GLOBE-MACKAY CABLE & RADIO CORP. v. PHILIPPINE PETROLEUM CORP v.

GEORGE BARRIOS & OLDA CRUZ-BARRIOS MUNICIPALITY OF PILILLA, RIZAL

(Globe-Mackay v. Barrios)
GR No. 90776, 3 June 1991
GR No. L-60859, 27 December 1982
FACTS:
FACTS:
PPC is a business enterprise engaged in the
Petitioner cable company failed to deliver manufacture of lubricated oil basestock
to respondent spouses a cablegram (a which is a petroleum product in Pililla, Rizal.
telegraph message sent by cable) from Under Section 142 of the National Internal
Mercy Hospital in New York which Revenue Code of 1939, manufactured oils
apparently held the respondent wifes and other fuels are subject to specific tax.
admission for a rotating internship in the said
hospital. As a consequence, she was unable 1. PD 231 (Local Tax Code of 1973)
to signify her acceptance and the position gave the LGUs the power to tax and
was given to someone else. raise their own revenues. Sections 19
and 19 (a) thereof, provide that the
ISSUE: municipality may impose taxes on
business, except on those for which
W/N company respondent is a private, fixed taxes are provided on
public, or quasi-public corp.? manufacturers, importers or
producers of any article of
HELD:
commerce of whatever kind or
Taking into account the facts and nature
circumstances, that petitioner is a quasi- 2. Provincial Circular No. 26-73
public corporation affected with public refrained LGU treasurers from
interest. collecting any local tax imposed in
A telegraph company is a public service the old or new tax ordinances in f
corporation owing guties to the general manufacturing, wholesaling,
public and is liable to any member of the retailing, or dealing in petroleum
public to whom it owes a duty for damages products subject to the specific tax
proximately flowing from a violation of that under the National Internal Revenue
duty (Western U. Tel. Co. vs. Ramsey) Code.
3. The Pililla Tax Code of 1974, Sections
ACCORDINGLY, the Decision appealed 9 and 10 of the said ordinance
from is hereby modified by reducing the imposed a tax on business, EXCEPT
award of: a) actual damages, to the for those for which fixed taxes are
equivalent of $ 2,703.00 n Philippine provided in the Local Tax Code on
currency at the prevailing exchange rate as manufacturers, importers, or
of July 31, 1973; b) moral damages, to producers of any article of
P5,000.00; c) exemplary damages, to commerce of whatever kind or
P5,000.00; and d) attorney's fees, to nature as well as mayor's permit,
P8,000.00. In all other respects, the judgment sanitary inspection fee and storage
is affirmed. permit fee for flammable,
combustible or explosive substances.
QUASIPUBLIC CORPORATIONS

Public corporations created as agencies of

the ISSUE:

State for narrow and limited purposes
without the powers and liabilities of
selfgoverning corporations.
W/N petitioner PPC (whose oil products are
subject to specific tax under the National
Internal Revenue Code) is still liable to pay
(a) tax on business and (b) storage fees, as
regards to Provincial Circular No. 6-77; and
mayors permit and sanitary inspection fee
unto the respondent municipality, based on
Municipal Ordinance No.1.

