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STATUTORY CONSTRUCTION (2/4) Resolving the accompanying prayer for the issuance of a writ of preliminary

injunction, respondent Judge issued an order on March 11, 1975, denying the
G.R. No. L-41631 December 17, 1976 plea for failure of the respondent Federation of Manila Market Vendors, Inc. to
exhaust the administrative remedies outlined in the Local Tax Code.
HON. RAMON D. BAGATSING, as Mayor of the City of Manila; ROMAN G.
GARGANTIEL, as Secretary to the Mayor; THE MARKET After due hearing on the merits, respondent Judge rendered its decision on
ADMINISTRATOR; and THE MUNICIPAL BOARD OF MANILA, petitioners, August 29, 1975, declaring the nullity of Ordinance No. 7522 of the City of
vs. Manila on the primary ground of non-compliance with the requirement of
HON. PEDRO A. RAMIREZ, in his capacity as Presiding Judge of the publication under the Revised City Charter. Respondent Judge ruled:
Court of First Instance of Manila, Branch XXX and the FEDERATION OF
MANILA MARKET VENDORS, INC., respondents. There is, therefore, no question that the ordinance in question was not
published at all in two daily newspapers of general circulation in the
Santiago F. Alidio and Restituto R. Villanueva for petitioners. City of Manila before its enactment. Neither was it published in the
same manner after approval, although it was posted in the legislative
Antonio H. Abad, Jr. for private respondent. hall and in all city public markets and city public libraries. There being
no compliance with the mandatory requirement of publication before
and after approval, the ordinance in question is invalid and, therefore,
Federico A. Blay for petitioner for intervention. null and void.

MARTIN, J.: Petitioners moved for reconsideration of the adverse decision, stressing that
(a) only a post-publication is required by the Local Tax Code; and (b) private
The chief question to be decided in this case is what law shall govern the respondent failed to exhaust all administrative remedies before instituting an
publication of a tax ordinance enacted by the Municipal Board of Manila, the action in court.
Revised City Charter (R.A. 409, as amended), which requires publication of
the ordinance before its enactment and after its approval, or the Local Tax On September 26, 1975, respondent Judge denied the motion.
Code (P.D. No. 231), which only demands publication after approval.
Forthwith, petitioners brought the matter to Us through the present petition for
On June 12, 1974, the Municipal Board of Manila enacted Ordinance No. 7522, review on certiorari.
We find the petition impressed with merits.
PURPOSES." The petitioner City Mayor, Ramon D. Bagatsing, approved the
ordinance on June 15, 1974. 1. The nexus of the present controversy is the apparent conflict between the
Revised Charter of the City of Manila and the Local Tax Code on the manner
of publishing a tax ordinance enacted by the Municipal Board of Manila. For,
On February 17, 1975, respondent Federation of Manila Market Vendors, Inc.
while Section 17 of the Revised Charter provides:
commenced Civil Case 96787 before the Court of First Instance of Manila
presided over by respondent Judge, seeking the declaration of nullity of
Ordinance No. 7522 for the reason that (a) the publication requirement under Each proposed ordinance shall be published in two daily newspapers
the Revised Charter of the City of Manila has not been complied with; (b) the of general circulation in the city, and shall not be discussed or enacted
Market Committee was not given any participation in the enactment of the by the Board until after the third day following such publication. * *
ordinance, as envisioned by Republic Act 6039; (c) Section 3 (e) of the Anti- * Each approved ordinance * * * shall be published in two daily
Graft and Corrupt Practices Act has been violated; and (d) the ordinance would newspapers of general circulation in the city, within ten days after its
violate Presidential Decree No. 7 of September 30, 1972 prescribing the approval; and shall take effect and be in force on and after the
collection of fees and charges on livestock and animal products. twentieth day following its publication, if no date is fixed in the
Section 43 of the Local Tax Code directs: later than the one containing the general provision. The City Charter of Manila
was promulgated on June 18, 1949 as against the Local Tax Code which was
Within ten days after their approval, certified true copies of all decreed on June 1, 1973. The law-making power cannot be said to have
provincial, city, municipal and barrioordinances levying or imposing intended the establishment of conflicting and hostile systems upon the same
taxes, fees or other charges shall be published for three consecutive subject, or to leave in force provisions of a prior law by which the new will of
days in a newspaper or publication widely circulated within the the legislating power may be thwarted and overthrown. Such a result would
jurisdiction of the local government, or posted in the local legislative render legislation a useless and Idle ceremony, and subject the law to the
hall or premises and in two other conspicuous places within the reproach of uncertainty and unintelligibility. 5
territorial jurisdiction of the local government. In either case, copies of
all provincial, city, municipal and barrio ordinances shall be furnished The case of City of Manila v. Teotico 6 is opposite. In that case, Teotico sued
the treasurers of the respective component and mother units of a local the City of Manila for damages arising from the injuries he suffered when he
government for dissemination. fell inside an uncovered and unlighted catchbasin or manhole on P. Burgos
Avenue. The City of Manila denied liability on the basis of the City Charter
In other words, while the Revised Charter of the City of Manila requires (R.A. 409) exempting the City of Manila from any liability for damages or injury
publication before the enactment of the ordinance and after the approval to persons or property arising from the failure of the city officers to enforce the
thereof in two daily newspapers of general circulation in the city, the Local Tax provisions of the charter or any other law or ordinance, or from negligence of
Code only prescribes for publication after the approval of "ordinances levying the City Mayor, Municipal Board, or other officers while enforcing or attempting
or imposing taxes, fees or other charges" either in a newspaper or publication to enforce the provisions of the charter or of any other law or ordinance. Upon
widely circulated within the jurisdiction of the local government or by posting the other hand, Article 2189 of the Civil Code makes cities liable for damages
the ordinance in the local legislative hall or premises and in two other for the death of, or injury suffered by any persons by reason of the defective
conspicuous places within the territorial jurisdiction of the local government. condition of roads, streets, bridges, public buildings, and other public works
Petitioners' compliance with the Local Tax Code rather than with the Revised under their control or supervision. On review, the Court held the Civil Code
Charter of the City spawned this litigation. controlling. It is true that, insofar as its territorial application is concerned, the
Revised City Charter is a special law and the subject matter of the two laws,
There is no question that the Revised Charter of the City of Manila is a special the Revised City Charter establishes a general rule of liability arising from
act since it relates only to the City of Manila, whereas the Local Tax Code is a negligence in general, regardless of the object thereof, whereas the Civil Code
constitutes a particularprescription for liability due to defective streets in
general law because it applies universally to all local governments. Blackstone
particular. In the same manner, the Revised Charter of the City prescribes a
defines general law as a universal rule affecting the entire community and
rule for the publication of "ordinance" in general, while the Local Tax Code
special law as one relating to particular persons or things of a class. 1 And the
rule commonly said is that a prior special law is not ordinarily repealed by a establishes a rule for the publication of "ordinance levying or imposing taxes
fees or other charges in particular.
subsequent general law. The fact that one is special and the other general
creates a presumption that the special is to be considered as remaining an
exception of the general, one as a general law of the land, the other as the law In fact, there is no rule which prohibits the repeal even by implication of a
of a particular case. 2 However, the rule readily yields to a situation where the special or specific act by a general or broad one. 7 A charter provision may be
special statute refers to a subject in general, which the general statute treats impliedly modified or superseded by a later statute, and where a statute is
in particular. The exactly is the circumstance obtaining in the case at bar. controlling, it must be read into the charter notwithstanding any particular
Section 17 of the Revised Charter of the City of Manila speaks of "ordinance" charter provision. 8 A subsequent general law similarly applicable to all cities
in general, i.e., irrespective of the nature and scope thereof,whereas, Section prevails over any conflicting charter provision, for the reason that a charter
43 of the Local Tax Code relates to "ordinances levying or imposing taxes, must not be inconsistent with the general laws and public policy of the state. 9 A
fees or other charges" in particular. In regard, therefore, to ordinances in chartered city is not an independent sovereignty. The state remains supreme
general, the Revised Charter of the City of Manila is doubtless dominant, but, in all matters not purely local. Otherwise stated, a charter must yield to the
that dominant force loses its continuity when it approaches the realm of constitution and general laws of the state, it is to have read into it that general
"ordinances levying or imposing taxes, fees or other charges" in particular. law which governs the municipal corporation and which the corporation cannot
There, the Local Tax Code controls. Here, as always, a general provision must set aside but to which it must yield. When a city adopts a charter, it in effect
give way to a particular provision. 3 Special provision governs. 4 This is adopts as part of its charter general law of such character. 10
especially true where the law containing the particular provision was enacted
2. The principle of exhaustion of administrative remedies is strongly asserted 4. The non-participation of the Market Committee in the enactment of
by petitioners as having been violated by private respondent in bringing a Ordinance No. 7522 supposedly in accordance with Republic Act No. 6039,
direct suit in court. This is because Section 47 of the Local Tax Code provides an amendment to the City Charter of Manila, providing that "the market
that any question or issue raised against the legality of any tax ordinance, or committee shall formulate, recommend and adopt, subject to the ratification of
portion thereof, shall be referred for opinion to the city fiscal in the case of tax the municipal board, and approval of the mayor, policies and rules or regulation
ordinance of a city. The opinion of the city fiscal is appealable to the Secretary repealing or maneding existing provisions of the market code" does not infect
of Justice, whose decision shall be final and executory unless contested before the ordinance with any germ of invalidity. 17 The function of the committee is
a competent court within thirty (30) days. But, the petition below plainly shows purely recommendatory as the underscored phrase suggests, its
that the controversy between the parties is deeply rooted in a pure question of recommendation is without binding effect on the Municipal Board and the City
law: whether it is the Revised Charter of the City of Manila or the Local Tax Mayor. Its prior acquiescence of an intended or proposed city ordinance is not
Code that should govern the publication of the tax ordinance. In other words, a condition sine qua non before the Municipal Board could enact such
the dispute is sharply focused on the applicability of the Revised City Charter ordinance. The native power of the Municipal Board to legislate remains
or the Local Tax Code on the point at issue, and not on the legality of the undisturbed even in the slightest degree. It can move in its own initiative and
imposition of the tax. Exhaustion of administrative remedies before resort to the Market Committee cannot demur. At most, the Market Committee may
judicial bodies is not an absolute rule. It admits of exceptions. Where the serve as a legislative aide of the Municipal Board in the enactment of city
question litigated upon is purely a legal one, the rule does not apply. 11 The ordinances affecting the city markets or, in plain words, in the gathering of the
principle may also be disregarded when it does not provide a plain, speedy necessary data, studies and the collection of consensus for the proposal of
and adequate remedy. It may and should be relaxed when its application may ordinances regarding city markets. Much less could it be said that Republic
cause great and irreparable damage. 12 Act 6039 intended to delegate to the Market Committee the adoption of
regulatory measures for the operation and administration of the city
3. It is maintained by private respondent that the subject ordinance is not a markets. Potestas delegata non delegare potest.
"tax ordinance," because the imposition of rentals, permit fees, tolls and other
fees is not strictly a taxing power but a revenue-raising function, so that the 5. Private respondent bewails that the market stall fees imposed in the
procedure for publication under the Local Tax Code finds no application. The disputed ordinance are diverted to the exclusive private use of the Asiatic
pretense bears its own marks of fallacy. Precisely, the raising of revenues is Integrated Corporation since the collection of said fees had been let by the
the principal object of taxation. Under Section 5, Article XI of the New City of Manila to the said corporation in a "Management and Operating
Constitution, "Each local government unit shall have the power to create its Contract." The assumption is of course saddled on erroneous premise. The
own sources of revenue and to levy taxes, subject to such provisions as may fees collected do not go direct to the private coffers of the corporation.
be provided by law." 13 And one of those sources of revenue is what the Local Ordinance No. 7522 was not made for the corporation but for the purpose of
Tax Code points to in particular: "Local governments may collect fees or raising revenues for the city. That is the object it serves. The entrusting of the
rentals for the occupancy or use of public markets and premises * * *." 14 They collection of the fees does not destroy the public purpose of the ordinance. So
can provide for and regulate market stands, stalls and privileges, and, also, long as the purpose is public, it does not matter whether the agency through
the sale, lease or occupancy thereof. They can license, or permit the use of, which the money is dispensed is public or private. The right to tax depends
lease, sell or otherwise dispose of stands, stalls or marketing privileges. 15 upon the ultimate use, purpose and object for which the fund is raised. It is not
dependent on the nature or character of the person or corporation whose
It is a feeble attempt to argue that the ordinance violates Presidential Decree intermediate agency is to be used in applying it. The people may be taxed for
No. 7, dated September 30, 1972, insofar as it affects livestock and animal a public purpose, although it be under the direction of an individual or private
products, because the said decree prescribes the collection of other fees and corporation. 18
charges thereon "with the exception of ante-mortem and post-mortem
inspection fees, as well as the delivery, stockyard and slaughter fees as may Nor can the ordinance be stricken down as violative of Section 3(e) of the Anti-
be authorized by the Secretary of Agriculture and Natural Graft and Corrupt Practices Act because the increased rates of market stall
Resources." 16Clearly, even the exception clause of the decree itself permits fees as levied by the ordinance will necessarily inure to the unwarranted
the collection of the proper fees for livestock. And the Local Tax Code (P.D. benefit and advantage of the corporation. 19 We are concerned only with the
231, July 1, 1973) authorizes in its Section 31: "Local governments may collect issue whether the ordinance in question is intra vires. Once determined in the
fees for the slaughter of animals and the use of corrals * * * " affirmative, the measure may not be invalidated because of consequences that
may arise from its enforcement. 20
ACCORDINGLY, the decision of the court below is hereby reversed and set first, this Court, in its resolution dated 11 August 1964, dismissed said petition
aside. Ordinance No. 7522 of the City of Manila, dated June 15, 1975, is without prejudice to action, if any, in the lower court; but, upon herein
hereby held to have been validly enacted. No. costs. petitioner's motion for reconsideration and supplemental petition to convert
said petition into one for prohibition, on the ground, among others, that
SO ORDERED. respondents have been actually enforcing said ordinance effective 17 August
1964, this Court reconsidered its first resolution, gave due course to the
Castro, C.J., Barredo, Makasiar, Antonio, Muoz Palma, Aquino and petition and required respondents to answer. This Court did not, however,
Concepcion, Jr., JJ., concur. issue the writ of preliminary injunction prayed for.

