Local autonomy protects LGU taxing power

It is a basic precept that the inherent legislative powers of Congress, broad as they may be, are limited and confined within the four walls of the Constitution.[1] Accordingly, whenever the legislature exercises its power to enact, amend, and repeal laws, it should do so without going beyond the parameters wrought by the organic law.In Film Developer Council v. Colon Heritage Realty Corp.,[2] through the application and enforcement of Sec. 14 of RA 9167, the income from the amusement taxes levied by the covered LGUs did not and will under no circumstance accrue to them, not even partially, despite being the taxing authority therefor. Congress, therefore, clearly overstepped its plenary legislative power, the amendment being violative of the fundamental law’s guarantee on local autonomy, as echoed in Sec. 130(d) of the LGC, thus:

Section 130. Fundamental Principles. - The following fundamental principles shall govern the exercise of the taxing and other revenue-raising powers of local government units:

x xx x

(d) The revenue collected pursuant to the provisions of this Code shall inure solely to the benefit of, and be subject to the disposition by, the local government unit levying the tax, fee, charge or other imposition unless otherwise specifically provided herein xxx.

Moreover, in the Pimentel case,[3] the Supreme Court elucidated that local fiscal autonomy includes the power of LGUs to allocate their resources in accordance with their own priorities. By earmarking the income on amusement taxes imposed by the LGUs in favor of FDCP and the producers of graded films, the legislature appropriated and distributed the LGUs’ funds––as though it were legally within its control––under the guise of setting a limitation on the LGUs’ exercise of their delegated taxing power. This, undoubtedly, is a usurpation of the latter’s exclusive prerogative to apportion their funds, an impermissible intrusion into the LGUs’ constitutionally-protected domain which puts to naught the guarantee of fiscal autonomy to municipal corporations enshrined in our basic law.

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[1] See Social Justice Society (SJS) v. Dangerous Drugs Board,supra note 1; citing Government v. Springer, 50 Phil. 259 (1927). [As early as 1927, in Government v. Springer, the Court has defined, in the abstract, the limits on legislative power in the following wise:

Someone has said that the powers of the legislative department of the Government, like the boundaries of the ocean, are unlimited. In constitutional governments, however, as well as governments acting under delegated authority, the powers of each of the departments x x x are limited and confined within the four walls of the constitution or the charter, and each department can only exercise such powers as are necessarily implied from the given powers. The Constitution is the shore of legislative authority against which the waves of legislative enactment may dash, but over which it cannot leap.

[2] G.R. No. 203754, June 16, 2015.

[3] G.R. No. 132988, July 19, 2000.