MANILA ELECTRIC COMPANY, petitioner, vs.
through the reduction of its franchise tax from 5% to 2%,
PHILIPPINE CONSUMERS FOUNDATION,
INC., EDGARDO S. ISIP, HON. JUDGE
MANUEL M. CALANOG, JR., and HON.
JUDGE TIRSO D'C. VELASCO, respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
Interest republicae ut sit finis litiumi - it is to the
interest of the public that there should be an end to litigation
by the same parties and their privies over a subject fully and
fairly adjudicated. From this overwhelming concern springs
the doctrine of res judicata an obvious rule of reason
according stability to judgments.
Challenged in this petition for review on certiorari are
the a) Decision in Civil Case No. Q-89-3659 dated January
16, 1991 of the Regional Trial Court, Branch 76, Quezon
City; ii and b) its Order dated September 10, 1991iii denying
the motion for reconsideration of the said Decision.
The pertinent facts are:
On September 11, 1974, former President Ferdinand
E. Marcos, with the objective of enabling the grantees of
electric franchises to reduce their rates "within the reach of
consumers",iv promulgated Presidential Decree No. 551v
providing for the reduction from 5% to 2% of the franchise
tax paid by electric companies, thus:
SECTION 1. Any provision of law or
local ordinance to the contrary notwithstanding,
the franchise tax payable by all grantees of
franchises to generate, distribute and sell electric
current for light, heat and power shall be two
(2%) of their gross receipts received from the
sale of electric current and from transactions
incident to the generation, distribution and sale
of electric current.
On February 5, 1982, the Philippine Consumers
Foundation, Inc., (PCFI) filed with the Board of Energy
(BOE) a "Petition for Specific Performance, Damages and
Violation of P. D. No. 551"vi against the Manila Electric
Company (Meralco), docketed as BOE Case No. 82-198.
PCFI sought for the immediate refund by Meralco to its
customers of all the savings it realized under P.D. No. 551,
dated November 30, 1979 of the Minister of
with interest at the legal rate; and for the payment of
damages and a fine in the amount of P50, 000.00 for
violating P.D. 551. It moored its petition on Section 4 of P.D.
No. 551 which provides:
Sec. 4. All the savings realized by electric
franchise holders from the reduction of the
franchise tax under Section 1 and tariff
reductions and tax credits under Sections 2 and
3, shall be passed on to the ultimate
consumer. The Secretary of Finance shall
promulgate rules and regulations and devise a
reporting systems to carry out the provisions of
this Decree.
In its answer to the petition, Meralco alleged that it was
duly authorized by the BOE in its Order dated March 10,
1980 in BOE Case No. 79-692 to retain the disputed savings;
and that the said Order had long become final.
On November 25, 1982, the BOE issued its Decision
dismissing PCFI's petition, declaring that Meralco was
indeed authorized by the BOE, in BOE Case No. 79-692, to
retain the disputed savings under P.D. 551, thus:
It is at once evident from the foregoing
controlling facts and circumstances,
particularly the Order of this Board dated
March 10, 1980, as confirmed by the reply-
letter dated March 3, 1981, that Meralco has
been duly authorized to retain the savings
realized under the provisions of P.D. 551. The
authority granted in the said Order and letter is
so clear and unequivocal as to leave any room
for contradictory interpretation. This Board,
therefore, holds as untenable petitioners claim
that respondent Meralco was never authorized
under the said Order and letter to hold on to the
savings realized under the said decree.
"The Board likewise finds to be devoid of
merit petitioners contention that pursuant to
Opinion No. 140, Series of 1979, of the Minister
of Justice, it is absolutely mandatory on the part
of respondent Meralco to pass on to its
customers the savings under consideration. It
must be pointed out that the Order of March 10,
1980 was issued by this Board on the basis of the
recommendation contained in the Memorandum
Finance, which was approved by the President
of the Philippines in his directive to this Board
dated December 11, 1979 issued thru
Presidential Executive Assistant Jacobo Clave.
This Board believes and so holds that the
approval by the President of the Philippines of
the aforesaid Finance Ministrys
recommendation had the effects of (a) reversing
or modifying the aforementioned Opinion of the
Minister of Justice; and (b) confirming the
promulgation by the Ministry of Finance,
conformably with the specific authority granted
it under P.D. No. 551, of an additional rule or
regulation for the implementation of the said
decree for the guidance of this Board. In issuing
the Order of March 10, 1980, therefore, the
Board has done no more than follow and be
guided by the said additional rule or regulation.
"It is noteworthy to mention also that
the registered oppositors in BOE Case No. 79-
692 (formerly BPW Case No. 72-2146), where
the respondent herein originally filed its
motion requesting for authority to defer the
passing on to its customers of the franchise
tax reduction benefits under P.D. No. 551,
have done nothing to seek relief from or to
appeal to the appropriate forum, the said
Order of March 10, 1980. As a consequence,
the disposition contained therein have long
become final.
x x
x
xxx
"That Meralco has been authorized to
retain the savings resulting from the
reduction of the franchise tax under P.D. No.
551 is, therefore beyond question." vii
(Emphasis supplied)
PCFI filed a motion for reconsideration but was denied
by the BOE. Hence, PCFI filed a Petition for Certiorari with
this Court, docketed as G.R. No. 63018. In a Resolution
dated October 22, 1985, this Court dismissed the petition for
lack of merit, holding that:
 We see no grave abuse of discretion
warranting the setting aside of the BOE order.
"P.D. No. 551 ordered the Minister of
Finance to issue implementing rules and
regulations. The Minister authorized all
grantees of electric franchises, not Meralco
alone, whose rates of return on their rate bases
were below the legal allowable level to either
ask for increased rates or to defer the passing on
of benefits under the decree to consumers until
just and reasonable returns could be had.
Lengthy investigations, audits, hearings, and
determinations over practically an eight year
period preceded the questioned decision. The
petitioners failed both below and in this petition
to successfully refute the facts ascertained in the
audits and examinations. The BOE approved
option formed the basis of subsequent
determinations of Meralco rates and the adopted
formula became the basis of computations.
When this petition was filed on January 27,
1983, the November 25, 1982 ruling was
already final and executory. Moreover, the
March 10, 1980 judgment rendered in BOE
Case No. 79-692, where Meralco had filed a
motion for authority to defer passing on to
customers the savings from the reduction of
franchise taxes, was not appealed or
questioned by the petitioners. Instead, they
filed BOE Case No. 82-198 on February 5,
1982 or almost two years later, raising the
same issues against the same parties. BOEs
questioned decision in Case No. 82-198 used
the facts in BOE Case No. 79-692 for its
conclusions. Not only had the March 10, 1980
decision confirmed the findings of the
Minister of Finance on Meralcos accounts
and finances but in filing the second case, the
petitioners were asking for a readjudication
of the same issues in another challenge to
these same findings .x x x.viii (Emphasis
supplied)
Four years thereafter, PCFI and a certain Edgardo S.
Isip, private respondents herein, filed with respondent
Regional Trial Court, Branch 76, Quezon City, a petition for
declaratory relief, docketed as Civil Case No. Q-89-3659.
Private respondents prayed for a ruling on who should be
entitled to the savings realized by Meralco under P.D. No.
551. Once again, they insisted that pursuant to Section 4 of
P.D. No. 551, the savings belong to the ultimate consumers.
Meralco, in its answer, prayed for the dismissal of the
petition on the ground of res judicata, citing this Court's
Resolution in G.R. No. 63018 which affirmed the BOE's
Decision in BOE Case No. 82-198.
On January 16, 1991, respondent RTC rendered the
assailed Decision declaring null and void the Resolution of
this Court in G.R. No. 63018 and on the basis of the
Dissenting Opinion of the late Justice Claudio Teehankee,
held that the disputed savings belong to the consumers, thus:
Respondent Meralcos theory is devoid of
merit. As correctly stated in the dissenting
opinion of the late Chief Justice Claudio
Teehankee in the October 22, 1985 resolution
of the Supreme Court in SC G.R. No. 63018,
the decision of the Board of Energy is ultra
vires, hence, null and void. x x x.
"It is a well-settled rule in statutory
construction that when the law is clear, it leaves
no room for interpretation. The memorandum
issued by the Minister of Finance which was
made the basis of the decision of the Board of
Energy has no legal effect because Sec. 4 of P.D.
No. 551 is clear and unequivocal.
x x
x
xxx
"Since the law is clear, what is left to be
done by the administrative body or agency
concerned is to enforce the law. There is no
room for an administrative interpretation of the
law. In the instant case, the Board interpreted PD
551 and chose not only to enforce it but to amend
and modify the law on the basis of a
Memorandum and the authority issued by the
Minister of Finance to all grantees of electric-
franchises, not Meralco alone, whose rates of
return on their rate basis were below the legal
allowable level, to either ask for an increased
rates or to defer the passing on of benefits under
the decree to consumers, until just and
reasonable return could be had. This is beyond
the authority granted by PD 551 to the Minister
of Finance. PD 551 merely ordered the Minister
of Finance to issue implementing rules and
regulations. He cannot amend or modify the
clear mandate of the law. The act therefore of
the Minister of Finance was ultra vires, hence,
null and void. Considering that said act
became the basis of the Board of Energys
decision, it follows that said decision is
likewise null and void and the Supreme Court
resolution affirming said decision is also null
and void having proceeded from a void
judgment, hence, cannot be considered as
valid judgment that will be a bar to the
present action."ix (Emphasis supplied)
Meralco moved for a reconsideration of the above
Decision but was denied by respondent court in its Order of
September 10, 1991.
Hence, Meralco's petition for review on certiorari
anchored on the following grounds:
"I
RESPONDENT JUDGES ERRED IN
HOLDING THAT CIVIL CASE NO. 89-
3659 IS NOT BARRED BY PRIOR
JUDGMENT.
II
RESPONDENT JUDGES ERRED IN
DECLARING NULL AND VOID A
RESOLUTION OF THIS HONORABLE
SUPREME COURT.
III
RESPONDENT JUDGES ERRED IN
HOLDING THAT THE REMEDY OF
DECLARATORY RELIEF WAS STILL
AVAILABLE TO PRIVATE
RESPONDENTS.
IV
RESPONDENT JUDGES ERRED IN
NOT DISMISSING THE PETITION FOR
 DECLARATORY RELIEF."x
Meralco contends that Civil Case No. Q -89-3659 is
already barred by prior judgments, referring to a) this Courts
Resolution in G.R. No. 63018 sustaining the BOE's Decision
in BOE Case No. 82-198; and b) the Order dated March 10,
1980 of the same Board in BOE Case No. 79-692, both
holding that Meralco is authorized to retain its savings
realized under P.D. 551. Meralco likewise argues that
respondent RTC cannot annul the Resolution of this Court in
G.R. No. 63018 considering that trial courts cannot set aside
decisions of a superior court. And lastly, Meralco maintains
that private respondents can no longer avail of the remedy of
an action for declaratory relief in view of the rule that such
action should be filed before a violation of the statute
occurred.xi
In their comment,xii private respondents argue that this
Court's Resolution in G.R. No. 63018 cannot be a bar to Civil
Case No. Q-89-3659 for declaratory relief considering that it
did not delve on the essential issue raised in the latter case,
i.e., who is entitled to the savings. Further, they claim that
public interest would be defeated by the application of
res judicata.
The petition is meritorious.
The issue - whether or not Meralco is duly authorized
to retain the savings resulting from the reduction of the
franchise tax under P.D. No. 551 as long as its rate of return
falls below the 12 % allowable rate recognized in this
jurisdiction has long been settled. Thus, the relitigation of
the same issue in Civil Case No. Q-89-3659 cannot be
sanctioned under the principle of res judicata.
