Magtajas vs. PHILIPPINE AMUSEMENT and GAMING CORPORATION, n.d., G.R. No. 111097, filed on July 20, 1994. The city of Cagayan de Oro City was angrily denounced when PAGCOR announced the opening of a casino in the city. The sangguniang panlungsod of the city enacted ordinances No. 3353 and 3375-
Magtajas vs. PHILIPPINE AMUSEMENT and GAMING CORPORATION, n.d., G.R. No. 111097, filed on July 20, 1994. The city of Cagayan de Oro City was angrily denounced when PAGCOR announced the opening of a casino in the city. The sangguniang panlungsod of the city enacted ordinances No. 3353 and 3375-
Magtajas vs. PHILIPPINE AMUSEMENT and GAMING CORPORATION, n.d., G.R. No. 111097, filed on July 20, 1994. The city of Cagayan de Oro City was angrily denounced when PAGCOR announced the opening of a casino in the city. The sangguniang panlungsod of the city enacted ordinances No. 3353 and 3375-
MAYOR PABLO P. MAGTAJAS & THE CITY OF CAGAYAN DE ORO, petitioners, vs. PRYCE PROPERTIES CORPORATION, INC. & PHILIPPINE AMUSEMENT AND GAMING CORPORATION, FACTS: There was instant opposition when PAGCOR announced the opening of a casino in Cagayan de Oro City. Civic organizations angrily denounced the project.The trouble arose when in 1992, flush with its tremendous success in several cities, PAGCOR decided to expand its operations to Cagayan de Oro City.he reaction of the Sangguniang Panlungsod of Cagayan de Oro City was swift and hostile. On December 7, 1992, it enacted Ordinance No. 3353.Nor was this all. On January 4, 1993, it adopted a sterner Ordinance No. 3375-93Pryce assailed the ordinances before the Court of Appeals, where it was joined by PAGCOR as intervenor and supplemental petitioner. Their challenge succeeded. On March 31, 1993, the Court of Appeals declared the ordinances invalid and issued the writ prayed for to prohibit their enforcement ISSUE: WON Ordinance 3353 and 3375-93 valid HELD: No Local Government Code, local government units are authorized to prevent or suppress, among others, "gambling and other prohibited games of chance." Obviously, this provision excludes games of chance which are not prohibited but are in fact permitted by law.The rationale of the requirement that the ordinances should not contravene a statute is obvious.Casino gambling is authorized by P.D. 1869. This decree has the status of a statute that cannot be amended or nullified by a mere ordinance. Hence, it was not competent for the Sangguniang Panlungsod of Cagayan de Oro City to enact Ordinance No. 3353 prohibiting the use of buildings for the operation of a casino and Ordinance No. 3375-93 prohibiting the operation of casinos. For all their praiseworthy motives, these ordinances are contrary to P.D. 1869 and the public policy announced therein and are therefore ultra vires and void. Drilon vs LIM GR No. 112497, August 4, 1994 FACTS: Pursuant to Section 187 of the Local Government Code, the Secretary of Justice had, on appeal to him of four oil companies and a taxpayer, declared Ordinance No. 7794, otherwise known as the Manila Revenue Code, null and void for non-compliance with the prescribed procedure in the enactment of tax ordinances and for containing certain provisions contrary to law and public policy. In a petition for certiorari filed by the City of Manila, the Regional Trial Court of Manila revoked the Secretarys resolution and sustained the ordinance, holding inter alia that the procedural requirements had been observed. More importantly, it declared Section 187 of the Local Government Code as unconstitutional because of its vesture in the Secretary of Justice of the power of control over local governments in violation of the policy of local autonomy mandated in the Constitution and of the specific provision therein conferring on the President of the Philippines only the power of supervision over local governments. The court cited the familiar distinction between control and supervision, the first being the power of an officer to alter or modify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for the latter, while the second is the power of a superior officer to see to it that lower officers perform their functions is accordance with law. ISSUES: The issues in this case are (1) whether or not Section 187 of the Local Government Code is unconstitutional; and (2) whether or not the Secretary of Justice can exercise control, rather than supervision, over the local government HELD: The judgment of the lower court is reversed in so far as its declaration that Section 187 of the Local Government Code is unconstitutional but affirmed the said lower courts finding that the procedural requirements in the enactment of the Manila Revenue Code have been observed. Section 187 authorizes the Secretary of Justice to review only the constitutionality or legality of the tax ordinance and, if warranted, to revoke it on either or both of these grounds. When he alters or modifies or sets aside a tax ordinance, he is not also permitted to substitute his own judgment for the judgment of the local government that enacted the measure. Secretary Drilon did set aside the Manila Revenue Code, but he did not replace it with his own version of what the Code should be. An officer in control lays down the rules in the doing of an act. It they are not followed, he may, in his discretion, order the act undone or re-done by his subordinate or he may even decide to do it himself. Supervision does not cover such authority. The supervisor or superintendent merely sees to it that the rules are followed, but he himself does not lay down such rules, nor does he have the discretion to modify or replace them. In the opinion of the Court, Secretary Drilon did precisely this, and no more nor less than this, and so performed an act not of control but of mere supervision. Regarding the issue on the non-compliance with the prescribed procedure in the enactment of the Manila Revenue Code, the Court carefully examined every exhibit and agree with the trial court that the procedural requirements have indeed been observed. The only exceptions are the posting of the ordinance as approved but this omission does not affect its validity, considering that its publication in three successive issues of a newspaper of general circulation will satisfy due process. 