| CONTACT: |
| Supreme Court of the Philippines Library Services, Padre Faura, Ermita, Manila, Philippines 1000 |
| (632) 8524-2706 |
| libraryservices.sc@judiciary.gov.ph |
504 Phil. 543
SECOND DIVISION
[ G.R. NO. 127383, August 18, 2005 ]
THE CITY OF DAVAO, CITY TREASURER AND THE CITY ASSESSOR OF DAVAO CITY, PETITIONERS, VS. THE REGIONAL TRIAL COURT, BRANCH XII, DAVAO CITY AND THE GOVERNMENT INSURANCE SYSTEM (GSIS), RESPONDENTS.
D E C I S I O N
TINGA, J.:
A Davao City Regional Trial Court (RTC) upheld the tax-exempt status of the Government Service Insurance System (GSIS) for the years 1992 to 1994 in contravention of the mandate under the Local Government Code of 1992,[1] the precedent set by this Court in Mactan-Cebu International Airport Authority v. Hon. Marcos,[2] and the public policy on local autonomy enshrined in the Constitution.[3]
The matter was elevated to this Court directly from the trial court on a pure question of law.[4] The facts are uncontroverted.
On 8 April 1994, the GSIS Davao City branch office received a Notice of Public Auction scheduling the public bidding of GSIS properties located in Matina and Ulas, Davao City for non-payment of realty taxes for the years 1992 to 1994 totaling Two Hundred Ninety Five Thousand Seven Hundred Twenty One Pesos and Sixty One Centavos (P295,721.61).[5] The auction was subsequently reset by virtue of a deadline extension allowed by Davao City for the payment of delinquent real property taxes.[6]
On 28 July 1994, the GSIS received Warrants of Levy and Notices of Levy on three parcels of land owned by the GSIS. Another Notice of Public Auction was received by the GSIS on 29 August 1994, setting the date of auction sale for 20 September 1994.
On 13 September 1994, the GSIS filed a Petition for Certiorari, Prohibition, Mandamus And/Or Declaratory Relief with the RTC of Davao City. It also sought the issuance of a temporary restraining order. The case was raffled to Branch 12, presided by Judge Maximo Magno Libre. On 13 September 1994, the RTC issued a temporary restraining order for a period of twenty (20) days,[7] effectively enjoining the auction sale scheduled seven days later. Following exchange of arguments, the RTC issued an Order dated 3 April 1995 issuing a writ of preliminary injunction effective for the duration of the suit.[8]
At the pre-trial, it was agreed that the sole issue for resolution was purely a question of law, that is, whether Sections 234 and 534 of the Local Government Code, which have withdrawn real property tax exemptions of government owned and controlled corporations (GOCCs), have also withdrawn from the GSIS its right to be exempted from payment of the realty taxes sought to be levied by Davao City.[9] The parties submitted their respective memoranda.
On 28 May 1996, the RTC rendered the Decision[10] now assailed before this Court. It concluded that notwithstanding the enactment of the Local Government Code, the GSIS retained its exemption from all taxes, including real estate taxes. The RTC cited Section 33 of Presidential Decree (P.D.) No. 1146, the Revised Government Service Insurance Act of 1977, as amended by P. D. No. 1981, which mandated such exemption.
The RTC conceded that the tax exempting statute, P.D. No. 1146, was enacted prior to the Local Government Code. However, it noted that the earlier law had prescribed two conditions in order that the tax exemption provided therein could be withdrawn by future enactments, namely: (1) that Section 33 be expressly and categorically repealed by law; and (2) that a provision be enacted to substitute the declared policy of exemption from any and all taxes as an essential factor for the solvency of the GSIS fund.[11] The RTC concluded that both conditions had not been satisfied by the Local Government Code. The RTC likewise accorded weight to Legal Opinion No. 165 of the Secretary of Justice dated 16 December 1996 concluding that Section 33 was not repealed by the Local Government Code, and a memorandum emanating from the Office of the President dated 14 February 1995 expressing the same opinion.[12]
The dispositive portion of the assailed Decision reads:
Petitioners argue that the exemption granted in Section 33 of P.D. No. 1146, as amended, was effectively withdrawn upon the enactment of the Local Government Code, particularly Sections 193 and 294 thereof. These provisions made the GSIS, along with all other GOCCs, subject to realty taxes. Petitioners point out that under Section 534(f) of the Local Government Code, even special laws, such as PD No. 1146, which are inconsistent with the Local Government Code, are repealed or modified accordingly.
On the other hand, GSIS contends, as the RTC held, that the requisites for repeal are laid down in Section 33 of P.D. No. 1146, as amended, namely that it be done expressly and categorically by law, and that a provision be enacted to substitute the declared policy of exemption from taxes as an essential factor for the solvency of the GSIS fund. It stresses that it had been exempt from taxation as far back as 1936, when its original charter was enacted through Commonwealth Act No. 186.[14] It asserts further that this Court had previously recognized the "extraordinary exemption" of GSIS in Testate Estate of Concordia T. Lim v. City of Manila,[15] and such exemption has similarly been affirmed by the Secretary of Justice and the Office of the President in the aforementioned issuances also cited by the RTC.[16]
GSIS likewise notes that had it been the intention of the legislature to repeal Section 33 of P.D. No. 1146 through the Local Government Code, said law would have included the appropriate retraction in its repealing clause found in Section 534(f). However, said section, according to the GSIS, partakes the nature of a general repealing provision which is accorded less weight in light of the rule that implied repeals are not favored. Consequently with its position that it remains exempt from realty taxation, the GSIS argues that the Notices of Assessment, Warrants and Notices of Levy, Notices of Public Auction Sale and the Annotations of the Notice of Levy are void ab initio.
