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Taxation II

DONORS TAX
I. Definition/Nature LLADOC V. COMMISSIONER GR L-19201 PAREDES; June 16, 1965
chris

A2010

Prof.Movido
-Shortly thereafter, the Company modified the resolution upon receipt of the total sum of P643k as proceeds of the said life insurance policies obtained from American insurers. Said sum plus interest was then given to the minor children of the deceased, subject to the express condition that said amount should be retained by the Company in the nature of a loan to it, payable to the Pirovano children after the Company shall have first settled in full the balance of its present remaining bonded indebtedness in the sum of approximately P5M. -Mrs. Pirovano, in behalf of her children, executed a public document formally accepting the donation. (The Company took note of this acceptance.) -However, the majority stockholders of the Company voted to revoke the resolution approving the donation in favor of the Pirovano children. -As a consequence of this revocation and refusal of the Company to pay the balance of the donation despite demands therefor, the petitioners brought an action for the recovery of said amount, plus interest and damages against De la Rama Steamship Co., in the CFI of Rizal, which case ultimately culminated to an appeal to this Court. -SC rendered its decision (w/c became final and executory) in the appealed case holding that the donation was valid and remunerative in nature. - De la Rama Steamship Co. made a partial payment on the amount of the judgment and paid the balance thereof. -Commissioner assessed the amount of P60,869.67 as donees' gift tax, inclusive of surcharges, interests and other penalties, against each of the petitioners-appellants, or for the total sum of P243,478.68; and a donor's gift tax in the total amount of P34,371.76 was also assessed against De la Rama Steamship Co., which the latter paid. -Petitioners-appellants herein contested the Commissioner's assessment and imposition of the donees' gift taxes and donor's gift tax and also made a claim for refund of the donor's gift tax so collected. Commissioner overruled petitioners' claims. -Pirovanos went to the CTA to dispute the legality of the assessment of donees' gift taxes and donor's gift tax and to claim for refund of the donor's gift tax already paid. -CTA ordered a refund of the donor s gift tax but found the donees gift taxes were correctly assessed. -Pirovanos filed a MR, which the lower court denied. Hence, this appeal. ISSUE: WON the Pirovanos should pay the donees' gift taxes (bcoz they alleged that the sum involved herein was in payment of their fathers past services TF not a donation.) HELD: Yes.

FACTS - MB Estate Inc. of Bacolod City, donated P10000 in cash to Rev. Fr. Ruiz, parish priest of Negros Occidental, predecessor of petitioner, for construction of new Catholic Church. Total amount was actually spent for purpose intended. - Donor filed donor's gift tax return. CIR issued assessment for donee's gift tax against Catholic Parish of Victorias, Negros Occidental, of w/c petitioner was priest. Tax amounted to P1,370 incl surcharges, interests of 1% monthly fr May 15, 1958 to June 15, 1960, and compromise for late filing of return. - Petitioner lodged protest to assessment & requested w/drawal thereof. Protest & MFR were denied. Petitioner appealed to CTA. In petition for review, Lladoc claimed that at the time of donation, he wasnt the parish priest in Victorias; that theres no legal entity / juridical person known as "Catholic Parish Priest of Victorias," and, therefore, he shouldnt be liable for donee's gift tax. It was also asserted that assessment of gift tax, even against Roman Catholic Church, wouldnt be valid, for such would be violation of Constitution. - CTA affirmed decision of Commissioner. ISSUE WON Lladoc shld be liable for assessed donees gift tax HELD YES - Sec 22(3), AVI of Consti exempts fr taxation cemeteries, churches and parsonages or convents, appurtenant thereto, and all lands, buildings, and improvements used exclusively for religious purposes. The exemption is only from payment of taxes assessed on such properties, as property taxes, as contra distinguished fr excise taxes. In the present case, what Collector assessed was donee's gift tax; the

assessment was not on the properties themselves. It didnt rest upon general ownership; it was an excise upon use made of the properties, upon exercise of privilege of rcvng properties. Gift tax isnt w/in exempting provisions of the section. - A gift tax isnt a property tax, but an excise tax imposed on transfer of property by way of gift inter vivos, the imposition of which on property used exclusively for religious purposes, does not constitute an impairment of the Constitution. - The phrase "exempt from taxation," shouldnt be interpreted to mean exemption from all kinds of taxes. And there being no clear, positive or express grant of such privilege by law, in favor of petitioner, exemption must be denied.

BIR RULING NO. 029-01

II. Transfer Subject To Donors Tax PIROVANO V. COMMISSIONER G.R. No. L-19865 REYES, J.B.L./ July 31, 1965 Del
FACTS: -De la Rama Steamship Co. insured the life of said Enrico Pirovano, who was then its President and General Manager until the time of his death, with various Philippine and American insurance companies for a total sum of 1M pesos, designating itself as the beneficiary of the policies, obtained by it. -Due to the Japanese occupation of the Philippines during WWII, the Company was unable to pay the premiums on the policies issued by its Philippine insurers and these policies lapsed, while the policies issued by its American insurers were kept effective and subsisting, the New York office of the Company having continued paying its premiums from year to year. -During the Japanese occupation, or more particularly in the latter part of 1944, Pirovano died. -After the liberation of the Philippines from the Japanese forces, the Board of Directors of De la Rama Steamship Co. adopted a resolution dated July 10, 1946 granting and setting aside, out of the proceeds expected to be collected on the insurance policies, the sum of P400k for equal division among the 4 minor children of Enrico, said sum of money to be convertible into 4,000 shares of stock of the Company, at par, or 1,000 shares for each child.

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Taxation II

A2010

Prof.Movido
. . . an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it. - Donation has the following elements: (a) the reduction of the patrimony of the donor; (b) the increase in the patrimony of the donee; and, (c) the intent to do an act of liberality or animus donandi. 2) Donative intent is a creature of the mind. It can only be perceived thru the material and tangible acts which manifest its presence. It is presumed present when one gives a part of ones patrimony to another without consideration. It is not negated when the person donating has other intentions, motives or purposes which do not contradict donative intent. This Court is not convinced that since the purpose of the contribution was to help elect a candidate, there was no donative intent. Petitioners contribution of money without any material consideration evinces animus donandi. The fact that their purpose for donating was to aid in the election of the donee does not negate the presence of donative intent. 3) The purpose for which the sums of money were given, which was to fund the campaign of Senator Angara in his bid for a senatorial seat, cannot be considered as a material consideration so as to negate a donation. The fact that petitioners will somehow in the future benefit from the election of the candidate to whom they contribute, in no way amounts to a valuable material consideration so as to remove political contributions from the purview of a donation. Senator Angara was under no obligation to benefit the petitioners. The proper performance of his duties as a legislator is his obligation as an elected public servant of the Filipino people and not a consideration for the political contributions he received. In fact, as a public servant, he may even be called to enact laws that are contrary to the interests of his benefactors, for the benefit of the greater good. 4) The petitioners argue that for half a century, the BIR never attempted to subject campaign contributions to donors tax. This may be so, but the BIR is not precluded from making a new interpretation of the law, especially when the old interpretation was flawed. 5) The law is clear and unambiguous; therefore, there is no room for construction. (Petitioners argue that the law should be construed liberally in favor of taxpayers.) * Congress approved Republic Act No. 7166 on November 25, 1991, providing in Section 13 thereof

Ratio: Without proof of donative intent, application of the donors tax on the difference between the fair market value and the selling price of the shares sold has no basis. -There is nothing on record to show that when the late Enrico Pirovano rendered services as President and General Manager of the De la Rama Steamship Co. he was not fully compensated for such services. The fact that his services contributed in a large measure to the success of the company did not give rise to a recoverable debt, and the conveyances made by the company to his heirs remain a gift or donation. The true consideration for the donation was, therefore, the company's gratitude for his services, and not the services themselves. -CTA regarded the conveyance as a simple donation; whether remuneratory or simple, the conveyance remained a gift, taxable under IRC. -Pirovano's successful activities as officer of the De la Rama Steamship Co. cannot be deemed such consideration for the gift to his heirs, since the services were rendered long before the Company ceded the value of the life policies to said heirs; cession and services were not the result of one bargain or of a mutual exchange of promises. -Anglo-American law treats a subsequent promise to pay for past services (like one to pay for improvements already made without prior request from the promisor) to be a nudum pactum i.e., one that is unenforceable in view of the common law rule that consideration must consist in a legal benefit to the promisee or some legal detriment to the promisor. -What is more, the actual consideration for the cession of the policies was the Company's gratitude to Pirovano; so that under section 111 of the Code there is no consideration the value of which can be deducted from that of the property transferred as a gift. Like "love and affection," gratitude has no economic value and is not "consideration" in the sense that the word is used in this section of the Tax Code. -It is of course perfectly possible that a donation or gift should at the same time impose a burden or condition on the donee involving some economic liability for him. A, for example, may donate a parcel of land to B on condition that the latter assume a mortgage existing on the donated land. In this case the donee may rightfully insist that the gift tax be computed only on the value of the land less the value of the mortgage. This, in fact, is contemplated by Article 619 of the Civil Code of 1889 (Art. 726 of the Tax Code) when it provides that there is also a donation "when the gift imposes upon the donee a burden which is less than the value of the thing given." Section 111 of the Tax Code has in view situations of this kind, since it also prescribes that "the amount by which the value of the property exceeded the value of the consideration" shall be deemed a gift for the purpose of the tax. .

