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a. Why must a statute be construed as a whole? (Catiis v. Court of Appeals, G.R. No. 153979) p 148
A statute is passed a whole not in parts or sections and is animated by one general purpose and intent. And it
is this purpose of the statute as whole that is subject of ascertainment. Each part or section should be
constructed in connection with every other part and section so as to produce a harmonious whole.
Facts: Petitioner filed a letter-complaint dated May 28, 2001 against private respondents Reynaldo A. Patacsil,
Enrico D. Lopez, Luzviminda A. Portuguez and a certain Margielyn Tafalla before the Office of the City
Prosecutor of Quezon City, for violation of Art. 315, No. 2(a) of the Revised Penal Code in relation to Presidential
Decree No. 1689 (syndicated estafa) and other related offenses. Private respondents, except for Tafalla, filed
their joint counter-affidavits denying the charges against them.

On October 10, 2001, Assistant City Prosecutor Alessandro D. Jurado issued a Resolution finding the existence
of a probable cause for syndicated Estafa against private respondents and Tafalla with no bail recommended.
The Resolution was approved by City Prosecutor Claro A. Arellano.

An Information was filed on the same day by Prosecutor Jurado against private respondents and Tafalla before
the Regional Trial Court of Quezon City and raffled off to the sala of Honorable Judge Lucas Bersamin.

That on or about the 3rd week of January 2000 or subsequent thereto in Quezon City and within the jurisdiction
of this Honorable Court, the above-named accused, conspiring and confederating together and all of them
mutually helping and aiding one another in a syndicated manner consisting of five (5) or more persons through
corporations registered with the Securities and Exchange Commission (SEC) and/or unregistered foreign entities
with intention of carrying out the unlawful or illegal act, transaction, enterprise or scheme, with intent to gain and
by means of fraud and deceit, did then and there willfully, unlawfully and feloniously defraud REGINO SY CATIIS
and several other persons in the following manner, to wit: by falsely or fraudulently pretending or representing,
in a transaction or series of transactions, which they made with the Complainant and the public in general to the
effect that they were in a legitimate business of foreign exchange trading successively or simultaneously
operating under the following name and style of Asia Profits Philippines, Incorporation, Winggold Management
Philippines Incorporated, Belkin Management Consultancy, Inc. and/or Belkin Profits Limited or other
unregistered foreign entities induced and succeeded in inducing complainant and several other persons to give
and deliver and in fact, the latter and said persons gave and delivered to said accused the amount of at least
US$ 123,461.14 or its equivalent in Philippine Pesos on the strength of said manifestations and representations,
the accused knowing fully well that the above-named corporations registered with the SEC and/or those
unregistered foreign entities are not licensed nor authorized to engage in foreign exchange trading corporations
and that such manifestations and representations to transact in foreign exchange were false and fraudulent that
resulted to the damage and prejudice of the complainant and other persons and that the defraudation pertains
to funds solicited from the public in general by such corporations/associations.

On November 7, 2001, Judge Lucas P. Bersamin issued an Order finding probable cause against all the accused
and approved the recommendation of the City Prosecutor that the charge be non-bailable. The corresponding
warrants of arrest were issued.

A return on the warrant of arrest was made by PO3 Joselito M. Coronel, PNP Criminal Investigation and
Detection Group, Camp Crame, Quezon City, with the information that except for Margielyn Tafalla, who
remained at large, all other accused were already detained at the Makati City Jail.

On November 12, 2001, a notice of hearing was issued by Judge Bersamin setting the case for arraignment on
November 20, 2001. Private respondents on the same day filed an urgent motion to fix bail.

On November 20, 2001, private respondents, when arraigned, entered pleas of not guilty. The Prosecution was
required to file their comment/opposition on private respondents motion to fix bail which they did through the
Private Prosecutor with the conformity of Assistant City Prosecutor Arthur O. Malabaguio.
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On December 18, 2001, Judge Bersamin issued an Order reconsidering his earlier Order of November 7, 2001
by declaring that the offense charged is bailable. In finding that the accused are entitled to bail.

Issue:

Whether Judge Bersamin is correct in finding that the crime charged is bailable despite that the imposable
penalty ranges from reclusion temporal to reclusion perpetua?

Held:

The Court held that since the crime charged was not committed by a syndicate as defined under the law, the
penalty of life imprisonment to death cannot be imposed on private respondents. Judge Bersamin is correct when
he ruled that private respondents could only be punished with reclusion temporal to reclusion perpetua in case
of conviction since the amount of the fraud exceeds P100,000.00.

The Court further held that Sections 8 and 9 of Rule 110 of the Revised Rules of Criminal Procedure, which took
effect on December 1, 2000, provide:

Sec. 8. Designation of the offense. The complaint or information shall state the designation of the offense
given by the statute, aver the acts or omissions constituting the offense, and specify its qualifying and aggravating
circumstances. If there is no designation of the offense, reference shall be made to the section or subsection of
the statute punishing it.

