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i.

Requirements for valid local tax; questions on its validity – Secs. 186188, LGC

Miscellaneous Provisions Section 186. Power To Levy Other Taxes, Fees or Charges. - Local government units may exercise the power to levy taxes, fees or charges on any base or subject not otherwise specifically enumerated herein or taxed under the provisions of the National Internal Revenue Code, as amended, or other applicable laws: Provided, That the taxes, fees, or charges shall not be unjust, excessive, oppressive, confiscatory or contrary to declared national policy: Provided, further, That the ordinance levying such taxes, fees or charges shall not be enacted without any prior public hearing conducted for the purpose. Section 187. Procedure for Approval and Effectivity of Tax, Ordinances and Revenue Measures; Mandatory Public Hearings. - The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof: Provided, further, That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction. Section 188. Publication of Tax Ordinances and Revenue Measures. - Within ten (10) days after their approval, certified true copies of all provincial, city, and municipal tax ordinances or revenue measures shall be published in full for three (3) consecutive days in a newspaper of local circulation: Provided, however, That in provinces, cities and municipalities where there are no newspapers of local circulation, the same may be posted in at least two (2) conspicuous and publicly accessible places. Section 189. Furnishing of Copies of Tax Ordinances and Revenue Measures. - Copies of all provincial, city, and municipal and barangay tax ordinances and revenue measures shall be furnished the respective local treasurers for public dissemination. Section 190. Attempt to Enfor ce Void or Suspended Tax Ordinances and revenue measures. The enforcement of any tax ordinance or revenue measure after due notice of the disapproval or suspension thereof shall be sufficient ground for administrative disciplinary action against the local officials and employees responsible therefor.

i.

LGU‘s authority on fixing of rates, exemptions and withdrawal of exemptions – Secs. 191-193 LGC

Section 191. Authority of Local Government Units to Adjust Rates of Tax Ordinances. - Local government units shall have the authority to adjust the tax rates as prescribed herein not oftener than once every five (5) years, but in no case shall such adjustment exceed ten percent (10%) of the rates fixed under this Code. Section 192. Authority to Grant Tax Exemption Privileges. - Local government units may, through ordinances duly approved, grant tax exemptions, incentives or reliefs under such terms and conditions as they may deem necessary. Section 193. 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 R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code.

Cases: 1) Figuerres vs. CA, 305 SCRA 206 BELEN C. FIGUERRES, petitioner, vs. COURT OF APPEALS, CITY OF ASSESSORS OF MANDALUYONG, CITY TREASURER OF MANDALUYONG, and SANGGUNIANG BAYAN OF MANDALUYONG, respondents. DECISION MENDOZA, J.: This is a petition for review on certiorari of the decision of the Court of Appeals, dated February 8, 1995, dismissing a prohibition suit brought by petitioner against respondent officials of the Municipality, now City, of Mandaluyong to prevent them from enforcing certain ordinances revising the schedule of fair market values of the various classes of real property in that municipality and the assessment levels applicable thereto. Petitioner Belen C. Figuerres is the owner of a parcel of land, covered by Transfer Certificate of Title No. 413305, and located at Amarillo Street, Barangay Mauway, City of Mandaluyong. In 1993, she received a notice of assessment, dated October 20, 1993, from the municipal assessor of the then Municipality of Mandaluyong, containing the following specifics: TYPE AREA BASE VALUE PER SQ. M. MARKET VALUE ASSESSMENT ASSESSED LEVEL VALUE P265,000.00[1]

Residential 530 sq.m. P2,500.00

P1,325,000.00

20

The assessment, effective in the year 1994, was based on Ordinance Nos. 119 and 125, series of 1993, and Ordinance No. 135, series of 1994, of the Sangguniang Bayan

of Mandaluyong. Ordinance No. 119, series of 1993, which was promulgated on April 22, 1993, contains a schedule of fair market values of the different classes of real property in the municipality.[2] Ordinance No. 125, series of 1993, which was promulgated on November 11, 1993, on the other hand, fixes the assessment levels applicable to such classes of real property.[3] Finally, Ordinance No. 135, series of 1994, which was promulgated on February 24, 1994, amended Ordinance No. 119, §6 by providing that only one third (1/3) of the increase in the market values applicable to residential lands pursuant to the said ordinance shall be implemented in the years 1994, 1995, and 1996.[4] Petitioner brought a prohibition suit in the Court of Appeals against the Assessor, the Treasurer, and the Sangguniang Bayan to stop them from enforcing the ordinances in question on the ground that the ordinances were invalid for having been adopted allegedly without public hearings and prior publication or posting and without complying with the implementing rules yet to be issued by the Department of Finance.[5] In its decision, dated February 8, 1995,[6] the Court of Appeals threw out the petition. The appellate court said in part: Petitioner‘s claim that Ordinance Nos. 119, 125 and 135 are null and void since they were prepared without the approval and determination of the Department of Finance is without merit. The approval and determination by the Department of Finance is not needed under the Local Government Code of 1991, since it is now the city council of Mandaluyong that is empowered to determine and approve the aforecited ordinances. Furthermore, contrary to the claim of petitioner that the Department of Finance ―has not promulgated the necessary rules and regulations for the classification, appraisal and assessment of real property as prescribed by the 1991 Local Government Code,‖ Department of Finance Local Assessment Regulation No. 1-92 dated October 6, 1992, which is addressed to provincial, city, and municipal assessors and others concerned with the proper implementation of Section 219 of R.A. No. 7160, provides for the rules relative to the conduct of general revisions of real property assessments pursuant to Sections 201 and 219 of the Local Government Code of 1991. Regarding petitioner‘s claim that there is need for municipal ordinances to be published in the Official Gazette for their effectivity, the same is also without merit. Section 511 of R.A. No. 7160 provides that¾ .... The secretary to the Sanggunian concerned shall transmit official copies of such ordinances to the chief executive officer of the Official Gazette within seven (7) days following the approval of the said ordinances for publication purposes. The Official Gazette may publish ordinances with penal sanctions for archival and reference purposes. Thus, the posting and publication in the Official Gazette of ordinances with penal sanctions is not a prerequisite for their effectivity. This finds support in the case of Tañada v. Tuvera (146 SCRA 446), wherein the Supreme Court declared that municipal ordinances are covered by the Local Government Code. Moreover, petitioner failed to exhaust the administrative remedies available to him as provided for under Section 187 of R.A. No. 7160, before filing the instant petition with this Court.

aside from filing an appeal to the Secretary of Justice as provided under Section 187 of R.[7] Petitioner Figuerres assails the above decision. (3) although an ordinance concerning the imposition of real property taxes is not required to be published in the Official Gazette in order to be valid. the decision of which is in turn appealable to the Central Board of Assessment Appeals as provided under Sections 226 and 230 of the said law. EVEN IF THE HONORABLE COURT OF APPEALS MENTIONED THE EXISTENCE OF THE SAID ASSESSMENT REGULATIONS. 3. WITH DUE RESPECT. As the petitioner has not pursued the administrative remedies available to him. 12 SCRA 711). According to current jurisprudence. the petition is hereby DENIED due course and is hereby DISMISSED. (Gonzales v. EXHAUSTION OF ADMINISTRATIVE REMEDIES IS NOT REQUIRED BY LAW AND WOULD HAVE BEEN A USELESS FORMALITY.. administrative remedies must be exhausted before seeking judicial intervention. and . 1-92 DATED OCTOBER 6. still the subject ordinances were disseminated before their effectivity in accordance with the relevant provisions of R.[8] On the other hand.A. In fact. 2. No. Secretary of Education. the petitioner . If a litigant goes to court without first pursuing the available administrative remedies. (2) apart from her bare allegations. 1992. No. THE HONORABLE COURT OF APPEALS PATENTLY ERRED IN STATING THAT THERE IS NO NEED FOR PUBLICATION OF TAX ORDINANCES. 40 SCRA 555). WHEREFORE. No. . the Municipality of Mandaluyong contends: (1) the present case does not fall within any of the exceptions to the doctrine of exhaustion of administrative remedies. 7160. 7160. THE HONORABLE COURT OF APPEALS ERRED WHEN IT STATED THAT THE CITY COUNCIL OF MANDALUYONG IS EMPOWERED TO DETERMINE AND APPROVE THE AFORECITED ORDINANCES WITHOUT TAKING INTO ACCOUNT THE MANDATORY PUBLIC HEARINGS REQUIRED BY R. 4. 5 SCRA 657)..A. She contends that ¾ 1. 7160. his action is considered premature and not yet ripe for judicial determination (Allied Brokerage Corporation v. petitioner Figuerres has not presented any evidence to show that no public hearings were conducted prior to the enactment of the ordinances in question.A.. his petition for prohibition cannot prosper (Gonzales v. THE HONORABLE COURT OF APPEALS PATENTLY ERRED IN FINDING LACK OF EXHAUSTION OF ADMINISTRATIVE REMEDIES ON THE PART OF HEREIN PETITIONER WHEN UNDER THE CIRCUMSTANCES. . Commissioner of Customs. THERE IS NON COMPLIANCE BY PUBLIC RESPONDENTS OF ASSESSMENT REGULATION No. Provincial Auditor of Iloilo. could have appealed to the Local Board of Assessment Appeals..

‖ it likewise requires the Secretary of Justice to ―render a decision within . he must first pay the amount due. as will presently be shown. §187 provides that ―any question on the constitutionality or legality of tax ordinances or revenue measures‖ may be appealed to the Secretary of Justice. where a remedy is available within the administrative machinery. No.A. . No. not only to give the administrative agency the opportunity to decide the matter by itself correctly. but also to prevent unnecessary and premature resort to courts. . to the Secretary of Justice.A. the Secretary of Justice can take cognizance of a case involving the constitutionality or legality of tax ordinances where. in the case at bar. an owner of real property who is not satisfied with the assessment of his property may. proof of facts for their resolution. fee. No. . as in this case. There need be no fear that compliance with the rule on exhaustion of administrative remedies will unduly delay resort to the courts to the detriment of taxpayers. Although R. The petitioner after finding that his assessment is unjust. may bring the case before the Secretary of Justice for questions of legality or constitutionality of the city ordinance. 7160. . 7160 provides. and 252 of R. 7160. or charge levied therein. With regard to questions on the legality of a tax ordinance. Therefore. in accordance with Section 252 of R. Section 187 of R. this should be resorted to before resort can be made to the courts. within sixty (60) days from notice of assessment.A. there are factual issues involved. . §187 provides that an appeal to the Secretary of Justice ―shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax. 226. Although cases raising purely legal questions are excepted from the rule requiring exhaustion of administrative remedies before a party may resort to the courts. Precisely. City of Manila. confiscatory.A. Should the taxpayer question the excessiveness of the amount of tax. the petitioner‘s action in the Court of Appeals was premature.A.(4) the Municipality of Mandaluyong complied with the regulations of the Department of Finance in enacting the subject ordinances. he must request the annotation of the phrase ―paid under protest‖ and accordingly appeal to the Board of Assessment Appeals by filing a petition under oath together with copies of the tax declarations and affidavits or documents to support his appeal. 7160. and the appellate court correctly dismissed her action on the ground that she failed to exhaust available administrative remedies as above stated. the remedies available to the taxpayer are provided under Sections 187. appeal to the Board of Assessment Appeals. the legal questions raised by petitioner require. 7160.A. Therefore. or excessive. that the taxpayer may question the constitutionality or legality of a tax ordinance on appeal within thirty (30) days from effectivity thereof. Petitioner argues that resort to the Secretary of Justice is not mandatory but only directory because R. Under Section 226 of R. Exhaustion of administrative remedies In Lopez v. Then.[9] we recently held: . 7160.

