8/21/2019 Tax Caban for Digesting Due June 30 http://slidepdf.com/reader/full/tax-caban-for-digesting-due-june-30 1/54 G.R. No. 106611 July 21, 1994 COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. COURT OF APPEALS, CITYTRUST AN!ING CORPORATION "#$ COURT OF TA% APPEALS, respondents. The Solicitor General for petitioner. Palaez, Adriano & Gregorio for private respondent. REGALA&O, J.: The judicial proceedings over the present controversy commenced with CTA Case No. 4099, wherein the Court of Ta Appeals ordered herein petitioner Commissioner of !nternal "evenue to grant a refund to herein private respondent Citytrust #an$ing Corporation %Citytrust& in the amount of '(),)(4,*0+.(4, representing its overpaid income taes for (94 and (9*, -ut denied its claim for the alleged refunda-le amount reflected in its (9) income ta return on the ground of prescription. 1 That judgment of the ta court was affirmed -y respondent Court of Appeals in its judgment in CA/.". ' No. 1+)9. 2 The case was then elevated to us in the present petition for review on certiorari wherein the latter judgment is impugned and sought to -e nullified and2or set aside. !t appears that in a letter dated August 1+, (9+, '()(*# +)*"-( )(+o#$(#- /o)+o)"-*o# *l($ " /l"* o) )(u#$ *-' -'( u)("u o I#-()#"l R((#u( 3IR in the amount of '(9,93(,34*.00 )(+)((#-*#5 -'( "ll(5($ "55)(5"-( o -'( (/( o *- /"))*($7o() -o-"l 8u")-()ly +"y(#- o() -'( "/-u"l *#/o( -" $u(, +lu /"))*($7o() *-''ol$*#5 -" +"y(#- o# 5o()#(#- (/u)*-*( "#$ )(#-"l *#/o(, " /o+u-($ *# *- *#"l *#/o( -" )(-u)# o) -'( /"l(#$") y(") (#$*#5 &(/(() :1, 19;<. : Two days later, or on August 1, (9+, in order to interrupt the running of the prescriptive period, Citytrust filed a petition with the Court of Ta Appeals, doc$eted therein as CTA Case No. 4099, claiming the refund of its income ta overpayments for the years (9), (94 and (9* in the total amount of '(9,93(,34*.00. 4
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COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. COURT OF APPEALS,
CITYTRUST AN!ING CORPORATION "#$ COURT OF TA% APPEALS, respondents.
The Solicitor General for petitioner.
Palaez, Adriano & Gregorio for private respondent.
REGALA&O, J.:
The judicial proceedings over the present controversy commenced with CTA Case No. 4099,
wherein the Court of Ta Appeals ordered herein petitioner Commissioner of !nternal "evenue to
grant a refund to herein private respondent Citytrust #an$ing Corporation %Citytrust& in the
amount of '(),)(4,*0+.(4, representing its overpaid income taes for (94 and (9*, -ut denied
its claim for the alleged refunda-le amount reflected in its (9) income ta return on the ground
of prescription. 1 That judgment of the ta court was affirmed -y respondent Court of Appeals in
its judgment in CA/.". '
No. 1+)9.
2
The case was then elevated to us in the present petition for reviewon certiorari wherein the latter judgment is impugned and sought to -e nullified and2or set aside.
