Republic of the Philippines
Province of South Cotabato
City of Koronadal
OFFICE OF THE CITY LEGAL OFFICER
Tel No. (083) 228-1742
LEGAL OPINION NO. ________
DATE : 27 August 2013
TO : Hon. PETER B. MIGUEL, M.D., FPSO-HNS
City Mayor
RE : AS STATED
____________________________________________________
Kanami Koronadal!
This has reference to your request for legal opinion regarding the conflicting claims over the New Alkor Gallera, situated at Lot No. 33-D-3, (LRC) Psd-159732, with an area of 10,000 square meters, more or less, between Joveniano Tiu, et al. and Engr. Ernie Padernal. Said lot was formerly covered by TCT No. T-31907.
As gathered, it appears that the subject property, which was originally registered in the name of Alfredo (deceased) and Rufina Padernal, was mortgaged to the Philippine National Bank (PNB) by Ernie and Evelyn Padernal on the strength of a Special Power of Attorney from the registered owners. Upon default of the mortgagor, the mortgage was extrajudicially foreclosed and PNB was able to acquire the property, including the improvements thereon. Eventually, the title was consolidated in the name of PNB under TCT No. T-91167.
Subsequently, PNB entered into a Contract to Sell with Joveniano Tiu, et al. and authorized the latter to operate the said cockpit. The vendees formed a corporation and have now a pending application with the Securities and Exchange Commission.
Prior thereto, Joveniano Tiu, et al. used to operate the said cockpit on the strength of a contract of lease with the Padernals, which however had already expired. Considering that the subject property has already been sold to them by PNB, Joveniano Tiu, et al. are now applying for a business permit/special permit to operate the same. Engr. Ernie Padernal interposed an objection thereto claiming that he is the licensee as regards the said cockpit and that although there already was a foreclosure, there was no writ of possession from the court yet allowing PNB to take possession of the subject property.
We are therefore confronted by an issue of whether or not Joveniano Tiu, et al. may be issued business permit/special permit with respect to the operation of the subject cockpit.
We answer in the affirmative, subject only to the requirements set by the law and ordinance.
As discussed, PNB, the new registered owner of the subject property, has already entered into a Contract to Sell with Joveniano Tiu, et al., on 18 February 2013. In addition, PNB, through its Branch Manager, Evelyn B. Tampus, has authorized Joveniano Tiu, et al., via a Memorandum/Certification dated 19 July 2013 to operate the said cockpit. Considering that they have been in possession of the subject property, we find no logic in requiring them to secure first a writ of possession from the Court. A writ of possession is needed only if the prevailing party in an action or proceeding is not yet in possession of the property. It is a remedy available to the purchaser at a public auction and to any subsequent buyers thereof, which remedy may or may not be availed of. In this case, such writ is no longer necessary because the purchasers have been in possession of the property and have in fact been operating the same. This is a case of possessors who have been enjoying the beneficial use of a property, who have subsequently acquired the naked ownership of the same property. Needless to say, Engr. Padernal had already ceased to be the owner of the property; hence, his objection has no leg to stand on.
We hope that we have guided you accordingly.
In public service,
ATTY. EUFEMIO A. SIMTIM, JR.
City Legal Officer
ABEGAIL F. BATARA, LLB
Legal Assistant II
Who is Atty. Jayr?
- atty. jay_ar
- Atty. Eufemio A. Simtim, Jr. or Atty. Jayr is a licensed lawyer in the Philippines. He is a Partner at Simtim Gunay Viejo Sales Sobrejuanite Law Group, but he does only virtual consultations as he is presently out of the country. He has been in the litigation practice in most part of his legal career and has worked in the academe, in the government and in the corporate world. He also passed the PRC licensure exams for Real Estate Broker and for Real Estate Appraiser (Rank No. 5). He presently runs his Youtube Channel, @yourlawyer, providing free legal information and updates.
Friday, November 29, 2013
LEGAL OPINION RE ESTABLISHMENT OF COCKPITS [DELAYED POSTING]
Republic of the Philippines
Province of South Cotabato
City of Koronadal
OFFICE OF THE CITY LEGAL OFFICER
Tel No. (083) 228-1742
LEGAL OPINION NO. ________
DATE : 27 August 2013
TO : Hon. PETER B. MIGUEL, M.D., FPSO-HNS
City Mayor
RE : AS STATED
___________________________________________________
Kanami Koronadal!
This has reference to your request for legal opinion on the granting of franchise and issuance of special and/or business permit concerning the operation of a cockpit/cockfighting business.
Before delving into details, please be informed that this opinion is supplementary to the legal opinion rendered by the City Legal Office via Legal Opinion No. 2013-08-04 dated 2nd of August 2013. A perusal of the above-mentioned opinion may be helpful and contributive as the controversies and parties involved are the same as this case before us.
I. BRIEF HISTORICAL BACKGROUND OF COCKFIGHTING LAWS
Let us examine the evolution of Laws pertaining to the authorization of the Cockfighting/Cockpit Operation in the LGUs.
A. PRESIDENTIAL DECREE NO. 449, otherwise known as "The Cockfighting Law of 1974".
In 1970s, the desire for stricter licensing requirements of cockpits started to see legislative fruit. The Cockfighting Law of 1974 (PD 449) enacted several of these requisites/restrictions, to wit:
(a) one-cockpit-per-city/municipality rule except if its population exceeds one hundred thousand, in this case, two cockpits maybe operated.
x x x
“Section 5. Cockpits and Cockfighting: In General:
(a) xxx
(b) Establishment of Cockpits. Only one cockpit is allowed in each city or municipality, except that in cities or municipalities with a population of over hunddred thousand, two cockpits maybe established, maintained and operated.
x x x
(b) limitation of ownership of cockpits to Filipino citizens.
x x x
“Section 5. Cockpits and Cockfighting: In General:
(a) Ownership, Operation and Management of Cockpits. Only Filipino citizens not otherwise inhibited by existing laws shall be allowed to own, manage and operate cockpits. Cooperative capitalization is encouraged.
x x x
(c) it was the city or municipal mayor who was authorized to issue licenses for the operation and maintenance of cockpits, subject to the approval of the Chief of Constabulary or his authorized representatives.
x x x
“Section 6.LICENSING OF COCKPITS.
City and Municipal mayors are authorized to issue licenses for the operation and maintenance of cockpits subject to the approval of the Chief of Constabulary or his authorized representatives.”
x x x
Thus, the sole discretion to authorize the operation of cockpits as contained in previous laws was removed from the local government unit since the approval of the Chief of Constabulary was required
B. PRESIDENTIAL DECREE NO. 1803, otherwise known as "Creating the Philippine Gamefowl Commission".
Then came P.D. No. 1803 which established the Philippine Gamefowl Commission and imposed further structure in the regulation of cockfighting.
x x x
"Section 4.
City and Municipal Mayors with the concurrence of their respectives Sangguniang Panglunsod or Sangguniang Bayan, shall have the authority to license and regulate regular cockfighting, under the supervision of the City Mayor and the Provincial Governor, as the case may be.
x x x
Based on the foregoing, the approval of the Chief Constabulary or his representative as enunciated in PD 449 was expressly removed.
However, the preceding section was subsequently amended by Presidential Decree 1802-A, otherwise known as "Amending Section 4 of Presidential Decree No. 1802". The amended provision ordained:
x x x
"Section 4.
City and Municipal Mayors with the concurrence of their respective "Sanggunians" shall have the authority to license and regulate regular cockfighting pursuant to the rules and regulations promulgated by the Commission and subject to its review and supervision.
x x x
As above-mentioned, such amendment removes the supervision exercised by the mayor or governor and substituting in their stead the Philippine Gamefowl Commission (PGC). But the PGC’s power of supervision under such law has been clarified by the Honorable Supreme Court in the light of the Local Government Code then in effect, thus:
x x x
“According to the Local Government Code, the municipal mayor has the power to "grant licenses and permits in accordance with existing laws and municipal ordinances and revoke them for violation of the conditions upon which they have been granted," and the Sangguniang Bayan is authorized to "regulate cockpits, cockfighting and the keeping or training of gamecocks, subject to existing guidelines promulgated by the Philippine Gamefowl Commission."
A study of the above-cited powers shows that it is the municipal mayor with the authorization of the Sangguniang Bayan that has the primary power to issue licenses for the operation of ordinary cockpits. Even the regulation of cockpits is vested in the municipal officials, subject only to the guidelines laid down by the Philippine Gamefowl Commission. Its power to license is limited only to international derbies and does not extend to ordinary cockpits. Over the latter kind of cockpits, it has the power not of control but only of review and supervision.
We have consistently held that supervision means "overseeing or the power or authority of an officer to see that their subordinate officers perform their duties. If the latter fail or neglect to fulfill them, the former may take such action or steps as prescribed by law to make them perform their duties." Supervision is a lesser power than control, which connotes "the power of the officer to alter or modify or set aside what a subordinate had done in the performance of his duties and to substitute the judgment of the former for that of the latter." Review, on the other hand, is a reconsideration or reexamination for purposes of correction.
As thus defined, the power of supervision does not snow the supervisor to annul the acts of the subordinate, for that comes under the power of control. What it can do only is to see to it that the subordinate performs his duties in accordance with law. The power of review is exercised to determine whether it is necessary to correct the acts of the subordinate. If such correction is necessary, it must be done by the authority exercising control over the subordinate or through the instrumentality of the courts of justice, unless the subordinate motu proprio corrects himself after his error is called to his attention by the official exercising the power of supervision and review over him.
At that, even the power of review vested in the Philippine Gamefowl Commission by P.D. 1802-A may have been modified by the Local Government Code, which became effective on February 14, 1983. Under the Code, the Sangguniang Panlalawigan is supposed to examine the ordinances, resolutions and executive orders issued by the municipal government and to annul the same, but only on one ground, to wit, that it is beyond the powers of the municipality or ultra vires. Significantly, no similar authority is conferred in such categorical terms on the Philippine Gamefowl Commission regarding the licensing and regulation of cockpits by the municipal government.
The conferment of the power to license and regulate municipal cockpits in the municipal authorities is in line with the policy of local autonomy embodied in Article II, Section 10, and Article XI of the 1973 Constitution. It is also a recognition, as the Court of Appeals correctly points out, of the superior competence of the municipal officials in dealing with this local matter with which they can be expected to be more knowledgeable than the national officials. Surely, the Philippine Gamefowl Commission cannot claim to know more than the municipal mayor and the Sangguniang Bayan of Bogo, Cebu, about the issues being disputed by the applicants to the cockpit license.” [PHILIPPINE GAMEFOWL COMMISSION AND HEE ACUSAR vs.HON. INTERMEDIATE APPELLATE COURT, MAYOR CELESTINO E. MARTINEZ, JR., THE SANGGUNIANG BAYAN OF BOGO (CEBU), and SANTIAGO SEVILLA, G.R. No. 72969-70 December 17, 1986]
x x x
C. REPUBLIC ACT 7160, otherwise known as "The Local Government Code of 1991".
More importantly, Republic Act 7160 has already conferred such power to the Sangguniang Panlungsod. Said law provides that:
x x x
Article Three – The Sangguniang Panlungsod
Section 458.Powers, Duties, Functions and Compensation. –
(a) The Sangguniang Panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the city as provided for under Section 22 of this Code, and shall:
(1) xxx
(2) xxx
(3) Subject to the provisions of Book II of this Code, enact ordinances granting franchises and authorizing the issuance of permits or licenses, upon such conditions and for such purposes intended to promote the general welfare of the inhabitants of the city and pursuant to this legislative authority shall:
(i)xxx
(ii)xxx
(iii)xxx
(iv)xxx
(v) Any law to the contrary notwithstanding, authorize and license the establishment, operation, and maintenance of cockpits, and regulate cockfighting and commercial breeding of gamecocks: Provided, That existing rights should not be prejudiced;
x x x
Article 99, Rule XV of the Local Government Code’s Implementing Rules and Regulations provides in toto a similar provision.
There is no more forceful authority on this landmark legislation than Senator Aquilino Pimentel, Jr., its principal author. In his annotations to the Local Government Code, he makes the following remarks relating to Section 448(a)(3)(v):
x x x
"12.Licensing power. In connection with the power to grant licenses lodged with it, the Sangguniang Panlungsod may now regulate not only businesses but also occupations, professions or callings that do not require government examinations within its jurisdiction. It may also authorize and license the establishment, operation and maintenance of cockpits, regulate cockfighting, and the commercial breeding of gamecocks."
x x x
Ergo, based on the preceding provisions and annotation, the power to license cockpits and permits for cockfighting has been removed completely from the Gamefowl Commission and devolved to Sangguniang Panlungsod by virtue of R.A.7160.
Again, it must be stressed out also that even before the advent of RA 7160, the Court interpreted in a series of cases that the Philippine Gamefowl Commission's power of review and supervision does not extend to licensing which belongs exclusively to the Sangguniang Panlungsod. The landmark cases of the Supreme Court elucidates further in the following cases:
(a) Deang v. Intermediate Appellate Court, 24 September 1987, 154 SCRA 250)
(b) Municipality of Malolos v. Libangang Malolos Inc., 11 August 1988, 164 SCRA 290
(c) Adlawan v. Intermediate Appellate Court, 9 February 1989, 170 SCRA 165).
In the afore-cited case of Philippine Gamefowl Commission et al. vs. Hon. Intermediate Appellate Court, et al., the Honorable Supreme Court has intoned:
xxx xxx xxx
“This is as good an occasion as any to stress the commitment of the Constitution to the policy of local autonomy which is intended to provide the needed impetus and encouragement to the development of our local political subdivisions as "self-reliant communities." In the words of Jefferson, "Municipal corporations are the small republics from which the great one derives its strength." The vitalization of local governments will enable their inhabitants to fully exploit their resources and, more important, imbue them with a deepened sense of involvement in public affairs as members of the body politic. This objective could be blunted by undue interference by the national government in purely local affairs which are best resolved by the officials and inhabitants of such political units. The decision we reach today conforms not only to the letter of the pertinent laws but also to the spirit of the Constitution.”
xxx xxx xxx
It must be noted that the final provisions of RA 7160 decreed that:
xxx xxx xxx
“Title Four - Final Provisions
"Section. 534.
(a) xxx
(b) xxx
(c) xxx
(d) xxx
(e) xxx
(f) all general and special laws, acts, city charters, decrees, executive orders, proclamations and administrative regulations, or part or parts thereof which are inconsistent with any of this Code are hereby repealed or modified accordingly.”
xxx xxx xxx
The above section repeals or amends expressly several laws mentioned thereat. However, PD 449 was not among them. It is a cardinal rule in statutory construction that implied repeals are disfavoured and will not be so declared --
(a) UNLESS the intent of the legislators is manifest and unless the repugnancy between the two is not only irreconcilable but also clear and convincing as a result of the language used,
(b) UNLESS the latter Act fully embraces the subject matter of the earlier.
Hence, the conditions set therein still find application.
xxx xxx xxx
“Except as provided in this Decree, cockfighting shall be allowed only in licensed cockpits during Sundays and legal holidays and during local fiestas for not more than three days. It may also be held during provincial, city or municipal, agricultural, commercial or industrial fair, carnival or exposition for a similar period of three days upon resolution of the province, city or municipality where such fair, carnival or exposition is to be held, subject to the approval of the Chief of Constabulary or his authorized representative: Provided, that, no cockfighting on the occasion of such fair, carnival or exposition shall be allowed within the month of a local fiesta or for more than two occasions a year in the same city or municipality: Provided, further, that no cockfighting shall be held on December 30 (Rizal Day), June 12 (Philippine Independence Day) November 30 (National Heroes Day), Holy Thursday, Good Friday, Election or Referendum Day and during Registration Days for such election or referendum. (P.D. 449, Section 5)
xxx xxx xxx
Thus, the Honorable Supreme Court has ruled:
xxx xxx xxx
"We do not doubt, however, the ability of the national government to implement police power measures that affect the subjects of municipal government, especially if the subject of regulation is a condition of universal character irrespective of territorial jurisdictions. Cockfighting is one such condition. It is a traditionally regulated activity, due to the attendant gambling involved or maybe even the fact that it essentially consists of two birds killing each other for public amusement. Laws have been enacted restricting the days when cockfights could be held, and legislation has even been emphatic that cockfights could not be held on holidays celebrating national honor such as Independence Day (R.A. 137) and Rizal Day (R.A. 229)." (Tan vs. Perena, G.R. No. 149743, February 18, 2005)
xxx xxx xxx
II. THE POWER AND AUTHORITY OF THE CITY MAYOR IN ISSUING A SPECIAL AND/OR BUSINESS PERMITS AS PROVIDED FOR BY LAWS AND CITY ORDINANCE
A. THE ESSENTIAL REQUISITES/QUALIFICATIONS FOR THE ISSUANCE OF SPECIAL /BUSINESS PERMITS FOR THE OPERATION OF COCKFIGHTING BUSINESS
The power and authority of the City Mayor to issue the Mayor’s Permit for cockpits owners, operators, licensees, promoters and cockpit personnel, is expressly provided under the 2008 Local Revenue Code of the City of Koronadal which provides that:
xxx xxx xxx
“CHAPTER 3. PERMIT AND REGULATORY FEES
Article K. – PERMIT FEE FOR COCKPITS OWNERS, OPERATORS, LICENSEES, PROMOTERS AND COCKPIT PERSONNEL
Sec. 3K. 01. Imposition of Fees. There shall be collected the following Mayor’s Permit fees from cockpit operators/owners/licensees and cockpit personnel:
(a) From the owner/operator/licensees of the cockpit:
xxx xxx xxxx
xxx xxx xxxx
(b) From Cockpit personnel
xxx xxx xxxx
xxx xxx xxxx
Sec. 3K. 02. Time and Manner of Payment.
(a) The application filing fee is payable to the City Treasurer upon application for a permit or license to operate and maintain cockpits.
(b) The cockpit registration fee is also payable upon application for a permit before a cockpit can operate and within the first twenty (20) days of January of each year in case of renewal thereof.
(c) The permit fees on cockpit personnel shall be paid before they participate in a cockfight and shall be paid annually upon renewal of the permit on the birth month of the permittee.
Sec. 3K. 03. Administrative Provisions.
(a) Ownership, operation and management of cockpit. Only Filipino Citizens not otherwise inhibited by existing ordinances or laws shall be allowed to own, manage and operate cockpits. Cooperative capitalization is encouraged.
(b) Establishment of Cockpits. The Sangguninang Panlungsod shall determine the number of cockpits to be allowed in this pursuant to the Philippine's Game and Fouls Commission PD449 & PD 1802.
(c) Cockpit-size and Construction. Cockpits shall be constructed and operated within the appropriate areas as prescribed in Zoning Law or Ordinance. In the absence of such law or ordinance, the City shall see to it that no cockpits are constructed within or near existing residential or commercial areas, hospitals, school buildings, churches or other public buildings. OWNERS, LESSEES, or OPERATORS of cockpits which are now in existence and do not conform to this requirement are required to comply with these provisions within a period to be specified by the City Mayor. Approval or issuance of building permits for the construction of cockpits shall be made by the City Engineer in accordance with existing ordinances, laws and practices.
(d) Only duly registered and licensed promoters, referees, cashiers, bet managers, pit referees, bet takers, or gaffers shall take part in all kinds of cockfights held in this City. No OPERATOR or OWNER OF A COCKPIT shall employ or allow any of the above-named personnel to participate in a cockfight unless he has registered and paid the fee herein required.
(e) Upon payment of the fees herein imposed, the corresponding Mayor's Permit shall be issued.
x x x
Article L. – SPECIAL PERMIT FOR DERBY COCKFIGHTING
“Sec.3L.01. Imposition of Fees. There shall be collected the following fees per day for cockfighting:
(a) xxx
(b) xxx
x x x
Notably, Sec. 3K. 04, Article K, of the said Ordinance provides:
xxx xxx xxx
“Sec 3K. 04. Applicability Clause. The provision of PD 449, otherwise known as the Cockfighting Law of 1974, PD 1802 (Creating the Philippines Gamefowl Commission), and such other pertinent laws shall apply to all matters regarding the operation of cockpits and the holding of cockfights in this City.”
xxx xxx xxx
Similarly, Sec. 3L. 05, Article L, of the same Ordinance likewise provides:
xxx xxx xxx
Sec. 3L. 05. Applicability Clause. The provision of PD 449, otherwise known as the Cockfighting Law of 1974, PD 1802 (Creating the Philippines Gamefowl Commission), and such other pertinent laws shall apply to all matters regarding the operation of cockpits and the holding of cockfights in this city.”
xxx xxx xxx
Presidential Decree No. 449 provides:
xxx xxx xxx
“Section 5. Cockpits and Cockfighting: In General:
(a) Ownership, Operation and Management of Cockpits. Only Filipino citizens not otherwise inhibited by existing laws shall be allowed to own, manage and operate cockpits. Cooperative capitalization is encouraged.
(b) Establishment of Cockpits. Only one cockpit shall be allowed in each city or municipality, except that in cities or municipalities with a population of over one hundred thousand, two cockpits may be established, maintained and operated.
