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G.R. No.

L-22814 August 28, 1968


8. That the parties reserve the right to submit arguments on the
PEPSI-COLA BOTTLING CO. OF THE PHILIPPINES, constitutionality and illegality of Ordinance No. 110, as
INC., plaintiff-appellant, amended of the City of Butuan in their respective memoranda.
vs.
CITY OF BUTUAN, MEMBERS OF THE MUNICIPAL xxx xxx x x x1wph1.t
BOARD,
THE CITY MAYOR and THE CITY TREASURER, all of Section 1 of said Ordinance No. 110, as amended, states what
the CITY OF BUTUAN, defendants-appellees. products are "liquors", within the purview thereof. Section 2
provides for the payment by "any agent and/or consignee" of
Direct appeal to this Court, from a decision of the Court of any dealer "engaged in selling liquors, imported or local, in
First Instance of Agusan, dismissing plaintiff's complaint, with the City," of taxes at specified rates. Section 3 prescribes a tax
costs. of P0.10 per case of 24 bottles of the soft drinks and
carbonated beverages therein named, and "all other soft drinks
Plaintiff, Pepsi-Cola Bottling Company of the Philippines, is a or carbonated drinks." Section 3-A, defines the meaning of the
domestic corporation with offices and principal place of term "consignee or agent" for purposes of the ordinance.
business in Quezon City. The defendants are the City of Section 4 provides that said taxes "shall be paid at the end of
Butuan, its City Mayor, the members of its municipal board every calendar month." Pursuant to Section 5, the taxes "shall
and its City Treasurer. Plaintiff seeks to recover the sums be based and computed from the cargo manifest or bill of
paid by it to the City of Butuan hereinafter referred to as lading or any other record showing the number of cases of soft
the City and collected by the latter, pursuant to its Municipal drinks, liquors or all other soft drinks or carbonated drinks
Ordinance No. 110, as amended by Municipal Ordinance No. received within the month." Sections 6, 7 and 8 specify the
122, both series of 1960, which plaintiff assails as null and surcharge to be added for failure to pay the taxes within the
void, and to prevent the enforcement thereof. Both parties period prescribed and the penalties imposable for "deliberate
submitted the case for decision in the lower court upon a and willful refusal to pay the tax mentioned in Sections 2 and
stipulation to the effect: 3" or for failure "to furnish the office of the City Treasurer a
copy of the bill of lading or cargo manifest or record of soft
1. That plaintiff's warehouse in the City of Butuan serves as a drinks, liquors or carbonated drinks for sale in the City."
storage for its products the "Pepsi-Cola" soft drinks for sale to Section 9 makes the ordinance applicable to soft drinks,
customers in the City of Butuan and all the municipalities in liquors or carbonated drinks "received outside" but "sold
the Province of Agusan. These "Pepsi-Cola Cola" soft drinks within" the City. Section 10 of the ordinance provides that the
are bottled in Cebu City and shipped to the Butuan City revenue derived therefrom "shall be alloted as follows: 40%
warehouse of plaintiff for distribution and sale in the City of for Roads and Bridges Fund; 40% for the General Fund and
Butuan and all municipalities of Agusan. . 20% for the School Fund."

2. That on August 16, 1960, the City of Butuan enacted Plaintiff maintains that the disputed ordinance is null and void
Ordinance No. 110 which was subsequently amended by because: (1) it partakes of the nature of an import tax; (2) it
Ordinance No. 122 and effective November 28, 1960. A copy amounts to double taxation; (3) it is excessive, oppressive and
of Ordinance No. 110, Series of 1960 and Ordinance No. 122 confiscatory; (4) it is highly unjust and discriminatory; and (5)
are incorporated herein as Exhibits "A" and "B", respectively. section 2 of Republic Act No. 2264, upon the authority of
which it was enacted, is an unconstitutional delegation of
3. That Ordinance No. 110 as amended, imposes a tax on any legislative powers.
person, association, etc., of P0.10 per case of 24 bottles of
Pepsi-Cola and the plaintiff paid under protest the amount of The second and last objections are manifestly devoid of merit.
P4,926.63 from August 16 to December 31, 1960 and the Indeed independently of whether or not the tax in question,
amount of P9,250.40 from January 1 to July 30, 1961. when considered in relation to the sales tax prescribed by Acts
of Congress, amounts to double taxation, on which we need
4. That the plaintiff filed the foregoing complaint for the not and do not express any opinion - double taxation, in
recovery of the total amount of P14,177.03 paid under protest general, is not forbidden by our fundamental law. We have not
and those that if may later on pay until the termination of this adopted, as part thereof, the injunction against double taxation
case on the ground that Ordinance No. 110 as amended of the found in the Constitution of the United States and of some
City of Butuan is illegal, that the tax imposed is excessive and States of the Union.1 Then, again, the general principle
that it is unconstitutional. against delegation of legislative powers, in consequence of the
theory of separation of powers2 is subject to one well-
5. That pursuant to Ordinance No. 110 as amended, the City established exception, namely: legislative powers may be
Treasurer of Butuan City, has prepared a form to be delegated to local governments to which said theory does
accomplished by the plaintiff for the computation of the tax. A not apply3 in respect of matters of local concern.
copy of the form is enclosed herewith as Exhibit "C".
The third objection is, likewise, untenable. The tax of "P0.10
6. That the Profit and Loss Statement of the plaintiff for the per case of 24 bottles," of soft drinks or carbonated drinks
period from January 1, 1961 to July 30, 1961 of its warehouse in the production and sale of which plaintiff is engaged or
in Butuan City is incorporated herein as Exhibits "D" to "D-1" less than P0.0042 per bottle, is manifestly too small to be
to "D-5". In this Profit and Loss Statement, the defendants excessive, oppressive, or confiscatory.
claim that the plaintiff is not entitled to a depreciation of
P3,052.63 but only P1,202.55 in which case the profit of The first and the fourth objections merit, however, serious
plaintiff will be increased from P1,254.44 to P3,104.52. The consideration. In this connection, it is noteworthy that the tax
plaintiff differs only on the claim of depreciation which the prescribed in section 3 of Ordinance No. 110, as originally
company claims to be P3,052.62. This is in accordance with approved, was imposed upon dealers "engaged in selling" soft
the findings of the representative of the undersigned City drinks or carbonated drinks. Thus, it would seem that the
Attorney who verified the records of the plaintiff. intent was then to levy a tax upon the sale of said
merchandise. As amended by Ordinance No. 122, the tax is,
7. That beginning November 21, 1960, the price of Pepsi-Cola however, imposed only upon "any agent and/or consignee of
per case of 24 bottles was increased to P1.92 which price is any person, association, partnership, company or corporation
uniform throughout the Philippines. Said increase was made engaged in selling ... soft drinks or carbonated drinks." And,
due to the increase in the production cost of its manufacture.
pursuant to section 3-A, which was inserted by said Ordinance
No. 122:

... Definition of the Term Consignee or Agent. For


purposes of this Ordinance, a consignee of agent shall mean
any person, association, partnership, company or corporation
who acts in the place of another by authority from him or one
entrusted with the business of another or to whom is
consigned or shipped no less than 1,000 cases of hard liquors
or soft drinks every month for resale, either retail or
wholesale.