Sec. 9. Cause of the accusations. The acts or omissions complained of as constituting the offense and the
qualifying and aggravating circumstances must be stated in ordinary and concise language and not necessarily
in the language used in the statute but in terms sufficient to enable a person of common understanding to know
what offense is being charged as well as its qualifying and aggravating circumstances and for the court to
pronounce judgment.

Clearly, it is now a requirement that the aggravating as well as the qualifying circumstances be expressly and
specifically alleged in the complaint or information. Otherwise, they cannot be considered by the trial court in
their judgment, even, if they are subsequently proved during trial. A reading of the Information shows that there
was no allegation of any aggravating circumstance, thus Judge Bersamin is correct when he found that the lesser
penalty, i.e., reclusion temporal, is imposable in case of conviction.

b. What is optima statuti interpretatix est ipsum statuum? (Serana v. Sandiganbayan G.R. No. 162059)
The best interpreter of the statute is the statute itself. Hence, in the construction of statutes, what is of prevailing
importance is to discover the legislative intent why the law is enacted. This intent is primarily determined from
the language of the statute.

FACTS: Petitioner Hannah Eunice D. Serana was a senior student of the UP-Cebu. She was appointed by then
President Joseph Estrada on December 21, 1999 as a student regent of UP, to serve a one-year term starting
January 1, 2000 and ending on December 31, 2000. On September 4, 2000, petitioner, with her siblings and
relatives, registered with the SEC the Office of the Student Regent Foundation, Inc. (OSRFI). One of the projects
of the OSRFI was the renovation of the Vinzons Hall Annex. President Estrada gave P15,000,000.00 to the
OSRFI as financial assistance for the proposed renovation. The source of the funds, according to the
information, was the Office of the President. The renovation of Vinzons Hall Annex failed to materialize.The
succeeding student regent, Kristine Clare Bugayong, and Christine Jill De Guzman, Secretary General of the
KASAMA sa U.P., a system-wide alliance of student councils within the state university, consequently filed a
complaint for Malversation of Public Funds and Property with the Office of the Ombudsman. The Ombudsman
found probable cause to indict petitioner and her brother Jade Ian D. Serana for estafa and filed the case to the
Sandiganbayan. Petitioner moved to quash the information. She claimed that the Sandiganbayan does not have
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any jurisdiction over the offense charged or over her person, in her capacity as UP student regent. The
Sandiganbayan denied petitioners motion for lack of merit. Petitioner filed a motion for reconsideration but was
denied with finality.

ISSUE: (1) Whether or not the Sandiganbayan has jurisdiction over an estafa case? (2) Whether or not petitioner
is a public officer with Salary Grade 27?

DOCTRINE: (1) Section 4(B) of P.D. No. 1606 which defines the jurisdiction of the Sandiganbayan reads: Other
offenses or felonies whether simple or complexed with other crimes committed by the public officials and
employees mentioned in subsection (a) of this section in relation to their office. (2) While the first part of Section
4(A) covers only officials with Salary Grade 27 and higher, its second part specifically includes other executive
officials whose positions may not be of Salary Grade 27 and higher butwho are by express provision of law
placed under the jurisdiction of the said court.

RATIONALE: (1) The rule is well-established in this jurisdiction that statutes should receive a sensible
construction so as to avoid an unjust or an absurd conclusion. Every section, provision or clause of the statute
must be expounded by reference to each other in order to arrive at the effect contemplated by the legislature.
Evidently, from the provisions of Section 4(B) of P.D. No. 1606, the Sandiganbayan has jurisdiction over other
felonies committed by public officials in relation to their office. Plainly,
estafa is one of those other felonies. The jurisdiction is simply subject to the twin requirements that (a) the offense
is committed by public officials and employees mentioned in Section 4(A) of P.D. No. 1606, as amended, and
that (b) the offense is committed in relation to their office.

(2) Petitioner falls under the jurisdiction of the Sandiganbayan, even if she does not have a salary grade 27, as
she is placed thereby express provision of law. Section 4(A)(1)(g) of P.D. No. 1606 explicitly vested the
Sandiganbayan with jurisdiction over Presidents, directors or trustees, or managers of government-owned or
controlled corporations, state universities or educational institutions or foundations. Petitioner falls under this
category. As the Sandiganbayan pointed out, the BOR performs functions similar to those of a board of trustees
of a non-stock corporation. By express mandate of law, petitioner is, indeed, a public officer as contemplated by
P.D. No. 1606. By express mandate of law, petitioner is, indeed, a public officer as contemplated by P.D. No.
1606.