200 SCRA 271 Political Law Control Power Local Government Ganzon vs ca Rodolfo Ganzon was the then mayor of Iloilo City. 10 complaints were filed against him on grounds of misconduct and misfeasance of office. The Secretary of Local Government issued several suspension orders against Ganzon based on the merits of the complaints filed against him hence Ganzon was facing about 600 days of suspension. Ganzon appealed the issue to the CA and the CA affirmed the suspension order by the Secretary. Ganzon asserted that the 1987 Constitution does not authorize the President nor any of his alter ego to suspend and remove local officials; this is because the 1987 Constitution supports local autonomy and strengthens the same. What was given by the present Constitution was mere supervisory power. ISSUE: Whether or not the Secretary of Local Government, as the Presidents alter ego, can suspend and or remove local officials. HELD: Yes. Ganzon is under the impression that the Constitution has left the President mere supervisory powers, which supposedly excludes the power of investigation, and denied her control, which allegedly embraces disciplinary authority. It is a mistaken impression because legally, supervision is not incompatible with disciplinary authority. The SC had occasion to discuss the scope and extent of the power of supervision by the President over local government officials in contrast to the power of control given to him over executive officials of our government wherein it was emphasized that the two terms, control and supervision, are two different things which differ one from the other in meaning and extent. In administration law supervision means overseeing or the power or authority of an officer to see that subordinate officers perform their duties. If the latter fail or neglect to fulfill them the former may take such action or step as prescribed by law to make them perform their duties. Control, on the other hand, means the power of an officer to alter or modify or nullify of set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for that of the latter. But from this pronouncement it cannot be reasonably inferred that the power of supervision of the President over local government officials does not include the power of investigation when in his opinion the good of the public service so requires. The Secretary of Local Government, as the alter ego of the president, in suspending Ganzon is exercising a valid power. He however overstepped by imposing a 600 day suspension. National liga ng mga barangay vs paredes Facts: DILG, appointed as interim caretaker to administer and manage the affairs of the Liga ng mga Barangay in giving remedy to alleged violations made by the incumbent officer of the Liga in the conduct of their elections, issued 2 memorandum circulars which alter, modify, nullify or set aside the actions of the Liga. Petitioner contends that DILGs appointment constitutes undue interference in the internal affairs of the Liga, since the latter is not subject to DILG control and supervision. Respondent judge contends that DILG exercises general supervisory jurisdiction over LGUs including the different leagues based on sec. 1 of Admin. Order No. 267 providing for a broad premise of the supervisory power of the DILG. Issue: WON DILG Secretary as alter-ego of the President has power of control over the Liga ng mga Barangay. Held: No. Sec. 4, Art. X of the Constitution provides that the President of the Philippines shall exercise general supervision over local government, which exclude the power of control. As the entity exercising supervision over the Liga, the DILGs authority is limited to seeing to it that the rules are followed, but it cannot lay down such rules itself nor does it have the discretion to modify or replace the same. AMPATUAN v. PUNO October 26, 2012 Leave a comment June 7, 2011 (G.R. No. 190259) PARTIES: Petitioners: DATU ZALDY UY AMPATUAN, ANSARUDDIN ADIONG, REGIE SAHALI-GENERALE Respondents : HON. RONALDO PUNO, ARMED FORCES OF THE PHILIPPINES, PHILIPPINE NATIONAL POLICE
