G.R. No. L-37251 - City of Manila vs. Gomez

Case Summary (G.R. No. L-37251)

Key Dates and Legislative Instruments (not including the decision date)

Republic Act No. 409 (Revised Charter of Manila): Sec. 64 fixed annual realty tax at 1½% (took effect June 18, 1949).
Republic Act No. 5447 (Special Education Fund Law): Sec. 4 imposed additional 1% on assessed value for education but capped total real property tax at 3% (took effect January 1, 1969).
City Ordinance No. 7125: Approved December 26, 1971; effective beginning 3rd quarter 1972; levied an additional ½% to attain a total 3% rate.
Esso’s payment under protest and filing: Paid the additional ½% for 3rd quarter 1972; filed suit November 9, 1972.
Presidential Decree No. 464 (Real Property Tax Code): Sec. 39(2) and Sec. 41 (took effect June 1, 1974).
Ordinance No. 7566 (enacted September 10, 1974) later imposed 2% on commercial real properties (relevant to subsequent collection history).
Payments by Esso/Petrophil from 1975–1980: Continued payment of the 3% rate; aggregate sum disclosed in the record.

Applicable Law and Constitutional Basis

Statutory provisions central to the dispute: RA 409 (Revised Charter of Manila, Sec. 64), RA 5447 (Special Education Fund Law, Sec. 4), Ordinance No. 7125, PD 464 (Real Property Tax Code, Sec. 39(2) and Sec. 41), Ordinance No. 7566, and reference to Sec. 2 of RA 2264.
Applicable constitution for contextual legal basis: 1973 Constitution (decision predates the 1987 Constitution; therefore the constitution then in force is the appropriate constitutional backdrop).

Facts and Trial Court Disposition

RA 409 set Manila’s basic realty tax at 1½%. RA 5447 added a 1% special education tax but capped total real property tax at 3%. The Manila municipal board, interpreting this cap as leaving room to reach a 3% ceiling, enacted Ordinance No. 7125 to levy an additional ½%, producing a total 3% realty tax.
Esso paid the ½% under protest for the 3rd quarter of 1972 and sued for recovery, asserting the additional ½% lacked charter or statutory authorization. The trial court declared Ordinance No. 7125 void and ordered refund of the tax paid under protest.

Issue Presented

Whether the City of Manila had legal authority to impose the additional ½% realty tax by Ordinance No. 7125 for the period from the third quarter of 1972 through the second quarter of 1974 (i.e., whether the ordinance was valid and the tax collectible).

Supreme Court’s Reasoning

The Supreme Court analyzed RA 409 (fixing 1½%) together with RA 5447 (fixing an additional 1% for education but capping total at 3%). The Court applied the doctrine of implications in statutory construction: that what is plainly implied in a statute is as much a part of it as what is expressed.
The Court read RA 5447’s 3% ceiling as carrying an implication that municipal authorities could impose tax levies that, when combined with the special education 1%, would reach but not exceed the 3% maximum. In Manila’s case, because the charter-fixed 1½% plus the education 1% totaled 2½%, an additional ½% could validly be levied to reach the statutory 3% cap.
The Court rejected Esso’s contention that RA 5447 only contemplated a contingency in which the 1% education tax might otherwise push an already-existing local tax beyond 3%, arguing instead that the later statute’s setting of a 3% maximum necessarily authorized municipalities to augment pre-existing local rates up to that maximum.
The Court noted confirmatory evidence in the Real Property Tax Code (PD 464), which later explicitly authorized city councils to impose a realty tax between ½% and 2% and reaffirmed the 1% special education levy in addition to the basic 2% rate. The Court treated this later codification as confirming the legislative intent that municipalities could impose a basic 2% realty tax (and therefore that Manila’s augmentation to reach an aggregate of 3% was consistent wit

Case Syllabus (G.R. No. L-37251)

Procedural History

Case decided by the Second Division of the Supreme Court of the Philippines, G.R. No. L-37251, dated August 31, 1981; Decision authored by Justice Aquino.
Esso Philippines, Inc. paid under protest P16,092.69 as an additional one-half percent realty tax for the third quarter of 1972 and filed suit for recovery on November 9, 1972 (Civil Case No. 88827) in the Court of First Instance of Manila.
After hearing, the trial court declared the ordinance imposing the additional one-half percent tax void and ordered refund to Esso.
The City of Manila and the City Treasurer appealed to the Supreme Court under Republic Act No. 5440 (which superseded Rule 42 of the Rules of Court).
Manifestations filed in the Supreme Court included: petitioners’ manifestation dated March 17, 1981 (averring the ordinance is still in force and referring to Ordinance No. 7566, enacted September 10, 1974) and Esso’s (now Petrophil Corporation) manifestation dated March 2, 1981 (stating continued payment of the additional one-half percent tax and aggregate payments 1975–1980).

Facts

Section 64 of the Revised Charter of Manila (Republic Act No. 409), effective June 18, 1949, fixed the annual realty tax at one and one-half percent (1-1/2%).
Section 4 of the Special Education Fund Law (Republic Act No. 5447), effective January 1, 1969, imposed "an annual additional tax of one per centum on the assessed value of real property in addition to the real property tax regularly levied thereon under existing laws" but provided that "the total real property tax shall not exceed a maximum of three per centum."
The municipal board of Manila, interpreting the maximum three percent provision, enacted Ordinance No. 7125, approved by the city mayor on December 26, 1971, effective beginning the third quarter of 1972, imposing an additional one-half percent realty tax.
Ordinance No. 7125 reads: "SECTION 1. An additional annual realty tax of one-half percent (1/2%), or in short a total of three percent (3%) realty tax (1-1/2% pursuant to the Revised Charter of Manila; 1% per Republic Act No. 5447; and 1/2% per this Ordinance) on the assessed value x x x is hereby levied and imposed."
Esso Philippines, Inc. paid the additional 1/2% for the specified quarter under protest and sought recovery.
Later statutory developments included Presidential Decree No. 464 (Real Property Tax Code), effective June 1, 1974, with section 39(2) and section 41 relevant to municipal realty taxation.
Petitioners averred that Ordinance No. 7566 (enacted September 10, 1974) imposed a two percent tax on commercial real properties, and that two percent plus the one percent under the Special Education Fund Law results in a total three percent tax on commercial properties.
Esso (Petrophil Corporation) revealed it continued to pay the additional one-half percent and that from 1975 to 1980 it paid P4,206,240.71 as three percent tax on its real properties.

Statutory Framework and Ordinances

Republic Act No. 409 (Revised Charter of Manila), sec. 64, effective June 18, 1949: fixed annual realty tax at 1-1/2%.
Republic Act No. 5447 (Special Education Fund Law), sec. 4, effective January 1, 1969: imposed an additional annual 1% on assessed real property value "in addition to the real property tax regularly levied thereon under existing laws" and capped total real property tax at a maximum of 3%.
Ordinance No. 7125 of the City of Manila, approved December 26, 1971, effective third quarter 1972: levied an additional 1/2% realty tax to reach a total of 3% (text quoted in source).
Presidential Decree No. 464 (Real Property Tax Code), effective June 1, 1974:
- Section 39(2): permits a city council, by ordinance, to impose a realty tax "of
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