Court. To said notice, petitioner Province of Cebu filed through counsel, its opposition dated April 23, 1975, stating that the payment of attorney's fees and reimbursement of incidental expenses are not allowed by law and settled jurisprudence to be paid by the Province. A rejoinder to this opposition was filed by private respondent Garcia. After hearing, the Court of First Instance of Cebu, then presided over by Judge Alfredo Marigomen, rendered judgment dated May 30, 1979, in favor of private respondent and against petitioner Province of Cebu, declaring that the former is entitled to recover attorney's fees on the basis of quantum meruit and fixing the amount thereof at P30,000.00.

GLCD Both parties appealed from the decision to the Court of Appeals. In the case of private respondent, however, he appealed only from that portion of the decision which fixed his attorney's fees at P30,000.00 instead of at 30% of the value of the properties involved in the litigation as stated in his original claim On October 18, 1985, the Intermediate Appellate Court rendered a decision affirming the findings and conclusions of the trial court that the private respondent is entitled to recover attorney's fees but fixing the amount of such fees at 5% of the market value of the properties involved in the litigation as of the date of the filing of the claim in 1975. The dispositive portion of the decision reads: WHEREFORE, except for the aforementioned modification that the compensation for the services rendered by the Claimant Atty. Pablo P. Garcia is fixed at five percent (5%) of the total fair market value of the lots in question, the order appealed from is hereby affirmed in all other respects. Both parties went to the Supreme Court with private respondent questioning the fixing of his attorney's fees at 5% instead of 30% of the value of the properties in litigations as prayed for in his claims. However, the private respondent later withdrew his petition in G.R. No. 72818 with the following explanation: That after a long and serious reflection and reassessment of his position and intended course of action and, after seeking the views of his friends, petitioner has come to the definite conclusion that prosecuting his appeal would only result in further delay in the final disposition of his claim (it has been pending for the last 10 years 4 in the CFI and 6 in the Court of Appeals, later Intermediate Appellate Court) and that it would be more prudent and practicable to accept in full the decision of the Intermediate Appellate Court. Hence, only the petition of the Province of Cebu is pending before this Court. The matter of representation of a municipality by a private attorney has been settled in Ramos v. Court of Appeals (108 SCRA 728). Collaboration of a private law firm with the fiscal and the municipal attorney is not allowed. Section 1683 of the Revised Administrative Code provides: .Section 1683. Duty of fiscal to represent provinces and provincial subdivisions in litigation. The provincial fiscal shall represent the province and any municipality, or municipal district thereof in any court, except in cases whereof original jurisdiction is vested in the Supreme Court or in cases where the municipality, or municipal district in question is a party adverse to the provincial government or to some other municipality, or municipal district in the same province. When the interests of a provincial government and of any political division thereof are opposed, the provincial fiscal shall act on behalf of the province. When the provincial fiscal is disqualified to serve any municipality or other political subdivision of a province, a special attorney may be employed by its council The above provision, complemented by Section 3 of the Local Autonomy Law, is clear in providing that only the provincial fiscal and the municipal attorney can represent a province or municipality in its lawsuits. The provision is mandatory. The municipality's authority to employ a private lawyer is expressly limited only to situations where the provincial fiscal is disqualified to represent it (De Guia v. The Auditor General 44 SCRA 169; Municipality of Bocaue, et. al. v. Manotok, 93 Phil. 173; Enriquez, Sr., v. Honorable Gimenez, 107 Phil. 932) as when he represents the province against a municipality. 29