(c) Cockpits Site and Construction. Cockpits shall be constructed and operated within the appropriate areas as prescribed in Zoning Law or Ordinance. In the absence of such law or ordinance, the local executives shall see to it that no cockpits are constructed within or near existing residential or commercial areas, hospitals, school buildings, churches or other public buildings. Owners, lessees, or operators of cockpits which are now in existence and do not conform to this requirement are given three years from the date of effectivity of this Decree to comply herewith. Approval or issuance of building permits for the construction of cockpits shall be made by the city or provincial engineer in accordance with their respective building codes, ordinances or engineering laws and practice.
(d) Holding of Cockfights. Except as provided in this Decree, cockfighting shall be allowed only in licensed cockpits during Sundays and legal holidays and during local fiestas for not more than three days. It may also be held during provincial, city or municipal, agricultural, commercial or industrial fair, carnival or exposition for a similar period of three days upon resolution of the province, city or municipality where such fair, carnival or exposition is to be held, subject to the approval of the Chief of Constabulary or his authorized representative: Provided, that, no cockfighting on the occasion of such fair, carnival or exposition shall be allowed within the month of a local fiesta or for more than two occasions a year in the same city or municipality: Provided, further, that no cockfighting shall be held on December 30 (Rizal Day), June 12 (Philippine Independence Day) November 30 (National Heroes Day), Holy Thursday, Good Friday, Election or Referendum Day and during Registration Days for such election or referendum. (P.D. 449, Section 5)
xxx xxx xxx
It is important to note that under the Local Government Code of 1991, the City Mayor shall “issue licenses and permits and suspend and revoke the same for any violation of the conditions upon which said licenses or permits had been issued, pursuant to law or ordinance” [Sec. 455 (b) (3) (iv)]. The 2008 Local Revenue Code of the City of Koronadal has already set the policy and guidelines for the issuance such permit or license, incorporating therein the provisions of PD 449. In issuing the Mayor’s Permit contemplated in the ordinance, the City Mayor is guided by such policy and guidelines.
To sum up, based on the foregoing quoted provisions of national laws and ordinance, the City Mayor may issue the special and/or regular business permits in the conduct of cockfighting business provided all the essential requisites/qualifications are complied with, to wit:
(a) limitation of ownership of cockpits to Filipino citizens, although cooperative capitalization is encouraged;
(b) one-cockpit-per-city-rule except if its population exceeds one hundred thousand, in which case, two cockpits may be operated;
(c) the OWNERS, LESSEES, or OPERATORS are in actual possession and/or ownership of the licensed cockpit where regular and/or special cockfights may be held;
(d) only duly registered and licensed Cockpit Personnel shall take part in all cockfights held in this City;
(e) payment of imposed/necessary fees as scheduled shall be made before owners, lessees, operators and cockpit personnel may participate in cockfights.
However, mere compliance to all the above-mentioned requisites for the application of mayor’s special and/or business permit for the cockfighting business would not warrant or render the automatic approval of the City Mayor, otherwise it would tantamount to the undue encroachment on the Mayor’s administrative prerogatives. Such power is discretionary and not merely a ministerial duty on his part.
B. THE BENEFITS AND LIMITATIONS ACQUIRED BY THE OWNERS, LESSEES, or OPERATORS UPON ISSUANCE OF SPECIAL/BUSINESS PERMITS RELATIVE TO THE OPERATION OF COCKFIGHTING BUSINESS
Upon compliance with the essential requirements/qualifications provided for by PD 449 and the City Ordinance, and upon approval of the City Mayor and/ or upon resolution of Sangguniang Panlungsod as the case maybe, OWNERS, LESSEES, or OPERATORS of Cockfighting Trade shall operate or conduct their business within the bounds of the mentioned laws, subject further to the police power measures of the local government.
In the case of Social Justice Society vs. Atienza, G.R. No. 156052, February 13, 2008, the Supreme Court decided that:
“Police power is the plenary power vested in the legislature to make statutes and ordinances to promote the health, morals, peace, education, good order or safety and general welfare of the people. While the police power rest primarily with the national legislature, such power may be delegated. Section 16 of the Local Government Code known as the general welfare clause, encapsulates the delegated police power to local governments:
x x x
“Section 16.General Welfare. - Every local government unit shall exercise the powers expressly granted, those necessarily implied there from, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local government units shall ensure and support, among other things, the preservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced ecology, encourage and support the development of appropriate and self-reliant scientific and technological capabilities, improve public morals, enhance economic prosperity and social justice, promote full employment among their residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants”.
X x x
“Section 18. Power to Generate and Apply Resources. - Local government units shall have the power and authority to establish an organization that shall be responsible for the efficient and effective implementation of their development plans, program objectives and priorities; to create their own sources of revenues and to levy taxes, fees, and charges which shall accrue exclusively for their use and disposition and which shall be retained by them; to have a just share in national taxes which shall be automatically and directly released to them without need of any further action; to have an equitable share in the proceeds from the utilization and development of the national wealth and resources within their respective territorial jurisdictions including sharing the same with the inhabitants by way of direct benefits; to acquire, develop, lease, encumber, alienate, or otherwise dispose of real or personal property held by them in their proprietary capacity and to apply their resources and assets for productive, developmental, or welfare purposes, in the exercise or furtherance of their governmental or proprietary powers and functions and thereby ensure their development into self-reliant communities and active participants in the attainment of national goals.
x x x
Article One – The City Mayor
“Section 455. Chief Executive; Powers, Duties and Compensation.
(a) xxx
(b) For efficient, effective and economical governance the purpose of which is the general welfare of the city and its inhabitants pursuant to Section 16 of this Code, the city mayor shall:
(3) Initiate and maximize the generation of resources and revenues, and apply the same to the implementation of development plans, program objectives and priorities as provided for under Section 18 of this Code, particularly those resources and revenues programmed for agro-industrial development and countryside growth and progress and, relative thereto, shall:
(i) xxx
(ii) xxx
(iii)
(iv) Issue licenses and permits and suspend or revoke the same for any violation of the conditions upon which said licenses or permits had been issued, pursuant to law or ordinance;
(v) Issue permits, without need of approval therefore from any national agency, for the holding of activities for any charitable or welfare purpose, excluding prohibited games of chance or shows contrary to law, public policy and public morals;
x x x
As gathered from the afore-quoted provisions, permits and licenses are issued for revenue and regulatory purposes, it carries therewith the corollary power to suspend, revoke or even refuse to issue the same including the power to inspect and investigate for any violation of the conditions of their licenses and permit.
The general welfare clause is the delegation in statutory form of the police power of the State to LGUs. Through this, LGUs may prescribe regulations to protect the lives, health, and property of their constituents and maintain peace and order within their respective territorial jurisdictions.
C. HOLDING OF FRANCHISE, SPECIAL AND/OR BUSINESS PERMITS IS NOT A MATTER OF RIGHT BUT A PRIVELEGE
It is a well-settled rule that the issuance of franchise and/or special/business permits are pursuant to laws and ordinances, the entitlement thereof is not a matter of right but a privilege, and neither is it a property.
x x x
In the case of ACEBEDO OPTICAL COMPANY, INC. vs. COURT OF APPEALS, (G.R. No. 100152, March 31, 2000), Supreme Court decided that:
x x x
“xxx a license or a permit is not a contract between the sovereignty and the licensee or permitee, and is not a property in the constitutional sense, as to which the constitutional proscription against impairment of the obligation of contracts may extend. xxx a license is rather in the nature of a special privilege, of permission or authority to do what is within its terms. It is not in any way vested, permanent or absolute”.
x x x
In RCPI v. NTC (150 SCRA 450), Supreme Court held that:
x x x
“A franchise started out as a "royal privilege or (a) branch of the King's prerogative, subsisting in the hands of a subject." A franchise being merely a privilege emanating from the sovereign power of the state and owing its existence to a grant, is subject to regulation by the state itself by virtue of its police power through its administrative agencies.
x x x
Anent thereto, franchise, special and/or business permits are special privileges intended to individual persons or corporations. Being a privilege, it neither confers proprietary rights nor precludes the grantor, licensee or permitee to withdraw the same for causes not in tuned with the law or ordinances.
Therefore, the holding of franchise, special permit and/or business permit relative to the Cockfighting/Cockpit Business Operation is temporary in character.
Hoping that we have guided you accordingly.
In public service,
ATTY. EUFEMIO A. SIMTIM, JR.
City Legal Officer
ABEGAIL F. BATARA, LLB
Legal Assistant II
Province of South Cotabato
City of Koronadal
OFFICE OF THE CITY LEGAL OFFICER
Tel No. (083) 228-1742
LEGAL OPINION NO. ________
DATE : 27 August 2013
TO : Hon. PETER B. MIGUEL, M.D., FPSO-HNS
City Mayor
RE : AS STATED
___________________________________________________
Kanami Koronadal!
This has reference to your request for legal opinion on the granting of franchise and issuance of special and/or business permit concerning the operation of a cockpit/cockfighting business.
Before delving into details, please be informed that this opinion is supplementary to the legal opinion rendered by the City Legal Office via Legal Opinion No. 2013-08-04 dated 2nd of August 2013. A perusal of the above-mentioned opinion may be helpful and contributive as the controversies and parties involved are the same as this case before us.
I. BRIEF HISTORICAL BACKGROUND OF COCKFIGHTING LAWS
Let us examine the evolution of Laws pertaining to the authorization of the Cockfighting/Cockpit Operation in the LGUs.
A. PRESIDENTIAL DECREE NO. 449, otherwise known as "The Cockfighting Law of 1974".
In 1970s, the desire for stricter licensing requirements of cockpits started to see legislative fruit. The Cockfighting Law of 1974 (PD 449) enacted several of these requisites/restrictions, to wit:
(a) one-cockpit-per-city/municipality rule except if its population exceeds one hundred thousand, in this case, two cockpits maybe operated.
x x x
“Section 5. Cockpits and Cockfighting: In General:
(a) xxx
(b) Establishment of Cockpits. Only one cockpit is allowed in each city or municipality, except that in cities or municipalities with a population of over hunddred thousand, two cockpits maybe established, maintained and operated.
x x x
(b) limitation of ownership of cockpits to Filipino citizens.
x x x
“Section 5. Cockpits and Cockfighting: In General:
(a) Ownership, Operation and Management of Cockpits. Only Filipino citizens not otherwise inhibited by existing laws shall be allowed to own, manage and operate cockpits. Cooperative capitalization is encouraged.
x x x
(c) it was the city or municipal mayor who was authorized to issue licenses for the operation and maintenance of cockpits, subject to the approval of the Chief of Constabulary or his authorized representatives.
x x x
“Section 6.LICENSING OF COCKPITS.
City and Municipal mayors are authorized to issue licenses for the operation and maintenance of cockpits subject to the approval of the Chief of Constabulary or his authorized representatives.”
x x x
Thus, the sole discretion to authorize the operation of cockpits as contained in previous laws was removed from the local government unit since the approval of the Chief of Constabulary was required
B. PRESIDENTIAL DECREE NO. 1803, otherwise known as "Creating the Philippine Gamefowl Commission".
Then came P.D. No. 1803 which established the Philippine Gamefowl Commission and imposed further structure in the regulation of cockfighting.
x x x
"Section 4.
City and Municipal Mayors with the concurrence of their respectives Sangguniang Panglunsod or Sangguniang Bayan, shall have the authority to license and regulate regular cockfighting, under the supervision of the City Mayor and the Provincial Governor, as the case may be.
x x x
Based on the foregoing, the approval of the Chief Constabulary or his representative as enunciated in PD 449 was expressly removed.
However, the preceding section was subsequently amended by Presidential Decree 1802-A, otherwise known as "Amending Section 4 of Presidential Decree No. 1802". The amended provision ordained:
x x x
"Section 4.
City and Municipal Mayors with the concurrence of their respective "Sanggunians" shall have the authority to license and regulate regular cockfighting pursuant to the rules and regulations promulgated by the Commission and subject to its review and supervision.
x x x
As above-mentioned, such amendment removes the supervision exercised by the mayor or governor and substituting in their stead the Philippine Gamefowl Commission (PGC). But the PGC’s power of supervision under such law has been clarified by the Honorable Supreme Court in the light of the Local Government Code then in effect, thus:
x x x
“According to the Local Government Code, the municipal mayor has the power to "grant licenses and permits in accordance with existing laws and municipal ordinances and revoke them for violation of the conditions upon which they have been granted," and the Sangguniang Bayan is authorized to "regulate cockpits, cockfighting and the keeping or training of gamecocks, subject to existing guidelines promulgated by the Philippine Gamefowl Commission."
A study of the above-cited powers shows that it is the municipal mayor with the authorization of the Sangguniang Bayan that has the primary power to issue licenses for the operation of ordinary cockpits. Even the regulation of cockpits is vested in the municipal officials, subject only to the guidelines laid down by the Philippine Gamefowl Commission. Its power to license is limited only to international derbies and does not extend to ordinary cockpits. Over the latter kind of cockpits, it has the power not of control but only of review and supervision.
We have consistently held that supervision means "overseeing or the power or authority of an officer to see that their subordinate officers perform their duties. If the latter fail or neglect to fulfill them, the former may take such action or steps as prescribed by law to make them perform their duties." Supervision is a lesser power than control, which connotes "the power of the officer to alter or modify or set aside what a subordinate had done in the performance of his duties and to substitute the judgment of the former for that of the latter." Review, on the other hand, is a reconsideration or reexamination for purposes of correction.
As thus defined, the power of supervision does not snow the supervisor to annul the acts of the subordinate, for that comes under the power of control. What it can do only is to see to it that the subordinate performs his duties in accordance with law. The power of review is exercised to determine whether it is necessary to correct the acts of the subordinate. If such correction is necessary, it must be done by the authority exercising control over the subordinate or through the instrumentality of the courts of justice, unless the subordinate motu proprio corrects himself after his error is called to his attention by the official exercising the power of supervision and review over him.
At that, even the power of review vested in the Philippine Gamefowl Commission by P.D. 1802-A may have been modified by the Local Government Code, which became effective on February 14, 1983. Under the Code, the Sangguniang Panlalawigan is supposed to examine the ordinances, resolutions and executive orders issued by the municipal government and to annul the same, but only on one ground, to wit, that it is beyond the powers of the municipality or ultra vires. Significantly, no similar authority is conferred in such categorical terms on the Philippine Gamefowl Commission regarding the licensing and regulation of cockpits by the municipal government.
The conferment of the power to license and regulate municipal cockpits in the municipal authorities is in line with the policy of local autonomy embodied in Article II, Section 10, and Article XI of the 1973 Constitution. It is also a recognition, as the Court of Appeals correctly points out, of the superior competence of the municipal officials in dealing with this local matter with which they can be expected to be more knowledgeable than the national officials. Surely, the Philippine Gamefowl Commission cannot claim to know more than the municipal mayor and the Sangguniang Bayan of Bogo, Cebu, about the issues being disputed by the applicants to the cockpit license.” [PHILIPPINE GAMEFOWL COMMISSION AND HEE ACUSAR vs.HON. INTERMEDIATE APPELLATE COURT, MAYOR CELESTINO E. MARTINEZ, JR., THE SANGGUNIANG BAYAN OF BOGO (CEBU), and SANTIAGO SEVILLA, G.R. No. 72969-70 December 17, 1986]
x x x
C. REPUBLIC ACT 7160, otherwise known as "The Local Government Code of 1991".
More importantly, Republic Act 7160 has already conferred such power to the Sangguniang Panlungsod. Said law provides that:
x x x
Article Three – The Sangguniang Panlungsod
Section 458.Powers, Duties, Functions and Compensation. –
(a) The Sangguniang Panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the city as provided for under Section 22 of this Code, and shall:
(1) xxx
(2) xxx
(3) Subject to the provisions of Book II of this Code, enact ordinances granting franchises and authorizing the issuance of permits or licenses, upon such conditions and for such purposes intended to promote the general welfare of the inhabitants of the city and pursuant to this legislative authority shall:
(i)xxx
(ii)xxx
(iii)xxx
(iv)xxx
(v) Any law to the contrary notwithstanding, authorize and license the establishment, operation, and maintenance of cockpits, and regulate cockfighting and commercial breeding of gamecocks: Provided, That existing rights should not be prejudiced;
x x x
Article 99, Rule XV of the Local Government Code’s Implementing Rules and Regulations provides in toto a similar provision.
There is no more forceful authority on this landmark legislation than Senator Aquilino Pimentel, Jr., its principal author. In his annotations to the Local Government Code, he makes the following remarks relating to Section 448(a)(3)(v):
x x x
"12.Licensing power. In connection with the power to grant licenses lodged with it, the Sangguniang Panlungsod may now regulate not only businesses but also occupations, professions or callings that do not require government examinations within its jurisdiction. It may also authorize and license the establishment, operation and maintenance of cockpits, regulate cockfighting, and the commercial breeding of gamecocks."
x x x
Ergo, based on the preceding provisions and annotation, the power to license cockpits and permits for cockfighting has been removed completely from the Gamefowl Commission and devolved to Sangguniang Panlungsod by virtue of R.A.7160.
Again, it must be stressed out also that even before the advent of RA 7160, the Court interpreted in a series of cases that the Philippine Gamefowl Commission's power of review and supervision does not extend to licensing which belongs exclusively to the Sangguniang Panlungsod. The landmark cases of the Supreme Court elucidates further in the following cases:
(a) Deang v. Intermediate Appellate Court, 24 September 1987, 154 SCRA 250)
(b) Municipality of Malolos v. Libangang Malolos Inc., 11 August 1988, 164 SCRA 290
(c) Adlawan v. Intermediate Appellate Court, 9 February 1989, 170 SCRA 165).
In the afore-cited case of Philippine Gamefowl Commission et al. vs. Hon. Intermediate Appellate Court, et al., the Honorable Supreme Court has intoned:
xxx xxx xxx
“This is as good an occasion as any to stress the commitment of the Constitution to the policy of local autonomy which is intended to provide the needed impetus and encouragement to the development of our local political subdivisions as "self-reliant communities." In the words of Jefferson, "Municipal corporations are the small republics from which the great one derives its strength." The vitalization of local governments will enable their inhabitants to fully exploit their resources and, more important, imbue them with a deepened sense of involvement in public affairs as members of the body politic. This objective could be blunted by undue interference by the national government in purely local affairs which are best resolved by the officials and inhabitants of such political units. The decision we reach today conforms not only to the letter of the pertinent laws but also to the spirit of the Constitution.”
xxx xxx xxx
It must be noted that the final provisions of RA 7160 decreed that:
xxx xxx xxx
“Title Four - Final Provisions
"Section. 534.
(a) xxx
(b) xxx
(c) xxx
(d) xxx
(e) xxx
(f) all general and special laws, acts, city charters, decrees, executive orders, proclamations and administrative regulations, or part or parts thereof which are inconsistent with any of this Code are hereby repealed or modified accordingly.”
xxx xxx xxx
The above section repeals or amends expressly several laws mentioned thereat. However, PD 449 was not among them. It is a cardinal rule in statutory construction that implied repeals are disfavoured and will not be so declared --
(a) UNLESS the intent of the legislators is manifest and unless the repugnancy between the two is not only irreconcilable but also clear and convincing as a result of the language used,
(b) UNLESS the latter Act fully embraces the subject matter of the earlier.
Hence, the conditions set therein still find application.
xxx xxx xxx
“Except as provided in this Decree, cockfighting shall be allowed only in licensed cockpits during Sundays and legal holidays and during local fiestas for not more than three days. It may also be held during provincial, city or municipal, agricultural, commercial or industrial fair, carnival or exposition for a similar period of three days upon resolution of the province, city or municipality where such fair, carnival or exposition is to be held, subject to the approval of the Chief of Constabulary or his authorized representative: Provided, that, no cockfighting on the occasion of such fair, carnival or exposition shall be allowed within the month of a local fiesta or for more than two occasions a year in the same city or municipality: Provided, further, that no cockfighting shall be held on December 30 (Rizal Day), June 12 (Philippine Independence Day) November 30 (National Heroes Day), Holy Thursday, Good Friday, Election or Referendum Day and during Registration Days for such election or referendum. (P.D. 449, Section 5)
xxx xxx xxx
Thus, the Honorable Supreme Court has ruled:
xxx xxx xxx
"We do not doubt, however, the ability of the national government to implement police power measures that affect the subjects of municipal government, especially if the subject of regulation is a condition of universal character irrespective of territorial jurisdictions. Cockfighting is one such condition. It is a traditionally regulated activity, due to the attendant gambling involved or maybe even the fact that it essentially consists of two birds killing each other for public amusement. Laws have been enacted restricting the days when cockfights could be held, and legislation has even been emphatic that cockfights could not be held on holidays celebrating national honor such as Independence Day (R.A. 137) and Rizal Day (R.A. 229)." (Tan vs. Perena, G.R. No. 149743, February 18, 2005)
xxx xxx xxx
II. THE POWER AND AUTHORITY OF THE CITY MAYOR IN ISSUING A SPECIAL AND/OR BUSINESS PERMITS AS PROVIDED FOR BY LAWS AND CITY ORDINANCE
A. THE ESSENTIAL REQUISITES/QUALIFICATIONS FOR THE ISSUANCE OF SPECIAL /BUSINESS PERMITS FOR THE OPERATION OF COCKFIGHTING BUSINESS
The power and authority of the City Mayor to issue the Mayor’s Permit for cockpits owners, operators, licensees, promoters and cockpit personnel, is expressly provided under the 2008 Local Revenue Code of the City of Koronadal which provides that:
xxx xxx xxx
“CHAPTER 3. PERMIT AND REGULATORY FEES
Article K. – PERMIT FEE FOR COCKPITS OWNERS, OPERATORS, LICENSEES, PROMOTERS AND COCKPIT PERSONNEL
Sec. 3K. 01. Imposition of Fees. There shall be collected the following Mayor’s Permit fees from cockpit operators/owners/licensees and cockpit personnel:
(a) From the owner/operator/licensees of the cockpit:
xxx xxx xxxx
xxx xxx xxxx
(b) From Cockpit personnel
xxx xxx xxxx
xxx xxx xxxx
Sec. 3K. 02. Time and Manner of Payment.