HELD:
There is no question that Pililla's Municipal
Tax Ordinance No. 1 imposing the assailed
taxes, fees and charges is valid especially
Section 9 (A) which according to the trial
court "was lifted in toto and/or is a literal
reproduction of Section 19 (a) of the Local
Tax Code as amended by P.D. No. 426." It
conforms with the mandate of said law.
AS TO TAX ON BUSINESS
Since the Local Tax Code does not provide
the prescriptive period for collection of local
taxes, Article 1143 of the Civil Code applies.
Said law provides that an action upon an
obligation created by law prescribes within
ten (10) years from the time the right of
action accrues. The Municipality of Pililla
can therefore enforce the collection of the
tax on business of petitioner PPC due from
1976 to 1986, and NOT the tax that had
accrued prior to 1976.
AS TO STORAGE FEE
Provincial Circular No. 6-77 enjoining all city
and municipal treasurers to refrain from
collecting the so-called storage fee on
flammable or combustible materials
imposed in the local tax ordinance of their
respective locality frees petitioner PPC from
the payment of storage permit fee.
The storage permit fee being imposed by
Pililla's tax ordinance is a fee for the
installation and keeping in storage of any
flammable, combustible or explosive
substances. Inasmuch as said storage
makes use of tanks owned not by the
municipality of Pililla, but by petitioner PPC,
same is obviously not a charge for any
service rendered by the municipality as
what is envisioned in Section 37 of the same
Code.
Internal Revenue, 124 SCRA 121 [1983]).
Thus, in the absence of a clear and express
exemption from the payment of said fees,
the waiver cannot be recognized. As
already stated, it is the law-making body,
and not an executive like the mayor, who
can make an exemption. Under Section 36
of the Code, a permit fee like the mayor's
permit, shall be required before any
individual or juridical entity shall engage in
any business or occupation under the
provisions of the Code.
The exercise by local governments of the
power to tax is ordained by the present
Constitution.1wphi1 To allow the
continuous effectivity of the prohibition set
forth in PC No. 26-73 (1) would be
tantamount to restricting their power to tax
by mere administrative issuances. Under
Section 5, Article X of the 1987 Constitution,
only guidelines and limitations that may be
established by Congress can define and
limit such power of local governments. Thus:
Each local government unit shall have the
power to create its own sources of revenues
and to levy taxes, fees, and charges subject
to such guidelines and limitations as the
Congress may provide, consistent with the
basic policy of local autonomy .