Res judicata means a matter adjudged, a thing
judicially acted upon or decided; a thing or matter settled by
judgment.xiii In res judicata, the judgment in the first action
is considered conclusive as to every matter offered and
received therein, as to any other admissible matter which
might have been offered for that purpose, and all other
matters that could have been adjudged therein.xiv For a claim
of res judicata to prosper, the following requisites must
concur: 1) there must be a final judgment or order; 2) the
court rendering it must have jurisdiction over the subject
matter and the parties; 3) it must be a judgment or order on
the merits; and 4) there must be, between the two cases
identity of parties, subject matter and causes of action.xv
All the above requisites are extant in the records and
thus, beyond dispute.
Re: FIRST REQUISITE - there must be a final
judgment:
It is beyond question that this Courts Resolution dated
October 22, 1985 in G.R. No. 63018, sustaining the BOEs
Decision dated November 25, 1982 in BOE Case No. 82-198
which dismissed PCFI's petition, attained finality on
December 4, 1985. As a matter of fact, this Court had long
ago issued an Entry of Judgment stating that the said
Resolution "became final and executory and is x x x recorded
in the Book of Entries of Judgements." Prior thereto, or on
March 10, 1980, the BOE's Order in BOE Case No. 79-672
became final when the oppositors therein did not appeal.
Re: SECOND REQUISITE - the court which rendered
the final judgment must have jurisdiction over the
subject matter and the parties:
There is no question that the BOE has jurisdiction over
the subject matter and the parties herein. Under P.D. No.
1206,xvi The BOE is the agency authorized to "regulate and
fix the power rates to be charged by electric companies." xvii
As such, it has jurisdiction over Meralco, an electric
company, and over the savings it realized under P.D. No.
551. It bears stressing that P.D. No. 551 was passed precisely
to enable the grantees of electric franchises to reduce their
rates within the reach of consumers. Clearly, the matter on
how the disputed savings should be disposed of in order to
realize a reduction of rates is within the competence of the
BOE.
Re: THIRD REQUISITE - it must be a judgment or
order on the merits:
The BOE's Decision in BOE Case No. 82-198 is a
judgment on the merits. A judgment is on the merits when it
determines the rights and liabilities of the parties based on
the disclosed facts, irrespective of formal, technical or
dilatory objections. After according both parties the
opportunities to be heard, the BOE disposed of the
controversy by resolving the rights of the parties under P.D.
No. 551. In its Decision, the BOE declared in clear and
unequivocal manner that Meralco "has been duly authorized
to retain the savings realized under the provisions of P.D.
No. 551" and that private respondent PCFIs argument to the
contrary is "untenable." The BOE's Decision was upheld by
this Court in G.R. No. 63018.
Re: FOURTH REQUISITE - there must be between the
two cases identity of parties, subject matter and causes of
action:
There is identity of parties between the two cases.
BOE Case No. 82-198 was a contest between private
respondent PCFI, as petitioner, and Meralco, as respondent.
Civil Case No. Q-89-3659 involves the same contenders,
except that respondent Edgardo Isip joined PCFI as a
plaintiff. But his inclusion as such plaintiff is
inconsequential. A party by bringing forward, in a second
case, additional parties cannot escape the effects of the
principle of res judicata when the facts remain the same. Res
judicata is not defeated by a minor difference of parties, as
it does not require absolute but only substantial identity of
parties.xviii
The subject matters of BOE Case No. 82-198 and Civil
Case No. Q-89-3659 are likewise identical since both refer
to the savings realized by Meralco from the reduction of the
franchise tax under P.D. No. 551. The subject matter of an
action refers to the thing, wrongful act, contract or property
which is directly involved in the action, concerning which
the wrong has been done and with respect to which the
controversy has arisen.xix In both cases, the controversy is
how the disputed savings shall be disposed of - whether they
shall be retained by Meralco or be passed on to the
consumers.
With respect to identity of causes of action, this
requisite is likewise present. In both cases, the act alleged to
be in violation of the legal right of private respondents is
Meralco's retention of the savings it realized under P.D. No.
551. While it is true that BOE Case No. 82-198 is one for
specific performance, while Civil Case No. Q-89-3659 is for
declaratory relief - in the ultimate - both are directed towards
only one relief, i.e., the refund of the disputed savings to the
consumers. To seek a court's declaration on who should
benefit from the disputed savings (whether Meralco or the
consumers) will result in the relitigation of an issue fairly
and fully adjudicated in BOE Case No. 82-198.
Clearly, the test of identity of causes of action lies not
in the form of an action. The difference of actions in the
aforesaid cases is of no moment. The doctrine of res judicata
still applies considering that the parties were litigating for
the same thing and more importantly, the same
contentions.xx As can be gleaned from the records, private
respondents arguments in Civil Case No. Q-89-3659 bear
extreme resemblance with those raised in BOE Case No. 82-
198.
Respondent RTC's Decision granting PCFI and Isip's
petition for declaratory relief is in direct derogation of the
principle of res judicata. Twice, it has been settled that
Meralco is duly authorized to retain the savings it realized
under P.D. No. 551 as long as its rate of return falls below
the 12% allowable rate. The pronouncement of the BOE in
BOE Case No. 82-198 finding such fact to be "beyond
question" is clear and not susceptible of equivocation. This
pronouncement was sustained by this Court in G.R. No.
63018. In finding no grave abuse of discretion on the part of
the BOE, this Court saw the wisdom of its assailed Decision.
Thus, this Court held: "[I]n dismissing the petition for
specific performance, the BOE authorized Meralco, in lieu
of increasing its rates to get a more reasonable return on
investments while at the same time refunding to consumers
the benefit of P.D. No. 551, to instead defer the passing on
of benefits but without the planned increases. Instead of
giving back money to consumers and then taking back the
same in terms of increased rates, Meralco was allowed by
the BOE to follow the more simplified and rational
procedure."xxi
Private respondents now argue that G.R. No. 63018
merely decreed the postponement of the passing of Meralco's
savings to the consumers until it could increase its rate
charges. On this point, this Court categorically ruled:
"X x x. And finally, as stated by the
Solicitor General, if only to put the issue to
final rest, BOEs decision authorizing Meralco
to retain the savings resulting from the
reduction of franchise tax as long as its rate
of return falls below the 12% allowable rate
is supported by P.D. No. 551, the rules and
administrative orders of the Ministry of
Finance which had been duly authorized by
the decree itself and by directives of the
President to carry out the provisions of the
decree, and most of all by equitable economic
considerations without which the decree
would lose its purpose and viability."xxii
Corollarily, let it not be overlooked that the purpose of
an action for declaratory relief is to secure an authoritative
statement of the rights and obligations of the parties under a
statute, deed, contract etc. for their guidance in the
enforcement thereof, or compliance therewith, and not to
settle issues arising from an alleged breach thereof. It may
be entertained only before the breach or violation of the 3659 are REVERSED and SET ASIDE.
statute, deed, contract etc., to which it refers.xxiii The petition
gives a practical remedy in ending controversies which have SO ORDERED.
not reached the stage where other relief is immediately
available. It supplies the need for a form of action that will
set controversies at rest before they lead to repudiation of
obligations, invasion of rights, and the commission of
wrongs.xxiv Here, private respondents brought the petition for
declaratory relief long after the alleged violation of P.D. No.
551.
Lastly, we are dismayed by respondent RTC's
adherence to the Dissenting Opinion, instead of the Majority
Opinion, of the members of this Court in G.R. No. 63018, as
well as its temerity to declare a Resolution of this Court "null G.R. No. 180235, January 20, 2016
and void" and "cannot be considered as valid judgment
that will be a bar to the present action." ALTA VISTA GOLF AND COUNTRY CLUB,
Petitioner, v. THE CITY OF CEBU, HON. MAYOR
A lower court cannot reverse or set aside decisions or TOMAS R. OSMEÑA, IN HIS CAPACITY AS
orders of a superior court, especially of this Court, for to do MAYOR OF CEBU, AND TERESITA C.
so will negate the principle of hierarchy of courts and nullify CAMARILLO, IN HER CAPACITY AS THE CITY
the essence of review. A final judgment, albeit erroneous, is TREASURER, Respondents.
binding on the whole world. Thus, it is the duty of the lower
courts to obey the Decisions of this Court and render DECISION
obeisance to its status as the apex of the hierarchy of courts.
"A becoming modesty of inferior courts demands conscious
LEONARDO-DE CASTRO, J.:
realization of the position that they occupy in the
interrelation and operation of the integrated judicial system
of the nation."xxv "There is only one Supreme Court from Before the Court is a Petition for Review on Certiorari of
whose decisions all other courts should take their bearings," the Resolution1 dated March 14, 2007 and the Order2 dated
as eloquently declared by Justice J. B. L. Reyes. xxvi October 3, 2007 of the Regional Trial Court (RTC), Cebu
City, Branch 9 in Civil Case No. CEB-31988, dismissing
the Petition for Injunction, Prohibition, Mandamus,
Respondent RTC, and for this matter, all lower courts,
Declaration of Nullity of Closure Order, Declaration of
ought to be reminded that a final and executory decision or
Nullity of Assessment, and Declaration of Nullity of
order can no longer be disturbed or reopened no matter how
Section 42 of Cebu City Tax Ordinance, with Prayer for
erroneous it may be. Although judicial determinations are
Temporary Restraining Order and Writ of Preliminary
not infallible, judicial error should be corrected through
Injunction3 filed by petitioner Alta Vista Golf and Country
appeals, not through repeated suits on the same claim. xxvii In
Club against respondents City of Cebu (Cebu City), then
setting aside the Resolution and Entry of Judgment of this
Cebu City Mayor Tomas R. Osmeña (Osmeña), and then
Court in G.R. No. 63018, respondent court grossly violated
Cebu City Treasurer Teresita Camarillo (Camarillo).
basic rules of civil procedure.
Petitioner is a non-stock and non-profit corporation
In fine, we stress that the rights of Meralco under P.D. operating a golf course in Cebu City.
No. 551, as determined by the BOE and sustained by this
Court, have acquired the character of res judicata and can no On June 21, 1993, the Sangguniang Panlungsod of Cebu
longer be challenged. City enacted City Tax Ordinance No. LXIX, otherwise
known as the "Revised Omnibus Tax Ordinance of the City
WHEREFORE, the petition is hereby GRANTED. of Cebu" (Revised Omnibus Tax Ordinance).
The assailed RTC Decision dated January 16, 1991 and
Order dated September 10, 1991 in Civil Case No. Q-89- Section 42 of the said tax ordinance on amusement tax was
amended by City Tax Ordinance Nos. LXXXII4 and substantial portion of which consisted of the amusement tax
Less: Payment based on computer 74,858.61
LXXXIV5 (which were enacted by the Sangguniang on the golf course. Petitioner steadfastly refused to pay the
assessment
Panlungsod of Cebu City on December 2, 1996 and April amusement tax arguing that the imposition of said tax by
20, 1998, respectively6) to read as follows: Section 42 of the Revised Omnibus Tax Ordinance, as Short payment P 12,723.18
amended, was irregular, improper, and illegal.
Section 42. Rate of Tax. - There shall be paid to the Office 25% surcharge 3,180.80
of the City Treasurer by the proprietors, lessees or Petitioner reasoned that under the Local Government Code,
operators of theaters, cinemas, concert halls, circuses and amusement tax can only be imposed on operators of 72% interest 11,450.00
other similar places of entertainment, an amusement tax at theaters, cinemas, concert halls, or places where one seeks
to entertain himself by seeing or viewing a show or Penalty for understatement 500.00
the rate of thirty percent (30%), golf courses and polo
grounds at the rate of twenty percent (20%), of their performance. Petitioner further cited the ruling in
Philippine Basketball Association (PBA) v. Court of Amount Due P 27,854.85
gross receipts on entrance, playing green, and/or
admission fees; PROVIDED, HOWEVER, That in case of Appeals9 that under Presidential Decree No. 231, otherwise
known as the Local Tax Code of 1973, the province could Add: Amusement P 1,373,761.24
movie premieres or gala shows for the benefit of a Tax on golf course
charitable institution/foundation or any government only impose amusement tax on admission from the
institution where higher admission fees are charged, the proprietors, lessees, or operators of theaters,
25% surcharge 343,440.31
aforementioned rate of thirty percent (30%) shall be levied cinematographs, concert halls, circuses, and other places of
(P6,868,806.20 x
against the gross receipts based on the regular admission amusement, but not professional basketball games.
