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COA - Section 2: General Functions: Strategic Alliance v. Radstock Securities, GR No. 178158, December 4, 2009
COA - Section 2: General Functions: Strategic Alliance v. Radstock Securities, GR No. 178158, December 4, 2009
ISSUE:
Whether or not GOCCs are included in the audit jurisdiction of COA.
HELD:
GOCCs are included in the audit jurisdiction of COA as its jurisdiction extends not only to government "agencies or
instrumentalities," but also to "government-owned and controlled corporations with original charters" as well as "other government-
owned or controlled corporations" without original charters.
Further, Gov. Paredes was never made a party to nor served a notice of the proceedings before the COA and it would be unfair to
hold him personally liable for the claims of petitioners without giving him an opportunity to be heard and present evidence in his
defense.
Davao City Water District v. CSC and COA, GR No. 95237, September 13, 1991
COA Section 2: GENERAL FUNCTIONS
FACTS:
The case at bar clarifies conflicting jurisprudence with regard to the whether PD 198 is a special law (with grant original charters) or
a general legislation and whether such corporations are under the jurisdiction of CSC and COA. Petitioners claim that in Metro Iloilo
Water District v. NLRC, et al.,PD 198 is a general legislation empowering government agencies and entities to create water districts
and that the PD cannot be considered a charter in itself creating the water district. Respondents however site Tanjay Water District
v. Gabaton, et al, which state the PD No. 198, as amended, is the original charter of all water districts in the country and thus
come under the coverage of CSC.
ISSUE:
Whether or not water districts created under PD 198 are GOCC with original charters and are thus under the jurisdiction of CSC and
COA?
HELD:
Yes, water districts are considered GOCCs with original charters as they conform to such definition of corporations
created by a special law and not under the Corporation Code of the Philippines. PD198, which is applicable only to different
water districts created pursuant thereto, is a special law as it pertains to a special purpose which is intended to meet a particular set
of conditions and circumstances.
Thus, water districts are deemed "government-owned or controlled corporations with original charter" and fall under the jurisdiction
of the public respondents CSC and COA.
Parreno v. COA, GR No. 162224, June 7, 2007
COA Section 2: GENERAL FUNCTIONS
Topic: Prospective and retrospective effect of laws.
Facts: a petition for certiorari assailing the January 9, 2003 decision and January 13, 2004 resolution of the COA filed by 2lt
Salvador Parreno (ret) represented by his daughter.
Salvador Parreno served in the AFP for 32 years and was retired on January 1982. He received payment of his lump sum pension
and started receiving his monthly pension in 1985. Petitioner migrated to Hawaii and became a naturalized American citizen. In
January 2001, the AFP stopped petitioners monthly pension in accordance with sec. 27 of P.D. 1638 which provides that a retiree
who loses his Filipino citizenship shall be removed from the retired list and his retirement benefits terminated upon loss of Filipino
citizenship. Petitioner requested for reconsideration but AFP JAGO denied his request.
Petitioner filed a claim before the COA for the continuance of his monthly pension but on January 9, 2003, COA denied his claim for
lack of jurisdiction. COA ruled that the issue at hand requires the courts as mandated by the constitution to determine the validity of
the law re: P.D. 1638 sec. 27.
Petitioner filed a motion for reconsideration but on January 13, 2004, in its resolution COA denied the motion further ruling that even
if assumed jurisdiction over the claim, petitioners entitlement to the retirement benefits he was previously receiving must necessarily
cease upon the loss of his Filipino citizenship in accordance with sec. 27 of P.D. 1638 as amended.
Petitioner argued that P.D. 1638, as amended applies prospectively and should apply only to those who joined the military service
after its effectivity.
ISSUE: Whether COA has jurisdiction on the case
HELD: No. The COA can decide money claims based on law. But if a money claim is denied by law, COA has no authority to pass
judgement on the constitutionality of the law.
Boy Scouts of the Philippines v. COA, 651 SCRA 146
COA Section 2: GENERAL FUNCTIONS
Facts: The COA issued a resolution in 1999 defining its policy with respect to the audit of the Boy Scouts of the Philippine, which
was created as a public corporation, and that in BSP vs. NLRC, the SC ruled that the BSP, as constituted under its charter, was a
GOCC within the meaning of Art. IX (B) (2) (1) of the Constitution, and that the BSP is regarded as a government instrumentality
under the Administrative Code. For the purposes of audit supervision, the BSP shall be classified among the government
corporations to be audited by employing the team audit approach. The BSP sought reconsideration of the COA Resolution in a letter
signed by then BSP National President Jejomar C. Binay, saying that it is not subject to the COAs jurisdiction.
