LUCENA GRAND CENTRAL

TERMINAL, INC. v. JAC LINER,

INC.
DOCTRINE : The true role of
Constitutional law is to effect an
equilibrium between authority and
liberty so that rights are exercised
within the framework of the law and
thelawsareenactedwithduedeference
torights.
FACTS:Two ordinances were enacted
by the Sangguniang Panlungsod of
Lucenawiththeobjectiveofalleviating
thetrafficcongestionsaidtohavebeen
caused bytheexistence ofvarious bus
and jeepney terminals within the city.
CityOrdinance1631grantsfranchiseto
theLucenaGrandCentralTerminal,Inc.
to construct, finance, establish, operate
and maintain common bus jeepney
terminalfacilityintheCityofLucena.
CityOrdinance1778,ontheotherhand,
stripsoutallthetemporaryterminalsin
theCityofLucenatherighttooperate
whichasaresultfavorsonlytheLucena
GrandCentralTerminal,Inc.
The Regional Trial Court of Lucena
declaredCityOrdinance1631asavalid
excercise of police power while
declaring City Ordinance 1778 as null
and void for being invalid. Petitioner
Lucena Grand Central Terminal, Inc.
filed its Motion for Reconsideration
whichwasdenied.Lucenathenelevated
itviapetitionforreviewunderRule45
beforetheCourt.TheCourtreferredthe
petition to the Court of Appeals (CA)
withwhichithasconcurrentjurisdiction.
The CA dismissed the petition and
affirmed the challenged orders of the
trialcourt.Itsmotionforreconsideration

havingbeendeniedbytheCA,Lucena
nowcomestotheCourtviapetitionfor
review to assail the Decision and
ResolutionoftheCA.
ISSUE:Whether or not the means
employed by the Lucena Sannguniang
Panlungsod to attain its professed
objectivewerereasonablynecessaryand
notdulyoppressiveuponindividuals
HELD:With the aim of localizing the
sourceoftrafficcongestioninthecityto
asinglelocation,thesubjectordinances
prohibit the operation of all bus and
jeepney terminals within Lucena,
including those already existing, and
allowtheoperationofonlyonecommon
terminallocatedoutsidethecityproper,
the franchise forwhich was grantedto
Lucena. The common carriers plying
routestoandfromLucenaCityarethus
compelled to close down their existing
terminals and use the facilities of
Lucena.
ThetrueroleofConstitutionalLawisto
effectanequilibriumbetweenauthority
and liberty so that rights are exercised
withintheframeworkofthelawandthe
lawsareenactedwithduedeferenceto
rights.
A due deference to the rights of the
individual thus requires a more careful
formulation of solutions to societal
problems.
Fromthememorandumfiledbeforethe
CourtbyLucena,itisgatheredthatthe
Sangguniang Panlungsod had identified
thecauseoftrafficcongestiontobethe
indiscriminateloadingandunloadingof
passengersbybusesonthestreetsofthe

city proper, hence, the conclusion that

the terminals contributed to the
proliferationofbusesobstructingtraffic
onthecitystreets.
Bus terminals per se do not, however,
impede or help impede the flow of
traffic. How the outright proscription
against the existence of all terminals,
apartfromthatfranchisedtoLucena,can
beconsideredasreasonablynecessaryto
solvethetrafficproblem,theCourthas
not been enlightened. If terminals lack
adequatespacesuchthatbusdriversare
compelledtoloadandunloadpassengers
on the streets instead of inside the
terminals,thenreasonablespecifications
for the size of terminals could be
instituted, with permits to operate the
samedeniedthosewhichareunableto
meetthespecifications.
Inthesubjectordinances,however,the
scope of the proscription against the
maintenanceofterminalsissobroadthat
even entities which might be able to
provide facilities better than the
franchised terminal are barred from
operatingatall.
The Court is not unaware of the
resolutions of various barangays in
Lucena City supporting the
establishment of a common terminal,
andsimilarexpressionsofsupportfrom
theprivatesector,copiesofwhichwere
submittedtothisCourtbyLucenaGrand
Central Terminal, Inc. The weight of
popular opinion, however, must be
balanced with that of an individuals
rights

BatangasvsShellPetroleum
MANILA, Philippines The Supreme
CourtruledonWednesday,August12,
that local government units (LGUs)
cannot impose business taxes on those
into the manufacturing and distribution
ofpetroleumproducts.
The court's 3rd division dismissed the
petition of the Batangas city
government,whichhassoughttocollect
P405 million in business taxes from
PilipinasShellPetroleum,whichhasan
oil refinery and depot in Barangay
Tabagao.
The14pageruling,pennedbyAssociate
Justice Diosdado Peralta, upholdsthe
resolutions issued by the Court of Tax
Appeals(CTA)in2009:onJanuary22
andonApril13.
The CTA resolutions reversed and set
aside the October 29, 2004, ruling of
Batangas City, which favored the city
governmentonimposingbusinesstaxes
onShell.
The Batangas City government had
arguedthatLGUshasthepowertotax
anyactivitythatismeantforprofit,and
that includes the production and
distributionofpetroleumproducts.
It citedSection 143 (h) of the Local
GovernmentCode(LGC),whichstates:
"Themunicipalitymayimposetaxeson
any business...which the sanggunian
concerned may deem proper to tax:
providedthatonanybusinesssubjectto
theexcise,valueaddedorpercentagetax

under the National Internal Revenue

Code,asamended,therateoftaxshall
notexceedtwopercentofgrosssalesor
receiptsoftheprecedingcalendaryear."
ThecitygovernmentalsosaidtheCTA
erredwhenitsaidthatbusinesstaxesare
not covered by "taxes" referred to in
Section 133 (h) of the LGC.
The Supreme Court, however, said
LGUsdon'tenjoythepowertotaxthatis
inherentinthestate.ItsaidtheLGUs'
powertotaxislimited,basedonSection
5, Article X of the Constitution. It
states:"Eachlocalgovernmentunitshall
havethepowertocreateitsownsources
ofrevenuesandtolevytaxes,fees,and
charges subject to such guidelines and
limitationsastheCongressmayprovide,
consistentwiththebasicpolicyoflocal
autonomy."
The High Court also said thatSection
133(h)oftheLGCprohibitsLGUsfrom
imposing excise taxes on items
enumerated in the National Internal
Revenue Code, including petroleum
products.
AssociatejusticesTeresitaLeonardode
Castro,MartinVillarama,JosePortugal
Perez, and Estela Perlas
Bernabeconcurred.

On February 20, 2001, Batangas City

LegalOfficerTeodulfoDeguitoandCity
Treasurer Teresa Geron demanded that
PilipinasShellpaidP92.37millionand
P312.65millioninbusinesstaxes.
Pilipinas Shell filed a protest on April
17,2002,sayingitwasn'tliabletopay
thelocalbusinesstaxformanufacturing
ordistributingpetroleumproducts.That
year, it only paid P98,964.71 for fees
and other charges, including P1,180.34
formayorspermit.
Itevensaidthecostofamayorspermit
was exorbitant, confiscatory, arbitrary,
unreasonable, and not commensurable
withthecostofissuingalicense.
OnMay13,2002,thecitygovernment
deniedShell'sprotest.CitingSection14
oftheBatangasCityTaxCodeof2002,
itsaidithasthepowertodenyShella
mayors permit based on its failure to
paybusinesstaxes.
Pilipinas Shell brought the case to the
Batangas City RTC, which sided with
the city governmenton October 29,
2004.Thecasewasthenelevatedbythe
companytotheCTA.Rappler.com