20%)
fees, subject to the approval of the Sangguniang Professional basketball games did not fall under the same
Panlungsod; PROVIDED FURTHER, That in case category as theaters, cinematographs, concert halls, and 72% Interest 1,236,385.12 2,953,586.67
payment of the amusement tax is made promptly on or circuses as the latter basically belong to artistic forms of
before the date hereinbelow prescribed, a rebate of five entertainment while the former catered to sports and GRAND TOTAL P2,981,441.5210
percent (5%) on the aforementioned gross receipts shall be gaming.
given to the proprietors, lessees or operators of theaters; (Emphasis
PROVIDED FURTHERMORE, that as an incentive to Through a letter dated October 11, 2005, respondent supplied.)
theater operators who own the real property and/or building Camarillo sought to collect once more from petitioner
where the theater is located, an additional one percent (1%) deficiency business taxes, fees, and charges for the year
rebate shall be given to said operator/real property owner 1998, totaling P2,981,441.52, computed as follows:
concerned for as long as their theater/movie houses are then Petitioner, through counsel, wrote respondent Camarillo a
(10) years old or older or the theater or movie house is letter11 dated October 17, 2005 still disputing the
located at the city's redevelopment area bounded on the P 40,950.00 amusement tax assessment on its golf course for 1998 for
Restaurant - P4,021,830.65
north by Gen. Maxilom Street up to the port area; on the being illegal. Petitioner, in a subsequent letter dated
south by V. Rama Avenue up to San Nicolas area; and on November 30, 2005, proposed that:
Permit Fee 2,000.00
the west by B. Rodriguez St. and General Maxilom
Avenue; PROVIDED FINALLY, that the proceeds of this Liquor-P1,940,283.80 20,160.00 While the question of the legality of the amusement tax on
additional one percent (1%) rebate shall be used by the golf courses is still unresolved, may we propose that Alta
building/property owner-theater operator to modernize their Permit Fee 2,000.00 Vista Golf and Country Club settle first the other
theater facilities. (Emphases supplied.) assessments contained in your Assessment Sheet issued on
Commission/Other Income 14,950.00 October 11, 2005.

P1,262,764.28 At this early stage, we also request that pending resolution

In an Assessment Sheet7 dated August 6, 1998, prepared by
Cebu City Assessor Sandra I. Po, petitioner was originally
assessed deficiency business taxes, fees, and other charges
for the year 1998, in the total amount of P3,820,095.68,
which included amusement tax on its golf course
amounting to P2,612,961.24 based on gross receipts of
P13,064,806.20.8chanroblesvirtuallawlibrary
Through the succeeding years, respondent Cebu City
repeatedly attempted to collect from petitioner its
deficiency business taxes, fees, and charges for 1998, a
of the legality of the amusement tax imposition on golf
Permit Fee 1,874.00 courses in [the Revised Omnibus Tax Ordinance, as
amended], Alta Vista Golf and Country Club be issued the
Retail Cigarettes - P42,076.11 - 84.15 required Mayor's and/or Business Permit.12chanrobleslaw
Permit
Non-Securing of Permit 979.33
Respondent Camarillo treated the letter dated October 17,
Sub-Total P 82,997.98 2005 of petitioner as a Protest of Assessment and rendered
on December 5, 2005 her ruling denying said Protest on the
following grounds: (a) a more thorough and comprehensive
reading of the PBA case would reveal that the Court
actually ruled therein that PBA was liable to pay
amusement tax, but to the national government, not the
local government; (b) Section 42 of the Revised Omnibus
Tax Ordinance, as amended, enjoyed the presumption of
constitutionality and petitioner failed to avail itself of the
remedy under Section 187 of the Local Government Code
to challenge the legality or validity of Section 42 of the
Revised Omnibus Tax Ordinance, as amended, by filing an
appeal with the Secretary of Justice within 30 days from
effectivity of said ordinance; and (c) the Office of the City
Attorney issued a letter dated July 9, 2004 affirming
respondent Camarillo's position that petitioner was liable to
pay amusement tax on its golf course.13 Ultimately,
respondent Camarillo held:
WHEREFORE, upon consideration of the legal grounds
as above-mentioned, we reiterate our previous stand on the
validity of the ASSESSMENT SHEET pertaining to the
Tax Deficiencies for CY 1998 and this ruling serve as the
FINAL DEMAND for immediate settlement and payment
of your amusement tax liabilities and/or delinquencies
otherwise we will constrained (sic) the non-issuance of a
Mayor's Business Permit for nonpayment of the said
deficiency on amusement tax and/or other tax liabilities as
well as to file the appropriate filing of administrative and
judicial remedies for the collection of the said tax liability
and the letter treated as a Protest of Assessment that was
duly submitted before this office is hereby
DENIED.14chanrobleslaw
Shortly after, on January 12, 2006, petitioner was served
with a Closure Order15 dated December 28, 2005 issued by
respondent City Mayor Osmefia. According to the Closure
Order, petitioner committed blatant violations of the laws
and Cebu City Ordinances, to wit:
1. Operating a business without a
business permit for five (5) years,
from year 2001-2005, in relation to
Chapters I and II and the penalty
clauses under Sections 4, 6, 8, 66 (f)
and 114 of the City Tax Ordinance No.
69, otherwise known as the REVISED
CITY TAX ORDINANCE OF THE
CITY OF CEBU, as amended by CO.
75;
2. Nonpayment of deficiency on
Business Taxes and Fees amounting
to Seventeen Thousand Four
Hundred Ninety-Nine Pesos and
Sixty-Four Centavos (Php17,499.64),
as adjusted, despite repeated demands
in violation [of] Sections 4 and 8 of
City Tax Ordinance No. 69, as
amended;
3. Nonpayment of deficiency on
Amusement Tax and the penalties
relative therewith totaling Two
Million Nine Hundred Fifty-Three
Thousand Five Hundred Eighty-Six
Pesos and Eighty-Six Centavos
(Php2,953,586.86) in violation of
Sections 4 and 8 in relation to Section
42 of City Tax Ordinance No. 69, as
amended, business permit-violation of
the Article 172, Revised Penal Code of
the Philippines. (Emphases supplied.)
The Closure Order established respondent Mayor Osmeña's
authority for issuance of the same and contained the
following directive:
As the chief executive of the City, the Mayor has the power
and duty to: Enforce all laws and ordinances relative to the
governance of the city x x x and, in addition to the
foregoing, shall x x x Issue such executive orders for the
faithful and appropriate enforcement and execution of laws
and ordinances x x x. These are undeniable in the LOCAL
GOVERNMENT CODE, Section 455, par. (2) and par.
(2)(iii).
Not only that, these powers can be exercised under the
general welfare clause of the Code, particularly Section 16
thereof, where it is irrefutable that "every government unit
shall exercise the powers expressly granted, those
necessarily implied therefrom, as well as powers necessary,
appropriate, or incidental of its efficient and effective
governance, and those which are essential to the promotion
of the general welfare."
This CLOSURE ORDER precisely satisfies these legal
precedents. Hence now, in view whereof, your business
establishment is hereby declared closed in direct
contravention of the above-specified laws and city
ordinances. Please cease and desist from further operating
your business immediately upon receipt of this order.
This closure order is without prejudice to the
constitutional/statutory right of the City to file criminal
cases against corporate officers, who act for and its behalf,
for violations of Section 114 of the REVISED CITY TAX
ORDINANCE OF THE CITY OF CEBU and Section 516
of the LOCAL GOVERNMENT CODE, with penalties of
imprisonment and/or fine.
FOR STRICT AND IMMEDIATE
COMPLIANCE.16chanrobleslaw
The foregoing developments prompted petitioner to file
with the RTC on January 13, 2006 a Petition for Injunction,
Prohibition, Mandamus, Declaration of Nullity of Closure
Order, Declaration of Nullity of Assessment, and
Declaration of Nullity of Section 42 of Cebu City Tax
Ordinance, with Prayer for Temporary Restraining Order
and Writ of Preliminary Injunction, against respondents,
which was docketed as Civil Case No. CEB-31988.17
Petitioner eventually filed an Amended Petition on January
19, 2006.18 Petitioner argued that the Closure Order is
unconstitutional as it had been summarily issued in
violation of its right to due process; a city mayor has no
power under the Local Government Code to deny the
issuance of a business permit and order the closure of a
business for nonpayment of taxes; Section 42 of the
Revised Omnibus Tax Ordinance, as amended, is null and
void for being ultra vires or beyond the taxing authority of
respondent Cebu City, and consequently, the assessment
against petitioner for amusement tax for 1998 based on said
Section 42 is illegal and unconstitutional; and assuming
arguendo that respondent Cebu City has the power to
impose amusement tax on petitioner, such tax for 1998
already prescribed and could no longer be enforced.
Respondents filed a Motion to Dismiss based on the
grounds of (a) lack of jurisdiction of the RTC over the
subject matter; (b) non-exhaustion of administrative
remedies; (c) noncompliance with Section 187 of the Local
Government Code, which provides the procedure and
prescriptive periods for challenging the validity of a local
tax ordinance; (d) noncompliance with Section 252 of the
Local Government Code and Section 75 of Republic Act
No. 3857, otherwise known as the Revised Charter of the
City of Cebu, requiring payment under protest of the tax
assessed; and (e) failure to establish the authority of Ma.
Theresa Ozoa (Ozoa) to institute the case on behalf of
petitioner.19chanroblesvirtuallawlibrary
In its Opposition to the Motion to Dismiss, petitioner
countered that the RTC, a court of general jurisdiction,
could take cognizance of its Petition in Civil Case No.
CEB-31988, which not only involved the issue of legality
or illegality of a tax ordinance, but also sought the
declaration of nullity of the Closure Order and the issuance
of writs of injunction and prohibition. Petitioner likewise
asserted that Section 195 of the Local Government Code on
the protest of assessment does, not require payment under
protest. Section 252 of the same Code invoked by
respondents applies only to real property taxes. In addition,
petitioner maintained that its Petition in Civil Case No.
CEB-31988 could not be barred by prescription. There is
nothing in the Local Government Code that could deprive
the courts of the power to determine the constitutionality or
validity of a tax ordinance due to prescription. It is the
constitutional duty of the courts to pass upon the validity of
a tax ordinance and such duty cannot be limited or
restricted. Petitioner further contended that there is no
need for exhaustion of administrative remedies given
that the issues involved are purely legal; the notice of
closure is patently illegal for having been issued without
due process; and there is an urgent need for judicial
intervention. Lastly, petitioner pointed out that there
were sufficient allegations in the Petition that its filing
was duly authorized by petitioner. At any rate, petitioner
already attached to its Opposition its Board Resolution No.
104 authorizing Ozoa to file a case to nullify the Closure
Order. Thus, petitioner prayed for the denial of the Motion
to Dismiss.20chanroblesvirtuallawlibrary
Respondents, in their Rejoinder to Petitioner's Opposition
to the Motion to Dismiss,21 asserted that the Closure Order
was just a necessary consequence of the nonpayment by
petitioner of the amusement tax assessed against it. The
Revised Omnibus Tax Ordinance of respondent Cebu City
directs that no permit shall be issued to a business
enterprise which made no proper payment of tax and,
correspondingly, no business enterprise may be allowed to
operate or continue to operate without a business permit.
The fundamental issue in the case was still the nonpayment
by petitioner of amusement tax. Respondents relied on
Reyes v. Court of Appeals,22 in which the Court
categorically ruled that the prescriptive periods fixed in
Section 187 of the Local Government Code are mandatory
and prerequisites before seeking redress from a competent
court. Section 42 of the Revised Omnibus Tax Ordinance,
as amended, was passed on April 20, 1998, so the
institution by petitioner of Civil Case No. CEB-31988
before the RTC on January 13, 2006 - without payment
under protest of the assessed amusement tax and filing of
an appeal before the Secretary of Justice within 30 days
from the effectivity of the Ordinance - was long barred by
prescription.
