EN BANC [G.R. No. 112099, February 21, 1995] ACHILLES C. BERCES, SR., PETITIONER, VS. HON.

EXECUTIVE SECRETARY TEOFISTO T. GUINGONA, JR., CHIEF PRESIDENTIAL LEGAL COUNSEL ANTONIO CARPIO AND MAYOR NAOMI C. CORRAL OF TIWI, ALBAY, RESPONDENTS. DECISION
QUIASON, J.: This is a petition for certiorari and prohibition under Rule 65 of the Revised Rules of Court with prayer for mandatory preliminary injunction, assailing the Orders of the Office of the President as having been issued with grave abuse of discretion. Said Orders directed the stay of execution of the decision of the Sangguniang Panlalawigan suspending the Mayor of Tiwi, Albay from office: I Petitioner filed two administrative cases against respondent Naomi C. Corral, the incumbent Mayor of Tiwi, Albay with the Sangguniang Panlalawigan of Albay, to wit: (1) Administrative Case No. 02-92 for abuse of authority and/or oppression for non-payment of accrued leave benefits due the petitioner amounting to P36,779.02. (2) Administrative Case No. 05-92 for dishonesty and abuse of authority for installing a water pipeline which is being operated, maintained and paid for by the municipality to service respondent's private residence and medical clinic. On July 1, 1993, the Sangguniang Panlalawigan disposed the two Administrative cases in the following manner: "(1) Administrative Case No. 02-92 ACCORDINGLY, respondent Mayor Naomi C. Corral of Tiwi, Albay, is hereby ordered to pay Achilles Costo Berces, Sr. the sum of THIRTYSIX THOUSAND AND SEVEN HUNDRED SEVENTY-NINE PESOS and TWO CENTAVOS (P36,779.02) per Voucher No. 352, plus legal interest due thereon from the time it was approved in audit up to final payment, it being legally due the Complainant representing the money value of his leave credits accruing for services rendered in the municipality from 1988 to 1992 as a duly elected Municipal Councilor. IN ADDITION, respondent Mayor NAOMI C. CORRAL is hereby ordered SUSPENDED from office as Municipal Mayor of Tiwi, Albay, for a period of two (2) months, effective upon receipt hereof for her blatant abuse of authority coupled with oppression as a public example to deter others similarly inclined from using public office as a tool for personal vengeance, vindictiveness and oppression at the expense of the Taxpayer" (Rollo, p. 14). "(2) Administrative Case No. 05-92. WHEREFORE, premises considered, respondent Mayor NAOMI C. CORRAL of Tiwi, Albay, is hereby sentenced to suffer the penalty of SUSPENSION from office as Municipal Mayor thereof for a period of THREE (3) MONTHS beginning after her service of the first penalty of suspension ordered in Administrative Case No. 02-92. She is likewise ordered to reimburse the Municipality of Tiwi One-half of the amount the latter have paid for electric and water bills from July to December 1992, inclusive" (Rollo, p. 16). Consequently, respondent Mayor appealed to the Office of the President questioning the decision and at the same time prayed for the stay of execution thereof in accordance with Section 67(b) of the Local Government Code, which provides: "Administrative Appeals. - Decision in administrative cases may, within thirty (30) days from receipt thereof, be appealed to the following:

xxx xxx xxx (b) The Office of the President, in the case of decisions of the sangguniang panlalawigan and the sangguniang panglungsod of highly urbanized cities and independent component cities." Acting on the prayer to stay execution during the pendency of the appeal, the Office of the President issued an Order on July 28, 1993, the pertinent portions of which read as follows: xxxxxxxxx "The stay of execution is governed by Section 68 of R.A. No. 7160 and Section 6 of Administrative Order No. 18 dated 12 February 1987, quoted below: 'SEC. 68. Execution Pending Appeal. - An appeal shall not prevent a decision from becoming final or executory. The respondent shall be considered as having been placed under preventive suspension during the pendency of an appeal in the event he wins such appeal. In the event the appeal results in an exoneration, he shall be paid his salary and such other emoluments during the pendency of the appeal (R.A. No. 7160). 'SEC. 6. Except as otherwise provided by special laws, the execution of the decision/resolution/order appealed from is stayed upon the filing of the appeal within the period prescribed herein. However, in all cases, at any time during the pendency of the appeal, the Office of the President may direct or stay the execution of the decision/resolution/order appealed from upon such terms and conditions as it may deem just and reasonable (Adm. Order No. 18).' " xxxxxxxxx "After due consideration, and in the light of the Petition for Review filed before this Office, we find that a stay of execution pending appeal would be just and reasonable to prevent undue prejudice to public interest. "WHEREFORE, premises considered, this Office hereby orders the suspension/stay of execution of: a) the Decision of the Sangguniang Panlalawigan of Albay in Administrative Case No. 02-92 dated 1 July 1993 suspending Mayor Naomi C. Corral from office for a period of two (2) months, and b) the Resolution of the Sangguniang Panlalawigan of Albay in Administrative Case No. 05-92 dated 5 July 1993 suspending Mayor Naomi C. Corral from office for a period of three (3) months" (Rollo, pp. 55-56). Petitioner then filed a Motion for Reconsideration questioning the aforesaid Order of the Office of the President. On September 13, 1990, the Motion for Reconsideration was denied. Hence, this petition. II Petitioner claims that the governing law in the instant case is R.A. No. 7160, which contains a mandatory provision that an appeal "shall not prevent a decision from becoming final and executory." He argues that Administrative Order No. 18 dated February 12, 1987, (entitled "Prescribing the Rules and Regulations Governing Appeals to the Office of the President") authorizing the President to stay the execution of the appealed decision at any time during the pendency of the appeal, was repealed by R.A. No. 7160, which took effect on January 1, 1991 (Rollo, pp. 5-6). The petition is devoid of merit. Petitioner invokes the repealing clause of Section 530(f), R.A. No. 7160, which provides:

"All general and special laws, acts, city charters, decrees, executive orders, administrative regulations, part or parts thereof, which are inconsistent with any of the provisions of this Code, are hereby repealed or modified accordingly." The aforementioned clause is not an express repeal of Section 6 of Administrative Order No. 18 because it failed to identify or designate the laws or executive orders that are intended to be repealed (cf. I Sutherland, Statutory Construction 467 [1943]). If there is any repeal of Administrative Order No. 18 by R.A. No. 7160, it is through implication though such kind of repeal is not favored (The Philippine American Management Co., Inc. v. The Philippine American Management Employees Association, 49 SCRA 194 [1973]). There is even a presumption against implied repeal. An implied repeal predicates the intended repeal upon the condition that a substantial conflict must be found between the new and prior laws. In the absence of an express repeal, a subsequent law cannot be construed as repealing a prior law unless an irreconcilable inconsistency and repugnancy exists in the terms of the new and old laws (Iloilo Palay and Corn Planters Association, Inc. v. Feliciano, 13 SCRA 377 [1965]). The two laws must be absolutely incompatible (Compania General de Tabacos v. Collector of Customs, 46 Phil. 8 [1924]). There must be such a repugnancy between the laws that they cannot be made to stand together (Crawford, Construction of Statutes 631 [1940]). We find that the provisions of Section 68 of R.A. No. 7160 and Section 6 of Administrative Order No. 18 are not irreconcilably inconsistent and repugnant and the two laws must in fact be read together. The first sentence of Section 68 merely provides that an "appeal shall not prevent a decision from becoming final or executory." As worded, there is room to construe said provision as giving discretion to the reviewing officials to stay the execution of the appealed decision. There is nothing to infer therefrom that the reviewing officials are deprived of the authority to order a stay of the appealed order. If the intention of Congress was to repeal Section 6 of Administrative Order No. 18, it could have used more direct language expressive of such intention. The execution of decisions pending appeal is procedural and in the absence of a clear legislative intent to remove from the reviewing officials the authority to order a stay of execution, such authority can be provided in the rules and regulations governing the appeals of elective officials in administrative cases. The term "shall" may be read either as mandatory or directory depending upon a consideration of the entire provision in which it is found, its object and the consequences that would follow from construing it one way or the other (cf. De Mesa v. Mencias, 18 SCRA 533 [1966]). In the case at bench, there is no basis to justify the construction of the word as mandatory. The Office of the President made a finding that the execution of the decision of the Sangguniang Panlalawigan suspending respondent Mayor from office might be prejudicial to the public interest. Thus, in order not to disrupt the rendition of service by the mayor to the public, a stay of the execution of the decision is in order. WHEREFORE, the petition is DISMISSED. SO ORDERED. Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, and Francisco, JJ., concur.

THIRD DIVISION [G.R. No. 127708, March 25, 1999] CITY GOVERNMENT OF SAN PABLO, LAGUNA, CITY TREASURER OF SAN PABLO, LAGUNA, AND THE SANGGUNIANG PANGLUNSOD OF SAN PABLO, LAGUNA, PETITIONERS, VS. HONORABLE BIENVENIDO V. REYES, IN HIS CAPACITY AS PRESIDING JUDGE, REGIONAL TRIAL COURT, BRANCH 29, SAN PABLO CITY AND THE MANILA ELECTRIC COMPANY, RESPONDENTS. DECISION
GONZAGA-REYES, J.: This is a petition under Rule 45 of the Rules of Court to review on a pure question of law the decision of the Regional Trial Court (RTC) of San Pablo City, Branch 29 in Civil Case No. SP-4459(96), entitled "Manila Electric Company vs. City of San Pablo, Laguna, City Treasurer of San Pablo Laguna, and the Sangguniang Panglunsod of San Pablo City, Laguna." The RTC declared the imposition of franchise tax under Section 2.09 Article D of Ordinance No. 56 otherwise known as the Revenue Code of the City of San Pablo as ineffective and void insofar as the respondent MERALCO is concerned for being violative of Act No. 3648, Republic Act No. 2340 and PD 551. The RTC also granted MERALCO'S claim for refund of franchise taxes paid under protest. The following antecedent facts are undisputed: Act No. 3648 granted the Escudero Electric Services Company, a legislative franchise to maintain and operate an electric light and power system in the City of San Pablo and nearby municipalities Section 10 of Act No. 3648 provides: "x x x In consideration of the franchise and rights hereby granted, the grantee shall pay unto the municipal treasury of each municipality in which it is supplying electric current to the public under this franchise, a tax equal to two percentum of the gross earnings from electric current sold or supplied under this franchise in each said municipality. Said tax shall be due and payable quarterly and shall be in lieu of any and all taxes of any kind, nature or description levied, established or collected by any authority whatsoever, municipal, provincial or insular, now or in the future, on its poles, wires, insulators, switches, transformers, and structures, installations, conductors, and accessories place in and over and under all public property, including public streets and highways, provincial roads, bridges and public squares, and on its franchise, rights, privileges, receipts, revenues and profits from which taxes the grantee is hereby expressly exempted." Escudero's franchise was transferred to the plaintiff (herein respondent) MERALCO under Republic Act No. 2340. Presidential Decree No. 551 was enacted on September 11, 1974. Section 1 thereof provides the following: "Section 1. Any provision of law or local ordinance to the contrary notwithstanding, the franchise tax payable by all grantees of franchise to generate, distribute and sell electric current for light, heat and power shall be two percent (2%) of their gross receipts received from the sale of electric current and from transactions incident to the generation, distribution and sale of electric current. Such franchise tax shall be payable to the Commissioner of

Internal Revenue or his duly authorized representative on or before the twentieth day of the month following the end of each calendar quarter or month as may be provided in the respective franchise or pertinent municipal regulation and shall, any provision of the Local Tax Code or any other law to the contrary notwithstanding, be in lieu of all taxes and assessments of whatever nature imposed by any national or local authority on earnings, receipts, income and privilege of generation, distribution and sale of electric current." Republic Act No. 7160, otherwise known as the "Local Government Code of 1991" (hereinafter referred to as the LGC) took effect on January 1, 1992. The said Code authorizes the province/city to impose a tax on business enjoying a franchise at a rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year realized within its jurisdiction. On October 5, 1992, the Sangguniang Panglunsod of San Pablo City enacted Ordinance No. 56, otherwise known as the Revenue Code of the City of San Pablo. The said Ordinance took effect on October 30, 1992:[1] Section 2.09 Article D of said Ordinance provides: "Sec. 2.09. Franchise Tax - There is hereby imposed a tax on business enjoying a franchise, at a rate of fifty percent (50%) of one percent (1%) of the gross annual receipts, which shall include both cash sales and sales on account realized during the preceding calendar year within the city." Pursuant to the above-quoted Section 2.09, the petitioner City Treasurer sent to private respondent a letter demanding payment of the aforesaid franchise tax. From 1994 to 1996, private respondent paid "under protest" a total amount of P1,857,711.67.[2] The private respondent subsequently filed this action before the Regional Trial Court to declare Ordinance No. 56 null and void insofar as it imposes the franchise tax upon private respondent MERALCO[3] and to claim for a refund of the taxes paid. The Court ruled in favor of MERALCO and upheld its argument that the LGC did not expressly or impliedly repeal the tax exemption/incentive enjoyed by it under its charter. The dispositive portion of the decision reads: "WHEREFORE, the imposition of a franchise tax under Sec. 2.09 Article D of Ordinance No. 56 otherwise known as the Revenue Code of the City of San Pablo, is declared ineffective and null and void insofar as the plaintiff MERALCO is concerned for being violative of Republic Act No. 2340, PD 551, and Republic Act No. 7160 and the defendants are ordered to refund to the plaintiff the amount of ONE MILLION EIGHT HUNDRED FIFTY SEVEN THOUSAND SEVEN HUNDRED ELEVEN & 67/100 (P1,857,711.67) and such other amounts as may have been paid by the plaintiff under said Revenue Ordinance No. 56 after the filing of the complaint.[4] SO ORDERED." Its motion for reconsideration having been denied by the trial court[5] the petitioners filed the instant petition with this Court raising pure questions of law based on the following grounds:

I.

RESPONDENT JUDGE GRAVELY ERRED IN HOLDING THAT ACT NO. 3648, REPUBLIC ACT NO. 2340 AND PRESIDENTIAL DECREE NO. 551 AS AMENDED, INSOFAR AS THEY GRANT TAX INCENTIVES, PRIVILEGES AND IMMUNITIES TO PRIVATE RESPONDENT, HAVE NOT BEEN REPEALED BY REPUBLIC ACT NO. 7160.

however, That the taxes, fees and charges levied and collected by highly urbanized and independent component cities shall accrue to them and distributed in accordance with the provisions of this Code. The rates of taxes that the city may levy may exceed the maximum rates allowed for the province or municipality by not more than fifty percent (50%) except the rates of professional and amusement taxes. Section 193 - Withdrawal of Tax Exemption Privileges. - Unless otherwise provided in this Code, tax exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including government-owned or controlled corporations, except local water districts, cooperatives duly registered under R.A. 6938, non-stock and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code.

II.

RESPONDENT JUDGE GRAVELY ERRED IN RULING THAT SECTION 193 OF REPUBLIC ACT NO. 7160 HAS NOT WITHDRAWN THE TAX INCENTIVES, PRIVILEGES AND IMMUNITIES BEING ENJOYED BY THE PRIVATE RESPONDENT UNDER ACT NO. 3648, REPUBLIC ACT NO. 2340 AND PRESIDENTIAL DECREE NO. 551, AS AMENDED.

III.

RESPONDENT JUDGE GRAVELY ERRED IN HOLDING THAT THE FRANCHISE TAX IN QUESTION CONSTITUTES AN IMPAIRMENT OF THE CONTRACT BETWEEN THE GOVERNMENT AND THE PRIVATE RESPONDENT. Petitioners' position is the RA 7160 (LGC) expressly repealed Act No. 3648, Republic Act No. 2340 and Presidential Decree 551 and that pursuant to the provisions of Sections 137 and 193 of the LGC, the province or city now has the power to impose a franchise tax on a business enjoying a franchise. Petitioners rely on the ruling in the case of Mactan Cebu International Airport Authority vs. Marcos
[6]

Section 534 (f) - Repealing Clause - All general and special laws, acts, city charters, decrees, executive orders, proclamations and administrative regulations, or part or parts thereof which are inconsistent with any of the provisions of this code are hereby repealed or modified accordingly. Section 534 (f), the repealing clause of the LGC, provides that all general and special laws, acts, city charters, decrees, executive orders, proclamations and administrative regulations or parts thereof which are inconsistent with any of the provisions of the Code are hereby repealed or modified accordingly.

where the Supreme Court held that the exemption

from real property tax granted to Mactan Cebu International Airport Authority under its charter has been withdrawn upon the effectivity of the LGC. In addition, the petitioners cite in their Memorandum dated December 8, 1997 an administrative interpretation made by the Bureau of Local Government Finance of the Department of Finance in its 3rd indorsement dated February 15, 1994 to the effect that the earlier ruling of the Department of Finance that holders of franchise which contain the phrase "in lieu of all taxes" proviso are exempt from the payment of any kind of tax is no longer applicable upon the effectivity of the LGC in view of the withdrawal of tax exemption privileges as provided in Sections 193 and 234 thereof.

This clause partakes of the nature of a general repealing clause.[7] It is certainly not an express repealing clause because it fails to designate the specific act or acts identified by number or title, that are intended to be repealed.[8] Was there an implied repeal by Republic Act No. 7160 of the MERALCO franchise insofar as the latter impose a 2% tax "in lieu of all taxes and assessments of whatever nature"? We rule affirmatively.

