Davao City v. Government Insurance System
REITERATIONFacts
The Antecedents: The City of Davao issued a Notice of Public Auction for GSIS properties due to non-payment of realty taxes for the years 1992 to 1994, totaling ₱295,721.61. Subsequently, Warrants of Levy and Notices of Levy were issued against GSIS properties. Procedural History: The GSIS filed a Petition for Certiorari, Prohibition, Mandamus and/or Declaratory Relief with the RTC of Davao City, seeking to nullify the tax assessments and auction sale. The RTC issued a temporary restraining order and later a preliminary injunction. The RTC, in its Decision dated May 28, 1996, upheld the tax-exempt status of the GSIS, citing Section 33 of P.D. No. 1146 as amended by P.D. No. 1981, and concluded that the Local Government Code did not meet the conditions for its repeal. The RTC denied the Motion for Reconsideration. The Petition: The City of Davao elevated the case to the Supreme Court, arguing that the Local Government Code of 1992, particularly Sections 193 and 294 thereof, withdrew the GSIS's tax exemption.
Issue(s)
Whether the tax exemption privilege of the GSIS was withdrawn by the Local Government Code of 1992 despite the conditions set forth in Section 33 of P.D. No. 1146, as amended. Whether the RTC erred in upholding the tax-exempt status of the GSIS.
Ruling
The Petition for Review is GRANTED. The Decision of the Regional Trial Court of Davao City, Branch 12 is REVERSED and SET ASIDE. The City of Davao may collect the assessed real property taxes from the GSIS for the years 1992 to 1994.
Ratio Decidendi
On whether the tax exemption privilege of the GSIS was withdrawn by the Local Government Code of 1992 despite the conditions set forth in Section 33 of P.D. No. 1146, as amended: The Supreme Court held that the conditions imposed by Section 33 of P.D. No. 1146, as amended by P.D. No. 1981, for the repeal of the GSIS's tax exemptions, are invalid. The Court reasoned that these conditions unduly restrained the plenary power of the legislature to amend or repeal laws, a power that can only be limited by the Constitution itself. The principle that a legislature cannot bind future legislatures to a particular mode of repeal was invoked, citing Duarte v. Dade. Therefore, the Local Government Code of 1992, through its express withdrawal of tax exemptions for government-owned and controlled corporations in Section 193, effectively removed the GSIS's exemption from real property taxes. The Court emphasized that the Local Government Code's provisions, particularly Sections 193, 232, and 234, were intended to withdraw such exemptions, and any prior special laws or conditions to the contrary were superseded. The Court also applied the rule of interpretation favoring local government units in cases of doubt, as provided in Section 5(a) of the Local Government Code. On whether the RTC erred in upholding the tax-exempt status of the GSIS: The RTC erred in upholding the tax-exempt status of the GSIS by strictly adhering to the conditions in Section 33 of P.D. No. 1146, as amended. The Supreme Court found a fundamental flaw in these conditions, as they attempted to restrict the legislative power of future Congresses. The Court reiterated that such restrictions are anathema to democratic principles and the inherent power of a legislature to amend or repeal prior enactments. Consequently, the Local Government Code's withdrawal of tax exemptions for GOCCs, as clarified by the Mactan-Cebu International Airport Authority v. Hon. Marcos ruling, applies to the GSIS. The Court noted that while the GSIS Act of 1997 (R.A. 8291) later restored tax exemptions, this did not affect the tax liability for the period of 1992-1994 when the Local Government Code was in effect.
Main Doctrine
The Local Government Code of 1992, specifically Sections 193, 232, and 234, effectively withdrew the tax exemption privileges of government-owned and controlled corporations, including the GSIS, notwithstanding prior special laws or conditions imposed for their repeal. A legislature cannot bind future legislatures by imposing restrictions on the amendment or repeal of laws.