c. Why should apparently conflicting provisions of a statute harmonized instead of outrightly

declaring one provision invalid against the other?
Each provision in the statute is inserted for a definite reason. The one who drafted the law may have a good
reason for inserting provision, which the reader may not see or appreciate. The courts therefore have the duty
to reconcile or harmonize so far as practicable the various parts and provisions of a statute, including the
conflicting provisions thereof, so as to make them consistent, harmonious and sensible.
d. What is the rule regarding conflicting special and general provisions found in the same statute?
Special provisions prevail over the general provisions. HOWEVER, if it is possible to harmonize the general and
special provisions, said rule shall NOT apply.
Exceptions: General law > Special Law, if the general law treats the subject in particular and the special law
refers to it in general. AND, when the legislature intended the general enactment to cover the whole subject
and to repeal all prior laws inconsistent therewith.
e. Why should statutes be given a construction that is in harmony with the Constitution?
To avoid conflict and constitutional doubt. As the Constitution is the fundamental law to which all laws are
subservient, a statute should not be interpreted independently of the Constitution. The statute should be
construed in harmony and not in violation of the fundamental law. It is presumed that the legislature in enacting
a law, have adhered to constitutional limitations.
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When a statute is susceptible of two constructions, one constitutional and the other unconstitutional, that
construction in favor of its constitutionality shall be adopted and the other that will render it invalid shall be
rejected.
f. What are statutes in pari materia?
Statutes are in pari materia when they relate to the same person or thing, or have the same purpose or object,
or cover the same specific or particular subject matter.
g. How are statutes in pari materia construed? (Natividad v. Felix G.R. No. 111616)
All statutes relating to the same subject, or having the same purpose, should be read and construed together
as if they constituted one law. They shall then be construed and harmonized with the existing law. The rule is
found on the assumption that in enacting a law, the legislature has in mind the previous statutes relating to the
same subject matter, and in the absence of any express repeal or amendment the new statute is deemed
enacted in accordance with legislative policy embodied in the previous statutes that it enacted.
Facts:

PNP requested Tarlac Provincial Prosecutor to investigate Mayor Natividads involvement in the death of Lourdes
Aquinos husband, Severino Aquino, at the Ramos Police Station.

During the investigation, PNP filed another complaint with the Tarlac Municipal Circuit Court, which directed Mayor
Natividads arrest with bail. He posted bail with the Manila RTC, which later issued an order recalling warrant. After
conducting the preliminary investigation, MCTC determined that there was probable cause to hold Natividad for murder
with bail.

The Provincial Prosecutor approved the filing of information against Natividad and Llerina in the Tarlac RTC (where Hon.
Felix was the judge).Warrant of arrest was issued.

Upon seeing that the MCTC judge failed to conduct the second staged in the preliminary investigation, RTC recalled the
warrant and remanded the case for further preliminary investigation. A panel of prosecutors later held that probable
cause exists. The information was amended, additionally charging Cabaong, Llerina and Millado. An arrest warrant was
issued without bail.

Mayor Natividad alleged that there was no preliminary investigation, and that Hon. Felix had no jurisdiction because it
was the Ombudsman, not the provincial prosecutor, who had jurisdiction to conduct the preliminary investigation and
that the proper court was the Sandiganbayan. Hon.Felix denied Mayor Natividads motion, and committed the latter to
Tarlac Penal Colony.

Issue:

Whether or not Hon. Felix committed grave abuse off discretion in admitting the amended information filed by the
provincial fiscal and in directing Natividads arrest

Held:

No.

Ratio:

The latest law on Sandiganbayan (PD 1606) states that there are 2 requirements for an offense to fall under the
Sandiganbayans jurisdiction: 1) offense committed by a public officer must be in relation to his office, and 2) that the
penalty be higher that prision correccional or imprisonment for 6 years or a fine of P6, 000.The 2ndrequirement was met,
but the 1strequirement wasnt because the offense charged was murder. The offense could not have been committed in
the performance of the mayors responsibility to maintain peace and order. The alleged act doesnt fall under any of the
functions of the municipal mayor in the Local Government Code. Assuming arguendo that the 1st requirement was
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satisfied, Ombudsman has only primary jurisdiction over cases cognizable by the Sandiganbayan, not exclusive original
jurisdiction. The Ombudsman is not an exclusive authority but a concurrent authority with similarly authorized agencies.
He may take over the investigation at any stage from any investigative government agency. His investigatory powers are
but directory in nature. (Also, Natividad wasnt denied due process as he has been afforded every opportunity to present
his counter-affidavit. He was notified, but it was he who did not appear.

h. What happens when conflicting laws on the same subject cannot be reconciled or harmonized?
If two or more laws on the same subject cannot possibly be reconciled or harmonized, one has to give way in
favor of the other. There cannot be two conflicting laws on the same subject. The earlier one must yield to the
later one, it being the later expression of the legislative will.
i. What is a general statute?
It is a statute which relates to persons, entities, or things as a class or operates equally or alike upon all of a
class, omitting no persons, entity, or thing belonging to a class. (Ex: The Family Code)
j. What is a special statute?
It is a statute, which relates to particular persons, entities or things of a class. (Ex: Child and Youth Welfare
Law)
k. How are general and special statutes to be construed when they affect the same subject matter?
The special statutes must prevail since it evinces the legislative intent more clearly than that of a general statute.
l. What is a reference statute?
It is a statute, which refers to other statutes and makes them applicable to the subject of legislation. It is used
to avoid unnecessary repetitions. It should be construed as to harmonize with, and give effect to, the adopted
statute.
m. What is a supplemental statute?
A supplemental statute is intended to supply deficiencies in an existing statutes and to add to, complete or
extend the statute without changing or modifying its original text. The original statute and the supplemental act
should be construed together in its entirety.
n. What is a reenacted statute?
They are the statutes that reenact provisions of an earlier statute. The provisions in the earlier statutes are
reproduced in the same words or substantially the same words. The courts will therefore follow the construction,
which adopted statute previously received.
o. What is strict construction?
Strict construction is that construction according to the letter of a statute, which recognizes nothing that is not
expressed, takes the language used in its exact meaning, and admits no equitable consideration.

p. What is liberal construction?