Dispositive: CTAs decision is affirmed.

ESTATE OF FIDEL REYES V. CIR

III.Computation of Taxes e. Contributions to Political Parties


ABELLO, et al v. CIR GR 120721 Azcuna, J.; Feb. 23, 2005 ina
FACTS Petitioners, partners in the ACCRA law firm, each contributed some P800k to the campaign funds of Angara for his senatorial bid in 1987. The collector assessed each of them donors tax of about P200k. The CIR denied their claim for exemption. The CTA granted it; while the CA sided with the CIR. ISSUE WON the campaign contributions in question are subject to donors tax* RULING YES 1) The National Internal Revenue Code, as amended, provides: Sec. 91. Imposition of Tax. (a) There shall be levied, assessed, collected, and paid upon the transfer by any person, resident, or non-resident, of the property by gift, a tax, computed as provided in Section 92. (b) The tax shall apply whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible. - The NIRC doesnt define transfer of property by gift; but the civil code, which applies suppletorily, defines donation, in Article 725, as:

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Taxation II

A2010

Prof.Movido
-Appellants herein are therefore in error when they contend that it is enough that the property donated should belong to the conjugal partnership in order that the donation be considered and taxed as a donation of both husband and wife, even if the husband should appear as the sole donor. There is no blinking the fact that, under the old Civil Code, to be a donation by both spouses, taxable to both, the wife must expressly join the husband in making the gift; her participation therein cannot be implied. -The consequence of the husband's legal power to donate community property is that, where made by the husband alone, the donation is taxable as his own exclusive act. Hence, only one exemption or deduction can be claimed for every such gift, and not two, as claimed by appellants herein

that political/electoral contributions, duly reported to the Commission on Elections, are not subject to the payment of any gift tax. Unfortunately, this doesnt retroact to the campaign contributions in question in this case.

V. Exemptions
TANG HO V BOARD OF TAX APPEALS 97 PHIL 890 REYES, J.B.L.; November 19, 1955 Apple
FACTS -Li Seng Giap (who died during the pendency of this appeal) and his wife Tang Ho and their thirteen children appear to be stockholders of two close family corporations named Li Seng Giap & Sons, Inc. and Li Seng Giap & Co. -Examiners of the Bureau of Internal Revenue made an examination of the books of the two corporations and found that each of Li Seng Giap's 13 children had a total investment therein of approximately P63,195.00, in shares issued to them by their father in the years 1940, 1942, 1948, 1949, and 1950 -The Collector of Internal Revenue regarded these transfers as undeclared gifts made in the respective years, and assessed against Li Seng Giap and his children donor's and donee's taxes in the total amount of P76,995.31, including penalties, surcharges, interests, and compromise fee due to the delayed payment of the taxes. - The petitioners paid P53,434.50 representing the amount of the basic taxes, and put up a surety bond to guarantee payment of the balance demanded. -On June 25, 1951, they requested the Collector of Internal Revenue for a revision of their tax assessments, and submitted donor's and donee's gift tax returns -Appellants admit that the gifts were not reported; but contend that as the cash donated came from the conjugal funds, they constituted individual donations by each of the spouses Li Seng Giap and Tang Ho of one half of the amount received by the donees in each instance -They also claimed the benefit of gift tax exemptions (under section 110 and 112 of the Internal Revenue Code) at the rate of P2000 a year for each donation,

plus P10,000 for each gift propter nuptias made by either parent -The Collector refused to revise his original assessments; and the petitioners appealed to the then Board of Tax Appeals -The Board of Tax Appeals upheld the decision of the respondent Collector of Internal Revenue; hence, this petition for review ISSUE WON the donations made by petitioner Li Seng Giap to his children from the conjugal property are taxable against husband and wife, and therefore, exemptions may be claimed twice HELD No. -Appellants submit that all such donations of community property are to be regarded, for tax purposes, as donations by both spouses, for which two separate exemptions may be claimed in each instance, one for each spouse. -This presentation should be viewed in the light of the provisions of the Spanish Civil Code of 1889. Arts. 1409 and 1415, reading as follows: Art. 1409. The conjugal partnership shall also be chargeable with anything which may have been given or promised by the husband to the children born of the marriage solely in order to obtain employment for them or give them a profession, or by both spouses by common consent, should they not have stipulated that such expenditures should be borne in whole or in part by the separate property of one of them. ART. 1415. The husband may dispose of the property of the conjugal partnership for the purposes mentioned in Art. 1409. -In effect, these Articles clearly refute the appellants' theory that because the property donated is community property, the donations should be viewed as made by both spouses. First, because the law clearly differentiates the donations of such property "by the husband" from the "donations by both spouses by common consent" -Next, the wording of Arts. 1409 and 1415 indicates that the lawful donations by the husband to the common children are valid and are chargeable to the community property, irrespective of whether the wife agrees or objects thereof. Obviously, should the wife object to the donation, she can not be regarded as a donor at all.

TAX REMEDIES
I. Local Taxes in General a. Assessment/Collectio n 3. Assessment of Deficiency/Delinquent Tax BLGF Ruling dates 13 June 2006
CALIFORNIA MANUFACTURING CO. V CITY OF LAS PIAS C.T.A. AC NO. 4 CASANOVA; September 28, 2005 Rache
NATURE Petition for Review seeking reversal of RTC Orders dismissing California Manufacturing's petition for lack of jurisdiction FACTS

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Taxation II

A2010

Prof.Movido
Local Government Code. 30 The RTC is correct in ruling that it has no jurisdiction over the subject matter of the case and the dismissal of the petition was proper. Ratio The requirement for an assessment notice to be valid is a statement of the nature of the tax, fee or charge, the amount of deficiency, the surcharges, interests and penalties. - Provisions of law clearly mandate that within sixty (60) days from receipt of the assessment, the aggrieved taxpayer may file a protest with the local treasurer in case of local tax assessments and with the Local Board of Assessment Appeals in case of real property tax assessments. Reasoning Petitioner insists that the lower court has jurisdiction over the case considering that the protest was timely filed. Jurisdiction of a court over the subject matter of an action is conferred only by the Constitution or the law and the Rules of Court yield to substantive law. Jurisdiction must exist as a matter of law. And the court can motu propio dismiss a case which is outside its jurisdiction (Sec. 1, Rule 9). - Section 195 of the Local Government Code provides: "When the local treasurer or his duly authorized representative finds that correct taxes, fees, or charges have not been paid, he shall issue a notice of assessment stating the nature of the tax, fee or charge, the amount of deficiency, the surcharges, interests and penalties. Within 60 days from the receipt of the notice of assessment, the taxpayer may file a written protest with the local treasurer contesting the assessment; otherwise the assessment shall become final and executory." - Section 226 provides: "Any owner or person having legal interest in the property who is not satisfied with the action of the provincial, city or municipal assessor in the assessment of his property may, within sixty (60) days from the date of receipt of the written notice of assessment, appeal to the Board of Assessment Appeals of the province or city by filing a petition under oath in the form prescribed for the purpose, together with copies of tax declarations and such affidavits or documents submitted in support of the appeal." - Petitioner had sixty (60) days from June 10, 2003 or until August 9, 2003, within which to protest the above assessment. Petitioner's argument that the letter is not an assessment for it failed to state the nature of the tax, fee or charge, the amount of deficiency, the surcharge or interests and penalties has no merit as

- Petitioner is a corporation duly organized and existing under the laws of the RP with principal place of business at Paraaque City. City of Las Pias is a local government unit created by law and respondent Hon. Rizal Y. Del Rosario is the duly appointed City Treasurer of Las Pias City, empowered to perform the duties of said office, including, inter alia, the collection of all local taxes, fees and charges, and the power to decide, approve and grant refunds or tax credits of erroneously or excessively paid taxes. It is engaged in the business of manufacturing and selling various food products, such as pasta, peanut butter, pickles, sinigang powder, hot pot, spaghetti meat sauce, Knorr cubesTM, chinese soups and cream soups.. - In a letter dated June 9, 2003, respondent City Treasurer informed petitioner that it had local business tax deficiency on non-essential commodities and deficiency real property tax in the total amount of P73,045,634.47. Upon receipt of the notice of assessment for deficiency business and real property taxes, petitioner's financial accountant attended a conference on June 23, 2003 with respondent City Treasurer and the examiners of the City of Las Pias. During the conference, petitioner personally served a letter dated June 23, 2003 to respondent City Treasurer requesting ample time to consider the validity of the assessment and asking for specific rulings and ordinances supporting the claim. Respondent City Treasurer issued a reply also dated June 23, 2003, informing petitioner that its request to consider the validity of the assessment has been granted and gave petitioner only up to July 15, 2003 to settle the tax deficiency. - Petitioner then filed on September 1, 2003, what it calls a supplemental protest against the assessment for deficiency local business tax. On October 16, 2003, petitioner filed a petition before the Regional Trial Court protesting the assessment for deficiency local business taxes, penalties and interest for the period 1999 up to the taxable quarter ending June 30, 2003 in the total amount of P15,283,815.79 and seeking the cancellation of the said assessment. - Respondents filed a Motion to Dismiss anchored on the following: first, petitioner has no legal capacity to sue since the person who signed the verification on the petition is not an authorized officer; and second, the RTC has no jurisdiction because the assessment has attained finality due to the lack of timely protest. - RTC granted the Motion to Dismiss filed by herein respondents through Atty. Prudencio A. Raola, Jr., on