Issue: Does the test of economic viability apply to public corporations dealing with governmental functions?
Held: Art. XII, Sec. 16 bans the creation of private corporations by special law, but the said constitutional provision should not be
construed so as to prohibit the creation of public corporations or a corporate agency or instrumentality of the government intended to
serve a public interest or purpose. This should not be measured on the basis of economic viability, but according to the public
interest or purpose it serves as envisioned by par. 2, Art. 44 of the Civil Code, and of the Administrative Code. The BSP is a public
corporation or a government agency or instrumentality with juridical personality, which does not fall within the constitutional
prohibition in Article XII, Section 16, notwithstanding the amendments to its charter. Not all corporations, which are not government
owned or controlled, are ipso facto to be considered private corporations as there exists another distinct class of corporations or
chartered institutions which are otherwise known as "public corporations." These corporations are treated by law as agencies or
instrumentalities of the government which are not subject to the tests of ownership or control and economic viability but to different
criteria relating to their public purposes/interests or constitutional policies and objectives and their administrative relationship to the
government or any of its Departments or Offices.
Cordillera Broad Coalition v. COA, GR No. 79956, January 26, 1990
ARTICLE X Section 1. Territorial and Political Subdivisions of the Philippines
Facts: EO 220 dated July 15, 1987 creates the Cordillera Administrative Region (CAR) creating a temporary administrative agency
pending the creation of the Cordillera Autonomous Region. EO 220, issued by the President in the exercise of her legislative powers
under Art. XVIII, sec. 6 of the Constitution, created the CAR. It was created to accelerate economic and social growth in the region
and to prepare for the establishment of the autonomous region in the Cordilleras. Its main function is to coordinate the planning and
implementation of programs and services in the region, particularly, to coordinate with the local government units as well as with the
executive departments of the National Government in the supervision of field offices and in identifying, planning, monitoring, and
accepting projects and activities in the region. It shall also monitor the implementation of all ongoing national and local government
projects in the region. The CAR shall have a Cordillera Regional Assembly as a policy-formulating body and a Cordillera Executive
Board as an implementing arm. The CAR and the Assembly and Executive Board shall exist until such time as the autonomous
regional government is established and organized.
In these cases, petitioners principally argue that by issuing E.O. No. 220 the President, in the exercise of her legislative powers prior
to the convening of the first Congress under the 1987 Constitution, has virtually pre-empted Congress from its mandated task of
enacting an organic act and created an autonomous region in the Cordilleras.
Issue: Whether EO 220 thereby create a territorial and political subdivision
Held: No. What is created is not a public corporation but an executive agency under the control of the national government. It is
more similar to the regional development councils which the president may create under Art. X Sec. 14
Limbona v. Conte Mangelin, et al, GR No. 80391, February 28, 1989
ARTICLE X Section 2: Local Autonomy
Facts: On March 12, 1987 petitioner Limbona was elected Speaker of the Regional Legislative Assembly or Batasang Pampook of
Central Mindanao. On November 2, 1987, members of Regional Legislative Assembly sans the petitioner Limbona convened in
defiance to short recess called for by petitioner as the latter was to attend a congressional committee hearing for Muslim Affairs in
Congress. During the convention, having acquired quorum, members thereof move to declare the Speakership of the Regional
Legislative Assembly vacant, thereby expelling petitioner from office. Petitioner Limbona filed petition for injunction praying that a
restraining order or writ of preliminary injunction be issued enjoining respondents from proceeding with their session to be held on
November 5, 1987, and on any day thereafter and that judgment be rendered declaring the proceedings held by respondents of their
session on November 2, 1987 as null and void. In view thereof, the jurisdiction of the Supreme Court to hear and decide matters
over autonomous region was challenged by respondents.
Issue: Whether or not autonomous governments of Mindanao, as they are now constituted, subject to the jurisdiction of the national
courts?
Ruling: Autonomy is either decentralization of administration or decentralization of power. There is decentralization of
administration when the central government delegates administrative powers to political subdivisions in order to broaden the base of
government power and in the process to make local governments more responsive and accountable, and ensure their fullest
development as self-reliant communities and make them more effective partners in the pursuit of national development and social
progress. At the same time, it relieves the central government of the burden of managing local affairs and enables it to concentrate
on national concerns.
