5/ 2018 D igest Drilon v Lim G R No 112497 - slide .

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Drilon v. Lim
G.R. No. 112497, August 4, 1994 n the e(ercise o this uris&iction, lo-er courts are a&$ise& to act -ith
Cruz, J. the ut%ost circu%spection, earing in %in& the conse3uences o a
&eclaration o unconstitutionality upon the sta ility o la-s, no less than on
the &octrine o separation o po-ers. t is also e%phasize& that e$ery court,
Facts: inclu&ing this Court, is charge& -ith the &uty o a purpose ul hesitation e
The principal issue in this case is the constitutionality o !ection 1"7 ore &eclaring a la- unconstitutional, on the theory that the %easure -as rst
o the #ocal Go$ern%ent Co&e1. The !ecretary o
Justice 'on appeal to hi% o our oil co%panies an& a ta(payer) &eclare& *r&inance No. 7794 '+anila care ully stu&ie& y the e(ecuti$e an& the legislati$e &epart%ents an& &eter%ine& y the% to e in
Re$enue Co&e) null an& $oi& accor&ance -ith the un&a%ental
or non co%pliance -ith the proce&ure in the enact%ent o ta( or&inances la- e ore it -as nally appro$e&. To &ou t is to sustain. The presu%ption o
an& or containing certain pro$isions contrary to la-an& pu lic policy. constitutionality can e o$erco%e only y the clearest sho-ing that there -as
in&ee& an in raction o the Constitution.

The RTC re$o/e& the !ecretary0s resolution an& sustaine& the

or&inance. t &eclare& !ec 1"7 o the #GC as unconstitutional ecause it
$ests on the !ecretary the po-er o control o$er #G s in
$iolation o the policy o local autono%y %an&ate& in the Constitution. The !
ecretary argues that the annulle& !ection 1"7 is constitutional an& that the
proce&ural re3uire%ents or the
enact%ent o ta( or&inances as speci e& in the #ocal Go$ern%ent Co&e ha& in&ee& not een
o ser$e&. '5etition originally &is%isse&
y the Court &ue to ailure to su %it certi e& true copy o the &ecision, ut
reinstate& it any-ay.)
Issue:
6*N the lo-er court has uris&iction to consi&er the constitutionality
o !ec 1"7 o the #GC
Held:
8es. 5 129 $ests in the regional trial courts uris&iction o$er all ci$il
cases in -hich the su ect o the litigation is incapa le o
pecuniary esti%ation. +oreo$er, Article :, !ection ;'2), o the Constitution $ests in the !upre%e
Court appellate uris&iction o$er
nal u&g%ents an& or&ers o lo-er courts in all cases in -hich the
constitutionality or $ali&ity o any treaty, international or e(ecuti$e agree
%ent, la-, presi&ential &ecree, procla%ation, or&er, instruction, or&inance,
or regulation is in 3uestion.
1 5roce&ure <or Appro$al An& =>ecti$ity * Ta( *r&inances An& Re$enue +easures? +an&atory 5u lic @earings. The
proce&ure or appro$al o local ta( or&inances an& re$enue %easures shall e in accor&ance -ith the pro$isions o this Co&e
5ro$i&e&, That pu lic hearings shall e con&ucte& or the purpose prior to the enact%ent thereo ? 5ro$i&e&, urther, That any
3uestion on the constitutionality or legality o ta( or&inances or re$enue %easures %ay e raise& on appeal -ithin thirty 'B )
&ays ro% the e>ecti$ity thereo to the !ecretary o Justice -ho shall ren&er a &ecision -ithin si(ty 'D ) &ays ro% the &ate o
receipt o the appeal 5ro$i&e&, ho-e$er, That such appeal shall not ha$e the e>ect o suspen&ing the e>ecti$ity o the
or&inance an& the accrual an& pay%ent o the ta(, ee, or charge le$ie& therein 5ro$i&e&, nally, That -ithin thirty 'B ) &ays a
ter receipt o the &ecision or the lapse o the si(ty &ay perio& -ithout the !ecretary o Justice acting upon the appeal, the
aggrie$e& party %ay le appropriate procee&ings -ith a court o co%petent uris&iction.
Issue:
6*N !ection 1"7 o the #GC is unconstitutional
Held:
8es. !ection 1"7 authorizes the !ecretary o Justice to
re$ie- only the constitutionality or legality o the ta( or&inance an&, i -arrante&, to re$o/e it on
either or oth o these groun&s.
6hen he alters or %o&i es or sets asi&e a ta( or&inance, he is not also per
%itte& to su stitute his o-n u&g%ent or the u&g%ent o the local go$ern
%ent that enacte& the %easure. !ecretary Erilon &i& set asi&e the +anila
Re$enue Co&e, ut he &i& not replace it -ith his o-n $ersion o -hat the
Co&e shoul& e.. 6hat he oun& only -as that it -as illegal. All he &i& in
re$ie-ing the sai& %easure -as &eter%ine i the petitioners -ere per or%ing
their unctions in accor&ance -ith la-, that is, -ith the prescri e& proce&ure
or the enact%ent o ta( or&inances an& the grant o po-ers to the city
go$ern%ent un&er the #ocal Go$ern%ent Co&e. As -e see it, that
-as an act not o control ut o %ere super$ision.
An oFcer in control lays &o-n the rules in the &oing o an act. they
are not ollo-e&, he %ay, in his &iscretion, or&er the act un&one or re &one
y his su or&inate or he %ay e$en &eci&e to &o it hi%sel . !uper$ision &oes
not co$er such authority. The super$isor or superinten&ent %erely sees to
it that the rules are ollo-e&, ut he hi%sel &oes not lay &o-n such rules, nor
&oes he ha$e the &iscretion to %o&i y or replace the%.
!igni cantly, a rule si%ilar to !ection 1"7 appeare& in the #ocal
Autono%y Act. That section allo-e& the !ecretary o <inance
to suspen& the e>ecti$ity o a ta( or&inance i , in his opinion, the ta( or ee le$ie& -as un ust,
e(cessi$e, oppressi $e or con scatory.

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5/ 2018 D igest Drilon v Lim G R No 112497 - slide .com
Eeter%ination o these a-s -oul& in$ol$e the e(ercise o
u&g%ent or &iscretion an& not %erely an e(a%ination o -hether G.R. No. 9B2;2 August ;, 1991
or not the re3uire%ents or li%itations o the la- ha& een R*E*#<* T. GANI*N, petitioner,
o ser$e&? hence, it -oul& s%ac/ o control rather than %ere $s.
super$ision. That po-er -as ne$er 3uestione& e ore this Court T@= @*N*RA #= C* RT *< A55=A#! an& # ! T.
ut, at any rate, the !ecretary o Justice is not gi$en the sa%e !ANT*!, respon&ents.
latitu&e un&er !ection 1"7. All he is per%itte& to &o is ascertain the G.R. No. 9B74D August ;,1991
constitutionality or legality o the ta( %easure, -ithout the right to +AR8 ANN R =RA ART =EA, petitioner,
&eclare that, in his opinion, it is un ust, e(cessi$e, oppressi$e or con scatory. @e has no &iscretion
$s.
on this %atter. n act, !ecretary @*N. # ! !ANT*!, in his capacity as !ecretary o the Eepart%ent o #ocal
Erilon set asi&e the +anila Re$enue Co&e only on t-o groun&s, to -ith, the Go$ern%ent, N CAN*R +. 5ATR C *, in his capacity as Chie , #egal !er$ice
inclusion therein o certain ultra $ires pro$isions an& non co%pliance -ith o the Eepart%ent o #ocal Go$ern%ent an& !A# AE*R CA A# NA JR.,
the prescri e& proce&ure in its enact%ent. These groun&s a>ecte& the respon&ents. G.R. No. 9;24; August ;,1991
legality, not the -is&o% or reasona leness, o the ta( %easure.
