Republic of t he Phi lippines

COURT OF TAX APPEALS

Quezon City

EN BANC

THE CITY OF MAKATI CTA EB CASE NO . 1086

represented in this case by (CTA AC Case No. 87 )
its City Mayor, the HON.
JEJOMAR C. BINAY, the OIC Prese nt:
City Treasurer, NELIA A . DE L RO_SARIO, P.J.,
BARLIS, and the OIC of the CASTAN EDA, JR.,
Business Tax Division, BAUTISTA,
FELITO A . MANRIQUE, UY,
Petition er, CASANOVA,
FABON - VICTORINO ,
- v ersus- MINDARO- GRULLA,
COT AN GCO- MANALAST AS I
TRANS- ASIA POWER RINGPIS-LIBAN, JJ.
GENERATION
CORPORATION, Promulgated:
Respondent.
JAN Z1 2015
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-....::::.....:!~..!.JO;! I'N ------x

MINDARO- GRULLA, J .:

Submitted for decision is a Petition for Review for the

Court En Bane under Section 2 (a)(2), Rule 4, in relation to
Section 4(b), Rule 8 of the 2 005 Revised Rules of the Court
of Tax Appea ls, as amended, seeking the reversa l of the
Deci sion 1 and Reso lution 2 rendered by t he Special First
Division of this Court on July 10, 2013 and October 23, 2013,
respective ly.

Th e antecedent fact s as cul led from the Decision of th e

Special First Division of this Court are as fo llows:

" Petitioner City of Ma kati is a local governm ent

unit and is sued herein as such t hro ugh its City Mayor
in t he latter's capa city or officia l duty to e nforce laws t:

1
Penned by Associate Justice Esperanza R. Fa bo n- Vi ct orino and concurred in by
Associa te Justice Erlind a P. Uy ; En Bane Docket , pp . 90- 107 .
7
!d., at 117 - 120.
/he Cily of Mokoli reprcsenled in /his case by ils Cily Ma yor, Page 2 of 14
/he lion . .Jejomor C. 13inoy, /he OIC Cily /rcosurer, Nelia A 13orlis,
and /he 0/C of /he 13usiness lox Division, 1-c/i/o A. Manrique
-vs.- Trans-Asia Power Generation Corporation
CT A m Case No. 1086 (CT A AC Case No. 87)
DECISION

and regulations relative to the governance of and the

exercise of corporate powers by the City.

Respondent Trans-Asia Power Generation

Corporation is a domestic corporation, with principal
business address at Level 11, Phinma Plaza, 39 Plaza
Drive, Rockwell Center, Makati City 1200. It is
primarily engaged in the business of building, erecting,
owning, installing, operating, maintaining, selling,
leasing power generation plants; and purchasing,
importing, acquiring, owning, leasing, or letting power
generation, transmission, te lecommunications,
transportation and other kinds of equipment,
materials and facilities.

For the years 1996 to 2005, petitioner classified

respondent as 'PRODUCER' for Local Business Tax
(LBT) purposes and respondent paid the
corresponding business tax. For the first two quarters
of 2006, petitioner also paid LBT as a ' PRODUCER'.

In the Order of Payment dated June 14, 2006,

petitioner changed respondent's classification from
'PRODUCER' to 'SERVICES-OTHER CO ' . Consequently,
the third quarter LBT payment was increased from
Php453,910.35 to Php648,443.35, and the additional
amount of P389,066 .00 LBT for the first and second
quarters was imposed.

On July 17, 2006, respondent paid under protest

the business tax of Php648,443 .35 for the 3rd Quarter
of 2006 and Php389,066.00 deficiency business taxes
for the 1sL and 2nd quarters of 2006, all in the total
amount of Php1,039,196.85 (inclusive of garbage fees
of P1,687.50).