R. Cristobal. We have a right to assume that officials have done that which the law requires them to do.A. we will assume. The appellant argues that there was no proof adduced during the trial of the cause showing that said ordinance had been approved by the provincial board. 7160. Hence. In rejecting this contention. that the law has been complied with. the lack of a public hearing is a negative allegation essential to petitioner‘s cause of action in the present case. In an analogous case. in accordance with the presumption of validity in favor of an ordinance. as petitioner is the party asserting it.‖ after which ―the aggrieved party may file appropriate proceedings with a court of competent jurisdiction. United States v. petitioner Figuerres has not presented any evidence to show that no public hearings were conducted prior to the enactment of the ordinances in question. or charges ―shall not be enacted without any prior public hearing conducted for the purpose. Publication and posting of schedule of fair market values Petitioner is also right that publication or posting of the proposed schedule of fair market values of the different classes of real property in a local government unit is required pursuant to R. it is noteworthy that apart from her bare assertions. No.[12] Furthermore. the Municipality of Mandaluyong claims that public hearings were indeed conducted before the subject ordinances were adopted.‖ Public hearings on tax ordinance Petitioner is right in contending that public hearings are required to be conducted prior to the enactment of an ordinance imposing real property taxes. fees.[11] it was alleged that the ordinance making it a crime for anyone to obstruct waterways had not been submitted by the provincial board as required by §§2232-2233 of the Administrative Code. Considering the provisions of law that it is the duty of the provincial board to approve or disapprove ordinances adopted by the municipal councils of the different municipalities. the Court held: From the judgment of the Court of First Instance the defendant appealed to this court upon the theory that the ordinance in question was adopted without authority on the part of the municipality and was therefore unconstitutional.A. their constitutionality or legality should be upheld in the absence of evidence showing that the procedure prescribed by law was not observed in their enactment.[13] Since petitioner failed to rebut the presumption of validity in favor of the subject ordinances and to discharge the burden of proving that no public hearings were conducted prior to the enactment thereof. 7160. in the absence of positive proof to the contrary. §212 which in part states: . On the other hand. §186 provides that an ordinance levying taxes.[10] although it likewise failed to submit any evidence to establish this allegation. However. No. we are constrained to uphold their constitutionality or legality. she has the burden of proof.‖ However.sixty (60) days from the date of receipt of the appeal. in the absence of proof to the contrary.

No. §188 likewise applies. not only §188 but §511(a) also must be observed: Ordinances with penal sanctions shall be posted at prominent places in the provincial capitol. and posted in at least two (2) prominent places in the provincial capitol. 7160. 7160 and enacted into ordinances by the sanggunians of the municipalities and cities concerned.A. within ten (10) days of its approval. after the proposed schedule of fair market values of the different classes of real property in a local government unit within Metro Manila. ¾ Within ten (10) days after their approval. city.A. No. Apart from her allegations. In addition.A. 7160. as prepared jointly by the local assessors concerned. §7 provides for a penal sanction for violations thereof by means of a fine of not less than P1. an ordinance imposing real property taxes (such as Ordinance Nos. city.[14] it was held that. an ordinance fixing the assessment levels applicable to the different classes of real property in a local government unit and imposing penal sanctions for violations thereof (such as Ordinance No. No.00. if the local government unit is part of Metro Manila.. as Ordinance No. 125. or both. city or municipal hall and in two other conspicuous public places therein. . where available.00 nor more than P5. except in the case of barangay ordinances. Publication of Tax Ordinances and Revenue Measures. the abovequoted portion of §212 must be understood to refer to the schedule of fair market values of the different classes of real property in the district to which the city or municipality belongs. . being in the nature of a tax ordinance. No. or imprisonment of not less than one (1) month nor more than six (6) months. where available.000. In view of §§188 and 511(a) of R. the same may be posted in at least two (2) conspicuous and publicly accessible places. The schedule of fair market values shall be published in a newspaper of general circulation in the province. With respect to ordinances which fix the assessment levels (such as Ordinance No. city. and municipal tax ordinances or revenue measures shall be published in full for three (3) consecutive days in a newspaper of local circulation: Provided. petitioner has not presented any evidence to show that the subject ordinances were not disseminated in accordance with these provisions of R. Moreover. 7160.000. 119 and 135) must be posted or published as required by R. or barangay hall for a minimum of three (3) consecutive weeks. certified true copies of all provincial. cities and municipalities where there are no newspapers of local circulation. shall be posted in the provincial capitol. however. as prepared jointly by the local assessors of the district to which the city or municipality belongs. . Such ordinances shall also be published in a newspaper of general circulation. whichever occurs later. the ordinances containing the schedule of fair market values must themselves be published or posted in the manner provided by §188 of R. said ordinances shall take effect on the day following its publication. Hence. municipal.A. for a minimum period of three (3) consecutive weeks. as the case may be. No. has been published or posted in accordance with §212 of R. §188 which provides: Section 188. or at the end of the period of posting. or in the absence thereof.A. municipal or barangay hall. In Ty v. 125). in the discretion of the court. within the territorial jurisdiction of the local government unit concerned. Unless otherwise provided therein. Trampe. or municipality concerned. That in provinces. city. 125) should be published in full for three (3) consecutive days in a newspaper of local circulation. .

ATIENZA. 235 SCRA 135 HON. SO ORDERED. Wong. .A. 1992. considering the presumption of validity in favor of the ordinances and the failure of petitioner to rebut such presumption. otherwise known as the Local Government Code of 1991. petitioner. Regala & Cruz for Caltex (Phils. concur. JJ. 119 and Ordinance No. 125. [16] Hence. 1993. the decision of the Court of Appeals is AFFIRMED. in his capacity as SECRETARY OF JUSTICE. we are constrained to dismiss the petition in this case. of the Department of Finance. 2) Drilon vs. Angara. dated October 6.). dated November 12. Puno. respondents. CITY TREASURER ANTHONY ACEVEDO. SANGGUNIANG PANGLUNSOD AND THE CITY OF MANILA. however. As in the case of the procedural requirements for the enactment of tax ordinances and revenue measures. and Buena. Sanggunian Secretary of the Municipality of Mandaluyong that ―Ordinance No. Concepcion.‖[15] Thus. which provides guidelines for the preparation of proposed schedules of fair market values of the different classes of real property in a local government unit. of Williard S. LIM. the Municipality of Mandaluyong presented a certificate. 1-92. Lim. Quisumbing. S-1993 . L.7160. Compliance with regulations issued by the Department of Finance Also without merit is the contention of petitioner that Ordinance No. it has complied with them. The Municipality of Mandaluyong claims that.A. has been posted in accordance with §59(b) of R. 135 are void for not having been enacted in accordance with Local Assessment Regulation No. FRANKLIN M. Maglaya for Petron Corporation. petitioner has not shown that the ordinances in this case were not enacted in accordance with the applicable regulations of the Department of Finance. The City Legal Officer for petitioner. in the absence of proof that the ordinances were not enacted in accordance with such regulations. vs. such as time tables for obtaining information from owners of affected lands and buildings regarding the value thereof. WHEREFORE. Joseph Lopez for Sangguniang Panglunsod of Manila. . Abello. said ordinances must be presumed to have been enacted in accordance with such regulations. No. MAYOR ALFREDO S. Bellosillo (Chairman). . VICE-MAYOR JOSE L. 7160. although the regulations are merely directory. On the other hand. DRILON..

on appeal to him of four oil companies and a taxpayer. BP 129 vests in the regional trial courts jurisdiction over all civil cases in which the subject of the litigation is incapable of pecuniary estimation. That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax. 1 In a petition for certiorari filed by the City of Manila. the Solicitor General having failed to submit a certified true copy of the challenged decision.: The principal issue in this case is the constitutionality of Section 187 of the Local Government Code reading as follows: Procedure For Approval And Effectivity Of Tax Ordinances And Revenue Measures. The Secretary argues that the annulled Section 187 is constitutional and that the procedural requirements for the enactment of tax ordinances as specified in the Local Government Code had indeed not been observed. 3 However. That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided. fee. it declared Section 187 of the Local Government Code as unconstitutional because of its vesture in the Secretary of Justice of the power of control over local governments in violation of the policy of local autonomy mandated in the Constitution and of the specific provision therein conferring on the President of the Philippines only the power of supervision over local governments. Pursuant thereto. 7794. 2 The present petition would have us reverse that decision. the Secretary of Justice had.CRUZ. the petition was reinstated in view of the importance of the issues raised therein. That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal. That public hearings shall be conducted for the purpose prior to the enactment thereof. 4even as the . null and void for non-compliance with the prescribed procedure in the enactment of tax ordinances and for containing certain provisions contrary to law and public policy. or charge levied therein: Provided. holding inter alia that the procedural requirements had been observed. More importantly. We stress at the outset that the lower court had jurisdiction to consider the constitutionality of Section 187. this petition was originally dismissed by the Court for non-compliance with Circular 1-88. finally. Mandatory Public Hearings. further. this authority being embraced in the general definition of the judicial power to determine what are the valid and binding laws by the criterion of their conformity to the fundamental law. — The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided. J. declared Ordinance No. Specifically. otherwise known as the Manila Revenue Code. Provided. however. on motion for reconsideration with the required certified true copy of the decision attached. Parenthetically. the aggrieved party may file appropriate proceedings with a court of competent jurisdiction. the Regional Trial Court of Manila revoked the Secretary's resolution and sustained the ordinance.