Decentralization of power, on the other hand, involves an abdication of political power in the favor of local governments units
declare to be autonomous. In that case, the autonomous government is free to chart its own destiny and shape its future with
minimum intervention from central government authorities. According to a constitutional author, decentralization of power amounts
to self-immolation, since in that event, the autonomous government becomes accountable not to the central authorities but to its
constituency.
San Juan v. CSC, 196 SCRA 69 (1991)
ARTICLE X Section 2: Local Autonomy
Facts: The Provincial Budget Officer of Rizal (PBO) was left vacant; thereafter Rizal Governor San Juan, peititioner, nominated
Dalisay Santos for the position and the latter quickly assumed position. However, Director Abella of Region IV Department of Budget
and Management (DBM) did not endorse the nominee, and recommended private respondent Cecilia Almajose as PBO on the
ground that she was the most qualified. This appointment was subsequently approved by the DBM. Petitioner protested the
appointment of Almajose before the DBM and the Civil Service Commission who both dismissed his complaints. His arguments rest
on his contention that he has the sole right and privilege to recommend the nominees to the position of PBO and that the appointee
should come only from his nominees. The law says that the budget officer shall be appointed by the Department head upon the
recommendation of the head of local government subject to civil service rules and regulations. If none of those recommended by the
local government head meets the requirement of law.
Issue: Whether or not the Department head may appoint anyone he chooses?
Ruling: No. He must return the recommendations of the local government head explaining why the recommendees are not qualified
and ask for new recommendations. In other words, the recommendation of the local government head is a conditio sine qua non
(requirement) of the Departments appointing authority. This is the only way local autonomy can be given the recognition the
Constitution wants it to have. When in doubt, favor autonomy.
Magtajas v. Pryce Properties, GR No. 111097, July 20, 1994
ARTICLE X Section 2: Local Autonomy
Facts: On December 7, 1992, Sangguniang Panlungsod of Cagayan de Oro City enacted ordinance 3353, prohibiting the issuance
of business permit and cancelling existing business permit to any establishment for the using and allowing to use its premises or
portion thereof for the operation of a casino. On January 4, 1993, it enacted Ordinance 3375-93, prohibiting the operation of casino
and providing penalty for violation therefore. Pryce assailed the ordinances before the CA, where it was joined by PAGCOR as
intervener. The Court found the ordinances invalid and issued the writ prayed for to prohibit their enforcement. CDO City and its
mayor filed a petition for review under Rules of Court with the Supreme Court.
Issue: Whether or not the Sangguniang Panlungsod can prohibit the establishment of casino operated by PAGCOR through an
ordinance?
Ruling: No. Local governments have certain powers given by the Constitution which may not be curtailed by the national
government, but that, outside of these, local governments may not pass ordinances contrary to statute.
The government of Cagayan de Oro City contended that, under its authority to prohibit gambling, the city could prevent the
Philippine Games and Amusement Board (PAGCOR) from operating a casino in the city. PAGCOR, however, had authority under
P.D. 1869 to centralize and regulate all games of chance under the territorial jurisdiction of the Philippines. In ruling that Cagayan de
Oro City could not curtail PAGCORs authority, the court in no uncertain terms said: Municipal governments are only agents of the
national government. Local councils exercise only delegated legislative powers conferred on them by Congress as the national
lawmaking body.
Leynes v. COA, GR No. 143596, Dec. 11, 2003
ARTICLE X Section 2: Local Autonomy
FACTS: This is a case regarding the constitutionality of the act of COA Provincial Auditor in disallowing the Sangguniang Bayan of
Naujan in granting RTC Judge Tomas C. Leynes an increase in monthly rice and transportation allowance through the latters
Resolution No. 057. COA disallowed the said act on the basis of Republic Act No. 7645 General Appropriations Act of 1993
Section 36 that states that one shall not be allowed to claim RATA from more than one source.
ISSUE: Whether or not COAs application of RA 7645 Section 36 is unconstitutional.