On October 13, 2006, or within the reglementary

period of two (2) years from payment of taxes,
respondent requested a return from its former
classification of business from 'SERVICES- OTHER CO'
to 'PRODUCER' and a refund of Php583,599.00,
representing erroneously and illegally col lected excess
local business taxes for the first, second and third
quarters of 2006. (
the City or Ma ko ti represented in /h is c a se by its City M ayor, l' a ge 3 of 14
/he / ton ..Jejomar C. l3inay, /he 0/C City trea surer, Nelia A. l3ar/is,
and /he OIC or the l3usiness tax Division, 1-c/i/o A. M anrique
-vs.- Trans-1\sia Po w er Generation Corpora tion
CT A m Case No. 1086 (CT A AC Case No. 87)
DECISION

As the protest letter remained unresolved,

respondent filed a civil action for Protest of
Assessment of Business Tax with Claim for Refund
against petitioner on October 16, 2006 before Branch
134 of the RTC of Makati City. The case entitled
'Trans-Asia Power Generation Corporation vs. City of
Makati, represented by the City Mayor, the Hon.
Jejomar C. Binay, the OIC City Treasurer, Nelia A.
Barlis, and the OIC of the Business Ta x Division, Felito
A. Manrique' was docketed as Civil Case No. 06- 880.

After the exchang e of various pleadings and trial,

the Court a quo rendered the assailed Decision 3 of
December 22, 2010, the dispositive portion of which
reads :

WHER EFORE, premises considered,

judgment is hereby rendered in favor of the plaintiff
Trans-Asia Power Generation Corporation and
against defendant City of Makati, ord ering the latter
the following:

1) To go back to its earlier classification of

plaintiff as ' Producer' or ' Manufacturer' as provid ed
in th e Makati Revenue Code for local business ta x
purposes;
2) To issu e tax credit to plaintiff in the total
amount of Php583,599 .00 representing excess local
business tax for the first, second, and third quarters
of 2006;
3) To refund subsequent business ta x
paym ent made in excess of 52.5/o of 1/o that may
have been paid by plaint iff und er protest and;
4) To pay attorney's fees in the amount of
Php20,000.00

SO ORDERED .

In finding for respondent, the RTC looked into

the nature of respondent 's business and its operation .
It found that respondent is engaged in the business of
transforming fuel into electricity and selling it to the
end user. Following the ejusdem generis rule, the
RTC ratiocinated that a careful analysis of
respondent's business in line with the definition of
'manufacturer/producer' and ' contractor' and the(

3
En Bane Docket, pp. 54 -62 .
/he City or Makoti represented in /his case by its City Mayor, Page 4 of 14
the lion ..Jejomor C. l3inoy, /he OIC City treasurer, Nelia A. l3or/is,
and the OIC or the l3usiness lox Division, 1-e/i/o A. Manrique
-vs.- Trans-1\sia Power Genera tion Corporation
CT A m Case No. 1086 (CT A AC Case No. 87)
DECISION

enumerations of persons and things that follows after

each defi nition show that respond ent's business
operation fall s within the scope of
manufacturer/producer.

On April 19, 2011, petitioner moved for

reconsideration but it was deni ed in the Ord er dated
J a n u a ry 2 7, 2 0 12 . " 4

On July 10, 2013, the Special First Division of this

Court promulgated a Decision 5 aff irming the Decision and
Order of the RTC of Makati City, Branch 134, dated
December 22, 2010 and Jan uary 27, 2012, respectively.
The dispositive portion of the said Decision reads:

"WHEREFORE , t he in stant Petition for Review

filed by petitioner is hereby DISMISSED, for la ck of
m erit.

The Decision dated December 22, 2010 and the

Ord er dat ed January 27, 201 2, both rendered by th e
Regional Trial Court of Makati City, Branch 134 in Civil
Case No. 06 -880 entitled 'Trans-Asia Power
Generation Corporation vs. City of Makati, represe nted
in thi s case by the City Mayor, th e Hon . Jej omar C.
Binay, the OIC City Treasurer, Nelia A. Barlis, and the
OIC of the Business Tax Divi sion, Felito A. Manrique'
are hereby AFFIRMED .

SO ORDERED ."6

Petition e r th e reafte r fi led a "Motion for Reconsideration

(of the Decision dated 10 July 2 01 3 )" 7 which was denied by
th e Court a quo in a Reso lution 8 dated Octobe r 23, 2013, th e
dispositive portion of which r ea ds:

"WHEREFORE , there being no new matters and

issues advanced th at will m erit reco nsi deration, let
alon e modification of t he assai led Decision of Jul y 10, (

4
Id., at 61 - 62 .
5
Supra not e 1.
6
En Bane Docket , p. 10 6; See Resoluti on dated Oct ober 23, 2013, En Bane Docket, p.
118.
'Filed on Au gust 14, 2013; En Bane Docket , pp . 108-115.
8
Supra note 2 .
the City or Makoti represented in this case by its City Mayor, l)age ~> of 14
the /ton ..Jejomar C. 13inay, the 0/C City treasurer, Nelia A 13or/is,
and the OIC or the Business tax Division, f-clilo A Manrique
-vs.- Trans-1\sia Power Generation Corporation
CT A m Case No. l 086 (CT A AC Case No. 87)
DECISION

2013, petition er 's Motion for Reconsideration dated

Augu st 13, 2013 is hereby DENIED, for lack of merit.

