THE CITY OF DAVAO, CITY TREASURER AND THE CITY ASSESSOR OF DAVAO CITY v.

THE REGIONAL TRIAL COURT, BRANCH XII, DAVAO CITY AND THE GOVERNMENT
SERVICE INSURANCE SYSTEM (GSIS)
18 August 2005
G.R. No. 127383
TINGA, J.
DOCTRINE/S: Reading together Secs. 133, 232, and 234 of the LGC, as a general rule, as
laid down in Sec 133, the taxing powers of LGUs cannot extend to the levy of, inter alia,
taxes, fees and charges of any kind on the National Governments, its agencies and
instrumentalities, and LGUs; however, pursuant to Sec 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 1 st
paragraph of Sec 234.
Petitioners are the taxing authorities while respondent is a government owned and controlled
corporation with branch in Davao City
BRIEF FACTS: Davao City imposed realty taxes against GSIS. Because GSIS failed to pay
from 1992-1994, a Notice of Public Auction scheduling the public bidding of GSIS properties
was issued. GSIS also received Warrants of Levy and Notices of Levy on three parcels of land it
owned. Thus, GSIS filed a Petition for Certiorari, Prohibition, Mandamus and/or Declaratory
Relief before the RTC on the ground that it is exempt from taxes.
PETITIONERS CONTENTION: LGC, particulary Secs 193 and 294, has withdrawn the
exemption previously granted to GOCCs including the GSIS. Under Sec 534 (f) of the LGC,
even special laws such as the GSIS Charter, which are inconsistent with the LGC are repealed
or modified accordingly.
RESPONDENTS CONTENTION: Its exemption was not withdrawn by the LGC. Under Sec 33
of PD 1146 (GSIS Charter), as amended by PD 1981, the following conditions must be met in
order for the GSIS tax exemption be effectively withdrawn:
1 That Sec 33 be expressly and categorically repealed by law; and,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.
GSIS contended that had it been the intention of the legislature to repeal Sec 33 through the
LGC, LGC should have included the appropriate retraction in its repealing clause in Sec 534 (f).
However, Sec 534 is a general repealing provision which is afforded less weight in light of the
rule that implied repeals are not favored.
RTC ruled for GSIS, holding that the LGC failed to satisfy both conditions. It also gave weight to
the legal opinion of the Sec of Justice concluding that Sec 33 was not repealed by the LGC and
a memo from the Office of the President expressing the same opinion.
ISSUE/S: WON the LGC has effectively repealed Sec 33 of PD 1146, as amended by PD 1981,
thus GSIS is no longer exempt from realty taxes

HELD: YES. The conditions set forth in Sec 33 cannot be given effect for they are in the form of
the prohibited irrepealable laws.
RATIO: PD 1146 was enacted in 1977 by Pres. Marcos in the exercise of his legislative powers.
Sec 33 merely provided a general rule exempting GSIS from all taxes. Then, he enacted PD
1931 which withdrew all tax exemptions granted to GOCCs. But Pres. Marcos immediately
reconsidered the withdrawal of exemptions on the GSIS and thus enacted PD 1146 which
expressly stated that GSIS remained tax exempt despite the passage of PD 1931. But PD 1146
did not merely restore GSISs previous exemptions but also proscribed future attempts to alter
the tax-exempt status of GSIS by imposing unorthodox conditions1 for its future repeal.

The Court looked at the decision in Mactan Cebu International Airport Authority (MCIAA) and
held that Sec 133 of the LGC was not intended to be an absolute prohibition on the power of the
LGUs to tax the National Government, its agencies and instrumentalities as evidenced by the ff
provisions which otherwise provided:
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.
(1) "unless otherwise provided herein" in the opening paragraph of
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
1 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.

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.
The Court looked at the specific conditions provided in Sec 33 of PD 1146 as amended and
conceded that there is, indeed, no provision enacted to substitute the declared policy of
exemption from any and all taxes as an essential factor for the solvency of the fund of GSIS.
However, the Court held that this provision 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 lawmakers 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.
The Court, citing Duarte v. Dade, held:
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.
Although it could be argued that Sec 33 of PD 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.
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.
In addition, Sec 5 of the LGC provides that any provision on a power of a LGU shall be liberally
interpreted in its favor in case of doubt. As to the Sec of Justice legal opinion and memo from

the Office of the President, the Court said that these interpretations are not binding upon the
Court but are merely persuasive.