PUBCORP CaseDigests

PUBLIC CORPORATION CASE DIGESTS
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PERCIVAL MODAY, ZOTICO MODAY (deceased) and LEONORA MODAY, vs. COURT OF
APPEALS, JUDGE EVANGELINE S. YUIPCO OF BRANCH 6, REGIONAL TRIAL COURT,
AGUSAN DEL SUR AND MUNICIPALITY OF BUNAWAN, [G.R. No. 107916 February 20,
1997]

FACTS:
On July 23, 1989, the Sangguniang Bayan of the Municipality of Bunawan in Agusan del Sur passed Resolution
No. 43-89, "Authorizing the Municipal Mayor to Initiate the Petition for Expropriation of a One (1) Hectare Portion
of Lot No. 6138-Pls-4 Along the National Highway Owned by Percival Moday for the Site of Bunawan Farmers
Center and Other Government Sports Facilities."
In due time, Resolution No. 43-89 was approved by then Municipal Mayor Anuncio C. Bustillo and transmitted to
the Sangguniang Panlalawigan for its approval.
On September 11, 1989, the Sangguniang Panlalawigan disapproved said Resolution and returned it with the
comment that "expropriation is unnecessary considering that there are still available lots in Bunawan for the
establishment of the government center."
The Municipality of Bunawan, herein public respondent, subsequently filed a petition for Eminent Domain against
petitioner Percival Moday before the Regional Trial Court at Prosperidad, Agusan del Sur. The complaint was
later amended to include the registered owners, Percival Moday's parents, Zotico and Leonora Moday, as party
defendants.
On March 6, 1991, public respondent municipality filed a Motion to Take or Enter Upon the Possession of Subject
Matter of This Case stating that it had already deposited with the municipal treasurer the necessary amount and
that it would be in the government's best interest for public respondent to be allowed to take possession of the
property.
Despite petitioners' opposition and after a hearing on the merits, the Regional Trial Court granted respondent
municipality's motion to take possession of the land.
Petitioners elevated the case in a petition for certiorari alleging grave abuse of discretion on the part of the trial
court, but the same was dismissed by respondent appellate court on July 15, 1992. The Court of Appeals held
that the public purpose for the expropriation is clear from Resolution No. 43-89 and that since the Sangguniang
Panlalawigan of Agusan del Sur did not declare Resolution No. 43-89 invalid, expropriation of petitioners' property
could proceed.

ISSUES:
1.) Whether or not the Court of Appeals erred in upholding the legality of the condemnation proceedings initiated
by the municipality.
2.) Whether or not the municipality lacks authority to exercise this right since the Sangguniang Panlalawigan
disapproved Resolution No. 43-89.

RULING:
Eminent domain, the power which the Municipality of Bunawan exercised in the instant case, is a fundamental
State power that is inseparable from sovereignty. It is government's right to appropriate, in the nature of a
compulsory sale to the State, private property for public use or purpose. Inherently possessed by the national
legislature, the power of eminent domain may be validly delegated to local governments, other public entities and
public utilities. For the taking of private property by the government to be valid, the taking must be for public use
and there must be just compensation.
The Municipality of Bunawan's power to exercise the right of eminent domain is not disputed as it is expressly
provided for in Batas Pambansa Blg. 337, the local Government Code in force at the time expropriation
proceedings were initiated. Section 9 of said law states:
Sec. 9. Eminent Domain. A local government unit may, through its head and acting
pursuant to a resolution of its sanggunian, exercise the right of eminent domain and institute
condemnation proceedings for public use or purpose.

The Sangguniang Panlalawigan was without the authority to disapprove Municipal Resolution No. 43-89 for the
Municipality of Bunawan clearly has the power to exercise the right of eminent domain and its Sangguniang
Bayan the capacity to promulgate said resolution, pursuant to the earlier-quoted Section 9 of B.P. Blg. 337.
Perforce, it follows that Resolution No. 43-89 is valid and binding and could be used as lawful authority to petition
for the condemnation of petitioners' property.
The Sangguniang Panlalawigan's disapproval of Municipal Resolution No. 43-89 is an infirm action which does
not render said resolution null and void. The law, as expressed in Section 153 of B.P. Blg. 337, grants the
Sangguniang Panlalawigan the power to declare a municipal resolution invalid on the sole ground that it is beyond
the power of the Sangguniang Bayan or the Mayor to issue.

WHEREFORE, the instant petition is hereby DENIED. The questioned Decision and Resolution of the Court of
Appeals in the case of "Percival Moday." et al. v. Municipality of Bunawan, et al." (CA G.R. SP No. 26712) are
AFFIRMED. The Temporary Restraining Order issued by the Court on December 8, 1993 is LIFTED.


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Province of Camarines Sur vs. Court of Appeals [GR 103125, 17 May 1993]

Facts:
On 22 December 1988, the Sangguniang Panlalawigan of the Province of Camarines Sur passed Resolution 129,
Series of 1988, authorizing the Provincial Governor to purchase or expropriate property contiguous to the
provincial capitol site, in order to establish a pilot farm for non-food and non-traditional agricultural crops and a
housing project for provincial government employees. Pursuant to the Resolution, the Province of Camarines Sur,
through its Governor, Hon. Luis R. Villafuerte, filed two separate cases for expropriation against Ernesto N. San
Joaquin and Efren N. San Joaquin with the Regional Trial Court, Pili, Camarines Sur (Hon. Benjamin V. Panga
presiding; Special Civil Action Nos. P-17-89 and P-19-89). Forthwith, the Province of Camarines Sur filed a motion
for the issuance of a writ of possession. The San Joaquins failed to appear at the hearing of the motion. The San
Joaquins moved to dismiss the complaints on the ground of inadequacy of the price offered for their property. In
an order dated 6 December 1989, the trial court denied the motion to dismiss and authorized the Province of
Camarines Sur to take possession of the property upon the deposit with the Clerk of Court of the amount of
P5,714.00, the amount provisionally fixed by the trial court to answer for damages that San Joaquin may suffer in
the event that the expropriation cases do not prosper. The trial court issued a writ of possession in an order dated
18 January 1990. The San Joaquins filed a motion for relief from the order, authorizing the Province of Camarines
Sur to take possession of their property and a motion to admit an amended motion to dismiss. Both motions were
denied in the order dated 26 February 1990. The San Joaquins filed their petition before the Court of Appeals,
praying (a) that Resolution No. 129, Series of 1988 of the Sangguniang Panlalawigan be declared null and void;
(b) that the complaints for expropriation be dismissed; and (c) that the order dated December 6, 1989 (i) denying
the motion to dismiss and (ii) allowing the Province of Camarines Sur to take possession of the property subject of
the expropriation and the order dated February 26, 1990, denying the motion to admit the amended motion to
dismiss, be set aside. They also asked that an order be issued to restrain the trial court from enforcing the writ of
possession, and thereafter to issue a writ of injunction. The Court of Appeals set aside the order of the trial court,
and ordered the trial court to suspend the expropriation proceedings until after the Province of Camarines Sur
shall have submitted the requisite approval of the Department of Agrarian Reform to convert the classification of
the property of the San Joaquins from agricultural to non-agricultural land. The Province of Camarines Sur filed a
petition for certiorari before the Supreme Court.

Issue:
Whether the establishment of the Pilot Development Center and the housing project are deemed for public use.

Held:
Local government units have no inherent power of eminent domain and can exercise it only when expressly
authorized by the legislature. In delegating the power to expropriate, the legislature may retain certain control or
impose certain restraints on the exercise thereof by the local governments. While such delegated power may be a
limited authority, it is complete within its limits. Moreover, the limitations on the exercise of the delegated power
must be clearly expressed, either in the law conferring the power or in other legislations. It is the legislative branch
of the local government unit that shall determine whether the use of the property sought to be expropriated shall
be public, the same being an expression of legislative policy. The courts defer to such legislative determination
and will intervene only when a particular undertaking has no real or substantial relation to the public use. Statutes
conferring the power of eminent domain to political subdivisions cannot be broadened or constricted by
implication. Section 9 of BP 337 does not intimate in the least that local government units must first secure the
approval of the Department of Land Reform for the conversion of lands from agricultural to non-agricultural use,
before they can institute the necessary expropriation proceedings. Likewise, there is no provision in the
Comprehensive Agrarian Reform Law which expressly subjects the expropriation of agricultural lands by local
government units to the control of the Department of Agrarian Reform. The rules on conversion of agricultural
lands found in Section 4 (k) and 5 (1) of Executive Order 129-A, Series of 1987, cannot be the source of the
authority of the Department of Agrarian Reform to determine the suitability of a parcel of agricultural land for the
purpose to which it would be devoted by the expropriating authority. While those rules vest on the Department of
Agrarian Reform the exclusive authority to approve or disapprove conversions of agricultural lands for residential,
commercial or industrial uses, such authority is limited to the applications for reclassification submitted by the land
owners or tenant beneficiaries. Further, there has been a shift from the literal to a broader interpretation of "public
purpose" or "public use" for which the power of eminent domain may be exercised. The old concept was that the
condemned property must actually be used by the general public (e.g. roads, bridges, public plazas, etc.) before
the taking thereof could satisfy the constitutional requirement of "public use". Under the new concept, "public use"
means public advantage, convenience or benefit, which tends to contribute to the general welfare and the
prosperity of the whole community, like a resort complex for tourists or housing project. The expropriation of the
property authorized by Resolution 129, Series of 1988, is for a public purpose. The establishment of a pilot
development center would inure to the direct benefit and advantage of the people of the Province of Camarines
Sur. Once operational, the center would make available to the community invaluable information and technology
on agriculture, fishery and the cottage industry. Ultimately, the livelihood of the farmers, fishermen and craftsmen
would be enhanced. The housing project also satisfies the public purpose requirement of the Constitution.
Housing is a basic human need. Shortage in housing is a matter of state concern since it directly and significantly
affects public health, safety, the environment and in sum the general welfare. Thus, the decision of the Court of
Appeals is set aside insofar as it (a) nullifies the trial court's order allowing the Province of Camarines Sur to take
possession of the property of the San Joaquins; (b) orders the trial court to suspend the expropriation
proceedings; and (c) requires the Province of Camarines Sur to obtain the approval of the Department of Agrarian
Reform to convert or reclassify the property of the San Joaquins property from agricultural to non-agricultural use.

CITY OF CEBU vs. SPOUSES APOLONIO and BLASA DEDAMO
[G.R. No. 142971, May 7, 2002]

FACTS:
On 17 September 1993, petitioner City of Cebu filed a complaint for eminent domain against
respondents spouses Apolonio and Blasa Dedamo. The former expropriated the parcel of land owned by the
spouses.The petitioner alleged therein that it needed the land for a public purpose, i.e., for the construction of a
public road which shall serve as an access/relief road of Gorordo Avenue to extend to the General Maxilum

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Avenue and the back of Magellan International Hotel Roads in Cebu City.
The parties executed and submitted to the trial court an Agreement wherein they declared that they
have partially settled the case. Pursuant to the Agreement, the trial court appointed 3 Commissioners to determine
the just compensation of the lots sought to be expropriated. The 3 Commissioners rendered an assessment for
the lot in dispute and fixed it at P12,824.10 sq.m. The assessment was approved as just compensation thereof by
the trial court. The lower court fixed the amount of just compensation at P20,826,339.50.
Petitioner alleged that the lower court erred in fixing the amount of just compensation at
P20,826,339.50. The just compensation should be based on the prevailing market price of the property at the
commencement of the expropriation proceedings and not at the time the property was actually taken.
The petitioner did not convince the Court of Appeals, which affirmed the lower courts decision in toto.

ISSUE:
1.Whether or not just compensation should be determined as of the date of the filing of the complaint
2. Whether or not the petitioner has the right to attack or question the report of the Commissioners on which the
decision was based.

HELD:
1. No. I n t he case at bar, t he appl i cabl e l aw as t o t he poi nt of r eckoni ng f or
t hedetermination of just compensation is Section 19 of R.A. No. 7160, which expressly provides that just
compensation shall be determined as of the time of actual taking. The petitioner has misread our ruling in The
National Power Corp. vs. Court of Appeals. We did not categorically rule in that case that just compensation
should be determined as of the filing of the complaint. We explicitly stated therein that although the general rule in
determining just compensation in eminent domain is the value of the property as of the date of the filing of the
complaint, the rule "admits of an exception: where this Court fixed the value of the property as of the date it was
taken and not at the date of the commencement of the expropriation proceedings."

2. NO. By a solemn document freely and voluntarily agreed upon by the petitioner and the respondents,
agreed to be bound by the report of the commission and approved by the trial court. The AGREEMENT is a
contract between the parties. It has the force of law between them and should be complied with (Art. 1159 , CC).
Furthermore, Art. 1315 of the same Code provides that contracts are perfected by mere consent.
In the case at bar, the petitioner was estopped from attacking the report on which the decision was
based due to consenting the commissioners report during the hearing.

Republic v. Court of Appeals, G.R. No. 146587, July 2, 2002
FACTS: Petitioner instituted an expropriation proceeding over his real property which is to be utilized for the
continued broadcast operation and use of radio transmitter facilities for the Voice of the Philippines project.
Petitioner, through the Philippine Information Agency (PIA), took over the premises after the previous lessee, the
Voice of America, had ceased its operations thereat. Petitioner made a deposit of P517,558.80, the sum
provisionally fixed as being the reasonable value of the property. Petitioner, in his complaint ordered the
defendants to pay the just compensation for the said property and the costs of suit.
However, the contention in the controversy is that said property was previously owned by Luis Santos,
predecessor-in-interest of herein respondents, which forms part from the expropriated area but it appears that the
national government failed to pay to herein respondents the compensation pursuant to the foregoing decision.
And after 5 years, respondents filed a manifestation with a motion seeking payment for the expropriated property.
However, the heirs still remained unpaid thus, they issued a writ of execution but the order was not complied with.
As such, respondents again filed a motion urging the trial court to direct the provincial treasurer of Bulacan to
release to them the due amount that was granted by the trial court.
In the meantime, President Joseph Ejercito Estrada issued Proclamation No. 22, transferring the 20
hectares of the expropriated property to the Bulacan State University for the expansion of its facilities and another
5 hectares to be used exclusively for the propagation of the Philippine carabao and the remaining portion was
retained by PIA.
Despite the court order, the heirs remained unpaid. Hence, the heirs of the late Luis Santos filed a
counter-motion to adjust the compensation from Php 6.00 per square meter fixed in the 1979 decision to its
current zonal valuation pegged at Php 5,000.00 per square meter or in the alternative, to return to them the
expropriated property. However, RTC Bulacan ruled in favor of the respondents and issued the assailed order,
vacating its decision and declaring it to be unenforceable on the ground of prescription.
Thus, the petitioner brought the matter to the Court of Appeals but was out rightly denied based on Sec.
4, Rule 65, of the 1997 Rules of Civil Procedure.
Hence, the filing of the petition for review of a decision of the Court of Appeals.

ISSUE: WON the petitioner is entitled to a just compensation even with the issuance of the Proclamation No.22

RULING: YES, the right to eminent domain is usually understood to be an ultimate right of the sovereign power to
appropriate any property within its territorial sovereignty for a public purpose. Expropriation proceedings are not
adversarial in the conventional sense, for the condemning authority is not required to assert any conflicting
interest in the property. However, in determining public use, two approaches are utilized, the first is public
employment or the actual use by the public, and the second is public advantage or benefit. These twin
proscriptions have their origin in the recognition of the necessity for achieving balance between the State
interests, on the one hand, and private rights, upon the other hand, by effectively restraining the former and
affording protection to the latter.
And, the grant of power of eminent domain to local governments under R.A. 7160 cannot be understood
as being pervasive and all-encompassing power vested in the legislative branch of government. For local
governments to be able to wield the power, it must, by enabling law, be delegated to it by the national legislature,
but even then, this delegated power of eminent domain is not, strictly speaking, a power of eminent, but only of
inferior, domain or only as broad or confined as the real authority would want it to be.
The constitutional limitation of just compensation is considered to be the sum equivalent to the market
value of the property, broadly described to be the price fixed by the seller in the open market in the usual and

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ordinary course of legal action and competition or the fair value of the property as between one who receives, and
who desires to sell, it fixed at the time of the actual taking by the government; between the taking of the property
and the actual payment, legal interest accrue in order to place the owner in a position as good as the position he
was in before the taking of the property.

City of Iloilo v Legaspi (Eminent Domain)
Facts: The Sangguniang Panlungsod of the City of Iloilo on March 7, 2001 enacted regulation ordinance granting
umbrella authority to then Mayor Mansueto A. Malabor to institute expropriation proceedings on Lot No. 935,
registered in the name of Manuela Yusay, located at barangay Sto. Nio Norte, Arevalo, Iloilo City. On March 14,
2001, Mayor Malabor wrote Mrs. Sylvia Yusay del Rosario, administration of the estate, making formal offer to
purchase the property for the purpose of converting the same as an on-site relocation for the poor and landless
resident of the city. With apparent refusal to sell the property, the city represented by Mayor Jerry P. Treas filed
an expropriation case based on the Power of State on Eminent Domain. Upon the strict compliance to the
governing rules on expropriation, the city of Iloilo argued that it is entitled to an immediate issuance of a writ of
possession.

Issue: What is the basis of a Local Government in its Exercise of the power of eminent domain?

Held: Petitioner has the irrefutable right to exercise its power of eminent domain. It being a local government unit,
the basis for its exercise is granted under Section 19 of Rep. Act No. 7160, to wit: Sec. 19. Eminent Domain. - A
local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of
eminent domain for public use, or purpose, or welfare for the benefit of the poor and the landless, upon payment
of just compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided, however, That
the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to
the owner, and such offer was not accepted: Provided, further, That the local government unit may immediately
take possession of the property upon the filing of the expropriation proceedings and upon making a deposit with
the proper court of at least fifteen percent (15%) of the fair market value of the property based on the current tax
declaration of the property to be expropriated: Provided, finally, That the amount to be paid for the expropriated
property shall be determined by the proper court, based on the fair market value at the time of the taking of the
property. The requisites for authorizing immediate entry are as follows: (1) the filing of a complaint for
expropriation sufficient in form and substance; and (2) the deposit of the amount equivalent to fifteen percent
(15%) of the fair market value of the property to be expropriated based on its current tax declaration.31 Upon
compliance with these requirements, the issuance of a writ of possession becomes ministerial.32 In the case at
bar, petitioner avers that the Amended Complaint it filed complies with both requisites, thus entitling it to a writ of
possession as a matter of right and the issuance thereof becoming ministerial on the part of the lower court even
without any hearing. On the other hand, private respondents allege that the Amended Complaint is not sufficient in
form and substance since it failed to allege compliance with the mandatory requirements for the exercise of the
power of eminent domain for purposes of socialized housing. Section 1 of Rule 67 of the Revised Rules of Civil
Procedure reads: Section 1. The complaint. The right of eminent domain shall be exercised by the filing of a
verified complaint which shall state with certainty the right and purpose of expropriation, describe the real or
personal property sought to be expropriated, and join as defendants all persons owning or claiming to own, or
occupying, any part hereof or interest therein, showing, so far as practicable, the separate interest of each
defendant. If the title to any property sought to be expropriated appears to be in the Republic of the Philippines,
although occupied by private individuals, or if the title is otherwise obscure or doubtful so that the plaintiff cannot
with accuracy or certainty specify who are the real owners, averment to that effect shall be made in the complaint.
The Court finds the Amended Complaint sufficient in form and substance, and the amount of P2,809,696.50
deposited with the Regional Trial Court of Iloilo is equivalent to fifteen percent (15%)33 of the fair market value of
the property sought to be expropriated per current tax declaration. On the averment of private respondents that
the Amended Complaint failed to allege compliance with the mandatory requirements34 for the exercise of the
power of eminent domain for purposes of socialized housing as interpreted in the Filstream cases, it appears that
the Amended Complaint did contain allegations showing compliance therewith.35 However, whether there is,
indeed, compliance with these requirements, the Court deems it not proper to resolve the issue at this time.
Hearing must be held to establish compliance. Private respondents argue that petitioner waived its right to ask for
the immediate possession of Lot No. 935 since it took the latter eight (8) months and twelve (12) days from the
filing of the Amended Complaint, and nine (9) months and thirteen (13) days from the filing of the Original
Complaint, before it filed the Motion for Issuance of Writ of Possession. Petitioner did not waive its right. Section
19 of Rep. Act No. 7160 does not put a time limit as to when a local government may immediately take
possession of the real property. Said section provides that the local government unit may take immediate
possession of the property upon the filing of the expropriation proceedings and upon making a deposit of at least
fifteen percent (15%) of the fair market value of the property based on its current tax declaration. As long as the
expropriation proceedings have been commenced and the deposit has been made, the local government unit
cannot be barred from praying for the issuance of a writ of possession.

