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    Philreca V Dilg - Public Policy

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    Cherry Sormillo
    The Supreme Court ruled that Sections 193 and 234 of the Local Government Code did not violate the equal protection clause. The Court found there was a reasonable classification between electric cooperatives covered by P.D. No. 269 and those under R.A. No. 6938 based on their capital contributions and government control. While local governments have taxing powers, Congress can regulate these powers and limit tax exemptions, which Sections 193 and 234 did by withdrawing most exemptions upon the Code's effectivity except for certain entities like cooperatives under R.A. No. 6938. Thus, the different tax treatment was held to be constitutional.

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    Philreca V Dilg - Public Policy

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    Cherry Sormillo
    97 views2 pages
    The Supreme Court ruled that Sections 193 and 234 of the Local Government Code did not violate the equal protection clause. The Court found there was a reasonable classification between electric cooperatives covered by P.D. No. 269 and those under R.A. No. 6938 based on their capital contributions and government control. While local governments have taxing powers, Congress can regulate these powers and limit tax exemptions, which Sections 193 and 234 did by withdrawing most exemptions upon the Code's effectivity except for certain entities like cooperatives under R.A. No. 6938. Thus, the different tax treatment was held to be constitutional.

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    Philreca-v-DILG

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    The Supreme Court ruled that Sections 193 and 234 of the Local Government Code did not violate the equal protection clause. The Court found there was a reasonable classification between electric cooperatives covered by P.D. No. 269 and those under R.A. No. 6938 based on their capital contributions and government control. While local governments have taxing powers, Congress can regulate these powers and limit tax exemptions, which Sections 193 and 234 did by withdrawing most exemptions upon the Code's effectivity except for certain entities like cooperatives under R.A. No. 6938. Thus, the different tax treatment was held to be constitutional.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    97 views2 pages

    Philreca V Dilg - Public Policy

    Uploaded by

    Cherry Sormillo
    The Supreme Court ruled that Sections 193 and 234 of the Local Government Code did not violate the equal protection clause. The Court found there was a reasonable classification between electric cooperatives covered by P.D. No. 269 and those under R.A. No. 6938 based on their capital contributions and government control. While local governments have taxing powers, Congress can regulate these powers and limit tax exemptions, which Sections 193 and 234 did by withdrawing most exemptions upon the Code's effectivity except for certain entities like cooperatives under R.A. No. 6938. Thus, the different tax treatment was held to be constitutional.

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    240.

    PHILRECA V DILG – PUBLIC POLICY

    EN BANC
    [G.R. No. 143076. June 10, 2003.]
    Philreca, et.al v DILG chairman and DF chairman
    Topic: Equal Protection – Public Policy

    Doctrine/Principle: The Court held that there is reasonable classification under the Local Government
    Code to justify the different tax treatment between electric cooperatives covered by P .D. No. 269, as
    amended, and electric cooperatives under R.A. No. 6938. The guaranty of the equal protection of laws is
    not violated by a law based on reasonable classification. Classification, to be reasonable, must (1) rest on
    substantial distinctions; (2) be germane to the purpose of the law; (3) not be limited to existing
    conditions only; and (4) apply equally to all members of the same class.

    Facts

     Petitioners assailed the constitutionality of Sections 193 and 234 of R.A. No. 7160, otherwise known
    as the Local Government Code, for being violative of the equal protection clause and non-
    impairment clause of the Constitution because of the withdrawal by the said Code of the tax
    exemptions previously enjoyed by petitioners.
     Under P .D. No. 269, as amended, or the National Electrification Administration Decree, it is the
    declared policy of the State to provide "the total electrification of the Philippines on an area
    coverage basis" the same "being vital to the people and the sound development of the nation."
    Pursuant to this policy, P .D. No. 269 aims to "promote, encourage and assist all public service
    entities engaged in supplying electric service, particularly electric cooperatives" by "giving every
    tenable support and assistance" to the electric cooperatives coming within the purview of the law.
     Petitioners contend that pursuant to the provisions of P.D. No. 269, as amended, and the provision
    in the loan agreements of the government of the Philippines with the government of the United
    State of America, they are exempt from payment of local taxes, including payment of real property
    tax. With the passage of the Local Government Code, however, they allege that their tax exemptions
    have been invalidly withdrawn.
     Petitioners assail Sections 193 and 234 of the Local Government Code on the ground that the said
    provisions discriminate against them, in violation of the equal protection clause.
     Further, they submit that the said provisions are unconstitutional because they impair the obligation
    of contracts between the Philippine Government and the United States Government.

    Issue
    Whether Sections 193 and 234 of the Local Government Code violate the equal protection clause.

    Ruling: NO, the said sections did not violate EPC.

     The Supreme Court ruled that there was no violation of the equal protection clause.
     The equal protection clause under the Constitution means that no person or class of persons
    shall be deprived of the same protection of laws which is enjoyed by other persons or other
    classes in the same place in like circumstances. The guaranty of the equal protection of laws is
    not violated by a law based on reasonable classification. Classification, to be reasonable, must
    (1) rest on substantial distinctions; (2) be germane to the purpose of the law; (3) not be
    limited to existing conditions only; and (4) apply equally to all members of the same class.
    240. PHILRECA V DILG – PUBLIC POLICY

    o The Court held that there is reasonable classification under the Local Government
    Code to justify the different tax treatment between electric cooperatives covered by
    P .D. No. 269, as amended, and electric cooperatives under R.A. No. 6938.
     In the present case, the Court points out the following:
    o First, substantial distinctions exist between cooperatives under P.D. No. 269, as
    amended, and cooperatives under R.A. No. 6938 on two material points, to wit –
     1) the capital contributions of the members, and
     2) the extent of government control over cooperatives. Second, the
    classification of tax-exempt entities in the Local Government Code is germane to
    the purpose of the law.
    o The Constitutional mandate that every local government unit shall enjoy local
    autonomy, does not mean that the exercise of power by local governments is beyond
    regulation by Congress.
     Thus, while each government unit is granted the power to create its own sources of revenue,
    Congress, in light of its broad power to tax, has the discretion to determine the extent of the
    taxing powers of local government units consistent with the policy of local autonomy.
     Section 193 of the Local Government Code is indicative of the legislative intent to vest broad
    taxing powers upon local government units and to limit exemptions from local taxation to
    entities specifically provided therein.
    o Section 193. Withdrawal of Tax Exemption Privileges. Unless otherwise provided in this
    Code, tax exemptions or incentives granted to, or presently enjoyed by all persons,
    whether natural or juridical, including government-owned and controlled corporations,
    except local water districts, cooperatives duly registered under R.A. No. 6938, non-stock
    and non-profit hospitals and educational institutions, are hereby withdrawn upon the
    effectivity of this Code.
     Section 234 provides:
    o Section 234. Exemptions from real property tax. The following are exempted from
    payment of the real property tax:

    XXX(d) All real property owned by duly registered cooperatives as provided for under R.A. No. 6938; …
    XXX Except as provided herein, any exemption from payment of real property tax previously granted to,
    or presently enjoyed by, all persons whether natural or juridical, including all government-owned and
    controlled corporations are hereby withdrawn upon effectivity of this Code.

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