We resolve to reverse the court a quo. We are mindful of the established rule that repeals by implication The pivotal issue is whether the City of San Pablo may impose a local franchise tax pursuant to the LGC upon the Manila Electric Company which pays a tax equal to two percent of its gross receipts in lieu of all taxes and assessments of whatever nature imposed by any national or local authority on savings or income. It is necessary to reproduce the pertinent provisions of the LGC. Section 137 - Franchise Tax - Notwithstanding any exemption granted by any law or other special law, the province may impose a tax on business enjoying a franchise, at a rate not exceeding fifty percent 50% of one percent 1% of the gross annual receipts for the preceding calendar year based on the incoming receipts, or realized, within its territorial jurisdiction. xxx" Section 151 - Scope of Taxing Powers - Except as otherwise provided in this Code, the city, may levy the taxes, fees, and charges which the province or municipality may impose: Provided, Section 193 buttresses the withdrawal of extant tax exemption It is our view that petitioners correctly rely on the provisions of Section 137 and 193 of the LGC to support their position that MERALCO's tax exemption has been withdrawn. The explicit language of Section 137 which authorizes the province to impose franchise tax "notwithstanding any exemption granted by any law or other special laws" is all-encompassing and clear. The franchise tax is imposable despite any exemption enjoyed under special laws. are not favored as laws are presumed to be passed with deliberation and full knowledge of all laws existing on the subject. A general law cannot be construed to have repealed a special law by mere implication unless the intent to repeal or alter is manifest[9] and it must be convincingly demonstrated that the two laws are so clearly repugnant and patently inconsistent that they cannot co-exist.[10]

privileges. By stating that unless otherwise provided in this Code, tax exemptions or incentives granted to or presently enjoyed by all persons whether natural or juridical, including governmentowned or controlled corporations except 1) local water districts, 2) cooperatives duly registered under R.A. 6938, (3) non-stock and non-profit hospitals and educational institutions, are withdrawn upon the effectivity of this code, the obvious import is to limit the exemptions to the three enumerated entities. It is a basic precept of statutory construction that the express mention of one person, thing, act, or consequence excludes all others as expressed in the familiar maxim expressio unius est exlcusio alterius.[11] In the absence of any provision of the Code to the contrary, and we find no other provision of the Code to the contrary, and we find no other provision in point, any existing tax exemption or incentive enjoyed by MERALCO under existing law was clearly intended to be withdrawn. Reading together Sections 137 and 193 of the LGC, we conclude that under the LGC the local government unit may now impose a local tax at a rate not exceeding 50% of 1% of the gross annual receipts for the preceding calendar year based on the incoming receipts realized within its territorial jurisdiction. The legislative purpose to withdraw tax privileges enjoyed under existing law or charter is clearly manifested by the language used in Section 137 and 193 categorically withdrawing such exemption subject only to the exceptions enumerated. Since it would be not only tedious and impractical to attempt to enumerate all the existing statutes providing for special tax exemptions or privileges, the LGC provided for an express, albeit general, withdrawal of such exemptions or privileges. No more unequivocal language could have been used. It is true that the phrase "in lieu of all taxes" found in special franchises has been held in several cases to exempt the franchise holder from payment of tax on its corporate franchise imposed by the Internal Revenue Code, as the charter is in the nature of a private contract and the exemption is part of the inducement for the acceptance of the franchise, and that the imposition of another franchise tax by the local authority would constitute an impairment of contract between the government and the corporation.[12]But these "magic words" contained in the phrase "shall be in lieu of all taxes."[13]Have to give way to the peremptory language of the LGC specifically providing for the withdrawal of such exemption privileges. Accordingly in Mactan Cebu International Airport Authority vs. Marcos,[14] this Court held that Section 193 of the LGC prescribes the general rule, viz., the tax exemptions or incentives granted to or presently enjoyed by natural or juridical persons are withdrawn upon the effectivity of the LGC except with respect to those entities expressly enumerated. In the same vein We must hold that the express withdrawal upon effectivity of the LGC of all exemptions only as provided therein, can no longer be invoked by Meralco to disclaim liability for the local tax. Private respondents further argue that the "in lieu of" provision contained in PD 551, Act No. 3648 and RA 2340 does not partake of the nature of an exemption, but is a "commutative tax". This contention was raised but was not upheld in Cagayan Electric

Power and Light Co. Inc. vs. Commissioner of Internal Revenue[15] wherein the Supreme Court stated: "xxx Congress could impair petitioner's legislative franchise by making it liable for income tax from which heretofore it was exempted by virtue of the exemption provided for in section 3 of its franchise xxx xxx Republic Act No. 5431, in amending section 24 of the Tax Code by subjecting to income tax all corporate tax payers not expressly exempted therein and in section 27 of the Code, had the effect ofwithdrawing petitioner's exemption from income tax xxx" Private respondent's invocation of the non-impairment clause of the Constitution is accordingly unavailing. The LGC was enacted in pursuance of the constitutional policy to ensure autonomy to local governments[16] and to enable them to attain fullest development as self-reliant communities.[17] Thus in Mactan Cebu International Airport Authority vs. Marcos, supra, this Court pointed out, in upholding the withdrawal of the real estate tax exemption previously enjoyed by the Mactan Cebu International Airport Authority, as follows: "Note that as reproduced in Section 234(a) the phrase "and any government owned or controlled corporation so exempt by its charter" was excluded. The justification for this restricted exemption in Section 234(a) seems obvious: to limit further tax exemption privileges especially in light of the general provision on withdrawal of tax exemption privileges in Section 193 and the special provision on withdrawal of exemption from payment of real property taxes in the last paragraph of Section 234. These policy considerations are consistent with the State policy to ensure autonomy to local governments and the objective of the LGC that they enjoy genuine and meaningful local autonomy to enable them to attain their fullest development as self-reliant communities and make them effective partners in attainment of national goals. The power to tax is the most effective instrument to raise needed revenues to finance and support myriad activities of local government units for the delivery of basic services essential to the promotion of the general welfare and the enhancement of peace, progress, and prosperity of the people. It may also be relevant to recall that the original reasons for the withdrawal of tax exemption privileges granted to governmentowned or controlled corporations and all other units of government were that such privilege resulted in serious tax base erosion and distortions in the tax treatment of similarly situated enterprises, and there was a need for these entities to share in the requirements of development, fiscal or otherwise, by paying the taxes and other charges due from them."[18] The Court therein concluded that: "nothing can prevent Congress from decreeing that even instrumentalities or agencies of the Government performing governmental functions may be subject to tax. Where it is done precisely to fulfill a constitutional mandate and national policy, no one can doubt its wisdom."[19] The power to tax is primarily vested in Congress. However, in our jurisdiction, it may be exercised by local legislative bodies, no longer merely by virtue of a valid delegation as before, but pursuant to direct authority conferred by Section 5, Article X of the Constitution.[20] Thus Article X, Section 5 of the Constitution reads:

"Section 5 - Each Local Government unit shall have the power to create its own sources of revenue and to levy taxes, fees and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees and charges shall accrue exclusively to the Local Governments." The important legal effect of Section 5 is that henceforth, in interpreting statutory provisions on municipal fiscal powers, doubts will have to be resolved in favor of municipal corporations.[21]

[5]

Order of January 10, 1996, p. 41, Rollo 261 SCRA 667, (1996). Ty vs. Trampe, 250 SCRA 500 at 512 (1995). Mecano vs. Commission on Audit, 216 SCRA 500 at 504

[6]

[7]

[8]

[1992]; Berces Sr., vs. Guingona, Jr., 241 SCRA 539 at 544 [1995].
[9]

Laguna Lake Development Authority vs. Court of Appeals, 251

There is further basis for the conclusion that the non-impairment of contract clause cannot be invoked to uphold Meralco's exemption from the local tax. Escudero Electric Co. was originally given the legislative franchise under Act. 3648 to operate an electric light and power system in the City of San Pablo and nearby municipalities. The term of the franchise under Act No. 3648 is a period of fifty years from the Act's approval in 1929. The said law provided that the franchise is granted upon the condition that it shall be subject to amendment, or repeal by the Congress of the United States.
[22]

SCRA 42 at 56 (1995).
[10]

Villegas vs. Subido, 41 SCRA 190 at 197 (1971); Mecano vs.

Commission on Audit, Supra.

[11]

Commissioner of Customs vs. Court of Tax Appeals, 224 SCRA

665 at pp. 669-670, (1993)

[12]

Cotabato Light and Power Co. vs. City of Cotabato, 32 SCRA

Under the 1935,

[23]

the

231; Commissioner of Internal Revenue vs. Lingayen Gulf Electric Power Co. 164 SCRA 27 at 34 (1988), Province of Misamis Oriental vs. Cagayan Electric Power and Light Co., Inc., 181 SCRA 38 at 43 (1990).
[13]

1973[24] and the 1987[25] Constitutions, no franchise or right shall be granted except under the condition that it shall be subject to amendment, alteration or repeal by the National Assembly when the public interest so requires. With or without the reservation clause, franchises are subject to alterations through a reasonable exercise of the police power; they are also subject to alteration by the power to tax, which like police power cannot be contracted away.[26] Finally, while the matter is not of controlling significance, the Court notes that whereas the original Escudero franchise exempted the franchise holder from all taxes levied or collected "now or in the future"
[27]

Province of Misamis Oriental vs. Cagayan Electric Power and

Light Co. Inc. supra, at p. 42.

[14]

Supra. 138 SCRA 629 at p. 631. Section 25, Art. II and 2, Art. X Constitution. 2(a) Local Government Code of 1991. Mactan Cebu International Airport Authority vs. Marcos, p.

[15]

[16]

this phrase is noticeably omitted in the

[17]

counterpart provision of P.D. 551 that said omission is intended not to foreclose future taxes may reasonably be deduced by statutory construction. WHEREFORE, the instant petition is GRANTED. The decision of the Regional Trial Court of San Pablo City, appealed from is hereby reversed and set aside and the complaint of MERALCO is hereby DISMISSED. No pronouncement as to costs. SO ORDERED. Romero, (Chairman), Vitug, Panganiban, and Purisima, JJ., concur.

[18]

690.
[19]

Ibid., p. 692. Isagani A. Cruz, Constitutional Law, (1991), at p. 84. Bernas, The Constitution of the Philippines, 1st ed. p. 381. Act No. 3648, 12. Article XIV, 8. Article XIV, 5. Article XII, 11. Bernas, Supra, p. 341. 10, Act No. 3648.

[20]

[21]

[22]

[23]

[24]

[25] [1]

Petitioner for review, p. 3

[26]

[2]

Ibid., p. 4 and Respondent's Memorandum, p. 3.

[27]

[3]

Petition for Review, p. 4 and Respondent's Memorandum, p. 4. Ibid E-Library Doc. ID: 1263538026564457718

[4]

THIRD DIVISION [G.R. No. 132378, January 18, 2000] ROGELIO JUAN, PEDRO DE JESUS, DELFIN CARREON AND ANTONIO GALGUERRA, PETITIONERS, VS. PEOPLE OF THE PHILIPPINES, RESPONDENT. DECISION
PANGANIBAN, J.: Unlawful and unauthorized use of government property by incumbent public officers constitutes fraud. Thus, the provision on preventive suspension in the Anti-Graft Law applies to such officers even if the alleged violations are primarily considered as election offenses. The Case Before us is a Petition for Review under Rule 45 assailing the October 14, 1997 Decision[1] and the January 26, 1998 Resolution of the Court of Appeals[2] (CA) in CA-GR SP No. 43903.[3] The assailed Decision dismissed the Petition for Certiorari filed by the petitioners. In that Petition, they questioned the April 3, 1997 Order[4] of the Regional Trial Court of Quezon City in Criminal Case Nos. Q-96-64564-6, directing their immediate suspension from office. On the other hand, the questioned CA Resolution denied their Motion for Reconsideration. The Facts The procedural and factual antecedents of this case are summarized in the challenged Decision as follows: "Petitioners Rogelio Juan, Barangay Chairman and Pedro de Jesus, Delfin Carreon, and Antonio Galguerra, Barangay Kagawads, of Barangay Talipapa, Novaliches, Quezon City, were separately accused in Criminal Cases Q-96-64564 to 66, for violation of Section 261-(o) of the Omnibus Election Code, before the Regional Trial Court, Branch 96, National Capital Judicial Region, Quezon City. Barangay Chairman Juan, and Bgy. Kagawad De Jesus were charged [with] willful and unlawful use of VHF radio transceiver, an equipment or apparatus owned by the barangay government of Talipapa, Novaliches, Quezon City, for election campaign or for partisan political activity. And Barangay Kagawads Carreon and Galguerra were charged with willful and unlawful use of a tricycle owned by the same barangay government in their political campaigns. "Rodolfo Cayubit and Ricardo Galguerra, representing themselves as "witnesses/private complainants," assisted by Atty. Leonides S. Bernabe, Jr., representing himself as "Private Prosecutor," filed a "Motion for Removal from Office," dated December 5, 1996, for the removal of said local elective officials, to which herein petitioners filed their comment, on the ground that movants have no legal standing in court, and neither was the public prosecutor notified of the motion to which he did not conform, and therefore, said motion should be expunged or stricken out from the records, or peremptorily denied. "In a Manifestation and Comment to the accused-petitioners comment, the COMELEC prosecutor stated that he "conforms" with the subject motion of private complainants, hence, respectfully submit[s] the same for the ruling of the court, followed by a Supplement to Motion for Removal from Office, dated February 28, 1997, to which petitioners also filed their

opposition. "On April 3, 1997, respondent court issued an Order, directing the "xxx immediate suspension from office of all the accused xxx for a period of sixty (60) days from service of this Order."[5] The CA Ruling In its Decision, the Court of Appeals upheld the trial courts discretion to order petitioners suspension from office. It ruled: "The preventive suspension of those officials is authorized under Section 13 of RA 3019, as amended, which is mandatory in character upon the filing of a valid information in court against them. Such suspension can be issued x x x in whatever stage of execution and mode of participation, is pending in court x x x (see also Gonzaga vs. Sandiganbayan, 201 SCRA 417, 422, 426). Said cases stressed though that the Constitution rejects preventive suspension for an indefinite duration as it constitutes a denial of due process and equal protection of the law. Nonetheless, preventive suspension is justifiable for as long as its continuance is for a reasonable length of time. This doctrine also finds expression in Luciano vs. Provincial Governor, 28 SCRA 570, upholding the power of courts to exercise the mandatory act of suspension of local elective official[s] under Section 13 of RA 3019."[6](underscoring found in the original) Hence, this Petition.[7] The Issues In their Memorandum, petitioners urge the Court to resolve the following questions: "1. Does Sec. 13 of R.A. No. 3019 (Anti-Graft and Corrupt Practices Act), or Sec. 60 of R.A. 7160 (The Local Government Code of 1991) confer upon a Regional Trial Court, before which a criminal case for violation of Sec. 261 (o) of the Omnibus Election Code is pending, the power and authority to order the preventive suspension from office of the accused therein upon the filing of a valid Information against him? "2. In a criminal case for violation of Sec. 261 (o) of the Omnibus Election Code, where the INFORMATION does not allege damages sustained by any private party by reason thereof, has a person, representing himself to be a "witness/private complainant," or a lawyer, representing himself to be a "private prosecutor," the legal standing or personality to file a motion for removal from office of the accused in said criminal case? 2.1. Does a motion so filed, acquire legal standing before the Court by the subsequent adoption thereof by the COMELEC Prosecutor in said case? Msesm 2.2. Does a motion so filed, without compliance of the notice requirements prescribed for motions under Rule 15 of the Revised Rules of Court, deserve judicial cognizance by the court vis-avis Del Castillo v. Aguinaldo, 212 SCRA 169, 174, holding that such motion is "a useless piece of paper with no legal effect" that should not be accepted for filing and if filed, is not entitled to judicial cognizance?" 2.3. Is there substantial compliance [with] such notice requirements by the mere fact that [the] adverse party filed an opposition to said motion, precisely to question its noncompliance [with] notice requirements, prescribed by Rule 15, Revised Rules of Court?" 2.4. Notwithstanding the foregoing defects of said motion, is it proper for a Regional Trial Court to take cognizance thereof and act favorably thereon, without setting said motion for hearing?"