Lourdes de la Paz v. City of Pasig, G.R. No. 136349, January 23, 2006

FACTS: Herein petitioner is the registered owner of a parcel of land located at Pag-Asa, Caniogan, Pasig City,
Metro Manila. Then the City of Pasig, respondent notified petitioner of its intention to expropriate a portion of her
property to be used for the sports development and recreational activities" pursuant to Ordinance No.42, enacted
by the Sangguniang Bayan of Pasig.

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Respondent, again wrote another letter to petitioner but this time the purpose was allegedly "in line with
the program of the Municipal Government to provide land opportunities to deserving poor sectors of our
community."
Petitioner sent a reply to respondent stating that the intended expropriation of her property is
unconstitutional, invalid, and oppressive, as the area of her lot is neither sufficient nor suitable to "provide land
opportunities to deserving poor sectors of our community."
Thereon, respondent filed with the trial court a complaint for expropriation and prayed that the trial court,
after due notice and hearing, issue an order for the condemnation of the property; that commissioners be
appointed for the purpose of determining the just compensation; and that judgment be rendered based on the
report of the commissioners.
Thus, petitioner filed a motion to dismiss but was dismissed on the ground that there is a genuine
necessity to expropriate the property for the sports and recreational activities of the residents of Pasig.
As to the issue of just compensation, the trial court held that the same is to be determined in accordance with the
Revised Rules of Court. Additionally, petitioner filed a motion for reconsideration but was also denied.
Hence, the filing of the petition.

ISSUE: WON the expropriation made by the City of Pasig is within its capacity to exercise the power of eminent
domain

RULING: NO, the Court defined the power of eminent domain as "the right of a government to take and
appropriate private property to public use, whenever the public exigency requires it, which can be done only on
condition of providing a reasonable compensation therefor." It has also been described as the power of the State
or its instrumentalities to take private property for public use and is inseparable from sovereignty and inherent in
government.
The power of eminent domain is lodged in the legislative branch of the government. It delegates the
exercise thereof to local government units, other public entities and public utility corporations,
9
subject only to
Constitutional limitations. Local governments have no inherent power of eminent domain and may exercise it only
when expressly authorized by statute.
10
Section 19 of the Local Government Code of 1991 (Republic Act No.
7160) prescribes the delegation by Congress of the power of eminent domain to local government units and lays
down the parameters for its exercise, thus:
"SEC. 19. Eminent Domain. - A local government unit may, through its chief executive and
acting pursuant to an ordinance, exercise the power of eminent domain for public use, purpose or
welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the
provisions of the Constitution and pertinent laws: Provided, however, That, the power of eminent domain
may not be exercised unless a valid and definite offer has been previously made to the owner and such
offer was not accepted: Provided, further, That, the local government unit may immediately take
possession of the property upon the filing of expropriation proceedings and upon making a deposit with
the proper court of at least fifteen percent (15%) of the fair market value of the property based on the
current tax declaration of the property to be expropriated: Provided, finally, That, the amount to be paid
for expropriated property shall be determined by the proper court, based on the fair market value at the
time of the taking of the property."
Judicial review of the exercise of eminent domain is limited to the following areas of concern: (a) the
adequacy of the compensation, (b) the necessity of the taking, and (c) the public use character of the purpose of
the taking.
The right to take private property for public purposes necessarily originates from "the necessity" and the
taking must be limited to such necessity. Necessity within the rule that the particular property to be expropriated
must be necessary, does not mean an absolute but only a reasonable or practical necessity, such as would
combine the greatest benefit to the public with the least inconvenience and expense to the condemning party and
the property owner consistent with such benefit. And the right to own and possess property is one of the most
cherished rights of men. It is so fundamental that it has been written into organic law of every nation where the
rule of law prevails. Unless the requisite of genuine necessity for the expropriation of one's property is clearly
established, it shall be the duty of the courts to protect the rights of individuals to their private property. Important
as the power of eminent domain may be, the inviolable sanctity which the Constitution attaches to the property of
the individual requires not only that the purpose for the taking of private property be specified. The genuine
necessity for the taking, which must be of a public character, must also be shown to exist.
Hence, where the taking by the State of private property is done for the benefit of a small community
which seeks to have its own sports and recreational facility, notwithstanding that there is such a recreational
facility only a short distance away, such taking cannot be considered to be for public use. Its expropriation is not
valid. In this case, the Court defines what constitutes a genuine necessity for public use.

SPOUSES ANTONIO and FE YUSAY
vs.
COURT OF APPEALS

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Facts:
The petitioners owned a parcel of land in Barangay Mauway, Mandaluyong City. Half of their land they used as
their residence, and the rest they rented out to nine other families. Allegedly, the land was their only property and
only source of income.

On October 2, 1997, the Sangguniang Panglungsod of Mandaluyong City adopted Resolution No. 552, Series of
1997, to authorize then City Mayor Benjamin S. Abalos, Sr. to take the necessary legal steps for the expropriation
of the land of the petitioners for the purpose of developing it for low cost housing for the less privileged but
deserving city inhabitants.

Notwithstanding that the enactment of Resolution No. 552 was but the initial step in the Citys exercise of its
power of eminent domain granted under Section 19 of the Local Government Code of 1991, the petitioners
became alarmed, and filed a petition for certiorari and prohibition in the RTC, praying for the annulment of
Resolution No. 552 due to its being unconstitutional, confiscatory, improper, and without force and effect.

On January 31, 2001, the RTC ruled in favor of the City and dismissed the petition for lack of merit. However, on
February 19, 2002, the RTC, acting upon the petitioners motion for reconsideration, set aside its decision and
declared that Resolution No. 552 was null and void. The RTC held that the petition was not premature because
the passage of Resolution No. 552 would already pave the way for the City to deprive the petitioners and their
heirs of their only property; that there was no due process in the passage of Resolution No. 552 because the
petitioners had not been invited to the subsequent hearings on the resolution to enable them to ventilate their
opposition; and that the purpose for the expropriation was not for public use and the expropriation would not
benefit the greater number of inhabitants.

Aggrieved, the City appealed to the CA. CA concluded that the reversal of the January 31, 2001 decision by the
RTC was not justified because Resolution No. 552 deserved to be accorded the benefit of the presumption of
regularity and validity absent any sufficient showing to the contrary; that notice to the petitioners (Spouses Yusay)
of the succeeding hearings conducted by the City was not a part of due process, for it was enough that their views
had been consulted and that they had been given the full opportunity to voice their protest; that to rule otherwise
would be to give every affected resident effective veto powers in law-making by a local government unit; and that
a public hearing, although necessary at times, was not indispensable and merely aided in law-making.

Regional Trial Court decision on the motion was declared null and void, is hereby REVERSED and SET ASIDE.
The petitioners moved for reconsideration, but the CA denied their motion. Thus, they appeal to the Court.

Issue:
Whether or not a Republic Act No. 7160 (The Local Government Code) required the City to pass an ordinance,
not adopt a resolution, for the purpose of initiating an expropriation proceeding

Ruling:
Differentiate between a resolution and an ordinance. The first is upon a specific matter of a temporary nature
while the latter is a law that is permanent in character. No rights can be conferred by and be inferred from a
resolution, which is nothing but an embodiment of what the lawmaking body has to say in the light of attendant
circumstances

A resolution like Resolution No. 552 that merely expresses the sentiment of the Sangguniang Panglungsod is not
sufficient for the purpose of initiating an expropriation proceeding.

Section 19. Eminent Domain. A local government unit may, through its chief executive and acting pursuant to an
ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the benefit of the poor
and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent
laws: Provided, however, That the power of eminent domain may not be exercised unless a valid and definite offer
has been previously made to the owner, and such offer was not accepted: Provided, further, That the local
government unit may immediately take possession of the property upon the filing of the expropriation proceedings
and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the
property based on the current tax declaration of the property to be expropriated: Provided, finally, That, the
amount to be paid for the expropriated property shall be determined by the proper court, based on the fair market
value at the time of the taking of the property.

Thus, the following essential requisites must concur before an LGU can exercise the power of eminent domain:
1. An ordinance is enacted by the local legislative council authorizing the local chief executive, in behalf of the
LGU, to exercise the power of eminent domain or pursue expropriation proceedings over a particular private
property.
2. The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit of the poor and
the landless.
3. There is payment of just compensation, as required under Section 9 Article III of the Constitution and other
pertinent laws.
4. A valid and definite offer has been previously made to the owner of the property sought to be expropriated, but
said offer was not accepted.

In the case at bar, the local chief executive sought to exercise the power of eminent domain pursuant to a
resolution of the municipal council. Thus, there was no compliance with the first requisite that the mayor be
authorized through an ordinance. Petitioner cites Camarines Sur vs. Court of Appeals to show that a resolution
may suffice to support the exercise of eminent domain by an LGU. This case, however, is not in point because the
applicable law at that time was BP 337, the previous Local Government Code, which had provided that a mere
resolution would enable an LGU to exercise eminent domain. In contrast, RA 7160, the present Local Government
Code which was already in force when the Complaint for expropriation was filed, explicitly required an ordinance
for this purpose.
We are not convinced by petitioners insistence that the terms "resolution" and "ordinance" are synonymous. A
municipal ordinance is different from a resolution. An ordinance is a law, but a resolution is merely a declaration of

Page | 7

the sentiment or opinion of a lawmaking body on a specific matter. An ordinance possesses a general and
permanent character, but a resolution is temporary in nature. Additionally, the two are enacted differently -- a third
reading is necessary for an ordinance, but not for a resolution, unless decided otherwise by a majority of all the
Sanggunian members.

In its Brief filed before Respondent Court, petitioner argues that its Sangguniang Bayan passed an ordinance on
October 11, 1994 which reiterated its Resolution No. 93-35, Series of 1993, and ratified all the acts of its mayor
regarding the subject expropriation.

This argument is bereft of merit. In the first place, petitioner merely alleged the existence of such an ordinance,
but it did not present any certified true copy thereof. In the second place, petitioner did not raise this point before
this Court. In fact, it was mentioned by private respondent, and only in passing. In any event, this allegation does
not cure the inherent defect of petitioners Complaint for expropriation filed on September 23, 1993"

x x x in a motion to dismiss based on the ground that the complaint fails to state a cause of action, the question
submitted before the court for determination is the sufficiency of the allegations in the complaint itself. Whether
those allegations are true or not is beside the point, for their truth is hypothetically admitted by the motion.

The fact that there is no cause of action is evident from the face of the Complaint for expropriation which was
based on a mere resolution. The absence of an ordinance authorizing the same is equivalent to lack of
cause of action. Consequently, the Court of Appeals committed no reversible error in affirming the trial courts
Decision which dismissed the expropriation suit.

Sy vs Local Government of Quezon City
G.R. No. 202690 June 5, 2013

FACTS:
On November 7, 1996, the City, through then Mayor Ismael Mathay, Jr., filed a complaint for
expropriation with the RTC in order to acquire a 1,000 sq. m. parcel of land, owned and registered under the
name of Sy (subject property), which was intended to be used as a site for a multi-purpose barangay hall, day-
care center, playground and community activity center for the benefit of the residents of Barangay Balingasa,
Balintawak, Quezon City.
On March 18, 1997, pursuant to Section 19 of RA 7160 (Local Government Code of 1991), the City
deposited the amount of P241,090.00 with the Office of the Clerk of Court, representing 15% of the fair market
value of the subject property based on its tax declaration.
During the preliminary conference on November 8, 2006, Sy did not question the Citys right to
expropriate the subject property. Thus, only the amount of just compensation remained at issue.
On July 6, 2006, the RTC appointed Commissioners Ostaco, Engr. Salinas and Atty. Alcantara to
determine the proper amount of just compensation to be paid by the City for the subject property. Subsequently,
Commissioners Ostaco and Alcantara, in a Report dated February 11, 2008, recommended the payment
of P5,500.00 per sq. m., to be computed from the date of the filing of the expropriation complaint, or on November
7, 1996. On the other hand, Commissioner Salinas filed a separate Report dated March 7, 2008, recommending
the higher amount ofP13,500.00 per sq. m. as just compensation.
On August 22, 2008, RTC citing the principle that just compensation must be fair not only to the owner
but to the expropriator as well, adopted the findings of Commissioners Ostaco and Alcantara and thus, held that
the just compensation for the subject property should be set at P5,500.00 per sq. m. Further, it found no basis for
the award of damages and back rentals in favor of Sy. Finally, while legal interest was not claimed, for equity
considerations, it awarded six percent (6%) legal interest, computed from November 7, 1996 until full payment of
just compensation.
Sy filed an appeal with the CA. It affirmed the RTCs ruling but modified the same, ordering the City to
pay Sy the amount of P200,000.00 as exemplary damages and attorneys fees equivalent to one percent (1%) of
the total amount due.
It found the appraisal of Commissioners Ostaco and Alcantara for the subject property to be
more believable than the P13,000.00 per sq. m. valuation made by independent appraisers
Cuervo and Asian Appraisers in 1995 and 1996, respectively
(a) the fair market value of the subject property in the amount of P4,000.00 per sq. m. based
on the September 4, 1996 recommendation of the City Appraisal Committee;
(b) the market value of the subject lot in the amount of P2,000.00 per sq. m. based on
several sworn statements made by Sy himself;
(c) Sys own tax declaration for 1996,
20
stating that the subject property has a total market
value of P2,272,050.00. Accordingly, it held that the fair market value ofP5,500.00 per
sq. m., or P5,500,000.00 in total, for the 1,000 sq. m. subject property arrived at by
Commissioners Ostaco and Alcantara was more than fair and reasonable.
CA also denied Sys assertion that he should be entitled to damages on account of the
purported shelving of his housing project, finding no sufficient evidence to support the same.
It observed that the expropriation would not leave the rest of Sys properties useless as they
would still be accessible through a certain Lot 8 based on the Property Identification Map.
citing the case of Manila International Airport Authority v. Rodriguez (MIAA), it awarded
exemplary damages in the amount of P200,000.00 and attorneys fees equivalent to one
percent (1%) of the amount due because of the Citys taking of the subject property without
even initiating expropriation proceedings.
It, however, denied Sys claim of back rentals considering that the RTC had already granted
legal interest in his favor.
Aggrieved, Sy moved for reconsideration which was denied in the Resolution dated July 16, 2012 for
being filed out of time. The City also filed a motion for reconsideration which was equally denied for lack of merit.

Page | 8

Hence, this petition.

ISSUE:
Whether or not CA correctly upheld the amount of just compensation as determined by the RTC as well as its
grant of six percent (6%) legal interest.

RULING:
No. Based on a judicious review of the records and application of jurisprudential rulings, the Court
holds that the correct rate of legal interest to be applied is twelve percent (12%) and not six percent (6%) per
annum, owing to the nature of the Citys obligation as an effective forbearance.
In the case of Republic v. CA, the Court ruled that the debt incurred by the government on account of the taking of
the property subject of an expropriation constitutes an effective forbearance which therefore, warrants the
application of the 12% legal interest rate, viz:
The constitutional limitation of "just compensation" is considered to be the
sum equivalent to the market value of the property, broadly described to
be the price fixed by the seller in open market in the usual and ordinary
course of legal action and competition or the fair value of the property as
between one who receives, and one who desires to sell, it fixed at the time
of the actual taking by the government. Thus, if property is taken for public
use before compensation is deposited with the court having jurisdiction
over the case, the final compensation must include interests on its just
value to be computed from the time the property is taken to the time when
compensation is actually paid or deposited with the court. In fine, between
the taking of the property and the actual payment, legal interests accrue in
order to place the owner in a position as good as (but not better than) the
position he was in before the taking occurred.
The Bulacan trial court, in its 1979 decision, was correct in imposing
interests on the zonal value of the property to be computed from the time
petitioner instituted condemnation proceedings and "took" the property in
September 1969. This allowance of interest on the amount found to be the
value of the property as of the time of the taking computed, being an
effective forbearance, at 12% per annum should help eliminate the issue
of the constant fluctuation and inflation of the value of the currency over
time. x x x
Finally, the Court cannot sustain the amount of P5,500.00/sq. m. as just compensation which was set by
the RTC and upheld by the CA. The said valuation was actually arrived at after considering: (a) the September 4,
1996 recommendation of the City Appraisal Committee; (b) several sworn statements made by Sy himself; and (c)
Sys own tax declaration for 1996.
It is well-settled that the amount of just compensation is to be ascertained as of the time of the
taking.
49
However, the above-stated documents do not reflect the value of the subject property at the time of its
taking in 1986 but rather, its valuation in 1996. Consequently, the case must be remanded to the RTC in order to
properly determine the amount of just compensation during such time the subject property was actually taken.
Hence, the case was remanded to the trial court for the proper determination of the amount of just
compensation in accordance with this Decision. To forestall any further delay in the resolution of this case, the trial
court is hereby ordered to fix the just compensation for petitioner Henry L. Sy's property with dispatch and report
must be submitted to SC for its compliance. Finally, respondent Local Government of Quezon City was ordered to
pay exemplary damages in the amount ofP200,000.00 and attorney's fees equivalent to one percent (1%) of the
amount due, after final determination of the amount of just compensation.

Estanislao v Costales

FACTS: The validity of Ordinance No. 44 of Zamboanga City, dated January 13, 1982 imposing a P0.01 tax per
liter of softdrinks produced, manufactured, and/or bottled within the territorial jurisdiction of the City of Zamboanga
is the issue addressed by this petition.
This Ordinance was passed by the Sangguniang Panglungsod of Zamboanga City. On February 16, 1982, the
Sanggunian sent a copy of the Ordinance to the then Minister of Finance by registered mail for his review
pursuant to P.D. No. 231, otherwise known as the Local Tax Code.
On December 3, 1982, the Minister of Finance through Deputy Minister Antonino P. Roman, Jr., sent the letter
addressed to the Sanggunian, suspending the effectivity of Ordinance No. 44 on the ground that it contravenes
Section 19(a) of the Local Tax Code.
On January 31, 1983, the City of Zamboanga, represented by its City Mayor, appealed said decision of the
Minister of Finance to the Regional Trial Court, Branch 14, at Zamboanga City.
On December 5, 1990, the lower court rendered a decision finding that the tax levied under said Ordinance is not
among those that the Sanggunian may impose under the Local Tax Code, but nonetheless, it upheld its validity on
the ground that the Minister of Finance did not take appropriate action on the matter within the prescribed period
of 120 days after receipt of a copy thereof.
Hence, this petition for review on certiorari filed by the incumbent Secretary of Finance, represented by the
Solicitor General, alleging that the trial court erred when it held that the failure of the Minister of Finance to
suspend the effectivity of Ordinance No. 44 within 120 days from receipt of a copy thereof rendered said
Ordinance valid.

RULING:
Ordinance No. 44 of the respondent Zamboanga City imposes P0.01 per liter of softdrinks produced,
manufactured, and/or bottled within the territorial jurisdiction of the City of Zamboanga. No doubt this Ordinance is
ultra vires as it is not within the authority of the City to impose said tax. The authority of the City is limited to the
imposition of a percentage tax on the gross sales or receipts of said product which, being non-essential, shall be
at the rate of not exceeding 2% of the gross sales or receipts of the softdrinks for the preceding calendar year.
The tax being imposed under said Ordinance is based on the output or production and not on the gross sales or
receipts as authorized under the Local Tax Code.

Page | 9

Public respondent Zamboanga City, however, invokes the ruling of this Court in Pepsi-Cola Bottling Company vs.
Municipality of Tanauan, Leyte whereby this Court upheld the validity of Municipal Ordinance No. 27 enacted by
the Municipality of Tanauan, Leyte imposing a tax of P0.01 for every gallon of softdrinks produced in the
municipality.
Said case was decided by this Court on the basis of the provisions of the Local Autonomy Act (Republic Act No.
2264, as amended, which took effect on June 19, 1959), particularly Section 2 thereof, which gives the cities or
municipalities ample taxing authority covering almost "everything, excepting those mentioned herein."
However, the Local Autonomy Act has been superseded by the Local Tax Code insofar as the taxing authority in
the provinces, cities or municipalities is concerned. By express language of Section 64(a) of the Local Tax Code,
"all existing tax ordinances of provinces, cities, municipalities and barrios shall be deemed ipso facto nullified on
June 30, 1974."
The applicable law, therefore, to the present case is the Local Tax Code and not the Local Autonomy Act. Section
5, Article X of the 1987 Constitution provides "Each local government unit shall have the power to create its own
sources of revenues, and to levy taxes, fees, and charges subject to such guidelines and limitations as the
Congress may provide, consistent with the basic policy of local autonomy." Ordinance No. 44 of public respondent
Zamboanga City traverses the limitations set by the Local Tax Code.
Public respondent Zamboanga City concurs in the position of the respondent judge that since the Minister of
Finance failed to act or otherwise suspend the effectivity of the tax ordinance within 120 days from receipt of a
copy thereof, said Ordinance is valid and remains in force.
There is no authority under Section 44 of the Local Tax Code for this conclusion. All that is provided therein is that
if the Secretary of Finance "takes no action as authorized in this section, the tax ordinance shall remain in force."
Even if the Secretary of Finance failed to review or act on the Ordinance within the prescribed period of 120 days
it does not follow as a legal consequence thereof that an otherwise invalid ordinance is thereby validated.
Much less can it be interpreted to mean that the Secretary of Finance can no longer act by suspending and/or
revoking an invalid ordinance even after the lapse of the 120-day period. All that the law says is that after said
period the tax ordinance shall remain in force. The prescribed period for review is only directory and the Secretary
of Finance may still review the ordinance and act accordingly even after the lapse of the said period provided he
acts within a reasonable time.
Consequently even after the prescribed period has lapsed, should the Secretary of Finance, upon review, find that
the tax or fee levied or imposed is unjust, excessive, oppressive, confiscatory, or not among those that the
particular local government may impose in the exercise of its power in accordance with this Code; or when the tax
ordinance is, in whole or in part, contrary to the declared national economic policy; or when the ordinance is
discriminatory in nature on the conduct of business or calling or in restraint of trade, the Secretary of Finance may
certainly suspend the effectivity of such ordinance and revoke the same, without prejudice to the right to appeal to
the courts within 30 days after receipt of the notice of suspension. The same rule should apply to the provincial
and city treasurers, as the case may be, under Section 44 of the Local Tax Code.

