Drilon vs. Lim

The Secretary of Justice’s power under Section 187 of the Local Government Code to review and set aside a local tax ordinance solely on grounds of constitutionality or legality is an exercise of supervision, not control; it does not transgress the President’s general supervision over local governments under Article X, Section 4 of the Constitution, nor does it undermine the policy of local autonomy. The provision allows the Secretary to determine whether the ordinance is in accordance with law, but does not authorize a declaration that the measure is unwise, unreasonable, oppressive, or confiscatory.

Four oil companies and a taxpayer appealed to the Secretary of Justice under Section 187 of the Local Government Code, questioning the constitutionality and legality of Ordinance No. 7794, otherwise known as the Manila Revenue Code, enacted by the City of Manila. Secretary of Justice Franklin M. Drilon issued a resolution declaring the ordinance null and void for non-compliance with the prescribed procedure in the enactment of tax ordinances and for containing certain provisions contrary to law and public policy. The City of Manila then filed a petition for certiorari in the Regional Trial Court of Manila, which revoked the Secretary’s resolution, sustained the validity of the ordinance, and, going further, declared Section 187 of the Local Government Code unconstitutional on the ground that it conferred the power of control over local governments upon the Secretary of Justice.

• Enactment and appeal: The City of Manila enacted Ordinance No. 7794, the Manila Revenue Code, imposing local taxes, fees, and charges. Four oil companies and a taxpayer appealed to the Secretary of Justice under Section 187 of the Local Government Code, alleging that the ordinance was unconstitutional, illegal, and enacted without observing the mandatory procedural requirements.
• Secretary’s resolution: After evaluating the appeal, Secretary Drilon declared the ordinance null and void. He found that there were no written notices of public hearings sent to interested parties as required by Article 276(b) of the Implementing Rules of the Local Government Code, no copies of the proposed ordinance published in three successive issues of a newspaper of general circulation pursuant to Article 276(a), no minutes submitted showing that obligatory public hearings had been held, no posting of the approved ordinance in prominent places in the city in accordance with Section 511(a) of the Local Government Code, and no translation into Pilipino or Tagalog and dissemination under Section 59(b) of the Code. He further ruled that certain substantive provisions of the ordinance were ultra vires and contrary to law and public policy.
• RTC challenge: The City of Manila filed a petition for certiorari with the Regional Trial Court, contending that the Secretary’s resolution was invalid and, for the first time, challenging the constitutionality of Section 187 itself. The city claimed that the procedural requirements had been duly observed but that it had been given only five days by the Secretary to gather and present its evidence.
• RTC ruling: The trial court (Judge Palattao) found that the procedural requirements were indeed complied with based on the evidence later presented in court. It examined 25 exhibits and concluded that written notices of public hearings had been sent, minutes of hearings existed, and the proposed and approved ordinances had been published in newspapers of general circulation. It furthermore declared Section 187 unconstitutional, reasoning that the provision allowed the Secretary of Justice to alter, modify, or set aside a tax ordinance, which is an act of control, not supervision, and that the Constitution vests in the President only the power of general supervision over local governments.
• Supreme Court review: The exhibits were elevated to the Supreme Court upon the respondents’ motion. The Court examined the exhibits and agreed with the trial court’s factual findings on procedural compliance. The substantive validity of specific provisions of the Manila Revenue Code was not raised in the petition and was therefore not ruled upon.

• Constitutionality of Section 187: Petitioner maintained that Section 187 of the Local Government Code is constitutional because the authority it grants the Secretary of Justice is limited to reviewing the constitutionality or legality of a tax ordinance. Such review is an act of supervision, not control, since the Secretary may only determine whether the local government followed the law, without substituting his own judgment on the wisdom or policy of the measure.
• Procedural defects: Petitioner argued that the Manila Revenue Code was enacted without the mandatory public hearings, publication of the proposed ordinance, posting of the approved ordinance, and translation into the vernacular, as required by the Local Government Code and its Implementing Rules, thereby rendering the ordinance null and void.