!t appears that in a letter dated August 1+, (9+, '()(*# +)*"-( )(+o#$(#- /o)+o)"-*o# *l($ "
/l"* o) )(u#$ *-' -'( u)("u o I#-()#"l R((#u( 3IR in the amount of '(9,93(,34*.00
)(+)((#-*#5 -'( "ll(5($ "55)(5"-( o -'( (/( o *- /"))*($7o() -o-"l 8u")-()ly +"y(#-
!n the answer filed -y the ffice of the olicitor /eneral, for and in -ehalf of therein respondent
commissioner, it was asserted that the mere averment that Citytrust incurred a net loss in (9*
does not ipso facto merit a refund5 that the amounts of '+,+((,11).00, '(,9*9,*(4.00 and
'1,1).00 claimed -y Citytrust as (9) income ta overpayment, taes withheld on proceeds of
government securities investments, as well as on rental income, respectively, are not properly
documented5 that assuming arguendo that petitioner is entitled to refund, the right to claim the
same has prescri-ed
with respect to income ta payments prior to August 1, (94, pursuant to ections 191 and 19*
of the National !nternal "evenue Code of (933, as amended, since the petition was filed only on
August 1, (9+. <
n 6e-ruary 10, (99(, the case was su-mitted for decision -ased solely on the pleadings andevidence su-mitted -y herein private respondent Citytrust. 7erein petitioner could not present
any evidence -y reason of the repeated failure of the Ta Credit2"efund 8ivision of the #!" to
transmit the records of the case, as well as the investigation report thereon, to the olicitor
/eneral. 6
7owever, on une 14, (99(, herein petitioner filed with the ta court a manifestation and motion
praying for the suspension of the proceedings in the said case on the ground that the claim of
Citytrust for ta refund in the amount of '(9,93(,34*.00 was already -eing processed -y the Ta
Credit2"efund 8ivision of the #!", and that said -ureau was only awaiting the su-mission -y
Citytrust of the re:uired confirmation receipts which would show whether or not the aforestated
amount was actually paid and remitted to the #!". =
Citytrust filed an opposition thereto, contending that since the Court of Ta Appeals already
ac:uired jurisdiction over the case, it could no longer -e divested of the same5 and, further, that
the proceedings therein could not -e suspended -y the mere fact that the claim for refund was
-eing administratively processed, especially where the case had already -een su-mitted for
decision.
!t also argued that the #!" had already conducted an audit, citing therefor ;hi-its <, <(, <1
and <) adduced in the case, which clearly showed that there was an overpayment of income
taes and for which a ta credit or refund was due to Citytrust. The 6oregoing ehi-its are
As indicated at the outset, a petition for review was filed -y herein petitioner with respondentCourt of Appeals which in due course promulgated its decision affirming the judgment of the
Court of Ta Appeals. 'etitioner eventually elevated the case to this Court, maintaining that said
respondent court erred in affirming the grant of the claim for refund of Citytrust, considering
that, firstly, said private respondent failed to prove and su-stantiate its claim for such refund5
and, secondly, the -ureaus findings of deficiency income and -usiness ta lia-ilities against
private respondent for the year (94 -ars such payment. 16
After a careful review of the records, we find that under the peculiar circumstances of this case,
the ends of su-stantial justice and pu-lic interest would -e -etter su-served -y the remand of this
case to the Court of Ta Appeals for further proceedings.
!t is the sense of this Court that the #!", represented herein -y petitioner Commissioner of
!nternal "evenue, was denied its day in court -y reason of the mista$es and2or negligence of its
officials and employees. !t can readily -e gleaned from the records that when it was herein
petitioners turn to present evidence, several postponements were sought -y its counsel, the
olicitor /eneral, due to the unavaila-ility of the necessary records which were not transmitted
-y the "efund Audit 8ivision of the #!" to said counsel, as well as the investigation report made
-y the #an$s26inancing and !nsurance 8ivision of the said -ureau2 despite repeated re:uests. 1= !t
was under such a predicament and in deference to the ta court that ultimately, said records -eing
Thus, to avoid multiplicity of suits and unnecessary difficulties or epenses, it is -oth logically
necessary and legally appropriate that the issue of the deficiency ta assessment against Citytrust
-e resolved jointly with its claim for ta refund, to determine once and for all in a single
proceeding the true and correct amount of ta due or refunda-le.
!n fact, as the Court of Ta Appeals itself has heretofore conceded, 24 it would -e only just and
fair that the tapayer and the /overnment ali$e -e given e:ual opportunities to avail of remedies
under the law to defeat each others claim and to determine all matters of dispute -etween them
in one single case. !t is important to note that in determining whether or not petitioner is entitled
to the refund of the amount paid, it would necessary to determine how much the /overnment is
entitled to collect as taes. This would necessarily include the determination of the correct
lia-ility of the tapayer and, certainly, a determination of this case would constitute res judicataon -oth parties as to all the matters su-ject thereof or necessarily involved therein.