Philippine Petroleum Corp v. Municipality of Pililla, Rizal
G.R. No. 90776, June 3, 1991.

Principle:
The validity of the ordinance is undisputed for it is an exercise of the constitutional power of LGUs to levy taxes.
To allow the continuous effectivity of the prohibition set forth in the circulars would be tantamount to restricting
their power to tax by mere administrative issuances. Administrative regulations must be in harmony with the
provisions of the law. It is an ancient rule that exemptions from taxation are construed in strictissimi juris against
the taxpayer and liberally in favor of the taxing authority.

Facts:

Petitioner, Philippine Petroleum Corporation (PPC for short) is a business enterprise engaged in the manufacture
of lubricated oil base stocks which is a petroleum product, with its refinery plant situated at Malaya, Pililla, Rizal,
conducting its business activities within the territorial jurisdiction of the Municipality of Pililla, Rizal.Under Section
142 of the National Internal Revenue Code of 1939, manufactured oils and other fuels are subject to specific
tax.Later, Presidential Decree No. 231, otherwise known as the Local Tax Code was issued by former President
Ferdinand E. Marcos governing the exercise by provinces, cities, municipalities and barrios of their taxing and
other revenue-raising powers. Sections 19 and 19(a) thereof, provide among others, that the municipality may
impose taxes on business, except on those for which fixed taxes are provided on manufacturers, importers or
producers of any article of commerce of whatever kind or nature. The Secretary of Finance issued a Circular
directed to all provincial, city and municipal treasurers to refrain from collecting any local tax imposed in old or
new tax ordinances in the business of manufacturing, wholesaling, retailing, or dealing in petroleum products
subject to the specific tax under the National Internal Revenue Code. Likewise, another Circular was issued by the
Secretary of Finance instructing all City Treasurers to refrain from collecting any local tax imposed in tax
ordinances enacted before or after the effectivity of the Local Tax Code as provided before.Meanwhile,
Respondent Municipality of Pililla enacted Municipal Tax Ordinance No. 1 otherwise known as "The Pililla Tax
Code of 1974 ". Sections 9 and 10 of the said ordinance imposed a tax on business, except for those for which
fixed taxes are provided in the Local Tax Code. P.D. 436 was promulgated increasing the specific tax all
petroleum based products levied under Sections 142, 144 and 145 of the National Internal Revenue Code, as
amended, and granting provinces, cities and municipalities certain shares in the specific tax on such products in
lieu of local taxes imposed on petroleum products. Provincial Circular No. 6-77 was also issued directing all city

Page | 10

and municipal treasurers to refrain from collecting the so-called storage fee onflammable or combustible materials
imposed under the local tax ordinance of their respective locality, said fee partaking of the nature of a strictly
revenue measure or service charge. P.D.1158 otherwise known as the National Internal Revenue Code of 1977
was enacted, Section 153 of which specifically imposes specific tax on refined and manufactured mineral oils and
motor fuels. Enforcing the provisions of the above-mentioned ordinance, the respondent filed a complaint on April
4, 1986 docketed as Civil Case No. 057-T against PPC for the collection of the business tax from 1979 to 1986;
storage permit fees from 1975 to 1986; mayor's permit and sanitary inspection fees from 1975 to 1984. PPC,
however, have already paid the last-named fees starting 1985. The trial court rendered a decision against the
petitioner. Hence, the instant petition.

Issue:
Whether or not PPC whose oil products are subject to specific tax under the NIRC, is still liable to pay taxes on
business and storage fees, considering Provincial Circular No. 6-77, mayor's permit and sanitary inspection fee
under Municipal Ordinance No.1.

Ruling:
The Supreme Court held that PPC is liable to pay taxes.
There is no question that Pililla's Municipal Tax Ordinance No. 1, imposing the assailed taxes, fees and charges is
valid especially Section 9 (A) which according to the trial court "was lifted in toto and/or is a literal reproduction of
Section19 (a) of the Local Tax Code as amended by P.D. No. 426." It conforms with the mandate of said law. But
P.D. No. 426 amending the Local Tax Code is deemed to have repealed Provincial Circular Nos. 26-73 and 26 A-
73 issued by the Secretary of Finance when Sections 19 and 19(a) were carried over into P.D. No. 426 and no
exemptions were given to manufacturers, wholesalers, retailers, ordealers in petroleum products. Well-
settled is the rule that administrative regulations must be in harmony with the provisions of the law. In case of
discrepancy between the basic law and an implementing rule or regulation, the former prevails. Furthermore,
while Section 2 of P.D. 436 prohibits the imposition of local taxes on petroleum products, said decree did not
amend Sections 19 and 19 (a) of P.D. 231 as amended by P.D. 426, wherein the municipality is granted the
right to levy taxes on business of manufacturers, importers, producers of any article of commerce of
whatever kind or nature. A tax on business is distinct from a tax on the article itself. Thus, if the imposition
of tax on business of manufacturers, that is in petroleum products contravenes a declared national policy, it
should have been expressly stated in P.D. No. 436. The exercise by local governments of the power to tax is
ordained by the present Constitution. To allow the continuous effectivity of the prohibition set forth in PC
No.26-73 (1) would be tantamount to restricting their power to tax by mere administrative issuances. Under
Section 5, Article X of the 1987 Constitution, only guidelines and limitations that may be established by Congress
can define and limit such power of local governments. Provincial Circular No. 6-77 enjoining all city and municipal
treasurers to refrain from collecting the so-called storage fee on flammable or combustible materials imposed in
the local tax ordinance of their respective locality frees petitioner PPC from the payment of storage permit fee.
The storage permit fee being imposed by Pililla's tax ordinance is a fee for the installation and keeping in storage
of any flammable, combustible or explosive substances. In asmuch as said storage makes use of tanks owned not
by the municipality of Pililla, but by petitioner PPC, same is obviously not a charge for any service rendered by the
municipality as what is envisioned in Section 37 of the same Code. Section 10 (z) (13) of Pililla's Municipal Tax
Ordinance No. 1 prescribing a permit fee is a permit fee allowed under Section 36 of the amended Code. As to the
authority of the mayor to waive payment of the mayor's permit and sanitary inspection fees, the trial court did not
err in holding that "since the power to tax includes the power to exempt thereof which is essentially a
legislative prerogative, it follows that a municipal mayor who is an executive officer may not unilaterally
withdraw such an expression of a policy thru the enactment of a tax." The waiver partakes of the nature of
an exemption. It is an ancient rule that exemptions from taxation are construed instrictissimi juris against
the taxpayer and liberally in favor of the taxing authority. Tax exemptions are looked upon with disfavor.
Thus, in the absence of a clear and express exemption from the payment of said fees, the waiver cannot be
recognized. As already stated, it is the law-making body, and not an executive like the mayor, who can make
an exemption. Under Section 36 of the Code, a permit fee like the mayor's permit, shall be required before any
individualor juridical entity shall engage in any business or occupation under the provisions of the Code. However,
since the Local Tax Code does not provide the prescriptive period for collection of local taxes, Article 1143 of the
Civil Code applies. Said law provides that an action upon an obligation created by law prescribes within ten (10)
years from the time the right of action accrues. The Municipality of Pililla can therefore enforce the collection
of the tax on business of petitioner PPC due from 1976 to 1986, and NOT the tax that had accrued prior to
1976 because such has already prescribed.

TUZON v CA

Facts:
Sangguniang Bayan of Camalaniugan, Cagayan, unanimously adopted Resolution No. 9 which allows
Sangguniang Bayan to solicit 1% donation from the thresher operators who will apply for a permit to
thresh within the jurisdiction of this municipality to help finance the construction project of the Sports and
Nutrition Center Building.
Private respondent Saturnino T. Jurado sent his agent to the municipal treasurers office to pay the
license fee of 285 for thresher operators. Mapagu, then incumbent municipal treasurer, refused to
accept the payment and required him to first secure a mayors permit. Mayor Tuazon said that Jurado
should first comply with the Resolution No 9 and sign the agreement before the permit could be issued.
Jurado ignored the requirement.
Jurado filed a complaint with CFI of Cagayan for mandamus with actual and moral damages to compel
the issuance of mayors permit and license. He filed another petition with same court for declaratory
judgment against the said resolution for being illegal either as a donation or as a tax measure.
Trial court upheld the challenged measure. However it dismissed claims for damages.
Jurado appealed to CA which affirmed the validity of Resolution No 9 but found Tuazon and Mapagu to
have acted maliciously and in bad faith hence, they were held liable.
CA ruled that the challenge measures are valid.

Page | 11

Respondent court has not offered any explanation for its conclusion that the challenged measures are
valid nor does it discuss its own concept of the nature of the resolution.
While it would appear from the wording of the resolution that the municipal govt merely
intends to solicit the 1% contribution from the threshers, the implementing agreement seems to make
the donation obligatory and a condition precedent to the issuance of the mayors permit. This goes
against the nature of a donation, which is an act of liberality and is never obligatory.
If, on the other hand, it is to be considered a tax ordinance, then it must be shown in view of
the challenge raised by the private respondents to have been enacted in accordance with the
requirements of the Local Tax Code. These would include the holding of a public hearing on the
measure 4 and its subsequent approval by the Secretary of Finance, 5 in addition to the usual requisites
for publication of ordinances in general.

(Provides for requisites to be considered a tax ordinance:
It must be shown to have enacted in accordance with the requirements of the Local Tax Code i.e.
holding of public hearing on the measure and subsequent approval by Sec of Finance in addition to
publication of ordinances in general.)
Tuazon and Mapagu filed the instant petition.
Issue: Whether or not the petitioners are liable in damages to the private respondent for having withheld from him
the mayors permit and license because of his refusal to comply with Resolution No. 9.
Ruling:
No, they are not liable. Petitioners acted within the scope of their authority and in consonance with their honest
interpretation of the resolution in question. In the absence of judicial decision declaring it invalid, its legality would
have to be presumed. As executive officials of the municipality, they had the duty to enforce it as long as it had not
been repealed by the Sangguniang Bayan or annulled by the courts.
As a rule, public officer, whether judicial, quasi-judicial or executive, is not personally liable to one injured in
consequence of an act performed within the scope of his official authority, and in line of his official duty.

G.R. No. 131359 May 5, 1999
MANILA ELECTRIC COMPANY, petitioner, vs. PROVINCE OF LAGUNA and BENITO R.
BALAZO, in his capacity as Provincial Treasurer of Laguna,respondents.
Facts:
Petitioner protested the franchise tax collected to them by Province of Laguna pursuance to Laguna Provincial
Ordinance No. 01-92, effective 01 January 1993. Petitioner was granted franchise by various municipalities of the
Province of Laguna on various dates for the supply of electric light, heat and power within their concerned areas.
Petitioner was also granted a franchise by the National Electrification Administration to operate an electric light
and power service in the Municipality of Calamba, Laguna. There was a protest to the tax collected by the
Province of Laguna because according to the petitioner the franchise tax it had paid and continued to pay to the
National Government pursuant to P.D. 551 already included the franchise tax imposed by the Provincial Tax
Ordinance. It also contended that the imposition of a franchise tax under Section 2.09 of Laguna Provincial
Ordinance No. 01-92, insofar as it concerned MERALCO, contravened the provisions of Section 1 of P.D. 551
xxx... be in lieu of all taxes and assessments of whatever nature imposed by any national or local authority on
earnings, receipts, income and privilege of generation, distribution and sale of electric current.
Issue:
Whether the imposition of a franchise tax under Section 2.09 of Laguna Provincial Ordinance No. 01-92, insofar
as petitioner is concerned, is violative of the non-impairment clause of the Constitution and Section 1 of
Presidential Decree No. 551.
Ruling:
The imposition of a franchise tax under Section 2.09 of Laguna Provincial Ordinance No. 01-92, insofar as
petitioner is concerned, is not violative of the non-impairment clause of the Constitution and Section 1 of
Presidential Decree No. 551.
The 1991 Code explicitly authorizes provincial governments, notwithstanding "any exemption granted by any law
or other special law, . . . (to) impose a tax on businesses enjoying a franchise." Section 137 thereof provides:
Sec. 137. Franchise Tax Notwithstanding any exemption granted by any law or other special law, the province
may impose a tax on businesses enjoying a franchise, 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, or realized,
within its territorial jurisdiction. In the case of a newly started business, the tax shall not exceed one-twentieth
(1/20) of one percent (1%) of the capital investment. In the succeeding calendar year, regardless of when the
business started to operate, the tax shall be based on the gross receipts for the preceding calendar year, or any
fraction thereof, as provided herein. (Underscoring supplied for emphasis)
Indicative of the legislative intent to carry out the Constitutional mandate of vesting broad tax powers to local
government units, the Local Government Code has effectively withdrawn under Section 193 thereof, tax
exemptions or incentives theretofore enjoyed by certain entities. This law states:

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Sec. 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. (Underscoring supplied for emphasis)
The Code, in addition, contains a general repealing clause in its Section 534; thus:
Sec. 534. Repealing Clause. . . .
(f) All general and special laws, acts, city charters, decrees, executive orders, proclamations and administrative
regulations, or part or parts thereof which are inconsistent with any of the provisions of this Code are hereby
repealed or modified accordingly. (Underscoring supplied for emphasis)
In the recent case of the City Government of San Pablo, etc., et al. vs. Hon. Bienvenido V. Reyes, et al., the Court
has held that the phrase in lieu of all taxes "have to give way to the peremptory language of the Local
Government Code specifically providing for the withdrawal of such exemptions, privileges," and that "upon the
effectivity of the Local Government Code all exemptions except only as provided therein can no longer be invoked
by MERALCO to disclaim liability for the local tax." In fine, the Court has viewed its previous rulings as laying
stress more on the legislative intent of the amendatory law whether the tax exemption privilege is to be
withdrawn or not rather than on whether the law can withdraw, without violating the Constitution, the tax
exemption or not.
While the Court has, not too infrequently, referred to tax exemptions contained in special franchises as being in
the nature of contracts and a part of the inducement for carrying on the franchise, these exemptions,
nevertheless, are far from being strictly contractual in nature. Contractual tax exemptions, in the real sense of the
term and where the non-impairment clause of the Constitution can rightly be invoked, are those agreed to by the
taxing authority in contracts, such as those contained in government bonds or debentures, lawfully entered into by
them under enabling laws in which the government, acting in its private capacity, sheds its cloak of authority and
waives its governmental immunity. Truly, tax exemptions of this kind may not be revoked without impairing the
obligations of contracts. These contractual tax exemptions, however, are not to be confused with tax exemptions
granted under franchises. A franchise partakes the nature of a grant which is beyond the purview of the non-
impairment clause of the Constitution.

Indeed, Article XII, Section 11, of the 1987 Constitution, like its precursor
provisions in the 1935 and the 1973 Constitutions, is explicit that no franchise for the operation of a public utility
shall be granted except under the condition that such privilege shall be subject to amendment, alteration or repeal
by Congress as and when the common good so requires.
WHEREFORE, the instant petition is hereby DISMISSED. No costs.

Non-impairment clause
The non-impairment clause is contained in Section 10, Article III of the Constitution, which provides that no law
impairing the obligation of contracts shall be passed. The non-impairment clause is limited in application to laws
that derogate from prior acts or contracts by enlarging, abridging or in any manner changing the intention of the
parties. There is impairment if a subsequent law changes the terms of a contract between the parties, imposes
new conditions, dispenses with those agreed upon or withdraws remedies for the enforcement of the rights of the
parties.

CITY OF ILOILO vs. SMART COMMUNICATIONS, INC. (SMART)
GR No. 167260
February 27, 2009

FACTS:

SMART received a letter of assessment dated February 12, 2002 from petitioner requiring it to pay deficiency
local franchise and business taxes, in the amount of P764,545.29, which it incurred for the years 1997 to 2001.
SMART protested the assessment, claiming exemption from payment of local franchise and business taxes based
on Section 9 of its legislative franchise under Republic Act (R.A.) No. 7294 (SMARTs franchise). Under SMARTs
franchise, it was required to pay a franchise tax equivalent to 3% of all gross receipts, which amount shall be in
lieu of all taxes. SMART contends that the in lieu of all taxes clause covers local franchise and business taxes.
SMART similarly invoked R.A. No. 7925 or the Public Telecommunications Policy Act (Public Telecoms Act)
whose Section 23 declares that any existing privilege, incentive, advantage, or exemption granted under existing
franchises shall ipso facto become part of previously granted-telecommunications franchise. SMART contends
that by virtue of Section 23, tax exemptions granted by the legislature to other holders of telecommunications
franchise may be extended to and availed of by SMART.

The petitioner posits that SMARTs claim for exemption under its franchise is not equivocal enough to prevail over
the specific grant of power to local government units to exact taxes from businesses operating within its territorial
jurisdiction under Section 137 in relation to Section 151 of the LGC. More importantly, it claimed that exemptions

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from taxation have already been removed by Section 193 of the LGC, which provides that tax exemptions or
incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including government-
owned or controlled corporations, except local water districts, cooperatives duly registered under RA No. 6938,
non-stock and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this
Code.

ISSUE:
Whether or not SMART is exempt from the payment of local franchise and business taxes under Section
9 of its franchise and Section 23 of the Public Telecoms Act.

HELD:

The basic principle in the construction of laws granting tax exemptions is he who claims an exemption from his
share of the common burden of taxation must justify his claim by showing that the Legislature intended to exempt
him by words too plain to be beyond doubt or mistake.

We have indeed ruled that by virtue of Section 193 of the LGC, all tax exemption privileges then enjoyed by all
persons, save those expressly mentioned, have been withdrawn effective January 1, 1992 the date of effectivity
of the LGC. The first clause of Section 137 of the LGC states the same rule. However, the withdrawal of
exemptions, whether under Section 193 or 137 of the LGC, pertains only to those already existing when the LGC
was enacted. The intention of the legislature was to remove all tax exemptions or incentives granted prior to the
LGC. As SMARTs franchise was made effective on March 27, 1992 after the effectivity of the LGC Section
193 will therefore not apply in this case.

But while Section 193 of the LGC will not affect the claimed tax exemption under SMARTs franchise, we fail to
find a categorical and encompassing grant of tax exemption to SMART covering exemption from both national and
local taxes:

R.A. No 7294 does not expressly provide what kind of taxes SMART is exempted from. It is not clear whether the
in lieu of all taxes provision in the franchise of SMART would include exemption from local or national taxation.
What is clear is that SMART shall pay franchise tax equivalent to three percent (3%) of all gross receipts of the
business transacted under its franchise. But whether the franchise tax exemption would include exemption from
exactions by both the local and the national government is not unequivocal.

The uncertainty in the in lieu of all taxes clause in R.A. No. 7294 on whether SMART is exempted from both
local and national franchise tax must be construed strictly against SMART which claims the exemption.

SMARTs claim for exemption from local business and franchise taxes based on Section 9 of its franchise is
therefore unfounded.

Whether Section 23 of the Public Telecoms Act extends tax exemptions granted by Congress to new franchise
holders to existing ones has been answered in the negative in the case of PLDT v. City of Davao. The term
exemption in Section 23 of the Public Telecoms Act does not mean tax exemption; rather, it refers to exemption
from certain regulatory or reporting requirements imposed by government agencies such as the National
Telecommunications Commission. The thrust of the Public Telecoms Act is to promote the gradual deregulation of
entry, pricing, and operations of all public telecommunications entities, and thus to level the playing field in the
telecommunications industry. The language of Section 23 and the proceedings of both Houses of Congress are
bereft of anything that would signify the grant of tax exemptions to all telecommunications entities. Intent to grant
tax exemption cannot therefore be discerned from the law; the term exemption is too general to include tax
exemption and runs counter to the requirement that the grant of tax exemption should be stated in clear and
unequivocal language too plain to be beyond doubt or mistake.