R*E*#<* T. GANI*N, petitioner, $s.

The issue o non co%pliance -ith the prescri e& proce&ure in the
enact%ent o the +anila Re$enue Co&e is another %atter. 'allegations No
-ritten notices o pu lic hearing, no pu lication o the or&inance, no %inutes o
pu lic hearing, no posting, no
translation into Tagalog)
Ju&ge 5alattao ho-e$er oun& that all the proce&ural re3uire%ents
ha& een o ser$e& in the enact%ent o the +anila Re$enue Co&e an& that
the City o +anila ha& not een a le to pro$e such co%pliance e ore the !
ecretary only ecause he ha& gi$en it only $e &ays -ithin -hich to gather
an& present to hi% all the e$i&ence 'consisting o 2; e(hi its) later su %itte&
to the trial court. 6e agree -ith the trial court that the proce&ural re3uire
%ents ha$e in&ee& een o ser$e&. Notices o the pu lic hearings -ere sent
to intereste& parties as e$i&ence&. The %inutes o the hearings are oun&
in =(hi its +, + 1, + 2, an& + B. =(hi its
an& C sho- that the propose& or&inances -ere pu lishe& in the alita an&
the +anila !tan&ar& on April 21 an& 2;, 199B, respecti$ely, an& the
appro$e& or&inance -as pu lishe& in the July B, 4, ;, 199B issues o the
+anila !tan&ar& an& in the July D, 199B issue o alita, as sho-n y =(hi its H,
H 1, H 2, an& H B.
The only e(ceptions are the posting o the or&inance as appro$e&
ut this o%ission &oes not a>ect its $ali&ity, consi&ering that its pu lication
in three successi$e issues o a ne-spaper o general circulation -ill satis y
&ue process. t has also not een sho-n that the te(t o the or&inance has
een translate& an& &isse%inate&, ut this re3uire%ent applies to the
appro$al o local
&e$elop%ent plans an& pu lic in$est%ent progra%s o the local go$ern%ent unit an& not to
ta( or&inances.
T@= @*N*RA #= C* RT *< A55=A#! an& # ! T. !ANT*!, in his capacity as
the !ecretary o the Eepart%ent o #ocal Go$ern%ent, respon&ents.
Topic #ocal Autono%y Not !el e(ecuting pro$isions <acts
A series o a&%inistrati$e co%plaints, ten in nu% er, -ere le& e
ore the Eepart%ent o #ocal Go$ern%ent against +ayor Ro&ol o T.
Ganzon y $arious city oFcials so%eti%e in 19"" on $arious charges, a
%ong the%, a use o authority, oppression, gra$e %iscon&uct, etc.
1 <in&ing pro a le groun&s, the !ecretary !antos o the Eepart%ent o
#ocal Go$ern%ent #uis T. !antos issue& successi$e suspensions.
2Ganzon then institute& an action or prohi ition against the
secretary in the RTC o loilo City -here he succee&e& in o taining a -rit o preli%inary in
unction.
B Ganzon also institute& actions or prohi ition e ore the Court o
Appeals ut -ere oth &is%isse&.
4 Thus, this petition or re$ie- -ith the argu%ent that the respon&ent !
ecretary is &e$oi&, in any e$ent, o any authority to suspen& an& re
%o$e local oFcials as the 19"7 Constitution no longer allo-s the
5resi&ent to e(ercise sai& po-er.
ssue
6KN the !ecretary o #ocal Go$ern%ent, as the 5resi&ent0s alter
ego, can suspen& an& or re%o$e local oFcials.
@el&
8es

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! ++AR8 *< RAT *
0 Ganzon is under the impression that the Constitution has left the
President mere supervisory po ers! hich supposedly e"cludes the po er
of investi#ation! and denied her control! hich alle#edly em$races
disciplinary authority. It is a mista%en impression $ecause le#ally!
&supervision' is not incompati$le ith disciplinary authority. (he )C had
occasion to discuss the scope and
e"tent of the po er of supervision $y the President over local #overnment o*cials in contrast
to the po er of
control #iven to him over e"ecutive o*cials of
our #overnment herein it as emphasized that the t o terms! control
and supervision! are t o di+erent thin#s hich di+er one from the
other in meanin# and e"tent.
&In administration la supervision means overseein# or the po er or
authority of an o*cer to see that
su$ordinate o*cers perform their duties. If the latter fail or ne#lect to
ful,ll them the former may ta%e such action or step as prescri$ed $y la
to ma%e them perform their duties. Control! on the other hand! means
the po er of an
o*cer to alter or modify or nullify of set aside hat a su$ordinate o*cer had done in
the performance of his
duties and to su$stitute the -ud#ment of the former for that of the latter.'
ut from this pronouncement it cannot $e reasona$ly inferred that the po
er of supervision of the President over local #overnment o*cials does not
include the po er of investi#ation hen in his opinion the #ood of the
pu$lic service so re/uires.
(he )ecretary of Local Government! as the alter e#o of the
president! in suspendin# Ganzon is e"ercisin# a valid po er. He ho ever
overstepped $y imposin# a 100 day suspension.
1 t is the petitionersL argu%ent that the 19"7 Constitution no longer allo-s the
5resi&ent, as the 19B; an& 197B Constitutions
&i&, to e(ercise the po-er o suspension an&Kor re%o$al o$er local
oFcials. Accor&ing to oth petitioners, the Constitution is %eant, rst, to
strengthen sel rule y local go$ern%ent units an& secon&, y &eleting the
phrase as %ay e pro$i&e& y la- to strip the 5resi&ent o the po-er o
control o$er local go$ern%ents. t is a $ie-, so they conten&, that n&s
support in the &e ates o the Constitutional Co%%ission.
!ec. 4. The 5resi&ent o the 5hilippines shall e(ercise general
super$ision o$er local go$ern%ents. 5ro$inces -ith respect to co%ponent
cities an& %unicipalities, an& cities an&
%unicipalities -ith respect to co%ponent arangays shall ensure
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that the acts o their co%ponent units are -ithin the scope o their prescri
e& po-ers an& unctions.
1 t %o&i es a counterpart pro$ision appearing in the 19B;
Constitution
!ec. 1 . The 5resi&ent shall ha$e control o all the e(ecuti$e &epart
%ents, ureaus, or oFces, e(ercise general super$ision o$er all #ocal
go$ern%ents as %ay e pro$i&e& y la-, an& ta/e care that the la-s e aith
ully e(ecute&.