A review of the relevant statutory provisions is in order.
Presidential Decree No. 1146 was enacted in 1977 by President Marcos in the exercise of his legislative powers. Section 33, as originally enacted, read:
Notably, P.D. No. 1931 was also an exercise of legislative powers then accorded to President Marcos by virtue of Amendment No. 6 to the 1973 Constitution. Whether he was aware of the effect of P.D. No. 1931 on the GSIS's tax-exempt status or the ramifications of the decree thereon is unknown; but apparently, he immediately reconsidered the withdrawal of the exemptions on the GSIS. Thus, P.D. No. 1981 was enacted, expressly stating that the tax-exempt status of the GSIS under Section 33 of P.D. No. 1146 remained in place, notwithstanding the passage of P.D. No. 1931.
However, P.D. No. 1981 did not stop there, serving merely as it should to restore the previous exemptions on the GSIS. It also attempted to proscribe future attempts to alter the tax-exempt status of the GSIS by imposing unorthodox conditions for its future repeal. Thus, as intimated earlier, a second paragraph was added to Section 33, containing the restrictions relied upon by the RTC and presently invoked by the GSIS before this Court.
These laws have to be weighed against the Local Government Code of 1992, a landmark law which implemented the constitutional aspirations for a more extensive breadth of local autonomy. The Court, in Mactan, was asked to consider the effect of the Local Government Code on the taxability by local governments of GOCCs such as the Mactan Cebu International Airport Authority (MCIAA). Particularly, MCIAA invoked Section 133(o) of the Local Government Code as the basis for its claimed exemption, the provision reading:
Worth reckoning, however, is an essential difference between the situation of the MCIAA (and most other GOCCs, for that matter) and that of the GSIS. Unlike most other GOCCs, there is a statutory provision- Section 33 of P.D. No. 1146, as amended-which imposes conditions on the subsequent withdrawal of the GSIS's tax exemptions. The RTC justified the affirmance of the tax exemptions based on the non-compliance by the Local Government Code with these conditionalities, and not by reason of a general proposition that GOCCs or instrumentalities remain exempt from local government taxation.
Absent Section 33 of P.D. No. 1146, as amended, there would be no impediment in squarely applying the express provisions of Sections 193, 232 and 234 of the Local Government Code, as the Court did in Mactan and recently in Philippine Rural Electric Cooperatives Association, Inc. et al. v. Secretary of Interior And Local Government, et al. [21] and in ruling that the tax exemptions of GSIS were withdrawn by the Code. Thus, the crucial proposition is whether the GSIS tax exemptions can be deemed as withdrawn by the Local Government Code notwithstanding Section 33 of P.D. No. 1146 as amended.
Concededly, it does not appear that at the very least, the second conditionality of Section 33 has been met. No provision has been enacted "to substitute the declared policy of exemption from any and all taxes as an essential factor for the solvency of the fund."[22] Yet the Court is averse to employing this framework, in the first place as utilized by the RTC, for we recognize a fundamental flaw in Section 33, particularly the amendatory second paragraph introduced by P.D. No. 1981.
The second paragraph of Section 33 of P.D. No. 1146, as amended, effectively imposes restrictions on the competency of the Congress to enact future legislation on the taxability of the GSIS. This places an undue restraint on the plenary power of the legislature to amend or repeal laws, especially considering that it is a lawmaker's act that imposes such burden. Only the Constitution may operate to preclude or place restrictions on the amendment or repeal of laws. Constitutional dicta is of higher order than legislative statutes, and the latter should always yield to the former in cases of irreconcilable conflict.
It is a basic precept that among the implied substantive limitations on the legislative powers is the prohibition against the passage of irrepealable laws.[23] Irrepealable laws deprive succeeding legislatures of the fundamental best senses carte blanche in crafting laws appropriate to the operative milieu. Their allowance promotes an unhealthy stasis in the legislative front and dissuades dynamic democratic impetus that may be responsive to the times. As Senior Associate Justice Reynato S. Puno once observed, "[t]o be sure, there are no irrepealable laws just as there are no irrepealable Constitutions. Change is the predicate of progress and we should not fear change."[24]
Moreover, it would be noxious anathema to democratic principles for a legislative body to have the ability to bind the actions of future legislative body, considering that both assemblies are regarded with equal footing, exercising as they do the same plenary powers. Perpetual infallibility is not one of the attributes desired in a legislative body, and a legislature which attempts to forestall future amendments or repeals of its enactments labors under delusions of omniscience.
It might be argued that Section 33 of P.D. No. 1146, as amended, does not preclude the repeal of the tax-exempt status of GSIS, but merely imposes conditions for such to validly occur. Yet these conditions, if honored, have the precise effect of limiting the powers of Congress. Thus, the same rationale for prohibiting irrepealable laws applies in prohibiting restraints on future amendatory laws. President Marcos, who exercised his legislative powers in amending P.D. No. 1146, could not have demanded obeisance from future legislators by imposing restrictions on their ability to legislate amendments or repeals. The concerns that may have militated his enactment of these restrictions need not necessarily be shared by subsequent Congresses.
We do not mean to trivialize the need to ensure the solvency of the GSIS fund, a concern that has seen legislative expression, even with the most recently enacted Government Service Insurance System Act of 1997.[25] Yet at the same time, we recognize that Congress has the putative authority, through valid legislation, to diminish such fund, or even abolish the GSIS itself if it so desires. The GSIS may provide vital services and security to employees of the civil service, yet it is not a sacred cow that is beyond abolition by Congress if, for example, more innovative methods are devised to ensure stable pension funds for government employees. If Congress has the inherent power to abrogate the GSIS itself, then it necessarily has the ability to inflict less detrimental burdens, such as abolishing its tax-exempt status. If there could be legal authority proscribing the Congress from enacting such legislation, such should be sourced from the Constitution itself, and not from antecedent statutes which were themselves enacted by legislative power.