On the oth er hand, the Manifestation dated

September 24, 2013 filed by respondent on
September 26, 2013, is NOTED .

SO ORD ERED ."9

Hence, the instant Petition for Review was filed.

Petitioner raises the following arguments, to wit: 10

"I. Whether or not the Honorable Special First Division
of the Court of Tax Appea ls gravely erred in
affirming the Decision dated 22 December 2010
and the Order dated January 27, 2012 both
rendered by the Hon. Regional Trial Court of
Makati City, Branch 134 in Civil Case No. 06 - 880,
and thus classifying respondent Trans-Asia Power
Generation Corporation as a ' MANUFACTURER',
and not as a 'CONTRACTOR', for local business
tax purposes, and order the petitioner:

a. To go back to its earlier classification of

the herein respondent as Producer,
albeit the overwhelming evidence to the
contrary.
b. To credit/refund to herein respondent
the amount representing alleged excess
local business taxes for the 1st, 2 nd and
3 rd quarters of 2006, as well as the local
business tax payment allegedly made in
excess of 52. 5/o of 1 /o that may have
been paid by respondent under protest.

II. Whether or not the Honorable Special First

Division of the Court of Tax Appea ls gravely
erred in failing to make a ru ling that
respondent Tran s-Asia Power Generation
Corporation miserably failed to overcome the
presumption against tax refunds.~

9
En Bane Docket , p . 120 .
10
En Bane Docke t , pp . 6-7 .
the Cily or Mokoli rcpresen led in /his case by ils C il y Ma yor, l'oge 6 of 14
I he lion . .Jejomor C. 13inoy, Ih e O IC Cily treasurer, Nelia A. 13orlis,
and /he O IC o r lh e Business lox Division, t-clil o A. Manrique
-vs.- Trons-1\sia Power Generation Corpora tion
CT A m Case No. 1086 (CT A AC Case No. 87)
DECISION

III. Whether or not the Honorable Special First

Division of the Court of Tax Appeals gravely
erred in affirming the Honorable Regional Trial
Court of Makati City's Decision dated December
22, 2010 and the Order dated January 27,
2012, erroneously awarding P2 0 , 000 .00 as
attorney's fees in favor of respondent,
Trans-Asia Power Generation Corporation,
despite the absence of awards for moral and
exemplary damages."

The principal issue to be resolved in this case is

whether petitioner correctly reclassified respondent as
"Contractor" for loca I business tax purposes.

Petitioner vigorously argues that respondent's actual

nature of business corresponds with the definition of a
"Contractor" under Section 131(h) of the Local Government
Code (LGC) of 1991. It contends that respondent not only
supplies electricity to Hi -Cement but also manages, operates
and maintains and even repairs the power plant/s of Hi-
Cement, for a substantial fee or consideration. Petitioner
therefore concludes that respondent is considered as a
" Contractor", engaged in the installation of electricity, and
even management and operation of power plants.

Petitioner anchors its argument that respondent is a

"service-enterprise" based on the General Terms and
Conditions of its Certificate of BOI Registration dated
September 23, 1996 (Exhibit "A") 11 requiring the latter to
submit the following reporting requirement to the
Infrastructure & Service -Oriented Industries Department;
and the Electricity Supply Agreement (ESA) between Hi
Cement and Trans Asia-Power Generation Corporation
(Exhibit "P") 1 2 requiring Hi Cement to pay for Electricity Fees
for the services rendered by respondent.