Citing RA 7691,[8] petitioners likewise assail the authority of the trial court to hear the cases against them. For the sake of clarity, the discussion of the case will revolve around three points:first, the jurisdiction of regional trial courts over violations of the Election Code;second, the propriety of petitioners suspension; and third, the alleged procedural lapses of the trial court. The Courts Ruling We find no merit in the Petition. First Issue: Jurisdiction over Election Cases Petitioners insist that the RTC did not have the jurisdiction to hear and decide the cases filed against them, because the penalty for the offenses charged did not exceed six years. Thus, they claim that the authority to hear the cases is vested by RA 7691 in the first-level courts. The argument does not persuade. It is evident from Section 32, BP 129, as amended by Section 2 of RA 7691, that the jurisdiction of first-level courts -- the metropolitan trial courts, municipal trial courts and municipal circuit trial courts -- does not cover those criminal cases which by specific provision of law are cognizable by regional trial courts. Section 32 provides: "Sec. 32. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Criminal Cases. Except in cases falling within the exclusive original jurisdiction of the Regional Trial Courts and of the Sandiganbayan, the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise: (1) Exclusive original jurisdiction over all violations of city or municipal ordinances, committed within their respective territorial jurisdiction; and (2) Exclusive original jurisdiction over all offenses punishable with imprisonment not exceeding six (6) years irrespective of the amount of fine, and regardless of other imposable accessory or other penalties, including the civil liability arising from such offenses or predicated thereon, irrespective of kind, nature, value or amount thereof;Provided, however, that in offenses involving damage to property through criminal negligence, they shall have exclusive original jurisdiction thereof. Petitioners were charged with violating Section 261 (o) of the Omnibus Election Code. Under Section 268 of the said Code, regional trial courts have exclusive jurisdiction to try and decide any criminal action or proceeding for violation of the Code, "except those relating to the offense of failure to register or failure to vote." The said provision reads: "Sec. 268. Jurisdiction of courts. The regional trial court shall have the exclusive jurisdiction to try and decide any criminal action or proceeding for violation of this Code, except those relating to the offense of failure to register or failure to vote, which shall be under the jurisdiction of the metropolitan or municipal trial courts. From the decision of the courts, appeal will lie as in other criminal cases." Worth noting also is this Courts disquisition in COMELEC v. Noynay:[9] "We have explicitly ruled in Morales v. Court of Appeals, that by virtue of the exception provided for in the opening sentence of Section 32, the exclusive original jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts

does not cover criminal cases which by specific provisions of law fall within the exclusive original jurisdiction of Regional Trial Courts and of the Sandiganbayan, regardless of the penalty prescribed therefor. Otherwise stated, even if those excepted cases are punishable by imprisonment not exceeding six (6) years, (i.e., prision correccional, arresto mayor, or arresto menor)jurisdiction thereon is retained by the Regional Trial Courts or the Sandiganbayan, as the case may be. "Among the examples cited in Morales as falling within the exception provided for in the opening sentence of Section 32 are cases under (1) Section 20 of BP Blg. 129; (2) Article 360 of the Revised Penal Code as amended; (3) the Decree on Intellectual Property; and (4) the Dangerous Drugs Act of 1972, as amended. "Undoubtedly, pursuant to Section 268 of the Omnibus Election Code, election offenses also fall within the exception. "As we stated in Morales, jurisdiction is conferred by the Constitution or Congress. Outside the cases enumerated in Section 5(2) of Article VIII of the Constitution, Congress has the plenary power to define, prescribe, and apportion the jurisdiction of various courts. Congress may thus provide by law that a certain class of cases should be exclusively heard and determined by one court. Such law would be a special law and must be construed as an exception to the general law on jurisdiction of courts, namely, the Judiciary Act of 1948, as amended, and the Judiciary Reorganization Act of 1980. R.A. 7691 can by no means be considered as a special law on jurisdiction; it is merely an amendatory law intended to amend specific sections of the Judiciary Reorganization Act of 1980. Hence, R.A. No. 7691 does not have the effect of repealing laws vesting upon Regional Trial Courts or the Sandiganbayan exclusive original jurisdiction to hear and decide the cases therein specified. That Congress never intended that RA 7691 should repeal such special provisions is indubitably evident from the fact that it did not touch at all the opening sentence of Section 32 of B.P. Blg. 129 providing for the exception." (Itals supplied) Clearly then, regional trial courts have jurisdiction to hear and decide cases for violation of the Omnibus Election Code, such as those filed against petitioners. Second Issue: Preventive Suspension Petitioners contend that their cases are not subject to Section 13 of RA 3019, the Anti-Graft and Corrupt Practices Act, which mandates the preventive suspension of indicted public officials. We disagree. Petitioners were accused of using barangay property for election campaign purposes and other partisan political activities during their incumbency as barangay officials, in violation of Section 261 (o) of the Omnibus Election Code, which reads as follows: "Section 261. Prohibited Acts. The following shall be guilty of an election offense: (o) Use of public funds, money deposited in trust, equipment, facilities owned or controlled by the government for an election campaign. - Any person who uses under any guise whatsoever, directly or indirectly, (1) public funds or money deposited with or held in trust by, public financing institutions or by government offices, banks, or agencies; (2) any printing press, radio, or television station or audio-visual equipment operated by the Government or by its divisions, sub-divisions, agencies or instrumentalities, including government-owned or controlled

corporations, or by the Armed Forces of the Philippines; or (3) any equipment, vehicle, facility, apparatus or paraphernalia owned by the government or by its political subdivisions, agencies, including government-owned or controlled corporations, or by the Armed Forces of the Philippines for any election campaign or for any partisan political activity." On the other hand, Section 13, R.A. 3019, as amended, provides: "SEC. 13. Suspension and loss of benefits. Any incumbent public officer against whom any criminal prosecution under a valid information under this Act or under Title 7, Book II of the Revised Penal Code or for any offense involving fraud upon government or public funds or property whether as a simple or as a complex offense and in whatever stage of execution and mode of participation, is pending in court, shall be suspended from office. Should he be convicted by final judgment, he shall lose all retirement or gratuity benefits under any law, but if he is acquitted, he shall be entitled to reinstatement, and to the salaries and benefits which he failed to receive during suspension, unless in the meantime administrative proceedings have been filed against him. "In the event that such convicted officer, who may have already been separated from the service, has already received such benefits he shall be liable to restitute the same to the government." Interestingly, prior to its amendment by BP 195,[10] the said provision had applied to public officers who, under a valid information, were charged with violations of RA 3019 or with offenses covered by the Revised Penal Code provision on bribery.[11] The amendatory law expanded the scope of the provision; now, public officers may likewise be suspended from office if, under a valid information, they are charged with an offense falling under Title 7 of Book II of the Revised Penal Code, or with any other form of fraud involving government funds or property. True, the cases against petitioners involve violations of the Election Code; however, the charges are not unidimensional. Every law must be read together with the provisions of any other complementing law, unless both are otherwise irreconcilable. It must be emphasized that petitioners were incumbent public officers charged with the unauthorized and unlawful use of government property in their custody, in the pursuit of personal interests. The crime being imputed to them is akin to that committed by public officers as laid down in the Revised Penal Code. Certainly, petitioners acts constitute fraud against the government; thus, the present case is covered by Section 13 of RA 3019. The aforementioned proviso reinforces the principle that a public office is a public trust. Its purpose is to prevent the accused public officer from hampering his prosecution by intimidating or influencing witnesses, tampering with documentary evidence, or committing further acts of malfeasance while in office.[12] Preventive suspension is not a penalty;[13] petitioners, whose culpability remains to be proven, are still entitled to the constitutional presumption of innocence. Third Issue: Allegations of Procedural Prejudice Petitioners assail the trial courts Order of suspension on the ground that it was issued pursuant to the initial "Motion for Removal From Office,"[14] received by the trial court on December 6, 1996. The records show that this Motion neither complied with the notice requirements provided under the Rules of Court, nor

was it filed by one who was a party to their cases. The Court has held time and again that a motion that does not meet the notice requirements of Sections 4 and 5 of Rule 15 of the Rules of Court[15] is pro forma, and that the trial court has no authority to act on it. The requisites laid down in the aforementioned provisions are categorical and mandatory, and the failure of the movants to comply with them renders their Motions fatally defective.[16] The Rules mandate the service of a copy of a motion containing a notice of time and place of hearing, in order to afford the adverse party time to study and answer the arguments in the said motion before its resolution by the court. Considering the circumstances of the present Petition, however, we believe that the requirements of procedural due process were substantially complied with, and that such compliance justifies a liberal interpretation of the above-mentioned rules. In his "Manifestation on Comment of the Accused," the COMELEC prosecutor adopted the assailed Motion as well as the February 28, 1997 "Supplement to Motion for Removal from Office." This action should be considered to have thus cured the procedural defect pointed out by petitioners. More important, however, is the fact that the trial court heard petitioners and considered their arguments. In their six-page Memorandum[17] filed pursuant to the directive of the trial court, petitioners were able to ventilate their arguments against the Motion for Removal from Office. They contended that neither RA 3019 nor Section 60 of the Local Government Code justified their suspension from office. Indeed, the purpose of a notice of hearing was served;[18] the pleadings that were filed for and against them negated their allegations of procedural prejudice. Under Section 13 of RA 3019, the suspension of a public officer is mandatory after the determination of the validity of the information, as enunciated in Socrates v. Sandiganbayan[19] which we quote: "This Court has ruled that under Section 13 of the anti-graft law, the suspension of a public officer is mandatory after the validity of the information has been upheld in a pre-suspension hearing conducted for that purpose. This pre-suspension hearing is conducted to determine basically the validity of the information, from which the court can have a basis to either suspend the accused and proceed with the trial on the merits of the case, or withhold the suspension of the latter and dismiss the case, or correct any part of the proceeding which impairs its validity. That hearing may be treated in the same manner as a challenge to the validity of the information by way of a motion to quash." In the case at bar, while there was no pre-suspension hearing held to determine the validity of the Informations that had been filed against petitioners, we believe that the numerous pleadings filed for and against them have achieved the goal of this procedure. The right to due process is satisfied not just by an oral hearing but by the filing and the consideration by the court of the parties pleadings, memoranda and other position papers. WHEREFORE, the petition is hereby DENIED and the assailed Decision of the Court of Appeals AFFIRMED. Costs against petitioners. SO ORDERED. Melo, (Chairman), Vitug, Purisima and Gonzaga-Reyes,

JJ., concur.

hearing, unless the court for good reason sets the hearing on shorter notice. Section 5. Notice of hearing. The notice of hearing shall be addressed to all parties concerned, and shall specify the time and date of the hearing which must not be later than ten (10) days after the filing of the motion.
[16]

[1]

Rollo, pp. 52-55.

[2]

Special Ninth Division composed of J. Artemon D. Luna, Division chairman andponente; and JJ. Bennie A. Adefuin de la Cruz and Demetrio G. Demetria, who both concurred.
[3]

Entitled "Rogelio Juan, Pedro de Jesus, Delfin Carreon and Antonio Galguerra v. Hon. Lucas P. Bersamin, in his capacity as Presiding Judge, Regional Trial Court of Quezon City, Branch 96, and People of the Philippines."
[4]

People v. Court of Appeals et al., GR No. 126005, January 21, 1999; Tan v. Court of Appeals and Bloomberry Export Manufacturing, Inc., 295 SCRA 755, September 22, 1998; Goldloop Properties, Inc., v. Court of Appeals, 212 SCRA 498, August 11, 1992.
[17]

Rollo, pp. 82-87.

Penned by Judge Lucas P. Bersamin. Rollo, pp. 52-53. Rollo, p. 54.

[18]

[5]

See Vlasons Enterprises Corporation v. Court of Appeals, GR Nos. 121662-64, July 6, 1999.
[19]

[6]

253 SCRA 773, February 20, 1996, per Regalado, J.

[7]

The case was deemed submitted for decision on June 9, 1999, upon receipt by this Court of respondents Memorandum, which was signed by Sol. Gen. Ricardo P. Galvez, Asst. Sol. Gen. Fernanda Lampas Peralta and Asst. Sol. Marilou B. Dayao. Petitioners Memorandum, submitted by Atty. Cenon C. Sorreta, was received by the Court on February 11, 1999.
[8]

E-Library Doc. ID: 12584214931629076694

Petition, pp. 28-43; rollo, pp. 30-45. 292 SCRA 254, July 9, 1998, per Davide, J. (Now CJ)

[9]

[10]

"AN ACT AMENDING SECTION EIGHT, NINE, TEN, ELEVEN, AND THIRTEEN OF REPUBLIC ACT NUMBERED THIRTY HUNDRED AND NINETEEN, OTHERWISE KNOWN AS THE ANTI-GRAFT AND CORRUPT PRACTICES ACT."
[11]

Before its amendment, Section 13 of R.A. 3019 read as follows: "Sec. 13.Suspension and loss of benefits. Any public officer against whom any criminal prosecution under a valid information under this Act or under the provisions of the Revised Penal Code on bribery is pending in court shall be suspended from office. Should he be convicted by final judgment, he shall lose all retirement or gratuity benefits under any law, but if he is acquitted, he shall be entitled to reinstatement and to the salaries and benefits which he failed to receive during suspension, unless in the meantime, administrative proceedings have been filed against him."
[12]

Pimentel v. Garchitorena, 208 SCRA 122, April 14, 1992.

[13]

Socrates v. Sandiganbayan, 253 SCRA 773, February 20, 1996; Bunye v. Escareal, 226 SCRA 332, September 10, 1993; Gonzaga v. Sandiganbayan, 201 SCRA 417, September 6, 1991.
[14]

Rollo, pp. 64-65.

[15]

Section 4. Hearing of motion. Except for motions which the court may act upon without prejudicing the rights of the adverse party, every written motion shall be set for hearing by the applicant. Every written motion required to be heard and the notice of hearing shall be served in such a manner as to ensure its receipt by the other party at least three (3) days before the date of

SECOND DIVISION [G.R. No. 154616, July 12, 2004] GOV. ANTONIO CALINGIN, PETITIONER, VS. COURT OF APPEALS, SPECIAL 17TH DIVISION, EXECUTIVE SECRETARY RENATO S. DE VILLA, DEPT. OF INTERIOR & LOCAL GOVERNMENT SECRETARY JOEY LINA,[*]UNDERSECRETARY EDUARDO R. SOLIMAN, JR., DEPARTMENT OF THE INTERIOR & LOCAL GOVERNMENT, REGIONAL OFFICE NO. 10, DIRECTOR RODOLFO Z. RAZUL, RESPONDENTS. RESOLUTION
QUISUMBING, J.: Before us is a petition for review seeking to annul the Resolution
[1]

COMMISSION ON ELECTIONS. FINDING THAT THE DECISION OF THE OFFICE OF THE PRESIDENT IS FINAL AND EXECUTORY AS PROVIDED IN SECTION 67, CHAPTER 4, OF REPUBLIC ACT 7160, THE LOCAL GOVERNMENT CODE OF 1991.[7] In dispute is the validity of the DILG Memorandum implementing the suspension order issued by the Office of the President. We are asked to resolve in this connection two issues: (1) Was the decision of the Office of the President already final and executory? and (2) Was the exemption from the election ban in the movement of any public officer granted by COMELEC valid? Petitioner contends that decisions of the Office of the President on cases where it has original jurisdiction become final and executory only after the lapse of 15 days from the receipt thereof and that the filing of a Motion for Reconsideration shall suspend the running of the said period[8] in accordance with Section 15,[9] Chapter 3, Book VII of the Administrative Code of 1987. Petitioner further contends that Section 67,[10] Chapter 4 of the Local Government Code (Rep. Act 7160), which provides that decisions of the Office of the President shall be final and executory, applies only to decisions of the Office of the President on administrative cases appealed from the sangguniang
[3]

dated May 11, 2001 of the Court of Appeals in CA-

G.R. SP No. 64583, which denied petitioner Governor Antonio Calingins petition for prohibition with prayer for temporary restraining order and/or the issuance of an order of status quo ante, as well as its Resolution[2] dated July 1, 2002, denying the motion for reconsideration. The antecedent facts, as summarized by the Court of Appeals and borne by the records, are as follows: The Office of the President issued a Resolution dated March 22,

panlalawigan, sangguniang panlungsod of highly-urbanized cities and independent component cities, andsangguniang bayan of municipalities within the Metro Manila Area. It does not cover decisions on cases where the Office of the President has original jurisdiction such as those involving a Provincial Governor.[11] In Lapid v. Court of Appeals,[12] we held that it is a principle of statutory construction that where there are two statutes that apply to a particular case, that which was specially intended for the said case must prevail. The case on hand involves a disciplinary action against an elective local official. Thus, the Local Government Code is the applicable law and must prevail over the Administrative Code which is of general application.[13] Further, the Local Government Code of 1991 was enacted much later than the Administrative Code of 1987. In statutory construction, all laws or parts thereof which are inconsistent with the later law are repealed or modified accordingly.[14] Besides, even though appeal to the Court of Appeals is granted under Sec. 1,[15] Rule 43 of the Revised Rules of Court, Sec. 12,[16] Rule 43 of the Revised Rules of Court in relation to Sec. 68[17] of the Local Government Code provides for the immediate execution pending appeal. Under the same case of Lapid v. Court of Appeals,[18] we enunciated that the decisions of the Office of the President under the Local Government Code are immediately executory even pending appeal because the pertinent laws under which the decisions were rendered mandated them to be so. In sum, the decisions of the Office of the President are final and executory. No motion for reconsideration is allowed by law but the parties may appeal the decision to the Court of Appeals. The appeal, however, does not stay the execution of the decision. Thus, the DILG Secretary may validly move for its immediate execution.