2 The issue, as the Court un&erstan&s it, consists o three 3uestions '1) Ei& the 19"7
Constitution, in &eleting the phrase Mas
%ay e pro$i&e& y la-M inten& to &i$est the 5resi&ent o the po-er to
in$estigate, suspen&, &iscipline, an&Kor re%o$e local oFcials '2) @as
the Constitution repeale& !ections D2 an& DB o the #ocal Go$ern%ent
Co&e 'B) 6hat is the signi cance o the change in the constitutional
language t is the consi&ere& opinion o the Court that not-ithstan&ing the
change in the constitutional language, the charter &i& not inten& to
&i$est the legislature o its right or the 5resi&ent o her prerogati$e as con
erre& y e(isting legislation to pro$i&e a&%inistrati$e sanctions against
local oFcials. t is our opinion that the o%ission 'o Mas %ay e pro$i&e&
y la-M) signi es nothing %ore than to un&erscore local
go$ern%entsL autono%y ro% congress an& to rea/ CongressL
McontrolM o$er local go$ern%ent a>airs. The Constitution &i& not, ho-
e$er, inten&, or the sa/e o local autono%y, to &epri$e the legislature o
all authority o$er %unicipal corporations, in particular, concerning
&iscipline.
B Autono%y &oes not, a ter all, conte%plate %a/ing %ini states out
o local go$ern%ent units, as in the e&eral go$ern%ents o the nite& !tates
o A%erica 'or razil or Ger%any), although Je>erson is sai& to ha$e co
%pare& %unicipal corporations euphe%istically to Ms%all repu lics.M
Autono%y, in the constitutional sense, is su ect to the gui&ing star, though
not
control, o the legislature, al eit the legislati$e responsi ility un&er the Constitution an& as
the Msuper$ision clauseM itsel suggest is to
-ean local go$ern%ent units ro% o$er &epen&ence on the central go$ern
%ent.
4 t is note-orthy that un&er the Charter, Mlocal autono%yM is not
instantly sel e(ecuting, ut su ect to, a%ong other things, the passage o a
local go$ern%ent co&e, a local ta( la-, inco%e &istri ution legislation, an&
a national representation la-, an& %easures &esigne& to realize autono
%y at the local le$el. t is also note-orthy that in spite o autono%y, the
Constitution places the local go$ern%ent un&er the general super$ision o
the =(ecuti$e. t is note-orthy nally, that the Charter allo-s Congress to
inclu&e in
the local go$ern%ent co&e pro$isions or re%o$al o local oFcials, -hich suggest that
Congress %ay e(ercise re%o$al po-ers, an& as
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5/ 2018 D igest
the e(isting #ocal Go$ern%ent Co&e has &one, &elegate its e(ercise to
the 5resi&ent
!ec. B. The Congress shall enact a local go$ern%ent co&e -hich
shall pro$i&e or a %ore responsi$e an& accounta le local go$ern%ent
structure institute& through a syste% o &ecentralization -ith e>ecti$e
%echanis%s o recall, initiati$e, an& re eren&u%, allocate a%ong the
&i>erent local go$ern%ent units their po-ers, responsi ilities an&
resources, an& pro$i&e or the
3uali cations, election, appoint%ent an& re%o$al, ter%, salaries, po-ers an& unctions an& &uties o
local oFcials, an& all other
%atters relating to the organization an& operation o the local units.
; The &eletion o Mas may $e provided $y la M -as %eant to stress,
sub silencio, the o ecti$e o the ra%ers to strengthen local autono%y y
se$ering congressional control o its a>airs, as o ser$e& y the Court o
Appeals, li/e the po-er o local legislation. The Constitution &i& nothing
%ore, ho-e$er, an& inso ar as e(isting legislation authorizes the 5resi&ent
'through the !ecretary o #ocal Go$ern%ent) to procee& against local
oFcials a&%inistrati$ely, the Constitution contains no prohi ition.
D The petitioners are un&er the i%pression that the Constitution has le t the 5resi&ent
%ere super$isory po-ers, -hich
suppose&ly e(clu&es the po-er o in$estigation, an& &enie& her
control, -hich allege&ly e% races &isciplinary authority. t is a %ista/en
i%pression ecause legally, Msuper$isionM is not inco%pati le -ith
&isciplinary authority
7 MControlM has een &e ne& as Mthe po-er o an oFcer to alter or
%o&i y or nulli y or set asi&e -hat a su or&inate oFcer ha& &one in the per
or%ance o his &uties an& to su stitute the u&g%ent o the or%er or test o
the latter.M M)upervisionM on the other han& %eans Mo$erseeing or the
po-er or authority o an oFcer to see that su or&inate oFcers per or% their
&uties. As -e
hel&, ho-e$er, Min$estigatingM is not inconsistent -ith Mo$erseeingM, although it is a lesser
po-er than MalteringM. The i%pression is
apparently e(acer ate& y the CourtLs pronounce%ents in at least three
cases, Lacson v. Roque, Hebron v. Reyes, an& Mondano v. Silvosa, an&
possi ly, a ourth one, 5elaez $. Au&itor General.
n Lacson, this Court sai& that the President en-oyed no control po ers
$ut only supervision 2as may $e provided $y la !2 a rule -e reiterate& in
Hebron, an& Mondano. n Pelaez, -e state&
that the 5resi&ent M%ay not . . . suspen& an electi$e oFcial o a
regular %unicipality or ta/e any &isciplinary action against hi%,
e(cept on appeal ro% a &ecision o the correspon&ing pro$incial
oar&.M Ho ever!neither Lacson nor Hebron nor Mondano ca
te#orically $anned the Chief 3"ecutive from e"ercisin# acts of disciplinary
authority $ecause she did not e"ercise
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control po ers! $ut $ecause no la allo ed her to e"ercise disciplinary
authority.
" The Court &oes not elie$e that the petitioners can right ully point
to the &e ates o the Constitutional Co%%ission to &e eat the 5resi&entLs
po-ers. The Court elie$es that the &eli erations are y the%sel$es
inconclusi$e, ecause although Co%%issioner Jose Nolle&o -oul& e(clu&e
the po-er o re%o$al ro% the
5resi&ent, Co%%issioner las *ple -oul& not.
9 The Court is conse3uently reluctant to say that the ne-Constitution has repeale& the #ocal
Go$ern%ent Co&e, atas lg.
B7. As -e sai&, Msuper$isionM an& Mre%o$alM are not inco%pati le ter
%s an& one %ay stan& -ith the other not-ithstan&ing the stronger
e(pression o local autono%y un&er the ne- Charter. 6e ha$e in&ee& hel&
that in spite o the appro$al o the Charter, atas lg. BB7 is still in orce an&
e>ect.
1 As the Constitution itsel &eclares, local autono%y %eans Ma %ore
responsi$e an& accounta le local go$ern%ent structure institute& through
a syste% o &ecentralization.M The Constitution as -e o ser$e&, &oes
nothing %ore than to rea/ up the %onopoly o the national go$ern%ent
o$er the a>airs o local go$ern%ents
an& as put y political a&herents, to Mli erate the local
go$ern%ents ro% the i%perialis% o +anila.M Autono%y, ho-e$er,
is not %eant to en& the relation o partnership an& inter
&epen&ence et-een the central a&%inistration an& local
go$ern%ent units, or other-ise, to user in a regi%e o e&eralis%.
