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

Case Summary (G.R. No. 112497)

Factual Background

The City of Manila enacted Ordinance No. 7794, styled the Manila Revenue Code. Four oil companies and a taxpayer appealed to the Secretary of Justice under Section 187 of the Local Government Code, challenging the ordinance's constitutionality and legality. The Secretary of Justice, on appeal, declared the Manila Revenue Code null and void for failure to comply with prescribed procedural requirements for enacting local tax ordinances and for containing provisions deemed ultra vires.

Trial Court Proceedings

The Regional Trial Court of Manila reviewed the Secretary's resolution. Judge Rodolfo C. Palattao revoked the Secretary's resolution and sustained the Manila Revenue Code. The trial court also declared Section 187 of the Local Government Code unconstitutional, reasoning that it vested the Secretary of Justice with a power of control over local governments that contravened the constitutional policy of local autonomy and the allocation of only supervisory power to the President under the Constitution.

Present Petition and Procedural Posture

The Secretary of Justice filed a petition with the Supreme Court seeking reversal of the trial court's decision. The petition was initially dismissed by the Court for non-compliance with Circular 1-88 because the Solicitor General had failed to submit a certified true copy of the challenged RTC decision. The petition was reinstated upon motion for reconsideration after the required certified true copy was submitted, given the importance of the constitutional and statutory questions presented.

Jurisdictional Observations

The Court observed that the Regional Trial Court had jurisdiction to decide constitutional questions in the case. The Court reiterated that judicial power includes the authority to determine the validity of laws against the Constitution. The Court cited the jurisdictional provisions that vest appellate jurisdiction in the Supreme Court over final orders where the constitutionality of laws or ordinances is drawn into question and cautioned lower courts to exercise restraint before declaring statutes unconstitutional.

Lower Court's Rationale on Control Versus Supervision

Judge Palattao concluded that Section 187 of the Local Government Code conferred on the Secretary of Justice a power of control rather than mere supervision. He relied on established distinctions in the jurisprudence defining control as the power to alter, modify, or set aside a subordinate's act and to substitute the superior's judgment, and supervision as the power to ensure that lower officers perform functions according to law. The trial court held that the Secretary's power to review and revoke local tax ordinances intruded upon the constitutional scheme of local autonomy and the presidential power of supervision.

Supreme Court's Analysis on the Nature of the Secretary's Power

The Court reversed the trial court's view and held that Section 187 authorized only a review of the constitutionality or legality of local tax ordinances and did not vest in the Secretary the discretionary authority to substitute his policy judgment for that of the local legislative body. The Court explained that the Secretary's annulment of the Manila Revenue Code rested on legal defects—ultra vires provisions and procedural non-compliance—and not on a determination that the ordinance was unwise, excessive, or otherwise an exercise of policy control. The Court therefore characterized the Secretary's function under Section 187 as supervision and not control.

Comparison With the Local Autonomy Act Provision

The Court examined an analogous provision in the former Local Autonomy Act, which empowered the Secretary of Finance to suspend the effectivity of a tax ordinance when, in his opinion, the tax was unjust, excessive, oppressive, or confiscatory. The Court observed that the Local Autonomy Act provision involved an exercise of judgment and discretion amounting to control. By contrast, Section 187 did not grant the Secretary of Justice comparable discretion to evaluate the wisdom or reasonableness of a tax and to suspend effectivity on that basis; his authority under Section 187 was confined to questions of constitutionality and legality.

Secretary's Specific Findings and the Procedural-Compliance Issue

In his resolution, the Secretary of Justice had found that the Manila Revenue Code lacked evidence of written notices of public hearings as required by Art. 276(b) of the Implementing Rules, omitted publication of the proposed ordinance in three successive issues as required by Art. 276(a), failed to submit minutes of obligatory public hearings, did not post copies of the approved ordinance as required by Sec. 511(a) of the Local Government Code, and did not translate and disseminate the measure in Pilipino or Tagalog as provided by Sec. 59(b).