After filing by the parties of their respective Memorandum,
the RTC issued an Order23 dated March 16, 2006 denying
the prayer of petitioner for issuance of a Temporary
Restraining Order (TRO). The RTC found that when the
business permit of petitioner expired and it was operating
without a business permit, it ceased to have a legal right to
do business. The RTC affirmed respondent Mayor
Osmeña's authority to issue or grant business licenses and
permits pursuant to the police power inherent in his office;
and such authority to issue or grant business licenses and
permits necessarily included the authority to suspend or
revoke or even refuse the issuance of the said business
licenses and permits in case of violation of the conditions
for the issuance of the same. The RTC went on to hold that:
[Petitioner] was given opportunities to be heard when it
filed a protest [of] the assessment which was subsequently
denied. To the mind of this court, this already constitutes
the observance of due process and that [petitioner] had
already been given the opportunity to be heard. Due
process and opportunity to be heard does not necessarily
mean winning the argument in one's favor but to be given
the fair chance to explain one's side or views with regards
[to] the matter in issue, which in this case is the legality of
the tax assessment.
It is therefore clear that when this case was filed,
[petitioner] had no more legal right in its favor for the
courts to protect. It would have been a different story
altogether had [petitioner] paid the tax assessment for the
green fees even under protest and despite payment and
[respondent] Mayor refused the issuance of the business
permit because all the requisites for the issuance of the said
permit are all complied with.24chanroblesvirtuallawlibrary
On March 20, 2006, petitioner paid under protest to
respondent Cebu City, through respondent Camarillo, the
assessed amusement tax, plus penalties, interest, and
surcharges, in the total amount of
P2,750,249.17.25cralawred
Since the parties agreed that the issues raised in Civil Case
No. CEB-31988 were all legal in nature, the RTC already
considered the case submitted for resolution after the
parties filed their respective
Memorandum.26chanroblesvirtuallawlibrary
On March 14, 2007, the RTC issued a Resolution granting
the Motion to Dismiss of respondents. Quoting from Reyes
and Hagonoy Market Vendor Association v. Municipality of
Hagonoy, Bulacan,27 the RTC sustained the position of
respondents that Section 187 of the Local Government
Code is mandatory. Thus, the RTC adjudged:
From the above cited cases, it can be gleaned that the
period in the filing of the protests is important. In other
words, it is the considered opinion of this court [that] when
a taxpayer questions the validity of a tax ordinance passed
by a local government legislative body, a different
procedure directed in Section 187 is to be followed. The
reason for this could be because the tax ordinance is clearly
different from a law passed by Congress. The local
government code has set several limitations on the taxing
power of the local government legislative bodies including
the issue of what should be taxed.
In this case, since the Petitioner failed to comply with the
procedure outlined in Section 187 of the Local Government
Code and the fact that this case was filed way beyond the
period to file a case in court, then this court believes that
the action must fail.
Because of the procedural infirmity in bringing about this
case to the court, then the substantial issue of the propriety
of imposing amusement taxes on the green fees could no
longer be determined.
WHEREFORE, in view of the aforegoing, this case is
hereby DISMISSED.28chanrobleslaw
The RTC denied the Motion for Reconsideration of
petitioner in an Order dated October 3, 2007.
Petitioner is presently before the Court on pure questions of
law, viz.:
I. WHETHER OR NOT THE POWER
OF JUDICIAL REVIEW OVER THE
VALIDITY OF A LOCAL TAX
ORDINANCE HAS BEEN
RESTRICTED BY SECTION 187 OF
THE LOCAL GOVERNMENT CODE.
II. WHETHER OR NOT THE CITY OF
CEBU OR ANY LOCAL
GOVERNMENT CAN VALIDLY
IMPOSE AMUSEMENT TAX TO
THE ACT OF PLAYING GOLF.29

There is merit in the instant Petition.
The RTC judgment on pure
questions of law may be directly
appealed to this Court via a petition
for review on certiorari.
Even before the RTC, the parties already acknowledged
that the case between them involved only questions of law;
hence, they no longer presented evidence and agreed to
submit the case for resolution upon submission of their
respective memorandum.
It is incontestable that petitioner may directly appeal to this
Court from the judgment of the RTC on pure questions of
law via its Petition for Review on Certiorari. Rule 41,
Section 2(c) of the Rules of Court provides that "[i]n all
cases where only questions of law are raised or involved,
the appeal shall be to the Supreme Court by petition for
review on certiorari in accordance with Rule 45." As the
Court declared in Bonifacio v. Regional Trial Court of
Makati, Branch 14930:
The established policy of strict observance of the judicial
hierarchy of courts, as a rule, requires that recourse must
first be made to the lower-ranked court exercising
concurrent jurisdiction with a higher court. A regard for
judicial hierarchy clearly indicates that petitions for the
issuance of extraordinary writs against first level courts
should be filed in the RTC and those against the latter
should be filed in the Court of Appeals. The rule is not
iron-clad, however, as it admits of certain exceptions.
Thus, a strict application of the rule is unnecessary when
cases brought before the appellate courts do not involve
factual but purely legal questions. (Citations omitted.)
"A question of law exists when the doubt or controversy
concerns the correct application of law or jurisprudence to a
certain set of facts; or when the issue does not call for an
examination of the probative value of the evidence
presented, the truth or falsehood of facts being admitted[;]"
and it may be brought directly before this Court, the
undisputed final arbiter of all questions of
law.31chanroblesvirtuallawlibrary
The present case is an exception
to Section 187 of the Local Government
Code and the doctrine of exhaustion of
administrative remedies.
Section 187 of the Local Government Code reads:
Sec. 187. Procedure for Approval and Effectivity of Tax
Ordinances and Revenue Measures; Mandatory Public
Hearings. - The procedure for approval of local tax
ordinances and revenue measures shall be in accordance
with the provisions of this Code: Provided, That public
hearings shall be conducted for the purpose prior to the
enactment thereof: Provided, further, That any question on
the constitutionality or legality of tax ordinances or revenue
measures may be raised on appeal within thirty (30) days
from the effectivity thereof to the Secretary of Justice who
shall render a decision within sixty (60) days from the date
of receipt of the appeal: Provided, however, That such
appeal shall not have the effect of suspending the
effectivity of the ordinance and the accrual and payment of
the tax, fee, or charge levied therein: Provided, finally, That
within thirty (30) days after receipt of the decision or the
lapse of the sixty-day period without the Secretary of
Justice acting upon the appeal, the aggrieved party may file
appropriate proceedings with a court of competent
jurisdiction.
Indeed, the Court established in Reyes that the aforequoted
provision is a significant procedural requisite and,
therefore, mandatory:
Clearly, the law requires that the dissatisfied taxpayer who
questions the validity or legality of a tax ordinance must
file his appeal to the Secretary of Justice, within 30 days
from effectivity thereof. In case the Secretary decides the
appeal, a period also of 30 days is allowed for an aggrieved
party to go to court. But if the Secretary does not act
thereon, after the lapse of 60 days, a party could already
proceed to seek relief in court. These three separate periods
are clearly given for compliance as a prerequisite before
seeking redress in a competent court. Such statutory periods
are set to prevent delays as well as enhance the orderly and
speedy discharge of judicial functions. For this reason the
courts construe these provisions of statutes as mandatory.
A municipal tax ordinance empowers a local government
unit to impose taxes. The power to tax is the most effective
instrument to raise needed revenues to finance and support
the myriad activities of local government units for the
delivery of basic services essential to the promotion of the
general welfare and enhancement of peace, progress, and
prosperity of the people. Consequently, any delay in
implementing tax measures would be to the detriment of
the public. It is for this reason that protests over tax
ordinances are required to be done within certain time
frames. In the instant case, it is our view that the failure of
petitioners to appeal to the Secretary of Justice within 30
days as required by Sec. 187 of R.A. 7160 is fatal to their
cause.32 (Citations omitted.)
The Court further affirmed in Hagonoy that:
At this point, it is apropos to state that the timeframe fixed
by law for parties to avail of their legal remedies before
competent courts is not a "mere technicality" that can be
easily brushed aside. The periods stated in Section 187 of
the Local Government Code are mandatory. Ordinance No.
28 is a revenue measure adopted by the municipality of
Hagonoy to fix and collect public market stall rentals.
Being its lifeblood, collection of revenues by the
government is of paramount importance. The funds for the
operation of its agencies and provision of basic services to
its inhabitants are largely derived from its revenues and
collections. Thus, it is essential that the validity of revenue
measures is not left uncertain for a considerable length of
time. Hence, the law provided a time limit for an aggrieved
party to assail the legality of revenue measures and tax
ordinances.33 (Citations omitted.)
Nevertheless, in later cases, the Court recognized
exceptional circumstances that justify noncompliance by a
taxpayer with Section 187 of the Local Government Code.
The Court ratiocinated in Ongsuco v. Malones,34 thus:
It is true that the general rule is that before a party is
allowed to seek the intervention of the court, he or she
should have availed himself or herself of all the means of
administrative processes afforded him or her. Hence, if
resort to a remedy within the administrative machinery can
still be made by giving the administrative officer concerned
every opportunity to decide on a matter that comes within
his or her jurisdiction, then such remedy should be
exhausted first before the court's judicial power can be
sought. The premature invocation of the intervention of the
court is fatal to one's cause of action. The doctrine of
exhaustion of administrative remedies is based on practical
and legal reasons. The availment of administrative remedy
entails lesser expenses and provides for a speedier
disposition of controversies. Furthermore, the courts of
justice, for reasons of comity and convenience, will shy
away from a dispute until the system of administrative
redress has been completed and complied with, so as to
give the administrative agency concerned every opportunity
to correct its error and dispose of the case. However, there
are several exceptions to this rule.
The rule on the exhaustion of administrative remedies is
intended to preclude a court from arrogating unto itself the
authority to resolve a controversy, the jurisdiction over
which is initially lodged with an administrative body of
special competence. Thus, a case where the issue raised is
a purely legal question, well within the competence; and
the jurisdiction of the court and not the administrative
agency, would clearly constitute an exception. Resolving
questions of law, which involve the interpretation and
application of laws, constitutes essentially an exercise of
judicial power that is exclusively allocated to the
Supreme Court and such lower courts the Legislature
may establish.
In this case, the parties are not disputing any factual
matter on which they still need to present evidence. The
sole issue petitioners raised before the RTC in Civil Case
No. 25843 was whether Municipal Ordinance No. 98-01
was valid and enforceable despite the absence, prior to its
enactment, of a public hearing held in accordance with
Article 276 of the Implementing Rules and Regulations of
the Local Government Code. This is undoubtedly a pure
question of law, within the competence and jurisdiction
of the RTC to resolve.
Paragraph 2(a) of Section 5, Article VIII of the
Constitution, expressly establishes the appellate jurisdiction
of this Court, and impliedly recognizes the original
jurisdiction of lower courts over cases involving the
constitutionality or validity of an
ordinance:ChanRoblesVirtualawlibrary
Section 5. The Supreme Court shall have the following
powers:
xxxx
(2) Review, revise, reverse, modify or affirm on appeal or
certiorari, as the law or the Rules of Court may provide,
final judgments and orders of lower courts in:
(a) All cases in which the constitutionality or validity of
any treaty, international or executive agreement, law,
presidential decree, proclamation, order, instruction,
ordinance, or regulation is in question.
In J.M. Tuason and Co., Inc. v. Court of Appeals, Ynot v.
Intermediate Appellate Court, and Commissioner of
Internal Revenue v. Santos, the Court has affirmed the
jurisdiction of the RTC to resolve questions of
constitutionality and validity of laws (deemed to include
local ordinances) in the first instance, without deciding
questions which pertain to legislative policy. (Emphases
supplied, citations omitted.)
In Cagayan Electric Power and Light Co., Inc.