the ground that it had no jurisdiction over the subject matter. "Under the said law, 11 a taxpayer may contest an assessment by a local treasurer or his duly authorized representative within sixty (60) days after the notice of assessment is given him by filing a written protest with the local treasurer. It can be gleaned from the records that the City Treasurer made a letter on June 9, 2003 assessing that petitioner CMC, Inc. had a tax deficiency in the total amount of Seventy Three Million Forty Five Thousand Six Hundred Thirty Four Pesos and 47/100 (P73,045,634.47) for taxable years 1999 to 2003. This notice of assessment for deficiency tax was actually received by petitioner CMC, Inc. on June 10, 2003. Given the above-cited provision, petitioner should have filed the protest before the deadline, which is August 9, 2003 or sixty (60) days from the notice of assessment. Since the letter protesting the assessment was filed on September 1 and 2, 2003 or approximately eighty three (83) days after the assessment, it is the conclusion of this Court that the protest was filed way beyond the reglementary period of 60 days as provided for by Section 195 of the Local Government Code. Hence, the assessment became final and executory." - Petitioner filed an Omnibus Motion praying for the reconsideration of the Order and therein argued that the June 9, 2003 letter of the respondents was not an assessment because it is bereft of any statement as to the nature of the tax, fee or charge, the amount of deficiency, the surcharge or interests and penalties. And that assuming arguendo that the City Treasurer's June 9, 2003 letter was an assessment, it follows that petitioner's request for ample time partook of the nature of a preliminary protest that tolled the running of the 60-day period to file a protest. That, if the respondents considered the assessment to be final and unappealable, it would have been natural for the respondents to cite such ground in the denial of the protest. - The Omnibus Motion was denied for want of merit. ISSUE WON the protest was timely filed, thus the court had jurisdiction over the case HELD NO - There was no such valid and timely protest on the part of petitioner. Thus, the assessments became final and executory as provided for by Section 195 of the

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Taxation II

A2010

Prof.Movido
lands pursuant to the said ordinance shall be implemented in the years 1994, 1995, and 1996. Petitioner brought a prohibition suit in the CA against the Assessor, the Treasurer, and the Sangguniang Bayan to stop them from enforcing the ordinances in question on the ground that the ordinances were invalid for having been adopted allegedly without public hearings and prior publication or posting and without complying with the implementing rules yet to be issued by the Department of Finance. CA denied the petition.. ISSUES 1. WON exhaustion of administrative remedies obtains under the circumstances 2. WON the City Council of Mandaluyong is empowered to determine and approve the aforecited ordinances without taking into account the mandatory public hearings required by the LGC 3. WON there is a need for publication of tax ordinances. HELD 1. YES Where a remedy is available within the administrative machinery, this should be resorted to before resort can be made to the courts, not only to give the administrative agency the opportunity to decide the matter by itself correctly, but also to prevent unnecessary and premature resort to courts. - With regard to questions on the legality of a tax ordinance, the remedies available to the taxpayer: a. Section 187 of LGC provides, that the taxpayer may question the constitutionality or legality of a tax ordinance on appeal within thirty (30) days from effectivity thereof, to the Secretary of Justice. The petitioner after finding that his assessment is unjust, confiscatory, or excessive, may bring the case before the Secretary of Justice for questions of legality or constitutionality of the city ordinance. b.Under Section 226 of LGC, an owner of real property who is not satisfied with the assessment of his property may, within sixty (60) days from notice of assessment, appeal to the Board of Assessment Appeals. - Should the taxpayer question the excessiveness of the amount of tax, he must first pay the amount due, in accordance with Section 252 of LGC. Then, he must request the annotation of the phrase "paid under protest" and accordingly appeal to the Board of Assessment Appeals by filing a petition under oath

earlier because there were attachments to such letter. Further, the petitioner admitted in its Petition for Review filed with the RTC that it received the notice of the assessment for deficiency local business tax and real property tax on 10 June 2003. Still further, in the same petition, the petitioner was able to detail the composition of the deficiency tax assessment based on the table audit sent by the respondents and it was able to counter argue point by point the assessment made by the respondents hence, only belying its claim that the letter of June 9, 2003 did not contain the nature of the tax, fee or charge, the amount of deficiency, the surcharge or interests and penalties. Disposition Petition for Review is hereby DISMISSED for lack of merit.

WON the petition for review should be granted HELD NO. Reasoning. For mandamus to lie, petitioner San Juan should comply with Rule 65.3 of ROC which requires that there is no other plain, speedy and adequate remedy in the ordinary course of law. Under Section 195 of LGC, a taxpayer who disagrees with a tax assessment made by a local treasurer may file a written protest thereof. -Petitioner protested in writing against the assessment of tax due. Respondent sent him letter which operated as a denial of petitioners written protest. In accordance with Section 195 of LGC, petitioner should have either appealed the assessment before the court of competent jurisdiction or paid the tax then sought a refund. However, he instead opted to file a petition for mandamus to compel respondent to accept payment of transfer tax as computed by him. Disposition. WHEREFORE, the petition is DENIED. Costs against the petitioner. SO ORDERED.

B. Taxpayers Remedies
SAN JUAN V. CASTRO 541 SCRA 526 CARPI0-MORALES, December 27, 2007
cha NATURE Petition for review on certiorari of CA deci FACTS -Romulo San Juan, registered owner of real properties in Rancho Estate I, Concepcion II, Marikina City, with wifes consent, conveyed by Deed of Assignment said properties to Saints and Angels Realty Corporation (SARC) in exchange for 258,434 shares of stock in total par value of P2,584,340. 200,000 of the said shares of stocks worth P2M were placed in San Juans name while the rest were placed in the name of his wife. -San Juans rep went to Office of Marikina City Treasurer Castro to pay transfer tax based on the consideration in the Deed of Assignment but Castro informed him that the tax due should be based on the fair market value of the property -San Juan protested in writing to the basis of tax due. Castro replied still insisting that the basis is fair market value -San Juan filed in RTC Marikina Petition for Mandamus and Damages to perform a ministerial duty ISSUE

3. Contesting the Validity of a New Tax Ordinance


FIGUERRES v CA MENDOZA; March 25, 1999 jojo
FACTS Petitioner Belen Figuerres is the owner of a parcel of land located in Mandaluyong City. In 1993, she received a notice of assessment, dated Oct. 20, 1993, from the assessor of the then Municipality of Mandaluyong. The assessment, effective in the year 1994, was based on Ordinance Nos. 119 and 125, series of 1993, and Ordinance No. 135, series of 1994, of the Sangguniang Bayan of Mandaluyong. Ordinance No. 119 contains a schedule of fair market values of the different classes of real property in the municipality. Ordinance No. 125 fixes the assessment levels applicable to such classes of real property. Ordinance No. 135 amended Ordinance No. 119, 6 by providing that only one third (1/3) of the increase in the market values applicable to residential

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Taxation II

A2010

Prof.Movido
- Hagonoy enacted Kautusan Blg. 28 on Oct. 1996, increasing stall rentals of market vendors in Hagonoy. Art. 3 provided it would take effect upon approval. The ordinance was posted from Nov. 4-25, 1996. Petitioner Assns members were personally given copies on Nov. 1997; petitioners president appealed with the SoJ (over a year after its approval) assailing its constitutionality and claiming it was unaware of the posting. Respondent contended that the ordinance took effect in Oct. 1996 by operation of law and that the appeal was time-barred. The SoJ, citing Tanada vs Tuvera, held that ordinances effectivity retroacted to the date of its approval and that the appeal was filed beyond the 30 day limit from the date of approval. Its MFR denied, petitioner appealed with the CA which was denied for formal deficiencies. Its second MFR was denied, hence this appeal. ISSUE WON petitioners appeal was already time-barred HELD YES. Sec. 187 of the 1991 Local Government Code provides that any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within 30 days from the effectivity thereof to the Secretary of Justice who shall render a decision within 60 days from receipt of the appeal. The appeal will not suspend the effectivity of the ordinance and accrual of payment of the tax charged. Within 30 days from the partys receipt of the decision or the lapse of the 60 day period without the SoJ acting on the appeal, the party may file appropriate proceedings. -in the instant case, petitioner filed his appeal only in Dec. 1997, over a year after the ordinance took effect in 1996. The periods provided in Sec. 187 are mandatory; hence, the appeal was rightly dismissed as it was clearly time-barred. Since taxes are the lifeblood of the State, the validity of such revenue measures cannot be left uncertain for considerable lengths of time. Dispositive IN VIEW WHEREOF, petition is DISMISSED