The Charter has not ta/en such a ra&ical step. #ocal go$ern%ents,
un&er the Constitution, are su ect to regulation, ho-e$er li%ite&,
an& or no other purpose than precisely, al eit para&o(ically, to
enhance sel go$ern%ent.
11 As -e o ser$e& in one case, &ecentralization %eans
&e$olution o national a&%inistration ut not po-er to the local le$els.
Thus
No-, autono%y is either &ecentralization o a&%inistration or &ecentralization o
po-er. There is decentralization of
administration -hen the central go$ern%ent &elegates
a&%inistrati$e po-ers to political su &i$isions in or&er to roa&en
the ase o go$ern%ent po-er an& in the process to %a/e local
go$ern%ents M%ore responsi$e an& accounta le,M an& Mensure their
ullest &e$elop%ent as sel reliant co%%unities an& %a/e the%
%ore e>ecti$e partners in the pursuit o national &e$elop%ent an&
social progress.M At the sa%e ti%e, it relie$es the central
go$ern%ent o the ur&en o %anaging local a>airs an& ena les it
to concentrate on national concerns. The 5resi&ent e(ercises
Mgeneral super$isionM o$er the%, ut only to Mensure that local
a>airs are a&%inistere& accor&ing to la-.M @e has no control o$er
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5/ 2018 D igest
their acts in the sense that he can su stitute their u&g%ents -ith his o-n.
1 Decentralization of po er, on the other han&, in$ol$es an a &ication
o political po-er in the a$or o local go$ern%ents units &eclare& to e autono
%ous, n that case, the autono%ous go$ern%ent is ree to chart its o-n &estiny
an& shape its uture -ith %ini%u% inter$ention ro% central authorities.
Accor&ing to a constitutional author, &ecentralization o po-er a%ounts to Msel
i%%olation,M since in that e$ ent, the autono%ous go$ern%ent eco%es accounta le not to the
central authorities ut to its
constituency
1 *ther issues on !uspension o D &ays
@el& it -as N*T proper
1 !uspension is not a penalty an& is not unli/e pre$enti$e i%prison
%ent in -hich the accuse& is hel& to insure his presence at the trial. n oth
cases, the accuse& 'the respon&ent) en oys a presu%ption o innocence
unless an& until oun& guilty.
2!uspension nally is te%porary an& as the #ocal
Go$ern%ent Co&e pro$i&es, it %ay e i%pose& or no %ore than si(ty
&ays. As -e hel&, a longer suspension is un ust an&
unreasona le, an& -e %ight a&&, nothing less than tyranny.
asco v. P4GC56
<acts 5AGC*R -as create& un&er 5E 1"D9 to ena le the Go$ern%ent to
regulate an& centralize all ga%es o chance authorize& y e(isting ranchise
or per%itte& y la-. To attain its o ecti$es 'centralize an& integrate the right
an& authority to operate an& con&uct ga%es o chance, generate
a&&itional re$enue to un& in rastructure an& socio ci$ic pro ect, e(pan&
touris%, %ini%ize e$ils pre$alent in con&uct an& operation o ga% ling clu
s) 5AGC*R is gi$en territorial uris&iction all o$er the 5hilippines. n&er its
CharterLs repealing clause, all la-s, &ecrees,
e(ecuti$e or&ers, rules an& regulations, inconsistent there-ith, are accor&ingly repeale&, a
%en&e& or %o&i e&.
ssues
6*N 5E 1"D9 constitutes a -ai$er o the right o the City o +anila to i
%pose ta(es an& legal ees. N*
The City o +anila, eing a %ere 7unicipal corporation has no
inherent ri#ht to impose ta"es. Thus, Mthe Charter or statute %ust plainly
sho- an intent to con er that po-er or the %unicipality cannot assu%e it.M
ts Mpo-er to ta(M there ore %ust al-ays yiel& to a legislati$e act -hich is
superior ha$ing een passe& upon y the state itsel -hich has the Minherent
po-er to ta(M
1 The Charter o the City o +anila is su ect to control y Congress. t shoul& e stresse&
that M%unicipal corporations are
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%ere creatures o CongressM -hich has the po-er to Mcreate an& a olish
%unicipal corporationsM &ue to its Mgeneral legislati$e po-ers.M
Congress, there ore, has the po-er o control o$er #Gs. An& i Congress can
grant the City o +anila the po-er to ta( certain %atters, it can also pro$i&e
or e(e%ptions or e$en ta/e ac/ the po-er.
2 The City o +anilaLs po-er to i%pose license ees on ga% ling, has
long een re$o/e&. As early as 197;, the po-er o
#Gs to regulate ga% ling thru the grant o M ranchise, licenses or per%itsM -as -ith&ra-n y 5E 771 an& -as
$este& e(clusi$ely on
the NG. *nly the NG has the po-er to issue Mlicenses or per%itsM or the
operation o ga% ling. Necessarily, the po-er to &e%an& or collect license
ees -hich is a conse3uence o the issuance o Mlicenses or per%itsM is no
longer $este& in the City o +anila.
B #Gs ha$e no po-er to ta( instru%entalities o the NG. 5AGC*R is a
go$ern%ent o-ne& or controlle& corporation -ith an original charter, 5E
1"D9. All o its shares o stoc/s are o-ne& y the NG. n a&&ition to its
corporate po-ers '!ec. B, Title , 5E 1"D9) it also e(ercises regulatory po-ers.
5AGC*R has a &ual role, to operate an& to regulate ga% ling casinos. The
latter role is
go$ern%ental, -hich places it in the category o an agency or instru%entality o the Go$ern%ent.
eing an instru%entality o the
Go$ern%ent, 5AGC*R shoul& e an& actually is e(e%pt ro% local ta(es.
*ther-ise, its operation %ight e ur&ene&, i%pe&e& or su ecte& to control y
a %ere #G.
4 The states ha$e no po-er y ta(ation or other-ise, to retar&, i%pe&e,
ur&en or in any %anner control the operation o constitutional la-s enacte&
y Congress to carry into e(ecution the po-ers $este& in the e&eral go$ern
%ent. O Msupre%acyM o the NG o$er #Gs.
; @ol%es a sence o po-er on the part o the !tates to touch, in that -ay
'ta(ation) at least, the instru%entalities o the
nite& !tates
D %ere creatures o the !tate can &e eat National policies thru e(ter
%ination o -hat local authorities %ay percei$e to e un&esira le acti$ities or
enterprise using the po-er to ta( as Ma tool or regulationM
1 6*N the #ocal Autono%y Clause o the Constitution -ill e $iolate& y
5E 1"D9. N*.
7 Art ( !ec ;, Consti =ach #G unit shall ha$e the po-er to create its o-n
source o re$enue an& to le$y ta(es, ees, an& other charges su ect to such
gui&elines an& li%itation as the congress %ay pro$i&e, consistent -ith the
asic policy on local autono%y.