2001 in OP Case No. 00-1-9220 (DILG ADM. Case No. P-16-99) entitled Vice Governor Danilo P. Lagbas, et al. versus Governor Antonio P. Calingin (Misamis Oriental) suspending Gov. Calingin for 90 days. On April 30, 2001, Undersecretary Eduardo R. Soliman of the Department of the Interior and Local Government (DILG), by authority of Secretary Jose D. Lina, Jr., issued a Memorandum[4] implementing the said Resolution of the Office of the President. On May 3, 2001, Gov. Calingin filed before the Office of the President a Motion for Reconsideration.
[5]

The DILG Memorandum bore the authority of the Commission on Elections (COMELEC) which granted an exemption to the election ban in the movement of any public officer in its Resolution No. 3992[6] promulgated on April 24, 2001. This was in pursuance to COMELEC Resolution No. 3401 which provides in part that Section 1. Prohibited Acts (a) During the election period from January 2, 2001 until July 13, 2001, no public official shall make or cause any transfer/detail whatsoever of any officer or employee in the civil service, including public school teachers, or suspend elective provincial, city, municipal or barangay official, except upon prior written approval of the Commission. On May 7, 2001, Gov. Calingin filed a petition for prohibition before the Court of Appeals to prevent the DILG from executing the assailed suspension order. However, on May 11, 2001, the Court of Appeals dismissed the said petition and by resolution issued on July 1, 2002, denied petitioners motion for reconsideration. Hence, this appeal by certiorari where petitioner asserts that the Court of Appeals erred in FINDING THAT THE EXECUTION OF THE SUSPENSION ORDER OF THE DEPARTMENT OF INTERIOR AND LOCAL GOVERNMENT DURING THE ELECTION PERIOD IS WITH AUTHORITY FROM THE

[8]

Id. at 17-18. SEC. 15. Finality of Order. The decision of the agency shall

As to the validity of the exemption granted by COMELEC in its Resolution No. 3992, petitioner claims that the exemption was invalid for being based on a mere draft resolution. According to him, a draft resolution does not operate as a final resolution of a case until the proper resolution is duly signed and promulgated. Petitioner maintains that a draft cannot produce any legal effect. A perusal of the records, however, reveals that the Resolution in O.P. Case No. 00-1-9220 was approved and signed on March 22, 2001 by Executive Secretary Renato de Villa by the authority of the President. Hence, the approval was before the promulgation of COMELEC Resolution No. 3992 on April 24, 2001. The record also shows that the request to implement the said suspension order was filed on March 22, 2001 by the Senior Deputy Executive Secretary of the Office of the President pursuant to the requirements stated in the Resolution. Moreover, COMELEC Resolution No. 3529[19] which may be applied by analogy and in relation to Sec. 2[20] of COMELEC Resolution No. 3401 merely requires the request to be in writing indicating the office and place from which the officer is removed, and the reason for said movement, and submitted together with the formal complaint executed under oath and containing the specific charges and the answer to said complaint. The request for the exemption was accompanied with the Affidavit of Complaint, Affidavit of Controversion, Reply and Draft Resolution. The pertinent documents required by the COMELEC to substantiate the request were submitted. There being a proper basis for its grant of exemption, COMELEC Resolution No. 3992 is valid. WHEREFORE, the instant petition for review on certiorari is DENIED. The assailed Court of Appeals resolutions dated May 11, 2002 and July 1, 2002 in CA-G.R. SP No. 64583 are hereby AFFIRMED. SO ORDERED. Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.
[16] [15] [14] [13] [12] [11] [10] [9]

become final and executory fifteen (15) days after the receipt of a copy thereof by the party adversely affected unless within that period an administrative appeal or judicial review, if proper, has been perfected. One motion for reconsideration may be filed, which shall suspend the running of the said period. SEC. 67. Administrative Appeals. Decisions in administrative

cases may, within thirty (30) days from receipt thereof, be appealed to the following: (a) The sangguniang panlalawigan, in the case of decisions of thesangguniang panlungsod of component cities and the sangguniang bayan; and (b) The Office of the President, in the case of decisions of thesangguniang panlalawigan and the sangguniang panlungsod of highly urbanized cities and independent component cities. Decisions of the Office of the President shall be final and executory. Records, p. 16. G.R. No. 142261, 29 June 2000, 334 SCRA 738, 754. Corona v. Court of Appeals, G.R. No. 97356, 30 September

1992, 214 SCRA 378, 391-392; See also Zaldivia v. Reyes, Jr., G.R. No. 102342, 3 July 1992, 211 SCRA 277, 284. Ruben Agpalo, STATUTORY CONSTRUCTION, Third Edition, p.

321. SEC. 1. Scope. This Rule shall apply to appeals from

judgments or final orders of the Court of Tax Appeals and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions. Among these agencies are the Civil Service Commission, Office of the President, . . . . (Emphasis supplied) SEC. 12. Effect of appeal. The appeal shall not stay the

award, judgment, final order or resolution sought to be reviewed unless the Court of Appeals shall direct otherwise upon such
[*]

Also referred to as DILG Sec. Jose D. Lina, Jr. Rollo, pp. 26-34. Id. at 36-37. Id. at 55-58. Id. at 38-39, 51-52. Id. at 60-64. Id. at 67-75. Id. at 9.

terms as it may deem just.

[17]

[1]

SEC. 68. Execution Pending Appeal. An appeal shall not

prevent a decision from becoming final or executory. The

[2]

respondent shall be considered as having been placed under preventive suspension during the pendency of an appeal in the event he wins such appeal. In the event the appeal results in an exoneration, he shall be paid his salary and such other emoluments during the pendency of the appeal.
[18]

[3]

[4]

[5]

Supra, note 12 at 752. Premises considered, the Commission RESOLVED, as it hereby

[6]

[19]

RESOLVES, to approve the addendum to Sec. 2 of Resolution No.

[7]

3401, promulgated on 15 December 2000 to read as follows:

SEC. 2. Any request for authority to suspend an elective city and barangay officer shall be submitted in writing to the commission, together with the formal complaint containing the specific charges, executed under oath and the answer to said complaint. ...
[20]

SEC. 2. Requests for authority of the Commission. How to

file: (1) The requests shall indicate the office and place to which the officer or employee is proposed to be transferred/detailed or otherwise moved and the reason for said transfer/detail.

E-Library Doc. ID: 12162723492088011366

SECOND DIVISION [G.R. No. 127383, August 18, 2005] THE CITY OF DAVAO, CITY TREASURER AND THE CITY ASSESSOR OF DAVAO CITY, PETITIONERS, VS. THE REGIONAL TRIAL COURT, BRANCH XII, DAVAO CITY AND THE GOVERNMENT INSURANCE SYSTEM (GSIS), RESPONDENTS. DECISION
TINGA, J.: A Davao City Regional Trial Court (RTC) upheld the tax-exempt status of the Government Service Insurance System (GSIS) for the years 1992 to 1994 in contravention of the mandate under the Local Government Code of 1992,[1] the precedent set by this Court in Mactan-Cebu International Airport Authority v. Hon. Marcos,[2] and the public policy on local autonomy enshrined in the Constitution.[3] The matter was elevated to this Court directly from the trial court on a pure question of law.[4] The facts are uncontroverted. On 8 April 1994, the GSIS Davao City branch office received a Notice of Public Auction scheduling the public bidding of GSIS properties located in Matina and Ulas, Davao City for nonpayment of realty taxes for the years 1992 to 1994 totaling Two Hundred Ninety Five Thousand Seven Hundred Twenty One Pesos and Sixty One Centavos (P295,721.61).[5] The auction was subsequently reset by virtue of a deadline extension allowed by Davao City for the payment of delinquent real property taxes.[6] On 28 July 1994, the GSIS received Warrants of Levy and Notices of Levy on three parcels of land owned by the GSIS. Another Notice of Public Auction was received by the GSIS on 29 August 1994, setting the date of auction sale for 20 September 1994. On 13 September 1994, the GSIS filed a Petition for Certiorari, Prohibition, Mandamus And/Or Declaratory Relief with the RTC of Davao City. It also sought the issuance of a temporary restraining order. The case was raffled to Branch 12, presided by Judge Maximo Magno Libre. On 13 September 1994, the RTC issued a temporary restraining order for a period of twenty (20) days,[7] effectively enjoining the auction sale scheduled seven days later. Following exchange of arguments, the RTC issued anOrder dated 3 April 1995 issuing a writ of preliminary injunction effective for the duration of the suit.[8] At the pre-trial, it was agreed that the sole issue for resolution was purely a question of law, that is, whether Sections 234 and 534 of the Local Government Code, which have withdrawn real property tax exemptions of government owned and controlled corporations (GOCCs), have also withdrawn from the GSIS its right to be exempted from payment of the realty taxes sought to be levied by Davao City.[9] The parties submitted their respective memoranda. On 28 May 1996, the RTC rendered the Decision[10] now assailed before this Court. It concluded that notwithstanding the enactment of the Local Government Code, the GSIS retained its exemption from all taxes, including real estate taxes. The RTC cited Section 33 of Presidential Decree (P.D.) No. 1146, the Revised Government Service Insurance Act of 1977, as amended by P. D. No. 1981, which mandated such exemption. The RTC conceded that the tax exempting statute, P.D. No. 1146, was enacted prior to the Local Government Code. However, it noted that the earlier law had prescribed two conditions in order that the tax exemption provided therein could be withdrawn by future enactments, namely: (1) that Section 33 be expressly and categorically repealed by law; and (2) that a provision be enacted to substitute the declared policy of exemption from any and all taxes as an essential factor for the solvency of the GSIS fund.[11] The RTC concluded that both conditions had not been satisfied by the Local Government Code. The RTC likewise accorded weight to Legal Opinion No. 165 of the Secretary of Justice dated 16 December 1996 concluding that Section 33 was not repealed by the Local Government Code, and a memorandum emanating from the Office of the President dated 14 February 1995 expressing the same opinion.[12] The dispositive portion of the assailed Decision reads: Now then, in light of the foregoing observation, the court perceives, that the cause of action asseverated by petitioner in its petition has been well established by law and jurisprudence, and therefore the following relief should be granted:
a) The tax exemption privilege of petitioner should be upheld and continued and that the warrants of levy and notices of levy issued by the respondent Treasurer is hereby voided and declared of no effect; Let a writ of prohibition be issued restraining the City Treasurer from proceeding with the auction sale of the subject properties, as well as the respondents Register of Deeds from annotating the warrants/notices of levy on the certificate of titles of petitioners real properties subject of this suit; and Compelling the City Assessor of Davao City to include the properties of petitioner in the list of properties exempt from payment of realty tax and if the warrants and levies issued by the City Treasurer had been annotated in the memorandum of encumbrance on the certificates of title of petitioner's properties, to cancel such annotation so that the certificates of titles of petitioners will be free from such liens and encumbrances.

b)

c)

SO ORDERED.[13] Petitioners' Motion for Reconsideration was denied by the RTC in an Order dated 30 October 1996, hence the present petition. Petitioners argue that the exemption granted in Section 33 of P.D. No. 1146, as amended, was effectively withdrawn upon the enactment of the Local Government Code, particularly Sections 193 and 294 thereof. These provisions made the GSIS, along with all other GOCCs, subject to realty taxes. Petitioners point out that under Section 534(f) of the Local Government Code, even special laws, such as PD No. 1146, which are inconsistent with the Local Government Code, are repealed or modified accordingly. On the other hand, GSIS contends, as the RTC held, that the requisites for repeal are laid down in Section 33 of P.D. No. 1146, as amended, namely that it be done expressly and categorically by law, and that a provision be enacted to substitute the declared policy of exemption from taxes as an essential factor for the solvency of the GSIS fund. It stresses that it had been exempt from taxation as far back as 1936, when its original charter was enacted through Commonwealth Act No. 186.[14] It asserts further that this Court had previously recognized the "extraordinary exemption" of GSIS in Testate Estate of Concordia T. Lim v. City of Manila,[15] and such exemption has similarly been affirmed by the Secretary of Justice and the Office of the President in the aforementioned issuances also cited by the RTC.[16] GSIS likewise notes that had it been the intention of the

legislature to repeal Section 33 of P.D. No. 1146 through the Local Government Code, said law would have included the appropriate retraction in its repealing clause found in Section 534(f). However, said section, according to the GSIS, partakes the nature of a general repealing provision which is accorded less weight in light of the rule that implied repeals are not favored. Consequently with its position that it remains exempt from realty taxation, the GSIS argues that the Notices of Assessment, Warrants and Notices of Levy, Notices of Public Auction Sale and the Annotations of the Notice of Levy are void ab initio. A review of the relevant statutory provisions is in order. Presidential Decree No. 1146 was enacted in 1977 by President Marcos in the exercise of his legislative powers. Section 33, as originally enacted, read: Sec. 33. Exemption from tax, Legal Process and Lien.- It is hereby declared to be the policy of the State that the actuarial solvency of the funds of the System shall be preserved and maintained at all times and that the contribution rates necessary to sustain the benefits under this Act shall be kept as low as possible in order not to burden the members of the system and/or their employees. . . . Accordingly, notwithstanding any laws to the contrary, the System, its assets, revenues including the accruals thereto, and benefits paid, shall be exempt from all taxes. These exemptions shall continue unless expressly and specifically revoked and any assessment against the System as of the approval of this Act are hereby considered paid. As it stood then, Section 33 merely provided a general rule exempting the GSIS from all taxes. However, Section 33 of P.D. No. 1146 was amended in 1985 by President Marcos, again in the exercise of his legislative powers, through P.D. No. 1981. It was through this latter decree that a second paragraph was added to Section 33 delineating the requisites for repeal of the tax exemption enjoyed by the GSIS by incorporating the following: ... Moreover, these exemptions shall not be affected by subsequent laws to the contrary, such as the provisions of Presidential Decree No. 1931 and other similar laws that have been or will be enacted, unless this section is expressly and categorically repealed by law and a provision is enacted to substitute the declared policy of exemption from any and all taxes as an essential factor for the solvency of the fund.[17] It bears noting though, and it is perhaps key to understanding the necessity of the addendum provided under P.D. No. 1981, that a presidential decree enacted a year earlier, P.D. No. 1931, effectively withdrew all tax exemption privileges granted to GOCCs.[18] In fact, P.D. No. 1931 was specifically named in the afore-quoted addendum as among those laws which, despite passage, would not affect the tax exempt status of GSIS. Section 1 of P.D. No. 1931 states: Sec. 1. The provisions of special or general law to the contrary notwithstanding, all exemptions from the payment of duties, taxes, fees, imposts and other charges heretofore granted in favor of government-owned or controlled corporations including their subsidiaries, are hereby withdrawn. There is no doubt that the GSIS which was established way back in 1937 is a GOCC, a fact that GSIS itself admits in its petition for certiorari before the RTC.[19] It thus clear that Section 1 of P.D. No. 1931 expressly withdrew those exemptions granted to the GSIS. Presidential Decree No. 1931 did allow the exemption to be restored in special cases through an application for restoration with the Secretary of Finance, but otherwise, the exemptions granted to the GSIS prior to the enactment of P.D. No. 1931 were withdrawn.

Notably, P.D. No. 1931 was also an exercise of legislative powers then accorded to President Marcos by virtue of Amendment No. 6 to the 1973 Constitution. Whether he was aware of the effect of P.D. No. 1931 on the GSIS's tax-exempt status or the ramifications of the decree thereon is unknown; but apparently, he immediately reconsidered the withdrawal of the exemptions on the GSIS. Thus, P.D. No. 1981 was enacted, expressly stating that the tax-exempt status of the GSIS under Section 33 of P.D. No. 1146 remained in place, notwithstanding the passage of P.D. No. 1931. However, P.D. No. 1981 did not stop there, serving merely as it should to restore the previous exemptions on the GSIS. It also attempted to proscribe future attempts to alter the tax-exempt status of the GSIS by imposing unorthodox conditions for its future repeal. Thus, as intimated earlier, a second paragraph was added to Section 33, containing the restrictions relied upon by the RTC and presently invoked by the GSIS before this Court. These laws have to be weighed against the Local Government Code of 1992, a landmark law which implemented the constitutional aspirations for a more extensive breadth of local autonomy. The Court, in Mactan, was asked to consider the effect of the Local Government Code on the taxability by local governments of GOCCs such as the Mactan Cebu International Airport Authority (MCIAA). Particularly, MCIAA invoked Section 133(o) of the Local Government Code as the basis for its claimed exemption, the provision reading: SECTION 133. Common Limitations on the Taxing Powers of Local Government Units.- Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following: ....

(o)

Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities and local government units.

However, the Court, in ruling MCIAA non-exempt from realty taxes, considered that Section 133 qualified the exemption of the National Government, its agencies and instrumentalities from local taxation with the phrase "unless otherwise provided herein." The Court then considered the other relevant provisions of the Local Government Code, particularly the following: SECTION 193. Withdrawal of Tax Exemption Privileges. - Unless otherwise provided in this Code, tax exemption or incentives granted to, or enjoyed by all persons, whether natural or juridical, including government-owned and controlled corporations, except local water districts, cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code. SECTION 232. Power to Levy Real Property Tax. - A province or city or a municipality within the Metropolitan Manila area may levy an annualad valorem tax on real property such as land, building, machinery, and other improvements not hereafter specifically exempted. SECTION 234. Exemptions from Real Property Tax. -- The following are exempted from payment of the real property tax:
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person; Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, non-profit or religious

(b)

(c)

(d) (e)

cemeteries and all lands, buildings, and improvements actually, directly, and exclusively used for religious charitable or educational purposes; All machineries and equipment that are actually, directly and exclusively used by local water districts and governmentowned and controlled corporations engaged in the distribution of water and/or generation and transmission of electric power; All real property owned by duly registered cooperatives as provided for under R.A. No. 6938; and Machinery and equipment used for pollution control and environmental protection.

