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MANILA ELECTRIC COMPANY, petitioner, vs. customers of all the savings it realized under P.D. No.

t realized under P.D. No. 551, 1980 was issued by this Board on the basis of
PHILIPPINE CONSUMERS FOUNDATION, through the reduction of its franchise tax from 5% to 2%, the recommendation contained in the
INC., EDGARDO S. ISIP, HON. JUDGE with interest at the legal rate; and for the payment of Memorandum dated November 30, 1979 of the
MANUEL M. CALANOG, JR., and HON. damages and a fine in the amount of P50, 000.00 for Minister of Finance, which was approved by
JUDGE TIRSO D'C. VELASCO, respondents. violating P.D. 551. It moored its petition on Section 4 of the President of the Philippines in his directive
P.D. No. 551 which provides: to this Board dated December 11, 1979 issued
DECISION thru Presidential Executive Assistant Jacobo
Sec. 4. All the savings realized by electric Clave. This Board believes and so holds that
franchise holders from the reduction of the the approval by the President of the Philippines
SANDOVAL-GUTIERREZ, J.: of the aforesaid Finance Ministrys
franchise tax under Section 1 and tariff
reductions and tax credits under Sections 2 and recommendation had the effects of (a) reversing
Interest republicae ut sit finis litium i - it is to the 3, shall be passed on to the ultimate or modifying the aforementioned Opinion of
interest of the public that there should be an end to consumer. The Secretary of Finance shall the Minister of Justice; and (b) confirming the
litigation by the same parties and their privies over a promulgate rules and regulations and devise a promulgation by the Ministry of Finance,
subject fully and fairly adjudicated. From this reporting systems to carry out the provisions of conformably with the specific authority granted
overwhelming concern springs the doctrine of res judicata this Decree. it under P.D. No. 551, of an additional rule or
an obvious rule of reason according stability to judgments. regulation for the implementation of the said
decree for the guidance of this Board. In issuing
In its answer to the petition, Meralco alleged that it the Order of March 10, 1980, therefore, the
Challenged in this petition for review on certiorari are was duly authorized by the BOE in its Order dated March
the a) Decision in Civil Case No. Q-89-3659 dated January Board has done no more than follow and be
10, 1980 in BOE Case No. 79-692 to retain the disputed guided by the said additional rule or regulation.
16, 1991 of the Regional Trial Court, Branch 76, Quezon savings; and that the said Order had long become final.
City; ii and b) its Order dated September 10, 1991iii denying
the motion for reconsideration of the said Decision. "It is noteworthy to mention also that
On November 25, 1982, the BOE issued its Decision the registered oppositors in BOE Case No.
dismissing PCFI's petition, declaring that Meralco was 79-692 (formerly BPW Case No. 72-2146),
The pertinent facts are: indeed authorized by the BOE, in BOE Case No. 79-692, to where the respondent herein originally filed
retain the disputed savings under P.D. 551, thus: its motion requesting for authority to defer
On September 11, 1974, former President Ferdinand the passing on to its customers of the
E. Marcos, with the objective of enabling the grantees of It is at once evident from the foregoing franchise tax reduction benefits under P.D.
electric franchises to reduce their rates "within the reach controlling facts and circumstances, No. 551, have done nothing to seek relief
of consumers",iv promulgated Presidential Decree No. 551v particularly the Order of this Board dated from or to appeal to the appropriate forum,
providing for the reduction from 5% to 2% of the franchise March 10, 1980, as confirmed by the reply- the said Order of March 10, 1980. As a
tax paid by electric companies, thus: letter dated March 3, 1981, that Meralco has consequence, the disposition contained
been duly authorized to retain the savings therein have long become final.
SECTION 1. Any provision of law or realized under the provisions of P.D. 551. The
local ordinance to the contrary notwithstanding, authority granted in the said Order and letter is xxx
the franchise tax payable by all grantees of so clear and unequivocal as to leave any room xxx
franchises to generate, distribute and sell for contradictory interpretation. This Board,
electric current for light, heat and power shall therefore, holds as untenable petitioners claim
be two (2%) of their gross receipts received that respondent Meralco was never authorized "That Meralco has been authorized to
from the sale of electric current and from under the said Order and letter to hold on to the retain the savings resulting from the
transactions incident to the generation, savings realized under the said decree. reduction of the franchise tax under P.D. No.
distribution and sale of electric current. 551 is, therefore beyond question."vii
(Emphasis supplied)
"The Board likewise finds to be devoid of
On February 5, 1982, the Philippine Consumers merit petitioners contention that pursuant to
Foundation, Inc., (PCFI) filed with the Board of Energy Opinion No. 140, Series of 1979, of the PCFI filed a motion for reconsideration but was
(BOE) a "Petition for Specific Performance, Damages and Minister of Justice, it is absolutely mandatory denied by the BOE. Hence, PCFI filed a Petition for
Violation of P. D. No. 551"vi against the Manila Electric on the part of respondent Meralco to pass on to Certiorari with this Court, docketed as G.R. No. 63018. In
Company (Meralco), docketed as BOE Case No. 82-198. its customers the savings under consideration. It a Resolution dated October 22, 1985, this Court dismissed
PCFI sought for the immediate refund by Meralco to its must be pointed out that the Order of March 10, the petition for lack of merit, holding that:
We see no grave abuse of discretion Section 4 of P.D. No. 551, the savings belong to the of Finance. PD 551 merely ordered the Minister
warranting the setting aside of the BOE order. ultimate consumers. of Finance to issue implementing rules and
regulations. He cannot amend or modify the
"P.D. No. 551 ordered the Minister of Meralco, in its answer, prayed for the dismissal of the clear mandate of the law. The act therefore of
Finance to issue implementing rules and petition on the ground of res judicata, citing this Court's the Minister of Finance was ultra vires,
regulations. The Minister authorized all Resolution in G.R. No. 63018 which affirmed the BOE's hence, null and void. Considering that said
grantees of electric franchises, not Meralco Decision in BOE Case No. 82-198. act became the basis of the Board of Energys
alone, whose rates of return on their rate bases decision, it follows that said decision is
were below the legal allowable level to either likewise null and void and the Supreme
On January 16, 1991, respondent RTC rendered the Court resolution affirming said decision is
ask for increased rates or to defer the passing assailed Decision declaring null and void the Resolution of
on of benefits under the decree to consumers also null and void having proceeded from a
this Court in G.R. No. 63018 and on the basis of the void judgment, hence, cannot be considered
until just and reasonable returns could be had. Dissenting Opinion of the late Justice Claudio Teehankee,
Lengthy investigations, audits, hearings, and as valid judgment that will be a bar to the
held that the disputed savings belong to the consumers, present action."ix (Emphasis supplied)
determinations over practically an eight year thus:
period preceded the questioned decision. The
petitioners failed both below and in this petition Meralco moved for a reconsideration of the above
to successfully refute the facts ascertained in Respondent Meralcos theory is devoid of Decision but was denied by respondent court in its Order of
the audits and examinations. The BOE merit. As correctly stated in the dissenting September 10, 1991.
approved option formed the basis of subsequent opinion of the late Chief Justice Claudio
determinations of Meralco rates and the Teehankee in the October 22, 1985 resolution
of the Supreme Court in SC G.R. No. 63018, Hence, Meralco's petition for review on certiorari
adopted formula became the basis of anchored on the following grounds:
computations. When this petition was filed on the decision of the Board of Energy is ultra
January 27, 1983, the November 25, 1982 vires, hence, null and void. x x x.
ruling was already final and executory. "I
Moreover, the March 10, 1980 judgment "It is a well-settled rule in statutory
rendered in BOE Case No. 79-692, where construction that when the law is clear, it leaves RESPONDENT JUDGES ERRED IN
Meralco had filed a motion for authority to no room for interpretation. The memorandum HOLDING THAT CIVIL CASE NO. 89-
defer passing on to customers the savings issued by the Minister of Finance which was 3659 IS NOT BARRED BY PRIOR
from the reduction of franchise taxes, was made the basis of the decision of the Board of JUDGMENT.
not appealed or questioned by the Energy has no legal effect because Sec. 4 of
petitioners. Instead, they filed BOE Case No. P.D. No. 551 is clear and unequivocal. II
82-198 on February 5, 1982 or almost two
years later, raising the same issues against xxx
the same parties. BOEs questioned decision RESPONDENT JUDGES ERRED IN
in Case No. 82-198 used the facts in BOE
Case No. 79-692 for its conclusions. Not only RESOLUTION OF THIS HONORABLE
had the March 10, 1980 decision confirmed "Since the law is clear, what is left to be SUPREME COURT.
the findings of the Minister of Finance on done by the administrative body or agency
Meralcos accounts and finances but in filing concerned is to enforce the law. There is no III
the second case, the petitioners were asking room for an administrative interpretation of the
for a readjudication of the same issues in law. In the instant case, the Board interpreted
PD 551 and chose not only to enforce it but to RESPONDENT JUDGES ERRED IN
another challenge to these same findings .x x
amend and modify the law on the basis of a HOLDING THAT THE REMEDY OF
x.viii (Emphasis supplied)
Memorandum and the authority issued by the DECLARATORY RELIEF WAS STILL
Minister of Finance to all grantees of electric- AVAILABLE TO PRIVATE
Four years thereafter, PCFI and a certain Edgardo S. franchises, not Meralco alone, whose rates of RESPONDENTS.
Isip, private respondents herein, filed with respondent return on their rate basis were below the legal
Regional Trial Court, Branch 76, Quezon City, a petition allowable level, to either ask for an increased IV
for declaratory relief, docketed as Civil Case No. Q-89- rates or to defer the passing on of benefits
3659. Private respondents prayed for a ruling on who under the decree to consumers, until just and
should be entitled to the savings realized by Meralco under RESPONDENT JUDGES ERRED IN
reasonable return could be had. This is beyond NOT DISMISSING THE PETITION FOR
P.D. No. 551. Once again, they insisted that pursuant to the authority granted by PD 551 to the Minister
DECLARATORY RELIEF."x All the above requisites are extant in the records and Decision was upheld by this Court in G.R. No. 63018.
thus, beyond dispute.
Meralco contends that Civil Case No. Q -89-3659 is Re: FOURTH REQUISITE - there must be between the
already barred by prior judgments, referring to a) this Re: FIRST REQUISITE - there must be a final two cases identity of parties, subject matter and causes
Courts Resolution in G.R. No. 63018 sustaining the BOE's judgment: of action:
Decision in BOE Case No. 82-198; and b) the Order dated
March 10, 1980 of the same Board in BOE Case No. 79- It is beyond question that this Courts Resolution There is identity of parties between the two cases.