FACTS: On November 24, 2009, the day after the gruesome massacre of 57 men and women, then President Gloria Macapagal-Arroyo issued Proclamation 1946, placing the Provinces of Maguindanao and Sultan Kudarat and the City of Cotabato under a state of emergency. She directed the AFP and the PNP to undertake such measures as may be allowed by the Constitution and by law to prevent and suppress all incidents of lawless violence in the named places. Under AO 273, she also delegated to the DILG the supervision of the ARMM. The petitioners claimed that the Presidents issuances encroached the ARMMs autonomy, that it constitutes an invalid exercise of emergency powers, and that the President had no factual basis for declaring a state of emergency, especially in the Province of Sultan Kudarat and the City of Cotabato, where no critical violent incidents occurred. They want Proc. 1946 and AO 273 be declared unconstitutional. The respondents, however, said that its purpose was not to deprive the ARMM of its autonomy, but to restore peace and order in subject places. It is pursuant to her calling out power as Commander-in-Chief. The determination of the need to exercise this power rests solely on her wisdom. The President merely delegated her supervisory powers over the ARMM to the DILG Secretary who was her alter ego any way. The delegation was necessary to facilitate the investigation of the mass killings ISSUE: WON President Arroyo invalidly exercised emergency powers when she called out the AFP and the PNP to prevent and suppress all incidents of lawless violence in Maguindanao, Sultan Kudarat, and Cotabato City HELD: NO. The President did not proclaim a national emergency, only a state of emergency in the three places mentioned. And she did not act pursuant to any law enacted by Congress that authorized her to exercise extraordinary powers. The calling out of the armed forces to prevent or suppress lawless violence in such places is a power that the Constitution directly vests in the President. She did not need a congressional authority to exercise the same. ISSUE (2): WON there is factual basis on the calling out of the Armed Forces. HELD: Yes. The Presidents call on the armed forces to prevent or suppress lawless violence springs from the power vested in her under Section 18, Article VII of the Constitution. While it is true that the Court may inquire into the factual bases for the Presidents exercise of the above power, unless it is shown that such determination was attended by grave abuse of discretion, the Court will accord respect to the Presidents judgment. Lino Vs Pano
HON. JOSE D. LINA, JR., SANGGUNIANG PANLALAWIGAN OF LAGUNA, and HON.CALIXTO CATAQUIZ, petitioners, vs . HON. FRANCISCO DIZON PAO and TONYCALVENTO, respondents . G.R. No. 129093 FACTS:On December 29, 1995, respondent Tony Calvento was appointed agent by the Philippine Charity Sweepstakes Office (PCSO) to install Terminal OM 20 for the operation of lotto. He asked Mayor Calixto Cataquiz, Mayor of San Pedro, Laguna, for a mayors permit to open the lotto outlet. This was denied by Mayor Cataquiz in a letter dated February 19, 1996. The ground for said denial was an ordinance passed by the Sangguniang Panlalawigan of Laguna entitled Kapasiyahan Blg. 508, T. 1995which was issued on September 18, 1995.As a result of this resolution of denial, respondent Calvento filed a complaint for declaratory relief with prayer for preliminary injunction and temporary restraining order. In the said complaint, respondent Calvento asked the Regional Trial Court of San Pedro Laguna, Branch 93, for the following reliefs: (1) a preliminary injunction or temporary restraining order, ordering the defendants to refrain from implementing or enforcing Kapasiyahan Blg. 508, T. 1995; (2) an order requiring Hon. Municipal Mayor Calixto R. Cataquiz to issue a business permit for the operation of a lotto outlet; and (3) an order annulling or declaring as invalid Kapasiyahan Blg. 508, T. 1995.On February 10, 1997, the respondent judge, Francisco Dizon Pao, promulgated his decision enjoining the petitioners from implementing or enforcing resolution or Kapasiyahan Blg. 508, T. 1995. ISSUE: WON Kapasiyahan Blg. 508, T. 1995 is valid HELD: As a policy statement expressing the local governments objection to the lotto, such resolution is valid. This is part of the local governments autonomy to air its views which may be contrary to that of the national governments. However, this freedom to exercise contrary views does not mean that local governments may actually enact ordinances that go against laws duly enacted by Congress. Given this premise, the assailed resolution in this case could not and should not be interpreted as a measure or ordinance prohibiting the operation of lotto.n our system of government, the power of local government units to legislate and enact ordinances and resolutions is merely a delegated power coming from Congress. As held in Tatel vs. Virac, ordinances should not contravene an existing statute enacted by Congress. The reasons for this is obvious, as elucidated in Magtajas v. Pryce Properties Corp. Province of rizal vs executive secretary G.R. No. 129546 December 13, 2005 Facts: This is a petition filed by the Province of Rizal, the municipality of San Mateo, and various concerned citizens for review on certiorari of the Decision of the Court of Appeals, denying, for lack of cause of action, the petition for certiorari, prohibition and mandamus with application for a temporary restraining order/writ of preliminary injunction assailing the legality and constitutionality of Proclamation No. 635. At the height of the garbage crisis plaguing Metro Manila and its environs, parts of the Marikina Watershed Reservation were set aside by the Office of the President [President Ramos], through Proclamation No. 635, for use as a sanitary landfill and similar waste disposal applications. The petioners opposed the implementation of said order since the creation of dump site under the territorial jurisdiction would compromise the health of their constutents. Moreso, the the dump site is to be constructed in Watershed reservation. Through their concerted efforts of the officials and residents of Province of Rizal and Municipality of San Mateo, the dump site was closed. However, during the term of President Estrada in 2003, the dumpsite was re-opened.