Except as provided herein, any exemption from payment of real property tax previously granted to, or presently enjoyed by, all persons, whether natural or juridical, including all government-owned or controlled corporations are hereby withdrawn upon the effectivity of this Code. (Emphasis supplied.) Evidently, Section 133 was not intended to be so absolute a prohibition on the power of LGUs to tax the National Government, its agencies and instrumentalities, as evidenced by these cited provisions which "otherwise provided." But what was the extent of the limitation under Section 133? This is how the Court, in a discussion of far-reaching consequence, defined the parameters in Mactan: The foregoing sections of the LGC speak of: (a) the limitations on the taxing powers of local government units and the exceptions to such limitations; and (b) the rule on tax exemptions and the exceptions thereto. The use of exceptions or provisos in these sections, as shown by the following clauses: (1) "unless otherwise provided herein" in the opening paragraph of Section 133; (2) "Unless otherwise provided in this Code" in Section 193; (3) "not hereafter specifically exempted" in Section 232; and (4) "Except as provided herein" in the last paragraph of Section 234 initially hampers a ready understanding of the sections. Note, too, that the aforementioned clause in Section 133 seems to be inaccurately worded. Instead of the clause "unless otherwise provided herein," with the "herein" to mean, of course, the section, it should have used the clause "unless otherwise provided in this Code." The former results in absurdity since the section itself enumerates what are beyond the taxing powers of local government units and, where exceptions were intended, the exceptions are explicitly indicated in the next. For instance, in item (a) which excepts income taxes "when levied on banks and other financial institutions"; item (d) which excepts "wharfage on wharves constructed and maintained by the local government unit concerned"; and item (1) which excepts taxes, fees and charges for the registration and issuance of licenses or permits for the driving of "tricycles." It may also be observed that within the body itself of the section, there are exceptions which can be found only in other parts of the LGC, but the section interchangeably uses therein the clause, "except as otherwise provided herein" as in items (c) and (i), or the clause "except as provided in this Code" in item (j). These clauses would be obviously unnecessary or mere surplusages if the opening clause of the section were "Unless otherwise provided in this Code" instead of "Unless otherwise provided herein." In any event, even if the latter is used, since under Section 232 local government units have the power to levy real property tax, except those exempted therefrom under Section 234, then Section 232 must be deemed to qualify Section 133. Thus, reading together Sections 133, 232, and 234 of the LGC, we conclude that as a general rule, as laid down in Section 133, the taxing powers of local government units

cannot extend to the levy of, inter alia, "taxes, fees and charges of any kind on the National Government, its agencies and instrumentalities, and local government units"; however, pursuant to Section 232, provinces, cities, and municipalities in the Metropolitan Manila Area may impose the real property tax except on, inter alia, "real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person," as provided in item (a) of the first paragraph of Section 234. As to tax exemptions or incentives granted to or presently enjoyed by natural or judicial persons, including governmentowned and controlled corporations, Section 193 of the LGC prescribes the general rule, viz., they are withdrawn upon the effectivity of the LGC, except those granted to local water districts, cooperatives duly registered under R.A. No. 6938, nonstock and non-profit hospitals and educational institutions, and unless otherwise provided in the LGC. The latter proviso could refer to Section 234 which enumerates the properties exempt from real property tax. But the last paragraph of Section 234 further qualifies the retention of the exemption insofar as real property taxes are concerned by limiting the retention only to those enumerated therein; all others not included in the enumeration lost the privilege upon the effectivity of the LGC. Moreover, even as to real property owned by the Republic of the Philippines or any of its political subdivisions covered by item (a) of the first paragraph of Section 234, the exemption is withdrawn if the beneficial use of such property has been granted to a taxable person for consideration or otherwise. Since the last paragraph of Section 234 unequivocally withdrew, upon the effectivity of the LGC, exemptions from payment of real property taxes granted to natural or juridical persons, including government-owned or controlled corporations, except as provided in the said section, and the petitioner is, undoubtedly, a government-owned corporation, it necessarily follows that its exemption from such tax granted it in Section 14 of its Charter, R.A. No. 6958, has been withdrawn. Any claim to the contrary can only be justified if the petitioner can seek refuge under any of the exceptions provided in Section 234, but not under Section 133, as it now asserts, since, as shown above, the said section is qualified by Sections 232 and 234.[20] (Emphasis supplied.) This Court, in Mactan, acknowledged that under Section 133, instrumentalities were generally exempt from all forms of local government taxation, unless otherwise provided in the Code. On the other hand, Section 232 "otherwise provides" insofar as it allowed local government units to levy an ad valorem real property tax, irrespective of who owned the property. At the same time, the imposition of real property taxes under Section 232 is in turn qualified by the phrase "not hereinafter specifically exempted." The exemptions from real property taxes are enumerated in Section 234, which specifically states that only real properties owned "by the Republic of the Philippines or any of its political subdivisions" are exempted from the payment of the tax. Clearly, instrumentalities or GOCCs do not fall within the exceptions under Section 234. Worth reckoning, however, is an essential difference between the situation of the MCIAA (and most other GOCCs, for that matter) and that of the GSIS. Unlike most other GOCCs, there is a statutory provision- Section 33 of P.D. No. 1146, as amendedwhich imposes conditions on the subsequent withdrawal of the GSIS's tax exemptions. The RTC justified the affirmance of the tax exemptions based on the non-compliance by the Local

Government Code with these conditionalities, and not by reason of a general proposition that GOCCs or instrumentalities remain exempt from local government taxation. Absent Section 33 of P.D. No. 1146, as amended, there would be no impediment in squarely applying the express provisions of Sections 193, 232 and 234 of the Local Government Code, as the Court did in Mactan and recently in Philippine Rural Electric Cooperatives Association, Inc. et al. v. Secretary of Interior And Local Government, et al. [21] and in ruling that the tax exemptions of GSIS were withdrawn by the Code. Thus, the crucial proposition is whether the GSIS tax exemptions can be deemed as withdrawn by the Local Government Code notwithstanding Section 33 of P.D. No. 1146 as amended. Concededly, it does not appear that at the very least, the second conditionality of Section 33 has been met. No provision has been enacted "to substitute the declared policy of exemption from any and all taxes as an essential factor for the solvency of the fund."[22] Yet the Court is averse to employing this framework, in the first place as utilized by the RTC, for we recognize a fundamental flaw in Section 33, particularly the amendatory second paragraph introduced by P.D. No. 1981. The second paragraph of Section 33 of P.D. No. 1146, as amended, effectively imposes restrictions on the competency of the Congress to enact future legislation on the taxability of the GSIS. This places an undue restraint on the plenary power of the legislature to amend or repeal laws, especially considering that it is a lawmaker's act that imposes such burden. Only the Constitution may operate to preclude or place restrictions on the amendment or repeal of laws. Constitutional dicta is of higher order than legislative statutes, and the latter should always yield to the former in cases of irreconcilable conflict. It is a basic precept that among the implied substantive limitations on the legislative powers is the prohibition against the passage of irrepealable laws.[23] Irrepealable laws deprive succeeding legislatures of the fundamental best senses carte blanche in crafting laws appropriate to the operative milieu. Their allowance promotes an unhealthy stasis in the legislative front and dissuades dynamic democratic impetus that may be responsive to the times. As Senior Associate Justice Reynato S. Puno once observed, "[t]o be sure, there are no irrepealable laws just as there are no irrepealable Constitutions. Change is the predicate of progress and we should not fear change."[24] Moreover, it would be noxious anathema to democratic principles for a legislative body to have the ability to bind the actions of future legislative body, considering that both assemblies are regarded with equal footing, exercising as they do the same plenary powers. Perpetual infallibility is not one of the attributes desired in a legislative body, and a legislature which attempts to forestall future amendments or repeals of its enactments labors under delusions of omniscience. It might be argued that Section 33 of P.D. No. 1146, as amended, does not preclude the repeal of the tax-exempt status of GSIS, but merely imposes conditions for such to validly occur. Yet these conditions, if honored, have the precise effect of limiting the powers of Congress. Thus, the same rationale for prohibiting irrepealable laws applies in prohibiting restraints on future amendatory laws. President Marcos, who exercised his legislative powers in amending P.D. No. 1146, could not have demanded obeisance from future legislators by imposing restrictions on their ability to legislate amendments or repeals. The concerns that may

have militated his enactment of these restrictions need not necessarily be shared by subsequent Congresses. We do not mean to trivialize the need to ensure the solvency of the GSIS fund, a concern that has seen legislative expression, even with the most recently enacted Government Service Insurance System Act of 1997.[25] Yet at the same time, we recognize that Congress has the putative authority, through valid legislation, to diminish such fund, or even abolish the GSIS itself if it so desires. The GSIS may provide vital services and security to employees of the civil service, yet it is not a sacred cow that is beyond abolition by Congress if, for example, more innovative methods are devised to ensure stable pension funds for government employees. If Congress has the inherent power to abrogate the GSIS itself, then it necessarily has the ability to inflict less detrimental burdens, such as abolishing its tax-exempt status. If there could be legal authority proscribing the Congress from enacting such legislation, such should be sourced from the Constitution itself, and not from antecedent statutes which were themselves enacted by legislative power. The Court's position is aligned with entrenched norms of statutory construction. InDuarte v. Dade,[26] the Court cited with approval Lewis' Southerland on Statutory Construction, which states: A state legislature has a plenary law-making power over all subjects, whether pertaining to persons or things, within its territorial jurisdiction, either to introduce new laws or repeal the old, unless prohibited expressly or by implication by the federal constitution or limited or restrained by its own. It cannot bind itself or its successors by enacting irrepealable laws except when so restrained. Every legislative body may modify or abolish the acts passed by itself or its predecessors. This power of repeal may be exercised at the same session at which the original act was passed; and even while a bill is in its progress and before it becomes a law. This legislature cannot bind a future legislature to a particular mode of repeal. It cannot declare in advance the intent of subsequent legislatures or the effect of subsequent legislation upon existing statutes. (Emphasis supplied.)[27] The citation is particularly apropos to our present task, since the question for resolution is primarily one of statutory construction, i.e., whether or not Section 33 of P.D. No. 1146 has been repealed by the Local Government Code. It is evident that we cannot render effective the amendatory second paragraph of Section 33 as the RTC did, for by doing so, we would be giving sanction to a disingenuous means employed through legislative power to bind subsequent legislators to a particular mode of repeal. Thus, the two conditionalities of Section 33 cannot bear relevance on whether the Local Government Code removed the tax-exempt status of the GSIS. The express withdrawal of all tax exemptions accorded to all persons, natural or juridical, as stated in Section 193 of the Local Government Code, applies without impediment to the present case. Such position is bolstered by the other cited provisions of the Local Government Code, and by the Mactan ruling. There are other reasons that guide us to construe the Local Government Code in favor of the City of Davao's position. Section 5 of the Local Government Code provides the guidelines on how to construe the Code's provisions in cases of doubt, and they are self-explanatory, thus: Section 5. Rules of Interpretation. - In the interpretation of the provisions of this Code, the following rules shall apply:

(a) Any provision on a power of a local government unit shall be liberally interpreted in its favor, and in case of doubt, any question thereon shall be resolved in favor of devolution of powers and of the lower local government unit. Any fair and reasonable doubt as to the existence of the power shall be interpreted in favor of the local government unit concerned; (b) In case of doubt, any tax ordinance or revenue measure shall be construed strictly against the local government unit enacting it, and liberally in favor of the taxpayer. Any tax exemption, incentive or relief granted by any local government unit pursuant to the provisions of this Code shall be construed strictly against the person claiming it; (Emphasis supplied.) Also worthy of note is that the Constitution itself promotes the principles of local autonomy as embodied in the Local Government Code. The State is mandated to ensure the autonomy of local governments,[28] and local governments are empowered to levy taxes, fees and charges that accrue exclusively to them, subject to congressional guidelines and limitations.[29] The principle of local autonomy is no mere passing dalliance but a constitutionally enshrined precept that deserves respect and appropriate enforcement by this Court. We are aware that this stance runs contrary to that which was adopted by the Secretary of Justice in his Opinion dated 22 July 1993, as well as the memorandum from the Office of the President dated 14 February 1995, expressing the same opinion. However, statutory interpretations of these executive bodies do not hold decisive sway upon the judiciary but are merely persuasive. These issuances cannot derogate from the binding precept that one legislature cannot enact irrepealable legislation or limit or restrict its own power or the power of its successors as to the repeal of statutes.[30] The act of one legislature is not binding upon and does not tie the hands of future legislatures.[31] The GSIS's tax-exempt status, in sum, was withdrawn in 1992 by the Local Government Code but restored by the Government Service Insurance System Act of 1997, the operative provision of which is Section 39.[32] The subject real property taxes for the years 1992 to 1994 were assessed against GSIS while the Local Government Code provisions prevailed and, thus, may be collected by the City of Davao. WHEREFORE, premises considered, the Petition for Review is hereby GRANTED. The appealed Decision of the Regional Trial Court of Davao City, Branch 12 is REVERSED and SET ASIDE. Costs de oficio. SO ORDERED. Puno, (Chairman), Austria-Martinez, Callejo, Sr. and ChicoNazario, JJ., concur.

[4]

Authorized under Section 2(c), Rule 41, 1997 Rules of Civil Procedure.
[5]

Rollo, p. 32. Id. at 9. Records, p. 26. Id. at 128. See Rollo, p. 12 Id. at 121-127. Id. at 123. Id. at 125. Id. at 126-27. Id. at 175. G.R. No. 90639, 21 February 1990, 182 SCRA 482. Supra note 12.

[6]

[7]

[8]

[9]

[10]

[11]

[12]

[13]

[14]

[15]

[16]

[17]

Section 6, P.D. No. 1981, amending Section 33, P.D. No. 1146.
[18]

See Philippine Ports Authority v. City of Iloilo, G.R. No. 109791, 14 July 2003, 406 SCRA 88, 98.
[19]

See Rollo, p. 23. Supra note 2 at 411-413.

[20]

[21]

451 Phil. 683 (2003). See also Philippine Ports Authority v. City of Iloilo, supra note 18.
[22]

Supra note 17.

[23]

See A.B. Nachura, Outline of Political Law Reviewer at 174. There can be no vested right to the continued existence of a statute which precludes its change or appeal. See also Traux v. Corrigan, 257 U.S. 312, 66 L. Ed. 254, cited in Asociacion De Agricultores De Talisay-Silay, Inc v. Talisay-Silay Milling Co., Inc., G.R. Nos. L-19937 & L-21304, 19 February 1979, 88 SCRA 294, 452.
[24]

"To be sure, there are no irrepealable laws just as there are no irrepealable Constitutions. Change is the predicate of progress and we should not fear change." J. Puno, concurring and dissenting, Defensor-Santiago v. COMELEC, 336 Phil. 848, 918 (1997).
[25]

[1]

R.A. No. 7160.

Republic Act 8291, which contains a similar tax exempting provision in its Section 39 cf., footnote 35, infra.
[26]

[2]

330 Phil. 392 (1996). Reiterated in Philippine Rural Electric Cooperatives Association, Inc. et al. v. Secretary of Interior And Local Government, et al., 451 Phil. 683 (2003). See also Philippine Ports Authority v. City of Iloilo, infra at note 18.
[3]

32 Phil. 36 (1915).

[27]

Id. at 49, citing Lewis' Southerland on Statutory Construction, vol. 1, section 244, pp. 456-57.
[28]

Section 2, Article X.

Article II, Sec. 25, 1987 Constitution.

[29]

Id., Article X, Sec. 5. 59 C.J., sec. 500, pp. 899-900. Ibid.

[30]

[31]

[32]

Sec. 39. Exemption from tax, Legal Process and Lien.- It is hereby declared to be the policy of the State that the actuarial solvency of the funds of the GSIS shall be preserved and maintained at all times and that the contribution rates necessary to sustain the benefits under this Act shall be kept as low as possible in order not to burden the members of the GSIS and their employees. Taxes imposed on the GSIS tend to impair the actuarial solvency of its funds and increase the contribution rate necessary to sustain the benefits of this Act. Accordingly, notwithstanding any laws to the contrary, the GSIS, its assets, revenues including the accruals thereto, and benefits paid, shall be exempt from all taxes. These exemptions shall continue unless expressly and specifically revoked and any assessment against the System as of the approval of this Act are hereby considered paid. Consequently, all laws, ordinances, regulations, issuances, opinions or jurisprudence contrary to or in derogation of this provision are hereby deemed repealed, superseded and rendered ineffective and without legal force and effect. Moreover, these exemptions shall not be affected by subsequent laws to the contrary, unless this section is expressly and categorically repealed by law and a provision is enacted to substitute or replace the exemption referred to herein as an essential factor to maintain or protect the solvency of the fund, notwithstanding and independently of the guaranty of the national government to secure such solvency or liability. ... ... It does not escape this Court's attention that Section 39 of Republic Act No. 8291 essentially replicates Section 33 of P.D. No. 1146, as amended, including those conditionalities on future repeal which we had observed to be flawed. Nonetheless, the Court is precluded as of now from making any declaration regarding Section 39 of R.A. No. 8291, since the said provision is not relevant to this case, nor would any corresponding declaration assist in the resolution of the issues of this case, which after all involves taxes assessed prior to the enactment of R.A. No. 8291. We likewise do not see any foreseeable instance wherein the status of Section 39 of R.A. No. 8291 would become ripe for judicial adjudication, unless and until there is subsequent legislation enacted affecting the tax-exempt status of the GSIS, or at least attempts in Congress to pass such legislation. Until then, judicial silence is proper.