together with copies of the tax declarations and affidavits or documents to support his appeal. - Although cases raising purely legal questions are excepted from the rule requiring exhaustion of administrative remedies before a party may resort to the courts, in the case at bar, the legal questions raised by petitioner require, as will presently be shown, proof of facts for their resolution. Therefore, the petitioners action in the CA was premature, and the appellate court correctly dismissed her action on the ground that she failed to exhaust available administrative remedies as above stated. - Petitioner argues that resort to the Secretary of Justice is not mandatory but only directory because LGC, 187 provides that "any question on the constitutionality or legality of tax ordinances or revenue measures" may be appealed to the Secretary of Justice. Precisely, the Secretary of Justice can take cognizance of a case involving the constitutionality or legality of tax ordinances where, as in this case, there are factual issues involved. - There need be no fear that compliance with the rule on exhaustion of administrative remedies will unduly delay resort to the courts to the detriment of taxpayers. Although LGC 187 provides that an appeal to the Secretary of Justice "shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein," it likewise requires the Secretary of Justice to "render a decision within sixty (60) days from the date of receipt of the appeal," after which "the aggrieved party may file appropriate proceedings with a court of competent jurisdiction." 2. NO. - LGC, 186 provides that an ordinance levying taxes, fees, or charges "shall not be enacted without any prior public hearing conducted for the purpose." - However, it is noteworthy that apart from her bare assertions, petitioner Figuerres has not presented any evidence to show that no public hearings were conducted prior to the enactment of the ordinances in question. On the other hand, the Municipality of Mandaluyong claims that public hearings were indeed conducted before the subject ordinances were adopted, although it likewise failed to submit any evidence to establish this allegation. However, in accordance with the presumption of validity in favor of an ordinance, their constitutionality or legality should be upheld in the absence of evidence showing that the

procedure prescribed by law was not observed in their enactment. - Furthermore, the lack of a public hearing is a negative allegation essential to petitioners cause of action in the present case. Hence, as petitioner is the party asserting it, she has the burden of proof.13 [Industrial Finance Corporation v. Tobias, 78 SCRA 28 (1977).] Since petitioner failed to rebut the presumption of validity in favor of the subject ordinances and to discharge the burden of proving that no public hearings were conducted prior to the enactment thereof, we are constrained to uphold their constitutionality or legality. 3. YES In view of 188 and 511(a) of LGC, an ordinance fixing the assessment levels applicable to the different classes of real property in a local government unit and imposing penal sanctions for violations thereof (such as Ordinance No. 125) should be published in full for three (3) consecutive days in a newspaper of local circulation, where available, within ten (10) days of its approval, and posted in at least two (2) prominent places in the provincial capitol, city, municipal, or barangay hall for a minimum of three (3) consecutive weeks. Apart from her allegations, petitioner has not presented any evidence to show that the subject ordinances were not disseminated in accordance with these provisions of LGC. On the other hand, the Municipality of Mandaluyong presented a certificate, dated November 12, 1993, of Williard S. Wong, Sanggunian Secretary of the Municipality of Mandaluyong that "Ordinance No. 125, S-1993 . . . has been posted in accordance with 59(b) of LGC. Thus, considering the presumption of validity in favor of the ordinances and the failure of petitioner to rebut such presumption, we are constrained to dismiss the petition in this case.

HAGONOY MARKET VENDORS ASSN V HAGONOY G.R No. 137621 PUNO, J.; Feb. 6, 2002 kiyo
NATURE Petition for Review of CA Resolution FACTS

COCA-COLA BOTTLERS PHILIPPINES, INC. VS. CITY OF MANILA CHICO-NAZARIO; June 27, 2006
(athe)

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8011 was not declared null and void, the trial court should not have dismissed the case on the reason that said tax ordinance had already amended Tax Ordinance No. 7988. As held by this Court in the case of People v. Lim, if an order or law sought to be amended is invalid, then it does not legally exist, there should be no occasion or need to amend it. DISPOSITION Petition is GRANTED. The Orders of the RTC of Manila are hereby REVERSED and SET ASIDE.

NATURE: Petition for Review on Certiorari under Rule 45 FACTS - Petitioner Coca-Cola Bottlers Philippines, Inc. is a corporation engaged in the business of manufacturing and selling beverages and maintains a sales office located in the City of Manila. - The City Mayor of Manila approved Tax Ordinance No. 7988, otherwise known as "Revised Revenue Code of the City of Manila", which increased the tax rates applicable to certain establishments operating within the territorial jurisdiction of the City of Manila, including herein petitioner. - Aggrieved by said tax ordinance, petitioner filed a Petition before the Department of Justice (DOJ), against the City of Manila and its Sangguniang Panlungsod questioning the constitutionality or legality of Section 21 of Tax Ordinance No. 7988. The provision, in effect, impose additional business tax on businesses, including herein petitioner, that are already subject to business tax, which imposition, petitioner claims, "is beyond or exceeds the limitation on the taxing power of the City of Manila. - Then DOJ Secretary Artemio G. Tuquero issued a Resolution declaring Tax Ordinance No. 7988 null and void and without legal effect on the ground of its failure to meet publication requirement as mandated by Sec 188 of LGC. It provides that Within ten (10) days after their approval, certified true copies of all provincial, city and municipal tax ordinances or revenue measures shall be published in full for three (3) consecutive days in a newspaper of local circulation; Provided, however, that in provinces, cities, and municipalities where there are no newspapers or local circulations the same may be posted in at least two (2) conspicuous and publicly accessible places." - Reasoning of the DOJ Secretary a. The use of the word "shall" in both provisions is imperative, operating to impose a duty that may be enforced. b. Strict observance of the said procedural requirement is the only safeguard against any unjust and unreasonable exercise of the taxing powers by ensuring that the taxpayers are notified through publication of the existence of the measure, and are therefore able to voice out their views or objections to the said measure. For, after all, taxes are obligatory

exactions or enforced contributions corollary to taking of property. c. the documentary evidence submitted by petitioner which indubitably show that subject tax ordinance was published only once, i.e., on the May 22, 2000 issue of the Philippine Post. Clearly, therefore, herein respondents failed to satisfy the requirement that said ordinance shall be published for three (3) consecutive days as required by law. - Despite the Resolution of the DOJ declaring Tax Ordinance No. 7988 null and void and the directive of the BLGF that respondents cease and desist from enforcing said tax ordinance, respondents continued to assess petitioner business tax for the year 2001 based on the tax rates prescribed under Tax Ordinance No. 7988. Thus, petitioner filed a Complaint with the RTC of Manila praying that respondents be enjoined from implementing the aforementioned tax ordinance. - During the pendency of the said case, the City Mayor of Manila approved Tax Ordinance No. 8011 entitled, "An Ordinance Amending Certain Sections of Ordinance No. 7988." Said tax ordinance was again challenged by petitioner before the DOJ through a Petition questioning the legality of the aforementioned tax ordinance on the grounds that (1) said tax ordinance amends a tax ordinance previously declared null and void and without legal effect by the DOJ; and (2) said tax ordinance was likewise not published upon its approval in accordance with Section 188 of the Local Government Code of 1991. - Then DOJ Secretary Hernando Perez issued a Resolution declaring Tax Ordinance No. 8011 null and void and legally not existing. ISSUE WON Tax Ordinance No. 7988 is null and void and of no legal effect. HELD YES. Tax Ordinance No. 7988 is null and void as said ordinance was published only for one day in the 22 May 2000 issue of the Philippine Post in contravention of the unmistakable directive of the Local Government Code of 1991. Likewise, the amendatory ordinance (Tax Ordinance 8011) is null and void. The passage of the assailed ordinance did not have the effect of curing the defects of Ordinance No. 7988 which, any way, does not legally exist." Furthermore, even if Tax Ordinance No.

II. Real Property Taxes


2. Collection of Real Property Taxes d. Remedies of Government to Collect

SPS TAN V BANTEGUI GR No 154027 PANGANIBAN; October 24, 2005 giulia


NATURE The case is a Petition for Review under Rule 45 assailing the Decision and Resolution of the Court of Appeals FACTS - Bantegui acquired the property sometime in 1954 and rented it to spouses Caedo, who resided therein until 1994. In 1970, she left for the US and returned to the Philippines in January 1988 and executed her special power of attorney, making Guadalupe B. Bautista her representative, after which, she went back to the United States. - Her taxes on the subject property were paid but only until 1977. The real property taxes from the year 1978 to 1983 amounting to P3,034.99, inclusive of penalties, however, were not paid. - For failure of Bantegui to pay said taxes, the City Treasurer of QC sold said property at public auction to the spouses Capistrano, for the sum of P10,000.00. The Certificate of Sale of Delinquent Property was subsequently issued in their favor. - Since the property was not redeemed within the 1 year redemption period, title to said property was consolidated to the Capistranos. The Capistranos, however, did not take possession of the land or inform

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First, no notice of delinquency or of sale was given to either Gorgonia Bantegui, the delinquent owner; or to her representative. - In the present case, notices either of delinquency or of sale were not given to the delinquent taxpayer. Those notices are mandatory, and failure to issue them invalidates a sale. Because it was clearly in contravention of the requirements under the law and jurisprudence, the subsequent sale of the real property did not make its purchaser the new owner.