A temporary restraining order was then filed. Although petitioners did not raised the question that the project was not consulted and approved by their appropriate Sanggunian, the court take it into consideration since a mere MOA does not guarantee the dump sites permanent closure. Issue: Whether or not the consultation and approval of the Province of Rizal and municipality of San Mateo is needed before the implementation of the project.. Ruling: The court reiterated again that "the earth belongs in usufruct to the living." Yes, as lucidly explained by the court: contrary to the averment of the respondents, Proclamation No. 635, which was passed on 28 August 1995, is subject to the provisions of the Local Government Code, which was approved four years earlier, on 10 October 1991. Section 2(c) of the said law declares that it is the policy of the state- "to require all national agencies and offices to conduct periodic consultation with appropriate local government units, non-governmental and people's organization, and other concerned sectors of the community before any project or program is implemented in their respective jurisdiction." Likewise Section 27 requires prior consultations before a program shall be implemented by government authorities ans the prior approval of the Sanggunian is obtained." Corollarily as held in Lina , Jr. v. Pao, Section 2 (c), requiring consultations with the appropriate local government units, should apply to national government projects affecting the environmental or ecological balance of the particular community implementing the project. Relative to the case, during the oral arguments at the hearing for the temporary restraining order, Director Uranza of the MMDA Solid Waste Management Task Force declared before the Court of Appeals that they had conducted the required consultations. However, the ambivalence of his reply was brought to the fore when at the height of the protest rally and barricade made by the residents of petitioners to stop dump trucks from reaching the site, all the municipal mayors of the province of Rizal openly declared their full support for the rally and notified the MMDA that they would oppose any further attempt to dump garbage in their province. Moreover, Section 447, which enumerates the powers, duties and functions of the municipality, grants the sangguniang bayan the power to, among other things, enact ordinances, approve resolutions and appropriate funds for the general welfare of the municipality and its inhabitants pursuant to Section 16 of th(e) Code. These include: (1) Approving ordinances and passing resolutions to protect the environment and impose appropriate penalties for acts which endanger the environment, such as dynamite fishing and other forms of destructive fishing, illegal logging and smuggling of logs, smuggling of natural resources products and of endangered species of flora and fauna, slash and burn farming, and such other activities which result in pollution, acceleration of eutrophication of rivers and lakes, or of ecological imbalance; [Section 447 (1)(vi)] (2) Prescribing reasonable limits and restraints on the use of property within the jurisdiction of the municipality, adopting a comprehensive land use plan for the municipality, reclassifying land within the jurisdiction of the city, subject to the pertinent provisions of this Code, enacting integrated zoning ordinances in consonance with the approved comprehensive land use plan, subject to existing laws, rules and regulations; establishing fire limits or zones, particularly in populous centers; and regulating the construction, repair or modification of buildings within said fire limits or zones in accordance with the provisions of this Code;[Section 447 (2)(vi-ix)]
(3) Approving ordinances which shall ensure the efficient and effective delivery of the basic services and facilities as provided for under Section 17 of this Code, and in addition to said services and facilities, providing for the establishment, maintenance, protection, and conservation of communal forests and watersheds, tree parks, greenbelts, mangroves, and other similar forest development projects .and, subject to existing laws, establishing and providing for the maintenance, repair and operation of an efficient waterworks system to supply water for the inhabitants and purifying the source of the water supply; regulating the construction, maintenance, repair and use of hydrants, pumps, cisterns and reservoirs; protecting the purity and quantity of the water supply of the municipality and, for this purpose, extending the coverage of appropriate ordinances over all territory within the drainage area of said water supply and within one hundred (100) meters of the reservoir, conduit, canal, aqueduct, pumping station, or watershed used in connection with the water service; and regulating the consumption, use or wastage of water.[Section 447 (5)(i) & (vii)] Briefly stated, under the Local Government Code, two requisites must be met before a national project that affects the environmental and ecological balance of local communities can be implemented: (1) prior consultation with the affected local communities, and (2)prior approval of the project by the appropriate sanggunian.
