G.R. No. 112497 - Drilon vs. Lim

Case Summary (G.R. No. 112497)

Petitioner’s Action and Administrative Determination

Pursuant to Section 187 of the Local Government Code, Secretary Drilon, on appeal by four oil companies and a taxpayer, reviewed Ordinance No. 7794 and declared the Manila Revenue Code null and void. The Secretary’s annulment rested on findings of (a) non-compliance with the procedural requirements prescribed for enactment of tax ordinances and (b) inclusion of provisions that were ultra vires or contrary to law and public policy.

Lower Court Ruling and Its Constitutional Finding

The Regional Trial Court (Manila) in a petition for certiorari revoked the Secretary’s resolution and sustained the ordinance. The trial court also declared Section 187 unconstitutional insofar as it vested the Secretary of Justice with power to review and annul local tax ordinances, holding that such power constituted “control” over local governments in violation of the constitutional policy of local autonomy and the specific allocation of supervisory power to the President.

Central Legal Questions

The case presents two principal issues: (1) whether Section 187 of the Local Government Code is constitutional under the framework of local autonomy and the separation of supervisory versus control functions; and (2) whether the procedural requirements for the enactment of the Manila Revenue Code were complied with.

Applicable Constitution and Relevant Provisions

The decision was rendered in 1994; therefore the 1987 Constitution is the constitutional basis relied upon. The case discusses Article X (local government) — specifically Section 4 (the President’s power of general supervision over local governments) and Section 5 (local taxing powers subject to guidelines and limitations) — and the Supreme Court’s appellate jurisdiction over questions of constitutionality as reflected in the pertinent constitutional provision cited by the Court. Section 187 of the Local Government Code (text reproduced in the record) prescribes mandatory public hearings and provides for appeals to the Secretary of Justice on questions of constitutionality or legality of tax ordinances, with prescribed time frames and without suspending effectivity of the ordinance.

Jurisdiction and Standard of Review

The Supreme Court held that the Regional Trial Court had jurisdiction to entertain constitutional questions concerning Section 187, noting BP 129’s grant of jurisdiction to regional trial courts in appropriate civil matters and the accused’s right to question the constitutionality of laws in criminal actions. The Court emphasized the settled standard: courts should exercise caution before declaring a law unconstitutional, honoring the presumption of constitutionality that can be overcome only by the clearest showing of an infraction of the Constitution, and recognizing that final determination is best made by a collegiate body.

The Distinction Between Control and Supervision

The Court reiterated the established distinction: “control” implies the superior’s power to alter, modify or set aside subordinate acts and to substitute the superior’s judgment for that of the subordinate; “supervision” means ensuring that lower officers perform functions in accordance with law, without prescribing procedures or substituting judgment. The trial court’s characterization of Section 187 as an act of control was examined against this distinction.

Application of the Distinction to Section 187

The Court found that Section 187 authorizes the Secretary of Justice to review the constitutionality or legality of tax ordinances and, if warranted, to revoke them on those grounds. That authority, as used by Secretary Drilon in this instance, was confined to determining legality and constitutionality — whether prescribed procedures and substantive legal limits had been followed — and did not grant the Secretary latitude to annul ordinances based on policy, wisdom, or reasonableness. Because the Secretary did not substitute his own policy judgments for those of the local government but only assessed legal compliance, his act was characterized as supervision rather than control.

Comparison with a Prior Statutory Provision (Local Autonomy Act)

The Court contrasted Section 187 with an earlier provision of the Local Autonomy Act that gave the Secretary of Finance authority to suspend the effectivity of an ordinance if, in his opinion, the tax was unjust, excessive, oppressive or contrary to national economic policy. That earlier provision conferred discretionary judgmental power that arguably amounted to control. Section 187, by contrast, does not authorize the Secretary of Justice to make such discretionary assessments; it confines review to legality and constitutionality. The Court noted the distinction and found Section 187 less intrusive.