the Caedos about the sale or collected any rent from them. They, likewise, did not pay real property taxes thereon. - The property was later sold by the Capistranos to spouses Pereyra for P60,000.00. The Pereyras also did not take possession of the property in question. They, however, mortgaged the same to the Rural Bank of Imus, Cavite, which was annotated on the title of the property. - These transfers were unknown to Bantegui and the Caedos, despite the fact that Evelyn Pereyra is the daughter of the Caedos, as the latter did not inform them about anything concerning these transactions. The actual occupants, the Caedos, considered themselves as tenants of Bantegui. - Bantegui, on her part, applied for administrative reconstitution of her title, as it was lost in a fire. Reconstituted Title No. 28458 was subsequently issued in her name. She likewise paid the realty taxes on the subject property for the years 1987 to 1989. The [c]ity [t]reasurer of Quezon City, however, refused to accept her payment for the year 1990. - On May 3, 1990, said property was again sold by the Pereyras to the spouses Tan, with the latter paying the amount of P300,000.00 to the Rural Bank of Imus, Cavite for the release of the mortgage per agreement by the parties. They likewise paid the overdue taxes and other expenses incurred by the Pereyras pertaining to said mortgage. The Tans, like their predecessors, did not take immediate possession of the property [or inform] the occupants (Caedos) of their title to the land. Towards the latter part of 1990, however, the Tans, thru their lawyer, informed the Caedos of their ownership over the property and demanded that the Caedos vacate the property. They subsequently filed an action for ejectment against the Caedos before the MTC of QC where the TC rules in favor of the Tans. The Caedos then interposed an appeal, which was remanded to the same Court for further proceedings, and for failure of the Caedos to appear during the hearing of the case, they were declared in default and were subsequently ejected from the property, when the house that they erected thereon was demolished. Bantegui, thru her sister Guadalupe Bautista, and joined by the spouses Caedo, filed a Complaint for Annulment of Sale, Quieting of Title, Injunction and

Damages with the RTC. After the trial court rendered its Decision in favor of respondents, petitioners appealed to the CA. CA affirmed TC judgment. Ruling of the Court of Appeals In declaring that petitioners were not purchasers in good faith and had no better right to the subject property than that of any of their predecessors-ininterest, the appellate court gave the following reasons. First, the auction sale was tainted with irregularities: no notices of delinquency and of sale were sent to the owner. Second, the owner continued to pay realty taxes on the property, even after the date of the sale. She would not have done so had she been aware that it had already been auctioned off. Third, the selling price was grossly inadequate and, when viewed together with the other facts and circumstances, would render the sale itself void. Fourth, the purchasers failed to take possession of the property, pay the real taxes, and inform the lessees of the purchase. As a result, the latter continued to pay rent to the owner. ISSUE WON the auction sale was valid HELD The petition has no merit. Ratio The auction sale of land to satisfy alleged delinquencies in the payment of real estate taxes derogates or impinges on property rights and due process. Thus, the steps prescribed by law for the sale, particularly the notices of delinquency and of sale, must be followed strictly. Failure to observe those steps invalidates the sale. Reasoning The tax sale did not conform to the requirements prescribed under PD 4641, otherwise known as the Real Property Tax Code.
1
SECTION 65. Notice of delinquency in the payment of the real property tax. Upon the real property tax or any installment thereof becoming delinquent, the x x x city treasurer shall immediately cause notice of the fact to be posted at the main entrance of the x x x city hall and in a public and conspicuous place in each barrio of the x x x city as the case may be. The notice of delinquency shall also be published once a week for three consecutive weeks, in a newspaper of general circulation in the x x x city, if any there be, and announced by a crier at the market place for at least three market days.

Such notice shall specify the date upon which tax became delinquent, and shall state that personal property may be seized to effect payment. It shall also state that, at any time, before the seizure of personal property, payment may be made with penalty in accordance with the next following section, and further, that unless the tax and penalties be paid before the expiration of the year for which the tax is due, or the tax shall have been judicially set aside, the entire delinquent real property will be sold at public auction, and that thereafter the full title to the property will be and remain with the purchaser, subject only to the right of delinquent taxpayer or any other person in his behalf to redeem the sold property within one year from the date of sale. SECTION 73. Advertisement of sale of real property at public auction. After the expiration of the year for which the tax is due, the x x x city treasurer shall advertise the sale at public auction of the entire delinquent real property, except real property mentioned in subsection (a) of Section forty hereof, to satisfy all the taxes and penalties due and the costs of sale. Such advertisement shall be made by posting a notice for three consecutive weeks at the main entrance of the x x x city or x x x hall in the case of cities, and in a public and conspicuous place in barrio or district wherein the property is situated, in English, Spanish and the local dialect commonly used, and by announcement at least three market days at the market by crier, and, in the discretion of the x x x city treasurer, by publication once a week for three consecutive weeks in a newspaper of general circulation published in the x x x city. The notice, publication, and announcement by crier shall state the amount of the taxes, penalties and costs of sale; the date, hour, and place of sale, the name of the taxpayer against whom the tax was assessed; and the kind or nature of property and, if land, its approximate areas, lot number, and location stating the street and block number, district or barrio, municipality and the province or city where the property to be sold is situated. Copy of the notice shall forthwith be sent either by registered mail or by messenger, or through the barrio captain, to the delinquent taxpayer, at his address as shown in the tax rolls or property tax record cards of the x x x city where the property is located, or at his residence, if known to said treasurer or barrio captain: Provided, however, That a return of the proof of service under o a t h s h a l l b e f i l e d b y t h e p e r s o n m a k i n g t h e service with the x x x city treasurer concerned.

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derived income therefrom in the form of rentals and other local taxes assumed by the Systems Plus. - Systems Plus and the Consolidated Assembly and Pair Management entered into separate agreements which in effect novated their existing contracts of lease on the subject parcels of land and converted them to donations of the beneficial use thereof. - Systems Plus wrote City Assessor informing the latter of the new agreements and seeking a reconsideration of earlier denial of the application for tax exemption. They no longer received income by way of rentals from the subject properties, accompanied by the corresponding board resolutions, Again, the application was denied. - Systems Plus filed a petition for mandamus with RTC which, however, dismissed it for being premature. Its timely motion for reconsideration having been denied, Systems Plus filed the instant petition for certiorari imputing grave abuse of discretion on the part of the trial court when it ruled: (1) that mandamus does not lie and (2) that Systems Plus failed to exhaust available administrative remedies. ISSUE WON mandamus is the proper remedy HELD NO. Under Section 226 of RA 7160,[12] the remedy of appeal to the Local Board of Assessment Appeals is available from an adverse ruling or action of the provincial, city or municipal assessor in the assessment of property. - The Systems Plus cannot bypass the authority of the concerned administrative agencies and directly seek redress from the courts even on the pretext of raising a supposedly pure question of law without violating the doctrine of exhaustion of administrative remedies. - Hence, when the law provides for remedies against the action of an administrative board, body, or officer, as in the case at bar, relief to the courts can be made only after exhausting all remedies provided therein. - Before seeking the intervention of the courts, it is a precondition that Systems Plus should first avail of all the means afforded by the administrative processes. - Besides, mandamus does not lie against the respondent City Assessor in the exercise of his function of assessing properties for taxation purposes. While its duty to conduct assessments is a ministerial function, the actual exercise thereof is necessarily discretionary.

- A certificate of title under the Torrens system serves as evidence of an indefeasible title to the property in favor of the person whose name appears on it. While it is true that Transfer Certificates of Title have already been issued in the names of the subsequent purchasers, they should nonetheless be invalidated. Considering the failure to abide by the mandatory requirements of a proceeding in personam, no better title than that of the original owner can be assumed by the transferees. - A gross inadequacy in the price is of no moment either. It is true that the lower the price, the easier it will be for the owner to effect redemption; but the fact remains that without the mandatory notices, the registered owner will never be given the opportunity to redeem the property, despite the lapse of one year from the date the sale is registered. - Second, only a copy of the Resolution of RTC-QC, confirming the final bill of sale to the Capistranos, has been submitted by the city treasurer to show the validity of the sale.

possession of the owners duplicate copy of the Certificate of Title. She was even allowed to undertake an administrative reconstitution of her file copy after its destruction by fire. Accordingly, the Register of Deeds issued a reconstituted title in her name, in which the property had been registered as early as 1959. For reasons known only to the alleged purchasers, no attempt was even made to have the title immediately cancelled. It is basic that registration does not vest title, which is a mere evidence of title to a property. Disposition WHEREFORE, the Petition is hereby DENIED, and the assailed Decision and Resolution are AFFIRMED. Costs against petitioners.