As a consequence, merchants engaged in the sale of soft drink


or carbonated drinks, are not subject to the tax, unless they are
agents and/or consignees of another dealer, who, in the very
nature of things, must be one engaged in business outside the
City. Besides, the tax would not be applicable to such agent
and/or consignee, if less than 1,000 cases of soft drinks are
consigned or shipped to him every month. When we consider,
also, that the tax "shall be based and computed from the cargo
manifest or bill of lading ... showing the number of cases"
not sold but "received" by the taxpayer, the intention to
limit the application of the ordinance to soft drinks and
carbonated drinks brought into the City from outside thereof
becomes apparent. Viewed from this angle, the tax partakes of
the nature of an import duty, which is beyond defendant's
authority to impose by express provision of law.4

Even however, if the burden in question were regarded as a


tax on the sale of said beverages, it would still be invalid, as
discriminatory, and hence, violative of the uniformity required
by the Constitution and the law therefor, since only sales by
"agents or consignees" of outside dealers would be subject to
the tax. Sales by local dealers, not acting for or on behalf of
other merchants, regardless of the volume of their sales, and
even if the same exceeded those made by said agents or
consignees of producers or merchants established outside the
City of Butuan, would be exempt from the disputed tax.

It is true that the uniformity essential to the valid exercise of


the power of taxation does not require identity or equality
under all circumstances, or negate the authority to classify the
objects of taxation.5 The classification made in the exercise of
this authority, to be valid, must, however, be reasonable6 and
this requirement is not deemed satisfied unless: (1) it is based
upon substantial distinctions which make real differences; (2)
these are germane to the purpose of the legislation or
ordinance; (3) the classification applies, not only to present
conditions, but, also, to future conditions substantially
identical to those of the present; and (4) the classification
applies equally all those who belong to the same class.7

These conditions are not fully met by the ordinance in


question.8 Indeed, if its purpose were merely to levy a burden
upon the sale of soft drinks or carbonated beverages, there is
no reason why sales thereof by sealers other than agents or
consignees of producers or merchants established outside the
City of Butuan should be exempt from the tax.

WHEREFORE, the decision appealed from is hereby reversed,


and another one shall be entered annulling Ordinance No. 110,
as amended by Ordinance No. 122, and sentencing the City of
Butuan to refund to plaintiff herein the amounts collected from
and paid under protest by the latter, with interest thereon at the
legal rate from the date of the promulgation of this decision, in
addition to the costs, and defendants herein are, accordingly,
restrained and prohibited permanently from enforcing said
Ordinance, as amended. It is so ordered.
Pepsi Cola Bottiling Co. vs City of Butuan (1968)

Facts: Ordinance 110 was enacted by the City of Butuan


imposing a tax of P0.10 per case of 24 bottles of softdrinks or
carbonated drinks. The tax was imposed upon dealers engeged
in selling softdrinks or carbonated drinks. When Ordinance
110, the tax was imposed upon an agent or consignee of any
person, association, partnership, company or corporation
engaged in selling softdrinks or carbonated drinks, with agent
or consignee being particularly defined on the inserted
provision Section 3-A. In effect, merchants engaged in the sale
of softdrinks, etc. are not subject to the tax unless they are
agents or consignees of another dealer who must be one
engaged in business outside the City. Pepsi-Cola Bottling Co.
filed suit to recover sums paid by it to the city pursuant to the
Ordinance, which it claims to be null and void.

Issue: Whether the Ordinance is discriminatory.

Held: The Ordinance, as amended, is discriminatory since


only sales by agents or consignees of outside dealers would
be subject to the tax. Sales by local dealers, not acting for or
on behalf of other merchants, regardless of the volume of their
sales , and even if the same exceeded those made by said
agents or consignees of producers or merchants established
outside the city, would be exempt from the tax. The
classification made in the exercise of the authority to tax, to be
valid must be reasonable, which would be satisfied if the
classification is based upon substantial distinctions which
makes real differences; these are germane to the purpose of
legislation or ordinance; the classification applies not only to
present conditions but also to future conditions substantially
identical to those of the present; and the classification applies
equally to all those who belong to the same class. These
conditions are not fully met by the ordinance in question.
G.R. No. 91649 May 14, 1991
Subsequently, on July 11, 1983, PAGCOR was created under
ATTORNEYS HUMBERTO BASCO, EDILBERTO P.D. 1869 to enable the Government to regulate and centralize
BALCE, SOCRATES MARANAN AND LORENZO all games of chance authorized by existing franchise or
SANCHEZ, petitioners, permitted by law, under the following declared policy
vs.
PHILIPPINE AMUSEMENTS AND GAMING Sec. 1. Declaration of Policy. It is hereby declared to be
CORPORATION (PAGCOR), respondent. the policy of the State to centralize and integrate all games of
chance not heretofore authorized by existing franchises or
H.B. Basco & Associates for petitioners. permitted by law in order to attain the following objectives:
Valmonte Law Offices collaborating counsel for petitioners.
Aguirre, Laborte and Capule for respondent PAGCOR. (a) To centralize and integrate the right and authority to
operate and conduct games of chance into one corporate entity
to be controlled, administered and supervised by the
PARAS, J.: Government.