CITY OF IRIGA vs. CAMARINES SUR III ELECTRIC COOPERATIVE, INC. (CASURECO III)

Facts: Respondent Camarines Sur III Electric Cooperative, Inc. (CASURECO), an electric cooperative organized
under Presidential Decree(PD) No. 269 and registered with the National Electrification Administration (NEA), is
engaged in the business of electric power distribution to various end-users and consumers within the City of Iriga
and the municipalities of Nabua, Bato, Baao, Buhi, Bula andBalatan of the Province of Camarines Sur (or the
Rinconada area).Petitioner City of Iriga assessed CASURECO deficiency franchise tax and RPT covering the
periods 1998 to 2003 and 1995 to 2003,respectively. CASURECO refused to pay and argued that as an electric
cooperative provisionally registered with the CooperativeDevelopment Authority (CDA), it is exempt from the
payment of local taxes.Petitioner filed a collection complaint against CASURECO with the RTC, which ruled that
the citys right to assess RPT for 1995 - 1999had already prescribed. The RTC also ruled that CASURECO is
liable for franchise taxes for 2000 2003 based on its gross receipts fromIriga City and the Rinconada area, on
the ground that the Situs of taxation is the place where the privilege is exercised.On appeal, the Court of
Appeals (CA) reversed the RTC on the ground that CASURECO is a non-profit entity which does not fall withinthe
purview of businesses enjoying a franchise.

Issue: (1) whether or not an electric cooperative registered under PD 269 but not under RA 693817 is liable for
the payment of local franchise taxes;
(2) whether or not the situs of taxation is the place where the franchise holder exercises its franchise
regardless of the place where its services or products are delivered.

Ruling: (1) CASURECO III is not exempt from payment of franchise tax.

In National Power Corporation v. City of Cabanatuan, the Court declared that a franchise tax is a tax on the
privilege of transacting business in the state and exercising corporate franchises granted by the state. It is not

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levied on the corporation simply for existing as a corporation, upon its property or its income, but on its exercise of
the rights or privileges granted to it by the government. 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.

Thus, to be liable for local franchise tax, the following requisites should concur: (1) that one has a "franchise" in
the sense of a secondary or special franchise; and (2) that it is exercising its rights or privileges under this
franchise within the territory of the pertinent local government unit.

There is a confluence of these requirements in the case at bar. By virtue of PD 269, NEA granted CASURECO III
a franchise to operate an electric light and power service for a period of fifty (50) years from June 6, 1979, and it is
undisputed that CASURECO III operates within Iriga City and the Rinconada area. It is, therefore, liable to pay
franchise tax notwithstanding its non-profit nature.

(2) CASURECO III is liable for franchise tax on gross receipts within Iriga City and Rinconada area.

It should be stressed that what the petitioner seeks to collect from CASURECO III is a franchise tax, which as
defined, is a tax on the exercise of a privilege. As Section 137 of the LGC provides, franchise tax shall be based
on gross receipts precisely because it is a tax on business, rather than on persons or property.36 Since it
partakes of the nature of an excise tax the situs of taxation is the place where the privilege is exercised, in this
case in the City of Iriga, where CASURECO III has its principal office and from where it operates, regardless of
the place where its services or products are delivered. Hence, franchise tax covers all gross receipts from Iriga
City and the Rinconada area.

G.R. No. 191761 November 14, 2012
CAGAYAN ELECTRIC POWER AND LIGHT CO., INC., Petitioner,
vs.
CITY OF CAGAYAN DE ORO, Respondent.

Facts:
On January 10, 2005, the Sangguniang Panlungsod of Cagayan de Oro (City Council) passed Ordinanc
e No. 9503-2005 imposing a tax on the lease or rental of electric and/or telecommunication posts, poles or towers
by pole owners to other pole users at ten percent (10%) of the annual rental income derived from such lease or re
ntal. It also informed petitioner, Cagayan Electric Power and Light Company, Inc. (CEPALCO), through its Preside
nt and Chief Operation Manager of the passage of the subject ordinance by a letter.
Petitioner then filed a petition for declaratory relief assailing the validity of Ordinance No. 9503-2005 bef
ore the Regional Trial Court of Cagayan de Oro City on the ground that the tax imposed by the disputed ordinance
is in reality a tax on income which the City Council may not impose on the ground that it is expressly prohibited by
Section 133(a) of Republic Act No. 7160 (Local Government Code of 1991). Moreover, it argues that it is exempt f
rom the imposition of the tax by virtue of Republic Act No. 9284 (R.A. 9284) providing for its franchise.
Respondent, on the other hand, contends as its affirmative defenses that:
(a) the enactment and implementation of the subject ordinance was a valid and lawful exercis
e of its powers pursuant to the 1987 Constitution, the Local Government Code, other applicable provisio
ns of law, and pertinent jurisprudence;
(b) non-exemption of CEPALCO because of the express withdrawal of the exemption provide
d by Section 193 of the LGC;
(c) the subject ordinance is legally presumed valid and constitutional;
(d) prescription of respondent-appellees action pursuant to Section 187 of the LGC;
(e) failure of respondent-appellee to exhaust administrative remedies under the Local Govern
ment Code;
(f) CEPALCOs action for declaratory relief cannot prosper since no breach or violation of the
subject ordinance was yet committed by the City.
The trial court rendered its Decision in favor of the City of Cagayan de Oro. It held that CEPALCOs busi
ness of leasing its posts to pole users is what is directly taxed, the tax is not upon the income but upon the privileg
e to engage in business. Moreover, Section 143(h), in relation to Section 151, of the Local Government Code auth
orizes a city to impose taxes, fees and charges on any business which is not specified as prohibited under Section
143(a) to (g) and which the city council may deem proper to tax. It also rejected CEPALCOs claim of exemption fr
om tax. The trial court noted that Republic Act (R.A.) Nos. 3247, 3570 and 6020, which previously granted CEPAL
COs franchise, expressly stated that CEPALCO would pay a three percent franchise tax in lieu of all assessments
of whatever authority. Finally, it found that CEPALCOs action is barred by prescription as it failed to raise an appe
al to the Secretary of Justice within the thirty-day period provided in Section 187 of the Local Government Code.
On appeal, the Court of Appeals affirmed that decision of the trial court stating that CEPALCO failed to fi
le a timely appeal to the Secretary of Justice, and did not exhaust its administrative remedies. It also agreed with t
he trial courts ruling that the assailed ordinance is valid and declared that the subject tax is a license tax for the re
gulation of business in which CEPALCO is engaged. Finally, the appellate court found that CEPALCOs claim of t
ax exemption rests on a strained interpretation of R.A. No. 9284.
Hence, CEPALCO filed this petition for review assailing the Decision promulgated by the Court of Appea
ls which affirmed the trial courts ruling on the validity of Ordinance No. 9503-2005 passed by the City Council of C
agayan de Oro.

Issues:
1. Whether or not CEPALCO must first exhaust all administrative remedies before resorting to the regul
ar court
2. Whether or not CEPALCO is entitle of the tax exemption.
3. Whether or not subject Ordinance No. 9503-2005 complied with the Local Government Code.

Court's Ruling:


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1. YES. CEPALCO must first exhaust all administrative remedies before resorting to regular courts.
Ordinance No. 9503-2005 is a local revenue measure. As such, the Local Government Code applies.
SEC. 187. Procedure for Approval and Effectivity of Tax Ordinances and Revenu
e Measures; Mandatory Public Hearings. The procedure for approval of local tax ordinance
s and revenue measures shall be in accordance with the provisions of this Code: Provided, T
hat public hearings shall be conducted for the purpose prior to the enactment thereof: Provid
ed, 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 S
ecretary 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 t
he effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied t
herein: 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.
SEC. 188. Publication of Tax Ordinances and Revenue Measures. Within ten (1
0) days after their approval, certified true copies of all provincial, city, and municipal tax ordin
ances or revenue measures shall be published in full for three (3) consecutive days in a new
spaper of local circulation: Provided, however, That in provinces, cities and municipalities wh
ere there are no newspapers of local circulation, the same may be posted in at least two (2)
conspicuous and publicly accessible places.

The Sangguniang Panlungsod of Cagayan de Oro approved Ordinance No. 9503-2005 on 10 January 200
5. Section 5 of said ordinance provided that the "Ordinance shall take effect after 15 days following its publication i
n a local newspaper of general circulation for at least three (3) consecutive issues." Gold Star Daily published Ordi
nance No. 9503-2005 on 1 to 3 February 2005. Ordinance No. 9503-2005 thus took effect on 19 February 2005.
CEPALCO filed its petition for declaratory relief before the Regional Trial Court on 30 September 2005, clearly be
yond the 30-day period provided in Section 187. It did not file anything before the Secretary of Justice, thus, ignori
ng the ruling in Reyes v. Court of Appeals on the mandatory nature of the statutory periods:
"Clearly, 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, within 30 days from
effectivity thereof. In case the Secretary decides the appeal, a period also of 30 days is allowe
d for an aggrieved party to go to court. But if the Secretary does not act thereon, after the laps
e of 60 days, a party could already proceed to seek relief in court. These three separate perio
ds are clearly given for compliance as a prerequisite before seeking redress in a competent co
urt. Such statutory periods are set to prevent delays as well as enhance the orderly and speed
y discharge of judicial functions. For this reason the courts construe these provisions of statut
es as mandatory."

A municipal tax ordinance empowers a local government unit to impose taxes. The power to tax is the most
effective instrument to raise needed revenues to finance and support the myriad activities of local government unit
s for the delivery of basic services essential to the promotion of the general welfare and enhancement of peace, pr
ogress, and prosperity of the people. Consequently, any delay in implementing tax measures would be to the detri
ment of the public. It is for this reason that protests over tax ordinances are required to be done within certain time
frames. In the instant case, it is our view that the failure of petitioners to appeal to the Secretary of Justice within 3
0 days as required by Sec. 187 of R.A. 7160 is fatal to their cause.

However, the Court relax the application of the rules in view of the more substantive matters.

2. NO. CEPALCO is not entitled of the tax exemption.

Section 5, Article X of the 1987 Constitution provides that:
"Each local government unit shall have the power to create its own sources of reve
nues and to levy taxes, fees, and charges subject to such guidelines and limitations as the
Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees,
and charges shall accrue exclusively to the local government."

The Local Government Code supplements the Constitution with Sections 151 and 186:
"SEC. 151. Scope of Taxing Powers. Except as otherwise provided in this Code, t
he city may levy the taxes, fees and charges which the province or municipality may impose:
Provided, however, That the taxes, fees and charges levied and collected by highly urbanize
d and independent component cities shall accrue to them and distributed in accordance with
the provisions of this Code.
The rates of taxes that the city may levy may exceed the maximum rates allowed for the prov
ince or municipality by not more than fifty percent (50%) except the rates of professional and
amusement taxes.
SEC. 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 s
pecifically 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: Pro
vided, further, That the ordinance levying such taxes, fees, or charges shall not be enacted w
ithout any prior public hearing conducted for the purpose."

Ordinance No. 9503-2005 is a tax on business. CEPALCOs act of leasing for a consideration the use of its
posts, poles or towers to other pole users falls under the Local Government Codes definition of business. Busines
s is defined by Section 131(d) of the Local Government Code as "trade or commercial activity regularly engaged i
n as a means of livelihood or with a view to profit." In relation to Section 131(d), Section 143(h) of the Local Gover
nment Code provides that the city may impose taxes, fees, and charges on any business which is not specified in
Section 143(a) to (g) and which the sanggunian concerned may deem proper to tax.
In contrast to the express statutory provisions on the City of Cagayan de Oros power to tax, CEPALCOs
claim of tax exemption of the income from its poles relies on a strained interpretation. Section 1 of R.A. No. 9284
added Section 9 to R.A. No. 3247, CEPALCOs franchise:

Page | 16

"SEC. 9. Tax Provisions. The grantee, its successors or assigns, shall be subject to the pay
ment of all taxes, duties, fees or charges and other impositions applicable to private electric uti
lities under the National Internal Revenue Code (NIRC) of 1997, as amended, the Local Gover
nment Code and other applicable laws: Provided, That nothing herein shall be construed as re
pealing any specific tax exemptions, incentives, or privileges granted under any relevant law:
Provided, further, That all rights, privileges, benefits and exemptions accorded to existing and
future private electric utilities by their respective franchises shall likewise be extended to the gr
antee.
The grantee shall file the return with the city or province where its facility is located and pay th
e taxes due thereon to the Commissioner of Internal Revenue or his duly authorized represent
ative in accordance with the NIRC and the return shall be subject to audit by the Bureau of Int
ernal Revenue."

The Local Government Code withdrew tax exemption privileges previously given to natural or juridical pers
ons, and granted local government units the power to impose franchise tax, thus:
"SEC. 137. Franchise Tax. Notwithstanding any exemption granted by any law or other speci
al law, the province may impose a tax on businesses enjoying a franchise, at a rate not exceedi
ng fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calend
ar year based on the incoming receipt, or realized, within its territorial jurisdiction.
x x x x
SEC. 193. Withdrawal of Tax Exemption Privileges. Unless otherwise provided in
this Code, tax exemptions or incentives granted to, or presently enjoyed by all persons, wheth
er natural or juridical, including government-owned or controlled corporations, except local wat
er districts, cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospit
als and educational institutions, are hereby withdrawn upon the effectivity of this Code.
SEC. 534. Repealing Clause. x x x.
(f) All general and special laws, acts, city charters, decrees, executive orders, proclamations
and administrative regulations, or part or parts thereof which are inconsistent with any of the p
rovisions of this Code are hereby repealed or modified accordingly."

It is hornbook doctrine that tax exemptions are strictly construed against the claimant. For this reason, tax exe
mptions must be based on clear legal provisions. The separate opinion in PLDT v. City of Davao is applicable to t
he present case, thus:
"Tax exemptions must be clear and unequivocal. A taxpayer claiming a tax exempt
ion must point to a specific provision of law conferring on the taxpayer, in clear and plain ter
ms, exemption from a common burden. Any doubt whether a tax exemption exists is resolv
ed against the taxpayer. Tax exemptions cannot arise by mere implication, much less by an
implied re-enactment of a repealed tax exemption clause."

CEPALCOs claim of exemption under the "in lieu of all taxes" clause must fail in light of Section 19
3 of the Local Government Code as well as Section 9 of its own franchise.

3. NO. Ordinance No. 9503-2095 did not complied with the Local Government Code.

Ordinance No. 9503-2005 is subject to the limitation set by Section 143(h). Section 143 recognizes sep
arate lines of business and imposes different tax rates for different lines of business. Let us suppose that one is a
brewer of liquor and, at the same time, a distributor of articles of commerce. The brewery business is subject to th
e rates established in Section 143(a) while the distribution business is subject to the rates established in Section 1
43(b). The City of Cagayan de Oros imposition of a tax on the lease of poles falls under Section 143(h), as the lea
se of poles is CEPALCOs separate line of business which is not covered by paragraphs (a) to (g) of Section 143.
The treatment of the lease of poles as a separate line of business is evident in Section 4(a) of Ordinance No. 950
3-2005. The City of Cagayan de Oro required CEPALCO to apply for a separate business permit.
More importantly, because "any person, who in the course of trade or business x x x leases goods or properti
es x x x shall be subject to the value-added tax," the imposable tax rate should not exceed two percent of gross re
ceipts of the lease of poles of the preceding calendar year. Section 143(h) states that "on any business subject to
x x x value-added x x x tax under the National Internal Revenue Code, as amended, the rate of tax shall not excee
d two percent (2%) of gross sales or receipts of the preceding calendar year" from the lease of goods or propertie
s.

Hence, the 10% tax rate imposed by Ordinance No. 9503-2005 clearly violates Section 143(h) of t
he Local Government Code.

Finally, in view of the lack of a separability clause, we declare void the entirety of Ordinance No. 9503-200
5. Any payment made by reason of the tax imposed by Ordinance No. 9503-2005 should, therefore, be refu
nded to CEPALCO. Our ruling, however, is made without prejudice to the enactment by the City of Cagaya
n de Oro of a tax ordinance that complies with the limits set by the Local Government Code.
THE PETITION IS GRANTED.

G.R. No. 100959 June 29, 1992 BENGUET CORPORATION vs. CENTRAL BOARD OF
ASSESSMENT APPEALS,

FACTS: The Provincial Assessor of Benguet assessed real property tax on the bunkhouses of petitioner Benguet
Corporation occupied for residential purposes by its rank and file employees. According to the Provincial
Assessor, the tax exemption of bunkhouses was withdrawn by P.D. 1955. Petitioner appealed the assessment on
Tax Declarations Nos. 8471 and 10454 to the Local Board of Assessment Appeals (LBAA) of the Province of
Benguet, docketed as LBAA Cases Nos. 42 and 43, respectively. Both were heard jointly. Meanwhile, the parties
agreed to suspend hearings in LBAA Cases Nos. 42 and 43 to await the outcome of another case, LBAA Case
No. 41. On July 15, 1986, CBAA handed down its decision in LBAA Case No. 41 holding that the buildings of

Page | 17

petitioner used as dwellings by its rank and file employees were exempt from real property tax pursuant to P.D.
745. Thereafter, the proceedings in LBAA Cases Nos. 42 and 43 proceeded after which a decision was rendered
affirming the taxability of subject property of petitioner. On appeal, CBAA sustained the decision holding that the
realty tax exemption under P.D. 745 was withdrawn by P.D. 1955 and E.O. 93, so that petitioner should have
applied for restoration of the exemption with the Fiscal Incentives Review Board (FIRB). The decision of CBAA
clarified that Case No. 41 was different because it was effective prior to 1985, hence, was not covered by P.D.
1955 nor by E.O. 93. Petitioner moved for reconsideration but was denied with CBAA
ISSUES:(1) whether respondent Assessors may validly assess real property tax on the properties of petitioner
considering the proscription in The Local Tax Code (P.D. 231) and the Mineral Resources Development Degree of
1974 (P.D. 463)against imposition of taxes on mines by local governments; and,
(2) whether the real tax exemption granted under P.D. 745 (promulgated July 15, 1975) was withdrawn
by P.D. 1955 (took effect October 15, 1984) and E.O. 93.
RULING: Executive Order No. 93, promulgated December 17, 1986, is also to the same effect. Both P.D. 1955
and E.O. 93 operate as wholesale withdrawal of tax incentives granted to private entities. On the first issue,
petitioner contends that local government units are without any authority to levy realty taxes on mines pursuant to
Sec. 52 of P.D. 463, which states: Sec. 52. Power to Levy Taxes on Mines, Mining Operations and Mineral
Products. 17 Any law to the contrary notwithstanding, no province, city, municipality, barrio or municipal district
shall levy and collect taxes, xxx, and Sec. 5 (m) of The Local Tax Code, as amended by P.D. 426 (reiterated in
Secs. 17 [d] and 22 [c], same Code), which provides: Sec. 5. Common limitations on the taxing powers of local
governments. 17 The exercise of the taxing powers of provinces, cities, municipalities and barrios shall not
extend to the imposition of the following: . . . (m) Taxes on mines; mining operations; and minerals, mineral
products, and their by-products when sold domestically by the operator . . . The Solicitor General observes that
the petitioner is estopped from raising the question of lack of authority to issue the challenged assessments
inasmuch as it was never raised before,xxx. This observation is well taken. . . . While petitioner could have
prevented the trial court from exercising jurisdiction over the case by seasonably taking exception thereto, they
instead invoked the very same jurisdiction by filing an answer and seeking affirmative relief from it. What is more,
they participated in the trial of the case by cross-examining respondent. Upon the premises, petitioner cannot now
be allowed belatedly to adopt an inconsistent posture by attacking the jurisdiction of the court to which they had
submitted themselves voluntarily (Tijam vs. Sibonghanoy, supra). xxx. In this case, petitioner may not complain of
denial of due process since it had enough opportunity, but opted not, to raise the issue of jurisdiction in any of the
administrative bodies to which the case may have been brought. Petitioner argues that realty taxes are local taxes
because they are levied by local government units, citing Sec. 39 of P.D. 464, xxx While local government units
are charged with fixing the rate of real property taxes, it does not necessarily follow from that authority the
determination of whether or not to impose the tax. In fact, local governments have no alternative but to collect
taxes as mandated in Sec. 38 of the Real Property Tax Code. It is thus clear from the foregoing that it is the
national government, expressing itself through the legislative branch, that levies the real property tax.
Consequently, when local governments are required to fix the rates, they are merely constituted as agents of the
national government in the enforcement of the Real Property Tax Code. The delegation of taxing power is not
even involved here because the national government has already imposed realty tax in Sec. 38 above-quoted,
leaving only the enforcement to be done by local governments. The realty tax is enforced throughout the
Philippines and not merely in a particular municipality or city but the proceeds of the tax accrue to the province,
city, municipality and barrio where the realty taxed is situated (Sec. 86, P.D. No. 464). In contrast, a local tax is
imposed by the municipal or city council by virtue of the Local Tax Code, Presidential Decree No. 231, which took
effect on July 1, 1973 (69 O.G. 6197). Consequently, the provisions of Sec. 52 of the Mineral Resources
Development Decree of 1974 (P.D. 463), and Secs. 5 (m), 17 (d) and 22 (c) of The Local Tax Code (P.D. 231)
cited by petitioner are mere limitations on the taxing power of local government units; As regards the second
issue, petitioner, which claims that E.O. 93 does not repeal social statutes like P.D. 745, in the same breath takes
refuge in Sec. 1 (e) of the same E.O. 93 We do not agree. If We are to sanction this interpretation, then
necessarily all real properties exempt by any law would be covered, and there would be no need for the
legislature to specify "Real Property Tax Code, as amended", instead of stating clearly "realty tax exemption
laws''. Indubitably, the intention is to limit the application of the "exception clause" only to those conferred by the
Real Property Tax Code. This is not only a logical construction of the provisions but more so in keeping with the
principle of statutory construction that tax exemptions are construed strictly against taxpayers, hence, they cannot
be created by mere implication but must be clearly provided by law. Non-exemption, in case of doubt, is favored.
Quite obviously, the exception in Sec. 1 (e), (iv), of E.O. 93, refers to "those conferred under . . . Real Property
Tax Case, as amended, and that the exemption claimed by petitioner is granted not by the Real Property Tax
Code but by P.D. 745. The phrase "any special or general law" explicitly indicates that P.D. No. 1955 did not
distinguish between a social statute and an economic or tax legislation. Hence, where the law does not
distinguish, we cannot distinguish. In view thereof, we have no recourse but to apply the express provision of P.D.
No. 1955 and rule in favor of the withdrawal of the real property tax exemption provided under P.D. No. 745.

