#02

City Government of Quezon City v. Bayan Telecommunications, Inc.

G.R. No.162015. March 6, 2006

FACTS:

Respondent Bayan Telecommunications, Inc. (Bayantel) is a legislative franchise holder under Republic
Act (R.A.) No. 3259 (1961) to establish and operate radio stations for domestic telecommunications,
radiophone, broadcasting and telecasting. Section 14 (a) of R.A. No. 3259 states: “The grantee shall be
liable to pay the same taxes on its real estate, buildings and personal property, exclusive of the franchise,
xxx”. In 1992, R.A. No. 7160, otherwise known as the “Local Government Code of 1991” (LGC) took
effect. Section 232 of the Code grants local government units within the Metro Manila Area the power to
levy tax on real properties. Barely few months after the LGC took effect, Congress enacted R.A. No. 7633,
amending Bayantel’s original franchise. The Section 11 of the amendatory contained the following tax
provision: “The grantee, its successors or assigns shall be liable to pay the same taxes on their real
estate, buildings and personal property, exclusive of this franchise, xxx“. In 1993, the government of
Quezon City enacted an ordinance otherwise known as the Quezon City Revenue Code withdrawing tax
exemption privileges.

ISSUE:

Whether or not Bayantel’s real properties in Quezon City are exempt from real property taxes under its
franchise.

HELD:

YES. A clash between the inherent taxing power of the legislature, which necessarily includes the power
to exempt, and the local government’s delegated power to tax under the aegis of the 1987 Constitution
must be ruled in favor of the former. The grant of taxing powers to LGUs under the Constitution and the
LGC does not affect the power of Congress to grant exemptions to certain persons, pursuant to a
declared national policy. The legal effect of the constitutional grant to local governments simply means
that in interpreting statutory provisions on municipal taxing powers, doubts must be resolved in favor of
municipal corporations.

The legislative intent expressed in the phrase “exclusive of this franchise” cannot be construed other
than distinguishing between two (2) sets of properties, be they real or personal, owned by the
franchisee, namely, (a) those actually, directly and exclusively used in its radio or telecommunications
business, and (b) those properties which are not so used. It is worthy to note that the properties subject
of the present controversy are only those which are admittedly falling under the first category.

Since R. A. No. 7633 was enacted subsequent to the LGC, perfectly aware that the LGC has already
withdrawn Bayantel’s former exemption from realty taxes, the Congress using, Section 11 thereof with
exactly the same defining phrase “exclusive of this franchise” is the basis for Bayantel’s exemption from
realty taxes prior to the LGC. In plain language, the Court views this subsequent piece of legislation as an
express and real intention on the part of Congress to once again remove from the LGC’s delegated taxing
power, all of the franchisee’s (Bayantel’s) properties that are actually, directly and exclusively used in the
pursuit of its franchise.

#10

National Power Corporation vs City of Cabanatuan

G.R. No. 149110 April 9, 2003

FACTS:

Petitioner is a government-owned and controlled corporation created under Commonwealth Act No.
120, as amended. For many years now, petitioner sells electric power to the residents of Cabanatuan
City, posting a gross income of P107,814,187.96 in 1992.7 Pursuant to section 37 of Ordinance No. 165-
92,8 the respondent assessed the petitioner a franchise tax amounting to P808,606.41, representing
75% of 1% of the latter’s gross receipts for the preceding year.

Petitioner refused to pay the tax assessment arguing that the respondent has no authority to impose tax
on government entities. Petitioner also contended that as a non-profit organization, it is exempted from
the payment of all forms of taxes, charges, duties or fees in accordance with sec. 13 of Rep. Act No.
6395, as amended.

The respondent filed a collection suit in the RTC, demanding that petitioner pay the assessed tax due,
plus surcharge. Respondent alleged that petitioner’s exemption from local taxes has been repealed by
section 193 of the LGC, which reads as follows:

“Sec. 193. Withdrawal of Tax Exemption Privileges.- Unless otherwise provided in this Code, tax
exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical,
including government owned or controlled corporations, except local water districts, cooperatives duly
registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, are
hereby withdrawn upon the effectivity of this Code.”

RTC upheld NPC’s tax exemption. On appeal the CA reversed the trial court’s Order on the ground that
section 193, in relation to sections 137 and 151 of the LGC, expressly withdrew the exemptions granted
to the petitioner.

