Cebu Portland Cement Co. vs. Municipality of Naga

A municipal treasurer’s power to distrain personal property for delinquent taxes is triggered immediately upon the taxpayer’s failure to pay at the time required; a demand letter granting additional time does not amend the statute. Moreover, the twenty-day notice period for an auction sale is substantially complied with when the initial distraint and notice of sale occurred many months before the sale, and the delay was caused by the taxpayer’s own requests for deferment.

Cebu Portland Cement Company operated a cement plant in Tina-an, Naga, Cebu. The Municipality of Naga imposed a municipal license tax on cement factories under Amended Ordinance No. 21, Series of 1959. The company failed to pay the assessed deficiency municipal license tax for 1960 and the regular tax for 1961, plus a 20% penalty, in the total sum of P204,300.00. Repeated demands for payment were unsuccessful, leading the municipal treasurer to resort to the summary remedy of distraint under the Revised Administrative Code.

• The Tax Delinquency and Demands: The municipal treasurer repeatedly demanded payment of the municipal license tax imposed by Amended Ordinance No. 21, Series of 1959, on cement factories from Cebu Portland Cement Company. The company did not settle the account. On June 26, 1961, the treasurer sent a final letter demanding settlement of P204,300.00, composed of P80,250.00 deficiency municipal license tax for 1960, P90,000.00 municipal license tax for 1961, and P34,050.00 penalty. The letter gave the company ten days from receipt to pay and warned that distraint would follow.

• The Distraint on July 6, 1961: On July 6, 1961, at 11:00 A.M., the municipal treasurer notified the company’s plant manager that he was distraining 100,000 bags of Apo cement in satisfaction of the delinquency. The acting officer in charge, Vicente T. Garaygay, initially asked for time to study the matter but later that afternoon acknowledged the distraint. The treasurer certified that he had constructively distrained the 100,000 bags and would sell them at public auction on July 27, 1961 to partially satisfy the account.

• The Initial Notice of Sale and Postponement: On the same day, July 6, 1961, the treasurer posted a notice of sale specifying that the auction would take place on July 27, 1961, at 9:00 A.M. at the municipal building. No sale was conducted on that date. The parties stipulated that the auction sale ultimately occurred on January 30, 1962. The lower court found that the deferment was caused by the taxpayer’s repeated requests for postponement, which unduly delayed the collection proceedings.

• The Readvertisement and Auction on January 30, 1962: On January 16, 1962, the treasurer notified Garaygay of the readvertisement of the public auction. On January 19, 1962, the treasurer issued a new notice of sale fixing the date as January 30, 1962, at 10:00 A.M. The notice was posted in public places and copies delivered to interested parties. On January 30, 1962, the bidding was conducted with representatives of the Provincial Auditor and Provincial Treasurer present. Two sealed bids were submitted, and the winning bidder was awarded the property.

• Premature Distraint: Petitioner argued that the distraint on July 6, 1961 was illegal because the June 26, 1961 demand letter had expressly granted a ten-day grace period within which to settle the account. The ten-day period had not yet expired when the treasurer seized the property, and he could not act in violation of his own undertaking.

• Lack of Twenty-Day Notice for Sale: Petitioner maintained that the auction sale on January 30, 1962 was void under Section 2305 of the Revised Administrative Code because the readvertisement was made only on January 19, 1962 — less than twenty days before the sale. The taxpayer was entitled to the full twenty-day statutory notice from the date of the notice actually relied upon for the sale.

• Sale on a Date Different from the Notice: Petitioner further contended that the auction sale was illegal because it took place on January 30, 1962, instead of January 29, 1962, as stated in the readvertisement notice, and any deviation from the announced time and place rendered the sale invalid.

• Distraint Immediately Authorized by Law: Respondent countered that Section 2304 of the Revised Administrative Code empowers the municipal treasurer to seize and distrain personal property upon the taxpayer’s failure to pay the tax at the time required. The statute does not impose a waiting period. Whatever grace period the treasurer’s letter mentioned could not amend or override the clear statutory mandate, and distraint was legally effected as soon as the delinquency arose.

• Substantial Compliance with Notice Period: Respondent argued that more than twenty days had elapsed from the initial notice of distraint and posting of the first notice of sale on July 6, 1961 to the eventual sale on January 30, 1962. The delay was solely attributable to petitioner’s requests for deferment. A taxpayer who causes the delay cannot invoke the shortened period to defeat the sale when the purpose of the notice had been fully served.

• Correctness of the Sale Date: Respondent pointed out that the lower court’s factual finding established that the notice of sale issued on January 19, 1962 correctly specified January 30, 1962 as the date of sale, and the sale was conducted exactly as advertised. No discrepancy existed.

• Validity of Distraint — Grace Period: Whether the distraint on July 6, 1961 was invalid for having been effected before the expiration of the ten-day grace period stated in the treasurer’s demand letter.

• Validity of Auction Sale — Twenty-Day Notice: Whether the auction sale on January 30, 1962 was void because the final readvertisement was made less than twenty days before the sale, in violation of Section 2305 of the Revised Administrative Code.