Province of Tarlac v. Hon. Alcantara, G.R. No. 65230, Dec. 23, 1992

Rationale: Taxation, Supreme Court does not agree with the lower court that the phrase in lieu of all taxes and
assessments of whatever nature in the second paragraph of Sec. 1 of P.D. No. 551 expressly exempts private
respondents from paying real property taxes. As correctly observed by the petitioner, said proviso is modified and
delimited by the phrase on earnings, receipts, income and privilege of generation, distribution and sale which
specifies the kinds of taxes and assessments which shall not be collected in view of the imposition of franchise
tax. Said enumerated items upon which taxes shall not be imposed, have no relation at all, and are entirely
different from, real properties subject to tax.
If the intention of the law is to exempt electric franchise grantees from paying real property tax and to
make the 2% percent franchise tax the only imposable tax, then said enumerated items would not have been
added when P.D. No. 852 was enacted to amend P.D. No. 551. The legislative authority would have simply
stopped after the phrase national or local authority by putting therein a period. On the contrary, it went on to
enumerate what should not be subject to tax thereby delimiting the extent of the exemption.
P.D. No. 551, as amended by P.D. No. 852, deals with franchise tax and tariff on fuel oils and the
earnings, receipts, income and privilege of generation, distribution and sale of electric current are the
items exempted from taxation by the imposition of said tax or tariff duty.

Page | 18

Exemptions from taxation are construed in strictissimi juris against the taxpayer and liberally in favor
of the taxing authority. Taxes are the lifeblood of government and their prompt and certain availability is an
imperious need. Thus, to be exempted from payment of taxes, it is the taxpayers duty to justify the exemption by
words too plain to be mistaken and too categorical to be misinterpreted.

Principles Applied:
Strictissimi Juris The most strict right or law. In general, when a person receives an advantage, as the grant of
a license, he is bound to conform strictly of the rights given him by it, and in case of dispute, it will be strictly
construed.
Life-Blood Doctrine / Theory Taxes are the lifeblood of the government without which no government can
continue to exist without means of paying its expenses, and that for these means it has a right to compel its
citizens and property within its limits to contribute.

FACTS: Province of Tarlac filed a complaint against Tarlac Enterprises, Inc. for collection of real property tax
which was dismissed by the Regional Trial Court of Tarlac Branch LXIII. The petitioner alleged that the defendant
owns several real properties, that the real estate taxes of said properties has not been paid by the defendant as
per statement of realty taxes issued by the Municipal Treasurer of Tarlac, Tarlac, and that said taxes is now past
due and demandable and despite several demands made against the defendant, defendant refused and
continues to refuse payment to the irreparable damage of the plaintiff. Thereon, petitioner prayed that private
respondent be ordered to pay its accrued real estate taxes, as well as damages and the costs of the suit.
Consequently, private respondent filed a motion to dismiss the complaint which was opposed by the petitioner.
However, it was denied by the lower court, as well as the motion for reconsideration filed by the private
respondent.
Thereafter, petitioner set the auction sale of the private respondents properties to satisfy the real estate
taxes due. This prompted the private respondent to file a motion praying that petitioner be directed to desist from
proceeding with the public auction sale which was granted to prevent mootness of the case considering that the
properties to be sold were the subjects of the complaint.
Consequently, private respondent admitted that it refused to pay its real estate taxes despite of the
petitioners demands for its payment for the reason that under Sec. 40, par(g) of P.D. No. 464 in relation to P.D.
No. 551, it was exempt from paying tax. Additionally, private respondent raised as an affirmative defenses that the
complaint stated no cause of action and that the claims had been waived, abandoned or otherwise extinguished
or barred by the statute of limitations.
As a result, the lower court ruled that P.D. No. 551 expressly exempts private respondent from paying
the real property taxes demanded, it being a grantee of a franchise to generate, distribute and sell electric current
for light.
Hence, the filing of the present petition for review on certiorari questioning the decision of the Regional
Trial Court of Tarlac Branch LXIII.

ISSUE: Whether or not private respondent Tarlac Enterprises, Inc. is exempt from the payment of real tax under
Sec. 40(g) of P.D. No. 464 in relation to P.D. No. 551 as amended.

RULING: No, Supreme Court does not agree with the lower court that the phrase in lieu of all taxes and
assessments of whatever nature in the second paragraph of Sec. 1 of P.D. No. 551 expressly exempts private
respondents from paying real property taxes. As correctly observed by the petitioner, said proviso is modified and
delimited by the phrase on earnings, receipts, income and privilege of generation, distribution and sale which
specifies the kinds of taxes and assessments which shall not be collected in view of the imposition of franchise
tax. Said enumerated items upon which taxes shall not be imposed, have no relation at all, and are entirely
different from, real properties subject to tax.
If the intention of the law is to exempt electric franchise grantees from paying real property tax and to
make the 2% percent franchise tax the only imposable tax, then said enumerated items would not have been
added when P.D. No. 852 was enacted to amend P.D. No. 551. The legislative authority would have simply
stopped after the phrase national or local authority by putting therein a period. On the contrary, it went on to
enumerate what should not be subject to tax thereby delimiting the extent of the exemption.
Exemptions from taxation are construed in strictissimi juris against the taxpayer and liberally in favor
of the taxing authority. Taxes are the lifeblood of government and their prompt and certain availability is an
imperious need.
Thus, to be exempted from payment of taxes, it is the taxpayers duty to justify the exemption by words
too plain to be mistaken and too categorical to be misinterpreted.

THE HONORABLE SECRETARY OF FINANCE vs.THE HONORABLE RICARDO M.
ILARDE and CIPRIANO P. CABALUNA, JR.

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Facts: : Cabaluna with his wife owns several real property located in Iloilo City. Cabaluana is the Regional
Director of Regional Office No. VI of the Department of Finance in Iloilo City. After his retirement, there are tax
delinquencies on his properties; he paid the amount under protest contending that the penalties imposed to him
are in excess than that provided by law. After exhausting all administrative remedies, he filed a suit before the
RTC which found that Section 4(c) of Joint Assessment Regulation No. 1-85 and Local Treasury Regulation No.
2-85 issued on August 1, 1985 by respondent Secretary (formerly Minister) of Finance is null and void; (2)
declaring that the penalty that should be imposed for delinquency in the payment of real property taxes should be
two per centum on the amount of the delinquent tax for each month of delinquency or fraction thereof, until the
delinquent tax is fully paid but in no case shall the total penalty exceed twenty-four per centum of the delinquent
tax as provided for in Section 66 of P.D. 464 otherwise known as the Real Property Tax Code.

Issue: Whether or not the then Ministry of Finance could legally promulgate Regulations prescribing a rate of
penalty on delinquent taxes other than that provided for under Presidential Decree (P.D.) No.
464,alsoknownastheRealPropertyTaxCode.

Ruling: The Ministry of Finance now Secretary of Finance cannot promulgate regulations prescribing a rate of
penalty on delinquent taxes.
Despite the promulgation of E.O. No. 73, P.D. No. 464 in general and Section 66 in particular, remained to be
good law. To accept petitioner's premise that E.O. No. 73 had accorded the Ministry of Finance the authority to
alter, increase, or modify the tax structure would be tantamount to saying that E.O. No. 73 has repealed or
amended P.D. No. 464. Repeal of laws should be made clear and expressed. Repeals by implication are not
favored as laws are presumed to be passed with deliberation and full knowledge of all laws existing on the
subject. Such repeals are not favored for a law cannot be deemed repealed unless it is clearly manifest that the
legislature so intended it. The failure to add a specific repealing clause indicates that the intent was not to repeal
any existing law, unless an irreconcilable inconsistency and repugnancy exist in the terms of the new and old
laws. We find, as the trial court has found, no such inconsistency or repugnancy between E.O. No. 73 and Section
66 of P.D. No. 464. Jurisprudence thrives to the effect that it is only Republic Act No. 7160 or the Local
Government Code of 1991, which repealed the Real Property Tax Code or P.D. No. 464.
Assuming argumenti that E.O. No. 73 has authorized the petitioner to issue the objected Regulations, such
conferment of powers is void for being repugnant to the well-encrusted doctrine in political law that the power of
taxation is generally vested with the legislature. Yes, President Corazon Aquino, at that time, was exercising both
executive and legislative powers. But, the power delegated to the executive branch, in this case the Ministry of
Finance, to lay down implementing rules must, nevertheless, be germane to the general law it seeks to apply. The
implementing rules cannot add to or detract from the provisions of the law it is designed to implement.

Administrative regulations adopted under legislative authority by a particular department must be in harmony with
the provisions of the law they are intended to carry into effect,

which in this case is merely to antedate the
effectivity of the 1984 Real Property Tax values inasmuch as this is the raison d'tre of E.O. No. 73.
At bottom, the law applicable, in the case at bar, for purposes of computation of the real property taxes due from
private respondent for the years 1986 to 1991, including the penalties and interests, is still Section 66 of the Real
Property Tax Code of 1974 or P.D. No. 464. the penalty that ought to be imposed for delinquency in the payment
of real property taxes should, therefore, be that provided for in Section 66 of P.D. No. 464, i.e., two per centum on
the amount of the delinquent tax for each month of delinquency or fraction thereof but "in no case shall the total
penalty exceed twenty-four per centum of the delinquent tax."
Accordingly, the penalties imposed by respondents City Treasurer and Assistant City Treasurer of Iloilo City on
the property of private respondent are valid only up to 24% of the delinquent taxes. The excess penalties paid by
the private respondent should, in view of that, be refunded by the latter.

b. Real Property Taxation
G.R. No. 171586 January 25, 2010
NATIONAL POWER CORPORATION, Petitioner,
vs.
PROVINCE OF QUEZON and MUNICIPALITY OF PAGBILAO, Respondent.

Facts:
Petitioner, National Power Corporation (Napocor) entered into a Build-Operate-Transfer Agreement with
Mirant Pagbilao Corporation (Mirant) entitled Energy Conversion Agreement. The Province of Quezon assesses
Mirant for unpaid real property taxes in the amount of 1.5 billion for the machineries located in its power plant in
Pagbilao, Quezon. Mirant furnished a copy of this tax assessment to Napocor.
Petitioner then protested the assessment before the Local Board of Assessment Appeals (LBAA),
claiming that it is entitled to tax exemptions under Section 234 of the Local Government Code (LGC). It further
argued that even if it is not exempted from the said tax, it is still entitled to certain privileges like;
a. the lower assessment level of 10% under Section 218(d) of the LGC for government-owned and
controlled corporations engaged in the generation and transmission of electric power, instead of the 80%
assessment level for commercial properties imposed in the assessment letter; and
b. an allowance for depreciation of the subject machineries under Section 225 of the LGC.
On July 15, 2009, the Court rendered decision that Napocor is not entitled to any of its claimed tax
exemptions and privileges because it has no legal standing and it failed to question the assessment before the
LBAA which becomes final, executory, and demandable. Thus, it is precluded from questioning the correctness of
the assessment or from invoking any defense that would reopen the question of its liability on the merits.

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Furthermore, under Section 226 of the LGC, any owner or person having legal interest in the property may appeal
an assessment for real property taxes to the LBAA. Since Section 250 adopts the same language in enumerating
who may pay the tax, we equated those who are liable to pay the tax to the same entities who may protest the tax
assessment. A person legally burdened with the obligation to pay for the tax imposed on the property has the
legal interest in the property and the personality to protest the tax assessment.
As a result, petitioner then filed a motion for reconsideration of the Courts Decision. It contends that it
had legal interest in the taxed machineries because;
1. the stipulation in the BOT Agreement that authorized the transfer of ownership to Napocor
after 25 years;
2. its authority to control and supervise the construction and operation of the power plant; and
3. its obligation to pay for all taxes that may be incurred, as provided in the BOT Agreement.
Due to this, Napocor claimed that Mirant only possessed naked title to the machineries. The BOT
Agreement is a mere financing agreement and is similar to the arrangement authorized under Article 1503 of the
Civil Code. Hence, Mirants ownership over the subject machineries is merely a security interest, given only for the
purpose of ensuring the performance of Napocors obligations. Napocor additionally contends that its contractual
assumption liability (through the BOT Agreement) for all taxes vests it with sufficient legal interest because it is
actually, directly, and materially affected by the assessment.

Issues:
1. Whether or not Napocor has legal interest on the question tax assessment.
2. Whether or not Napocor is the true owner of the subject machineries.
3. Whether or not Napocor is entitled to appeal a real property tax assessment of LBAA.
4. Whether or not Napocor is entitrled to tax exemptions and tax privileges.

Courts Ruling:

1. NO. Napocor has no legal interest on the question tax assessment.

Legal interest is defined as interest in property or a claim cognizable at law, equivalent to that of a legal
owner who has legal title to the property.
Clearly, Napocor is not vested with the requisite interest to protest the tax assessment because it is not
an entity having the legal title over the machineries. It has absolutely no soled claim of ownership or even of use
and possession of the machineries. The Court reiterated its July 15, 2009 decision;
A BOT agreement is not a mere financing arrangement. It is defined and described as:
Build-operate-and-transfer A contractual arrangement whereby the project proponent
undertakes the construction, including financing, of a given infrastructure facility, and the operation and
maintenance thereof. The project proponent operates the facility over a fixed term during which it is
allowed to charge facility users appropriate tolls, fees, rentals, and charges not exceeding those
proposed in its bid or as negotiated and incorporated in the contract to enable the project proponent to
recover its investment, and operating and maintenance expenses in the project. The project proponent
transfers the facility to the government agency or local government unit concerned at the end of the
fixed term which shall not exceed fifty (50) years x x x x.

Article 1503 is inapplicable to define the contract between Napocor and Mirant, as it refers only to
ordinary contracts of sale. We thus declared in Tatad v. Garcia that under BOT agreements, the private
corporations/investors are the owners of the facility or machinery concerned. Apparently, even Napocor and
Mirant recognize this principle; Article 2.12 of their BOT Agreement provides that "until the Transfer Date,
[Mirant] shall, directly or indirectly, own the Power Station and all the fixtures, fitting, machinery and
equipment on the Site x x x. [Mirant] shall operate, manage, and maintain the Power Station for the
purpose of converting fuel of Napocor into electricity."

The LGC has required legal interest in the property taxed before any administrative or judicial remedy
can be availed and not mere pecuniary interest. The right to appeal a tax assessment is a purely statutory right;
whether a person challenging an assessment bears such a relation to the real property being assessed as to
entitle him the right to appeal is determined by the applicable statute which is the LGC.
2. NO. Napocor is not the true owner of the subject machineries.

If Napocor truly believed that it was the owner of the subject machineries, it should have complied with
Sections 202 and 206 of the LGC which obligates owners of real property to:
a. file a sworn statement declaring the true value of the real property, whether taxable or
exempt; and
b. file sufficient documentary evidence supporting its claim for tax exemption.

While a real property owners failure to comply with Sections 202 and 206 does not necessarily negate
its tax obligation nor invalidate its legitimate claim for tax exemption, Napocors omission to do so in this case can
be construed as contradictory to its claim of ownership of the subject machineries. That it assumed liability for the
taxes that may be imposed on the subject machineries similarly does not clothe it with legal title over the same.
We do not believe that the phrase "person having legal interest in the property" in Section 226 of the LGC can
include an entity that assumes another persons tax liability by contract.
A review of the provisions of the LGC on real property taxation shows that the phrase has been
repeatedly adopted and used to define an entity:
a. in whose name the real property shall be listed, valued, and assessed;
b. who may be summoned by the local assessor to gather information on which to
base the market value of the real property;
c. who may protest the tax assessment before the LBAA and may appeal the latters
decision to the CBAA;
d. who may be liable for the idle land tax, as well as who may be exempt from the
same;
21


Page | 21

e. who shall be notified of any proposed ordinance imposing a special levy, as well
as who may object the proposed ordinance;
f. who may pay the real property tax;
g. who is entitled to be notified of the warrant of levy and against whom it may be
enforced;
h. who may stay the public auction upon payment of the delinquent tax, penalties
and surcharge; and
i. who may redeem the property after it was sold at the public auction for delinquent
taxes.

For the Court to consider an entity assuming another persons tax liability by contract as a person
having legal interest in the real property would extend to it the privileges and responsibilities enumerated above.
The framers of the LGC certainly did not contemplate that the listing, valuation, and assessment of real property
can be made in the name of such entity; nor did they intend to make the warrant of levy enforceable against it.
Insofar as the provisions of the LGC are concerned, this entity is a party foreign to the operation of real property
tax laws and could not be clothed with any legal interest over the property apart from its assumed liability for tax.
The rights and obligations arising from the BOT Agreement between Napocor and Mirant were of no legal interest
to the tax collector the Province of Quezon which is charged with the performance of independent duties
under the LGC.

3. NO. Napocor is not entitled to the appeal the real property tax assessment of LBAA.

Before a taxpayer can appeal the real property tax assessment of LBAA, there must be first payment
made by it which Napocor fails to do.
The court reiterating its decision on the case of Ty vs. Trampe and the case of Olivarez vs. Marquez:
In Ty v. Trampe, the Court, through former Chief Justice Artemio Panganiban,
declared that Ty correctly filed a petition for prohibition before the trial court against the
assailed act of the city assessor and treasurer. The administrative protest proceedings
provided in Section 252 and 226 will not apply. The protest contemplated under Section 252 is
required where there is a question as to the reasonableness or correctness of the amount
assessed. Hence, if a taxpayer disputes the reasonableness of an increase in a real
property tax assessment, he is required to "first pay the tax" under protest. Otherwise,
the city or municipal treasurer will not act on his protest. Ty however was questioning the very
authority and power of the assessor, acting solely and independently, to impose the
assessment and of the treasurer to collect the tax. These were not questions merely of
amounts of the increase in the tax but attacks on the very validity of any increase. Moreover,
Ty was raising a legal question that is properly cognizable by the trial court; no issues of fact
were involved. In enumerating the power of the LBAA, Section 229 declares that "the
proceedings of the Board shall be conducted solely for the purpose of ascertaining the facts x
x x." Appeals to the LBAA (under Section 226) are therefore fruitful only where questions of
fact are involved.
In Olivarez v. Marquez, on the other hand, which involved a petition for certiorari,
mandamus, and prohibition questioning the assessment and levy made by the City of
Paraaque. The court held that Olivarez petition filed before the trial court primarily
involved the correctness of the assessments, which is a question of fact that is not allowed
in a petition for certiorari, prohibition, and mandamus. Hence, we declared that the petition
should have been brought, at the very first instance, to the LBAA, not the trial court.