(a) The application filing fee is payable to the City Treasurer upon application for a permit or license to operate and maintain cockpits.
(b) The cockpit registration fee is also payable upon application for a permit before a cockpit can operate and within the first twenty (20) days of January of each year in case of renewal thereof.
(c) The permit fees on cockpit personnel shall be paid before they participate in a cockfight and shall be paid annually upon renewal of the permit on the birth month of the permittee.
Sec. 3K. 03. Administrative Provisions.
(a) Ownership, operation and management of cockpit. Only Filipino Citizens not otherwise inhibited by existing ordinances or laws shall be allowed to own, manage and operate cockpits. Cooperative capitalization is encouraged.
(b) Establishment of Cockpits. The Sangguninang Panlungsod shall determine the number of cockpits to be allowed in this pursuant to the Philippine's Game and Fouls Commission PD449 & PD 1802.
(c) Cockpit-size and Construction. Cockpits shall be constructed and operated within the appropriate areas as prescribed in Zoning Law or Ordinance. In the absence of such law or ordinance, the City shall see to it that no cockpits are constructed within or near existing residential or commercial areas, hospitals, school buildings, churches or other public buildings. OWNERS, LESSEES, or OPERATORS of cockpits which are now in existence and do not conform to this requirement are required to comply with these provisions within a period to be specified by the City Mayor. Approval or issuance of building permits for the construction of cockpits shall be made by the City Engineer in accordance with existing ordinances, laws and practices.
(d) Only duly registered and licensed promoters, referees, cashiers, bet managers, pit referees, bet takers, or gaffers shall take part in all kinds of cockfights held in this City. No OPERATOR or OWNER OF A COCKPIT shall employ or allow any of the above-named personnel to participate in a cockfight unless he has registered and paid the fee herein required.
(e) Upon payment of the fees herein imposed, the corresponding Mayor's Permit shall be issued.
x x x
Article L. – SPECIAL PERMIT FOR DERBY COCKFIGHTING
“Sec.3L.01. Imposition of Fees. There shall be collected the following fees per day for cockfighting:
(a) xxx
(b) xxx
x x x
Notably, Sec. 3K. 04, Article K, of the said Ordinance provides:
xxx xxx xxx
“Sec 3K. 04. Applicability Clause. The provision of PD 449, otherwise known as the Cockfighting Law of 1974, PD 1802 (Creating the Philippines Gamefowl Commission), and such other pertinent laws shall apply to all matters regarding the operation of cockpits and the holding of cockfights in this City.”
xxx xxx xxx
Similarly, Sec. 3L. 05, Article L, of the same Ordinance likewise provides:
xxx xxx xxx
Sec. 3L. 05. Applicability Clause. The provision of PD 449, otherwise known as the Cockfighting Law of 1974, PD 1802 (Creating the Philippines Gamefowl Commission), and such other pertinent laws shall apply to all matters regarding the operation of cockpits and the holding of cockfights in this city.”
xxx xxx xxx
Presidential Decree No. 449 provides:
xxx xxx xxx
“Section 5. Cockpits and Cockfighting: In General:
(a) Ownership, Operation and Management of Cockpits. Only Filipino citizens not otherwise inhibited by existing laws shall be allowed to own, manage and operate cockpits. Cooperative capitalization is encouraged.
(b) Establishment of Cockpits. Only one cockpit shall be allowed in each city or municipality, except that in cities or municipalities with a population of over one hundred thousand, two cockpits may be established, maintained and operated.
(c) Cockpits Site and Construction. Cockpits shall be constructed and operated within the appropriate areas as prescribed in Zoning Law or Ordinance. In the absence of such law or ordinance, the local executives shall see to it that no cockpits are constructed within or near existing residential or commercial areas, hospitals, school buildings, churches or other public buildings. Owners, lessees, or operators of cockpits which are now in existence and do not conform to this requirement are given three years from the date of effectivity of this Decree to comply herewith. Approval or issuance of building permits for the construction of cockpits shall be made by the city or provincial engineer in accordance with their respective building codes, ordinances or engineering laws and practice.
(d) Holding of Cockfights. Except as provided in this Decree, cockfighting shall be allowed only in licensed cockpits during Sundays and legal holidays and during local fiestas for not more than three days. It may also be held during provincial, city or municipal, agricultural, commercial or industrial fair, carnival or exposition for a similar period of three days upon resolution of the province, city or municipality where such fair, carnival or exposition is to be held, subject to the approval of the Chief of Constabulary or his authorized representative: Provided, that, no cockfighting on the occasion of such fair, carnival or exposition shall be allowed within the month of a local fiesta or for more than two occasions a year in the same city or municipality: Provided, further, that no cockfighting shall be held on December 30 (Rizal Day), June 12 (Philippine Independence Day) November 30 (National Heroes Day), Holy Thursday, Good Friday, Election or Referendum Day and during Registration Days for such election or referendum. (P.D. 449, Section 5)
xxx xxx xxx
It is important to note that under the Local Government Code of 1991, the City Mayor shall “issue licenses and permits and suspend and revoke the same for any violation of the conditions upon which said licenses or permits had been issued, pursuant to law or ordinance” [Sec. 455 (b) (3) (iv)]. The 2008 Local Revenue Code of the City of Koronadal has already set the policy and guidelines for the issuance such permit or license, incorporating therein the provisions of PD 449. In issuing the Mayor’s Permit contemplated in the ordinance, the City Mayor is guided by such policy and guidelines.
To sum up, based on the foregoing quoted provisions of national laws and ordinance, the City Mayor may issue the special and/or regular business permits in the conduct of cockfighting business provided all the essential requisites/qualifications are complied with, to wit:
(a) limitation of ownership of cockpits to Filipino citizens, although cooperative capitalization is encouraged;
(b) one-cockpit-per-city-rule except if its population exceeds one hundred thousand, in which case, two cockpits may be operated;
(c) the OWNERS, LESSEES, or OPERATORS are in actual possession and/or ownership of the licensed cockpit where regular and/or special cockfights may be held;
(d) only duly registered and licensed Cockpit Personnel shall take part in all cockfights held in this City;
(e) payment of imposed/necessary fees as scheduled shall be made before owners, lessees, operators and cockpit personnel may participate in cockfights.
However, mere compliance to all the above-mentioned requisites for the application of mayor’s special and/or business permit for the cockfighting business would not warrant or render the automatic approval of the City Mayor, otherwise it would tantamount to the undue encroachment on the Mayor’s administrative prerogatives. Such power is discretionary and not merely a ministerial duty on his part.
B. THE BENEFITS AND LIMITATIONS ACQUIRED BY THE OWNERS, LESSEES, or OPERATORS UPON ISSUANCE OF SPECIAL/BUSINESS PERMITS RELATIVE TO THE OPERATION OF COCKFIGHTING BUSINESS
Upon compliance with the essential requirements/qualifications provided for by PD 449 and the City Ordinance, and upon approval of the City Mayor and/ or upon resolution of Sangguniang Panlungsod as the case maybe, OWNERS, LESSEES, or OPERATORS of Cockfighting Trade shall operate or conduct their business within the bounds of the mentioned laws, subject further to the police power measures of the local government.
In the case of Social Justice Society vs. Atienza, G.R. No. 156052, February 13, 2008, the Supreme Court decided that:
“Police power is the plenary power vested in the legislature to make statutes and ordinances to promote the health, morals, peace, education, good order or safety and general welfare of the people. While the police power rest primarily with the national legislature, such power may be delegated. Section 16 of the Local Government Code known as the general welfare clause, encapsulates the delegated police power to local governments:
x x x
“Section 16.General Welfare. - Every local government unit shall exercise the powers expressly granted, those necessarily implied there from, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local government units shall ensure and support, among other things, the preservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced ecology, encourage and support the development of appropriate and self-reliant scientific and technological capabilities, improve public morals, enhance economic prosperity and social justice, promote full employment among their residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants”.
X x x
“Section 18. Power to Generate and Apply Resources. - Local government units shall have the power and authority to establish an organization that shall be responsible for the efficient and effective implementation of their development plans, program objectives and priorities; to create their own sources of revenues and to levy taxes, fees, and charges which shall accrue exclusively for their use and disposition and which shall be retained by them; to have a just share in national taxes which shall be automatically and directly released to them without need of any further action; to have an equitable share in the proceeds from the utilization and development of the national wealth and resources within their respective territorial jurisdictions including sharing the same with the inhabitants by way of direct benefits; to acquire, develop, lease, encumber, alienate, or otherwise dispose of real or personal property held by them in their proprietary capacity and to apply their resources and assets for productive, developmental, or welfare purposes, in the exercise or furtherance of their governmental or proprietary powers and functions and thereby ensure their development into self-reliant communities and active participants in the attainment of national goals.
x x x
Article One – The City Mayor
“Section 455. Chief Executive; Powers, Duties and Compensation.
(a) xxx
(b) For efficient, effective and economical governance the purpose of which is the general welfare of the city and its inhabitants pursuant to Section 16 of this Code, the city mayor shall:
(3) Initiate and maximize the generation of resources and revenues, and apply the same to the implementation of development plans, program objectives and priorities as provided for under Section 18 of this Code, particularly those resources and revenues programmed for agro-industrial development and countryside growth and progress and, relative thereto, shall:
(i) xxx
(ii) xxx
(iii)
(iv) Issue licenses and permits and suspend or revoke the same for any violation of the conditions upon which said licenses or permits had been issued, pursuant to law or ordinance;
(v) Issue permits, without need of approval therefore from any national agency, for the holding of activities for any charitable or welfare purpose, excluding prohibited games of chance or shows contrary to law, public policy and public morals;
x x x
As gathered from the afore-quoted provisions, permits and licenses are issued for revenue and regulatory purposes, it carries therewith the corollary power to suspend, revoke or even refuse to issue the same including the power to inspect and investigate for any violation of the conditions of their licenses and permit.
The general welfare clause is the delegation in statutory form of the police power of the State to LGUs. Through this, LGUs may prescribe regulations to protect the lives, health, and property of their constituents and maintain peace and order within their respective territorial jurisdictions.
C. HOLDING OF FRANCHISE, SPECIAL AND/OR BUSINESS PERMITS IS NOT A MATTER OF RIGHT BUT A PRIVELEGE
It is a well-settled rule that the issuance of franchise and/or special/business permits are pursuant to laws and ordinances, the entitlement thereof is not a matter of right but a privilege, and neither is it a property.
x x x
In the case of ACEBEDO OPTICAL COMPANY, INC. vs. COURT OF APPEALS, (G.R. No. 100152, March 31, 2000), Supreme Court decided that:
x x x
“xxx a license or a permit is not a contract between the sovereignty and the licensee or permitee, and is not a property in the constitutional sense, as to which the constitutional proscription against impairment of the obligation of contracts may extend. xxx a license is rather in the nature of a special privilege, of permission or authority to do what is within its terms. It is not in any way vested, permanent or absolute”.
x x x
In RCPI v. NTC (150 SCRA 450), Supreme Court held that:
x x x
“A franchise started out as a "royal privilege or (a) branch of the King's prerogative, subsisting in the hands of a subject." A franchise being merely a privilege emanating from the sovereign power of the state and owing its existence to a grant, is subject to regulation by the state itself by virtue of its police power through its administrative agencies.
x x x
Anent thereto, franchise, special and/or business permits are special privileges intended to individual persons or corporations. Being a privilege, it neither confers proprietary rights nor precludes the grantor, licensee or permitee to withdraw the same for causes not in tuned with the law or ordinances.
Therefore, the holding of franchise, special permit and/or business permit relative to the Cockfighting/Cockpit Business Operation is temporary in character.
Hoping that we have guided you accordingly.
In public service,
ATTY. EUFEMIO A. SIMTIM, JR.
City Legal Officer
ABEGAIL F. BATARA, LLB
Legal Assistant II
Thursday, November 28, 2013
LEGAL OPINION RE TAXABILITY OF SSS MACHINERIES [DELAYED POSTING]
Republic of the Philippines
Province of South Cotabato
City of Koronadal
OFFICE OF THE CITY LEGAL OFFICER
LEGAL OPINION NO.___________
DATE : 30 May 2011
TO : ENGR. ARTHUR R. BUZARANG, MPA
OIC-City Assessor
RE : Taxability of Social Security System’s (SSS) Machineries
______
Sir:
This refers to your query on whether or not the machineries owned by the Social Security System (SSS) are subject to real property tax (RPT), a query which arises from the claim of the SSS for exemption therefrom under Section 16 of Republic Act 8282, to wit:
x x x
“All laws to the contrary notwithstanding, the SSS and all its assets and properties, all contributions collected and all accruals thereto and income or investment earnings therefrom, as well as all supplies, equipment, papers or documents shall be exempt from any tax, assessment, fee, charge, or customs or import duty, and all benefit payments made by the SSS shall likewise be exempt from all kinds of taxes, fees or charges and shall not be liable to attachments, garnishments, levy or seizure by or under any legal or equitable process whatsoever, either before or after receipt by the person or persons entitled thereto, except to pay any debt of the member to the SSS. No tax measure of whatever nature enacted shall apply to the SSS, unless it expressly revokes the declared policy of the State in Section 2 hereof granting tax-exemption to the SSS. Any tax assessment imposed against the SSS shall be null and void.”
x x x
The undersigned is of the opinion that the said machineries are indeed NON-TAXABLE SUBJECT TO QUALIFICATIONS SET BY LAW.
The Honorable Supreme Court, in the case of SOCIAL SECURITY SYSTEM vs. CITY OF BACOLOD and MIGUEL REYNALDO as City Treasurer of Bacolod City [G.R. No. L-35726, 21 July 1982], had the occasion to rule that Republic Act No. 1161, otherwise known as Social Security Act of 1954, has removed all doubts as to the exemption of the SSS from taxation by explicitly providing for such exemption. Said law contained the same provision quoted above. While it may be argued that the Local Government Code of 1991 has withdrawn certain tax privileges, it is important to underscore that the Supreme Court construed that SSS falls squarely within the definition of the terms "Government of the Republic of the Philippines" and "Republic of the Philippines" whose real property are exempt from the payment of real property tax. More so, Republic Act 8282 was enacted subsequent to the effectivity of the Local Government Code of 1991.
However, such exemption is subject the qualification provided under Section 234 of RA 7160, to wit:
x x x
Section 234. Exemptions from Real Property Tax. - The following are exempted from payment of the real property tax:
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person; [emphasis added]
x x x
The above view finds support from the 7 November 2003 Bureau of Local Government Finance Opinion issued by Executive Director Ma. Presentation R. Montesa, which reads, to wit:
x x x
“This Bureau, therefore, agrees with the opinion rendered by Atty. Monteiro that SSS maintains its real property tax-exempt status even after the effectivity of R.A. No. 7160. However, on the issue of the subject real properties of SSS, the beneficial use of which are being let to private persons, for consideration or otherwise, this Bureau believes otherwise.
Granting arguendo, that there was no distinction made under the SSS Law with regard to its assets, particularly real properties, this Bureau believes that nowhere in its mandate, that in furtherance of its main purpose, the real properties owned by SSS shall be let to private or taxable persons and still be exempt from all kinds of taxes, fees or charges. This would violate the principle of "inclusio unius est exclusio alterius" (what is not included is deemed excluded). It is therefore more logical to conclude that what was exempted under the said special law (SSS charter) are those real properties which are actually, directly and exclusively used for the operation in the achievement of its existence. R.A. No. 7160, a general law, however, specifically provides for the limitations of the said exemption granted to SSS' real properties from real property tax when the beneficial use thereof has been granted for consideration or otherwise to a taxable person, and those acquired or foreclosed properties and assets not yet titled in the name of SSS.
Moreover, Supreme Court (SC) Decision (No. L-35726), entitled: "SOCIAL SECURITY SYSTEM vs. CITY OF BACOLOD and MIGUEL REYNALDO as CITY TREASURER OF BACOLOD CITY" cited by Atty. Monteiro, the Court held, thus:
". . . . What is decisive is that the properties possessed by the SSS, albeit devoted to private or proprietary purpose, are in fact owned by the government of the Philippines. As such they are exempt from realty taxes. It is axiomatic that when public property is involved, exemption is the rule and taxation, the exception." (Emphasis supplied)
In another SC Decision (G.R. No. 120082), in the case of "MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY, petitioner, vs. HON. FERDINAND J. MARCOS, et al.," the term "Government of the Republic of the Philippines" is considered synonymous with the term "Republic of the Philippines."
In view hereof, this Bureau is of the opinion that the SSS does not fall under the category of government-owned or controlled corporations. Hence, we further believe that its real property tax exemption provided for under its charter remains covered by the exemption proviso of Section 234(a) of the said Code (R.A. No. 7160) which provides below:
"SEC. 234. Exemptions from Real Property Tax. — The following are exempted from payment of the real property tax:
"(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person;"
x x x
In an answer to the request of MR. MARIANO S. TOLENTINO, Asst. Vice-President of Social Security System (SSS), Executive Director Montesa, on 1 June 2009, reiterated the earlier stance, thus:
x x x
“This refers to your letter dated November 18, 2008, which, in effect, is a follow- up of your letter dated May 16, 2007 addressed to the City Assessor of Makati City, and forwarded to this Bureau regarding your request for exemption from the payment of real property tax on the condominium units located thereat which are owned by the Social Security System (SSS), but are held-in-trust by Philam Tower Realty Corporation (PTRC).
It may be recalled that your request was anchored on R.A. No. 8282, otherwise known as the Social Security Act of 1987 particularly Section 16 thereof.
This Bureau, under its letter dated May 16, 2008, in reply to the said letter, required that office to submit a contract and/or agreement that was executed by and between the SSS and PTRC, in order to determine fully the tax exemption privileges of SSS with regard to its real properties.
Apparently, the Memorandum of Agreement (MOA) submitted reveals that the three (3) condominium units owned by SSS are intended primarily and exclusively for lease to private individuals. The said MOA further provides that PTRC is a corporation organized and existing under the laws of the Philippines. More importantly, PTRC is acting in behalf of and/or in trust for SSS properties which are specifically intended for lease.
Consequently, this Bureau concurs with the views expressed by the City Assessor of Makati City, in his undated letter, copy attached, addressed to Mr. Baltazar C. Cajilig, Officer-In-Charge, Asset Management Department, that office.
In view hereof, attention is invited on this Bureau’s ruling issued under its 1st Indorsement, copy enclosed, dated June 17, 1997, which reads in part, as follows:
“The tax exemption privileges therefore of the SSS shall continue unless expressly and specifically revoked, provided, however, that: 1) the beneficial use of the subject properties has not been let for consideration or otherwise to a taxable person pursuant to Section 234 (a) of the Code; and 2) the acquired or foreclosed properties and assets not yet titled in the name of SSS shall be declared as taxable.”
Section 234 (a) of the Code provides:
SECTION 234. Exemptions from Real Property Tax.-The following are exempted from payment of the real property tax:
“(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person;”(Underscoring ours)
Moreover, attention is invited on this Bureau’s ruling dated November 7, 2003, copy enclosed, which provides in part, to wit:
“In view of the foregoing, this Bureau maintains its stand embodied under our above-mentioned 1st Indorsement dated November 17, 1997. The subject real properties of SSS. . . .being occupied/tenanted for dwelling purposes by private persons or individuals for consideration or otherwise, should be included in the “Taxable” roll of real properties.”
In the light of all the foregoing, this Bureau reiterates its ruling rendered under the above-mentioned 1st Indorsement dated June 17, 1997. Thus, SSS shall continue to enjoy its exemption from the payment of real property tax except, however, when the beneficial use of the subject properties has been granted, for consideration or otherwise, to a taxable person pursuant to the above-mentioned provision of the Local Government Code.
x x x
RESPECTFULLY SUBMITTED:
EUFEMIO A. SIMTIM, JR.
City Legal Officer
Province of South Cotabato
City of Koronadal
OFFICE OF THE CITY LEGAL OFFICER
LEGAL OPINION NO.___________
DATE : 30 May 2011
TO : ENGR. ARTHUR R. BUZARANG, MPA
OIC-City Assessor
RE : Taxability of Social Security System’s (SSS) Machineries
______
Sir:
This refers to your query on whether or not the machineries owned by the Social Security System (SSS) are subject to real property tax (RPT), a query which arises from the claim of the SSS for exemption therefrom under Section 16 of Republic Act 8282, to wit:
x x x
“All laws to the contrary notwithstanding, the SSS and all its assets and properties, all contributions collected and all accruals thereto and income or investment earnings therefrom, as well as all supplies, equipment, papers or documents shall be exempt from any tax, assessment, fee, charge, or customs or import duty, and all benefit payments made by the SSS shall likewise be exempt from all kinds of taxes, fees or charges and shall not be liable to attachments, garnishments, levy or seizure by or under any legal or equitable process whatsoever, either before or after receipt by the person or persons entitled thereto, except to pay any debt of the member to the SSS. No tax measure of whatever nature enacted shall apply to the SSS, unless it expressly revokes the declared policy of the State in Section 2 hereof granting tax-exemption to the SSS. Any tax assessment imposed against the SSS shall be null and void.”
x x x
The undersigned is of the opinion that the said machineries are indeed NON-TAXABLE SUBJECT TO QUALIFICATIONS SET BY LAW.