The Court's position is aligned with entrenched norms of statutory construction. In Duarte v. Dade,[26] the Court cited with approval Lewis' Southerland on Statutory Construction, which states:
Thus, the two conditionalities of Section 33 cannot bear relevance on whether the Local Government Code removed the tax-exempt status of the GSIS. The express withdrawal of all tax exemptions accorded to all persons, natural or juridical, as stated in Section 193 of the Local Government Code, applies without impediment to the present case. Such position is bolstered by the other cited provisions of the Local Government Code, and by the Mactan ruling.
There are other reasons that guide us to construe the Local Government Code in favor of the City of Davao's position. Section 5 of the Local Government Code provides the guidelines on how to construe the Code's provisions in cases of doubt, and they are self-explanatory, thus:
We are aware that this stance runs contrary to that which was adopted by the Secretary of Justice in his Opinion dated 22 July 1993, as well as the memorandum from the Office of the President dated 14 February 1995, expressing the same opinion. However, statutory interpretations of these executive bodies do not hold decisive sway upon the judiciary but are merely persuasive. These issuances cannot derogate from the binding precept that one legislature cannot enact irrepealable legislation or limit or restrict its own power or the power of its successors as to the repeal of statutes.[30] The act of one legislature is not binding upon and does not tie the hands of future legislatures.[31]
The GSIS's tax-exempt status, in sum, was withdrawn in 1992 by the Local Government Code but restored by the Government Service Insurance System Act of 1997, the operative provision of which is Section 39.[32] The subject real property taxes for the years 1992 to 1994 were assessed against GSIS while the Local Government Code provisions prevailed and, thus, may be collected by the City of Davao.
WHEREFORE, premises considered, the Petition for Review is hereby GRANTED. The appealed Decision of the Regional Trial Court of Davao City, Branch 12 is REVERSED and SET ASIDE.
Costs de oficio.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr. and Chico-Nazario, JJ., concur.
[1] R.A. No. 7160.
[2] 330 Phil. 392 (1996). Reiterated in Philippine Rural Electric Cooperatives Association, Inc. et al. v. Secretary of Interior And Local Government, et al., 451 Phil. 683 (2003). See also Philippine Ports Authority v. City of Iloilo, infra at note 18.
[3] Section 2, Article X.
[4] Authorized under Section 2(c), Rule 41, 1997 Rules of Civil Procedure.
[5] Rollo, p. 32.
[6] Id. at 9.
[7] Records, p. 26.
[8] Id. at 128.
[9] See Rollo, p. 12
[10] Id. at 121-127.
[11] Id. at 123.
[12] Id. at 125.
[13] Id. at 126-27.
[14] Id. at 175.
[15] G.R. No. 90639, 21 February 1990, 182 SCRA 482.
[16] Supra note 12.
[17] Section 6, P.D. No. 1981, amending Section 33, P.D. No. 1146.
[18] See Philippine Ports Authority v. City of Iloilo, G.R. No. 109791, 14 July 2003, 406 SCRA 88, 98.
[19] See Rollo, p. 23.
[20] Supra note 2 at 411-413.
[21] 451 Phil. 683 (2003). See also Philippine Ports Authority v. City of Iloilo, supra note 18.
[22] Supra note 17.
[23] See A.B. Nachura, Outline of Political Law Reviewer at 174. There can be no vested right to the continued existence of a statute which precludes its change or appeal. See also Traux v. Corrigan, 257 U.S. 312, 66 L. Ed. 254, cited in Asociacion De Agricultores De Talisay-Silay, Inc v. Talisay-Silay Milling Co., Inc., G.R. Nos. L-19937 & L-21304, 19 February 1979, 88 SCRA 294, 452.
[24] "To be sure, there are no irrepealable laws just as there are no irrepealable Constitutions. Change is the predicate of progress and we should not fear change." J. Puno, concurring and dissenting, Defensor-Santiago v. COMELEC, 336 Phil. 848, 918 (1997).
[25] Republic Act 8291, which contains a similar tax exempting provision in its Section 39 cf., footnote 35, infra.
[26] 32 Phil. 36 (1915).
[27] Id. at 49, citing Lewis' Southerland on Statutory Construction, vol. 1, section 244, pp. 456-57.
[28] Article II, Sec. 25, 1987 Constitution.
[29] Id., Article X, Sec. 5.
[30] 59 C.J., sec. 500, pp. 899-900.
[31] Ibid.
[32] Sec. 39. Exemption from tax, Legal Process and Lien.- It is hereby declared to be the policy of the State that the actuarial solvency of the funds of the GSIS shall be preserved and maintained at all times and that the contribution rates necessary to sustain the benefits under this Act shall be kept as low as possible in order not to burden the members of the GSIS and their employees. Taxes imposed on the GSIS tend to impair the actuarial solvency of its funds and increase the contribution rate necessary to sustain the benefits of this Act. Accordingly, notwithstanding any laws to the contrary, the GSIS, its assets, revenues including the accruals thereto, and benefits paid, shall be exempt from all taxes. These exemptions shall continue unless expressly and specifically revoked and any assessment against the System as of the approval of this Act are hereby considered paid. Consequently, all laws, ordinances, regulations, issuances, opinions or jurisprudence contrary to or in derogation of this provision are hereby deemed repealed, superseded and rendered ineffective and without legal force and effect.