Absent either of these mandatory requirements, the projects implementation is illegal. Andaya vs RTC Posted on October 23, 2012 319 SCRA 696 (G.R. No. 126661) February 13, 2004
FACTS: On January 3, 1996, the position of City Director, Cebu City Police Command (chief of police) became vacant after P/Supt. Antonio Enteria was relieved of command. Thereafter, petitioner Andaya submitted to the City Mayor of Cebu a list of 5 eligibles from which the latter would choose and appoint as the new chief of police. However, the mayor did not choose anyone from the list because P/Chief Inspector Andres Sarmiento was not included therein. Petitioner Andaya refused the Mayors request to include Major Andres Sarmiento in the list of police officers for appointment since he was not qualified for the position under NAPOLCOM Memorandum Circular No. 95-04. ISSUE: WON Mayor of Cebu City may require the inclusion of his protg in the list of 5 eligibles to be recommended to him by the Regional Police Dir., Regional Police Command No.7, for his selection of the the City Director, City Police Command (chief of police) HELD: No. RA 6975 Sec.51 deputizes the Mayor of Cebu City as representative of the National Police Commission in his territorial jurisdiction grants the Mayor of Cebu City authority to choose the chief of police from a list of five (5) eligibles recommended by the Regional Director, Regional Police Command No. 7 The City Police Station of Cebu City is under the direct command & control of the PNP Regional Director, and is equivalent to a provincial office. It is the prerogative of the Regional Police Director to name the 5 eligibles from a pool of eligible officers, screened by the Senior Officers Promotion and Selection Board, without interference from local executives. The National Police Commission issued Memorandum Circular No. 95-04 to implement RA 6975. Memorandum Circular 95-04 provides qualifications for Chief of Police of highly urbanized cities: (1) completion of the Officers Senior Executive Course (OSEC) (2) holding the rank of Police Superintendent In case of disagreement between the Regional Police Director and the Mayor, the question shall be elevated to the Regional Director, National Police Commission, who shall resolve the issue within 5 working days from receipt and whose decision on the choice of the Chief of Police shall be final and executory. As deputy of the Commission, the authority of the mayor is very limited. In reality, he has no power of appointment; he has only the limited power of selecting one from among the list of 5 eligibles to be named the chief of police. The actual power to appoint the Chief of Police is vested in the Regional Director. As such, the mayor cannot require the Regional Director to include the name of any officer, no matter how qualified, in the list of 5 to be submitted to him. This is to enhance police professionalism and to isolate the police service from political domination.
Part V governmental power of local governments Basco vs pagcor On July 11, 1983, PAGCOR was created under PD 1869 to enable the Government to regulate and centralize all games of chance authorized by existing franchise or permitted by law. Basco and four others (all lawyers) assailed the validity of the law creating PAGCOR on constitutional grounds among others particularly citing that the PAGCORs charter is against the constitutional provision on local autonomy. Basco et al contend that P.D. 1869 constitutes a waiver of the right of the City of Manila to impose taxes and legal fees; that Section 13 par. (2) of P.D. 1869 which exempts PAGCOR, as the franchise holder from paying any tax of any kind or form, income or otherwise, as well as fees, charges or levies of whatever nature, whether National or Local is violative of the local autonomy principle. ISSUE: Whether or not PAGCORs charter is violative of the principle of local autonomy. HELD: NO. Section 5, Article 10 of the 1987 Constitution provides: Each local government unit shall have the power to create its own source of revenue and to levy taxes, fees, and other charges subject to such guidelines and limitation as the congress may provide, consistent with the basic policy on local autonomy. Such taxes, fees and charges shall accrue exclusively to the local government.