Teehankee, J., reserves his vote. As disclosed by the record, the facts are:

Separate Opinions Petitioner was granted a certificate of public convenience by the Public Service
Commission (by a decision, dated 20 March 1963, in PSC Case No. 61-7383)
to operate for public service fifteen (15) auto trucks with fixed routes and
FERNANDO, J., concurring: regular terminal for the transportation of passengers and freight, on the line
Bocaue (Bulacan) Paraaque (Rizal) via Meycauayan, Marilao, Obando,
But qualifies his assent as to an ordinance intra vires not being open to Polo, Malabon, Rizal, Grace Park, Rizal Avenue, Recto Avenue, Sta. Cruz
question "because of consequences that may arise from its enforcement." Bridge, Taft Avenue, Libertad, Pasay City and Baclaran, and vice versa. Within
Manila, the line passes thru Rizal Avenue, Plaza Goiti, McArthur Bridge, Plaza
Separate Opinions Lawton, P. Burgos, Taft Avenue and Taft Avenue Extension. Pursuant to said
certificate, petitioner, who is doing business under the firm name and style of
FERNANDO, J., concurring: "Marco Transit", began operating twelve (12) passenger buses along his
authorized line.
But qualifies his assent as to an ordinance intra vires not being open to
question "because of consequences that may arise from its enforcement." On 17 June 1964, the Municipal Board of respondent City of Manila, in
pursuance to Section 18, paragraph hh, of Republic Act No. 409, as amended
(otherwise known as the Revised Charter of the City of Manila), that reads:
G.R. No. L-23305 June 30, 1966
The Municipal board shall have the following legislative powers:
BENEDICTO C. LAGMAN, doing business under the firm name and
style "MARCO TRANSIT", petitioner,
vs. xxx xxx xxx
CITY OF MANILA, its officers and/or agents, respondents.
(hh) To establish and regulate the size, speed, and operation of motor
David G. Nitafan for petitioner. and other public vehicles within the city; to establish bus stops and
Antonio J. Villegas for respondents. terminals; and prohibit and regulate the entrance of provincial utility
vehicles into the city, except those passing thru the city."
REYES, J.B.L., J.:
xxx xxx xxx
Petitioner Benedicto C. Lagman originally filed, on 6 August 1964, with this
Court a petition for declaratory relief seeking a declaration of his rights under enacted Ordinance No. 4986, entitled "An Ordinance Rerouting Traffic On
the so-called "provincial bus ban" ordinance (No. 4986, approved on 13 July Roads and Streets Within The City of Manila, and For Other Purposes", which
1964 by the City Mayor) of respondent City of Manila, with prayer for writs of the City Mayor approved, on 13 July 1964, effective upon approval thereof.
preliminary and permanent injunctions to restrain and enjoin said respondent, The pertinent provisions of said ordinance, insofar as it affect the certificate of
its officers and/or agents, from enforcing and implementing said ordinance. At public convenience of petitioner, are quoted below, to wit:
SECTION 1. As a positive measure to relieve the critical traffic 1. In order that provincial commuters shall not be unduly
congestion in the City of Manila, which has grown to alarming and inconvenienced as a result of the implementation of these essential
emergency proportions, and in the best interest of public welfare and traffic control regulations, operators of provincial passenger buses
convenience, the following traffic rules and regulations are hereby shall be allowed to provide buses to shuttle their passengers from their
Promulgated: respective entry control points, under the following conditions:

RULE 1. DEFINITIONS (a) Each provincial bus company or firm Shall be allowed such
number of shuttle buses proportionate to the number of units
A. Definition of Terms. When used in this ordinance and in authorized it, the ratio to be determined by the Chief, Traffic
subsequent ordinance having reference thereto, unless the context Control Bureau, based on his observations as to the actual needs
indicates otherwise: of commuters and traffic volume; in no case shall the allocation
be more than one shuttle bus for every 10 authorized units, or
(a) The terms "provincial passenger buses" and provincial fraction thereof.
passenger jeepneys' shall be understood to mean those (b) No shuttle bus shall enter Manila unless the same shall have
been provided with identification stickers as required under Rule
whose route (or origin-destination) lines come from or going
IV hereof, which shall be furnished and allocated by the Chief,
to points beyond Pasay City, Makati, Mandaluyong, San Juan,
Traffic Control Bureau to each provincial bus company or
Quezon City, Caloocan City and Navotas.
(c) All such shuttle buses are not permitted to load or unload or to
xxx xxx xxx pick and/or drop passengers along the way but must do so only
in the following places:

1. Provincial passenger buses and jeepneys (PUB and PUJ) shall be (a) J. Abad Santos corner Rizal Avenue, or vicinities
allowed to enter Manila, but only through the following entry points and
routes, from 6:30 A.M. to 8:30 P.M. every day except Sundays and
xxx xxx xxx

(3) South
(a) Those coming from the north shall enter the city through
Rizal Avenue; turn right to Mt. Samat; right to Dinalupihan
right to J. Abad Santos; left to Rizal Avenue towards Caloocan (a) Harrison Boulevard, between Dakota and Taft Avenue
xxx xxx xxx
xxx xxx xxx
(n) Those coming from the south through Taft Avenue shall
turn left at Vito Cruz; turn right to Dakota; turn right to Harrison SEC. 4. Any violation of the provisions of this ordinance and of any
Boulevard; turn right to Taft Avenue; thence proceed towards other ordinance regulating traffic in the city, shall be punished by a fine
Pasay City; of not less than P20.00, nor more than P200.00, or by imprisonment
for not less than five (5) days nor more than six (6) months, or both
xxx xxx xxx such fine or imprisonment in the discretion of the court.

RULE III. FLEXIBLE SHUTTLE BUS SERVICE On 17 August 1964, the Mayor of respondent City of Manila, through its police
agencies, began actual enforcement of said ordinance and prevented
petitioner from operating his buses, except two (2) "Shuttle" buses, along the On the other hand, respondent City of Manila, in its answer to the original and
line specified in his certificate of public convenience. supplemental petitions, maintains that its power to "prohibit and regulate the
entrance of provincial public utility vehicles into the City, except those passing
Petitioner Lagman claims in his original and supplemental petitions that the thru the City", as provided in its charter, is an explicit delegation of police power
enactment and enforcement of Ordinance No. 4986 is unconstitutional, which is paramount and superior both with respect to the administrative power
illegal, ultra vires, and null and void. Thus, he contends that the routes within of the Director of Public Works, under Commonwealth Act No. 548, to regulate
Manila through which he has been authorized to operate his buses are national and control the use of, and traffic on, national roads or streets and to the
roads or streets, and the regulation and control relating to the use of and traffic administrative authority of the Public Service Commission, under Section 16
of which (roads) are vested, under Commonwealth Act No. 548, in the Director (m), of the Public Service Act, to amend, modify or revoke certificates of public
of Public Works, subject to the approval of the Secretary of Public Works and convenience.
Communications; but, since said ordinance was not proposed nor approved
by the executive officials mentioned in said Act, its enactment and enforcement It also maintains that the provisions of Commonwealth Act No. 548 have been
is a usurpation of the latter officials' functions, and said ordinance is, therefore, repealed by Section 27 of Republic Act No. 917; and, even assuming that the
unauthorized and illegal. former has not been so repealed by the latter, Ordinance No. 4968 does not
contravene Commonwealth Act No. 548 because, even assuming that a
He also contends that the power conferred upon respondent City of Manila, repugnancy or conflict exists between this Act and Section 18 (hh) of Republic
under said Section 18 (hh) of Republic Act No. 409, as amended, does not Act No. 409, as amended, the latter provisions prevails over the former.
include the right to enact an ordinance such as the one in question, which has Republic Act No. 409 being a special law and of later enactment. Neither does
the effect of amending or modifying a certificate of public convenience granted Republic Act No. 409 contravene Section 16 (m) of the Public Service Act,
by the Public Service Commission because any amendment or modification of Section 17(j) of the latter Act having imposed a duty in the Public Service
said certificate is solely vested by law in the latter governmental agency, and Commission to require any public service to comply with any ordinance relating
only after notice and hearing (Sec. 16[m], Public Service Act); but since this thereto.
procedure was not adopted or followed by respondents in enacting the
disputed ordinance, the same is likewise illegal and null and void. Lastly, respondent, in its reply memorandum, maintains that since petitioner
admittedly engages in business within the city limits by picking up passengers
He further contends that the enforcement of said ordinance is arbitrary, therein, his buses do not merely pass thru the city; and they are not, therefore,
oppressive and unreasonable because the city streets from which he had been covered within the saving clause of Section 18 (hh), of Republic Act No. 409,
prevented to operate his buses are the cream of his business. as amended.

He finally contends that, even assuming that Ordinance No. 4986 is valid, it is In our opinion, the present petition for prohibition should be denied.
only the Public Service Commission which can require compliance with its
provisions (Sec. 17[j], Public Service Act), but since its implementation is First, as correctly maintained by respondents, Republic Act No. 409, as
without the sanction or approval of the Commission, its enforcement is also amended, otherwise known as the Revised Charter of the City of Manila, is a
unauthorized and illegal. special law and of later enactment than Commonwealth Act No. 548 and the
Public Service Law (Commonwealth Act No. 146, as amended), so that even
In his memorandum, petitioner adds as contention therefor that although his if conflict exists between the provisions of the former act and the latter acts,
buses fall within the definition of the term "provincial passenger buses" under Republic Act No. 409 should prevail over both Commonwealth Acts Nos. 548
the disputed ordinance his route line having terminal outside the City of and 146. In Cassion vs. Banco Nacional Filipino, 89 Phil. 560, 561, this Court
Manila and its immediate suburbs they merely "pass thru the city"; hence, said:
its operation is covered within the saving clause of the above-quoted Section
18 (hh) of Republic Act No. 409, as amended, and he should not have been for with or without an express enactment it is a familiar rule of statutory
prevented from operating his buses within the city streets specified in his construction that to the extent of any necessary repugnancy between
certificate of public convenience. a general and a special law or provision, the latter will control the
former without regard to the respective dates of passage.
It is to be noted that Commonwealth Act No. 548 does not confer SEC. 17. Proceedings of Commission without previous hearing.
an exclusive power or authority upon the Director of Public Works, subject to The Commission shall have power, without previous hearing, subject
the approval of the Secretary of Public Works and Communications, to to established limitations and exceptions, and saving provisions to the
promulgate rules and regulations relating to the use of and traffic on national contrary:
roads or streets. This being the case, section 18 (hh) of the Manila Charter is
deemed enacted as an exception to the provisions of Commonwealth Act No. xxx xxx xxx
(j) To require any public service to comply with the laws of the
It is a well settled principle that, because repeals by implication are not Philippines, and with any provincial resolution or municipal ordinance
favored, a special law must be taken as intended to constitute an relating thereto, and to conform to the duties imposed upon itthereby,
exception to the general law, in the absence of special circumstances or by the provisions of its own charter, whether obtained under any
forcing a contrary conclusion. (Baga vs. Philippine National Bank, 52 general or special law of the Philippines. (Emphasis supplied)
O.G. 6140).
The petitioner's contention that, under this section, the respective ordinances
Where a special act is repugnant to or inconsistent with a prior general of the City can only be enforced by the Commission alone is obviously
act, a partial repeal of the latter act will be implied or exception grafted unsound. Subsection (j) refers not only to ordinances but also to "the laws of
upon the general act. (City of Geneses vs. Illinois Northern Utility Co., the Philippines", and it is plainly absurd to assume that even laws relating to
39 NE 2d, p. 26) public services are to remain a dead letter without the placet of the
Commission; and the section makes no distinction whatever between
Second, the same situation holds true with respect to the provisions of the enforcement of laws and that of municipal ordinances.
Public Service Act. Although the Public Service Commission is empowered,
under its Section 16 (m), to amend, modify or revoke certificates of public The very fact, furthermore, that the Commission is empowered, but not
convenience after notice and hearing, yet there is no provision, specific or required, to demand compliance with apposite laws and ordinances proves
otherwise, which can be found in this statute (Commonwealth Act No. 146) that the Commission's powers are merely supplementary to those of state
vesting power in the Public Service Commission to superintend, regulate, or organs, such as the police, upon which the enforcement of laws primarily rests.
control the streets of respondent City or suspend its power to license or prohibit
the occupancy thereof. On the other hand, this right or authority, as
Third, the implementation of the ordinance in question cannot be validly
hereinabove concluded, is conferred upon respondent City of Manila. The assailed as arbitrary, oppressive and unreasonable. Aside from the fact that
power vested in the Public Service Commission under Section 16 (m) is, there is no evidence to substantiate this charge, it is not disputed that petitioner
therefore, subordinate to the authority granted to respondent City, under said
has not been totally banned or prohibited from operating all his buses, he
section 18 (hh). As held in an American case:
having allowed to operate two (2) "shuttle" buses within the city limits.