It does not escape this Court's attention that Section 39 of Republic Act No. 8291 essentially replicates Section 33 of P.D. No. 1146, as amended, including those conditionalities on future repeal which we had observed to be flawed. Nonetheless, the Court is precluded as of now from making any declaration regarding Section 39 of R.A. No. 8291, since the said provision is not relevant to this case, nor would any corresponding declaration assist in the resolution of the issues of this case, which after all involves taxes assessed prior to the enactment of R.A. No. 8291. We likewise do not see any foreseeable instance wherein the status of Section 39 of R.A. No. 8291 would become ripe for judicial adjudication, unless and until there is subsequent legislation enacted affecting the tax-exempt status of the GSIS, or at least attempts in Congress to pass such legislation. Until then, judicial silence is proper.
The matter was elevated to this Court directly from the trial court on a pure question of law.[4] The facts are uncontroverted.
On 8 April 1994, the GSIS Davao City branch office received a Notice of Public Auction scheduling the public bidding of GSIS properties located in Matina and Ulas, Davao City for non-payment of realty taxes for the years 1992 to 1994 totaling Two Hundred Ninety Five Thousand Seven Hundred Twenty One Pesos and Sixty One Centavos (P295,721.61).[5] The auction was subsequently reset by virtue of a deadline extension allowed by Davao City for the payment of delinquent real property taxes.[6]
On 28 July 1994, the GSIS received Warrants of Levy and Notices of Levy on three parcels of land owned by the GSIS. Another Notice of Public Auction was received by the GSIS on 29 August 1994, setting the date of auction sale for 20 September 1994.
On 13 September 1994, the GSIS filed a Petition for Certiorari, Prohibition, Mandamus And/Or Declaratory Relief with the RTC of Davao City. It also sought the issuance of a temporary restraining order. The case was raffled to Branch 12, presided by Judge Maximo Magno Libre. On 13 September 1994, the RTC issued a temporary restraining order for a period of twenty (20) days,[7] effectively enjoining the auction sale scheduled seven days later. Following exchange of arguments, the RTC issued an Order dated 3 April 1995 issuing a writ of preliminary injunction effective for the duration of the suit.[8]
At the pre-trial, it was agreed that the sole issue for resolution was purely a question of law, that is, whether Sections 234 and 534 of the Local Government Code, which have withdrawn real property tax exemptions of government owned and controlled corporations (GOCCs), have also withdrawn from the GSIS its right to be exempted from payment of the realty taxes sought to be levied by Davao City.[9] The parties submitted their respective memoranda.
On 28 May 1996, the RTC rendered the Decision[10] now assailed before this Court. It concluded that notwithstanding the enactment of the Local Government Code, the GSIS retained its exemption from all taxes, including real estate taxes. The RTC cited Section 33 of Presidential Decree (P.D.) No. 1146, the Revised Government Service Insurance Act of 1977, as amended by P. D. No. 1981, which mandated such exemption.
The RTC conceded that the tax exempting statute, P.D. No. 1146, was enacted prior to the Local Government Code. However, it noted that the earlier law had prescribed two conditions in order that the tax exemption provided therein could be withdrawn by future enactments, namely: (1) that Section 33 be expressly and categorically repealed by law; and (2) that a provision be enacted to substitute the declared policy of exemption from any and all taxes as an essential factor for the solvency of the GSIS fund.[11] The RTC concluded that both conditions had not been satisfied by the Local Government Code. The RTC likewise accorded weight to Legal Opinion No. 165 of the Secretary of Justice dated 16 December 1996 concluding that Section 33 was not repealed by the Local Government Code, and a memorandum emanating from the Office of the President dated 14 February 1995 expressing the same opinion.[12]
The dispositive portion of the assailed Decision reads:
Now then, in light of the foregoing observation, the court perceives, that the cause of action asseverated by petitioner in its petition has been well established by law and jurisprudence, and therefore the following relief should be granted:Petitioners' Motion for Reconsideration was denied by the RTC in an Order dated 30 October 1996, hence the present petition.
SO ORDERED.[13]
Petitioners argue that the exemption granted in Section 33 of P.D. No. 1146, as amended, was effectively withdrawn upon the enactment of the Local Government Code, particularly Sections 193 and 294 thereof. These provisions made the GSIS, along with all other GOCCs, subject to realty taxes. Petitioners point out that under Section 534(f) of the Local Government Code, even special laws, such as PD No. 1146, which are inconsistent with the Local Government Code, are repealed or modified accordingly.
On the other hand, GSIS contends, as the RTC held, that the requisites for repeal are laid down in Section 33 of P.D. No. 1146, as amended, namely that it be done expressly and categorically by law, and that a provision be enacted to substitute the declared policy of exemption from taxes as an essential factor for the solvency of the GSIS fund. It stresses that it had been exempt from taxation as far back as 1936, when its original charter was enacted through Commonwealth Act No. 186.[14] It asserts further that this Court had previously recognized the "extraordinary exemption" of GSIS in Testate Estate of Concordia T. Lim v. City of Manila,[15] and such exemption has similarly been affirmed by the Secretary of Justice and the Office of the President in the aforementioned issuances also cited by the RTC.[16]
GSIS likewise notes that had it been the intention of the legislature to repeal Section 33 of P.D. No. 1146 through the Local Government Code, said law would have included the appropriate retraction in its repealing clause found in Section 534(f). However, said section, according to the GSIS, partakes the nature of a general repealing provision which is accorded less weight in light of the rule that implied repeals are not favored. Consequently with its position that it remains exempt from realty taxation, the GSIS argues that the Notices of Assessment, Warrants and Notices of Levy, Notices of Public Auction Sale and the Annotations of the Notice of Levy are void ab initio.
A review of the relevant statutory provisions is in order.