Like Olivarez, Napocor, by claiming exemption from realty taxation, is simply raising a question of the
correctness of the assessment. A claim for tax exemption, whether full or partial, does not question the authority
of local assessor to assess real property tax. This may be inferred from Section 206 which states that:
Proof of Exemption of Real Property from Taxation. - Every person by or for whom
real property is declared, who shall claim tax exemption for such property under this Title shall
file with the provincial, city or municipal assessor within thirty (30) days from the date of the
declaration of real property sufficient documentary evidence in support of such claim including
corporate charters, title of ownership, articles of incorporation, bylaws, contracts, affidavits,
certifications and mortgage deeds, and similar documents. If the required evidence is not
submitted within the period herein prescribed, the property shall be listed as taxable in the
assessment roll. However, if the property shall be proven to be tax exempt, the same shall be
dropped from the assessment roll. [Emphasis provided]

By providing that real property not declared and proved as tax-exempt shall be included in the
assessment roll, the above-quoted provision implies that the local assessor has the authority to assess the
property for realty taxes, and any subsequent claim for exemption shall be allowed only when sufficient proof has
been adduced supporting the claim. Since Napocor was simply questioning the correctness of the assessment, it
should have first complied with Section 252, particularly the requirement of payment under protest. Napocors
failure to prove that this requirement has been complied with thus renders its administrative protest under Section
226 of the LGC without any effect. No protest shall be entertained unless the taxpayer first pays the tax.
Under Section 226 of the Local Government Code;
Local Board of Assessment Appeals. - Any owner or person having legal interest
in the property who is not satisfied with the action of the provincial, city or municipal assessor
in the assessment of his property may, within sixty (60) days from the date of receipt of the
written notice of assessment, appeal to the Board of Assessment Appeals of the provincial or
city by filing a petition under oath in the form prescribed for the purpose, together with copies
of the tax declarations and such affidavits or documents submitted in support of the appeal.

It was an ill-advised move for Napocor to directly file an appeal with the LBAA under Section 226 without
first paying the tax as required under Section 252. Sections 252 and 226 provide successive
administrative remedies to a taxpayer who questions the correctness of an assessment. Section 226, in
declaring that "any owner or person having legal interest in the property who is not satisfied with the
action of the provincial, city, or municipal assessor in the assessment of his property may x x x appeal to
the Board of Assessment Appeals x x x," should be read in conjunction with Section 252 (d), which states

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that "in the event that the protest is denied x x x, the taxpayer may avail of the remedies as provided for in
Chapter 3, Title II, Book II of the LGC [Chapter 3 refers to Assessment Appeals, which includes Sections
226 to 231]. The "action" referred to in Section 226 (in relation to a protest of real property tax
assessment) thus refers to the local assessors act of denying the protest filed pursuant to Section 252.
Without the action of the local assessor, the appellate authority of the LBAA cannot be invoked.
Napocors action before the LBAA was thus prematurely filed.

4. NO. Napocor is not entitled to tax exemptions and tax privileges.

Napocor has no because legal interest should be one that is actual and material, direct and immediate,
not simply contingent or expectant. Moreover, Napocor has no claim of control and supervision of the power
plants construction and operation under its BOT Agreement.
Moreover, the court reiterated the ruling in Baguio v. Busuego, the Court essentially declared that
contractual assumption of tax liability alone is insufficient to make one liable for taxes. The contractual assumption
of tax liability must be supplemented by an interest that the party assuming the liability had on the property; the
person from whom payment is sought must have also acquired the beneficial use of the property taxed. In other
words, he must have the use and possession of the property an element that was missing in Napocors case.
The tax liability must be a liability that arises from law, which the local government unit can rightfully and
successfully enforce, not the contractual liability that is enforceable only between the parties to the contract. In the
present case, the Province of Quezon is a third party to the BOT Agreement and could thus not exact payment
from Napocor without violating the principle of relativity of contracts. Corollarily, for reasons of fairness, the local
government units cannot be compelled to recognize the protest of a tax assessment from Napocor, an entity
against whom it cannot enforce the tax liability.
Napocor could not successfully claim exemption under Section 234 (c) of the LGC because to be
entitled to the exemption under that provision, there must be actual, direct, and exclusive use of
machineries. Napocor failed to satisfy these requirements.

NOTE:
Section 234 of LGC provides;
Exemptions from Real Property Tax. - The following are exempted from payment of the
real property tax:
(a) 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, to a taxable person;
(b) Charitable institutions, churches, parsonages or convents appurtenant thereto,
mosques, non-profit or religious cemeteries and all lands, buildings, and improvements
actually, directly, and exclusively used for religious, charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and exclusively
used by local water districts and government owned or controlled corporations
engaged in the supply and distribution of water and/or generation and transmission of
electric power;
(d) All real property owned by duly registered cooperatives as provided for under
R.A. No. 6938; and
(e) Machinery and equipment used for pollution control and environmental
protection.
Except as provided herein, any exemption from payment of real property tax previously
granted to, or presently enjoyed by, all persons, whether natural or juridical, including all
government-owned or controlled corporations are hereby withdrawn upon the effectivity of this
Code.

Province of Batangas vs. Romulo GR 152774 May 27, 2004

FACTS: In 1998, then President Estrada issued EO No. 48 establishing the Program for Devolution Adjustment
and Equalization to enhance the capabilities of LGUs in the discharge of the functions and services devolved to
them through the LGC. The Oversight Committee under Executive Secretary Ronaldo Zamora passed
Resolutions No. OCD-99-005, OCD-99-006 and OCD-99-003 which were approved by Pres. Estrada on October
6, 1999. The guidelines formulated by the Oversight Committee required the LGUs to identify the projects eligible
for funding under the portion of LGSEF and submit the project proposals and other requirements to the DILG for
appraisal before the Committee serves notice to the DBM for the subsequent release of the corresponding funds.
Hon. Herminaldo Mandanas, Governor of Batangas, petitioned to declare unconstitutional and void certain
provisos contained in the General Appropriations Acts (GAAs) of 1999, 2000, and 2001, insofar as they uniformly
earmarked for each corresponding year the amount of P5billion for the Internal Revenue Allotment (IRA) for the
Local Government Service Equalization Fund (LGSEF) & imposed conditions for the release thereof.

ISSUE: Whether the assailed provisos in the GAAs of 1999, 2000, and 2001, and the OCD resolutions infringe the
Constitution and the LGC of 1991.

RULING: Yes. The assailed provisos in the GAAs of 1999, 2000, and 2001, and the OCD resolutions constitute a
withholding of a portion of the IRA they effectively encroach on the fiscal autonomy enjoyed by LGUs and must
be struck down. According to Art. II, Sec.25 of the Constitution, the State shall ensure the local autonomy of local
governments. Consistent with the principle of local autonomy, the Constitution confines the Presidents power
over the LGUs to one of general supervision, which has been interpreted to exclude the power of control. Drilon v.
Lim distinguishes supervision from control: control lays down the rules in the doing of an act the officer has the
discretion to order his subordinate to do or redo the act, or decide to do it himself; supervision merely sees to it
that the rules are followed but has no authority to set down the rules or the discretion to modify/replace them. The

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entire process involving the distribution & release of the LGSEF is constitutionally impermissible. The LGSEF is
part of the IRA or just share of the LGUs in the national taxes. Sec.6, Art.X of the Constitution mandates that the
just share shall be automatically released to the LGUs. Since the release is automatic, the LGUs arent required
to perform any act to receive the just share it shall be released to them without need of further action. To
subject its distribution & release to the vagaries of the implementing rules & regulations as sanctioned by the
assailed provisos in the GAAs of 1999-2001 and the OCD Resolutions would violate this constitutional mandate.
The only possible exception to the mandatory automatic release of the LGUs IRA is if the national internal
revenue collections for the current fiscal year is less than 40% of the collections of the 3rd preceding fiscal year.
The exception does not apply in this case. The Oversight Committees authority is limited to the implementation of
the LGC of 1991 not to supplant or subvert the same, and neither can it exercise control over the IRA of the
LGUs. Congress may amend any of the provisions of the LGC but only through a separate law and not through
appropriations laws or GAAs. Congress cannot include in a general appropriations bill matters that should be
more properly enacted in a separate legislation. A general appropriations bill is a special type of legislation, whose
content is limited to specified sums of money dedicated to a specific purpose or a separate fiscal unit any
provision therein which is intended to amend another law is considered an inappropriate provision.
Increasing/decreasing the IRA of LGUs fixed in the LGC of 1991 are matters of general & substantive law. To
permit the Congress to undertake these amendments through the GAAs would unduly infringe the fiscal autonomy
of the LGUs. The value of LGUs as institutions of democracy is measured by the degree of autonomy they enjoy.
Our national officials should not only comply with the constitutional provisions in local autonomy but should also
appreciate the spirit and liberty upon which these provisions are based.

ROBINSON CASINO, vs. THE COURT OF APPEALS, GINGOOG GALLERA, INC.,
represented by its President and Manager, LINDY L. DE LARA, [G.R. No. 91192
December 2, 1991]

FACTS:
Prior to the passage by the Sangguniang Panlungsod of Gingoog City of Resolution No. 49, Code Ordinance,
Series of 1984, the Coliseum, located on Block 125 at the corner of Lugod and Jadol Streets, Gingoog City and
owned by petitioner, was a licensee of a cockpit under Sections 2285 to 2286 of the Revised Administrative Code.
Thereafter, the aforesaid resolution classified certain areas of the city as residential zones, declaring, among
others, the site of Coliseum as such. The classification led to the cancellation of petitioner's license to operate the
cockpit.
On August 13, 1985, Resolution No. 378, Code Ordinance, Series of 1985, reclassified Block 125 as within the
recreational zone, thus allegedly amending Resolution No. 49. Nine (9) members of the said sangguniang
panlungsod, participated, with four (4) members voting for the amendment, while four (4) voted against, and with
one (1) abstention. The vice-mayor, as presiding officer, broke the deadlock by voting for the amendment.
When Resolution No. 378 was transmitted to then City Mayor Miguel Paderanga for approval, he returned the
same to the sangguniang panlungsod within ten days, without any action, stating that his approval thereof was not
necessary since it did not involve a disposition of city government funds, as provided by Section 180 of the Local
Government Code and Section 14 of the charter of Gingoog City.
By virtue of said Resolution No. 378, the succeeding city mayor, Arturo S. Lugod, issued to petitioner the
aforestated permit to operate a cockpit dated April 2, 1986, which was renewed by another permit issued on
January 5, 1987.
Private respondent Gingoog Gallera, Inc., (hereafter, Gallera) protested the operation of Coliseum before the
Philippine Gamefowl Commission (PGC, for short). The protest was founded on the fact that no certificate of
registration had as yet been issued by the PGC, 5 although city mayor's permits were issued to petitioner. On
April 11, 1986, the PGC, through OIC Pacifico L. Orog sent a telegram to the Station Commander of Gingoog City
to suspend in the meantime the operation of the cockpit. On April 24, 1986, the PGC eventually sent a telegram to
the city mayor to stop any cockfight in the Coliseum in view of its failure to register with the PGC.
Thereafter, mandamus with preliminary injunction was filed by Gallera before the Regional Trial Court against
petitioner, on the ground that Resolution No. 378, purportedly amending zoning Ordinance No. 49, is invalid. It
asserted that the classification of Coliseum's site as still within the residential zone of Gingoog City was
accordingly maintained and unchanged, thereby rendering the mayor's permits issued to the latter null and void
for being in violation of Section 6 of the Rules and Regulations of the PGC.
On April 25, 1986, the trial court issued a writ of preliminary injunction enjoining petitioner to desist from operating
the Coliseum until the PGC shall have finally decided the controversy between petitioner and private respondent
Gallera.
On July 25, 1988, the trial court rendered judgment in favor of private respondent, declaring the aforesaid mayor's
permits null and void and ordering herein petitioner and all persons representing him or acting in his behalf from
further operating the cockpit in question.
Petitioner appealed the said unfavorable judgment to respondent court.
After petitioner's motion for reconsideration was denied for lack of merit.

ISSUES:
1.) Whether or not the Philippine Gamefowl Commission controls the operations of the Don Romulo Rodriguez
Coliseum with respect to the local/ordinary cockfights.
2.) Whether or not the mayor's permits issued by the Mayor of Gingoog City for the years 1986 and 1987 are null
and void because Resolution 378 did not amend Section 6.44 of Resolution 49 , the three-fourths (3/4) votes not
having been obtained in passing said Resolution 378.

Page | 24

RULING:
On the first objection of petitioner, it is true that the PGC has the power not of control but only of review and
supervision. This power was validly exercised by said commission over Coliseum when it sought to stop the
former's operations through the local officials. It did not whimsically order the suspension and the consequent
stoppage of Coliseum's operations. Rather, PGC only exercised its power of review over the acts performed by
the local authorities in relation to or which affect the exercise of its functions.
Review is a reconsideration or re-examination for purposes of correction. The power of review is exercised to
determine whether it is necessary to correct the acts of the subordinate and to see to it that he performs his duties
in accordance with law. This the PGC did by bringing to the attention of the local authorities the non-compliance
by petitioner with the rules involved in this case which we find reasonable and necessary in the discharge of the
regulatory functions of PGC. PGC may, for that purpose and as it did here, indicate its disapproval of the acts of
the local officials concerned to stress and perform its role with respect to the regulation of cockpits.
In the instant case, although the general law on the matter requires a mere majority, the higher requisite vote in
Resolution No. 49 shall govern since municipal authorities are in a better position to determine the evils sought to
be prevented by the inclusion or incorporation of particular provisions in enacting a particular statute and,
therefore, to pass the appropriate ordinance to attain the main object of the law.
It bears mention, however, that the issue in this case is the validity of the city mayor's permits of April 22, 1986
and January 5, 1987 and the nullity whereof is affirmed in this opinion. Respondents observe that they see no
useful purpose in having said permits declared null and void since they are already functus officio.

IN VIEW OF THE FOREGOING, the petition is hereby DENIED. The decision of respondent Court of Appeals
promulgated on May 30, 1989 and its resolution dated October 27, 1989 are AFFIRMED.

GARCIA V. COMELEC
Sept. 30, 1994

FACTS:

On May 24, 1993, petitioners filed a petition with the Sangguniang Bayan of Morong to annul Pambansang
Kapasyahan Blg. 10, Serye 1993 which includes the Municipaloty of Morong as part of the Subic Special
Economic Zone in accord with the RA No. 7227. The municipality did not take any action on the petition within 30
days after its submission; so, they resorted to their power of initiative under the Local Government Code of 1991.
They solicited the required number of signatures to repeal the said resolution.

However, the Vice Mayor, Hon. Edilberto de Leon, and the Presiding Office of the Sangguniang Bayan
ng Morong wrote a letter dated June 11, 1993 to deny the petition for local initiative and/or referendum.
On July 6, 1993, the Comelec denied the petition for local initiative because its subject is merely a resolution and
not an ordinance.

ISSUE:
whether or not the Pambansang Kapasyahan Blg. 10, Serye 1993 is the proper subject of an initiative?
Sub-issue: w/n the decision of the COMELEC to deny the petition be set aside?
HELD:
The petition is granted and the decision of the Comelec on July 6, 1993 is annulled and set aside.

The 1987 Constitution installed back the power to the people regarding legislation because of the event in
February 1986. The new Constitution became less trusting of public officials. Through initiative, the people were
given the power to amend the Constitution under Sec. 2 Art. 17 which provides amendments to this Constitution
may likewise be directly proposed by the people through initiative upon a petition of at least 12% of the total
number of registered voters, of which every legislative district must be represented by at least 3% of the
registered voter therein.

The COMELEC was also empowered to enforce and administer all laws and regulations relative to the
conduct of an initiative and referendum.
On Aug. 4, 1989, the Congress approved RA No. 6735 entitled An Act Providing for a System of Initiative and
Referendum and Appropriating Funds Therefor.

YES. Sec. 32 of Art. 6 provides the Congress shall provide for a system of initiative and referendum,
and the exceptions therefrom, whereby the people can directly propose and enact laws or approve or reject any
act or law or part thereof passed by the Congress or local legislative body
.
Under Sec. 32(a) of RA No. 6735 it provided the 3 systems of initiative, namely:

1. Initiative on the Constitution petition to amend the Constitution
2. Initiative on statutes petition proposing to enact a national legislation
3. Initiative on local legislation petition proposing to enact a regional, provincial, city, municipal, or
barangay law, resolution or ordinance

Under its Sec.16(a), it provided the limitations on local initiatives, which is the power of local initiative
shall not be exercised more than once a year.


Page | 25

SUBIC BAY METROPOLITAN AUTHORITY vs. COMMISSION ON ELECTIONS, ENRIQUE
T. GARCIA and CATALINO A. CALIMBAS

[G.R. No. 125416. September 26, 1996.]
FACTS:
Congress enacted Republic Act No. 7227 (The Bases Conversion and Development Act of 1992), which
among others, provided for the creation of the Subic Special Economic Zone
R.A. No. 7227 likewise created petitioner to implement the declared national policy of converting the Subic
military reservation into alternative productive uses. 2Petitioner was organized with an authorized capital
stock of P20 billion which was fully subscribed and fully paid up by the Republic of the Philippines with,
among other assets, (a)ll lands embraced, covered and defined in Section 12 hereof, as well as permanent
improvements and fixtures upon proper inventory not otherwise alienated, conveyed, or transferred to another
government agency. 3
On November 24, 1992, the American navy turned over the Subic military reservation to the Philippine
government. Immediately, petitioner commenced the implementation of its task, particularly the preservation
of the seaports, airports buildings, houses and other installations left by the American navy.
The Sangguniang Bayan of Morong, Bataan passed Pambayang Kapasyahan Bilang 10, Serye 1993,
expressing therein its absolute concurrence, as required by said Sec. 12 of R.A. No. 7227, to join the Subic
Special Economic Zone. On September 5, 1993, the Sangguniang Bayan of Morong submitted Pambayang
Kapasyahan Bilang 10, Serye 1993 to the Office of the President. respondents Garcia, Calimbas and their
companions filed a petition with the Sangguniang Bayan of Morong to annul Pambayang Kapasyahan Blg. 10,
Serye 1993.

The Sangguniang Bayan of Morong acted upon the petition of respondents Garcia, Not satisfied, and within
30 days from submission of their petition, herein respondents resorted to their power of initiative under the
Local Government Code of 1991. Respondent Comelec issued Resolution No. 2845, adopting therein a
Calendar of Activities for local referendum on certain municipal ordinance passed by the Sangguniang Bayan
of Morong, Bataan, and which indicated, among others, the scheduled Referendum Day (July 27, 1996,
Saturday). On June 27, 1996, the Comelec promulgated the assailed Resolution No. 2848 providing for the
rules and guidelines to govern the conduct of the referendum proposing to annul or repeal Kapasyahan Blg.
10, Serye 1993 of the Sangguniang Bayan of Morong, Bataan.
ISSUE: whether the Comelec acted properly and juridically in promulgating and implementing Resolution No.
2848.
HELD: NO. To begin with, the process started by private respondents was an INITIATIVE but respondent
Comelec made preparations for a REFERENDUM only. In fact, in the body of the Resolution 11 as
reproduced in the footnote below, the word referendum is repeated at least 27 times, initiative is not
mentioned at all.
The Comelec labeled the exercise as a Referendum; the counting of votes was entrusted to a Referendum
Committee; the documents were called referendum returns; the canvassers, Referendum Board of
Canvassers and the ballots themselves bore the description referendum. To repeat, not once was the word
initiative used in said body of Resolution No. 2848. And yet, this exercise is unquestionably an INITIATIVE.
There are statutory and conceptual demarcations between a referendum and an initiative. In enacting the
Initiative and Referendum Act, Congress differentiated one term from the other, thus:
(a)Initiative is the power of the people to propose amendments to the Constitution or to propose and enact
legislations through an election called for the purpose.
There are three (3) systems of initiative, namely:

a.1.Initiative on the Constitution which refers to a petition proposing amendments to the Constitution;
a.2.Initiative on statutes which refers to a petition proposing to enact a national legislation; and
a.3.Initiative on local legislation which refers to a petition proposing to enact a regional, provincial, city,
municipal, or barangay law, resolution or ordinance.
(b)Indirect initiative is exercise of initiative by the people through a proposition sent to Congress or the local
legislative body for action.

(c)Referendum is the power of the electorate to approve or reject a legislation through an election called for
the purpose. It may be of two classes, namely:

c.1Referendum on statutes which refers to a petition to approve or reject an act or law, or part thereof,
passed by Congress; and
c.2Referendum on local law which refers to a petition to approve or reject a law, resolution or
ordinance enacted by regional assemblies and local legislative bodies.

Page | 26

DIFFERENTIATED. There are statutory and conceptual demarcations between a referendum and an
initiative. In enacting the Initiative and Referendum Act, Congress differentiated one term from the other.
Along these statutory definitions, Justice Isagani A. Cruz defines initiative as the power of the people to
propose bills and laws, and to enact or reject them at the polls independent of the legislative assembly. On
the other hand, he explains that referendum is the right reserved to the people to adopt or reject any act or
measure which has been passed by a legislative body and which in most cases would without action on the
part of electors become a law. The foregoing definitions, which are based on Blacks and other leading
American authorities, are echoed in the Local Government Code (R.A. 7160).
SEC. 120. Local Initiative Defined. Local initiative is the legal process whereby the registered voters of a
local government unit may directly propose, enact, or amend any ordinance.