that the challenged act must be struck down. All he did in reviewing the said measure was determine if the petitioners were performing their functions in accordance with law. to defer to the higher judgment of this Court in the consideration of its validity. proclamation. . if only out of a becoming modesty. Section 187 authorizes the Secretary of Justice to review only the constitutionality or legality of the tax ordinance and. inferentially. on the theory that the measure was first carefully studied by the executive and the legislative departments and determined by them to be in accordance with the fundamental law before it was finally approved. Secretary Drilon did set aside the Manila Revenue Code. no less than on the doctrine of separation of powers. in the discharge of the duty it cannot escape. particularly as they contravene the Bill of Rights. that is. a violation not only of Article X. bearing in mind the consequences of a declaration of unconstitutionality upon the stability of laws. ordinance. international or executive agreement. Palattao declared Section 187 of the Local Government Code unconstitutional insofar as it empowered the Secretary of Justice to review tax ordinances and. To doubt is to sustain. to annul them. As we see it. This was. but he did not replace it with his own version of what the Code should be. instruction. including this Court. lower courts are advised to act with the utmost circumspection. We do not share that view. with the prescribed procedure for the enactment of tax ordinances and the grant of powers to the city government under the Local Government Code. Article X. In the case before us. which is better determined after a thorough deliberation by a collegiate body and with the concurrence of the majority of those who participated in its discussion. He did not say that in his judgment it was a bad law. The presumption of constitutionality can be overcome only by the clearest showing that there was indeed an infraction of the Constitution. 5 It is also emphasized that every court. law. order. Section 5(2).accused in a criminal action has the right to question in his defense the constitutionality of a law he is charged with violating and of the proceedings taken against him. What he found only was that it was illegal. As the questioned act is usually the handiwork of the legislative or the executive departments. When he alters or modifies or sets aside a tax ordinance. In the exercise of this jurisdiction. the first being "the power of an officer to alter or modify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for the latter." while the second is "the power of a superior officer to see to it that lower officers perform their functions in accordance with law. that was an act not of control but of mere supervision. of the Constitution vests in the Supreme Court appellate jurisdiction over final judgments and orders of lower courts in all cases in which the constitutionality or validity of any treaty. if warranted. He cited the familiar distinction between control and supervision." 6 His conclusion was that the challenged section gave to the Secretary the power of control and not of supervision only as vested by the Constitution in the President of the Philippines. 8 and the policy of local autonomy in general. it will be prudent for such courts. is charged with the duty of a purposeful hesitation before declaring a law unconstitutional. he is not also permitted to substitute his own judgment for the judgment of the local government that enacted the measure. or both. to revoke it on either or both of these grounds. The lower court was rather hasty in invalidating the provision. in his view. He did not pronounce the ordinance unwise or unreasonable as a basis for its annulment. specifically Section 4 thereof. presidential decree. Judge Rodolfo C. Moreover. or regulation is in question. 7and of Section 5 on the taxing powers of local governments. and only when such a conclusion is reached by the required majority may the Court pronounce.

oppressive or confiscatory. excessive. shall be considered as revoked. for a period of thirty days within which period the local legislative body may either modify the tax ordinance to meet the objections thereto. That section allowed the Secretary of Finance to suspend the effectivity of a tax ordinance if. Secretary Drilon did precisely this. the local legislative body may not reimpose the same tax or fee until such time as the grounds for the suspension thereof shall have ceased to exist. of the tax measure. in his discretion. In the opinion of the Court. If the rules are not observed. the inclusion therein of certain ultra vires provisions and non-compliance with the prescribed procedure in its enactment. Supervision does not cover such authority. He may not prescribe his own manner for the doing of the act. hence. oppressive. in his opinion. the Secretary of Justice is not given the same latitude under Section 187. and so performed an act not of control but of mere supervision. The case of Taule v. excessive. otherwise. however. but he himself does not lay down such rules. or when it is contrary to declared national economy policy. the tax ordinance or the part or parts thereof declared suspended. he may. The supervisor or superintendent merely sees to it that the rules are followed. nor does he have the discretion to modify or replace them. or confiscatory. it is unjust. In fact. If they are not followed. the tax or fee levied was unjust. in his opinion. he may order the work done or re-done but only to conform to the prescribed rules. Determination of these flaws would involve the exercise of judgment or discretion and not merely an examination of whether or not the requirements or limitations of the law had been observed. The issue of non-compliance with the prescribed procedure in the enactment of the Manila Revenue Code is another matter. at any rate. The conflict was over jurisdiction. and no more nor less than this. and when the said Secretary exercises this authority the effectivity of such ordinance shall be suspended. not the wisdom or reasonableness. That the Secretary of Finance shall have authority to suspend the effectivity of any ordinance within one hundred and twenty days after receipt by him of a copy thereof. not supervision or control. That power was never questioned before this Court but. if.An officer in control lays down the rules in the doing of an act. Significantly. excessive. unless the ordinance shall provide otherwise: Provided. either in part or as a whole. Thereafter. without the right to declare that. All he is permitted to do is ascertain the constitutionality or legality of the tax measure. He has no judgment on this matter except to see to it that the rules are followed. a rule similar to Section 187 appeared in the Local Autonomy Act. Secretary Drilon set aside the Manila Revenue Code only on two grounds. which provided in its Section 2 as follows: A tax ordinance shall go into effect on the fifteenth day after its passage. . in his opinion. These grounds affected the legality. He has no discretion on this matter. the tax or fee therein levied or imposed is unjust. to with. it would smack of control rather than mere supervision. Santos 9 cited in the decision has no application here because the jurisdiction claimed by the Secretary of Local Governments over election contests in the Katipunan ng Mga Barangay was held to belong to the Commission on Elections by constitutional provision. oppressive or confiscatory. or file an appeal with a court of competent jurisdiction. order the act undone or re-done by his subordinate or he may even decide to do it himself.

Notices of the public hearings were sent to interested parties as evidenced by Exhibits G-1 to 17.In his resolution. It has also not been shown that the text of the ordinance has been translated and disseminated.. 59(b) of the Code. but this requirement applies to the approval of local development plans and public investment programs of the local government unit and not to tax ordinances. Bidin. JJ. the Manila Revenue Code was not translated into Pilipino or Tagalog and disseminated among the people for their information and guidance.J. 511(a) of the Local Government Code. To get to the bottom of this question. as shown by Exhibits Q. He declared that all the procedural requirements had been observed in the enactment of the Manila Revenue Code and that the City of Manila had not been able to prove such compliance before the Secretary only because he had given it only five days within which to gather and present to him all the evidence (consisting of 25 exhibits) later submitted to the trial court. conformably to Sec. Feliciano. Narvasa. Jr. 4. Bellosillo. We have carefully examined every one of these exhibits and agree with the trial court that the procedural requirements have indeed been observed. Q-2. M-1. 1993 issues of the Manila Standard and in the July 6. and the approved ordinance was published in the July 3. the Court acceded to the motion of the respondents and called for the elevation to it of the said exhibits. Kapunan and Mendoza. Romero. C. Melo. Neither were copies of the measure as approved posted in prominent places in the city in accordance with Sec. . WHEREFORE. We make no ruling on the substantive provisions of the Manila Revenue Code as their validity has not been raised in issue in the present petition. Q-1. The only exceptions are the posting of the ordinance as approved but this omission does not affect its validity. The minutes of the hearings are found in Exhibits M.. Puno. SO ORDERED. No pronouncement as to costs. the judgment is hereby rendered REVERSING the challenged decision of the Regional Trial Court insofar as it declared Section 187 of the Local Government Code unconstitutional but AFFIRMING its finding that the procedural requirements in the enactment of the Manila Revenue Code have been observed. 5. Finally. M-2. considering that its publication in three successive issues of a newspaper of general circulation will satisfy due process. 1993. concur. Exhibits B and C show that the proposed ordinances were published in the Balita and the Manila Standard on April 21 and 25.. No minutes were submitted to show that the obligatory public hearings had been held. Secretary Drilon declared that there were no written notices of public hearings on the proposed Manila Revenue Code that were sent to interested parties as required by Art. and Q-3. Davide. 1993 issue of Balita. Judge Palattao found otherwise. 276(b) of the Implementing Rules of the Local Government Code nor were copies of the proposed ordinance published in three successive issues of a newspaper of general circulation pursuant to Art. and M-3. Quiason. 276(a). Regalado. Padilla. respectively. Vitug.

when procedural rules are unbendingly applied and when their rigid application may be relaxed. Interestingly. The subject ordinance was posted from November 4-25. pursuant to Section 3 of said ordinance.[4] the Secretary of Justice held that the date of effectivity of the subject ordinance retroacted to the date of its approval in October 1996. dated February 15. 1996. Unfortunately. 1997. as prescribed under Section 187 of the 1991 Local Government Code. 6. was posted as required by law. Instead. petitioner appealed to the Court of Appeals. In contrast. respondent. beyond thirty (30) days from the effectivity of the Ordinance on October 1. 1999. 1996 and that the ordinance. Bulacan. are rigorously applied to resolve legal issues on the merits.e. petitioner. as approved. after the required publication or posting has been complied with. the Sangguniang Bayan of Hagonoy. i. vs. 1996. it urged that the Secretary of Justice should have overlooked this ―mere technicality‖ and ruled on its petition on the merits. Tuvera. the petitioner‘s members were personally given copies of the approved Ordinance and were informed that it shall be enforced in January. Hence. J. Petitioner did not assail the finding of the Secretary of Justice that their appeal was filed beyond the reglementary period.[5] After its motion for reconsideration was denied. was already time-barred. Nonetheless. Petitioner claimed it was unaware of the posting of the ordinance. 1998.: Laws are of two (2) kinds: substantive and procedural. it was pointed out that petitioner‘s appeal. GR No. 28.. Citing the case of Tañada vs. the case at bar singularly illustrates both instances. insofar as their provisions are unambiguous.3) Hagonoy Market Vendor Association vs. The Secretary of Justice dismissed the appeal on the ground that it was filed out of time. i. 1996. Respondent opposed the appeal. It contended that the ordinance took effect on October 6. BULACAN.[3] In the last week of November.. DECISION PUNO. its petition for review was dismissed by the Court of Appeals for being formally deficient as it was not accompanied by certified true copies of the assailed Resolutions of the Secretary of Justice. Substantive laws. 137621. The facts: On October 1. enacted an ordinance. Municipality of Hagonoy. dismissing the appeal of petitioner Hagonoy Market Vendor Association from the Resolutions of the Secretary of Justice for being formally deficient.e. Feb. the petitioner‘s President filed an appeal with the Secretary of Justice assailing the constitutionality of the tax ordinance. Kautusan Blg. OnDecember 8. This is a petition for review of the Resolution[1] of the Court of Appeals.[6] . Article 3 provided that it shall take effect upon approval. 1997. Bulacan. MUNICIPALITY OF HAGONOY. made over a year later. courts generally frown upon an uncompromising application of procedural laws so as not to subvert substantial justice. 2002 HAGONOY MARKET VENDOR ASSOCIATION. it is not totally uncommon for courts to decide cases based on a rigid application of the so-called technical rules of procedure as these rules exist for the orderly administration of justice.[2] which increased the stall rentals of the market vendors in Hagonoy.

