Drilon v.

Lim
G.R. No. 112497, August 4, 1994
Cruz, J.
Facts:

The principal issue in this case is the constitutionality of

Section 187 of the Local Government Code 1. The Secretary of
Justice (on appeal to him of four oil companies and a taxpayer)
declared Ordinance No. 7794 (Manila Revenue Code) null and void
for non-compliance with the procedure in the enactment of tax
ordinances and for containing certain provisions contrary to law
and public policy.
The RTC revoked the Secretarys resolution and sustained
the ordinance. It declared Sec 187 of the LGC as unconstitutional
because it vests on the Secretary the power of control over LGUs in
violation of the policy of local autonomy mandated in the
Constitution. The Secretary argues that the annulled Section 187 is
constitutional and that the procedural requirements for the
enactment of tax ordinances as specified in the Local Government
Code had indeed not been observed. (Petition originally dismissed
by the Court due to failure to submit certified true copy of the
decision, but reinstated it anyway.)
Issue:

WON the lower court has jurisdiction to consider the

constitutionality of Sec 187 of the LGC
Held:

Yes. BP 129 vests in the regional trial courts jurisdiction over

all civil cases in which the subject of the litigation is incapable of
pecuniary estimation. Moreover, Article X, Section 5(2), of the
Constitution vests in the Supreme Court appellate jurisdiction over
final judgments and orders of lower courts in all cases in which the
constitutionality or validity of any treaty, international or executive
agreement, law, presidential decree, proclamation, order,
instruction, ordinance, or regulation is in question.
1

Procedure For Approval And Effectivity Of Tax Ordinances And Revenue Measures; Mandatory Public Hearings.
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.

In the exercise of this jurisdiction, lower courts are advised

to act with the utmost circumspection, bearing in mind the
consequences of a declaration of unconstitutionality upon the
stability of laws, no less than on the doctrine of separation of
powers. It is also emphasized that every court, including this Court,
is charged with the duty of a purposeful hesitation before declaring
a law unconstitutional, on the theory that the measure was first
carefully studied by the executive and the legislative departments
and determined by them to be in accordance with the fundamental
law before it was finally approved. To doubt is to sustain. The
presumption of constitutionality can be overcome only by the
clearest showing that there was indeed an infraction of the
Constitution.
Issue:

WON Section 187 of the LGC is unconstitutional

Held:
Yes. 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.. What he found
only was that it was illegal. All he did in reviewing the said measure
was determine if the petitioners were performing their functions in
accordance with law, that is, with the prescribed procedure for the
enactment of tax ordinances and the grant of powers to the city
government under the Local Government Code. As we see it, that
was an act not of control but of mere supervision.
An officer in control lays down the rules in the doing of an
act. If 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.
Significantly, a rule similar to Section 187 appeared in the
Local Autonomy Act. That section allowed the Secretary of Finance
to suspend the effectivity of a tax ordinance if, in his opinion, the
tax or fee levied was unjust, excessive, oppressive or confiscatory.

Determination of these flaws would involve the exercise of

judgment or discretion and not merely an examination of whether
or not the requirements or limitations of the law had been
observed; hence, it would smack of control rather than mere
supervision. That power was never questioned before this Court
but, at any rate, the Secretary of Justice is not given the same
latitude under Section 187. All he is permitted to do is ascertain the
constitutionality or legality of the tax measure, without the right to
declare that, in his opinion, it is unjust, excessive, oppressive or
confiscatory. He has no discretion on this matter. In fact, Secretary
Drilon set aside the Manila Revenue Code only on two grounds, to
with, the inclusion therein of certain ultra vires provisions and noncompliance with the prescribed procedure in its enactment. These
grounds affected the legality, not the wisdom or reasonableness, of
the tax measure.
The issue of non-compliance with the prescribed procedure
in the enactment of the Manila Revenue Code is another matter.
(allegations: No written notices of public hearing, no publication of
the ordinance, no minutes of public hearing, no posting, no
translation into Tagalog)
Judge Palattao however found that all the procedural
requirements had been observed in the enactment of the Manila
Revenue Code and that the City of Manila had not been able to
prove such compliance before the Secretary only because he had
given it only five days within which to gather and present to him all
the evidence (consisting of 25 exhibits) later submitted to the trial
court. We agree with the trial court that the procedural
requirements have indeed been observed. Notices of the public
hearings were sent to interested parties as evidenced. The minutes
of the hearings are found in Exhibits M, M-1, M-2, and M-3. Exhibits
B and C show that the proposed ordinances were published in the
Balita and the Manila Standard on April 21 and 25, 1993,
respectively, and the approved ordinance was published in the July
3, 4, 5, 1993 issues of the Manila Standard and in the July 6, 1993
issue of Balita, as shown by Exhibits Q, Q-1, Q-2, and Q-3.
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. It has also not been
shown that the text of the ordinance has been translated and
disseminated, but this requirement applies to the approval of local
development plans and public investment programs of the local
government unit and not to tax ordinances.

G.R. No. 93252 August 5, 1991

RODOLFO
T.
GANZON, petitioner,
vs.
THE
HONORABLE
COURT
OF
APPEALS
and
LUIS
T.
SANTOS, respondents.
G.R. No. 93746 August 5,1991
MARY
ANN
RIVERA
ARTIEDA, petitioner,
vs.
HON. LUIS SANTOS, in his capacity as Secretary of the Department
of Local Government, NICANOR M. PATRICIO, in his capacity as
Chief, Legal Service of the Department of Local Government and
SALVADOR CABALUNA JR., respondents.
G.R. No. 95245 August 5,1991
RODOLFO
T.
GANZON, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and LUIS T. SANTOS, in his
capacity as the Secretary of the Department of Local Government,
respondents.
Topic: Local Autonomy- Not Self-executing provisions
Facts:
1. A series of administrative complaints, ten in number, were
filed before the Department of Local Government against
Mayor Rodolfo T. Ganzon by various city officials sometime
in 1988 on various charges, among them, abuse of
authority, oppression, grave misconduct, etc.
2. Finding probable grounds, the Secretary Santos of the
Department of Local Government Luis T. Santos issued
successive suspensions.
3. Ganzon then instituted an action for prohibition against the
secretary in the RTC of Iloilo City where he succeeded in
obtaining a writ of preliminary injunction.
4. Ganzon also instituted actions for prohibition before the
Court of Appeals but were both dismissed.
5. Thus, this petition for review with the argument that the
respondent Secretary is devoid, in any event, of any
authority to suspend and remove local officials as the 1987
Constitution no longer allows the President to exercise said
power.
Issue:
1. W/N the Secretary of Local Government, as the Presidents
alter ego, can suspend and or remove local officials.
Held:

