[G.R. No. 155591. September 22, 2004] DR. PABLO R. OLIVARES vs. MAYOR JOEY MARQUEZ AUSTRIA-MARTINEZ, J.

: Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Order dated July 24, 2002 of the Regional Trial Court (Branch 257) of Paraaque City (RTC for brevity), dismissing Civil Case No. 98-0313 on the following grounds: 1. 2. Questions involving tax assessment is within the jurisdiction of the Bureau of Internal Revenue (BIR). It is improper for this Court to prohibit or annul a tax assessment issued by the City Assessors Office since it is legally inherent in the functions of their office. Any complaint or protest thereto should be coursed through the BIR. It appears on record that the City Treasurers Office had already responded to the letter-protest of plaintiff. Hence, the prayer in the complaint asking that the City Treasurer be ordered to act on it is now moot. It is also of judicial notice that at present there is no longer any publication regarding plaintiffs tax delinquency. Hence, the prayer that this kind of publication be ordered stopped is now, likewise, moot.[1]

Ruling in favor of respondents motion to dismiss, the trial court issued the herein assailed order dismissing Civil Case No. 98-0313. The trial court denied petitioners motion for reconsideration.[5] Hence, petitioners filed the herein petition for review raising the following questions of law to be resolved by the Court: FIRST QUESTION OF LAW WHETHER OR NOT THE COURT A QUO HAS JURISDICTION TO TRY THE CASE INVOLVING MATTERS QUESTIONING THE VERY AUTHORITY AND POWER OF THE ASSESSOR TO IMPOSE ASSESSMENT AND OF THE CITY TREASURER TO COLLECT THE TAX. SECOND QUESTION OF LAW WHETHER OR NOT THE COURT A QUO BLATANTLY ERRED [IN] NOT DECLARING THE CONFISCATORY AND OPPRESSIVE NATURE OF THE ASSESSMENTS AS ILLEGAL, VOID AB INITIO, UNCONSTITUTIONAL AND CONSTITUTING DEPRIVATION OF PROPERTY WITHOUT DUE PROCESS OF LAW.[6] The Court rules against petitioners. The petition has no merit. The extraordinary remedies of certiorari, prohibition and mandamus may be resorted to only when there is no other plain, available, speedy and adequate remedy in the course of law.[7] Where administrative remedies are available, petitions for the issuance of these peremptory writs do not lie[8] in order to give the administrative body the opportunity to decide the matter by itself correctly and to prevent unnecessary and premature resort to courts.[9] Republic Act (R.A.) No. 7160, or the Local Government Code of 1991, clearly sets forth the administrative remedies available to a taxpayer or real property owner who is not satisfied with the assessment or reasonableness of the real property tax sought to be collected.[10] Section 252 of R.A. No. 7160 provides: SEC. 252. Payment Under Protest. - (a) No protest shall be entertained unless the taxpayer first pays the tax. There shall be annotated on the tax receipts the words paid under protest. The protest in writing must be filed within thirty (30) days from payment of the tax to the provincial, city treasurer or municipal treasurer, in the case of a municipality within Metropolitan Area, who shall decide the protest within sixty (60) days from receipt. (b) The tax or a portion thereof paid under protest shall be held in trust by the treasurer concerned. (c) In the event that the protest is finally decided in favor of the taxpayer, the amount or portion of the tax protested shall be refunded to the protestant, or applied as tax credits against his existing or future tax liability. (d) In the event that the protest is denied or upon the lapse of the sixty-day period prescribed in subparagraph (a), the taxpayer may avail of the remedies as provided for in Chapter 3, Title Two, Book II[11] of this Code. (Emphasis supplied) Chapter 3, Title Two, Book II of the Local Government Code, entitled Assessment Appeals, refers to the appellate procedure before the Local Board of Assessment Appeals (LBAA), as provided in Section

3.

4.

Civil Case No. 98-0313 is a petition for certiorari, prohibition and mandamus filed by petitioners with the RTC on August 18, 1998, questioning the assessment and levy made by the Office of the City Treasurer of Paraaque City on petitioners properties. Petitioners alleged that on July 1, 1998, they received a final notice from the Office of the City Treasurer on their real estate tax delinquencies. They protested said notice in a letter dated July 7, 1998, and sought reinvestigation on the grounds that: (1) some of the taxes being collected have already prescribed and may no longer be collected as provided in Section 194 of the Local Government Code of 1991; (2) some properties have been doubly taxed/assessed; (3) some properties being taxed are no longer existent; (4) some properties are exempt from taxation as they are being used exclusively for educational purposes; and (5) some errors are made in the assessment and collection of taxes due on petitioners properties. They wrote another letter on July 24, 1998, but respondents failed to act thereon. Thus, petitioners sought, among others, the annulment of the assessments and respondents be ordered to act on their protest immediately.[2] Respondents filed a motion to dismiss Civil Case No. 98-0313 on the grounds that: (1) the trial court has no jurisdiction over tax assessment matters; (2) petitioners failed to comply with the requirements of a tax protest; and (3) the petition states no cause of action.[3] Petitioners opposed the motion, arguing that the trial court has jurisdiction over the case as the issue raised pertains to the authority of respondents to assess and collect the real estate taxes. Petitioners cite the case of Ty vs. Trampe,[4] wherein the Court upheld the jurisdiction of the Regional Trial Court (Branch 163) of Pasig to entertain the petition for prohibition as it questions the power of the assessor to impose and collect any tax, and not merely the reasonableness thereof.

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226, et seq. of the Code, and the Central Board of Assessment Appeals (CBAA), as provided in Section 230 thereof. Thus, should the taxpayer/real property owner question the excessiveness or reasonableness of the assessment, Section 252 directs that the taxpayer should first pay the tax due before his protest can be entertained. There shall be annotated on the tax receipts the words paid under protest. It is only after the taxpayer has paid the tax due that he may file a protest in writing within thirty days from payment of the tax to the Provincial, City or Municipal Treasurer, who shall decide the protest within sixty days from receipt. In no case is the local treasurer obliged to entertain the protest unless the tax due has been paid. If the local treasurer denies the protest or fails to act upon it within the 60-day period provided for in Section 252, the taxpayer/real property owner may then appeal or directly file a verified petition with the LBAA within sixty days from denial of the protest or receipt of the notice of assessment, as provided in Section 226 of R.A. No. 7160, to wit: SEC. 226. Local Board of Assessment Appeals. - Any owner or person having legal interest in the property who is not satisfied with the action of the provincial, city or municipal assessor in the assessment of his property may, within sixty (60) days from the date of receipt of the written notice of assessment, appeal to the Board of Assessment Appeals of the province or city by filing a petition under oath in the form prescribed for the purpose, together with copies of the tax declarations and such affidavits or documents submitted in support of the appeal. And, if the taxpayer is not satisfied with the decision of the LBAA, he may elevate the same to the CBAA, which exercises exclusive jurisdiction to hear and decide all appeals from the decisions, orders and resolutions of the Local Boards involving contested assessments of real properties, claims for tax refund and/or tax credits or overpayments of taxes.[12] An appeal may be taken to the CBAA by filing a notice of appeal within thirty days from receipt thereof.[13] From the CBAA, the dispute may then be taken to the Court of Appeals by filing a verified petition for review under Rule 43 of the Rules of Court. The Court is not convinced with petitioners argument that their recourse of filing a petition before the trial court is proper as they are questioning the very authority of respondents to assess and collect the real estate taxes due on their properties, and not merely the correctness of said amount. The well-established rule is that the allegations in the complaint and the character of the relief sought determine the nature of an action.[14] A perusal of the petition before the RTC plainly shows that what is actually being assailed is the correctness of the assessments made by the local assessor of Paraaque on petitioners properties. The allegations in the said petition purportedly questioning the assessors authority to assess and collect the taxes were obviously made in order to justify the filing of the petition with the RTC. In fact, there is nothing in the said petition that supports their claim regarding the assessors alleged lack of authority. What petitioners raise are the following: (1) some of the taxes

being collected have already prescribed and may no longer be collected as provided in Section 194 of the Local Government Code of 1991; (2) some properties have been doubly taxed/assessed; (3) some properties being taxed are no longer existent; (4) some properties are exempt from taxation as they are being used exclusively for educational purposes; and (5) some errors are made in the assessment and collection of taxes due on petitioners properties,*15+ and that respondents committed grave abuse of discretion in making the improper, excessive and unlawful the collection of taxes against the petitioner*s+.*16+ Moreover, these arguments essentially involve questions of fact. Hence, the petition should have been brought, at the very first instance, to the LBAA. Under the doctrine of primacy of administrative remedies, an error in the assessment must be administratively pursued to the exclusion of ordinary courts whose decisions would be void for lack of jurisdiction. But an appeal shall not suspend the collection of the tax assessed without prejudice to a later adjustment pending the outcome of the appeal.[17] Even assuming that the assessors authority is indeed an issue, it must be pointed out that in order for the court a quo to resolve the petition, the issues of the correctness of the tax assessment and collection must also necessarily be dealt with. In Ty vs. Trampe,[18] cited by petitioners, the Court held that jurisdiction over the case was properly vested with the trial court because what was being questioned is the very authority and power of the assessor, acting solely and independently, to impose the assessment and of the treasurer to collect the tax, and not merely of amounts of the increase in the tax. The petitioners therein were questioning the increased real estate taxes imposed by and being collected in Pasig City effective from the year 1994, premised on the legal question of whether or not P.D. No. 921 was repealed by R.A. No. 7160. P.D. No. 921, particularly Section 9 thereof, 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. No. 7160 states that the schedule shall be prepared by the provincial, city or 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. In the present case, the authority of the assessor is not being questioned. Despite petitioners protestations, the petition filed before the court a quo primarily involves the correctness of the assessments, which are questions of fact, that are not allowed in a petition for certiorari, prohibition and mandamus. The court a quo is therefore precluded from entertaining the petition, and it appropriately dismissed the petition.

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[G.R. No. 150763. July 2, 2004] RURAL BANK OF MAKATI, INC., vs. MUNICIPALITY OF MAKATI QUISUMBING, J.: In its decision[1] dated July 17, 2001, in CA-G.R. CV No. 58214, the Court of Appeals affirmed the decision[2] dated October 22, 1996 of the Regional Trial Court of Makati City, Branch 134, in Civil Case No. 91-2866 dismissing petitioners complaint for recovery of a sum of money and damages. Petitioners now assail said CA decision as well as the Resolution[3] dated November 9, 2001, which denied their Motion for Reconsideration. The facts are as follows:

In its Answer, respondent municipality asserted that petitioners payment of P82,408.66 was for a legal obligation because the payment of the mayors permit fee as well as the municipal business license was required of all business concerns. According to respondent, said requirement was in furtherance of the police power of the municipality to regulate businesses. For his part, Atty. Valero filed an Answer claiming that there was no coercion committed by the municipality, that payment was a legal obligation of the bank, and that its claim of exemption had no legal basis. He further alleged that petitioners action was clearly intended to harass and humiliate him and as counterclaim, he asked for moral and other damages. On October 22, 1996, the RTC decided Civil Case No. 91-2866 as follows: WHEREFORE, in view of all the foregoing, judgment is hereby rendered dismissing the complaint.