Ordinances designating the streets within a municipality upon which And finally, respondents correctly maintain that petitioner cannot avail of the
buses may operate, or prohibiting their operation in certain streets do saving clause of said section 18 (hh), he having admitted that his buses
not encroach upon the jurisdiction of the Public Service Commission
engaged in business within the city limits by picking up passengers therein;
over motorbus common carriers, so long as the ordinances do not
hence, they do not merely "pass thru the city".
prevent or unreasonably interfere with the utility's operation under the
certificate or franchise granted by that Commission. (Stuck vs. Town
of Beech Grove, 163 N.E. 483; 166 N.E. 153). Wherefore, the instant petition for prohibition should be as it is hereby,
dismissed. With cost against petitioner Benedicto C. Lagman.
That the powers conferred by law upon the Public Service Commission were
not designed to deny or supersede the regulatory power of local governments Concepcion, C.J., Barrera, Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar
over motor traffic, in the streets subject to their control, is made evident by and Sanchez, JJ., concur.
section 17 (j) of the Public Service Act (Commonwealth Act No. 146) that
provides as follows: G.R. No. 122068. July 8, 1998
JUANITO MANZANO, petitioner, a motion to Dismiss, invoking no jurisdiction over the offense charged. [6] A twist
vs. took place when the Assistant Provincial Prosecutor was required to file a
HON. REDENTOR VALERA, Judge, Municipal Trial Court of Bangued, comment on the aforesaid Motion to Dismiss. Instead of arguing to retain the
Abra, and VILMA A. BOBILA, respondents. case in the MTC, he changed the stand of the prosecution. In his Comment,
he supported petitioners arguments and asked that the entire records of the
DECISION case be elevated to the RTC. He cited libel as one of the offenses outside the
scope and jurisdiction of inferior courts, following Jalandoni vs. Endaya (55
QUISUMBING, J.: SCRA 261) wherein this court ruled that the Court of First Instance (now RTC)
has the exclusive original jurisdiction over libel cases. [7] In spite of this,
At issue in this petition for certiorari and prohibition with temporary restraining respondent Judge denied[8] the Motion to Dismiss and thereafter also
order is the jurisdiction of the municipal trial court in a case for criminal libel. It denied[9] the Motion for Reconsideration. Petitioner went for a final attempt by
seeks to enjoin respondent Judge of the MTC in Bangued, Abra from further filing his Last Appeal[10] which was likewise denied.[11]
proceeding with Criminal Case No. 5728, for alleged lack of
In holding that the MTC had jurisdiction, respondent Judge made reference to
jurisdiction. Petitioner further prays for the nullification of the Order dated
RA 7691 which according to him, amended Article 360 of the Revised Penal
August 2, 1995[1] issued by the respondent Judge and the subsequent Order
Code.[12] Furthermore, he opined that although Section 6 RA 7691[13] does not
dated August 30, 1995[2] denying petitioners Motion for Reconsideration.
specifically state what laws fall within the scope of the amendment, the
The antecedent facts are as follows: provision on jurisdiction over libel being inconsistent with the new enactment,
the code should now be considered amended.
On June 2, 1994, a criminal complaint for libel was filed in the sala of
respondent Judge against Juanito Manzano (herein petitioner), who was then
Hence this petition.
Senior Police Officer 1. Complainant (now private respondent) Vilma Bobila,
who was then an employee of the Bureau of Internal Revenue, charged that
with malicious intent to expose her to public ridicule, Manzano caused to be In a Resolution of this Court dated October 23, 1995, respondents were
entered and written in the PNP, Bangued Police Station Blotter (a public required to file a comment on the petition; and in the same resolution,
record) a (sic) false, malicious and highly defamatory statements against petitioners prayer for the issuance of a temporary restraining order was
(Bobila) and with no good intentions or justifiable motive for preparing and granted. On November 8, 1995, respondent Judge filed his comment simply
writing the same.[3] The complaint in sum contained an account of the entry in reiterating his opinion as stated in his questioned Order. On March 12, 1996,
the police blotter, which was the alleged source of the libelous matter.Allegedly the Office of the Solicitor general as counsel to public respondent, also filed its
in the blotter, Bobila was made to appear as having made grave threats comment. By way of reply, petitioner submitted a copy of the provincial
against SPO1 Manzano when she visited the police station and when she prosecutors comment on the motion to dismiss; petitioner adopted the
uttered threatening remarks against him, a portion of which we quote as prosecutions position as his own.
follows: The sole issue here concerns jurisdiction over a complaint for
libel. Specifically, is it the RTC or the MTC which has exclusive original
same time she allegedly raise (sic) her palm and made a sign across her neck
which according to said reported (sic) it was a clear sign she wants somebody Public respondent contended that the applicable law is RA 7691 which
among the BPP personnel be (sic) killed.[4] amended certain provisions of BP 129, specifically Section 32, expanding
jurisdiction of Metropolitan Trial courts, Municipal Trial Courts and Municipal
Circuit Trial Courts to hear and decide criminal cases where the penalty does
On October 24, 1994, the respondent Judge initially recognized that the
not exceed six (6) years. He further argued that RA 7691 should control as it
Regional Trial court (RTC) had jurisdiction and forwarded the records to the
is the later enactment. Worth noting, the Office of the Solicitor General capped
Office of the Provincial Prosecutor.However, upon receipt of the records,
its Comment in this wise:
Prosecutor Edgardo Flores invoking the amendment in Paragraph 2, Section
32 of B.P. 129 which is now also Section 2 of Republic Act 7691,[5]opined that While, indeed, R.A. 7691 excludes from the MTCs expanded
the MTC should take cognizance of the case. A month later, Assistant jurisdiction those cases falling within the exclusive original
Provincial Prosecutor Ricarte Valera requested that the records of the case be jurisdiction of the RTC and the Sandiganbayan, there is nothing in
returned to the MTC. Upon the MTCs acceptance of the case, petitioner filed B.P. 129 nor in any other subsisting law that expressly confers
exclusive original jurisdiction over libel cases on the latter courts. As the exclusive jurisdiction over libel cases, hence, the expanded
such, libel cases are not excluded from the expanded jurisdiction of jurisdiction conferred by R.A. 7691 to inferior courts cannot be
the municipal courts.[14] applied to libel cases.[20]
Public respondent also wished to impress upon this Court that since the Conformably with this rulings, we now hold that public respondent committed
penalty for libel as found in Article 355 of the RPC is prision correcional in its an error in ordering that the criminal case for libel be tried by the MTC of
minimum and medium periods and that prision correcional has a range from Bangued.
six months and one day to six years,[15] then it is the penalty that is to be
followed in determining the proper jurisdiction over libel cases. Moreover, For, although RA 7691 was enacted to decongest the clogged dockets of the
considering the fact that there is nothing in the amendment which properly Regional Trail Courts by expanding the jurisdiction of first level courts, said law
excludes crimes such as libel from the application of the new law, he argued is of a general character.Even if it is a later enactment, it does not alter the
that libel falls within the scope of the aforementioned provision of RA 7691. provision of Article 360 of the RPC, a law of a special nature. Laws vesting
jurisdiction exclusively with a particular court, are special in character, and
We find merit in the petition at bar. Respondents position is not legally tenable. should prevail over the Judiciary Act defining the jurisdiction of other courts
(such as the Court of First Instance) which is a general law.[21] A later
The applicable law is still Article 360 of the Revised Penal Code,[16] which enactment like RA 7691 does not automatically override an existing law,
categorically provides that jurisdiction over libel cases are lodged with the because it is a well-settled principle of construction that, in case of conflict
Courts of First Instance (now Regional Trial Courts). between a general law and a special law, the latter must prevail regardless of
This Court already had the opportunity to rule on the matter in G.R. No. the dates of their enactment.[22] Jurisdiction conferred by a special law on the
123263, People vs. MTC of Quezon City, Branch 32 and Isah v. RTC must therefore prevail over that granted by a general law on the MTC.[23]
Red[17] wherein a similar question of jurisdiction over libel was raised. In that Moreover, from the provisions of R.A. 7691, there seems to be no manifest
case, the MTC judge opined that it was the first level courts which had intent to repeal or alter the jurisdiction in libel cases. If there was such intent,
jurisdiction due to the enactment of RA 7691. Upon elevation of the matter to then the amending law should have clearly so indicated because implied
us, respondent judges orders were nullified for lack of jurisdiction, as follows: repeals are not favored. As much as possible, effect must be given to all
WHEREFORE, the petition is granted: the respondent Courts Orders enactments of the legislature. A special law cannot be repealed, amended or
dated August 14, 1995, September 7, 1995, and October 18, 1995 altered by a subsequent general law by mere implication. [24] Furthermore, for
are declared null and void for having been issued without jurisdiction; an implied repeal, a pre-condition must be found, that is, a substantial conflict
and said Court is enjoined from further taking cognizance of and should exist between the new and prior laws. Absent an express repeal, a
proceeding with Criminal Case No. 43-00548, which it is subsequent law cannot be construed as repealing a prior one unless an
commanded to remand to the Executive Judge of the Regional Trial irreconcilable inconsistency or repugnancy exists in the terms of the new and
Court of Quezon City for proper disposition.[18] old laws. The two laws, in brief, must be absolutely incompatible.[25] In the law
which broadened the jurisdiction of the first level courts, there is no absolute
Another case[19] involving the same question was cited as resolving the matter: prohibition barring Regional Trial Courts from taking cognizance of certain
cases over which they have been priorly granted special and exclusive
Anent the question of jurisdiction, we ** find no reversible error
jurisdiction. Such grant of the RTC (previously CFI) was categorically
committed by public respondent Court of Appeals in denying
contained in the first sentence of the amended Sec. 32 of B.P. 129. [26] The
petitioners motion to dismiss for lack of jurisdiction. The contention
inconsistency referred to in Section 6 of RA 7691,[27] therefore, does not apply
** that R.A. 7691 divested the Regional Trial Courts of jurisdiction to
to cases of criminal libel.
try libel cases cannot be sustained. While libel is punishable by
imprisonment of six months and one day to four years and two Lastly, in Administrative Order No. 104-96 issued 21 October 1996, this Court
months (Art. 360, Revised Penal Code) which imposable penalty is delineated the proper jurisdiction over libel cases, hence settled the matter
lodged within the Municipal Trial Courts jurisdiction under R.A. No. with finality:
7691 (Sec. 32 [2]), said law however, excludes therefrom ** cases
falling within the exclusive original jurisdiction of the Regional Trial RE: DESIGNATION OF SPECIAL COURTS FOR KIDNAPPING,
Courts **. The Court in Bocobo vs. Estanislao, 72 SCRA 520 ROBBERY, CARNAPPING, DANGEROUS DRUGS CASES AND
andJalandoni vs. Endaya, 55 SCRA 261, correctly cited by the Court OTHER HEINOUS CRIMES; INTELLECTUAL PROPERTY RIGHTS
of Appeals, has laid down the rule that Regional Trial courts have VIOLATIONS AND JURISDICTION IN LIBEL CASES.
XXX XXX XXX Simeon T. Garcia filed a petition for mandamus on September 11, 1958, which
was amended on June 15, 1959. The facts involved in this case may be briefly
C stated as follows: the acting justice of the peace of the municipality of San
Jose, Nueva Ecija appointed petitioner Simeon T. Garcia, junior typist civil
service eligible, as clerk of the justice of the peace court of said municipality
on July 1, 1958. This appointment was approved by the Department of Justice.
On July 7, 1958, the acting justice of the peace forwarded the appointment,
MUNICIPAL TRIAL COURTS IN CITIES, MUNICIPAL TRIAL duly approved by the department and the Civil Service Commission, to the
COURTS AND MUNICIPAL CIRCUIT TRIAL municipal treasurer. The petitioner submitted certain vouchers supporting his
daily time record, duly approved by the acting justice of the peace, for
COURTS. (Underscoring supplied)
payment, but the treasurer returned the vouchers with the information that they
WHEREFORE, the petition is hereby GRANTED; the respondent courts orders be first approved by the municipal mayor before payment could be made. The
dated August 2 and august 30, 1995 are declared NULL and VOID for having vouchers were submitted to the mayor but the latter did not want to approve
been issued without jurisdiction; and said court is permanently enjoined from them. The reason of the mayor was an opinion of the provincial fiscal, that
further taking cognizance of and proceeding with Criminal Case No. 5728, as Rep. Act No. 1551 has repealed Section 75 of Rep. Act No. 296, otherwise
it is now commanded to FORWARD the case to the Executive Judge of the known as the Judiciary Act.
Regional Trial court of Abra for proper disposition.
Section 75 of the judiciary act provides that the justices of the peace of first
class municipalities may have clerks of the court and other necessary
Davide, Jr., (Chairman), Bellosillo, Vitug, and Panganiban, JJ., concur. employees at the expense of said municipalities, which clerks of court and
employees shall be appointed by the respective justices of the peace. On the
other hand, Rep. Act No. 1551, which is claimed to have repealed section 75
G.R. No. L-16950 December 22, 1961 of Rep. Act No. 296, provides

SIMEON T. GARCIA, petitioner-appellee, Hereafter, all employees whose salaries are paid out of the general
vs. funds of the municipalities shall, subject to the civil service law, be
ARTURO B. PASCUAL, Mayor of the Municipality of San Jose, Nueva appointed by the municipal mayor upon the recommendation of the
Ecija, EULOGIO STA. MARIA, Municipal Treasurer of said municipality corresponding chief of office. Provided, that in case of disagreement
and the MUNICIPALITY OF SAN JOSE, NUEVA ECIJA,respondents- between the chief of office concerned and the municipal Mayor, the
appellants. matter shall be submitted for action to the proper provincial
department head whose decision shall be final....
Cezar Francisco for petitioner-appellee.
Cirilo V. Soriano for respondents-appellants. The judge below ruled that said Rep. Act No. 1551 did not expressly repeal
section 75 of the Judiciary Act and that the two laws, although apparently in
conflict with each other, may be reconciled, following the principle of law that
a prior specific statute is not repealed by a subsequent general law. The judge
further ruled that there being no specific grant of authority in favor of the mayor
Appeal from a decision of the Court of First Instance of Nueva Ecija, Hon. Felix to appoint the clerk of court of the justice of the peace the power to appoint
B. Makasiar, presiding, declaring the appointment of petitioner-appellee, should not be considered lodged in said mayor. Lastly, the judge held that the
Simeon T. Garcia as clerk of court of the justice of the peace court of San intent of the law in placing the appointment of clerks in the justice of the peace
Jose, Nueva Ecija valid, and, ordering the respondents Municipality of San is to prevent the clerks from the importunities and pressure of prejudicial
Jose, Nueva Ecija, Arturo B. Pascual and Eulogio Sta. Maria, Mayor and politics.
Treasurer, respectively of said Municipality, to approve the vouchers of
petitioner-appellee covering his period of service, as well as to pay petitioner's
On this appeal appellants insist that the provisions of Rep. Act No. 1551
salary from July 1, 1958 and directing the respondent municipality to provide
repealed the provisions of section 75 of the Judiciary Act because section 1 of
for the necessary appropriations therefore.
Rep. Act No. 1551 provides that all employees whose salaries are paid by the
general funds of the municipality shall be appointed by the mayor upon Rep. Act No. 1551. The Secretary of Justice is the legal adviser of the
recommendation of the chief of office, so that, as the clerk of court of the justice government and his opinions override those of provincial fiscals who are his
of the peace is paid out of the general funds of the municipality the power to subordinates. His opinions although not law, should be given great weight,
appoint the said clerk should be lodged in the mayor as with all other which in this case is the correct interpretation of the laws involved.
subordinate officials of the municipality.
For the foregoing considerations, the decision appealed from should be, as is
We find no merit on the above contention. In the first place, justices of the it is hereby, affirmed with costs against the appellants.
peace are appointed by the President of the Philippines, in the same manner
as judges of superior courts, in pursuance of the separation of powers among Bengzon, C.J., Padilla, Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera
the three departments of the government. The independence of the judiciary Paredes, Dizon and De Leon, JJ.,concur.
from the other departments of the government is one of the fundamental
principles established by the Constitution. This independence will be greatly G.R. No. 72477 October 16, 1990
hampered if subordinate officials of the courts are subject to appointment by
the head of the municipality province. A cursory reading of the provisions of
Rep. No. 1551 clearly shows that what it intended to be made subject to NATIONAL POWER CORPORATION, petitioner,
appointment by the municipal mayor are subordinate officials in the vs.
municipality, like employees in the executive branch and employees in the HON. PRESIDING JUDGE, REGIONAL TRIAL COURT, 10TH JUDICIAL
municipal council or board. There is no reason why said act, as a general law, REGION BRANCH XXV, CAGAYAN DE ORO CITY, PROVINCE OF
may be considered as having repealed the specific provisions of section 75 of MISAMIS ORIENTAL, MUNICIPALITY OF JASAAN, MISAMIS ORIENTAL
Rep. Act No. 296.lawphil.net AND BARANGAY APLAYA, JASAAN, MISAMIS ORIENTAL, respondents.