!uch ta(es, ees an& charges shall accrue e(clusi$ely to the #G.
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5/ 2018 D igest
" po-er o #G to Mi%pose ta(es an& eesM is su ect to Mli%itationsM
-hich Congress %ay pro$i&e y la-. !ince 5E 1"D9 re%ains an Moperati$eM
la- until Ma%en&e&, repeale& or re$o/e&M '!ec. B, Art. : , 19"7
Constitution), its Me(e%ption clauseM re%ains as an e(ception to the
e(ercise o the po-er o #Gs to i%pose ta(es an& ees. t cannot there ore e
$iolati$e ut rather is consistent -ith the principle o local autono%y.
9principle o local autono%y un&er the 19"7 Constitution
si%ply %eans M&ecentralization.M t &oes not %a/e #Gs so$ereign -ithin the state or an Mi%periu% in i
%perio.M
LG: political su$division of a nation or state hich is constituted $y la and
has su$stantial control of local
a+airs. n a unitary syste% o go$ern%ent, such as the go$ern%ent un&er the
5hilippine Constitution, #Gs can only e an intra so$ereign su &i$ision o one
so$ereign nation, it cannot e an i%periu% in i%perio. #G in such a syste% can
only %ean a %easure o &ecentralization o the unction o go$ern%ent.
7anila 3lectric Co! Inc. vs Province of La#una G.6. 8o.
99;
)u$-ect: 5u lic Corporation
Doctrine: 5o-er to generate re$enues
Facts:
+=RA#C* -as grante& ranchise or the supply o electric light, heat an& po-
er y certain %unicipalities o the 5ro$ince o #aguna inclu&ing, iPan, !ta
Rosa, !an 5e&ro, #uisiana, Calauan an& Ca uyao.
*n 19 January 19"B, +=RA#C* -as li/e-ise grante& a ranchise y the
National =lectri cation A&%inistration to operate an electric light an& po-
er ser$ice in the +unicipality o Cala% a, #aguna.
*n 12 !epte% er 1991, Repu lic Act No. 71D , other-ise /no-n as the
Q#ocal Go$ern%ent Co&e o 1991, -as enacte& to ta/e e>ect on 1
January 1992 en oining local go$ern%ent units to create their o-n sources
o re$enue an& to le$y ta(es, ees an& charges, su ect to the li%itations
e(presse& therein, consistent -ith the asic policy o local autono%y.
5ursuant to the pro$isions o the Co&e, respon&ent pro$ince enacte&
#aguna 5ro$incial *r&inance pro$i&ing or ranchise ta( at a rate o ; S o 1S
o the gross annual receipts. 5ro$incial Treasurer, then sent a &e%an&
letter to +=RA#C* or the correspon&ing ta( pay%ent.
5etitioner +=RA#C* pai& the ta(, -hich then a%ounte& to 519,;2 ,D2".42, un&er
protest. A or%al clai% or re un& -as
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therea ter sent y +=RA#C* to the 5ro$incial Treasurer o #aguna clai%ing
that the ranchise ta( it ha& pai& an& continue& to pay to the National
Go$ern%ent pursuant to 5.E. ;;1 alrea&y inclu&e& the ranchise ta( i
%pose& y the 5ro$incial Ta( *r&inance. +=RA#C* conten&e& that the i
%position o a ranchise ta( un&er !ection 2. 9 o #aguna 5ro$incial
*r&inance No. 1 92, inso ar as it concerne& +=RA#C*, contra$ene& the
pro$isions o !ection 1 o 5.E. ;;1 -hich pro$i&es QAny pro$ision o la- or
local or&inance to the
contrary not-ithstan&ing, the ranchise ta( paya le y all grantees o ranchises to generate, &istri ute an&
sell electric current or
light, heat an& po-er shall e t-o per cent '2S) o their gross receipts
recei$e& ro% the sale o electric current an& ro% transactions
inci&ent to the generation, &istri ution an& sale o electric current !uch
ranchise ta( shall e paya le to the Co%%issioner o nternal Re$enue
or his &uly authorize& representati$e.
*n 2" August 199;, the clai% or re un& o petitioner -as &enie& in a letter
signe& y Go$ernor Jose E. #ina. n &enying the clai%, respon&ents relie&
on a %ore recent la-, i.e., Repu lic Act No. 71D or the #ocal Go$ern%ent
Co&e o 1991, than the ol& &ecree in$o/e&
y petitioner.
*n 14 <e ruary 199D, petitioner +=RA#C* le& -ith the RTC a co%plaint or
re un& against the 5ro$ince o #aguna an& also enito R. alazo in his
capacity as the 5ro$incial Treasurer o #aguna. RTC &is%isse& the co
%plaint hol&ing that the po-er to ta( e(ercise& y the pro$ince o #aguna -as
$ali&.
I))<3: 6hether or not the po-er to ta( -as $ali&ly e(ercise&.
H3LD: 5re atorily, it %ight e -ell to recall that local go$ern%ents &o not ha$e
the inherent po-er to ta( e(cept to the e(tent that such po-er %ight e
&elegate& to the% either y the asic la- or
y statute. 5resently, un&er Article : o the 19"7 Constitution, a general &elegation o that
po-er has een gi$en in a$or o local
go$ern%ent units.
n&er the regi%e o the 19B; Constitution no si%ilar &elegation o ta( po-
ers -as pro$i&e&, an& local go$ern%ent units instea& &eri$e& their
ta( po-ers un&er a li%ite& statutory authority. 6hereas, then, the
&elegation o ta( po-ers grante& at that ti%e y statute to local go$ern
%ents -as con ne& an& &e ne& 'outsi&e o -hich the po-er -as &ee%e&
-ithhel&), the present constitutional rule 'starting -ith the 197B
Constitution), ho-e$er, -oul& roa&ly con er such ta( po-ers su ect only to
speci c
e(ceptions that the la- %ight prescri e.
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5/ 2018 D igest Drilon v Lim G R No 112497 - slide .com

n&er the no- pre$ailing Constitution, -here there is neither a grant nor inco%e or receipts realize& -ithin the territorial uris&iction o Ea$ao City.
a prohi ition y statute, the ta( po-er %ust e &ee%e& to e(ist although
Congress %ay pro$i&e statutory li%itations an& gui&elines. B. A%ong the o ections raise& y !%art -ere
a. The issuance o its ranchise un&er RA No. 7294, -hich is su
se3uent to RA 71D '#ocal Go$ern%ent Co&e) sho-s the clear legislati$e
The asic rationale or the current rule is to sa eguar& the $ia ility an& sel intent to e(e%pt it ro% the pro$isions o RA 71D
suFciency o local go$ern%ent units y &irectly granting the% general an& . !ec. 1B7 o the #GC is %eant to apply to e(e%ptions alrea&y
roa& ta( po-ers. Ne$ertheless, the un&a%ental e(isting at the ti%e o its e>ecti$ity an& not to uture
e(e%ption
thela- constitutional&i&notinten& otheecti&elegation$eo$iouslyto eis atosoluteensurean&that,uncon&itional?-hilethe c. The po-er o the City o Ea$ao to i%pose a ranchise ta( is su ect
local go$ern%ent units are eing strengthene& an& %a&e %ore to statutory li%itation such as the Q in lieu of all ta"es clause oun& in RA
autono%ous, the legislature %ust still see to it that 'a) the ta(payer 7294
-ill not e o$er ur&ene& or sa&&le& -ith %ultiple an& & The i%position o ranchise ta( y the City o Ea$ao -oul& a
unreasona le i%positions? ' ) each local go$ern%ent unit -ill ha$e %ount to a $iolation o the constitutional pro$ision against i%pair%ent o
its air share o a$aila le resources? 'c) the resources o the contract.