E-Library Doc. ID: a45475a11ec72b843d74959b60fd7bd6462fd564930e3

SECOND DIVISION [G.R. No. 147192, June 27, 2006] GOVERNMENT SERVICE INSURANCE SYSTEM, PETITIONER, VS. THE CITY ASSESSOR OF ILOILO CITY, THE REGISTER OF DEEDS OF ILOILO CITY AND ROSALINA FRANCISCO, REPRESENTED BY HER ATTORNEY-IN-FACT, SALVADOR PAJA I,[*] RESPONDENTS. DECISION
CORONA, J.: Assailed in this present petition for review under Rule 45 of the Rules of Court are the decision[1] and resolution[2] of the Court of Appeals (CA) dismissing a petition for annulment of judgment[3] filed by petitioner, the Government Service Insurance System (GSIS), in Cadastral Case No. 84 and another unnumbered cadastral case decided by the Regional Trial Court (RTC), Branches 36 and 31, of Iloilo City, respectively. In the two cadastral cases, private respondent Rosalina Francisco petitioned for the issuance of new transfer certificates of title (TCTs) in her name over two parcels of land, to wit: TCT No. 41681 A parcel of land known as Lot No. 6, Block 2, of the Subdivision Plan (LRC) Psd-184005 being a portion of Lot 2214-B, Jaro Cadastre, LRC (GLRO) Record No. 8 situated in the District of Jaro, Iloilo City, Island of Panay, registered in the name of GSIS c/o Baldomero Dagdag, of legal age, Filipino citizen and resident of Jaro, Iloilo City, Philippines on June 28, 1991. TCT No. 48580 A parcel of land known as Lot No. 22, Block 2, of the Subdivision Record No. 8 situated in the District of Jaro, Iloilo City, Island of Panay, registered in the name of GSIS c/o Rodolfo Ceres, of legal age, Filipino Citizen and a resident of Iloilo City, Philippines, with an area of Two Hundred Ninety Four (294) square meters, more or less. Private respondent Francisco purchased the subject properties in the auction sales held for the satisfaction of delinquent real property taxes. After the lapse of the one-year redemption period and the failure of the registered owner or any interested person to redeem the properties, the Iloilo City Treasurer issued the corresponding final bill of sale to private respondent. The sales were later on duly annotated on the certificates of title on file with the Register of Deeds. However, the final bill of sale could not be registered because the owner's duplicate certificate of title was unavailable at that time. To effect registration in her name, private respondent instituted separate petitions for the entry of title in her name over the two lots with the RTCs of Iloilo City. Both petitions were unopposed. Finding merit in her petitions, the RTCs, in separate orders issued on separate dates, directed the issuance of new duplicate TCTs. The dispositive portion of the April 29, 1993 order of RTC Branch 36 in Cadastral Case No. 84 read: WHEREFORE, premises considered, the Register of Deeds of the City of Iloilo is hereby ordered to issue new owner's duplicate copy of Transfer Certificate of Title No. T-41681 in the name of GSIS c/o Baldomero Dagdag, upon payment of the required legal

fees. Accordingly, the lost copy of the subject title is hereby declared as NULL and VOID.[4] On the other hand, RTC Branch 31 also issued an order, dated November 8, 1994, in the other (unnumbered) cadastral case, the dispositive portion of which read: WHEREFORE, as prayed for, the Register of Deeds, City of Iloilo is hereby directed to issue a new owner's duplicate certificate of Title No. T-48580 in the name of the G.S.I.S. C/O RODOLFO CERES, the registered owner, basing the same on the Original Certificate of Title found intact and existing in the Office of the Register of Deeds and the latter to cancel Transfer Certificate of Title No. T-48580 together with the encumbrances therein and to issue a new Transfer Certificate of Title in the name of ROSALINA FRANCISCO of legal age, single, Filipino Citizen and resident of Brgy. Tacas, Jaro, Iloilo City, Philippines. The owner's duplicate certificate of title No. T-48580 which was not surrendered is hereby declared null and void.[5] No appeal was made from both orders of the courts a quo, hence, they became final and executory. In a petition to annul the judgment of the trial court, petitioner, as the alleged previous owner of the parcels of land sold at public auction, assailed the orders of the RTCs of Iloilo City before the CA. It claimed that the assessment of real property taxes on it (GSIS) was void since, under its charter (RA 8291), it was exempt from all forms of taxes (including real property taxes on the properties held by it) that were due to the local governments where such properties were located. Furthermore, it claimed that the proceedings in the assessment and levy of said taxes, as well as the sale of the properties at public auction, were held without notice to it, hence, its right to due process was violated. The appellate court gave no credence to the arguments of petitioner and dismissed its petition. According to the CA, the exemption of GSIS under its charter was not applicable pursuant to Section 234(a) of RA 7160, otherwise known as The Local Government Code of 1991 (LGC). Under that law, the tax-exempt status of GSIS cannot be invoked where the actual use or beneficial ownership of the properties under its title has been conveyed to another person.[6] The CA added that there was also no basis for GSIS's claim that it was denied due process.[7] Petitioner filed a motion for reconsideration but this was denied by the CA, hence, it brought this case to us via a petition for review on certiorari under Rule 45 of the Rules of Court. In this petition, petitioner essentially faults the CA for ruling that its properties were not exempt from all forms of taxes under its charter (RA 8291) and that the proceedings on the assessment and levy of its properties were legal. In support of its position, petitioner points to Section 39 of RA 8291 which reads: Section 39. Exemption from Tax, Legal Process and Lien. It is hereby declared that the actuarial solvency of the funds of the GSIS shall be preserved and maintained at all times and that the contribution rates are necessary to sustain the benefits under this Act shall be kept low as possible in order not to burden the member of the GSIS and their employers. Taxes imposed on the GSIS tend to impair the actuarial solvency of its funds and increase the contribution rate necessary to sustain the benefits of this Act. Accordingly, notwithstanding any laws to the contrary, the GSIS, its assets, revenues, including all accruals thereto, and benefits paid shall be exempt from all taxes, assessment fees, charges or duties of all kinds. These exemptions shall continue unless expressly and specifically revoked and any assessment

against the GSIS as of the approval of this Act are hereby considered paid. Consequently, all laws, ordinances, regulations, issuances, opinions, or jurisprudence contrary to or in derogation of this provision are hereby deemed repealed, superseded and rendered ineffective and without legal force and effect. xxx xxx xxx

The rule is that every statute must be interpreted and brought into accord with other laws in a way that will form a uniform system of jurisprudence.[14] The legislature is presumed to have known existing laws on the subject and not to have enacted conflicting laws.[15] Thus, the legislature cannot be presumed to have intended Section 234 (a) to run counter to Section 39 of RA 8291. This conclusion is buttressed by the Court's 2003 decision in National Power Corporation v. City of Cabanatuan[16] where we declared that the tax provisions of the LGC were the most significant provisions therein insofar as they removed the blanket exclusion of instrumentalities and agencies of the national government (like petitioner) from the coverage of local taxation. In that case, petitioner National Power Corporation (NPC) claimed that it was an instrumentality of the government exempt under its charter from paying franchise tax. The Court overruled NPC and upheld the right of respondent city government to impose the franchise tax on its privilege to transact business in its area. Again, in the 2004 case of Rubia v. Government Service Insurance System,[17] the Court declared that any interpretation that gave Section 39 an expansive construction to exempt all GSIS assets and properties from legal processes was unwarranted. These processes included the levy and garnishment of its assets for taxes or claims enforced against it. The Court there ruled that the exemption under Section 39 of the GSIS Charter should be read consistently with its avowed purpose the maintenance of its actuarial solvency to finance the retirement, disability and life insurance benefits of its members. The Court meant that the tax-exempt properties and assets of GSIS referred to those that remained at its disposal and use, either for investment or for income-generating purposes. Properties whose actual and beneficial use had been transferred to private taxable persons, for consideration or otherwise, were excluded and were thus taxable. In Mactan Cebu International Airport Authority v. Marcos,[18] the Court ruled that the exemption of a government-owned or controlled corporation from taxes and other charges was not absolute and could be withdrawn, as in fact certain provisions of the LGC, including Section 234 (a), were deemed to have expressly withdrawn the tax-exempt privilege of petitioner as a government-owned corporation. Lastly, even if we were to construe that RA 8291 abrogated Section 234(a) of the LGC, still it cannot be made to apply retroactively without impairing the vested rights of private respondent. The appellate court thus correctly stated: xxx it has been the courts' consistent ruling that a repealing statute must not interfere with vested rights or impair the obligation of contracts; that if any other construction is possible, the act should not be construed so as to affect rights which have vested under the old law. Private respondent[s], we reiterate, have become the private owner[s] of the properties in question in the regular course of proceedings established by law, and after the decisions granting such rights have become final and executory. The enactment of the new GSIS Charter cannot be applied in a retroactive manner as to divest the private respondent[s] of [their] ownership.[19] (citations omitted) WHEREFORE, the petition is hereby DENIED. No costs. SO ORDERED.

The funds and/or properties referred to herein as well as the benefits, sums or monies corresponding to the benefits under this Act shall be exempt from attachment, garnishment, execution, levy or other processes issued by the courts, quasi-judicial agencies or administrative bodies including the Commission on Audit (COA) disallowances and from all financial obligations of the members, including his pecuniary accountability arising from or caused or occasioned by his exercise or performance of his official functions or duties, or incurred relative to or in connection with his position or otherwise, is in favor of GSIS.[8](italics supplied) We find no reversible error in the decision and resolution of the CA. Even if the charter of the GSIS generally exempts it from tax liabilities, the prescription is not so encompassing as to make the tax exemption applicable to the properties in dispute here. In the early case of City of Baguio v. Busuego,[9] we held that the tax-exempt status of the GSIS could not prevent the accrual of the real estate tax liability on properties transferred by it to a private buyer through a contract to sell. In the present case, GSIS had already conveyed the properties to private persons thus making them subject to assessment and payment of real property taxes.[10] The alienation of the properties sold by GSIS was the proximate cause and necessary consequence of the delinquent taxes due. The doctrine laid down in City of Baguio is reflected in Section 234 (a) of the LGC,[11]which states: Section 234. Exemptions from Real Property Tax. The following are exempted from payment of the real property tax: (a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person. (emphasis supplied) Petitioner, however, claims that RA 8291, which took effect in 1997, abrogated Section 234 (a) of the LGC of 1991. We disagree. The abrogation or repeal of a law cannot be assumed; the intention to revoke must be clear and manifest.[12] RA 8291 made no express repeal or abrogation of the provisions of RA 7160, particularly Section 234 (a) thereof. Repeal by implication in this case is not at all convincing either. To bring about an implied repeal, the two laws must be absolutely incompatible. They must be clearly repugnant in a way that the later law (RA 8291) cannot exist without nullifying the prior law (RA 7160).[13] Indeed, there is nothing in RA 8291 which abrogates, expressly or impliedly, that particular provision of the LGC. The two statutes are not inconsistent on that specific point, let alone so irreconcilable as to compel us to uphold one and strike down the other.

Puno, (Chairperson), Sandoval-Gutierrez, Azcuna, and Garcia, JJ., concur.

[18]

330 Phil. 392 (1996). Rollo, p. 38.

[19]

[*]

The Presiding Judges of the Regional Trial Court, Branches 36 and 31, both of Iloilo City, were impleaded as public respondents. Under Rule 45 of the Rules of Court, the appeal therein may be filed without impleading the lower courts or the judges thereof, either as petitioners or respondents.
[1]

E-Library Doc. ID: a45475a11ec72b843d74959b60fd7bd6465b168e02195

Penned by Justice Rodrigo V. Cosico and concurred in by Associate Justices Godardo A. Jacinto and Remedios SalazarFernando of the 11th Division of the Court of Appeals; rollo, pp. 31-35.
[2]

Penned by Justice Rodrigo V. Cosico, and concurred in by Associate Justices Godardo A. Jacinto and Remedios SalazarFernando of the Former 11th Division of the Court of Appeals; rollo, pp. 37-38.
[3]

CA-G.R. SP No. 51149. Decided by Judge Quiaico G. Defensor. Decided by Judge Nicolas Sian Monteblanco. Rollo, pp. 31-35. Id. Rollo, pp. 10-11. No. L-29772, 18 September 1980, 100 SCRA 116.

[4]

[5]

[6]

[7]

[8]

[9]

[10]

The property with TCT 41681 was previously conveyed to Baldomero Dagdag, while the property with TCT No. 48580 was conveyed to Rodolfo Ceres. Supra at p. 2.
[11]

Section 40 of the Real Property Tax Code, which took effect in 1974, also carries the same provision. The case of City of Baguio quoted: "Sec. 40 Exemptions from Real Property Tax. The exemption shall be as follows: (a) Real property owned by the Republic of the Philippines or any of its political subdivisions and governmentowned or controlled corporations so exempt by its charter; Provided, however, that this tax exemption shall not apply to real property of the above-named entitles the beneficial use of which has been granted, for consideration or otherwise to a taxable person."
[12]

STATUTORY CONSTRUCTION, Agpalo, Fifth Edition (2003) (REX Printing Company, Inc., Quezon City, Philippines); citing City of Manila v. Reyes, 99 Phil. 986 (1957).
[13]

Id., pp. 399, 404-405. Hagad v. Gozodadole, 321 Phil. 604 (1995). Id. 449 Phil. 233 (2003). G.R. No. 151439, 21 June 2004, 432 SCRA 529.

[14]

[15]

[16]

[17]

FIRST DIVISION [G.R. No. 124293, November 20, 2000] JG SUMMIT HOLDINGS, INC.,PETITIONER, VS. COURT OF APPEALS, COMMITTEE ON PRIVATIZATION, ITS CHAIRMAN AND MEMBERS; ASSET PRIVATIZATION TRUST AND PHILYARDS HOLDINGS, INC., RESPONDENTS. DECISION
YNARES-SANTIAGO, J.: On January 27, 1977, the National Investment and Development Corporation (NIDC), a government corporation, entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. of Kobe, Japan (Kawasaki) for the construction, operation, and management of the Subic National Shipyard, Inc. (SNS), which subsequently became the Philippine Shipyard and Engineering Corporation (PHILSECO). Under the JVA, NIDC and Kawasaki would maintain a shareholding proportion of 60%-40%, respectively. One of the provisions of the JVA accorded the parties the right of first refusal should either party sell, assign or transfer its interest in the joint venture. Thus, paragraph 1.4 of the JVA states: "Neither party shall sell, transfer or assign all or any part of its interest in SNS to any third party without giving the other under the same termsthe right of first refusal. This provision shall not apply if the transferee is a corporation owned or controlled by the GOVERNMENT or by a KAWASAKI affiliate." (Italics supplied.) On November 25, 1986, NIDC transferred all its rights, title and interest in PHILSECO to the Philippine National Bank (PNB). More than two months later or on February 3, 1987, by virtue of Administrative Order No. 14, PNB's interest in PHILSECO was transferred to the National Government. Meanwhile, on December 8, 1986, President Corazon C. Aquino issued Proclamation No. 50 establishing the Committee on Privatization (COP) and the Asset Privatization Trust (APT) to take title to and possession of, conserve, manage and dispose of nonperforming assets of the National Government. On February 27, 1987, a trust agreement was entered into between the National Government and the APT by virtue of which the latter was named the trustee of the National Government's share in PHILSECO. In 1989, as a result of a quasi-reorganization of PHILSECO to settle its huge obligations to PNB, the National Government's shareholdings in PHILSECO increased to 97.41% thereby reducing Kawasaki's shareholdings to 2.59%. Exercising their discretion, the COP and the APT deemed it in the best interest of the national economy and the government to privatize PHILSECO by selling 87.67% of its total outstanding capital stock to private entities. After a series of negotiations between the APT and Kasawaki, they agreed that the latter's right of first refusal under the JVA be "exchanged" for the right to top by five percent (5%) the highest bid for said shares. They further agreed that Kawasaki would be entitled to name a company in which it was a stockholder, which could exercise the right to top. On September 7, 1990, Kawasaki informed APT that Philyards Holdings, Inc. (PHI) would exercise its right to top by 5%. At the pre-bidding conference held on September 28, 1993, interested bidders were given copies of the JVA between NIDC and Kawasaki, and of the Asset Specific Bidding Rules (ASBR)

drafted for the 87.67% equity (sic)[1] in PHILSECO of the National Government. Salient provisions of the ASBR state: "1.0. The subject of this Asset Privatization Trust (APT) sale through public bidding is the National Government's equity in PHILSECO consisting of 896,869,942 shares of stock (representing 87.67% of PHILSECO's oustanding capital stock), which will be sold as a whole block in accordance with the rules herein enumerated. xxx xxx xxx

3.0. This public bidding shall be on an Indicative Price Bidding basis. The Indicative price set for the National Government's 87.67% equity in PHILSECO is PESOS: ONE BILLION THREE HUNDRED MILLION (P1,300,000,000.00). xxx xxx xxx

