THE CITY OF MAKATI AND THE CITY TREASURER OF MAKATI CITY v. CITYLAND, INC.

REPUBLIC qF THE PHILIPPINES COURT qF TAX APPEALS QUEZON CITY ENBANC THE CITY OF MAKATI AN D THE CTA EB No. 1428 CITY TREASURER OF MAKATI (CTA AC No. 125) CITY, Petitioners -versus- CITYLAND, INC., Respondent. x--------------------------------x CTA EB No. 1439 (CTA AC No. 125) CITYLAND, INC., Petitioner -versus- Present: DEL ROSARIO, P.J., THE CITY OF MAKATI AND THE CASTANEDA, JR., CITY TREASURER OF MAKATI BAUTISTA, CITY, UY, CASANOVA, FABON-VICTORINO, MINDARO-GRULLA, RINGPIS-LIBAN, and MANAHAN, JJ. Respondents. Promulgated: x--------------------------------------D--E-C---1-9---2-0-1-7---~ ~{;__-x � RESOLUTION MINDARO- GRULLA, J.: Submitted for resolution of this Court En Bane are the fo ll ow ing:

The City of Makati and the City Treasurer of Page 2 of 7 Makati City vs. Cityland, Inc., /Cityla(1d, Inc., vs. The City of Makati and the City Treasurer of Makati City CTA EB Nos. 1428 and 1439 (CTA Aq Case No. 125) RESOLUTION . 1. Motion for Recon$ideration (Re: Decision dated 28 June 2017) filed lby petitioners the City of Makati and the City Tre~surer of Makati City in CTA EB 1428; and 2. Respectful Motion !for Partial Reconsideration filed by petitioner Citylan~, Inc., petitioners in CTA EB No. 1439 (City/and, I}(lc. vs. City of Makati and the City Treasurer of Makalti City). I Petitioners in CTA E~No. 1428 insist on the validity of subjecting Cityland to usiness tax as a real estate developer (or as owner/ perator of real estate developer) based on Section 3A.02(rn) of the Revised Makati Revenue Code. We resolve to ideny petitioner's Motion for I Reconsideration. A perus~l of the contents of the Motion shows that the grounds rlaised therein relate to or are the exact same arguments ithat has been comprehensively passed upon in the Decisidn dated June 28, 2017. i For emphasis, a unicipal corporation, unlike a sovereign state, is clot ed with no inherent power of taxation. If granted unde a charter or a statute, and that power when granted is t be construed in strictissimi juris. As such, in this case, dny doubt or ambiguity must be resolved against the city qf Makati City officials must keep in mind tax ordinances, tho~gh well-meaning, reasonable and profitable, must conform ito national law. Making sure our ordinances are legally soulnd is necessary to protect the city against vexing suits in t~e future and likewise encourage I businesses instead of stun~ing them. Section 143 of the L~C has been held to be "the very source of the power of mpnicipalities and cities to impose a local business tax, and Ito which any local business tax imposed x x x must confo~m. "1 1 Nursery Care Corporation, etal., v. Abthony Acevedo, in his capacity as the Treasurer of Manila, and the City of Manila, G.R. No. tso651, July 30, 2014. I !