SEC. 126.Local Referendum Defined. Local referendum is the legal process whereby the registered
voters of the local government units may approve, amend or reject any ordinance enacted by the sanggunian.
The local referendum shall be held under the control and direction of the Comelec within sixty (60) days in
case of provinces and cities, forty-five (45) days in case of municipalities and thirty (30) days in case of
barangays.

The Comelec shall certify and proclaim the results of the said referendum.
Prescinding from these definitions, we gather that initiative is resorted to (or initiated) by the people directly
either because the law-making body fails or refuses to enact the law, ordinance, resolution or act that they
desire or because they want to amend or modify one already existing. Under Sec. 13 of R.A. 6735, the local
legislative body is given the opportunity to enact the proposal. If it refuses/neglects to do so within thirty (30)
days from its presentation, the proponents through their duly-authorized and registered representatives may
invoke their power of initiative, giving notice thereof to the local legislative body concerned. Should the
proponents be able to collect the number of signed conformities within the period granted by said statute, the
Commission on Elections shall then set a date for the initiative (not referendum) at which the proposition shall
be submitted to the registered voters in the local government unit concerned . . .. On the other hand, in a
local referendum, the law-making body submits to the registered voters of its territorial jurisdiction, for
approval or rejection, any ordinance or resolution which is duly enacted or approved by such law-making
authority. Said referendum shall be conducted also under the control and direction of the Commission on
Elections. In other words, while initiative is entirely the work of the electorate, referendum is begun and
consented to by the law-making body. Initiative is a process of law-making by the people themselves without
the participation and against the wishes of their elected representatives, while referendum consists merely of
the electorate approving or rejecting what has been drawn up or enacted by a legislative body. Hence, the
process and the voting in an initiative are understandably more complex than in a referendum where
expectedly the voters will simply write either Yes or No in the ballot.
COMELEC EXERCISES ADMINISTRATION AND SUPERVISION ON THE CONDUCT THEREOF. From
the above differentiation, it follows that there is need for the Comelec to supervise an initiative more closely,
its authority thereon extending not only to the counting and canvassing of votes but also to seeing to it that the
matter or act submitted to the people is in the proper form and language so it may be easily understood and
voted upon by the electorate. This is especially true where the proposed legislation is lengthy and
complicated, and should thus be broken down into several autonomous parts, each such part to be voted
upon separately. Care must also be exercised that (n)o petition embracing more than one subject shall be
submitted to the electorate, although two or more propositions may be submitted in an initiative. It should be
noted that under Sec. 13 (c) of R.A. 6735, the Secretary of Local Government or his designated
representative shall extend assistance in the formulation of the proposition. In initiative and referendum, the
Comelec exercises administration and supervision of the process itself, akin to its powers over the conduct of
elections. These law-making powers belong to the people, hence the respondent Commission cannot control
or change the substance or the content of legislation. In the exercise of its authority, it may (in fact it should
have done so already) issue relevant and adequate guidelines and rules for the orderly exercise of these
people-power features of our Constitution.
ID.; ID.; ID.; THE COURT CANNOT PASS UPON A PROPOSED INITIATIVE UNTIL THE PEOPLE HAVE
VOTED FOR IT AND IT HAS BECOME AN APPROVED ORDINANCE OR RESOLUTION. Deliberating on
this issue, the Court agrees with private respondent Garcia that indeed, the municipal resolution is still in the
proposal stage. It is not yet an approved law. Should the people reject it, then there would be nothing to
contest and to adjudicate. It is only when the people have voted for it and it has become an approved
ordinance or resolution that rights and obligations can be enforced or implemented thereunder. At this point, it
is merely a proposal and the writ of prohibition cannot issue upon a mere conjecture or possibility.
Constitutionally speaking, courts may decide only actual controversies, not hypothetical questions or cases.
We also note that the Initiative and Referendum Act itself provides that (n)othing in this Act shall prevent or
preclude the proper courts from declaring null and void any proposition approved pursuant to this Act . . .. So
too, the Supreme Court is basically a review court. It passes upon errors of law (and sometimes of fact, as in
the case of mandatory appeals of capital offenses) of lower courts as well as determines whether there had
been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of government. In the present case, it is quite clear that the Court has authority to review
Comelec Resolution No. 2848 to determine the commission of grave abuse of discretion. However, it does not
have the same authority in regard to the proposed initiative since it has not been promulgated or approved, or
passed upon by any branch or instrumentality or lower court, for that matter. The Commission on Elections
itself has made no reviewable pronouncement about the issues brought by the pleadings. The Comelec
simply included verbatim the proposal in its questioned Resolution No. 2848. Hence, there is really no
decision or action made by a branch, instrumentality or court which this Court could take cognizance of and
acquire jurisdiction over, in the exercise of its review powers.
ID.; ID.; ID.; THE COMELEC MAY PASS UPON SUCH PROPOSAL INSOFAR AS TO ITS FORM AND
LANGUAGE ARE CONCERNED AND WHETHER THE SAME IS PATENTLY AND CLEARLY OUTSIDE THE
CAPACITY OF THE LOCAL LEGISLATIVE BODY TO ENACT. Having said that, we are in no wise

Page | 27

suggesting that the Comelec itself has no power to pass upon proposed resolutions in an initiative. Quite the
contrary, we are ruling that these matters are in fact within the initiatory jurisdiction of the Commission to
which then the herein basic questions ought to have been addressed, and by which the same should have
been decided in the first instance. In other words, while regular courts may take jurisdiction over approved
propositions per said Sec. 18 of R.A. 6735, the Comelec in the exercise of its quasi-judicial and
administrative powers may adjudicate and pass upon such proposals insofar as their form and language are
concerned, as discussed earlier; and it may be added, even as to content, where the proposals or parts
thereof are patently and clearly outside the capacity of the local legislative body to enact. Accordingly, the
question of whether the subject of this initiative is within the capacity of the Municipal Council of Morong to
enact may be ruled upon by the Comelec upon remand and after hearing the parties thereon.

Albon v. Fernando, G.R. No. 148357, June 30, 2006
FACTS: Petitioner filed a taxpayers suit for certiorari, prohibition and injunction with damages against
respondents in the Regional Trial Court of Marikina. Petitioner claimed that it was unconstitutional and unlawful for
respondents to use government equipment and property, and to disburse public funds, of the City of Marikina for
the grading, widening, clearing, repair and maintenance of the existing sidewalks of Marikina Greenheights
Subdivision. He alleged that the sidewalks were private property because Marikina Greenheights Subdivision was
owned by V.V. Soliven, Inc. Hence, the city government could not use public resources on them. In undertaking
the project, therefore, respondents allegedly violated the constitutional proscription against the use of public funds
for private purposes
4
as well as Sections 335 and 336 of RA 7160
5
and the Anti-Graft and Corrupt Practices Act.
Petitioner further alleged that there was no appropriation for the project.
However, the trial court dismissed the petition on the ground that the City of Marikina was authorized to
carry out the contested undertaking pursuant to its inherent police power. Invoking this Courts 1991 decision
in White Plains Association v. Legaspi,
7
the roads and sidewalks inside the Marikina Greenheights Subdivision
were deemed public property. Petitioner sought for consideration but was denied.
Hence, the petitioner elevated the case to the Court of Appeals via a petition for certiorari, prohibition,
injunction and damages. However, it sustained the ruling of the trial court and held that Ordinance No. 59, s was a
valid enactment and within the LGUs power. Petitioner moved for reconsideration of the appellate court but it was
denied.
Thus, he instituted this petition.

ISSUE: WON a local government unit may validly use public funds to undertake the widening, repair, and
improvement of the sidewalks of a private-owned subdivision.

RULING: Yes, Local Government Units are vested with police powers delegated to them under the general
welfare clause of RA 7160, and with this power, LGUs may prescribe reasonable regulations to protect the lives,
health, and property of their constituents and maintain peace and order within their respective territorial
jurisdiction. Cities and municipalities also have the power to exercise such powers and discharge such
functions and responsibilities as may be necessary, appropriate or incidental to efficient and effective provisions of
the basic services and facilities, including infrastructure facilities intended primarily to service the needs of their
residents and which are financed by their own funds.
10
These infrastructure facilities include municipal or city
roads and bridges and similar facilities.
It is the registered owner of a subdivision who has the responsibility for the maintenance, repair, and
improvement of road lots and open spaces of the subdivision prior to their donation to the concerned local
government unit. The use of local government unit funds for the widening and improvement of privately owned
sidewalks is unlawful as it directly contravenes Sec. 335 of RA 7160. RA 7160 contemplates that only the
construction, improvement, repair, and maintenance of infrastructure facilities owned by the local government unit
may be bankrolled with local government funds. The law speaks of infrastructure facilities intended primarily to
service the needs of the residents of the LGU and which are funded out of municipal funds. It particularly refers
to municipal roads and bridges and similar facilities. Applying the rules on ejusdem generis, the phrase similar
facilities refers to or includes infrastructure facilities like sidewalks owned by the LGU.
Thus, RA 7160 contemplates that only the construction, improvement, repair and maintenance of
infrastructure facilities owned by the LGU may be bankrolled with local government funds.

La Carlota City v Rojo (Acts of Sanggunian)
Facts: Former Vice-Mayor Rex R. Jalandoon of La Carlota City, Negros Occidental appointed Atty. Rex G. Rojo
who had just tendered his resignation as member of the Sangguniang Panlungsod the day preceding such
appointment, as Sangguniang Panlungsod Secretary. The Vice-Mayor submitted Rojos appointment papers to
the Civil Service Commission Negros Occidental Field Office (CSCFO-Negros Occidental) for attestation. In a
Letter dated March 24, 2004, the said CSCFO wrote Jalandoon to inform him of the infirmities the office found on
the appointment documents. Jalandoon deemed the recall a disapproval of the appointment, hence, he brought
the matter to the CSC Regional Office No. 6 in Iloilo City, by way of an appeal. Before the said CSC Regional
Office No. 6 could resolve the appeal, the City of La Carlota represented by the newly elected mayor, Hon. Jeffrey
P. Ferrer and the Sangguniang Panlungsod represented by the newly elected Vice-Mayor, Hon. Demie John C.

Page | 28

Honrado, collectively, the petitioners herein, intervened. They argued that Jalandoon is not the real party in
interest in the appeal but Rojo who, by his inaction, should be considered to have waived his right to appeal from
the disapproval of his appointment; that the appointment was made within the period of the election ban prior to
the May 14, 2004 national and local elections, and finally, that the resignation of Rojo as member of the
Sangguniang Panlungsod is ineffective having not complied with the provision on quorum under Section 82(d) of
R.A. No. 7160. the CSC Regional Office No. 6 reversed and set aside the CSCFOs earlier ruling. On the
argument of the intervenors that the former Vice-Mayor lacked legal personality to elevate the case on appeal, the
regional office cited settled jurisprudence that the disapproval of an appointment affects the discretionary authority
of the appointing authority. Hence, he alone may request for reconsideration of or appeal the disapproval of an
appointment. The regional office likewise ruled that Rojos appointment on March 18, 2004 was made outside the
period of the election ban from March 26 to May 9, 2004, and that his resignation from the Sangguniang
Panlungsod was valid having been tendered with the majority of the council members in attendance (seven (7) out
of the thirteen councilors were present). Considering that the appointment of Rojo sufficiently complied with the
publication requirement, deliberation by the Personnel Selection Board, certification that it was issued in
accordance with the limitations provided for under Section 325 of R.A. 7160 and that appropriations or funds are
available for said position, the regional office approved the same. x x x Mayor Ferrer and Vice-Mayor Honrado
appealed the foregoing Decision of the CSC Regional Office No. 6 to the Civil Service Commission (or
Commission). On May 17, 2005, the Commission dismissed said appeal. The case was elevated to the Court of
Appeals which found that the appointment of respondent on 18 March 2004 did not violate the election ban period
which was from 26 March to 9 May 2004. Furthermore, there was no substantial evidence to show that the
appointment was a "midnight appointment." Thus, the Court of Appeals concluded that since respondent
possessed the minimum qualifications for the position of Sangguniang Panlungsod Secretary, and the appointing
authority has adequately complied with the other requirements for a valid appointment, then the Civil Service
Commissions approval of the appointment was only proper.

Issue: WON the resignation of Jalondoon is in accordance with sec.82 of RA 7160 as provided under the law.

Ruling: The resolution of this case requires the application and interpretation of certain provisions of Republic Act
No. 7160 (RA 7160), otherwise known as the Local Government Code of 1991. The pertinent provisions read:
Section 82. Resignation of Elective Local Officials. (a) Resignations by elective local officials shall be deemed
effective only upon acceptance by the following authorities: (1) The President, in the case of governors, vice-
governors, and mayors and vice-mayors of highly urbanized cities and independent component cities; (2) The
governor, in the case of municipal mayors, municipal vice-mayors, city mayors and city vice-mayors of component
cities; (3) The sanggunian concerned, in case of sanggunian members; and (4) The city or municipal mayor, in the
case of barangay officials. (b) Copies of the resignation letters of elective local officials, together with the action
taken by the aforesaid authorities, shall be furnished the Department of Interior and Local Government. (c) The
resignation shall be deemed accepted if not acted upon by the authority concerned within fifteen (15) working
days from receipt thereof. (d) Irrevocable resignations by sanggunian members shall be deemed accepted upon
presentation before an open session of the sanggunian concerned and duly entered in its records: Provided,
however,That this subsection does not apply to sanggunian members who are subject to recall elections or to
cases where existing laws prescribe the manner of acting upon such resignations. Section 49. Presiding Officer.
(a) The vice-governor shall be the presiding officer of the sangguniang panlalawigan; the city vice-mayor, of the
sangguniang panlungsod; the municipal vice-mayor, of the sangguniang bayan; and the punong barangay, of the
sangguniang barangay. The presiding officer shall vote only to break a tie. (b) In the event of the inability of the
regular presiding officer to preside at a sanggunian session, the members present and consisting a quorum shall
elect from among themselves a temporary presiding officer. He shall certify within ten (10) days from the passage
of ordinances enacted and resolutions adopted by the sanggunian in the session over which he temporarily
presided. Section 52. Sessions. (a) On the first day of the session immediately following the election of its
members, the sanggunian shall, by resolution, fix the day, time, and place of its regular sessions. The minimum
number of regular sessions shall be once a week for the sangguniang panlalawigan, sangguniang panlungsod,
and sangguniang bayan, and twice a month for the sangguniang barangay. (b) When public interest so demands,
special session may be called by the local chief executive or by a majority of the members of the sanggunian. (c)
All sanggunian sessions shall be open to the public unless a closed-door session is ordered by an affirmative vote
of a majority of the members present, there being a quorum, in the public interest or for reasons of security,
decency, or morality. No two (2) sessions, regular or special, may be held in a single day. (d) In the case of
special sessions of the sanggunian, a written notice to the members shall be served personally at the members
usual place of residence at least twenty-four (24) hours before the special session is held. Unless otherwise
concurred in by two-thirds (2/3) vote of the sanggunian members present, there being a quorum, no other matters
may be considered at a special session except those stated in the notice. (e) Each sanggunian shall keep a
journal and record of its proceedings which may be published upon resolution of the sanggunian concerned.
Section 53. Quorum. (a) A majority of all the members of the sanggunian who have been elected and qualified
shall constitute a quorum to transact official business. Should a question of quorum be raised during a session,
the presiding officer shall immediately proceed to call the roll of the members and thereafter announce the results.
(b) Where there is no quorum, the presiding officer may declare a recess until such time as a quorum is
constituted, or a majority of the members present may adjourn from day to day and may compel the immediate
attendance of any member absent without justifiable cause by designating a member of the sanggunian, to be
assisted by a member or members of the police force assigned in the territorial jurisdiction of the local government
unit concerned, to arrest the absent member and present him at the session. (c) If there is still no quorum despite
the enforcement of the immediately preceding subsection, no business shall be transacted. The presiding officer,
upon proper motion duly approved by the members present, shall then declare the session adjourned for lack of
quorum. Section 457. Composition. (a) The sangguniang panlungsod, the legislative body of the city, shall be
composed of the city vice-mayor as presiding officer, the regular sanggunian members, the president of the city
chapter of the liga ng mga barangay, the president of the panlungsod na pederasyon ng mga sangguniang
kabataan, and the sectoral representatives, as members. (b) In addition thereto, there shall be three (3) sectoral
representatives: one (1) from the women; and as shall be determined by the sanggunian concerned within ninety
(90) days prior to the holding of the local elections, one (1) from the agricultural or industrial workers; and one (1)
from the other sectors, including the urban poor, indigenous cultural communities, or disabled persons. (c) The
regular members of the sangguniang panlungsod and the sectoral representatives shall be elected in the manner
as may be provided for by law. (Boldfacing supplied) On 10 October 1991, the Congress approved RA 7160 or the

Page | 29

Local Government Code. Under RA 7160, the city vice-mayor, as presiding officer, is a member of the
Sangguniang Panlungsod, thus: Section 49. Presiding Officer. (a) The vice-governor shall be the presiding officer
of the sangguniang panlalawigan; the city vice-mayor, of the sangguniang panlungsod; the municipal vice-mayor,
of the sangguniang bayan; and the punong barangay, of the sangguniang barangay. The presiding officer shall
vote only to break a tie. (b) In the event of the inability of the regular presiding officer to preside at a sanggunian
session, the members present and consisting a quorum shall elect from among themselves a temporary presiding
officer. He shall certify within ten (10) days from the passage of ordinances enacted and resolutions adopted by
the sanggunian in the session over which he temporarily presided. Section 457. Composition. (a) The
sangguniang panlungsod, the legislative body of the city, shall be composed of the city vice-mayor as presiding
officer, the regular sanggunian members, the president of the city chapter of the liga ng mga barangay, the
president of the panlungsod na pederasyon ng mga sangguniang kabataan, and the sectoral representatives, as
members. (b) In addition thereto, there shall be three (3) sectoral representatives: one (1) from the women; and as
shall be determined by the sanggunian concerned within ninety (90) days prior to the holding of the local
elections, one (1) from the agricultural or industrial workers; and one (1) from the other sectors, including the
urban poor, indigenous cultural communities, or disabled persons. (c) The regular members of the sangguniang
panlungsod and the sectoral representatives shall be elected in the manner as may be provided for by law.
(Boldfacing and underscoring supplied) RA 7160 clearly states that the Sangguniang Panlungsod "shall be
composed of the city vice-mayor as presiding officer, the regular sanggunian members, the president of the city
chapter of the liga ng mga barangay, the president of the panlungsod na pederasyon ng mga sangguniang
kabataan, and the sectoral representatives, as members." Blacks Law Dictionary defines "composed of" as
"formed of" or "consisting of." As the presiding officer, the vice-mayor can vote only to break a tie. In effect, the
presiding officer votes when it matters the most, that is, to break a deadlock in the votes. Clearly, the vice-mayor,
as presiding officer, is a "member" of the Sangguniang Panlungsod considering that he is mandated under
Section 49 of RA 7160 to vote to break a tie. To construe otherwise would create an anomalous and absurd
situation where the presiding officer who votes to break a tie during a Sanggunian session is not considered a
"member" of the Sanggunian. For the sanggunian to officially transact business, there should be a quorum. A
quorum is defined by Section 53 of the Local Government Code of 1991 as referring to the presence of the
majority of all the members of the sanggunian who have been duly elected and qualified. Relative thereto,
generally, ordinary measures require for its enactment only the approval of a simple majority of the sanggunian
members present, there being a quorum. These pertain to the normal transactions of the sanggunian which are
approved by the sanggunian through a vote of simple majority of those present. On the other hand, there are
certain measures where the Local Government Code requires for its approval the vote of majority of all the
members who were duly elected and qualified. This is what we call approval by the qualified majority of the
sanggunian. In this case, the approval is to be voted not just by the majority of those present in a session there
being a quorum but by the majority of all the members of the sanggunian duly elected and qualified regardless of
whether all of them were present or not in a particular session, there being a quorum. x x x x In determining a
quorum, Section 53 of the Local Government Code of 1991 provides that a majority of all the members of the
sanggunian who have been elected and qualified shall constitute a quorum. Along this line, it bears to emphasize
that per Section 467 (a) of the Local Government Code of 1991, the Sangguniang Panlalawigan is a composite
body where the Vice-Governor as Presiding Officer is a composite member thereof. As a composite member in
the sangguniang panlalawigan, he is therefore included in the determination of a quorum. Clearly, the
appointment of respondent on 18 March 2004 was validly issued considering that: (1) he was considered resigned
as Sangguniang Panlungsod member effective 17 March 2004; (2) he was fully qualified for the position of
Sanggunian Secretary; and (3) there was substantial compliance with the appointment requirements.