The Court cannot end this adjudication without o-serving that what caused the /overnment to
lose its case in the ta court may hopefully -e ascri-ed merely to the ennui or ineptitude of
officialdom, and not to syndicated intent or corruption. The evidential cul-de-sac in which the
olicitor /eneral found himself once again gives su-stance to the pu-lic perception and
suspicion that it is another prover-ial tip in the ice-erg of venality in a government -ureau which
is pejoratively rated over the years. >hat is so distressing, aside from the financial losses to the
/overnment, is the erosion of trust in a vital institution wherein the reputations of so many
honest and dedicated wor$ers are -esmirched -y the acts or omissions of a few. 7ence, the
li-eral view we have here ta$en pro hac vice, which may give some degree of assurance that this
Court will unhesitatingly react to any -ane in the government service, with a replication of such
response -eing li$ewise epected -y the people from the eecutive authorities.
>7;";6";, the judgment of respondent Court of Appeals in CA/.". ' No. 1+)9 is
here-y ;T A!8; and the case at -ar is ";HAN8;8 to the Court of Ta Appeals for further
proceedings and appropriate action, more particularly, the reception of evidence for petitioner
and the corresponding disposition of CTA Case No. 4099 not otherwise inconsistent with our
'etitioner argues that its claims for refund and ta credits are not yet -arred -y prescriptionrelying on the applica-ility of "evenue Hemorandum Circular No. 3* issued on April (, (9*.
The circular states that overpaid income taes are not covered -y the twoyear prescriptive
period under the ta Code and that tapayers may claim refund or ta credits for the ecess
:uarterly income ta with the #!" within ten %(0& years under Article ((44 of the Civil Code.
year period. As already stated, actions hereon -y the #ureau are immediate after
only a cursory preaudit of the income ta returns. Horeover, a tapayer may
recover from the #ureau of !nternal "evenue ecess income ta paid under the
provisions of ection + of the Ta Code within (0 years from the date of
payment considering that it is an o-ligation created -y law %Article ((44 of the
Civil Code&. 9 %;mphasis supplied.&
'etitioner argues that the government is -arred from asserting a position contrary to its declared
circular if it would result to injustice to tapayers. Citing A"S C"N "roadcasting Corporation
vs. Court of Ta# Appeals 10 petitioner claims that rulings or circulars promulgated -y the
Commissioner of !nternal "evenue have no retroactive effect if it would -e prejudicial to
tapayers, !n A#C#N case, the Court held that the government is precluded from adopting a position inconsistent with one previously ta$en where injustice would result therefrom or where
there has -een a misrepresentation to the tapayer.
'etitioner contends that ec. 14+ of the National !nternal "evenue Code eplicitly provides for
this rules as follows=
ec. 14+ Non-retroactivit$ of rulings% Any revocation, modification or reversal
of any of the rules and regulations promulgated in accordance with the precedingsection or any of the rulings or circulars promulgated -y the Commissioner shall
not -e given retroactive application if the revocation, modification or reversal will
-e prejudicial to the tapayers ecept in the following cases=
a&. where the tapayer deli-erately misstates or
omits material facts from his return or in any
document re:uired of him -y the #ureau of !nternal
"evenue5
-&. where the facts su-se:uently gathered -y the
#ureau of !nternal "evenue are materially different
"espondent Commissioner of !nternal "evenue, through olicitor /eneral, argues that the two
year prescriptive period for filing ta cases in court concerning income ta payments of
Corporations is rec$oned from the date of filing the 6inal Adjusted !ncome Ta "eturn, which is
generally done on April (* following the close of the calendar year. As precedents, respondent
Commissioner cited cases which adhered to this principle, to wit ACCA 'nvest!ents Corp. vs.
Court of Appeals, et al., 11 and Co!!issioner of 'nternal evenue vs. T( Sales, 'nc., et
al .. 12"espondent Commissioner also states that since the 6inal Adjusted !ncome Ta "eturn of
the petitioner for the taa-le year (9* was supposed to -e filed on April (*, (9+, the latter had
only until April (*, (9 to see$ relief from the court. 6urther, respondent Commissioner stresses
that when the petitioner filed the case -efore the CTA on Novem-er (, (9, the same was filed -eyond the time fied -y law, and such failure is fatal to petitioners cause of action.