Liberal construction is that construction which expands the meaning of a statute to meet case which are clearly
within the spirit or reason thereof or within the evil which the statute was designed to remedy, or which give
the statute its generally accepted meaning to the end that most comprehensive application thereof may be
accorded, without being inconsistent with its language or doing violence to any of its terms.
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Liberal construction means that the words should receive a fair and reasonable interpretation, so as to attain
the intent, spirit and purpose of the law.
q. How are penal statutes construed? (Resterio v. PoP G.R. No. 177438)
Penal or criminal laws are construed against the state and liberally in favor of the accused, cannot be enlarged
or extended by intendment, implication, or any equitable consideration. The purpose of strict construction is not
to enable a guilty person to escape punishment through a technicality but to provide a precise definition of
forbidden acts.
FACTS: In May 2002, Amada Resterio issued a Chinabank check worth P50k to Bernardo Villadolid. When
the check became due, Bernardo tried to encash the check but it was dishonored because the account was
closed. Thereafter, Bernardo sent two notices of dishonor to Resterio. The notices were sent via registered
mail. Resterio however failed to make good the said check. Hence, Bernardo filed a case against Resterio
for violation of Batas Pambansa Blg. 22 (BP 22; Anti-Bouncing Checks Law).
During trial, Bernardo presented the registry return receipts as proof that the notices of dishonor were sent
to and received by Resterio.
Resterio was convicted by the trial court and her conviction was affirmed by the Court of Appeals.
On appeal, Resterio argued that:
1. she is not the owner of the check she issued nor does she own the bank account against which the check
was drawn;
2. she never received a notice of dishonor.
ISSUES:
1. Whether or not BP 22 applies if the issuer of the check is not the account owner/check owner.
2. Whether or not the issuer of a bouncing check may be convicted without proof that a notice of dishonor
was sent to her.
HELD:
1. Yes, it applies. BP 22 does not make a distinction. The law did not look either at the actual ownership of
the check or of the account against which it was made, drawn, or issued, or at the intention of the drawee,
maker, or issuer. As such, even if Resterio does not own the check she issued, the mere fact she issued a
worthless check, she can still be prosecuted for violation of BP 22. However, as discussed below, her guilt
was not proven.
2. No. There must be sufficient proof that a notice of dishonor was sent to the issuer of the check. Further,
the notice of dishonor must be in writing. Oral or verbal notice is not sufficient. The notice must be actually
received by none other than the issuer. The reason for this rule is that the law gives her a chance to make
good the check. Without such notice, she is being deprived of that chance. Further, the giving of notice
gives rise to the presumption that the issuer has knowledge of the insufficiency of funds an element of the
crime under BP 22. And if despite such knowledge, the issuer refuses or fails to pay the amount of the
check within 5 days from the receipt of the notice of dishonor, the issuer becomes liable for violation of BP
22.
r. How are statutes authorizing expropriations construed?
It must be strictly construed against expropriating authority and liberally in favor of the property owners.
Exercise of right of eminent domain, whether by state or by its authorized agents is necessarily in derogation
of private rights, and the rule in that case is that the authority must be strictly construed; right to freehold
inhabitants.
s. How are statutes granting privileges construed?
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It must be strictly construed. Strict construction requires that those who invoke a special privilege granted by
the statute must comply strictly with its provisions.
t. How are naturalization laws construed?
These are strictly construed against the applicant because the right of an alien to become a citizen by
naturalization is merely a statutory right.
u. How are statutes imposing taxes and custom duties construed? (Marinduque Iron Mines Agents, Inc.
v. Hinabangan Samar G.R. No. 18924)
Statutes imposing taxes and custom duties are to be construed most strongly against the government and in
favor of the subjects or citizens, because burdens are not to be imposed nor to be presumed to be imposed
beyond what statutes expressly and clearly import.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-18924 June 30, 1964

MARINDUQUE IRON MINES AGENTS, INC., petitioner-appellee,

vs.
THE MUNICIPAL COUNCIL OF THE MUNICIPALITY OF HINABANGAN, PROVINCE OF SAMAR, ET
AL.,respondents-appellants.

Santiago de los Reyes and Francisco C. Catral for petitioner-appellee.

Eliseo de Veyra and Juan Figueroa for defendants-appellants.

REYES, J.B.L., J.:

Appeal from a declaratory decision of the Court of First Instance of Manila declaring Municipal Ordinance No. 7, Series of
1960, of the Municipality of Hinabangan, Samar, null and void.