Sometime in August 1990, Atty. Victor A.L. Valero, then the municipal attorney of the Municipality of Makati, upon request of the municipal treasurer, went to the Rural Bank of Makati to inquire about the banks payments of taxes and fees to the municipality. He was informed, however, by petitioner Magdalena V. Landicho, corporate secretary of the bank, that the bank was exempt from paying taxes under Republic Act No. 720, as amended.[4] On November 19, 1990, the municipality lodged a complaint with the Prosecutors Office, charging petitioners Esteban S. Silva, president and general manager of the bank and Magdalena V. Landicho for violation of Section 21(a), Chapter II, Article 3 in relation to Sections 105 and 169 of the Metropolitan Tax Code. On April 5, 1991, an Information docketed as Criminal Case No. 140208, for violation of Municipal Ordinance Nos. 122 and 39 for non-payment of the mayors permit fee, was filed with the Metropolitan Trial Court (MeTC) of Makati against petitioners. Another Information, docketed as Criminal Case No. 140209, for non-payment of annual business tax, in violation of Metro Manila Commission Ordinance No. 82-03, Section 21(a), Chapter II, Article 3, was likewise filed with the MeTC. While said cases were pending with the municipal court, respondent municipality ordered the closure of the bank. This prompted petitioners to pay, under protest, the mayors permit fee and the annual fixed tax in the amount of P82,408.66. On October 18, 1991, petitioners filed with the RTC of Makati a Complaint for Sum of Money and Damages, docketed as Civil Case No. 91-2866. Petitioners alleged that they were constrained to pay the amount of P82,408.66 because of the closure order, issued despite the pendency of Criminal Cases Nos. 140208-09 and the lack of any notice or assessment of the fees to be paid. They averred that the collection of the taxes/fees was oppressive, arbitrary, unjust and illegal. Additionally, they alleged that respondent Atty. Valero had no power to enforce laws and ordinances, thus his action in enforcing the collection of the permit fees and business taxes was ultra vires. Petitioners claimed that the bank lost expected earnings in the amount of P19,778. Petitioners then assailed the municipal ordinances of Makati as invalid for want of the requisite publication.

On the counterclaim, the plaintiffs are hereby ordered jointly and severally to pay to defendant Victor Valero the sum of P200,000.00 as moral damages and the amount of P50,000.00 as attorneys fees. The counterclaim of defendant Municipality is dismissed. Cost against the plaintiffs. SO ORDERED.[5] In finding for respondents, the RTC ruled that the bank was engaged in business as a rural bank. Hence, it should secure the necessary permit and business license, as well as pay the corresponding charges and fees. It found that the municipality had authority to impose licenses and permit fees on persons engaging in business, under its police power embodied under the general welfare clause. Also, the RTC declared unmeritorious petitioners claim for exemption under Rep. Act No. 720 since said exemption had been withdrawn by Executive Order No. 93[6] and the Rural Bank Act of 1992.[7] These statutes no longer exempted rural banks from paying corporate income taxes and local taxes, fees and charges. It also found petitioners claim of lack of publication of MMC Ordinance Nos. 82-03 and Municipal Ordinance No. 122 to be mere allegations unsupported by clear and convincing evidence. In awarding damages to Atty. Valero, the RTC found that he had been maliciously impleaded as defendant. It noted that Atty. Valero, as a municipal legal officer, was tasked to enforce municipal ordinances. In short, he was merely an agent of the local chief executive and should not be faulted for performing his assigned task. Petitioners seasonably moved for reconsideration, but this was denied by the RTC in its Order dated January 10, 1997.[8] Petitioners appealed to the Court of Appeals in CA-G.R. CV No. 58214. The appellate court sustained the lower court in this wise:

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WHEREFORE, premises considered, the appealed decision is hereby AFFIRMED in toto. SO ORDERED.[9] The Court of Appeals found the order of closure of the bank valid and justified since the bank was operating without any permit and without having paid the requisite permit fee. Thus, declared the Court of Appeals, it is not merely a matter of enforcement and collection of fees, as the appellants would have it, but a violation of the municipalitys authority to regulate the businesses operating within its territory.*10+ The appellate court also brushed aside petitioners claim that the general welfare clause is limited only to legislative action. It declared that the exercise of police power by the municipality was mandated by the general welfare clause, which authorizes the local government units to enact ordinances, not only to carry into effect and discharge such duties as are conferred upon them by law, but also those for the good of the municipality and its inhabitants. This mandate includes the regulation of useful occupations and enterprises. Petitioner moved for reconsideration, but the appellate court in its Resolution[11] of November 9, 2001 denied the same. Hence, this instant petition alleging that the Honorable Court of Appeals seriously erred in: 1) .HOLDING THAT THE CLOSURE BY THE APPELLEE, VICTOR VALERO, OF THE APPELLANT BANK WAS A LEGITIMATE EXERCISE OF POLICE POWER BY THE MUNICIPALITY OF MAKATI; 2) .NOT CONSIDERING THE FACT THAT MAKATI ORDINANCE 122 REQUIRING MAYORS PERMIT FOR OPERATION OF AN ESTABLISHMENT AND MMC ORDINANCE NO. 82-03 WERE ADMITTED AS NOT PUBLISHED AS REQUIRED IN TAADA, ET AL., vs. TUVERA, NO. L-63915, DECEMBER 29, 1986 AND THAT NO TAX ASSESSMENT WAS PRESENTED TO THE BANK; 3) .AWARDING MORAL DAMAGES TO APPELLEE VICTOR VALERO IN THE AMOUNT OF P200,000.00 AND ATTORNEYS FEES IN THE SUM OF P50,000.00; 4) .NOT AWARDING TO THE APPELLANT BANK, THE AMOUNT OF P57,854.00 REPRESENTING THE AMOUNT UNJUSTLY AND ILLEGALLY COLLECTED FROM THE APPELLANT BANK; 5) .NOT AWARDING THE AMOUNT OF P10,413.75 YEARLY REPRESENTING THE UNREALIZED PROFIT WHICH THE APPELLANT BANK IS BEING DEPRIVED OF IN THE USE OF THE AFORESAID AMOUNT PLUS LEGAL INTEREST ALLOWED IN JUDGMENT FROM THE TIME OF THE EXTRAJUDICIAL DEMAND. (DEMAND LETTER, DATED OCTOBER 4, 1991, EXHIBIT O FOR THE APPELLANTS); 6) .NOT GRANTING TO APPELLANTS ESTEBAN S. SILVA AND MAGDALENA LANDICHO MORAL DAMAGES IN THE AMOUNT OF P15,000.00; 7) .NOT AWARDING TO APPELLANTS, P1,000,000.00 EXEMPLARY DAMAGES; 25% OF THE APPELLANTS CLAIM AS AND FOR ATTORNEYS FEE AND COSTS OF SUIT.*12+ Essentially, the following are the relevant issues for our resolution: 1. Whether or not petitioner bank is liable to pay the business taxes and mayors permit fees imposed by respondent;

2. Whether or not the closure of petitioner bank is valid; 3. Whether or not petitioners are entitled to an award of unrealized profit and damages; 4. Whether or not respondent Atty. Victor Valero is entitled to damages. On the first issue, petitioner bank claims that of the P82,408.66 it paid under protest, it is actually liable only for the amount of P24,154, representing taxes, fees and charges due beginning 1987, or after the issuance of E.O. No. 93. Prior to said year, it was exempt from paying any taxes, fees, and charges by virtue of Rep. Act No. 720. We find the banks claim for refund untenable now. Section 14 of Rep. Act No. 720, as amended by Republic Act No. 4106,[13] approved on July 19, 1964, had exempted rural banks with net assets not exceeding one million pesos (P1,000,000) from the payment of all taxes, charges and fees. The records show that as of December 29, 1986, petitioner banks net assets amounted only to P745,432.29[14] or below the one million ceiling provided for in Section 14 of the old Rural Banking Act. Hence, under Rep. Act No. 720, petitioner bank could claim to be exempt from payment of all taxes, charges and fees under the aforementioned provision. However, on December 17, 1986, Executive Order No. 93 was issued by then President Corazon Aquino, withdrawing all tax and duty incentives with certain exceptions. Notably, not included among the exceptions were those granted to rural banks under Rep. Act No. 720. With the passage of said law, petitioner could no longer claim any exemption from payment of business taxes and permit fees. Now, as to the refund of P57,854 claimed by petitioners allegedly because of overpayment of taxes and fees, we note that petitioners have not adequately substantiated their claim. As found by the Court of Appeals: As to the computation of the payable fees, the plaintiffs-appellants claim an overpayment and pray for a refund. It is not clearly shown from their argument that such overpayment exists. And from their initial complaint, they even asked for the refund of the whole P82,408.66 paid, which complaint was instituted in 1991. They claim having paid the fees and charges due since 1991, which is irrelevant, since the P82,408.66 was paid for the period before 1991, and thus no deduction can be made for payments after that period. It is not clear where their computation of P57,854.00 owed them came from, and lacking solid support, their prayer for a partial refund must fail. Plaintiffs-appellants have failed to show that the payment of fees and charges even covered the period before their exemption was withdrawn.[15] Factual findings of the Court of Appeals, which are supported on record, are binding and conclusive upon this Court. As repeatedly held, such findings will not be disturbed unless they are palpably unsupported by the evidence on record or unless the judgment itself is based on misapprehension of facts.[16] Moreover, in a petition for review, only questions of law are properly raised. On this score, the refund sought by petitioners could not be entertained much less granted. Anent the second issue, petitioner bank claims that the closure of respondent bank was an improper exercise of police power because a municipal corporation has no inherent but only delegated police

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power, which must be exercised not by the municipal mayor but by the municipal council through the enactment of ordinances. It also assailed the Court of Appeals for invoking the General Welfare Clause embodied in Section 16[17] of the Local Government Code of 1991, which took effect in 1992,[18] when the closure of the bank was actually done on July 31, 1991. Indeed the Local Government Code of 1991 was not yet in effect when the municipality ordered petitioner banks closure on July 31, 1991. However, the general welfare clause invoked by the Court of Appeals is not found on the provisions of said law alone. Even under the old Local Government Code (Batas Pambansa Blg. 337)[19] which was then in effect, a general welfare clause was provided for in Section 7 thereof. Municipal corporations are agencies of the State for the promotion and maintenance of local self-government and as such are endowed with police powers in order to effectively accomplish and carry out the declared objects of their creation.[20] The authority of a local government unit to exercise police power under a general welfare clause is not a recent development. This was already provided for as early as the Administrative Code of 1917.[21] Since then it has been reenacted and implemented by new statutes on the matter. Thus, the closure of the bank was a valid exercise of police power pursuant to the general welfare clause contained in and restated by B.P. Blg. 337, which was then the law governing local government units. No reversible error arises in this instance insofar as the validity of respondent municipalitys exercise of police power for the general welfare is concerned. The general welfare clause has two branches. The first, known as the general legislative power, authorizes the municipal council to enact ordinances and make regulations not repugnant to law, as may be necessary to carry into effect and discharge the powers and duties conferred upon the municipal council by law. The second, known as the police power proper, authorizes the municipality to enact ordinances as may be necessary and proper for the health and safety, prosperity, morals, peace, good order, comfort, and convenience of the municipality and its inhabitants, and for the protection of their property.[22] In the present case, the ordinances imposing licenses and requiring permits for any business establishment, for purposes of regulation enacted by the municipal council of Makati, fall within the purview of the first branch of the general welfare clause. Moreover, the ordinance of the municipality imposing the annual business tax is part of the power of taxation vested upon local governments as provided for under Section 8 of B.P. Blg. 337,[23] to wit: Sec. 8. Authority to Create Sources of Revenue. (1) Each local government unit shall have the power to create its own sources of revenue and to levy taxes, subject to such limitations as may be provided by law. ... Implementation of these ordinances is vested in the municipal mayor, who is the chief executive of the municipality as provided for under the Local Government Code, to wit: Sec. 141. Powers and Duties.