After a careful study of the records and applica-le jurisprudence on the matter, we find that,
contrary to the petitioners contention, -'( )(l""-*o# o )((#u( )(5ul"-*o# y RMC =7;< *
#asic is the principle that Gtaes are the life-lood of the nation.G The primary purpose is to
generate funds for the tate to finance the needs of the citiJenry and to advance the commonweal. 1: 8ue process of law under the Constitution does not re:uire judicial proceedings in ta
cases. This must necessarily -e so -ecause it is upon taation that the government chiefly relies
to o-tain the means to carry on its operations and it is of utmost importance that the modes
adopted to enforce the collection of taes levied should -e summary and interfered with as little
as possi-le. 14
6rom the same perspective, claims for refund or ta credit should -e eercised within the time
fied -y law -ecause the #!" -eing an administrative -ody enforced to collect taes, its
functions should not -e unduly delayed or hampered -y incidental matters.
ec. 1)0 of the National !nternal "evenue Code %N!"C& of (933 %now ec. 119, N!"C of (993&
provides for the prescriptive period for filing a court proceeding for the recovery of ta
ec. 1)0. ecover$ of ta# erroneousl$ or illegall$ collected . B No suit or
proceeding shall -e maintained in any court for the recovery of any national
internal revenue ta hereafter alleged to have -een erroneously or illegally
assessed or collected, or of any penalty claimed to have -een collected without
authority, or of any sum alleged to have -een ecessive or in any manner
wrongfully collected, until a claim for refund or credit has -een duly filed with
the Commissioner5 -ut such suit or proceeding may -e maintained, whether or not
such ta, penalty, or sum has -een paid under protest or duress.
!n any case, no such suit or proceedings shall )egun after the e#piration of t*o
$ears fro! the date of pa$!ent of the ta# or penalt$ regardless of an$
supervening cause that !a$ arise after pa$!ent 5 Provided ho*ever , That theCommissioner may, even without a written claim therefor, refund or credit any
ta, where on the face of the return upon which payment was made, such payment
appears clearly to have -een erroneously paid. %;mphasis supplied&
>hen the Acting Commissioner of !nternal "evenue issued "HC 3*, changing the
prescriptive period of two years to ten years on claims of ecess :uarterly income ta payments,
such circular created a clear inconsistency with the provision of ec. 1)0 of (933 N!"C. !n so
doing, the #!" did not simply interpret the law5 rather it legislated guidelines contrary to the
statute passed -y Congress.
!t -ears repeating that "evenue memorandumcirculars are considered administrative rulings %in
the sense of more specific and less general interpretations of ta laws& which are issued from
time to time -y the Commissioner of !nternal "evenue. !t is widely accepted that the
interpretation placed upon a statute -y the eecutive officers, whose duty is to enforce it, is
entitled to great respect -y the courts. Nevertheless, such interpretation is not conclusive and will
-e ignored if judicially found to -e erroneous.
20
Thus, courts will not countenance administrativeissuances that override, instead of remaining consistent and in harmony with the law they see$ to
apply and implement. 21
!n the case of People vs. +i!, 22 it was held that rules and regulations issued -y administrative
officials to implement a law cannot go -eyond the terms and provisions of the latter.
Appellant contends that ection 1 of 6A No. )3( is void -ecause it is not only
inconsistent with -ut is contrary to the provisions and spirit of Act. No 400) asamended, -ecause whereas the prohi-ition prescri-ed in said 6isheries Act was for
any single period of time not eceeding five years duration, 6A No )3( fied
no period, that is to say, it esta-lishes an a-solute -an for all time. This
discrepancy -etween Act No. 400) and 6A No. )3( was pro-a-ly due to an
oversight on the part of ecretary of Agriculture and Natural "esources. f
course, in case of discrepancy, the -asic Act prevails, for the reason that the
regulation or rule issued to implement a law cannot go -eyond the terms and
provisions of the
latter. . . . !n this connection, the attention of the technical men in the offices of
8epartment 7eads who draft rules and regulation is called to the importance and
necessity of closely following the terms and provisions of the law which they
To help raise funds for the 'hilippine Tu-erculosis ociety, the 8irector of 'osts shall
order for the period from August nineteen to eptem-er thirty every year the printing and
issue of semipostal stamps of different denominations with face value showing the
regular postage charge plus the additional amount of five centavos for the said purpose,
and during the said period, no mail matter shall -e accepted in the mails unless it -ears
such semipostal stamps= Provided , That no such additional charge of five centavos shall
-e imposed on newspapers. The additional proceeds realiJed from the sale of the semi
postal stamps shall constitute a special fund and -e deposited with the National Treasury
to -e epended -y the 'hilippine Tu-erculosis ociety in carrying out its no-le wor$ to
prevent and eradicate tu-erculosis.