The Honorable Supreme Court, in the case of SOCIAL SECURITY SYSTEM vs. CITY OF BACOLOD and MIGUEL REYNALDO as City Treasurer of Bacolod City [G.R. No. L-35726, 21 July 1982], had the occasion to rule that Republic Act No. 1161, otherwise known as Social Security Act of 1954, has removed all doubts as to the exemption of the SSS from taxation by explicitly providing for such exemption. Said law contained the same provision quoted above. While it may be argued that the Local Government Code of 1991 has withdrawn certain tax privileges, it is important to underscore that the Supreme Court construed that SSS falls squarely within the definition of the terms "Government of the Republic of the Philippines" and "Republic of the Philippines" whose real property are exempt from the payment of real property tax. More so, Republic Act 8282 was enacted subsequent to the effectivity of the Local Government Code of 1991.
However, such exemption is subject the qualification provided under Section 234 of RA 7160, to wit:
x x x
Section 234. Exemptions from Real Property Tax. - The following are exempted from payment of the real property tax:
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person; [emphasis added]
x x x
The above view finds support from the 7 November 2003 Bureau of Local Government Finance Opinion issued by Executive Director Ma. Presentation R. Montesa, which reads, to wit:
x x x
“This Bureau, therefore, agrees with the opinion rendered by Atty. Monteiro that SSS maintains its real property tax-exempt status even after the effectivity of R.A. No. 7160. However, on the issue of the subject real properties of SSS, the beneficial use of which are being let to private persons, for consideration or otherwise, this Bureau believes otherwise.
Granting arguendo, that there was no distinction made under the SSS Law with regard to its assets, particularly real properties, this Bureau believes that nowhere in its mandate, that in furtherance of its main purpose, the real properties owned by SSS shall be let to private or taxable persons and still be exempt from all kinds of taxes, fees or charges. This would violate the principle of "inclusio unius est exclusio alterius" (what is not included is deemed excluded). It is therefore more logical to conclude that what was exempted under the said special law (SSS charter) are those real properties which are actually, directly and exclusively used for the operation in the achievement of its existence. R.A. No. 7160, a general law, however, specifically provides for the limitations of the said exemption granted to SSS' real properties from real property tax when the beneficial use thereof has been granted for consideration or otherwise to a taxable person, and those acquired or foreclosed properties and assets not yet titled in the name of SSS.
Moreover, Supreme Court (SC) Decision (No. L-35726), entitled: "SOCIAL SECURITY SYSTEM vs. CITY OF BACOLOD and MIGUEL REYNALDO as CITY TREASURER OF BACOLOD CITY" cited by Atty. Monteiro, the Court held, thus:
". . . . What is decisive is that the properties possessed by the SSS, albeit devoted to private or proprietary purpose, are in fact owned by the government of the Philippines. As such they are exempt from realty taxes. It is axiomatic that when public property is involved, exemption is the rule and taxation, the exception." (Emphasis supplied)
In another SC Decision (G.R. No. 120082), in the case of "MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY, petitioner, vs. HON. FERDINAND J. MARCOS, et al.," the term "Government of the Republic of the Philippines" is considered synonymous with the term "Republic of the Philippines."
In view hereof, this Bureau is of the opinion that the SSS does not fall under the category of government-owned or controlled corporations. Hence, we further believe that its real property tax exemption provided for under its charter remains covered by the exemption proviso of Section 234(a) of the said Code (R.A. No. 7160) which provides below:
"SEC. 234. Exemptions from Real Property Tax. — The following are exempted from payment of the real property tax:
"(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person;"
x x x
In an answer to the request of MR. MARIANO S. TOLENTINO, Asst. Vice-President of Social Security System (SSS), Executive Director Montesa, on 1 June 2009, reiterated the earlier stance, thus:
x x x
“This refers to your letter dated November 18, 2008, which, in effect, is a follow- up of your letter dated May 16, 2007 addressed to the City Assessor of Makati City, and forwarded to this Bureau regarding your request for exemption from the payment of real property tax on the condominium units located thereat which are owned by the Social Security System (SSS), but are held-in-trust by Philam Tower Realty Corporation (PTRC).
It may be recalled that your request was anchored on R.A. No. 8282, otherwise known as the Social Security Act of 1987 particularly Section 16 thereof.
This Bureau, under its letter dated May 16, 2008, in reply to the said letter, required that office to submit a contract and/or agreement that was executed by and between the SSS and PTRC, in order to determine fully the tax exemption privileges of SSS with regard to its real properties.
Apparently, the Memorandum of Agreement (MOA) submitted reveals that the three (3) condominium units owned by SSS are intended primarily and exclusively for lease to private individuals. The said MOA further provides that PTRC is a corporation organized and existing under the laws of the Philippines. More importantly, PTRC is acting in behalf of and/or in trust for SSS properties which are specifically intended for lease.
Consequently, this Bureau concurs with the views expressed by the City Assessor of Makati City, in his undated letter, copy attached, addressed to Mr. Baltazar C. Cajilig, Officer-In-Charge, Asset Management Department, that office.
In view hereof, attention is invited on this Bureau’s ruling issued under its 1st Indorsement, copy enclosed, dated June 17, 1997, which reads in part, as follows:
“The tax exemption privileges therefore of the SSS shall continue unless expressly and specifically revoked, provided, however, that: 1) the beneficial use of the subject properties has not been let for consideration or otherwise to a taxable person pursuant to Section 234 (a) of the Code; and 2) the acquired or foreclosed properties and assets not yet titled in the name of SSS shall be declared as taxable.”
Section 234 (a) of the Code provides:
SECTION 234. Exemptions from Real Property Tax.-The following are exempted from payment of the real property tax:
“(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person;”(Underscoring ours)
Moreover, attention is invited on this Bureau’s ruling dated November 7, 2003, copy enclosed, which provides in part, to wit:
“In view of the foregoing, this Bureau maintains its stand embodied under our above-mentioned 1st Indorsement dated November 17, 1997. The subject real properties of SSS. . . .being occupied/tenanted for dwelling purposes by private persons or individuals for consideration or otherwise, should be included in the “Taxable” roll of real properties.”
In the light of all the foregoing, this Bureau reiterates its ruling rendered under the above-mentioned 1st Indorsement dated June 17, 1997. Thus, SSS shall continue to enjoy its exemption from the payment of real property tax except, however, when the beneficial use of the subject properties has been granted, for consideration or otherwise, to a taxable person pursuant to the above-mentioned provision of the Local Government Code.
x x x
RESPECTFULLY SUBMITTED:
EUFEMIO A. SIMTIM, JR.
City Legal Officer
LEGAL OPINION RE PHILHEALTH PREMIUM CONTRIBUTION
Republic of the Philippines
Province of South Cotabato
City of Koronadal
OFFICE OF THE CITY LEGAL OFFICER
LEGAL OPINION NO. __________
DATE : 15 January 2013
TO : JULIETA R. GASTALA, MPA
City Budget Officer
This City
RE : PHILHEALTH PREMIUM CONTRIBUTION
Madam:
The issue being presented in your query is: Which should be followed as regards the premium contributions to be remitted by the LGU to PhilHealth, the PhilHealth Circular No. 011- S-2012 (as superseded by PhilHealth Circular No. 057, s-2012) or the DBM Circular Letter No. 2012-12, dated 29 June 2012?
This issue boils down into the question as to who has the authority to fix the Philhealth premium contribution. Pertinent provisions of Republic Act No. 7875, as amended by Republic Act No. 9241, state:
xxx xxx xxx
“Section 14. Creation and Nature of the Corporation. – There is hereby created a Philippine Health Insurance Corporation, which shall have the status of a tax-exempt government corporation attached to the Department of Health for policy coordination and guidance.”
xxx xxx xxx
“Section 16. Powers and Functions. – The Corporation shall have the following powers and functions:
a) to administer the National Health Insurance Program;
b) to formulate and promulgate policies for the sound administration of the Program;
c) to set standards, rules, and regulations necessary to ensure quality of care, appropriate utilization of services, fund viability, member satisfaction, and overall accomplishment of Program objectives;
d) to formulate and implement guidelines on contributions and benefits, cost containment and quality assurance; and health care provider arrangements, payment methods; and referral systems;”
xxx xxx xxx
"SEC. 4. Definition of Terms.-For the purpose of this Act, the following terms shall be defined as follows:
xxx xxx xxx
d) Contribution - The amount paid by or in behalf of a member to the Program for coverage, based on salaries or wages in the case of formal sector employees, and on household earnings and assets, in the case of self-employed, or on other criteria as may be defined by the Corporation in accordance with the guiding principles set forth in Article 1 of this Act.
xxx xxx xxx
ARTICLE VII
FINANCING
“Section 28. Contributions. – All members of the Program shall contribute to the Fund, in accordance with a reasonable, equitable and progressive contribution schedule to be determined by the Corporation on the basis of applicable actuarial studies and in accordance with the following guidelines:
a) Formal sector employees and current medicare members and their employers shall continue paying the same monthly contributions as provided for by law until such time that the Corporation shall have determined the contribution schedule mentioned herein: provided, that their monthly contribution shall not exceed three percent (3%) of their respective monthly salaries.
b) Contributions from self-employed members shall be based primarily on household earnings and assets; their total contributions for one year shall not, however, exceed three percent (3%) of their estimated actual net income for the preceding year.
c) Contributions made in behalf of indigent members shall not exceed the minimum contributions set for employed members.
xxx xxx xxx
It cannot be denied that based on the foregoing provisions of the law, the PhilHealth Corporation has the authority to fix the premium contribution that must be remitted by the employers, including the LGU. The Department of Budget and Management (DBM), without any statutory fiat, cannot arrogate unto itself such authority.
The following are the general functions of the DBM:
1. Formulates the overall resource application strategy to match the government’s macro-economic policy;
2. Prepares the medium-term expenditure plan, indicating the programming, prioritization, and financing of capital investment and current operating expenditure requirements of medium-term sectoral development plans;
3. Undertakes the formulation of the annual national budget in a way that ensures the appropriate prioritization and allocation of funds to support the annual program of government;
4. Develops and administers a national accounting system essential to fiscal management and control;
5. Conducts a continuing study of the bureaucracy and assesses as well as makes policy recommendation on its role, size, composition, structure and functions to establish a government bureaucracy imbued with a spirit of public service;
6. Establishes the rules and procedures for the management of government organization resources i.e., physical, manpower and other resources, formulates standards of organizational program performance; and undertakes or provides services in work simplification or streamlining of systems and procedures to improve efficiency and effectiveness in government operations;
7. Conceptualizes and administers the government’s compensation and position classification plan; and
8. Monitors and assesses the physical as well as the financial operations of local government units and government-owned and/or – controlled corporations.
While DBM is mandated under Executive Order No. 25, dated April 25, 1936, and subsequent issuances to promote the sound, efficient and effective management and utilization of government resources (i.e., technological, manpower, physical and financial) as instrument in the achievement of national socioeconomic and political development goals, this cannot be construed as to include the power or authority to alter or modify the acts of the PhilHealth Corporation. There is nothing in the law that empowers the DBM to review the decisions of the Corporation. Neither is there any provision of law which requires the prior approval by DBM before any increase in premium can be implemented by PhilHealth. It is worthy to note that even the DBM Circular letters make reference to the PhilHealth Circulars.
One cannot simply brush aside the possible repercussions to the Philhealth members and to the employer LGU should their benefits be withheld in the future due to under-remittance.
Based on the foregoing, the undersigned is of the opinion that the PhiliHealth Circular should prevail.
I hope this opinion could be of help to the LGU’s endeavors.
Yours truly,
ATTY. EUFEMIO A. SIMTIM, JR.
City Legal Officer
cc:
CMO
Province of South Cotabato
City of Koronadal
OFFICE OF THE CITY LEGAL OFFICER
LEGAL OPINION NO. __________
DATE : 15 January 2013
TO : JULIETA R. GASTALA, MPA
City Budget Officer
This City
RE : PHILHEALTH PREMIUM CONTRIBUTION
Madam:
The issue being presented in your query is: Which should be followed as regards the premium contributions to be remitted by the LGU to PhilHealth, the PhilHealth Circular No. 011- S-2012 (as superseded by PhilHealth Circular No. 057, s-2012) or the DBM Circular Letter No. 2012-12, dated 29 June 2012?
This issue boils down into the question as to who has the authority to fix the Philhealth premium contribution. Pertinent provisions of Republic Act No. 7875, as amended by Republic Act No. 9241, state:
xxx xxx xxx
“Section 14. Creation and Nature of the Corporation. – There is hereby created a Philippine Health Insurance Corporation, which shall have the status of a tax-exempt government corporation attached to the Department of Health for policy coordination and guidance.”
xxx xxx xxx
“Section 16. Powers and Functions. – The Corporation shall have the following powers and functions:
a) to administer the National Health Insurance Program;
b) to formulate and promulgate policies for the sound administration of the Program;
c) to set standards, rules, and regulations necessary to ensure quality of care, appropriate utilization of services, fund viability, member satisfaction, and overall accomplishment of Program objectives;
d) to formulate and implement guidelines on contributions and benefits, cost containment and quality assurance; and health care provider arrangements, payment methods; and referral systems;”
xxx xxx xxx
"SEC. 4. Definition of Terms.-For the purpose of this Act, the following terms shall be defined as follows:
xxx xxx xxx
d) Contribution - The amount paid by or in behalf of a member to the Program for coverage, based on salaries or wages in the case of formal sector employees, and on household earnings and assets, in the case of self-employed, or on other criteria as may be defined by the Corporation in accordance with the guiding principles set forth in Article 1 of this Act.
xxx xxx xxx
ARTICLE VII
FINANCING
“Section 28. Contributions. – All members of the Program shall contribute to the Fund, in accordance with a reasonable, equitable and progressive contribution schedule to be determined by the Corporation on the basis of applicable actuarial studies and in accordance with the following guidelines:
a) Formal sector employees and current medicare members and their employers shall continue paying the same monthly contributions as provided for by law until such time that the Corporation shall have determined the contribution schedule mentioned herein: provided, that their monthly contribution shall not exceed three percent (3%) of their respective monthly salaries.
b) Contributions from self-employed members shall be based primarily on household earnings and assets; their total contributions for one year shall not, however, exceed three percent (3%) of their estimated actual net income for the preceding year.
c) Contributions made in behalf of indigent members shall not exceed the minimum contributions set for employed members.
xxx xxx xxx
It cannot be denied that based on the foregoing provisions of the law, the PhilHealth Corporation has the authority to fix the premium contribution that must be remitted by the employers, including the LGU. The Department of Budget and Management (DBM), without any statutory fiat, cannot arrogate unto itself such authority.
The following are the general functions of the DBM:
1. Formulates the overall resource application strategy to match the government’s macro-economic policy;
2. Prepares the medium-term expenditure plan, indicating the programming, prioritization, and financing of capital investment and current operating expenditure requirements of medium-term sectoral development plans;
3. Undertakes the formulation of the annual national budget in a way that ensures the appropriate prioritization and allocation of funds to support the annual program of government;
4. Develops and administers a national accounting system essential to fiscal management and control;
5. Conducts a continuing study of the bureaucracy and assesses as well as makes policy recommendation on its role, size, composition, structure and functions to establish a government bureaucracy imbued with a spirit of public service;
6. Establishes the rules and procedures for the management of government organization resources i.e., physical, manpower and other resources, formulates standards of organizational program performance; and undertakes or provides services in work simplification or streamlining of systems and procedures to improve efficiency and effectiveness in government operations;
7. Conceptualizes and administers the government’s compensation and position classification plan; and
8. Monitors and assesses the physical as well as the financial operations of local government units and government-owned and/or – controlled corporations.
While DBM is mandated under Executive Order No. 25, dated April 25, 1936, and subsequent issuances to promote the sound, efficient and effective management and utilization of government resources (i.e., technological, manpower, physical and financial) as instrument in the achievement of national socioeconomic and political development goals, this cannot be construed as to include the power or authority to alter or modify the acts of the PhilHealth Corporation. There is nothing in the law that empowers the DBM to review the decisions of the Corporation. Neither is there any provision of law which requires the prior approval by DBM before any increase in premium can be implemented by PhilHealth. It is worthy to note that even the DBM Circular letters make reference to the PhilHealth Circulars.
One cannot simply brush aside the possible repercussions to the Philhealth members and to the employer LGU should their benefits be withheld in the future due to under-remittance.
Based on the foregoing, the undersigned is of the opinion that the PhiliHealth Circular should prevail.
I hope this opinion could be of help to the LGU’s endeavors.
Yours truly,
ATTY. EUFEMIO A. SIMTIM, JR.
City Legal Officer
cc:
CMO
LEGAL OPINION RE CONFLICTING CLAIMS IN THE KORONADAL CITY PUBLIC MARKET [STALL NO. 13]
Republic of the Philippines
Province of South Cotabato
City of Koronadal
OFFICE OF THE CITY LEGAL OFFICER
Tel No. (083) 228-1742
LEGAL OPINION NO. ________
DATE : 15 November 2013
TO : CYRUS JOSE J. URBANO, CPA, MBA
City Administrator
RE : As Stated
________________________________________________________
Kanami Koronadal!
This is with reference to your letter dated 12 November 2013 requesting for a legal opinion apropos the letter of Atty. Raul O. Tolentino asking for the cancellation/revocation of the lease contract which was entered into by John Abella with the City Government of Koronadal.
It appears that on 14 January 2013, a Contract of Lease was entered into between the City Government of Koronadal, as the lessor and John Abella, as the lessee, covering Stall No. 13, Supermarket Building 1, Ground Floor of the City Public Market of this City. The lease has duration of two (2) years renewable upon its expiration unless revoked in accordance with the Local Revenue Code of Koronadal City. However, it appears from the record of the Licensing Office that Agencia Niña, Inc. under the business name, Golden Drug Store had been actually occupying the leased subject property.
Based on the foregoing facts, it can be gleaned that John Abella subleased the said property to the Agencia Niña, Inc., /Golden Drug Store.
However, note must be taken that the aforementioned contract specifically prohibits the subleasing of the above-mentioned property to any third person which provides:
x x x
“6. That it shall be inviolable [sic] violation of this contract to sublease, mortgage, sell, transfer or in any manner allow people to conduct business in the said stall/room other than the lessee himself/herself”
x x x
Also, the Civil Code of the Philippines particularly Article 1649 expressly provides, inter alia, that:
x x x
Art. 1649. The lessee cannot assign the lease without the consent of the lessor, unless there is a stipulation to the contrary."
x x x
Applying the above provisions to the case under consideration, it follows that the subleasing could not have been valid there being no proof that the City Government of Koronadal, the lessor, gave its express consent to the substitution of Agencia Niña, Inc.,/Golden Drug Store in lieu of John Abella as lessee. In view of such violation of the provision of the lease contract or for failure to comply with the terms/ conditions thereof, the lessor has a right to revoke/cancel/terminate the contract of lease with the lessee John Abella and to take physical possession of the subject property.
Section 5, B.04. Administrative Provisions.- of the City Market Ordinance provides that:
x x x
“Dummies, sublease of stalls/rooms- In any case the person registered to be the holder or lessee of a stall room/room in the public market, is found to be not the same person who is actually occupying said stall/room, the lease of such stall/room shall be cancelled, if upon investigation such stall holder shall be found to have subleased his stall/room to another person or to have connived with such person so that the latter may for any reason, be able to occupy the said stall.”
x x x
Nonetheless, it does not follow that the actual occupant Agencia Niña, Inc., /Golden Drug Store be permitted or be placed as lessee.
Anent thereto, the undersigned, consequently, recommend that the subject property be DECLARED VACANT AND REOPENED FOR APPLICATION FOR LEASE.
Please be guided accordingly.
In public service,
ATTY. EUFEMIO A. SIMTIM, JR., REA, REB
City Legal Officer
JACQUELINE MAE ESTORNINOS-SAQUILABON, LLB
Legal Assistant II
c.c
BPLS
CMO
City Market Committee
Province of South Cotabato
City of Koronadal
OFFICE OF THE CITY LEGAL OFFICER
Tel No. (083) 228-1742
LEGAL OPINION NO. ________
DATE : 15 November 2013
TO : CYRUS JOSE J. URBANO, CPA, MBA
City Administrator
RE : As Stated
________________________________________________________
Kanami Koronadal!
This is with reference to your letter dated 12 November 2013 requesting for a legal opinion apropos the letter of Atty. Raul O. Tolentino asking for the cancellation/revocation of the lease contract which was entered into by John Abella with the City Government of Koronadal.
It appears that on 14 January 2013, a Contract of Lease was entered into between the City Government of Koronadal, as the lessor and John Abella, as the lessee, covering Stall No. 13, Supermarket Building 1, Ground Floor of the City Public Market of this City. The lease has duration of two (2) years renewable upon its expiration unless revoked in accordance with the Local Revenue Code of Koronadal City. However, it appears from the record of the Licensing Office that Agencia Niña, Inc. under the business name, Golden Drug Store had been actually occupying the leased subject property.