it was raining very hard due to (t)yphoon ―Loleng. RIGID AND TECHNICAL ADHERENCE TO SECTION 6.Undaunted. October 22. WITH DUE RESPECT. thus: ―x x x (D)uring the preparation of the petition on October 21. was declared a non-working holiday because of (t)yphoon ―Loleng.‖ AND THAT THE ACTUAL COPIES RECEIVED BY THE PETITIONER MAY BE CONSIDERED AS SUBSTANTIAL COMPLIANCE WITH THE RULES. The first and second assigned errors impugn the dismissal by the Court of Appeals of its petition for review for petitioner‘s failure to attach certified true copies of the assailed Resolutions of the Secretary of Justice. petitioner was again unable to have the Resolutions of the Department of Justice stamped ―certified true copies. 1996. of October 21.‖ Thus. However. where petitioner contends that: I THE HONORABLE COURT OF APPEALS. III PETITIONER WILL SUFFER IRREPARABLE DAMAGE IF ORDINANCE/KAUTUSAN NO. 1998. FRUSTRATED THE VALID LEGAL ISSUES RAISED BY THE PETITIONER THAT ORDINANCE (KAUTUSAN) NO. 1998. 28 WAS NOT VALIDLY ENACTED. ERRED IN ITS STRICT. IS CONTRARY TO LAW AND IS UNCONSTITUTIONAL. CONTRARY TO THE GENERAL RULE.[8] the petitioner satisfactorily explained the circumstances relative to its failure to attach to its appeal certified true copies of the assailed Resolutions of the Secretary of Justice.‖ In the morning of October 23. ERRED IN DENYING THE MOTION FOR RECONSIDERATION NOTWITHSTANDING PETITIONER‘S EXPLANATION THAT ITS FAILURE TO SECURE THE CERTIFIED TRUE COPIES OF THE RESOLUTIONS OF THE DEPARTMENT OF JUSTICE WAS DUE TO THE INTERVENTION OF AN ACT OF GOD – TYPHOON ―LOLENG. THAT NO LAW SHALL HAVE RETROACTIVE EFFECT. ARTICLE 4 OF THE CIVIL CODE. WITH DUE RESPECT.‖ When the petition was completed.m. due to time . II THE HONORABLE COURT OF APPEALS. this appeal. TANTAMOUNT TO AN ILLEGAL EXACTION IF ENFORCED RETROACTIVELY FROM THE DATE OF ITS APPROVAL ON OCTOBER 1. The petitioner insists that it had good reasons for its failure to comply with the rule and the Court of Appeals erred in refusing to accept its explanation. the petitioner moved for reconsideration but it was denied. 1996. due to bad weather. with (the) instruction to have the Resolutions of the Department of Justice be stamped as ―certified true copies. 1998. 28 BE NOT DECLARED NULL AND VOID AND IS ALLOWED TO BE ENFORCED RETROACTIVELY FROM OCTOBER 1. We agree. 1998.[7] Hence. the person in charge (at the Department of Justice) was no longer available to certify to (sic) the Resolutions. ―The following day. copy was served on the Department of Justice at about (sic) past4:00 p. IN EFFECT. In its Motion for Reconsideration before the Court of Appeals. RULE 43 OF THE 1997 RULES OF COURT AND THIS.

Being its lifeblood. the effectivity of the assailed ordinance shall not be suspended. the same was filed with the Court of Appeals ―as is. However. That such appeal shall not have the effect of suspending the effectivity of the ordinance and accrual and payment of the tax. In the case at bar. more than a year after the effectivity of the ordinance in 1996. fee or charge levied therein: Provided. The funds for the operation of its agencies and provision of basic services to its inhabitants are largely derived from its revenues and collections. respondent appellate court should have tempered its strict application of procedural rules in view of the fortuitous event considering that litigation is not a game of technicalities. Procedure for Approval and Effectivity of Tax Ordinances and Revenue Measures. finally. Bulacan. Mandatory Public Hearings. .‖ We find that the Court of Appeals erred in dismissing petitioner‘s appeal on the ground that it was formally deficient. The applicable law is Section 187 of the 1991 Local Government Code which provides: ―SEC. 187. Clearly.[11] Hence. It is clear from the records that the petitioner exerted due diligence to get the copies of its appealed Resolutions certified by the Department of Justice. but failed to do so on account of typhoon ―Loleng. the aggrieved party may file appropriate proceedings. as the herein counsel went back to Manila.The procedure for the approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided. That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the receipt of the appeal: Provided. That public hearings shall be conducted for the purpose prior to the enactment thereof: Provided. however. Thus. the Secretary of Justice correctly dismissed it for being time-barred. further. (official business in) government offices were suspended in the afternoon and the personnel of the Department of Justice tasked with issuing or stamping ―certified true copies‖ of their Resolutions were no longer available. despite the flooded roads and heavy rains.[9] Nonetheless. it is apropos to state that the timeframe fixed by law for parties to avail of their legal remedies before competent courts is not a ―mere technicality‖ that can be easily brushed aside. The aforecited law requires that an appeal of a tax ordinance or revenue measure should be made to the Secretary of Justice within thirty (30) days from effectivity of the ordinance and even during its pendency. . That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal. The periods stated in Section 187 of the Local Government Code are mandatory.constraint(s). ―To avoid being time-barred in the filing of the (p)etition. collection of revenues by the government is of paramount importance. At this point. we hold that the petition should be dismissed as the appeal of the petitioner with the Secretary of Justice is already time-barred. 28 took effect in October 1996.[10] Ordinance No. Petitioner filed its appeal only in December 1997.‖ Under the circumstances. herein counsel served a copy by personal service on (r)espondent‘s lawyer at (sic) Malolos. 28 is a revenue measure adopted by the municipality of Hagonoy to fix and collect public market stall rentals. the law provided a time limit for an aggrieved party to assail the legality of revenue measures and tax ordinances. Municipal Ordinance No. it is essential that the validity of revenue measures is not left uncertain for a considerable length of time.

We do not agree. however. The Ordinance was posted during the period from November 4 . To be sure. . the approved ordinance was not posted. are not binding on the legislative body and it is not compelled by law to adopt the same. It insists that it was unaware of the approval and effectivity of the subject ordinance in 1996 on two (2) grounds: first. Bulacan. the same may be posted in at least two (2) conspicuous and publicly accessible places. no public hearing was conducted prior to the passage of the ordinance and. certified true copies of all provincial. Section 188 of the Local Government Code provides: ―Section 188. Within ten (10) days after their approval. public hearings are conducted by legislative bodies to allow interested parties to ventilate their views on a proposed law or ordinance. Provided. July 15 and August 19. Petitioner‘s bold assertion that there was no public hearing conducted prior to the passage of Kautusan Blg. In contrast.Ana Parish Church and on the front door of the Office of the Market Master in the public market. This fact was known to and admitted by petitioner.25. Then Acting Municipal Mayor Maria Garcia Santos approved the Ordinance on October 7. presented evidence which clearly shows that the procedure for the enactment of the assailed ordinance was complied with. the petitioner contends that its period to appeal should be counted not from the time the ordinance took effect in 1996 but from the time its members were personally given copies of the approved ordinance in November 1997. 28 was enacted by the Sangguniang Bayan of Hagonoy on October 1. the respondent Sangguniang Bayan of the Municipality of Hagonoy. the Ordinance was approved by the Sangguniang Panlalawigan. second. After its approval. and municipal tax ordinances or revenue measures shall be published in full for three (3) consecutive days in a newspaper of local circulation. They are mandated to use their discretion and best judgment in serving the people.In a last ditch effort to justify its failure to file a timely appeal with the Secretary of Justice. On November 9. at the bulletin board of the Sta. viz: in front of the municipal building. 1996. cities and municipalities where there are no newspapers of local circulation.[12] it enumerated the various objections raised by its members before the passage of the ordinance in several meetings called by the Sanggunian for the purpose. for the proposed increase in the stall rentals. however. 1996 in three (3) public places. 1996. Publication of Tax Ordinance and Revenue Measures. 1996. copies of the Ordinance were given to the Municipal Treasurer on the same day. Municipal Ordinance No.[13] Petitioner cannot gripe that there was practically no public hearing conducted as its objections to the proposed measure were not considered by the Sangguniang Bayan. These show beyond doubt that petitioner was aware of the proposed increase and in fact participated in the public hearings therefor. 28 is belied by its own evidence.[14] Posting was validly made in lieu of publication as there was no newspaper of local circulation in the municipality of Hagonoy. city. all in 1996. Sanggunian members are elected by the people to make laws that will promote the general interest of their constituents. On the issue of publication or posting. That in provinces. The respondent municipality likewise submitted the Minutes and Report of the public hearings conducted by the Sangguniang Bayan‘s Committee on Appropriations and Market on February 6. In petitioner‘s two (2) communications with the Secretary of Justice.‖ (emphasis supplied) The records is bereft of any evidence to prove petitioner‘s negative allegation that the subject ordinance was not posted as required by law. These views. Parties who participate in public hearings to give their opinions on a proposed ordinance should not expect that their views would be patronized by their lawmakers.

: For review is the decision[1] of the Court of Appeals. Neither can it be said that the rates were not uniformly imposed or that the public markets included in the Ordinance were unreasonably determined or classified. CA. Finally. METRO MANILA. not rentals. al. 95. 28 and so the posting could not have been made in November 1996[15] was sufficiently disproved by the positive evidence of respondent municipality. vs. 87. December 10. intended for transient peddlers who used to sell their goods along the sidewalk. petitioner cannot validly claim lack of knowledge of the approved ordinance. 1999 ANTONIO Z. petitioners. the Palengkeng Bagong Munisipyo or Gabaldon was excluded from the increase in rentals as it is only a makeshift. dilapidated place. 87 Title An ordinance imposing a municipal tax of fifty percent (50%) of one percent (1%) of the gross receipt on business of printing and publication .G. the Ordinance covered the three (3) concrete public markets: the two-storey Bagong Palengke. GR 118233. 4) Antonio Reyes. Given the foregoing circumstances. SP No.Thus. 1994 in CA . No pronouncement as to costs. 100 and 101. COURT OF APPEALS. even on the substantive points raised.R. Section 6c. However. Said decision dismissed the prohibition case brought by the petitioners against respondent officials of the Municipality of San Juan to stop the enforcement of Tax Ordinance Nos. J. petitioner‘s ambiguous and unsupported claim that it was only ―sometime in November1997‖ that the Provincial Board approved Municipal Ordinance No.04 of the 1993 Municipal Revenue Code and Section 191 of the Local Government Code limiting the percentage of increase that can be imposed apply to tax rates. respondents. REYES. HON. 32473. the petition must fail. SO ORDERED. OCAMPO and EDITHA ARCIAGA-SANTOS. 91. et. ELISEO P. 1994 and its resolution[2] dated December 8. The factual antecedents are as follows: The Sangguniang Bayan of San Juan. the burnt but reconstructed Lumang Palengke and the more recent Lumang Palengke with wet market. The filing of its appeal a year after the effectivity of the subject ordinance is fatal to its cause. the petition is DISMISSED for lack of merit. dated August 3. SECRETARY OF JUSTICE FRANKLIN DRILON and MAYOR JINGGOY ESTRADA (JOSE EJERCITO) OF THE MUNICIPALITY OF SAN JUAN. To be sure. RESOLUTION QUISUMBING.[16] IN VIEW WHEREOF. Metro Manila implemented several tax ordinances as follows: Ordinance No. vs. with no doors or protection for security.