(CEPALCO) v. City of Cagayan De Oro,35 the Court
initially conceded that as in Reyes, the failure of taxpayer
CEPALCO to appeal to the Secretary of Justice within the
statutory period of 30 days from the effectivity of the
ordinance should have been fatal to its cause. However, the
Court purposefully relaxed the application of the rules in
view of the more substantive matters.
Similar to Ongsuco and CEPALCO, the case at bar
constitutes an exception to the general rule. Not only does
the instant Petition raise pure questions of law, but it also
involves substantive matters imperative for the Court to
resolve.
Section 42 of the Revised Omnibus
Tax Ordinance, as amended, imposing
amusement tax on golf courses is null
and void as it is beyond the authority of
respondent Cebu City to enact under the
Local Government Code.
The Local Government Code authorizes the imposition by
local government units of amusement tax under Section
140, which provides:
Sec. 140. Amusement Tax. - (a) The province may levy an
amusement tax to be collected from the proprietors,
lessees, or operators of theaters, cinemas, concert halls,
circuses, boxing stadia, and other places of amusement
at a rate of not more than thirty percent (30%) of the gross
receipts from admission fees.
(b) In the case of theaters or cinemas, the tax shall first be
deducted and withheld by their proprietors, lessees, or
operators and paid to the provincial treasurer before the
gross receipts are divided between said proprietors, lessees,
or operators and the distributors of the cinematographic
films.
(c) The holding of operas, concerts, dramas, recitals,
painting, and art exhibitions, flower shows, musical
programs, literary and oratorical presentations, except pop,
rock, or similar concerts shall be exempt from the payment
of the tax hereon imposed.
(d) The sangguniang panlalawigan may prescribe the time,
manner, terms and conditions for the payment of tax. In
case of fraud or failure to pay the tax, the sangguniang
panlalawigan may impose such surcharges, interests and
penalties as it may deem appropriate.
(e) The proceeds from the amusement tax shall be shared
equally by the province and the municipality where such
amusement places are located. (Emphasis supplied.)
"Amusement places," as defined in Section 131 (c) of the
Local Government Code, "include theaters, cinemas,
concert halls, circuses and other places of amusement
where one seeks admission to entertain oneself by seeing or
viewing the show or performance."
The pronouncements of the Court in Pelizloy Realty
Corporation v. The Province of Benguet36 are of particular
significance to this case. The Court, in Pelizloy Realty,
declared null and void the second paragraph of Article X,
Section 59 of the Benguet Provincial Code, in so far as it
imposes amusement taxes on admission fees to resorts,
swimming pools, bath houses, hot springs, and tourist
spots. Applying the principle of ejusdem generis, as well as
the ruling in the PBA case, the Court expounded on the
authority of local government units to impose amusement
tax under Section 140, in relation to Section 131(c), of the
Local Government Code, as follows:
Under the principle of ejusdem generis, "where a general
word or phrase follows an enumeration of particular and
specific words of the same class or where the latter follow
the former, the general word or phrase is to be construed to
include, or to be restricted to persons, things or cases akin
to, resembling, or of the same kind or class as those
specifically mentioned."
The purpose and rationale of the principle was explained by
the Court in National Power Corporation v. Angas as
follows:ChanRoblesVirtualawlibrary
The purpose of the rule on ejusdem generis is to give effect
to both the particular and general words, by treating the
particular words as indicating the class and the general
words as including all that is embraced in said class,
although not specifically named by the particular words.
This is justified on the ground that if the lawmaking body
intended the general terms to be used in their unrestricted
sense, it would have not made an enumeration of particular
subjects but would have used only general terms. [2
Sutherland, Statutory Construction, 3rd ed., pp. 395-400].
In Philippine Basketball Association v. Court of Appeals,
the Supreme Court had an opportunity to interpret a starkly
similar provision or the counterpart provision of Section
140 of the LGC in the Local Tax Code then in effect.
Petitioner Philippine Basketball Association (PBA)
contended that it was subject to the imposition by LGUs of
amusement taxes (as opposed to amusement taxes imposed
by the national government). In support of its contentions,
it cited Section 13 of Presidential Decree No. 231,
otherwise known as the Local Tax Code of 1973, (which is
analogous to Section 140 of the LGC) providing the
following:ChanRoblesVirtualawlibrary
Section 13. Amusement tax on admission. — The province
shall impose a tax on admission to be collected from the
proprietors, lessees, or operators of theaters,
cinematographs, concert halls, circuses and other places of
amusement xxx.
Applying the principle of ejusdem generis, the Supreme
Court rejected PBA's assertions and noted
that:ChanRoblesVirtualawlibrary
[I]n determining the meaning of the phrase 'other places of
amusement', one must refer to the prior enumeration of
theaters, cinematographs, concert halls and circuses with
artistic expression as their common characteristic.
Professional basketball games do not fall under the same
category as theaters, cinematographs, concert halls and
circuses as the latter basically belong to artistic forms of
entertainment while the former caters to sports and gaming.
However, even as the phrase 'other places of amusement'
was already clarified in Philippine Basketball Association,
Section 140 of the LGC adds to the enumeration of 'places
of amusement' which may properly be subject to
amusement tax. Section 140 specifically mentions 'boxing
stadia' in addition to "theaters, cinematographs, concert
halls [and] circuses" which were already mentioned in PD
No. 231. Also, 'artistic expression' as a characteristic does
not pertain to 'boxing stadia'.
In the present case, the Court need not embark on a
laborious effort at statutory construction. Section 131 (c) of
the LGC already provides a clear definition of 'amusement
places':
xxxx
Indeed, theaters, cinemas, concert halls, circuses, and
boxing stadia are bound by a common typifying
characteristic in that they are all venues primarily for
the staging of spectacles or the holding of public shows,
exhibitions, performances, and other events meant to be
viewed by an audience. Accordingly, 'other places of
amusement' must be interpreted in light of the typifying
characteristic of being venues "where one seeks
admission to entertain oneself by seeing or viewing the
show or performances" or being venues primarily used
to stage spectacles or hold public shows, exhibitions,
performances, and other events meant to be viewed by
an audience.
As defined in The New Oxford American Dictionary,
'show' means "a spectacle or display of something, typically
an impressive one"; while 'performance' means "an act of
staging or presenting a play, a conceit, or other form of
entertainment." As such, the ordinary definitions of the
words 'show' and 'performance' denote not only visual
engagement (i.e., the seeing or viewing of things) but
also active doing (e.g., displaying, staging or presenting)
such that actions are manifested to, and
(correspondingly) perceived by an audience.
Considering these, it is clear that resorts, swimming pools,
bath houses, hot springs and tourist spots cannot be
considered venues primarily "where one seeks admission to
entertain oneself by seeing or viewing the show or
performances". While it is true that they may be venues
where people are visually engaged, they are not primarily
venues for their proprietors or operators to actively display,
stage or present shows and/or performances.
Thus, resorts, swimming pools, bath houses, hot springs
and tourist spots do not belong to the same category or
class as theaters, cinemas, concert halls, circuses, and
boxing stadia. It follows that they cannot be considered as
among the 'other places of amusement' contemplated by
Section 140 of the LGC and which may properly be subject
to amusement taxes.37 (Emphases supplied, citations
omitted.)
In light of Pelizloy Realty, a golf course cannot be
considered a place of amusement. As petitioner asserted,
people do not enter a golf course to see or view a show or
performance. Petitioner also, as proprietor or operator of
the golf course, does not actively display, stage, or present
a show or performance. People go to a golf course to
engage themselves in a physical sport activity, i.e., to play
golf; the same reason why people go to a gym or court to
play badminton or tennis or to a shooting range for target
practice, yet there is no showing herein that such gym,
court, or shooting range is similarly considered an
amusement place subject to amusement tax. There is no
basis for singling out golf courses for amusement tax
purposes from other places where people go to play sports.
This is in contravention of one of the fundamental
principles of local taxation: that the "[taxation shall be
uniform in each local government unit."38 Uniformity of
taxation, like the kindred concept of equal protection,
requires that all subjects or objects of taxation, similarly
situated, are to be treated alike both in privileges and
liabilities.39chanroblesvirtuallawlibrary
Not lost on the Court is its declaration in Manila Electric
Co. v. Province of Laguna40 that under the 1987
Constitution, "where there is neither a grant nor a
prohibition by statute, the tax power [of local government
units] must be deemed to exist although Congress may
provide statutory limitations and guidelines." Section 186
of the Local Government Code also expressly grants local
government units the following residual power to tax:
Sec. 186. Power to Levy Other Taxes, Fees, or Charges. -
Local government units may exercise the power to levy
taxes, fees, or charges on any base or subject not
otherwise specifically enumerated herein or taxed under
the provisions of the National Internal Revenue Code,
as amended, or other applicable laws: Provided, that the
taxes, fees, or charges shall not be unjust, excessive,
oppressive, confiscatory or contrary to declared national
policy: Provided, further, That the ordinance levying such
taxes, fees or charges shall not be enacted without any prior
public hearing conducted for the purpose. (Emphasis
supplied.)
Respondents, however, cannot claim that Section 42 of the
Revised Omnibus Tax Ordinance, as amended, imposing
amusement tax on golf courses, was enacted pursuant to the
residual power to tax of respondent Cebu City. A local
government unit may exercise its residual power to tax
when there is neither a grant nor a prohibition by statute; or
when such taxes, fees, or charges are not otherwise
specifically enumerated in the Local Government Code,
National Internal Revenue Code, as amended, or other
applicable laws. In the present case, Section 140, in relation
to Section 131(c), of the Local Government Code already
explicitly and clearly cover amusement tax and respondent
Cebu City must exercise its authority to impose amusement
tax within the limitations and guidelines as set forth in said
statutory provisions.
WHEREFORE, in view of all the foregoing, the Court
GRANTS the instant Petition, and REVERSES and SETS
ASIDE the Resolution dated March 14, 2007 and the Order
dated October 3, 2007 of the Regional Trial Court, Cebu
City, Branch 9 in Civil Case No. CEB-31988. The Court
DECLARES NULL and VOID the following: (a) Section
42 of the Revised Omnibus Tax Ordinance of the City of
Cebu, as amended by City Tax Ordinance Nos. LXXXII
and LXXXIV, insofar as it imposes amusement tax of 20%
on the gross receipts on entrance, playing green, and/or
admission fees of golf courses; (b) the tax assessment
against petitioner for amusement tax on its golf course for
the year 1998 in the amount of Pl,373,761.24, plus
surcharges and interest pertaining to said amount, issued by
the Office of the City Treasurer, City of Cebu; and (c) the
Closure Order dated December 28, 2005 issued against Alta
Vista Golf and Country Club by the Office of the Mayor,
City of Cebu. The Court also ORDERS the City of Cebu to
refund to Alta Vista Golf and Country Club the amusement
tax, penalties, surcharge, and interest paid under protest by
the latter in the total amount of P2,750,249.17 or to apply
the same amount as tax credit against existing or future tax
liability of said Club.
SO ORDERED
G.R. No. L-59070 March 15, 1982
PHILIPPINE PACIFIC FISHING CO., INC., CHENG
YONG, LILIA GAW and CHEN GUAT, petitioners,
vs.
HON. ARTEMON D. LUNA, Judge of the Court of
First Instance of Manila; YOSHIO YAMAMOTO and
MARILYN A. JAVIER, respondent.
BARREDO, J.:
Petition for certiorari and prohibition to annul and set aside
as acts in excess of jurisdiction and or a abuse to discretion
the order of respondent judge, which, briefly characterized,
amount to an assumption of jurisdiction by a Court of First
Instance and its exercise of the power to review actuations
of the Securities and Exchange Commission. Notably, the
respondents have not filed any answer, required by the
Court's resolution of December 16, 1981.