AS TO THE AUTHORITY OF THE MAYOR TO

WAIVE PAYMENT OF THE MAYOR'S PERMIT
AND SANITARY INSPECTION FEE

the trial court did not err in holding that

"since the power to tax includes the power
to exempt thereof which is essentially a
legislative prerogative, it follows that a
municipal mayor who is an executive officer
may not unilaterally withdraw such an
expression of a policy thru the enactment of
a tax." The waiver partakes of the nature of
an exemption. It is an ancient rule that
exemptions from taxation are construed in
strictissimi juris against the taxpayer and
liberally in favor of the taxing . Tax
exemptions are looked upon with disfavor
(Western Minolco Corp. v. Commissioner of
BASCO VS. PHILIPPINE AMUSEMENT AND
GAMING CORPORATION (PAGCOR)
G.R. No. 31649, 14 May 1991
FACTS:
On January 1, 1977 PAGCOR was created
by virtue of P.D. 1067-A and was granted
franchise under P.D. 1076-B to establish,
operate and maintain gambling casinos on
land or water within the territorial jurisdiction
of the Philippines. On July 11, 1983,
PAGCOR was created under P.D. 1869 to
enable the Government to regulate and
centralize all games of chance authorized
by existing franchise or permitted by law. To
attain these objectives, PAGCOR is given
territorial jurisdiction all over the Philippines.
Petitioners are questioning the validity of
P.D. 1869 and allege that it is null and void
for being contrary to morals, public policy
and public order, monopolistic and tends
toward crony economy, and is violative of
the equal protection clause and local
autonomy as well as for running counter to
the state policies enunciated in Sections 11
(Personal Dignity and Human Rights), 12
(Family) and 13 (Role of Youth) of Article II,
Section 1 (Social Justice) of Article XIII and
Section 2 (Educational Values) of Article XIV
of the 1987 Constitution.
ISSUE:
W/N the Local Autonomy Clause of the
Constitution is violated by P.D. 1869.
HELD:
No. the principle of local autonomy under
the 1987 Constitution simply means
decentralization (III Records of the 1987
Constitutional Commission, pp. 435-436, as
cited in Bernas, the Constitution of the
Republic of the Philippines, Vol. II, First Ed.,
1988, p. 374). It does not make local
governments sovereign within the state or
an imperium in imperio. Local
Government has been described as a
political subdivision of a nation or state
which is constituted by law and has
substantial control of local affairs. In a
unitary system of government, such as the
government under the Philippine
Constitution, local governments can only be
an intra sovereign subdivision of one
sovereign nation, it cannot be an imperium
in imperio. Local government in such a
system can only mean a measure of
decentralization of the function of
government.
As to what state powers should be
decentralized and what may be
delegated to local government units
remains a matter of policy, which concerns
wisdom. It is therefore a political question.
(Citizens Alliance for Consumer Protection v.
Energy Regulatory Board, 162 SCRA 539).
What is settled is that the matter of
regulating, taxing or otherwise dealing with
gambling is a State concern and hence, it is
the sole prerogative of the State to retain it
or delegate it to local governments.
LIMBONA v. MANGELIN
GR No. 80391, 28 February 1989
FACTS:
Petitioner, Sultan Alimbusar Limbona, was
elected Speaker of the Regional Legislative
Assembly or Batasang Pampook of Central
Mindanao (Assembly). On October 21, 1987
Congressman Datu Guimid Matalam,
Chairman of the Committee on Muslim
Affairs of the House of Representatives,
invited petitioner in his capacity as Speaker
of the Assembly of Region XII in a
consultation/dialogue with local
government officials. Petitioner accepted
the invitation and informed the Assembly
members through the Assembly Secretary
that there shall be no session in November
as his presence was needed in the house
committee hearing of Congress. However,
on November 2, 1987, the Assembly held a
session in defiance of the Limbona's advice,
where he was unseated from his position.
Petitioner prays that the session's
proceedings be declared null and void and
be it declared that he was still the Speaker
of the Assembly. Pending further
proceedings of the case, the SC received a
resolution from the Assembly expressly
expelling petitioner's membership therefrom.
Respondents argue that petitioner had "filed
a case before the Supreme Court against
some members of the Assembly on a
question which should have been resolved
within the confines of the Assembly," for
which the respondents now submit that the
petition had become "moot and academic"
because of its resolution.
ISSUES:
1. Whether or not the expulsion of the
petitioner (pending litigation) has made the
case moot and academic.
2. Are the so-called autonomous
governments of Mindanao subject to the
jurisdiction of the national courts? In other
words, what is the extent of self-government
given to the two autonomous governments
of Region 9 and 12?
HELD:
1. The Court does not agree that the case is
moot and academic simply by reason of
the expulsion resolution that was issued. If
the expulsion was done purposely to make
the petition moot and academic, it will not
make it academic. On the ground of due
process, the Court hold that the expulsion is
without force and effect. First, there is no
showing that the Sanggunian had
conducted an investigation. It also does not
appear that the petitioner had been made
aware that he was charged with graft and
corruption before his colleagues. It cannot
be said therefore that he was accorded
any opportunity to rebut their accusations.
As it stands, the charges now are leveled
amount to mere accusations that cannot
warrant expulsion. Thus, the Court ordered
reinstatement of the petitioner.
2. The autonomous governments of
Mindanao were organized in Regions 9 and
12 by Presidential Decree No. 1618. In
relation to the central government, the
Presidential Decree provides that the
President shall have the power of general
supervision and control over the
Autonomous Regions... Now, autonomy is
either decentralization of administration or
decentralization of power. There is
decentralization of administration when the
central government delegates
administrative powers to political
subdivisions in order to broaden the base of
government power and in the process to
make local governments more responsive
and accountable, and ensure their fullest
development as self-reliant communities
and make them more effective partners in
the pursuit of national development and
social progress. At the same time, it relieves
the central government of the burden of
managing local affairs and enables it to
concentrate on national concerns. The
president exercises general supervision
over them, but only to ensure that local
affairs are administered according to law.
He has not control over their acts in the
sense that he can substitute their judgments
with his own. Decentralization of power, on
the other hand, involves an abdication of
political power in the favor of local
government units declared to be
autonomous. In that case, the autonomous
government is free to chart its own destiny
and shape its future with minimum
intervention from central authorities.
According to the Supreme Court, an
examination of the very Presidential Decree
creating the autonomous governments of
Mindanao persuades us to believe that they
were never meant to exercise autonomy
through decentralization of power. The
Presidential Decree, in the first place,
mandates that the President shall have the
power of general supervision and control
over Autonomous Regions. In the second
place, the Sangguniang Pampook, their
legislative arm, is made to dischage chiefly
administrative services. Thus, the SC assumes
jurisdiction.
Upon the facts presented, the Court finds
two sessions held on November to be
invalid. Wherefore, the petition is Granted.
The petitioner is reinstated as Member and
speaker of the Sanggunian
SAN JUAN vs. CIVIL SERVICE COMMISSION
G.R. No. 92299 19 April 1991
FACTS:
When the position of Provincial Budget
Officer (PBO) for the province of Rizal was
left vacant, petitioner Governor of the
Province of Rizal informed Director Reynaldo
Abella of the Department of Budget and
Management (DBM) that Ms. Dalisay Santos
assumed office as Acting PBO and further
requested Director Abella to endorse the
appointment of Ms. Dalisay Santos to the
position of PBO of Rizal. However, Director
Abella recommended the appointment of
the private respondent, Cecilia Almajose,
who according to him was the most
qualified. The petitioner was informed that
Santos and his other recommendees did not
meet the minimum requirements under
Local Budget Circular No. 31 for the position
of a local budget officer.
Petitioner protested against the said
appointment on the ground that under
Section 1 of Executive Order No. 112, "All
budget officers of provinces, cities and
municipalities shall be appointed
henceforth by the Minister of Budget and
Management upon recommendation of the
local chief executive concerned, subject to
civil service law, rules and regulations, and
they shall be placed under the
administrative control and technical
supervision of the Ministry of Budget and
Management." The petitioner contends that
the phrase "upon recommendation of the
local chief executive concerned" must be
given mandatory application in
consonance with the state policy of local
autonomy as guaranteed by the 1987
Constitution under Art. II, Sec. 25 and Art. X,
Sec. 2 thereof.