1. Yes
a. SUMMARY OF RATIO:
i. 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.
ii. 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.
b. It is the petitioners' argument that the 1987
Constitution no longer allows the President, as the
1935 and 1973 Constitutions did, to exercise the
power of suspension and/or removal over local
officials. According to both petitioners, the
Constitution is meant, first, to strengthen self-rule by
local government units and second, by deleting the
phrase as may be provided by law to strip the
President of the power of control over local
governments. It is a view, so they contend, that finds
support in the debates of the Constitutional
Commission.
i. Sec. 4. The President of the Philippines shall
exercise general supervision over local
governments. Provinces with respect to
component cities and municipalities, and
cities and municipalities with respect to
component barangays shall ensure that the
acts of their component units are within the
scope of their prescribed powers and
functions.
ii. It modifies a counterpart provision appearing
in the 1935 Constitution:
1. Sec. 10. The President shall have
control of all the executive
departments, bureaus, or offices,
exercise general supervision over all
Local governments as may be provided
by law, and take care that the laws be
faithfully executed.
c. The issue, as the Court understands it, consists of
three questions: (1) Did the 1987 Constitution, in
deleting the phrase "as may be provided by law"
intend to divest the President of the power to
investigate, suspend, discipline, and/or remove local
officials? (2) Has the Constitution repealed Sections
62 and 63 of the Local Government Code? (3) What is
the significance of the change in the constitutional
language?It is the considered opinion of the Court
that notwithstanding the change in the constitutional
language, the charter did not intend to divest the
legislature of its right or the President of her
prerogative as conferred by existing legislation to
provide administrative sanctions against local

officials. It is our opinion that the omission (of "as

may be provided by law") signifies nothing more than
to underscore local governments' autonomy from
congress and to break Congress' "control" over local
government affairs. The Constitution did not,
however, intend, for the sake of local autonomy, to
deprive the legislature of all authority over municipal
corporations, in particular, concerning discipline.
d. Autonomy does not, after all, contemplate making
mini-states out of local government units, as in the
federal governments of the United States of America
(or Brazil or Germany), although Jefferson is said to
have compared municipal corporations
euphemistically to "small republics." Autonomy, in
the constitutional sense, is subject to the guiding
star, though not control, of the legislature, albeit the
legislative responsibility under the Constitution and
as the "supervision clause" itself suggest-is to wean
local government units from over-dependence on the
central government.
e. It is noteworthy that under the Charter, "local
autonomy" is not instantly self-executing, but subject
to, among other things, the passage of a local
government code, a local tax law, income distribution
legislation, and a national representation law, and
measures designed to realize autonomy at the local
level. It is also noteworthy that in spite of autonomy,
the Constitution places the local government under
the general supervision of the Executive. It is
noteworthy finally, that the Charter allows Congress
to include in the local government code provisions
for removal of local officials, which suggest that
Congress may exercise removal powers, and as the
existing Local Government Code has done, delegate
its exercise to the President
i. Sec. 3. The Congress shall enact a local
government code which shall provide for a
more responsive and accountable local
government structure instituted through a
system of decentralization with effective
mechanisms of recall, initiative, and
referendum, allocate among the different local
government units their powers,
responsibilities and resources, and provide for
the qualifications, election, appointment and
removal, term, salaries, powers and functions

and duties of local officials, and all other

matters relating to the organization and
operation of the local units.
f. The deletion of "as may be provided by law" was
meant to stress, sub silencio, the objective of the
framers to strengthen local autonomy by severing
congressional control of its affairs, as observed by
the Court of Appeals, like the power of local
legislation. The Constitution did nothing more,
however, and insofar as existing legislation
authorizes the President (through the Secretary of
Local Government) to proceed against local officials
administratively, the Constitution contains no
prohibition.
g. The petitioners are 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
h. "Control" has been defined as "the power of an
officer to alter or modify or nullify or set aside what a
subordinate officer had done in the performance of
his duties and to substitute the judgment of the
former for test of the latter." "Supervision" on the
other hand means "overseeing or the power or
authority of an officer to see that subordinate officers
perform their duties. As we held, however,
"investigating" is not inconsistent with "overseeing",
although it is a lesser power than "altering". The
impression is apparently exacerbated by the Court's
pronouncements in at least three cases, Lacson v.
Roque, Hebron v. Reyes, and Mondano v. Silvosa, and
possibly, a fourth one, Pelaez v. Auditor General.
In Lacson, this Court said that the President
enjoyed no control powers but only supervision
"as may be provided by law," a rule we reiterated
in Hebron, and Mondano. In Pelaez, we stated that
the President "may not . . . suspend an elective
official of a regular municipality or take any
disciplinary action against him, except on appeal
from a decision of the corresponding provincial
board." However,neither Lacson nor Hebron nor
Mondano categorically banned the Chief
Executive from exercising acts of disciplinary