The background facts are simple. As alleged in The petition
which be their very nature, and because they are not denied
anyway, respondents having failed to answer. The
circumstances that led to the filing of the instant recourse
are:
4.1. The Philippine Pacific Fishing Co.,
Inc. through its of. officers, Yoshio
Yamamoto anterior Marilyn Javier,
private respondents herein, who are
plaintiffs in Civil Case No. 144299,
mortgaged to the Philippine Banking
Corporation the fishing vessels,
PACIFIC I and PACIFIC II, to secure
payment of a debt. Upon default of the
Philippine Pacific Fishing Co., Inc. to
pay its debt, the Philippine Banking
Corporation instituted foreclosure
proceedings and filed an action for
replevin. To prevent the foreclosure,
Yamamoto and/or Marilyn Javier,
acting as officers of the corporation,
made an agreement with Cheng Yong,
one of the defendants in the
aforementioned Civil Case. Under the
agreement, Cheng Yong paid the
indebtedness of Philippine Pacific
Fishing to Philippine Banking
Corporation, and in turn, Yamamoto
and/or Javier, as officers of Philippine
Pacific Fishing executed a chattel
mortgage of the two vessels in favor of
Cheng Yong.
4.2. Upon failure of Philippine Pacific
to pay the debt, Cheng Yong foreclosed
the mortgage. Yamamoto and Javier
then went to the Securities and
Exchange Commission and filed a
complaint, alleging that the controversy
between Cheng Yong and Philippine
Pacific was intra-corporate. (SEC Case
No. 002042). The SEC restrained the
foreclosure proceedings and thereafter,
the parties finally agreed to the
formation of a Management
Committee, with powers among others,
'to take custody and possession of all
assets, funds, properties and records of
the corporation; and 'to administer,
manage and preserve such assets, funds
and records. Exercising said powers the
Management Committee ordered
Yamamoto and Javier to deliver to the
Committee vessels, PACIFIC I and
PACIFIC II;
V. PERTINENT PROCEEDINGS
5.1. On October 22, 1979 private
respondents, through counsel, filed
with the respondent court a complaint
for declaration of rescission and
injunction, with ex-parte preliminary
injunction docketed as Civil Case No.
144299, entitled 'Yoshio Yamamoto
and Marilyn A. Javier, plaintiffs,
versus, Securities and Exchange
Commission, Jose Maria Hilado,
Philippine Pacific Fishing Co., Inc.
Cheng Yong, Lilia Gaw and Cheng
Guat; xerox copy of said complaint is
hereto attached as Annex 'B',
5.2. In their complaint, private
respondents pray that upon filing of the
complaint, a restraining order be issued
ex-parte commanding the defendants to
desist from further proceeding in SEC
Case No. 2042 and from enforcing the
orders issued by the Securities and
Exchange Commission under date of
August 14, 1981, September 29, 1981
and October 6, 1981; that thereafter, a
writ of preliminary injunction be
issued restraining the defendants,
particularly the Securities and
Exchange Commission, from
enforcing and implementing the
orders complained of and from
disturbing or interfering in the
exercise by private respondent
Yoshio Yamamoto of his rights to the
ownership and possession of the two
fishing vessels, PACIFIC I and
PACIFIC II;
5.3. Likewise, private respondents pray
that after hearing, private respondent
Yoshio Yamamoto be declared the
lawful and absolute owner of the
aforementioned two fishing vessels;
that all questioned orders of the
Securities and Exchange Commission
be declared null and void and issued
without authority and jurisdiction
and/or with grave abuse of discretion
that the defendants, particularly the
Securities and Exchange Commission,
desist from questioning the herein
private respondent Yoshio Yamamoto's
ownership and right of possession of
the aforesaid two vessels and making
permanent such writ of preliminary
injunction which it may have issued;
5.4. On the same date, private
respondents filed an ex-parte motion
for resolution of the Executive Judge of
the Court of First Instance of Manila,
praying that an order be issued
directing the Clerk of Court or his
authorized deputy to give due course to
the complaint of the herein private
respondents upon payment of the
docket fee of P200.00 pursuant to par.
10, Section 5 Rule 141 of the Rules of
Court. Xerox copy of the motion is
hereto attached as Annex 'C'. Acting
upon said motion, the aforementioned
Executive Judge granted the same and
ordered the Clerk of Court to accept the
filing of private respondents' complaint
upon payment of docket fee in the sum
of P200.00. Xerox copy of the order is
hereto attached as Annex 'D';
5.5. On October 26, 1981, the
respondent judge issued the order
complained of, copy of which is hereto
attached as Annex 'A' restraining the
Securities and Exchange Commission,
and Jose Maria Hilado, and the
petitioners from further proceeding
with SEC Case No. 2042 and from
enforcing the aforesaid orders until
further orders from the Court;
5.6. On November 10, 1981 petitioners
Cheng Yong, Lilia Gaw and Cheng
Guat, who are some of the defendants
named in the aforestated Civil Case No.
144299, Court of First Instance of
Manila, filed, through counsel, a
motion to dismiss the complaint, xerox
copy of which is hereto attached as
Annex 'E' and an opposition to the
issuance of a writ of preliminary
injunction, xerox copy of which is
hereto attached as Annex 'F'
5.7. In his meantime the hearing of the
application for issuance of a writ of
preliminary injunction which was
originally set on November 6, 1981
was, upon motion of private
respondents' counsel, postponed and
reset to November 18, 1981, during
which The parties were given a period
of fifteen (15) days within which to
simultaneously submit their respective
memorandum:
5.8. On November 19, 1981, as
aforesaid, the fourth floor of the City
Hall of Manila housing several salas of
the Court of first Instance of Manila,
among which is the sala of Branch
XXXII was burned and as
consequence, the judicial records
including those of the aforementioned
case was burned, hence, The
proceedings in said case is ordered
suspended pending the reconstitution of
the judicial records. thereafter however
counsel for defendant Cheng Yong,
Lilia Gaw and Cheng Guat in the
aforementioned Civil case No. L-44299
in the court below filed, through
counsel, their memorandum, xerox
copy of which is hereto attached as
Annex 'G' (Pp. 7-12, Record)
The order of herein respondent Judge being questioned
reads thus:
This is a complaint for declaration of
rescission and injunction, with prayer
for issuance of a writ of preliminary
injunction to restrain the Securities and
Exchange Commission from further
proceeding with SEC Case No. 2042,
entitled, 'YOSHIO YAMAMOTO and
MARILYN A. JAVIER vs.
PHILIPPINE PACIFIC FISHING CO.,
INC., CHENG YONG, LILIA GAW,
CHENG GUAT and the SHERIFF OF
MANILA' as well as from enforcing its
Orders of August 14, September 29,
and October 6, 1981. Finding the
complaint sufficient in form and
substance, defendants are required to
show cause on November 6, 1981 at
8:30 o'clock a.m. why the writ of
preliminary injunction should not be
issued. Let copies of this Order together
with copies of the complaint be served
upon the defendants at the expense of
plaintiffs. Defendants are required to
answer the petition within ten (10) days
from receipt of this Order.
Meanwhile, the defendants are hereby
restrained from further proceeding with
SEC. No. 2042 and from enforcing the
aforesaid Orders until further orders
from this Court.
Plaintiffs are hereby ordered to
immediately file a bond of P20,000 to
answer for any damages which
respondents may sustain by reason of
the issuance of this Order, if the Court
should finally decide that they are not
entitled thereto.
SO ORDERED.
Manila, Philippines, October 26, 1981.
(Page 22, Record)
The orders of the Securities and Exchange Commission
referred to in the above order are as follows:
ORDER
After a careful study and review of the allegations of the
separate motions filed by the respondents, both seeking to
reconsider the Order of this Commission dated June 17,
1981 denying the motion to dismiss and the opposition of
petitioners thereto, this Hearing Officer finds no
compelling reason for disturbing the findings made in the
Order sought to be reconsidered, and thereto, said motions
are hereby DENIED.
At the hearing on July 27, 1981, the motion of counsel for
the respondent corporation requiring the petitioners who are
in possession of the fishing vessels F/B Pacific I and II, to
deliver said fishing vessels to the corporation was likewise
considered. After considering the manifestation and
arguments of both parties and upon suggestion of this
Hearing Officer, the parties agreed that in lieu of the
appointment of a receiver as prayed for by the petitioners in
their motion of this Hearing Officer, the parties agreed that
in lieu of the appointment of a receiver as prayed for by the
petitioners in their motion to that effect and the delivery of
the fishing vessels to the corporation as requested by
counsel for the respondent corporation, a Management
Committee be instead created. The petitioners and the
respondents immediately nominated their representatives as
members and the Chairman to be designated by the
Commission.
As agreed upon by the parties, assisted by their respective
counsels, a Management Committee is hereby created and
constituted to be composed of Mrs. Marilyn Javier and Mr.
Melecio Hernandez as members with Atty. Felipe S.
Tongco of this Commission as Chairman. The said
Committee, which shall at all times be under the control
and supervision of this Commission shall have the
following powers, functions and duties, to wit:
1. to take custody and possession of all
assets, funds, properties and records of
the corporation and to prepare an
inventory thereof;
2. to administer, manage and preserve
such assets, funds and records;
3. to receive any and all amounts, sums
or money due and owing to the
company and to deposit such amounts
received in an appropriate bank for and
in the account of the corporation;
4. to make such payments and
disbursements in the ordinary course of
business;
5. to keep and maintain proper
accounting records of each and every
transaction of the company, particularly
receipts and disbursements of funds;
6. to submit to this Commission a
detailed report on all receipts and
disbursement of funds and such other
reports as this Commission may require
and
7. to acquire, lease, sell mortgage or
otherwise encumber such assets with
the prior approval of this Commission.
The parties, petitioners as well as
defendants shall turn over to the
Commission all the assets, funds,
properties and records of the
corporation in their possession
including the vessels F/B Pacific I and
II within five (5) days and to submit to
the Commission within ten (10) days a
complete inventory of all the assets,
funds, properties and records of the
corporation which are in their
possession, in the presence of the
Chairman and the members of the
above committee
Until further orders from this
Commission, said Committee created
pursuant to this Order shall have all the
foregoing authorities and must
discharge all the functions pertaining
thereto as well as to perform such other
duties as may be necessary in order to
protect the interest of the corporation.
The application of the petitioners for
the provisional remedy of receivership
is also hereby considered withdrawn.
SO ORDERED.
Mandaluyong, Metro Manila, August
14, 1981.
xxx xxx xxx
ORDER
Submitted for resolution is the
manifestation and motion filed by the
respondents to cite petitioners in
contempt of this Commission and the
opposition thereto filed by petitioners.
In a manifestation and motion filed
before this Commission on September
1, 1981, respondents alleged that in an
order dated August 14, 1981, issued by
the Commission, the parties, petitioners
and respondents, were directed to turn
over to the Management Committee
formed thereat, all the assets, funds,
properties and records of the
corporation which are in their
possession, including the vessels F/B
Pacific I and Pacific II within five (5)
days and to submit to the Commission
within ten (10) days, a complete
inventory of said assets, funds,
properties and records of the
corporation in the presence of the
Chairman and members of the
Management Committee; that more
than five (5) days have elapsed since
the receipt of the order of August 14,
1981 by the petitioners without the
latter having complied with the
directive to deliver the aforesaid vessels
to the Commission; that each day of
delay in the delivery of the possession
of the aforestated vessel and. in the
operation thereof by the Management
Committee, deprived the corporation of
sizeable earnings out of said vessels
and that this failure of petitioners to
comply with the Order, being willful
and deliberate, constitute contumacious
acts punishable under the New Rules of
Procedure in the Securities and
Exchange Commission.
Petitioners, in opposing the motion for
contempt, averred that they are not in
possession of assets, funds, properties
and records of the corporation which to
the best of their knowledge are in the
possession of respondent Cheng, that
the fishing vessels F/B Pacific I and II
are not assets of respondent
corporation, petitioner Yamamoto
having rescinded the sale in the
exercise of his lien as an unpaid seller
of the vessels and that petitioner
Yamamoto is willing to consider
arrangement whereby the vessels would
be operated under the supervision of
the Management Committee for the
benefit of all the parties concerned, the
rescission the sale of the vessels
notwithstanding. "Considering that one
of the issues involved in this case is the
ownership of the two (2) vessels, we
consider it quite impractical for the
petitioners to capitalize on this issue to
justify their inability to comply with the
Order of this Commission dated August
14, 1981.