Law on Public Corporation - Finals The lawmaker, in requiring that the local government should be represented in its court cases by a government lawyer, like its municipal attorney and the provincial fiscal intended that the local government should not be burdened with the expenses of hiring a private lawyer. The lawmaker also assumed that the interests of the municipal corporation would be best protected if a government lawyer handles its litigations. It is to be expected that the municipal attorney and the fiscal would be faithful and dedicated to the corporation's interests, and that, as civil service employees, they could be held accountable for any misconduct or dereliction of duty (See Ramos v. Court of Appeals, supra). However, every rule is not without an exception, Ibi quid generaliter conceditur; inest haec exceptio, si non aliquid sit contra jus fasque (Where anything is granted generally, this exception is implied; that nothing shall be contrary to law and right). Indeed, equity, as well as the exceptional situation facing us in the case at bar, require a departure from the established rule. The petitioner anchors its opposition to private respondent's claim for compensation on the grounds that the employment of claimant as counsel for the Province of Cebu by then Governor Rene Espina was unauthorized and violative of Section 1681 to 1683 in relation to Section 1679 of the Revised Administrative Code and that the claim for attorney's fees is beyond the purview of Section 37, Rule 138 of the Rules of Court. It is argued that Governor Espina was not authorized by the Provincial Board, through a board resolution, to employ Atty. Pablo P. Garcia as counsel of the Province of Cebu. Admittedly, this is so. However, the circumstances obtaining in the case at bar are such that the rule cannot be applied. The Provincial Board would never have given such authorization. The decision of the respondent court elucidates the matter thus: ... The provisions of Sections 1681 to 1683 of the Revised Administrative Code contemplate a normal situation where the adverse party of the province is a third person as in the case of Enriquez v. Auditor General, 107 Phil 932. In the present case, the controversy involved an intramural fight between the Provincial Governor on one hand and the members of the Provincial Board on the other hand. Obviously it is unthinkable for the Provincial Board to adopt a resolution authorizing the Governor to employ Atty. Garcia to act as counsel for the Province of Cebu for the purpose of filing and prosecuting a case against the members to the same Provincial Board According to the claimant Atty. Garcia, how can Governor Espina be expected to secure authority from the Provincial Board to employ claimant as counsel for the Province of Cebu when the very officials from whom authority is to be sought are the same officials to be sued, It is simply impossible that the Vice-Governor and the members of the Provincial Board would pass a resolution authorizing Governor Espina to hire a lawyer to file a suit against themselves. xxx xxx xxx efforts by directing him to dismiss the case or by refusing to appropriate funds for the expenses of the litigation.

GLCD

... Consequently, there could have been no occasion for the exercise by the Provincial Fiscal of his powers and duties since the members of the Provincial Board would not have directed him to file a suit against them. A situation obtains, therefore, where the Provincial Governor, in behalf of the Province of Cebu, seeks redress against the very members of the body, that is, the Provincial Board, which, under the law, is to provide it with legal assistance. A strict application of the provisions of the Revise Administrative Code on the matter would deprive the plaintiffs in the court below of redress for a valid grievance. The provincial board authorization required by law to secure the services of special counsel becomes an impossibility. The decision of the respondent court is grounded in equity a correction applied to law, where on account of the general comprehensiveness of the law, particular exceptions not being provided against, something is wanting to render it perfect. It is also argued that the employment of claimant was violative of sections 1681 to 1683 of the Revised Administrative Code because the Provincial Fiscal who was the only competent official to file this case was not disqualified to act for the Province of Cebu. Respondent counsel's representation of the Province of Cebu became necessary because of the Provincial Board's failure or refusal to direct the bringing of the action to recover the properties it had donated to the City of Cebu. The Board more effectively disqualified the Provincial Fiscal from representing the Province of Cebu when it directed the Fiscal to appear for its members in Civil Case No. R-8669 filed by Atty. Garcia, and others, to defend its actuation in passing and approving Provincial Board Resolution No. 186. The answer of the Provincial Fiscal on behalf of the Vice-Governor and the Provincial Board members filed in Civil Case No. R-8669; (Exhibit "K") upholds the validity and legality of the donation. How then could the Provincial Fiscal represent the Province of Cebu in the suit to recover the properties in question? How could Governor Espina be represented by the Provincial Fiscal or seek authorization from the Provincial Board to employ special counsel? Nemo tenetur ad impossibile (The law obliges no one to perform an impossibility).lwphl@it Neither could a prosecutor be designated by the Department of Justice. Malacaang had already approved the questioned donation Anent the question of liability for respondent counsel's services, the general rule that an attorney cannot recover his fees from one who did not employ him or authorize his employment, is subject to its own exception. Until the contrary is clearly shown an attorney is presumed to be acting under authority of the litigant whom he purports to represent (Azotes v. Blanco, 78 Phil. 739) His authority to appear for and represent petitioner in litigation, not having been questioned in the lower court, it will be presumed on appeal that counsel was properly authorized to file the complaint and appear for his client. (Republic v. Philippine Resources Development Corporation, 102 Phil. 960) Even where an attorney is employed by an unauthorized person to represent a client, the latter will be bound where it has knowledge of the fact that it is being represented by an attorney in a particular litigation and takes no prompt measure to repudiate the assumed authority. Such acquiescence in the employment of an attorney as occurred in this case is tantamount to ratification (Tan Lua v. O' Brien, 55 Phil. 53). The act of the successor provincial board and provincial officials in allowing respondent Atty. Pablo P. Garcia to continue as counsel and in joining him in the suit led the counsel to believe his services were still necessary. 30