On June 27, 1960, the Municipality of Hinabangan, through its duly constituted Municipality Council, enacted Ordinance
No. 7, Series of 1960, which in full reads as follows:

An Ordinance Imposing a Municipal License Tax On the Gross Outputs of the Mines and Other Business; Its
Imposition and Penalties Thereof Within the Jurisdiction of this Municipality.

Be it ordained by the Municipal Council of Hinabangan. Samar, THAT:

Section 1. For the purpose of this Ordinance, the following terms are defined:

"CORPORATION" refers to any person or persons, firm or association engaged in the business for which this
Ordinance is enacted.

"GROSS OUTPUTS" shall be interpreted as the total actual market value of minerals or mineral products from
each mine or mineral land operated as separate entity without any deduction on expenses incurred in the
operation of the business.

"MUNICIPAL TREASURER" herein referred to, is the duly appointed Municipal Treasurer including his authorized
representatives and/or deputies in his office.
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Section 2. Republic Act 2264 empowers the Municipal Council of Hinabangan, Samar, to impose a graduated
Municipal License Fees on any occupation or business in the municipality to any Corporation, based on the gross
outputs or in accordance with following schedule:

MINES AND OTHER BUSINESS

Amount of Tax
Yearly Gross Output or Sales
to be Levied

P 50,000.00 to P 100,000.00 P 100.00

P 100,001.00 to P 500,000.00 P 1,000.00

P 500,001.00 to P 1,500,000.00 P 7,500.00

P 1,500,001.00 to P 3,500,000.00 P 26,250.00

P 3,500,001.00 to P 7,500,000.00 P 75,000.00

P 7,500,001.00 to P 13,500,000.00 P 168,750.00

P 13,500,001.00 to P 23,500,000.00 P 352,500.00

P 23,500,001.00 to P 50,000,000.00 P 875,000.00

P 50,000,001.00 to P up P 1,000,000.00

Section 3. Any corporation subject to payment of the Municipal License herein imposed shall immediately at
the end of each calendar year, but in no case shall it exceed beyond the first FIFTEEN (15) DAYS of the
succeeding year, submit to Municipal Treasurer certified true copies of receipts and/or invoices as the case may
be on the total output per shipment of the mining produce, for the year or the total yearly sales which will serve
as the basis for the collection of the Municipal License Tax PROVIDED that upon subsequent verification by the
Municipal Treasurer no erroneous or fraudulent entries are made. On the contrary when upon proper
investigation and examination of the Books and/or Records of the Corporation, there shall be found discrepancies
in the declarations of the total output per shipment or sales, such discrepancy shall be revised within TEN (10)
DAYS from the date of verification within which to settle the taxes due without penalties as provided for by law.

Section 4. To enforce this Ordinance, the Municipal Treasurer shall have authority to examine the Books and
Records of the Corporation subject to the payment of tax herein levied, PROVIDED that such examination of
Records or Books as the case may be, be made during Office hours, unless a written consent from the President,
or Manager as the case may be of the Corporation is secured.

Section 5. Any violation of a provision of this Ordinance is punishable by a fine of not less than ONE HUNDRED
(P100.00) PESOS nor more than TWO HUNDRED (P200.00) PESOS or by an imprisonment of not less than ONE
(1) MONTH nor more than SIX (6) MONTHS or both fine and imprisonment in the discretion of the Court. Any
violation of Section 2 of this Ordinance shall subject the Corporation to pay the tax imposed plus penalties and
the subsequent fine and imprisonment promulgated by the Court. Criminal responsibility rests on the President,
Manager or any person charged with the management of the Corporation.

Section 6. All Ordinances or parts thereof in conflict with the Present Ordinance are hereby repealed.

Section 7. This Ordinance shall take effect FIFTEEN (15) DAYS from its approval.

On December 14, 1960, the petitioner, a corporation duly organized and existing under the laws of the Philippines and
operating the only mine within the jurisdiction of the municipality of Hinabangan, filed this case of declaratory relief in the
Court of First Instance of Manila questioning the validity of the ordinance as enacted without authority and in violation of
law. Respondents answered averring the ordinance's validity with a counterclaim for damages and petitioner having filed
an amended petition and answer to the counterclaim, which amended petition was accordingly answered by respondents,
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the case was tried by the Court a quo on March 15, 1961; the parties filed respective memoranda, and on April 4, 1961
the Court a quo rendered its decision declaring the ordinance in question illegal, from which judgment respondents in due
time perfected their appeal to this Court.

Neither petitioner-appellee nor respondents-appellants adduced any evidence before the Court a quo, the facts heretofore
stated having been based on the allegations of the amended petition and the admissions thereof in the appellants'
amended answer thereto and the case was submitted for decision on the pleadings.

Respondents-appellants maintain in this appeal that the Court a quo erred in finding that Ordinance No. 7 does impose a
tax; that Ordinance No. 7 was intended to impose a tax on sales; that Ordinance No. 7 is illegal because it is an
imposition of a double taxation, and that Ordinance No. 7 is null and void.