On December 8. On June 10. and until October 29. thereby constituting as they do a deprivation of property without due process. SP No. the present petition for review. 1992. 1993 and therefore not in accordance with the requirements provided for under Section 187 of the Local Government Code of 1991. 1994. in the case of Tax Ordinance No. or more than thirty (30) days from the effectivity thereof when the appeal was filed and received by this Department on May 21. 87. petitioners filed with the Court of Appeals a petition for certiorari and prohibition (CA-G.‖[3] Undaunted. until October 22. ―2.000. 1992. respondent Secretary of Justice dismissed the appeal for having been filed out of time. 1993. having been filed out of time. 1992.A. . But respondent court affirmed the decision of the Secretary. Whether or not the wording of the law under Section 187 of the Local Government Code of 1991 that ―any question on the constitutionality x x x of tax ordinance x x x may be raised on appeal within thirty (30) days from the effectivity thereof x x x‖ is a reductio ad absurdum. No. An ordinance imposing new rates of business taxes of the Municipality of San Juan Metro Manila An ordinance levying an annual ―Ad Valorem‖ tax on real property and an additional tax accruing to the special education fund (SEF) 95 100 101 On May 21.R. Metro Manila. raising the following questions: ―1. 91 and 95. donation. in the case of Tax Ordinance Nos.A. he said: ―It appears that the tax ordinances in question took effect on September 24. the motion for reconsideration filed by the petitioners was denied for lack of merit. Metro Manila in excess of P50. or its fair market value. Whether or not the questioned tax ordinances are violative of the Constitution. in the case of Tax Ordinance Nos. Hence. whichever is higher An ordinance imposing fifty percent (50%) of one percent of (1%) for social housing tax on the assessed value of all real estate property in San Juan. 7160. the instant appeal. since if the tax ordinance is found to be unconstitutional.91 An ordinance imposing a transfer tax equivalent to fifty percent (50%) of one percent (1%) of the total consideration on the sale. 100 and 101. it will be considered as never having become effective at all from the very beginning. 32473). considering the undisputed fact that no public hearings were ever held on the ordinances before they were passed and approved as required by the Local Government Code of 1991. is hereby DISMISSED. also known as R.00 value as provided in the New Urban Land Reform Law. 7279. WHEREFORE. Citing Section 187. petitioners filed an appeal with the Department of Justice assailing the constitutionality of these tax ordinances allegedly because they were promulgated without previous public hearings thereby constituting deprivation of property without due process of law. barter or any other mode of transferring ownership or title of real property situated in San Juan. R. 1993.

The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided. 187 of the Local Government Code could be raised for the first time on appeal? According to petitioners. however. no prescriptive thirty-day period to question the validity of the ordinance could toll to bar their appeal to the Department of Justice. Because of this. These three separate periods are clearly given for compliance as a prerequisite before seeking redress in a competent court. a party could already proceed to seek relief in court. 95. In case the Secretary decides the appeal. Sec. That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided. That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax. That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal. Mandatory Public Hearings. they claim the ordinances are inoperative.Procedure for Approval and Effectivity of Tax Ordinances and Revenue Measures. can be questioned at any time despite the prescription of a limited period within which to question it. 100 and 101. or is not the lis mota of the case. the aggrieved party may file appropriate proceedings with a court of competent jurisdiction. Whether or not the constitutionality of an ordinance or a law may be questioned even if the question of constitutionality may not have been originally or initially raised. 95. -. or charge levied therein: Provided. 87. they assail Municipal Ordinance Nos. as though they were never passed. cited by respondent Secretary. Also. 91. a period also of 30 days is allowed for an aggrieved party to go to court.‖ Clearly. within 30 days from effectivity thereof. 7160. But if the Secretary does not act thereon. 187-. Whether or not the constitutionality of a tax ordinance. ―3. as in the case at bar. and ―4. after the lapse of 60 days. provides as follows: ―Sec. Whether or not the constitutional validity of Sec.A. 187 of R. 87. the pertinent issues for our resolution now are: 1. on the ground that it was filed out of time? 2.for which reason the thirty-day appeal period cannot be reckoned and cannot be enforced. That public hearings shall be conducted for the purpose prior to the enactment thereof: Provided further. if it appears that a determination of the question of constitutionality is necessary to a decision of the case. 100 and 101 render them void on the ground of deprivation of property without due process? 3. the law requires that the dissatisfied taxpayer who questions the validity or legality of a tax ordinance must file his appeal to the Secretary of Justice. Consequently. respondent Secretary erred in declaring that they failed to file their appeal on time. or any law for that matter. Whether or not the Court of Appeals erred in affirming the decision of the Secretary of Justice who dismissed the prohibition suit.‖[4] In our view. fee. Whether or not lack of mandatory public hearings prior to enacting Municipal Ordinance Nos. Such statutory periods are set to prevent delays as well as enhance the orderly and . 91. for alleged failure of the Municipal Council of San Juan to conduct mandatory public hearings. finally .

186. On the second issue. No. although it likewise failed to submit any evidence to establish this allegation. any delay in implementing tax measures would be to the detriment of the public.‘ However. the Court said: ―Petitioner is right in contending that public hearings are required to be conducted prior to the enactment of an ordinance imposing real property taxes. we are constrained to uphold their constitutionality or legality. fees. 7160. their petition was properly dismissed. [10] Proof that public hearings were not held falls on petitioners‘ shoulders. for the purpose of securing certainty where doubt would be intolerable.[7] Consequently.A. For failing to discharge that burden. In any event. their constitutionality or legality should be upheld in the absence of evidences showing that procedure prescribed by law was not observed in their enactment. 100 and 101. On the other hand. It is for this reason that protests over tax ordinances are required to be done within certain time frames. 7160 is fatal to their cause. the lack of a public hearing is a negative allegation essential to petitioner‘s cause of action in the present case. as petitioner is the party asserting it. 187 of R. progress. or charges ‗shall not be enacted without any prior public hearing conducted for the purpose. Although the Sanggunian had the control of records or the better means of proof regarding the facts alleged. Hence. In Figuerres vs.[8] where the municipality failed to conduct public hearings prior to enacting the revisions on the schedule of fair market values and assessment level of classes of real estate properties. it is our view that the failure of petitioners to appeal to the Secretary of Justice within 30 days as required by Sec.speedy discharge of judicial functions. and prosperity of the people. petitioners allege that the Sangguniang Bayan of San Juan did not comply with the prescribed procedure for enacting an ordinance because they failed to conduct public hearings. she has the burden of proof. Since petitioner failed to rebut the presumption of validity in favor of the subject ordinances and to discharge the burden of proving that no public hearings were conducted prior to the enactment thereof. provides that an ordinance levying taxes.‖[9] We find Figuerres instructive. Court of Appeals. petitioners are not relieved from the burden of proving their averments.[5] For this reason the courts construe these provisions of statutes as mandatory. the Municipality of Mandaluyong claims that public hearings were indeed conducted before the subject ordinances were adopted.A. Petitioners have not proved in the case before us that the Sangguniang Bayan of San Juan failed to conduct the required public hearings before the enactment of Ordinance Nos. x x x Furthermore. it is a general rule that the regularity of the enactment of an officially promulgated statute or ordinance may not be impeached by parol evidence or oral testimony either of individual officers and . it is noteworthy that apart from her bare assertions. R.[6] A municipal tax ordinance empowers a local government unit to impose taxes. 87. 91. 95. In the instant case. However. in accordance with the presumption of validity in favor of an ordinance. The power to tax is the most effective instrument to raise needed revenues to finance and support the myriad activities of local government units for the delivery of basic services essential to the promotion of the general welfare and enhancement of peace. petitioner Figuerres has not presented any evidence to show that no public hearings were conducted prior to the enactment of the ordinances in question. Sec.

[10] refused to pay the tax assessment. among others. GR 149110. Cabanatuan City.[8] the respondent assessed the petitioner a franchise tax amounting to P808. absent a clear showing to the contrary.[9] Petitioner. 165-92. and adequately argued. insisted upon. 5) NAPOCOR vs. respondent. J. we find no genuine necessity to dwell on the issue of constitutional invalidity of Section 187 in relation to issue of valid enactment of the subject ordinances.[4] It is tasked to undertake the ―development of hydroelectric generations of power and the production of electricity from nuclear. 2003 NATIONAL POWER CORPORATION. Further constitutional scrutiny of Section 187 is unwarranted. or of strangers who may be interested in nullifying legislative action.187. CITY OF CABANATUAN. petitioner has.‖ [5] Concomitant to its mandated duty. No pronouncement as to costs. posting a gross income of P107. the power to construct. as well as. vs. power stations and substations for the purpose of developing hydraulic power and supplying such power to the inhabitants. 120. we find no grave abuse of discretion nor reversible error in the decision of the respondent appellate court. petitioner. representing 75% of 1% of the latter‘s gross receipts for the preceding year. DECISION PUNO. having resolved the first and second issues. 2001 and July 10. WHEREFORE.96 in 1992. SO ORDERED.: This is a petition for review[1] of the Decision[2] and the Resolution[3] of the Court of Appeals dated March 12.814. on the validity of Section 187 of R. Petitioner is a government-owned and controlled corporation created under Commonwealth Act No. as shown in the foregoing discussion. 7160.[11] This rule supplements the presumption in favor of the regularity of official conduct which we have upheld repeatedly. operate and maintain power plants.[12] The constitutional validity of a statutory provision should not be entertained by the Court where it was not specifically raised below. auxiliary plants.members. whose capital stock was subscribed and paid wholly by the Philippine Government. the Local Government Code. petitioner sells electric power to the residents of Cabanatuan City.[6] For many years now. Petitioner also contended that as a non-profit . the present petition is DISMISSED for lack of merit and the assailed decision of the Court of Appeals is AFFIRMED. geothermal and other sources.[13] Moreover. respectively. and is necessary to a determination of the case. given the circumstances in this case. particularly where the issue of constitutionality is the very lis mota presented. Finally. Suffice it now to say that. the transmission of electric power on a nationwide basis. 2001. we must stress that the constitutionality of an act of Congress will not be passed upon by the Court unless at the first opportunity that question is properly raised and presented in an appropriate case.41. It argued that the respondent has no authority to impose tax on government entities. finding petitioner National Power Corporation (NPC) liable to pay franchise tax to respondent City of Cabanatuan.606.[7] Pursuant to section 37 of Ordinance No. as amended. April 9.A.