Presidential Decree No. 1146 was enacted in 1977 by President Marcos in the exercise of his legislative powers. Section 33, as originally enacted, read:
Sec. 33. Exemption from tax, Legal Process and Lien.- It is hereby declared to be the policy of the State that the actuarial solvency of the funds of the System shall be preserved and maintained at all times and that the contribution rates necessary to sustain the benefits under this Act shall be kept as low as possible in order not to burden the members of the system and/or their employees. . . . Accordingly, notwithstanding any laws to the contrary, the System, its assets, revenues including the accruals thereto, and benefits paid, shall be exempt from all taxes. These exemptions shall continue unless expressly and specifically revoked and any assessment against the System as of the approval of this Act are hereby considered paid.As it stood then, Section 33 merely provided a general rule exempting the GSIS from all taxes. However, Section 33 of P.D. No. 1146 was amended in 1985 by President Marcos, again in the exercise of his legislative powers, through P.D. No. 1981. It was through this latter decree that a second paragraph was added to Section 33 delineating the requisites for repeal of the tax exemption enjoyed by the GSIS by incorporating the following:
. . .It bears noting though, and it is perhaps key to understanding the necessity of the addendum provided under P.D. No. 1981, that a presidential decree enacted a year earlier, P.D. No. 1931, effectively withdrew all tax exemption privileges granted to GOCCs.[18] In fact, P.D. No. 1931 was specifically named in the afore-quoted addendum as among those laws which, despite passage, would not affect the tax exempt status of GSIS. Section 1 of P.D. No. 1931 states:
Moreover, these exemptions shall not be affected by subsequent laws to the contrary, such as the provisions of Presidential Decree No. 1931 and other similar laws that have been or will be enacted, unless this section is expressly and categorically repealed by law and a provision is enacted to substitute the declared policy of exemption from any and all taxes as an essential factor for the solvency of the fund.[17]
Sec. 1. The provisions of special or general law to the contrary notwithstanding, all exemptions from the payment of duties, taxes, fees, imposts and other charges heretofore granted in favor of government-owned or controlled corporations including their subsidiaries, are hereby withdrawn.There is no doubt that the GSIS which was established way back in 1937 is a GOCC, a fact that GSIS itself admits in its petition for certiorari before the RTC.[19] It thus clear that Section 1 of P.D. No. 1931 expressly withdrew those exemptions granted to the GSIS. Presidential Decree No. 1931 did allow the exemption to be restored in special cases through an application for restoration with the Secretary of Finance, but otherwise, the exemptions granted to the GSIS prior to the enactment of P.D. No. 1931 were withdrawn.
Notably, P.D. No. 1931 was also an exercise of legislative powers then accorded to President Marcos by virtue of Amendment No. 6 to the 1973 Constitution. Whether he was aware of the effect of P.D. No. 1931 on the GSIS's tax-exempt status or the ramifications of the decree thereon is unknown; but apparently, he immediately reconsidered the withdrawal of the exemptions on the GSIS. Thus, P.D. No. 1981 was enacted, expressly stating that the tax-exempt status of the GSIS under Section 33 of P.D. No. 1146 remained in place, notwithstanding the passage of P.D. No. 1931.
However, P.D. No. 1981 did not stop there, serving merely as it should to restore the previous exemptions on the GSIS. It also attempted to proscribe future attempts to alter the tax-exempt status of the GSIS by imposing unorthodox conditions for its future repeal. Thus, as intimated earlier, a second paragraph was added to Section 33, containing the restrictions relied upon by the RTC and presently invoked by the GSIS before this Court.
These laws have to be weighed against the Local Government Code of 1992, a landmark law which implemented the constitutional aspirations for a more extensive breadth of local autonomy. The Court, in Mactan, was asked to consider the effect of the Local Government Code on the taxability by local governments of GOCCs such as the Mactan Cebu International Airport Authority (MCIAA). Particularly, MCIAA invoked Section 133(o) of the Local Government Code as the basis for its claimed exemption, the provision reading:
SECTION 133. Common Limitations on the Taxing Powers of Local Government Units.- Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following:However, the Court, in ruling MCIAA non-exempt from realty taxes, considered that Section 133 qualified the exemption of the National Government, its agencies and instrumentalities from local taxation with the phrase "unless otherwise provided herein." The Court then considered the other relevant provisions of the Local Government Code, particularly the following:. . . .
SECTION 193. Withdrawal of Tax Exemption Privileges. - Unless otherwise provided in this Code, tax exemption or incentives granted to, or enjoyed by all persons, whether natural or juridical, including government-owned and 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.Evidently, Section 133 was not intended to be so absolute a prohibition on the power of LGUs to tax the National Government, its agencies and instrumentalities, as evidenced by these cited provisions which "otherwise provided." But what was the extent of the limitation under Section 133? This is how the Court, in a discussion of far-reaching consequence, defined the parameters in Mactan:
SECTION 232. Power to Levy Real Property Tax. - A province or city or a municipality within the Metropolitan Manila area may levy an annual ad valorem tax on real property such as land, building, machinery, and other improvements not hereafter specifically exempted.
SECTION 234. Exemptions from Real Property Tax. -- The following are exempted from payment of the real property tax:
Except as provided herein, any exemption from payment of real property tax previously granted to, or presently enjoyed by, all persons, whether natural or juridical, including all government-owned or controlled corporations are hereby withdrawn upon the effectivity of this Code. (Emphasis supplied.)