ISSUE:

In the event that the Governor recommends

an unqualified person, is the Department
Head free to appoint anyone he fancies?

HELD:

No. The right given by Local Budget Circular

No. 31 which states:

Sec. 6.0 The DBM reserves the right to fill

up any existing vacancy where none of the
nominees of the local chief executive meet
the prescribed requirements is ultra vires.

When the Civil Service Commission

interpreted the recommending power of
the Provincial Governor as purely directory,
it went against the letter and spirit of the
constitutional provisions on local autonomy.
If the DBM Secretary jealously hoards the
entirety of budgetary powers and ignores
the right of local governments to develop
self-reliance and resoluteness in the
handling of their own funds, the goal of
meaningful local autonomy is frustrated and
set back. The DBM may appoint only from
the list of qualified recommendees
nominated by the Governor. If none is
qualified, he must return the list of nominees
to the Governor explaining why no one
meets the legal requirements and ask for
new recommendees who have the
necessary eligibilities and qualifications.
PHILIPPINE SOCIETY FOR THE PREVENTION OF
CRUELTY TO ANIMALS vs. COA
G.R. No. 169752, 25 September 2007
FACTS:
The petitioner was incorporated as a
juridical entity over one hundred years ago
by virtue of Act No. 1285, enacted on
January 19, 1905, by the Philippine
Commission. The petitioner, at the time it
was created, was composed of animal
aficionados and animal propagandists. The
objects of the petitioner, as stated in Section
2 of its charter, shall be to enforce laws
relating to cruelty inflicted upon animals or
the protection of animals in the Philippine
Islands, and generally, to do and perform all
things which may tend in any way to
alleviate the suffering of animals and
promote their welfare.

At the time of the enactment of Act No.

1285, the original Corporation Law, Act No.
1459, was not yet in existence. Act No. 1285
antedated both the Corporation Law and
the constitution of the SEC.