national go$ern%ent -ill not e un&uly &istur e&? an& '&) local 4. Ea$ao, ho-e$er, in$o/e& the po-er grante& y the Constitution to local
ta(ation -ill e air, uni or%, an& ust. The 1991 Co&e e(plicitly go$ern%ent units '#G ) to create their o-n sources o re$enue.
authorizes pro$incial go$ern%ents, not-ithstan&ing Qany
e(e%ption grante& y any la- or other special la-, ( ( ( 'to) ; The RTC hel& a &ecision in a$or o Ea$ao stating that the a% iguity in
i%pose a ta( on usinesses en oying a ranchise. n&icati$e o the RA 7294 regar&ing Qin lieu o all ta(es %ust e
legislati$e intent to carry out the Constitutional %an&ate o $esting roa& ta( po-ers to local go$ern resol$e& against the ta(payer. Ta( e(e%ptions are construe& in strictly against the ta(payer an& li
%ent units, the #ocal Go$ern%ent erally in a$or o the ta(ing
Co&e has e>ecti$ely -ith&ra-n un&er !ection 19B thereo , ta( e(e authority.
%ptions or incenti$es thereto ore en oye& y certain entities. The Co&e, D. The RTC also hel& that there -as no $iolation o the non i%pair%ent
in a&&ition, contains a general repealing clause in its !ection ;B4 -hich clause o the Constitution since the po-er to ta( is ase& not %erely on a
states that QAll general an& special la-s, acts, city charters, &ecrees, $ali& &elegation o legislati$e po-er ut on the &irect authority grante& to it y
e(ecuti$e or&ers, procla%ations an& a&%inistrati$e regulations, or the un&a%ental la-. t a&&e& that -hile such po-er %ay e su ect to
part or parts thereo -hich are inconsistent -ith any o the pro$isions o restrictions or con&itions i%pose& y Congress, any such legislati$e li
this Co&e are here y repeale& or %o&i e& accor&ingly. %itation %ust e consistent -ith the asic policy o local autono%y.

!! =! 6hether !%art is lia le to pay the ranchise ta( i%pose& y the City o
=H363F563! the instant petition is here y E !+ !!=E. No costs. Ea$ao 8=!
@=#E
G.6. 8o. >; ?uly @ ! @00; 1. !%art alleges that the Qin lieu o all ta(es clause o its ranchise e(e%pts it
)746( C577<8IC4(I58)! I8C.! 5etitioner, ro% all ta(es, oth local an& national, e(cept the national ranchise ta( 'no-
$s. AT), inco%e ta( an& real property ta(. The uncertainty in the Qin lieu o all
(H3 CI(A 5F D4B45! represented herein $y its 7ayor Hon. ta(es clause in RA No. 7294 on -hether !%art is e(e%pte& ro% oth local
65D6IG5 D<(36(3! and the )48GG<8I48G P48L<8)5D 5F an& national ranchise ta( %ust e construe& strictly against !%art -hich clai
D4B45 CI(A! Respon&ents. %s e(e%ption. !%art has the ur&en o pro$i&ing that, asi&e ro% the i
<ACT! %pose& BS ranchise ta(, Congress inten&e& it to e e(e%pt ro% all /in&s o
1. *n <e ruary 1", 2 2, !%art le& a special ci$il action or &eclaratory relie ranchise ta(es -hether local or national. !%art, aile& in this regar&.
B
or the ascertain%ent o its rights an& o ligations un&er the Ta( Co&e o
the City o Ea$ao 'EA A*).
2. The ta( eing i%pose& is a ta( on usinesses en oying a 2. Ta( e(e%ptions can only e gi$en orce i they are clear an&
ranchise, at the rate o se$enty $e percent o one percent o the gross annual receipts or the categorical. Congress inten&e& !%art to e e(e%pte& ro% %unicipal an& pro$incial ta(es, it
prece&ing calen&ar year ase& on the coul& ha$e use& the sa%e

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5/ 2018
language as the Cla$ecilla ranchise -hich state& Qin lieu o any an& all
ta(es o any /in&, nature or &escription le$ie&, esta lishe& ot collecte& y
any authority -hatsoe$er, %unicipal, pro$incial or national, ro% -hich the
grantee is here y e(pressly e(e%pte&. The interpretation o the ranchise
grante& to !%art is that it re ers only to national an& not to local ta(es.
B. !%art also clai%s that the clause Qin lieu o all ta(es is in the nature o a
ta( e(clusion an& not a ta( e(e%ption. The &istinction
et-een the t-o
Ta( =(e%ption This %eans that the ta(payer &oes not pay any ta( at all. An
e(e%ption is an i%%unity or pri$ilege, it is the ree&o% ro% a charge or
ur&en to -hich others are su ecte&.
Ta( =(clusion The re%o$al o other-ise ta(a le ite%s ro% the reach o
ta(ation e.g e(clusions ro% gross inco%e an& allo-a le &e&uctions. An
e(clusion is also an i%%unity or pri$ilege -hich rees a ta(payer ro% a
charge to -hich others are su ecte&. The rule that a ta( e(e%ption shoul& e
applie& strictly against the ta(payer an& li erally in a$or o the go$ern%ent
applies e3ually to ta( e(clusion.
!%art pays AT, inco%e ta( an& real property ta(. Thus, -hat it
en oys it %ore accurately a ta( e(clusion.
4. !%art posits that the ranchise o G#* = contains a pro$ision e(e%pting it
ro% %unicipal or local ranchise ta(, an& that !%art shoul& li/e ene t y
these. n granting the ranchise o G#* = un&er RA No. 792;, Congress &i&
not inten& it to operate as a lan/et ta( e(e%ption to all teleco%%unications
entities. G#* = pays only 1.;S o its gross receipts in lieu o any an& all ta(es
o any /in&, nature or &escription le$ies, esta lishe& or collecte& y any
authority -hatsoe$er, %unicipal, pro$incial or national. This grant to G#* =
is clear an& categorical. No such pro$ision is oun& in the ranchise o !%art,
the /in& o ta( ro% -hich it is e(e%pte& is not clearly speci e&.
; the contention o !%art is to e ollo-e&. The Go$ern%ent -ill e ur&ene& o ha$ing to /eep trac/ o all
grante&
teleco%%unications ranchises, lest so%e co%panies e treate& une3ually.
t is &i>erent i Congress enacts a la- speci cally granting uni or%
a&$antages, a$or, pri$ilege, e(e%ption or i%%unity to all teleco%
%unication entities.