its provinces. 6938. (b) From all income taxes. Pertinent portion of the Order reads: ―The question of whether a particular law has been repealed or not by a subsequent law is a matter of legislative intent. viz: ―Sec. imposts. 13 of Rep. imposts. for expansion. Withdrawal of Tax Exemption Privileges. utilization. restrictions and duties to the Republic of the Philippines. 6395. or presently enjoyed by all persons. Act No. and 2% monthly interest. including government owned or controlled corporations. and sale of electric power. and portions thereof. duties or fees [11] in accordance with sec. and wharfage fees on import of foreign goods required for its operations and projects. charges. and (3) local governments have no power to tax instrumentalities of the national government. Act No. as well as excess revenues from its operation.Unless otherwise provided in this Code. (2) section 193 of Rep. it is exempted from the payment of all forms of taxes. and (d) From all taxes. Imposts and Other Charges by Government and Governmental Instrumentalities. municipalities and other government agencies and instrumentalities. as amended. 7160 for the following reasons: (1) Rep.organization. duties. 6395 is a particular law and it may not be repealed by Rep. transmission. 7160 which is a general law. Act No. charges. that a particular and specific law. its provinces. identified by its number or title is repealed is . costs and service fees in any court or administrative proceedings in which it may be a party. its provinces. 7160 is in the nature of an implied repeal which is not favored. on all petroleum products used by the Corporation in the generation.13. 193. Act No.‖ [12] The respondent filed a collection suit in the Regional Trial Court of Cabanatuan City. except local water districts. Duties.[13] Respondent alleged that petitioner‘s exemption from local taxes has been repealed by section 193 of Rep. Non-profit Character of the Corporation.A. that are intended to be repealed.[14] which reads as follows: ―Sec. duties.‖ On January 25. plus a surcharge equivalent to 25% of the amount of tax. 7160. the Corporation is hereby exempt: (a) From the payment of all taxes. compensating taxes and advanced sales tax.. non-stock and non-profit hospitals and educational institutions. are hereby withdrawn upon the effectivity of this Code. demanding that petitioner pay the assessed tax due. It ruled that the tax exemption privileges granted to petitioner subsist despite the passage of Rep. Act No. franchise taxes and realty taxes to be paid to the National Government.The Corporation shall be non-profit and shall devote all its return from its capital investment. whether natural or juridical. 1996. Act No. cooperatives duly registered under R. No. cities. fees. the trial court issued an Order[15] dismissing the case. The lawmakers may expressly repeal a law by incorporating therein repealing provisions which expressly and specifically cite(s) the particular law or laws. Exemption from all Taxes. municipalities and other government agencies and instrumentalities. (c) From all import duties. municipalities and other government agencies and instrumentalities. cities. To enable the Corporation to pay its indebtedness and obligations and in furtherance and effective implementation of the policy enunciated in Section one of this Act. A declaration in a statute. and all other charges imposed by the Republic of the Philippines. cities. Fees. tax exemptions or incentives granted to. usually in its repealing clause. fees..

197 SCRA 52.606. Philippine Amusement and Gaming Corporation.00 as litigation expense. No. NPC. expressly withdrew the exemptions granted to the petitioner.[18] It ordered the petitioner to pay the respondent city government the following: (a) the sum of P808. including its financial institutions. it is very clear that the plaintiff could not impose the subject tax on the defendant. 7160 is an implied repealing clause because it fails to identify the act or acts that are intended to be repealed. Thus. being a government owned and controlled corporation with an original charter and its shares of stocks owned by the National Government. despite the passage of R. to pay a surcharge of 25% of the tax due and unpaid.000. Its taxing power is limited to that which is provided for in its charter or other statute. 165-92 was based. PD 1869. The presumption is against inconsistency and repugnancy for the legislative is presumed to know the existing laws on the subject and not to have enacted inconsistent or conflicting statutes. To allow plaintiff to subject defendant to its tax-ordinance would be to impede the avowed goal of this government instrumentality. xxx Being an instrumentality of the government. 7160 from which the questioned Ordinance No.‘ Like PAGCOR. It is a well-settled rule of statutory construction that repeals of statutes by implication are not favored.41 representing the franchise tax due based on gross receipts for the year 1992.[19] On April 4. Sec. Unlike the State.A. and (d) the sum of P 10. general law does not repeal a special law unless it clearly appears that the legislative has intended by the latter general act to modify or repeal the earlier special law. Any grant of taxing power is to be construed strictly. PAGCOR is a government owned or controlled corporation with an original charter.an express repeal. impeded or subjected to control by mere local government.A. is beyond the taxing power of the Local Government.‖ [16] On appeal. Otherwise. All of its shares of stocks are owned by the National Government. Congress declared that: ‗xxx (2) the total electrification of the Philippines through the development of power from all services to meet the needs of industrial development and dispersal and needs of rural electrification are primary objectives of the nations which shall be pursued coordinately and supported by all instrumentalities and agencies of the government. PAGCOR should be and actually is exempt from local taxes. viz: . where it was held that: ‗Local governments have no power to tax instrumentalities of the National Government. No. 2001. (b) the tax due every year thereafter based in the gross receipts earned by NPC. It is also a well-settled rule that. a city or municipality has no inherent power of taxation. the petitioner filed a Motion for Reconsideration on the Court of Appeal‘s Decision. its operation might be burdened. the tax exemption privileges of defendant NPC remain. it should be noted here that in the NPC Charter‘s declaration of Policy. all others are implied repeal. 193 of R. From the existing law and the rulings of the Supreme Court itself. (c) in all cases.‘ (underscoring supplied). Corollary to this. the Court of Appeals reversed the trial court‘s Order[17] on the ground that section 193. in relation to sections 137 and 151 of the LGC. with doubts resolved against its existence. generally. Another point going against plaintiff in this case is the ruling of the Supreme Court in the case of Basco vs. This was denied by the appellate court.

the province may impose a tax on businesses enjoying a franchise.Notwithstanding any exemption granted by any law or other special law. viz: ―Sec. WHICH IS A GENERAL LAW. the motion for reconsideration is hereby DENIED. Scope of Taxing Powers. SO ORDERED. as provided herein. In the succeeding calendar year. not implied. In the case of a newly started business. the tax shall be based on the gross receipts for the preceding calendar year. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT NPC. the city.. or presently enjoyed by all persons. That the taxes. Its arguments reiterated therein that the taxing power of the province under Art. or any fraction thereof. the tax shall not exceed one-twentieth (1/20) of one percent (1%) of the capital investment. within its territorial jurisdiction. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT NPC‘S EXEMPTION FROM ALL FORMS OF TAXES HAS BEEN REPEALED BY THE PROVISION OF THE LOCAL GOVERNMENT CODE AS THE ENACTMENT OF A LATER LEGISLATION. A PUBLIC NONPROFIT CORPORATION. C. IS LIABLE TO PAY A FRANCHISE TAX AS IT FAILED TO CONSIDER THAT SECTION 137 OF THE LOCAL GOVERNMENT CODE IN RELATION TO SECTION 131 APPLIES ONLY TO PRIVATE PERSONS OR CORPORATIONS ENJOYING A FRANCHISE.Except as otherwise provided in this Code. THE COURT OF APPEALS GRAVELY ERRED IN NOT CONSIDERING THAT AN EXERCISE OF POLICE POWER THROUGH TAX EXEMPTION SHOULD PREVAIL OVER THE LOCAL GOVERNMENT CODE. 137. petitioner raises the following issues: ―A. fees. 151..―The Court finds no merit in NPC‘s motion for reconsideration. 137 (sic) of the Local Government Code refers merely to private persons or corporations in which category it (NPC) does not belong. however. at a rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year based on the incoming receipt. regardless of when the business started to operate.‖[20] In this petition for review. B. including government-owned or controlled corporations except local water districts xxx are hereby withdrawn. fees and charges levied and collected by highly urbanized and . and charges which the province or municipality may impose: Provided.‖ (emphasis supplied) xxx Sec.‖ pursuant to section 151 in relation to section 137 of the LGC.‘ The repeal is direct and unequivocal. may levy the taxes.‖[21] It is beyond dispute that the respondent city government has the authority to issue Ordinance No. 165-92 and impose an annual tax on ―businesses enjoying a franchise. CANNOT BE CONSTRUED TO HAVE REPEALED A SPECIAL LAW. whether natural or juridical. IN VIEW WHEREOF. and that the LGC (RA 7160) which is a general law may not impliedly repeal the NPC Charter which is a special law—finds the answer in Section 193 of the LGC to the effect that ‗tax exemptions or incentives granted to. Franchise Tax. or realized.

‖ Petitioner. On the other hand. 4 Wheat 316. all these profits are required by law to be channeled for expansion and improvement of its facilities and services. Maryland. which places it in the category of an agency or instrumentality of the Government. the petitioner claims that the word ―private‖ modifies the terms ―persons‖ and ―corporations. may not be taxed by the respondent city government. burden or in any manner control the operation of constitutional laws enacted by Congress to carry into execution the powers vested in the federal government.[23] Ergo.‖ Petitioner claims that it is not engaged in an activity for profit. security and safety. in as much as its charter specifically provides that it is a ―non-profit organization. speaking for the Supreme Court. 4 L Ed. to operate and regulate gambling casinos. The latter role is governmental. ‗The states have no power by taxation or otherwise.[24] Petitioner also alleges that it is an instrumentality of the National Government. ‗Justice Holmes. Maryland. in that way (taxation) at least. affected with public interest which is conferred upon private persons or corporations. viz: ―Local governments have no power to tax instrumentalities of the National Government. Philippine Amusement and Gaming Corporation[26] where this Court held that local governments have no power to tax instrumentalities of the National Government.independent component cities shall accrue to them and distributed in accordance with the provisions of this Code. its operation might be burdened. under such terms and conditions as the government and its political subdivisions may impose in the interest of the public welfare. (MC Culloch v. 579)‘ This doctrine emanates from the ‗supremacy‘ of the National Government over local governments. made reference to the entire absence of power on the part of the States to touch. 254 US 51) and it can be agreed that no state or . The rates of taxes that the city may levy may exceed the maximum rates allowed for the province or municipality by not more than fifty percent (50%) except the rates of professional and amusement taxes. however. limit the taxing power of the respondent city government to private entities that are engaged in trade or occupation for profit.‖ Hence.‖ In any case. PAGCOR should be and actually is exempt from local taxes. impeded or subjected to control by a mere local government. Being an instrumentality of the Government. It contends that sections 137 and 151 of the LGC in relation to section 131.‖ From the phraseology of this provision. its charter should not be considered a ―franchise‖ for the purpose of imposing the franchise tax in question. PAGCOR has a dual role. It cites the doctrine in Basco vs.‖ petitioner submits that it should refer specifically to franchises granted to private natural persons and to private corporations. Otherwise. submits that it is not liable to pay an annual franchise tax to the respondent city government. [25] and as such. the instrumentalities of the United States (Johnson v. to retard.[22] Section 131 (m) of the LGC defines a ―franchise‖ as ―a right or privilege. impede. section 131 (d) of the LGC defines ―business‖ as ―trade or commercial activity regularly engaged in as means of livelihood or with a view to profit. when the LGC uses the term ―franchise. petitioner argues that the accumulation of profit is merely incidental to its operation.