A substantially similar rule prevails in cases where the two conflicting Pantaleon Z. Salcedo for respondent Barangay Aplaya.
provisions are found in different statutes relating to the same subject.
It is an established rule in the construction of statutes that a The Provincial Attorney for respondent Misamis Oriental and Municipality of
subsequent act treating a subject in general terms, and not expressly Jasaan.
contradicting the provisions of a prior special statute, is not to be
considered as intended to affect the more particular and specific FERNAN, C.J.:
provisions of the earlier act, unless it is absolutely necessary so to
construe it in order to give its words any meaning at all. Hence, where In this Special Civil Action for Certiorari, petitioner National Power Corporation
there are two acts or provisions, one of which is special and particular, (NAPOCOR for brevity) questions the jurisdiction of the Regional Trial Court
and certainly includes the matter in question, and the other general, of Cagayan de Oro City, Branch XXV to hear Civil Case No. 9901 filed by
which, if standing alone, would include the same matter, and thus respondents Province of Misamis Oriental and Municipality of Jasaan for the
conflict with the special act or provision, the special act must be taken collection of real property tax and special education fund tax from petitioner
as intended to constitute an exception to general act, as the legislature covering the years 1978 to 1984. The antecedent facts are as follows:
is not presumed to have intended a conflict. Thus, when the provisions
of a general law, applicable to the entire state, are repugnant to the
On October 10, 1984, the Province of Misamis Oriental filed a complaint 1 with
provisions of a previously enacted special law, applicable in a
the Regional Trial Court of Cagayan de Oro City, Branch XXV against
particular locality only, the passage of such general law does not
NAPOCOR for the collection of real property tax and special education fund
operate to modify or repeal the special law, either wholly or in part,
tax in the amounts of P11,105,008.10 and P11,104,658.10, respectively,
unless such modification or repeal is provided for in express words, or
covering the period 1978 to 1984. Petitioner NAPOCOR then defendant
arises by necessary implication. (pp. 328-329. Black on Interpretation
therein, filed a motion to dismiss 2 dated January 12, 1985 on the grounds that
of Laws.)
the court has no jurisdiction over the action or suit and that it is not the proper
forum for the adjudication of the case. In support of this motion NAPOCOR
Another ground for the legal conclusion arrived at by the court below is that cited Presidential Decree No. 242 dated July 9, 1973 which provides that
the Secretary of Justice, in an opinion dated June 7, 1957, Opinion No. 122, disputes between agencies of the government including govemment-owned or
has already held that section 75 of the Judiciary Act has not been repealed by
controlled corporations shall be administratively settled or adjudicated by the owned or controlled corporations and entities, in consonance with
Secretary of Justice. section 83 of the Revised Administrative Code. His ruling or
determination of the question in each case shall be conclusive and
The court through Judge Pablito C. Pielago issued an order 3 dated January binding upon all the parties concerned.
28, 1985 denying the motion to dismiss. NAPOCOR filed a supplemental
motion to dismiss 4 on February 22, 1985 citing a resolution of the Fiscal Section 3. Cases involving mixed questions of law and of fact or only
Incentive Review Board, No. 10-85 effective January 11, 1984, restoring the factual issues shall be submitted to and settled or adjudicated by:
tax and duty exemption privileges of petitioner.
(a) The Solicitor General, with respect to disputes or claims or
On March 27, 1985, NAPOCOR filed its answer to the complaint with controversies between or among the departments, bureaus, offices
counterclaim. Treating the same as a second motion to dismiss and finding and other agencies of the National Government;
the affirmative defenses therein stated to be unmeritorious, the court a
quoissued an order on June 27, 1985, denying the second motion to dismiss (b) The Govermnent Corporate Counsel, with respect to disputes or
and requiring both parties to appear before the court for the purpose of claims or controversies between or among the government-owned or
submitting a stipulation of facts. controlled corporations or entities being served by the office of the
Government Corporate Counsel and
On July 23, 1985, Barangay Aplaya, Municipality of Jasaan, Misamis Oriental
filed a complaint in intervention 5contending that non-payment by NAPOCOR (c) The Secretary of Justice, with respect to all other disputes or claims
of real property taxes would adversely affect its interest since under the law, or controversies which do not fall under the categories mentioned in
ten percent (10%) of the real property tax collected on properties within its paragraphs (a) and (b). (Emphasis supplied)
jurisdiction shall accrue to the general fund of the barangay. Thereafter, the
case was set for trial pursuant to the court's order dated August 20, 1985. 6
In upholding the lower court's jurisdiction, respondent municipal corporations,
on the other hand, rely on Presidential Decree No. 464, entitled "THE REAL
On October 30, 1985, petitioner NAPOCOR filed before this Court the present PROPERTY TAX CODE" enacted on July 1, 1974, specifically Section 82
special civil action for certiorari 7setting forth the following issues, to wit: thereof which provides:

1) Respondent Court acted without or in excess of jurisdiction and Section 82. Collection of real property tax through the courts. The
with grave abuse of discretion when it issued the orders dated delinquent real property tax shall constitute a lawful indebtedness of
January 28, 1985, June 27, 1985 and August 20, 1985, denying the taxpayer to the province or city and collection of the tax may be
petitioner's motions to have Civil Case No. 9901 dismissed on the enforced by civil action in any court of competent jurisdiction. The civil
grounds of lack of jurisdiction and/or improper venue. action shall be filed by the Provincial or City Fiscal within fifteen days
2) Petitioner is exempt from payment of real property taxes. after receipt of the statement of delinquency certified to by the
provincial or city treasurer. This remedy shall be in addition to all other
Relied upon by NAPOCOR in assailing the jurisdiction of the lower court and/or remedies provided by law.
the venue of the action are Sections 2 and 3 of Presidential Decree No. 242,
entitled "PRESCRIBING THE PROCEDURE FOR ADMINISTRATIVE It is indeed desirable and beneficial to the Judiciary's ongoing program of
SETTLEMENT OR ADJUDICATION OF DISPUTES, CLAIMS AND decongesting court dockets that intra-governmental disputes such as this be
CONTROVERSIES BETWEEN OR AMONG GOVERNMENT OFFICES, settled administratively. Unfortunately, our consideration of the legal
AGENCIES AND INSTRUMENTALITIES, INCLUDING GOVERNMENT- provisions involved leads us to a different conclusion. In reconciling these two
OWNED OR CONTROLLED CORPORATIONS, AND FOR OTHER conflicting provisions of P.D. 242 and P.D. 464 on the matter of jurisdiction, we
PURPOSES" dated on July 9, 1973. Sections 2 and 3 of this Decree provide: are guided by the basic rules on statutory construction.

Section 2. In all cases involving only questions of law, the same shall An examination of these two decrees shows that P.D. 242 is a general law
be submitted to and settled or adjudicated by the Secretary of Justice, which deals with administrative settlement or adjudication of disputes, claims
as Attorney General and ex officio legal adviser of all government- and controversies between or among government offices, agencies and
instrumentalities, including government-owned or controlled corporations. The such subsidies shall automatically be considered as both revenue and
coverage is broad and sweeping, encompassing all disputes, claims and expenditure of the General Fund. (Emphasis supplied)
Petitioner alleges that what has been withdrawn is its exemption from taxes,
P.D. 464 on the other hand, governs the appraisal and assessment of real duties, and fees which are payable to the national government while its
property for purposes of taxation by provinces, cities and municipalities, as exemption from taxes, duties and fees payable to government branches,
wen as the levy, collection and administration of real property tax. It is a special agencies and instrumentalities remains unaffected. Considering that real
law which deals specifically with real property taxes. property taxes are payable to the local government, NAPOCOR maintains that
it is exempt therefrom.
It is a basic tenet in statutory construction that between a general law and a
special law, the special law prevails. GENERALIA SPECIALIBUS NON We find the above argument untenable. It reads into the law a distinction that
DEROGANT. 8 is not there. It is contrary to the clear intent of the law to withdraw from all units
of government, including government-owned or controlled corporations their
Where a later special law on a particular subject is repugnant to, or exemptions from all kinds of taxes. Had it been otherwise, then the law would
inconsistent with, a prior general law on the same subject, a partial repeal of have said so. Not having distinguished as to the kinds of tax exemptions
the latter win be implied to the extent of the repugnancy or an exception grafted withdrawn, the plain meaning is that all tax exemptions are covered. There the
upon the general law. law does not distinguish, neither must we.

A special law must be intended to constitute an exception to the general law Moreover, Presidential Decree No. 1931 entitled "DIRECTING THE
in the absence of special circumstances forcing a contrary conclusion. 9 RATIONALIZATION OF DUTY AND TAX EXEMPTION PRIVILEGES
The conflict in the provisions on jurisdiction between P.D. 242 and P.D. 464
should be resolved in favor of the latter law, since it is a special law and of later passed on June 11, 1984, categorically states:
enactment. P.D. 242 must yield to P.D. 464 on the matter of who or which
tribunal or agency has jurisdiction over the enforcement and collection of real WHEREAS, Presidential Decree No. 1177 has already expressly
property taxes. Therefore, respondent court has jurisdiction to hear and decide repealed the grunt of tax privileges to any government-owned or
Civil Case No. 9901. controlled corporation and all other units of government. (Emphasis
supplied )
On the question of whether or not NAPOCOR is liable to pay real property
taxes and special education fund taxes for the years 1978 to 1984, we rule in Thus, any dubiety on NAPOCOR'S liability to pay taxes, duties and fees should
the affirmative. be considered unequivocably resolved by the above provision.

Presidential Decree No. 1177, entitled "REVISING THE BUDGET PROCESS In the case of National Power Corporation vs. The Province of Albay, et.
IN ORDER TO INSTITUTIONALIZE THE BUDGETARY INNOVATIONS OF al., 10 herein petitioner was held liable for real property taxes to the provincial
THE NEW SOCIETY" was passed on July 30, 1977. Section 23 thereof government of Albay for the period June 11, 1984 to March 10, 1987, when it
provides: claims to have been enjoying tax exemptions under Resolutions Nos. 10-85,
1-86 and 17-87 of the Fiscal Incentives Review Board (FIRB). It must be noted
Section 23. Tax and Duty Exemptions. All units of govemment, that Resolution 10-85 was the same resolution cited by petitioner in its
supplemental motion to dismiss 11 inCivil Case No. 9901. If the attempt (found
including government-owned or controlled corporations, shall pay
ineffective for lack of authority in the above-cited case of NPC vs. The Province
income taxes, customs duties and other taxes and fees as are
of Albay) to restore petitioner's tax exemptions began only in 1985 with the
imposed under revenue laws; provided, that organizations otherwise
issuance of FIRB Resolution No. 10-85, it stands to reason that prior thereto,
exempted by law from the payment of such taxes/duties may ask for
a subsidy from the General Fund in the exact amount of taxes/duties i.e., from 1977 when P.D. 1177 was promulgated up to 1984, petitioner did not
due; provided, further, that a procedure shag be established by the enjoy any tax privilege as would exempt it from the payment of the taxes under
Secretary of Finance and the Commissioner of the Budget, whereby
In the same case of NPC vs. The Province of Albay, 12 this Court had occasion The City Legal Officer for petitioner.
to state: Lacuna, Bello & Associates Law Offices for Danilo B. Lacuna.

Actually, the State has no reason to decry the taxation of NAPOCOR's SARMIENTO, J.:
properties, as and by way of real property taxes. Real property taxes,
after all, form part and parcel of the financing apparatus of the The only question in this petition, denominated as a "direct appeal under
Government in development and nation-building, particularly in the Article VIII, Section 5 (2) (e), of the Constitution and Section 9(3), of Batas Blg.
local government level. 129," is whether the City Council of Manila still has the power to appoint
Council officers and employees under Republic Act No. 409, otherwise known
xxx xxx xxx as the Charter of the City of Manila, or whether the power is now vested with
the City Mayor pursuant to Republic Act No. 5185, the Decentralization Law,
To all intents and purposes, real property taxes are funds taken by the and Batas Blg. 337, the Local Government Code. The facts are as follows:
State with one hand and given to the other. In no measure can the
Government be said to have lost anything. On September 13, 1988, the Vice-Mayor of Manila and Presiding Officer of the
City Council of Manila, the Hon. Danilo R. Lacuna, submitted to the Civil
The proceeds of the real property tax are divided among the province, city or Service Commission, through the Regional Director of the National Capital
municipality where the property subject to the tax is situated and shall be Region, the appointments of nineteen officers and employees in the Executive
applied by the respective local government unit for its own use and benefit. Staff of the Office of the Presiding Officer, City Council of Manila, pursuant to
Even the barrio where the property is situated shares in the real property tax the provisions of Section 15, of said Republic Act No. 409, as amended, which
collections. Likewise, the entire proceeds of the additional one per cent (1%) reads:
real property tax levied for the Special Education Fund created under R.A.
5447, are divided among the province, city and municipalities where the Sec. 15. . . . .
property is situated.
xxx xxx xxx
WHEREFORE, the petition is DISMISSED. Petitioner having been found liable
for the taxes being collected in Civil Case No. 9901, the respondent court is . . . The Board shall appoint and the Vice Mayor shall sign all
hereby directed to proceed with deliberate dispatch in hearing the case for the appointments of the other employees of the Board.1
purpose of determining the exact liability of petitioner. No Costs.
The City Budget Officer of Manila later sought from the Personnel Bureau of
SO ORDERED. the Mayor's office "comment and/or recommendation" on whether the payroll
of the newly appointed employees of the City Council may be paid on the basis
Gutierrez, Jr., Bidin and Cortes, JJ., concur. of appointments signed by the Vice-Mayor.2 The Personnel Bureau then
forwarded the query to the City Legal Officer who, in a 3rd endorsement dated
Feliciano, J., is on leave. September 19, 1988,3 rendered an opinion that the proper appointing officer is
the City Mayor and not the City Council. This opinion was transmitted by the
G.R. No. 87119 April 16, 1991 Secretary to the City Mayor to the Commission.

HON. GEMILIANO C. LOPEZ, JR., in his capacity as City Mayor of On February 1, 1989, the Commission promulgated Resolution No. 89-075,
Manila, petitioner, and held that contrary to the opinion of the City Legal Officer, it is the City
Council to which the appointing power is vested. The dispositive portion
THE CIVIL SERVICE COMMISSION, HON. DANILO R. LACUNA, in his thereof is as follows:
capacity as Vice-Mayor and Presiding Officer of the City Council of
Manila, and THE CITY COUNCIL OF MANILA, respondents. WHEREFORE, foregoing premises considered, the Commission
resolved to rule, as it hereby rules that the proper appointing authority
of the officers and employees of the City Council of Manila is the City
Council and the signatory of individual appointments thus issued is the All other employees, except teachers, paid out of provincial, city or
City Vice-Mayor of Manila.4 municipal general funds, road and bridge funds, school funds, and
other local funds, shall, subject to civil service law, rules and
As we stated at the outset, the issue is whether or not Section 15, supra, of regulations, be appointed by the Provincial Governor, City or
the Charter of the City of Manila has been repealed, and as a result, the City Municipal Mayor upon recommendation of the office head concerned.
Council can no longer tender appointments to Council positions. . . .8