692, both holding that Meralco is authorized to retain its dated October 22, 1985 in G.R. No. 63018, sustaining the BOE Case No. 82-198 was a contest between private
savings realized under P.D. 551. Meralco likewise argues BOEs Decision dated November 25, 1982 in BOE Case No. respondent PCFI, as petitioner, and Meralco, as respondent.
that respondent RTC cannot annul the Resolution of this 82-198 which dismissed PCFI's petition, attained finality on Civil Case No. Q-89-3659 involves the same contenders,
Court in G.R. No. 63018 considering that trial courts December 4, 1985. As a matter of fact, this Court had long except that respondent Edgardo Isip joined PCFI as a
cannot set aside decisions of a superior court. And lastly, ago issued an Entry of Judgment stating that the said plaintiff. But his inclusion as such plaintiff is
Meralco maintains that private respondents can no longer Resolution "became final and executory and is x x x inconsequential. A party by bringing forward, in a second
avail of the remedy of an action for declaratory relief in recorded in the Book of Entries of Judgements." Prior case, additional parties cannot escape the effects of the
view of the rule that such action should be filed before a thereto, or on March 10, 1980, the BOE's Order in BOE principle of res judicata when the facts remain the same.
violation of the statute occurred.xi Case No. 79-672 became final when the oppositors therein Res judicata is not defeated by a minor difference of
did not appeal. parties, as it does not require absolute but only substantial
In their comment,xii private respondents argue that identity of parties.xviii
this Court's Resolution in G.R. No. 63018 cannot be a bar Re: SECOND REQUISITE - the court which rendered
to Civil Case No. Q-89-3659 for declaratory relief the final judgment must have jurisdiction over the The subject matters of BOE Case No. 82-198 and
considering that it did not delve on the essential issue raised subject matter and the parties: Civil Case No. Q-89-3659 are likewise identical since both
in the latter case, i.e., who is entitled to the savings. refer to the savings realized by Meralco from the reduction
Further, they claim that public interest would be of the franchise tax under P.D. No. 551. The subject matter
defeated by the application of res judicata. There is no question that the BOE has jurisdiction
over the subject matter and the parties herein. Under P.D. of an action refers to the thing, wrongful act, contract or
No. 1206,xvi The BOE is the agency authorized to "regulate property which is directly involved in the action,
The petition is meritorious. and fix the power rates to be charged by electric concerning which the wrong has been done and with
companies."xvii As such, it has jurisdiction over Meralco, an respect to which the controversy has arisen. xix In both cases,
The issue - whether or not Meralco is duly authorized electric company, and over the savings it realized under the controversy is how the disputed savings shall be
to retain the savings resulting from the reduction of the P.D. No. 551. It bears stressing that P.D. No. 551 was disposed of - whether they shall be retained by Meralco or
franchise tax under P.D. No. 551 as long as its rate of return passed precisely to enable the grantees of electric franchises be passed on to the consumers.
falls below the 12 % allowable rate recognized in this to reduce their rates within the reach of consumers. Clearly,
jurisdiction has long been settled. Thus, the relitigation of the matter on how the disputed savings should be disposed With respect to identity of causes of action, this
the same issue in Civil Case No. Q-89-3659 cannot be of in order to realize a reduction of rates is within the requisite is likewise present. In both cases, the act alleged
sanctioned under the principle of res judicata. competence of the BOE. to be in violation of the legal right of private respondents is
Meralco's retention of the savings it realized under P.D. No.
Res judicata means a matter adjudged, a thing Re: THIRD REQUISITE - it must be a judgment or 551. While it is true that BOE Case No. 82-198 is one for
judicially acted upon or decided; a thing or matter settled order on the merits: specific performance, while Civil Case No. Q-89-3659 is
by judgment.xiii In res judicata, the judgment in the first for declaratory relief - in the ultimate - both are directed
action is considered conclusive as to every matter offered towards only one relief, i.e., the refund of the disputed
The BOE's Decision in BOE Case No. 82-198 is a savings to the consumers. To seek a court's declaration on
and received therein, as to any other admissible matter judgment on the merits. A judgment is on the merits when it
which might have been offered for that purpose, and all who should benefit from the disputed savings (whether
determines the rights and liabilities of the parties based on Meralco or the consumers) will result in the relitigation of
other matters that could have been adjudged therein. xiv For a the disclosed facts, irrespective of formal, technical or
claim of res judicata to prosper, the following requisites an issue fairly and fully adjudicated in BOE Case No. 82-
dilatory objections. After according both parties the 198.
must concur: 1) there must be a final judgment or order; 2) opportunities to be heard, the BOE disposed of the
the court rendering it must have jurisdiction over the controversy by resolving the rights of the parties under P.D.
subject matter and the parties; 3) it must be a judgment or No. 551. In its Decision, the BOE declared in clear and Clearly, the test of identity of causes of action lies not
order on the merits; and 4) there must be, between the two unequivocal manner that Meralco "has been duly in the form of an action. The difference of actions in the
cases identity of parties, subject matter and causes of authorized to retain the savings realized under the aforesaid cases is of no moment. The doctrine of res
action.xv provisions of P.D. No. 551" and that private respondent judicata still applies considering that the parties were
PCFIs argument to the contrary is "untenable." The BOE's litigating for the same thing and more importantly, the same
contentions.xx As can be gleaned from the records, private of an action for declaratory relief is to secure an Court, have acquired the character of res judicata and can
respondents arguments in Civil Case No. Q-89-3659 bear authoritative statement of the rights and obligations of the no longer be challenged.
extreme resemblance with those raised in BOE Case No. parties under a statute, deed, contract etc. for their guidance
82-198. in the enforcement thereof, or compliance therewith, and WHEREFORE, the petition is hereby GRANTED.
not to settle issues arising from an alleged breach thereof. It The assailed RTC Decision dated January 16, 1991 and
Respondent RTC's Decision granting PCFI and Isip's may be entertained only before the breach or violation of Order dated September 10, 1991 in Civil Case No. Q-89-
petition for declaratory relief is in direct derogation of the the statute, deed, contract etc., to which it refers. xxiii The 3659 are REVERSED and SET ASIDE.
principle of res judicata. Twice, it has been settled that petition gives a practical remedy in ending controversies
Meralco is duly authorized to retain the savings it realized which have not reached the stage where other relief is
immediately available. It supplies the need for a form of SO ORDERED.
under P.D. No. 551 as long as its rate of return falls below
the 12% allowable rate. The pronouncement of the BOE in action that will set controversies at rest before they lead to
BOE Case No. 82-198 finding such fact to be "beyond repudiation of obligations, invasion of rights, and the
question" is clear and not susceptible of equivocation. This commission of wrongs.xxiv Here, private respondents
pronouncement was sustained by this Court in G.R. No. brought the petition for declaratory relief long after the
63018. In finding no grave abuse of discretion on the part alleged violation of P.D. No. 551.
of the BOE, this Court saw the wisdom of its assailed
Decision. Thus, this Court held: "[I]n dismissing the Lastly, we are dismayed by respondent RTC's
petition for specific performance, the BOE authorized adherence to the Dissenting Opinion, instead of the
Meralco, in lieu of increasing its rates to get a more Majority Opinion, of the members of this Court in G.R. No.
reasonable return on investments while at the same time 63018, as well as its temerity to declare a Resolution of this
refunding to consumers the benefit of P.D. No. 551, to Court "null and void" and "cannot be considered as valid G.R. No. 180235, January 20, 2016
instead defer the passing on of benefits but without the judgment that will be a bar to the present action."
planned increases. Instead of giving back money to
consumers and then taking back the same in terms of A lower court cannot reverse or set aside decisions or Petitioner, v. THE CITY OF CEBU, HON. MAYOR
increased rates, Meralco was allowed by the BOE to follow orders of a superior court, especially of this Court, for to do TOMAS R. OSMEÑA, IN HIS CAPACITY AS MAYOR
the more simplified and rational procedure."xxi so will negate the principle of hierarchy of courts and OF CEBU, AND TERESITA C. CAMARILLO, IN HER
nullify the essence of review. A final judgment, albeit CAPACITY AS THE CITY TREASURER, Respondents.
Private respondents now argue that G.R. No. 63018 erroneous, is binding on the whole world. Thus, it is the
merely decreed the postponement of the passing of duty of the lower courts to obey the Decisions of this Court
Meralco's savings to the consumers until it could increase and render obeisance to its status as the apex of the
its rate charges. On this point, this Court categorically hierarchy of courts. "A becoming modesty of inferior courts
ruled: demands conscious realization of the position that they LEONARDO-DE CASTRO, J.:
occupy in the interrelation and operation of the integrated
"X x x. And finally, as stated by the judicial system of the nation." xxv "There is only one Before the Court is a Petition for Review on Certiorari of
Solicitor General, if only to put the issue to Supreme Court from whose decisions all other courts the Resolution1 dated March 14, 2007 and the Order2 dated
final rest, BOEs decision authorizing should take their bearings," as eloquently declared by October 3, 2007 of the Regional Trial Court (RTC), Cebu
Meralco to retain the savings resulting from Justice J. B. L. Reyes.xxvi City, Branch 9 in Civil Case No. CEB-31988, dismissing
the reduction of franchise tax as long as its the Petition for Injunction, Prohibition, Mandamus,
rate of return falls below the 12% allowable Respondent RTC, and for this matter, all lower courts, Declaration of Nullity of Closure Order, Declaration of
rate is supported by P.D. No. 551, the rules ought to be reminded that a final and executory decision or Nullity of Assessment, and Declaration of Nullity of
and administrative orders of the Ministry of order can no longer be disturbed or reopened no matter how Section 42 of Cebu City Tax Ordinance, with Prayer for
Finance which had been duly authorized by erroneous it may be. Although judicial determinations are Temporary Restraining Order and Writ of Preliminary
the decree itself and by directives of the not infallible, judicial error should be corrected through Injunction3 filed by petitioner Alta Vista Golf and Country
President to carry out the provisions of the appeals, not through repeated suits on the same claim. xxvii In Club against respondents City of Cebu (Cebu City), then
decree, and most of all by equitable setting aside the Resolution and Entry of Judgment of this Cebu City Mayor Tomas R. Osmeña (Osmeña), and then
economic considerations without which the Court in G.R. No. 63018, respondent court grossly violated Cebu City Treasurer Teresita Camarillo (Camarillo).
decree would lose its purpose and basic rules of civil procedure.
viability."xxii Petitioner is a non-stock and non-profit corporation
operating a golf course in Cebu City.
In fine, we stress that the rights of Meralco under P.D.
Corollarily, let it not be overlooked that the purpose No. 551, as determined by the BOE and sustained by this
On June 21, 1993, the Sangguniang Panlungsod of Cebu
City enacted City Tax Ordinance No. LXIX, otherwise P13,064,806.20.8chanroblesvirtuallawlibrary
known as the "Revised Omnibus Tax Ordinance of the City
of Cebu" (Revised Omnibus Tax Ordinance). Through the succeeding years, respondent Cebu City Commission/Other Income 14,950.00
repeatedly attempted to collect from petitioner its
Section 42 of the said tax ordinance on amusement tax was deficiency business taxes, fees, and charges for 1998, a
amended by City Tax Ordinance Nos. LXXXII4 and substantial portion of which consisted of the amusement tax
LXXXIV5 (which were enacted by the Sangguniang on the golf course. Petitioner steadfastly refused to pay the P1,262,764.28
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
amended, was irregular, improper, and illegal.