12.0. The bidder shall be solely responsible for examining with appropriate care these rules, the official bid forms, including any addenda or amendments thereto issued during the bidding period. The bidder shall likewise be responsible for informing itself with respect to any and all conditions concerning the PHILSECO Shares which may, in any manner, affect the bidder's proposal. Failure on the part of the bidder to so examine and inform itself shall be its sole risk and no relief for error or omission will be given by APT or COP. x x x." The provisions of the ASBR were explained to the interested bidders who were notified that bidding would be held on December 2, 1993. At the public bidding on said date, the consortium composed of petitioner JG Summit Holdings, Inc., Sembawang Shipyard Ltd. of Singapore (Sembawang), and Jurong Shipyard Limited of Malaysia (Jurong), was declared the highest bidder at P2.03 billion. The following day, December 3, 1993, the COP approved the sale of 87.67% National Government shares of stock in PHILSECO to said consortium. It notified petitioner of said approval "subject to the right of Kawasaki Heavy Industries, Inc./Philyards Holdings, Inc. to top JGSMI's (petitioner's) bid by 5% as specified in the bidding rules." On December 29, 1993, petitioner informed the APT that it was protesting the offer of PHI to top its bid on the grounds that: (a) the Kawasaki/PHI consortium composed of Kawasaki, Philyards, Mitsui, Keppel, SM Group, ICTSI and Insular Life violated the ASBR because the last four (4) companies were the losing bidders (for P1.528 billion) thereby circumventing the law and prejudicing the weak winning bidder; (b) only Kawasaki could exercise the right to top; (c) giving the same option to top to PHI constituted unwarranted benefit to a third party; (d) no right of first refusal can be exercised in a public bidding or auction sale, and (e) the JG Summit Consortium was not estopped from questioning the proceedings. On February 2, 1994, petitioner was notified that PHI had fully paid the balance of the purchase price of the subject bidding. On February 7, 1994, the APT notified petitioner that PHI had exercised its option to top the highest bid and that the COP had approved the same on January 6, 1994. On February 24, 1994, the APT and PHI executed a Stock Purchase Agreement. Consequently, petitioner filed with this Court a petition

for mandamus under G.R. No. 114057. On May 11,1994, said petition was referred to the Court of Appeals --"x x x for proper determination and disposition, pursuant to Section 9, paragraph 1 of B.P. 129, granting the Court of Appeals `original jurisdiction to issue writs of mandamus x x x and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction,' which jurisdiction is concurrent with this Court, there being no special and important reason for this Court to assume jurisdiction over the case in the first instance."[2] On July 18, 1995, the Court of Appeals "denied" for lack of merit the petition formandamus. Citing Guanio v. Fernandez,[3] it held that mandamus is not the proper remedy to "compel the undoing of an act already done or the correction of a wrong already perpetuated, even though the action taken was clearly illegal." It was further ruled that it was not the proper forum for a "mere petition for mandamus" that aimed to question the constitutionality or legality of the right of first refusal and the right to top that was exercised by Kawasaki/PHI and that the matter must be brought "by the proper party in the proper forum at the proper time and threshed out in a full blown trial." After ruling that the right of first refusal and the right to top are prima facie legal, the Court of Appeals found petitioner to be in estoppel for the following reasons: "5. If petitioner found the right to top to be illegal, it should not have participated in the public bidding; or it should have questioned the legality of the rules before the courts or filed a petition for declaratory relief (Rule 64, Rules of Court) before the public bidding could have taken place. By participating in the public bidding, with full knowledge of the right to top granted to Kawasaki/Philyards, petitioner is estopped from questioning the validity of the award given to Philyards after the latter exercised the right to top and had paid in full the purchase price of the subject shares, pursuant to the ASBR. 6. The fact that the losing bidder, Keppel Consortium (composed of Keppel, SM Group, Insular Life Assurance, Mitsui and ICTSI) appears to have joined Philyards in the latter's effort to raise P2.131 billion necessary in exercising the right to top by 5% is a valid activity in free enterprise that is not contrary to law, public policy or public morals. It should not be a cause of grievance for petitioner as it is the very essence of free competition in the business world. Astute businessmen involved in the public bidding in question knew what they were up against. And when they participated in the public bidding with prior knowledge of the right to top, they did so, with full knowledge of the eventuality that the highest bidder may still be topped by Kawasaki/Philyards by 5%. It is admitted by petitioner that it likewise represents a consortium composed of JG Summit, Sembawang Singapore and Jurong of Malaysia. Why should petitioner then expect Philyards to limit itself to its own resources when the latter can enter into agreements with other entities to help it raise the money it needed to pay the full purchase price as in fact it had already paid the National Government in the amount of P2.131 billion as required under the ASBR?"[4] Petitioner filed a motion for the reconsideration of said Decision which was denied on March 15, 1996. Petitioner thus filed the instant petition for review on certiorari, raising the following arguments: I.

THE COURT OF APPEALS GRIEVOUSLY ERRED IN HOLDING THAT PETITIONER JG SUMMIT IS LEGALLY ESTOPPED FROM CHALLENGING THE LEGALITY OF THE RIGHT TO TOP, INSERTED IN THE BIDDING RULES, AS WELL AS THE RIGHT OF FIRST REFUSAL FROM WHICH THE RIGHT TO TOP WAS ADMITTEDLY SOURCED, BY SIMPLY STATING THAT THOSE RIGHTS ARE VALID AND ENFORCEABLE WITHOUT RULING ON ANY OF THE IMPORTANT LEGAL AND CONSTITUTIONAL GROUNDS RAISED BY THE PETITIONER AS FOLLOWS: (A) THE RIGHT OF FIRST REFUSAL, GRANTED TO A JAPANESE CORPORATION AT A TIME WHEN IT HELD 40% EQUITY IN PHILSECO, A LANDHOLDING CORPORATION, IS NULL AND VOID FOR BEING CONTRARY TO THE CONSTITUTION. (B) THE RIGHT TO TOP WAS GRANTED TO THE JAPANESE CORPORATION AT A TIME WHEN IT MERELY HELD 2.6% EQUITY IN PHILSECO. (C) THE RIGHT OF FIRST REFUSAL GRANTED TO THE JAPANESE CORPORATION OVER SHARES OF STOCK IS CONTRARY TO THE CORPORATION CODE. (D) THE RIGHT TO TOP IS CONTRARY TO PUBLIC POLICY AS IT IS ANATHEMA TO COMPETITIVE PUBLIC BIDDING FOR BEING UNDULY RESTRICTIVE THEREOF, AND, MOREOVER, IS CONTRARY TO DUE PROCESS OF LAW AS IT IS AGAINST THE BASIC RUDIMENTS OF FAIR PLAY. (E) THE GRANT OF THE RIGHT TO TOP IS A CRIMINAL VIOLATION OF THE ANTI-GRAFT LAW AS IT GIVES A CLEARLY UNWARRANTED BENEFIT IN FAVOR OF PHILYARDS AS SHOWN BY CLEAR AND UNDISPUTED DOCUMENTARY EVIDENCE. II. THE COURT OF APPEALS GRIEVOUSLY ERRED IN HOLDING THAT MANDAMUS IS NOT A PROPER REMEDY IN THIS CASE. III. FOLLOWING ITS OWN FINDINGS, THE COURT OF APPEALS GRIEVOUSLY ERRED (A) IN NOT DIRECTING THAT TRIAL BE HELD ON ALLEGED ISSUES OF FACT AND (B) IN NOT APPOINTING AN AMICUS CURIAEFROM AMONG THE LAWYERS IN THE COMMISSION ON AUDIT TO DETERMINE THE APPLICABILITY OF ITS REQUIREMENTS TO THE TRANSACTIONS IN THIS CASE.[5] In their comment on the petition, private respondent PHI contends that the real party in interest which should have filed the petition for mandamus is the JG Summit Consortium and not solely petitioner JG Summit Holdings, Inc. which is just a part of that consortium. Since Sembawang and Jurong, the other members of the consortium, are indispensable parties to the petition,[6] petitioner's failure to implead them as co-petitioners warranted the dismissal of the petition. Public respondents' contention must fail. While it is true that Rule 3, Section 2 of the Rules of Court provides that "(a)ll persons having an interest in the subject of the action and in obtaining the relief demanded shall be joined as plaintiffs," petitioner may file the petition alone. In the first place, Sembawang and Jurong are not indispensable parties, such that their non-joinder as petitioners will not necessarily result in a failure to arrive at a final determination of the case.[7] They may be necessary parties as

they were members of the consortium that won the public bidding prior to the exercise of the right to top by private respondent, but the petition may be resolved even without their active participation. Secondly, there is a doubt as to whether or not said foreign corporations are "subject to the jurisdiction of the court as to both service of process and venue."[8] Thirdly, petitioner may be deemed to represent Sembawang and Jurong. The admission of petitioner's counsel that said foreign corporations are underwriting his and the other counsel's fees reflects this fact.[9] By the nexus that binds the members of the consortium, in the event that petitioner succeeds in pursuing this case, it is bound to respect the existence of the consortium and the corresponding responsibilities arising therefrom. Public respondents also contend that petitioner has no standing to question the legality of a provision of the JVA in which it is not a party.[10] However, as this Court held inKilosbayan v. Morato,[11] there is a difference between the rule on real-party-ininterest and the rule on standing, as the latter has constitutional underpinnings. In the case at bar, petitioner has sufficiently alleged constitutional ramifications in the questioned public bidding of the PHILSECO that merit the attention of the Court. Moreover, the prospect of financial gains arising from the award of the sale of PHILSECO is enough personal stake in the outcome of the controversy to vest upon petitioner the locus standi to file the petition for mandamus. Besides, without Kawasaki-PHI's right to top the highest bid, petitioner would have been awarded the sale as the highest bidder. A winning bidder has personality to initiate proceedings to prevent setting at naught his right; otherwise, his right to due process would be violated.[12] As such winning bidder, petitioner has "a present substantial interest," or such interest in the subject matter of action as will entitle it, under substantive law, to recover if the evidence is sufficient. [13] With respect to the propriety of the remedy availed by petitioner, the Court of Appeals correctly held that the special civil action of mandamus is not the proper remedy to question the legality of the exercise of the right to top by private respondent. It does not lie to compel the award of a contract subject of bidding to an unsuccessful bidder.[14] Mandamus applies as a remedy only where petitioner's right is founded clearly in law and not when it is doubtful.[15] Thus: "In order that a writ of mandamus may issue, it is essential that the person petitioning for the same has a clear legal right to the thing demanded and that it is the imperative duty of the respondent to perform the act required. It neither confers powers nor imposes duties and is never issued in doubtful cases. It is simply a command to exercise a power already possessed and to perform a duty already imposed."[16] The Court of Appeals cannot declare petitioner as the winning bidder in this case and direct the COP/APT to award the sale to it without first determining the validity of the right to top stipulated in the ASBR. Moreover, the sale of government share in PHILSECO is a fait accompli, in view of the execution of the Stock Purchase Agreement between APT and PHI. Mandamus may not be availed 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.[17] Be that as it may, the Court of Appeals erred when it dismissed the petition on the sole ground of the impropriety of the special civil action of mandamus. It must be stressed that the petition was also one for certiorari, seeking to nullify the award of the sale to private respondent of the PHILSECO shares. Verily, the petition

alleges that "respondents COP and APT have committed such a grave abuse of discretion tantamount to lack or excess of their jurisdiction in insisting on awarding the bid to Philyards, for the various reasons stated herein, particularly since the right of first refusal and the right to top the bid are unconstitutional, contrary to law and public policy."[18] Petitioner's failure to include certiorari in its caption should not negate the fact that the petition charged public respondent with grave abuse of discretion in awarding the sale to private respondent. Well-settled is the rule that it is not the caption of the pleading but the allegations therein that determine the nature of the action and the Court shall grant relief warranted by the allegations and the proof even if no such relief is prayed for.[19] Petitioner's main contention is that PHILSECO, as a shipyard, is a public utility and, hence, could be operated only by a corporation at least 60% of whose capital is owned by Filipino citizens, in accordance with Article XII, Section 10 of the Constitution. Petitioner asserts that a shipyard is a public utility pursuant to Section 13 (b) of Commonwealth Act No. 146.[20] Respondents, on the other hand, contend that shipyards are no longer public utilities by express provision of Presidential Decree No. 666, which provided incentives to the shipbuilding and ship repair industry. Indeed, P.D. No. 666 dated March 5, 1975 explicitly stated that a "shipyard" was not a "public utility." Section 1 thereof provide as follows: "d) Registration required but not as Public Utility. - The business of constructing and repairing vessels or parts thereof shall not be considered a public utility and no Certificate of Public Convenience shall be required therefor. However, no shipyard, graving dock, marine railway or marine repair shop and no person or enterprise shall engage in the construction and/or repair of any vessel, or any phase or part thereof, without a valid Certificate of Registration and license for this purpose from the Maritime Industry Authority, except those owned or operated by the Armed Forces of the Philippines or by foreign governments pursuant to a treaty or agreement." (Underscoring supplied.) However, Section 1 of P.D. No. 666 was expressly repealed by Section 20 of Batas Pambansa Blg. 391, the Investment Incentive Policy Act of 1983.[21] Subsequently, Executive Order No. 226, the Omnibus Investments Code of 1987, was issued and Section 85 thereof expressly repealed B.P. Blg. 391.[22] The express repeal of B.P. Blg. 391 by E.O. No. 226 did not revive Section 1 of P.D. No. 666, declassifying the shipbuilding and ship repair industry as a public utility, as said executive order did not provide otherwise. When a law which expressly repeals a prior law is itself repealed, the law first repealed shall not be thereby revived unless expressly so provided.[23] Consequently, when the APT drafted the ASBR sometime in 1993, P.D. No. 666 no longer existed in our statute books. While it is true that the repeal of a statute does not operate to impair rights that have become vested or accrued while the statute was in force, there are no vested rights of the parties that should be protected in the case at bar. The reason is simple: said decree was already inexistent when the ASBR was issued. A shipyard such as PHILSECO being a public utility as provided by law, the following provision of the Article XII of the Constitution applies: "Sec. 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted

except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens, nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public utilities by the general public.The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association shall be citizens of the Philippines." (Italics supplied.) The progenitor of this constitutional provision, Article XIV, Section 5 of the 1973 Constitution, required the same proportion of 60%40% capitalization. The JVA between NIDC and Kawasaki entered into on January 27, 1977 manifests the intention of the parties to abide by the constitutional mandate on capitalization of public utilities.[24] Paragraph 1.3 of the JVA, as amended by Addendum No. 2 dated December 28, 1983,[25] provides: "The authorized capital stock of PHILSECO shall be P330 milion. The parties shall thereafter increase their subscription in PHILSECO as may be necessary and as called by the Board of Directors, maintaining a proportion of 60%-40% for NIDC and KAWASAKI, respectively, up to a total subscribed and paid-up capital stock of P312 million." (Underscoring supplied.)

as far as corporations and partnerships are concerned. However, Section 2.3.1 (a) of its Memorandum Circular No. 95, Series of 1994,[30]setting out the Revised Implementing Guidelines on the Licensing of Shipbuilders, Ship Repairers, Afloat Repairers, Boatbuilders and Shipbreakers, seems to exempt joint ventures registered with the SEC, the BOI and the EPZA from the 60% requirement of Filipino ownership.[31] The said provision states: "The applicant must be a Filipino citizen or a corporation/partnership at least 60% of the authorized capital stock of which is owned by Filipino citizens except for joint ventures which are registered with the Securities and Exchange Commission, the Board of Investments and/or Export Processing Zone Authorities."[32] The constitutionality of said MARINA guideline, however, is not in issue here. Kawasaki was bound by its contractual obligation under the JVA that limits its right of first refusal to 40% of the total capitalization of PHILSECO. Thus, Kawasaki cannot purchase beyond 40% of the capitalization of the joint venture on account of both constitutional and contractual proscriptions. From the facts on record, it appears that at the outset, the APT and Kawasaki respected the 60%-40% capitalization proportion in PHILSECO. However, APT subsequently encouraged Kawasaki to participate in the public bidding of the National Government's shareholdings of 87.67% of the total PHILSECO shares, definitely over and above the 40% limit of its shareholdings. In so doing, the APT went beyond the ambit of its authority. It is well settled that the role of courts is to ascertain whether a branch or instrumentality of Government has transgressed its constitutional or statutory boundaries. The courts, must examine those boundaries in the light of provisions of the law. Otherwise, it would stray into the realm of policy decision-making.[33] Proclamation No. 50, creating the COP and the APT, was issued by President Corazon C. Aquino pursuant to her legislative powers under the Provisional Constitution of 1986. Section 12 of said Proclamation vested the APT with the following powers: (1) To formulate and, after approval by the Committee, implement a program for the disposition of assets transferred to it under this Proclamation, such program to be completed within a period of five years from the date of the issuance of this Proclamation; (2) Subject to its having received the prior written approval of the Committee to sell such asset at a price and on terms of payment and to a party disclosed to the Committee, to sell each asset referred to it by the Committee to such party and on such terms as in its discretion are in the best interest of the National Government, and for such purpose to execute and deliver, on behalf and in the name of the National Government, such deeds of sale, contracts and other instruments as may be necessary or appropriate to convey title to such assets; xxx xxx xxx

A joint venture is an association of persons or companies jointly undertaking some commercial enterprise with all of them generally contributing assets and sharing risks. It requires a community of interest in the performance of the subject matter, a right to direct and govern the policy in connection therewith, and duty, which may be altered by agreement to share both in profit and losses.[26] Persons and business enterprises usually enter into a joint venture because it is exempt from corporate income tax.[27] Considered more of a partnership,[28] a joint venture is governed by the laws on contracts and on partnership. The joint venture created between NIDC and Kawasaki falls within the purview of an "association" pursuant to Section 5 of Article XIV of the 1973 Constitution and Section 11 of Article XII of the 1987 Constitution. Consequently, a joint venture that would engage in the business of operating a public utility, such as a shipyard, must observe the proportion of 60%-40% Filipino-foreign capitalization. Notably, paragraph 1.4 of the JVA accorded the parties the right of first refusal "under the same terms." This phrase implies that when either party exercises the right of first refusal under paragraph 1.4, they can only do so to the extent allowed them by paragraphs 1.2 and 1.3 of the JVA or under the proportion of 60%-40% of the shares of stock. Thus, should the NIDC opt to sell its shares of stock to a third party, Kawasaki could only exercise its right of first refusal to the extent that its total shares of stock would not exceed 40% of the entire shares of stock of SNS or PHILSECO. The NIDC, on the other hand, may purchase even beyond 60% of the total shares. As a government corporation and necessarily a 100% Filipino-owned corporation, there is nothing to prevent its purchase of stocks even beyond 60% of the capitalization as the Constitution clearly limits only foreign capitalization. Parenthetically, the Maritime Industry Authority (MARINA) which has been tasked to regulate the operation of shipbuilding and ship repair yards,[29] abides by the Filipino capitalization requirement