authority because she did not exercise control

powers, but because no law allowed her to
exercise disciplinary authority.
i. The Court does not believe that the petitioners can
rightfully point to the debates of the Constitutional
Commission to defeat the President's powers. The
Court believes that the deliberations are by
themselves inconclusive, because although
Commissioner Jose Nolledo would exclude the power
of removal from the President, Commissioner Blas
Ople would not.
j. The Court is consequently reluctant to say that the
new Constitution has repealed the Local Government
Code, Batas Blg. 37. As we said, "supervision" and
"removal" are not incompatible terms and one may
stand with the other notwithstanding the stronger
expression of local autonomy under the new Charter.
We have indeed held that in spite of the approval of
the Charter, Batas Blg. 337 is still in force and effect.
k. As the Constitution itself declares, local autonomy
means "a more responsive and accountable local
government structure instituted through a system of
decentralization." The Constitution as we observed,
does nothing more than to break up the monopoly of
the national government over the affairs of local
governments and as put by political adherents, to
"liberate the local governments from the imperialism
of Manila." Autonomy, however, is not meant to end
the relation of partnership and inter-dependence
between the central administration and local
government units, or otherwise, to user in a regime
of federalism. The Charter has not taken such a
radical step. Local governments, under the
Constitution, are subject to regulation, however
limited, and for no other purpose than precisely,
albeit paradoxically, to enhance self- government.
l. As we observed in one case, decentralization means
devolution of national administration but not power
to the local levels. Thus:
i. Now, autonomy is either decentralization of
administration or decentralization of power.
There is decentralization of
administration when the central
government delegates administrative powers
to political subdivisions in order to broaden
the base of government power and in the

2. Other
a.
b.

c.

process to make local governments "more

responsive and accountable," and "ensure
their fullest development as self-reliant
communities and make them more effective
partners in the pursuit of national
development and social progress." At the
same time, it relieves the central government
of the burden of managing local affairs and
enables it to concentrate on national
concerns. The President exercises "general
supervision" over them, but only to "ensure
that local affairs are administered according
to law." He has no control over their acts in
the sense that he can substitute their
judgments with his own.
ii. Decentralization of power, on the other
hand, involves an abdication of political power
in the favor of local governments units
declared to be autonomous, In that case, the
autonomous government is free to chart its
own destiny and shape its future with
minimum intervention from central
authorities. According to a constitutional
author, decentralization of power amounts to
"self-immolation," since in that event, the
autonomous government becomes
accountable not to the central authorities but
to its constituency
issues: on Suspension of 60days
Held: it was NOT proper
Suspension is not a penalty and is not unlike
preventive imprisonment in which the accused is
held to insure his presence at the trial. In both cases,
the accused (the respondent) enjoys a presumption
of innocence unless and until found guilty.
Suspension finally is temporary and as the Local
Government Code provides, it may be imposed for no
more than sixty days. As we held, a longer
suspension is unjust and unreasonable, and we might
add, nothing less than tyranny.

Basco v. PAGCOR
Facts: 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. To attain its
objectives (centralize and integrate the right and authority to

operate and conduct games of chance, generate additional revenue

to fund infrastructure and socio-civic project, expand tourism,
minimize evils prevalent in conduct and operation of gambling
clubs) PAGCOR is given territorial jurisdiction all over the
Philippines. Under its Charter's repealing clause, all laws, decrees,
executive orders, rules and regulations, inconsistent therewith, are
accordingly repealed, amended or modified.
Issues:
1. WON PD 1869 constitutes a waiver of the right of the City of
Manila to impose taxes and legal fees. NO
The City of Manila, being a mere Municipal
corporation has no inherent right to impose taxes.
Thus, "the Charter or statute must plainly show an intent
to confer that power or the municipality cannot assume
it." Its "power to tax" therefore must always yield to a
legislative act which is superior having been passed
upon by the state itself which has the "inherent power to
tax"
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 LGs. 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.
The City of Manila's power to impose license fees on
gambling, has long been revoked. As early as 1975, the
power of LGs to regulate gambling thru the grant of
"franchise, licenses or permits" was withdrawn by PD
771 and was vested exclusively on the NG. Only the NG
has the power to issue "licenses or permits" for the
operation of gambling. Necessarily, the power to
demand or collect license fees which is a consequence of
the issuance of "licenses or permits" is no longer vested
in the City of Manila.
LGs have no power to tax instrumentalities of the NG.
PAGCOR is a government owned or controlled
corporation with an original charter, PD 1869. All of its
shares of stocks are owned by the NG. In addition to its
corporate powers (Sec. 3, Title II, PD 1869) it also
exercises regulatory powers. PAGCOR has a dual role, to
operate and to regulate gambling casinos. The latter role
is governmental, which places it in the category of an
agency or instrumentality of the Government. Being an

instrumentality of the Government, PAGCOR should be

and actually is exempt from local taxes. Otherwise, its
operation might be burdened, impeded or subjected to
control by a mere LG.
The states have no power by taxation or otherwise, to
retard, impede, burden or in any manner control the
operation of constitutional laws enacted by Congress to
carry into execution the powers vested in the federal
government.--> "supremacy" of the NG over LGs.
Holmes: absence of power on the part of the States to
touch,
in that way (taxation) at least, the
instrumentalities of the United States
mere creatures of the State can defeat National policies
thru extermination of what local authorities may
perceive to be undesirable activities or enterprise using
the power to tax as "a tool for regulation"
2.