A TV ad proudly announces: (b) To establish and operate clubs and casinos, for
amusement and recreation, including sports gaming pools,
"The new PAGCOR responding through responsible (basketball, football, lotteries, etc.) and such other forms of
gaming." amusement and recreation including games of chance, which
may be allowed by law within the territorial jurisdiction of the
But the petitioners think otherwise, that is why, they filed the Philippines and which will: (1) generate sources of additional
instant petition seeking to annul the Philippine Amusement revenue to fund infrastructure and socio-civic projects, such as
and Gaming Corporation (PAGCOR) Charter PD 1869, flood control programs, beautification, sewerage and sewage
because it is allegedly contrary to morals, public policy and projects, Tulungan ng Bayan Centers, Nutritional Programs,
order, and because Population Control and such other essential public services;
(2) create recreation and integrated facilities which will
A. It constitutes a waiver of a right prejudicial to a third expand and improve the country's existing tourist attractions;
person with a right recognized by law. It waived the Manila and (3) minimize, if not totally eradicate, all the evils,
City government's right to impose taxes and license fees, malpractices and corruptions that are normally prevalent on
which is recognized by law; the conduct and operation of gambling clubs and casinos
without direct government involvement. (Section 1, P.D.
B. For the same reason stated in the immediately 1869)
preceding paragraph, the law has intruded into the local
government's right to impose local taxes and license fees. To attain these objectives PAGCOR is given territorial
This, in contravention of the constitutionally enshrined jurisdiction all over the Philippines. Under its Charter's
principle of local autonomy; repealing clause, all laws, decrees, executive orders, rules and
regulations, inconsistent therewith, are accordingly repealed,
C. It violates the equal protection clause of the amended or modified.
constitution in that it legalizes PAGCOR conducted
gambling, while most other forms of gambling are outlawed, It is reported that PAGCOR is the third largest source of
together with prostitution, drug trafficking and other vices; government revenue, next to the Bureau of Internal Revenue
and the Bureau of Customs. In 1989 alone, PAGCOR earned
D. It violates the avowed trend of the Cory government P3.43 Billion, and directly remitted to the National
away from monopolistic and crony economy, and toward free Government a total of P2.5 Billion in form of franchise tax,
enterprise and privatization. (p. 2, Amended Petition; p. 7, government's income share, the President's Social Fund and
Rollo) Host Cities' share. In addition, PAGCOR sponsored other
socio-cultural and charitable projects on its own or in
In their Second Amended Petition, petitioners also claim that cooperation with various governmental agencies, and other
PD 1869 is contrary to the declared national policy of the private associations and organizations. In its 3 1/2 years of
"new restored democracy" and the people's will as expressed operation under the present administration, PAGCOR remitted
in the 1987 Constitution. The decree is said to have a to the government a total of P6.2 Billion. As of December 31,
"gambling objective" and therefore is contrary to Sections 11, 1989, PAGCOR was employing 4,494 employees in its nine
12 and 13 of Article II, Sec. 1 of Article VIII and Section 3 (2) (9) casinos nationwide, directly supporting the livelihood of
of Article XIV, of the present Constitution (p. 3, Second Four Thousand Four Hundred Ninety-Four (4,494) families.
Amended Petition; p. 21, Rollo).
But the petitioners, are questioning the validity of P.D. No.
The procedural issue is whether petitioners, as taxpayers and 1869. They allege that the same is "null and void" for being
practicing lawyers (petitioner Basco being also the Chairman "contrary to morals, public policy and public order,"
of the Committee on Laws of the City Council of Manila), can monopolistic and tends toward "crony economy", and is
question and seek the annulment of PD 1869 on the alleged violative of the equal protection clause and local autonomy as
grounds mentioned above. well as for running counter to the state policies enunciated in
Sections 11 (Personal Dignity and Human Rights), 12
The Philippine Amusements and Gaming Corporation (Family) and 13 (Role of Youth) of Article II, Section 1
(PAGCOR) was created by virtue of P.D. 1067-A dated (Social Justice) of Article XIII and Section 2 (Educational
January 1, 1977 and was granted a franchise under P.D. 1067- Values) of Article XIV of the 1987 Constitution.
B also dated January 1, 1977 "to establish, operate and
maintain gambling casinos on land or water within the This challenge to P.D. No. 1869 deserves a searching and
territorial jurisdiction of the Philippines." Its operation was thorough scrutiny and the most deliberate consideration by the
originally conducted in the well known floating casino Court, involving as it does the exercise of what has been
"Philippine Tourist." The operation was considered a success described as "the highest and most delicate function which
for it proved to be a potential source of revenue to fund belongs to the judicial department of the government." (State
infrastructure and socio-economic projects, thus, P.D. 1399 v. Manuel, 20 N.C. 144; Lozano v. Martinez, 146 SCRA 323).
was passed on June 2, 1978 for PAGCOR to fully attain this
objective.
As We enter upon the task of passing on the validity of an act Having disposed of the procedural issue, We will now discuss
of a co-equal and coordinate branch of the government We the substantive issues raised.
need not be reminded of the time-honored principle, deeply
ingrained in our jurisprudence, that a statute is presumed to be Gambling in all its forms, unless allowed by law, is generally
valid. Every presumption must be indulged in favor of its prohibited. But the prohibition of gambling does not mean that
constitutionality. This is not to say that We approach Our task the Government cannot regulate it in the exercise of its police
with diffidence or timidity. Where it is clear that the power.
legislature or the executive for that matter, has over-stepped
the limits of its authority under the constitution, We should not The concept of police power is well-established in this
hesitate to wield the axe and let it fall heavily, as fall it must, jurisdiction. It has been defined as the "state authority to enact
on the offending statute (Lozano v. Martinez, supra). legislation that may interfere with personal liberty or property
in order to promote the general welfare." (Edu v. Ericta, 35
In Victoriano v. Elizalde Rope Workers' Union, et al, 59 SCRA 481, 487) As defined, it consists of (1) an imposition or
SCRA 54, the Court thru Mr. Justice Zaldivar underscored the restraint upon liberty or property, (2) in order to foster the
common good. It is not capable of an exact definition but has
been, purposely, veiled in general terms to underscore its all-
. . . thoroughly established principle which must be followed comprehensive embrace. (Philippine Association of Service
in all cases where questions of constitutionality as obtain in Exporters, Inc. v. Drilon, 163 SCRA 386).
the instant cases are involved. All presumptions are indulged
in favor of constitutionality; one who attacks a statute alleging Its scope, ever-expanding to meet the exigencies of the times,
unconstitutionality must prove its invalidity beyond a even to anticipate the future where it could be done, provides
reasonable doubt; that a law may work hardship does not enough room for an efficient and flexible response to
render it unconstitutional; that if any reasonable basis may be conditions and circumstances thus assuming the greatest
conceived which supports the statute, it will be upheld and the benefits. (Edu v. Ericta, supra)
challenger must negate all possible basis; that the courts are
not concerned with the wisdom, justice, policy or expediency It finds no specific Constitutional grant for the plain reason
of a statute and that a liberal interpretation of the constitution that it does not owe its origin to the charter. Along with the
in favor of the constitutionality of legislation should be taxing power and eminent domain, it is inborn in the very fact
adopted. (Danner v. Hass, 194 N.W. 2nd 534, 539; Spurbeck of statehood and sovereignty. It is a fundamental attribute of
v. Statton, 106 N.W. 2nd 660, 663; 59 SCRA 66; see also e.g. government that has enabled it to perform the most vital
Salas v. Jarencio, 46 SCRA 734, 739 [1970]; Peralta v. functions of governance. Marshall, to whom the expression
Commission on Elections, 82 SCRA 30, 55 [1978]; and Heirs has been credited, refers to it succinctly as the plenary power
of Ordona v. Reyes, 125 SCRA 220, 241-242 [1983] cited in of the state "to govern its citizens". (Tribe, American
Citizens Alliance for Consumer Protection v. Energy Constitutional Law, 323, 1978). The police power of the State
Regulatory Board, 162 SCRA 521, 540) is a power co-extensive with self-protection and is most aptly
termed the "law of overwhelming necessity." (Rubi v.
Of course, there is first, the procedural issue. The respondents Provincial Board of Mindoro, 39 Phil. 660, 708) It is "the most
are questioning the legal personality of petitioners to file the essential, insistent, and illimitable of powers." (Smith Bell &
instant petition. Co. v. National, 40 Phil. 136) It is a dynamic force that
enables the state to meet the agencies of the winds of change.
Considering however the importance to the public of the case
at bar, and in keeping with the Court's duty, under the 1987 What was the reason behind the enactment of P.D. 1869?
Constitution, to determine whether or not the other branches
of government have kept themselves within the limits of the P.D. 1869 was enacted pursuant to the policy of the
Constitution and the laws and that they have not abused the government to "regulate and centralize thru an appropriate
discretion given to them, the Court has brushed aside institution all games of chance authorized by existing
technicalities of procedure and has taken cognizance of this franchise or permitted by law" (1st whereas clause, PD 1869).
petition. (Kapatiran ng mga Naglilingkod sa Pamahalaan ng As was subsequently proved, regulating and centralizing
Pilipinas Inc. v. Tan, 163 SCRA 371) gambling operations in one corporate entity the PAGCOR,
was beneficial not just to the Government but to society in
With particular regard to the requirement of proper party as general. It is a reliable source of much needed revenue for the
applied in the cases before us, We hold that the same is cash strapped Government. It provided funds for social impact
satisfied by the petitioners and intervenors because each of projects and subjected gambling to "close scrutiny, regulation,