ISSUE:

Whether or not the respondent city government has the authority to issue Ordinance No. 165-92 and
impose an annual tax on “businesses enjoying a franchise

HELD:
YES. Taxes are the lifeblood of the government, for without taxes, the government can neither exist nor
endure. A principal attribute of sovereignty, the exercise of taxing power derives its source from the very
existence of the state whose social contract with its citizens obliges it to promote public interest and
common good. The theory behind the exercise of the power to tax emanates from necessity;32 without
taxes, government cannot fulfill its mandate of promoting the general welfare and well-being of the
people.

Section 137 of the LGC clearly states that the LGUs can impose franchise tax “notwithstanding any
exemption granted by any law or other special law.” This particular provision of the LGC does not admit
any exception. In City Government of San Pablo, Laguna v. Reyes,74 MERALCO’s exemption from the
payment of franchise taxes was brought as an issue before this Court. The same issue was involved in the
subsequent case of Manila Electric Company v. Province of Laguna.75 Ruling in favor of the local
government in both instances, we ruled that the franchise tax in question is imposable despite any
exemption enjoyed by MERALCO under special laws, viz:

“It is our view that petitioners correctly rely on provisions of Sections 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 law’ is all-encompassing and clear. The franchise tax is imposable despite any
exemption enjoyed under special laws.

Section 193 buttresses the withdrawal of extant tax exemption 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 government-owned 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 exclusio alterius. In the absence of any 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 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 on (sic) Sections 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.”76 (emphases supplied)
Doubtless, the power to tax is the most effective instrument to raise needed revenues to finance and
support myriad activities of the 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. As this Court observed in the Mactan case, “the original reasons for the withdrawal of tax
exemption privileges granted to government-owned 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.” With the added burden of devolution, it is even more
imperative for government entities to share in the requirements of development, fiscal or otherwise, by
paying taxes or other charges due from them.

#20

Lopez v. City of Manila

GR No. 127139 Feb. 19, 1999

FACTS:

Section 219 of Republic Act 7160 (R.A. 7160) or the Local Government Code of 1991 requires the
conduct of the general revision of real property. The revision of real property assessments prescribed
therein was not yet enforced in the City of Manila. Upon receipt of Memorandum Circular No. 04-95
from the Bureau of Local Government Finance relating to the failure of most of the cities and
municipalities of Metropolitan Manila, including the City of Manila, to conduct the general revision of
real property and after obtaining the necessary funds from the City Council, the City Assessor began the
process of general revision based on the updated fair market values of the real properties.

The City Assessor’s Office submitted the proposed schedule of fair market values to the City Council for
its appropriate action. The council then enacted Manila Ordinance No. 7894 which was approved. With
the implementation of the ordinance, the tax on the land owned by the petitioner was increase hence he
filed a special proceeding for the declaration of nullity of the City of Manila Ordinance No. 7894 for being
“unjust, excessive, oppressive or confiscatory.”

Manila Ordinance No. 7905 took effect thereafter, reducing by fifty percent (50%) the assessment levels
(depending on the use of property, e.g., residential, commercial) for the computation of tax due. The
new ordinance amended the assessment levels provided by Section 74, paragraph (A) of Manila
Ordinance No. 7794. Despite the amendment brought about by Manila Ordinance No. 7905, the
controversy proceeded.

The trial court dismissed the case for failure of the petitioner to exhaust administrative remedies.
ISSUE:

Whether or not the doctrine of exhaustion of administrative remedies may be dispensed with in the
instant case

HELD:

NO. As a general rule, where the law provides for the remedies against the action of an administrative
board, body, or officer, relief to courts can be sought only after exhausting all remedies provided. The
reason rests upon the presumption that the administrative body, if given the chance to correct its
mistake or error, may amend its decision on a given matter and decide it properly. Therefore, where a
remedy is available within the administrative machinery, this should be resorted to before resort can be
made to the courts, not only to give the administrative agency the opportunity to decide the matter by
itself correctly, but also to prevent unnecessary and premature resort to courts.

“One of the reasons for the doctrine of exhaustion is the separation of powers which enjoins upon the
judiciary a becoming policy of non-interference with matters coming primarily within the competence of
other department. x x x

There are however a number of instances when the doctrine may be dispensed with and judicial action
validly resorted to immediately. Among these exceptional cases are: (1) when the question raised is
purely legal, (2) when the administrative body is in estoppel; (3) when the act complained of is patently
illegal; (4) when there is urgent need for judicial intervention; (5) when the claim involved is small; (6)
when irreparable damage will be suffered; (7) when there is no other plain, speedy and adequate
remedy; (8) when strong public interest is involved; (9) when the subject of controversy is private land;
and (10) in quo-warranto proceeding (citation omitted). In the court’s opinion, however, the instant
petition does not fall within any of the exceptions above-mentioned.