D. !%art li/e-ise clai%s a $iolation o the non i%pair%ent clause since the
ranchise is in the nature o the contract et-een the go$ern%ent an& !%art. !
%art0s ranchise -as grante& -ith the e(press con&ition that it is su ect to a
%en&%ent, alteration or repeal. As hel& in Tolentino $s. !ecretary o
<inance
Q=(isting la-s are rea& into contracts in or&er to (
o ligations as et-een parties, the reser$ation o essential attri utes o so$ereign po-er is also
rea& into contracts as a asic
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postulate o the legal or&er. The policy o protecting contracts against i%pair
%ent presupposes the %aintenance o a go$ern%ent -hich retains
a&e3uate authority to secure the peace an& goo& or&er o society.
n truth, the Contract Clause -as ne$er een though as a li%itation
on the e(ercise o the !tate0s po-er o ta(ation sa$e only -here a ta( e(e
%ption has een grante& or a $ali& consi&eration (((.
Eispositi$e 6here ore, the instant petition is &enie& or lac/ o %erit. Costs against petitioner.
Aamane vs Lepanto
Facts: Respon&ent A #epanto Con&o%iniu% Corporation 'the
MCorporationM) is a &uly organize& con&o%iniu% corporation constitute& in
accor&ance -ith the Con&o%iniu% Act, -hich o-ns an& hol&s title to the co%
%on an& li%ite& co%%on areas o the A #epanto Con&o%iniu% 'the MCon&o
%iniu%M). The Corporation is authorize&, un&er Article o its A%en&e& y #a-
s, to collect regular assess%ents ro% its %e% ers or operating e(penses,
capital e(pen&itures on the co%%on areas, an& other special assess%ents as pro$ i&e& or in the +aster
Eee& -ith Eeclaration o
Restrictions o the Con&o%iniu%.
*n 1; Eece% er 199", the Corporation recei$e& a Notice o Assess%ent
&ate& 14 Eece% er 199" signe& y the City Treasurer. The Notice o
Assess%ent state& that the Corporation is Mlia le to pay the correct city
usiness ta(es, ees an& charges,M co%pute& as totaling 51,D 1, 1B.77 or
the years 199; to 1997. @85=R# NU Mhttp KK---.la-phil.netK u& urisK
uri2 ;Koct2 ;KgrV1;499BV2 ;. ht%lM Wl M ntBM B The Notice o Assess
%ent -as silent as to the statutory asis o the usiness ta(es assesse&.
5rocee&ing ro% the pre%ise that its ta( lia ility arose ro% !ection
BA. 2'%) o the +a/ati Re$enue Co&e, the Corporation procee&e&
to argue that un&er oth the +a/ati Co&e an& the #ocal
Go$ern%ent Co&e, M usinessM is &e ne& as Mtra&e or co%%ercial
acti$ity regularly engage& in as a %eans o li$elihoo& or -ith a $ie-
to pro t.M t -as su %itte& that the Corporation, as a con&o%iniu%
corporation, -as organize& not or pro t, ut to hol& title o$er the
co%%on areas o the Con&o%iniu%, to %anage the Con&o%iniu%
or the unit o-ners, an& to hol& title to the parcels o lan& on -hich
the Con&o%iniu% -as locate&. Neither -as the Corporation
authorize&, un&er its articles o incorporation or y la-s to engage
in pro t %a/ing acti$ities. The assess%ents it &i& collect ro% the unit o-ners -ere or capital
e(pen&itures an& operating e(penses.
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5roce&ural
<ro% the &enial o the protest, the Corporation le& an Appeal -ith the 0 5roce&ural =hether the 6(C! in decidin# an appeal ta%en from a
Regional Trial Court 'RTC) o +a/ati -hich &is%iss the appeal an& denial of a protest $y a local treasurer under )ection ; of the Local
conclu&e& that the acti$ities o the Corporation ell s3uarely un&er the &e Government Code! e"ercises 2ori#inal -urisdiction2 or 2appellate
nition o M usinessM un&er !ection 1B' ) o the #ocal Go$ern%ent Co&e, -urisdiction *riginal
an& thus su ect to local usiness ta(ation.
There are 2 con icting $ie-s on this issue
The Corporation le& a Petition for Review un&er Rule 42 o the 5osition o CA RTC, in re$ie-ing &enials o protests y local
Rules o Ci$il 5roce&ure -ith the Court o Appeals. nitially, the petition -as &is%isse& outright on the groun& that e
treasurers, e( rcises appellate uris&iction. This is anchore& on the language o ! c. 19; o the #GC -hich states that the re%e&y o
only &ecisions o
the RTC rought on appeal ro% a rst le$el court coul& e ele$ate& or re$ie- the ta(payer -hose protest is &enie& y the local treasurer is Qto appeal
un&er the %o&e o re$ie- prescri e& un&er Rule -ith the court o co%petent uris&iction. The #GC ho-e$er &oes not ela
42. @o-e$er, the Corporation pointe& out in its Motion for orate on ho- such Qappeal shoul& e un&erta/en.
Reconsideration that un&er !ection 19; o the #ocal Go$ern%ent Co&e, the re 1 5osition o City Treasurer uris&iction e(ercise& is original in
%e&y o the ta(payer on the &enial o the protest le& -ith the local treasurer is character.
to appeal the &enial -ith the court o co%petent uris&iction. 5ersua&e& y this
contention, the Court o Appeals reinstate& the petition. Court aFr%e& the position o the City Treasurer. The #GC &oes not
e(pressly con er appellate uris&iction on the part o RTCs ro% the &enial o
a ta( protest y a local treasurer. *n the other han&, !ection 22 o 5 129
The appellate court re$erse& the RTC an& &eclare& that the e(pressly &elineates the appellate uris&iction
o the RTCs, con ning appellate uris&iction to cases &eci&e& y +etropolitan, +unicipal, an& +unicipal
Corporation -as not lia le to pay usiness ta(es to the City o +a/ati. Circuit Trial Courts. 5 129
&oes not con er appellate uris&iction on RTCs o$er rulings %a&e y non
pon &enial o her Motion for u&icial entities.
Reconsideration,http KK---.la-phil.netK u& urisK uri2 ;Koct2
;KgrV1;499BV2 ;.ht%l nt21 the City Treasurer ele$ate& the present @*6= =R, this pronounce%ent is su ect to t-o 3uali cations.