As we also mentioned at the outset, this petition has been brought by way of and by Batas Blg. 337, we likewise quote:
a "direct appeal" from the resolution of the Civil Service Commission pursuant
supposedly to the Constitution and Batas Blg. 129. In this connection, we have Sec. 171. Chief Executive; Compensation, Powers, and Duties.
held that no appeal lies from the decisions of the Civil Service Commission,
and that parties aggrieved thereby may proceed to this Court alone xxx xxx xxx
on certiorari under Rule 65 of the Rules of Court, within thirty days from receipt
of a copy thereof, pursuant to Section 7, Article IX, of the Constitution. We
(2) The city mayor shall:
xxx xxx xxx
Sec. 7. Unless otherwise provided by this Constitution or by law, any
decision, order, or ruling of each Commission may be brought to the
Supreme Court on certiorari by the aggrieved party within thirty days (h) Appoint, in accordance with civil service law, rules and regulations,
from receipt of a copy thereof.5 all officers and employees of the city, whose appointments are not
otherwise provided in this Code;9
As we held, the Civil Service Commission, under the Constitution, is the single
arbiter of all contests relating to the civil service and as such, its judgments are There is no doubt that Republic Act No. 409, which provides specifically for
unappealable and subject only to this Court's certiorari jurisdiction.6 the organization of the Government of the City of Manila, is a special law, and
whereas Republic Act No. 5185 and Batas Blg. 337, which apply to municipal
governments in general, are general laws. As the Solicitor General points out,
The petitioner's omission notwithstanding, we are nevertheless accepting the
and we agree with him, it is a canon of statutory construction that a special law
petition and because of the important public interest it involves, we are prevails over a general law regardless of their dates of passage and the
considering it as a petition for certiorari under Rule 65, considering further that
special is to be considered as remaining an exception to the general. 10
it was filed within the thirty-day period.7
So also, every effort must be exerted to avoid a conflict between statutes. If
As the petitioner contends, Section 15 of Republic Act No. 409 as amended reasonable construction is possible, the laws must be reconciled in that
has supposedly been repealed by Republic Act No. 5185, specifically, Section manner.
4 thereof, which we quote, in part:
Repeals of laws by implication moreover are not favored, and the mere
xxx xxx xxx
repugnancy between two statutes should be very clear to warrant the court in
holding that the later in time repeals the other.11
The City Assessor, City Agriculturist, City Chief of Police and City
Chief of Fire Department and other heads of offices entirely paid out
Why a special law prevails over a general law has been put by the Court as
of city funds and their respective assistants or deputies shall, subject
to civil service law, rules and regulations, be appointed by the City
Mayor: Provided, however, That this section shall not apply to Judges,
Auditors, Fiscals, City Superintendents of Schools, Supervisors, xxx xxx xxx
Principals, City Treasurers, City Health Officers and City Engineers.
. . . The Legislature consider and make provision for all the
xxx xxx xxx circumstances of the particular case.1wphi1 The Legislature having
specially considered all of the facts and circumstances in the particular REYES, J. B. L., J.:
case in granting a special charter, it will not be considered that the
Legislature, by adopting a general law containing provisions This is an action filed by Plaintiff-Appellant Tan Liao against the Defendant-
repugnant to the provisions of the charter, and without making any Appellee American President Lines, Ltd., for the recovery of P92,755, with
mention of its intention to amend or modify the charter, intended to interest from the time of the filing of the complaint, for damages allegedly
amend, repeal, or modify the special act. (Lewis vs. Cook County, 74 suffered by Plaintiff due to the wrongful and unauthorized delay,
I11. App., 151; Philippine Railway Co. vs. Nolting 34 Phil., 401.)12 transshipment, and careless handling in the transportation of a cargo of eggs
undertaken by Defendant for Plaintiff from the port of New York, U. S. A., to
In one case, we held that Republic Act No. 5185 did not divest the Mayor of the port of Manila.
Manila of his power under the Charter of the City of Manila to approve the city
The following facts are not disputed:
On July 30, 1946, Plaintiff entered into a contract with the Kent Sales Co., Inc.,
We also agree with the Civil Service Commission that the provisions of of New York City, through the latters agents in Manila, the Peoples Trading,
Republic Act No. 5185, giving mayors the power to appoint all officials "entirely for the importation of 2,000 cases of fresh hen eggs, for a total price of $45,520
paid out by city funds14 and those of Batas Blg. 337, empowering local (P91,040 in Philippine currency), to be shipped on the S.S. Marine Leopard,
executives with the authority to appoint "all officers and employees of the sailing from New York on August 7, 1946 (Exhibit B). Upon notification and
city,"15 were meant not to vest the city mayors per se with comprehensive receipt of the payment, made by letter of credit of the Philippine Trust Co. of
powers but rather, to underscore the transfer of the power of appointment over Manila, the Kent Sales Co., Inc. issued on August 6, 1946 Invoice No. 5070
local officials and employees from the President to the local governments and (Exhibit A) in favor of Plaintiff, and on the same day contracted with
to highlight the autonomy of local governments. They were not meant,
the Defendant shipping company to have the eggs shipped to Manila on the
however, to deprive the City Council of Manila for instance, its appointing
vessel S.S. Marine Leopard as refrigerated cargo, in accordance with B/L
power granted by existing statute, and after all, that arrangement is sufficient
to accomplish the objectives of both the Decentralization Act and the Local No. 5297 issued on August 6, 1946. Also on the same day (August 6),
Government Code, that is, to provide teeth to local autonomy. the Defendant, through ship captain Frank J. Wood, received at the port of
New York the 2,000 cases of eggs and loaded them on the S.S. Marine
In the light of an the foregoing, we do not find any grave abuse of discretion Leopard in a refrigerated space for delivery to Plaintiff in Manila.
committed by the respondent Commission. Upon arrival in San Francisco, California, on August 30, 1946,
the Defendant unloaded the 2,000 cases of eggs from the S.S. Marine
WHEREFORE, the petition is DISMISSED. No costs. Leopard, which resumed its voyage, arriving in Singapore in September,
1946. The eggs were later shipped on another of Defendants ships, the S.S.
SO ORDERED. General Meigs, on November 27, 1946, which arrived in Manila on December
26, 1946.
Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras,
Feliciano, Gancayco, Padilla, Bidin, Grio-Aquino, Medialdea, Regalado and It is claimed by Plaintiff that the discharge of his cargo at the port of San
Davide, Jr., JJ., concur. Francisco was wrongful and unjustified, and a violation of the bill of lading
Exhibit B which provided that the eggs would be shipped to Manila on the S.S.
[G.R. No. L-7280. January 20, 1956.] Marine Leopard; that when they were discharged in San Francisco, the eggs
were exposed to the hot summer weather without having been placed in
TAN LIAO, Plaintiff-Appellant, refrigeration from August 30 to September 12, 1946, when they were
vs. transferred to the storage plants of the National Ice and Cold Storage; that the
AMERICAN PRESIDENT LINES, LTD., Defendant-Appellee. eggs could have been transhipped on August 31, 1946, on the S.S. Clovis
Victory, also one of Defendants ships, that arrived in Manila on September
20, 1946; that because of the delay in the shipment and the careless and
DECISION repeated handling of the cases of eggs by mechanical devices, a substantial
number of them arrived broken and damaged; that upon arrival in
Manila, Plaintiff employed the services of marine surveyors C. B. Nelson & not given as provided for in this section, that fact shall not affect or prejudice
Co., who reported (Exhibit I) that 587 of the cases were broken, with the eggs the right of the shipper to bring suit within one year after the delivery of the
contained therein in leaking condition, while the rest of the eggs in the 1,413 goods or the date when the goods should have been delivered.
cases were in a state of deterioration; that upon recommendation of the
In support of his contention that the above provision does not apply, Plaintiff-
surveyors, Plaintiff immediately disposed of the eggs, realizing from the sale
Appellant argues that the suit or action referred to therein is one for loss or
the amount of P27,300; that had the cargo arrived in Manila without any
damage, either apparent or concealed to the goods, and not one for a breach
delay, Plaintiff would have been able to sell each case of eggs for P60, or the
of the contract of carriage on the part of the carrier where, as in this case, it is
entire shipment for the total sum of P120,000, thereby realizing a profit of
guilty of delay in the shipment of the goods, causing losses and damages to
P92,755 on his total investment; and that Plaintiff having sold the eggs for only
the consignee. The distinction drawn is more apparent than real. Actually, any
P27,300, he suffered a loss of P92,700, plus the sum of P55 which he paid the
and all injury or damages suffered by the goods, while in transit and in the
marine surveyors who inspected the cargo.
custody of the carrier, amounts to a breach of the contract of carriage, unless
Defendant, upon the other hand, alleged in defense that under the terms of due to fortuitous event; for the carrier is bound to transport the goods safely
the Bill of Lading Exhibit B, it was at liberty to tranship the cargo in question and so breaches its contract if it neglects such duty.
on any other vessel; that when the eggs were discharged in San Francisco,
Appellant also makes a distinction between damage to the goods and
they were immediately brought to the storage plant of the National Ice and
damages to the shipper or consignee, and claims that while the former falls
Cold Storage Co. so that if they arrived in Manila in deteriorated condition, it
within the prescriptive period in question, the latter is governed by the
was because of the inherent nature or defect of the eggs; that the delay in the
provisions of the Code of Civil Procedure (now the New Civil Code) on
transshipment of the cargo was due to the strike of the union of longshoremen
limitation of actions. We see no difference between the two. Whatever damage
in the western coast of the United States from September to November, 1947,
or injury is suffered by the goods while in transit would result in loss or damage
although when the goods were unloaded in San Francisco, there was yet no
to either the shipper or the consignee. As long as it is claimed, therefore, as it
threat of a strike; and that immediately after the strike, the cargo was loaded
is done here, that the losses or damages suffered by the shipper or consignee
and transported on the S.S. General Meigs. As a special defense,
were due to the arrival of the goods in damaged or deteriorated condition, the
Defendant claimed that while Plaintiff received the goods in question on
action is still basically one for damage to the goods, and must be filed within
December 26, 1946, he filed a claim with Defendant for damages only on July
the period of one year from delivery or receipt, under the above-quoted
25, 1947 (denied on February 16, 1948), and brought suit on May 25, 1948,
provision of the Carriage of Goods by Sea Act.
more than a year from the receipt of the goods, and so Plaintiffs action had
prescribed under section 3, paragraph 6 of the Carriage of Goods by Sea Act. Appellant furthermore urges that the action or suit referred to in the provision
in question refers only to loss or damage to the goods in relation to their
After trial, the Court below found that Plaintiff had suffered a loss of P25,896.81
loading, handling, storage, carriage, custody, care, and discharge (section 2,
by reason of the delayed arrival of his cargo of eggs, which Defendant could
supra), and does not cover or include loss or damage due to the wrongful and
have transshipped on the S.S. Clovis Victory which left San Francisco before
unreasonable delay in their transportation. The argument is equally untenable.
the strike of the longshoremen in the west coast of the United States. The
The obligation of the carrier to carry the goods naturally includes the duty not
Court, however, found Defendants defense of prescription meritorious, and so
to delay their transportation, so unjustified delay, the carrier is held liable
dismissed the case. From the judgment of dismissal, Plaintiff Tan Liao
therefor. Besides, the damages or losses claimed to have been suffered
appealed to this Court.
by Appellant, on account of the unreasonable delay in the shipment of his
The main argument of the Appellant is that the present case does not fall within cargo, still arose from the arrival of the goods in decayed and damaged state,
the following prescriptive provision of the Carriage of Goods by Sea Act resulting in Appellants inability to sell them at the price he would have obtained
(section 3, paragraph 6): had they arrived in good condition. This is shown by the averments of his
amended complaint that such wrongful and unauthorized delay was the
In any event the carrier and the ship shall be discharged from all liability in
respect of loss or damage unless suit is brought within one year after delivery reason for which a great portion of the said cargo of eggs decayed and
of the goods or the date when the goods should have been delivered: became broken and rotten before the same was actually delivered to
Provided, That, if a notice of loss or damage, either apparent or concealed, is
the Plaintiff (First Cause of Action, paragraph 4, Rec. App., 15) (Italics Philippine ports in foreign trade, the former being a special act while the latter
supplied.) is a law of general application.
and that because of Lastly, Appellant urges that, assuming that his action against
the Defendant company prescribes in one year, the same accrued, not upon
the almost rotten condition in which the cargo was found at the time it reached
his receipt of the goods, but upon denial of his claim for damages by
Manila, the sale thereof only produced the sum of P27,300 or a difference of
the Defendant on February 16, 1948. The claim is clearly without merit, for the
P92,700 which is the amount of sure profits which the Plaintiff should have
law in question explicitly requires that suit must be brought within one year
realized on said 2,000 cases of hen fresh eggs had they arrived on time in the
after delivery of the goods or the date when the goods should have been
port of Manila cralaw (Second Cause of Action, paragraph 7, Rec. App., pp.
delivered. Neither could the pendency of the extra-judicial claim for damages
18-19). (Italics supplied.)
filed with the Defendant company toll or suspend the running of the period of
And the second cause of action of Appellants complaint clearly alleges that limitation; for as already ruled in the case of Chua Kuy vs. Everett Steamship
the Defendantshipping company. Corp., supra, neither the proposal for arbitration for the fact that negotiations
have been made for the adjustment of a controversy suspends the running of
has failed to comply with its duty and contractual obligation with the Plaintiff to
the period for prescription, unless there is an express agreement to the
exercise due care in the custody and handling of the said cargo of eggs as
contrary. There being no stipulation between Appellant and
required and demanded by the delicate nature of the eggs and by the gross
theDefendant company that the prescriptive period for the filing of an action
negligence and acts of omission on the part of theDefendant, the aforesaid
for loss or damage to the goods would be suspended by the filing of a claim
cargo suffered damages while the same was still in its custody, control and
with the carrier for damages and pending action thereon, Appellant is required
possession, as conclusively established by the numerous broken boxes or
to bring suit against the latter within one year from the receipt of his goods,
containers of the eggs as well as the great number of broken eggs (paragraph
and not having done so, his action had already prescribed.
2, Rec. App., pp. 16-17.) (Italics supplied.)
Wherefore, the decision appealed from is affirmed. No pronouncement as to
Needless to say, such alleged negligence of the Defendant company in the
costs. SO ORDERED.
custody and handling ofAppellants cargo falls squarely within the provisions
of the Carriage of Goods by Sea Act. Paras, C.J., Padilla, Montemayor, Reyes, A., Bautista Angelo, Labrador
and Concepcion, JJ., concur.
There would be some merit in Appellants insistence that the damages suffered
by him as a result of the delay in the shipment of his cargo are not covered by
the prescriptive provision of the Carriage of Goods by Sea Act above referred G.R. No. L-44007 March 20, 1991
to, if such damages were due, not to the deterioration and decay of the goods
while in transit, but to other causes independent of the condition of the cargo THE COMMISSIONER OF INTERNAL REVENUE, petitioner,
upon arrival, like a drop in their market value. But the ultimate objective vs.
ofAppellants action being to recover damages suffered by reason of the decay
and deterioration of his goods while in transit, the same is still governed by the
prescriptive period of one year under the Carriage of Goods by Sea Act.
Sycip, Salazar, Feliciano, Hernandez & Castillo for private respondent.
Coming now to Appellants second proposition that the Carriage of Goods by
Sea Act does not repeal the provisions of the Code of Civil Procedure on MEDIALDEA, J.:
prescription of actions, the question has already been resolved by this Court
in the case of Chua Kuy vs. Everett Steamship Corp., 50 Off. Gaz. No. 1, p. The petitioner Commissioner of Internal Revenue challenges the decision of
159, and the very recent case of Go Chan & Co. vs. Aboitiz & Co., Supra, p. the respondent Court of Tax Appeals dated February 18, 1976 in CTA Case
179 promulgated December 29, 1955, wherein we ruled that the prescriptive No. 2498 entitled "Eastern Extension Australasia and China Telegraph Co.
period of one year established in the Carriage of Goods by Sea Act modified Ltd. v. The Commissioner of Internal Revenue." The dispositive portion of said
pro tanto the provisions of Act No. 190 as to goods transported to and from decision reads as follows:
WHEREFORE, the decision of the respondent Commissioner of shall pay the tax on its real property in conformity with existing
Internal Revenue appealed from is reversed. Respondent's income law. (Emphasis supplied) (Rollo, p. 180)
tax assessment of P21,523,288.37 issued against the petitioner is
hereby cancelled and declared to be without any legal force and- On May 2, 1967, Republic Act No. 808 was amended by Republic Act No.
effect. No pronouncement as to costs. 5002 by enlarging the scope of the franchise granting respondent corporation
a franchise to land, construct, maintain and operate telecommunications by
SO ORDERED. (Rollo, p. 71) cable or other means known to science or which in the future may be
developed for the transmission of messages between any point in the
Petitioner also seeks annulment of the Resolution dated June 18, 1976 Philippines to points exterior thereto.
denying the motion for reconsideration of the abovementioned decision, the
dispositive portion of which reads: Respondent corporation, pursuant to the provisions of Section 8 of Republic
Act No. 808 which was not amended by Republic Act No. 5002, had duly
WHEREFORE, finding Respondent's Motion for Reconsideration reported its gross Philippine earnings and paid the corresponding franchise
dated March 26, 1976 to be without sufficient legal and valid tax thereon beginning the year 1952 to the General Auditing office.
justification, the same has to be, as it is hereby, DENIED.
The controversy commenced on November 25, 1971 when petitioner
SO ORDERED. (Rollo, p. 99) assessed private respondent in the amount of P7,122,571.61, representing
private respondent's deficiency income tax, inclusive of surcharges, interests
and penalties thereon for the years 1965 to 1970. It is obvious that petitioner
From the records, the antecedents facts of the case are as follows:
made its assessment in view of its belief that respondent corporation's
franchise under Republic Act No. 808, later amended by Republic Act No.
Private respondent, Eastern Extension Australasia and China Telegraph Co., 5002 is inoperative for failure of the latter to conform with the constitutional
Ltd. is a foreign corporation, organized and existing under the laws of Great requirement that it be organized under Philippine laws with 60% of its capital
Britain and is engaged in international telecommunications. By a Royal Decree owned by Filipinos. The provision of Section 8, Art. XIV of the 1935
of the Spanish Government dated March 30, 1898, petitioner was given a Constitution provides as follows:
concession for the construction, operation and maintenance of submarine
telegraph cable from Hongkong to Manila.
Art. XIV. Sec. 8. No franchise, certificate or any other forms of
authorization for the operation of a public utility shall be granted except
On June 21, 1952, when the concession expired, Republic Act No. 808 was to citizen of the Philippines or to corporations or other entities
approved granting to respondent corporation a legislative franchise "to land, organized under the laws of the Philippines sixty per centum of the
construct, maintain and operate at Manila in the Philippines a submarine capital of which is owned by citizens of the Philippines, nor shall such
telegraph cable connecting Manila with Hongkong." Section 8 thereof granted franchise, certificate or authorization be exclusive in character or for a
to the Corporation a tax exemption from the payment of an taxes whether longer period than fifty years. No franchise or right shall be granted to
municipal, provincial, or national except a franchise tax of 5% on the gross any individual, firm, or corporation, except under the condition that it
earnings and the tax on its real property. Thus shall be subject to amendment, alteration or repeal by the Congress
when the public interest so requires. (Rollo, p. 58)
Sec. 8. In consideration of the franchise and rights hereby granted, the
Grantee shall pay to the Republic of the Philippines during the life of Petitioner contends that since private respondent is 100% owned by British
this franchise a tax of five percent of the gross earnings derived by the citizens, it is illegally operating its business in the Philippines it being a fact
grantee from its operation under this franchise and which originate in that private respondent is engaged in the operation of a public utility. Private
the Philippines. Such tax shall be due and payable annually, within ten respondent through counsel questioned and disputed this assessment by
(10) days after the audit and approval of the accounts as prescribed means of two letters dated 17 and 18 January 1972. The letter questioned
in Section seven of this Act, and shall be in lieu of all taxes of any kind, petitioner's authority to assess income taxes against private respondent
nature or description, levied, established or collected by any pointing out the franchise and its exclusive tax feature. It contends further that
municipal, provincial or Republic Authority except that the Grantee
the assessment is incorrect and without basis and that prescription had set in requirements of the Constitution, the Corporation Law and the Public
on part of the assessment assuming that the assessment is valid. Service Act.