Based on the foregoing facts, it can be gleaned that John Abella subleased the said property to the Agencia Niña, Inc., /Golden Drug Store.
However, note must be taken that the aforementioned contract specifically prohibits the subleasing of the above-mentioned property to any third person which provides:
x x x
“6. That it shall be inviolable [sic] violation of this contract to sublease, mortgage, sell, transfer or in any manner allow people to conduct business in the said stall/room other than the lessee himself/herself”
x x x
Also, the Civil Code of the Philippines particularly Article 1649 expressly provides, inter alia, that:
x x x
Art. 1649. The lessee cannot assign the lease without the consent of the lessor, unless there is a stipulation to the contrary."
x x x
Applying the above provisions to the case under consideration, it follows that the subleasing could not have been valid there being no proof that the City Government of Koronadal, the lessor, gave its express consent to the substitution of Agencia Niña, Inc.,/Golden Drug Store in lieu of John Abella as lessee. In view of such violation of the provision of the lease contract or for failure to comply with the terms/ conditions thereof, the lessor has a right to revoke/cancel/terminate the contract of lease with the lessee John Abella and to take physical possession of the subject property.
Section 5, B.04. Administrative Provisions.- of the City Market Ordinance provides that:
x x x
“Dummies, sublease of stalls/rooms- In any case the person registered to be the holder or lessee of a stall room/room in the public market, is found to be not the same person who is actually occupying said stall/room, the lease of such stall/room shall be cancelled, if upon investigation such stall holder shall be found to have subleased his stall/room to another person or to have connived with such person so that the latter may for any reason, be able to occupy the said stall.”
x x x
Nonetheless, it does not follow that the actual occupant Agencia Niña, Inc., /Golden Drug Store be permitted or be placed as lessee.
Anent thereto, the undersigned, consequently, recommend that the subject property be DECLARED VACANT AND REOPENED FOR APPLICATION FOR LEASE.
Please be guided accordingly.
In public service,
ATTY. EUFEMIO A. SIMTIM, JR., REA, REB
City Legal Officer
JACQUELINE MAE ESTORNINOS-SAQUILABON, LLB
Legal Assistant II
c.c
BPLS
CMO
City Market Committee
LEGAL OPINION RE CONFLICTING CLAIMS OF STALLHOLDERS IN THE KORONADAL CITY PUBLIC MARKET [STALL NO. 22]
Republic of the Philippines
Province of South Cotabato
City of Koronadal
OFFICE OF THE CITY LEGAL OFFICER
Tel No. (083) 228-1742
LEGAL OPINION NO. ________
DATE : 20 November 2013
TO : CYRUS JOSE J. URBANO, MPA
City Administrator
City Market Committee, Chair
SUBJECT : As Stated
__________________________________________________
Kanami Koronadal!
Subject of this Opinion is the query of herein parties, Mrs. Clarita M. Cuaresma and her son Mr. Leslie C. Lu seeking the resolution of their contest apropos the lawful leasehold right of Stall No. 22, Supermart Building Shed 2, Ground floor of the City of Koronadal Public Market lodged before the City Market Committee.
As culled from the records of the City Treasurer and Office of the Market Supervisor, and the minutes of the meetings previously called for by the Market Committee, hereunder are the uncontroverted factual antecedents:
Herein parties are Mrs. Clarita M. Cuaresma lessee of Stall No. 22 and Mr. Leslie C. Lu lessee of Stall No. 23, both in the Supermart Building 2, Ground Floor of the City of Koronadal. Both stalls are being occupied as a compact stall removing the division between them in which their family business, the Liberty Bakeshop, is situated. Both parties admit that at the onset of the business, Mrs. Cuaresma was the sole proprietor of the bakery.
Meanwhile, Mrs. Cuaresma left their business to her sister and pursued another course elsewhere. However, due to the prodding of her son, Mr. Lu, she had a change of heart and decided to instead leave the business to him, inversely promising that he will send his brother to school while his mother is away.
Pursuantly, Mr. Lu managed Liberty Bakeshop and paid the rentals and surcharges for Stall Nos. 22 and 23 in the name of Mrs. Cuaresma, in her absence.
As evidenced by Official Receipts issued by the Treasurer’s Office, rentals and surcharges were paid either by Mrs. Cuaresma or paid by Mr. Lu in her name. Also, the latest Lease Contract between the City Government and Mrs. Cuaresma duly signed by her issued on 30 August 2006 which took effect on January 2006 until December 2007. Sans the Contract of Lease from 2008 up to present, Stall No. 22 remained under the name of Mrs. Cuaresma.
Herein parties assert opposing claims of leasehold rights over Stall No. 22. In particular, Mrs. Cuaresma clung to her claim being the Lessee by virtue of the Lease Contract and as appearing in the Official Receipts of the Treasurer’s Office. On the contrary, Mr. Lu based his claim on his payment of rentals and surcharges for several times during the absence of his mother.
This office opines that Mr. Lu failed in his burden of clearly and unequivocally proving his claim of leasehold rights on the subject stall. The fact of his payment of the rentals and surcharges on the subject stall during the absence of Mrs. Cuaresma cannot mean that the latter relinquished her leasehold thereto. She may have been remiss in her obligation to personally maintain or conduct business in the said stall but this cannot belie the fact that the bakery was family-owned.
In addition, worthy of note is the records of the Office of the Treasurer which accepted payments and issued receipts for the stall in the name of Mrs. Cuaresma. Payment of Mr. Lu on several occasions is bereft of indicia of Mrs. Cuaresma’s intent to surrender or abandon said stall in favor of Mr. Lu. Had that been the case, proper procedures should have been observed.
Reason dictates that the acceptance of payments by the City Government from Mr. Lu in the name of his mother is recognition on our part that the legitimate lessee of the contested stall is Mrs. Cuaresma sans a contract of lease. Failure of Mr. Lu to show proof that he is the lessee of the stall defeats his challenge. He cannot by the mere fact of his payment of the rentals and surcharge validly claim leasehold on the stall.
Herein parties cannot undermine the proscriptions of the Local Tax Ordinance on dummy and subleasing of stalls and the lease of more than one stall in the public market.
Ergo, this office respectfully opines that Mrs. Clarita M. Cuaresma is the LEGITIMATE LESSEE OF STALL NO. 22. Further, it is recommended that the stalls of Liberty Bakeshop must be reverted to its original state. Consequently, necessary division must be constructed between Stall Nos. 22 and 23, being leased by separate individuals. This shall also serve as a stern warning to herein parties that said stalls must not be merged to form a single compact stall contrary to the provisions of Lease Contract and market ordinances. Otherwise, the City Government can, motu proprio revoke or cancel the lease and declare the stall of erring stall holders vacant.
Please be guided accordingly.
In public service,
ATTY. EUFEMIO A. SIMTIM, JR., REA, REB
City Legal Officer
MYRA JOY H. LAWI-AN, LLB
Legal Assistant II
c.c
BPLS
CMO
City Market Committee
Province of South Cotabato
City of Koronadal
OFFICE OF THE CITY LEGAL OFFICER
Tel No. (083) 228-1742
LEGAL OPINION NO. ________
DATE : 20 November 2013
TO : CYRUS JOSE J. URBANO, MPA
City Administrator
City Market Committee, Chair
SUBJECT : As Stated
__________________________________________________
Kanami Koronadal!
Subject of this Opinion is the query of herein parties, Mrs. Clarita M. Cuaresma and her son Mr. Leslie C. Lu seeking the resolution of their contest apropos the lawful leasehold right of Stall No. 22, Supermart Building Shed 2, Ground floor of the City of Koronadal Public Market lodged before the City Market Committee.
As culled from the records of the City Treasurer and Office of the Market Supervisor, and the minutes of the meetings previously called for by the Market Committee, hereunder are the uncontroverted factual antecedents:
Herein parties are Mrs. Clarita M. Cuaresma lessee of Stall No. 22 and Mr. Leslie C. Lu lessee of Stall No. 23, both in the Supermart Building 2, Ground Floor of the City of Koronadal. Both stalls are being occupied as a compact stall removing the division between them in which their family business, the Liberty Bakeshop, is situated. Both parties admit that at the onset of the business, Mrs. Cuaresma was the sole proprietor of the bakery.
Meanwhile, Mrs. Cuaresma left their business to her sister and pursued another course elsewhere. However, due to the prodding of her son, Mr. Lu, she had a change of heart and decided to instead leave the business to him, inversely promising that he will send his brother to school while his mother is away.
Pursuantly, Mr. Lu managed Liberty Bakeshop and paid the rentals and surcharges for Stall Nos. 22 and 23 in the name of Mrs. Cuaresma, in her absence.
As evidenced by Official Receipts issued by the Treasurer’s Office, rentals and surcharges were paid either by Mrs. Cuaresma or paid by Mr. Lu in her name. Also, the latest Lease Contract between the City Government and Mrs. Cuaresma duly signed by her issued on 30 August 2006 which took effect on January 2006 until December 2007. Sans the Contract of Lease from 2008 up to present, Stall No. 22 remained under the name of Mrs. Cuaresma.
Herein parties assert opposing claims of leasehold rights over Stall No. 22. In particular, Mrs. Cuaresma clung to her claim being the Lessee by virtue of the Lease Contract and as appearing in the Official Receipts of the Treasurer’s Office. On the contrary, Mr. Lu based his claim on his payment of rentals and surcharges for several times during the absence of his mother.
This office opines that Mr. Lu failed in his burden of clearly and unequivocally proving his claim of leasehold rights on the subject stall. The fact of his payment of the rentals and surcharges on the subject stall during the absence of Mrs. Cuaresma cannot mean that the latter relinquished her leasehold thereto. She may have been remiss in her obligation to personally maintain or conduct business in the said stall but this cannot belie the fact that the bakery was family-owned.
In addition, worthy of note is the records of the Office of the Treasurer which accepted payments and issued receipts for the stall in the name of Mrs. Cuaresma. Payment of Mr. Lu on several occasions is bereft of indicia of Mrs. Cuaresma’s intent to surrender or abandon said stall in favor of Mr. Lu. Had that been the case, proper procedures should have been observed.
Reason dictates that the acceptance of payments by the City Government from Mr. Lu in the name of his mother is recognition on our part that the legitimate lessee of the contested stall is Mrs. Cuaresma sans a contract of lease. Failure of Mr. Lu to show proof that he is the lessee of the stall defeats his challenge. He cannot by the mere fact of his payment of the rentals and surcharge validly claim leasehold on the stall.
Herein parties cannot undermine the proscriptions of the Local Tax Ordinance on dummy and subleasing of stalls and the lease of more than one stall in the public market.
Ergo, this office respectfully opines that Mrs. Clarita M. Cuaresma is the LEGITIMATE LESSEE OF STALL NO. 22. Further, it is recommended that the stalls of Liberty Bakeshop must be reverted to its original state. Consequently, necessary division must be constructed between Stall Nos. 22 and 23, being leased by separate individuals. This shall also serve as a stern warning to herein parties that said stalls must not be merged to form a single compact stall contrary to the provisions of Lease Contract and market ordinances. Otherwise, the City Government can, motu proprio revoke or cancel the lease and declare the stall of erring stall holders vacant.
Please be guided accordingly.
In public service,
ATTY. EUFEMIO A. SIMTIM, JR., REA, REB
City Legal Officer
MYRA JOY H. LAWI-AN, LLB
Legal Assistant II
c.c
BPLS
CMO
City Market Committee
Tuesday, March 5, 2013
LEGAL OPINION RE ESTABLISHMENT OF PUBLIC TRANSPORT TERMINAL
Republic of the Philippines
Province of South Cotabato
City of Koronadal
OFFICE OF THE CITY LEGAL OFFICER
DATE : 30 May 2012
TO : HON. PETER B. MIGUEL, MD, FPSO-HNS
City Mayor
This City
RE : LEGAL REQUIREMENTS FOR THE ESTABLISHMENT OF PUBLIC
TRANSPORT TERMINAL
Sir:
In your letter dated 3 May 2012, you requested for a legal opinion/assessment on the use of the city’s proposed integrated public terminal vis-à-vis the existing transportation and traffic laws and regulations.
Republic Act No. 7160, otherwise known as the “Local Government Code of 1991” provides for the power of the LGU, through the Sangguniang Panlungsod, to regulate the use of streets, the traffic as well as the operation of transport terminals, thus:
x x x
“Section 458, par. (3). Subject to the provisions of Book II of this Code, enact ordinances granting franchises and authorizing the issuance of permits or licenses, upon such conditions and for such purposes intended to promote the general welfare of the inhabitants of the city and pursuant to this legislative authority shall:
xxx
(vi). Subject to the guidelines prescribed by the Department of Transportation and Communications, regulate the operation of tricycles and grant franchises for the operation thereof within the territorial jurisdiction of the city;
x x x
“Section 458, par. (4). Regulate activities relative to the use of land, buildings and structures within the city in order to promote the general welfare and for said purpose shall:
xxx
(iv) Regulate the establishment, operation and maintenance of cafes, restaurants, beerhouses, hotels, motels, inns, pension houses, lodging houses, and other similar establishments, including tourist guides and transports;
x x x
“Sec. 458, par. (5). Approve ordinances which shall ensure the efficient and effective delivery of the basic services and facilities as provided for under Section 17 of this Code, and in addition to said services and facilities, shall:
xxx
(v) Regulate the use of streets, avenues, alleys, sidewalks, bridges, parks and other public places and approve the construction, improvement repair and maintenance of the same; establish bus and vehicle stops and terminals or regulate the use of the same by privately-owned vehicles which serve the public; regulate garages and the operation of conveyances for hire; designate stands to be occupied by public vehicles when not in use; regulate the putting up of signs, signposts, awnings and awning posts on the streets; and provide for the lighting, cleaning and sprinkling of streets; and public places;
(vi) Regulate traffic on all streets and bridges; prohibit encroachments or obstacles thereon, and when necessary in the interest of public welfare, authorize the removal or encroachments and illegal constructions in public places;
x x x
Similar provisions are found under Article IV, Section 10, (D), of Republic Act No. 8803, otherwise known as “An Act Converting the Municipality of Koronadal, South Cotabato Province, Into A Component City To Be Known As The City Of Koronadal.”
There is no doubt as to the power of the LGU to establish its own integrated transport terminal. Also, the power of the LGU to regulate the use of the same is clearly provided under the law. However, the Department of Interior and Local Government (DILG) and the Department of Transportation and Communications (DOTC) had issued Joint Memorandum Circular No. 01, s. 2008 (JMC No.1 for brevity), on 10 September 2008, providing for the guidelines in the review of local ordinances, orders, rules and regulations concerning public transportation. Specifically, JMC No. 1 provides for the guidelines governing the establishment and operation of public transport terminals, as follows:
x x x
“3.2 On the Establishment and Operation of Public Transport Terminals
All locally-issued ordinances, orders, rules and regulations should be in conformity with the following policies, standards and limitations:
a. Prior to the commencement of the construction, a public hearing must be held and publication of the construction of the public transport terminals in local newspapers of general circulation and/or posting in at least four conspicuous and publicly accessible places including the main entrance of the city/municipal hall must be observed.
Public hearing includes an official notification of authorized representatives of the LTO, LTFRB and other concerned agencies, public transport operators/drivers and stakeholders.
b. The use of public terminal established or designated by LGUs shall not be imposed compulsorily, directly or indirectly, on operators/drivers with existing private terminals.
Public and private transportation terminals refer to any building or facility constructed or designated by the local government unit and by a private transport operator, respectively, primarily for the purpose of loading and unloading of passengers and cargoes by the different modes of public transportation and for the necessary repair and maintenance of equipment to insure public safety.
c. Vehicles merely passing through cannot be compelled to use the public terminals established or designated by the LGUs.
Passing-through public utility vehicles refer to public utility vehicles plying the routes between points of origin and designation.
d. LGUs cannot close down existing private terminals or curtail the operation of said terminals for the purpose of using the public transport terminals established or designated by the LGUs as this is tantamount to encroachment by LGUs upon property rights of private individuals and the legitimate use thereof.
e. The standards set by the LTFRB as prescribed in its Memorandum Circular No. 2008-013 dated June 4, 2008 or any amendment thereto must be complied with by all public and private transport terminals, to wit:
1. - Adequate and comfortable benches or sets with backrests for waiting passengers;
2. - Roofing that would provide sufficient shade to passengers from heat of the sun and rain;
3. - Information and Passenger Assistance Counters;
4. - Appropriate and adequate signages;
5. - Sufficient number of security personnel for the protection of passengers from abusive vendors, pickpockets and other lawless elements and for the proper inspection of baggages; and
6. - Diaper changing table inside the female restrooms for female passengers traveling with infant or babies;
In addition, the following standards must also be included for inter-modal transport terminal or one which can simultaneously accommodate or serve at east three types of public land transport vehicles, such as PUBs, PUJs, Multi-Cabs, Vans/AUVs, etc. and for bus terminal or terminal which caters to less than three vehicle types, one of which would be public utility buses, to wit:
1. - Concrete pavement and flooring;
2. - Wide entrances and exits for easy mobility to and from the terminal;
3. - Provision for communication facilities (such as telephone, fax machines, internet, etc.);
4. - Installation of Public Address System Facilities and CCTV cameras or monitors;
5. - Separate rest rooms for male and female disabled passengers which must at all times be clean, sufficiently lighted, foul odor-free, ventilated with clean running water, flush system, toilet seat with cover, lavatory, waste bin, toilet paper, mirror, dispenser with soap, hand dryer, dry flooring, functional door lock, and janitorial maintenance personnel;
6. - Provision for separate and sufficient parking lots or spaces for each mode of transport, for inter-modal transport terminal only; and
7. - Priority lane for persons with special needs specifically pregnant women, mother travelling with infants or small children and those with physical disabilities, for inter-modal transport terminal only.
f. The minimum location standards provided under the HLURB’s Locational Guidelines and Standards for Land Transportation Terminal and Garages pursuant to Board Resolution no. R-408, series of 19888, or any amendment thereto, must be fully satisfied, to wit:
1. - Terminals should be more than 100 meters away from institutional establishment particularly schools and hospitals.
2. - The terminal must be accessible to commuters, i.e. transfer routes are available or within its service radius. However, direct access to major thoroughfares especially high speed highways and expressways should be discouraged for safety and smooth traffic flow purposes.
3. - The approved zoning ordinance should indicate the location of bus stations/terminals, freight/truck terminals which should be at the periphery of a commercial zone.
4. - If the municipality has no approved zoning ordinance, the location of bus stations/terminals, freight/truck terminals should be outside the center of commercial activities to reduce and minimize street congestion.
5. - Jeepney/taxi terminal may be located within the central business district or commercial zone provided, it should not be major road intersection.
6. - Garage must be located at the outskirt of the business center or commercial zone.
g. The standards set by the Department of Health as provided under Chapter IX Section 54 of the Sanitation Code of the Philippines or any subsequent amendment thereto, must be duly observed, to wit:
1. - Rest areas, bus terminals, bus stops and service stations shall be established with ample area to prevent overcrowding of motor vehicles and travelers.
2. - They shall be provided with adequate ventilation and lighting away from sources of nuisance.
3. - Safe and adequate water supply shall be provided in accordance with the provisions of Chapter II of this Code.
4. - Refuse collection and disposal shall be in accordance with the provisions of Chapter XVII of the Sanitation Code of the Philippines.
5. - Adequate numbers of comfort rooms shall be provided as well auxiliary facilities therein in accordance with the provisions on Chapter XVII of the Sanitation Code of the Philippines.
6. - Waiting sheds for commuters shall be of adequate size to comfortably accommodate a minimum of thirty persons. Floors shall be of smooth concrete finish and adequate sitting facilities provided for.
7. - Sale of foodstuffs in those establishments shall be done in conformity with the provisions of Chapter III of the Sanitation Code of the Philippines.
h. Should there be an existing LGU-operated or owned Inter-Modal Grand Terminal which is compliant with LTFRB standards, the existing transport terminals of franchise grantees within the said LGU should be considered as garage and the use of the LGU operated or owned inter-modal terminal is hereby encouraged.
i. Existing transport terminals, both LGU-owned and privately-owned, not in compliance with the aforementioned standards shall be given a period of one (1) year from the effectivity of this Joint Memorandum Circular to implement and fully comply with the policies, standards and limitations set forth above.
j. Any further extension of time for compliance may be submitted by the concerned owner or operator, transport association or cooperative on justifiable reasons, subject to the approval of the LTFRB or its Regional Directors, as the case may be.
3.4 On the Issuance of Traffic Citation Tickets
All locally-issued ordinances, orders, rules and regulations should be in conformity with the following policies, standards and limitations:
a. The LGUs can issue traffic citation tickets but only the LTO and their deputized agents can confiscate driver’s licenses. However, in Metro Manila, the single ticketing system shall be worked out.
Traffic citation ticket refers to traffic violation receipts issued by traffic law enforcers in the course of their enforcement of traffic rules and regulations.