Petition for Review un&er Rule 4;. t is argue& that the Corporation is <irst, in this case there are signi cant reasons or the Court to
engage& in usiness, or the &ues collecte& ro% the &i>erent unit o-ners is o$erloo/ the proce&ural error an& ulti%ately uphol& the a& u&ication o
utilize& to-ar&s the eauti cation an& %aintenance o the Con&o%iniu%, the uris&iction e(ercise& y the CA.
resulting in M ull appreciati$e li$ing $aluesM or the con&o%iniu% units -hich 1 !econ&, the &octrinal -eight o the pronounce%ent is con ne& to
-oul& co%%an& etter %ar/et prices shoul& they e sol& in the uture. The City cases an& contro$ersies that e%erge& prior to the enact%ent o RA
92"2 'e>ecti$e April 2 4), the la- -hich
Treasurer li/e-ise a$ers that the rationale or usiness ta(es is not on the inco%e e(pan&e& the uris&iction o the Court o Ta( Appeals 'CTA). n&er RA 92"2, the CTA, not CA,
recei$e& or pro t earne& y the usiness, ut the e(ercises e(clusi$ e appellate uris&iction
pri$ilege to engage in usiness. to re$ie- on appeal &ecisions, or&ers or resolutions o the RTCs in local
ta( cases -hether originally &eci&e& or resol$e& y the% in the e(ercise o
The City Treasurer also clai%s that the Corporation ha& le& the -rong their original or appellate uris&iction. RA 92"2 thus -oul& not apply here
%o&e o appeal e ore the Court o Appeals -hen the latter le& its 5etition ecause the case arose prior to the a>ecti$ity o the la-.
or Re$ie- un&er Rule 42. t is reasone& that the &ecision o the +a/ati
RTC -as ren&ere& in the e(ercise o original uris&iction, it eing the rst
court -hich too/ cognizance o the case. Accor&ingly, -ith the Corporation
ha$ing pursue& an erroneous %o&e o appeal, the RTC Decision is &ee !u stanti$e =hether the City of 7a%ati may collect $usiness
ta"es on condominium corporations No
%e& to ha$e eco%e nal an& e(ecutory.
The po-er o local go$ern%ent units to i%pose ta(es -ithin its
territorial uris&iction &eri$es ro% the Constitution itsel , -hich recognizes the po-er o
Issues and 6ulin#: these units Mto create its o-n sources o

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re$enue an& to le$y ta(es, ees, an& charges su ect to such gui&elines or the purpose o hol&ing title to the co%%on area, in -hich the
an& li%itations as the Congress %ay pro$i&e, consistent -ith the asic hol&ers o separate interests shall auto%atically e %e% ers or
policy o local autono%y.M sharehol&ers, to the e(clusion o others, in proportion to the
!ection 14B o the Co&e speci cally enu%erates se$eral types o usiness appurtenant interest o their respecti$e units.
on -hich %unicipalities an& cities %ay i%pose ta(es. These inclu&e
%anu acturers, -holesalers, &istri utors, &ealers o any article o co% =$en though the Corporation is e%po-ere& to le$y assess%ents or &ues
%erce o -hate$er nature? those engage& in the e(port or co%%erce o ro% the unit o-ners, these a%ounts collecte& are not inten&e& or the
essential co%%o&ities? contractors an& incurrence o pro t y the Corporation or its
t
other in&epen&ent contractors? an/s an& nancial ins itutions? an& pe&&lers engage& in the sale o any %erchan&ise or ar icle o %e% ers, ut to shoul&er the %ultitu&e o necessary e(penses that arise ro% the %aintenance o the Con&o%iniu%
5ro ect.
co%%erce. +oreo$er, the local sanggunian is also authorize& to i
%pose ta(es on any other usinesses not other-ise speci e& un&er ! n re ecting the contention o the City Treasurer that the collection
ection 14B -hich the sanggunian concerne& %ay &ee% proper to ta(. o these assess%ents an& &ues are M-ith the en& $ie- o getting
ull appreciati$e li$ing $aluesM or the con&o%iniu% units, an& as a
result, pro t is o taine& once these units are sol& at higher prices,
At no point has the City Treasurer een can&i& enough to in or% the it hel& that <irst, i any pro t is o taine& y the sale o the units, it
Corporation, the RTC, the Court o Appeals, or this Court or that %atter, as accrues not to the corporation ut to the unit o-ner. !econ&, i the
to -hat e(actly is the precise statutory asis un&er the +a/ati Re$enue Co&e unit o-ner &oes o tain pro t ro% the sale o the corporation, the
or the le$ying o the usiness ta( on petitioner. No-here therein is there any o-ner is alrea&y re3uire& to pay capital gains ta( on the
citation %a&e y the City appreciate& $alue o the con&o%iniu% unit. 6hate$er capacity the
Treasurer o any pro$ision o the Re$enue Co&e -hich -oul& ser$e as the legal authority or the collection Corporation %ay ha$e pursuant to its po-er to e(ercise acts o o-nership o$er personal an& real
o usiness ta(es ro% property is li%ite& y its state&
con&o%iniu%s in +a/ati. corporate purposes, -hich are y the%sel$es urther li%ite& y the Con&o
%iniu% Act. A con&o%iniu% corporation, -hile en oying such po-ers o o-
The initial in3uiry is -hat pro$ision o the +a/ati Re$enue Co&e &oes the nership, is prohi ite& y la- ro% transacting its properties or the purpose o
City Treasurer relies on to %a/e the Corporation lia le or usiness ta(es. gain ul pro t.
The notice o assess%ent, -hich stan&s as the rst instance the ta(payer is
oFcially %a&e a-are o the pen&ing ta( lia ility, shoul& e suFciently in or The Court hol&s that con&o%iniu% corporations are generally e(e%pt
%ati$e to apprise the ta(payer the legal asis o the ta(. !ection 19; o the ro% local usiness ta(ation un&er the #ocal Go$ern%ent Co&e,
#ocal Go$ern%ent Co&e &oes not go as ar as to e(pressly re3uire that irrespecti$e o any local or&inance that see/s to &eclare other-ise. !till,
the notice o assess%ent speci cally cite the pro$ision o the or&inance the City Treasurer has not posite& the clai% that the Corporation is
in$ol$e& engage& in usiness acti$ities eyon& the
ut it &oes re3uire that it state the nature o the ta(, ee or charge, the a%ount o &e ciency, statutory purposes o a con&o%iniu% corporation. The assess%ent appears to e ase& solely on
surcharges, interests an& penalties. the Corporation0s collection o
Re erence to the local ta( or&inance is $ital, or the po-er o local go$ern assess%ents ro% unit o-ners, such assess%ents eing utilize& to &e ray
%ent units to i%pose local ta(es is e(ercise& through the appropriate the necessary e(penses or the Con&o%iniu% 5ro ect an& the co%%on
or&inance enacte& y the !anggunian, an& not y the #ocal Go$ern%ent areas. There is no conte%plation o usiness, no orientation to-ar&s pro t in
Co&e alone. 6hat &eter%ines ta( lia ility is the ta( or&inance, the #ocal this case. @ence, the assaile& ta( assess%ent has no asis un&er the
Go$ern%ent Co&e eing the ena ling la-or the local legislati$e o&y. #ocal Go$ern%ent Co&e or the +a/ati Re$enue Co&e, an& the insistence
o the city in its collection o the $oi& ta( constitutes an atte%pt at
The creation o the con&o%iniu% corporation is sanctione& y Repu lic &epri$ation o property -ithout &ue process o la-.
Act No. 472D. n&er the la-, to ena le the or&erly a&%inistration o$er
these co%%on areas -hich are ointly o-ne&
y the $arious unit o-ners, the Con&o%iniu% Act per%its the creation o a con&o%iniu%
corporation, -hich is specially or%e&
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