The City of Makati and the City Treasurer of Page 3 of 7 Makati City vs. Cityland, Inc., /Citylid, Inc., vs. The City of Makati and the City Treas rer of Makati City CTA EB Nos. 1428 and 1439 {CTA A Case No. 125) RESOLUTION ! i Relative thereto, S~ction 1512 states that a city government may impose I business tax on the businesses enumerated under the fqrmer. Dealers "in any article of commerce of whatever k~md or nature" are covered under Section 143(b), while de elopers may be deemed covered by Sec. 143(h), which akes business tax imposable on "any business, not otherwise specified in the preceding paragraphs." ' Section 3A.02(m) of jthe Revised Makati Revenue Code imposes business tax "on~lowners or operators of real estate developer." The languag of this provision is clear. Sec. 3A.02(m) of the Revised Makati Revenue Code is directed towards the Real Estate Develo er itself which has a ersonalit and distinct from its stockholders owners and o erators. (Emphasis supplied) It is worth stressing I out that one of the primary and basic rules in statutory cohstruction is that where the words of a statute are clear, plaim, and free from ambiguity, it must be given its literal meani~g and applied without attempted interpretation3 � I I In the case at bar, t~e attempt of the petitioners to in effect delete "owners and pperators" so as to impose the tax directly on the real esta~e developer, runs counter to the rules of statutory constru~tion, and would effectively amend the said provision. The city treasurer by herself is without authority to amend the evised Makati Revenue Code, for that power is vested by thle Local Government Code solely in the Sangguniang Panlung~od. ! 2 Section 151. Scope if Taxing ~'owers. - Except as otherwise provided in this Code, the city, may levy the tax s, fees, and charges which the province or municipality may impose: Prov ded, however, That the taxes, fees and charges levied and collected by highly urbanized and independent component cities shall accrue tt them and distributed in accordance with the provisions of this Code. The rates of taxes that the Fity may levy may exceed the maximum rates allowed for the province or municip1ity by not more than fifty percent {50%) except the rates of professional and amuseTent taxes. 3 Francisco I. Chavez vs. Judicial arld Bar Council, eta/., G.R. No. 202242, July 17, 2012, En Bane, citing National Foo~ Authority (NFA) vs. Masada Security Agency, Inc., 493 Phil. 241, 250 (2005); PHilippine National Bank vs. Garcia, Jr., 437 Phil. 289 (2oo2). I i (

The City of Makati and the City Treasurer of Page 4 of 7 Makati City vs. Cityland, Inc., /Citylarhd, Inc., vs. The City of Makati and the City Treas~rer of Makati City CTA EB Nos. 1428 and 1439 (CTA Aej Case No. 125) RESOLUTION i I Clearly, by imposing I the business tax on "owners and operators of real estate developer", rather than directly upon the real estate devel per, the Sangguniang Panlungsod of Makati City conte plated these i"owners and o erators" to be entitie different from the real estate developer itself. Other ise, the tax would have simply been directly imposed on he said developer. I I Also, there is nothing in the records that would show that Cityland in fact acte8 as operator. Petitioners did not bother to establish that 4ityland's juridical personality and that of its "owners and ~perators" are one and the same. Instead, petitioners po tulated that the "owners and operators" clause in Secti n 3A.02(m) of the Revised Makati Revenue Code should be idisregarded, so that the business tax may be imposed direc~ly on the real estate developer. ! ! Indubitably, as corre�tly cited by the Court in Division4, respondent has contra~icted her own allegations in interpreting Section 3A.02~m), to wit: "What responden did, in her Answer, was to conclude that 'from he definition of 'Real Estate Developer' under Sec ion 3A.01 (xx), it is crystal clear that Petitione Cityland, Inc. should be classified as a Real E tate Developer.' Respondent insisted that the bu~iness tax imposed by Sec. 3A.02(m) is squarjiY upon the real estate developer, and notl "owners and operators". Respondent posited in her Answer: '10. The allegation that Petitioner City land, Inc. canno be taxed under Sec. 3A.02(g) since ec. 3A.02(m) allegedly imposes the tax awards the 'owners and operators' of the I real estate developer is illogical and misle~ding. 11. I t cannCJ t be denied that such particular sectron of the Revised Makati Revenue Code [Sec. 3A.02(m)1 is directed tovt.rards the Real Estate 4 CTA EB No. 1428, En Bane Docket, p.29.