Procedural-Compliance Findings Concerning the Manila Revenue Code

Secretary Drilon had found several procedural lapses (absence of written notices of public hearings required by Art. 276(b) of the Implementing Rules, lack of publication in three successive issues required by Art. 276(a), absence of minutes, failure to post the approved ordinance as required by Sec. 511(a), and lack of Pilipino/Tagalog translation under Sec. 59(b)). The trial court disagreed and the Supreme Court ordered elevation of exhibits submitted by the City of Manila. After examining those exhibits, the Court concluded that required notices of p

Case Syllabus (G.R. No. 112497)

Citation and Procedural Posture

Reported at 305 Phil. 146, En Banc; G.R. No. 112497; decided August 04, 1994.
Petition for certiorari filed by Hon. Franklin M. Drilon in his capacity as Secretary of Justice against Mayor Alfredo S. Lim, Vice-Mayor Jose L. Atienza, City Treasurer Anthony Acevedo, Sangguniang Panglungsod and the City of Manila.
The Secretary of Justice had, on appeal, declared Ordinance No. 7794 (the Manila Revenue Code) null and void for (a) non-compliance with the prescribed procedure for enactment of tax ordinances and (b) containing provisions contrary to law and public policy (Annex "E").
The City of Manila filed a petition for certiorari before the Regional Trial Court (RTC) of Manila; the RTC revoked the Secretary’s resolution, sustained the ordinance, and declared Section 187 of the Local Government Code unconstitutional insofar as it vested reviewal power in the Secretary of Justice (Annex "A").
The present petition seeks reversal of the RTC decision; the Secretary contends Section 187 is constitutional and that procedural requirements were not observed.
The petition was initially dismissed for non-compliance with Circular 1-88 because the Solicitor General failed to submit a certified true copy of the challenged decision, but reinstated on motion for reconsideration when the certified copy was filed (rullo, p. 256).

Central Legal Issue

The principal issue: the constitutionality of Section 187 of the Local Government Code (Procedure For Approval And Effectivity Of Tax Ordinances And Revenue Measures; Mandatory Public Hearings).
Subsidiary issues: whether the Secretary of Justice properly declared the Manila Revenue Code invalid for procedural defects; and whether the procedural requirements for enactment of the Manila Revenue Code were complied with.

Text of Section 187 (as quoted in the source)

The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof; Provided, further, That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction.

Facts Relevant to the Dispute

Ordinance No. 7794, known as the Manila Revenue Code, was enacted by the City of Manila and later appealed to the Secretary of Justice by four oil companies and a taxpayer.
Secretary of Justice Drilon declared the Manila Revenue Code null and void on grounds of: (a) non-compliance with prescribed procedure in enactment of tax ordinances, and (b) inclusion of provisions contrary to law and public policy (Annex "E").
The RTC of Manila reviewed the Secretary’s action, revoked the Secretary’s resolution, sustained the ordinance, and held Section 187 unconstitutional.
Judge Rodolfo C. Palattao’s RTC decision specifically found that procedural requirements had been observed and that Section 187 vested control (not mere supervision) in the Secretary of Justice, violating the Constitution and local autonomy.
The Supreme Court, upon respondents’ motion, called for elevation of the exhibits presented to the RTC to resolve the factual question of procedural compliance.

Jurisdictional and Justiciability Points

The RTC possessed jurisdiction to consider the constitutionality of Section 187 under BP 129 which vests in regional trial courts jurisdiction over civil cases incapable of pecuniary estimation (Sec. 19(1)).
A criminal accused may question the constitutionality of a law he is charged with violating and of proceedings that contravene the Bill of Rights.
Article X, Section 5(2) of the Constitution vests the Supreme Court with appellate jurisdiction over final judgments and orders of lower courts when constitutionality or validity of laws or ordinances is in question; lower courts should exercise circumspection when declaring unconstitutionality.
The Court emphasizes judicial restraint: courts should hesitate before declaring laws unconstitutional, respecting the presumption of constitutionality which can be overcome only by the clearest showing of constitutional infraction and by the required majority.

RTC Rationale Declaring Section 187 Unconstitutional

Judge Palattao distinguished "control" from "supervision":
- Control: power to alter, modify, or set aside subordinate acts and substitute the superior’s judgment for the subordinate’s.
- Supervision: power to ensure subordinates perform functions according to law without laying down rules or substituting judgment.
RTC concluded Section 187 granted the Secretary of Justice power of control (allowing annulment) over local governments, violating:
- Article X, Section 4 of the Constitution (the President's power of general supervision over local governments),
- Article X, Section 5 (on taxing powers of local governments and the basic policy of local autonomy),
- and the constitutional policy of local autonomy more generally.