- Third, Section 80 of PD 464 provides that any

balance of the proceeds of the sale left after deducting the amount of the taxes and penalties due and the costs of sale, shall be returned to the owner or his representative. Again contrary to the mandate of the law, the balance of the proceeds from the tax sale was not even returned to Respondent Bantegui or her representative after the issuance of the final bill of sale. The failure to return the proceeds reinforced the apparent irregularity not only in the conduct of the tax sale, but also in its subsequent disposition. - Fourth, petitioners were not innocent purchasers for value. Despite their awareness of defects in their title, they still failed to investigate or take the necessary precaution. In the present case, the exercise of the right of possession over the property was attempted by none of the purchasers, except petitioners.Furthermore, nothing on the record shows that, aside from Respondent Bantegui, the purchasers paid real property taxes, as required of every registered property owner. The tax on real property for any year shall attach to, become due and payable from, and be the personal liability of its owner at the beginning of the year. - Finally, Respondent Bantegui remained in continuous

B. Taxpayers Remedies 1. Contesting the assessment of land value a. Appeal to the Local Board of Assessment Appeals
SYSTEMS PLUS COMPUTER COLLEGE OF CALOOCAN CITY v. CALOOCAN CITY GR No. 122451 CORONA; October 12, 2000 glaisa
FACTS - Systems Plus Computer College is a non-stock and non-profit educational institution organized and established in 1997. As such, it enjoys property tax exemption from the local government on its buildings but not on the parcels of land which Systems Plus is renting for P5,000 monthly from its sister companies, Consolidated Assembly and Pair Management and Development Corporation. - Systems Plus requested Caloocan city government to extend tax exemption to the parcels of land claiming that the same were being used actually, directly and exclusively for educational purposes. - City government denied the request on the ground that the subject parcels of land were owned by Consolidated Assembly and Pair Management which

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Milling, whose properties were foreclosed and held for auction by the Asset Privitization Trust (APT). APT set floor bid price at P355million. Robina acquired the properties for P464million. Among the properties acquired were machineries located in the millsite of Cagayan Milling - shortly after, the provincial assessor sent a notice of assessment of real property to Robina, covering the machineries installed in the millsite, based on the market value of P391.6m and assessed value of P313.3m - Robina appealed to the LBAA, contending that the assessment should not be based on the APT-set floor bid price alone, but should also consider other pricing factors like goodwill and future business potential. - LBAA affirmed the assessment of the provincial assessor, but modified the amount (it used the APT-set floor bid price then deducted the value of all other properties not covered by the assessment) to market value of P260m and assessed value of P208m. Resolution was given April 1, 1992, and given to Robina on April 18, 1992. - Robina then prepared an appeal to the CBAA, but it was only on November 1992 that the same was filed in the CBAA. Naturally, the LBAA and provincial assessor moved to dismiss for being time-barred (past the 30day period for appeal to CBAA). CBAA dismissed - Robina filed (actually with SC, but SC referred to CA) a petition on certiorari against CBAA. CA upheld the dismissal and denied the petition. Hence, the present petition ISSUE 1. WON there was any error in dismissing the appeal of Robina HELD 1. NO Ratio Robina failed to show that the use by the LBAA and CBAA of the APT floor bid price, pursuant to Sec.3(n) of the RPTC was incorrect and done in bad faith. The method used by the LBAA and CBAA cannot be deemed erroneous since there is no rigid rule for the valuation of property, which is affected by a multitude of circumstances and which rules could not foresee nor provide for. LBAA and CBAA were not precluded from adopting various approaches to value determination, including adopting the APT floor bid price for Robinas properties. Further, the appeal was time-barred

- Mandamus may not be availed of to direct the exercise of judgment or discretion in a particular way, or to retract or reverse an action already taken in the exercise of either.

b. Appeal to the Central Board of Assessment Appeals


CALTEX V. CBAA AND CITY ASSESSOR OF PASAY 114 SCRA 196 May 31, 1982 tito
FACTS - Caltex was assessed realty tax on machinery & equipment installed in its gas stations on leased lands. (underground tanks, elevanted tanks, elevated water tanks, water tanks, gasoline pumps, etc.) - Those are loaned by Caltex to gas station operators under lease agreement. The operators must return them. The lessor of the land doesnt become the owner of the machines & equipment. - City Assessor of Pasay said those are taxable realty. City Board of Tax Appeals said theyre personalty. - Assessor appealed to Central Board of Assessment Appeals. - Central Board of Assessment Appeals said theyre real prop. - Caltex filed this certiorari petition. - The Solicitor General contends that the CTA has exclusive appellate jurisdiction over the case. and hence ISSUE 1. WON CTA has exclusive jurisdiction 2. WON the equipment / machineries are real or personal property HELD 1. No. The Solicitor General's contention that the Court of Tax Appeals has exclusive appellate jurisdiction over this case is not correct. \A hen Republic Act No. 1125 created the Tax Court in 1954, there was as yet no Central Board of Assessment Appeals. Section 7(3) of that law in providing that the Tax Court had jurisdiction to review by appeal decisions of provincial or city boards of assessment appeals had in mind the local boards of assessment appeals but not the Central

Board of Assessment Appeals which under the Real Property Tax Code has appellate jurisdiction over decisions of the said local boards of assessment appeals and is, therefore, in the same category as the Tax Court. Section 36 of the Real Property Tax Code provides that the decision of the Central Board of Assessment Appeals shall become final and executory after the lapse of fifteen days from the receipt of its decision by the appellant, Within that fifteen-day period, a petition for reconsideration may be filed. The Code does not provide for the review of the Board's decision by this Court. Consequently, the only remedy available for seeking a review by this Court of the decision of the Central Board of Assessment Appeals is the special civil action of certiorari, the recourse resorted to herein by Caltex (Philippines), Inc. 2.REAL PROP - bec as appurtenances to the gas station, theyre necessary to the operation of the gas station. - bec improvements on land are commonly taxed as realty even though for some purposes they might be considered personalty. Standard Oil v. Jaramillo

CHAVEZ V. ONGPIN (supra, Local Government p. 14) owen CAGAYAN ROBINA SUGAR MILLING V CA (CBAA, LBAA, PROVINCIAL ASSESSOR OF CAGAYAN) GR 122451 QUISUMBING; October 12, 2000 Maia
NATURE Petition for certiorari decision of CA petition for certiorari of Cagayan Robina) (dismissing

FACTS - Cagayan Robina Sugar Milling (Robina for short) was the highest bidder for the properties of Cagayan Sugar

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In addition, Municipal Treasurer Alon also sent a formal letter to MERALCO reiterating his demand for tax payment. Again, MERALCO did not pay. -Accordingly, after issuing the requisite certification of non-payment of real property taxes and complying with the additional requirement of public posting of the notice of delinquency, Municipal Treasurer Eduardo A. Alon issued warrants of garnishment, copies of which were served on MERALCO on 10 October 1990, ordering the attachment of the bank deposits of MERALCO with the Philippine Commercial and Industrial Bank (PCIB), Metropolitan Bank and Trust Company (METROBANK) and the Bank of the Philippine Islands (BPI) to the extent of its unpaid real property taxes. -MERALCO filed before the RTC of Makati, Metro Manila a Petition for Prohibition with Prayer for Writ of Preliminary Mandatory Injunction and/or Temporary Restraining order (TRO) praying, among others, that a TRO be issued to enjoin the Municipal Treasurer of Muntinlupa from enforcing the warrants of garnishment. -RTC issued a TRO which was modified to the effect that the warrants of garnishment against the bank accounts shall be in full force and effect, provided, that the Municipal Treasurer shall not in the meantime collect, receive or withdraw the frozen bank deposits; and that MERALCO can withdraw from the frozen deposits provided that it does not leave a balance less than the tax claim of the Municipality of Muntinlupa. -Municipal Treasurer filed a Motion to Dismiss on the grounds of: (1) lack of jurisdiction since, under Sec. 64 of the Real Property Tax Code, courts are prohibited from entertaining any suit assailing the validity of a tax assessed thereunder until the taxpayer shall gave paid, under protest, the tax assessed against him ISSUE: WON RTC has jurisdiction over a petition for prohibition which seeks to set aside the warrants of garnishment over the bank deposits of petitioner MERALCO without payment under protest of the tax assessed as required in Sec. 64 of the Real Property Tax Code HELD: No. The trial court has no jurisdiction to entertain a Petition for Prohibition absent petitioner's payment, under protest, of the tax assessed as required by Sec. 64 of the RPTC. Payment of the tax assessed under protest, is a condition sine qua non before the trial

Reasoning Note that the real property tax being assessed and collected here is for 1990. Hence, the applicable law is the Real Property Tax Code (PD464), and not the Local Government Code (RA7160). -the main contention of Robina is that the method by which the LBAA arrived at the assessment is not sanctioned by law, insofar as the RPTC provides a formula for reaching market value of machineries, viz: (remaining economic value/ economic life) x replacement cost (sec. 28, RPTC) - however, sec.28 must be read in consonance with sec.3(n) of RPTC, which defines market value. Here, LBAA and CBAA are not precluded from adopting various approaches to value determination, including adopting the APT "floor bid price" for the properties - Valuation on the basis of a floor bid price is not bereft of any basis in law. One of the approaches to value is the Sales Analysis Approach or the Market Data Approach where the source of market data for valuation is from offer of sales or bids of real property. Valuation based on the floor bid price belongs to this approach, pursuant to Section 3(n) - Worthy of note, Robina has not shown that the current market value of its properties would be significantly lower if its proposed formula is adopted. A party challenging an appraiser's finding of value is required not only to prove that the appraised value is erroneous but also what the proper value is. - further, the appeal to the CBAA was time-barred. The RPTC provides: Where the owner or administrator of a property or an assessor is not satisfied with the decision of the LBAA, he may, within 30days from the receipt of the decision, appeal to the CBAA. - Robina had only until May 18, 1992, to appeal the local board's resolution to the CBAA. However, it only filed its appeal with the CBAA on November 25, 1992, way beyond the period to perfect an appeal. No error was committed by CBAA when it dismissed petitioner's appeal for having been filed out of time and CA was correct in affirming the dismissal. - Robina contends that the appeal period doesnt apply in this case because of the rule that an assessment of a provincial assessor that is void ab initio, the prescriptive period to appeal to the LBAA is suspended. However, this argument is off-tangent as the appeal found to be time-barred in this case is the appeal to the CBAA, not to the LBAA. - Well-entrenched is the rule that the perfection of an appeal within the period therefor is both mandatory and jurisdictional, and that failing in this regard

renders the decision final and executory. Disposition Petition is denied. Decision affirmed