Section 42. Rate of Tax. - There shall be paid to the Office Permit Fee 1,874.00
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
other similar places of entertainment, an amusement tax at theaters, cinemas, concert halls, or places where one seeks
the rate of thirty percent (30%), golf courses and polo to entertain himself by seeing or viewing a show or
Retail Cigarettes - P42,076.11 - Permit 84.15
grounds at the rate of twenty percent (20%), of their performance. Petitioner further cited the ruling in
gross receipts on entrance, playing green, and/or Philippine Basketball Association (PBA) v. Court of
admission fees; PROVIDED, HOWEVER, That in case of Appeals9 that under Presidential Decree No. 231, otherwise
movie premieres or gala shows for the benefit of a known as the Local Tax Code of 1973, the province could
only impose amusement tax on admission from the Non-Securing of Permit 979.33
charitable institution/foundation or any government
institution where higher admission fees are charged, the proprietors, lessees, or operators of theaters,
aforementioned rate of thirty percent (30%) shall be levied cinematographs, concert halls, circuses, and other places of
against the gross receipts based on the regular admission amusement, but not professional basketball games.
fees, subject to the approval of the Sangguniang Professional basketball games did not fall under the same Sub-Total P 82,997.98
Panlungsod; PROVIDED FURTHER, That in case payment category as theaters, cinematographs, concert halls, and
of the amusement tax is made promptly on or before the circuses as the latter basically belong to artistic forms of
date hereinbelow prescribed, a rebate of five percent (5%) entertainment while the former catered to sports and
on the aforementioned gross receipts shall be given to the gaming. Less: Payment based on computer 74,858.61
proprietors, lessees or operators of theaters; PROVIDED assessment
FURTHERMORE, that as an incentive to theater operators Through a letter dated October 11, 2005, respondent
who own the real property and/or building where the Camarillo sought to collect once more from petitioner
theater is located, an additional one percent (1%) rebate deficiency business taxes, fees, and charges for the year
shall be given to said operator/real property owner 1998, totaling P2,981,441.52, computed as follows:
Short payment P 12,723.18
concerned for as long as their theater/movie houses are then
(10) years old or older or the theater or movie house is
located at the city's redevelopment area bounded on the
north by Gen. Maxilom Street up to the port area; on the Restaurant - P4,021,830.65 P 40,950.00
south by V. Rama Avenue up to San Nicolas area; and on 25% surcharge 3,180.80
the west by B. Rodriguez St. and General Maxilom Avenue;
PROVIDED FINALLY, that the proceeds of this additional
one percent (1%) rebate shall be used by the Permit Fee 2,000.00
building/property owner-theater operator to modernize their 72% interest 11,450.00
theater facilities. (Emphases supplied.)

Liquor-P1,940,283.80 20,160.00
In an Assessment Sheet7 dated August 6, 1998, prepared by Penalty for understatement 500.00
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, Permit Fee 2,000.00
which included amusement tax on its golf course Amount Due P 27,854.85
amounting to P2,612,961.24 based on gross receipts of
2005 of petitioner as a Protest of Assessment and rendered 2. Nonpayment of deficiency on
on December 5, 2005 her ruling denying said Protest on the Business Taxes and Fees amounting
following grounds: (a) a more thorough and comprehensive to Seventeen Thousand Four
reading of the PBA case would reveal that the Court Hundred Ninety-Nine Pesos and
actually ruled therein that PBA was liable to pay Sixty-Four Centavos (Php17,499.64),
amusement tax, but to the national government, not the as adjusted, despite repeated demands
Add: Amusement P 1,373,761.24 local government; (b) Section 42 of the Revised Omnibus in violation [of] Sections 4 and 8 of
Tax on golf course Tax Ordinance, as amended, enjoyed the presumption of City Tax Ordinance No. 69, as
constitutionality and petitioner failed to avail itself of the amended;
remedy under Section 187 of the Local Government Code
to challenge the legality or validity of Section 42 of the 3. Nonpayment of deficiency on
Revised Omnibus Tax Ordinance, as amended, by filing an Amusement Tax and the penalties
25% surcharge 343,440.31
appeal with the Secretary of Justice within 30 days from relative therewith totaling Two
(P6,868,806.20 x
effectivity of said ordinance; and (c) the Office of the City Million Nine Hundred Fifty-Three
Attorney issued a letter dated July 9, 2004 affirming Thousand Five Hundred Eighty-Six
respondent Camarillo's position that petitioner was liable to Pesos and Eighty-Six Centavos
pay amusement tax on its golf course.13 Ultimately, (Php2,953,586.86) in violation of
respondent Camarillo held: Sections 4 and 8 in relation to Section
72% Interest 1,236,385.12 2,953,586.67
42 of City Tax Ordinance No. 69, as
WHEREFORE, upon consideration of the legal grounds amended, business permit-violation of
as above-mentioned, we reiterate our previous stand on the the Article 172, Revised Penal Code of
validity of the ASSESSMENT SHEET pertaining to the Tax the Philippines. (Emphases supplied.)
GRAND TOTAL P2,981,441.5210 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 The Closure Order established respondent Mayor Osmeña's
otherwise we will constrained (sic) the non-issuance of a authority for issuance of the same and contained the
(Emphasis supplied.) Mayor's Business Permit for nonpayment of the said following directive:
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 As the chief executive of the City, the Mayor has the power
and the letter treated as a Protest of Assessment that was and duty to: Enforce all laws and ordinances relative to the
Petitioner, through counsel, wrote respondent Camarillo a duly submitted before this office is hereby governance of the city x x x and, in addition to the
letter11 dated October 17, 2005 still disputing the DENIED.14chanrobleslaw foregoing, shall x x x Issue such executive orders for the
amusement tax assessment on its golf course for 1998 for faithful and appropriate enforcement and execution of laws
being illegal. Petitioner, in a subsequent letter dated and ordinances x x x. These are undeniable in the LOCAL
November 30, 2005, proposed that: GOVERNMENT CODE, Section 455, par. (2) and par. (2)
Shortly after, on January 12, 2006, petitioner was served (iii).
with a Closure Order15 dated December 28, 2005 issued by
While the question of the legality of the amusement tax on respondent City Mayor Osmefia. According to the Closure Not only that, these powers can be exercised under the
golf courses is still unresolved, may we propose that Alta Order, petitioner committed blatant violations of the laws general welfare clause of the Code, particularly Section 16
Vista Golf and Country Club settle first the other and Cebu City Ordinances, to wit: thereof, where it is irrefutable that "every government unit
assessments contained in your Assessment Sheet issued on shall exercise the powers expressly granted, those
October 11, 2005. 1. Operating a business without a necessarily implied therefrom, as well as powers necessary,
business permit for five (5) years, appropriate, or incidental of its efficient and effective
At this early stage, we also request that pending resolution from year 2001-2005, in relation to governance, and those which are essential to the promotion
of the legality of the amusement tax imposition on golf Chapters I and II and the penalty of the general welfare."
courses in [the Revised Omnibus Tax Ordinance, as clauses under Sections 4, 6, 8, 66 (f)
amended], Alta Vista Golf and Country Club be issued the and 114 of the City Tax Ordinance No. This CLOSURE ORDER precisely satisfies these legal
required Mayor's and/or Business Permit.12chanrobleslaw 69, otherwise known as the REVISED precedents. Hence now, in view whereof, your business
CITY TAX ORDINANCE OF THE establishment is hereby declared closed in direct
CITY OF CEBU, as amended by CO. contravention of the above-specified laws and city
Respondent Camarillo treated the letter dated October 17, 75; ordinances. Please cease and desist from further operating
your business immediately upon receipt of this order. an appeal before the Secretary of Justice within 30 days
In its Opposition to the Motion to Dismiss, petitioner from the effectivity of the Ordinance - was long barred by
This closure order is without prejudice to the countered that the RTC, a court of general jurisdiction, prescription.
constitutional/statutory right of the City to file criminal could take cognizance of its Petition in Civil Case No.
cases against corporate officers, who act for and its behalf, CEB-31988, which not only involved the issue of legality After filing by the parties of their respective Memorandum,
for violations of Section 114 of the REVISED CITY TAX or illegality of a tax ordinance, but also sought the the RTC issued an Order23 dated March 16, 2006 denying
ORDINANCE OF THE CITY OF CEBU and Section 516 declaration of nullity of the Closure Order and the issuance the prayer of petitioner for issuance of a Temporary
of the LOCAL GOVERNMENT CODE, with penalties of of writs of injunction and prohibition. Petitioner likewise Restraining Order (TRO). The RTC found that when the
imprisonment and/or fine. asserted that Section 195 of the Local Government Code on business permit of petitioner expired and it was operating
the protest of assessment does, not require payment under without a business permit, it ceased to have a legal right to
FOR STRICT AND IMMEDIATE protest. Section 252 of the same Code invoked by do business. The RTC affirmed respondent Mayor
COMPLIANCE.16chanrobleslaw respondents applies only to real property taxes. In addition, Osmeña's authority to issue or grant business licenses and
petitioner maintained that its Petition in Civil Case No. permits pursuant to the police power inherent in his office;
CEB-31988 could not be barred by prescription. There is and such authority to issue or grant business licenses and
The foregoing developments prompted petitioner to file nothing in the Local Government Code that could deprive permits necessarily included the authority to suspend or
with the RTC on January 13, 2006 a Petition for Injunction, the courts of the power to determine the constitutionality or revoke or even refuse the issuance of the said business
Prohibition, Mandamus, Declaration of Nullity of Closure validity of a tax ordinance due to prescription. It is the licenses and permits in case of violation of the conditions
Order, Declaration of Nullity of Assessment, and constitutional duty of the courts to pass upon the validity of for the issuance of the same. The RTC went on to hold that:
Declaration of Nullity of Section 42 of Cebu City Tax a tax ordinance and such duty cannot be limited or
Ordinance, with Prayer for Temporary Restraining Order restricted. Petitioner further contended that there is no [Petitioner] was given opportunities to be heard when it
and Writ of Preliminary Injunction, against respondents, need for exhaustion of administrative remedies given filed a protest [of] the assessment which was subsequently
which was docketed as Civil Case No. CEB-31988.17 that the issues involved are purely legal; the notice of denied. To the mind of this court, this already constitutes
Petitioner eventually filed an Amended Petition on January closure is patently illegal for having been issued without the observance of due process and that [petitioner] had
19, 2006.18 Petitioner argued that the Closure Order is due process; and there is an urgent need for judicial already been given the opportunity to be heard. Due process
unconstitutional as it had been summarily issued in intervention. Lastly, petitioner pointed out that there and opportunity to be heard does not necessarily mean
violation of its right to due process; a city mayor has no were sufficient allegations in the Petition that its filing winning the argument in one's favor but to be given the fair
power under the Local Government Code to deny the was duly authorized by petitioner. At any rate, petitioner chance to explain one's side or views with regards [to] the
issuance of a business permit and order the closure of a already attached to its Opposition its Board Resolution No. matter in issue, which in this case is the legality of the tax
business for nonpayment of taxes; Section 42 of the 104 authorizing Ozoa to file a case to nullify the Closure assessment.
Revised Omnibus Tax Ordinance, as amended, is null and Order. Thus, petitioner prayed for the denial of the Motion
void for being ultra vires or beyond the taxing authority of to Dismiss.20chanroblesvirtuallawlibrary It is therefore clear that when this case was filed,
respondent Cebu City, and consequently, the assessment [petitioner] had no more legal right in its favor for the
against petitioner for amusement tax for 1998 based on said Respondents, in their Rejoinder to Petitioner's Opposition courts to protect. It would have been a different story
Section 42 is illegal and unconstitutional; and assuming to the Motion to Dismiss,21 asserted that the Closure Order altogether had [petitioner] paid the tax assessment for the
arguendo that respondent Cebu City has the power to was just a necessary consequence of the nonpayment by green fees even under protest and despite payment and
impose amusement tax on petitioner, such tax for 1998 petitioner of the amusement tax assessed against it. The [respondent] Mayor refused the issuance of the business
already prescribed and could no longer be enforced. Revised Omnibus Tax Ordinance of respondent Cebu City permit because all the requisites for the issuance of the said
directs that no permit shall be issued to a business permit are all complied with.24chanroblesvirtuallawlibrary
Respondents filed a Motion to Dismiss based on the enterprise which made no proper payment of tax and,
grounds of (a) lack of jurisdiction of the RTC over the correspondingly, no business enterprise may be allowed to
subject matter; (b) non-exhaustion of administrative operate or continue to operate without a business permit.