them has sustained or is in danger of sustaining an immediate supervision and control of the Government" (4th Whereas
injury as a result of the acts or measures complained of. And Clause, PD 1869). With the creation of PAGCOR and the
even if, strictly speaking they are not covered by the direct intervention of the Government, the evil practices and
definition, it is still within the wide discretion of the Court to corruptions that go with gambling will be minimized if not
waive the requirement and so remove the impediment to its totally eradicated. Public welfare, then, lies at the bottom of
addressing and resolving the serious constitutional questions the enactment of PD 1896.
raised.
Petitioners contend that P.D. 1869 constitutes a waiver of the
In the first Emergency Powers Cases, ordinary citizens and right of the City of Manila to impose taxes and legal fees; that
taxpayers were allowed to question the constitutionality of the exemption clause in P.D. 1869 is violative of the principle
several executive orders issued by President Quirino although of local autonomy. They must be referring to Section 13 par.
they were involving only an indirect and general interest (2) of P.D. 1869 which exempts PAGCOR, as the franchise
shared in common with the public. The Court dismissed the holder from paying any "tax of any kind or form, income or
objection that they were not proper parties and ruled that "the otherwise, as well as fees, charges or levies of whatever
transcendental importance to the public of these cases nature, whether National or Local."
demands that they be settled promptly and definitely, brushing
aside, if we must technicalities of procedure." We have since (2) Income and other taxes. a) Franchise Holder: No
then applied the exception in many other cases. (Association tax of any kind or form, income or otherwise as well as fees,
of Small Landowners in the Philippines, Inc. v. Sec. of charges or levies of whatever nature, whether National or
Agrarian Reform, 175 SCRA 343). Local, shall be assessed and collected under this franchise
from the Corporation; nor shall any form or tax or charge
attach in any way to the earnings of the Corporation, except a
franchise tax of five (5%) percent of the gross revenues or and other matters concerning the operation of the affiliated
earnings derived by the Corporation from its operations under entities, the provisions of the Corporation Code of the
this franchise. Such tax shall be due and payable quarterly to Philippines to the contrary notwithstanding, except only with
the National Government and shall be in lieu of all kinds of respect to original incorporation.
taxes, levies, fees or assessments of any kind, nature or
description, levied, established or collected by any municipal, PAGCOR has a dual role, to operate and to regulate gambling
provincial or national government authority (Section 13 [2]). casinos. The latter role is governmental, which places it in the
category of an agency or instrumentality of the Government.
Their contention stated hereinabove is without merit for the Being an instrumentality of the Government, PAGCOR should
following reasons: be and actually is exempt from local taxes. Otherwise, its
operation might be burdened, impeded or subjected to control
(a) The City of Manila, being a mere Municipal by a mere Local government.
corporation has no inherent right to impose taxes (Icard v. City
of Baguio, 83 Phil. 870; City of Iloilo v. Villanueva, 105 Phil. The states have no power by taxation or otherwise, to retard,
337; Santos v. Municipality of Caloocan, 7 SCRA 643). Thus, impede, burden or in any manner control the operation of
"the Charter or statute must plainly show an intent to confer constitutional laws enacted by Congress to carry into
that power or the municipality cannot assume it" (Medina v. execution the powers vested in the federal government. (MC
City of Baguio, 12 SCRA 62). Its "power to tax" therefore Culloch v. Marland, 4 Wheat 316, 4 L Ed. 579)
must always yield to a legislative act which is superior having
been passed upon by the state itself which has the "inherent This doctrine emanates from the "supremacy" of the National
power to tax" (Bernas, the Revised [1973] Philippine Government over local governments.
Constitution, Vol. 1, 1983 ed. p. 445).
Justice Holmes, speaking for the Supreme Court, made
(b) The Charter of the City of Manila is subject to reference to the entire absence of power on the part of the
control by Congress. It should be stressed that "municipal States to touch, in that way (taxation) at least, the
corporations are mere creatures of Congress" (Unson v. instrumentalities of the United States (Johnson v. Maryland,
Lacson, G.R. No. 7909, January 18, 1957) which has the 254 US 51) and it can be agreed that no state or political
power to "create and abolish municipal corporations" due to subdivision can regulate a federal instrumentality in such a
its "general legislative powers" (Asuncion v. Yriantes, 28 Phil. way as to prevent it from consummating its federal
67; Merdanillo v. Orandia, 5 SCRA 541). Congress, therefore, responsibilities, or even to seriously burden it in the
has the power of control over Local governments (Hebron v. accomplishment of them. (Antieau, Modern Constitutional
Reyes, G.R. No. 9124, July 2, 1950). And if Congress can Law, Vol. 2, p. 140, emphasis supplied)
grant the City of Manila the power to tax certain matters, it
can also provide for exemptions or even take back the power. Otherwise, mere creatures of the State can defeat National
policies thru extermination of what local authorities may
(c) The City of Manila's power to impose license fees on perceive to be undesirable activities or enterprise using the
gambling, has long been revoked. As early as 1975, the power power to tax as "a tool for regulation" (U.S. v. Sanchez, 340
of local governments to regulate gambling thru the grant of US 42).
"franchise, licenses or permits" was withdrawn by P.D. No.
771 and was vested exclusively on the National Government, The power to tax which was called by Justice Marshall as the
thus: "power to destroy" (Mc Culloch v. Maryland, supra) cannot be
allowed to defeat an instrumentality or creation of the very
Sec. 1. Any provision of law to the contrary notwithstanding, entity which has the inherent power to wield it.
the authority of chartered cities and other local governments to
issue license, permit or other form of franchise to operate, (e) Petitioners also argue that the Local Autonomy
maintain and establish horse and dog race tracks, jai-alai and Clause of the Constitution will be violated by P.D. 1869. This
other forms of gambling is hereby revoked. is a pointless argument. Article X of the 1987 Constitution (on
Local Autonomy) provides:
Sec. 2. Hereafter, all permits or franchises to operate,
maintain and establish, horse and dog race tracks, jai-alai and Sec. 5. Each local government unit shall have the power to
other forms of gambling shall be issued by the national create its own source of revenue and to levy taxes, fees, and
government upon proper application and verification of the other charges subject to such guidelines and limitation as the
qualification of the applicant . . . congress may provide, consistent with the basic policy on
local autonomy. Such taxes, fees and charges shall accrue
Therefore, only the National Government has the power to exclusively to the local government. (emphasis supplied)
issue "licenses or permits" for the operation of gambling.
Necessarily, the power to demand or collect license fees which The power of local government to "impose taxes and fees" is
is a consequence of the issuance of "licenses or permits" is no always subject to "limitations" which Congress may provide
longer vested in the City of Manila. by law. Since PD 1869 remains an "operative" law until
"amended, repealed or revoked" (Sec. 3, Art. XVIII, 1987
(d) Local governments have no power to tax Constitution), its "exemption clause" remains as an exception
instrumentalities of the National Government. PAGCOR is a to the exercise of the power of local governments to impose
government owned or controlled corporation with an original taxes and fees. It cannot therefore be violative but rather is
charter, PD 1869. All of its shares of stocks are owned by the consistent with the principle of local autonomy.
National Government. In addition to its corporate powers
(Sec. 3, Title II, PD 1869) it also exercises regulatory powers Besides, the principle of local autonomy under the 1987
thus: Constitution simply means "decentralization" (III Records of
the 1987 Constitutional Commission, pp. 435-436, as cited in
Sec. 9. Regulatory Power. The Corporation shall maintain Bernas, The Constitution of the Republic of the Philippines,
a Registry of the affiliated entities, and shall exercise all the Vol. II, First Ed., 1988, p. 374). It does not make local
powers, authority and the responsibilities vested in the governments sovereign within the state or an "imperium in
Securities and Exchange Commission over such affiliating imperio."
entities mentioned under the preceding section, including, but
not limited to amendments of Articles of Incorporation and Local Government has been described as a political
By-Laws, changes in corporate term, structure, capitalization subdivision of a nation or state which is constituted by law and
has substantial control of local affairs. In a unitary system of mathematically exact. (Dominican Hotel v. Arizona, 249 US
government, such as the government under the Philippine 2651).
Constitution, local governments can only be an intra sovereign
subdivision of one sovereign nation, it cannot be an imperium Anent petitioners' claim that PD 1869 is contrary to the
in imperio. Local government in such a system can only mean "avowed trend of the Cory Government away from
a measure of decentralization of the function of government. monopolies and crony economy and toward free enterprise
(emphasis supplied) and privatization" suffice it to state that this is not a ground for
this Court to nullify P.D. 1869. If, indeed, PD 1869 runs
As to what state powers should be "decentralized" and what counter to the government's policies then it is for the
may be delegated to local government units remains a matter Executive Department to recommend to Congress its repeal or
of policy, which concerns wisdom. It is therefore a political amendment.
question. (Citizens Alliance for Consumer Protection v.
Energy Regulatory Board, 162 SCRA 539). The judiciary does not settle policy issues. The Court can only
declare what the law is and not what the law should
What is settled is that the matter of regulating, taxing or be.1wphi1 Under our system of government, policy issues
otherwise dealing with gambling is a State concern and hence, are within the domain of the political branches of government
it is the sole prerogative of the State to retain it or delegate it and of the people themselves as the repository of all state
to local governments. power. (Valmonte v. Belmonte, Jr., 170 SCRA 256).