De Los Reyes v. Sandiganbayan, G.R. No. 121215, Nov. 13, 1997

FACTS: Petitioner, along with the two others, was charged with the crime of falsification of a public document,
specifically Resolution No. 57-S-92, in the Municipal Council of Mariveles, Bataan. In the complaint it was alleged
that the petitioners appropriated the amount of P8,500.00 for the payment of the terminal leave of two municipal
employees, and it was anomalous for not having been approved by the said Council, as the minutes of the
proceedings therein made no reference to the supposed approval thereof. It was carried out by petitioner in
connivance with Sangguniang Bayan (SB) Member Jesse Concepcion and SB Secretary Antonio Zurita.

Hence, a preliminary investigation was conducted. The deputized prosecutor of Balangga, Bataan found
probable cause thus, the filing of information in SandiganBayan.

SandiganBayan ruled that the appropriation made by the two public officers for payment of the terminal
leave of two (2) employees of the municipality, when in truth and in fact as both accused knew well the same is
false and incorrect as the said resolution was not approved by the aforesaid Sangguniang Bayan for which both
accused has the obligation to disclose the truth which is contrary to law was invalid.

Aggrieved, petitioner filed a motion for investigation but was denied by the SandiganBayan.

Thus, the filing of the petition for certiorari.

ISSUE: WON the appropriation under the Resolution No. 57-S-92 made by the petitioners without the approval of
the sannguniang concerned is valid.

RULING: NO, under the Local Government Code, the veto power of the local chief executive confers beyond
mechanical act of signing an ordinance or resolution as a requisite to its enforceability. Such power accords the
local chief executive the discretion to sustain a resolution or ordinance in the first instance or to veto it and return it
with his objections to the Sanggunian, which may proceed to reconsider the same. The Sanggunian concerned,
however, may override the veto by a two-thirds (2/3) vote of all its members thereby making the ordinance or
resolution effective for all legal intents and purposes. It is clear, therefore, that the concurrence of a local chief
executive in the enactment of an ordinance or resolution requires, not only a flourish of the pen, but the
application of judgment after meticulous analysis and intelligence as well.

Page | 30

Tayaban v. People, G.R. No. 150194, March 26, 2007

Facts:
Mayor Tayaban submitted a project proposal to provincial governor Benjamin Cappleman for the construction of
the Tinoc Public Market. Subsequently, Tayaban was informed by the Governor that his proposal was approved
and that the project shall be funded by the Cordillera Executive Board (CEB) subsequently, a bidding was
conducted and private complainant Lopez Pugong won the contract for the construction of the said public market.
On March 1, 1989, a formal contract

was executed by and between Pugong, as the contractor, and the CEB, as
the project owner. Actual construction of the public market was commenced in June 1989. On August 15, 1989,
the Sangguniang Bayan of Tinoc adopted Resolution No. 20.

On that same day, Tayaban and his co-petitioners, together with some men, proceeded to the construction site
and demolished the structures and improvements introduced thereon. As a result, Pugong filed an Affidavit-
Complaint against herein petitioners.

Subsequently, in an Information dated June 26, 1992, herein petitioners were charged with violation of Section
3(e) of Republic Act (R.A.) No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act. The
accusatory portion of the Information reads:

That on August 17, 1989 and for sometime prior or subsequent thereto, in the Municipality of Tinoc, Ifugao,
Philippines and within the jurisdiction of this Honorable Court, the above-named accused Robert Tayaban,
Municipal Mayor of Tinoc, Francisco Maddawat, Artemio Balangue, Francisco Mayumis and Quirino Pana, are all
public officers being Municipal Councilors of Tinoc, Ifugao and in the performance of their official functions acting
in evident bad faith and conspiring with each other, did then and there, willfully and unlawfully pass and
unanimously approve Resolution No. 20, thereby vesting upon themselves powers and authority to demolish the
half-finished Tinoc Public Market construction whereby respondents themselves personally and actually demolish
it, to the damage and prejudice of the government particularly the Cordillera Executive Board, being the owner of
the project.

Upon arraignment, herein petitioners pleaded not guilty.

After trial, the Sandiganbayan promulgated the presently assailed Decision, is hereby rendered convicting all the
accused ROBERT TAYABAN Y CALIPLIP, FRANCISCO MADDAWAT Y TAYOBAN, ARTEMIO BALANGUE Y
LANGA, FRANCISCO MAYUMIS Y BAHEL and QUIRINO PANA Y CUYAHEN of the crime of Violation of Section
3 (e) of Republic Act No. 3019 as amended, and in the absence of mitigating and aggravating circumstances and
applying the Indeterminate Sentence Law, herein accused are hereby sentenced to suffer the indeterminate
penalty of imprisonment of six (6) years and one (1) month as minimum to eight (8) years as maximum and are
hereby ordered jointly and severally to pay the government the amount of P134,632.80 without subsidiary
imprisonment in case of insolvency.

Petitioners filed a Motion for Reconsideration but the Sandiganbayan denied. Hence, herein petition for review
with the following assignment of errors.

Issue:
The honorable Sandiganbayan erred in holding that resolution no. 20 is an invalid legislation and that the
demolition of the five posts was an implementation of LOI no. 19 and an exercise of the police power vested in
local government unit.

Ruling:
Petitioners argue that the Sandiganbayan erred in applying Sections 56

and 59(a)

of the Local Government Code
(LGC) of 1991, which provide, respectively, for the review by the Sangguniang Panlalawigan of component city
and municipal ordinances and resolutions approving local development plans and public investment programs and
for the posting in conspicuous places in the local government unit concerned of the said resolutions and
ordinances.

They argue that the applicable law at the time of the passage of Resolution No. 20 is Batas Pambansa Bilang
(B.P. Blg.) 337 or the Local Government Code of 1983. Claiming that Pugong failed to obtain the requisite building
permit pursuant to Presidential Decree (P.D.) No. 1096,

petitioners assert that their act of demolishing the
structures erected on the construction site is an implementation of the provisions of the Letter of Instruction (LOI)
No. 19

which empowers certain public officials, like the municipal mayor, to remove illegal constructions which
were built, either in public places or private property, without permit. Petitioners further contend that the demolition
is a valid exercise of police power and that their act is justified by the general welfare clause under the LGC which
empowers them to enact and implement measures for the general well-being of their constituents.

The Court agrees with the petitioners and the OSG that Sections 56 and 59(a) of the 1991 LGC (R.A. No. 7160)
are not applicable in the present case. The Sangguniang Bayan of Tinoc enacted the questioned resolution on
August 15, 1989, more than two years before the effectivity of the said Code. The prevailing law at that time was
the Local Government Code of 1983 (B.P. Blg. 337). The Court agrees with the OSG that Sections 56 and 59(a)
of the 1991 LGC have no similar or counterpart provisions in the 1983 LGC. In addition, the Court agrees with
petitioners that Sections 56 and 59(a) of the 1991 LGC find no application in the present case because these
provisions refer, specifically, to ordinances and resolutions approving the local development plans and public
investment programs formulated by the local development council.

However, the Court is NOT persuaded by petitioners reliance on the provisions of P.D. No. 1096 and LOI No. 19
as their legal bases in conducting the questioned demolition. A careful reading of Resolution No. 20 reveals
that petitioners only basis in deciding to carry out the demolition was because the supposed public
market was being erected in a place other than that identified by the Sangguniang Bayan of Tinoc. There
was no mention whatsoever in the said Resolution that the private contractor failed to secure the requisite building
permit. Neither was there any mention that the demolition was being conducted pursuant to the power vested
upon the Mayor by the provisions of LOI No. 19. Even the letter sent by petitioner Tayaban to the head laborer of
Pugong dated July 31, 1989, the letter to the Station Commander of the INP, Tinoc of even date,

and the

Page | 31

memorandum sent to the laborers of Pugong dated August 3, 1989 uniformly state that the only reason why
petitioners wanted to stop the construction was because the supposed public market was being erected in the
wrong place.

Hence, petitioners reliance on the provisions of P.D. No. 1096 and LOI No. 19 was merely an afterthought
and as a means of justification for their acts which, in the first place, were done in bad faith. Likewise, the
Court is not persuaded by petitioners contention that the subject demolition is a valid exercise of police
power. The exercise of police power by the local government is valid unless it contravenes the
fundamental law of the land, or an act of the legislature, or unless it is against public policy, or is
unreasonable, oppressive, partial, discriminating, or in derogation of a common right. In the present case,
the acts of petitioner have been established as a violation of law, particularly of the provisions of Section
3(e) of R.A. No. 3019.

Neither can petitioners seek cover under the general welfare clause authorizing the abatement of nuisances
without judicial proceedings. This principle applies to nuisances per se, or those, which affect the immediate
safety of persons and property and may be summarily abated under the undefined law of necessity.

Petitioners
claim that the public market would pose danger to the safety and health of schoolchildren if it were built on the
place being contested.

However, petitioners never made known their supposed concerns either to the Governor or
to the CEB. Instead, they took the law into their own hands and precipitately demolished the subject structures
that were built without the benefit of any hearing or consultation with the proper authority, which in this case is the
CEB.

The assailed Decision and Resolution of the Sandiganbayan are AFFIRMED with MODIFICATION. The additional
penalty of perpetual disqualification from public office is imposed upon petitioners.

ONGSUCO vs MALONES
G.R. No. 182065
October 27, 2009

FACTS:
Petitioners are stall holders at the Maasin Public Market, which had just been newly renovated. In a
letter dated 6 August 1998, the Office of the Municipal Mayor informed petitioners of a meeting scheduled on 11
August 1998 concerning the municipal public market. Revenue measures were discussed during the said
meeting, including the increase in the rentals for the market stalls and the imposition of goodwill fees in the
amount of P20,000.00, payable every month.

On 17 August 1998, the Sangguniang Bayan of Maasin approved Municipal Ordinance No. 98-01,
entitled The Municipal Revised Revenue Code. The Code contained a provision for increased rentals for the
stalls and the imposition of goodwill fees in the amount of P20,000.00 and P15,000.00 for stalls located on the first
and second floors of the municipal public market, respectively. The same Code authorized respondent to enter
into lease contracts over the said market stalls, and incorporated a standard contract of lease for the stall holders
at the municipal public market.

Only a month later, on 18 September 1998, the Sangguniang Bayan of Maasin approved Resolution No.
68, series of 1998, moving to have the meeting dated 11 August 1998 declared inoperative as a public hearing,
because majority of the persons affected by the imposition of the goodwill fee failed to agree to the said
measure. However, respondent (Mayor of Maasin) vetoed the Resolution.

Municipal Ordinance No. 98-01 was approved on 17 August 1998. On 9 June 1999, respondent wrote a
letter to petitioners informing them that they were occupying stalls in the newly renovated municipal public market
without any lease contract, as a consequence of which, the stalls were considered vacant and open for qualified
and interested applicants.

Petitioners argued that public hearing was mandatory in the imposition of goodwill fees. Section 186 of
the Local Government Code of 1991 provides that an ordinance levying taxes, fees, or charges shall not be
enacted without any prior hearing conducted for the purpose. Municipal Ordinance No. 98-01, imposing goodwill
fees, is invalid on the ground that the conferences held on 11 August 1998 and 22 January 1999 could not be
considered public hearings. The letter from the Office of the Municipal Mayor was sent to stall holders on 6
August 1998, informing the latter of the meeting to be held, as was in fact held, on 11 August 1998, only five
days after notice in violation of the 10 days notice of Article 277(b)(3) of the Implementing Rules and Regulations
of the Local Government Code.

Petitioners prayed that respondent be enjoined from imposing the goodwill fees pending the
determination of the reasonableness thereof, and from barring petitioners from occupying the stalls at the
municipal public market and continuing with the operation of their businesses.

On the otherhand, Respondent sought from the RTC an award for moral damages in the amount of not
less than P500,000.00, for the social humiliation and hurt feelings he suffered by reason of the unjustified filing by
petitioners of Civil Case No. 25843; and an order for petitioners to vacate the renovated market stalls and pay
reasonable rentals from the date they began to occupy said stalls until they vacate the same.

RTC subsequently rendered a Decision on 15 July 2003 dismissing the Petition in Civil Case.
found that petitioners could not avail themselves of the remedy of mandamus or prohibition
mandamus would not lie in this case where petitioners failed to show a clear legal right to the use of the
market stalls without paying the goodwill fees imposed by the municipal government
Prohibition likewise would not apply to the present case where respondents acts, sought to be enjoined,
did not involve the exercise of judicial or quasi-judicial functions.

Page | 32

non-exhaustion of administrative remedies
failure to question the legality of Municipal Ordinance No. 98-01 before the Secretary of Justice, as
provided under Section 187 of the Local Government Code
the Petition raising the very same issue before the RTC premature

Court of Appeals again ruled in respondents favor.
Declared that the goodwill fee was a form of revenue measure, which the Municipality of Maasin was
empowered to impose under Section 186 of the Local Government Code
Petitioners failed to establish any grave abuse of discretion committed by respondent in enforcing
goodwill fees
Additionally held that even if respondent acted in grave abuse of discretion, petitioners resort to a
petition for prohibition was improper, since respondents acts in question herein did not involve the
exercise of judicial, quasi-judicial, or ministerial functions, as required under Section 2, Rule 65 of the
Rules of Court.
failed to exhaust administrative remedies prior thereto.
Petitioners filed a Motion for Reconsideration but was denied by the Court of Appeals. Hence this petition.

ISSUES:
a. WHETHER OR NOT THE PETITIONERS HAVE EXHAUSTED ADMINISTRATIVE REMEDIES
BEFORE FILING THE INSTANT CASE IN COURT
b. WHETHER OR NOT THE APPELLEE MARIANO MALONES WHO WAS THEN THE MUNICIPAL
MAYOR OF MAASIN, ILOILO HAS COMMITTED GRAVE ABUSE OF DISCRETION.
c. Whether or not Municipal Ordinance No. 98-01 is valid.
RULING:
a. No need for petitioners to exhaust administrative remedies before resorting to the courts.
It is true that the general rule is that before a party is allowed to seek the intervention of the
court, he or she should have availed himself or herself of all the means of administrative processes
afforded him or her. Hence, if resort to a remedy within the administrative machinery can still be made
by giving the administrative officer concerned every opportunity to decide on a matter that comes within
his or her jurisdiction, then such remedy should be exhausted first before the courts judicial power can
be sought. The premature invocation of the intervention of the court is fatal to ones cause of
action. The doctrine of exhaustion of administrative remedies is based on practical and legal
reasons. The availment of administrative remedy entails lesser expenses and provides for a speedier
disposition of controversies. Furthermore, the courts of justice, for reasons of comity and convenience,
will shy away from a dispute until the system of administrative redress has been completed and
complied with, so as to give the administrative agency concerned every opportunity to correct its error
and dispose of the case. However, there are several exceptions to this rule.
b. No, respondent did not commit grave abuse of discretion. Respondent herein is
performing a ministerial function. It bears to emphasize that Municipal Ordinance No. 98-01 enjoys the
presumption of validity, unless declared otherwise. Respondent has the duty to carry out the provisions
of the ordinance under Section 444 of the Local Government Code:
Section 444. The Chief Executive: Powers, Duties, Functions
and Compensation. (a) The Municipal mayor, as the chief executive of
the municipal government, shall exercise such powers and perform such
duties and functions as provided by this Code and other laws.

(b) For efficient, effective and economical governance the
purpose of which is the general welfare of the municipality and its
inhabitants pursuant to Section 16 of this Code, the Municipal mayor
shall:

x x x x

(2) Enforce all laws and ordinances relative to the
governance of the municipality and the exercise of its corporate powers
provided for under Section 22 of this Code, implement all approved
policies, programs, projects, services and activities of the municipality x x
x.

x x x x

(3) Initiate and maximize the generation of resources and
revenues, and apply the same to the implementation of development
plans, program objectives sand priorities as provided for under Section
18 of this Code, particularly those resources and revenues programmed
for agro-industrial development and country-wide growth and progress,
and relative thereto, shall:

x x x x

(iii) Ensure that all taxes and other revenues of the
municipality are collected, and that municipal funds are applied in
accordance with law or ordinance to the payment of expenses and
settlement of obligations of the municipality; x x x.

c.
No, Municipal Ordinance No. 98-01 is invalid. no public hearing had been duly conducted prior to the
enactment of Municipal Ordinance No. 98-01, said ordinance is void and cannot be given any
effect. Consequently, a void and ineffective ordinance could not have conferred upon respondent the
jurisdiction to order petitioners stalls at the municipal public market vacant.


Page | 33

There is no dispute herein that the notices sent to petitioners and other stall holders at the
municipal public market were sent out on 6 August 1998, informing them of the supposed public
hearing to be held on 11 August 1998. Even assuming that petitioners received their notice also on 6
August 1998, the public hearing was already scheduled, and actually conducted, only five days later,
on 11 August 1998. This contravenes Article 277(b)(3) of the Implementing Rules and Regulations of
the Local Government Code which requires that the public hearing be held no less than ten days from
the time the notices were sent out, posted, or published.

When the Sangguniang Bayan of Maasin sought to correct this procedural defect through
Resolution No. 68, series of 1998, dated 18 September 1998, respondent vetoed the said
resolution. Although the Sangguniang Bayan may have had the power to override respondents veto, it
no longer did so.
The defect in the enactment of Municipal Ordinance No. 98 was not cured when another
public hearing was held on 22 January 1999, after the questioned ordinance was passed by
the Sangguniang Bayan and approved by respondent on 17 August 1998. Section 186 of the Local
Government Code prescribes that the public hearing be held priorto the enactment by a local
government unit of an ordinance levying taxes, fees, and charges.

NOTE:
Section 277 of the Implementing Rules and Regulations of the
Local Government Code establishes in detail the procedure for the
enactment of such an ordinance, relevant provisions of which are
reproduced below:

Section 277. Publication of Tax Ordinance and Revenue
Measures.x x x.

x x x x

(b) The conduct of public hearings shall be governed by the
following procedure:

x x x x

(2) In addition to the requirement for publication or posting, the
sanggunian concerned shall cause the sending of written notices of the
proposed ordinance, enclosing a copy thereof, to the interested or
affected parties operating or doing business within the territorial
jurisdiction of the LGU concerned.

(3) The notice or notices shall specify the date or dates and
venue of the public hearing or hearings. The initial public hearing shall
be held not earlier than ten (10) days from the sending out of the notice
or notices, or the last day of publication, or date of posting thereof,
whichever is later;

x x x x

(c) No tax ordinance or revenue measure shall be enacted
or approved in the absence of a public hearing duly conducted in the
manner provided under this Article. (Emphases ours.)

Figuerres v CA

FACTS: 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.
The assessment, effective in the year 1994, was based on Ordinance Nos. 119 which contains a schedule of fair
market values of the different classes of real property in the municipality; Ordinance No. 125 which fixes the
assessment levels applicable to such classes of real property; and finally, Ordinance No. 135 which 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.
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.
On the other hand, the Municipality of Mandaluyong contends:
xxx
(2) apart from her bare allegations, petitioner Figuerres has not presented any evidence to show that no
public hearings were conducted prior to the enactment of the ordinances in question;
(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, still the subject ordinances were disseminated
before their effectivity in accordance with the relevant provisions of R.A. No. 7160; and
xxx
RULING:
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. R.A. No. 7160, 186 provides that an ordinance levying taxes, fees, or
charges shall not be enacted without any prior public hearing conducted for the purpose.

Page | 34

However, it is noteworthy that apart from her bare assertions, petitioner Figuerres has not presented any evidence
to show that no public hearings were conducted prior to the enactment of the ordinances in question.
The lack of a public hearing is a negative allegation essential to petitioners cause of action in the present
case.Hence, as petitioner is the party asserting it, 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, we are constrained to uphold their constitutionality or
legality.
Publication and Posting of Scedule 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.A. No. 7160, 212 which in part
states:
. . . . The schedule of fair market values shall be published in a newspaper of general circulation in the
province, city, or municipality concerned, or in the absence thereof, shall be posted in the provincial
capitol, city or municipal hall and in two other conspicuous public places therein.
In addition, an ordinance imposing real property taxes (such as Ordinance Nos. 119 and 135) must be posted or
published as required by R.A. No. 7160, 188 which provides:
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.
In view of 188 and 511(a) of R.A. No. 7160, 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. 125) should be published in full for three (3) consecutive days in a newspaper of local
circulation, where available, within ten (10) days of its approval, and posted in at least two (2) prominent places in
the provincial capitol, city, municipal, or barangay hall for a minimum of three (3) consecutive weeks.
Apart from her allegations, petitioner has not presented any evidence to show that the subject ordinances were
not disseminated in accordance with these provisions of R.A. No. 7160. On the other hand, the Municipality of
Mandaluyong presented a certificate, dated November 12, 1993, of Williard S. Wong, Sanggunian Secretary of
the Municipality of Mandaluyong that Ordinance No. 125, S-1993 . . . has been posted in accordance with 59(b)
of R.A. No. 7160, otherwise known as the Local Government Code of 1991. [15] Thus, considering the
presumption of validity in favor of the ordinances and the failure of petitioner to rebut such presumption, we are
constrained to dismiss the petition in this case.

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