The fundamental issue in the case was still the nonpayment On March 20, 2006, petitioner paid under protest to
remedies; (c) noncompliance with Section 187 of the Local respondent Cebu City, through respondent Camarillo, the
Government Code, which provides the procedure and by petitioner of amusement tax. Respondents relied on
Reyes v. Court of Appeals,22 in which the Court assessed amusement tax, plus penalties, interest, and
prescriptive periods for challenging the validity of a local surcharges, in the total amount of
tax ordinance; (d) noncompliance with Section 252 of the categorically ruled that the prescriptive periods fixed in
Section 187 of the Local Government Code are mandatory P2,750,249.17.25cralawred
Local Government Code and Section 75 of Republic Act
No. 3857, otherwise known as the Revised Charter of the and prerequisites before seeking redress from a competent
court. Section 42 of the Revised Omnibus Tax Ordinance, Since the parties agreed that the issues raised in Civil Case
City of Cebu, requiring payment under protest of the tax No. CEB-31988 were all legal in nature, the RTC already
assessed; and (e) failure to establish the authority of Ma. as amended, was passed on April 20, 1998, so the
institution by petitioner of Civil Case No. CEB-31988 considered the case submitted for resolution after the
Theresa Ozoa (Ozoa) to institute the case on behalf of parties filed their respective
petitioner.19chanroblesvirtuallawlibrary before the RTC on January 13, 2006 - without payment
under protest of the assessed amusement tax and filing of Memorandum.26chanroblesvirtuallawlibrary
On March 14, 2007, the RTC issued a Resolution granting IMPOSE AMUSEMENT TAX TO The present case is an exception
the Motion to Dismiss of respondents. Quoting from Reyes THE ACT OF PLAYING GOLF.29 to Section 187 of the Local Government
and Hagonoy Market Vendor Association v. Municipality of Code and the doctrine of exhaustion of
Hagonoy, Bulacan,27 the RTC sustained the position of administrative remedies.
respondents that Section 187 of the Local Government There is merit in the instant Petition.
Code is mandatory. Thus, the RTC adjudged: Section 187 of the Local Government Code reads:
The RTC judgment on pure
From the above cited cases, it can be gleaned that the questions of law may be directly Sec. 187. Procedure for Approval and Effectivity of Tax
period in the filing of the protests is important. In other appealed to this Court via a petition Ordinances and Revenue Measures; Mandatory Public
words, it is the considered opinion of this court [that] when for review on certiorari. Hearings. - The procedure for approval of local tax
a taxpayer questions the validity of a tax ordinance passed ordinances and revenue measures shall be in accordance
by a local government legislative body, a different Even before the RTC, the parties already acknowledged with the provisions of this Code: Provided, That public
procedure directed in Section 187 is to be followed. The that the case between them involved only questions of law; hearings shall be conducted for the purpose prior to the
reason for this could be because the tax ordinance is clearly hence, they no longer presented evidence and agreed to enactment thereof: Provided, further, That any question on
different from a law passed by Congress. The local submit the case for resolution upon submission of their the constitutionality or legality of tax ordinances or revenue
government code has set several limitations on the taxing respective memorandum. measures may be raised on appeal within thirty (30) days
power of the local government legislative bodies including from the effectivity thereof to the Secretary of Justice who
the issue of what should be taxed. It is incontestable that petitioner may directly appeal to this shall render a decision within sixty (60) days from the date
Court from the judgment of the RTC on pure questions of of receipt of the appeal: Provided, however, That such
In this case, since the Petitioner failed to comply with the law via its Petition for Review on Certiorari. Rule 41, appeal shall not have the effect of suspending the effectivity
procedure outlined in Section 187 of the Local Government Section 2(c) of the Rules of Court provides that "[i]n all of the ordinance and the accrual and payment of the tax,
Code and the fact that this case was filed way beyond the cases where only questions of law are raised or involved, fee, or charge levied therein: Provided, finally, That within
period to file a case in court, then this court believes that the appeal shall be to the Supreme Court by petition for thirty (30) days after receipt of the decision or the lapse of
the action must fail. review on certiorari in accordance with Rule 45." As the the sixty-day period without the Secretary of Justice acting
Court declared in Bonifacio v. Regional Trial Court of upon the appeal, the aggrieved party may file appropriate
Because of the procedural infirmity in bringing about this Makati, Branch 14930: proceedings with a court of competent jurisdiction.
case to the court, then the substantial issue of the propriety
of imposing amusement taxes on the green fees could no The established policy of strict observance of the judicial
longer be determined. hierarchy of courts, as a rule, requires that recourse must Indeed, the Court established in Reyes that the aforequoted
first be made to the lower-ranked court exercising provision is a significant procedural requisite and,
WHEREFORE, in view of the aforegoing, this case is concurrent jurisdiction with a higher court. A regard for therefore, mandatory:
hereby DISMISSED.28chanrobleslaw judicial hierarchy clearly indicates that petitions for the
issuance of extraordinary writs against first level courts Clearly, the law requires that the dissatisfied taxpayer who
should be filed in the RTC and those against the latter questions the validity or legality of a tax ordinance must
The RTC denied the Motion for Reconsideration of should be filed in the Court of Appeals. The rule is not iron- file his appeal to the Secretary of Justice, within 30 days
petitioner in an Order dated October 3, 2007. clad, however, as it admits of certain exceptions. from effectivity thereof. In case the Secretary decides the
appeal, a period also of 30 days is allowed for an aggrieved
Petitioner is presently before the Court on pure questions of Thus, a strict application of the rule is unnecessary when party to go to court. But if the Secretary does not act
law, viz.: cases brought before the appellate courts do not involve thereon, after the lapse of 60 days, a party could already
factual but purely legal questions. (Citations omitted.) proceed to seek relief in court. These three separate periods
I. WHETHER OR NOT THE POWER are clearly given for compliance as a prerequisite before
OF JUDICIAL REVIEW OVER THE seeking redress in a competent court. Such statutory periods
VALIDITY OF A LOCAL TAX "A question of law exists when the doubt or controversy are set to prevent delays as well as enhance the orderly and
ORDINANCE HAS BEEN concerns the correct application of law or jurisprudence to a speedy discharge of judicial functions. For this reason the
RESTRICTED BY SECTION 187 OF certain set of facts; or when the issue does not call for an courts construe these provisions of statutes as mandatory.
THE LOCAL GOVERNMENT CODE. examination of the probative value of the evidence
presented, the truth or falsehood of facts being admitted[;]" A municipal tax ordinance empowers a local government
II. WHETHER OR NOT THE CITY OF and it may be brought directly before this Court, the unit to impose taxes. The power to tax is the most effective
CEBU OR ANY LOCAL undisputed final arbiter of all questions of instrument to raise needed revenues to finance and support
law.31chanroblesvirtuallawlibrary the myriad activities of local government units for the
delivery of basic services essential to the promotion of the and legal reasons. The availment of administrative remedy (a) All cases in which the constitutionality or validity of
general welfare and enhancement of peace, progress, and entails lesser expenses and provides for a speedier any treaty, international or executive agreement, law,
prosperity of the people. Consequently, any delay in disposition of controversies. Furthermore, the courts of presidential decree, proclamation, order, instruction,
implementing tax measures would be to the detriment of justice, for reasons of comity and convenience, will shy ordinance, or regulation is in question.
the public. It is for this reason that protests over tax away from a dispute until the system of administrative
ordinances are required to be done within certain time redress has been completed and complied with, so as to
frames. In the instant case, it is our view that the failure of give the administrative agency concerned every opportunity In J.M. Tuason and Co., Inc. v. Court of Appeals, Ynot v.
petitioners to appeal to the Secretary of Justice within 30 to correct its error and dispose of the case. However, there Intermediate Appellate Court, and Commissioner of
days as required by Sec. 187 of R.A. 7160 is fatal to their are several exceptions to this rule. Internal Revenue v. Santos, the Court has affirmed the
cause.32 (Citations omitted.) jurisdiction of the RTC to resolve questions of
The rule on the exhaustion of administrative remedies is constitutionality and validity of laws (deemed to include
intended to preclude a court from arrogating unto itself the local ordinances) in the first instance, without deciding
The Court further affirmed in Hagonoy that: authority to resolve a controversy, the jurisdiction over questions which pertain to legislative policy. (Emphases
which is initially lodged with an administrative body of supplied, citations omitted.)
special competence. Thus, a case where the issue raised is
At this point, it is apropos to state that the timeframe fixed a purely legal question, well within the competence; and
by law for parties to avail of their legal remedies before the jurisdiction of the court and not the administrative
competent courts is not a "mere technicality" that can be agency, would clearly constitute an exception. Resolving In Cagayan Electric Power and Light Co., Inc.
easily brushed aside. The periods stated in Section 187 of questions of law, which involve the interpretation and (CEPALCO) v. City of Cagayan De Oro,35 the Court
the Local Government Code are mandatory. Ordinance No. application of laws, constitutes essentially an exercise of initially conceded that as in Reyes, the failure of taxpayer
28 is a revenue measure adopted by the municipality of judicial power that is exclusively allocated to the CEPALCO to appeal to the Secretary of Justice within the
Hagonoy to fix and collect public market stall rentals. Supreme Court and such lower courts the Legislature statutory period of 30 days from the effectivity of the
Being its lifeblood, collection of revenues by the may establish. ordinance should have been fatal to its cause. However, the
government is of paramount importance. The funds for the Court purposefully relaxed the application of the rules in
operation of its agencies and provision of basic services to In this case, the parties are not disputing any factual view of the more substantive matters.
its inhabitants are largely derived from its revenues and matter on which they still need to present evidence. The
collections. Thus, it is essential that the validity of revenue sole issue petitioners raised before the RTC in Civil Case Similar to Ongsuco and CEPALCO, the case at bar
measures is not left uncertain for a considerable length of No. 25843 was whether Municipal Ordinance No. 98-01 constitutes an exception to the general rule. Not only does
time. Hence, the law provided a time limit for an aggrieved was valid and enforceable despite the absence, prior to its the instant Petition raise pure questions of law, but it also
party to assail the legality of revenue measures and tax enactment, of a public hearing held in accordance with involves substantive matters imperative for the Court to
ordinances.33 (Citations omitted.) Article 276 of the Implementing Rules and Regulations of resolve.
the Local Government Code. This is undoubtedly a pure
question of law, within the competence and jurisdiction Section 42 of the Revised Omnibus
Nevertheless, in later cases, the Court recognized of the RTC to resolve. Tax Ordinance, as amended, imposing
exceptional circumstances that justify noncompliance by a amusement tax on golf courses is null
taxpayer with Section 187 of the Local Government Code. Paragraph 2(a) of Section 5, Article VIII of the and void as it is beyond the authority of
Constitution, expressly establishes the appellate jurisdiction respondent Cebu City to enact under the
The Court ratiocinated in Ongsuco v. Malones,34 thus: of this Court, and impliedly recognizes the original Local Government Code.
jurisdiction of lower courts over cases involving the
constitutionality or validity of an The Local Government Code authorizes the imposition by
It is true that the general rule is that before a party is local government units of amusement tax under Section
allowed to seek the intervention of the court, he or she ordinance:ChanRoblesVirtualawlibrary
140, which provides:
should have availed himself or herself of all the means of
administrative processes afforded him or her. Hence, if Section 5. The Supreme Court shall have the following
resort to a remedy within the administrative machinery can powers: Sec. 140. Amusement Tax. - (a) The province may levy an
still be made by giving the administrative officer concerned amusement tax to be collected from the proprietors,
every opportunity to decide on a matter that comes within xxxx lessees, or operators of theaters, cinemas, concert halls,
his or her jurisdiction, then such remedy should be circuses, boxing stadia, and other places of amusement
exhausted first before the court's judicial power can be (2) Review, revise, reverse, modify or affirm on appeal or at a rate of not more than thirty percent (30%) of the gross
sought. The premature invocation of the intervention of the certiorari, as the law or the Rules of Court may provide, receipts from admission fees.
court is fatal to one's cause of action. The doctrine of final judgments and orders of lower courts in:
exhaustion of administrative remedies is based on practical (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 the Court in National Power Corporation v. Angas as amusement tax. Section 140 specifically mentions 'boxing
gross receipts are divided between said proprietors, lessees, follows:ChanRoblesVirtualawlibrary stadia' in addition to "theaters, cinematographs, concert
or operators and the distributors of the cinematographic halls [and] circuses" which were already mentioned in PD
films. The purpose of the rule on ejusdem generis is to give effect No. 231. Also, 'artistic expression' as a characteristic does
to both the particular and general words, by treating the not pertain to 'boxing stadia'.