(1) The mayor shall be the chief executive of the municipal government and shall exercise such powers, duties and functions as provided in this Code and other laws. (2) He shall: ... (k) Grant licenses and permits in accordance with existing laws or municipal ordinances and revoke them for violation of the conditions upon which they have been granted; ... (o) Enforce laws, municipal ordinances and resolutions and issue necessary orders for their faithful and proper enforcement and execution; (p) Ensure that all taxes and other revenues of the municipality are collected, and that municipal funds are spent in accordance with law, ordinances and regulations; ... (t) Cause to be instituted judicial proceedings in connection with the violation of ordinances, for the collection of taxes, fees and charges, and for the recovery of property and funds of the municipality, and otherwise to protect the interest of the municipality; [24] (Emphasis supplied) ... Consequently, the municipal mayor, as chief executive, was clothed with authority to create a Special Task Force headed by respondent Atty. Victor A.L. Valero to enforce and implement said ordinances and resolutions and to file appropriate charges and prosecute violators.[25] Respondent Valero could hardly be faulted for performing his official duties under the cited circumstances. Petitioners contend that MMC Ordinance No. 82-03 and Municipal Ordinance No. 122 are void for lack of publication. This again raises a factual issue, which this Court may not look into. As repeatedly held, this Court is not a trier of facts.[26] Besides, both the Court of Appeals and the trial court found lack of sufficient evidence on this point to support petitioners claim, thus: And finally the matter of the lack of publication is once again alleged by the plaintiffs-appellants, claiming that the matter was skirted by the trial court. This argument must fail, in the light of the trial courts squarely finding lack of evidence to support the allegation of the plaintiffs-appellants. We quote from the trial courts decision: The contention that MMC Ordinance No. 82-03 and Municipal Ordinance No. 122 of Makati are void as they were not publishced (sic) is untenable. The mere allegation of the plaintiff is not sufficient to declare said ordinances void. The plaintiffs failed to adduce clear, convincing and competent evidence to prove said Ordinances void. Moreover, in this jurisdiction, an ordinance is presumed to be valid

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unless declared otherwise by a Court in an appropriate proceeding where the validity of the ordinance is directly put in issue.[27] On the issue of the closure of the bank, we find that the bank was not engaged in any illegal or immoral activities to warrant its outright closure. The appropriate remedies to enforce payment of delinquent taxes or fees are provided for in Section 62 of the Local Tax Code, to wit: SEC. 62. Civil Remedies. The civil remedies available to enforce payment of delinquent taxes shall be by distraint of personal property, and by legal action. Either of these remedies or both simultaneously may be pursued at the discretion of the proper authority. The payment of other revenues accruing to local governments shall be enforced by legal action.[28] Said Section 62 did not provide for closure. Moreover, the order of closure violated petitioners right to due process, considering that the records show that the bank exercised good faith and presented what it thought was a valid and legal justification for not paying the required taxes and fees. The violation of a municipal ordinance does not empower a municipal mayor to avail of extrajudicial remedies.*29+ It should have observed due process before ordering the banks closure. Finally, on the issue of damages, we agree with both the trial and the appellate courts that the bank is not entitled to any damages. The award of moral damages cannot be granted to a corporation, it being an artificial person that exists only in legal contemplation and cannot, therefore, experience physical suffering and mental anguish, which can be experienced only by one having a nervous system.[30] There is also no sufficient basis for the award of exemplary damages. There being no moral damages, exemplary damages could not be awarded also. As to attorneys fees, aside from lack of adequate support and proof on the matter, these fees are not recoverable as a matter of right but depend on the sound discretion of the courts.[31] Under the circumstances of this case, the award of damages to Atty. Valero is also baseless. We cannot ascribe any illegal motive or malice to the bank for impleading Atty. Valero as an officer of respondent municipality. The bank filed the case against respondent municipality in the honest belief that it is exempt from paying taxes and fees. Since Atty. Valero was the official charged with the implementation of the ordinances of respondent municipality, he was rightly impleaded as a necessary party in the case. WHEREFORE, the assailed Decision dated July 17, 2001, of the Court of Appeals in CA-G.R. CV No. 58214 is AFFIRMED with MODIFICATIONS, so that (1) the order denying any claim for refunds and fees allegedly overpaid by the bank, as well as the denial of any award for damages and unrealized profits, is hereby SUSTAINED; (2) the order decreeing the closure of petitioner bank is SET ASIDE; and (3) the award of moral damages and attorneys fees to Atty. Victor A.L. Valero is DELETED. No pronouncement as to costs. AZCUNA, J.:

[G.R. No. 109791. July 14, 2003] PHILIPPINE PORTS AUTHORITY, petitioner, vs. CITY OF ILOILO, respondent.

Before us is a petition for review on certiorari assailing the Decision of the Regional Trial Court of Iloilo City, Branch 39, dated February 26, 1993 in Civil Case No. 18477, a case for collection of a sum of money. Seeking to raise questions purely of law, petitioner Philippine Ports Authority (PPA) would want us to set aside the ruling ordering it to pay real property and business taxes to respondent City of Iloilo. The factual antecedents are summarized by the trial court: This is an action for the recovery of sum of money filed by *respondent+ City of Iloilo, a public corporation organized under the laws of the Republic of the Philippines, represented by the Hon. Rodolfo T. Ganzon as City Mayor, against petitioner, Philippine Ports Authority (PPA), a government corporation created by P.D. 857. [Respondent] seeks to collect from [petitioner] real property taxes as well as business taxes, computed from the last quarter of 1984 up to fourth quarter of 1988. [Respondent] alleges that [petitioner] is engaged in the business of arrastre and stevedoring services and the leasing of real estate for which it should be obligated to pay business taxes. It further alleges that [petitioner] is the declared and registered owner of a warehouse which is used in the operation of its business and is also thereby subject to real property taxes. It demands the aggregate amount of P510,888.86 in realty and business taxes as of December 1988 (real property tax last quarter of 1984 to 1988; business tax- 1984 to 1988) including its corresponding interests and penalty charges. On July 19, 1989, [petitioner] filed a motion to dismiss but [it] was denied by this court. A motion for reconsideration was filed, but the same was still denied, after which [petitioner] filed its answer. During the pre-trial conference, the following factual and legal issues were defined and clarified. Factual Issues: 1. 2. Whether or not [petitioner] is engaged in business; Whether or not the assessment of tax by [respondent] is accurate as of 4th quarter of 1988 from the year 1984; real property tax in the amount of P180,953.93 and business tax in the amount of P329,934.93 as of December 31, 1988.

Legal Issues:

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1. 2. 3.

Whether or not Philippine Ports Authority is exempt from the payment of real property tax and business tax; Whether by filing a motion to dismiss, [petitioner] impliedly admitted the allegations in the complaint; Whether Philippine Ports Authority is engaged in business. If in the negative, whether or not it is exempt from payment of business taxes.

public dominion during the trial nor did it mention it in the memorandum it filed with the lower court. It further contends that such change of theory patently contradicts petitioners admission in its pleadings and is disallowed under applicable jurisprudence.[4] The records show that the theory of petitioner before the trial court was different from that of the present petition. In fact, even while at the trial court stage, petitioner was not consistent in its theory.[5] Initially in its pleadings therein, it argued that as a government-owned corporation, it is exempt from paying real property taxes by virtue of its specific exemption in its charter,[6] Section 40 of the Real Property Tax Code and Executive Order No. 93. Subsequently, in the memorandum it filed with the trial court, it omitted its earlier argument and changed its theory by alleging that it is a government instrumentality, which, according to applicable jurisprudence, may not be taxed by the local government. After obtaining an adverse decision from the trial court, it adopts yet another stance on appeal before us, contesting the taxability of its warehouse. It argued for the first time that since ports constructed by the State are considered under the Civil Code as properties of public dominion, its warehouse, which it insists to be part of its port, should be treated likewise. To support this, it invokes Article 420 of the Civil Code, which provides: Art. 420. The following things are property of public dominion: Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others of similar character; xxx xxx xxx

During trial, [respondent] presented two witnesses, namely: Mrs. Rizalina F. Tulio and Mr. Leoncio Macrangala. xxx xxx xxx

After [respondent] had rested its case, [petitioner] did not present any evidence. Instead, its counsel asked the court to give him time to file a memorandum, as said counsel is convinced that the issues involved in this case are purely legal issues. He has no quarrel as regards the computation of the real property and business taxes made by [respondent]. He is convinced, however, that the issue in this case involves a question of law and that [petitioner] is not liable to pay any kind of taxes to the City of Iloilo.[1] The court a quo rendered its decision holding petitioner liable for real property taxes from the last quarter of 1984 to December 1986, and for business taxes with respect to petitioners lease of real property from the last quarter of 1984 up to 1988. It, however, held that respondent may not collect business taxes on petitioners arrastre and stevedoring services, as these form part of petitioners governmental functions. The dispositive portion of said decision states: WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendant, ordering the latter to pay the plaintiff, as follows: 1. 2. the amount of P98,519.16 as real property tax, from [the] last quarter of 1984 up to December 1986; the amount of P3,828.07, as business tax, for leasing of real estate from [the] last quarter of 1984 up to 1988.[2]

Insisting that the subject warehouse is considered as part of its port, it points to Section 3 (e) of its charter quoted hereunder: e) port means a place where ships may anchor or tie up for the purpose of shelter, repair, loading or discharge of cargo, or for other such activities connected with water-borne commerce, and including all the land and water areas and the structures, equipment and facilities related to these functions. [Emphasis supplied] A perusal of the records shows that this thesis was never presented nor discussed at the trial stage. As a rule, a party who deliberately adopts a certain theory upon which the case is tried and decided by the lower court will not be permitted to change theory on appeal.[7] Points of law, theories, issues and arguments not brought to the attention of the lower court need not be, and ordinarily will not be, considered by a reviewing court, as these cannot be raised for the first time at such late stage. Basic considerations of due process underlie this rule.[8] It would be unfair to the adverse party who would have no opportunity to present further evidence material to the new theory, which it could have done had it been aware of it at the time of the hearing before the trial court.[9] To permit petitioner in this case to change its theory on appeal would thus be unfair to respondent, and offend the basic rules of fair play, justice and due process.[10]

Petitioner now seeks a review of the case, contending that the court a quo decided a question of substance which has not been decided by us in that: (i) It decreed a property of public dominion (port facility) as subject to realty taxes just because the mentioned property is being administered by what it perceived to be a taxable government corporation. And, It declared that petitioner PPA is subject to business taxes for leasing to private persons or entities real estate without considering that petitioner PPA is not engaged in business.*3+

(ii)

In its Comment, respondent in addition raises the issue of whether or not petitioner may change its theory on appeal. It points out that petitioner never raised the issue that the subject property is of

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Petitioner however cites an exception to the rule, as enunciated in Lianga Lumber Co. v. Lianga Timber Co., Inc.,[11] wherein we said: [I]n the interest of justice and within the sound discretion of the appellate court, a party may change his theory on appeal only when the factual bases thereof would not require presentation of any further evidence by the adverse party in order to enable it to properly meet the issue raised in the new theory. Petitioner contends that its new theory falls under the aforecited exception, as the issue does not involve any disputed evidentiary matter. Contrary to petitioners claim, we find that the new issue raised is not a purely legal question. It must be emphasized that the enumeration of properties of public dominion under Article 420 of the Civil Code specifically states ports constructed by the State. Thus, in order to consider the port in the case at bar as falling under the said classification, the fact that the port was constructed by the State must first be established by sufficient evidence. This fact proved crucial in Santos v. Moreno,[12] where the issue raised was whether the canals constructed by private persons were of public or private ownership. We ruled that the canals were privately owned, thus: Under Art. 420, canals constructed by the State and devoted and devoted to public use are of public ownership. Conversely, canals constructed by private persons within private lands and devoted exclusively for private use must be of private ownership. In the case at bar, no proof was adduced to establish that the port was constructed by the State. Petitioner cannot have us automatically conclude that its port qualified as property of public dominion. It would be unfair to respondent, which would be deprived of its opportunity to present evidence to disprove the factual basis of the new theory. It is thus clear that the Lianga exception cannot apply in the case at bar. Moreover, as correctly pointed out by respondent, we cannot ignore the fact that petitioners new position runs contrary to its own admission in the pleadings filed in the trial court. Under paragraph 3 of respondents complaint quoted hereunder, the fact of petitioners ownership of the property was specifically alleged as follows: III Defendant is likewise the declared and registered owner of a warehouse standing on Lot No. 1065 situated at Bgy. Concepcion, City Proper, declared under Tax Declaration No. 56325. Xerox copy of the said Tax Declaration is hereto attached as annex D and form*s+ an integral part of herein complaint;[13] In its Answer, referring to the abovecited complaint, petitioner stated, Paragraph 3 is admitted.*14+ Notably, this admission was never questioned nor put at issue during the trial.