2. Payment of Real Property Tax under Protest


MANILA ELECTRIC COMPANY V BARLIS G.R. No. 114231 DE LEON: May 18, 2001 da
FACTS: -MERALCO erected four (4) power generating plants in Sucat, Muntinlupa which it declared in its tax declarations including the buildings thereon and the machineries and equipment therein. From 1975 to 1978 MERALCO paid the real property taxes on the said properties on the basis of their assessed value as stated in the tax declarations. MERALCO sold all the power-generating plants including the landsite to the NAPOCOR. -In 1985, the Offices of the Municipal Assessor and Municipal Treasurer of Muntinlupa discovered, that MERALCO, for the period beginning 1 January 1976 to 29 December 1978, misdeclared and/or failed to declare for taxation purposes a number of real properties, consisting of several equipment and machineries, found in the said power plants. These machineries were reflected in the Deed of Sale. -The Municipal Assessor of Muntinlupa then declared and assessed the subject real properties for taxation purposes .. The Municipal Treasurer of Muntinlupa issued several collection notices to MERALCO, ordering it to pay the deficiency in the real property taxes covering the machineries and equipment found in the said power plants. MERALCO did not pay. -BLGF-DOF conducted a number of hearings with both MERALCO and the Municipality of Muntinlupa participating and issued a Letter-Endorsement declaring MERALCO liable to pay the deficiency or delinquent real property taxes claimed by the Municipality. -Municipal Treasurer Eduardo A. Alon forwarded a supplemental collection notice to MERALCO demanding the immediate payment of 36 Million pesos of unpaid real property taxes inclusive of penalties and accrued interest.

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for the issuance of a temporary restraining order (TRO) and preliminary injunction. On October 15, 2007, the trial court issued a TRO for 20 days enjoining petitioner from proceeding with the public auction of Petrons properties. Petitioner thereafter filed an urgent motion for the immediate dissolution of the TRO, followed by a motion to dismiss Petrons petition for prohibition. On November 5, 2007, the trial court issued the assailed Order granting Petrons petition for issuance of writ of preliminary injunction, subject to Petrons posting of a P444,967,503.52 bond in addition to its previously posted surety bond of P1,286,057,899.54, to complete the total amount equivalent to the revised assessment of P1,731,025,403.06. The trial court held that in scheduling the sale of the properties despite the pendency of Petrons appeal and posting of the surety bond with the LBAA, petitioner deprived Petron of the right to appeal. Hence, this direct recourse to the SC. ISSUE 1. Whether or not the petitioner properly invoked Rule 65 on certiorari (note that this case is already under the remedies part of our outline). 2. Whether or not preliminary injunction was properly granted in light of the settled rule that taxes are the lifeblood of the nation, hence the immediacy of timely and speedy collection. 3. Whether or not the remedies availed of by Petron have statutory basis. RULING 1. NO, since this involves purely a question of law, the proper vehicle would be petition for review on certiorari under Rule 45. RATIO Rule 65 is an independent action that cannot be availed of as a substitute for the lost remedy of an ordinary appeal, including that under Rule 45,

court could assume jurisdiction over the petition and failure to do so, the RTC has no jurisdiction to entertain it. The restriction upon the power of courts to impeach tax assessment without a prior payment, under protest, of the taxes assessed is consistent with the doctrine that taxes are the lifeblood of the nation and as such their collection cannot be curtailed by injunction or any like action; otherwise, the state or, in this case, the local government unit, shall be crippled in dispensing the needed services to the people, and its machinery gravely disabled.

(1) the subject assessment pertained to properties that have been previously declared; (2) and that the assessment covered periods of more than 10 years which is not allowed under the Local Government Code (LGC). According to Petron, the possible valid assessment pursuant to Section 222 of the LGC could only be for the years 1997 to 2006. Petron further contended that the fair market value or replacement cost used by petitioner included items which should be properly excluded; that prompt payment of discounts were not considered in determining the fair market value; and that the subject assessment should take effect a year after or on January 1, 2008. In the same petition, Petron sought the approval of a surety bond in the amount of P1,286,057,899.54. On August 22, 2007, Petron received from petitioner a final notice of delinquent real property tax with a warning that the subject properties would be levied and auctioned should Petron fail to settle the revised assessment due. Consequently, Petron sent a letter to petitioner stating that in view of the pendency of its appeal with the LBAA, any action by the Treasurers Office on the subject properties would be premature. However, petitioner replied that only Petrons payment under protest shall bar the collection of the realty taxes due, pursuant to Sections 231 and 252 of the LGC. With the issuance of a Warrant of Levy against its machineries and pieces of equipment, Petron filed on September 24, 2007, an urgent motion to lift the final notice of delinquent real property tax and warrant of levy with the LBAA. It argued that the issuance of the notice and warrant is premature because an appeal has been filed with the LBAA, where it posted a surety bond in the amount of P1,286,057,899.54. On October 3, 2007, Petron received a notice of sale of its properties scheduled on October 17, 2007. Consequently, on October 8, 2007, Petron withdrew its motion to lift the final notice of delinquent real property tax and warrant of levy with the LBAA. On even date, Petron filed with the Regional Trial Court of Bataan the instant case for prohibition with prayer

TALENTO VS. JUDGE ESCALADA AND PETRON G.R. No. 180884 YNARES-SANTIAGO, J. (2008) SJ
NATURE Certiorari under Rule 65 of the Rules of Court assailing the November 5, 2007 Order of the Regional Trial Court of Bataan, Branch 3 granting the petition for the issuance of a writ of preliminary injunction in favor of Petron FACTS On June 18, 2007, Petron received from the Provincial Assessors Office of Bataan a notice of revised assessment over its machineries and pieces of equipment in Lamao, Limay, Bataan. Petron was given a period of 60 days within which to file an appeal with the Local Board of Assessment Appeals (LBAA). Based on said revised assessment, petitioner Provincial Treasurer of Bataan issued a notice informing Petron that as of June 30, 2007, its total liability is P1,731,025,403.06, representing deficiency real property tax due from 1994 up to the first and second quarters of 2007. On August 17, 2007, Petron filed a petition with the LBAA contesting the revised assessment on the grounds that

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refuse or to hold in abeyance the payment of taxes. In the instant case, we note that respondent contested the revised assessment on the following grounds: that the subject assessment pertained to properties that have been previously declared; that the assessment covered periods of more than 10 years which is not allowed under the LGC; that the fair market value or replacement cost used by petitioner included items which should be properly excluded; that prompt payment of discounts were not considered in determining the fair market value; and that the subject assessment should take effect a year after or on January 1, 2008. To our mind, the resolution of these issues would have a direct bearing on the assessment made by petitioner. Hence, it is necessary that the issues must first be passed upon before the properties of respondent is sold in public auction. 3. YES RATIO Although generally, appeal does not suspend payment, levy, distraint or sale of property to satisfy tax liability, the law empowers our courts at any stage of the processing to suspend the collection and require the taxpayer either to deposit the amount claimed or to file a surety bond for not more than double the amount with the Court. THE GROUND TO BE INVOKED IS THAT THE COLLECTION BY GOVERNMENT AGENCIES MAY JEOPARDIZE THE INTEREST OF THE GOVERNMENT AND/OR THE TAXPAYER REASONING The Rules of Procedure of the LBAA, particularly Section 7, Rule V thereof, provides: Section 7. Effect of Appeal on Collection of Taxes. An appeal shall not suspend the collection of the corresponding realty taxes on the real property subject of the appeal as assessed by the Provincial, City or Municipal Assessor, without prejudice to the subsequent adjustment depending upon the outcome of the appeal. AN APPEAL MAY BE ENTERTAINED BUT THE HEARING THEREOF SHALL BE DEFERRED UNTIL THE CORRESPONDING TAXES DUE ON THE REAL PROPERTY SUBJECT OF THE APPEAL SHALL HAVE BEEN PAID UNDER PROTEST OR THE

especially if such loss or lapse was occasioned by ones own neglect or error in the choice of remedies. REASONING In the instant case, petitioner received the questioned order of the trial court on November 6, 2007, hence, she had only up to November 21, 2007 to file the petition. However, the same was filed only on January 4, 2008, or 43 days late. Consequently, petitioners failure to file an appeal within the reglementary period rendered the order of the trial court final and executory. The perfection of an appeal in the manner and within the period prescribed by law is mandatory. Failure to conform to the rules regarding appeal will render the judgment final and executory and beyond the power of the Courts review. Jurisprudence mandates that when a decision becomes final and executory, it becomes valid and binding upon the parties and their successors in interest. Such decision or order can no longer be disturbed or reopened no matter how erroneous it may have been. Petitioners resort to a petition under Rule 65 is obviously a play to make up for the loss of the right to file an appeal via a petition under Rule 45. However, a special civil action under Rule 65 can not cure petitioners failure to timely file a petition for review on certiorari under Rule 45 of the Rules of Court. Rule 65 is an independent action that cannot be availed of as a substitute for the lost remedy of an ordinary appeal, including that under Rule 45, especially if such loss or lapse was occasioned by ones own neglect or error in the choice of remedies. Moreover, even if we assume that a petition under Rule 65 is the proper remedy, the petition is still dismissible. We note that NO MOTION FOR RECONSIDERATION OF THE NOVEMBER 5, 2007 ORDER OF THE TRIAL COURT WAS FILED PRIOR TO THE FILING OF THE INSTANT PETITION. The settled rule is that a motion for reconsideration is a sine qua non condition for the filing of a petition for certiorari. The purpose is to grant the public respondent an opportunity to correct any actual or perceived error attributed to it by the re-