#24

Alejandro B. Ty. vs. Hon. Aurelio C. Trampe

G.R. No. 117577. December 1, 1995

FACTS:

Petitioner Alejandro B. Ty and MVR Picture Tube, Inc., both registered owners of lands and
buildings in the then Municipality of Pasig, assailed the legality of the increase of real estate
taxes imposed by and being collected in Pasig from the year 1994. Petitioners argue that the
schedule of market values and the assessments prepared solely by municipal assessor in
accordance with LGC were null and void. They further argued that the said Code did not
expressly repealed nor impliedly repealed P.D. 921, which still required, in the preparation of
said schedule, joint action by all the city and municipal assessors in the Metropolitan Manila
area. On the other hand, respondents contend that the tax assessments prepared solely by
respondent assessor were valid and legal because the LGC impliedly repealed PD 921.
ISSUE:

Whether or not the increased real estate taxes imposed by and being collected in Pasig were valid
and legal.

HELD:

NO. The schedule of values prepared solely by the respondent municipal assessor is illegal and
void because P.D. 921 is still the prevailing law. It is clear that the two laws are NOT co-
extensive and mutually inclusive in their scope and purpose. While R.A. 7160 covers almost all
governmental functions delegated to local government units all over the country, P.D. 921
embraces only the Metropolitan Manila area and is limited to the administration of financial
services therein, especially the assessment and collection of real estate taxes.

Sec. 9 of P.D. 921 requires that the schedule of values of real properties in the Metropolitan
Manila area shall be prepared jointly by the city assessors in the districts created therein; while
Sec. 212 of R.A. 7160 states that the schedule shall be prepared "by the provincial, city and
municipal assessors of the municipalities within the Metropolitan Manila Area for the different
classes of real property situated in their respective local government units for enactment by
ordinance of the Sanggunian concerned.

It is obvious that harmony in these provisions is not only possible, but in fact desirable,
necessary and consistent with the legislative intent and policy. Hence, the questioned Schedule
of Market Values for properties in Pasig City prepared by respondent Assessor as well as the
corresponding tax assessments based thereon was declared null and void.

#31

Aquino vs. Quezon City

G.R. No. 137534 March 3, 2006

FACTS:

This case involves two petitions for review on certiorari involving the decisions declaring valid the
auction sales of two real properties by the Quezon City Local Gov’t for failure to pay real property taxes.

The first case deals with a lot formerly owned by petitioners Aquino. Petitioners withheld payment of the
real property taxes as a form of protest for the gov’t of then President Marcos. As a result of the
nonpayment, the property was sold by the Quezon City local government, through the Treasurer’s Office,
at public auction to private respondent Aida Linao, the highest bidder. Petitioners claimed that they
learned of the sale about 2 years later. They fixed as action for annulment of title, reconveyance, and
damages against the respondents.

The seconds case deals with a property located In Cubao, Quezon City in the name of Solomon Torrado.
According to petitioner heirs, Torrado paid taxes on the improvements on Lot 8 but not on the lot itself
because the Treasurer’s Office could not locate the index card for that property. For failure to pay real
property taxes from 1976 to 1982, the City Treasurer sent a Notice of Intent to Sell to Torrado to his
address indicated in the tax register, which simply states as ‘ButuanCity. The notice was returned by
reason of ‘Insufficient Address. Next sent was a Notice of Sale of Delinquent Property. This was sent to
the same address and similarly returned unclaimed. Thereafter, a public auction was held and the lot
was sold to Veronica Baluyot, who mortgaged the property to Spouses Uy who then sold it to DNX Corp
for failure to pay the mortgaged debt. Also, a Notice of Sold Property was subsequently sent to Torrado
which was returned unclaimed.

ISSUE:

Whether or not there is a failure on the part of the Quezon City Local Gov’t to satisfy the notice
requirements before selling the property for tax delinquency.

HELD:

Definitely, there is no more logical way to construe the whole chapter on ‘Collection of Real Property Tax
(Sections 56 to 85) than to stress that while three methods are provided to enforce collection on real
property taxes, a notice of delinquency is a requirement regardless of the method or methods chosen.

It is incorrect for the respondents to claim that notice of delinquency has limited application only to
distraint of personal property. They mistakenly lumped Section 65 exclusively with Sections 68 to 72 and,
in so doing, restricted its application from the other tax remedies. Section 65 is to be construed together
with Sections 66 and 78 and all three operate in reference to tax methods in general.

Petitioners are correct in insisting that two notices must be sent to the taxpayer concerned.
Nevertheless, respondents still prevail because the Court is satisfied that the two-notice requirement has
been complied with by the Treasurer’s Office.