Now before us, petitioner contradicts its earlier admission by claiming that the subject warehouse is a property of public dominion. This inconsistency is made more apparent by looking closely at what public dominion means. Tolentino explains this in this wise: Private ownership is defined elsewhere in the Code; but the meaning of public dominion is nowhere defined. From the context of various provisions, it is clear that public dominion does not carry the idea of ownership; property of public dominion is not owned by the State, but pertains to the State, which as territorial sovereign exercises certain judicial prerogatives over such property. The ownership of such property, which has the special characteristics of a collective ownership for the general use and enjoyment, by virtue of their application to the satisfaction of collective needs, is in the social group, whether national, provincial, or municipal. Their purpose is not to serve the State as a juridical person, but the citizens; they are intended for the common and public welfare, and so they cannot be the object of appropriation, either by the State or by private persons.[15] [Emphasis supplied] Following the above, properties of public dominion are owned by the general public and cannot be declared to be owned by a public corporation, such as petitioner. As the object of the pleadings is to draw the lines of battle, so to speak, between the litigants and to indicate fairly the nature of the claims or defenses of both parties, a party cannot subsequently take a position contrary to, or inconsistent, with his pleadings.[16] Unless a party alleges palpable mistake or denies such admission, judicial admissions cannot be controverted.[17] Petitioner is thus bound by its admission of ownership of the subject property and is barred from claiming otherwise. We also note that petitioner failed to raise the issue of ownership during the pre-trial. In its petition, it insists that to determine liability for real property tax, the ownership of the property must first be ascertained.[18] In the pre-trial order, however, to which petitioner did not object, nowhere was the issue of ownership included in the stipulated factual or legal issues.[19] We have ruled that a pre-trial is primarily intended to make certain that all issues necessary to the disposition of a case are properly raised. Thus to obviate the element of surprise, parties are expected to disclose at the pre-trial conference all issues of law and fact which they intend to raise at the trial. Consequently, the determination of issues at a pre-trial conference bars the consideration of other questions on appeal.[20] Hence, in the case at bar, the fact that the issue of ownership is outside of what has been delimited during the pre-trial further justifies the disallowance of petitioners new theory. Therefore, on the basis of the foregoing considerations and in the absence of compelling reasons to rule otherwise, we hold that petitioner may not be permitted to change its theory at this stage. Wellsettled is the rule that questions that were not raised in the lower court cannot be raised for the first time on appeal.[21] In any case, granting that petitioners present theory is allowed at this stage, we nevertheless find it untenable. Concededly, ports constructed by the State are properties of the public dominion, as Article 420 of the Civil Code enumerates these as properties intended for public use. It must be stressed however that what is being taxed in the present case is petitioners warehouse, which,

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although located within the port, is distinct from the port itself. In Light Rail Transit Authority v. Central Board of Assessment Appeals et al.,[22] petitioner therein similarly sought an exemption from real estate taxes on its passenger terminals, arguing that said properties are considered as part of the public roads, which are classified as property of public dominion in the Civil Code.[23] We ruled therein that: *T+he properties of petitioner are not exclusively considered as public roads being improvements placed upon the public road, and this [separable] nature of the structure in itself physically distinguishes it from a public road. Considering further that carriageways or passenger terminals are elevated structures which are not freely accessible to the public, vis--vis roads which are public improvements openly utilized by the public, the former are entirely different from the latter. Using the same reasoning, the warehouse in the case at bar may not be held as part of the port, considering its separable nature as an improvement upon the port, and the fact that it is not open for use by everyone and freely accessible to the public. In the same way that we ruled in one case that the exemption of public property from taxation does not extend to improvements made thereon by homesteaders or occupants at their own expense,[24] we likewise uphold the taxability of the warehouse in the instant case, it being a mere improvement built on an alleged property of public dominion, assuming petitioners port to be so. Moreover, petitioner may not invoke the definition of port in its charter to expand the meaning of ports constructed by the State in the Civil Code to include improvements built thereon. It must be noted that the charter itself limited the use of said definition only for the interpretation of Presidential Decree (P.D.) No. 857, its by-laws, regulations and rules,[25] and not of other statutes such as the Civil Code. Given these parameters, therefore, petitioners move to present its new theory, even if allowed, would nonetheless prove to be futile. The trial court correctly ruled that for the assessed period of 1984 to 1988, petitioners exemption from real property taxes was withdrawn by P.D. No. 1931, at least for the period of 1984 to 1986. Originally, petitioner was exempt from real property taxes on the basis of the Real Property Tax Code[26] then governing, which provided: SECTION 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 any government-owned corporation so exempt by its charter: Provided; however, That this exemption shall not apply to real property of the above-named entities the beneficial use of which has been granted, for consideration or otherwise, to a taxable person. Petitioners charter, P.D. 857,*27+ further specifically exempted it from real property taxes: SECTION 25. Exemption from Realty Taxes The Authority shall be exempt from the payment of real property taxes imposed by the Republic of the Philippines, its agencies, instrumentalities or political subdivisions; Provided, That no tax exemptions shall be extended to any subsidiaries of the Authority that may be organized; Provided, finally, That investments in fixed assets shall be deductible for income tax purposes.

It can thus be seen from the foregoing that petitioner, as a government-owned or controlled corporation, enjoyed an exemption from real property taxes. On June 11, 1984, however, P.D. 1931 effectively withdrew all tax exemption privileges granted to government-owned or controlled corporations as stated in Section 1 thereof, which reads: 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. Under the same law, the exemption can be restored in special cases through an application for restoration with the Secretary of Finance,[28] which, notably, petitioner did not avail. Subsequently, Executive Order (E.O.) No. 93 was enacted on December 17, 1986 restoring tax exemptions provided under certain laws, one of which is the Real Property Tax Code. The pertinent portion of said law provides: SECTION 1. The provisions of any general or special law to the contrary notwithstanding, all tax and duty incentives granted to government and private entities are hereby withdrawn, except: xxx xxx xxx

e) those conferred under four basic codes namely: (i) the Tariff and Customs Code, as amended; (ii) the National Internal Revenue Code, as amended; (iii) the Local Tax Code, as amended; (iv) the Real Property Tax Code, as amended; The abovecited laws, therefore, indicate that petitioners tax exemption from real property taxes was withdrawn by P.D. 1931 effective June 11, 1984, but was subsequently restored by virtue of E.O. 93, starting December 17, 1986.[29] Hence, petitioner is liable for real property taxes on its warehouse, computed from the last quarter of 1984 up to December 1986. Petitioner, however, seeks to be excused from liability for taxes by invoking the pronouncement in Basco v. PAGCOR[30] (Basco) quoted hereunder: PAGCOR has a dual role, to operate and to regulate gambling casinos. The latter role is governmental, which places it in the category of an agency or instrumentality of the Government. Being an instrumentality of the Government, PAGCOR should be and actually is exempt from local taxes. Otherwise, its operation might be burdened, impeded or subject to control by a mere Local government. [Emphasis supplied]

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Petitioner points out that its exercise of regulatory functions as decreed by its charter[31] places it within the category of an agency or instrumentality of the government, which, according to Basco, is beyond the reach of local taxation. Reliance in the abovecited case is unavailing considering that P.D. 1931 was never raised therein, and given that the issue in said case focused on the constitutionality of P.D. 1869, the charter of PAGCOR. The said decision did not absolutely prohibit local governments from taxing government instrumentalities. In fact we stated therein: The power of local government to impose taxes and fees is always subject to limitations which Congress may provide by law. Since P.D. 1869 remains an operative law until amended, repealed or revokedits exemption clause remains an exemption to the exercise of the power of local governments to impose taxes and fees.[32] Furthermore, in the more recent case of Mactan Cebu International Airport Authority v. Marcos,[33] where the Basco case was similarly invoked for tax exemption, we stated: *N+othing 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. The fact that tax exemptions of government-owned or controlled corporations have been expressly withdrawn by the present Local Government Code*34+ clearly attests against petitioners claim of absolute exemption of government instrumentalities from local taxation. Petitioner also contends that the term government-owned or controlled corporations referred in P.D. 1931 covers only those not performing governmental functions. This argument is without legal basis for it reads into the law a distinction that is not there. It runs contrary to the clear intent of the law to withdraw from all units of the government, including government-owned or controlled corporations, their exemptions from taxes. Had it been otherwise, the law would have said so.[35] Moreover, the trial court correctly pointed out that if indeed petitioner were not subject to local taxation, petitioners charter would not have specifically provided for its exemption from the payment of real property tax. Its exemption therein therefore proves that it was only an exception to the general rule of taxability of petitioner. Given that said privilege was withdrawn by subsequent law, petitioners claim for exemption from real property taxes for the entire assessed period fails. We affirm the finding of the lower court on petitioners liability for business taxes for the lease of its building to private corporations. During the trial, petitioner did not present any evidence to refute respondents proof of petitioners income from the lease of its property. Neither did it present any proof of exemption from business taxes. Instead, it emphasized its charter provisions defining its functions as governmental in nature. It averred that it allowed port users to occupy certain premises within the port area only to ensure order and convenience in discharging its governmental functions. It hence claimed that it is not engaged in business, as the act of leasing out its property was not motivated by profit, but by its duty to manage and control port operations.

The argument is unconvincing. As admitted by petitioner, it leases out its premises to private persons for convenience and not necessarily as part of its governmental function of administering port operations. In fact, its charter classifies such act of leasing out port facilities as one of petitioners corporate powers.[36] Any income or profit generated by an entity, even of a corporation organized without any intention of realizing profit in the conduct of its activities, is subject to tax.[37] What matters is the established fact that it leased out its building to ten private entities from which it regularly earned substantial income. Thus, in the absence of any proof of exemption therefrom, petitioner is liable for the assessed business taxes. In closing, we reiterate that in taxing government-owned or controlled corporations, the State ultimately suffers no loss. In National Power Corp. v. Presiding Judge, RTC, Br. XXV,[38] we elucidated: Actually, the State has no reason to decry the taxation of NAPOCORs properties, as and by way of real property taxes. Real property taxes, after all, form part and parcel of the financing apparatus of the Government in development and nation-building, particularly in the local government level. xxx xxx xxx

To all intents and purposes, real property taxes are funds taken by the State with one hand and given to the other. In no measure can the government be said to have lost anything. Finally, we find it appropriate to restate that the primary reason for the withdrawal of tax exemption privileges granted to government-owned and controlled corporations and all other units of government was that such privilege resulted in serious tax base erosion and distortions in the tax treatment of similarly situated enterprises, hence resulting in the need for these entities to share in the requirements of development, fiscal or otherwise, by paying the taxes and other charges due from them.[39] WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED.