In its comment, respondent argues that it is engaged in

the business of manufacture and sale of electricity as it uses
bunker fuel as raw material for its power generation plant
and converts the same fuel by mechanical and chemical<'

11
RTC Docket , pp. 107-111.
12
Id ., at 14 2-177 .
the City or Makoti represented in this case by its City Mayor, Page I of 14
the /ton . .Jejomar C. 13inay, the 0/C City treasurer, Nelia A. 13arlis,
and /he 0/C or /he 13usiness tax Division, t-cli/o A. Manrique
-vs.- Trans-1\sia Power Generation Corporation
CT A m Case No. 1086 (CT A AC Case No. 87)
DECISION

process to electricity. Respondent adds that it takes bunker

fuel as a raw material then feeds it into the plant's diesel
engine, which ignites and burns the fuel, producing heat
energy. In the instant case, the fuel undergoes a process
called combustion; while heat is used to activate the plant's
turbine, converting heat energy into mechanical energy.

Respondent asserts that the nature of its business fits

in the definition of a "manufacturer" under Section 131(o) of
the LGC and Section 3A.01(11) of the Makati Revenue Code
as it transforms the chemical energy in fuel into electrical
energy in generating electricity. Thus, respondent claims
that it is entitled to a refund of excess local business taxes
that it paid to petitioner under protest.

Moreover, respondent counters that the General Terms

and Conditions of its Certificate of Registration with the BOI
do not establish that it is a contractor nor state that it is a
"service-enterprise". Even assuming arguendo that the BOI
Certificate of Registration classifies respondent as "service-
enterprise", it was solely for the purpose of availing benefits
under the Omnibus Investments Act and is neither relevant
nor controlling for local business tax purposes . Similarly,
respondent argues that the additional undertakings rendered
by respondent under the ESA are merely ancillary to and in
aid of its primary function as producer of electricity in order
to ensure the safe and continuous delivery of the electricity
sold.

The instant petition is partly meritorious.

The definitions of "Contractor" and "Manufacturer"

provided under Section 131 (h) and (o), respectively, of the
LGC of 1991, and Sections 3A.01(t) and 3A.01(11) of the
Makati Revenue Code, are the guiding light in order to
correctly classify respondent's nature of business, thus:

SEC. 131. Definition of Terms. - When

used in this Title, the term:
XXX
(h) "Contractor" includes persons,
natural or juridical, not subject to professional
tax under Section 139 of this Code, whose
activity consists essentially of the sale of all~
the City or Moko li rcprcsenled in /his case by ils Ci ly Mayor, Page 8 o f 14
/he lion . .Jejomor C. Binoy, /he OIC Cily lrcosurcr, Nelia A Bar/is,
and /he 0/C or /he Business lox Division, 1-e/i/o A Manrique
-vs. - Trans 1\sia Power Generation Corporation
CTA m Case No. 1086 (CTA AC Case No. 87)
DECISION

kinds of services for a fee, regardless of

whether or not the performance of the service
calls for the exercise or use of the physical or
mental faculties of such contractor or his
employees.

As used in this Section, the term

"contractor" shall include general eng ineering,
general building and specialty contractors as
defined under applicable laws; filling, demolition
and salvage works contractors; proprietors or
operators of mine drilling apparatus;
proprietors or operators of dockyards; persons
engaged in the installation of water system, and
gas or electric light, heat, or power; proprietors
or operators of smelting plants, engraving,
plating, and plastic lamination establishments;
proprietors or operators of estab li shments for
repairing, repainting, upholstering, washing or
greasing of vehicles, heavy equipment,
vulcanizing, recapping and battery charging;
proprietors or operators of furniture shops and
estab li shments for planing or surfacing and
recutting of lumber, and sawmills under
contract to saw or cut logs belonging to others;
proprietors or operators of dry cleaning or
dyeing estab lishments, steam laundries, and
laundries using washing machines; proprietors
or owners of shops for the repair of any kind of
mechanical and electrica l devices, instruments,
apparatus, or furniture and shoe repairing by
machine or any mechanical contrivance;
proprietors or operators of estab li shments or
lots for parking purposes; proprietors or
operators of tailor shops, dress shops, milliners
and hatters, beauty parlors, barbershops,
massage clini cs, sauna, Turkish and Swedish
baths, slenderizing and building saloons and
si milar establishments; photographic studios;
funeral parlors; proprietors or operators of
hotels, motel s, and lodging hou ses; proprietors
or ope rators of arrastre and stevedoring,
warehousing, or forwarding esta blishments;
master plumbers, smiths, and house or sign
painters; printers, bookbind ers, lithographers;
publi shers except those engaged in the~
the Cily o f Makoti reprcsen led in /his case by ils Cily Mayor, Page 9 o f 14
/he I to n ..Jejomar C. l3inay, /he OIC Cily /rcasurer, Nelia A. l3ar/is,
and /he 0/C of /he l3usiness tax Division, 1-e/i/o A. Manrique
-vs.- Trans-Asia Power Generation Corporation
CTA m Coso No. 1086 (CTA AC Coso No. 87)
DECISION