Petitioner in a letter dated February 28, 1973, rejected the private respondent's III. Whether or not the respondent Court acted in excess of its
position and declared that the Office of the Commissioner finds no reason to jurisdiction in declaring the assessment in question as "fantastic and
withdraw much more cancel its assessment and even reassessed the private fabulous" considering that there had been no trial on the merits of this
respondent not only from 1965 to 1970 but from 1952 to 1971 in the aggregate case.
amount of P21,523,288.37 representing deficiency income taxes, inclusive of
surcharges, interests and compromise penalties. IV. Whether or not the assessment was issued within the period
prescribed by law.
On March 13, 1973, private respondent filed with the respondent Court of Tax
Appeals a petition for review contesting the legality of the assessment dated V. Whether or not petitioner's assessment against respondent
February 28, 1973 with prayer for a restraining order directing the Corporation is in the nature of a ruling within the purview of Section
Commissioner of Internal Revenue to desist from enforcing and collecting the 338-A of the National Internal Revenue Code. (pp. 11 -12, Rollo)
It has been the persistent contention of the petitioner that the constitutionality
In the meanwhile, President Ferdinand E. Marcos promulgated on July 24, of R.A. No. 808 was never raised as an issue by either party. Moreover,
1974 Presidential Decree No. 489 authorizing the herein respondent petitioner argued that said issue was not necessary in the resolution of this
corporation to transfer and assign the franchise granted to it under Republic case. On the other hand, both public and respondent corporation maintained
Act No. 808 as amended by Republic Act No. 5002, to the Eastern that the issue was properly raised during the trial. Respondent tax court, in its
Telecommunications Philippines, Inc. Thereabout, respondent corporation resolution dated June 18, 1976 stated as follows:
transferred its franchise to Eastern Telecommunications, Inc. a duly organized
corporation existing under the laws of the Philippines with at least 60% of its The constitutionality of the legislative franchise granted to petitioner
capital owned by Filipino citizens. (now private respondent) under Republic Act No. 808, as amended, is
not only an indispensable issue in this case but a prejudicial question
On February 18, 1976, public respondent rendered the assailed decision. to be resolved by the Court. We will first begin with the BIR Records.
While holding the franchise as unconstitutional, public respondent declared the In their memorandum to the Commissioner of Internal Revenue dated
petitioner's assessment as cancelled and without any legal force and effect, November 2, 1972, the Investigating Revenue Examiners reported,
the "ratio decidendi" being that the assessment was made beyond the among others, as follows:
prescribed period required by the Tax Code; and that the assessment which
is tantamount to a revocation of the Tax on Franchise under Section 259 (now
xxx xxx xxx
sec. 117) of the Tax Code cannot be given retroactive effect pursuant to the
provisions of Section 338- A (now Section 246) of the same code. Unable to
obtain a reconsideration from the said decision, this petition for review is now 9. That the Court of Tax Appeals has previously decided on
before Us raising the following issues: an issue of constitutionality in the case of Jose Ma. Espino v.
Commissioner of Internal Revenue, CTA No. 1532 March 31,
1969. (Emphasis supplied; p. 308, BIR Records).
I. Whether or not the constitutionality of the legislative franchise
granted to the respondent Corporation should have been passed upon
by the respondent Court when it was not an issue raised in the In the statement of Mrs. Librada R. Natividad, Chief, Litigation Division
pleadings; of the BIR, dated October 5, 1973, she stated, among others, as
II. Whether or not the provision in the franchise requiring the payment
of only 5% of gross receipts in lieu of any and all taxes is Observations and Recommendations:
unenforceable and without effect, considering that the franchise is
inoperative for failure of the respondent Corporation to comply with the 1. That Eastern is operating illegally because:
(a) Eastern was not organized under Philippine law and/or licensed to It is a well-settled rule that no constitutional question will be heard and
do business in the Philippines; resolved unless the following requisites of a judicial inquiry are
present: (1) the existence of an appropriate case; (2) an interest
(b) That it is wholly owned by British; personal and substantial by the party raising the constitutional
question; (3) the plea that the function be exercised at the earliest
opportunity; and (4) the necessity that the constitutional question be
(c) It is engaged in the business of public utility; and
passed upon in order to decide the case" (People v. Vera, 65 Phil. 56
[1937]; Dumlao v. COMELEC, 95 SCRA 400 [1980]; National
(d) That Republic Act No. 808 is unconstitutional. (Emphasis supplied, Economic Protectionism Association v. Ongpin, 171 SCRA 657
p. 448, BIR records) [1989]).

Even before this case was elevated to the Court of Tax Appeals, the Undoubtedly, the last criterion is not present. This case can be resolved based
in investigating Revenue Examiners and the Chief of the Litigation on the other available grounds obtaining in this case. Respondent court should
Division, BIR, were already certain that the only way to negate and have avoided the issue and instead maintained the presumption of
counteract the broad legislative grant of tax-exemption to petitioner constitutionality. A law is supposed to have been carefully studied and
(private respondent) from the payment of any municipal, provincial, determined to be constitutional before it was finally enacted by Congress and
and national tax under Section 8 of Republic Act No. 808 was to approved by the Chief Executive. Accordingly, this Court gives high respect
impugn and consider petitioner's legislative franchise invalid and/or for the acts of the other departments of the government and, as much as
unconstitutional; otherwise, respondent's income tax assessment possible, avoids deciding the constitutional question.
against petitioner will have no solid and justifiable legal basis to stand
on. (Rollo, pp. 83-85)
The evidence demonstrate quite clearly the logic of the above ruling. Republic
Act No. 808 was enacted in 1952 and it was amended in 1967 by Republic Act
xxx xxx xxx No. 5002. These Acts conferred the said franchise to the private respondent
for the operation of an international telecommunications system during the
It has been said that a review and analysis of the transcript of effectivity of the 1935 Constitution. This is a persuasive indication that
stenographic notes taken during the hearing on January 16, 1965 Congress excluded the operation of international telecommunication from the
failed to show that the issue of constitutionality of petitioner's coverage of the constitutional prohibition. The deliberations in Congress, as
legislative franchise was ever raised by respondent. It is to be noted, extensively quoted in respondent's brief, indubitably show that a legislative
however, that before the formal hearing of this case on the date franchise was granted to said private respondent on the premise that its
abovementioned, a pre-trial conference was held in the private operations were merely that of an international airline, establishing merely a
chamber of the undersigned Judge where Attys. Manuel Tomacruz terminal or station in the Philippines. As such, it is the opinion of Congress
and Cirilo Francisco where then and there present. At the suggestion "that a company which operates only a cable station or a terminal in the
of the Court, both counsel agreed that the prejudicial issue of whether Philippines, does not and cannot fall under that provision of the Constitution
or not petitioner's legislative franchise is valid and constitutional that confines the granting of franchises, permits and other certificates to
should be resolved first. (Rollo, pp. 88-89) Filipino citizens and Filipino corporations" (Respondent's Brief, p. 38; Rollo, p.
Although We sustain the respondent tax court's finding that the constitutional
issue was squarely raised by the parties, We find merit with the contention of It is rather unusual that in the case at bar, petitioner is the one seeking the
the petitioner that it is not necessary for the disposition of this case. The fact annulment of the respondent tax court's decision declaring R.A. No. 808
that constitutional question was properly raised by a party is not alone unconstitutional. It's argument is premised on the fact that despite the validity
sufficient for the respondent court to pass upon the issue of constitutionality. of Republic Act No. 808, respondent corporation cannot avail of the tax
This is supported by recent Supreme Court rulings which oblige every court to exemption granted therein because of its failure to comply with the
approach a constitutional question with grave care and considerable caution. requirements of Section 8, Article XIV of the 1935 Constitution, the Public
Thus: Service and the Corporation Law, which formed part and should be read into
Republic Act No. 808. Respondent corporation, according to petitioner, should
1) restructured its equity by transferring at least 60 per centum of its capital to cable and station for transmission and reception of submarine
citizens of the Philippines; telegraph cable messages of the Grantee.

2) obtained the certificate of convenience and public necessity required by Sec. 10. The Grantee shall be subject to the Corporation laws of the
Section 15 of the Public Service Law; and Philippines now existing or hereafter enacted.

3) secured a license as required by Sections 68 and 69 of the Philippine Sec. 11. It shall be unlawful for the Grantee to use, employ, or contract
Corporation Law. for the labor of persons held in involuntary servitude.

In resolving this issue, this Court adverted to the terms and conditions set Sec. 12. The franchise hereby granted shall be subject to amendment,
fourth in the said legislative franchise. Thus: alteration, or repeal by the Congress of the Philippines, and the rights
to use and occupy public property and places hereby granted shall
xxx xxx xxx revert to the Government, upon the termination of this franchise, by
such repeal, or by forfeiture or expiration in due course.
Sec. 7. The Grantee shall keep a separate account of the gross
earnings from submarine telegraph cable messages originating in the Unless earlier terminated by any such repeal or forfeiture, or extended,
Philippines, and shall furnish to the General Auditing Office, or its the franchise and rights hereby granted shall terminate by expiration
successor a copy of such account not later than the thirty-first day of of time fifty years after the date of the acceptance of this Act by the
January of each year for the preceding year. For the purpose of Grantee.
auditing accounts so rendered, all of the books and accounts of the
Grantee, or duplicates thereof, so far as they relate to submarine Sec. 13. As a condition of the granting of this franchise the Grantee
telegraph cable messages originating in the Philippines, shall be kept shall execute a bond in favor of the Government of the Philippines, in
in the Philippines, and shall be subject to the official inspection of the the sum of fifty thousand pesos; in a form and with sureties satisfactory
Auditor General or his authorized representatives, and the audit and to the Secretary of Public Works and Communications, conditioned
approval of such accounts shall be final and conclusive evidence as upon the faithful performance of the Grantee's obligations hereunder
to the amount of said gross earnings, except that the Grantee shall during the first three years of the life of this franchise. If after three
have the right to appeal to the courts of the Philippines, under the years from date of acceptance of this franchise, the Grantee shall have
terms and conditions provided in the laws of the Philippines. fulfilled said obligation, or so soon thereafter as the Grantee shall have
fulfilled the same, the bond aforesaid shall be cancelled by the
Sec. 8. In consideration of the franchise and rights hereby granted, the Secretary of Public Works and Communications.
Grantee shall pay to the Republic of the Philippines during the life of
this franchise a tax of five per cent of the gross earnings derived by Sec. 14. Acceptance of this franchise shall be given in writing within
the Grantee from its operation under this franchise and which originate six months after approval of this Act. When so accepted by the
in the Philippines. Such tax shall be due and payable annually, within Grantee and upon the approval of the bond aforesaid by the Secretary
ten (10) days after the audit and approval of the accounts as of Public Works and Communications, the Grantee shall be
prescribed in section seven of this Act, and shall be in lieu of all taxes empowered to exercise the privileges granted hereby.
of any kind, nature and description, levied, established or collected by
any municipal, provincial or Republic authority except that the Grantee Sec. 15. The Grantee shall not lease, transfer, grant the usufruct of,
shall pay the tax of its real property in conformity with existing law. sell or assign this franchise nor the right and privileges acquired
thereunder to any person, firm company, corporation or other
Sec. 9. The grantee shall hold the national, provincial and municipal commercial or legal entity, nor merge with any other company or
governments of the Philippines, harmless from all claims, accounts, corporation organized for the same purpose, without the approval of
demands, or actions arising out of accidents or injuries, whether to the Philippine Congress first had. Any corporation to which this
property or to persons, caused by the construction or operation of the franchise may be sold, transferred, or assigned shall be subject to the
corporation laws of the Philippines now existing or hereafter enacted,
and any person, firm, company, corporation or other commercial or requirements of the general statutes which are not mentioned in R.A. No. 808.
legal entity to which this franchise is sold transferred, or assigned shall To allow petitioner's claim would be to defy and ignore the superiority of a
be subject to all the conditions, terms, restrictions and limitations of legislative franchise granted by a special enactment over a mere authorization
this franchise as fully and completely and to the same extent as if the or permit granted in accordance with the provisions of laws of general
franchise had been originally granted to the said person, firm, application. Republic Act No. 808 as amended by Republic Act No. 5002, is a
company, corporation or other commercial or legal entity. (Rollo,pp. special law applicable only to the respondent corporation, while the Public
179-182) Service Act and the Corporation Law are general statutes. The presumption is
that special statutes are exemptions to the general law because they pertain
Undisputedly, respondent corporation duly complied with all the foregoing to special charter granted to meet a particular set of conditions and
conditions. It accepted in writing the franchise within the requisite period and circumstances (Province of Misamis Oriental v. Cagayan Electric Power and
filed the required bond. The Secretary of Public Works and Communications Light Company, Inc.,supra).
in turn approved and accepted the bond. Respondent corporation further
complied with the tax requirement by paying to the Republic of the Philippines In the same vein, We cannot accept petitioner's claim that the franchise is
a tax of five per cent of the gross earnings from Philippine operations regularly "inoperative and unenforceable" due to the failure of the respondent
since its creation. Corporation to comply with the constitutional requirement. Under Section 15
of the same act, the respondent corporation is expressly prohibited from
A legislative franchise partakes of the nature of a contract. In the case of leasing, transferring, selling or assigning the franchise thus granted to it,
the Province of Misamis Oriental v. Cagayan Electric Power and Light without the approval of the Philippine Congress being previously obtained.
Company, Inc., (G.R. No. L-45355, January 12, 1990, 181 SCRA 38), We Presidential Decree No. 489 which authorized respondent Corporation to
stated: transfer to another corporation its franchise was issued only on June 24, 1974.
Consequently, respondent corporation cannot be faulted in not restructuring
its equity to conform with the constitutional requirement of 60% Filipino
So was the exemption upheld in favor of the Carcar Electric and Ice
ownership in view of its limited right to transfer its property. Why then should
Plant Company when it was required to pay the corporate franchise
the private respondent be at the receiving end or the "horses to be beaten" for
tax under Section 259 of the Internal Revenue Code, as amended by
R.A. No. 39 (Carcar Electric and Ice Plant v. Collector of Internal its inability to comply with the "60% Filipino ownership" when the franchise
itself prohibited it from doing so. This Court is not prepared to punish the
Revenue, 53 O.G. [No. 4] 1068). This Court pointed out that such
respondent corporation which remained firm in not violating its franchise.
exemption is part of the inducement for the acceptance of the
franchise and the rendition of public service by the grantee. As a
charter is in the nature of a private contract, the imposition of another Petitioner claims that the respondent court had no basis in declaring the
franchise tax on the corporation by the local authority would constitute assessment as "fantastic and fabulous" considering that there was no trial on
an impairment of the contract between the government and the the merits thereby implying grave abuse of discretion. In justifying its
Corporation (Emphasis supplied) position, petitioner argued:

Franchises spring from contracts between the sovereign power and private . . . Had there been such a hearing petitioner could have presented
citizens made upon valuable considerations, for purposes of individual the examiners who conducted the examination of the book of accounts
advantage as well as public benefit. It is generally considered that the and accounting records of respondent Corporation. And they would
obligation resting upon the grantee to comply with the terms and conditions of have testified on all of the facts that they were able to gather in the
the grant constitutes a sufficient consideration. It can also be said that the course of their examination. . . . Without their testimonies, there is
benefit to the community may constitute the sole consideration for the grant of really no way of ascertaining whether or not the assessment or the
a franchise by the state. Such being the case, the franchise is the law between deficiency income tax on respondent Corporation is "fantastic and
the parties and they are bound by the terms thereof fabulous" . . . (Brief for the Petitioner, pp. 34-35,Rollo, p. 222)

Petitioner, being a government agency, is also bound by the terms of the The main thrust of petitioner's argument in this regard is directed to the
franchise. It cannot declare the franchise as "ineffective and unenforceable" propriety of the respondent court's pronouncement that the assessment is
merely by stating that the private respondent failed to comply with the "fantastic and fabulous." The pertinent portion of the said decision reads:
The fantastic and fabulous income tax assessment of P21,523,288.37 Sec. 331 (now Section 203). Period of Limitation upon assessment
issued by respondent (herein petitioner) against petitioner (herein and collection. Except as provided in the succeeding section,
private respondent) is without sufficient legal and valid justification internal revenue taxes shall be assessed within five years (now 3
under Sections 331 and 332(a) of the National Internal Revenue years) after the return was filed, and no proceeding in court without
Code, in relation to Section 72 of the same Code which reads as assessment for the collection of such taxes shall be begun after
follows: expiration of such period. . .

xxx xxx xxx It is clear from the foregoing provision that internal revenue taxes shall be
assessed within five (5) years after the taxpayer's return was filed. It is,
(Rollo, p. 65) (words in parenthesis supplied) however, undisputed that petitioner has failed to file any corporate income tax
return for a period of twenty (20) years from 1952 to 1971. With this, petitioner
argued that under Section 332 (a) (now Section 223 a of the Revenue Code,
Petitioner displayed a crude attempt to impress upon this Court that
respondent tax court made a grave error and abused its discretion in declaring private respondent's failure to file the income tax returns authorizes him to
the assessment "fantastic and fabulous." While such phrase is an "obiter assess the income tax due from the private respondent within ten years after
dictum"petitioner capitalized on it in assailing the decision as having been the discovery of the falsity, fraud, or omission. Petitioner relied on Section 332
(now Section 223) of the same Code:
rendered with grave abuse of discretion. Assuming that the same was really
made without basis, considering that there was really no trial on the merits of
the case, as the respondent court decided to avoid a tedious and prolonged Sec. 332 (now Section 223). Exceptions as to period of limitation of
litigation involving the disputed income tax assessments, and limited its assessment and collection of taxes.
consideration only on the validity or constitutionality of the franchise, does it
constitute grave abuse of discretion which amounts to lack of jurisdiction? (a) In the case of a false or fraudulent return with intent to evade tax
or of a failure to file a return, the tax may be assessed, or a proceeding
The answer is in the negative. An act of a court or tribunal may only be in court for the collection of such tax may be begun without
considered as committed in grave abuse of discretion when the same was assessment, at any time within ten years after the discovery of the
performed in a capricious and whimsical exercise of judgment which is falsity, fraud or omission. (Emphasis supplied)
equivalent to lack of jurisdiction. The abuse of discretion must be so patent
and gross as to amount to an evasion of positive duty enjoined by law, or to The omission was discovered only in 1971 upon investigation conducted by
act at all in contemplation of law, as where the power is exercised in an petitioner's examiners. Accordingly, petitioner has ten (10) years from 1971 or
arbitrary and despotic manner by reason of passion or personal hostility until 1981 within which to assess respondent corporation. The assessment on
(Butuan Bay Wood Export Corp. v. CA, G.R. No. L- 45473, April 28, 1980, 97 the deficiency income tax against private respondent in the amount of
SCRA 297; Litton Mills, Inc. v. Galleon Traders, Inc., G.R. No. L-40867, July P21,523,288.37 was issued on February 28, 1973 which is well within the
26, 1988, 163, SCRA 489). period prescribed by law.

The phrase "fantastic and fabulous" is a collateral matter and is not But while it is true that the assessment is within the prescribed period, it does
substantially material to the instant case because, as already stated above, not necessarily follow that it is a valid assessment in its entirety. We have
the court did not proceed with the merits of the case or did not deal with the already ruled that Republic Act No. 808 is an operative act. Because of this,
factual issue to prove or disprove the figures or amount of the assailed private respondent is exempted from the payment of all taxes whether local,
assessment. This case will necessarily be decided upon with this Court simply provincial or national, except franchise and real property taxes. It goes without
disregarding the said phrase and by so doing, this Court perceives no saying that the assessment cannot be held valid against the income derived
substantial change in the respondent Court's assailed decision. from private respondent's operation authorized by the franchise. It can only
stand valid insofar as the assessment is for income derived from services
As regards the fourth assigned error, this Court finds that respondent tax court within the Philippines and which is beyond the scope of R.A. 808.
erred in declaring that the assessment was issued beyond the period
prescribed by law. The National Internal Revenue Code then in force provides: For example, private respondent should be held liable to pay the taxes on its
income derived from the managerial services it rendered to other corporations,
like the Oceanic Wireless, Inc., a domestic corporation; and the income recommendation of respondent, may promulgate the implementing rules and
derived from rentals on a leased portion of its building. Private respondent may regulations. It is to be noted that the said rules and regulations will merely
not escape payment of these taxes by claiming tax exemption in view of the implement the provisions of the franchise tax. law. Any revocation,
provision of R.A. 808. To hold otherwise would open the gate to rampant tax modification or reversal of the ruling or the franchise tax law itself by the
evasion. respondent Commissioner of Internal Revenue shall not be given retroactive
application. The mandatory requirement for the prospective operation of the
Lastly, We find that respondent tax court erred in declaring that the new ruling is explicit under Section 338-A (now Section 246) of the National
assessment for deficiency income tax against respondent corporation is in the Internal Revenue Code which provides as follows:
nature of a ruling within the purview of section 338-A of the tax code.
Sec. 338-A. (Section 246). Non-retroactivity of rulings. Any
The Court of Tax Appeal' decision stated: revocation, modification or reversal of any of the rules and regulations
promulgated in accordance with the preceding section or any of the
Sec. 338 (now Section 246) of the National Internal Revenue Code rulings or circulars promulgated by the Commissioner of Internal
authorizes the Secretary of Finance, upon the recommendation of the Revenue shall not be given retroactive application if the revocation,
modification or reversal will be prejudicial to the taxpayers except in
Commissioner of Internal Revenue, to promulgate all needful rules
the following cases; (a) where the taxpayers deliberately misstates or
and regulations for the effective enforcement of the provisions of the
omits material facts from his return or in any document required of him
same code. One of these provisions relate to the franchise tax under
by the Bureau of Internal Revenue; (b) where the facts subsequently
Section 259 of the aforesaid Code which reads as follows:
gathered by the Bureau of Internal Revenue are materially different
from the facts on which the ruling is based; or (c) where the taxpayer
Sec. 259 (now Sec. 117). Tax on franchises. There shall be acted in bad faith. (inserted by Sec. 61, Republic Act No. 6110).
collected in respect to all franchises, upon the gross receipts from the
business covered by the law granting the franchise, a tax of five per
centum or such taxes, charges, and percentages as are specified in xxx xxx xxx
the special charters of the grantees upon whom such franchises are
conferred, whichever is higher, unless the provisions thereof preclude Respondent's income tax assessment against petitioner for a period
the imposition of a higher tax. For the purposes of facilitating the of twenty (20) years is tantamount to a revocation of the tax on
assessment of this tax, reports shall be made by the respective franchise prescribed by Section 259 of the National Internal Revenue
holders of the franchises in such form and at such times, as shall be Code, supra, because the provisions thereof were disregarded in favor
required by the regulations of the Department of Finance. of Section 24 of the same code which imposes the corporate income
tax. In such a case, the revocation of the franchise tax law shall have
prospective operation except in the following cases.
The taxes, charges and percentages on franchises, shall be
assessed, collected by and paid to the Commissioner of Internal
Revenue or any of his collection agents, any provision in the franchise xxx xxx xxx
to the contrary notwithstanding, and shall be due and payable as
specified in the particular franchise, or, in case no time limit is specified (Rollo, pp. 69-71)
therein, the provisions of Section one hundred eighty three shall apply;
and if such taxes, charges, and percentages remain unpaid on the (Words in parenthesis supplied)
date on which they must be paid, twenty-five per centum shall be
added to the amount of such taxes, charges, and percentages, which Contrary to the Court of Tax Appeals ruling, We believe that the assessment
increase shall form part of the tax. (As amended by Sec. 7, Republic
against the petitioner cannot be likened to a revocation of the tax on franchise
Act No. 39; Sec. 1, Republic Act No. 418; and Sec. 53, Republic Act
prescribed in Section 259. Firstly, a ruling by a Commissioner cannot revoke
No. 6110).
a provision of the National Internal Revenue Code, a substantive law.
Secondly, the provision above stated contemplates of a revocation,
It can thus be seen from the said provisions that for the purpose of facilitating modification or reversal of any of the rules and regulations promulgated for the
the assessment of the franchise tax, the Secretary of Finance, upon the enforcement of the provisions of the tax code but not a revocation, modification
or reversal of the tax code's provision itself. The reason why the Commissioner G.R. No. L-23678 June 6, 1967
issued the assailed assessment of P21,523,288.37 was not because he
wanted to revoke, expressly or implicitly, Section 259 of the Tax Code, but TESTATE ESTATE OF AMOS G. BELLIS, deceased.
because the Commissioner believed that private respondent is liable for PEOPLE'S BANK and TRUST COMPANY, executor.
corporate income tax by virtue of an inoperative franchise. Hence, the said MARIA CRISTINA BELLIS and MIRIAM PALMA BELLIS, oppositors-
assessment should not be regarded as a ruling contemplated under Section appellants,
338-A. It should be treated as an ordinary assessment for the payment of vs.
taxes, like any other assessment issued against any person or entity, holding EDWARD A. BELLIS, ET AL., heirs-appellees.
a legislative franchise and is exempted from the payment of Certain national
and local taxes, including corporate income tax but, nevertheless, found to be Vicente R. Macasaet and Jose D. Villena for oppositors appellants.
liable to pay the latter due to its earnings derived from sources within the Paredes, Poblador, Cruz and Nazareno for heirs-appellees E. A. Bellis, et al.
Philippines but beyond the scope of the franchise. Quijano and Arroyo for heirs-appellees W. S. Bellis, et al.
J. R. Balonkita for appellee People's Bank & Trust Company.
ACCORDINGLY, the decision of the Court of Tax Appeals is hereby modified, Ozaeta, Gibbs and Ozaeta for appellee A. B. Allsman.
as follows:
1. Republic Act No. 808 is presumed to be an operative act and the
decision of the respondent tax court declaring the same to be This is a direct appeal to Us, upon a question purely of law, from an order of
unconstitutional is hereby SET ASIDE; the Court of First Instance of Manila dated April 30, 1964, approving the project
of partition filed by the executor in Civil Case No. 37089 therein.1wph1.t
2. the provision in the franchise requiring the payment of 5% of gross
receipts as franchise tax in lieu of any and all taxes is enforceable and
The facts of the case are as follows:
Amos G. Bellis, born in Texas, was "a citizen of the State of Texas and of the
3. the assailed assessment was issued within the period prescribed
United States." By his first wife, Mary E. Mallen, whom he divorced, he had
by law;
five legitimate children: Edward A. Bellis, George Bellis (who pre-deceased
him in infancy), Henry A. Bellis, Alexander Bellis and Anna Bellis Allsman; by
4. the assailed assessment is not in the nature of a ruling within the his second wife, Violet Kennedy, who survived him, he had three legitimate
purview of Section 338-A of the National Internal Revenue Code; and children: Edwin G. Bellis, Walter S. Bellis and Dorothy Bellis; and finally, he
had three illegitimate children: Amos Bellis, Jr., Maria Cristina Bellis and
5. the decision of the respondent tax court declaring the Miriam Palma Bellis.
Commissioner's assessment cancelled and without any legal force
and effect is hereby SET ASIDE. A remand of this case to respondent On August 5, 1952, Amos G. Bellis executed a will in the Philippines, in which
Court of Tax Appeals is ordered for trial on the merits to determine the he directed that after all taxes, obligations, and expenses of administration are
income tax liability of the private respondent corresponding to its paid for, his distributable estate should be divided, in trust, in the following
income beyond the scope of Republic Act No. 808. order and manner: (a) $240,000.00 to his first wife, Mary E. Mallen; (b)
P120,000.00 to his three illegitimate children, Amos Bellis, Jr., Maria Cristina
The decision of the Court of Tax Appeals is AFFIRMED in all other respects. Bellis, Miriam Palma Bellis, or P40,000.00 each and (c) after the foregoing two
items have been satisfied, the remainder shall go to his seven surviving
SO ORDERED. children by his first and second wives, namely: Edward A. Bellis, Henry A.
Bellis, Alexander Bellis and Anna Bellis Allsman, Edwin G. Bellis, Walter S.
Narvasa, Cruz and Grio-Aquino, JJ., concur. Bellis, and Dorothy E. Bellis, in equal shares.1wph1.t
Gancayco, J., is on leave.
Subsequently, or on July 8, 1958, Amos G. Bellis died a resident of San In this regard, the parties do not submit the case on, nor even discuss, the
Antonio, Texas, U.S.A. His will was admitted to probate in the Court of First doctrine of renvoi, applied by this Court in Aznar v. Christensen Garcia, L-
Instance of Manila on September 15, 1958. 16749, January 31, 1963. Said doctrine is usually pertinent where the
decedent is a national of one country, and a domicile of another. In the present
The People's Bank and Trust Company, as executor of the will, paid all the case, it is not disputed that the decedent was both a national of Texas and a
bequests therein including the amount of $240,000.00 in the form of shares of domicile thereof at the time of his death.2 So that even assuming Texas has a
stock to Mary E. Mallen and to the three (3) illegitimate children, Amos Bellis, conflict of law rule providing that the domiciliary system (law of the domicile)
Jr., Maria Cristina Bellis and Miriam Palma Bellis, various amounts totalling should govern, the same would not result in a reference back (renvoi) to
P40,000.00 each in satisfaction of their respective legacies, or a total of Philippine law, but would still refer to Texas law. Nonetheless, if Texas has a
P120,000.00, which it released from time to time according as the lower court conflicts rule adopting the situs theory (lex rei sitae) calling for the application
approved and allowed the various motions or petitions filed by the latter three of the law of the place where the properties are situated, renvoi would arise,
requesting partial advances on account of their respective legacies. since the properties here involved are found in the Philippines. In the absence,
however, of proof as to the conflict of law rule of Texas, it should not be
On January 8, 1964, preparatory to closing its administration, the executor presumed different from ours.3 Appellants' position is therefore not rested on
submitted and filed its "Executor's Final Account, Report of Administration and the doctrine of renvoi. As stated, they never invoked nor even mentioned it in
Project of Partition" wherein it reported, inter alia, the satisfaction of the legacy their arguments. Rather, they argue that their case falls under the
circumstances mentioned in the third paragraph of Article 17 in relation to
of Mary E. Mallen by the delivery to her of shares of stock amounting to
Article 16 of the Civil Code.
$240,000.00, and the legacies of Amos Bellis, Jr., Maria Cristina Bellis and
Miriam Palma Bellis in the amount of P40,000.00 each or a total of
P120,000.00. In the project of partition, the executor pursuant to the Article 16, par. 2, and Art. 1039 of the Civil Code, render applicable the national
"Twelfth" clause of the testator's Last Will and Testament divided the law of the decedent, in intestate or testamentary successions, with regard to
residuary estate into seven equal portions for the benefit of the testator's seven four items: (a) the order of succession; (b) the amount of successional rights;
legitimate children by his first and second marriages. (e) the intrinsic validity of the provisions of the will; and (d) the capacity to
succeed. They provide that
On January 17, 1964, Maria Cristina Bellis and Miriam Palma Bellis filed their
respective oppositions to the project of partition on the ground that they were ART. 16. Real property as well as personal property is subject to the
deprived of their legitimes as illegitimate children and, therefore, compulsory law of the country where it is situated.
heirs of the deceased.
However, intestate and testamentary successions, both with respect
Amos Bellis, Jr. interposed no opposition despite notice to him, proof of service to the order of succession and to the amount of successional rights
of which is evidenced by the registry receipt submitted on April 27, 1964 by and to the intrinsic validity of testamentary provisions, shall be
the executor.1 regulated by the national law of the person whose succession is under
consideration, whatever may he the nature of the property and
After the parties filed their respective memoranda and other pertinent regardless of the country wherein said property may be found.
pleadings, the lower court, on April 30, 1964, issued an order overruling the
oppositions and approving the executor's final account, report and ART. 1039. Capacity to succeed is governed by the law of the nation
administration and project of partition. Relying upon Art. 16 of the Civil Code, of the decedent.
it applied the national law of the decedent, which in this case is Texas law,
which did not provide for legitimes. Appellants would however counter that Art. 17, paragraph three, of the Civil
Code, stating that
Their respective motions for reconsideration having been denied by the lower
court on June 11, 1964, oppositors-appellants appealed to this Court to raise Prohibitive laws concerning persons, their acts or property, and those
the issue of which law must apply Texas law or Philippine law. which have for their object public order, public policy and good
customs shall not be rendered ineffective by laws or judgments
promulgated, or by determinations or conventions agreed upon in a [G.R. No. 32280. March 24, 1930.]
foreign country.
PHILIPPINE TRUST CO., special guardian for Felina Tormo y Gonzalez,
prevails as the exception to Art. 16, par. 2 of the Civil Code afore-quoted. This incapacitated,Plaintiff-Appellant, v. DOROTEO T. MACUAN, Defendant-
is not correct. Precisely, Congressdeleted the phrase, "notwithstanding the Appellant.
provisions of this and the next preceding article" when they incorporated Art.
11 of the old Civil Code as Art. 17 of the new Civil Code, while reproducing Guevara, Francisco & Recto,, for Plaintiff-Appellant.
without substantial change the second paragraph of Art. 10 of the old Civil
Code as Art. 16 in the new. It must have been their purpose to make the M. H. De Joya and Enrique Tiangco,, for Defendant-Appellant.
second paragraph of Art. 16 a specific provision in itself which must be applied
in testate and intestate succession. As further indication of this legislative SYLLABUS
intent, Congress added a new provision, under Art. 1039, which decrees that
capacity to succeed is to be governed by the national law of the decedent. 1. GUARDIAN AND WARD; INVENTORY OF PROPERTY OF DEMENTED
WIFE. A married woman, under guardianship by reason of insanity, is not
It is therefore evident that whatever public policy or good customs may be entitled to have her half of the property of the subsisting conjugal partnership,
involved in our System of legitimes, Congress has not intended to extend the included in the inventory of her property to be filed by her guardian; and
same to the succession of foreign nationals. For it has specifically chosen to therefore, her husband, who was appointed guardian of her person and estate,
leave, inter alia, the amount of successional rights, to the decedent's national cannot be compelled to include in the inventory said half of the conjugal
law. Specific provisions must prevail over general ones. property.

