Alexandra Gerardine S. Escucha San Beda College Alabang- School of Law STATCON No.

L-21879 September 29, 1967

San Miguel Brewery, Inc. plaintiff-appellant vs. Francisco Magno, defendant-appellee

Facts: 1. The Mun. Board of Butuan passed Ordinance No. 11 imposing a tax of 2% on the gross sales or receipts of those engaged in the sale, trading in, or disposal of all alcoholic or malt beverages, wines and mixed or fermented liquors, including tuba, basi, & tapuy. The same Municipal Board passed Ordinance No. 110 amending Ordinance No. 11, fixing a tax on the sale of beer at the rate of Php 0.25 per case of 24 bottles, & on the sale of soft drinks at the rate of PhP 0.10 per case of 24 bottles of soft drinks or any carbonated drinks. 2. San Miguel Brewery (San Miguel) maintains a warehouse on the city of Butuan and although consistently & promptly paid the required taxes under Ordinance No. 11, suddenly stopped paying & incurred back taxes. Verbal demands were made by the City Treasurer to San Miguel and warned them that a warrant of distraint & levy will be issued against them if they continue to refuse to pay their taxes. 3. San Miguel answered the demands and questioned that the power of the city government to distraint & levy can only be exercised with respect to the delinquencies in the payment of real estate taxes. 4. Later, a formal letter for demand was made by the City Treasurer and San Miguel requested more time to act on the demand and refer the matter to its Manila Office. 5. More written demands were made by the Treasurer but failed to collect from San Miguel. The Treasurer then issued a warrant of distraint & levy against the properties of San Miguel at its branch office. Taxes and penalties amounted to Php 24,747.32. 6. The notice of seizure by virtue of the warrant of distraint & levy was served to the Branch Manager of San Miguel and San Miguel voluntarily surrendered 2 delivery trucks. 7. San Miguel filed at the Court of First Instance of Manila against Francisco Magno in his individual capacity to release the delivery trucks and to pay them the amount of Php 6,000 & Php 3,000.00 for each day that the trucks were impounded. Francisco Magno filed an Answer and stated that his actions were in furtherance of his duties as the City Treasurer of Butuan City. During the pendency of the action, San Miguel paid under protest the taxes assessed to them. The impounded trucks were then released. 8. San Miguel filed a Motion for Reconsideration in the Court of Appeals but was denied.

WHO San Miguel Brewery, Inc San Miguel Brewery,

WHAT Complaint Motion for

WHERE Court of First Instance of Manila Court of Appeals

DECISION Dismissed Denied

Alexandra Gerardine S. Escucha San Beda College Alabang- School of Law STATCON Inc San Miguel Brewery, Inc Reconsideration Appeal

Supreme Court

Modified the decision appealed from and affirmed in all other respects

Issue: 1. Whether the Ordinance No. 26 is constitutional 2. Whether Francisco Magno should be personally liable for damages 3. Whether San Miguel shall pay Magno for nominal damages & attorneys fees.

Decision:

1. Magno, as the City Treasurer of Butuan issued the said warrant through Ordinance No. 26 of Butuan City. The appeal of San Miguel questioned the validity of the said ordinance. As a general rule, the question of constitutionality should be raised at the earliest opportunity. If it was not raised in the pleadings, the issue cannot be raised at the trial court as well as on appeal. The exemptions are made in criminal cases where the issue of constitutionality can be raised at any stage of the proceedings and in civil cases where the determination of the constitutionality is important in the decision. In civil cases also, the appellate court may consider the question on the constitutionality of the statute when it involves the jurisdiction of the court below. Since there are no exemptions in this case where the question of the constitutionality of Ordinance No. 26 may be raised, the appeal of the petitioners cannot question the same.

In addition, it is not correct that Magno should be sued in his individual capacity since he is not the proper party against whom the invalidity of the statute should be pleaded. A municipal ordinance is not subject to collateral attack & public policy forbids collateral impeachment of legislative acts.

2. Magno should not be held personally & individually liable to pay for damages to San Miguel since he issued the warrant of distraint and levy in good faith & in his performance of his duties as the City Treasurer under Ordinance No. 26 of Butuan City.

3. San Miguel should be made to pay for the attorneys fees made by Magno. Since San Miguel sued Magno in his individual capacity, Magno is now forced to hire a private counsel to defend his rights. Because of this, it is only proper for San Miguel to pay for he expenses Magno made for hiring his own counsel.

Alexandra Gerardine S. Escucha San Beda College Alabang- School of Law STATCON