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[G.R. No. 144486. April 13, 2005] RADIO COMMUNICATIONS OF THE PHILIPPINES, INC. (RCPI), petitioner, vs. PROVINCIAL ASSESOR OF SOUTH COTABATO CARPIO, J.: The Case This is a petition for review[1] to set aside the Decision[2] dated 29 March 2000 of the Court of Appeals (appellate court) in CA-G.R. SP No. 47446. The appellate court modified the ruling of the Central Board of Assessment Appeals (CBAA) and exempted petitioner Radio Communications of the Philippines, Inc. (RCPI) from paying real property tax assessed on its machinery and radio equipment mounted on its relay station tower as accessories. However, the appellate court held RCPI liable for real property tax on its radio station building, machinery shed, and relay station tower. The Facts In 1957, Republic Act No. 2036 (RA 2036)*3+ granted RCPI a fifty-year franchise. Section 14 of RA 2036, as amended by Republic Act No. 4054 (RA 4054) in 1964, reads: Sec. 14. In consideration of the franchise and rights hereby granted and any provision of law to the contrary notwithstanding, the grantee shall pay the same taxes as are now or may hereafter be required by law from other individuals, copartnerships, private, public or quasi-public associations, corporations or joint stock companies, on real estate, buildings and other personal property except radio equipment, machinery and spare parts needed in connection with the business of the grantee, which shall be exempt from customs duties, tariffs and other taxes, as well as those properties declared exempt in this section. In consideration of the franchise, a tax equal to one and one-half per centum of all gross receipts from the business transacted under this franchise by the grantee shall be paid to the Treasurer of the Philippines each year, within ten days after the audit and approval of the accounts as prescribed in this Act. Said tax 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 national, from which taxes the grantee is hereby expressly exempted. (Emphasis supplied) On 10 June 1985, the municipal treasurer of Tupi, South Cotabato assessed RCPI real property taxes from 1981 to 1985.[4] The municipal treasurer demanded that RCPI pay P166,810 as real property tax on its radio station building in Barangay Kablon, as well as on its machinery shed, radio relay station tower and its accessories, and generating sets, based on the following tax declarations:[5] 1. Tax Declaration No. 7639 Radio station building 2. Tax Declaration No. 7640 Machinery shed

3. Tax Declaration No. 7641 Radio relay station tower and accessories (100 feet high) 4. Tax Declaration No. 7642 Two (2) units machinery [lister generating set] RCPI protested the assessment before the Local Board of Assessment Appeals (LBAA).*6+ RCPI claimed that all its assessed properties are personal properties and thus exempt from the real property tax. Assuming that the assessed properties are real property, they are still exempt from real property taxes. Section 3 of Presidential Decree No. 464 (PD 464) states that to be taxable, the machinery should be attached to the real estate and essential for manufacturing, commercial, mining, industrial, or agricultural purposes. RCPI claimed that the assessed properties are not used for manufacturing, commercial, mining, industrial, or agricultural purposes. Besides, the assessed properties are attached to a building on a lot not owned by RCPI. RCPI also pointed out that its franchise exempts RCPI from paying any and all taxes of any kind, nature or description in exchange for its payment of tax equal to one and one-half per cent on all gross receipts from the business conducted under its franchise. RCPI further claimed that any deviation from its franchise would violate the non-impairment of contract clause of the Constitution. Finally, RCPI stated that the value of the properties assessed has depreciated since their acquisition in the 1960s. The Provincial Assessor of South Cotabato (provincial assessor) opposed RCPIs claims on all points. The provincial assessor insisted that the assessed properties are subject to the real property tax. The Ruling of the Local Board of Assessment Appeals In its Decision[7] dated 19 May 1995, the LBAA of Koronadal, South Cotabato affirmed the notices of assessment as valid and consistent with the law. The properties covered by Tax Declaration Nos. 7639, 7640, 7641 and 7642 are real properties for purposes of real property taxation under PD 464. The in lieu of all taxes clause in RCPIs franchise does not exempt its properties from the real property tax. Finally, despite its protests, RCPI did not submit evidence as to the date of acquisition, acquisition cost, and condition of the assessed properties to support its claim of depreciation. The LBAA, in the absence of contrary evidence, relied on the validity of the Notice of Assessment and on the presumption that official duty has been regularly performed. The dispositive portion of the LBAAs decision reads: WHEREFORE, the appellant is hereby ordered to pay the real property taxes, inclusive of all penalties, surcharges and interest accruing as of the date of actual payment, on the properties covered by Tax Declaration Nos. 7639, 7640, 7641, and 7642, as computed. SO ORDERED.[8]

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RCPI appealed to the CBAA.*9+ RCPI maintained that the in lieu of all taxes clause in its franchise forecloses the imposition of taxes other than the franchise tax. RCPI also reiterated its arguments before the LBAA. Respondent assessors repeated their opposition to RCPIs appeal. The Ruling of the Central Board of Assessment Appeals In its Decision*10+ dated 7 November 1996, the CBAA dismissed RCPIs appeal. The CBAA held that RCPIs liability for the franchise tax does not exempt RCPI from the real property tax. Under RCPIs franchise, only personal properties such as radio equipment, machinery and spare parts are exempt from customs duties, tariffs and other taxes. The CBAA ruled that RCPI was liable for the real property tax on the assessed properties. RCPI could also not invoke the non-impairment of contract clause since no legal right of RCPI was violated. The dispositive portion of the CBAAs decision reads: WHEREFORE, the Decision rendered by the Local Board of Assessment Appeals of the Province of South Cotabato, dated 19 May 1995, is hereby AFFIRMED and the instant appeal is hereby DISMISSED. SO ORDERED.[11] The Ruling of the Court of Appeals RCPI filed its petition for review of the CBAA ruling before the appellate court. In its Decision[12] dated 29 March 2000, the appellate court modified the CBAA ruling. The appellate court ruled that Section 14 of RA 2036, as amended by RA 4054, clearly exempts RCPI from tax on radio equipment, machinery, and spare parts needed in connection with its business. Therefore, RCPI is not liable for real property tax on the generating sets, and on its radio relay station tower and its accessories consisting of two units of UHF communication equipment, power distribution unit boar, and battery charger, which are actually varying types of radio equipment. The appellate court explained thus: The tower upon which these different types of radio equipment are mounted or attached is, however, subject to real property tax since a tower is not strictly a radio equipment as it only serves as a support for antennas or other communication equipment mounted thereon for the transmission and reception of radio signals (Colliers Encyclopedia, Vol. 22, p. 127). Nor could it be classified as machinery, which is a combination of mechanical devices (26 Words and Phrases, p. 7), for without attachments to it, a tower is merely a structure designed primarily with a view to elevation (Websters New International Dictionary of the English Language, 2nd Ed., Unabridged). As RCPIs tax exemption covers only its radio equipment, machinery, and spare parts essential to its business, it is liable for realty tax on its radio station building. The machinery shed is likewise taxable as the same is a kind of real property falling within the classification of buildings or permanent structures intended to shelter human beings or domestic animals, or to receive, retain, or confine the goods in which a person deals, or to house the tools or machinery he uses, or the persons he employs in his business (5 Words and Phrases, p. 877).[13] The dispositive portion of the appellate courts decision reads:

WHEREFORE, the decision of the Central Board of Assessment Appeals is hereby MODIFIED. Petitioner is declared exempt from paying the real property taxes assessed upon its machinery and radio equipment mounted as accessories to its relay tower. The decision assessing taxes upon petitioners radio station building, machinery shed, and relay station tower is, however, AFFIRMED.[14] RCPI filed a partial motion for reconsideration, claiming that its exemption from real property tax applies to the radio relay station tower, the radio station building, and the machinery shed.[15] The appellate court denied the motion.[16] The Issues RCPI filed its petition for review before this Court. RCPI presented the following issues for resolution: 1. The appellate court erred when it excluded RCPIs tower, relay station building and machinery shed from tax exemption; and 2. The appellate court erred when it did not resolve the issue of nullity of the tax declarations and assessments due to non-inclusion of depreciation allowance.[17] The Ruling of the Court Exemption from Real Property Tax Respondents assert that RCPI not only changed its arguments, RCPI also made incorrect arguments. RCPI earlier maintained that its radio relay station tower, radio station building, and machinery shed are personal properties and are thus not subject to the real property tax. RCPI now argues that its radio relay station tower, radio station building, and machinery shed are tax-exempt because of the in lieu of all taxes clause in its franchise, which exempts RCPI from the real estate tax. RCPI contends that the in lieu of all taxes clause in its amended franchise exempts it from paying all taxes other than franchise tax. It is thus no longer necessary to determine whether the tower, relay station building, and machinery shed are radio equipment for purposes of exemption from the real estate tax. RCPI also states that legislative enactments during the pendency of this petition caused it to lose and then regain its tax-exempt status. RCPI enumerated thus: First, Congress passed the Local Government Code that withdrew all the tax exemptions existing at the time of its passageincluding that of RCPIs. Second, Congress enacted the franchise of telecommunications companies, such as Islacom, Bell, Island Country, IslaTel, TeleTech, Major Telecoms, and Smart, with the in lieu of all taxes proviso. Third, Congress passed RA 7925 entitled An Act to Promote and Govern the Development of Philippine Telecommunications and the Delivery of Public Telecommunications Services which,

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through Section 23, mandated the equality of treatment of service providers in the telecommunications industry.[18] We are not persuaded. As found by the appellate court, RCPIs radio relay station tower, radio station building, and machinery shed are real properties and are thus subject to the real property tax. Section 14 of RA 2036, as amended by RA 4054, states that *i+n consideration of the franchise and rights hereby granted and any provision of law to the contrary notwithstanding, the grantee shall pay the same taxes as are now or may hereafter be required by law from other individuals, copartnerships, private, public or quasipublic associations, corporations or joint stock companies, on real estate, buildings and other personal property x x x.*19+ The clear language of Section 14 states that RCPI shall pay the real estate tax. The in lieu of all taxes clause in Section 14 of RA 2036, as amended by RA 4054, cannot exempt RCPI from the real estate tax because the same Section 14 expressly states that RCPI shall pay the same taxes x x x on real estate, buildings x x x. The in lieu of all taxes clause in the third sentence of Section 14 cannot negate the first sentence of the same Section 14, which imposes the real estate tax on RCPI. The Court must give effect to both provisions of the same Section 14. This means that the real estate tax is an exception to the in lieu of all taxes clause. Subsequent legislations have radically amended the in lieu of all taxes clause in franchises of public utilities. As RCPI correctly observes, the Local Government Code of 1991 withdrew all the tax exemptions existing at the time of its passage including that of RCPIs with respect to local taxes like the real property tax. Also, Republic Act No. 7716 (RA 7716) abolished the franchise tax on telecommunications companies effective 1 January 1996. To replace the franchise tax, RA 7716 imposed a 10 percent value-added-tax on telecommunications companies under Section 102[20] of the National Internal Revenue Code. The present state of the law on the in lieu of all taxes clause in franchises of telecommunications companies was summarized as follows: The existing legislative policy is clearly against the revival of the in lieu of all taxes clause in franchises of telecommunications companies. After the VAT on telecommunications companies took effect on January 1, 1996, Congress never again included the in lieu of all taxes clause in any telecommunications franchise it subsequently approved. Also, from September 2000 to July 2001, all the fourteen telecommunications franchises approved by Congress uniformly and expressly state that the franchisee shall be subject to all taxes under the National Internal Revenue Code, except the specific tax. The following is substantially the uniform tax provision in these fourteen franchises: Tax Provisions. The grantee, its successors or assigns, shall be subject to the payment of all taxes, duties, fees, or charges and other impositions under the National Internal Revenue Code of 1997, as amended, and other applicable laws: Provided, That nothing herein shall be construed as repealing any specific tax exemptions, incentives or privileges granted under any relevant law: Provided, further, That all rights, privileges, benefits and exemptions accorded to existing and future telecommunications entities shall likewise be extended to the grantee.

Thus, after the imposition of the VAT on telecommunications companies, Congress refused to grant any tax exemption to telecommunications companies that sought new franchises from Congress, except the exemption from specific tax. More importantly, the uniform tax provision in these new franchises expressly states that the franchisee shall pay not only all taxes, except specific tax, under the National Internal Revenue Code, but also all taxes under other applicable laws. One of the other applicable laws is the Local Government Code of 1991, which empowers local governments to impose a franchise tax on telecommunications companies. This, to reiterate, is the existing legislative policy.[21] RCPI cannot also invoke the equality of treatment clause under Section 23 of Republic Act No. 7925.[22] The franchises of Smart,[23] Islacom,[24] TeleTech,[25] Bell,[26] Major Telecoms,[27] Island Country,[28] and IslaTel,[29] all expressly declare that the franchisee shall pay the real estate tax, using words similar to Section 14 of RA 2036, as amended. The provisions of these subsequent telecommunication franchises imposing the real estate tax on franchisees only confirm that RCPI is subject to the real estate tax. Otherwise, RCPI will stick out like a sore thumb, being the only telecommunications company exempt from the real estate tax, in mockery of the spirit of equality of treatment that RCPI is invoking, not to mention the violation of the constitutional rule on uniformity of taxation. It is an elementary rule in taxation that exemptions are strictly construed against the taxpayer and liberally in favor of the taxing authority. It is the taxpayers duty to justify the exemption by words too plain to be mistaken and too categorical to be misinterpreted.[30] Exclusion of Depreciation Allowance RCPI contends that the tax declarations and assessments covering its radio relay station tower, radio station building, and machinery shed are void because the assessors did not consider depreciation allowance in their assessments. We have examined the records of this case and found that RCPI raised before the LBAA and the CBAA the nullity of the assessments due to the non-inclusion of depreciation allowance. Therefore, RCPI did not raise this issue for the first time. However, even if we consider this issue, under the Real Property Tax Code depreciation allowance applies only to machinery and not to real property.[31] WHEREFORE, we DENY the petition. We AFFIRM the Decision of the Court of Appeals in CA-G.R. SP No. 47446 dated 29 March 2000.