3.5 On the Imposition of Other Local Fees and Charges Affecting
All locally-issued ordinances, orders, rules and regulations should be in conformity with the following policies, standards and limitations:
a. As a general rule, the LGUs should desist from unilaterally increasing fees and charges that would contribute to higher public transport cost. Increases in fees and charges should be in coordination with the LTFRB and should be commensurate with the administrative expenses. Before changes in fees can be imposed, there must be a public hearing and publication in local newspapers of general circulation and/or posting in at least four (4) conspicuous places including the main entrance of the city/municipal hall prior to said imposition.
b. As provided for under Section 10 of Republic Act no. 8794 (An Act Imposing a Motor Vehicle User’s Charge on Owners of all Types of Motor Vehicles and for other Purposes), to wit:
“No other tax, fee or any charge of similar nature, as the Motor Vehicles Users Charge shall be imposed by any political subdivision or unit in the country.”
c. Fees to be charged in the use of public transport terminals shall be reasonable and commensurate with the administrative and operating expenses in the operation of the said terminals.
Fees and charges refer to fees collected or charged by LGUs relating to public transport and do not include fines and penalties imposed for violation of traffic rules and regulations.
x x x
A full copy of JMC No.1 is attached hereto as ANNEX “A” for your ready reference.
A question however that may possibly confront the LGU is how to deal with the existing private transport terminals. It is clear that, as a general rule, the LGU cannot stop the operation of existing private transport terminals simply by reason of the establishment of a public transport terminal. There are, however, legitimate reasons upon which grounds the existing private transport terminal may be ordered to stop its operation without running afoul with the JMC, to wit:
1. If the existing private transport terminal constitutes a nuisance under the Civil Code, Fire Code or the National Building Code;
2. If the existing private transport terminal violates the Local Revenue Code;
3. If the existing private transport terminal is not compliant with the requirements set by the JMC; or
4. If the existing private transport terminal is a non-conforming entity under the local zoning ordinance based on the adopted revised Comprehensive Land Use Plan.
Further, it is worthy to note that under the same JMC No. 1, tricycles are not allowed to ply along national highways, thus:
x x x
“3.0 Guidelines
3.1 On the Granting of Franchises to Tricycles
All locally issued ordinances, orders, rules and regulations should be in the conformity with the following policies, standards and limitations:
x x x
b) Tricycle operation should only be confined along the city or municipal roads, not along national roads and is limited only to routes not traversed by higher modes public transport. However, the local Sanggunian may allow if there is no other alternative route.
Municipal and city roads refer to roads within the poblacion; they are roads that connect to provincial and national roads and provide inter-barangay connections to major municipal and city infrastructure without traversing provincial road.
National roads refer to any public road classified as primary and secondary, declared as national road by the President of the Philippines.”
x x x
This condition is deemed written in tricycle franchises but a corresponding ordinance could further give teeth thereto and effectively prohibit tricycles from plying along national highways. To reiterate, the LGU has the power to regulate not only the operation of tricycles but, more importantly, the traffic and the use of the streets within its territorial jurisdiction. It is opined therefore that a comprehensive traffic ordinance could regulate and properly set the flow of traffic in order to address the problem on traffic congestion. Consequently, however, this could render some existing transport terminals situated along the national highways physically obsolete, thus, for them to die a natural death, so to speak.
The undersigned believes, however, that earnest effort should first be exerted to reconcile the interests of the city and its constituents, on one hand, and the interests of the transport sector, on the other. This underscores the importance of proper consultation and negotiation with the stakeholders. This notwithstanding, the general welfare and convenience of the public, being the paramount consideration, should still prevail.
Meanwhile, actual visits and interviews conducted by the CLO staff in the three (3) neighboring LGU’s, particularly the Municipality of Surallah, City of Tacurong and City of General Santos, has brought about the following findings, to wit:
1. The operation of the Integrated Transport Terminal of Surallah is governed by the Local Revenue Code (a copy of which is attached hereto as ANNEX “B” for easy reference).
2. The operation of Tacurong City Integrated Public Terminal, on the other hand, is governed by a separate ordinance, Ordinance No. 51, Series of 2004, otherwise known as the “Tacurong City Integrated Public Terminal Ordinance” (a copy of which is attached hereto as ANNEX “C” for easy reference). It can be noted that the ordinance already embodies traffic rules prescribing the flow of traffic. The LGU of Tacurong has likewise come up with a Management Manual which provides in detail the operation of the terminal (a copy of which is attached hereto as ANNEX “D” for easy reference).
3. General Santos City, on its part, has passed Ordinance No. 08, Series of 2005, otherwise known as “An Ordinance Providing for the Policies, Rules and Regulations in the Operation and Maintenance of Eusebio Bulaong Public Terminal Located at Bulaong Subdivision, Barangay Dadiangas North, General Santos City, And For Other Purposes” (a copy of which is attached hereto as ANNEX “E” for easy reference). It was related to the CLO staff that LGU-GSC had once passed an ordinance prohibiting tricycles from using the national highway, but a copy thereof has still to be produced.
Relative to the case between the LGU of General Santos City and YBL, this office continues to communicate and to follow up with the LGU of General Santos City for a copy of the decision in a case filed by YBL against the LGU regarding their public transport terminal.
I hope this opinion could be of help to the LGU’s endeavors.
Yours truly,
ATTY. EUFEMIO A. SIMTIM, JR.
City Legal Officer
cc:
CPDO
Province of South Cotabato
City of Koronadal
OFFICE OF THE CITY LEGAL OFFICER
DATE : 30 May 2012
TO : HON. PETER B. MIGUEL, MD, FPSO-HNS
City Mayor
This City
RE : LEGAL REQUIREMENTS FOR THE ESTABLISHMENT OF PUBLIC
TRANSPORT TERMINAL
Sir:
In your letter dated 3 May 2012, you requested for a legal opinion/assessment on the use of the city’s proposed integrated public terminal vis-à-vis the existing transportation and traffic laws and regulations.
Republic Act No. 7160, otherwise known as the “Local Government Code of 1991” provides for the power of the LGU, through the Sangguniang Panlungsod, to regulate the use of streets, the traffic as well as the operation of transport terminals, thus:
x x x
“Section 458, par. (3). Subject to the provisions of Book II of this Code, enact ordinances granting franchises and authorizing the issuance of permits or licenses, upon such conditions and for such purposes intended to promote the general welfare of the inhabitants of the city and pursuant to this legislative authority shall:
xxx
(vi). Subject to the guidelines prescribed by the Department of Transportation and Communications, regulate the operation of tricycles and grant franchises for the operation thereof within the territorial jurisdiction of the city;
x x x
“Section 458, par. (4). Regulate activities relative to the use of land, buildings and structures within the city in order to promote the general welfare and for said purpose shall:
xxx
(iv) Regulate the establishment, operation and maintenance of cafes, restaurants, beerhouses, hotels, motels, inns, pension houses, lodging houses, and other similar establishments, including tourist guides and transports;
x x x
“Sec. 458, par. (5). Approve ordinances which shall ensure the efficient and effective delivery of the basic services and facilities as provided for under Section 17 of this Code, and in addition to said services and facilities, shall:
xxx
(v) Regulate the use of streets, avenues, alleys, sidewalks, bridges, parks and other public places and approve the construction, improvement repair and maintenance of the same; establish bus and vehicle stops and terminals or regulate the use of the same by privately-owned vehicles which serve the public; regulate garages and the operation of conveyances for hire; designate stands to be occupied by public vehicles when not in use; regulate the putting up of signs, signposts, awnings and awning posts on the streets; and provide for the lighting, cleaning and sprinkling of streets; and public places;
(vi) Regulate traffic on all streets and bridges; prohibit encroachments or obstacles thereon, and when necessary in the interest of public welfare, authorize the removal or encroachments and illegal constructions in public places;
x x x
Similar provisions are found under Article IV, Section 10, (D), of Republic Act No. 8803, otherwise known as “An Act Converting the Municipality of Koronadal, South Cotabato Province, Into A Component City To Be Known As The City Of Koronadal.”
There is no doubt as to the power of the LGU to establish its own integrated transport terminal. Also, the power of the LGU to regulate the use of the same is clearly provided under the law. However, the Department of Interior and Local Government (DILG) and the Department of Transportation and Communications (DOTC) had issued Joint Memorandum Circular No. 01, s. 2008 (JMC No.1 for brevity), on 10 September 2008, providing for the guidelines in the review of local ordinances, orders, rules and regulations concerning public transportation. Specifically, JMC No. 1 provides for the guidelines governing the establishment and operation of public transport terminals, as follows:
x x x
“3.2 On the Establishment and Operation of Public Transport Terminals
All locally-issued ordinances, orders, rules and regulations should be in conformity with the following policies, standards and limitations:
a. Prior to the commencement of the construction, a public hearing must be held and publication of the construction of the public transport terminals in local newspapers of general circulation and/or posting in at least four conspicuous and publicly accessible places including the main entrance of the city/municipal hall must be observed.
Public hearing includes an official notification of authorized representatives of the LTO, LTFRB and other concerned agencies, public transport operators/drivers and stakeholders.
b. The use of public terminal established or designated by LGUs shall not be imposed compulsorily, directly or indirectly, on operators/drivers with existing private terminals.
Public and private transportation terminals refer to any building or facility constructed or designated by the local government unit and by a private transport operator, respectively, primarily for the purpose of loading and unloading of passengers and cargoes by the different modes of public transportation and for the necessary repair and maintenance of equipment to insure public safety.
c. Vehicles merely passing through cannot be compelled to use the public terminals established or designated by the LGUs.
Passing-through public utility vehicles refer to public utility vehicles plying the routes between points of origin and designation.
d. LGUs cannot close down existing private terminals or curtail the operation of said terminals for the purpose of using the public transport terminals established or designated by the LGUs as this is tantamount to encroachment by LGUs upon property rights of private individuals and the legitimate use thereof.
e. The standards set by the LTFRB as prescribed in its Memorandum Circular No. 2008-013 dated June 4, 2008 or any amendment thereto must be complied with by all public and private transport terminals, to wit:
1. - Adequate and comfortable benches or sets with backrests for waiting passengers;
2. - Roofing that would provide sufficient shade to passengers from heat of the sun and rain;
3. - Information and Passenger Assistance Counters;
4. - Appropriate and adequate signages;
5. - Sufficient number of security personnel for the protection of passengers from abusive vendors, pickpockets and other lawless elements and for the proper inspection of baggages; and
6. - Diaper changing table inside the female restrooms for female passengers traveling with infant or babies;
In addition, the following standards must also be included for inter-modal transport terminal or one which can simultaneously accommodate or serve at east three types of public land transport vehicles, such as PUBs, PUJs, Multi-Cabs, Vans/AUVs, etc. and for bus terminal or terminal which caters to less than three vehicle types, one of which would be public utility buses, to wit:
1. - Concrete pavement and flooring;
2. - Wide entrances and exits for easy mobility to and from the terminal;
3. - Provision for communication facilities (such as telephone, fax machines, internet, etc.);
4. - Installation of Public Address System Facilities and CCTV cameras or monitors;
5. - Separate rest rooms for male and female disabled passengers which must at all times be clean, sufficiently lighted, foul odor-free, ventilated with clean running water, flush system, toilet seat with cover, lavatory, waste bin, toilet paper, mirror, dispenser with soap, hand dryer, dry flooring, functional door lock, and janitorial maintenance personnel;
6. - Provision for separate and sufficient parking lots or spaces for each mode of transport, for inter-modal transport terminal only; and
7. - Priority lane for persons with special needs specifically pregnant women, mother travelling with infants or small children and those with physical disabilities, for inter-modal transport terminal only.
f. The minimum location standards provided under the HLURB’s Locational Guidelines and Standards for Land Transportation Terminal and Garages pursuant to Board Resolution no. R-408, series of 19888, or any amendment thereto, must be fully satisfied, to wit:
1. - Terminals should be more than 100 meters away from institutional establishment particularly schools and hospitals.
2. - The terminal must be accessible to commuters, i.e. transfer routes are available or within its service radius. However, direct access to major thoroughfares especially high speed highways and expressways should be discouraged for safety and smooth traffic flow purposes.
3. - The approved zoning ordinance should indicate the location of bus stations/terminals, freight/truck terminals which should be at the periphery of a commercial zone.
4. - If the municipality has no approved zoning ordinance, the location of bus stations/terminals, freight/truck terminals should be outside the center of commercial activities to reduce and minimize street congestion.
5. - Jeepney/taxi terminal may be located within the central business district or commercial zone provided, it should not be major road intersection.
6. - Garage must be located at the outskirt of the business center or commercial zone.
g. The standards set by the Department of Health as provided under Chapter IX Section 54 of the Sanitation Code of the Philippines or any subsequent amendment thereto, must be duly observed, to wit:
1. - Rest areas, bus terminals, bus stops and service stations shall be established with ample area to prevent overcrowding of motor vehicles and travelers.
2. - They shall be provided with adequate ventilation and lighting away from sources of nuisance.
3. - Safe and adequate water supply shall be provided in accordance with the provisions of Chapter II of this Code.
4. - Refuse collection and disposal shall be in accordance with the provisions of Chapter XVII of the Sanitation Code of the Philippines.
5. - Adequate numbers of comfort rooms shall be provided as well auxiliary facilities therein in accordance with the provisions on Chapter XVII of the Sanitation Code of the Philippines.
6. - Waiting sheds for commuters shall be of adequate size to comfortably accommodate a minimum of thirty persons. Floors shall be of smooth concrete finish and adequate sitting facilities provided for.
7. - Sale of foodstuffs in those establishments shall be done in conformity with the provisions of Chapter III of the Sanitation Code of the Philippines.
h. Should there be an existing LGU-operated or owned Inter-Modal Grand Terminal which is compliant with LTFRB standards, the existing transport terminals of franchise grantees within the said LGU should be considered as garage and the use of the LGU operated or owned inter-modal terminal is hereby encouraged.
i. Existing transport terminals, both LGU-owned and privately-owned, not in compliance with the aforementioned standards shall be given a period of one (1) year from the effectivity of this Joint Memorandum Circular to implement and fully comply with the policies, standards and limitations set forth above.
j. Any further extension of time for compliance may be submitted by the concerned owner or operator, transport association or cooperative on justifiable reasons, subject to the approval of the LTFRB or its Regional Directors, as the case may be.
3.4 On the Issuance of Traffic Citation Tickets
All locally-issued ordinances, orders, rules and regulations should be in conformity with the following policies, standards and limitations:
a. The LGUs can issue traffic citation tickets but only the LTO and their deputized agents can confiscate driver’s licenses. However, in Metro Manila, the single ticketing system shall be worked out.
Traffic citation ticket refers to traffic violation receipts issued by traffic law enforcers in the course of their enforcement of traffic rules and regulations.
3.5 On the Imposition of Other Local Fees and Charges Affecting
All locally-issued ordinances, orders, rules and regulations should be in conformity with the following policies, standards and limitations:
a. As a general rule, the LGUs should desist from unilaterally increasing fees and charges that would contribute to higher public transport cost. Increases in fees and charges should be in coordination with the LTFRB and should be commensurate with the administrative expenses. Before changes in fees can be imposed, there must be a public hearing and publication in local newspapers of general circulation and/or posting in at least four (4) conspicuous places including the main entrance of the city/municipal hall prior to said imposition.
b. As provided for under Section 10 of Republic Act no. 8794 (An Act Imposing a Motor Vehicle User’s Charge on Owners of all Types of Motor Vehicles and for other Purposes), to wit:
“No other tax, fee or any charge of similar nature, as the Motor Vehicles Users Charge shall be imposed by any political subdivision or unit in the country.”
c. Fees to be charged in the use of public transport terminals shall be reasonable and commensurate with the administrative and operating expenses in the operation of the said terminals.
Fees and charges refer to fees collected or charged by LGUs relating to public transport and do not include fines and penalties imposed for violation of traffic rules and regulations.
x x x
A full copy of JMC No.1 is attached hereto as ANNEX “A” for your ready reference.
A question however that may possibly confront the LGU is how to deal with the existing private transport terminals. It is clear that, as a general rule, the LGU cannot stop the operation of existing private transport terminals simply by reason of the establishment of a public transport terminal. There are, however, legitimate reasons upon which grounds the existing private transport terminal may be ordered to stop its operation without running afoul with the JMC, to wit:
1. If the existing private transport terminal constitutes a nuisance under the Civil Code, Fire Code or the National Building Code;
2. If the existing private transport terminal violates the Local Revenue Code;
3. If the existing private transport terminal is not compliant with the requirements set by the JMC; or
4. If the existing private transport terminal is a non-conforming entity under the local zoning ordinance based on the adopted revised Comprehensive Land Use Plan.
Further, it is worthy to note that under the same JMC No. 1, tricycles are not allowed to ply along national highways, thus:
x x x
“3.0 Guidelines
3.1 On the Granting of Franchises to Tricycles
All locally issued ordinances, orders, rules and regulations should be in the conformity with the following policies, standards and limitations:
x x x
b) Tricycle operation should only be confined along the city or municipal roads, not along national roads and is limited only to routes not traversed by higher modes public transport. However, the local Sanggunian may allow if there is no other alternative route.
Municipal and city roads refer to roads within the poblacion; they are roads that connect to provincial and national roads and provide inter-barangay connections to major municipal and city infrastructure without traversing provincial road.
National roads refer to any public road classified as primary and secondary, declared as national road by the President of the Philippines.”
x x x
This condition is deemed written in tricycle franchises but a corresponding ordinance could further give teeth thereto and effectively prohibit tricycles from plying along national highways. To reiterate, the LGU has the power to regulate not only the operation of tricycles but, more importantly, the traffic and the use of the streets within its territorial jurisdiction. It is opined therefore that a comprehensive traffic ordinance could regulate and properly set the flow of traffic in order to address the problem on traffic congestion. Consequently, however, this could render some existing transport terminals situated along the national highways physically obsolete, thus, for them to die a natural death, so to speak.
The undersigned believes, however, that earnest effort should first be exerted to reconcile the interests of the city and its constituents, on one hand, and the interests of the transport sector, on the other. This underscores the importance of proper consultation and negotiation with the stakeholders. This notwithstanding, the general welfare and convenience of the public, being the paramount consideration, should still prevail.
Meanwhile, actual visits and interviews conducted by the CLO staff in the three (3) neighboring LGU’s, particularly the Municipality of Surallah, City of Tacurong and City of General Santos, has brought about the following findings, to wit:
1. The operation of the Integrated Transport Terminal of Surallah is governed by the Local Revenue Code (a copy of which is attached hereto as ANNEX “B” for easy reference).
2. The operation of Tacurong City Integrated Public Terminal, on the other hand, is governed by a separate ordinance, Ordinance No. 51, Series of 2004, otherwise known as the “Tacurong City Integrated Public Terminal Ordinance” (a copy of which is attached hereto as ANNEX “C” for easy reference). It can be noted that the ordinance already embodies traffic rules prescribing the flow of traffic. The LGU of Tacurong has likewise come up with a Management Manual which provides in detail the operation of the terminal (a copy of which is attached hereto as ANNEX “D” for easy reference).
3. General Santos City, on its part, has passed Ordinance No. 08, Series of 2005, otherwise known as “An Ordinance Providing for the Policies, Rules and Regulations in the Operation and Maintenance of Eusebio Bulaong Public Terminal Located at Bulaong Subdivision, Barangay Dadiangas North, General Santos City, And For Other Purposes” (a copy of which is attached hereto as ANNEX “E” for easy reference). It was related to the CLO staff that LGU-GSC had once passed an ordinance prohibiting tricycles from using the national highway, but a copy thereof has still to be produced.
Relative to the case between the LGU of General Santos City and YBL, this office continues to communicate and to follow up with the LGU of General Santos City for a copy of the decision in a case filed by YBL against the LGU regarding their public transport terminal.
I hope this opinion could be of help to the LGU’s endeavors.
Yours truly,
ATTY. EUFEMIO A. SIMTIM, JR.
City Legal Officer
cc:
CPDO
LEGAL OPINION RE GLOBE'S TAXABILITY (REAL PROPERTY TAXATION)
Republic of the Philippines
Province of South Cotabato
City of Koronadal
OFFICE OF THE CITY LEGAL OFFICER
________________________________________________________________
LEGAL OPINION NO. __________
6 June 2012
MR. JOSELO V. GALLEGO
City Assessor
This City
Sir:
Kanami Koronadal!
This is with reference to the inquiry of the Assistant City Treasurer, Remegia M. Palabrica, regarding the taxability of Globe Telecom Inc., which you indorsed to our office, specifically on the following matters:
1. Basis of tax exemption;
2. Tax exemption effectivity;
3. Kinds of property exempted; and
4. Should the City Government of Koronadal exempt Globe from the penalties from their previous payments.
The first three (3) issues have been the subject of the position paper submitted by the legal counsel of Globe Telecom Inc. In their letter, Globe's representatives are claiming for the exemption of Globe from real property tax on all its real properties. The fourth issue pertains to penalties which Globe owes to the LGU due to nonpayment of RPT in the previous years.
To put things in their proper context, it is important to discuss first the laws pertinent to the franchise and operation of Globe.
Republic Act No. 402 was enacted on 18 June 1949, granting the Clavecilla Radio System a franchise to establish radio stations for broadcasting, telecommunication and television. Section 9 thereof provides, thus:
x x x
“SECTION 9. (a) The grantee shall be liable to pay the same taxes on its real estate, buildings, and personal property, exclusive of the franchise, as other persons or corporations are now or hereafter may be required by law to pay.
(b) The grantee shall further pay to the Treasurer of the Philippines each year, within ten days after the audit and approval of the accounts as prescribed in this Act, one and one-half per centum of all gross receipts from business transacted under this franchise by the said grantee in the Philippines.