(7) To adopt its internal rules and regulations, to adopt, alter and use a seal which shall be judicially noticed; to enter into contracts; to sue and be sued; xxx xxx x x x"

Pursuant to these provisions, the APT drafted the ASBR. Since the APT's rule-making authority is merely delegated, the ASBR should be measured by the standard set by said proclamation.[34] Notably, the discretion granted by the proclamation to the APT for the sale of government property is circumscribed only by the "best interest of the National Government." Implicitly written in any delegated legislative authority, such as that provided for in Proclamation No. 50, is the requisite that the rules and regulations which an administrative body adopts must respect pertinent provisions of the Constitution and the law.[35] Article XII, Section 11 of the Constitution providing for a 60% Filipino capitalization in order that public utilities may be granted a franchise should thus be deemed a paramount consideration in drafting the ASBR. In this regard, worth noting is paragraph 15.0 of the ASBR, which provides that: "In the event that the winning bidder is a 100% foreign-owned corporation, it may name its nominee corporation to whom the NG shares shall be conveyed, provided it owns 40% equity in the nominee corporation, so as not to affect PHILSECO's qualification to own real estate properties in the Philippines." This rule is fraught with dangerous implications. It allows a completely foreign corporation to participate in the public bidding of more than 60% of the total shares of a public utility corporation without setting a period within which the foreign bidder should name its nominee. As it is, the rule allows a totally foreign investor to engage in the business of operating a public utility for an unlimited period of time in total disregard of the constitutional proscription on the percentage of Filipino ownership of corporations engaged therein. Paragraph 15.0 of the ASBR is thus directly and openly repugnant to the Constitution considering that it allows foreign corporations to operate a public utility for an unlimited period of time. In carrying out its objective of disposing of government property, the APT should take into account the pertinent laws. Since the method of disposing the PHILSECO that the APT had adopted was through public bidding, it was duty-bound to follow the rules and regulations on competitive public bidding, in order to uphold the elementary rule on fairness in such disposition. As this Court once said: "x x x. A competitive public bidding aims to protect the public interest by giving the public the best possible advantages through open competition. It is a mechanism that enables the government agency to avoid or preclude anomalies in the execution of public contracts."[36]

generally given to the lowest bidder while in the disposition of government assets, the award is to the highest bidder.[41] The term "public bidding" imports a sale to the highest bidder with absolute freedom for competitive bidding.[42] Under Section 504 of the Government Auditing Rules and Regulations, a public auction, which is the mode of divestment or disposal of government property, shall adhere to established mechanics and procedures in public bidding.[43] In such public auction sales, the presence of a Commission on Audit (COA) representative who shall see to the proper observance of auditing rules is imperative.[44] In this case, there is no record that a COA representative witnessed the public auction on December 2, 1993. Neither is there a showing that the APT observed the requirement of COA Circular No. 89-296, to the effect that a government entity that is disposing of government property shall furnish the COA with the disposal procedure adopted. Likewise, nowhere in the record is it stated that the APT heeded the suggestion of Secretary of Finance and COP Chairman Jayme that its decision to grant Kawasaki the right to top the highest bid be made "known to the Commission on Audit." What appears on record is that the COA did not approve the ASBR, specifically the provision on the right to top the highest bidder. Thus, then COA Chairman Pascasio S. Banaria, replying to the query of petitioner's counsel on whether or not the COA had approved the right to top the highest bid by 5%, stated: "Per information received from our Auditor at APT, no prior approval was issued by their Office regarding said preferential option. We have instructed our Auditor thereat to advise this Office of the result of the review of the Corporation's procedures for the sale of the assets including the review of the bidding documents pertaining to the subject public bidding pursuant to the provisions of the Commission on Audit Circular No. 89-296 dated January 27, 1989."[45] In according the KHI/PHI the right to top, the APT violated the rule on competitive public bidding, under which the highest bidder is declared the winner entitled to the award of the subject of the auction sale. In effect, the grant to KHI/PHI of the right to top can be likened to a second bidding, which, however, is allowed only if there is a failure of bidding, such as when there is only one bidder or none at all.[46] By placing KHI/PHI in the advantageous position of topping the highest bidder, the APT set aside the basic rule in public bidding that there be an opportunity for competition. While it may be argued that the right to top was aimed at giving the best financial advantage to the government, the manner by which that right was conceived and arrived at in this case manifested bias in favor of KHI, thereby clearly brushing aside the rule on fair competition. More importantly, the ASBR provision on the right to top the highest bidder completely disregarded the stipulation in the JVA between NIDC and KHI to comply with the 60%-40% capitalization arrangement whereby KHI, the foreign investor, would be able to exercise its right of first refusal to the extent of only 40% of the total capitalization of the PHILSECO. Thus, KHI, whose investment exposure was already diminished to only 2.59% of the total PHILSECO shares, was given the privilege, through its nominee PHI, of exercising the right to top the highest bid to 87.67% of those shares or definitely over and above its 40% contractual right to PHILSECO shares under the JVA. Consequently, the APT rendered nugatory the constitutional and contractual proscriptions clearly to favor a foreign investor. Furthermore, while the right of first refusal entitled KHI to priority in the award of the contract, that right cannot bar another bidder

The word "bidding" in its comprehensive sense means making an offer[37] or an invitation to prospective contractors whereby the government manifests its intention to make proposals[38] for the purchase of supplies, materials and equipment for official business or public use,[39] or for public works or repair. The three principles in public bidding are: the offer to the public; an opportunity for competition; and a basis for exact comparison of bids. The distinctive character of the system is destroyed and the purpose of its adoption is thwarted when a regulation thereon excludes any of these principles.[40] Public bidding of government contracts and for the disposition of government assets should have the same principles and objectives. Their only difference, if at all, is that in the public bidding for public contracts, the award is

from submitting a bid because, precisely, the law requires public bidding in government contracts.[47] Thus, by engrafting in the provisions of the ASBR the right to top, which was only an offshoot of the right of first refusal, the APT effectively did away with pubic bidding insofar as KHI/PHI was concerned. To be sure, the right to top is different from the right to match. In the latter, a qualified bidder is given the privilege of offering the same bid as that of the highest bidder.[48] In the former, as provided for by the ASBR, a non-bidder is accorded the right to top the highest bid. There is reason, therefore, for the petitioner to complain that the APT made a show of a public bidding in order to elicit the highest bid, only to award the sale to a non-bidder. The unfair manner by which the purported public bidding was conducted by the APT is even made more blatant by the fact that after the "public bidding," KHI exercised the right to top through its nominee, private respondent PHI, which has among its stockholders some losing bidders. In drafting the ASBR, the APT should have noted the fact that foreign investors were competing in the bidding. While it is true that foreign investment should be encouraged in this country, however, the ASBR provision on the right to top is unfair to all competitors, be they foreign or local, in the public auction of 87.67% of PHILSECO shares as it provided for a method that would set at naught the entire public bidding. It was thus error for the Court of Appeals to conclude that petitioner was estopped from contesting the validity of the ASBR and the bidding procedure conducted pursuant to it. It is clear from the provisions of the ASBR itself that the basic rules on fair competition in public biddings have been disregarded. Although petitioner had the opportunity to examine the ASBR before it participated in the bidding, it cannot be estopped from questioning the unconstitutional, illegal and inequitable provisions thereof. Estoppel is unavailing in this case; otherwise, it would stamp validity to an act that is prohibited by law or against public policy.[49] WHEREFORE, the instant petition for review on certiorari is GRANTED. The assailed Decision and Resolution of the Court of Appeals are REVERSED and SET ASIDE.Petitioner is ordered to pay to APT its bid price of Two Billion Thirty Million Pesos (P2,030,000,000.00), less its bid deposit plus interests upon the finality of this Decision. In turn, APT is ordered to: (a) accept said amount of P2,030,000,000.00 less bid deposit and interests from petitioner; (b) execute a Stock Purchase Agreement with petitioner;

[1]

The heading of the ASBR states that the same rules were specifically set up for "97.4% equity of the national government in Philippine Shipyard & Engineering Corporation (PHILSECO)" (Rollo of CA-G.R. SP No. 34208, p. 46).
[2]

CA Record, p. 135; CA-G.R. SP No. 34208. 55 Phil. 814 (1931). Rollo, pp. 209-210. Petition, pp. 15-16. Rollo, pp. 284-288. Rules of Court, Rule 3, Sec. 7. Sec. 8, supra. CA Record, p. 473; TSN, March 2, 1995, pp. 99-100. Rollo, pp. 38-40. 316 Phil. 652, 695 (1995). See: Republic v. NLRC, 314 Phil. 507, 538. Kilosbayan v. Morato, supra at p. 698. Borromeo v. City of Manila, 62 Phil. 512 (1935).

[3]

[4]

[5]

[6]

[7]

[8]

[9]

[10]

[11]

[12]

[13]

[14]

[15]

Garces v. Court of Appeals, 328 Phil. 403, 409 citing University of San Agustin v. Court of Appeals, G.R. No. 100588, 230 SCRA 761 (1994); Tamano v. Manglapus, G.R. No. 102787, 214 SCRA 567 (1992); Sanson v. Barrios, 63 Phil. 199 (1936), and Marcelo v. Tantuico, Jr., G.R. No. 60074, 142 SCRA 439 (1986).
[16]

Lim Tay v. Court of Appeals, G.R. No. 126891, 293 SCRA 634, 653 (1998) citing University of San Agustin, Inc. v. Court of Appeals, supra at pp. 771-772.
[17]

Angchangco, Jr. v. Hon. Ombudsman, 335 Phil. 766, 771-772 (1997).

[18]

CA Record, pp. 42-43.

[19]

Solid Homes, Inc. v. Court of Appeals, 337 Phil. 605, 613 (1997).
[20]

(c) cause the issuance in favor of petitioner of the certificates of stocks representing 87.67% of PHILSECO's total capitalization; (d) return to private respondent PHI the amount of Two Billion One Hundred Thirty One Million Five Hundred Thousand Pesos (P2,131,500,000.00); and (e) cause the cancellation of the stock certificates issued to PHI.

SO ORDERED. Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur.

The term "public service" includes every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier, railroad, street railway, traction railway, sub-way motor vehicle, either for freight or passenger, or both with or without fixed route and whatever may be its classification, freight or carrier service of any class, express service, steamboat, or steamship line, pontines, ferries, and water craft, engaged in the transportation of passengers or freight or both, shipyard,marine railway, marine repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and power, petroleum, sewerage system, wire or wireless communications system, wire or wireless broadcasting stations and other similar public services x x x. (Emphasis supplied)

No. 75875, 180 SCRA 130, 147 (1989).

[21]

The repealing clause states:

[29]

P.D. No. 1059.

"Sec. 20. The following provisions are hereby repealed: 1) Section 53, P.D. 463 (Mineral Resources Development Decree); 2) Section 1, P. D. 666 (Shipbuilding and Ship Repair Industry); 3) Section 6, P. D. 1101 (Radioactive Minerals); 4) LOI 508 extending P.D. 791 and P.D. 924 (Sugar); and 5) The following articles of Presidential Decree 1789: 2, 18, 19, 22, 28, 30, 39, 49(d), 62, and 77. Articles 45, 46 and 48 are hereby amended only with respect to domestic and export producers. All other laws, decrees, executive orders, administrative orders, rules and regulations or parts thereof which are inconsistent with the provisions of this Act are hereby repealed, amended or modified accordingly. All other incentive systems which are not in any way affected by the provisions of this Act may be restructured by the President so as to render them cost-efficient and to make them conform with the other policy guidelines in the declaration of policy provided in Section 2 of this Act."
[22]

[30]

This was published in the Malaya on December 30, 1994 and submitted to the U.P. Law Center on January 3, 1995.
[31]

Chapter II, Book II of Executive Order No. 226 provides:

ART. 46. Permitted Investments. - (1) Without need of prior authority, anyone not a Philippine national as that term is defined in Article 15 of this Code, and not otherwise disqualified by law, may invest: (a) In any enterprise registered under Book One hereof, to the extent that the total investment of non-Philippine nationals therein would not affect its status as a registered enterprise under the law; (b) In an enterprise not registered under Book One hereof, to the extent that the total investment of non-Philippine nationals herein shall not exceed forty percent (40%) of the outstanding capital of that enterprise, unless existing law forbids any non-Philippine ownership in the enterprise or limits ownership by non-Philippine national to a percentage smaller than forty percent (40%). (2) Within thirty (30) days after notice of the investment is received by it, the enterprise in which any investment is made by a non-Philippine national shall register the same with the Board of Investments for purposes of record. Investments made in the form of foreign exchange or other assets actually transferred to the Philippines shall also be registered with the Central Bank. The Board shall assess and appraise the value of such assets other than foreign exchange.
[32]

"ART. 85. Repealing Clause. - The following provisions or laws are hereby repealed: 1) Batas Pambansa 44 2) Batas Pambansa 391 (1983) 3) Presidential Decree No. 218 4) Presidential Decree No. 1419 5) Presidential Decree No. 1623, as amended 6) Presidential Decree No. 1789 (1981) 7) Presidential Decree No. 2032 8) Executive Order No. 815 9) Executive Order No. 1945 (1985) All other laws, decrees, executive orders, administrative orders, rules and regulations or parts thereof which are inconsistent with the provisions of this Code are hereby repealed, amended or modified accordingly."
[23]

There is no record showing that the joint venture between NIDC and Kawasaki was registered with the SEC, the Board of Investments and/or Export Processing Zone Authorities.
[33]

Bureau Veritas v. Office of the President, G.R. No. 101678, 205 SCRA 705, 718 (1992).
[34]

Philippine Communications Satellite Corporation v. Alcuaz, G.R: No. 84818, 180 SCRA 218, 225 (1989).
[35]

Manila Prince Hotel v. GSIS, 335 Phil. 82, 101 (1997).

[36]

National Food Authority v. Court of Appeals, 323 Phil. 558, 574 (1996) citing Danville Maritime, Inc. v. Commission on Audit, G.R. No. 85285, 175 SCRA 701 (1989) and Malaga v. Penachos, Jr., G.R. No. 86695, 213 SCRA 516 (1992).
[37]

LUCENARIO, LAW ON PUBLIC BIDDING AND GOVERNMENT CONTRACTS, 1960 ed., p. 1 citing Mercer v. North Little Rock Special School District, 177 Ark. 127, 6 S.W.2d 16, 18.
[38]

Administrative Code of 1987, Book I, Chapter 5, Section 21. CA Record, pp. 53-69. CA Record, pp. 71-72. Kilosbayan, Incorporated v. Guingona, Jr., supra, at p. 144. VILLANUEVA, PHILIPPINE CORPORATE LAW, 1998 ed., p. 729. Aurbach v. Sanitary Wares Manufacturing Corporation, G.R.

Ibid., citing Art. 1326, Civil Code. Ibid., citing Secs. 2041-2042 of Revised Administrative Code.

[24]

[39]

[25]

[40]

[26]

Malaga v. Penachos, Jr., G.R. No. 86695, 213 SCRA 516, 526 (1992).
[41]

[27]

Danville Maritime, Inc. v. Commission on Audit, G.R. No. 85285, 175 SCRA 701, 711 (1989).

[28]

[42]

Ibid., p. 712.

[43]

COA Circular No. 89-296 dated January 27, 1989, No. VI (1); GOVERNMENT ACCOUNTING AND AUDITING MANUAL, Vol. I, p. 301.
[44]

The pertinent provision of COA Circular No. 89-296 states:

"VII. COA ROLE DURING DISPOSAL: In all modes or instances of disposal of government property or assets as hereinabove contemplated, the proceedings shall be undertaken by the appropriate authority in the presence of the Auditor or other COA representative who shall act as an intelligent, responsible and articulate witness thereto. The said act of witnessing shall not be confined merely to seeing what is being done during the proceedings but shall be related to the more meaningful discharge by the Auditor of his/her constitutional duty to examine, audit and settle all accounts pertaining to the expenditures or uses of government funds and property. Thus, the Auditor acting as such witness may verbally advise the agency head or his duly authorized representative of any objectionable feature/s of the proceedings. Otherwise, he may sign documents and other papers pertinent only to those proceedings which he witnessed with his comments which he deems necessary under the circumstances. Related advices and/or comments done in writing should invariably be sent officially to and duly receipted for by the head of the agency or his duly authorized representative concerned. These written advices or comments shall form part of the bases of action to be taken by the auditor in the pre-audit or post audit of the subject transactions."
[45]

Rollo, p. 133.

[46]

Danville Maritime, Inc. v. Commission on Audit, supra. at p. 712.

[47]

See: Gov. Garcia v. Hon. Burgos, 353 Phil. 740, 767-768 (1998).
[48]

Manila Prince Hotel v. GSIS, supra, at p. 100. In that case, the bidding rules provided that "if for any reason, the Highest Bidder cannot be awarded the Block of Shares, GSIS may offer this to the other Qualified Bidders that have validly submitted bids provided that these Qualified Bidders are willing to match the highest bid in terms of price per share."
[49]

Development Bank of the Philippines v. Court of Appeals, 348 Phil. 14, 32 (1998).

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