5.1 Philippine Petroleum v. Municipality of Pililla, GR No.

90773, June 3, 1991

Facts:
Petitioner is a business enterprise engaged in the manufacture of lubricated oil base stocks
which is a petroleum product, with its refinery plant situated at Malaya, Pililla, Rizal, conducting its
business activities within the Municipality. Under Section 142 of the National Internal Revenue Code
of 1939, manufactured oils and other fuels are subject to specific tax. Later, Presidential Decree No.
231, otherwise known as the Local Tax Code was issued by former President Marcos. Sections 19 and
19(a) thereof, provide among others, that the municipality may impose taxes on business, except on
those for which fixed taxes are provided on manufacturers, importers or producers of any article of
commerce of whatever kind or nature. The Secretary of Finance issued a Circular directed to all
provincial, city and municipal treasurers to refrain from collecting any local tax imposed in old or new
tax ordinances in the business of manufacturing, wholesaling, retailing, or dealing in petroleum
products subject to the specific tax under the National Internal Revenue Code.
Issue:
May the power of local governments to raise revenues be limited by administrative order?

Ruling:
No. Under Sec. 5, Article X of the 1987 Constitution, only guidelines and limitations that may
be established by Congress can define and limit such power of local governments.