For the purpose of enhancing its powers in

promoting animal welfare and enforcing
laws for the protection of animals, the
petitioner was initially imbued under its
charter with the power to apprehend
violators of animal welfare laws. In addition,
the petitioner was to share 1/2 of the fines
imposed and collected through its efforts for
violations of the laws related thereto.
Subsequently, however, the power to make
arrests as well as the privilege to retain a
portion of the fines collected for violation of
animal-related laws were recalled by virtue
of C.A. No. 148. Whereas, the cruel
treatment of animals is now an offense
against the State, penalized under our
statutes, which the Government is duty
bound to enforce;
When the COA was to perform an audit on
them they refuse to do so, by the reason
that they are a private entity and not under
the said commission. It argued that COA
covers only government entities. On the
other hand the COA decided that it is a
government entity.
ISSUE:
W/N petitioner society is a private juridical
entity.
HELD:
YES.
1. The "charter test" cannot be applied.
Essentially, the "charter test" as it stands
today provides:
[T]he test to determine whether a
corporation is government owned or
controlled, or private in nature is simple. Is it
created by its own charter for the exercise
of a public function, or by incorporation
under the general corporation law? Those
with special charters are government
corporations subject to its provisions, and its
employees are under the jurisdiction of the
Civil Service Commission, and are
compulsory members of the Government
Service Insurance System.
The textual foundation of the charter test,
which placed a limitation on the power of
the legislature, first appeared in the 1935
Constitution. However, the petitioner was
incorporated in 1905 by virtue of Act No.
1258, a law antedating the Corporation Law
(Act No. 1459) by a year, and the 1935
Constitution, by thirty years. There being
neither a general law on the formation and
organization of private corporations nor a
restriction on the legislature to create
private corporations by direct legislation,
the Philippine Commission at that moment
in history was well within its powers in 1905 to
constitute the petitioner as a private juridical
entity.
2. A reading of petitioners charter shows
that it is not subject to control or supervision
by any agency of the State, unlike
government-owned and -controlled
corporations. No government representative
sits on the board of trustees of the petitioner.
Like all private corporations, the successors
of its members are determined voluntarily
and solely by the petitioner in accordance
with its by-laws, and may exercise those
powers generally accorded to private
corporations, such as the powers to hold
property, to sue and be sued, to use a
common seal, and so forth. It may adopt
by-laws for its internal operations: the
petitioner shall be managed or operated by
its officers "in accordance with its by-laws in
force.
3. The employees of the petitioner are
registered and covered by the Social
Security System at the latters initiative, and
not through the Government Service
Insurance System, which should be the case
if the employees are considered
government employees. This is another
indication of petitioners nature as a private
entity.
4. The respondents contend that the
petitioner is a "body politic" because its
primary purpose is to secure the protection
and welfare of animals which, in turn,
redounds to the public good.
This argument is false.
The fact that a certain juridical entity is
impressed with public interest does not, by
that circumstance alone, make the entity a
public corporation, inasmuch as a
corporation may be private although its
charter contains provisions of a public
character, incorporated solely for the public
good. This class of corporations may be
considered quasi-public corporations, which
are private corporations that render public
service, supply public wants or pursue other
eleemosynary objectives. While purposely
organized for the gain or benefit of its
members, they are required by law to
discharge functions for the public benefit. It
must be stressed that a quasi-public
corporation is a species of private
corporations, but the qualifying factor is the
type of service the former renders to the
public: if it performs a public service, then it
becomes a quasi-public corporation.

Authorities are of the view that the purpose

alone of the corporation cannot be taken
as a safe guide, for the fact is that almost all
corporations are nowadays created to
promote the interest, good, or convenience
of the public. A bank, for example, is a
private corporation; yet, it is created for a
public benefit. Private schools and
universities are likewise private corporations;
and yet, they are rendering public service.
Private hospitals and wards are charged
with heavy social responsibilities. More so
with all common carriers. On the other
hand, there may exist a public corporation
even if it is endowed with gifts or donations
from private individuals.