WON the Local Autonomy Clause of the Constitution will be

violated by PD 1869. NO.
Art x Sec 5, Consti: Each LG 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 LG.
power of LG to "impose taxes and fees" is subject to
"limitations" which Congress may provide by law. Since
PD 1869 remains an "operative" law until "amended,
repealed or revoked" (Sec. 3, Art. XVIII, 1987
Constitution), its "exemption clause" remains as an
exception to the exercise of the power of LGs to impose
taxes and fees. It cannot therefore be violative but
rather is consistent with the principle of local autonomy.
principle of local autonomy under the 1987 Constitution
simply means "decentralization." It does not make LGs
sovereign within the state or an "imperium in imperio."
LG: political subdivision of a nation or state which is
constituted by law and has substantial control of local
affairs. In a unitary system of government, such as the
government under the Philippine Constitution, LGs can only be an
intra sovereign subdivision of one sovereign nation, it cannot be an
imperium in imperio. LG in such a system can only mean a measure
of decentralization of the function of government.
Manila Electric Co, Inc. vs Province of Laguna

G.R. No. 131359

Subject: Public Corporation
Doctrine: Power to generate revenues
Facts:
MERALCO was granted franchise for the supply of electric light,
heat and power by certain municipalities of the Province of Laguna
including, Bian, Sta Rosa, San Pedro, Luisiana, Calauan and
Cabuyao.
On 19 January 1983, MERALCO was likewise granted a franchise by
the National Electrification Administration to operate an electric
light and power service in the Municipality of Calamba, Laguna.
On 12 September 1991, Republic Act No. 7160, otherwise known as
the Local Government Code of 1991, was enacted to take effect
on 01 January 1992 enjoining local government units to create their
own sources of revenue and to levy taxes, fees and charges,
subject to the limitations expressed therein, consistent with the
basic policy of local autonomy. Pursuant to the provisions of the
Code, respondent province enacted Laguna Provincial Ordinance
providing for franchise tax at a rate of 50% of 1% of the gross
annual receipts. Provincial Treasurer, then sent a demand letter to
MERALCO for the corresponding tax payment.
Petitioner MERALCO paid the tax, which then amounted to
P19,520,628.42, under protest. A formal claim for refund was
thereafter sent by MERALCO to the Provincial Treasurer of Laguna
claiming that the franchise tax it had paid and continued to pay to
the National Government pursuant to P.D. 551 already included the
franchise tax imposed by the Provincial Tax Ordinance. MERALCO
contended that the imposition of a franchise tax under Section 2.09
of Laguna Provincial Ordinance No. 01-92, insofar as it concerned
MERALCO, contravened the provisions of Section 1 of P.D. 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 28 August 1995, the claim for refund of petitioner was denied in
a letter signed by Governor Jose D. Lina. In denying the claim,
respondents relied on a more recent law, i.e., Republic Act No. 7160

or the Local Government Code of 1991, than the old decree invoked
by petitioner.
On 14 February 1996, petitioner MERALCO filed with the RTC a
complaint for refund against the Province of Laguna and also Benito
R. Balazo in his capacity as the Provincial Treasurer of Laguna. RTC
dismissed the complaint holding that the power to tax exercised by
the province of Laguna was valid.
ISSUE: Whether or not the power to tax was validly exercised.
HELD: Prefatorily, it might be well to recall that 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 local
government units.
Under the regime of the 1935 Constitution no similar delegation of
tax powers was provided, and local government units instead
derived their tax powers under a limited statutory authority.
Whereas, then, the delegation of tax powers granted at that time
by statute to local governments was confined and defined (outside
of which the power was deemed withheld), the present
constitutional rule (starting with the 1973 Constitution), however,
would broadly confer such tax powers subject only to specific
exceptions that the law might prescribe.
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. The 1991 Code 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. Indicative of the

legislative intent to carry out the Constitutional mandate of vesting
broad tax powers to local government units, the Local Government
Code has effectively withdrawn under Section 193 thereof, tax
exemptions or incentives theretofore enjoyed by certain entities.
The Code, in addition, contains a general repealing clause in its
Section 534 which states that 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.
WHEREFORE, the instant petition is hereby DISMISSED. No costs.
G.R. No. 155491
July 21, 2009
SMART
COMMUNICATIONS,
INC., Petitioner,
vs.
THE CITY OF DAVAO, represented herein by its Mayor Hon.
RODRIGO DUTERTE, and the SANGGUNIANG PANLUNSOD OF
DAVAO CITY, Respondents.
FACTS:
1. On February 18, 2002, Smart filed a special civil action for
declaratory relief3 for the ascertainment of its rights and obligations
under the Tax Code of the City of Davao (DAVAO).
2. The tax being imposed is a tax on businesses enjoying a
franchise, at the rate of seventy-five percent of one percent of the
gross annual receipts for the preceding calendar year based on the
income or receipts realized within the territorial jurisdiction of
Davao City.
3. Among the objections raised by Smart were:
a. The issuance of its franchise under RA No. 7294, which is
subsequent to RA 7160 (Local Government Code) shows the clear
legislative intent to exempt it from the provisions of RA 7160
b. Sec. 137 of the LGC is meant to apply to exemptions
already existing at the time of its effectivity and not to future
exemption
c. The power of the City of Davao to impose a franchise tax
is subject to statutory limitation such as the in lieu of all taxes
clause found in RA 7294
d. The imposition of franchise tax by the City of Davao
would amount to a violation of the constitutional provision against
impairment of contract.
4. Davao, however, invoked the power granted by the Constitution
to local government units (LGU) to create their own sources of
revenue.