its charter cannot be amended or modified impliedly by the local government code which is a general law. petitioner claims that its exemption from all taxes. viz: ―It is a well-settled rule of statutory construction that repeals of statutes by implication are not favored and as much as possible. including the power of taxation. is in the nature of an implied repeal. fees and other charges[34] pursuant toArticle X. 7160.[31] the exercise of taxing power derives its source from the very existence of the state whose social contract with its citizens obliges it to promote public interest and common good.S. effect must be given to all enactments of the legislature. Moreover. The theory behind the exercise of the power to tax emanates from necessity. Act No. local legislative bodies are now given direct authority to levy taxes. Maryland. v. Thenceforth. 140. The power to tax which was called by Justice Marshall as the ‗power to destroy‘ (Mc Culloch v. It is a basic rule in statutory construction that the enactment of a later legislation which is a general law cannot be construed to have repealed a special law. section 5 of the 1987 Constitution.‘ (Antieau. being a valid exercise of police power. it has to be conceded that the charter of the NPC constitutes a special law. 340 US 42). Vol. the special statute should prevail since it evinces the legislative intent more clearly than the general statute. 7160. the least limitable and most demanding of all powers.Each Local Government unit shall have the power to create its own sources of revenue. the increasing social challenges of the times expanded the scope of state activity. to levy taxes. the power to tax is no longer vested exclusively on Congress. Taxes are the lifeblood of the government. Modern Constitutional Law.‖[29] The petition is without merit. fees or charges under its charter subsists despite the passage of the LGC.political subdivision can regulate a federal instrumentality in such a way as to prevent it from consummating its federal responsibilities. should prevail over the LGC.‖[28] Finally. In recent years. italics supplied) Otherwise. fees and charges subject to such guidelines and limitations as the . is a general law. 2.[32] without taxes. petitioner submits that the charter of the NPC. Where there is a conflict between a general law and a special statute. Republic Act No.[33] Taxation assumes even greater significance with the ratification of the 1987 Constitution.. Consequently. economic progress and the protection of local industries as well as public welfare and similar objectives. withdrawing the tax privileges of government-owned or controlled corporations. It alleges that the power of the local government to impose franchise tax is subordinate to petitioner‘s exemption from taxation. A special law. ―police power being the most pervasive. supra) cannot be allowed to defeat an instrumentality or creation of the very entity which has the inherent power to wield it. government cannot fulfill its mandate of promoting the general welfare and well-being of the people. A principal attribute of sovereignty.[30] for without taxes. the government can neither exist nor endure. and taxation has become a tool to realize social justice and the equitable distribution of wealth. viz: ―Section 5. Sanchez. p. or even seriously burden it from accomplishment of them. mere creatures of the State can defeat National policies thru extermination of what local authorities may perceive to be undesirable activities or enterprise using the power to tax as ‗ a tool regulation‘ ( U.‖[27] Petitioner contends that section 193 of Rep.

allocate among the different local government units their powers. and resources.‖ To recall. forest concessionaires. and confer them sufficient powers to generate their own sources for the purpose. Such taxes. (c) limited authority to prioritize and approve development projects. viz: . i.‖ [35] The only way to shatter this culture of dependence is to give the LGUs a wider role in the delivery of basic services. term. fees or charges on the aforementioned entities. appointment and removal. and all other matters relating to the organization and operation of the local units. It does not prescribe graduated fixed rates but merely specifies the minimum and maximum tax rates and leaves the determination of the actual rates to the respective sanggunian. The Congress shall enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanisms of recall.[41] Considered as the most revolutionary piece of legislation on local autonomy. fees or charges of any kind on the National Government. [36] also known as the Local Government Code of 1991 (LGC). fees and charges shall accrue exclusively to the Local Governments.Congress may provide. powers and functions and duties of local officials. this rule now admits an exception. responsibilities.[40] Despite these initiatives. The LGC likewise provides enough flexibility to impose tax rates in accordance with their needs and capabilities. [42] the LGC effectively deals with the fiscal constraints faced by LGUs. mineral products.[43] One of the most significant provisions of the LGC is the removal of the blanket exclusion of instrumentalities and agencies of the national government from the coverage of local taxation.. innovation and imaginative resilience in matters of local development on the part of local government leaders. set the guidelines and limitations to this grant of taxing powers. and (e) limited supervisory control over personnel of national line agencies.‖ This paradigm shift results from the realization that genuine development can be achieved only by strengthening local autonomy and promoting decentralization of governance. the shackles of dependence on the national government remained. and provide for the qualifications. the country‘s highly centralized government structure has bred a culture of dependence among local government leaders upon the national leadership. (d) heavy dependence on external sources of income.[38] the Decentralization Act of 1967[39] and the Local Government Code of 1983. 7160. mining operations. LGUs cannot impose taxes. (b) lack of fiscal control over external sources of income. Act No. salaries. section 3 of Article X of the 1987 Constitution mandates Congress to enact a local government code that will. consistent with the basic policy of local autonomy. election. These include the Barrio Charter of 1959. when specific provisions of the LGC authorize the LGUs to impose taxes. initiative. Although as a general rule. and the like.e. and referendum. Local government units were faced with the same problems that hamper their capabilities to participate effectively in the national development efforts. among which are: (a) inadequate tax base. its agencies and instrumentalities. It has also ―dampened the spirit of initiative. prior to the enactment of the Rep. It widens the tax base of LGUs to include taxes which were prohibited by previous laws such as the imposition of taxes on forest products. To achieve this goal. For a long time. consistent with the basic policy of local autonomy.[37] the Local Autonomy Act of 1959. viz: ―Section 3. various measures have been enacted to promote local autonomy. however.

―Section 133. a franchise may refer to a general or primary franchise. Congress unmistakably defined a franchise in the sense of a secondary or special franchise. and local government units‘. this Court held that MCIAA. inter alia. cities and municipalities in the Metropolitan Manila Area may impose the real property tax except on. Congress exercised its prerogative to tax instrumentalities and agencies of government as it sees fit. viz: ―Thus. as this Court ruled in the case of Mactan Cebu International Airport Authority (MCIAA) vs. or to a special or secondary franchise. reading together sections 133. section 151 in relation to section 137 of the LGC clearly authorizes the respondent city government to impose on the petitioner the franchise tax in question. However. As commonly used. to a taxable person as provided in the item (a) of the first paragraph of section 12. Philippine Amusement and Gaming Corporation[44] relied upon by the petitioner to support its claim no longer applies. pursuant to section 232. its agencies and instrumentalities. In its general signification. when no law empowering the local government units to tax instrumentalities of the National Government was in effect. Marcos. erect poles or string wires. This is to avoid any confusion when the word franchise is used in the context of taxation.‘‖[47] In the case at bar. the Basco case was decided prior to the effectivity of the LGC. except such special or secondary franchises as are charged with a public use. a franchise is a privilege conferred by government authority.[46] In enacting the LGC. after reviewing the specific provisions of the LGC. 232. or a charter pursuant to a special law creating the corporation. and barangays shall not extend to the levy of the following: xxx (o) Taxes. fees. as laid down in section 133. or charges of any kind on the National Government. The former relates to the right to exist as a corporation. fees and charges of any kind on the national government. municipalities.[48] In its specific sense. however. ‗real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted for consideration or otherwise. its agencies and instrumentalities. the doctrine in Basco vs.Unless otherwise provided herein.‖ (emphasis supplied) In view of the afore-quoted provision of the LGC. was subject to real property tax.[50] On the other hand. Common Limitations on the Taxing Powers of the Local Government Units. the taxing power of local governments cannot extend to the levy of inter alia.[45] nothing prevents Congress from decreeing that even instrumentalities or agencies of the government performing governmental functions may be subject to tax. a franchise tax is ―a tax on the privilege of transacting business in the state and exercising corporate franchises granted by the state. cities. To emphasize. and local government units. we conclude that as a general rule. although an instrumentality of the national government.‖[53] It is not levied on the corporation simply for existing as a corporation.[49] The right under a primary or general franchise is vested in the individuals who compose the corporation and not in the corporation itself. the latter refers to the right or privileges conferred upon an existing corporation such as the right to use the streets of a municipality to lay pipes of tracks. and 234 of the LGC. Thus. [51] The rights under a secondary or special franchise are vested in the corporation and may ordinarily be conveyed or mortgaged under a general power granted to a corporation to dispose of its property. ‗taxes. which does not belong to citizens of the country generally as a matter of common right.[52] In section 131 (m) of the LGC. the exercise of the taxing powers of provinces. by virtue of duly approved articles of incorporation. provinces. upon its property[54] or its .

7395. mortgage. and improve gas. install. and/or other prime movers. (i) To construct works across. (h) To acquire. hold. to sell electric power in bulk to (1) industrial enterprises. oil. lake. generators and machinery in plants and/or auxiliary plants for the production of electric power. operate. transmission lines. the following requisites should concur: (1) that petitioner has a ―franchise‖ in the sense of a secondary or special franchise. street. 120. easement of right of way shall only be sought: Provided. (3) electric cooperatives. Verily. watercourse. flume. Petitioner fulfills the first requisite. canal. promote. highway or railway of private and public ownership. and other works for the purpose of developing hydraulic power from any river. to alter. municipal or provincial systems and other government institutions. Commonwealth Act No. mains. (2) city. Act No. Hence. construct. It serves as the petitioner‘s charter. 120. straighten. pipes.[55] but on its exercise of the rights or privileges granted to it by the government. or necessary. to intercept and divert the flow of waters from lands of riparian owners and from persons owning or interested in waters which are or may be necessary for said purposes. (f) To take water from any public stream. That just compensation shall be paid to any person or persons whose property is. to acquire. sell. and (2) that it is exercising its rights or privileges under this franchise within the territory of the respondent city government. transfer. however.[57] As its secondary franchise. dams. Commonwealth Act No. That in case a right of way is necessary for its transmission lines. vests the petitioner the following powers which are not available to ordinary corporations. or otherwise. the cost thereof shall be the fair market value at the time of the taking of such property. operate. power stations and substations. ditch. encumber and otherwise dispose of property incident to. river. That in case the property itself shall be acquired by purchase. constitutes petitioner‘s primary and secondary franchises. viz: ―xxx (e) To conduct investigations and surveys for the development of water power in any part of the Philippines. adversely affected or damaged thereby. auxiliary plants.income. the appointment and the specific duties of its corporate officers.[56] It is within this context that the phrase ―tax on businesses enjoying a franchise‖ in section 137 of the LGC should be interpreted and understood. lease. to determine whether the petitioner is covered by the franchise tax in question. any stream. upon payment of just compensation therefor. rent. as amended by Rep. for the purposes specified in this Act. obstruct or increase the flow of water in streams or water channels intersecting or connecting therewith or contiguous to its works or any part thereof: Provided. capitalization. creek. and (5) real estate subdivisions xxx. spring and waterfall in the Philippines and supplying such power to the inhabitants thereof. lake. operate and maintain power plants. creek. maintain and administer power and lighting systems for the transmission and utilization of its power generation. as the location of said works may require xxx. avenue. directly or indirectly. reservoirs. (g) To construct. to establish. develop. . a corporation need not pay franchise tax from the time it ceased to do business and exercise its franchise. maintain. as amended. defining its composition. and its corporate life span. or steam engines. convenient or proper to carry out the purposes for which the Corporation was created: Provided. (4) franchise holders. spring or waterfall in the Philippines.