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[G.R. No. 121782. May 9, 2005] THE HONORABLE SECRETARY OF FINANCE, petitioner, vs. THE HONORABLE RICARDO M. ILARDE, CHICO-NAZARIO, J.: At the fulcrum in the case before Us is the constitutional question of whether or not the then Ministry of Finance could legally promulgate Regulations prescribing a rate of penalty on delinquent taxes other than that provided for under Presidential Decree (P.D.) No. 464, also known as the Real Property Tax Code. In this petition for review, petitioner Secretary of Finance seeks to reverse and set aside the Decision[1] dated 28 August 1995 rendered by respondent Judge Ricardo M. Ilarde of the Regional Trial Court (RTC), 6th Judicial Region, Branch 26, Iloilo City, in Civil Case No. 21207 for Declaratory Relief with Damages, declaring as null and void Joint Assessment Regulations No. 1-85 and Local Treasury Regulations No. 2-85 of the Ministry (now Department) of Finance for being contrary to Section 66 of P.D. No. 464 or the Real Property Tax Code, which pegged the maximum penalty for delinquency in the payment of real estate taxes at 24% of the delinquent tax. Private respondent Cipriano P. Cabaluna, Jr., was the Regional Director of Regional Office No. VI of the Department of Finance in Iloilo City. He co-owns with his wife certain properties, namely, Lot No. 941D-1, Lot No. 941-D-2, and a residential house on Lot No. 942-D-1, all situated in 14 Jalandoni St., Jaro, Iloilo City. Aside from these properties, the Cabaluna spouses own Lot No. 12 (4491-E and F) and Lot No. 14 (4495-E and F), both situated in Barangay Tacas, Jaro, Iloilo City.[2] Private respondent failed to pay the land taxes on Lot No. 12 (4491-E and F) and Lot No. 14 (4495-E and F) for the years 1986 to 1992. For the years 1991 to 1992, taxes were also unpaid on Lot No. 941D-2, on the residential house, and on Lot No. 941-D-1.[3] A breakdown of the computation of the delinquent taxes and penalties, both Basic and Special Education Fund (SEF),*4+ for private respondents lots and residential house as of May 1993 as reflected in the various receipts issued by the City Treasurers Office of Iloilo City, shows that more than twenty-four percent (24%) of the delinquent taxes were charged and collected from private respondent by way of penalties. On the 6th and 7th of May 1993, private respondent paid his land taxes and the corresponding receipts were issued to him by the City Treasurers Office with the notation paid under protest. On 27 May 1993, soon after private respondent retired from his post as Regional Director of Regional Office No. VI of the Department of Finance in Iloilo City, he filed a formal letter of protest with the City Treasurer of Iloilo City[5] wherein he contends that the City Treasurers computation of penalties was erroneous since the rate of penalty applied exceeded twenty-four percent (24%) in contravention of Section 66 of P.D. No. 464, otherwise known as the Real Property Tax Code, as amended. In response, however, respondent Assistant City Treasurer, Rizalina F. Tulio, for and in behalf of the City Treasurer of Iloilo City, turned down private respondents protest, citing Sec. 4(c) of Joint

Assessment Regulations No. 1-85 and Local Treasury Regulations No. 2-85 of the then Ministry (now Department) of Finance which reads: Sec. 4. Computation of Penalties on Delinquent Real Property Taxes. (a) Unless condoned, wholly or partially, in a duly approved resolution of the Local Sanggunian, delinquent real property taxes shall be subject to penalty at the rate of two per cent (2%) for every month of delinquency, provided that the total penalty for one tax year shall not exceed twenty-four percent (24%). (b) Failure to pay on time at least the first quarter installment of the real property tax shall constitute a waiver on the part of the property owner or administrator to avail of the privilege granted by law for him to pay without penalty his annual realty tax obligation in four (4) equal installment on or before the end of every quarter of the tax year. Accordingly, if the portion of the real property tax due for the first quarter of tax year is not paid on or before the thirty-first day of March of the same year, the penalty shall be reckoned from the first day of January at the rate of two per cent (2%) for every month of delinquency on the basis of the total amount due for the entire year and not only on the amount due for the said first quarter of the tax year. (c) The penalty of two percent (2%) per month of delinquency, or twenty-four percent (24%) per annum, as the case may be, shall continue to be imposed on the unpaid tax from the time the delinquency was incurred up to the time that it is paid for in full.[6] (Underlining supplied) Despite his labors to exhaust all administrative remedies, the denial of his protest and his motion for reconsideration compelled private respondent to file a Petition for Declaratory Relief with Damages on 06 July 1993 before the sala of respondent Judge, assailing Joint Assessment Regulations No. 1-85 and Local Treasury Regulations No. 2-85 which, according to him, flouted Section 66 of P.D. No. 464 which fixed the maximum penalty for delinquency in the payment of real estate taxes at 24% of the delinquent tax. On 28 August 1995, respondent Judge rendered his Decision, the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered, (1) declaring as null and void Section 4(c) of Joint Assessment Regulation No. 1-85 and Local Treasury Regulation No. 2-85 issued on August 1, 1985 by respondent Secretary (formerly Minister) of Finance; (2) declaring that the penalty that should be imposed for delinquency in the payment of real property taxes should be two per centum on the amount of the delinquent tax for each month of delinquency or fraction thereof, until the delinquent tax is fully paid but in no case shall the total penalty exceed twenty-four per centum of the delinquent tax as provided for in Section 66 of P.D. 464 otherwise known as the Real Property Tax Code; and (3) ordering the respondent City Treasurer of Iloilo City to refund and/or reimburse to petitioner Cipriano P. Cabaluna [Jr.] the amounts paid by the latter corresponding to the penalties on his delinquent real property taxes in excess of twenty-four percent (24%) thereof. No pronouncement as to cost.[7] Petitioner, in this appeal, attributes the following errors to the trial court as grounds for the reversal of the assailed Decision:

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I. RESPONDENT JUDGES DECISION OF AUGUST 28, 1995 GRANTING PRIVATE RESPONDENTS PRAYER FOR DECLARATORY RELIEF WAS PREMISED ON ERRONEOUS GROUNDS. II. RESPONDENT JUDGE ERRED WHEN HE IGNORED THE FACT THAT PRIVATE RESPONDENT WAS ESTOPPED TO QUESTION THE VALIDITY OF THE SUBJECT REGULATION WHICH HE HIMSELF UPHELD AND APPLIED TO OTHER PROPERTY OWNERS WHILE HE WAS THEN THE REGIONAL DIRECTOR OF FINANCE FOR REGION VI.[8] The key in unlocking the present constitutional imbroglio is to address the following issues: (1) Whether or not Joint Assessment Regulations No. 1-85 and Local Treasury Regulations No. 2-85 are valid; (2) What is the proper rate of penalty for delinquent real property taxes; and (3) Whether or not the penalties for delinquent real property tax imposed by petitioner on the properties of private respondent are valid. Petitioner claims that respondent Judge has decided questions of substance in a way not in accord with law and jurisprudence as to call for an exercise of the power of review and supervision vested in this Honorable Court.[9] Private respondent, on the other hand, assails as unconstitutional the said Joint Assessment and Local Treasury Regulations. [10] Petitioners standpoint is devoid of basis in law or in logic. The subject Regulations must be struck down for being repugnant to Section 66 of P.D. No. 464 or the Real Property Tax Code, which is the law prevailing at the time material to this case. Section 66 provides: Section 66. Penalty for delinquency. - Failure to pay the real property tax before the expiration of the period for the payment without penalty of the quarterly installments thereof shall subject the taxpayer to the payment of a penalty of two per centum on the amount of the delinquent tax for each month of delinquency or fraction thereof, until the delinquent tax shall be fully paid: Provided, That in no case shall the total penalty exceed twenty-four per centum of the delinquent tax. The rate of penalty for tax delinquency fixed herein shall be uniformly applied in all provinces and cities. (Underlining supplied) Note that under Section 66 of P.D. No. 464, the maximum penalty for delinquency in the payment of real property tax shall in no case exceed twenty-four per centum of the delinquent tax. Upon the other hand, Section 4(c) of the challenged Joint Assessment Regulations No. 1-85 and Local Treasury Regulations No. 2-85 issued by respondent Secretary (formerly Minister) of Finance provides that the penalty of two percent (2%) per month of delinquency or twenty-four percent (24%) per annum as the case may be, shall continue to be imposed on the unpaid tax from the time the delinquency was incurred up to the time that the delinquency is paid for in full. As adeptly observed by the trial court, the penalty imposed under the assailed Regulations has no limit inasmuch as the 24% penalty per annum shall be continuously imposed on the unpaid tax until it is paid for in full unlike that imposed under Section 66 of the Real Property Tax Code where the total penalty is limited only to twenty-four percent of the delinquent tax. That such is the effect of an application of the Regulations under review is not disclaimed by the petitioner anywhere in his pleadings. Petitioner, however, attempts to justify the issued Regulations

departure from the Real Property Tax Code. Said Regulations, petitioner says, are sanctioned by Executive Order (E.O.) No. 73 and its implementing guidelines, Joint Local Assessment/Treasury Regulations No. 2-86.[11] Joint Local Assessment/Treasury Regulations No. 2-86, which provides in material parts: SECTION 1. Computation of Real Property Taxes. Effective January 1, 1987 the assessed values of real properties determined by the assessors during the latest general revision of real property assessments, which ended in December 1984, shall be used as the basis for the computation of the basic and additional 1% (SEF) real property taxes. However, in order to ease the tax burden, and pursuant to the provisions of Section 97-A of the Real Property Tax Code (PD 464, as amended), increases in real property taxes arising from the 1984 new or revised assessments shall become due and collectible, in addition to the preceding years tax, as follows: (a) CY 1987, a maximum increase of fifty percent (50%) over the 1986 tax, (b) in CY 1988, the remaining increase in tax but not exceeding a second fifty percent (50%) increase, or a total of 100%, over the 1986 tax, and (c) in CY 1989, the remaining increase in tax shall not exceed the yearly increments originally arrived at in applying the 1984 new or revised assessment of the property subject to tax. It is understood that the herein-authorized annual increases but not exceeding a third fifty percent (50%) increase, or a total of 150%, over the 1986 tax. Any increase in tax in excess of the maximum authorized for CY 1989 shall no longer be collectible. The annual 50% increase ceiling prescribed in the foregoing provisions may be availed of, however, only by taxpayers who shall meet the quarterly deadlines provided for in the Real Property Tax Code and where the subject property has no outstanding real property tax delinquency except those that are covered by Amnesty Compromise Agreements executed by and between the taxpayer and the local government pursuant to the provisions of Executive Order No. 42, dated August 22, 1986, of the President, as implemented by Joint Assessment/Treasury Regulations No. 2-86, dated August 26, 1986 of this Ministry. In case of failure to make prompt payments, the taxpayer shall be required to pay in full the increase in tax due and demandable for the tax year as a result of the full application of the 1984 new or revised assessment of the subject property. In addition, the two percent (2%) per month penalty shall be imposed on the amount due in the manner provided for under existing regulations. (Underscoring supplied.)[12] Petitioner Secretary of Finance avers in his petition that the last paragraph of Section 1, Joint Local Assessment/Treasury Regulations No. 2-86, explicitly provides for a 2% per month penalty without any limitation as to the maximum amount thereof, which is entirely consistent with the then existing Regulations, the now challenged Joint Assessment Regulations No. 1-85 and Local Treasury Regulations No. 2-85.[13] Petitioner further asserts that inasmuch as Joint Local Assessment/Treasury Regulations