(c) The holding of operas, concerts, dramas, recitals, particular words as indicating the class and the general
painting, and art exhibitions, flower shows, musical words as including all that is embraced in said class, In the present case, the Court need not embark on a
programs, literary and oratorical presentations, except pop, although not specifically named by the particular words. laborious effort at statutory construction. Section 131 (c) of
rock, or similar concerts shall be exempt from the payment This is justified on the ground that if the lawmaking body the LGC already provides a clear definition of 'amusement
of the tax hereon imposed. intended the general terms to be used in their unrestricted places':
sense, it would have not made an enumeration of particular
(d) The sangguniang panlalawigan may prescribe the time, subjects but would have used only general terms. [2 xxxx
manner, terms and conditions for the payment of tax. In Sutherland, Statutory Construction, 3rd ed., pp. 395-400].
case of fraud or failure to pay the tax, the sangguniang Indeed, theaters, cinemas, concert halls, circuses, and
panlalawigan may impose such surcharges, interests and boxing stadia are bound by a common typifying
penalties as it may deem appropriate. In Philippine Basketball Association v. Court of Appeals, characteristic in that they are all venues primarily for
the Supreme Court had an opportunity to interpret a starkly the staging of spectacles or the holding of public shows,
(e) The proceeds from the amusement tax shall be shared similar provision or the counterpart provision of Section exhibitions, performances, and other events meant to be
equally by the province and the municipality where such 140 of the LGC in the Local Tax Code then in effect. viewed by an audience. Accordingly, 'other places of
amusement places are located. (Emphasis supplied.) Petitioner Philippine Basketball Association (PBA) amusement' must be interpreted in light of the typifying
contended that it was subject to the imposition by LGUs of characteristic of being venues "where one seeks
amusement taxes (as opposed to amusement taxes imposed admission to entertain oneself by seeing or viewing the
by the national government). In support of its contentions, show or performances" or being venues primarily used
"Amusement places," as defined in Section 131 (c) of the it cited Section 13 of Presidential Decree No. 231,
Local Government Code, "include theaters, cinemas, to stage spectacles or hold public shows, exhibitions,
otherwise known as the Local Tax Code of 1973, (which is performances, and other events meant to be viewed by
concert halls, circuses and other places of amusement analogous to Section 140 of the LGC) providing the
where one seeks admission to entertain oneself by seeing or an audience.
viewing the show or performance."
As defined in The New Oxford American Dictionary, 'show'
The pronouncements of the Court in Pelizloy Realty Section 13. Amusement tax on admission. — The province means "a spectacle or display of something, typically an
Corporation v. The Province of Benguet36 are of particular shall impose a tax on admission to be collected from the impressive one"; while 'performance' means "an act of
significance to this case. The Court, in Pelizloy Realty, proprietors, lessees, or operators of theaters, staging or presenting a play, a conceit, or other form of
declared null and void the second paragraph of Article X, cinematographs, concert halls, circuses and other places of entertainment." As such, the ordinary definitions of the
Section 59 of the Benguet Provincial Code, in so far as it amusement xxx. words 'show' and 'performance' denote not only visual
imposes amusement taxes on admission fees to resorts, engagement (i.e., the seeing or viewing of things) but
swimming pools, bath houses, hot springs, and tourist Applying the principle of ejusdem generis, the Supreme also active doing (e.g., displaying, staging or presenting)
spots. Applying the principle of ejusdem generis, as well as Court rejected PBA's assertions and noted such that actions are manifested to, and
the ruling in the PBA case, the Court expounded on the that:ChanRoblesVirtualawlibrary (correspondingly) perceived by an audience.
authority of local government units to impose amusement
tax under Section 140, in relation to Section 131(c), of the Considering these, it is clear that resorts, swimming pools,
[I]n determining the meaning of the phrase 'other places of bath houses, hot springs and tourist spots cannot be
Local Government Code, as follows: amusement', one must refer to the prior enumeration of considered venues primarily "where one seeks admission to
theaters, cinematographs, concert halls and circuses with entertain oneself by seeing or viewing the show or
Under the principle of ejusdem generis, "where a general artistic expression as their common characteristic. performances". While it is true that they may be venues
word or phrase follows an enumeration of particular and Professional basketball games do not fall under the same where people are visually engaged, they are not primarily
specific words of the same class or where the latter follow category as theaters, cinematographs, concert halls and venues for their proprietors or operators to actively display,
the former, the general word or phrase is to be construed to circuses as the latter basically belong to artistic forms of stage or present shows and/or performances.
include, or to be restricted to persons, things or cases akin entertainment while the former caters to sports and gaming.
to, resembling, or of the same kind or class as those Thus, resorts, swimming pools, bath houses, hot springs
specifically mentioned." However, even as the phrase 'other places of amusement' and tourist spots do not belong to the same category or
was already clarified in Philippine Basketball Association, class as theaters, cinemas, concert halls, circuses, and
The purpose and rationale of the principle was explained by Section 140 of the LGC adds to the enumeration of 'places boxing stadia. It follows that they cannot be considered as
of amusement' which may properly be subject to among the 'other places of amusement' contemplated by
Section 140 of the LGC and which may properly be subject Revised Omnibus Tax Ordinance, as amended, imposing HON. ARTEMON D. LUNA, Judge of the Court of
to amusement taxes.37 (Emphases supplied, citations amusement tax on golf courses, was enacted pursuant to the First Instance of Manila; YOSHIO YAMAMOTO and
omitted.) residual power to tax of respondent Cebu City. A local MARILYN A. JAVIER, respondent.
government unit may exercise its residual power to tax
when there is neither a grant nor a prohibition by statute; or
In light of Pelizloy Realty, a golf course cannot be when such taxes, fees, or charges are not otherwise
considered a place of amusement. As petitioner asserted, specifically enumerated in the Local Government Code,
National Internal Revenue Code, as amended, or other BARREDO, J.:
people do not enter a golf course to see or view a show or
performance. Petitioner also, as proprietor or operator of applicable laws. In the present case, Section 140, in relation
the golf course, does not actively display, stage, or present a to Section 131(c), of the Local Government Code already Petition for certiorari and prohibition to annul and set aside
show or performance. People go to a golf course to engage explicitly and clearly cover amusement tax and respondent as acts in excess of jurisdiction and or a abuse to discretion
themselves in a physical sport activity, i.e., to play golf; the Cebu City must exercise its authority to impose amusement the order of respondent judge, which, briefly characterized,
same reason why people go to a gym or court to play tax within the limitations and guidelines as set forth in said amount to an assumption of jurisdiction by a Court of First
badminton or tennis or to a shooting range for target statutory provisions. Instance and its exercise of the power to review actuations
practice, yet there is no showing herein that such gym, of the Securities and Exchange Commission. Notably, the
court, or shooting range is similarly considered an WHEREFORE, in view of all the foregoing, the Court respondents have not filed any answer, required by the
amusement place subject to amusement tax. There is no GRANTS the instant Petition, and REVERSES and SETS Court's resolution of December 16, 1981.
basis for singling out golf courses for amusement tax ASIDE the Resolution dated March 14, 2007 and the Order
purposes from other places where people go to play sports. dated October 3, 2007 of the Regional Trial Court, Cebu The background facts are simple. As alleged in The petition
This is in contravention of one of the fundamental City, Branch 9 in Civil Case No. CEB-31988. The Court which be their very nature, and because they are not denied
principles of local taxation: that the "[taxation shall be DECLARES NULL and VOID the following: (a) Section anyway, respondents having failed to answer. The
uniform in each local government unit."38 Uniformity of 42 of the Revised Omnibus Tax Ordinance of the City of circumstances that led to the filing of the instant recourse
taxation, like the kindred concept of equal protection, Cebu, as amended by City Tax Ordinance Nos. LXXXII are:
requires that all subjects or objects of taxation, similarly and LXXXIV, insofar as it imposes amusement tax of 20%
situated, are to be treated alike both in privileges and on the gross receipts on entrance, playing green, and/or
admission fees of golf courses; (b) the tax assessment 4.1. The Philippine Pacific Fishing Co.,
liabilities.39chanroblesvirtuallawlibrary Inc. through its of. officers, Yoshio
against petitioner for amusement tax on its golf course for
the year 1998 in the amount of Pl,373,761.24, plus Yamamoto anterior Marilyn Javier,
Not lost on the Court is its declaration in Manila Electric private respondents herein, who are
Co. v. Province of Laguna40 that under the 1987 surcharges and interest pertaining to said amount, issued by
the Office of the City Treasurer, City of Cebu; and (c) the plaintiffs in Civil Case No. 144299,
Constitution, "where there is neither a grant nor a mortgaged to the Philippine Banking
prohibition by statute, the tax power [of local government Closure Order dated December 28, 2005 issued against Alta
Vista Golf and Country Club by the Office of the Mayor, Corporation the fishing vessels,
units] must be deemed to exist although Congress may PACIFIC I and PACIFIC II, to secure
provide statutory limitations and guidelines." Section 186 City of Cebu. The Court also ORDERS the City of Cebu to
refund to Alta Vista Golf and Country Club the amusement payment of a debt. Upon default of the
of the Local Government Code also expressly grants local Philippine Pacific Fishing Co., Inc. to
government units the following residual power to tax: tax, penalties, surcharge, and interest paid under protest by
the latter in the total amount of P2,750,249.17 or to apply pay its debt, the Philippine Banking
the same amount as tax credit against existing or future tax Corporation instituted foreclosure
Sec. 186. Power to Levy Other Taxes, Fees, or Charges. - liability of said Club. proceedings and filed an action for
Local government units may exercise the power to levy replevin. To prevent the foreclosure,
taxes, fees, or charges on any base or subject not SO ORDERED Yamamoto and/or Marilyn Javier,
otherwise specifically enumerated herein or taxed under acting as officers of the corporation,
the provisions of the National Internal Revenue Code, made an agreement with Cheng Yong,
as amended, or other applicable laws: Provided, that the one of the defendants in the
taxes, fees, or charges shall not be unjust, excessive, aforementioned Civil Case. Under the
oppressive, confiscatory or contrary to declared national agreement, Cheng Yong paid the
policy: Provided, further, That the ordinance levying such indebtedness of Philippine Pacific
taxes, fees or charges shall not be enacted without any prior G.R. No. L-59070 March 15, 1982 Fishing to Philippine Banking
public hearing conducted for the purpose. (Emphasis Corporation, and in turn, Yamamoto
supplied.) and/or Javier, as officers of Philippine
PHILIPPINE PACIFIC FISHING CO., INC., CHENG Pacific Fishing executed a chattel
YONG, LILIA GAW and CHEN GUAT, petitioners, mortgage of the two vessels in favor of
vs. Cheng Yong.