Under Section 2102 of the Revised Administrative Code it is the Provincial Board upon whom is vested the authority "to direct, in its discretion, the bringing or defense of civil suits on behalf of the Provincial Governor ___." Considering that the members of the Provincial Board are the very ones involved in this case, they cannot be expected to directed the Provincial Fiscal the filing of the suit on behalf of the provincial government against themselves. Moreover, as argued by the claimant, even if the Provincial Fiscal should side with the Governor in the bringing of this suit, the Provincial Board whose members are made defendants in this case, can simply frustrate his

Law on Public Corporation - Finals We apply a rule in the law of municipal corporations: "that a municipality may become obligated upon an implied contract to pay the reasonable value of the benefits accepted or appropriated by it as to which it has the general power to contract. The doctrine of implied municipal liability has been said to apply to all cases where money or other property of a party is received under such circumstances that the general law, independent of express contract implies an obligation upon the municipality to do justice with respect to the same." (38 Am Jur. Sec. 515, p. 193): The obligation of a municipal corporation upon the doctrine of an implied contract does not connote an enforceable obligation. Some specific principle or situation of which equity takes cognizance must be the foundation of the claim. The principle of liability rests upon the theory that the obligation implied by law to pay does not originate in the unlawful contract, but arises from considerations outside it. The measure of recovery is the benefit received by the municipal corporation. The amount of the loan, the value of the property or services, or the compensation specified in the contract, is not the measure. If the price named in the invalid contract is shown to be entirely fair and reasonable not only in view of the labor done, but also in reference to the benefits conferred, it may be taken as the true measure of recovery. The petitioner can not set up the plea that the contract was ultra vires and still retain benefits thereunder. Having regarded the contract as valid for purposes of reaping some benefits, the petitioner is estopped to question its validity for the purposes of denying answerability. The trial court discussed the services of respondent Garcia as follows: ... Thus because of his effort in the filing of this case and in securing the issuance of the injunction preventing the City of Cebu and Sergio Osmea, Jr., from selling or disposing the lots to third parties, on the part of the members of the Provincial Board from extending the date of the automatic reversion beyond August 15, 1965, on the part of the Register of Deeds from effecting the transfer of title of any of the donated lots to any vendee or transferee, the disposition of these lots by the City of Cebu to third parties was frustrated and thus: saved these lots for their eventual recovery by the province of Cebu. Actually it was Governor Espina who filed the case against Cebu City and Mayor Osmea. Garcia just happened to be the lawyer, Still Atty. Garcia is entitled to compensation. To deny private respondent compensation for his professional services would amount to a deprivation of property without due process of law (Cristobal v. Employees' Compensation Commission, 103 SCRA 329). The petitioner alleges that although they do not deny Atty. Garcia's services for Governor Espina (who ceased to be such Governor of Cebu on September 13, 1969) and the original plaintiffs in the case, "it cannot be said with candor and fairness that were it not for his services the lots would have already been lost to the province forever, because the donation itself he was trying to enjoin and annul in said case was subject to a reversion clause under which lots remaining undisposed of by the City as of August 15, 1965 automatically reverted to the province and only about 17 lots were disposed of by August 15, 1965." We quote respondent counsel's comment with approval: xxx xxx xxx