publication or printing of any newspaper,

magazine, review or bulletin which appears at
regular intervals with fixed prices for
subscription and sale and which is not devoted
principally to the publication and
advertisements; business agents, private
detective or watchman agencies, commercial
and immigration brokers, and cinematographic
film owners, lessors and distributors.
XXX

(o) "Manufacturer" includes every

person who, by physical or chemical process,
alters the exterior texture or form or inner
substance of any raw material or manufactured
or partially manufactured product in such
manner as to prepare it for special use or uses
as to which it could not have been put in its
original condition, or who by any such process
alters th e quality of any raw material or
manufactured or partially manufactured
products so as to reduce it to marketable shape
or prepare it for any of the use of industry, or
who by any such process combines any such
raw material or manufactured or partially
manufactured products with other materials or
products of the same or of different kinds and
in such manne r that the finished products of
such process or manufacture can be put to a
special use or uses to which such raw material
or manufactured or partially manufactured
products in th eir original condition could not
have been put, and who in addition alters such
raw material or manufactured or partially
manufactured products, or combines the same
to produce such finished products for the
purpose of their sal e or distribution to others
and not for his own use or consumption.

XXX

SECTION 3A.Ol. Definition s. Whe n

used in this Article :
XXX
(t) Contractor - includ es person s,
natural or juridi ca l, not subj ect to professional (
/he Ci ty or Mako ti represen ted in this case by its City M a yor, l)o ge 10 o f 14
the /ton . .Je jo m or C. l3inoy, the 0 /C Ci ty treasurer, Ne lia A. l3orlis,
and /h e 0/C or /he l3usiness lox Division, 1-e/i /o A. M anrique
-vs.- Trans-1\sio Power Genera tion Corporation
CTA m Case No. 1086 (C TA AC Case No. 87)
DECISION

ta x who se activity consists esse ntially of the

sa le of all kinds of services for a fee regardless
of whether or not the performance of the
service calls for the exercise or use of the
physical or mental faculties of such contractor
or hi s employees.
XXX
(II) Manufacturer - includes every
person who, for the purpose of sale or
distribution to others and not for his own use or
consumption, by physical or chemical process:
(1) alter the exterior texture of form, or inner
substance of any raw material or manufactured
or partially manufactured product in such
manner as to prepare it for a special use or
uses to which it co uld not have bee n put in its
original condition; (2) alters th e quality of any
such raw material or manufactured or partially
manufactured product so as to reduce it to
marketab le shape or prepare it for any use of
industry; or (3) co mbin es any raw m at erial or
m anufa ctured or partially manufactured product
wit h other materi als or products of the sa m e or
different kind in such mann er that th e fini shed
product of such process or manufacture can be
put to a special use or uses to which such
m ate ri al, or manufactured or partially
manufactured product in its original condition
could not have been put."

Based on the foregoing definitions, We affirm the

findings of the Special First Division of this Court in the
assailed Decision that respondent's nature of business falls
within the category of " manufacturer/producer" and not
"contractor" of e lectricity. We quote, to wit:

"[T] here is no reason to doubt that re spondent' s

business ope ration falls within th e purview of a
'manufacturer/p rodu cer'. To stress the obvious, th e
ruling of t he RTC on thi s point is hereby quoted with
approv a l, thus:

A carefu l ana lysis of th e nature of plaintiff's

bu siness in lin e w ith th e defi nition of
' manufacturer/ produ cer' and 'contractor' and th e
enumeration of person s and t hin gs t hat fo ll ows
after each definition show that plaintiff's bu siness <
tho City of Makoti roprosonlod in this case by its City Mayor, Page I I of 14
tho lion ..Jojomar C. l3inay, tho OIC City lroasuror, Nelia A l3arlis,
and /he 0/C or tho l3usinoss lax Division, rolilo A Manrique
-vs.- Trans-1\sia Power Genera tion Corporation
CT A m Case No. 1086 (CT A AC Case No. 87)
DECISION

operation falls within the scope of

manufacturer/prod ucer and while defendant
pressed that plaintiff's business is covered and
included under the word 'other co.', the Court
disagrees. Under th e principl e of ejusdem generis,
where general words follow an enumeration of
person and things, by words of a particular and
specific meaning, such general words are not to be
construed in their widest extent, but are to be held
as applying only to persons or things of the same
kind or class as those specifically mentioned (PNOC
Shipping and Transport Corporation vs. Court of
Appeal s, 297 SCRA 402, 422 citing Republic vs .
Migrino, 189 SCRA 289). Thus, in determining th e
mean ing of the phrase 'oth er co.' one must refer to
prior enumeration of what 'contractor' or kinds of
services must it include. Going over the
en umeration given under th e t erm 'contractor', it is
clea r that plaintiff's business does not fall under
such category but rather under the category of
'manufacturer/producer.' (Emphasis sup plied)

Petition er's assertion that a scrutiny of the ESA

would show that respondent not only supplies
electricity to Hi Cement but also manages, operates,
maintain s and even repairs the power plant/s of Hi
Cement for a fee, hence, it fits the definition of
'co ntractor' under the law also failed to make much
impression.

It was never disputed that respondent buys

bunker fuel as its chief raw material and converts it
through m echanical and chemical processes to
electricity. Respondent subsequently sells this
electricity to Hi Cement by virtue of the ESA. It is also
erroneous to say Hi Cement owns the power plant.
While Hi Cement initially owned the property where
the Power Plant is located, it was later sold to
respondent as provid ed under Article 3.1 of the ESA.
In fine, r espo ndent owns the Power Plant where the
electricity is generated. As th e owner of the Power
Plant, respondent needs to manage, operate, maintain,
and repair its own Power Plant .

The Court as w ell agrees with respondent that

th e add itional und ertakings und er the ESA are merely
ancillary to a nd in aid of its primary function as a
producer of electricity, and are not even services(
I he Cily or Makali roproson lod in /his coso by ils Cily M ayor, Page 12 of 14
/he lion . .Jojomar C. 13inay, /he OIC Ci ly lroasuror, Nelia A 13arlis,
and /he OIC or /he 13usinoss lax Division, 1-olilo A Manrique
-vs.- Trans-1\sia Power Genera tion Corporation
CT A m Case No. 1086 (CT A AC Case No. 87)
D EC ISIO N

rend ered to Hi Cem ent, but rath er are add itiona l

und ertakin gs t o ensure th e saf e a nd continuous
delivery of th e electri city so ld .

An e nt th e Certifi cat e of Regi st ration iss ued by

th e BOI, respond ent was correct in saying that
although th e sa id docum ent classifi ed res pond ent
und er th e category of an ' Infrastructure & Servi ce-
Oriented Indu st ries', th e said cl assifi cation is not
definitive of its rea l bu si ness purpose. In f act, there is
nothing in th e document th at ex plains the
cla ssification. It m erely e num erates th e do cume nt s
for submi ssion by res po nd ent ." 13

Howev er, We do not find the award of attorney 's fees

justified in thi s case . As a ru le, no premium should be
pla ced o n th e right t o litigate. As a ptly di scussed by th e
Supre m e Court in ABS-CBN Broadcasting Corporation v.
Honorable Court of Appeals, et a/., 14 t he powe r of th e
co urt t o award attorn ey 's fee s under Article 22 08 of t he Civil
Code 15 dem ands factua l, lega l, and equitable justifi cation,
t hu s:

"As rega rd s at to rn ey 's fees, th e law is clea r that

in th e absence of stipul ation, attorney 's f ees may be
recovered as actu al or co mpensatory damag es und er
any of the circumst ances provid ed for in Articl e 2208
of t he Civ il Code.~