The foregoing sections of the LGC speak of: (a) the limitations on the taxing powers of local government units and the exceptions to such limitations; and (b) the rule on tax exemptions and the exceptions thereto. The use of exceptions or provisos in these sections, as shown by the following clauses:This Court, in Mactan, acknowledged that under Section 133, instrumentalities were generally exempt from all forms of local government taxation, unless otherwise provided in the Code. On the other hand, Section 232 "otherwise provides" insofar as it allowed local government units to levy an ad valorem real property tax, irrespective of who owned the property. At the same time, the imposition of real property taxes under Section 232 is in turn qualified by the phrase "not hereinafter specifically exempted." The exemptions from real property taxes are enumerated in Section 234, which specifically states that only real properties owned "by the Republic of the Philippines or any of its political subdivisions" are exempted from the payment of the tax. Clearly, instrumentalities or GOCCs do not fall within the exceptions under Section 234.(1) "unless otherwise provided herein" in the opening paragraph of Section 133;initially hampers a ready understanding of the sections. Note, too, that the aforementioned clause in Section 133 seems to be inaccurately worded. Instead of the clause "unless otherwise provided herein," with the "herein" to mean, of course, the section, it should have used the clause "unless otherwise provided in this Code." The former results in absurdity since the section itself enumerates what are beyond the taxing powers of local government units and, where exceptions were intended, the exceptions are explicitly indicated in the next. For instance, in item (a) which excepts income taxes "when levied on banks and other financial institutions"; item (d) which excepts "wharfage on wharves constructed and maintained by the local government unit concerned"; and item (1) which excepts taxes, fees and charges for the registration and issuance of licenses or permits for the driving of "tricycles." It may also be observed that within the body itself of the section, there are exceptions which can be found only in other parts of the LGC, but the section interchangeably uses therein the clause, "except as otherwise provided herein" as in items (c) and (i), or the clause "except as provided in this Code" in item (j). These clauses would be obviously unnecessary or mere surplusages if the opening clause of the section were "Unless otherwise provided in this Code" instead of "Unless otherwise provided herein." In any event, even if the latter is used, since under Section 232 local government units have the power to levy real property tax, except those exempted therefrom under Section 234, then Section 232 must be deemed to qualify Section 133.
(2) "Unless otherwise provided in this Code" in Section 193;
(3) "not hereafter specifically exempted" in Section 232; and
(4) "Except as provided herein" in the last paragraph of Section 234
Thus, reading together Sections 133, 232, and 234 of the LGC, we conclude that as a general rule, as laid down in Section 133, the taxing powers of local government units cannot extend to the levy of, inter alia, "taxes, fees and charges of any kind on the National Government, its agencies and instrumentalities, and local government units"; however, pursuant to Section 232, provinces, cities, and municipalities in the Metropolitan Manila Area may impose the real property tax except on, inter alia, "real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person," as provided in item (a) of the first paragraph of Section 234.
As to tax exemptions or incentives granted to or presently enjoyed by natural or judicial persons, including government-owned and controlled corporations, Section 193 of the LGC prescribes the general rule, viz., they are withdrawn upon the effectivity of the LGC, except those granted to local water districts, cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, and unless otherwise provided in the LGC. The latter proviso could refer to Section 234 which enumerates the properties exempt from real property tax. But the last paragraph of Section 234 further qualifies the retention of the exemption insofar as real property taxes are concerned by limiting the retention only to those enumerated therein; all others not included in the enumeration lost the privilege upon the effectivity of the LGC. Moreover, even as to real property owned by the Republic of the Philippines or any of its political subdivisions covered by item (a) of the first paragraph of Section 234, the exemption is withdrawn if the beneficial use of such property has been granted to a taxable person for consideration or otherwise.
Since the last paragraph of Section 234 unequivocally withdrew, upon the effectivity of the LGC, exemptions from payment of real property taxes granted to natural or juridical persons, including government-owned or controlled corporations, except as provided in the said section, and the petitioner is, undoubtedly, a government-owned corporation, it necessarily follows that its exemption from such tax granted it in Section 14 of its Charter, R.A. No. 6958, has been withdrawn. Any claim to the contrary can only be justified if the petitioner can seek refuge under any of the exceptions provided in Section 234, but not under Section 133, as it now asserts, since, as shown above, the said section is qualified by Sections 232 and 234.[20] (Emphasis supplied.)
Worth reckoning, however, is an essential difference between the situation of the MCIAA (and most other GOCCs, for that matter) and that of the GSIS. Unlike most other GOCCs, there is a statutory provision- Section 33 of P.D. No. 1146, as amended-which imposes conditions on the subsequent withdrawal of the GSIS's tax exemptions. The RTC justified the affirmance of the tax exemptions based on the non-compliance by the Local Government Code with these conditionalities, and not by reason of a general proposition that GOCCs or instrumentalities remain exempt from local government taxation.
Absent Section 33 of P.D. No. 1146, as amended, there would be no impediment in squarely applying the express provisions of Sections 193, 232 and 234 of the Local Government Code, as the Court did in Mactan and recently in Philippine Rural Electric Cooperatives Association, Inc. et al. v. Secretary of Interior And Local Government, et al. [21] and in ruling that the tax exemptions of GSIS were withdrawn by the Code. Thus, the crucial proposition is whether the GSIS tax exemptions can be deemed as withdrawn by the Local Government Code notwithstanding Section 33 of P.D. No. 1146 as amended.
Concededly, it does not appear that at the very least, the second conditionality of Section 33 has been met. No provision has been enacted "to substitute the declared policy of exemption from any and all taxes as an essential factor for the solvency of the fund."[22] Yet the Court is averse to employing this framework, in the first place as utilized by the RTC, for we recognize a fundamental flaw in Section 33, particularly the amendatory second paragraph introduced by P.D. No. 1981.