(c) In order to foment local industry and the development of television in the Philippines, radio and television receiving sets manufactured or assembled in the Philippines, with Filipino labor and materials to the extent possible, shall be exempted from all taxes during a period of five years to be counted from the date this Act becomes into force and effect.”
x x x
On 19 June 1965, the aforequoted provision was amended by Section 3 of Republic Act No. 4540, thus:
x x x
“SEC. 3. Section nine of the same Act is hereby amended to read as follows:
‘SEC. 9. (a) The grantee shall be liable to pay the same taxes on its real estate, buildings, and personal property, exclusive of the franchise, as other persons or corporations are now or hereafter may be required by law to pay, except radio equipment, machinery and spare parts needed in connection with the business of the grantee, which shall be exempt from customs duties, tariffs and other taxes, as well as those declared exempt in this section.
‘(b) The grantee shall further pay to the Treasurer of the Philippines each year after the audit and approval of the accounts as prescribed in this Act, one and one-half per centum of all gross receipts from business transacted under this franchise by the said grantee in the Philippines, in lieu of any and all taxes of any kind, nature or description levied, established or collected by any authority whatsoever, municipal, provincial or national, from which the grantee is hereby expressly exempted, effective from the date of the approval of Republic Act Numbered Sixteen hundred eighteen.
“(c) In order to foment local industry and the development of television in the Philippines, radio and television receiving sets manufactured or assembled in the Philippines, with Filipino labor and materials to the extent possible, shall be exempted from all taxes from the date this Act becomes into force and effect.”
x x x
However, the Local Government Code of 1991, which took effect on 1 January 1992, repealed Section 9 (a) and (b) of Clavecilla’s franchise with respect to local taxes. Sections 137, 151, and 193 of the Local Government Code of 1991 provide that –
x x x
"Section 137. Franchise Tax. Notwithstanding any exemption granted by any law or other special law, the province may impose a tax on businesses enjoying a franchise, at the rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year based on the incoming receipt, or realized, within its territorial jurisdiction.
In the case of a newly started business, the tax shall not exceed one-twentieth (1/20) of one percent (1%) of the capital investment. In the succeeding calendar year, regardless of when the business started to operate, the tax shall be based on the gross receipts for the preceding calendar year, or any fraction thereon, as provided herein."
"Section 151. Scope of Taxing Powers. - Except as otherwise provided in this Code, the city may levy the taxes, fees, and charges which the province or municipality may impose: Provided, however, That the taxes, fees and charges levied and collected by highly urbanized and independent component cities shall accrue to them and distributed in accordance with the provisions of this Code.
The rates of taxes that the city may levy may exceed the maximum rates allowed for the province or municipality by not more than fifty percent (50%) except the rates of professional and amusement taxes."
"Section 193. Withdrawal of Tax Exemption Privileges. - Unless otherwise provided in this Code, tax exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including government-owned or controlled corporations, except local water districts, cooperatives duly registered under RA No. 6938, non-stock and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code."
x x x
On 19 March 1992, Congress enacted Republic Act No. 7229 entitled "An Act approving the merger between Globe Mackay Cable and Radio Corporation and Clavecilla Radio System and the consequent transfer of the franchise of Clavecilla Radio System granted under Republic Act No. 402, as amended, to Globe Mackay Cable and Radio Corporation, extending the life of said franchise and repealing certain sections of RA No. 402, as amended."
Interestingly, the "in lieu of all taxes" clause was not re-enacted in the franchise of Globe Mackay Cable and Radio Corporation (Globe) when Congress adopted Republic Act No. 7229 approving the merger of Globe and Clavecilla Radio System (Clavecilla). Hence, from 1 January 1992 up to the enactment on 19 March 1992 of RA No. 7229, Clavecilla did not enjoy, with respect to local taxes, the tax exemption under its "in lieu of all taxes" clause. Neither were the other exemptions provided under Section 9 of R.A. 402, as amended, were re-enacted. In other words, none of these exemptions therefore was restored. Justice Antonio T. Carpio (now Acting Chief Justice), in his separate opinion in PLDT vs. City of Davao (G.R. No. 143867, 25 March 2003) made a persuasive discourse, thus:
x x x
“xxx. The only question is whether RA No. 7229 re-enacted Section 9 (b) of Clavecilla’s old franchise to restore its "in lieu of all taxes" clause, at least with respect to local taxes.
The answer is a categorical no for two reasons. First, there is no language in RA No. 7229, express or even implied, re-enacting Section 9 (b) of Clavecilla’s old franchise with respect to local taxes. RA No. 7229 merely approved the merger of Globe and Clavecilla, and transferred the then existing franchise of Clavecilla to the surviving corporation, Globe. When Congress approved RA No. 7229, Clavecilla’s then existing franchise did not contain the "in lieu of all taxes" clause with respect to local taxes. Logically, the transfer of Clavecilla’s franchise to Globe did not transfer the "in lieu of all taxes" clause since Clavecilla’s franchise no longer had such clause with respect to local taxes.
Second, RA No. 7229 expressly provides that original provisions of the franchise of Clavecilla under Republic Act No. 402, as amended, which have not been repealed, shall continue in full force and effect. The clear intent of the law is that provisions in Clavecilla’s franchise which had already been repealed as of the enactment of RA No. 7229 shall remain repealed and shall not be re-enacted with the passage of RA No. 7229. Thus, Section 11 of RA No. 7229 states –
"All other provisions of Republic Act No. 402, as amended by Republic Act Nos. 1618 and 4540, and other provisions of Batas Pambansa Blg. 95 which are not inconsistent with the provisions of this Act and are still unrepealed shall continue to be in full force and effect." (Emphasis supplied)
Clearly, Congress did not intend to re-enact any of the provisions in the franchise of Clavecilla that had already been repealed by prior laws.
Tax exemptions must be clear and unequivocal. A taxpayer claiming a tax exemption must point to a specific provision of law conferring on the taxpayer, in clear and plain terms, exemption from a common burden. Any doubt whether a tax exemption exists is resolved against the taxpayer. Tax exemptions cannot arise by mere implication, much less by an implied re-enactment of a repealed tax exemption clause. In the instant case, there is even no implied re-enactment of Section 9 (b) of Clavecilla’s old franchise since Section 11 of RA No. 7229 expressly states that only unrepealed provisions of Clavecilla’s franchise shall continue in force and effect. Measured against these well-recognized principles of taxation, PLDT’s claim to tax exemption based on the franchise of Globe must necessarily fail.”
x x x
Globe, in its position paper, represents that Section 9 (a) and (b) of R.A. No. 402, as amended by Section 3 of R.A. No. 4540 were re-enacted into law via Republic Act No. 7229 after the effectivity of the Local Government Code. Such representation is misleading in the light of the above disquisitions.
Globe’s reliance on RCPI vs. Provincial Assessor of South Cotabato (G.R. No. 144486, 13 April 2005) is also misleading. The High Court has ruled therein --
x x x
“Respondents assert that RCPI not only changed its arguments, RCPI also made incorrect arguments. RCPI earlier maintained that its radio relay station tower, radio station building, and machinery shed are personal properties and are thus not subject to the real property tax. RCPI now argues that its radio relay station tower, radio station building, and machinery shed are tax-exempt because of the “in lieu of all taxes” clause in its franchise, which exempts RCPI from the real estate tax.
RCPI contends that the “in lieu of all taxes” clause in its amended franchise exempts it from paying all taxes other than franchise tax. It is thus no longer necessary to determine whether the tower, relay station building, and machinery shed are radio equipment for purposes of exemption from the real estate tax.
RCPI also states that legislative enactments during the pendency of this petition caused it to lose and then regain its tax-exempt status. RCPI enumerated thus:
1. First, Congress passed the Local Government Code that withdrew all the tax exemptions existing at the time of its passage—including that of RCPI’s.
2. Second, Congress enacted the franchise of telecommunications companies, such as Islacom, Bell, Island Country, IslaTel, TeleTech, Major Telecoms, and Smart, with the “in lieu of all taxes” proviso.
3. Third, Congress passed RA 7925 entitled “An Act to Promote and Govern the Development of Philippine Telecommunications and the Delivery of Public Telecommunications Services” which, through Section 23, mandated the equality of treatment of service providers in the telecommunications industry.
We are not persuaded.
As found by the appellate court, RCPI’s radio relay station tower, radio station building, and machinery shed are real properties and are thus subject to the real property tax. Section 14 of RA 2036, as amended by RA 4054, states that “[i]n consideration of the franchise and rights hereby granted and any provision of law to the contrary notwithstanding, the grantee shall pay the same taxes as are now or may hereafter be required by law from other individuals, copartnerships, private, public or quasi-public associations, corporations or joint stock companies, on real estate, buildings and other personal property x x x.” The clear language of Section 14 states that RCPI shall pay the real estate tax.
The “in lieu of all taxes” clause in Section 14 of RA 2036, as amended by RA 4054, cannot exempt RCPI from the real estate tax because the same Section 14 expressly states that RCPI “shall pay the same taxes x x x on real estate, buildings x x x.” The “in lieu of all taxes” clause in the third sentence of Section 14 cannot negate the first sentence of the same Section 14, which imposes the real estate tax on RCPI. The Court must give effect to both provisions of the same Section 14. This means that the real estate tax is an exception to the “in lieu of all taxes” clause.
Subsequent legislations have radically amended the “in lieu of all taxes” clause in franchises of public utilities. As RCPI correctly observes, the Local Government Code of 1991 “withdrew all the tax exemptions existing at the time of its passage — including that of RCPI’s” with respect to local taxes like the real property tax. Also, Republic Act No. 7716 (“RA 7716”) abolished the franchise tax on telecommunications companies effective 1 January 1996. To replace the franchise tax, RA 7716 imposed a 10 percent value-added-tax on telecommunications companies under Section 102 of the National Internal Revenue Code. The present state of the law on the “in lieu of all taxes” clause in franchises of telecommunications companies was summarized as follows:
4. The existing legislative policy is clearly against the revival of the “in lieu of all taxes” clause in franchises of telecommunications companies. After the VAT on telecommunications companies took effect on January 1, 1996, Congress never again included the “in lieu of all taxes” clause in any telecommunications franchise it subsequently approved. Also, from September 2000 to July 2001, all the fourteen telecommunications franchises approved by Congress uniformly and expressly state that the franchisee shall be subject to all taxes under the National Internal Revenue Code, except the specific tax. The following is substantially the uniform tax provision in these fourteen franchises:
Tax Provisions. — The grantee, its successors or assigns, shall be subject to the payment of all taxes, duties, fees, or charges and other impositions under the National Internal Revenue Code of 1997, as amended, and other applicable laws: Provided, That nothing herein shall be construed as repealing any specific tax exemptions, incentives or privileges granted under any relevant law: Provided, further, That all rights, privileges, benefits and exemptions accorded to existing and future telecommunications entities shall likewise be extended to the grantee.
5. Thus, after the imposition of the VAT on telecommunications companies, Congress refused to grant any tax exemption to telecommunications companies that sought new franchises from Congress, except the exemption from specific tax. More importantly, the uniform tax provision in these new franchises expressly states that the franchisee shall pay not only all taxes, except specific tax, under the National Internal Revenue Code, but also all taxes under “other applicable laws.” One of the “other applicable laws” is the Local Government Code of 1991, which empowers local governments to impose a franchise tax on telecommunications companies. This, to reiterate, is the existing legislative policy.
RCPI cannot also invoke the equality of treatment clause under Section 23 of Republic Act No. 7925. The franchises of Smart, Islacom, TeleTech, Bell, Major Telecoms, Island Country, and IslaTel, all expressly declare that the franchisee shall pay the real estate tax, using words similar to Section 14 of RA 2036, as amended. The provisions of these subsequent telecommunication franchises imposing the real estate tax on franchisees only confirm that RCPI is subject to the real estate tax. Otherwise, RCPI will stick out like a sore thumb, being the only telecommunications company exempt from the real estate tax, in mockery of the spirit of equality of treatment that RCPI is invoking, not to mention the violation of the constitutional rule on uniformity of taxation.
It is an elementary rule in taxation that exemptions are strictly construed against the taxpayer and liberally in favor of the taxing authority. It is the taxpayer’s duty to justify the exemption by words too plain to be mistaken and too categorical to be misinterpreted.
x x x
Globe further seeks to strengthen its position by invoking BLGF Memorandum Circular No. 01-2010. Globe has alleged that the BLGF MC “affirms GLOBE’s position that this particular provision of its franchise exempts from real property tax its machineries and equipment." To be certain, it is worthy to quote the MC, thus:
x x x
“The BLGF, under its Memorandum Circular No. 04-2006, issued on May 2, 2006, and subsequent opinions clarified that ‘Globe is liable to pay real property tax on its radio station building, machinery shed, and radio relay stations tower, while radio equipment, accessories, and spare parts needed in the business are exempt therefrom,’ on the basis of the case entitled ‘RCPI vs. Provincial Assessor of South Cotabato,’ (G.R. No. 144486) promulgated on April 13, 2005.”
x x x
Globe therefore seeks to expand the scope of such exemption to all its properties.
More importantly, it is respectfully submitted that BLGF failed to consider the fact that the exemptions granted to Clevecilla in its old franchise was never re-enacted in RA 7229. It must be remembered that the exemptions contained in the old franchise of Clavecilla, which formed the basis of the BLGF opinion, were effectively removed by the Local Government Code. To reiterate, RA No. 7229 merely approved the merger of Globe and Clavecilla, and transferred the then existing franchise of Clavecilla to the surviving corporation, Globe.
Besides, it has been repeatedly held by the High Court that the findings of the BLGF are not conclusive. In Smart Communications, Inc. vs. City of Davao (G.R. No. 155491, 16 September 2008), thus:
x x x
“[T]he BLGF opined that §23 of R.A. No. 7925 amended the franchise of petitioner and in effect restored its exemptions from local taxes. Petitioner contends that courts should not set aside conclusions reached by the BLGF because its function is precisely the study of local tax problems and it has necessarily developed an expertise on the subject.
To be sure, the BLGF is not an administrative agency whose findings on questions of fact are given weight and deference in the courts. The authorities cited by petitioner pertain to the Court of Tax Appeals, a highly specialized court which performs judicial functions as it was created merely to provide consultative services and technical assistance to local governments and the general public on local taxations, real property assessment , and other related matters, among others. The question raised by petitioner is a legal question, to wit, §23 of R.A. 7925. There is, therefore, no basis for claiming expertise for the BLGF that administrative agencies are said to possess in their respective fields.
Petitioner likewise argues that the BLGF enjoys the presumption of regularity in the performance of its duty. It does enjoy this presumption, but this has nothing to do with the question in this case. This case does not concern the regularity of performance of the BLGF in the exercise of its duties, but the correctness of its interpretation of a provision of law.”
x x x
Also, in Digitel Telecommunications Philippines, Inc. vs. City Government of Batangas (G.R. No. 15640, 11 December 2008), the Supreme Court has ruled:
x x x
On 25 October 2004, the BLGF issued Memorandum Circular No. 15-2004. This circular reversed the BLGF’s Letter-Opinion dated 8 April 1997 recognizing realty tax exemption under the phrase "exclusive of this franchise." This later circular states that the real properties owned by Globe and Smart Telecommunications and all other telecommunications companies similarly situated are subject to the realty tax. The BLGF has reversed its opinion on the realty tax exemption of telecommunications companies. Hence, petitioner’s claim of tax exemption based on BLGF’s opinion does not hold water. Besides, the BLGF has no authority to rule on claims for exemption from the realty tax.
x x x
The same argument should apply to the Legal Opinion of the Secretary of the Department of Justice. The error committed by the DOJ Secretary becomes apparent when it mistook real property tax with a local franchise tax. These two types of taxes are separate and distinct from each other. Hence, the reliance by the DOJ on the case of City Government of Quezon City, et al vs. Bayan Telecommunications, Inc. (G.R. No. 162015, 6 March 2006) and Smart Communications, Inc. vs. City of Davao (G.R. No. 155491, 16 September 2008) is misplaced considering that these cases pertain only to exemption from payment of local franchise tax, not real property tax.
Globe cannot rely on such decisions which were based on substantially different set of facts. As it has argued in its position paper, in parrying away the applicability of the decision in Digitel Telecommunications Philippines, Inc. vs. City Government of Batangas (G.R. No. 15640, 11 December 2008), “Globe is not a party at all in that case xxx. Said the Supreme Court, it is elementary that strangers to a case are not bound by the judgment rendered by the court and such judgment is not available as an adjudication either against or in favor of such person (QBE Insurance Phil., Inc. vs. Lavińa, 536 SCRA 372). The underlying reason behind this jurisprudential pronouncement is basic due process enshirened in our Constitution’s Bill of Rights. Globe Telecom was not given its day in court to argue for itself.” If Globe may invoke such right, the LGU is equally entitled to the same right and treatment.
Besides, the cases of City Government of Quezon City, et al vs. Bayan Telecommunications, Inc. (G.R. No. 162015, 6 March 2006) and Smart Communications, Inc. vs. City of Davao (G.R. No. 155491, 16 September 2008) were decided only by different divisions of the Supreme Court. The Supreme Court en banc, through Justice Antonio T. Carpio (now Acting Chief Justice), has made a more categorical determination of taxability of telecommunication companies in the more recent case of Digitel Telecommunications Philippines, Inc. vs. City Government of Batangas (G.R. No. 15640, 11 December 2008), thus:
x x x
“In PLDT v. City of Davao, it was observed that after the imposition of VAT on telecommunications companies, Congress refused to grant any tax exemption to telecommunications companies that sought new franchises from Congress, except the exemption from specific tax. More importantly, the uniform tax provision in these new franchises expressly states that the franchisee shall pay not only all taxes, except specific tax, under the National Internal Revenue Code, but also all taxes under "other applicable laws," one of which is the Local Government Code which imposes the realty tax.”
x x x
This was strengthened by the ruling of the Supreme Court on the motion for reconsideration filed by Smart Communications, Inc. in G.R. No. 155491, thus:
x x x
“In sum, the aforecited jurisprudence suggests that aside from the national franchise tax, the franchisee is still liable to pay the local franchise tax, unless it is expressly and unequivocally exempted from the payment thereof under its legislative franchise. The “in lieu of all taxes” clause in a legislative franchise should categorically state that the exemption applies to both local and national taxes; otherwise, the exemption claimed should be strictly construed against the taxpayer and liberally in favor of the taxing authority.
Republic Act No. 7716, otherwise known as the “Expanded VAT Law,” did not remove or abolish the payment of local franchise tax. It merely replaced the national franchise tax that was previously paid by telecommunications franchise holders and in its stead imposed a ten percent (10%) VAT in accordance with Section 108 of the Tax Code. VAT replaced the national franchise tax, but it did not prohibit nor abolish the imposition of local franchise tax by cities or municipalities.
The power to tax by local government units emanates from Section 5, Article X of the Constitution which empowers them to create their own sources of revenues and to levy taxes, fees and charges subject to such guidelines and limitations as the Congress may provide. The imposition of local franchise tax is not inconsistent with the advent of the VAT, which renders functus officio the franchise tax paid to the national government. VAT inures to the benefit of the national government, while a local franchise tax is a revenue of the local government unit.”
x x x
What actually muddles the issue here is the series of comparisons being made by Globe with those telecommunication companies which were subjects of previous litigations and Supreme Court decisions. Needless to state, the fate of Globe has never reached the High Court, but it must be emphasized that Globe’s franchise is based on R.A. No. 402, as amended by R.A. No. 4540. Provisions of these laws pertaining to tax exemptions were effectively repealed by R.A. No. 7160. These exemptions were never re-enacted despite the passage of R.A. No. 7229, which merely approved the merger of Globe and Clavecilla, and transferred the then existing franchise of Clavecilla to the surviving corporation, Globe. In fine, Globe cannot continue to invoke the tax exemptions already scrapped by R.A. No. 7160.
Based on the foregoing, Globe’s real properties, including immovable machineries and equipments, whether or not directly or indirectly used in its business, are NOT exempt from real property tax. Globe must also be subject to the payment of the local franchise tax. Also, Globe cannot deny liability for penalties considering that its tax liability was never dependent on the circumstances of other telecommunication companies. Even without the passage of Republic Act No. 7716 or the ruling of the Supreme Court in the Digitel case, Globe has long been taxable in all its properties since the time its exemptions were removed by Congress and its failure to comply with its obligation to pay such taxes for such a long period of time makes it liable for appropriate penalties.
I hope your queries have been fully addressed.
Yours truly,
ATTY. EUFEMIO A. SIMTIM, JR.
City Legal Officer
cc: CMO, CTO, File
Province of South Cotabato
City of Koronadal
OFFICE OF THE CITY LEGAL OFFICER
________________________________________________________________
LEGAL OPINION NO. __________
6 June 2012
MR. JOSELO V. GALLEGO
City Assessor
This City
Sir:
Kanami Koronadal!
This is with reference to the inquiry of the Assistant City Treasurer, Remegia M. Palabrica, regarding the taxability of Globe Telecom Inc., which you indorsed to our office, specifically on the following matters:
1. Basis of tax exemption;
2. Tax exemption effectivity;
3. Kinds of property exempted; and
4. Should the City Government of Koronadal exempt Globe from the penalties from their previous payments.
The first three (3) issues have been the subject of the position paper submitted by the legal counsel of Globe Telecom Inc. In their letter, Globe's representatives are claiming for the exemption of Globe from real property tax on all its real properties. The fourth issue pertains to penalties which Globe owes to the LGU due to nonpayment of RPT in the previous years.