13
En Bane Docket , pp. 103- 104.
1
" G.R. No. 1286 9 0, January 21 , 1999.
' ~ A RT. 22 08. In t he abse nce of stipu lation, at torn ey's fees and ex penses of
lit ig ation, other than judicial costs, ca nnot be recovered, except :
1. Wh en exe mp lary dam ages a re aw ard ed ;
2. When the defendant's act or omission has compelled t he plaintiff to li t igate
wi th third perso ns or to incur ex penses to protect his interest;
3. In crimin al cases o f m alicious prosecution against the p lai ntiff;
4. In case of a clea rl y unfounded civ il act ion or proceeding ag ainst the
plainti ff ;
5. Wh ere t h e defenda nt acted in g ross and eviden t bad faith in refusin g t o
sa tisfy th e plaintiff's p lain ly valid , j ust and dem and able claim ;
6. In actions for lega l suppor t ;
7. In actions fo r the recovery of w ages of h ouse hold helpers, laborers and
ski lled wo rk ers;
8. I n act io ns for indemnity u nder workm en's co m pensati on and employe r 's
liabi lity law s;
9. In a sepa ra te civ il action to recove r civil liabil it y arising from a crim e ;
the City or Makoti represented in /his case by ils Cily Ma yor, l'oge 13 of 14
/he /ton . .Jejomor C. 13inoy, /he OIC C il y treasurer, Ne lia A 13orlis,
and /he O IC or /he 13usiness tax Division, t-clilo A Manrique
-vs.- Trons-i\sia Power Generation Corporatio n
CTA mCase No . 1086 (CT A AC Case No. 87)
DECISION

The general rule is that attorney's fees

cannot be recovered as part of damages because
of the policy that no premium should be placed
on the right to litigate. T hey are not to be awarded
every time a party wins a suit. The power of the court
to award attorney's fees under Article 2208 demands
factual, lega l, and equitab le justification . Even when
claimant is compelled to litigate with third
persons or to incur expenses to protect his
rights, still attorney's fees may not be awarded
where no sufficient showing of bad faith could
be reflected in a party's persistence in a case
other than erroneous conviction of the
16
righteousness of his cause. " [Emp hasis supp lied.]

Under the circumsta nces prevai li ng in the instant case,

there is no factua l or lega l basis for an award of attorney 's
fees. In fa ct, petition er merely exercised its fu nctio n in
classifying respond ent's nature of business based on the
documents they have gathered. Contrary to t he assailed
Decision, respondent was give n an opportunit y to cha ll enge
the said reclassification by fili ng an administrative protest on
July 17, 2006 (Exhibit "J") 17 and "Letter Request for Refu nd"
on October 13, 2006 (Exh ibit "L") 18 before petitioner.
Therefore, the reclassification of respo nde nt's status from
"prod ucer " to a "services - other co ." without showing of bad
faith or fraud on the part of petitioner does not justify t he
award of attorney's fees.

WHEREFORE, the petit ion for rev iew is hereby

PARTLY GRANTED . The Decision of t he Specia l First
Division of this Court in CTA AC Case No . 87 dated July 10,
2013 and its Resolution dated October 23, 2013 are hereby
AFFIRMED WITH MODIFICATION . We DELETE t he
award of attorney 's fees in favor of respon dent.

SO ORDERED .
r.ffiliTo
iJ~-r-- ~4 rvt ~ Cl~
N . MINDARO- GRULLA
Associate Justice

16 !d.
11
RTC Docket, p. 120.
18
Id., at 122- 141.
/he Cily or Makoti represented in /his case by ils Cily Mayor, l'oge 14 o f 14
lhe lion. Jejomor C. l3inoy, lhe OIC Cily treasurer, Nelia A l3orlis.
and lhe 0/C or lhe l3usiness tax Division, t-clilo A Manrique
-vs. - Trans-1\sia Power Generation Corporation
CT A m Case No. 1086 (CT A AC Case No. 87)
DECISIO N

WE CONCUR:

Presiding Justice

0~;4 c . ~o..-r~ '~

JtJANITO c. CASTANElfA: .JR. lOVEll
Associate Justice Assoc~te Justice
...

ER~.UY
Associate Justice
CAESAR~ASANOVA
Associate Justice

. FASON - VICTORINO

A~~ a/~-~,..,~
AMELIA R. COTANGCO-MANALASTAS
Associate Justice

0/'rf(. ~ .,; t_
MA. BELEN M. RINGPIS- liBAN
Associate Justice

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution,

it is hereby certified that the conclusions in the above
Decision were reached in consu ltation among the mem bers
of the Court En Bane before the case was .............
assigned to the
writer of the opinion of the Coo-Ft...En Bane.

Presiding Justice