GLCD extension of the reversion date to beyond August 15, 1965. Once the date of reversion is extended, the disposition of an the donated lots would be only a matter of course. We have carefully reviewed the records of this case and conclude that 30% or even 5% of properties already worth (P120,000,000.00) in 1979 as compensation for the private respondent's services is simply out of the question. The case handled by Atty. Garcia was decided on the basis of a compromise agreement where he no longer participated. The decision was rendered after pre-trial and without any hearing on the merits. The factual findings and applicable law in this petition are accurately discussed in the exhaustive and well-written Order of then Trial Judge, now Court of Appeals Justice Alfredo Marigomen We agree with his determination of reasonable fees for the private lawyer on the basis of quantum meruit. The trial court fixed the compensation at P30,000.00 and ordered reimbursement of actual expenses in the amount of P289.43. WHEREFORE, the questioned October 18, 1985 decision of the Intermediate Appellate Court is set aside. The Order of the Trial Court dated May 30, 1979 is REINSTATED. CITY OF MANILA, petitioner-appellee, vs. TARLAC DEVELOPMENT CORPORATION, oppositor-appellant. ----------------------------G.R. No. L-24469 July 31, 1968

CITY OF MANILA, petitioner-appellee, vs. MANILA LODGE NO. 761, BENEVOLENT AND PROTECTIVE ORDER OF ELKS, INC., oppositor-appellant. ----------------------------G.R. No. L-24481 July 31, 1968 .

CITY OF MANILA, petitioner-appellee, vs. ARMY AND NAVY CLUB OF MANILA, oppositor-appellant. Assistant City Fiscal Leonardo L. Arguelles for petitioners-appellees. William H. Quasha and Associates for oppositors-appellants Manila Lodge No. 761 and others. Ponce Enrile, Siguion Reyna, Montecillo and Belo for oppositorappellant Tarlac Development Corporation. Picazo and Agcaoili for oppositor-appellant Army and Navy Club of Manila. Ambrosio Padilla as amicus curiae. REYES, J.B.L., J.: The above-numbered cases are separate appeals from the order, dated 19 November 1964, of Branch IV of the Court of First Instance of Manila directing the Register of Deeds for the City of Manila to reannotate entry No. 4608/T-1635 on Transfer Certificate of Title No. 73444 issued in the name of appellant Tarlac Development Corporation (hereinafter referred to as "Tarlac", for short) and entry No. 18115/T-9332 on Transfer Certificate of Title No. 51988 issued in the name of the appellant Army and Navy Club of Manila, Inc. The third a appellant is Manila Lodge No. 761, Benevolent and Protective Order of Elks of the United States, Inc. (hereinafter referred to as "BPOE", for short), which, as vendor, has privity of contract with Tarlac. 31

While it is true that the donation was subject to a reversion clause, the same clause gave the Provincial Board the discretion to extend the period of reversion beyond August 15, 1965 (see paragraph 3 of donation). With the known predisposition of the majority of the members of the Provincial Board, there would have been no impediment to the