On the petitioner-appellee's side, they maintain that Section 2 of Municipal Ordinance No. 7 does not impose a tax or
levy, and there is no clear and express imposition of a charge in the other provisions of the ordinance; that the
declaration of authority to impose a tax is false and erroneous because no such power is conferred in Section 2 of
Republic Act No. 2264 upon which such authority is based; that, moreover, there is no finding by the Court a quo that a
tax was imposed, much less, that the same is based on the gross outputs or sales, because the Court a quo merely
assumed that the tax is imposed and declared it illegal as not within the Municipal Council's authority to impose because
it falls within the exceptions to the tax-in-powers of municipal governments, as prescribed in Section 2, last paragraph, of
the Local Autonomy Act (R.A. No. 2264).

We find no error in the decision appealed from in so far as it holds that the ordinance in question fails to levy any tax.
Appellants admit in their brief that the main section (section 2) of the ordinance "seems merely declaratory of authority,"
albeit they aver that a reading of it as a whole leads to the conclusion that a tax was intended. It is, however, a well
established rule that

A statute will not be construed as imposing a tax unless does so clearly, expressly and it unambiguously. (82
C.J.S., 956) (Emphasis supplied)

and that

It is an ancient principle that a tax can not be imposed without clear and express words for that purpose.
Accordingly, the general rule of requiring adherence to the letter in construing statutes applies with peculiar
strictness to tax laws and the provisions of a taxing act are not to be extended by implication. (30 Am. Jur. 153;
also McQuillin on Municipal Corp., Vol. 16, p. 267; emphasis ours)

A mere reading of the ordinance discloses that not only are there no words therein imposing a tax but that the peruser is
left in doubt as to whether the intention is to levy a tax for revenue or charge a fee for permitting the business to be
carried on; for section 2 declares that the law "empowers the Municipal Council of Hinabangan, Samar to impose
graduated Municipal License Fecs." Since the validity of taxes and license fees are governed by different principles, the
taxpayer is left in doubt as to the true nature of the charge and whether he must bear it or not. The rule is that taxes
may not be imposed by implication,1 and "a tax statute is to be construed strictly and against the subjection to a tax
liability where the question is whether a matter, property or person is subject to the tax" (82 C.J.S., p. 957). Considering
the avoidability of taxes by the citizen, it seems that the least he is entitled to is to be expressly required to pay a tax,
which the words of the questioned ordinance do not state. This is particularly true where the ordinance, as in this case,
carries penal provisions.

We further agree with the judgment appealed from that Ordinance No. 7, Ser. 1960, of Hinabangan, Samar, is invalid
because the same infringes upon the express restrictions placed by the legislature upon the taxing power delegated to
city and municipal councils. Section 2, paragraph 1, of Republic Act No. 2264, after conferring power to cities,
municipalities, and municipal districts to impose license taxes and service fees or charges on business and occupations,
expressly limited said powers by the following proviso:

Provided that municipalities and municipal districts shall, in no case, impose any percentage tax on sales or other
taxes in any form based thereon; ... .
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Even granting that it does impose a tax, the ordinance in question, while not providing for a percentage tax, but a
graduated tax (the progressive tax therein imposed not being calculated on a percentage of the sales made by the
taxpayer), nevertheless, it prescribes a tax based on sales, contrary to the statute (R.A. 2264). It is true that the
ordinance purports to base the tax on either "gross output or sales but the only standard provided for measuring the
gross output is its peso value, as determined from "true copies of receipts and/or invoices (which are precisely the
evidence of sales) that the taxpayer is required to submit to the municipal treasurer (section 3), without deduction being
provided for freight insurance, or incidental costs. Directly or indirectly, the amount of payable tax under this ordinance is
determined by the gross sales of the taxpayer, and violates the explicit prohibition that the municipality must not levy, or
impose, "taxes in any form based on sales."

The plea that the members of the Municipal Council "are not attorneys and of low scholastic ability" afford no excuse for
not observing well-established legal principles. The tax imposing authority is held to know and understand that the
levying of taxes is a subject of grave responsibility, and of serious consequences to the taxpayer. Taxation is not merely a
matter of wishing before an unused well, or of stroking some wornout lamp. 1wph1.t

IN VIEW OF THE FOREGOING, the judgment appealed from is affirmed, with costs against appellants.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Paredes, Regala and Makalintal, JJ., concur.
Barrera and Dizon, JJ., concur.

v. How are statutes granting tax exemptions construed? (Sealand Service, Inc. v. Court of Appeals G.R.
No. 122605)
Tax exemptions are construed strictly against taxpayers and in favor of the taxing power. Moreover, exemptions
cannot be claimed unless they are expressly provided for in the law. This facilitates the collection of taxes and
penalties and tax evasions will be avoided.
FIRST DIVISION

[G.R. No. 122605. April 30, 2001]

SEA-LAND SERVICE, INC., petitioner, vs. COURT OF APPEALS and COMMISSIONER OF INTERNAL
REVENUE, respondents.

