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    04) City Government of San Pablo v. Reyes

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    Josiah Bagayas
    The City of San Pablo sued MERALCO, an electric company, to collect a 2% franchise tax on MERALCO's gross earnings within the city. [MERALCO had been granted a legislative franchise in the 1930s that was exempt from all taxes except a 2% franchise tax paid to municipalities.] The Supreme Court ruled that under the 1991 Local Government Code, local governments can impose franchise taxes notwithstanding any exemptions granted by other laws. Sections 137 and 193 of the Code explicitly withdrew all tax exemptions except for those given to local water districts, cooperatives, and non-profit hospitals and schools. Therefore, the City of San Pablo could collect the franchise tax from MERALCO.

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    04) City Government of San Pablo v. Reyes

    Uploaded by

    Josiah Bagayas
    156 views2 pages
    The City of San Pablo sued MERALCO, an electric company, to collect a 2% franchise tax on MERALCO's gross earnings within the city. [MERALCO had been granted a legislative franchise in the 1930s that was exempt from all taxes except a 2% franchise tax paid to municipalities.] The Supreme Court ruled that under the 1991 Local Government Code, local governments can impose franchise taxes notwithstanding any exemptions granted by other laws. Sections 137 and 193 of the Code explicitly withdrew all tax exemptions except for those given to local water districts, cooperatives, and non-profit hospitals and schools. Therefore, the City of San Pablo could collect the franchise tax from MERALCO.

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    The City of San Pablo sued MERALCO, an electric company, to collect a 2% franchise tax on MERALCO's gross earnings within the city. [MERALCO had been granted a legislative franchise in the 1930s that was exempt from all taxes except a 2% franchise tax paid to municipalities.] The Supreme Court ruled that under the 1991 Local Government Code, local governments can impose franchise taxes notwithstanding any exemptions granted by other laws. Sections 137 and 193 of the Code explicitly withdrew all tax exemptions except for those given to local water districts, cooperatives, and non-profit hospitals and schools. Therefore, the City of San Pablo could collect the franchise tax from MERALCO.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    156 views2 pages

    04) City Government of San Pablo v. Reyes

    Uploaded by

    Josiah Bagayas
    The City of San Pablo sued MERALCO, an electric company, to collect a 2% franchise tax on MERALCO's gross earnings within the city. [MERALCO had been granted a legislative franchise in the 1930s that was exempt from all taxes except a 2% franchise tax paid to municipalities.] The Supreme Court ruled that under the 1991 Local Government Code, local governments can impose franchise taxes notwithstanding any exemptions granted by other laws. Sections 137 and 193 of the Code explicitly withdrew all tax exemptions except for those given to local water districts, cooperatives, and non-profit hospitals and schools. Therefore, the City of San Pablo could collect the franchise tax from MERALCO.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    City Government of San Pablo, Laguna vs Reyes

    305 SCRA 353 [GR No. 127708 March 25, 1999]

    Facts: Act 3648 granted the Escudero Electric Service Company a legislative
    franchise to maintain and operate an electric light and power system in the city of
    San Pablo and nearby municipalities. Section 10 of said act provides:

    In consideration of the franchise and rights hereby granted, the grantee shall pay
    unto the municipal treasury of each municipality in which it is supplying electric
    current to the public under this franchise, a tax equal to two percentum of the
    gross earning from electric current sold or supplied under this franchise in each
    said municipality. Said tax shall be due and payable quarterly and shall be in lieu
    of any and all taxes of any kind nature or description levied, established or
    collected by any authority whatsoever, municipal, provincial or insular, now or in
    the future, or its pole wires, insulator, switches, transformers, and structures,
    installations, conductors and accessories placed in and over and under all public
    property, including public streets and highways, provincial roads, bridges and
    public squares, and on its franchises, rights, privileges, receipts, revenues and
    profits from which taxes the grantee is hereby expressly exempted.

    Escudero’s franchise was transferred to the plaintiff MERALCO under RA 2340.

    On October 5, 1992, the Sangguniang Panlungsod of San Pablo City enacted


    ordinance no. 56 otherwise known as the Revenue Code of the City of San
    Pablo. Pursuant to sec 2.09 article D of the said ordinance, the petitioner city
    treasurer sent to private respondent a letter demanding payment of the aforesaid
    franchise tax.

    Issue: Whether or not the city of San Pablo may impose a local franchise tax to
    MERALCO.

    Held: Yes. A general law cannot be construed to have repealed a special law by
    mere implication unless the intent to repeal or alter is manifest and it must be
    convincingly demonstrated that the two laws are so clearly repugnant and
    patently inconsistent that they cannot co-exist.

    It is our view that petitions correctly rely on the provisions of sections 137 and
    193 of the LGC to support their position that MERALCO’s tax exemption has
    been withdrawn. The explicit language of section 137 which authorizes the
    province to impose franchise tax not withstanding any exemption granted by law
    or other special law is all encompassing and clear. The franchise is imposable
    despite any exemption enjoyed under special law.

    Sec 193 buttresses the withdrawal of extant tax exemption privileges. By stating
    that unless otherwise provided in this code, tax exemptions or incentives granted
    to or presently enjoyed all persons whether natural or juridical, including GOCCs
    except: 1.) local water districts; 2.) Cooperatives duly registered under RA 6938;
    3.) Non-stock and non-profit hospitals and education institutions, are withdrawn
    upon the effectivity of this code, the obvious import is to limit the exemptions to
    the 3 enumerated entities. It is a basic precept of statutory construction that the
    express mention of one person, thing, act or consequences excludes all others
    as expressed in the familiar maxim expressio unius est exclusio alterus. In the
    absence of any provision of the code to the contrary, and we find no other
    provision in point, any existing tax exemption or incentive enjoyed by the
    MERALCO under the existing law was clearly intended to be withdrawn.

    Reading together section 193 and 137 of the LGC conclude that under the LGC,
    the local government unit may now impose a local tax at a rate not excluding
    50% of 1% of the gross annual receipts for the preceding calendar year based on
    the incoming receipts realized within its territorial jurisdiction. The legislative
    purpose to withdraw the tax privilege is only to enjoy and an existing law or
    charter is clearly manifested by the language used in sections 137 and 193
    categorically withdrawing such exemption subject only to the exceptions
    enumerated. Since it would be not only tedious and impractical to attempt to
    enumerate all the existing statutes providing for special tax exemptions or
    privileges, the LGC provided for an express, albeit general withdrawal of such
    exemptions or privileges. No more unequivocal language could have been used.

    It is true that the phrase “in lieu of all taxes” found in special franchises has been
    held in several cases to exempt the franchise holder from payment of tax on its
    corporate franchise imposed of the internal revenue code, as the charter is in the
    nature of a private contract and the exemption is part of the inducement for the
    acceptance of the franchise, and that the imposition of another franchise tax by
    the local authority would constitute an impairment of contract between the
    government and the corporation. But these “magic words” contained in the
    phrase “shall be in lieu of all taxes” have to give way to the premptory language
    of the LGC specifically providing for the withdrawal of such exemption privileges.

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