The respondent 'ostmaster /eneral, in implementation of the law, thereafter issued four %4&administrative orders num-ered ) %une 10, (9*&, 3 %August 9, (9*&, 9 %August 1, (9*&, and
(0 %uly (*, (9+0&. All these administrative orders were issued with the approval of the
respondent ecretary of 'u-lic >or$s and Communications.
The pertinent portions of Adm. rder ) read as follows=
uch semipostal stamps could not -e made availa-le during the period from August (9
to eptem-er )0, (9*3, for lac$ of time. 7owever, two denominations of such stamps,one at G* *G centavos and another at G(0 *G centavos, will soon -e released for use -y
the pu-lic on their mails to -e posted during the same period starting with the year (9*.
8uring the period from August (9 to eptem-er )0 each year starting in (9*, no mail
matter of whatever class, and whether domestic or foreign, posted at any 'hilippine 'ost
ffice and addressed for delivery in this country or a-road, shall -e accepted for mailing
unless it -ears at least one such semipostal stamp showing the additional value of five
centavos intended for the 'hilippine Tu-erculosis ociety.
!n the case of secondclass mails and mails prepaid -y means of mail permits or
impressions of postage meters, each piece of such mail shall -ear at least one such semi
to the fivecentavo etra charge intended for said society. The total etra charge thus
received shall -e entered in the same official receipt to -e issued for the postage
collected, as in su-paragraph (.
). etered !ail . B 6or each piece of mail matter impressed -y postage meter under
metered mail permit issued -y this #ureau, the etra charge of five centavos for said
society shall -e collected in cash and an official receipt issued for the total sum thus
received, in the manner indicated in su-paragraph (.
4. "usiness repl$ cards and envelopes. B Dpon delivery of -usiness reply cards and
envelopes to holders of -usiness reply permits, the fivecentavo charge intended for said
society shall -e collected in cash on each reply card or envelope delivered, in addition to
the re:uired postage which may also -e paid in cash. An official receipt shall -e issued
for the total postage and total etra charge received, in the manner shown in su-paragraph
(.
*. ails entitled to fran5ing privilege. B /overnment agencies, officials, and other
persons entitled to the fran$ing privilege under eisting laws may pay in cash such etra
charge intended for said society, instead of affiing the semipostal stamps to their mails,
provided that such mails are presented at the postoffice window, where the fivecentavoetra charge for said society shall -e collected on each piece of such mail matter. !n such
case, an official receipt shall -e issued for the total sum thus collected, in the manner
stated in su-paragraph (.
Hail under permits, metered mails and fran$ed mails not presented at the postoffice
window shall -e affied with the necessary semipostal stamps. !f found in mail -oes
without such stamps, they shall -e treated in the same way as herein provided for other
mails.
Adm. rder 9, amending Adm. rder ), as amended, eempts G/overnment and its Agencies and
The five centavo charge levied -y "epu-lic Act (+)*, as amended, is in the nature of an ecise
ta, laid upon the eercise of a privilege, namely, the privilege of using the mails. As such the
o-jections levelled against it must -e viewed in the light of applica-le principles of taation.
To -egin with, it is settled that the legislature has the inherent power to select the su-jects of
taation and to grant eemptions.4 This power has aptly -een descri-ed as Gof wide range and
flei-ility.G* !ndeed, it is said that in the field of taation, more than in other areas, the legislature
possesses the greatest freedom in classification.+ The reason for this is that traditionally,
classification has -een a device for fitting ta programs to local needs and usages in order to
achieve an e:uita-le distri-ution of the ta -urden.3
That legislative classifications must -e reasona-le is of course undenied. #ut what the petitioner
asserts is that statutory classification of mail users must -ear some reasona-le relationship to the
end sought to -e attained, and that a-sent such relationship the selection of mail users is
constitutionally impermissi-le. This is altogether a different proposition. As eplained
in Co!!on*ealth v. +ife Assurance Co.=
>hile the principle that there must -e a reasona-le relationship -etween classification
made -y the legislation and its purpose is undou-tedly true in some contets, it has no
application to a measure whose sole purpose is to raise revenue ... o long as theclassification imposed is -ased upon some standard capa-le of reasona-le
comprehension, -e that standard -ased upon a-ility to produce revenue or some other
legitimate distinction, e:ual protection of the law has -een afforded. ee Allied tores of
hio, !nc. v. #owers, supra, )* D.. at *13, 39 . Ct. at 44(5 #rown 6orman Co. v.