DECISION
PARDO, J.:

The Case

Appeal via certiorari from the decision of the Court of Appeals affirming in toto that of the Court of Tax Appeals which
denied petitioners claim for tax credit or refund of income tax paid on its gross Philippine billings for taxable year 1984, in
the amount of P870,093.12.[1]

The Facts

The facts, as found by the Court of Appeals, are as follows:

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Sea-Land Service Incorporated (SEA-LAND), an American international shipping company licensed by the Securities and
Exchange Commission to do business in the Philippines entered into a contract with the United States Government to
transport military household goods and effects of U. S. military personnel assigned to the Subic Naval Base.

From the aforesaid contract, SEA-LAND derived an income for the taxable year 1984 amounting to
P58,006,207.54. During the taxable year in question, SEA-LAND filed with the Bureau of Internal Revenue (BIR) the
corresponding corporate Income Tax Return (ITR) and paid the income tax due thereon of 1.5% as required in Section
25 (a) (2) of the National Internal Revenue Code (NIRC) in relation to Article 9 of the RP-US Tax Treaty, amounting to
P870,093.12.

Claiming that it paid the aforementioned income tax by mistake, a written claim for refund was filed with the BIR on 15
April 1987. However, before the said claim for refund could be acted upon by public respondent Commissioner of Internal
Revenue, petitioner-appellant filed a petition for review with the CTA docketed as CTA Case No. 4149, to judicially pursue
its claim for refund and to stop the running of the two-year prescriptive period under the then Section 243 of the NIRC.

On 21 February 1995, CTA rendered its decision denying SEA-LANDs claim for refund of the income tax it paid in 1984.[2]

On March 30, 1995, petitioner appealed the decision of the Court of Tax Appeals to the Court of Appeals.[3]
After due proceedings, on October 26, 1995, the Court of Appeals promulgated its decision dismissing the appeal and
affirming in toto the decision of the Court of Tax Appeals.[4]
Hence, this petition.[5]

The Issue

The issue raised is whether or not the income that petitioner derived from services in transporting the household goods
and effects of U. S. military personnel falls within the tax exemption provided in Article XII, paragraph 4 of the RP-US
Military Bases Agreement.

The Courts Ruling

We deny the petition.

The RP-US Military Bases Agreement provides:

No national of the United States, or corporation organized under the laws of the United States, resident in the United
States, shall be liable to pay income tax in the Philippines in respect of any profits derived under a contract made in the
United States with the government of the United States in connection with the construction, maintenance, operation and
defense of the bases, or any tax in the nature of a license in respect of any service or work for the United States in
connection with the construction, maintenance, operation and defense of the bases. [6]

Petitioner Sea-Land Service, Inc. a US shipping company licensed to do business in the Philippines earned income
during taxable year 1984 amounting to P58,006,207.54, and paid income tax thereon of 1.5% amounting to P870,093.12.
The question is whether petitioner is exempted from the payment of income tax on its revenue earned from the
transport or shipment of household goods and effects of US personnel assigned at Subic Naval Base.
Laws granting exemption from tax are construed strictissimi juris against the taxpayer and liberally in favor of the
taxing power. Taxation is the rule and exemption is the exception. [7] The law does not look with favor on tax exemptions
and that he who would seek to be thus privileged must justify it by words too plain to be mistaken and too categorical to
be misinterpreted.[8]
Under Article XII (4) of the RPUS Military Bases Agreement, the Philippine Government agreed to exempt from payment
of Philippine income tax nationals of the United States, or corporations organized under the laws of the United States,
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residents in the United States in respect of any profit derived under a contract made in the United States with the
Government of the United States in connection with the construction, maintenance, operation and defense of the
bases.
It is obvious that the transport or shipment of household goods and effects of U. S. military personnel is not included
in the term construction, maintenance, operation and defense of the bases. Neither could the performance of this service
to the U. S. government be interpreted as directly related to the defense and security of the Philippine territories. When
the law speaks in clear and categorical language, there is no reason for interpretation or construction, but only for
application.[9] Any interpretation that would give it an expansive construction to encompass petitioners exemption from
taxation would be unwarranted.
The avowed purpose of tax exemption is some public benefit or interest, which the lawmaking body considers sufficient
to offset the monetary loss entailed in the grant of the exemption. [10] The hauling or transport of household goods and
personal effects of U. S. military personnel would not directly contribute to the defense and security of the Philippines.
We see no reason to reverse the ruling of the Court of Appeals, which affirmed the decision of the Court of Tax
Appeals. The Supreme Court will not set aside lightly the conclusion reached by the Court of Tax Appeals which, by the
very nature of its function, is dedicated exclusively to the consideration of tax problems and has necessarily developed an
expertise on the subject, unless there has been an abuse or improvident exercise of authority. [11]
Hence, the Court of Appeals did not err or gravely abuse its discretion in dismissing the petition for review. We can
not grant the petition.

The Judgment

WHEREFORE, the Court DENIES the petition for lack of merit.