Unless, therefore, prevented by any
supervening events, petitioners are duty
bound to abide by the directive of this
Commission for the delivery of the two
(2) fishing boats to the Management
Committee. Viewed from this
perspective, we find petitioners' non-
compliance with the Order of this
Commission dated August 14, 1981
directing delivery of fishing boats P/B
Pacific I and II, which are admittedly in
their (petitioners) possession, to the
Management Committee to be without
any justifiable reason.
WHEREFORE, petitioners are hereby
found guilty of indirect contempt and
fine of P1,000 plus an additional fine of
P200 for every day of delay in the
delivery of said vessels or non-
compliance with the order is hereby
imposed upon them without prejudice
to imprisonment in case petitioners still
fail to deliver the two (2) fishing boats
within five (5) days from receipt of the
Order.
SO ORDERED.
Mandaluyong, Metro Manila,
September 29, 1981. (Pp. 57-59,
Record)
ORDER
Acting upon the urgent ex-parte motion
of defendant corporation dated October
6, 1981, and finding the same to be
meritorious, said urgent ex-parte
motion is hereby GRANTED.
WHEREFORE, the Chairman of the
Management Committee or his duly
authorized representative is hereby
directed to take possession of the
fishing vessel, the PACIFIC II,
wherever it may be found in Philippine
waters and for the purpose, is hereby
authorized 'to enlist the aid and support
of any and all enforcement agencies of
the government, civil or military'.
pursuant to Sec. 3 of Presidential
Decree No. 902-A.
SO ORDERED.
Mandaluyong, Metro Manila,
Philippines.
October 6, 1981. (Page 60, Record)
We are aware of the fact that up to the present respondent
judge has not gone beyond issuing the above restraining
order, notably requiring the filing of a bond. What has
happened with the motion for a writ of preliminary
injunction is not in the record. But assuming respondents
should claim that the herein petition is premature
considering there is no showing that respondent judge has
not been asked to reconsider his impugned order and the
incident on the preliminary injunction has not been
resolved. Our ready answer is that We have opted to act
now, for the simple reason that the invalidity of the
challenged order is so manifest and patent, in fact and in
law, that it would be a waste of time and actually an
injustice to petitioners, if We delayed further disposition of
the issues raised by them. We cannot imagine any different
end result that subsequent actions of the parties or
respondent judge could possibly affect Our conclusion
regarding the utter lack of jurisdiction of respondent judge
in the premises.
As already portrayed above, the parties came within the
jurisdiction of the Securities and Exchange Commission on
the basis of the complaint of herein petitioners. They
claimed their controversy with private respondents
involved intra-corporate matters within the exclusive
jurisdiction of that body. The Commission took cognizance
thereof, the parties discussed their respective positions
before it, and on the issues joined by them, the Commission
issued the orders above-quoted.
If any or all of said orders are erroneous, the organic act
creating the Commission, Presidential Decree 902-A,
provides the appropriate remedy, first within the
Commission itself, and ultimately in this Court. Nowhere
does the law empower Court of First Instance to interfere
with the orders of the Commission. Not even on grounds of
due process or jurisdiction. The Commission is, conceding
arguendo a possible claim of respondents, at the very least.
a co-equal body with the Courts of First Instance. Even as
such co-equal, one would have no power to control the
other. But the truth of the matter is that only the Supreme
Court can enjoy and correct any actuation of the
Commission. (Pineda vs. Lantin, 6 SCRA 757)
Moreover, it is obvious that since the Commission has its
offices outside of Manila, under settled jurisprudence, a
Manila court's writ of preliminary injunction. much less a
restraining order, can have no binding effect outside the
Manila area.
IN VIEW OF ALL THE FOREGOING, judgment is hereby
rendered setting aside the impugned order of herein
respondent judge and making the restraining order
heretofore issued by Us permanent. with costs against
respondents.
Aquino, Concepcion, Jr., De Castro, Ericta and Escolin JJ., rendered a Decision granting TRANSCARE,
concur. petitioner a certificate of public INC., in favor of
convenience to operate a garage ROYAL CLASS
Abad Santos, J., concur in the result. (tourist) air-conditioned service LIMOUSINE
within the City of Manila and from SERVICE of the
said place to any point in Luzon, Certificate of
and vice-versa (Annex A, CA-G.R. Public
SP No. 10049). Convenience
G.R. No. 79886 November 22, 1989 issued in Case
On June 25, 1982, said Decision Nos. 81-4405
QUALITRANS LIMOUSINE SERVICE, INC., was amended by converting and 82-415
petitioner, petitioner's certificate of public authorizing the
vs. convenience for garage service operation of a
ROYAL CLASS LIMOUSINE SERVICE, LAND into one for limousine tourist TOURIST CAR
TRANSPORTATION COMMISSION, COURT OF service for the transportation of (AIR-
APPEALS, respondents. all outgoing passengers of the CONDITIONED)
Manila International Airport SERVICE within
(Annex B, CA-G.R. SP No. 10049). the New Manila
G.R. No. 79887 November 22, 1989 International
Airport and from
QUALITRANS LIMOUSINE SERVICE, INC., On October 14, 1985, a Deed of said place to
vs. Absolute Sale (Annex I of both any point in the
ROYAL CLASS LIMOUSINE SERVICE, JUDGE Records) was executed by Island of Luzon
PERPETUA COLOMA, and COURT OF APPEALS, private respondent with accessible to
respondents. Transcare, Inc., a duly licensed motor vehicle
limousine service operator and traffic and vice-
likewise, a holder of a certificate versa, involving
of public convenience (Annex 2 the right to
of both Records). By virtue of operate forty
SARMIENTO, J.: said sale, the franchise granted (40) units
to Transcare, Inc. for the use of authorized
40 units of tourist cars was sold therein. ...
These two petitions, in the nature of appeals by
to private respondent. (Emphasis
certiorari, from a joint judgment of the Court of
Appeals, were brought by Qualitrans Limousine supplied).
Service, Inc., grantee of a certificate of public On December 27, 1985, upon
convenience issued by the defunct Board of application filed for the approval On June 17, 1986, petitioner filed
Transportation to operate a "garage (tourist) air- of aforementioned sale, an Order a motion for reconsideration
conditioned service" 1 in Manila to any point in the was issued by the Land before the Land Transportation
island of Luzon. By our Resolution of September Transportation Commission Commission to correct the route
7, 1988, we consolidated the twin cases. We also granting a provisional permit in specified in the prefatory portion
gave due course thereto. favor of private respondent of its December 27, 1986 Order
(Annexes C and 3, CA-G.R. SP (Annex 4 of both Records).
No. 10049); Annexes B and 3 CA- Petitioner argues that the
The facts, never disputed, are stated in the
G.R. No. 10370-SP). The prefatory application filed by private
decision of the Court of Appeals. We quote:
portion thereof states: respondent was for the route
from the "New Manila
xxx xxx xxx
The application International Airport to hotels
filed in this case and from said hotels to any point
On June 22, 1982, the then Board is for the in Luzon accessible to vehicular
of Transportation, now the Land approval of sale traffic and vice-versa", and not
Transportation Commission, made by from the "New Manila
International Airport ... to any
point in the Island of Luzon ... "
(ibidem). Petitioner claims that
respondent has been soliciting
passengers from the New Manila
International Airport to transport
them to any point in Luzon to the
prejudice of petitioner's
business.
On September 1, 1986, petitioner
filed Civil Case No. 4275-P before
the Pasay City Regional Trial
Court for damages with prayer
for issuance of a writ of
mandatory injunction against
private respondent (Annex D, CA-
G.R. SP No. 10049: Annex 5, CA-
G.R. SP No. 10370).
On same date, Hon. Fermin A.
Martin. Jr., Vice-Executive Judge
of the Pasay City Regional Trial
Court, issued a Restraining Order
directing private respondent to
desist from ferrying passengers
from the New Manila International
Airport to their residences
(Annex E, CA-G.R. SP No. 10049;
Annex 6, CA-G.R. SP No. 10370).
The petition for preliminary
injunction was set for hearing on
September 5, 1986.
On September 3, 1986, private
respondent, defendant in Civil
Case No. 4275, filed an Urgent
Motion to Dissolve/Lift
Restraining Order issued by Hon.
Fermin A. Martin, Jr. (Annex F,
CA-G.R. SP No. 10049).
Thereafter, same respondent
filed an Opposition to petitioner's
application for a writ of
preliminary mandatory injunction
(Annex G, CA-G.R. SP No. 10049).
In the hearing of September 5,
1986, respondent Hon. Perpetua
D. Coloma, in whose Branch the
civil case was raffled, gave IN VIEW OF ALL
petitioner up to September 8, THE
1986 within which to file an FOREGOING,
opposition, if any, to respondent this Court is
urgent motion. constrained to
Lift as it does lift
On September 8, 1986, petitioner the Restraining
filed the required opposition Order dated
(Annex 1, CA-G.R. SP No. 10049). September 1,
On that same date, respondent 1986 and hereby
Judge ruled on said urgent denies the
motion and petitioner's earlier Issuance of
prayer for the issuance of a Preliminary
preliminary mandatory Mandatory. (Sic)
injunction. Pertinent portions of (Annex H, CA-
respondent Judge's Order read G.R. SP No.
as follows: 10049; Annex 8,
CA-G.R. SP No.
10370).
After a careful
examination of
the arguments On September 16, 1986,
of both parties petitioner filed a Motion for
to support their Reconsideration (Annex J, CA-
respective G.R. SP No. 10049) which was
claims, this denied by respondent Court on
Court believes September 19, 1986.
that the
defendant's In the meantime, private
contention finds respondent filed in respondent
justification Commission a Petition for
under the Declaratory Relief (sic)
doctrine of requestioning the latter to
exhaustion of declare the extent of its rights
Administrative under its provisional authority
remedies. (Annex C, CA-G.R. SP No. 10370).
xxx xxx xxx On September 17, 1986,
petitioner was able to secure
Further, this Court doesn't have jurisdiction over from respondent Commission an
this case under Sec. 19 BP Blg. 129. Order directing private
respondent "to immediately
cease and desist from operating
RTC shall have Exclusive jurisdiction.— SEC. 19, its units from the New Manila
BP Blg. 129. International Airport to any point
in Luzon" (Annexes D and 9, CA-
6. In all cases not within the exclusive jurisdiction G.R. SP No. 10370). Two days
of a any Court, Tribunal, person or body later, however, this Order was
exercising judicial or quasi-judicial functions. lifted by respondent Commission
upon motion of private
respondent (Annex 5, CA-G.R. SP
 No. 10049; Annexes 10 and 11,
CA-G.R. SP No. 10370).
On September 23, 1986,
petitioner filed before this Court
CA-G.R. SP No. 10049 praying,
among others, that a Restraining
Order issue to prevent
implementation of the September
8, and 19, 1986 Orders of
respondent Court and to direct
said Court to grant the injunction
prayed for therein.
On October 1, 1986, petitioner
filed its Opposition to private
respondent's Petition for
Declaratory Relief pending before
respondent Commission (Annex
F, CA-G.R. SP No. 10370).
On October 9, 1986, respondent
Commission acted on private
respondent's Petition for
Declaratory Relief ruling that the
provisional authority granted to
private respondent was "to
transport passengers from the
New Manila International Airport
and from said place to any point
in the Island of Luzon ...." (Annex
G, CA-G.R. SP No. 10370).
On October 15, 1986, petitioner
filed a motion for respondent
Commission to reconsider its
Order of October 9, 1986 (Annex
H, CA-G.R. SP No. 10370). This
was denied by said Commission
in its Order dated October 17,
1986 (Annex I, CA-G.R. SP No.