A close reading of the above provision does not violate local autonomy (particularly on taxing powers) as it was clearly stated that the taxing power of LGUs are subject to such guidelines and limitation as Congress may provide. Further, the City of Manila, being a mere Municipal corporation has no inherent right to impose taxes. The Charter of the City of Manila is subject to control by Congress. It should be stressed that municipal corporations are mere creatures of Congress which has the power to create and abolish municipal corporations due to its general legislative powers. Congress, therefore, has the power of control over Local governments. And if Congress can grant the City of Manila the power to tax certain matters, it can also provide for exemptions or even take back the power. Further still, local governments have no power to tax instrumentalities of the National Government. PAGCOR is a government owned or controlled corporation with an original charter, PD 1869. All of its shares of stocks are owned by the National Government. Otherwise, its operation might be burdened, impeded or subjected to control by a mere Local government. This doctrine emanates from the supremacy of the National Government over local governments. MANILA ELECTRIC COMPANY vs. PROVINCE OF LAGUNA FACTS Manila Electric Company (MERALCO) on various dates (the latest being January 19, 1983) was granted franchises by various municipalities of Laguna. On Sept. 12 1991, RA 7160 "Local Government Code of 1991" (LGC) was enacted to take effect on Jan.1 1992 enjoining local goverment units to create their own sources of revenue and to levy taxes, fees and charges, subject to the limitations, consistent with the basic policy of local autonomy. Respondent Laguna Province enacted Ordinance No. 01-92 (effective Jan. 1, 1993) providing, in part: Sec. 2.09. Franchise Tax. There is hereby imposed a tax on businesses enjoying a franchise, at a rate of fifty percent (50%) of one percent (1%) of the gross annual receipts, which shall include both cash sales and sales on account realized during the preceding calendar year within this province, including the territorial limits on any city located in the province MERALCO was then sent a demand letter to pay the corresponding tax. MERALCO paid the tax under protest (approx. Php19.5M) and later on filed a formal claim for refund. It contends that the stated Section 2.09 of the LGC contravened the provisions of Section 1 of PD 551, which provides: Any provision of law or local ordinance to the contrary notwithstanding, the franchise tax payable by all grantees of franchises to generate, distribute and sell electric current for light, heat and power shall be two per cent (2%) of their gross receipts received from the sale of electric current and from transactions incident to the generation, distribution and sale of electric current. Such franchise tax shall be payable to the Commissioner of Internal Revenue or his duly authorized representative on or before the twentieth day of the month following the end of each calendar quarter or month, as may be provided in the respective franchise or pertinent municipal regulation and shall, any provision of the Local Tax Code or any other law to the contrary notwithstanding, be in lieu of all taxes and assessments of whatever nature imposed by any national or local authority on earnings, receipts, income and privilege of generation, distribution and sale of electric current. MERALCO then filed a complaint for refund with a prayer for the issuance of a writ of preliminary injunction and/or TRO at the RTC of Sta. Cruz, Laguna. The RTC dismissed the complaint and ruled that the Ordinance was valid, binding, reasonable and enforceable. ISSUES 1. W/N the imposition of a franchise tax under Section 2.09 of Laguna Provincial Ordinance No. 01-92, insofar as MERALCO is concerned, is violative of the non-impairment clause of the Constitution and Section 1 of Presidential Decree No. 551? NO 2. W/N the LGC, has repealed, amended or modified Presidential Decree No. 551? YES RULING (As an intro for the ruling as stated by the SC:) Local Governments do not have the inherent power to tax except to the extent that such power might be delegated to them either by the basic law or by statute. Presently, Under Article X of the 1987 Constitution, a general delegation of that power has been given in favor of the Local Government Units (LGU).