No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Ynares-Santiago, JJ., concur.

w. How are general welfare legislations construed? (Asian Transmission Corp. v. CA G.R. No. 144664)
They are construed liberally in favor of those intended to be benefited. This construction is more in consonance
with the constitutional mandate to promote social justice.

ASIAN TRANSMISSION CORPPORATION VS. CA

425 SCRA 478. March 15, 2004
FACTS:
The Department of Labor and Employment (DOLE), through Undersecretary Cresenciano B.Trajano, issued an
Explanatory Bulletin, wherein it clarified, that employees are entitled to 200% of their basic wage, which, apart
from being Good Friday, and, therefore, a legal holiday, is also Araw ng Kagitingan, which is also a legal
holiday, even if unworked. Despite the explanatory bulletin, petitioner Asian Transmission Corporation opted to
pay its daily paid employees only 100% of their basic
pay.Respondent Bisig ng Asian Transmission Labor Union (BATLU) protested. In accordance with Step 6
of the grievance procedure of the Collective Bargaining Agreement existing between petitioner and BATLU, the
controversy was submitted for voluntary arbitration. The Office of the Voluntary Arbitrator rendered a decision
directing petitioner to pay its covered employees "200% and not just 100% of the irregular daily wages for the
unworked. In deciding in favor of the Bisig ng Asian Transmission Labor Union (BATLU), the Voluntary Arbitrator
held that Article 94 of the Labor Code provides for holiday pay for every regular holiday, the computation of which
is determined by a legal formula which is not changed by the fact that there are two holidays falling on one day;
and that that the law, as amended, enumerates 12 regular holidays for every year, and should not be interpreted
as authorizing a reduction to nine the number of paid regular holidays "just because April 9 (Araw ng Kagitingan)
in certain years, is also Holy Friday or MaundyThursday."The Court of Appeals upheld the findings of the
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Voluntary Arbitrator, holding that the Collective Bargaining Agreement between petitioner and BATLU, the law
governing the relations between them, clearly recognizes their intent to consider Araw ng Kagitingan and Maundy
Thursday, on whatever date they may fall in any calendar year, as paid legal holidays during the effectivity of the
CBA and that "there is no condition, qualification or exception for any variance from the clear intent that all
holidays shall be compensated. The Court of Appeals further held that "in the absence of an explicit provision in
law which provides for [a] reduction of holiday pay if two holidays happen to fall on the same day, any doubt in
the interpretation and implementation of the Labor Code provisions on holiday pay must be resolved in favor of
labor. Hence, this petition.

ISSUE:
Whether or not daily-paid employees are entitled to be paid for two regular holidays which fall on the same day

RULING:
Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State shall afford
protection to labor. Its purpose is not merely "to prevent diminution of the monthly income of the workers on
account of work interruptions. In other words, although the worker is forced to take arrest, he earns what he
shouldearn, that is, his holiday pay.

It is also intended to enable the worker to participate in the national celebrations held during the days identified
as with great historical and cultural significance. Independence Day (June 12), Araw ng Kagitingan (April 9),National
Heroes Day (last Sunday of August), Bonifacio Day(November 30) and Rizal Day (December 30) were declared
national holidays to afford Filipinos with a recurring opportunity to commemorate the heroism of the Filipino
people, promote national identity, and deepen the spirit of patriotism. Labor Day (May 1) is a day traditionally
reserved to celebrate the contributions of the working class to the development of the nation, while the religious
holidays designated in Executive Order No. 203 allow the worker to celebrate his faith with his family. As reflected
above, Art. 94 of the Labor Code, as amended, afford a worker the enjoyment of 12paid regular holidays. The
provision is mandatory, regardless of whether an employee is paid on a monthly or daily basis. Since a worker
is entitled to the enjoyment of 12 paid regular holidays, the fact that two Holidays fall on the same date should
not operate to reduce to 11 the 12 holiday pay benefits a worker is entitled to receive. It is elementary, under the
rules of statutory construction, that when the language of the law is clear and unequivocal, the law must be taken
to mean exactly what it says. In the case at bar, there is nothing in the law which provides or indicates that the
entitlement to 12 days of holiday pay shall be reduced to 11 when two holidays fall on the same day. In any
event, Art. 4 of the Labor Code provide that all doubts in the implementation and interpretation of its provisions,
including its implementing rules and regulations, shall be resolved in favor of labor. For the working mans welfare
should be the primordial and paramount consideration. Moreover, Sec. 11, Rule IV, Book III of the Omnibus Rules
to Implement the Labor Code provides that Nothing in the law or the rules shall justify an employer in withdrawing
or reducing any benefits, supplements or payments for unworked regular holidays as provided in existing
individual or collective agreement or employer practice or policy. From the pertinent provisions of the CBA
entered into by the parties, petitioner had obligated itself to pay for the legal holidays as required by law.

x .How are statutes prescribing prescriptions of crimes construed?

Statutes prescribing prescriptions are liberally of construction and belongs to all acts of amnesty and grace.
y. How are the rules of court construed?
These rules shall be liberally construed in order to promote their objective and to assist the parties in obtaining
just, speedy and inexpensive determination of every action and proceeding.