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No. 2-86, which echoes the disputed Regulations, was issued to implement E.O. No. 73, private respondents recourse is to file a case questioning the validity of Joint Local Assessment/Treasury Regulations No. 2-86 in the same way that he has assailed Joint Assessment Regulations No. 1-85 and Local Treasury Regulations No. 2-85.[14] Petitioners reasoning is, to our mind, but a futile attempt to muddle the facts of the case and the issues involved. Recall that the present controversy cropped up when private respondent Cabaluna protested the payment of penalties on his delinquent taxes for being in excess of the 24% cap provided in P.D. No. 464 or the Real Property Tax Code. In response to his letter of protest, the Assistant Treasurer of Iloilo City justified the assessment by citing Sec. 4(c) of Joint Assessment Regulations No. 1-85 and Local Treasury Regulations No. 2-85 issued by petitioner Minister (now Secretary) of Finance. This has lead to the filing of the present case by Cabaluna to question the validity of the said Regulations. It is the validity of said Regulations, not Joint Local Assessment/Treasury Regulations No. 2-86, that is sought to be resolved herein and petitioner should not depart from the issue on hand. Petitioner urges this Court that inasmuch as Joint Local Assessment/Treasury Regulations No. 2-86 which was allegedly borne out of E.O. No. 73 is consistent with the Joint Assessment Regulations No. 185 and Local Treasury Regulations No. 2-85 now under scrutiny, E.O. No. 73 had the effect of validating the latter. The Court harbors doubts on the veracity of petitioners contention that the Regulations at issue are sanctioned by E.O. No. 73. The underlying principle behind E.O. No. 73, as gleaned from the whereas clauses and Section 1 thereof as quoted above, is to advance the date of effectivity of the application of the Real Property Tax Values of 1984 from 01 January 1988, the original date it was intended by E.O. No. 1019 to take effect for purposes stated therein, to 01 January 1987. E.O. No. 73 did not, in any way, alter the structure of the real property tax assessments as provided for in P.D. No. 464 or the Real Property Tax Code. Neither is this Court easily dissuaded by the submission of the Secretary of Finance that E.O. No. 73, which provides in Section 2 thereof that: The Minister of Finance shall promulgate the necessary rules and regulations to implement this Executive Order, has the effect of according petitioner the blanket authority to tinker with the rates of penalty on delinquency taxes as provided for in P.D. No. 464, the general law on real property taxation. The Court takes notice that E.O. No. 73 did not touch at all on the topic of amendment of rates of delinquent taxes or the amendment of rates of penalty on delinquent taxes. E.O. No. 73, particularly in Section 2 thereof, has merely designated the Minister of Finance to promulgate the rules and regulations towards the implementation of E.O. No. 73, particularly on the application of the Real Property Values as of 31 December 1984, which is the general purpose for enacting said executive order. In our mind, what is patent from the above-quoted Section 3 of E.O. No. 73 is the repeal of E.O. No. 1019, not Section 66 of P.D. No. 464. Said E.O. No. 1019 is known as the law Reorganizing the Tax Collection and Assessment Machinery in the Provinces, Municipalities, Municipalities and Cities, and Other Purpose, which was signed into law by deposed President Ferdinand E. Marcos on 18 April 1985, reads:

WHEREAS, there have been numerous requests from people in the provinces and towns proclaimed as calamity areas to allow them temporary respite from the payment of the increase in real property taxes; WHEREAS, there is a resolution in the Batasang Pambansa asking the President of the Philippines to suspend the accrual of real property taxes based on the general revision of real property assessments undertaken from July 1, 1981 to June 30, 1985; ... SECTION 1. The Ministry of Finance and the Ministry of Local Government shall immediately establish a more efficient tax collecting system to strengthen the present machinery in order to maximize the collection of taxes on the province, municipality or city levels; SEC. 2. For the above purpose, responsibilities now being performed by the province, municipality or city treasurers which do not pertain directly to treasury service, especially tax collection, shall be removed from said treasurers in order to enable them to concentrate on the collection of taxes. SEC. 3. The Ministry of Finance and the Ministry of Local Government shall likewise revise and strengthen the present tax assessment process in order to obtain a more efficient, equitable and realistic system. SEC. 4. The present distribution of shares from real property tax revenues among the provinces and municipalities or cities namely, 45% to the province, 45% to the municipality or city, and 10 % for the barangays, shall be maintained. SEC. 5. The increase in real property taxes resulting from the revised real property assessments as provided for under Section 21 of Presidential Decree No. 464, as amended by Presidential Decree No. 1621, shall be collected beginning January 1, 1988 instead of January 1, 1985 in order to enable the Ministry of Finance and the Ministry of Local Government to establish the new systems of tax collection and assessment provided herein and in order to alleviate the condition of the people, including real property owners, as a result of temporary economic difficulties. SEC. 6. Payments already made pursuant to the revised real property assessments shall be credited to future real property taxes due on the same property. . . . (Emphases supplied) Neither did E.O. No. 1019 directly or indirectly vest upon the Department of Finance the right to fiddle with the rates of penalty to be assessed on delinquency taxes as contained in the Real Property Tax Code. Even assuming that E.O. No. 1019 had vested the then Ministry of Finance with the authority to impose new rates of penalty on delinquency taxes, as petitioner would have us believe, such authority would have been automatically stripped off from it upon the express repeal of E.O. No. 1019 by E.O. No. 73 on the 25th of November 1986. Despite the promulgation of E.O. No. 73, P.D. No. 464 in general and Section 66 in particular, remained to be good law. To accept petitioners premise that E.O. No. 73 had accorded the Ministry of Finance the authority to alter, increase, or modify the tax structure would be tantamount to saying that E.O. No. 73 has repealed or amended P.D. No. 464. Repeal of laws should be made clear and expressed. Repeals by implication are not favored as laws are presumed to be passed with deliberation and full knowledge of all laws existing on the subject. Such repeals are not favored for a law cannot be deemed repealed unless it is clearly manifest that the legislature so intended it.[15] The failure to add a specific repealing clause indicates that the intent was not to repeal any existing law, unless an irreconcilable inconsistency and repugnancy exist in the terms of the new and old laws. We find, as

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the trial court has found, no such inconsistency or repugnancy between E.O. No. 73 and Section 66 of P.D. No. 464. Jurisprudence thrives to the effect that it is only Republic Act No. 7160 or the Local Government Code of 1991, which repealed the Real Property Tax Code or P.D. No. 464.[16] Assuming argumenti that E.O. No. 73 has authorized the petitioner to issue the objected Regulations, such conferment of powers is void for being repugnant to the well-encrusted doctrine in political law that the power of taxation is generally vested with the legislature.[17] Yes, President Corazon Aquino, at that time, was exercising both executive and legislative powers. But, the power delegated to the executive branch, in this case the Ministry of Finance, to lay down implementing rules must, nevertheless, be germane to the general law it seeks to apply. The implementing rules cannot add to or detract from the provisions of the law it is designed to implement.[18] Administrative regulations adopted under legislative authority by a particular department must be in harmony with the provisions of the law they are intended to carry into effect,[19] which in this case is merely to antedate the effectivity of the 1984 Real Property Tax values inasmuch as this is the raison dtre of E.O. No. 73. In a last-ditch effort to salvage the impugned Regulations, petitioner pushes on that Joint Local Assessment/Treasury Regulations No. 2-86, or the so-called implementing rules of E.O. No. 73, is not contrary to Section 66 of P.D. No. 464 inasmuch as the latter applies merely to simple delinquency in the payment of real property taxes while the former covers cases wherein there was failure to promptly pay the real property tax due, including the increase in tax due and demandable for the tax year as a result of the application of the 1984 New or Revised Assessment of the value of the subject property.[20] Such rationalization lacks legal traction. P.D. No. 464 makes no distinction as to whether it is simple delinquency or other forms thereof. The Real Property Tax Code covers the wide ilk of failure to promptly pay the real property taxes due and demandable for a particular period. Ubi lex non distinguit nec nos distinguere debemus. When the law does not distinguish, we must not distinguish. Further, P.D. No. 464 covers all real property titled to individuals who become delinquents in paying real estate tax. P.D. No. 464 is a law of general application.[21] On the second assigned error, the fact that private respondent Cabaluna was responsible for the issuance and implementation of Regional Office Memorandum Circular No. 04-89 which implemented Joint Assessment Regulations No. 1-85 and Local Treasury Regulations No. 2-85 does not put him in estoppel from seeking the nullification of said Regulations at this point. As adroitly elucidated by the trial court That petitioner had previously endorsed implementation of subject regulations is of no moment. For he did so then in his capacity as the Regional Director of Regional Office No. VI of the Department of Finance in Iloilo City. As such Regional Director, he was a subordinate of the Secretary of Finance so that he was duty bound to implement subject regulations. Petitioner had no alternative but to carry out the orders and issuances of his superior. In the case at bar, however, petitioner is suing as a plain taxpayer, he having already retired as Regional Director. His official acts as Regional Director could not have stripped him of his rights as a

taxpayer. To be sure, the official acts of petitioner as Regional Director cannot serve as estoppel for him to pursue the present course of action that he has taken as a taxpayer. In any event, a regulation which is in itself invalid for being contrary to law cannot be validated by any act of endorsement of any official, much less, by a subordinate of the official who issued such regulation. Estoppel, certainly, cannot make an invalid regulation valid.[22] At bottom, the law applicable, in the case at bar, for purposes of computation of the real property taxes due from private respondent for the years 1986 to 1991, including the penalties and interests, is still Section 66 of the Real Property Tax Code of 1974 or P.D. No. 464. The penalty that ought to be imposed for delinquency in the payment of real property taxes should, therefore, be that provided for in Section 66 of P.D. No. 464, i.e., two per centum on the amount of the delinquent tax for each month of delinquency or fraction thereof but in no case shall the total penalty exceed twenty-four per centum of the delinquent tax. Accordingly, the penalties imposed by respondents City Treasurer and Assistant City Treasurer of Iloilo City on the property of private respondent are valid only up to 24% of the delinquent taxes. The excess penalties paid by the private respondent should, in view of that, be refunded by the latter. However, from 01 January 1992 onwards, the proper basis for the computation of the real property tax payable, including penalties or interests, if applicable, must be Rep. Act No. 7160, known as the Local Government Code, which took effect on the 1st of January 1992[23] inasmuch as Section 534[24] thereof had expressly repealed P.D. No. 464 or the Real Property Tax Code. Section 5(d) of Rep. Act No. 7160 provides that rights and obligations existing on the date of effectivity of the new Code and arising out of contracts or any source of prestation involving a local government unit shall be governed by the original terms and conditions of the said contracts or the law in force at the time such contracts were vested. WHEREFORE, the instant petition is hereby DENIED and the order dated 28 August 1995 in Civil Case No. 21207 rendered by respondent Judge Ricardo M. Ilarde of the Regional Trial Court, 6th Judicial Region, Branch 26, Iloilo City, is hereby AFFIRMED with MODIFICATION that the real property tax payable by private respondent Cipriano P. Cabaluna, Jr., for the year 1992 shall be based on the Local Government Code of 1991. No costs.