• Validity of Auction Sale — Date Discrepancy: Whether the sale was illegal because it was allegedly held on a date different from the one stated in the notice.

• Validity of Distraint — Grace Period: The distraint was valid. Section 2304 of the Revised Administrative Code states in clear and categorical terms that the municipal treasurer may seize and distrain personal property “upon the failure of the person owing any municipal tax or revenue to pay the same, at the time required.” The statutory language leaves no room for interpretation; the power to distrain arose the moment petitioner failed to pay when due. The demand letter’s ten-day grace period could not amend or override the law. Where the law speaks unequivocally, there is only room for application, not construction.

• Validity of Auction Sale — Twenty-Day Notice: The auction sale was valid. From the initial distraint and posting of the first notice of sale on July 6, 1961 to the eventual sale on January 30, 1962, significantly more than twenty days had elapsed. The postponement from July 27, 1961 to January 30, 1962 was caused by petitioner’s own requests for deferment. A taxpayer who unduly delays the collection proceedings cannot complain that the required period has not been observed when the purpose of the notice — to inform the owner and afford an opportunity to settle — had been fulfilled many months earlier. The lower court correctly held that there was substantial compliance with Section 2305.

• Validity of Auction Sale — Date Discrepancy: The sale on January 30, 1962 was legal. The lower court’s factual finding, accepted as conclusive on this direct appeal limited to questions of law, was that the notice of readvertisement fixed January 30, 1962, and the sale took place on that day. Petitioner’s claim of a discrepancy was without evidentiary support.

• Immediate Distraint upon Delinquency — Under Section 2304 of the Revised Administrative Code, the municipal treasurer’s remedy by distraint arises immediately upon the taxpayer’s failure to pay the tax at the time required. An administrative demand letter granting additional time does not supersede the statute; the law must be enforced as written. The canon of statutory construction applies: when statutory language is clear and categorical, there is no room for interpretation, only application.

• Substantial Compliance with Notice of Sale — The twenty-day notice requirement under Section 2305 is substantially satisfied when the initial distraint and posting of the notice of sale occurred many months before the eventual auction, even if a final readvertisement issued closer to the sale date, particularly where the delay was at the instance of the taxpayer. A party cannot take advantage of a delay it caused to nullify a proceeding intended for its own benefit.

• Conclusiveness of Factual Findings on Direct Appeal — A party who appeals directly to the Supreme Court is deemed to have accepted the lower court’s findings of fact as conclusive. Only questions of law are subject to review in such an appeal.

• “The clear and explicit language of the law leaves no room for doubt. The municipal treasurer ‘may seize and distrain any personal property’ of the individual or entity subject to the tax upon failure ‘to pay the same, at the time required …’ There was such a failure on the part of plaintiff-appellant to pay the municipal tax at the time required. The power of the municipal treasurer in accordance with the above provision therefore came into play.” — Defines the immediate nature of the distraint remedy upon delinquency.

• “Whatever might have been set forth in the letter of the municipal treasurer could not change or amend the law it has to be enforced as written. That was what the lower court did.” — Establishes that a municipal officer’s communication cannot modify statutory authority.

• “Time and time again, it has been repeatedly declared by this Court that where the law speaks in clear and categorical language, there is no room for interpretation. There is only room for application.” — Restates a fundamental principle of statutory construction.

• “If the sale did not take place, as advertised, on July 27, 1961, but only on January 30, 1962, it was due to the requests for deferment made by the plaintiff which unduly delayed the proceedings for collection of the tax, and the said taxpayer should not be allowed now to complain that the required period has not yet elapsed when the intention of the tax collector was already well-publicized for many months.” — Articulates the equitable principle that a taxpayer cannot defeat a sale based on a procedural delay it itself requested.

• Lizarraga Hermanos v. Yap Tico, 24 Phil. 504 (1913) — Cited as a foundational authority for the canon that clear statutory language must be applied as written, not interpreted.

• People v. Mapa, L-22301, August 30, 1967; Pacific Oxygen and Acetylene Co. v. Central Bank, L-21881, March 1, 1968; Dequito v. Lopez, L-27757, March 28, 1968 — Recent precedents reinforcing the literal application of unambiguous statutes.

• Republic v. Luzon Stevedoring Corp., L-21749, September 29, 1967; Perez v. Araneta, L-18414, July 15, 1968 — Applied for the procedural rule that factual findings of the lower court are conclusive on direct appeal to the Supreme Court, which is limited to questions of law.

• Section 2304, Act No. 2711 (Revised Administrative Code), as amended — Provided the remedy by distraint: upon failure to pay the municipal tax at the time required, the municipal treasurer may seize and distrain any personal property sufficient to satisfy the tax, increments, and expenses. Applied to validate the seizure of the 100,000 bags of cement immediately upon delinquency.

• Section 2305, Act No. 2711 (Revised Administrative Code), as amended — Governed proceedings after seizure, including the requirement that the time of sale shall not be less than twenty days after notice to the owner and the posting of such notice. Substantial compliance was found given the long interval caused by the taxpayer’s deferral requests.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, and Angeles, JJ., concurred.