Law on Public Corporation - Finals The two (2) parcels of land described and embraced" in the aforesaid certificates of title were reclaimed from the Bay of Manila and given to the City of Manila by authority of Act 1360, enacted on 26 June 1905, by the Philippine Commission. Subsequently, these parcels were brought under the operation of the Land Registration Act, in the name of the City, per its Original Certificate of Title No. 1909. On 13 July 1911, the City of Manila conveyed one of these parcels to BPOE, subject to the following conditions: . La venta de la parcela de terreno del Presente Certificado se hizo bajo estas condiciones: que dicha parcela de terreno con las mejoras levantadas en la misma estaran exentas de contribucion por un periodo de diez aios desde el 20 de febrero de 1909; que la Ciudad de Manila completara el rompeolas adyacente a dicha parcels incluyendo una covertura apropriada, tambien adyacente a la misma y la conservara siempre en buen estado de reparacion sin gastos por parte de la entidad compradora que dicha Ciudad de Manila no permitira que se establezca un desembarcadero publico en el rompeolas que hay en frente y cerca de dicha propiedad; y que la Ciudad de Manila tendra derecho, a su opcion, de recomprar la expresada propiedad para fines publicos solamente en cualquier tiempo despues de cincuenta anos desde el 13 de Julio de 1911, previo pago a la entidad compradora sus sucesores, del precio de la venta de la misma propiedad, mas el valor que entonces tengan las mejoras. The foregoing conditions were annotated as entry No. 4608/T-1635 in the transferee's Transfer Certificates of Title Nos. 2195 and 67488. On 20 September 1918, the City of Manila also conveyed the second parcel to the Army and Navy Club of Manila, subject to the following conditions: La venta, cesion o traspaso de la finca a que se contrae el presente Certificado, hecha por la Ciudad de Manila a favor de la entidad "Army and Navy Club", esta sujeta a las siguientes condiciones y estipulaciones; 1. Que la expresada finca con las mejoras existentes en la misma estaria exenta do contribucion por el periodo de 10 anos desde la fecha en que el ingeniero de la Ciudad certifique que dicha propiedad estaria dispuesta para fines de edificacion. 2. Que la Ciudad de Manila no permitira que se construya un desembarcadero en el muro de contension frente y contiguo a dicha finca o parcela de terreno. 3. Que esta propiedad o parcela de terreno se usara para fines de club solamente y solo por clubs de indole social o recreativa y por las personas y para los fines que aprueba el Secretario de Guerra o por el funcionario de los EE. UU que entonces tenga el control administrativo de las Islas Filipinos que corresponda al del Secretario de Guerra. 4. Que la Ciudad de Manila tendra la opcion de recomprar dicha parcela de terreno para fines publicos solamente en cualquier tiempo despues de 50 anos desde el 20 de Septiembre de 1918, previo pago el "Army and Navy Club" del precio de compra de P31,168.49 mas el valor que entonces tengan las mejoras." . The foregoing conditions were annotated as entry No. 18115/T-9332 in the club's Transfer; Certificate of Tale No. 9332. The charter of the Army and Navy Club expired on 25 June 1958 and its members formed the American Club, Inc., which was later renamed as the Army and Navy Club of Manila, Inc. Transfer Certificate of Title No. 9332 was thus cancelled and replaced by Transfer Certificate of Title No. 51988 in the name of the new corporation and entry No. 18115/T-9332 was carried over to the new certificate of title. On 14 April 1961, then Mayor Arsenio Lacson of Manila advised the BPOE that the City of Manila will exercise its right to repurchase the land covered by Transfer Certificate of Title No. 2195. In June of the same year he requested the city fiscal to institute the proper court

GLCD action to compel the BPOE to reconvey the land. The city fiscal, however, believed that the City did not have any cause of action, because, in his opinion, the right of the City to reacquire the property could not extend beyond 10 years from and after the original conveyance, as provided by Article 1508 of the Civil Code. On 15 January 1963, BPOE filed a petition for the cancellation of the right of the City to repurchase the property as annotated in Transfer Certificate of Title No. 67488 (this new number was occasioned by transfer of title from Elks Club). The Army and Navy Club also filed a similar petition on 13 April 1963. Both the petitioners invoked the opinion of the city fiscal that Manila can no longer exercise the option. Despite notice to it, the City of Manila did not appear or oppose the petitions for cancellation. The lower court granted the petitions and the Register of Deeds made the corresponding entries of cancellation. On 9 November 1963, BPOE, supposedly a non-profit entity, sold the parcel of land that it held to Tarlac Development Corporation for P4,700,000.00, under certain conditions. On 10 June 1964, the City of Manila, filed two petitions for the reannotation of the entries that were ordered cancelled and, sifter hearing, the court issued the order of 19 November 1964 granting the petitions. This order is now contested in these appeals. I On Entry No. 4608/T-1635 (T.C.T. Nos. 2195 and 67488 and T.C.T. No. 73444): .1wph1.t The cardinal point of attack against the order of the court below, dated 19 November 1964, requiring reannotation of the entries ordered deleted by the previous order of 15 February 1963 on the above numbered certificates, is the alleged finality and conclusiveness of the latter order. Both the BPOE and the Tarlac Development Corporation contend that the 1963 order of deletion constitutes res judicata. There are at least two reasons why this claim can not be sustained: . (a) The record before us clearly establishes that the order of deletion of the entries in question was the result of the concordant positions of the city officers and the appellant entity, BPOE (petitioner in 1963), concerning the supposed lapse of the stipulation providing for the optional reacquisition by the City of Manila of the land conveyed to the appellants, and its improvements, after fifty years from the original conveyance (in 1911) at the price stated. Both the City and the appellant in 1963 entertained the view that this stipulation was void in so far as it exceeded the ten-year period fixed for repurchase in sales a retro by Article 1508 of the Spanish Civil Code of 1889, then in force (now Article 1606 of the new Civil Code). This conformity of views, expressly pleaded in the petition to cancel (Record on Appeal, pages 14-18), led the City not to file any opposition to the appellant's petition for an order to delete the entry of the City's option, as annotated in their certificates of title. The court's 1963 order granting such deletion was, in fact and in law, a judgment by consent. This is apparent from the last portion of the order. (Rec. on Appeal, p. 21). ... and further considering that it is the official opinion of the City Fiscal that the City has no cause of action against petitioner for the repurchase of said property as embodied in Opinion No. 14, Series of 1962 (Annex "B"), so that the City of Manila deemed it unnecessary to file any opposition in spite of having been furnished with a copy of the above entitled petition, said petition is hereby granted. But the rule is clear, and it is supported by abundant authority, that a consent decree, in which the officials of a municipality assumed obligations not authorized by law, is null and void (Kelley vs. Milan, 32 L. Ed. 77; Slayton vs. Crittenden County, 284 Fed. 293; State ex rel. St. Paul vs. Great Northern Ry Co., 158 N.W. 335; St. Paul vs. Chicago, 32