Respondents, however, cannot claim that Section 42 of the
4.2. Upon failure of Philippine Pacific issued restraining the defendants, 5.5. On October 26, 1981, the
to pay the debt, Cheng Yong foreclosed particularly the Securities and respondent judge issued the order
the mortgage. Yamamoto and Javier Exchange Commission, from complained of, copy of which is hereto
then went to the Securities and enforcing and implementing the attached as Annex 'A' restraining the
Exchange Commission and filed a orders complained of and from Securities and Exchange Commission,
complaint, alleging that the controversy disturbing or interfering in the and Jose Maria Hilado, and the
between Cheng Yong and Philippine exercise by private respondent Yoshio petitioners from further proceeding
Pacific was intra-corporate. (SEC Case Yamamoto of his rights to the with SEC Case No. 2042 and from
No. 002042). The SEC restrained the ownership and possession of the two enforcing the aforesaid orders until
foreclosure proceedings and thereafter, fishing vessels, PACIFIC I and further orders from the Court;
the parties finally agreed to the PACIFIC II;
formation of a Management 5.6. On November 10, 1981 petitioners
Committee, with powers among others, 5.3. Likewise, private respondents pray Cheng Yong, Lilia Gaw and Cheng
'to take custody and possession of all that after hearing, private respondent Guat, who are some of the defendants
assets, funds, properties and records of Yoshio Yamamoto be declared the named in the aforestated Civil Case No.
the corporation; and 'to administer, lawful and absolute owner of the 144299, Court of First Instance of
manage and preserve such assets, funds aforementioned two fishing vessels; Manila, filed, through counsel, a
and records. Exercising said powers the that all questioned orders of the motion to dismiss the complaint, xerox
Management Committee ordered Securities and Exchange Commission copy of which is hereto attached as
Yamamoto and Javier to deliver to the be declared null and void and issued Annex 'E' and an opposition to the
Committee vessels, PACIFIC I and without authority and jurisdiction issuance of a writ of preliminary
PACIFIC II; and/or with grave abuse of discretion injunction, xerox copy of which is
that the defendants, particularly the hereto attached as Annex 'F'
V. PERTINENT PROCEEDINGS Securities and Exchange Commission,
desist from questioning the herein 5.7. In his meantime the hearing of the
5.1. On October 22, 1979 private private respondent Yoshio Yamamoto's application for issuance of a writ of
respondents, through counsel, filed ownership and right of possession of preliminary injunction which was
with the respondent court a complaint the aforesaid two vessels and making originally set on November 6, 1981
for declaration of rescission and permanent such writ of preliminary was, upon motion of private
injunction, with ex-parte preliminary injunction which it may have issued; respondents' counsel, postponed and
injunction docketed as Civil Case No. reset to November 18, 1981, during
144299, entitled 'Yoshio Yamamoto and 5.4. On the same date, private which The parties were given a period
Marilyn A. Javier, plaintiffs, versus, respondents filed an ex-parte motion of fifteen (15) days within which to
Securities and Exchange Commission, for resolution of the Executive Judge of simultaneously submit their respective
Jose Maria Hilado, Philippine Pacific the Court of First Instance of Manila, memorandum:
Fishing Co., Inc. Cheng Yong, Lilia praying that an order be issued
Gaw and Cheng Guat; xerox copy of directing the Clerk of Court or his 5.8. On November 19, 1981, as
said complaint is hereto attached as authorized deputy to give due course to aforesaid, the fourth floor of the City
Annex 'B', the complaint of the herein private Hall of Manila housing several salas of
respondents upon payment of the the Court of first Instance of Manila,
5.2. In their complaint, private docket fee of P200.00 pursuant to par. among which is the sala of Branch
respondents pray that upon filing of the 10, Section 5 Rule 141 of the Rules of XXXII was burned and as
complaint, a restraining order be issued Court. Xerox copy of the motion is consequence, the judicial records
ex-parte commanding the defendants to hereto attached as Annex 'C'. Acting including those of the aforementioned
desist from further proceeding in SEC upon said motion, the aforementioned case was burned, hence, The
Case No. 2042 and from enforcing the Executive Judge granted the same and proceedings in said case is ordered
orders issued by the Securities and ordered the Clerk of Court to accept the suspended pending the reconstitution of
Exchange Commission under date of filing of private respondents' complaint the judicial records. thereafter however
August 14, 1981, September 29, 1981 upon payment of docket fee in the sum counsel for defendant Cheng Yong,
and October 6, 1981; that thereafter, a of P200.00. Xerox copy of the order is Lilia Gaw and Cheng Guat in the
writ of preliminary injunction be hereto attached as Annex 'D'; aforementioned Civil case No. L-44299
in the court below filed, through Manila, Philippines, October 26, 1981. 2. to administer, manage and preserve
counsel, their memorandum, xerox (Page 22, Record) such assets, funds and records;
copy of which is hereto attached as
Annex 'G' (Pp. 7-12, Record) The orders of the Securities and Exchange Commission 3. to receive any and all amounts, sums
referred to in the above order are as follows: or money due and owing to the
The order of herein respondent Judge being questioned company and to deposit such amounts
reads thus: ORDER received in an appropriate bank for and
in the account of the corporation;
This is a complaint for declaration of After a careful study and review of the allegations of the
rescission and injunction, with prayer separate motions filed by the respondents, both seeking to 4. to make such payments and
for issuance of a writ of preliminary reconsider the Order of this Commission dated June 17, disbursements in the ordinary course of
injunction to restrain the Securities and 1981 denying the motion to dismiss and the opposition of business;
Exchange Commission from further petitioners thereto, this Hearing Officer finds no compelling
proceeding with SEC Case No. 2042, reason for disturbing the findings made in the Order sought 5. to keep and maintain proper
entitled, 'YOSHIO YAMAMOTO and to be reconsidered, and thereto, said motions are hereby accounting records of each and every
MARILYN A. JAVIER vs. DENIED. transaction of the company, particularly
PHILIPPINE PACIFIC FISHING CO., receipts and disbursements of funds;
CHENG GUAT and the SHERIFF OF At the hearing on July 27, 1981, the motion of counsel for
MANILA' as well as from enforcing its the respondent corporation requiring the petitioners who are 6. to submit to this Commission a
Orders of August 14, September 29, in possession of the fishing vessels F/B Pacific I and II, to detailed report on all receipts and
and October 6, 1981. Finding the deliver said fishing vessels to the corporation was likewise disbursement of funds and such other
complaint sufficient in form and considered. After considering the manifestation and reports as this Commission may require
substance, defendants are required to arguments of both parties and upon suggestion of this and
show cause on November 6, 1981 at Hearing Officer, the parties agreed that in lieu of the
8:30 o'clock a.m. why the writ of appointment of a receiver as prayed for by the petitioners in 7. to acquire, lease, sell mortgage or
preliminary injunction should not be their motion of this Hearing Officer, the parties agreed that otherwise encumber such assets with
issued. Let copies of this Order together in lieu of the appointment of a receiver as prayed for by the the prior approval of this Commission.
with copies of the complaint be served petitioners in their motion to that effect and the delivery of
upon the defendants at the expense of the fishing vessels to the corporation as requested by
counsel for the respondent corporation, a Management The parties, petitioners as well as
plaintiffs. Defendants are required to defendants shall turn over to the
answer the petition within ten (10) days Committee be instead created. The petitioners and the
respondents immediately nominated their representatives as Commission all the assets, funds,
from receipt of this Order. properties and records of the
members and the Chairman to be designated by the
Commission. corporation in their possession
Meanwhile, the defendants are hereby including the vessels F/B Pacific I and
restrained from further proceeding with II within five (5) days and to submit to
SEC. No. 2042 and from enforcing the As agreed upon by the parties, assisted by their respective the Commission within ten (10) days a
aforesaid Orders until further orders counsels, a Management Committee is hereby created and complete inventory of all the assets,
from this Court. constituted to be composed of Mrs. Marilyn Javier and Mr. funds, properties and records of the
Melecio Hernandez as members with Atty. Felipe S. corporation which are in their
Tongco of this Commission as Chairman. The said possession, in the presence of the
Plaintiffs are hereby ordered to Committee, which shall at all times be under the control
immediately file a bond of P20,000 to Chairman and the members of the
and supervision of this Commission shall have the above committee
answer for any damages which following powers, functions and duties, to wit:
respondents may sustain by reason of
the issuance of this Order, if the Court Until further orders from this
should finally decide that they are not 1. to take custody and possession of all Commission, said Committee created
entitled thereto. assets, funds, properties and records of pursuant to this Order shall have all the
the corporation and to prepare an foregoing authorities and must
inventory thereof; discharge all the functions pertaining
thereto as well as to perform such other
duties as may be necessary in order to operation thereof by the Management WHEREFORE, petitioners are hereby
protect the interest of the corporation. Committee, deprived the corporation of found guilty of indirect contempt and
sizeable earnings out of said vessels fine of P1,000 plus an additional fine of
The application of the petitioners for and that this failure of petitioners to P200 for every day of delay in the
the provisional remedy of receivership comply with the Order, being willful delivery of said vessels or non-
is also hereby considered withdrawn. and deliberate, constitute contumacious compliance with the order is hereby
acts punishable under the New Rules of imposed upon them without prejudice
Procedure in the Securities and to imprisonment in case petitioners still
SO ORDERED. Exchange Commission. fail to deliver the two (2) fishing boats
within five (5) days from receipt of the
Mandaluyong, Metro Manila, August Petitioners, in opposing the motion for Order.
14, 1981. contempt, averred that they are not in
possession of assets, funds, properties SO ORDERED.
xxx xxx xxx and records of the corporation which to
the best of their knowledge are in the Mandaluyong, Metro Manila,
ORDER possession of respondent Cheng, that September 29, 1981. (Pp. 57-59,
the fishing vessels F/B Pacific I and II Record)
are not assets of respondent
Submitted for resolution is the corporation, petitioner Yamamoto
manifestation and motion filed by the having rescinded the sale in the ORDER
respondents to cite petitioners in exercise of his lien as an unpaid seller
contempt of this Commission and the of the vessels and that petitioner Acting upon the urgent ex-parte motion
opposition thereto filed by petitioners. Yamamoto is willing to consider of defendant corporation dated October
arrangement whereby the vessels would 6, 1981, and finding the same to be
In a manifestation and motion filed be operated under the supervision of meritorious, said urgent ex-parte
before this Commission on September the Management Committee for the motion is hereby GRANTED.