afford an ade:uate ground for classification. The same considerations may induce the legislature
to impose a flat ta which in effect is a charge for the transaction, operating e:ually on all
persons within the class regardless of the amount involved.(+ As Hr. ustice 7olmes said in
sustaining the validity of a stamp act which imposed a flat rate of two cents on every P(00 face
value of stoc$ transferred=
ne of the stoc$s was worth P)0.3* a share of the face value of P(00, the other P(31. The
ine:uality of the ta, so far as actual values are concerned, is manifest. #ut, here again
e:uality in this sense has to yield to practical considerations and usage. There must -e a
fied and indisputa-le mode of ascertaining a stamp ta. !n another sense, moreover,
there is e:uality. >hen the taes on two sales are e:ual, the same num-er of shares is
sold in each case5 that is to say, the same privilege is used to the same etent. Ialuation isnot the only thing to -e considered. As was pointed out -y the court of appeals, the
familiar stamp ta of 1 cents on chec$s, irrespective of income or earning capacity, and
many others, illustrate the necessity and practice of sometimes su-stituting count for
that mails deposited during the period August (9 to eptem-er )0 of each year in mail -oes
without the stamp should -e returned to the sender, if $nown, otherwise they should -e treated as
nonmaila-le.
!t is true that the law does not epressly authoriJe the collection of five centavos ecept through
the sale of antiT# stamps, -ut such authority may -e implied in so far as it may -e necessary to
prevent a failure of the underta$ing. The authority given to the 'ostmaster /eneral to raise funds
through the mails must -e li-erally construed, consistent with the principle that where the end is
re:uired the appropriate means are given.(9
The antiT# stamp is a distinctive stamp which shows on its face not only the amount of the
additional charge -ut also that of the regular postage. !n the case of -usiness reply cards, for
instance, it is o-vious that to re:uire mailers to affi the antiT# stamp on their cards would -e to
ma$e them pay much more -ecause the cards li$ewise -ear the amount of the regular postage.
!t is li$ewise true that the statute does not provide for the disposition of mails which do not -ear
the antiT# stamp, -ut a declaration therein that Gno mail matter shall -e accepted in the mails
unless it -ears such semipostal stampG is a declaration that such mail matter is nonmaila-le
within the meaning of section (9*1 of the Administrative Code. Administrative rder 3 of the
'ostmaster /eneral is -ut a restatement of the law for the guidance of postal officials andemployees. As for Administrative rder 9, we have already said that in listing the offices and
entities of the /overnment eempt from the payment of the stamp, the respondent 'ostmaster
/eneral merely o-served an esta-lished principle, namely, that the /overnment is eempt from
taation.
ACC"8!N/?<, the judgment a 6uo is reversed, and the complaint is dismissed, without
pronouncement as to costs.
Concepcion, C.J., e$es, J.".+., 3izon, a5alintal, Sanchez, Angeles and Capistrano,
(. The ne#us of the present controversy is the apparent conflict -etween the "evised Charter of
the City of Hanila and the ?ocal Ta Code on the manner of pu-lishing a ta ordinance enacted
-y the Hunicipal #oard of Hanila. 6or, while ection (3 of the "evised Charter provides=
9ach proposed ordinance shall -e pu-lished in two daily newspapers of general
circulation in the city, and shall not -e discussed or enacted -y the #oard until
after the third day following such pu-lication. 9ach approved ordinance
shall -e pu-lished in two daily newspapers of general circulation in the city,
within ten days after its approval5 and shall ta$e effect and -e in force on and after
the twentieth day following its pu-lication, if no date is fied in the ordinance.
ection 4) of the ?ocal Ta Code directs=
>ithin ten days after their approval , certified true copies of all provincial, city,
municipal and -arrioordinances lev$ing or i!posing ta#es, fees or other
charges shall -e pu-lished for three consecutive days in a newspaper or
pu-lication widely circulated within the jurisdiction of the local government, or
posted in the local legislative hall or premises and in two other conspicuous
places within the territorial jurisdiction of the local government. !n either case,
copies of all provincial, city, municipal and -arrio ordinances shall -e furnishedthe treasurers of the respective component and mother units of a local government
for dissemination.