The City of Makati and the City Treasurer of Page 5 of 7 Makati City vs. Cityland, Inc., /Citylarlld, Inc., vs. The City of Makati and the City Treas~rer of Makati City CTA EB Nos. 1428 and 1439 (CTA AC! Case No. 125) RESOLUTION . its owners operators.' XXX x:xx XXX Under the premises, it was the petitioners who gave this Court serious caus~ to doubt the validity of the provision, as well as the a$sessment based thereon. Considering that th~re was no sufficient evidence to establish Cityland to be t~e owner/operator of a real estate developer, Section 3A.020n) of the Revised Makati Revenue Code is inapplicable to it. Consequently, it sttays beyond the limit fixed by Section 146 of the Local i Government Code, it is an ultra vires exercise of local ta~Iing power, which is a violation of Section 146 of the Local ~overnment Code. Therefore, it is null and void and cannot ~e given any effect. Anent the procedura' issue raised by Cityland that the Court in Division's Decisibn had already become final and executory for failure to strictly comply with Section 6(3), Rule 15 of the Rev1� sed RIfules of the Court of Tax Appeals, has certainly been render�d moot and academic. A moot and academic case is one that ceases to present a justiciable coniroversy by virtue of supervening events, so that a decl ration thereon would be of no practical use or value. G. nerally, courts decline jurisdiction over such case or disrhiss it on ground of mootness. However, even in cases where supervening events had made the cases moot, courts doi not hesitate to resolve the legal or constitutional issues r~ised to formulate controlling principles to guide the ! bench, the bar and the public. Moreover, as an exceptipn to the rule on mootness, the courts will decide a question otherwise moot if it is capable of repetition, yet evading lreview. 5 5 Integrated Bar of the Philippines y. Atienza, G.R. No. 175241, February 24, 2010, 613 SCRA 518, 523, citing Funa v. ~rmita, G.R. No. 184740, February 11, 2010.

The City of Makati and the City Treasurer of Page 6 of 7 Makati City vs. Cityland, Inc., /Citylard, Inc., vs. The City of Makati and the City Treas~rer of Makati City CTA EB Nos. 1428 and 1439 (CTA Aq Case No. 125) RESOLUTION 1 It is noteworthy that~substantial justice, equity and fair play take precedence ove technicalities and legalisms. Law and justice are inseparabl , and we must keep them so. To be sure, there are some11aws that, while generally valid, may seem arbitrary when i applied in particular case because I of its peculiar circumstanfeS. Accordingly, it is the duty of this Court to find a balan�e between the word and the will, and to ensure that justice may be done even as the law is obeyed. As judges, �ot automatons. We do not and must not unfeelin I I the law as it is worded like robots to the literal command without uence.6 ! In view of the for~going, this Court finds no valid justification to compel al modification or reversal of the assailed Decision. � i WHEREFORE, pre~ises considered, the Motion for Reconsideration (Re: Decision dated 28 June 2017) filed by petitioners the City of .akati and the City Treasurer of Makati City in CTA EB 1428 and the Respectful Motion for Partial Reconsideration fil~d by petitioner Cityland, Inc., in CTA EB No. 1439 are here~y DENIED for lack of merit. SO ORDERED. !~ N ML�~-G~ WE CONCUR: ICIELITO N. MINDARO-GRULLA Associate Justice LOVELL~. BAUTISTA AssoCiate Justice 6 Zacarias Cometa and Herco Realty & Agricultural Corporation vs. Court Of Appeals and Jose Franco, G.R. No. 141855. February 6, 2001.

The City of Makati and the City Treasurer of Page 7 of 7 Makati City vs. Cityland, Inc., /Citylard, Inc., vs. The City of Makati and the City Trea~rer of Makati City CTA EB Nos. 1428 and 1439 (CTA A9 Case No. 125) RESOLUTION 1 ER~.uv CAESAR~ASANOVA Associate Justice Associate Justice I ~. ~ J ...__' MA. BELENJ'M. RINGPIS-LIBAN Ass ciate Justice I ! c~,..7>~ CATHER~NET.MANAHAN Assqciate Justice