1, 1981, respondents alleged that in an benefit of all the parties concerned, the
order dated August 14, 1981, issued by rescission the sale of the vessels WHEREFORE, the Chairman of the
the Commission, the parties, petitioners notwithstanding. "Considering that one Management Committee or his duly
and respondents, were directed to turn of the issues involved in this case is the authorized representative is hereby
over to the Management Committee ownership of the two (2) vessels, we directed to take possession of the
formed thereat, all the assets, funds, consider it quite impractical for the fishing vessel, the PACIFIC II,
properties and records of the petitioners to capitalize on this issue to wherever it may be found in Philippine
corporation which are in their justify their inability to comply with the waters and for the purpose, is hereby
possession, including the vessels F/B Order of this Commission dated August authorized 'to enlist the aid and support
Pacific I and Pacific II within five (5) 14, 1981. of any and all enforcement agencies of
days and to submit to the Commission the government, civil or military'.
within ten (10) days, a complete Unless, therefore, prevented by any pursuant to Sec. 3 of Presidential
inventory of said assets, funds, supervening events, petitioners are duty Decree No. 902-A.
properties and records of the bound to abide by the directive of this
corporation in the presence of the Commission for the delivery of the two
Chairman and members of the SO ORDERED.
(2) fishing boats to the Management
Management Committee; that more Committee. Viewed from this
than five (5) days have elapsed since perspective, we find petitioners' non- Mandaluyong, Metro Manila,
the receipt of the order of August 14, compliance with the Order of this Philippines.
1981 by the petitioners without the Commission dated August 14, 1981
latter having complied with the directing delivery of fishing boats P/B October 6, 1981. (Page 60, Record)
directive to deliver the aforesaid vessels Pacific I and II, which are admittedly in
to the Commission; that each day of their (petitioners) possession, to the
delay in the delivery of the possession We are aware of the fact that up to the present respondent
Management Committee to be without
of the aforestated vessel and. in the judge has not gone beyond issuing the above restraining
any justifiable reason.
order, notably requiring the filing of a bond. What has
happened with the motion for a writ of preliminary heretofore issued by Us permanent. with costs against On June 22, 1982, the then Board
injunction is not in the record. But assuming respondents respondents. of Transportation, now the Land
should claim that the herein petition is premature Transportation Commission,
considering there is no showing that respondent judge has Aquino, Concepcion, Jr., De Castro, Ericta and Escolin JJ., rendered a Decision granting
not been asked to reconsider his impugned order and the concur. petitioner a certificate of public
incident on the preliminary injunction has not been convenience to operate a garage
resolved. Our ready answer is that We have opted to act (tourist) air-conditioned service
now, for the simple reason that the invalidity of the Abad Santos, J., concur in the result. within the City of Manila and from
challenged order is so manifest and patent, in fact and in said place to any point in Luzon,
law, that it would be a waste of time and actually an and vice-versa (Annex A, CA-G.R.
injustice to petitioners, if We delayed further disposition of SP No. 10049).
the issues raised by them. We cannot imagine any different G.R. No. 79886 November 22, 1989
end result that subsequent actions of the parties or On June 25, 1982, said Decision
respondent judge could possibly affect Our conclusion was amended by converting
regarding the utter lack of jurisdiction of respondent judge QUALITRANS LIMOUSINE SERVICE, INC.,
petitioner, petitioner's certificate of public
in the premises. convenience for garage service
ROYAL CLASS LIMOUSINE SERVICE, LAND into one for limousine tourist
As already portrayed above, the parties came within the TRANSPORTATION COMMISSION, COURT OF service for the transportation of
jurisdiction of the Securities and Exchange Commission on APPEALS, respondents. all outgoing passengers of the
the basis of the complaint of herein petitioners. They Manila International Airport
claimed their controversy with private respondents (Annex B, CA-G.R. SP No. 10049).
involved intra-corporate matters within the exclusive G.R. No. 79887 November 22, 1989
jurisdiction of that body. The Commission took cognizance On October 14, 1985, a Deed of
thereof, the parties discussed their respective positions QUALITRANS LIMOUSINE SERVICE, INC., Absolute Sale (Annex I of both
before it, and on the issues joined by them, the Commission vs. Records) was executed by
issued the orders above-quoted. ROYAL CLASS LIMOUSINE SERVICE, JUDGE private respondent with
PERPETUA COLOMA, and COURT OF APPEALS, Transcare, Inc., a duly licensed
If any or all of said orders are erroneous, the organic act respondents. limousine service operator and
creating the Commission, Presidential Decree 902-A, likewise, a holder of a certificate
provides the appropriate remedy, first within the of public convenience (Annex 2
Commission itself, and ultimately in this Court. Nowhere of both Records). By virtue of
does the law empower Court of First Instance to interfere said sale, the franchise granted
with the orders of the Commission. Not even on grounds of to Transcare, Inc. for the use of
due process or jurisdiction. The Commission is, conceding 40 units of tourist cars was sold
arguendo a possible claim of respondents, at the very least. These two petitions, in the nature of appeals by to private respondent.
a co-equal body with the Courts of First Instance. Even as certiorari, from a joint judgment of the Court of
such co-equal, one would have no power to control the Appeals, were brought by Qualitrans Limousine
On December 27, 1985, upon
other. But the truth of the matter is that only the Supreme Service, Inc., grantee of a certificate of public
application filed for the approval
Court can enjoy and correct any actuation of the convenience issued by the defunct Board of
of aforementioned sale, an Order
Commission. (Pineda vs. Lantin, 6 SCRA 757) Transportation to operate a "garage (tourist) air-
was issued by the Land
conditioned service" 1 in Manila to any point in the
Transportation Commission
island of Luzon. By our Resolution of September
Moreover, it is obvious that since the Commission has its granting a provisional permit in
7, 1988, we consolidated the twin cases. We also
offices outside of Manila, under settled jurisprudence, a favor of private respondent
gave due course thereto.
Manila court's writ of preliminary injunction. much less a (Annexes C and 3, CA-G.R. SP
restraining order, can have no binding effect outside the No. 10049); Annexes B and 3 CA-
Manila area. The facts, never disputed, are stated in the G.R. No. 10370-SP). The prefatory
decision of the Court of Appeals. We quote: portion thereof states:
IN VIEW OF ALL THE FOREGOING, judgment is hereby
rendered setting aside the impugned order of herein xxx xxx xxx The application
respondent judge and making the restraining order filed in this case
is for the in Luzon accessible to vehicular In the hearing of September 5,
approval of sale traffic and vice-versa", and not 1986, respondent Hon. Perpetua
made by from the "New Manila D. Coloma, in whose Branch the
TRANSCARE, International Airport ... to any civil case was raffled, gave
INC., in favor of point in the Island of Luzon ... " petitioner up to September 8,
ROYAL CLASS (ibidem). Petitioner claims that 1986 within which to file an
LIMOUSINE respondent has been soliciting opposition, if any, to respondent
SERVICE of the passengers from the New Manila urgent motion.
Certificate of International Airport to transport
Public them to any point in Luzon to the On September 8, 1986, petitioner
Convenience prejudice of petitioner's filed the required opposition
issued in Case business. (Annex 1, CA-G.R. SP No. 10049).
Nos. 81-4405 On that same date, respondent
and 82-415 On September 1, 1986, petitioner Judge ruled on said urgent
authorizing the filed Civil Case No. 4275-P before motion and petitioner's earlier
operation of a the Pasay City Regional Trial prayer for the issuance of a
TOURIST CAR Court for damages with prayer preliminary mandatory
(AIR- for issuance of a writ of injunction. Pertinent portions of
CONDITIONED) mandatory injunction against respondent Judge's Order read
SERVICE within private respondent (Annex D, CA- as follows:
the New Manila G.R. SP No. 10049: Annex 5, CA-
International G.R. SP No. 10370).
Airport and from After a careful
said place to examination of
any point in the On same date, Hon. Fermin A. the arguments
Island of Luzon Martin. Jr., Vice-Executive Judge of both parties
accessible to of the Pasay City Regional Trial to support their
motor vehicle Court, issued a Restraining Order respective
traffic and vice- directing private respondent to claims, this
versa, involving desist from ferrying passengers Court believes
the right to from the New Manila International that the
operate forty Airport to their residences defendant's
(40) units (Annex E, CA-G.R. SP No. 10049; contention finds
authorized Annex 6, CA-G.R. SP No. 10370). justification
therein. ... The petition for preliminary under the
(Emphasis injunction was set for hearing on doctrine of
supplied). September 5, 1986. exhaustion of
On September 3, 1986, private remedies.
On June 17, 1986, petitioner filed
a motion for reconsideration respondent, defendant in Civil
before the Land Transportation Case No. 4275, filed an Urgent xxx xxx xxx
Commission to correct the route Motion to Dissolve/Lift
specified in the prefatory portion Restraining Order issued by Hon. Further, this Court doesn't have jurisdiction over
of its December 27, 1986 Order Fermin A. Martin, Jr. (Annex F, this case under Sec. 19 BP Blg. 129.
(Annex 4 of both Records). CA-G.R. SP No. 10049).
Petitioner argues that the Thereafter, same respondent filed
an Opposition to petitioner's RTC shall have Exclusive jurisdiction.— SEC. 19,
application filed by private BP Blg. 129.
respondent was for the route application for a writ of
from the "New Manila preliminary mandatory injunction
International Airport to hotels (Annex G, CA-G.R. SP No. 10049). 6. In all cases not within the exclusive jurisdiction
and from said hotels to any point of a any Court, Tribunal, person or body
exercising judicial or quasi-judicial functions.
IN VIEW OF ALL No. 10049; Annexes 10 and 11, holds the Appellate Court to be in error, in these
THE CA-G.R. SP No. 10370). respects:
this Court is On September 23, 1986, I
constrained to petitioner filed before this Court
Lift as it does lift CA-G.R. SP No. 10049 praying,
among others, that a Restraining THAT THE LAND TRASPORTATION COMMISSION
Order dated Order issue to prevent
implementation of the September DECLARATORY RELIEF,
1986 and hereby 8, and 19, 1986 Orders of
denies the respondent Court and to direct
Issuance of said Court to grant the injunction II
Preliminary prayed for therein.
G.R. SP No. On October 1, 1986, petitioner
filed its Opposition to private OF PRIVATE RESPONDENT WAS PROPER.
10049; Annex 8,
CA-G.R. SP No. respondent's Petition for
10370). Declaratory Relief pending before III
respondent Commission (Annex
On September 16, 1986,
petitioner filed a Motion for THAT THE DECISIONS OF THE LAND
Reconsideration (Annex J, CA- On October 9, 1986, respondent TRANSPORTATION COMMISSION IN CASES NOS.
G.R. SP No. 10049) which was Commission acted on private 81-4405 AND 82-416 ARE VOID FOR BEING
denied by respondent Court on respondent's Petition for CONTRARY TO MINISTRY ORDER NO. 81-054.