!n other words, while the "evised Charter of the City of Hanila re:uires pu-lication )efore the
enactment of the ordinance and after the approval thereof in two daily newspapers of general
circulation in the city, the ?ocal Ta Code only prescri-es for pu-lication after the approval of
Gordinances lev$ing or i!posing ta#es, fees or other chargesG either in a newspaper or
pu-lication widely circulated within the jurisdiction of the local government or -y posting the
ordinance in the local legislative hall or premises and in two other conspicuous places within the
territorial jurisdiction of the local government. 'etitioners compliance with the ?ocal Ta Code
rather than with the "evised Charter of the City spawned this litigation.
thirty %)0& days. #ut, the petition -elow plainly shows that the controversy -etween the parties is
deeply rooted in a pure :uestion of law= whether it is the "evised Charter of the City of Hanila
or the ?ocal Ta Code that should govern the pu-lication of the ta ordinance. !n other words,
the dispute is sharply focused on the applica-ility of the "evised City Charter or the ?ocal Ta
Code on the point at issue, and not on the legality of the imposition of the ta. ;haustion of
administrative remedies -efore resort to judicial -odies is not an a-solute rule. !t admits of
eceptions. >here the :uestion litigated upon is purely a legal one, the rule does not
apply. 11 The principle may also -e disregarded when it does not provide a plain, speedy and
ade:uate remedy. !t may and should -e relaed when its application may cause great and
irrepara-le damage. 12
). !t is maintained -y private respondent that the su-ject ordinance is not a Gta ordinance,G -ecause the imposition of rentals, permit fees, tolls and other fees is not strictly a taing power
-ut a revenueraising function, so that the procedure for pu-lication under the ?ocal Ta Code
finds no application. The pretense -ears its own mar$s of fallacy. 'recisely, the raising of
revenues is the principal o-ject of taation. Dnder ection *, Article F! of the New Constitution,
G;ach local government unit shall have the power to create its own sources of revenue and to
levy taes, su-ject to such provisions as may -e provided -y law.G 1: And one of those sources of
revenue is what the ?ocal Ta Code points to in particular= G?ocal governments may collect fees
or rentals for the occupancy or use of pu-lic mar$ets and premises .G 14 They can provide for
and regulate mar$et stands, stalls and privileges, and, also, the sale, lease or occupancy thereof.
They can license, or permit the use of, lease, sell or otherwise dispose of stands, stalls or
mar$eting privileges. 1<
!t is a fee-le attempt to argue that the ordinance violates 'residential 8ecree No. 3, dated
eptem-er )0, (931, insofar as it affects livestoc$ and animal products, -ecause the said decree
prescri-es the collection of other fees and charges thereon Gwith the eception of antemortem
and postmortem inspection fees, as well as the delivery, stoc$yard and slaughter fees as may -e
authoriJed -y the ecretary of Agriculture and Natural "esources.G 16Clearly, even the eception
clause of the decree itself permits the collection of the proper fees for livestoc$. And the ?ocal
Ta Code %'.8. 1)(, uly (, (93)& authoriJes in its ection )(= G?ocal governments may collect
fees for the slaughter of animals and the use of corrals G
ection ( of said rdinance No. +*)3 4 prohi-its aliens from -eing employed or to engage or
participate in any position or occupation or -usiness enumerated therein, whether permanent,temporary or casual, without first securing an employment permit from the Hayor of Hanila and
paying the permit fee of '*0.00 ecept persons employed in the diplomatic or consular missions
of foreign countries, or in the technical assistance programs of -oth the 'hilippine /overnment
and any foreign government, and those wor$ing in their respective households, and mem-ers of
religious orders or congregations, sect or denomination, who are not paid monetarily or in $ind.
'residential 'roclamation No. 4)0 of August (0, (9)9, and the warehouse erected
thereon from and after cto-er 1*, (9++, with interests thereon at the legal rate
from the date of the filing of the complaint and the costs of the suit.