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[G.R. No. 135253. December 9, 2004] COMMISSIONER OF CUSTOMS, petitioner, vs. MILWAUKEE INDUSTRIES CORPORATION, respondent. SANDOVAL-GUTIERREZ, J.: Assailed in this petition for review on certiorari[1] are the Decision[2] dated July 8, 1998 and Resolution dated August 24, 1998 of the Court of Appeals in CA-G.R. SP No. 44496, affirming the Decision of the Court of Tax Appeals (CTA) in C.T.A. Case No. 5160. The CTA Decision reversed and set aside the Commissioner of Customs Decision ordering the forfeiture of respondents shipment of imported steel billets. Milwaukee Industries Corporation, respondent, is a domestic corporation engaged in the importation of steel billets, with principal office at No. 130 Amorsolo Street, Legaspi Village, Makati City. It has a warehouse/factory in Apalit, Pampanga where it manufactures and molds the street billets into finished products, such as plates, sheets, pipes, rods and bars for the local market. On November 5, 1993, the Far East Bank and Trust Company (FEBTC) issued to respondent a commercial letter of credit in the amount of US$2,071,000.00, in favor of Klockner & Co. of Germany for the importation of 11,985 pieces of secondary steel billets weighing 9,500 metric tons. At about the same time, respondent, through its customs broker, Schmitz Transport and Brokerage Corporaton (Schmitz), filed with the FEBTC an Import Entry Declaration and deposited the amount of P1,863,598.00 representing the advance deposit for customs duties and taxes due on the importation. The Bureau of Customs then issued the corresponding Official Receipt No. 30277274 on the deposit.[3] On February 1, 1994, the shipment of steel billets arrived at the port of Manila aboard the vessel S/S SOLSYN. Forthwith, Jimmy Pastoriza, customs inspector, and Generoso Mirallo and Lucas Almendras, customs guards, who were tasked to supervise the unloading of the cargo, boarded the vessel. Jose Garcia, a supervisor of Schmitz, also boarded the vessel and presented to Inspector Pastoriza a Permit to Discharge Shipside (or Shipside Permit), he obtained from the Bureau of Customs, authorizing the discharge of the cargo from the vessel to the barges/lighters of Transport Venture, Inc. It took six days (from February 1 to 6, 1994) to discharge the cargo. Inspector Pastoriza then issued thirteen Boat Notes on the entire shipment authorizing its transfer, with the instruction that the same should be under guard by the Bureau of Customs, and that the (g)uard remain in continuous duty until released by Customs Authorities or upon presentation of a Valid Delivery Permit or PDIG.*4+ Thus, the cargo was loaded into the trucks of Schmitz and transported to the warehouse of respondent, the consignee, in Apalit, Pampanga.[5] Subsequently, the Customs Intelligence and Investigation Division (CIID) of the Bureau of Customs received information that the transfer of the shipment to respondents warehouse was questionable. Upon investigation, the CIID found that the shipment was transported without an Import Entry having been filed and without payment of the duties and taxes due thereon.

Consequently, on March 14, 1994, the CIID filed with the District Collector of Customs, Port of Manila, an application for the issuance of a warrant of seizure and detention against the cargo, docketed as Seizure Identification No. 94-055. The following day, the warrant of seizure and detention was issued. Meanwhile, prior to the return of the warrant, Alfredo S. Gloria, respondents consultant, conferred with the Commissioner of Customs, herein petitioner, concerning respondents shipment. As a result of the conference, Gloria sent petitioner a letter dated March 16, 1994,[6] attaching therewith the required Import Entry document covering the shipment and two checks, one for the amount of P5,000,000.00 and another for P4,944,864.00 representing the full payment of the duties and taxes due. On March 17, 1994, petitioner instructed its Special Assistant, Atty. Aaron Redubla, to accept the payment and to process the release of the shipment to respondent.[7] Accordingly, Atty. Redubla made a notation*8+ on Glorias letter that per instruction, the shipment is for further processing and release upon payment of taxes and duties.*9+ Atty. Redubla then went to the Office of District Customs Collector Oscar Brillo and the Cash Division to implement petitioners instruction.*10+ In turn, District Collector Brillo scribbled a note on Glorias letter ordering the processing of respondents payment.*11+ That same day (March 17, 1994), respondents checks were duly received by the Bureau of Customs of Manila per Official Receipts Nos. 45981887 and 46051162.[12] Notwithstanding the Bureau of Customs acceptance of respondents full payment of duties and taxes, District Collector Brillo still proceeded with the seizure and forfeiture proceedings. On August 3, 1994, he rendered a Decision*13+ holding that a violation of Section 2530 (f) and (l) - 3, 4 and 5 of the Tariff and Customs Code[14] was committed from the time the shipment was discharged from the vessel and taken to the warehouse of the consignee without legal documentation as required by laws and regulations for the same and without payment of duties and taxes due thereon.*15+ Thus, the shipment was ordered forfeited in favor of the Government, to be disposed of in the manner provided by law. The dispositive portion of the Decision reads: WHEREFORE, it is hereby ordered and decreed that the shipment of 11,985 pieces of secondary steel billets subject of this seizure case be, as it is hereby, FORFEITED in favor of the Government, to be disposed of in the manner provided for by law. Let copies of this Decision be furnished all parties and offices concerned for their information and guidance. SO ORDERED. Respondent appealed to the Office of petitioner Commissioner of Customs, docketed as Customs Case No. 94-09. On September 8, 1994, Deputy Commissioner Licerio C. Evangelista, by authority of the Commissioner of Customs, rendered a Decision*16+ affirming the District Collectors Decision. Respondents motion for reconsideration was likewise denied. Aggrieved, respondent filed with the Court of Tax Appeals (CTA) a petition for review, docketed as C.T.A. Case No. 5160. In its Decision[17] dated April 8, 1997, the CTA reversed and set aside

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petitioners Decision. The CTA ruled that petitioner erred in ordering the seizure of the shipment because (1) at the time the shipment was transported to respondents warehouse in Apalit, Pampanga, the same was not released from the Customs custody but was merely transferred or discharged under continuous customs guarding; and (2) after respondent had fully paid the customs duties and taxes due on the shipment, the same should have been released by petitioner to respondent. The dispositive portion of the CTA Decision reads: WHEREFORE, in view of the foregoing, the instant petition for review is hereby GRANTED. The assailed Decision of the respondent in Customs Case No. 94-09 (Manila Seizure Identification No. 94055) is hereby REVERSED and SET ASIDE. Accordingly, the Surety Bond (PGA Bond No. HQ 3451595/G[16] No. 17997 as amended under Endorsement No. HQ-E-09398-96 in the total amount of P75,000,000.00) posted by the petitioner is ordered CANCELLED. SO ORDERED. Petitioners motion for reconsideration was also denied in the CTA Resolution dated May 23, 1997.[18] On appeal by petitioner to the Court of Appeals, the latter affirmed the CTA Decision in its Decision dated July 8, 1998.[19] Petitioner filed a motion for reconsideration but was denied in a Resolution dated August 24, 1998.[20] Hence, this petition. Petitioner contends that

issues raised since the findings of both petitioner and the District Collector of Customs on the one hand, are in conflict with those of the CTA and Court of Appeals, on the other. We have reviewed the records and we find the petition devoid of merit. Petitioners contention that when the shipment in question was transported to respondents warehouse in Apalit, Pampanga, the same was released from the custody of the Customs authorities is misplaced. It bears stressing that such transfer of the shipment was made by virtue of the Boat Notes issued by Customs Inspector Jimmy Pastoriza. He made a specific instruction in the Boat Notes that the shipment should be under continuous guarding by the Customs guard until released by the Customs authorities, obviously because the customs duties and taxes due thereon have not yet been paid. Clearly, the physical and legal custody over the shipment remained with the Customs authorities. As ruled by the Court of Appeals: In the Decision under review, public respondent CTA found and held inter alia that at the time of the transfer of the subject shipment to Milwaukees factory, the same was not released but merely transferred or discharged under continuous customs guarding. The said factual finding of the CTA was based, among others, on the following corroborating evidence which belie petitioners claim: (a) Boat Notes (Exhibits S to S-12 and their sub-markings) signed by then Discharging Customs Inspector Pastoriza, majority of which contain a remark to wit: NOTE: Shipside discharge unto lighter under guard. Guard to remain in continuous duty until released by Customs proper authorities or upon proper presentation of a valid delivery permit or PDIG. Bill and/or statement demanding payment of overtime services rendered by Customs Guard in guarding the subject shipment of steel billets submitted by Customs Guard Incharge Oscar Almendras and certified to by Discharging Inspector Pastoriza; and Copy of Solidbank Check No. 08275 issued to Almendras (Exhibit O) and the dorsal part thereof showing the encashment and receipt of the check (Exhibit O-1) *as payment for services+.

b) THE COURT OF APPEALS ERRED IN DISREGARDING THE FOLLOWING PROPOSITIONS: I THE SHIPMENT OF STEEL BILLETS WAS RELEASED TO RESPONDENT MILWAUKEE INDUSTRIES CORPORATION AND NOT MERELY TRANSFERRED OR DISCHARGED UNDER CONTINUOUS CUSTOMS GUARDING; and II CONSIDERING THAT AT THE TIME THE SHIPMENT WAS RELEASED, RESPONDENT FAILED TO COMPLY WITH THE REQUIREMENTS OF THE TARIFF AND CUSTOMS CODE, THE IMPORTATION IS UNAUTHORIZED OR ILLEGAL, HENCE SUBJECT TO SEIZURE.*21+ Petitioner wants us to resolve (1) whether the shipment in question was released to respondent from the custody of the Customs authorities, as held by both petitioner and the District Collector of Customs, and not merely transferred to respondents warehouse, as found by the CTA and affirmed by the Court of Appeals; and (2) whether respondent failed to comply with the customs requirements to justify the seizure and forfeiture of the shipment. Obviously, these issues entail a reevaluation of factual circumstances, a matter that normally cannot be undertaken by this Court as it is not a trier of facts.[22] However, we are constrained to resolve the (c)

This court is not inclined to disturb public respondent CTAs factual finding, not only because the same is clearly and sufficiently supported by the above-enumerated evidence, but more importantly, said finding was categorically admitted by petitioner Commissioner of Customs in its motion for reconsideration to the CTAs Decision, to wit: It is not enough that duties and taxes are paid so that an importation may be considered legally terminated; it is also required that a legal permit for withdrawal shall have been granted. Such situation does not obtain in the case at bar. On the contrary, customs guards were posted at petitioners premises in Apalit, Pamoanga, thereby showing that respondent never released the shipment to petitioner. In view of such admission on the part of petitioner, there is no question by now that at the time the subject shipment of steel billets was transferred to the factory of private respondent Milwaukee, said shipment was not released but allowed only to be transferred under continuous customs guarding to the premises of private respondent by authority of the boat notes signed by Discharging Inspector

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Pastoriza. Simply put, since the said shipment was merely transferred under guard, not released, the same then remained under the custody of the Bureau of Customs for all legal intents and purposes.*23+ (Underscoring supplied) We sustain the findings of both the CTA and the Court of Appeals. It is axiomatic that their factual determination is generally binding upon this Court where, as here, it is sufficiently supported by the evidence on record and there is no clear showing of any palpable error.[24] Significantly, the District Collector of Customs contradicted himself when he categorically stated in his Decision that the shipment in question was never released to respondent, thus: x x x it is not enough that duties and taxes are paid for an importation to be considered legally terminated; it is also required that a legal permit for withdrawal shall have been granted, which is not true in this case. On the contrary, x x x the Bureau of Customs posted guards at the premises of the consignee showing that the Bureau never released the shipment to the claimant/importer.*25+ (Underscoring supplied) The order of release of the shipment came about only after Alfredo Gloria, respondents consultant, presented to petitioner the import entry document covering the shipment and two checks as full payment of the duties and taxes due thereon. The undisputed fact is that it was petitioner who instructed Atty. Aaron Redubla, his Special Assistant, to direct District Collector of Customs Oscar Brillo to further process respondents payment of the customs duties and taxes due on the shipment and to release the same upon full payment thereof. It is likewise undisputed that respondents payment of the customs duties and taxes on the shipment was duly accepted by the Bureau of Customs on March 17, 1994. Hence, this legally terminated the importation of goods or articles as provided under Section 1202 of the Tariff and Customs Code, viz: SECTION 1202. When Importation Begins and Deemed Terminated. Importation begins when the carrying vessel or aircraft enters the jurisdiction of the Philippines with intention to unlade therein. Importation is deemed terminated upon payment of the duties, taxes and other charges due upon the articles, or secured to be paid, at a port of entry and the legal permit for withdrawal shall have been granted, or in case said articles are free of duties, taxes and other charges, until they have legally left the jurisdiction of the customs. (Underscoring supplied) As regards the legal permit for withdrawal of the imported articles mentioned in the above provision, petitioners order of release upon payment of taxes and duties on the shipment, indicated in the notation (Exhibit M-1) made by his Special Assistant Atty. Redubla mentioned earlier, is a sufficient legal permit for the official release of the shipment transferred to respondents warehouse. WHEREFORE, the petition is hereby DENIED. The assailed Decision of the Court of Appeals in CA-G.R. SP No. 44496 is AFFIRMED.

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