• Unconstitutionality of Section 187: Respondents argued that Section 187 is unconstitutional because it empowers the Secretary of Justice to alter, modify, or set aside what the local legislative body has done, which constitutes control—not mere supervision—in violation of the President’s constitutionally delimited supervisory power over local governments under Article X, Section 4, and the policy of local autonomy under Section 5 of the same Article.
• Procedural compliance: Respondents countered that all procedural requirements had been satisfied. They presented evidence of written notices of public hearings sent to interested parties (Exhibits G-1 to 17), minutes of hearings (Exhibits M, M-1, M-2, M-3), and publication of the proposed ordinance in Balita and Manila Standard on April 21 and 25, 1993, and of the approved ordinance in three successive issues of Manila Standard and in Balita (Exhibits Q, Q-1, Q-2, Q-3). They further contended that the Secretary’s adverse finding resulted from the unreasonably short period given to them to gather and present all the documentary proof, which was later submitted to the trial court.

• Constitutionality of Section 187: Whether Section 187 of the Local Government Code vests the Secretary of Justice with the power of control over local governments, in contravention of the constitutional policy of local autonomy and the President’s general supervision over local governments under Article X, Section 4 of the 1987 Constitution.
• Procedural Compliance: Whether the Manila Revenue Code was enacted in accordance with the mandatory procedural requirements for tax ordinances prescribed by the Local Government Code and its Implementing Rules.

• Constitutionality of Section 187: Section 187 is constitutional. The power it confers is supervisory, not controlling. The Secretary of Justice is authorized only to review the constitutionality or legality of a tax ordinance; any revocation is limited to these grounds. Altering, modifying, or setting aside an ordinance on such bases does not involve substituting the Secretary’s own judgment for that of the local government. The Secretary may not declare the ordinance unwise, unreasonable, or oppressive—determinations that would require discretion and thus amount to control. In this case, Secretary Drilon annulled the Manila Revenue Code solely because it contained ultra vires provisions and had been enacted without complying with prescribed procedure, i.e., he determined whether the local government performed its functions in accordance with law. That is an act of supervision, consistent with the distinction drawn in Mondano v. Silvosa and related cases: an officer exercising control lays down the rules and may redo the act himself; a supervising officer merely ensures that the rules are followed and may order the work done or redone only to conform to existing rules. The earlier provision in the Local Autonomy Act that allowed the Secretary of Finance to suspend a tax ordinance if, in his opinion, it was unjust, excessive, oppressive, or confiscatory would have involved control, but Section 187 grants no such latitude; it confines the Secretary to questions of legality. Hence, the provision does not violate the President’s supervisory authority under Article X, Section 4, nor the taxing powers and local autonomy guaranteed by Section 5.
• Procedural Compliance: The procedural requirements were substantially observed. A thorough examination of the exhibits showed that written notices of public hearings were sent to interested parties (Exhibits G-1 to 17), minutes of public hearings were kept (Exhibits M, M-1, M-2, M-3), the proposed ordinance was published in newspapers of general circulation (Balita and Manila Standard) on April 21 and 25, 1993, and the approved ordinance was published in the July 3, 4, and 5, 1993 issues of Manila Standard and in the July 6, 1993 issue of Balita (Exhibits Q, Q-1, Q-2, Q-3). The failure to post the approved ordinance did not affect its validity because publication in three successive issues of a newspaper of general circulation satisfies the requirements of due process. The requirement to translate and disseminate applies to local development plans and public investment programs, not to tax ordinances. The trial court’s finding of compliance was therefore affirmed; the Secretary’s earlier contrary conclusion was the result of the insufficient time afforded the city to present its evidence.

• Supervision distinguished from control
• Control is the power of an officer to alter, modify, or set aside what a subordinate officer has done in the performance of duties and to substitute the judgment of the former for that of the latter. An officer exercising control lays down the rules for the doing of an act; if the rules are not followed, he may, in his discretion, order the act undone or redone by the subordinate or may even decide to do it himself.
• Supervision is the power of a superior officer merely to see to it that lower officers perform their functions in accordance with law. The supervising officer ensures that the rules are followed but does not lay down the rules, has no discretion to modify or replace them, and may order the work done or redone only to conform to the prescribed rules; he may not prescribe his own manner for the doing of the act.
• Under Section 187 of the Local Government Code, the Secretary of Justice is confined to determining whether the tax ordinance complies with the Constitution and the law. The Secretary does not assess its wisdom, reasonableness, or oppressiveness, and does not substitute his own judgment for that of the local legislative body. The review is therefore an exercise of supervision, not control.
• Presumption of constitutionality — Every statute is presumed constitutional, and the burden of proving its invalidity rests on the party challenging it. To doubt is to sustain. The presumption can be overcome only by the clearest showing of an infraction of the Constitution, and courts must act with a becoming modesty before declaring a law unconstitutional, especially when the question has not yet been passed upon by a collegiate body.
• Due process and publication of ordinances — Publication of an ordinance in a newspaper of general circulation for three successive issues satisfies the requirement of due process; a failure to post the ordinance in prominent places, while required, does not affect the ordinance’s validity when publication has been made. The translation and dissemination requirement under Section 59(b) of the Local Government Code applies to local development plans and public investment programs, not to tax ordinances.