5. The RTC held a decision in favor of Davao stating that the

ambiguity in RA 7294 regarding in lieu of all taxes must be
resolved against the taxpayer. Tax exemptions are construed in
strictly against the taxpayer and liberally in favor of the taxing
authority.
6. The RTC also held that there was no violation of the nonimpairment clause of the Constitution since the power to tax is
based not merely on a valid delegation of legislative power but on
the direct authority granted to it by the fundamental law. It added
that while such power may be subject to restrictions or conditions
imposed by Congress, any such legislative limitation must be
consistent with the basic policy of local autonomy.
ISSUES: Whether Smart is liable to pay the franchise tax imposed
by the City of Davao- YES
HELD:
1. Smart alleges that the in lieu of all taxes clause of its
franchise exempts it from all taxes, both local and national, except
the national franchise tax (now VAT), income tax and real property
tax. The uncertainty in the in lieu of all taxes clause in RA No.
7294 on whether Smart is exempted from both local and national
franchise tax must be construed strictly against Smart which claims
exemption. Smart has the burden of providing that, aside from the
imposed 3% franchise tax, Congress intended it to be exempt from
all kinds of franchise taxes-whether local or national. Smart, failed
in this regard.
2. Tax exemptions can only be given force if they are clear and
categorical. If Congress intended Smart to be exempted from
municipal and provincial taxes, it could have used the same
language as the Clavecilla franchise which stated: in lieu of any
and all taxes of any kind, nature or description levied, established
ot collected by any authority whatsoever, municipal, provincial or
national, from which the grantee is hereby expressly exempted.
The interpretation of the franchise granted to Smart is that it refers
only to national and not to local taxes.
3. Smart also claims that the clause in lieu of all taxes is in the
nature of a tax exclusion and not a tax exemption. The distinction
between the two:
Tax Exemption- This means that the taxpayer does not pay any tax
at all. An exemption is an immunity or privilege, it is the freedom
from a charge or burden to which others are subjected.
Tax Exclusion- The removal of otherwise taxable items from the
reach of taxation e.g exclusions from gross income and allowable
deductions. An exclusion is also an immunity or privilege which
frees a taxpayer from a charge to which others are subjected. The
rule that a tax exemption should be applied strictly against the

taxpayer and liberally in favor of the government applies equally to

tax exclusion.
Smart pays VAT, income tax and real property tax. Thus, what it
enjoys it more accurately a tax exclusion.
4. Smart posits that the franchise of GLOBE contains a provision
exempting it from municipal or local franchise tax, and that Smart
should like benefit by these. In granting the franchise of GLOBE
under RA No. 7925, Congress did not intend it to operate as a
blanket tax exemption to all telecommunications entities. GLOBE
pays only 1.5% of its gross receipts in lieu of any and all taxes of
any kind, nature or description levies, established or collected by
any authority whatsoever, municipal, provincial or national. This
grant to GLOBE is clear and categorical. No such provision is found
in the franchise of Smart, the kind of tax from which it is exempted
is not clearly specified.
5. If the contention of Smart is to be followed. The Government will
be burdened of having to keep track of all granted
telecommunications franchises, lest some companies be treated
unequally. It is different if Congress enacts a law specifically
granting uniform advantages, favor, privilege, exemption or
immunity to all telecommunication entities.
6. Smart likewise claims a violation of the non-impairment clause
since the franchise is in the nature of the contract between the
government and Smart. Smarts franchise was granted with the
express condition that it is subject to amendment, alteration or
repeal. As held in Tolentino vs. Secretary of Finance:
Existing laws are read into contracts in order to fix
obligations as between parties, the reservation of essential
attributes of sovereign power is also read into contracts as a basic
postulate of the legal order. The policy of protecting contracts
against impairment presupposes the maintenance of a government
which retains adequate authority to secure the peace and good
order of society.
In truth, the Contract Clause was never been though as a
limitation on the exercise of the States power of taxation save only
where a tax exemption has been granted for a valid consideration
xxx.
Dispositive: Wherefore, the instant petition is denied for lack of
merit. Costs against petitioner.
Yamane vs Lepanto
Facts: Respondent BA-Lepanto Condominium Corporation (the
"Corporation") is a duly organized condominium corporation
constituted in accordance with the Condominium Act, which owns
and holds title to the common and limited common areas of the BA-

Lepanto Condominium (the "Condominium"). The Corporation is

authorized, under Article V of its Amended By-Laws, to collect
regular assessments from its members for operating expenses,
capital expenditures on the common areas, and other special
assessments as provided for in the Master Deed with Declaration of
Restrictions of the Condominium.
On 15 December 1998, the Corporation received a Notice of
Assessment dated 14 December 1998 signed by the City Treasurer.
The Notice of Assessment stated that the Corporation is "liable to
pay the correct city business taxes, fees and charges," computed
as totaling P1,601,013.77 for the years 1995 to 1997.3 The Notice
of Assessment was silent as to the statutory basis of the business
taxes assessed.
Proceeding from the premise that its tax liability arose from Section
3A.02(m) of the Makati Revenue Code, the Corporation proceeded
to argue that under both the Makati Code and the Local
Government Code, "business" is defined as "trade or commercial
activity regularly engaged in as a means of livelihood or with a view
to profit." It was submitted that the Corporation, as a condominium
corporation, was organized not for profit, but to hold title over the
common areas of the Condominium, to manage the Condominium
for the unit owners, and to hold title to the parcels of land on which
the Condominium was located. Neither was the Corporation
authorized, under its articles of incorporation or by-laws to engage
in profit-making activities. The assessments it did collect from the
unit owners were for capital expenditures and operating expenses.
From the denial of the protest, the Corporation filed an Appeal with
the Regional Trial Court (RTC) of Makati which dismiss the appeal
and concluded that the activities of the Corporation fell squarely
under the definition of "business" under Section 13(b) of the Local
Government Code, and thus subject to local business taxation.
The Corporation filed a Petition for Review under Rule 42 of the
Rules of Civil Procedure with the Court of Appeals. Initially, the
petition was dismissed outright on the ground that only decisions of
the RTC brought on appeal from a first level court could be elevated
for review under the mode of review prescribed under Rule
42. However, the Corporation pointed out in its Motion for
Reconsideration that under Section 195 of the Local Government
Code, the remedy of the taxpayer on the denial of the protest filed
with the local treasurer is to appeal the denial with the court of
competent jurisdiction. Persuaded by this contention, the Court of
Appeals reinstated the petition.