Review of the Evidence by the Supreme Court

The Court ordered the elevation of the documentary exhibits later presented to the regional trial court and examined them. The Court found that notices of public hearings were shown by Exhibits G-1 to G-17 and that minutes of hearings appeared in Exhibits M, M-1, M-2, and M-3. Publication of the proposed ordinances appeared in Exhibits B and C, showing notices in the Balita and the Manila Standard on April 21 and 25, 1993, and publication of the approved ordinance appeared in Exhibits Q, Q-1, Q-2, and Q-3, showing issues of the Manila Standard on July 3, 4, 5, 1993 and Balita on July 6, 1993. The Court concluded that these documentary proofs established compliance with the procedural requirements for enactment.

Remaining Procedural Defects and Their Legal Consequences

The Court noted that the City did not post the approved ordinance as required by Sec. 511(a), but held that the omission did not invalidate the ordinance because publication in three successive issues of a newspaper of general circulation satisfied due process. The Court also observed that the translation and dissemination req

Case Syllabus (G.R. No. 112497)

Parties and Posture

HON. FRANKLIN M. DRILON, IN HIS CAPACITY AS SECRETARY OF JUSTICE, PETITIONER filed an appeal resolution annulling the Manila Revenue Code and sought review of the Regional Trial Court decision.
MAYOR ALFREDO S. LIM, VICE-MAYOR JOSE L. ATIENZA, CITY TREASURER ANTHONY ACEVEDO, SANGGUNIANG PANGLUNSOD, and THE CITY OF MANILA, RESPONDENTS sought annulment of the Secretary's resolution before the regional trial court.
The petition to this Court was initially dismissed for failure to comply with Circular 1-88 but was reinstated after submission of the certified true copy of the challenged decision.
The principal legal question presented is the constitutionality of Section 187 of the Local Government Code and the propriety of the Secretary's annulment of Ordinance No. 7794 (Manila Revenue Code).

Key Facts

Ordinance No. 7794, otherwise known as the Manila Revenue Code, was enacted by the Sangguniang Panglungsod of Manila.
Four oil companies and a taxpayer appealed the ordinance to the Secretary of Justice who declared the ordinance null and void for procedural noncompliance and for containing provisions contrary to law and public policy.
The Secretary annulled the ordinance on the grounds of inclusion of certain ultra vires provisions and non-compliance with prescribed procedures for enactment of tax ordinances.
The Regional Trial Court revoked the Secretary's resolution, sustained the ordinance, and declared Section 187 unconstitutional for vesting in the Secretary a power of control inconsistent with the Constitution and the policy of local autonomy.
The Court of Appeals record was supplemented by elevation of exhibits showing notices, minutes, and publications related to the ordinance.

Statutory Provision

Section 187 of the Local Government Code mandates public hearings prior to enactment of local tax ordinances and allows any question on constitutionality or legality to be appealed to the Secretary of Justice within thirty (30) days.
Section 187 requires the Secretary to render a decision within sixty (60) days and provides that such appeal does not suspend the ordinance's effectivity or the accrual and payment of the tax.
Section 187 further permits filing of appropriate proceedings in court within thirty (30) days after receipt of the Secretary's decision or lapse of the sixty-day period without action.

Issues

Whether Section 187 of the Local Government Code is unconstitutional because it vests in the Secretary of Justice a power of control over local governments contrary to the policy of local autonomy and the Constitution.
Whether the Secretary's annulment of the Manila Revenue Code constituted an exercise of control rather than supervision.
Whether the procedural requirements prescribed by the Local Government Code and its Implementing Rules were observed in the enactment of the Manila Revenue Code.

Contentions

The Petitioner contended that Section 187 is constitutional and that the procedural prerequisites for enactment of the Manila Revenue Code were not observed, justifying annulment.
The Respondents contended that Section 187 was unconstitutional because it conferred a power of control on the Secretary t