As gambling is usually an offense against the State, legislative On the issue of "monopoly," however, the Constitution
grant or express charter power is generally necessary to provides that:
empower the local corporation to deal with the subject. . . . In
the absence of express grant of power to enact, ordinance Sec. 19. The State shall regulate or prohibit monopolies when
provisions on this subject which are inconsistent with the state public interest so requires. No combinations in restraint of
laws are void. (Ligan v. Gadsden, Ala App. 107 So. 733 Ex- trade or unfair competition shall be allowed. (Art. XII,
Parte Solomon, 9, Cals. 440, 27 PAC 757 following in re Ah National Economy and Patrimony)
You, 88 Cal. 99, 25 PAC 974, 22 Am St. Rep. 280, 11 LRA
480, as cited in Mc Quinllan Vol. 3 Ibid, p. 548, emphasis It should be noted that, as the provision is worded, monopolies
supplied) are not necessarily prohibited by the Constitution. The state
must still decide whether public interest demands that
Petitioners next contend that P.D. 1869 violates the equal monopolies be regulated or prohibited. Again, this is a matter
protection clause of the Constitution, because "it legalized of policy for the Legislature to decide.
PAGCOR conducted gambling, while most gambling are
outlawed together with prostitution, drug trafficking and other On petitioners' allegation that P.D. 1869 violates Sections 11
vices" (p. 82, Rollo). (Personality Dignity) 12 (Family) and 13 (Role of Youth) of
Article II; Section 13 (Social Justice) of Article XIII and
We, likewise, find no valid ground to sustain this contention. Section 2 (Educational Values) of Article XIV of the 1987
The petitioners' posture ignores the well-accepted meaning of Constitution, suffice it to state also that these are merely
the clause "equal protection of the laws." The clause does not statements of principles and, policies. As such, they are
preclude classification of individuals who may be accorded basically not self-executing, meaning a law should be passed
different treatment under the law as long as the classification by Congress to clearly define and effectuate such principles.
is not unreasonable or arbitrary (Itchong v. Hernandez, 101
Phil. 1155). A law does not have to operate in equal force on In general, therefore, the 1935 provisions were not intended to
all persons or things to be conformable to Article III, Section 1 be self-executing principles ready for enforcement through the
of the Constitution (DECS v. San Diego, G.R. No. 89572, courts. They were rather directives addressed to the executive
December 21, 1989). and the legislature. If the executive and the legislature failed to
heed the directives of the articles the available remedy was not
The "equal protection clause" does not prohibit the Legislature judicial or political. The electorate could express their
from establishing classes of individuals or objects upon which displeasure with the failure of the executive and the legislature
different rules shall operate (Laurel v. Misa, 43 O.G. 2847). through the language of the ballot. (Bernas, Vol. II, p. 2)
The Constitution does not require situations which are
different in fact or opinion to be treated in law as though they Every law has in its favor the presumption of constitutionality
were the same (Gomez v. Palomar, 25 SCRA 827). (Yu Cong Eng v. Trinidad, 47 Phil. 387; Salas v. Jarencio, 48
SCRA 734; Peralta v. Comelec, 82 SCRA 30; Abbas v.
Just how P.D. 1869 in legalizing gambling conducted by Comelec, 179 SCRA 287). Therefore, for PD 1869 to be
PAGCOR is violative of the equal protection is not clearly nullified, it must be shown that there is a clear and
explained in the petition. The mere fact that some gambling unequivocal breach of the Constitution, not merely a doubtful
activities like cockfighting (P.D 449) horse racing (R.A. 306 and equivocal one. In other words, the grounds for nullity
as amended by RA 983), sweepstakes, lotteries and races (RA must be clear and beyond reasonable doubt. (Peralta v.
1169 as amended by B.P. 42) are legalized under certain Comelec, supra) Those who petition this Court to declare a
conditions, while others are prohibited, does not render the law, or parts thereof, unconstitutional must clearly establish
applicable laws, P.D. 1869 for one, unconstitutional. the basis for such a declaration. Otherwise, their petition must
fail. Based on the grounds raised by petitioners to challenge
If the law presumably hits the evil where it is most felt, it is the constitutionality of P.D. 1869, the Court finds that
not to be overthrown because there are other instances to petitioners have failed to overcome the presumption. The
which it might have been applied. (Gomez v. Palomar, 25 dismissal of this petition is therefore, inevitable. But as to
SCRA 827) whether P.D. 1869 remains a wise legislation considering the
issues of "morality, monopoly, trend to free enterprise,
The equal protection clause of the 14th Amendment does not privatization as well as the state principles on social justice,
mean that all occupations called by the same name must be role of youth and educational values" being raised, is up for
treated the same way; the state may do what it can to prevent Congress to determine.
which is deemed as evil and stop short of those cases in which
harm to the few concerned is not less than the harm to the As this Court held in Citizens' Alliance for Consumer
public that would insure if the rule laid down were made Protection v. Energy Regulatory Board, 162 SCRA 521
Presidential Decree No. 1956, as amended by Executive Order
No. 137 has, in any case, in its favor the presumption of
validity and constitutionality which petitioners Valmonte and
the KMU have not overturned. Petitioners have not undertaken
to identify the provisions in the Constitution which they claim
to have been violated by that statute. This Court, however, is
not compelled to speculate and to imagine how the assailed
legislation may possibly offend some provision of the
Constitution. The Court notes, further, in this respect that
petitioners have in the main put in question the wisdom,
justice and expediency of the establishment of the OPSF,
issues which are not properly addressed to this Court and
which this Court may not constitutionally pass upon. Those
issues should be addressed rather to the political departments
of government: the President and the Congress.