The appellate court reversed the RTC and declared that the
Corporation was not liable to pay business taxes to the City of
Makati.
Upon denial of her Motion for
Reconsideration,http://www.lawphil.net/judjuris/juri2005/oct20
05/gr_154993_2005.html - fnt21 the City Treasurer elevated the
present Petition for Review under Rule 45. It is argued that the
Corporation is engaged in business, for the dues collected from the
different unit owners is utilized towards the beautification and
maintenance of the Condominium, resulting in "full appreciative
living values" for the condominium units which would command
better market prices should they be sold in the future. The City
Treasurer likewise avers that the rationale for business taxes is not
on the income received or profit earned by the business, but the
privilege to engage in business.
The City Treasurer also claims that the Corporation had filed the
wrong mode of appeal before the Court of Appeals when the latter
filed its Petition for Review under Rule 42. It is reasoned that the
decision of the Makati RTC was rendered in the exercise of original
jurisdiction, it being the first court which took cognizance of the
case. Accordingly, with the Corporation having pursued an
erroneous mode of appeal, the RTC Decision is deemed to have
become final and executory.
Issues and Ruling:
Procedural:
1) Procedural: Whether the RTC, in deciding an appeal
taken from a denial of a protest by a local treasurer
under Section 195 of the Local Government Code,
exercises "original jurisdiction" or "appellate
jurisdiction? Original
There are 2 conflicting views on this issue:
a) Position of CA: RTC, in reviewing denials of
protests by local treasurers, exercises appellate
jurisdiction. This is anchored on the language of
Sec. 195 of the LGC which states that the remedy
of the taxpayer whose protest is denied by the
local treasurer is to appeal with the court of
competent jurisdiction. The LGC however does
not elaborate on how such appeal should be
undertaken.

b) Position of City Treasurer: jurisdiction exercised is

original in character.
Court affirmed the position of the City Treasurer. The LGC does not
expressly confer appellate jurisdiction on the part of RTCs from the
denial of a tax protest by a local treasurer. On the other hand,
Section 22 of BP 129 expressly delineates the appellate jurisdiction
of the RTCs, confining appellate jurisdiction to cases decided by
Metropolitan, Municipal, and Municipal Circuit Trial Courts. BP 129
does not confer appellate jurisdiction on RTCs over rulings made by
non-judicial entities.
HOWEVER, this pronouncement is subject to two qualifications.
- First, in this case there are significant reasons for the Court
to overlook the procedural error and ultimately uphold the
adjudication of the jurisdiction exercised by the CA.
- Second, the doctrinal weight of the pronouncement is
confined to cases and controversies that emerged prior to
the enactment of RA 9282 (effective April 2004), the law
which expanded the jurisdiction of the Court of Tax Appeals
(CTA). Under RA 9282, the CTA, not CA, exercises exclusive
appellate jurisdiction to review on appeal decisions, orders
or resolutions of the RTCs in local tax cases whether
originally decided or resolved by them in the exercise of
their original or appellate jurisdiction. RA 9282 thus would
not apply here because the case arose prior to the
affectivity of the law.
2) Substantive: Whether the City of Makati may collect
business taxes on condominium corporations? No
The power of local government units to impose taxes within its
territorial jurisdiction derives from the Constitution itself, which
recognizes the power of these units "to create its own sources of
revenue and to levy taxes, fees, and charges subject to such
guidelines and limitations as the Congress may provide, consistent
with the basic policy of local autonomy."
Section 143 of the Code specifically enumerates several types of
business on which municipalities and cities may impose taxes.
These include manufacturers, wholesalers, distributors, dealers of
any article of commerce of whatever nature; those engaged in the
export or commerce of essential commodities; contractors and
other independent contractors; banks and financial institutions; and
peddlers engaged in the sale of any merchandise or article of
commerce. Moreover, the local sanggunian is also authorized to
impose taxes on any other businesses not otherwise specified

under Section 143 which the sanggunian concerned may deem

proper to tax.
At no point has the City Treasurer been candid enough to inform the
Corporation, the RTC, the Court of Appeals, or this Court for that
matter, as to what exactly is the precise statutory basis under the
Makati Revenue Code for the levying of the business tax on
petitioner. Nowhere therein is there any citation made by the City
Treasurer of any provision of the Revenue Code which would serve
as the legal authority for the collection of business taxes from
condominiums in Makati.
The initial inquiry is what provision of the Makati Revenue Code
does the City Treasurer relies on to make the Corporation liable for
business taxes. The notice of assessment, which stands as the first
instance the taxpayer is officially made aware of the pending tax
liability, should be sufficiently informative to apprise the taxpayer
the legal basis of the tax. Section 195 of the Local Government
Code does not go as far as to expressly require that the notice of
assessment specifically cite the provision of the ordinance involved
but it does require that it state the nature of the tax, fee or charge,
the amount of deficiency, surcharges, interests and penalties.
Reference to the local tax ordinance is vital, for the power of local
government units to impose local taxes is exercised through the
appropriate ordinance enacted by the Sanggunian, and not by the
Local Government Code alone. What determines tax liability is the
tax ordinance, the Local Government Code being the enabling law
for the local legislative body.
The creation of the condominium corporation is sanctioned by
Republic Act No. 4726. Under the law, to enable the orderly
administration over these common areas which are jointly owned
by the various unit owners, the Condominium Act permits the
creation of a condominium corporation, which is specially formed
for the purpose of holding title to the common area, in which the
holders of separate interests shall automatically be members or
shareholders, to the exclusion of others, in proportion to the
appurtenant interest of their respective units.
Even though the Corporation is empowered to levy assessments or
dues from the unit owners, these amounts collected are not
intended for the incurrence of profit by the Corporation or its
members, but to shoulder the multitude of necessary expenses that
arise from the maintenance of the Condominium Project.