Law on Public Corporation - Finals etc. Ry Co., 166 N.W. 335; State ex rel. Bradway vs. De Mattos, 152 Pac. 721; Coolsaet vs. Veblen, 226 N.W. 726). Thus, the fact that, by consent of the municipal officers, an agreement or stipulation made by them has been put in the form of a judgment, in an effort to give it the force and effect of a judgment, does not cure a lack of power in the officers to make it, and if such power is lacking, the judgment as well as the stipulation is void (St. Paul v. Chicago, St. P. M. & O. R. Co. (1918) 139 Minn. 322, 166 N. W. 335). And it has been held that as a contract by which a city agrees with a railroad company that the city is to maintain and keep in repair a bridge over the tracks of the railroad is void as an attempt to take from the city a part of its police power to compel a railway company to construct and maintain a bridge for the purpose of carrying a street over its tracks when necessary for the public safety, of which the city cannot divest itself by contract or otherwise, such an invalid contract is not validated by a judgment consented to by the municipality, expressly stipulating that such a contract is valid and binding (State ex rel. St. Paul v. Great Northern R. Co. (1916) 134 Minn. 249, 158 N. W. 972; St. Paul v. Chicago St. P. M. & O. R. Co. (1918) 139 Minn. 322, 166 N. W. 335). (8) Authority is not wanting to the effect that judgments entered against municipalities on consent of the municipal authorities are not res judicata as to the authority or power to consent, and that such want of power or authority to consent may always be shown to avoid the judgment whenever, as here, the record shows that it was entered on consent. Consent judgments, are in effect, merely contracts of parties, acknowledged in open court, and ordered to be recorded. As such, they bind the parties themselves thereto as fully as other judgments; but, when parties act in a representative capacity, such judgments do not bind the cestui que trustent, unless the trustees had authority to act; and when (as in the present case) the parties to the action, the town authorities, had, as appears above, no authority to issue the bonds, their honest belief, however great, that they had such power, would not authorize them to acquire such power, and bind the town by consenting to a judgment. It is not a question of a fraudulent judgment, but a void judgment for want of authority to consent to a decree to bind principals (the tax payers), for whom they had no authority to create an indebtedness by consenting to a judgment any more than they would have had by issuing bonds. If authorized to create the indebtedness, either the bonds or the consent judgment would be equally an estoppel, but, as they had no such authority, neither bonds nor judgment is binding on the tax payers." Union Bank of Richmond v. Oxford, 119 N.C. 214, 226, 25 S.E. 966, 969, 34 L. R. A. 487, 490. See also, Kane v. Independent School Dist., 82 Iowa, 5, 47 N W. 1076; Smith v. Broderick, 107 Cal. 644, 40 Pac. 1033, 48 Am. St. Rep. 167; Oxford v. Union Bank of Richmond, 96 Fed. 293, 37 C. C. A. 493. The same rule has been applied by the Supreme Court of the United States in favor of a stockholder of a private corporation who was sued under a Kansas statute by a creditor in order to collect a judgment rendered against a corporation. The stockholder was permitted to go behind the judgment and show a want of power in the corporation to make the contract on which the judgment rested. Ward v. Joslin, 186 U.S. 142, 22 Sup. Ct. 907, 46 L. Ed. 1093." (State vs. De Mattos, 152 Pac. Rep. pages 725-726). Did the officials of the City of Manila have power and authority to agree to the deletion of the entry in appellant's certificates of title, and eliminate therefrom the right reserved to the City to repurchase the land in question "for public purposes only" at any time after 50 years from 13 July 1911, upon payment to the buyer or its successors of the original price of the sale of the land plus the value of the improvements? .