The true criterion, therefore, to determine

whether a corporation is public or private is
found in the totality of the relation of the
corporation to the State. If the corporation is
created by the State as the latters own
agency or instrumentality to help it in
carrying out its governmental functions, then
that corporation is considered public;
otherwise, it is private. Applying the above
test, provinces, chartered cities, and
MARILAO WATER CONSUMERS ASSO., INC. v.
barangays can best exemplify public
IAC, et al.,
corporations. They are created by the State
as its own device and agency for the GR No. 7280, 9 September 1991
accomplishment of parts of its own public
works. FACTS:

4 .The respondents argue that since the
charter of the petitioner requires the latter to
render periodic reports to the Civil
Governor, whose functions have been
inherited by the President, the petitioner is,
therefore, a government instrumentality.
NO.
This contention is inconclusive. By virtue of
the fiction that all corporations owe their
very existence and powers to the State, the
reportorial requirement is applicable to all
corporations of whatever nature, whether
they are public, quasi-public, or private
corporationsas creatures of the State,
there is a reserved right in the legislature to
investigate the activities of a corporation to
determine whether it acted within its
powers. In other words, the reportorial
requirement is the principal means by which
the State may see to it that its creature
acted according to the powers and
functions conferred upon it.
Marilao Water District was formed through a
Resolution of the Sangguniang Bayan of the
Municipality of Marilao, which resolution was
thereafter forwarded to the Local Water
Utilities Administration (LWUA) and duly
filed by it after ascertaining that it
conformed to the requirements of Law.
Marilao Water Consumers Association, Inc.
filed a petition claiming that the creation of
the water district is defective and illegal.
Marilao Water District filed its Answer with
affirmative that (a) the RTC lacked
jurisdiction over the subject matter since the
water districts dissolution fell under the
original and exclusive jurisdiction of the SEC
while the matter of the propriety of water
rates is within the primary administrative
jurisdiction of the LWUA and the quasi-
judicial jurisdiction of the National Water
Resources Council.
Marilao Consumers Association countered
that the SEC had no jurisdiction over a
proceeding for dissolution since the Marilao
Water District had not been organized
under the Corporation Code; and that
under Sec. 45 of PD 198, the proceeding to
determine if the dissolution of the water
district is for the best interest of the people, is
within the competence of a regular court of
justice, and neither the LWUA not the NWRC
is competent to take cognizance of the
matter of dissolution of the water district and
recovery of its waterworks system, or the
exorbitant rates imposed by it.
ISSUE:
Whether the RTC or the SEC has jurisdiction
over the dissolution of a water district
organized and operating as a quasi-public
corporation under the provisions of PD
No.198, as amended?
has nothing whatever to do with their
formation and organization, all the terms
and conditions for their organization and
operation being particularly spelled out in
PD 198. The resolutions creating them, their
charters, in other words, are filed not with
the Securities and Exchange Commission
but with the LWUA. It is these resolutions qua
charters, and not articles of incorporation
drawn up under the Corporation Code,
which set forth the name of the water
districts, the number of their directors, the
manner of their selection and replacement,
their powers, etc.
The SEC which is charged with enforcement
of the Corporation Code as regards
corporations, partnerships and associations
formed or operating under its provisions, has
no power of supervision or control over the
activities of water districts.

HELD:

The RTC has the general jurisdiction. PD 198

authorizes the formation, lays down the
powers and functions, and governs the
operation of water districts throughout the
country; it is "the source of authorization and
power to form and maintain a (water)
district." Once formed, it says, a district is
subject to its provisions and is not under the
jurisdiction of any political subdivision.

Under PD 198, water districts may be

created by the different local legislative
bodies by the passage of a resolution to this
effect, subject to the terms of the decree.
The primary function of these water districts
is to sell water to residents within their
territory, under such schedules of rates and
charges as may be determined by their
boards. They shall manage, administer,
operate and maintain all watersheds within
their territorial boundaries, safeguard and
protect the use of the waters therein,
supervise and control structures within their
service areas, and prohibit any person from
selling or otherwise disposing of water for
public purposes within their service areas
where district facilities are available to
provide such service.

The juridical entities known as water districts

created by PD 198, although considered as
quasi-public corporations and authorized to
exercise the powers, rights and privileges
given to private corporations under existing
laws, are entirely distinct from corporations
organized under the Corporation Code, PD
902-A, as amended. The Corporation Code