The defendants appealed to the Court of Appeals which however certified the case to Ds as one
involving pure :uestions of law, pursuant to ec. (3, ".A. 19+.
!n this appeal, C;#D assigns five %*& errors 1< imputed to the trial court which may -e
synopsiJed into whether N8C is eempted from payment of the real estate taes on the land
reserved -y the 'resident for warehousing purposes as well as the warehouse constructed
thereon, and in the affirmative, whether N8C may recover in refund unprotested real estate taes
it paid from (94 to (930.
n the first :uestion, C;#D insists on taa-ility of the su-ject properties, claiming that no law
grants N8C eemption from real estate taes, and that N8C, as recipient of the land reserved -y
the 'resident pursuant to ec. ) of the 'u-lic ?and Act, 16 is lia-le for payment or ordinary %real
estate& taes under ec. ((* therefore. C;#D contends that the properties have ceased to -e ta
eempt under the Assessment ?aw. 1= when the government disposed of them in favor of N8C,
and even assuming that title to the land remains with the government %ownership -eing the -asis
for real estate taa-ility under the Assessment ?aw&, the upreme Court rulings esta-lishincreasing rather than GownershipG as -asis for real estate ta lia-ility.
n the other hand, N8C maintains the ec. ) of the Assessment ?aw, which eempts properties
owned -y the "epu-lic from real estate ta, includes su-ject properties in the eemption. !t
invo$es the ruling in "oard of Assess!ent Appeals vs. CTA & N;SA 1; which held that properties
of N>A, a /CC, were eempt from real estate ta -ecause ec. ) of the Assessment ?aw
applied to all government properties whether held in governmental or proprietary capacity. N8C
rejects the applica-ility of ec. ((* of the 'u-lic ?and Act to the su-ject land, claiming that
provision contemplates dispositions of pu-lic land with eventual transfer of title. !n addition,
N8C -elieves that it is neither a grantee of a pu-lic land nor an applicant within the purview of
ec ((*. All lands granted -y virtue of this Act, including homesteads upon which
final proof has not -een made or approved shall, even though and while the title
remains in the tate, -e su-ject to the ordinary taes, which shall -e paid -y the
grantee or the applicant, -eginning with the year net following the one in which
the homestead application has -een filed, or the concession has -een approved, or
the contract has -een signed, as the case may -e, on the -asis of the value fied in
such filing, approval or signing of the application, concession or contract.
The essential :uestion then * '(-'() l"#$ )(()($ +u)u"#- -o S(/. ;: ")( /o+)('(#$($
*# S(/. 11< "#$, -'()(o)(, -""l(.
ection ((* of the 'u-lic ?and Act should -e treated as an eception to Art. ), par. %a&, of the
Assessment ?aw. >hile ordinary pu-lic lands are ta eempt -ecause title thereto -elongs to the
"epu-lic, ec. ((* su-jects them to real estate ta even -efore ownership thereto is transferred in
the name of the -eneficiaries. ec. ((* comprehends three %)& modes of disposition of ?ands
under the 'u-lic ?and Act, to wit= homestead, concession, and contract.
?ia-ility to real property taes under ec. ((* is predicated on %a& filing of homestead
application, %-& approval of concession and, %c& signing of contract. ignificantly, without these
words, the date of the accrual of the real estate ta would -e indeterminate. ince N8C is not ahomesteader and no GcontractG %-ilateral agreement& was signed, it would appear, then, that
reservation under ec. ), -eing a unilateral act of the 'resident, falls under GconcessionG.
GConcessionG as a technical term under the 'u-lic ?and Act is synonymous with GalienationG and
GdispositionG, and is defined in ec. (0 as Gany of the methods authoriJed -y this Act for the
ac:uisition, lease, use, or -enefit of the lands of the pu-lic domain other than tim-er or mineral
lands.G ?ogically, where ec. ((* contemplates authoriJed methods for ac:uisition, lease, use, or
-enefit under the Act, the taa-ility of the land would depend on whether reservation under ec.
) is one such method of ac:uisition, etc. Tersely put, is reservation synonymous with
alienationR r, are the two terms antithetical and mutually eclusiveR !ndeed, reservation
connotes retention, while concession %alienation& signifies cession.