GLCD This question requires a closer look at the nature of the right thus reserved to the City. Contrary to the views expressed by the appellant, the continued existence of the City's authority to reacquire the property "for public purposes only" (sic) any time after 13 July 1961 is not debatable: for such authority is nothing more than the City's right to exercise the power of eminent domain which the City of Manila can not be deprived of. It does not arise from contract, nor can it be barred by prescription. In fact, it would exist without any reservation or stipulation at all. The more important part in the deleted stipulation is the right of the City of Manila not to pay for the land more than the price at which it was originally sold to the BPOE in 1911, disregarding market values at the time of condemnation. The elimination of this part of the contractual reservation in favor of the City commits the latter to pay the actual market value of the land at the time of expropriation. Considering the uninterrupted rise in real estate values, it can be readily seen that by consenting to the deletion of the annotation the City of Manila was made, in effect, to donate to the BPOE, or its successor-in-interest, Tarlac Development Corporation, the difference between the original price at which the land was sold to the BPOE in 1911 and the market price of the land at the time the City decided to reaquire it for public purposes. It requires no argument to show that the City executive officers had no power to bind the City to a stipulation so unfavorable to its interests, and so prejudicial to its taxpayers. The court found, and so do we, that the city officials, in consenting to the judgment were actuated by no bad motive. But the court also found, and so do we, that they so far exceeded their powers as to taint the settlement and judgments with constructive fraud, and this, though less reprehensible, can be no less fatal to the validity of the judgment than actual fraud. (State ex rel. Bradway vs. De Mattos, 88 Wash. 35, 152 Pac. 721) . That neither in the petition nor in the order to delete the annotation in question is any mention or reference made to the disastrous consequences for the City of the action asked for, as above adverted to, nor to the fact that the City's right to reacquire the lot sold to the BPOE for public purposes was no other than the sovereign power of eminent domain, a power inalienable and imprescriptible, is eloquent proof that the Court, in granting the petition to delete, relied primarily, if not exclusively, on the assent thereto of the City authorities, and that the decree granting the petition to delete was nothing but a judgment by consent. Under the circumstances above discussed, we have no other alternative but to declare the order of deletion null and void. Hence, it can not be considered conclusive on any subsequent proceedings. (b) A further reason for this Court to deny the effect of res judicata to the 1963 order to delete from the certificates of title of the BPOE the annotation of the City's right to repurchase the property under the conditions specified in the original deed of conveyance lies in the fact that proceedings under Section 112 of the Land Registration Act presuppose unanimity among the parties;1 hence, the said 1963 order of the Land Registration Court lacks the quality of being an adjudication on the merits of a controversy, that is an essential requisite of res judicata (Rule 39, section 49), since there was no controversy resolved by the Court. And this was never truer than in the case at bar, where the decree of cancellation of the entry was, in fact, the result of an agreement between the parties, being a judgment by consent, as previously shown. (c) In Saminiada vs. Mata, 92 Phil. 426 431-432, this Court, following American authorities, ruled that an agreement or settlement between the parties, even if sanctioned by the decree of a court, does not give to such decree the character of res judicata. And this is particularly true in the present case, where the agreement concerned a question of law, 33