In rejecting the contention of the City Treasurer that the collection

of these assessments and dues are "with the end view of getting
full appreciative living values" for the condominium units, and as a
result, profit is obtained once these units are sold at higher prices,
it held that: First, if any profit is obtained by the sale of the units, it
accrues not to the corporation but to the unit owner. Second, if the
unit owner does obtain profit from the sale of the corporation, the
owner is already required to pay capital gains tax on the
appreciated value of the condominium unit. Whatever capacity the
Corporation may have pursuant to its power to exercise acts of
ownership over personal and real property is limited by its stated
corporate purposes, which are by themselves further limited by the
Condominium Act. A condominium corporation, while enjoying such
powers of ownership, is prohibited by law from transacting its
properties for the purpose of gainful profit.
The Court holds that condominium corporations are generally
exempt from local business taxation under the Local Government
Code, irrespective of any local ordinance that seeks to declare
otherwise. Still, the City Treasurer has not posited the claim that
the Corporation is engaged in business activities beyond the
statutory purposes of a condominium corporation. The assessment
appears to be based solely on the Corporations collection of
assessments from unit owners, such assessments being utilized to
defray the necessary expenses for the Condominium Project and
the common areas. There is no contemplation of business, no
orientation towards profit in this case. Hence, the assailed tax
assessment has no basis under the Local Government Code or the
Makati Revenue Code, and the insistence of the city in its collection
of the void tax constitutes an attempt at deprivation of property
without due process of law.
PETRON CORPORATION vs.MAYOR TOBIAS M. TIANGCO, and
MUNICIPAL TREASURER MANUEL T. ENRIQUEZ of the
MUNICIPALITY OF NAVOTAS, METRO MANILA
[G.R. No. 158881
April 16, 2008]
FACTS:
Petron maintains a depot or bulk plant at the Navotas
Fishport Complex in Navotas. Through that depot, it has
engaged in the selling of diesel fuels to vessels used in
commercial fishing in and around Manila Bay
On 1 March 2002, Petron received a letter from the office of
Navotas Mayor, respondent Toby Tiangco, wherein the
corporation was assessed taxes "relative to the figures

covering sale of diesel declared by your Navotas Terminal

from 1997 to 2001.
The stated total amount due was P6,259,087.62.
The computation sheets3 that were attached to the letter
made reference to Ordinance 92-03, or the New Navotas
Revenue Code (Navotas Revenue Code), though such
enactment was not cited in the letter itself.
Petron duly filed with Navotas a letter-protest to the notice
of assessment.
It argued that it was exempt from local business taxes in
view of Art. 232(h) of the Implementing Rules (IRR) of the
Code, as well as a ruling of the Bureau of Local Government
Finance of the Department of Finance dated 31 July 1995,
the latter stating that sales of petroleum fuels are not
subject to local taxation.
The letter-protest was denied by the Navotas Municipal
Treasurer.
This was followed by a letter from the Mayor dated 15 May
2002, captioned "Final Demand to Pay," requiring that
Petron pay the assessed amount within five (5) days from
receipt thereof, with a threat of closure of Petrons
operations within Navotas should there be no payment. 5
Petron, through counsel, replied to the Mayor by another
letter posing objections to the threat of closure. The Mayor
did not respond to this last letter.
Petron filed with the Malabon RTC a Complaint for
Cancellation of Assessment for Deficiency Taxes with Prayer
for the Issuance of TRO and/or Preliminary Injunction. The
TRO was not issued by the Malabon RTC upon manifestation
of respondents that they would not proceed with the closure
of Petrons Navotas bulk plant until after the RTC shall have
decided the case on the merits.7
However, while the case was pending decision, respondents
refused to issue a business permit to Petron.
Malabon RTC rendered its Decision dismissing Petrons
complaint and ordering the payment of the assessed
amount.9 Eleven days later, Petron received a Closure Order
from the Mayor, directing Petron to cease and desist from
operating the bulk plant. Petron sought a TRO from the
Malabon RTC, but this was denied.10 Petron also filed a
motion for reconsideration of the order of denial, but this
was likewise denied
ISSUE:

whether a local government unit is empowered under the Local

Government Code (the LGC) to impose business taxes on persons
or entities engaged in the sale of petroleum products.
HELD:
Particularly, the controversy hinges on the correct interpretation of
Section 133(h) of the LGC, and the applicability of Article 232 (h) of
the IRR.
Section 133(h) of the LGC reads as follows:
Sec. 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:
xxx
(h) Excise taxes on articles enumerated under the National Internal
Revenue Code, as amended, and taxes, fees or charges on
petroleum products;
Evidently, Section 133 prescribes the limitations on the capacity of
local government units to exercise their taxing powers otherwise
granted to them under the LGC. Apparently, paragraph (h) of the
Section mentions two kinds of taxes which cannot be imposed by
local government units, namely: "excise taxes on articles
enumerated under the National Internal Revenue Code [(NIRC)], as
amended;" and "taxes, fees or charges on petroleum products."
The power of a municipality to impose business taxes is provided
for in Section 143 of the LGC. Under the provision, a municipality is
authorized to impose business taxes on a whole host of business
activities. Suffice it to say, unless there is another provision of law
which states otherwise, Section 143, broad in scope as it is, would
undoubtedly cover the business of selling diesel fuels, or any other
petroleum product for that matter.
Nonetheless, Article 232 of the IRR defines with more particularity
the capacity of a municipality to impose taxes on businesses. The
enumeration that follows is generally a positive list of businesses
which may be subjected to business taxes, and paragraph (h) of
Article 232 does allow the imposition of local business taxes "on
any business not otherwise specified in the preceding paragraphs
which the sanggunian concerned may deem proper to tax," but
subject to this important qualification, thus:
"xxx provided further, that in line with existing national policy, any
business engaged in the production, manufacture, refining,

distribution or sale of oil, gasoline and other petroleum products

shall not be subject to any local tax imposed on this article.

definition sourced from a legal paradigm that is no longer

applicable in this jurisdiction.