The second paragraph of Section 33 of P.D. No. 1146, as amended, effectively imposes restrictions on the competency of the Congress to enact future legislation on the taxability of the GSIS. This places an undue restraint on the plenary power of the legislature to amend or repeal laws, especially considering that it is a lawmaker's act that imposes such burden. Only the Constitution may operate to preclude or place restrictions on the amendment or repeal of laws. Constitutional dicta is of higher order than legislative statutes, and the latter should always yield to the former in cases of irreconcilable conflict.
It is a basic precept that among the implied substantive limitations on the legislative powers is the prohibition against the passage of irrepealable laws.[23] Irrepealable laws deprive succeeding legislatures of the fundamental best senses carte blanche in crafting laws appropriate to the operative milieu. Their allowance promotes an unhealthy stasis in the legislative front and dissuades dynamic democratic impetus that may be responsive to the times. As Senior Associate Justice Reynato S. Puno once observed, "[t]o be sure, there are no irrepealable laws just as there are no irrepealable Constitutions. Change is the predicate of progress and we should not fear change."[24]
Moreover, it would be noxious anathema to democratic principles for a legislative body to have the ability to bind the actions of future legislative body, considering that both assemblies are regarded with equal footing, exercising as they do the same plenary powers. Perpetual infallibility is not one of the attributes desired in a legislative body, and a legislature which attempts to forestall future amendments or repeals of its enactments labors under delusions of omniscience.
It might be argued that Section 33 of P.D. No. 1146, as amended, does not preclude the repeal of the tax-exempt status of GSIS, but merely imposes conditions for such to validly occur. Yet these conditions, if honored, have the precise effect of limiting the powers of Congress. Thus, the same rationale for prohibiting irrepealable laws applies in prohibiting restraints on future amendatory laws. President Marcos, who exercised his legislative powers in amending P.D. No. 1146, could not have demanded obeisance from future legislators by imposing restrictions on their ability to legislate amendments or repeals. The concerns that may have militated his enactment of these restrictions need not necessarily be shared by subsequent Congresses.
We do not mean to trivialize the need to ensure the solvency of the GSIS fund, a concern that has seen legislative expression, even with the most recently enacted Government Service Insurance System Act of 1997.[25] Yet at the same time, we recognize that Congress has the putative authority, through valid legislation, to diminish such fund, or even abolish the GSIS itself if it so desires. The GSIS may provide vital services and security to employees of the civil service, yet it is not a sacred cow that is beyond abolition by Congress if, for example, more innovative methods are devised to ensure stable pension funds for government employees. If Congress has the inherent power to abrogate the GSIS itself, then it necessarily has the ability to inflict less detrimental burdens, such as abolishing its tax-exempt status. If there could be legal authority proscribing the Congress from enacting such legislation, such should be sourced from the Constitution itself, and not from antecedent statutes which were themselves enacted by legislative power.
The Court's position is aligned with entrenched norms of statutory construction. In Duarte v. Dade,[26] the Court cited with approval Lewis' Southerland on Statutory Construction, which states:
A state legislature has a plenary law-making power over all subjects, whether pertaining to persons or things, within its territorial jurisdiction, either to introduce new laws or repeal the old, unless prohibited expressly or by implication by the federal constitution or limited or restrained by its own. It cannot bind itself or its successors by enacting irrepealable laws except when so restrained. Every legislative body may modify or abolish the acts passed by itself or its predecessors. This power of repeal may be exercised at the same session at which the original act was passed; and even while a bill is in its progress and before it becomes a law. This legislature cannot bind a future legislature to a particular mode of repeal. It cannot declare in advance the intent of subsequent legislatures or the effect of subsequent legislation upon existing statutes. (Emphasis supplied.)[27]The citation is particularly apropos to our present task, since the question for resolution is primarily one of statutory construction, i.e., whether or not Section 33 of P.D. No. 1146 has been repealed by the Local Government Code. It is evident that we cannot render effective the amendatory second paragraph of Section 33 as the RTC did, for by doing so, we would be giving sanction to a disingenuous means employed through legislative power to bind subsequent legislators to a particular mode of repeal.
Thus, the two conditionalities of Section 33 cannot bear relevance on whether the Local Government Code removed the tax-exempt status of the GSIS. The express withdrawal of all tax exemptions accorded to all persons, natural or juridical, as stated in Section 193 of the Local Government Code, applies without impediment to the present case. Such position is bolstered by the other cited provisions of the Local Government Code, and by the Mactan ruling.
There are other reasons that guide us to construe the Local Government Code in favor of the City of Davao's position. Section 5 of the Local Government Code provides the guidelines on how to construe the Code's provisions in cases of doubt, and they are self-explanatory, thus:
Section 5. Rules of Interpretation. - In the interpretation of the provisions of this Code, the following rules shall apply:Also worthy of note is that the Constitution itself promotes the principles of local autonomy as embodied in the Local Government Code. The State is mandated to ensure the autonomy of local governments,[28] and local governments are empowered to levy taxes, fees and charges that accrue exclusively to them, subject to congressional guidelines and limitations.[29] The principle of local autonomy is no mere passing dalliance but a constitutionally enshrined precept that deserves respect and appropriate enforcement by this Court.
(a) Any provision on a power of a local government unit shall be liberally interpreted in its favor, and in case of doubt, any question thereon shall be resolved in favor of devolution of powers and of the lower local government unit. Any fair and reasonable doubt as to the existence of the power shall be interpreted in favor of the local government unit concerned;
(b) In case of doubt, any tax ordinance or revenue measure shall be construed strictly against the local government unit enacting it, and liberally in favor of the taxpayer. Any tax exemption, incentive or relief granted by any local government unit pursuant to the provisions of this Code shall be construed strictly against the person claiming it; (Emphasis supplied.)