10370). 2
xxx xxx xxx
The Court of Appeals dismissed both of Qualitrans'
petitions and directed it to respect the issuance of a
certificate of public convenience (CPC) in favor of
Royal Class Limousine Service. The petitioner now
holds the Appellate Court to be in error, in these
respects:
I Anent the said Appellate Court's affirmance of the
THE COURT OF APPEALS ERRED IN RULING
THAT THE LAND TRASPORTATION COMMISSION
HAD JURISDICTION OVER PETITIONS FOR
DECLARATORY RELIEF,
II
THE COURT OF APPEALS ERRED IN RULING
THAT THE PETITION FOR DECLARATORY RELIEF
OF PRIVATE RESPONDENT WAS PROPER.
III
THE COURT OF APPEALS ERRED IN NOT RULING
THAT THE DECISIONS OF THE LAND
TRANSPORTATION COMMISSION IN CASES NOS.
81-4405 AND 82-416 ARE VOID FOR BEING
CONTRARY TO MINISTRY ORDER NO. 81-054.
IV
THE COURT OF APPEALS ERRED IN NOT RULING
THAT THE LAND TRANSPORTATION
COMMISSION DENIED PETITIONER DUE
PROCESS OF LAW, BECAUSE IT ADVANCED THE
TIME OF THE HEARING WITHOUT NOTICE TO
PETITIONER.
V Commission, under its enabling law,
THE COURT OF APPEALS ERRED IN RULING
THAT THE ORDERS OF OCTOBER 9 AND 17, 1986
OF THE LAND TRANSPORTATION COMMISSION
WAS SUPPORTED BY THE EVIDENCE, WHEN
NONE WAS EVER ADDUCED.
VI
THE COURT OF APPEALS ERRED IN NOT RULING
THAT PRIVATE RESPONDENT IS NOT
AUTHORIZED TO TRANSPORT PASSENGERS
DIRECTLY FROM THE MANILA INTERNATIONAL
AIRPORT TO DESTINATIONS OTHER THAN
HOTELS. 3
Regional Trial Court's Order 4 dismissing Qualitrans'
complaint for injunction and damages, Qualitrans
assigns the following errors:
I
THE REGIONAL TRIAL COURT HAS JURISDICTION
OVER CIVIL CASE NO. 4275-P.
II
THE DOCTRINE OF EXHAUSTION OF
ADMINISTRATIVE REMEDIES IS NOT APPLICABLE
TO THIS CASE.
III
PETITIONER IS ENTITLED TO THE ISSUANCE OF
A WRIT OF PRELIMINARY INJUNCTION. 5
We sustain the Court of Appeals in both cases.
I (G.R. No 79886)
1. As to claims that the Land
Transportation Commission can not
entertain suits for declaratory relief,
there is merit in the ruling under
question to the effect that the
Executive Order No. 1011, has
ample powers to modify certificates
of public convenience, including the
grant of latitudinarian franchises in
favor of public utilities. We quote:
... The (Land Transportation)
Commission shall have, among
others, the following powers and
functions:
(a) Quasi-judicial
powers and
 functions which 2. Of course, the Commission's Mr. Chief Justice Claudio
require notice and action must have been preceded by Teehankee said:
hearing— due notice and hearing, 9 and
precisely, it is Qualitrans' complaint In this era of clogged court dockets,
xxx xxx xxx that it had been deprived of due the need for specialized
process for failure of the administrative boards or
transportation body to give it notice commissions with the special
(2) To issue, and hearing (in particular, of Royal
amend, revise, knowledge, experience and
Class' motion to lift cease and capability to hear and determine
suspend or desist order). The records show,
cancel promptly disputes on technical
however, that the decision of the matters or essentially factual
Certificates of Board is founded on substantial
Public matters, subject to judicial review in
evidence.10 Moreover, in case of grave abuse of discretion,
Convenience or administrative cases, notice" is not
permits has become well nigh
indispensable, but the deprivation of indispensable. 12
authorizing the opportunity to be heard. That is not
operation of the case here. The reality is that on
public land October 1, 1986, Qualitrans The records also reveal that there were sound
transportation opposed Royal Class' application reasons for the lifting of the Commission's cease and
services provided for "declaratory relief." 11 It can not desist order, to wit:
by motorized therefore be heard to say that the
vehicles, and to Commission had acted without xxx xxx xxx
prescribe the giving the petitioner an avenue to
appropriate terms air its side of the story.
and conditions 1. Complaint's
therefor; 6 (sic) Motion for
3. Anent charges that the Reconsideration
Commission issued the questioned of the order dated
xxx xxx xxx certificate of public convenience December 27,
without evidence, suffice it to say 1985, in Case No.
Royal Class' application is, quintessentially, a petition that: 85-9619 filed on
for an expanded route, over which the Board June 17, 1986,
exercises jurisdiction under its charter. If it seemed xxx xxx xxx has not yet been
like an "action for declaratory relief", it is only a resolved by this
coincidence, for the nature of an action is to be Commission;
determined by what the petition alleges and not by the . . .the courts cannot or will not
appellation the parties have attached to their determine a controversy involving a
question which is within the 2. Respondent's
pleadings.7 Whether it is a petition for declaratory Petition for
relief or for revision or grant or cancellation of an jurisdiction of an administrative
tribunal prior to the decision of that Declaratory Relief
existing CPC, the authority of the Commission to act filed on
is justified, so long as it has been properly invoked. question by the administrative
tribunal, where the question September 15,
demands the exercise of sound 1986, is still
The fact that Qualitrans had, meanwhile, commenced administrative discretion requiring pending
suit in the Regional Trial Court (RTC) does not oust the special knowledge, experience, resolution by this
the Commission of its jurisdiction. The Commission and services of the administrative Commission;
had a primacy of authority to take cognizance of tribunal to determine technical and
Royal Class 'inquiry. It is to be noted, indeed, that the intricate matters of fact, and a 3. Considerable
very trial court, by its order of September 8, 1986, 8 uniformity of ruling is essential to losses and
denied the issuance of preliminary injunctive relief comply with the purposes of the irreparable injury
sought by Qualitrans, in deference, precisely, to the regulatory statute administered." will be sustained
Board's primal and preferential jurisdiction. Recently, this Court speaking thru by respondent,
not to mention the
loss of income of as not to service over any and all of the
its prejudice either streets and alleys of the city, in any
drivers/employee party. 13 direction, from any place, and at
s whose only any time, subject to the call and
source of 3. As to charges that the certificate wish of the customer only both as to
livelihood is of public convenience of the private time, place, and route of travel. That
dependent on the respondent had allowed it to is to say, it is in the sole discretion
present and transport clients from the Ninoy of the person desiring to travel
continuous Aquino International Airport only to whether he shall call a taxi or an
operation of hotels but not to any other auto garage car, and as to when he
respondent; and destination, the Court is agreed that shall call it, and where he shall go,
the controlling jurisprudence is and in the operation of an autobus
4. Above all, Carmelo and Oriol v. Monserrat, 14 line, the operator must maintain a
public interest in which we held: fixed schedule over a specified
and convenience route between certain points, and
will suffer and be must make his trips with or without
xxx xxx xxx passengers. 15
prejudiced if
respondent is
restrained from Everything else being equal, the The abovestated doctrine applies with equal force to
ferrying real, primary question involved is the case under consideration. For although Monserrat
passengers from whether it is better and more involved a fleet of taxicabs, the taxicab business is no
the New MIA convenient for the travelling public different, fundamentally, from a limousine service
directly to their in the City of Manila to have two because both have very broad destinations.
respective taxicab companies in operation than
residences; it is to have one, and whether in
truth and in fact the granting of That Royal Class had, itself, admitted that its
another similar license to the franchise covered the NAIA-hotel route alone, does
5. Likewise, a petitioners would operate as a real not weaken the Commission's ruling. The yardstick,
restraining order injury to Monserrat. He is the first in so Monserrat tells us, is that:
should be granted the field and so long as he
only where there maintains good and efficient service xxx xxx xxx
is a clear showing and meets the demand of the
that there is public, it is fair to assume that he
indeed a flagrant In the granting or refusal of a
will hold his present customers and certificate of public convenience, all
violation on (sic) would have nothing to fear from the
the property right things considered, the question is
granting of a license to the what is for the best interests of the
of another. petitioners, and if for any reason he
Absence of which public.16
does not give the required kind of
or in case of service or satisfy the needs of the
ambiguity, a public, then he would have no right Like Monserrat, the Court finds it "hard to conceive
restraining order to complain. how it would be for the best interests of the public" 17,
is unavailing. And to have one line only, "and how the public would be
in the present injured by the granting of the certificate in question,
case there is xxx xxx xxx for it must be conceded that two companies in the
really that field would stimulate the business..." 18
ambiguity That is to say, taxies are not
attendant to the operated on any schedule or over It is simply bellyaching to say that Royal Class had
issues involved, any certain route or between certain transcended the bounds of the certificate of public
which this points or in any direction, and that convenience granted to it. What Qualitrans is plainly
Commission shall the certificate granted to Monserrat carping about is the threat the Royal Class' certificate
have to resolve is in the nature of a blanket of public convenience poses on its foothold in the
on the merits so franchise to operate a taxicab "limo" service business. This is monopolism, plainly
and simply, and we can not tolerate it. The
constitutional mandate is for "a more equitable
distribution of opportunities, income, and wealth" 19
and for the State to regulate or prohibit monopolies."
20
As we have held furthermore, a provisional authority
is given on showing of public need. 21 Thus, it may be
issued ex-parte.
II (G.R. No. 79887)
1. For the same reasons, the above
appeal must also fail. The Regional
Trial Court (RTC) had acted
correctly in dismissing Qualitrans'
damage suit.
Ramos v. Court of First Instance of Tayabas, 22 in
which we sustained the jurisdiction of the CFI (now,
RTC) at the expense of Public Service Commission
(now, the Land Transportation Commission), has no
application. In that case, the aggrieved party had
denounced his adversary's action before the PSC.
The latter, however, had failed to act. We stamped
our imprimatur on the CFI's jurisdiction because of
temporal constraints. ("Damages pile up day by day
as infringement continues. The Public Service
Commission has been afforded an opportunity to give
relief and has not done so." 23
In addition, there is a need to square the functioning
of administrative bodies vis-a-vis contemporary
realities. As we have observed, the increasing pattern
of law and legal development has been to entrust
"special cases" to "special bodies" rather than the
courts. As we have also held, the shift of emphasis is and all things equal, competition is
attributed to the need to slacken the encumbered a healthy thing. Besides, there is no
dockets of the judiciary and so also, to leave "special showing that Qualitrans stood to
cases" to specialists and persons trained therefor. lose its capital investment with the
approval of Royal Class' franchise.
27 Our considered opinion is that
There is no merit in the claims that Royal Class has
been guilty of unfair competition. For starters, its CPC Qualitrans should improve its
has been duly issued. It (CPC) can not therefore be services as a counter-balance to
said to have been acquired through duress or deceit Royal Class' own toehold in the
to warrant such a charge. market. And let that be its
challenge.
2. Failure to exhaust administrative
remedies is arrayed against WHEREFORE, the petitions are DENIED. The
decision appealed from is AFFIRMED in toto. No
Qualitrans. Hence, it can not validly
revoke our ruling in Arrow costs.
Transportation Corp. v. Board of
Transportation. 24 That case was SO ORDERED.
impelled by urgent need, which the
courts could address more swiftly. It Paras, Padilla and Regalado, JJ., concur.
is not the case here. Not much is at
stake in the "limo" business. We
hold that the Commission should Melencio-Herrera (Chairperson), J., is on leave.
have better been left alone to
discharge its duty without court
interference.
3. We are not impressed that
Qualitrans has successfully shown
that it is entitled to the injunctive
writ. Its appeal to "ruinous
competition" 25 is not well-taken.
Under the Constitution, the national
economy stands for, "competi[tion]
in both domestic and foreign
markets." 26 Obviously, not every
kind of competition is "ruinous
competition". All things considered