As earlier observed, Section 133(h) provides two kinds of taxes

which cannot be imposed by local government units: "excise taxes
on articles enumerated" under the NIRC, as amended; and "taxes,
fees or charges on petroleum products." There is no doubt that
among the excise taxes on articles enumerated under the NIRC are
those levied on petroleum products, per Section 148 of the NIRC.

We next consider whether the clause "taxes, fees or

charges on petroleum products" in Section 133(h) precludes
local government units from imposing business taxes based
on the sale of petroleum products.

We first consider Petrons argument that the "business

taxes" on its sale of diesel fuels partakes of an excise tax,
which if true, could invalidate the challenged tax solely on
the basis of the phrase "excise taxes on articles
enumerated under the [NIRC]."
Petrons argument is fraught with far-reaching implications, for if it
were sustained, it would mean that local government units are
barred from imposing business taxes on any of the articles subject
to excise taxes under the NIRC. These would include alcohol
products,20 tobacco products,21 mineral products22 automobiles,23
and such non-essential goods as jewelry, goods made of precious
metals, perfumes, and yachts and other vessels intended for
pleasure or sports
Beginning with the National Internal Revenue Code of 1986, as
amended, the term "excise taxes" was used and defined as
applicable "to goods manufactured or produced in the Philippines
and to things imported."29 This definition was carried over into the
present NIRC of 1997.30 Further, these two latest codes categorize
two different kinds of excise taxes: "specific tax" which is imposed
and based on weight or volume capacity or any other physical unit
of measurement; and "ad valorem tax" which is imposed and based
on the selling price or other specified value of the goods.
The current definition of an excise tax is that of a tax levied on a
specific article, rather than one "upon the performance, carrying
on, or the exercise of an activity."
It is quite apparent, therefore, that our current body of taxation law
does not explicitly accommodate the traditional definition of excise
tax offered by Petron.
Thus, Petrons argument concerning excise taxes is founded not on
what the NIRC or the Code actually provides, but on a non-statutory

The power of a municipality to impose business taxes derives from

Section 143 of the Code that specifically enumerates several types
of business on which it may impose taxes, including manufacturers,
wholesalers, distributors, dealers of any article of commerce of
whatever nature;38 those engaged in the export or commerce of
essential commodities;39 retailers;40 contractors and other
independent contractors;41 banks and financial institutions;42 and
peddlers engaged in the sale of any merchandise or article of
commerce.43 This obviously broad power is further supplemented
by paragraph (h) of Section 143 which authorizes the sanggunian
to impose taxes on any other businesses not otherwise specified
under Section 143 which the sanggunian concerned may deem
proper to tax.
This ability of local government units to impose business or other
local taxes is ultimately rooted in the 1987 Constitution. Section 5,
Article X assures that "[e]ach local government unit shall have the
power to create its own sources of revenues and to levy taxes, fees
and charges," though the power is "subject to such guidelines and
limitations as the Congress may provide."
Congress has the constitutional authority to impose limitations on
the power to tax of local government units, and Section 133 of the
Code is one such limitation. Indeed, the provision is the explicit
statutory impediment to the enjoyment of absolute taxing power by
local government units, not to mention the reality that such power
is a delegated power.
Section 133(h) states that local government units "shall not extend
to the levy of xxx taxes, fees or charges on petroleum products."
Respondents assert that the phrase "taxes, fees or charges on
petroleum products" pertains to the imposition of direct or excise
taxes on petroleum products, and not business taxes. If the phrase
actually pertains to excise taxes, then it would be an exercise in
utter redundancy, since the preceding phrase already prohibits the
imposition of excise taxes on articles already subject to such taxes
under the NIRC, such as petroleum products. There would be no
sense on the part of the legislature to twice emphasize in the same

sentence that excise taxes on petroleum products are beyond the

pale of local government taxation.
The dicta that "[a] tax on a business is distinct from a tax on the
article itself" might at first blush somehow lend support to
respondents position, yet that dicta has not since been reprised by
this Court. It is likewise worth observing that Pililla did involve a tax
ordinance that imposed business taxes on an enterprise engaged in
the manufacture and storage of petroleum products.
Significantly, the legal milieu governing Pililla is vastly different
from that existing at bar, to the extent that the earlier case could
not be presently controlling.
In view of the difference in statutory paradigm between this case
and Pililla, the latter case is severely diminished as applicable
precedent at bar.
We can concede that a tax on a business is distinct from a tax on
the article itself, or for that matter, that a business tax is distinct
from an excise tax. However, such distinction is immaterial insofar
as the latter part of Section 133(h) is concerned, for the phrase
"taxes, fees or charges on petroleum products" does not qualify the
kind of taxes, fees or charges that could withstand the absolute
prohibition imposed by the provision. It would have been a different
matter had Congress, in crafting Section 133(h), barred "excise
taxes" or "direct taxes," or any category of taxes only, for then it
would be understood that only such specified taxes on petroleum
products could not be imposed under the prohibition. The absence
of such a qualification leads to the conclusion that all sorts of taxes
on petroleum products, including business taxes, are prohibited by
Section 133(h). Where the law does not distinguish, we should not
distinguish.
The language of Section 133(h) makes plain that the prohibition
with respect to petroleum products extends not only to excise taxes
thereon, but all "taxes, fees and charges." The earlier reference in
paragraph (h) to excise taxes comprehends a wider range of
subjects of taxation: all articles already covered by excise taxation
under the NIRC, such as alcohol products, tobacco products,
mineral products, automobiles, and such non-essential goods as
jewelry, goods made of precious metals, perfumes, and yachts and
other vessels intended for pleasure or sports. In contrast, the later
reference to "taxes, fees and charges" pertains only to one class of
articles of the many subjects of excise taxes, specifically,
"petroleum products". While local government units are authorized

to burden all such other class of goods with "taxes, fees and
charges," excepting excise taxes, a specific prohibition is imposed
barring the levying of any other type of taxes with respect to
petroleum products.