examination of the legal and factual circumstances of the case. Petitioners failure to file a motion for reconsideration deprived the trial court of the opportunity to rectify an error unwittingly committed or to vindicate itself of an act unfairly imputed. Besides, a motion for reconsideration under the present circumstances is the plain, speedy and adequate remedy to the adverse judgment of the trial court. Petitioner also blatantly disregarded the rule on hierarchy of courts. Although the Supreme Court, Regional Trial Courts, and the Court of Appeals have concurrent jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction, such concurrence does not give the petitioner unrestricted freedom of choice of court forum. Recourse should have been made first with the Court of Appeals and not directly to this Court. 2. YES RATIO The requisites for the issuance of a writ of preliminary injunction were met (1) the existence of a clear and unmistakable right that must be protected; and (2) an urgent and paramount necessity for the writ to prevent serious damage. REASONING The urgency and paramount necessity for the issuance of a writ of injunction becomes relevant in the instant case considering that what is being enjoined is the sale by public auction of the properties of Petron amounting to at least P1.7 billion and which properties are vital to its business operations. If at all, the repercussions and far-reaching implications of the sale of these properties on the operations of Petron merit the issuance of a writ of preliminary injunction in its favor. We are not unaware of the doctrine that taxes are the lifeblood of the government, without which it can not properly perform its functions; and that appeal shall not suspend the collection of realty taxes. However, there is an exception to the foregoing rule, i.e., where the taxpayer has shown a clear and unmistakable right to

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franchise, as other persons or corporations are now or hereafter may be required by law to pay. In addition thereto, the grantee, its successors or assigns shall pay a franchise tax equivalent to three percent (3%) of all gross receipts of the telephone or other telecommunications businesses transacted under this franchise by the grantee, its successors or assigns and the said percentage shall be in lieu of all taxes on this franchise or earnings thereof. Provided, That the grantee, its successors or assigns shall continue to be liable for income taxes payable under Title II of the National Internal Revenue Code It is undisputed that within the territorial boundary of Quezon City, Bayantel owned several real properties on which it maintained various telecommunications facilities. In 1993, the government of Quezon City, pursuant to the taxing power vested on local government units by Section 5, Article X of the 1987 Constitution, , enacted the Quezon City Revenue Code (QCRC),5 imposing, under Section 5 thereof, a real property tax on all real properties in Quezon City. Furthermore, much like the LGC, the QCRC, under its Section 230, withdrew tax exemption privileges in general New tax declarations for Bayantel were given. Meanwhile, on March 16, 1995, Rep. Act No. 7925,6 otherwise known as the "Public Telecommunications Policy Act of the Philippines," envisaged to level the playing field among telecommunications companies, took effect. On January 7, 1999, Bayantel wrote the office of the City Assessor seeking the exclusion of its real properties in the city from the roll of taxable real properties. With its request having been denied, Bayantel interposed an appeal with the Local Board of Assessment Appeals (LBAA). And, evidently on its firm belief of its exempt status, Bayantel did not pay the real property taxes assessed against it by the Quezon City government. On account thereof, the Quezon City Treasurer sent out notices of delinquency for the total amount of P43,878,208.18, followed by the issuance of several warrants of levy against Bayantels properties preparatory to their sale at a public auction set on July 30, 2002.

PETITIONER SHALL HAVE GIVEN A SURETY BOND, subject to the following conditions: (1) the amount of the bond must not be less than the total realty taxes and penalties due as assessed by the assessor nor more than double said amount; (2) the bond must be accompanied by a certification from the Insurance Commissioner (a) that the surety is duly authorized to issue such bond; (a) that the surety bond is approved by and registered with said Commission; and (c) that the amount covered by the surety bond is within the writing capacity of the surety company; and (3) the amount of the bond in excess of the surety companys writing capacity, if any, must be covered by Reinsurance Binder, in which case, a certification to this effect must likewise accompany the surety bond. Corollarily, Section 11 of Republic Act No. 9282,] which amended Republic Act No. 1125 (The Law Creating the Court of Tax Appeals) provides: Section 11. Who may Appeal; Mode of Appeal; Effect of Appeal; xxxx No appeal taken to the Court of Appeals from the Collector of Internal Revenue x x x shall suspend the payment, levy, distraint, and/or sale of any property for the satisfaction of his tax liability as provided by existing law. PROVIDED, HOWEVER, THAT WHEN IN THE OPINION OF THE COURT THE COLLECTION BY THE AFOREMENTIONED GOVERNMENT AGENCIES MAY JEOPARDIZE THE INTEREST OF THE GOVERNMENT AND/OR THE TAXPAYER the Court at any stage of the processing may suspend the collection and require the taxpayer either to deposit the amount claimed or to file a surety bond for not more than double the amount with the Court. - On January 1, 1992, Rep. Act No. 7160, otherwise known as the "Local Government Code of 1991" (LGC), took effect. Section 232 of the Code grants local government units within the Metro Manila Area the power to levy tax on real properties: .Except as provided herein, any exemption from payment of real property tax previously granted to, or enjoyed by, all persons, whether natural or juridical, including government-owned-or-controlled corporations is hereby withdrawn upon effectivity of this Code On July 20, 1992, barely few months after the LGC took effect, Congress enacted Rep. Act No. 7633, amending Bayantels original franchise. The amendatory law (Rep. Act No. 7633) contained the following tax provision: SEC. 11. The grantee, its successors or assigns shall be liable to pay the same taxes on their real estate, buildings and personal property, exclusive of this

CITY GOVERNMENT OF QUEZON CITY VS BAYANTEL G.R. NO. 062015 Garcia; March 6, 2006 mel
NATURE Petition for review on certiorari FACTS -Bayan Telecommunications, Inc. (Bayantel) is a legislative franchise holder under Republic Act (Rep. Act) No. 32594 to establish and operate radio stations for domestic telecommunications, radiophone, broadcasting and telecasting. Rep. Act No. 3259, embodied in Section 14 thereof, states: (a) The grantee shall be liable to pay the same taxes on its real estate, buildings and personal property, exclusive of the franchise, as other persons or corporations are now or hereafter may be required by law to pay. ..

b. Protest to be filed with the LBAA: within 60 days from receipt of assessment; 120 days to decide

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Threatened with the imminent loss of its properties, Bayantel immediately withdrew its appeal with the LBAA and instead filed with the RTC of Quezon City a petition for prohibition with an urgent application for a temporary restraining order (TRO) and/or writ of preliminary injunction, thereat docketed as Civil Case No. Q-02-47292, which was raffled to Branch 227 of the court. On July 29, 2002, or in the eve of the public auction scheduled the following day, the lower court issued a TRO, followed, after due hearing, by a writ of preliminary injunction via its order of August 20, 2002. The lower court declared the real properties exempt from taxation after hearing the merits. MFR was denied. ISSUE Whether or not Bayantel is required to exhaust administrative remedies before seeking judicial relief with the trial court. HELD NO RATIO Petitions for prohibition are governed by the following provision of Rule 65 of the Rules of Court: SEC. 2. Petition for prohibition. When the proceedings of any tribunal, are without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent to desist from further proceedings in the action or matter specified therein, or otherwise, granting such incidental reliefs as law and justice may require.

With the reality that Bayantels real properties were already levied upon on account of its nonpayment of real estate taxes thereon, the Court agrees with Bayantel that an appeal to the LBAA is not a speedy and adequate remedy within the context of the aforequoted Section 2 of Rule 65. This is not to mention of the auction sale of said properties already scheduled on July 30, 2002. Moreover, one of the recognized exceptions to the exhaustion- of-administrative remedies rule is when, as here, only legal issues are to be resolved. In fact, the Court, cognizant of the nature of the questions presently involved, gave due course to the instant petition. As the Court has said in Ty vs. Trampe:7 xxx. Although as a rule, administrative remedies must first be exhausted before resort to judicial action can prosper, there is a well-settled exception in cases where the controversy does not involve questions of fact but only of law. xxx. Lest it be overlooked, an appeal to the LBAA, to be properly considered, required prior payment under protest of the amount of P43,878,208.18, a figure which, in the light of the then prevailing Asian financial crisis, may have been difficult to raise up. Given this reality, an appeal to the LBAA may not be considered as a plain, speedy and adequate remedy. It is thus understandable why Bayantel opted to withdraw its earlier appeal with the LBAA and, instead, filed its petition for prohibition with urgent application for injunctive relief in Civil Case No. Q-02-47292. The remedy availed of by Bayantel under Section 2, Rule 65 of the Rules of Court must be upheld.

California Manufacturing Co. v. City of Las Pias, id. NPC v. CBA eva

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