We are aware that this stance runs contrary to that which was adopted by the Secretary of Justice in his Opinion dated 22 July 1993, as well as the memorandum from the Office of the President dated 14 February 1995, expressing the same opinion. However, statutory interpretations of these executive bodies do not hold decisive sway upon the judiciary but are merely persuasive. These issuances cannot derogate from the binding precept that one legislature cannot enact irrepealable legislation or limit or restrict its own power or the power of its successors as to the repeal of statutes.[30] The act of one legislature is not binding upon and does not tie the hands of future legislatures.[31]
The GSIS's tax-exempt status, in sum, was withdrawn in 1992 by the Local Government Code but restored by the Government Service Insurance System Act of 1997, the operative provision of which is Section 39.[32] The subject real property taxes for the years 1992 to 1994 were assessed against GSIS while the Local Government Code provisions prevailed and, thus, may be collected by the City of Davao.
WHEREFORE, premises considered, the Petition for Review is hereby GRANTED. The appealed Decision of the Regional Trial Court of Davao City, Branch 12 is REVERSED and SET ASIDE.
Costs de oficio.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr. and Chico-Nazario, JJ., concur.
[1] R.A. No. 7160.
[2] 330 Phil. 392 (1996). Reiterated in Philippine Rural Electric Cooperatives Association, Inc. et al. v. Secretary of Interior And Local Government, et al., 451 Phil. 683 (2003). See also Philippine Ports Authority v. City of Iloilo, infra at note 18.
[3] Section 2, Article X.
[4] Authorized under Section 2(c), Rule 41, 1997 Rules of Civil Procedure.
[5] Rollo, p. 32.
[6] Id. at 9.
[7] Records, p. 26.
[8] Id. at 128.
[9] See Rollo, p. 12
[10] Id. at 121-127.
[11] Id. at 123.
[12] Id. at 125.
[13] Id. at 126-27.
[14] Id. at 175.
[15] G.R. No. 90639, 21 February 1990, 182 SCRA 482.
[16] Supra note 12.
[17] Section 6, P.D. No. 1981, amending Section 33, P.D. No. 1146.
[18] See Philippine Ports Authority v. City of Iloilo, G.R. No. 109791, 14 July 2003, 406 SCRA 88, 98.
[19] See Rollo, p. 23.
[20] Supra note 2 at 411-413.
[21] 451 Phil. 683 (2003). See also Philippine Ports Authority v. City of Iloilo, supra note 18.
[22] Supra note 17.
[23] See A.B. Nachura, Outline of Political Law Reviewer at 174. There can be no vested right to the continued existence of a statute which precludes its change or appeal. See also Traux v. Corrigan, 257 U.S. 312, 66 L. Ed. 254, cited in Asociacion De Agricultores De Talisay-Silay, Inc v. Talisay-Silay Milling Co., Inc., G.R. Nos. L-19937 & L-21304, 19 February 1979, 88 SCRA 294, 452.
[24] "To be sure, there are no irrepealable laws just as there are no irrepealable Constitutions. Change is the predicate of progress and we should not fear change." J. Puno, concurring and dissenting, Defensor-Santiago v. COMELEC, 336 Phil. 848, 918 (1997).
[25] Republic Act 8291, which contains a similar tax exempting provision in its Section 39 cf., footnote 35, infra.
[26] 32 Phil. 36 (1915).
[27] Id. at 49, citing Lewis' Southerland on Statutory Construction, vol. 1, section 244, pp. 456-57.
[28] Article II, Sec. 25, 1987 Constitution.
[29] Id., Article X, Sec. 5.
[30] 59 C.J., sec. 500, pp. 899-900.
[31] Ibid.
[32] Sec. 39. Exemption from tax, Legal Process and Lien.- It is hereby declared to be the policy of the State that the actuarial solvency of the funds of the GSIS shall be preserved and maintained at all times and that the contribution rates necessary to sustain the benefits under this Act shall be kept as low as possible in order not to burden the members of the GSIS and their employees. Taxes imposed on the GSIS tend to impair the actuarial solvency of its funds and increase the contribution rate necessary to sustain the benefits of this Act. Accordingly, notwithstanding any laws to the contrary, the GSIS, its assets, revenues including the accruals thereto, and benefits paid, shall be exempt from all taxes. These exemptions shall continue unless expressly and specifically revoked and any assessment against the System as of the approval of this Act are hereby considered paid. Consequently, all laws, ordinances, regulations, issuances, opinions or jurisprudence contrary to or in derogation of this provision are hereby deemed repealed, superseded and rendered ineffective and without legal force and effect.
Moreover, these exemptions shall not be affected by subsequent laws to the contrary, unless this section is expressly and categorically repealed by law and a provision is enacted to substitute or replace the exemption referred to herein as an essential factor to maintain or protect the solvency of the fund, notwithstanding and independently of the guaranty of the national government to secure such solvency or liability.
... ...
It does not escape this Court's attention that Section 39 of Republic Act No. 8291 essentially replicates Section 33 of P.D. No. 1146, as amended, including those conditionalities on future repeal which we had observed to be flawed. Nonetheless, the Court is precluded as of now from making any declaration regarding Section 39 of R.A. No. 8291, since the said provision is not relevant to this case, nor would any corresponding declaration assist in the resolution of the issues of this case, which after all involves taxes assessed prior to the enactment of R.A. No. 8291. We likewise do not see any foreseeable instance wherein the status of Section 39 of R.A. No. 8291 would become ripe for judicial adjudication, unless and until there is subsequent legislation enacted affecting the tax-exempt status of the GSIS, or at least attempts in Congress to pass such legislation. Until then, judicial silence is proper.