To put things in their proper context, it is important to discuss first the laws pertinent to the franchise and operation of Globe.
Republic Act No. 402 was enacted on 18 June 1949, granting the Clavecilla Radio System a franchise to establish radio stations for broadcasting, telecommunication and television. Section 9 thereof provides, thus:
x x x
“SECTION 9. (a) The grantee shall be liable to pay the same taxes on its real estate, buildings, and personal property, exclusive of the franchise, as other persons or corporations are now or hereafter may be required by law to pay.
(b) The grantee shall further pay to the Treasurer of the Philippines each year, within ten days after the audit and approval of the accounts as prescribed in this Act, one and one-half per centum of all gross receipts from business transacted under this franchise by the said grantee in the Philippines.
(c) In order to foment local industry and the development of television in the Philippines, radio and television receiving sets manufactured or assembled in the Philippines, with Filipino labor and materials to the extent possible, shall be exempted from all taxes during a period of five years to be counted from the date this Act becomes into force and effect.”
x x x
On 19 June 1965, the aforequoted provision was amended by Section 3 of Republic Act No. 4540, thus:
x x x
“SEC. 3. Section nine of the same Act is hereby amended to read as follows:
‘SEC. 9. (a) The grantee shall be liable to pay the same taxes on its real estate, buildings, and personal property, exclusive of the franchise, as other persons or corporations are now or hereafter may be required by law to pay, except radio equipment, machinery and spare parts needed in connection with the business of the grantee, which shall be exempt from customs duties, tariffs and other taxes, as well as those declared exempt in this section.
‘(b) The grantee shall further pay to the Treasurer of the Philippines each year after the audit and approval of the accounts as prescribed in this Act, one and one-half per centum of all gross receipts from business transacted under this franchise by the said grantee in the Philippines, in lieu of any and all taxes of any kind, nature or description levied, established or collected by any authority whatsoever, municipal, provincial or national, from which the grantee is hereby expressly exempted, effective from the date of the approval of Republic Act Numbered Sixteen hundred eighteen.
“(c) In order to foment local industry and the development of television in the Philippines, radio and television receiving sets manufactured or assembled in the Philippines, with Filipino labor and materials to the extent possible, shall be exempted from all taxes from the date this Act becomes into force and effect.”
x x x
However, the Local Government Code of 1991, which took effect on 1 January 1992, repealed Section 9 (a) and (b) of Clavecilla’s franchise with respect to local taxes. Sections 137, 151, and 193 of the Local Government Code of 1991 provide that –
x x x
"Section 137. Franchise Tax. Notwithstanding any exemption granted by any law or other special law, the province may impose a tax on businesses enjoying a franchise, at the rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year based on the incoming receipt, or realized, within its territorial jurisdiction.
In the case of a newly started business, the tax shall not exceed one-twentieth (1/20) of one percent (1%) of the capital investment. In the succeeding calendar year, regardless of when the business started to operate, the tax shall be based on the gross receipts for the preceding calendar year, or any fraction thereon, as provided herein."
"Section 151. Scope of Taxing Powers. - Except as otherwise provided in this Code, the city may levy the taxes, fees, and charges which the province or municipality may impose: Provided, however, That the taxes, fees and charges levied and collected by highly urbanized and independent component cities shall accrue to them and distributed in accordance with the provisions of this Code.
The rates of taxes that the city may levy may exceed the maximum rates allowed for the province or municipality by not more than fifty percent (50%) except the rates of professional and amusement taxes."
"Section 193. Withdrawal of Tax Exemption Privileges. - Unless otherwise provided in this Code, tax exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including government-owned or controlled corporations, except local water districts, cooperatives duly registered under RA No. 6938, non-stock and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code."
x x x
On 19 March 1992, Congress enacted Republic Act No. 7229 entitled "An Act approving the merger between Globe Mackay Cable and Radio Corporation and Clavecilla Radio System and the consequent transfer of the franchise of Clavecilla Radio System granted under Republic Act No. 402, as amended, to Globe Mackay Cable and Radio Corporation, extending the life of said franchise and repealing certain sections of RA No. 402, as amended."
Interestingly, the "in lieu of all taxes" clause was not re-enacted in the franchise of Globe Mackay Cable and Radio Corporation (Globe) when Congress adopted Republic Act No. 7229 approving the merger of Globe and Clavecilla Radio System (Clavecilla). Hence, from 1 January 1992 up to the enactment on 19 March 1992 of RA No. 7229, Clavecilla did not enjoy, with respect to local taxes, the tax exemption under its "in lieu of all taxes" clause. Neither were the other exemptions provided under Section 9 of R.A. 402, as amended, were re-enacted. In other words, none of these exemptions therefore was restored. Justice Antonio T. Carpio (now Acting Chief Justice), in his separate opinion in PLDT vs. City of Davao (G.R. No. 143867, 25 March 2003) made a persuasive discourse, thus:
x x x
“xxx. The only question is whether RA No. 7229 re-enacted Section 9 (b) of Clavecilla’s old franchise to restore its "in lieu of all taxes" clause, at least with respect to local taxes.
The answer is a categorical no for two reasons. First, there is no language in RA No. 7229, express or even implied, re-enacting Section 9 (b) of Clavecilla’s old franchise with respect to local taxes. RA No. 7229 merely approved the merger of Globe and Clavecilla, and transferred the then existing franchise of Clavecilla to the surviving corporation, Globe. When Congress approved RA No. 7229, Clavecilla’s then existing franchise did not contain the "in lieu of all taxes" clause with respect to local taxes. Logically, the transfer of Clavecilla’s franchise to Globe did not transfer the "in lieu of all taxes" clause since Clavecilla’s franchise no longer had such clause with respect to local taxes.
Second, RA No. 7229 expressly provides that original provisions of the franchise of Clavecilla under Republic Act No. 402, as amended, which have not been repealed, shall continue in full force and effect. The clear intent of the law is that provisions in Clavecilla’s franchise which had already been repealed as of the enactment of RA No. 7229 shall remain repealed and shall not be re-enacted with the passage of RA No. 7229. Thus, Section 11 of RA No. 7229 states –
"All other provisions of Republic Act No. 402, as amended by Republic Act Nos. 1618 and 4540, and other provisions of Batas Pambansa Blg. 95 which are not inconsistent with the provisions of this Act and are still unrepealed shall continue to be in full force and effect." (Emphasis supplied)
Clearly, Congress did not intend to re-enact any of the provisions in the franchise of Clavecilla that had already been repealed by prior laws.
Tax exemptions must be clear and unequivocal. A taxpayer claiming a tax exemption must point to a specific provision of law conferring on the taxpayer, in clear and plain terms, exemption from a common burden. Any doubt whether a tax exemption exists is resolved against the taxpayer. Tax exemptions cannot arise by mere implication, much less by an implied re-enactment of a repealed tax exemption clause. In the instant case, there is even no implied re-enactment of Section 9 (b) of Clavecilla’s old franchise since Section 11 of RA No. 7229 expressly states that only unrepealed provisions of Clavecilla’s franchise shall continue in force and effect. Measured against these well-recognized principles of taxation, PLDT’s claim to tax exemption based on the franchise of Globe must necessarily fail.”
x x x
Globe, in its position paper, represents that Section 9 (a) and (b) of R.A. No. 402, as amended by Section 3 of R.A. No. 4540 were re-enacted into law via Republic Act No. 7229 after the effectivity of the Local Government Code. Such representation is misleading in the light of the above disquisitions.
Globe’s reliance on RCPI vs. Provincial Assessor of South Cotabato (G.R. No. 144486, 13 April 2005) is also misleading. The High Court has ruled therein --
x x x
“Respondents assert that RCPI not only changed its arguments, RCPI also made incorrect arguments. RCPI earlier maintained that its radio relay station tower, radio station building, and machinery shed are personal properties and are thus not subject to the real property tax. RCPI now argues that its radio relay station tower, radio station building, and machinery shed are tax-exempt because of the “in lieu of all taxes” clause in its franchise, which exempts RCPI from the real estate tax.
RCPI contends that the “in lieu of all taxes” clause in its amended franchise exempts it from paying all taxes other than franchise tax. It is thus no longer necessary to determine whether the tower, relay station building, and machinery shed are radio equipment for purposes of exemption from the real estate tax.
RCPI also states that legislative enactments during the pendency of this petition caused it to lose and then regain its tax-exempt status. RCPI enumerated thus:
1. First, Congress passed the Local Government Code that withdrew all the tax exemptions existing at the time of its passage—including that of RCPI’s.
2. Second, Congress enacted the franchise of telecommunications companies, such as Islacom, Bell, Island Country, IslaTel, TeleTech, Major Telecoms, and Smart, with the “in lieu of all taxes” proviso.
3. Third, Congress passed RA 7925 entitled “An Act to Promote and Govern the Development of Philippine Telecommunications and the Delivery of Public Telecommunications Services” which, through Section 23, mandated the equality of treatment of service providers in the telecommunications industry.
We are not persuaded.
As found by the appellate court, RCPI’s radio relay station tower, radio station building, and machinery shed are real properties and are thus subject to the real property tax. Section 14 of RA 2036, as amended by RA 4054, states that “[i]n consideration of the franchise and rights hereby granted and any provision of law to the contrary notwithstanding, the grantee shall pay the same taxes as are now or may hereafter be required by law from other individuals, copartnerships, private, public or quasi-public associations, corporations or joint stock companies, on real estate, buildings and other personal property x x x.” The clear language of Section 14 states that RCPI shall pay the real estate tax.
The “in lieu of all taxes” clause in Section 14 of RA 2036, as amended by RA 4054, cannot exempt RCPI from the real estate tax because the same Section 14 expressly states that RCPI “shall pay the same taxes x x x on real estate, buildings x x x.” The “in lieu of all taxes” clause in the third sentence of Section 14 cannot negate the first sentence of the same Section 14, which imposes the real estate tax on RCPI. The Court must give effect to both provisions of the same Section 14. This means that the real estate tax is an exception to the “in lieu of all taxes” clause.
Subsequent legislations have radically amended the “in lieu of all taxes” clause in franchises of public utilities. As RCPI correctly observes, the Local Government Code of 1991 “withdrew all the tax exemptions existing at the time of its passage — including that of RCPI’s” with respect to local taxes like the real property tax. Also, Republic Act No. 7716 (“RA 7716”) abolished the franchise tax on telecommunications companies effective 1 January 1996. To replace the franchise tax, RA 7716 imposed a 10 percent value-added-tax on telecommunications companies under Section 102 of the National Internal Revenue Code. The present state of the law on the “in lieu of all taxes” clause in franchises of telecommunications companies was summarized as follows:
4. The existing legislative policy is clearly against the revival of the “in lieu of all taxes” clause in franchises of telecommunications companies. After the VAT on telecommunications companies took effect on January 1, 1996, Congress never again included the “in lieu of all taxes” clause in any telecommunications franchise it subsequently approved. Also, from September 2000 to July 2001, all the fourteen telecommunications franchises approved by Congress uniformly and expressly state that the franchisee shall be subject to all taxes under the National Internal Revenue Code, except the specific tax. The following is substantially the uniform tax provision in these fourteen franchises:
Tax Provisions. — The grantee, its successors or assigns, shall be subject to the payment of all taxes, duties, fees, or charges and other impositions under the National Internal Revenue Code of 1997, as amended, and other applicable laws: Provided, That nothing herein shall be construed as repealing any specific tax exemptions, incentives or privileges granted under any relevant law: Provided, further, That all rights, privileges, benefits and exemptions accorded to existing and future telecommunications entities shall likewise be extended to the grantee.
5. Thus, after the imposition of the VAT on telecommunications companies, Congress refused to grant any tax exemption to telecommunications companies that sought new franchises from Congress, except the exemption from specific tax. More importantly, the uniform tax provision in these new franchises expressly states that the franchisee shall pay not only all taxes, except specific tax, under the National Internal Revenue Code, but also all taxes under “other applicable laws.” One of the “other applicable laws” is the Local Government Code of 1991, which empowers local governments to impose a franchise tax on telecommunications companies. This, to reiterate, is the existing legislative policy.
RCPI cannot also invoke the equality of treatment clause under Section 23 of Republic Act No. 7925. The franchises of Smart, Islacom, TeleTech, Bell, Major Telecoms, Island Country, and IslaTel, all expressly declare that the franchisee shall pay the real estate tax, using words similar to Section 14 of RA 2036, as amended. The provisions of these subsequent telecommunication franchises imposing the real estate tax on franchisees only confirm that RCPI is subject to the real estate tax. Otherwise, RCPI will stick out like a sore thumb, being the only telecommunications company exempt from the real estate tax, in mockery of the spirit of equality of treatment that RCPI is invoking, not to mention the violation of the constitutional rule on uniformity of taxation.
It is an elementary rule in taxation that exemptions are strictly construed against the taxpayer and liberally in favor of the taxing authority. It is the taxpayer’s duty to justify the exemption by words too plain to be mistaken and too categorical to be misinterpreted.
x x x
Globe further seeks to strengthen its position by invoking BLGF Memorandum Circular No. 01-2010. Globe has alleged that the BLGF MC “affirms GLOBE’s position that this particular provision of its franchise exempts from real property tax its machineries and equipment." To be certain, it is worthy to quote the MC, thus:
x x x
“The BLGF, under its Memorandum Circular No. 04-2006, issued on May 2, 2006, and subsequent opinions clarified that ‘Globe is liable to pay real property tax on its radio station building, machinery shed, and radio relay stations tower, while radio equipment, accessories, and spare parts needed in the business are exempt therefrom,’ on the basis of the case entitled ‘RCPI vs. Provincial Assessor of South Cotabato,’ (G.R. No. 144486) promulgated on April 13, 2005.”
x x x
Globe therefore seeks to expand the scope of such exemption to all its properties.
More importantly, it is respectfully submitted that BLGF failed to consider the fact that the exemptions granted to Clevecilla in its old franchise was never re-enacted in RA 7229. It must be remembered that the exemptions contained in the old franchise of Clavecilla, which formed the basis of the BLGF opinion, were effectively removed by the Local Government Code. To reiterate, RA No. 7229 merely approved the merger of Globe and Clavecilla, and transferred the then existing franchise of Clavecilla to the surviving corporation, Globe.
Besides, it has been repeatedly held by the High Court that the findings of the BLGF are not conclusive. In Smart Communications, Inc. vs. City of Davao (G.R. No. 155491, 16 September 2008), thus:
x x x
“[T]he BLGF opined that §23 of R.A. No. 7925 amended the franchise of petitioner and in effect restored its exemptions from local taxes. Petitioner contends that courts should not set aside conclusions reached by the BLGF because its function is precisely the study of local tax problems and it has necessarily developed an expertise on the subject.
To be sure, the BLGF is not an administrative agency whose findings on questions of fact are given weight and deference in the courts. The authorities cited by petitioner pertain to the Court of Tax Appeals, a highly specialized court which performs judicial functions as it was created merely to provide consultative services and technical assistance to local governments and the general public on local taxations, real property assessment , and other related matters, among others. The question raised by petitioner is a legal question, to wit, §23 of R.A. 7925. There is, therefore, no basis for claiming expertise for the BLGF that administrative agencies are said to possess in their respective fields.
Petitioner likewise argues that the BLGF enjoys the presumption of regularity in the performance of its duty. It does enjoy this presumption, but this has nothing to do with the question in this case. This case does not concern the regularity of performance of the BLGF in the exercise of its duties, but the correctness of its interpretation of a provision of law.”
x x x
Also, in Digitel Telecommunications Philippines, Inc. vs. City Government of Batangas (G.R. No. 15640, 11 December 2008), the Supreme Court has ruled:
x x x
On 25 October 2004, the BLGF issued Memorandum Circular No. 15-2004. This circular reversed the BLGF’s Letter-Opinion dated 8 April 1997 recognizing realty tax exemption under the phrase "exclusive of this franchise." This later circular states that the real properties owned by Globe and Smart Telecommunications and all other telecommunications companies similarly situated are subject to the realty tax. The BLGF has reversed its opinion on the realty tax exemption of telecommunications companies. Hence, petitioner’s claim of tax exemption based on BLGF’s opinion does not hold water. Besides, the BLGF has no authority to rule on claims for exemption from the realty tax.
x x x
The same argument should apply to the Legal Opinion of the Secretary of the Department of Justice. The error committed by the DOJ Secretary becomes apparent when it mistook real property tax with a local franchise tax. These two types of taxes are separate and distinct from each other. Hence, the reliance by the DOJ on the case of City Government of Quezon City, et al vs. Bayan Telecommunications, Inc. (G.R. No. 162015, 6 March 2006) and Smart Communications, Inc. vs. City of Davao (G.R. No. 155491, 16 September 2008) is misplaced considering that these cases pertain only to exemption from payment of local franchise tax, not real property tax.
Globe cannot rely on such decisions which were based on substantially different set of facts. As it has argued in its position paper, in parrying away the applicability of the decision in Digitel Telecommunications Philippines, Inc. vs. City Government of Batangas (G.R. No. 15640, 11 December 2008), “Globe is not a party at all in that case xxx. Said the Supreme Court, it is elementary that strangers to a case are not bound by the judgment rendered by the court and such judgment is not available as an adjudication either against or in favor of such person (QBE Insurance Phil., Inc. vs. Lavińa, 536 SCRA 372). The underlying reason behind this jurisprudential pronouncement is basic due process enshirened in our Constitution’s Bill of Rights. Globe Telecom was not given its day in court to argue for itself.” If Globe may invoke such right, the LGU is equally entitled to the same right and treatment.
Besides, the cases of City Government of Quezon City, et al vs. Bayan Telecommunications, Inc. (G.R. No. 162015, 6 March 2006) and Smart Communications, Inc. vs. City of Davao (G.R. No. 155491, 16 September 2008) were decided only by different divisions of the Supreme Court. The Supreme Court en banc, through Justice Antonio T. Carpio (now Acting Chief Justice), has made a more categorical determination of taxability of telecommunication companies in the more recent case of Digitel Telecommunications Philippines, Inc. vs. City Government of Batangas (G.R. No. 15640, 11 December 2008), thus:
x x x
“In PLDT v. City of Davao, it was observed that after the imposition of VAT on telecommunications companies, Congress refused to grant any tax exemption to telecommunications companies that sought new franchises from Congress, except the exemption from specific tax. More importantly, the uniform tax provision in these new franchises expressly states that the franchisee shall pay not only all taxes, except specific tax, under the National Internal Revenue Code, but also all taxes under "other applicable laws," one of which is the Local Government Code which imposes the realty tax.”
x x x
This was strengthened by the ruling of the Supreme Court on the motion for reconsideration filed by Smart Communications, Inc. in G.R. No. 155491, thus:
x x x
“In sum, the aforecited jurisprudence suggests that aside from the national franchise tax, the franchisee is still liable to pay the local franchise tax, unless it is expressly and unequivocally exempted from the payment thereof under its legislative franchise. The “in lieu of all taxes” clause in a legislative franchise should categorically state that the exemption applies to both local and national taxes; otherwise, the exemption claimed should be strictly construed against the taxpayer and liberally in favor of the taxing authority.
Republic Act No. 7716, otherwise known as the “Expanded VAT Law,” did not remove or abolish the payment of local franchise tax. It merely replaced the national franchise tax that was previously paid by telecommunications franchise holders and in its stead imposed a ten percent (10%) VAT in accordance with Section 108 of the Tax Code. VAT replaced the national franchise tax, but it did not prohibit nor abolish the imposition of local franchise tax by cities or municipalities.
The power to tax by local government units emanates from Section 5, Article X of the Constitution which empowers them to create their own sources of revenues and to levy taxes, fees and charges subject to such guidelines and limitations as the Congress may provide. The imposition of local franchise tax is not inconsistent with the advent of the VAT, which renders functus officio the franchise tax paid to the national government. VAT inures to the benefit of the national government, while a local franchise tax is a revenue of the local government unit.”
x x x
What actually muddles the issue here is the series of comparisons being made by Globe with those telecommunication companies which were subjects of previous litigations and Supreme Court decisions. Needless to state, the fate of Globe has never reached the High Court, but it must be emphasized that Globe’s franchise is based on R.A. No. 402, as amended by R.A. No. 4540. Provisions of these laws pertaining to tax exemptions were effectively repealed by R.A. No. 7160. These exemptions were never re-enacted despite the passage of R.A. No. 7229, which merely approved the merger of Globe and Clavecilla, and transferred the then existing franchise of Clavecilla to the surviving corporation, Globe. In fine, Globe cannot continue to invoke the tax exemptions already scrapped by R.A. No. 7160.
Based on the foregoing, Globe’s real properties, including immovable machineries and equipments, whether or not directly or indirectly used in its business, are NOT exempt from real property tax. Globe must also be subject to the payment of the local franchise tax. Also, Globe cannot deny liability for penalties considering that its tax liability was never dependent on the circumstances of other telecommunication companies. Even without the passage of Republic Act No. 7716 or the ruling of the Supreme Court in the Digitel case, Globe has long been taxable in all its properties since the time its exemptions were removed by Congress and its failure to comply with its obligation to pay such taxes for such a long period of time makes it liable for appropriate penalties.
I hope your queries have been fully addressed.
Yours truly,
ATTY. EUFEMIO A. SIMTIM, JR.
City Legal Officer
cc: CMO, CTO, File
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