Law on Public Corporation - Finals to wit, the validity or invalidity in 1963 of the right reserved to the City of Manila. Upon the other hand, it is argued on behalf of the appellant BPOE, and its transferee Tarlac Development Corporation, that the 1964 order to reannotate the former entries in their certificates of title could not be decreed in proceedings under Section 112 of Act 496 (the Land Registration Law) for lack of jurisdiction, because the proposed reannotation had been controverted by them and the jurisprudence of this Court is to the effect that lack of unanimity between the parties bars any action by the Court of Land Registration under the section aforesaid. This contention might have carried weight if the parties had not discussed and extensively argued on the merits of the petition to reannotate. Instead of confining themselves to the jurisdictional question, appellants went on to discuss the nature of the title of the City of Manila to the land composing the Luneta Extension; whether or not said lots were property of public use (or of public service), or whether it was patrimonial property of the City; and whether the 1911 contract with the City vested upon appellant BPOE a title in fee simple or merely a temporary right of usufruct over the land in question. In Aglipay vs. Reyes, L-12776, 23 March 1960, and Franco, et al. vs. Monte de Piedad, L-17610, 22 April 1963, this Supreme Court ruled that where the parties have acquiesced in submitting the issues for determination on the merits in registration proceedings under Section 112 aforesaid, and they are given full opportunity to present their respective sides of the controversy, then the Land Registration Court, being itself a court of first instance may validly hear and determine issues otherwise litigable only in ordinary civil actions. At any rate, since the 1963 order to cancel the entry originally annotated on the back of the certificates of title of appellant BPOE reserving the right of the City of Manila to reacquire the property after 50 years from the original conveyance to said appellant was, and is, null and void, as previously shown, such nullity should necessarily result in the reannotation of the deleted entries on said certificates of title of the BPOE, as well as on the other transfer certificates derived therefrom, including that of the Tarlac Development Corporation, as transferee of the BPOE, subject to the right of said Development Corporation to sue for cancellation of the annotation on its own certificates (T.C.T. No. 73444 of Manila) as hereinafter reserved. II On Entry No. 18115/T-9332 (T.C.T. Nos. 9332 and 51988) : What has been stated concerning the invalidity of the 1963 order of the Land Registration Court decreeing the cancellation of the annotation of the rights of the City of Manila on Certificates of Title Nos. 2195 and 67488 of the BPOE applies with equal force, and for the same reason, to the order of the same court cancelling the annotations on Certificates of Title Nos. 9332 and 51988 of the Army and Navy Club of Manila, appellant in G.R. No. L-24481. The same issues were raised, and the resulting legal situation is identical. Hence, the subsequent order of reannotation must also be sustained in this case. III. Rights of the Tarlac Development Corporation: . Whether the Tarlac Development Corporation is entitled to hold the property (covered by T.C.T. No. 73444) free from the reserved rights of reacquisition of the City of Manila, on account of its claim of being a purchaser in good faith, involves essentially a question of fact. The appellee, City of Manila, has assailed the good faith of this transferee, pointing out that the Luneta Extension is a park, and, therefore, not patrimonial property of the City, and that the description of the property in the certificates of Tarlac and its predecessor, BPOE, clearly describes it as a part of the Luneta Extension, thereby placing its acquirers upon inquiry. Whether such is the fact, and whether the particular lot was turned over to the City of Manila as property for public use; under what authority the City entered into the contract of 12 July 1911 if the lands were not patrimonial property of said City and

GLCD other related questions are not fully elucidated in the proceedings now before us, and would be best litigated in another controversial proceeding, where Tarlac may, likewise, raise the question of its rights against its vendor, the BPOE, should it ultimately be declared that the City of Manila is still entitled to compel Tarlac to resell the property to it under the terms and conditions reserved in the original 1911 deed of sale by the City. For this purpose, the right is reserved to Tarlac Development Corporation to initiate a distinct action where its rights may be fully clarified and determined; but the reannotation order should be made effective on Tarlac's Certificate of Title No. 73444, as a preventive measure to protect the eventual rights of the City of Manila against the claims of future transferees. FOR THE FOREGOING CONSIDERATIONS, the appealed orders of the Land Registration Court decreeing the reannotation of Entry No. 4608/T-1635 on Transfer Certificates of Title Nos. 67488 and 73444, and Entry No. 18115/T-9332 on Transfer Certificate of Title No. 51988, all of the office of the Register of Deeds of Manila, are hereby affirmed, subject only to the right reserved to the appellant, Tarlac Development Corporation, to bring another action for the clarification of its rights, as stated in the body of this opinion. Costs against the appellants.

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