Under the now prevailing Constitution, where there is neither a grant nor a prohibition by statute, the tax power must be deemed to exist although Congress may provide statutory limitations and guidelines. The basic rationale for the current rule is to safeguard the viability and self-sufficiency of local government units by directly granting them general and broad tax powers. Nevertheless, the fundamental law did not intend the delegation to be absolute and unconditional; the constitutional objective obviously is to ensure that, while the local government units are being strengthened and made more autonomous, the legislature must still see to it that (a) the taxpayer will not be over-burdened or saddled with multiple and unreasonable impositions; (b) each local government unit will have its fair share of available resources; (c) the resources of the national government will not be unduly disturbed; and (d) local taxation will be fair, uniform, and just. 1. While the Court has, not too infrequently, referred to tax exemptions contained in special franchises as being in the nature of contracts and a part of the inducement for carrying on the franchise, these exemptions, nevertheless, are far from being strictly contractual in nature. Contractual tax exemptions, in the real sense of the term and where the non-impairment clause of the Constitution can rightly be invoked, are those agreed to by the taxing authority in contracts, such as those contained in government bonds or debentures, lawfully entered into by them under enabling laws in which the government, acting in its private capacity, sheds its cloak of authority and waives its governmental immunity. Truly, tax exemptions of this kind may not be revoked without impairing the obligations of contracts. These contractual tax exemptions, however, are not to be confused with tax exemptions granted under franchises. A franchise partakes the nature of a grant which is beyond the purview of the non-impairment clause of the Constitution. 2. The Local Government Code of 1991 explicitly authorizes provincial governments, notwithstanding any exemption granted by any law or other special law, x x x (to) impose a tax on businesses enjoying a franchise". (Section 137 of the LGC) Indicative of the legislative intent to carry out the Constitutional mandate of vesting broad tax powers to local government units, LGC has effectively withdrawn under Section 193 thereof, tax exemptions or incentives theretofore enjoyed by certain entities. This law states:
Section 193 Withdrawal of Tax Exemption Privileges Unless otherwise provided in this Code, tax exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including government-owned or controlled corporations, except local water districts, cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code. The Code, in addition, contains a general repealing clause in its Section 534; thus: Section 534. Repealing Clause. x x x. (f) 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 this Code are hereby repealed or modified accordingly. 3. MERALCO further contends that in a plethora of cases including Court in Province of Misamis Oriental vs. Cagayan Electric Power and Light Company, Inc., the phrase "shall be in lieu of all taxes and at any time levied, established by, or collected by any authority" exempted the franchise holder from any other tax imposed by the then Internal Revenue Cod and local ordinaces. The SC holds otherwise. In the recent case of the City Government of San Pablo, etc., et al. vs. Hon. Bienvenido V. Reyes, et al., the Court has held that the phrase in lieu of all taxes have to give way to the peremptory language of the Local Government Code specifically providing for the withdrawal of such exemptions, privileges, and that upon the effectivity of the Local Government Code all exemptions except only as provided therein can no longer be invoked by MERALCO to disclaim liability for the local tax. In fine, the Court has viewed its previous rulings as laying stress more on the legislative intent of the amendatory law whether the tax exemption privilege is to be withdrawn or not rather than on whether the law can withdraw, without violating the Constitution, the tax exemption or not. Mactan Cebu (MCIAA) vs. Marcos GR 120082 September 11, 1996 261 SCRA 667 FACTS: Mactan Cebu International Airport Authority (MCIAA) was created to principally undertake to economical, efficient and effective control, management and supervision of the Mactan International Airport and such other airports as may be established in the province of Cebu Section 14 of its charter excempts the Authority from payment of realty taxes but in 1994, the City Treasurer demanded payment for realty taxes on several parcels of land belonging to the other. MCIAA filed a petition in RTC contending that, by nature of its powers and functions, it has the same footing of an agency or instrumentality of the national government. The RTC dismissed the petition based on Section 193 & 234 of the local Government Code or R.A. 7160. Thus this petition. ISSUE:Whether or not the MCIAA is excempted from realty taxes? RULING: With the repealing clause of RA 7160 the tax exemption provided. All general and special in the charter of the MCIAA has been expressly repeated. It state laws, acts, City Charters, decrees, executive orders, proclamations and administrative regulations, or part of parts thereof which are inconsistent with any of the provisions of the Code are hereby repeated or modified accordingly. Therefore the SC affirmed the decision and order of the RTC and herein petitioner has to pay the assessed realty tax of its properties effective January 1, 1992 up to the present.