• “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. If the rules are not observed, he may order the work done or re-done but only to conform to the prescribed rules. He may not prescribe his own manner for the doing of the act. He has no judgment on this matter except to see to it that the rules are followed.” — This passage encapsulates the distinction between control and supervision and was central to the ruling that Section 187 involves supervision.
• “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.” — This clarifies the limited scope of the Secretary’s power under Section 187, distinguishing it from the earlier provision in the Local Autonomy Act.
• “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, and only when such a conclusion is reached by the required majority may the Court pronounce, in the discharge of the duty it cannot escape, that the challenged act must be struck down.” — A restatement of the heavy burden faced by a challenger to a statute’s validity.

• Mondano v. Silvosa, 97 Phil. 143 — Established the classic definition of supervision as the power to see that subordinate officers perform their functions in accordance with law, and of control as the power to substitute one’s judgment for that of a subordinate; relied upon by the Court to classify Section 187 as supervisory.
• Hebron v. Reyes, 104 Phil. 175 — Reiterated the distinction between control and supervision; cited alongside Mondano.
• Tecson v. Salas, 34 SCRA 282 — Affirmed the distinction; cited in the decision.
• Taule v. Santos, 200 SCRA 512 — Distinguished; that case involved a jurisdictional conflict between the Secretary of Local Governments and the Commission on Elections over barangay election contests and was inapplicable to the issue of supervision versus control.

• Section 187, Local Government Code (R.A. No. 7160) — The very provision examined for constitutionality. It provides that questions on the constitutionality or legality of tax ordinances may be raised on appeal to the Secretary of Justice within thirty days from effectivity; the appeal does not suspend the effectivity of the ordinance; the Secretary must decide within sixty days; and the aggrieved party may thereafter file appropriate proceedings in court. The Court interpreted the scope of the Secretary’s authority as confined to legality and constitutionality, rendering it an exercise of supervision.
• Article X, Section 4, 1987 Constitution — “The President of the Philippines shall exercise general supervision over local governments.” The Court ruled that Section 187 does not infringe this provision because the Secretary, acting as alter ego of the President, exercises only supervision, not control.
• Article X, Section 5, 1987 Constitution — Guarantees the taxing power of local government units subject to guidelines and limitations Congress may provide. The Court held that Section 187 is a valid limitation consistent with local autonomy.
• Article VIII, Section 4(2), 1987 Constitution — Defines the appellate jurisdiction of the Supreme Court over final judgments of lower courts in cases involving the constitutionality of laws. Cited to confirm that the RTC had jurisdiction to rule on the constitutionality of Section 187 and that the Supreme Court could review such a ruling.
• Section 19(1), B.P. Blg. 129 — Vests regional trial courts with jurisdiction over civil cases incapable of pecuniary estimation, which supported the RTC’s authority to hear the challenge to Section 187.
• Article 276 of the Implementing Rules of the Local Government Code — Requires written notices of public hearings to interested parties and publication of proposed tax ordinances in a newspaper of general circulation. Applied in evaluating procedural compliance.
• Section 511(a) and Section 59(b), Local Government Code — Section 511(a) requires the posting of approved ordinances; Section 59(b) requires translation and dissemination of certain local measures. The Court held that the posting requirement, though not complied with, did not affect validity in light of publication, and that translation and dissemination applied to development plans, not tax ordinances.

Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Quiason, Puno, Vitug, Kapunan, and Mendoza, JJ.