Appellants would also point out that the decedent executed two wills one to
govern his Texas estate and the other his Philippine estate arguing from VILLA-REAL, J.:
this that he intended Philippine law to govern his Philippine estate. Assuming
that such was the decedent's intention in executing a separate Philippine will,
it would not alter the law, for as this Court ruled in Miciano v. Brimo, 50 Phil. Two appeals were taken, one by the plaintiff, the Philippine Trust co., as
867, 870, a provision in a foreigner's will to the effect that his properties shall special guardian for Felina Tormo y Gonzalez, incapacitated, and the other by
be distributed in accordance with Philippine law and not with his national law, the defendant, Doroteo T. Macuan, from the judgment of the Court of First
is illegal and void, for his national law cannot be ignored in regard to those Instance of Manila, the dispositive part of which reads as follows:
matters that Article 10 now Article 16 of the Civil Code states said
national law should govern. "In view of the foregoing, it is held that the parcels of land described in transfer
certificates of title Nos. 18261, 11205, and 18536, as well as those described
The parties admit that the decedent, Amos G. Bellis, was a citizen of the State in transfer certificate of title No. 19335 are conjugal property of the defendant
of Texas, U.S.A., and that under the laws of Texas, there are no forced heirs and Felina Tormo y Gonzalez, and said defendant is hereby ordered to include
or legitimes. Accordingly, since the intrinsic validity of the provision of the will said property in the inventory filed by himself in special proceeding No. 32569,
and the amount of successional rights are to be determined under Texas law, stating that only one-half of said property belongs to the ward. This decision
the Philippine law on legitimes cannot be applied to the testacy of Amos G. must not be understood as altering the rights and obligations of the conjugal
Bellis. partnership and of the spouses severally, with relation to said property, as
provided in the Civil Code. Without special pronouncement as to costs.
Wherefore, the order of the probate court is hereby affirmed in toto, with costs
against appellants. So ordered. In support of its appeal, the Philippine Trust Co., special guardian of Felina
Tormo y Gonzalez, incapacitated, assigns the following alleged errors as
Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Zaldivar, Sanchez committed by the court below in its decision, to
and Castro, JJ., concur.
1. The trial court erred in not holding that the defendants stock in the On February 1, 1928, Mariano Tormo, Francisco Tormo y Gonzalez, Gregorio
Centro de Modas belongs to the conjugal partnership of the defendant Tormo y Gonzalez, Martin Caluag y Gonzalez, Manuela Tormo y Gonzalez,
and his incapacitated wife, Felina Tormo. and Vicente Caluag y Gonzalez, filed with the court a motion praying that the
2. It likewise erred in not holding that the dividends from said stock are guardian be instructed to file a complete inventory of all the property belonging
also conjugal property."cralaw virtua1aw library to his ward in accordance with the testimony given on October 17, 1927. The
guardian having opposed said motion on the ground that the movants lacked
In turn, the defendant, Doroteo T. Macuan, assigns the following errors the personality to file it, the court denied said motion but reserved to the
alleged to have been committed by the court in its decision, in support of movants the right to petition for the appointment of a special guardian
his appeal, to wit: empowered to start proceedings against the regular guardian for the recovery
of the ownership and possession of the property which they alleged belongs
either to the conjugal partnership, or to the incapacitated party alone.
"1. The trial court erred in holding that the property described in transfer
certificates of title Exhibits A, B, C, and D, is conjugal property of the In pursuance of said order, the plaintiff has filed the complaint herein in the
defendant Doroteo T. Macuan and his incapacitated wife, Felina Tormo y interests of the incapacitated Felina Tormo y Gonzalez against the defendant,
Gonzalez. Doroteo T. Macuan, praying for an order requiring him to file a complete
inventory of the property of his ward.
"2. The trial court also erred in ordering said defendant, as guardian of the
person and property of the aforesaid incapacitated person, to include the The first question that must be decided in this appeal, and upon the decision
property alleged to be conjugal, in the inventory filed by himself in special of which will depend the necessity of deciding the other questions raised, is
proceeding No. 32569 of the Court of First Instance of Manila, stating that whether or not a woman judicially declared to be mentally incapacitated, is
one-half of said property belongs to said incapacitated party. entitled to have included in the inventory of her property, before the dissolution
of the marriage, that which is conjugal, and whether or not the husband may
"3. The trial court, finally, erred in not dismissing the complaint as be compelled to include in the inventory of his wifes property judicially
improper. declared mentally incapacitated, whose guardian he is, her undivided half of
the conjugal property.
The following facts were proved at the trial without question
According to section 561 of the Code Of Civil Procedure, the guardian
The defendant, Doroteo T. Macuan, married Felina Tormo y Gonzalez in appointed shall have the care and custody of the person of his ward and the
1905, this being his second marriage, and has had no issue by her. At that administration of all the latters property, and according to section 567 of the
time, the defendant was already a merchant in this City of Manila, and same Code, he must file with the court an inventory of the property of his ward,
brought to the marriage contract a capital of about P20,000. Felina Tormo which shall be appraised by two experts appointed by the judge, and, in
y Gonzalez brought nothing to the marriage; she was merely a dressmaker accordance with section 565 of the same Code, as said administrator, he is
earning a salary of from P3 to P5 a week. Felina Tormo y Gonzalez having empowered to sell with the authorization of the court, the real property,
become mentally incapacitated, her husband, the herein defendant- applying the proceeds, as far as may be necessary to the support of the ward.
appellant, Doroteo T. Macuan, on October 17, 1927, filed a petition with
the Court of First Instance of Manila, asking that he be appointed guardian On the other hand, article 1392 of the Civil Code provides that in virtue of the
of the person and estate of his wife, the latter consisting in an undivided conjugal partnership, the earnings or profits obtained by either of the spouses
one-half interest in a certain parcel of land with the improvements thereon, during the marriage shall belong to the husband and wife, share and share
situated at No. 265 San Rafael Street, in the City of Manila, with Torrens alike, upon the dissolution of the marriage, and article 1412 of said Code
title No. 19335, claimed to be conjugal property. On December 17, 1927, provides that the husband shall be the manager of the conjugal partnership,
the Court of First Instance declared Felina Tormo y Gonzalez, mentally and as such, according to article 1413 of said Code, he may for a valuable
incapacitated and appointed her husband, Doroteo T. Macuan, guardian consideration alienate and encumber the property of the conjugal partnership
of her person and estate. On January 24, 1928, said guardian filed with without the consent of the wife. Article 1416 of said Civil Code prescribes that
said court an inventory of said property. the wife cannot bind the property of the conjugal partnership without the
consent of the husband, except in the cases provided in article 1362, referring
to the unappraised dowry which answers for the usual daily expenses of the
family incurred by the wife or by her order with the tacit consent of her husband,
and in articles 1441 and 1442 where the management of the conjugal property
belonging to the marriage has been transferred to the wife in the cases
provided in these two last articles.

The provisions of the Code of Civil Procedure referring to the management

and to the inventory of a demented wards property, be she married or not, are
general in character, for they affect all her property without exception; while
the provisions of the Civil Code referring to the management of the property of
the said demented ward, when married, are special provisions; therefore, the
latter take precedence over the former case of conflict.

If the husband were obliged, as his demented wifes guardian, to include in the
inventory of her property, her half of the conjugal property, it would be a
diminution of his powers conferred upon him by the Civil code to manage the
property of the conjugal partnership, and to encumber and bind for a valuable
consideration said property without his wifes consent, for as said guardian he
would not be able to exercise said powers freely, being subject to the
supervision and control of the court, with regard to the demented wifes half of
the conjugal property. And this anomaly is not remedied by declaring in the
judgment that it is not to be understood as altering the rights and obligations
of the partnership and of the spouses severally, with relation to said property
established in said Civil Code, inasmuch as such a proviso constitutes a
limitation of the guardians power to manage the property of the married
demented ward, and, therefore, an amendment to the law, an act beyond
the powers of the court of justice.

For the foregoing considerations, we are of opinion and so hold that a married
woman, under guardianship by reason of mental derangement, is not entitled
to have her half of the legal conjugal partnership which still subsists, included
in the inventory of her property to be filed by her guardian, and therefore, the
husband, appointed guardian of her person and estate, cannot be compelled
to include in the inventory of the same, said half of the conjugal property.

Having reached this conclusion, we deem it unnecessary to decide the

questions raised in the other assignments of error, since the special guardian
does not contend that the regular guardian holds in his possession property
belonging exclusively to the ward, other than conjugal property.

By virtue whereof, the judgment appealed from is reversed, and the complaint
is dismissed, without special pronouncement as to the cost. So ordered.

Johnson, Malcolm, Villamor, Ostrand and Johns, JJ., concur.