Parenthetically, We wish to state that gambling is generally


immoral, and this is precisely so when the gambling resorted
to is excessive. This excessiveness necessarily depends not
only on the financial resources of the gambler and his family
but also on his mental, social, and spiritual outlook on life.
However, the mere fact that some persons may have lost their
material fortunes, mental control, physical health, or even their
lives does not necessarily mean that the same are directly
attributable to gambling. Gambling may have been the
antecedent, but certainly not necessarily the cause. For the
same consequences could have been preceded by an overdose
of food, drink, exercise, work, and even sex.

WHEREFORE, the petition is DISMISSED for lack of merit.


Humberto Basco vs Philippine Amusements and Gaming charges subject to such guidelines and limitation as the
Corporation congress may provide, consistent with the basic policy on
local autonomy. Such taxes, fees and charges shall accrue
In 1977, the Philippine Amusements and Gaming Corporation exclusively to the local government.
(PAGCOR) was created by Presidential Decree 1067-A. PD
1067-B meanwhile granted PAGCOR the power to establish, A close reading of the above provision does not violate local
operate and maintain gambling casinos on land or water within autonomy (particularly on taxing powers) as it was clearly
the territorial jurisdiction of the Philippines. PAGCORs stated that the taxing power of LGUs are subject to such
operation was a success hence in 1978, PD 1399 was passed guidelines and limitation as Congress may provide.
which expanded PAGCORs power. In 1983, PAGCORs
charter was updated through PD 1869. PAGCORs charter Further, the City of Manila, being a mere Municipal
provides that PAGCOR shall regulate and centralize all games corporation has no inherent right to impose taxes. The Charter
of chance authorized by existing franchise or permitted by of the City of Manila is subject to control by Congress. It
law. Section 1 of PD 1869 provides: should be stressed that municipal corporations are mere
creatures of Congress which has the power to create and
Section 1. Declaration of Policy. It is hereby declared to abolish municipal corporations due to its general legislative
be the policy of the State to centralize and integrate all games powers. Congress, therefore, has the power of control over
of chance not heretofore authorized by existing franchises or Local governments. And if Congress can grant the City of
permitted by law. Manila the power to tax certain matters, it can also provide for
exemptions or even take back the power.
Atty. Humberto Basco and several other lawyers assailed the
validity of the law creating PAGCOR. They claim that PD Further still, local governments have no power to tax
1869 is unconstitutional because a) it violates the equal instrumentalities of the National Government. PAGCOR is a
protection clause and b) it violates the local autonomy clause government owned or controlled corporation with an original
of the constitution. charter, PD 1869. All of its shares of stocks are owned by the
National Government. Otherwise, its operation might be
Basco et al argued that PD 1869 violates the equal protection burdened, impeded or subjected to control by a mere Local
clause because it legalizes PAGCOR-conducted gambling, government.
while most other forms of gambling are outlawed, together
with prostitution, drug trafficking and other vices. This doctrine emanates from the supremacy of the National
Government over local governments.
Anent the issue of local autonomy, Basco et al contend that
P.D. 1869 forced cities like Manila to waive its right to impose
taxes and legal fees as far as PAGCOR is concerned; that
Section 13 par. (2) of P.D. 1869 which exempts PAGCOR, as
the franchise holder from paying any tax of any kind or form,
income or otherwise, as well as fees, charges or levies of
whatever nature, whether National or Local is violative of the
local autonomy principle.

