TOPIC: Manifest intention of the legislature to repeal earlier special law
City Government of San Pablo, Laguna v. Reyes
G.R. No. 127708. March 25, 1999
FACTS:
Act no. 3648 granted a legislative franchise to Escudero Electric Services Company to
maintain and operate an electric light and power system in the City of San Pablo,
Laguna, and other neighboring municipalities. A provision of its franchise provides that
the grantee shall pay unto the municipal treasury of each municipality where it supplies
electric current a tax equal to 2% of its gross earnings from electric current sold within
that municipality. Such tax is in lieu of any and all taxes of any kind that may be imposed
on it or its installations.
In 1959, RA 2340 transferred the franchise of EESC to Meralco.
In 1974, President Marcos issued PD no. 551 was enacted providing that the franchise
tax, in lieu of any and all taxes, shall be 2% of gross receipts and shall be paid to the
Commissioner of Internal Revenue.
In January 1992, RA 7160 took effect and authorized local government units to impose a
tax on business enjoying a franchise at a rate not exceeding fifty percent (50%) of one
percent (1%) of the gross annual receipts for the preceding calendar year realized within
its jurisdiction.
In October 1992, the City Council of San Pablo passed its Revenue Code, which took
effect at the end of said month, imposing a franchise tax of 50% of 1% of the gross
annual receipts for the preceding year realized within its jurisdiction.
City Treasurer sent letters to Meralco collecting its dues for years 1994 to 1996 for which
the latter paid under protest an amount of P1.8 million.
Meralco brought an action before the RTC to nullify the revenue code in so far as the
imposition of franchise tax on Meralco is concerned and to claim for the refund of the
paid taxes based on the tax exemption/incentive it enjoys under its charter and PD no.
551. It argues that LGC did not expressly or impliedly repealed the Act no. 3648, RA
2340, and PD no. 551 contrary to claims of the CGSP.
The RTC ruled in favor of Meralco hence CGSP filed the petition for certiorari before the
Court.
ISSUE: Whether or not RA 7160 repealed Act no. 3648, RA 2340, and PD 551.
HELD: YES, RA 7160 has repealed Act no. 3648, RA 2340, and PD 551.
A general law cannot be construed to have repealed a special law by mere implication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.
In the present case, the pertinent provisions of RA 7160 which show the manifest intent
of the legislature to repeal the special laws providing for the tax exemption/incentive
afforded to the franchisee include sections 137, 151, 193, and 534 (f).
Section 137 expressly provided that the province may impose a tax on businesses with
franchise notwithstanding any exemption granted by any law or other special laws;
Section 151 provides the same authority to cities; Section 193 provides for the
withdrawal of tax exemption privileges except for local water districts, cooperatives duly
registered under R.A. 6938, non-stock and non-profit hospitals and educational
institutions; and Section 534 (f) or its repealing clause provides the repeal or
modification of 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 the provisions of the Code.
The Court also upheld its earlier decision in MCIAA v. Marcos where the Court held that
Section 193 of the LGC prescribes the general rule, viz., the tax exemptions or
incentives granted to or presently enjoyed by natural or juridical persons are withdrawn
upon the effectivity of the LGC except with respect to those entities expressly
enumerated.
Therefore, RA 7160 is construed to have repealed Act no. 3648, RA 2340, and PD 551,
and that the City Government of San Pablo is authorized to impose and collect the
franchise tax according to its Revenue Code on Meralco.