September 19, 1986. Declaratory Relief ruling that the
provisional authority granted to IV
private respondent was "to
In the meantime, private transport passengers from the
respondent filed in respondent New Manila International Airport THE COURT OF APPEALS ERRED IN NOT RULING
Commission a Petition for and from said place to any point THAT THE LAND TRANSPORTATION COMMISSION
Declaratory Relief (sic) in the Island of Luzon ...." (Annex DENIED PETITIONER DUE PROCESS OF LAW,
requestioning the latter to G, CA-G.R. SP No. 10370). BECAUSE IT ADVANCED THE TIME OF THE
declare the extent of its rights HEARING WITHOUT NOTICE TO PETITIONER.
under its provisional authority
(Annex C, CA-G.R. SP No. 10370). On October 15, 1986, petitioner
filed a motion for respondent V
Commission to reconsider its
On September 17, 1986, Order of October 9, 1986 (Annex THE COURT OF APPEALS ERRED IN RULING
petitioner was able to secure H, CA-G.R. SP No. 10370). This THAT THE ORDERS OF OCTOBER 9 AND 17, 1986
from respondent Commission an was denied by said Commission OF THE LAND TRANSPORTATION COMMISSION
Order directing private in its Order dated October 17, WAS SUPPORTED BY THE EVIDENCE, WHEN
respondent "to immediately 1986 (Annex I, CA-G.R. SP No. NONE WAS EVER ADDUCED.
cease and desist from operating 10370). 2
its units from the New Manila
International Airport to any point VI
in Luzon" (Annexes D and 9, CA- xxx xxx xxx
later, however, this Order was The Court of Appeals dismissed both of Qualitrans' THAT PRIVATE RESPONDENT IS NOT
lifted by respondent Commission petitions and directed it to respect the issuance of a AUTHORIZED TO TRANSPORT PASSENGERS
upon motion of private certificate of public convenience (CPC) in favor of DIRECTLY FROM THE MANILA INTERNATIONAL
respondent (Annex 5, CA-G.R. SP Royal Class Limousine Service. The petitioner now
AIRPORT TO DESTINATIONS OTHER THAN functions which 2. Of course, the Commission's
HOTELS. 3 require notice and action must have been preceded by
hearing— due notice and hearing, 9 and
Anent the said Appellate Court's affirmance of the precisely, it is Qualitrans' complaint
Regional Trial Court's Order 4 dismissing Qualitrans' xxx xxx xxx that it had been deprived of due
complaint for injunction and damages, Qualitrans process for failure of the
assigns the following errors: transportation body to give it notice
(2) To issue, and hearing (in particular, of Royal
amend, revise, Class' motion to lift cease and
I suspend or desist order). The records show,
cancel however, that the decision of the
THE REGIONAL TRIAL COURT HAS JURISDICTION Certificates of Board is founded on substantial
OVER CIVIL CASE NO. 4275-P. Public evidence.10 Moreover, in
Convenience or administrative cases, notice" is not
permits indispensable, but the deprivation of
II authorizing the opportunity to be heard. That is not
operation of the case here. The reality is that on
THE DOCTRINE OF EXHAUSTION OF public land October 1, 1986, Qualitrans
ADMINISTRATIVE REMEDIES IS NOT APPLICABLE transportation opposed Royal Class' application
TO THIS CASE. services provided for "declaratory relief." 11 It can not
by motorized therefore be heard to say that the
III vehicles, and to Commission had acted without
prescribe the giving the petitioner an avenue to
appropriate terms air its side of the story.
3. Anent charges that the
Commission issued the questioned
We sustain the Court of Appeals in both cases. xxx xxx xxx certificate of public convenience
without evidence, suffice it to say
I (G.R. No 79886) Royal Class' application is, quintessentially, a petition that:
for an expanded route, over which the Board
1. As to claims that the Land exercises jurisdiction under its charter. If it seemed xxx xxx xxx
Transportation Commission can not like an "action for declaratory relief", it is only a
entertain suits for declaratory relief, coincidence, for the nature of an action is to be
determined by what the petition alleges and not by the . . .the courts cannot or will not
there is merit in the ruling under
appellation the parties have attached to their determine a controversy involving a
question to the effect that the
pleadings.7 Whether it is a petition for declaratory question which is within the
Commission, under its enabling law,
relief or for revision or grant or cancellation of an jurisdiction of an administrative
Executive Order No. 1011, has
existing CPC, the authority of the Commission to act tribunal prior to the decision of that
ample powers to modify certificates
is justified, so long as it has been properly invoked. question by the administrative
of public convenience, including the
tribunal, where the question
grant of latitudinarian franchises in
demands the exercise of sound
favor of public utilities. We quote: The fact that Qualitrans had, meanwhile, commenced administrative discretion requiring
suit in the Regional Trial Court (RTC) does not oust the special knowledge, experience,
... The (Land Transportation) the Commission of its jurisdiction. The Commission and services of the administrative
Commission shall have, among had a primacy of authority to take cognizance of tribunal to determine technical and
others, the following powers and Royal Class 'inquiry. It is to be noted, indeed, that the intricate matters of fact, and a
functions: very trial court, by its order of September 8, 1986, 8 uniformity of ruling is essential to
denied the issuance of preliminary injunctive relief comply with the purposes of the
sought by Qualitrans, in deference, precisely, to the regulatory statute administered."
(a) Quasi-judicial
Board's primal and preferential jurisdiction. Recently, this Court speaking thru
powers and
Mr. Chief Justice Claudio loss of income of as not to
Teehankee said: its prejudice either
drivers/employee party. 13
In this era of clogged court dockets, s whose only
the need for specialized source of 3. As to charges that the certificate
administrative boards or livelihood is of public convenience of the private
commissions with the special dependent on the respondent had allowed it to
knowledge, experience and present and transport clients from the Ninoy
capability to hear and determine continuous Aquino International Airport only to
promptly disputes on technical operation of hotels but not to any other
matters or essentially factual respondent; and destination, the Court is agreed that
matters, subject to judicial review in the controlling jurisprudence is
case of grave abuse of discretion, 4. Above all, Carmelo and Oriol v. Monserrat, 14
has become well nigh public interest in which we held:
indispensable. 12 and convenience
will suffer and be xxx xxx xxx
The records also reveal that there were sound prejudiced if
reasons for the lifting of the Commission's cease and respondent is
restrained from Everything else being equal, the
desist order, to wit: real, primary question involved is
passengers from whether it is better and more
xxx xxx xxx the New MIA convenient for the travelling public
directly to their in the City of Manila to have two
1. Complaint's respective taxicab companies in operation than
(sic) Motion for residences; it is to have one, and whether in
Reconsideration truth and in fact the granting of
of the order dated another similar license to the
5. Likewise, a petitioners would operate as a real
December 27, restraining order
1985, in Case No. injury to Monserrat. He is the first in
should be granted the field and so long as he
85-9619 filed on only where there
June 17, 1986, maintains good and efficient service
is a clear showing and meets the demand of the
has not yet been that there is
resolved by this public, it is fair to assume that he
indeed a flagrant will hold his present customers and
Commission; violation on (sic) would have nothing to fear from the
the property right granting of a license to the
2. Respondent's of another. petitioners, and if for any reason he
Petition for Absence of which does not give the required kind of
Declaratory Relief or in case of service or satisfy the needs of the
filed on ambiguity, a public, then he would have no right
September 15, restraining order to complain.
1986, is still is unavailing. And
pending in the present
resolution by this case there is xxx xxx xxx
Commission; really that
ambiguity That is to say, taxies are not
3. Considerable attendant to the operated on any schedule or over
losses and issues involved, any certain route or between certain
irreparable injury which this points or in any direction, and that
will be sustained Commission shall the certificate granted to Monserrat
by respondent, have to resolve is in the nature of a blanket
not to mention the on the merits so franchise to operate a taxicab
service over any and all of the and simply, and we can not tolerate it. The Qualitrans. Hence, it can not validly
streets and alleys of the city, in any constitutional mandate is for "a more equitable revoke our ruling in Arrow
direction, from any place, and at distribution of opportunities, income, and wealth" 19 Transportation Corp. v. Board of
any time, subject to the call and and for the State to regulate or prohibit monopolies." Transportation. 24 That case was
wish of the customer only both as to impelled by urgent need, which the
time, place, and route of travel. That courts could address more swiftly. It
is to say, it is in the sole discretion As we have held furthermore, a provisional authority is not the case here. Not much is at
of the person desiring to travel is given on showing of public need. 21 Thus, it may be stake in the "limo" business. We
whether he shall call a taxi or an issued ex-parte. hold that the Commission should
auto garage car, and as to when he have better been left alone to
shall call it, and where he shall go, discharge its duty without court
and in the operation of an autobus II (G.R. No. 79887) interference.
line, the operator must maintain a
fixed schedule over a specified 1. For the same reasons, the above 3. We are not impressed that
route between certain points, and appeal must also fail. The Regional Qualitrans has successfully shown
must make his trips with or without Trial Court (RTC) had acted that it is entitled to the injunctive
passengers. 15 correctly in dismissing Qualitrans' writ. Its appeal to "ruinous
damage suit. competition" 25 is not well-taken.
The abovestated doctrine applies with equal force to Under the Constitution, the national
the case under consideration. For although Monserrat Ramos v. Court of First Instance of Tayabas, 22 in economy stands for, "competi[tion]
involved a fleet of taxicabs, the taxicab business is no which we sustained the jurisdiction of the CFI (now, in both domestic and foreign
different, fundamentally, from a limousine service RTC) at the expense of Public Service Commission markets." 26 Obviously, not every
because both have very broad destinations. (now, the Land Transportation Commission), has no kind of competition is "ruinous
application. In that case, the aggrieved party had competition". All things considered
That Royal Class had, itself, admitted that its denounced his adversary's action before the PSC. and all things equal, competition is
franchise covered the NAIA-hotel route alone, does The latter, however, had failed to act. We stamped our a healthy thing. Besides, there is no
not weaken the Commission's ruling. The yardstick, imprimatur on the CFI's jurisdiction because of showing that Qualitrans stood to
so Monserrat tells us, is that: temporal constraints. ("Damages pile up day by day lose its capital investment with the
as infringement continues. The Public Service approval of Royal Class' franchise.
Commission has been afforded an opportunity to give Our considered opinion is that
xxx xxx xxx relief and has not done so." 23 Qualitrans should improve its
services as a counter-balance to
In the granting or refusal of a In addition, there is a need to square the functioning Royal Class' own toehold in the
certificate of public convenience, all of administrative bodies vis-a-vis contemporary market. And let that be its
things considered, the question is realities. As we have observed, the increasing pattern challenge.
what is for the best interests of the of law and legal development has been to entrust
public.16 "special cases" to "special bodies" rather than the WHEREFORE, the petitions are DENIED. The
courts. As we have also held, the shift of emphasis is decision appealed from is AFFIRMED in toto. No
Like Monserrat, the Court finds it "hard to conceive attributed to the need to slacken the encumbered costs.
how it would be for the best interests of the public" 17, dockets of the judiciary and so also, to leave "special
to have one line only, "and how the public would be cases" to specialists and persons trained therefor. SO ORDERED.
injured by the granting of the certificate in question,
for it must be conceded that two companies in the There is no merit in the claims that Royal Class has
field would stimulate the business..." 18 Paras, Padilla and Regalado, JJ., concur.
been guilty of unfair competition. For starters, its CPC
has been duly issued. It (CPC) can not therefore be
It is simply bellyaching to say that Royal Class had said to have been acquired through duress or deceit Melencio-Herrera (Chairperson), J., is on leave.
transcended the bounds of the certificate of public to warrant such a charge.
convenience granted to it. What Qualitrans is plainly
carping about is the threat the Royal Class' certificate 2. Failure to exhaust administrative
of public convenience poses on its foothold in the remedies is arrayed against
"limo" service business. This is monopolism, plainly