ISSUE:

1. Whether or not PD 1869 violates the equal protection


clause.

2. Whether or not PD 1869 violates the local autonomy clause.

HELD:

1. No. Just how PD 1869 in legalizing gambling conducted by


PAGCOR is violative of the equal protection is not clearly
explained in Bascos petition. The mere fact that some
gambling activities like cockfighting (PD 449) horse racing
(RA 306 as amended by RA 983), sweepstakes, lotteries and
races (RA 1169 as amended by BP 42) are legalized under
certain conditions, while others are prohibited, does not render
the applicable laws, PD. 1869 for one, unconstitutional.

Bascos posture ignores the well-accepted meaning of the


clause equal protection of the laws. The clause does not
preclude classification of individuals who may be accorded
different treatment under the law as long as the classification
is not unreasonable or arbitrary. A law does not have to
operate in equal force on all persons or things to be
conformable to Article III, Sec 1 of the Constitution. The
equal protection clause does not prohibit the Legislature
from establishing classes of individuals or objects upon which
different rules shall operate. The Constitution does not require
situations which are different in fact or opinion to be treated in
law as though they were the same.

2. No. Section 5, Article 10 of the 1987 Constitution provides:

Each local government unit shall have the power to create its
own source of revenue and to levy taxes, fees, and other
G.R. No. 147192 June 27, 2006
On the other hand, RTC Branch 31 also issued an order, dated
GOVERNMENT SERVICE INSURANCE SYSTEM, November 8, 1994, in the other (unnumbered) cadastral case,
Petitioner, the dispositive portion of which read:
vs.
THE CITY ASSESSOR OF ILOILO CITY, THE REGISTER WHEREFORE, as prayed for, the Register of Deeds, City of
OF DEEDS OF ILOILO CITY and ROSALINA Iloilo is hereby directed to issue a new owners duplicate
FRANCISCO, represented by her attorney-in-fact, certificate of Title No. T-48580 in the name of the G.S.I.S.
SALVADOR PAJA I,* Respondents. C/O RODOLFO CERES, the registered owner, basing the
same on the Original Certificate of Title found intact and
DECISION existing in the Office of the Register of Deeds and the latter to
cancel Transfer Certificate of Title No. T-48580 together with
CORONA, J.: the encumbrances therein and to issue a new Transfer
Certificate of Title in the name of ROSALINA FRANCISCO
Assailed in this present petition for review under Rule 45 of of legal age, single, Filipino Citizen and resident of Brgy.
the Rules of Court are the decision1 and resolution2 of the Tacas, Jaro, Iloilo City, Philippines. The owners duplicate
Court of Appeals (CA) dismissing a petition for annulment of certificate of title No. T-48580 which was not surrendered is
judgment3 filed by petitioner, the Government Service hereby declared null and void.5
Insurance System (GSIS), in Cadastral Case No. 84 and
another unnumbered cadastral case decided by the Regional No appeal was made from both orders of the courts a quo,
Trial Court (RTC), Branches 36 and 31, of Iloilo City, hence, they became final and executory.
respectively.
In a petition to annul the judgment of the trial court, petitioner,
In the two cadastral cases, private respondent Rosalina as the alleged previous owner of the parcels of land sold at
Francisco petitioned for the issuance of new transfer public auction, assailed the orders of the RTCs of Iloilo City
certificates of title (TCTs) in her name over two parcels of before the CA. It claimed that the assessment of real property
land, to wit: taxes on it (GSIS) was void since, under its charter (RA 8291),
it was exempt from all forms of taxes (including real property
TCT No. 41681 taxes on the properties held by it) that were due to the local
governments where such properties were located.
A parcel of land known as Lot No. 6, Block 2, of the Furthermore, it claimed that the proceedings in the assessment
Subdivision Plan (LRC) Psd-184005 being a portion of Lot and levy of said taxes, as well as the sale of the properties at
2214-B, Jaro Cadastre, LRC (GLRO) Record No. 8 situated in public auction, were held without notice to it, hence, its right
the District of Jaro, Iloilo City, Island of Panay, registered in to due process was violated.
the name of GSIS c/o Baldomero Dagdag, of legal age,
Filipino citizen and resident of Jaro, Iloilo City, Philippines on The appellate court gave no credence to the arguments of
June 28, 1991. petitioner and dismissed its petition. According to the CA, the
exemption of GSIS under its charter was not applicable
TCT No. 48580 pursuant to Section 234(a) of RA 7160, otherwise known as
The Local Government Code of 1991 (LGC). Under that law,
A parcel of land known as Lot No. 22, Block 2, of the the tax-exempt status of GSIS cannot be invoked where the
Subdivision Record No. 8 situated in the District of Jaro, Iloilo actual use or beneficial ownership of the properties under its
City, Island of Panay, registered in the name of GSIS c/o title has been conveyed to another person.6 The CA added that
Rodolfo Ceres, of legal age, Filipino Citizen and a resident of there was also no basis for GSISs claim that it was denied due
Iloilo City, Philippines, with an area of Two Hundred Ninety process.7
Four (294) square meters, more or less.
Petitioner filed a motion for reconsideration but this was
Private respondent Francisco purchased the subject properties denied by the CA, hence, it brought this case to us via a
in the auction sales held for the satisfaction of delinquent real petition for review on certiorari under Rule 45 of the Rules of
property taxes. After the lapse of the one-year redemption Court.
period and the failure of the registered owner or any interested
person to redeem the properties, the Iloilo City Treasurer In this petition, petitioner essentially faults the CA for ruling
issued the corresponding final bill of sale to private that its properties were not exempt from all forms of taxes
respondent. The sales were later on duly annotated on the under its charter (RA 8291) and that the proceedings on the
certificates of title on file with the Register of Deeds. assessment and levy of its properties were legal.
However, the final bill of sale could not be registered because
the owners duplicate certificate of title was unavailable at that In support of its position, petitioner points to Section 39 of RA
time. 8291 which reads:

To effect registration in her name, private respondent Section 39. Exemption from Tax, Legal Process and Lien. It
instituted separate petitions for the entry of title in her name is hereby declared that the actuarial solvency of the funds of
over the two lots with the RTCs of Iloilo City. Both petitions the GSIS shall be preserved and maintained at all times and
were unopposed. that the contribution rates are necessary to sustain the benefits
under this Act shall be kept low as possible in order not to
Finding merit in her petitions, the RTCs, in separate orders burden the member of the GSIS and their employers. Taxes
issued on separate dates, directed the issuance of new imposed on the GSIS tend to impair the actuarial solvency of
duplicate TCTs. The dispositive portion of the April 29, 1993 its funds and increase the contribution rate necessary to sustain
order of RTC Branch 36 in Cadastral Case No. 84 read: the benefits of this Act. Accordingly, notwithstanding any
laws to the contrary, the GSIS, its assets, revenues, including
WHEREFORE, premises considered, the Register of Deeds of all accruals thereto, and benefits paid shall be exempt from all
the City of Iloilo is hereby ordered to issue new owners taxes, assessment fees, charges or duties of all kinds. These
duplicate copy of Transfer Certificate of Title No. T-41681 in exemptions shall continue unless expressly and specifically
the name of GSIS c/o Baldomero Dagdag, upon payment of revoked and any assessment against the GSIS as of the
the required legal fees. Accordingly, the lost copy of the approval of this Act are hereby considered paid.
subject title is hereby declared as NULL and VOID.4 Consequently, all laws, ordinances, regulations, issuances,
opinions, or jurisprudence contrary to or in derogation of this
provision are hereby deemed repealed, superseded and This conclusion is buttressed by the Courts 2003 decision in
rendered ineffective and without legal force and effect. National Power Corporation v. City of Cabanatuan16 where
we declared that the tax provisions of the LGC were the most
xxx xxx xxx significant provisions therein insofar as they removed the
blanket exclusion of instrumentalities and agencies of the
The funds and/or properties referred to herein as well as the national government (like petitioner) from the coverage of
benefits, sums or monies corresponding to the benefits under local taxation. In that case, petitioner National Power
this Act shall be exempt from attachment, garnishment, Corporation (NPC) claimed that it was an instrumentality of
execution, levy or other processes issued by the courts, quasi- the government exempt under its charter from paying
judicial agencies or administrative bodies including the franchise tax. The Court overruled NPC and upheld the right
Commission on Audit (COA) disallowances and from all of respondent city government to impose the franchise tax on
financial obligations of the members, including his pecuniary its privilege to transact business in its area.
accountability arising from or caused or occasioned by his
exercise or performance of his official functions or duties, or Again, in the 2004 case of Rubia v. Government Service
incurred relative to or in connection with his position or Insurance System,17 the Court declared that any interpretation
otherwise, is in favor of GSIS.8 (italics supplied) that gave Section 39 an expansive construction to exempt all
GSIS assets and properties from legal processes was
We find no reversible error in the decision and resolution of unwarranted. These processes included the levy and
the CA. garnishment of its assets for taxes or claims enforced against
it. The Court there ruled that the exemption under Section 39
Even if the charter of the GSIS generally exempts it from tax of the GSIS Charter should be read consistently with its
liabilities, the prescription is not so encompassing as to make avowed purpose the maintenance of its actuarial solvency to
the tax exemption applicable to the properties in dispute here. finance the retirement, disability and life insurance benefits of
its members. The Court meant that the tax-exempt properties
In the early case of City of Baguio v. Busuego,9 we held that and assets of GSIS referred to those that remained at its
the tax-exempt status of the GSIS could not prevent the disposal and use, either for investment or for income-
accrual of the real estate tax liability on properties transferred generating purposes. Properties whose actual and beneficial
by it to a private buyer through a contract to sell. In the use had been transferred to private taxable persons, for
present case, GSIS had already conveyed the properties to consideration or otherwise, were excluded and were thus
private persons thus making them subject to assessment and taxable.
payment of real property taxes.10 The alienation of the
properties sold by GSIS was the proximate cause and In Mactan Cebu International Airport Authority v. Marcos,18
necessary consequence of the delinquent taxes due. the Court ruled that the exemption of a government-owned or
controlled corporation from taxes and other charges was not
The doctrine laid down in City of Baguio is reflected in absolute and could be withdrawn, as in fact certain provisions
Section 234 (a) of the LGC,11 which states: of the LGC, including Section 234 (a), were deemed to have
expressly withdrawn the tax-exempt privilege of petitioner as
Section 234. Exemptions from Real Property Tax. The a government-owned corporation.
following are exempted from payment of the real property tax:
Lastly, even if we were to construe that RA 8291 abrogated
(a) Real property owned by the Republic of the Philippines or Section 234(a) of the LGC, still it cannot be made to apply
any of its political subdivisions except when the beneficial use retroactively without impairing the vested rights of private
thereof has been granted, for consideration or otherwise, to a respondent. The appellate court thus correctly stated:
taxable person. (emphasis supplied)
xxx it has been the courts consistent ruling that a repealing
Petitioner, however, claims that RA 8291, which took effect in statute must not interfere with vested rights or impair the
1997, abrogated Section 234 (a) of the LGC of 1991. obligation of contracts; that if any other construction is
possible, the act should not be construed so as to affect rights
We disagree. which have vested under the old law. Private respondent[s],
we reiterate, have become the private owner[s] of the
The abrogation or repeal of a law cannot be assumed; the properties in question in the regular course of proceedings
intention to revoke must be clear and manifest.12 RA 8291 established by law, and after the decisions granting such rights
made no express repeal or abrogation of the provisions of RA have become final and executory. The enactment of the new
7160, particularly Section 234 (a) thereof. GSIS Charter cannot be applied in a retroactive manner as to
divest the private respondent[s] of [their] ownership.19
Repeal by implication in this case is not at all convincing (citations omitted)
either. To bring about an implied repeal, the two laws must be
absolutely incompatible. They must be clearly repugnant in a WHEREFORE, the petition is hereby DENIED.
way that the later law (RA 8291) cannot exist without
nullifying the prior law (RA 7160).13

Indeed, there is nothing in RA 8291 which abrogates,


expressly or impliedly, that particular provision of the LGC.
The two statutes are not inconsistent on that specific point, let
alone so irreconcilable as to compel us to uphold one and
strike down the other.

The rule is that every statute must be interpreted and brought


into accord with other laws in a way that will form a uniform
system of jurisprudence.14 The legislature is presumed to
have known existing laws on the subject and not to have
enacted conflicting laws.15 Thus, the legislature cannot be
presumed to have intended Section 234 (a) to run counter to
Section 39 of RA 8291.