insists that it is excluded from the coverage of the franchise tax simply because its stocks are wholly owned by the National Government. as amended. 2029[63]classifies government-owned or controlled corporations (GOCCs) into those performing governmental functions and those performing proprietary functions. and not the individual stockholders. Upon determination by the Corporation of the areas required for watersheds for a specific project. From its operations in the City of Cabanatuan. Order No. development and maximum utilization of natural resources xxx ‖[58] With these powers.96 in 1992. Fulfilling both requisites. Petitioner.187. By virtue of its charter. the Corporation shall adopt measures to prevent environmental pollution and promote the conservation. viz: ―A government-owned or controlled corporation is a stock or a non-stock corporation. Petitioner also fulfills the second requisite. 215[60] thereafter allowed private sector participation in the generation of electricity. The taxable entity is the corporation which exercises the franchise. however. subject to existing private rights. the Bureau of Forestry.[62] To be sure. provincial and municipal governments. petitioner was created as a separate and distinct entity from the National Government. It can sue and be sued under its own name. Decree No. the needs of waterworks systems.[59]nationalizing the electric power industry. Section 2 of Pres. the Reforestation Administration and the Bureau of Lands shall.814. xxx (m) To cooperate with. subject of the franchise tax in question. 120. To stress. which is directly chartered by special law or if . petitioner eventually had the monopoly in the generation and distribution of electricity. and its charter characterized it as a ―non-profit‖ organization. Although Exec. and to coordinate its operations with those of the National Electrification Administration and public service entities. This monopoly was strengthened with the issuance of Pres.(j) To exercise the right of eminent domain for the purpose of this Act in the manner provided by law for instituting condemnation proceedings by the national. (o) In the prosecution and maintenance of its projects. 40. These contentions must necessarily fail.[61] and can exercise all the powers of a corporation under the Corporation Code. petitioner is. and the requirements of domestic water supply. (n) To exercise complete jurisdiction and control over watersheds surrounding the reservoirs of plants and/or projects constructed or proposed to be constructed by the Corporation. a franchise tax is imposed based not on the ownership but on the exercise by the corporation of a privilege to do business. petitioner realized a gross income of P107. whether performing governmental or proprietary functions. the ownership by the National Government of its entire capital stock does not necessarily imply that petitioner is not engaged in business. It is operating within the respondent city government‘s territorial jurisdiction pursuant to the powers granted to it by Commonwealth Act No. upon written advice by the Corporation. the transmission of electricity remains the monopoly of the petitioner. Decree No. forthwith surrender jurisdiction to the Corporation of all areas embraced within the watersheds. and ought to be.

power plants. In both instances. to the extent of at least a majority of its outstanding voting capital stock xxx. water supply and irrigation companies. and as such. to contract indebtedness and issue bonds subject to approval of the President upon recommendation of the Secretary of Finance.‖ although it limits petitioner‘s profits to twelve percent (12%). coal or light companies. The public interest involved in its activities. from time to time.[65] among others.organized under the general corporation law is owned or controlled by the government directly.‖[66] Pursuant to this mandate.[67] A closer reading of its charter reveals that even the legislature treats the character of the petitioner‘s enterprise as a ―business. these activities do not partake of the sovereign functions of the government. useful. and not the individual stockholders.[64] Included in the class of GOCCs performing proprietary functions are ―business-like‖ entities such as the National Steel Corporation (NSC). (o) To exercise such powers and do such things as may be reasonably necessary to carry out the business and purposes for which it was organized. however.[69] The main difference is that the petitioner is mandated to devote ―all its returns from its capital investment. . the taxable entity is the corporation. for expansion‖[70] while other franchise holders have the option to distribute their profits to its stockholders by declaring dividends. as well as the transmission of electric power on a nationwide basis. We do not see why this fact can be a source of difference in tax treatment. ice plant among others. albeit imbued with public interest. may be declared by the Board to be necessary. all of which are declared by this Court as ministrant or proprietary functions of government aimed at advancing the general interest of society. Certainly.‖(emphases supplied) It is worthy to note that all other private franchise holders receiving at least sixty percent (60%) of its electricity requirement from the petitioner are likewise imposed the cap of twelve percent (12%) on profits.viz:[68] ―(n) When essential to the proper administration of its corporate affairs or necessary for the proper transaction of its business or to carry out the purposes for which it was organized. Petitioner was created to ―undertake the development of hydroelectric generation of power and the production of electricity from nuclear. geothermal and other sources. in the same league with similar public utilities like telephone and telegraph companies. petitioner generates power and sells electricity in bulk. are treated as absolute obligation on the part of the state to perform while proprietary functions are those that are undertaken only by way of advancing the general interest of society. and the National Water Sewerage Authority (NAWASA). We also do not find merit in the petitioner‘s contention that its tax exemptions under its charter subsist despite the passage of the LGC. the Social Security System (SSS). does not distract from the true nature of the petitioner as a commercial enterprise. the National Development Corporation (NDC).‖ (emphases supplied) Governmental functions are those pertaining to the administration of government. or indirectly through a parent corporation or subsidiary corporation. as well as excess revenues from its operation. the Government Service Insurance System (GSIS). gas. and are merely optional on the government. railroad companies. or which. incidental or auxiliary to accomplish the said purpose xxx. They are purely private and commercial undertakings. which exercises the franchise.

cooperatives duly registered under R. In the absence of any provision of the Code to the contrary. [71] In the case at bar. tax exemptions or incentives granted to or presently enjoyed by all persons. a cooperative registered under R. The franchise tax is imposable despite any exemption enjoyed under special laws. Exemptions must be shown to exist clearly and categorically. subject to limited exceptions. among others. the petitioner‘s sole refuge is section 13 of Rep. the sweeping tax privileges previously enjoyed by private and public corporations. Section 137 of the LGC clearly states that the LGUs can impose franchise tax ―notwithstanding any exemption granted by any law or other special law.‖ (emphases supplied) It is a basic precept of statutory construction that the express mention of one person. 6938.[72] It reads: ―Sec. thing. Contrary to the contention of petitioner. By stating that unless otherwise provided in this Code. viz: ―It is our view that petitioners correctly rely on provisions of Sections 137 and 193 of the LGC to support their position that MERALCO‘s tax exemption has been withdrawn. act. 6938. we ruled that the franchise tax in question is imposable despite any exemption enjoyed by MERALCO under special laws. repeal of all statutes granting tax exemptions from local taxes. franchise taxes and realty taxes to be paid to the National Government. Withdrawal of Tax Exemption Privileges. section 193 of the LGC withdrew. albeit general. ―all income taxes. It is therefore incumbent upon the petitioner to point to some provisions of the LGC that expressly grant it exemption from local taxes. No. thing.‖ However. Laguna v. non-stock and non-profit hospitals and educational institutions. But this would be an exercise in futility. whether natural or juridical. including government-owned or controlled corporations except (1) local water districts. or presently enjoyed by all persons. are hereby withdrawn upon the effectivity of this Code. and supported by clear legal provisions. and we find no other provision in point. Section 193 buttresses the withdrawal of extant tax exemption privileges. (2) cooperatives duly registered under R. whether natural or juridical.[75] Ruling in favor of the local government in both instances. tax exemptions are construed strongly against the claimant. the obvious import is to limit the exemptions to the three enumerated entities. petitioner clearly does not belong to the exception. It is a basic precept of statutory construction that the express mention of one person. Province of Laguna.[74] MERALCO‘s exemption from the payment of franchise taxes was brought as an issue before this Court. 6938. cities. or a non-stock and non-profit hospital or educational institution. are withdrawn upon the effectivity of this code. any existing tax exemption or incentive enjoyed by MERALCO under existing law was clearly intended to be withdrawn.A. or consequence excludes all others as expressed in the familiar maxim expressio unius est exclusio alterius. 6395 exempting from. The explicit language of section 137 which authorizes the province to impose franchise tax ‗notwithstanding any exemption granted by any law or other special law‘ is all-encompassing and clear.As a rule. (3) non-stock and non-profit hospitals and educational institutions. section 193 of the LGC is an express. Act No.Unless otherwise provided in this Code. No.[73] Not being a local water district. The same issue was involved in the subsequent case of Manila Electric Company v. except local water districts. or consequence excludes all others as expressed in the familiar maxim expressio unius est exclusio alterius.A. tax exemptions or incentives granted to. act. its provinces. 193. Reyes.A.‖ This particular provision of the LGC does not admit any exception. municipalities and other government agencies and instrumentalities.. In City Government of San Pablo. . including government-owned or controlled corporations.

initiatives or reliefs. are herebyAFFIRMED. IN VIEW WHEREOF. . the power to tax is the most effective instrument to raise 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. ―the original reasons for the withdrawal of tax exemption privileges granted to government-owned or controlled corporations and all other units of government were that such privilege resulted in serious tax base erosion and distortions in the tax treatment of similarly situated enterprises. As this Court observed in the Mactan case. fiscal or otherwise.‖[76] (emphases supplied).‖ the respondent city government clearly did not intend to exempt the petitioner from the coverage thereof. SO ORDERED. albeit general. and prosperity of the people. respectively.Reading together sections 137 and 193 of the LGC. [77] But in enacting section 37 of Ordinance No.‖[78] With the added burden of devolution. The legislative purpose to withdraw tax privileges enjoyed under existing law or charter is clearly manifested by the language used on (sic) Sections 137 and 193 categorically withdrawing such exemption subject only to the exceptions enumerated. by paying taxes or other charges due from them. It is worth mentioning that section 192 of the LGC empowers the LGUs. No more unequivocal language could have been used. we conclude that under the LGC the local government unit may now impose a local tax at a rate not exceeding 50% of 1% of the gross annual receipts for the preceding calendar based on the incoming receipts realized within its territorial jurisdiction. Doubtless. to grant tax exemptions. 165-92 which imposes an annual franchise tax ―notwithstanding any exemption granted by law or other special law. the LGC provided for an express. Since it would be not only tedious and impractical to attempt to enumerate all the existing statutes providing for special tax exemptions or privileges. 2001. withdrawal of such exemptions or privileges. the instant petition is DENIED and the assailed Decision and Resolution of the Court of Appeals dated March 12. progress. it is even more imperative for government entities to share in the requirements of development. through ordinances duly approved. 2001 and July 10.