HELD: YES. COA misconstrued RA 7645 Section 36. The said section is merely an administrative tool employed by the DBM to
prevent the much-abused practice of multiple allowance by standardizing the grant of RATA by national agencies; it does not apply
to local government funds. To unjustly widen the coverage of the questioned section to include local government policies will be in
grave violation of Section 2 Article 10 of the 1987 Constitution which guarantees the local autonomy of the States territorial and
political subdivisions. Genuine and meaningful autonomy of local government agencies shall be ensured only when, as in this case,
the power to grant allowances is provided to the local government with the discretion as to the amount of the said allowances
depending on the fund availability.
Batangas CATV v. CA and Batangas City, GR No. 138810, September 29, 2004
ARTICLE X Section 2: Local Autonomy
FACTS: This is a case regarding the constitutionality of Resolution No. 210 enacted by the Sangguniang Panglungsod of Batangas
City. This Resolution gave the petitioner the permit to conduct, install and operate a CATV in Batangas, provided that, in accordance
with Section 8 of the said Resolution, increase of subscriber rates shall be subject to the approval of the Sanggunian. Petitioner later
increased its rates without seeking for approval; hence, respondent threatened petitioner to possible revocation of the permit; hence,
this case.
ISSUE: Whether or not the local government have the authority to regulate CATV subscriber rates.
HELD: No, LGUs does not have the authority to regulate CATV rates. The National Telecommunications Commission has the
regulatory power over technical matters of CATV, including the determination of fair subscriber rates. Although the LGU can
regulate CATVs under the general welfare clause governing local government units, this local autonomy has limits. These limits was
crossed by Resolution No. 210 which violated the mandate of existing laws and the States deregulation policy over the CATV
industry. In the case at bar, the Sanggunian illegally usurped the jurisdiction of the NTC.
Garcia v. COMELEC, 227 SCRA 100 (1993
ARTICLE X Section 3: Local Government Code
FACTS: This is a case on the question of constitutionality of Section 70 of the Local Government Code. In accord with Section 70 of
the local government code, some mayors, vice-mayors and members of the Sangguniang Bayan of twelve Bataan municipalities
formed a Preparatory Recall Assembly (PRAC) to initiate the recall election of petitioner Governor Garcia as governor of Bataan on
the ground of loss of confidence. COMELEC scheduled the said elections. Garcia contends the constitutionality of Section 70 of the
Local Government Code on the ground that a recall election through the PRAC is unconstitutional.
ISSUE: Whether or not Section 70 of the Local Government Code is unconstitutional.
HELD: No, it is not unconstitutional. The Constitution did not provide for any means to be followed in conducting a recall election.
Section 3 Article X of the Constitution mandates that the Congress shall enact a local government code which will provide for a
more responsive and accountable local government structure through a system of decentralization with effective mechanisms of
recall, initiative, and referendum. It is clear from the aforementioned section that the Congress is given the power to choose the
means of recall it deems to be most effective to support the judgment of the electorate and not to mandate the Congress into
choosing a particular mechanism of initiating recall elections.
Malonzo v. COMELEC, 269 SCRA 380 (1997)
ARTICLE X Section 3: Local Government Code
1.)
Court records showed that Petron, which maintains a depot or bulk plant atthe Novatas Fishport Complex in Navotas, received a
letter from respondentNavotas Mayor Tobias Tiangco, wherein the firm was assessed taxescovering its sale of diesel from 1997 to
2001.The Navotas city governmentdemanded payment of P10.2 million representing Petrons deficiency taxes.Petron filed with
Navotas a letter-protest to the notice of assessmentpursuant to Section 195 of the Code. It argued that it was exempt from
localbusiness taxes in view of Article 232 of the Implementin Rules of the LGC aswell as the ruling of the Bureau of Local
Government Finance of theDepartment of Finance. Owing to the denial of its protest, Petron filed withthe RTC in Malabon a
complaint for cancellation of assessment for deficiencytaxes with prayer for the issuance of a temprorary restraining order
andpreliminary injunction.On May 5, 2003, the RTC in Malabon rendered its decision dismissingPetrons complaint and ordering the
payment of the assessed amount.After 11 days, Petron received a closure order from Tiangco, directing it tocease and desist from
operating the bulk plant, prompting it to elevate thecase to the SC.
ISSUE/S:
Whether or not local government unit is empowered under the Local Government Code (the LGC) to impose business
taxes on persons or entitiese ngaged in the sale of petroleum products.
HELD:
The power of a municipality to impose business taxes is provided for in Section 143 of the LGC. Under the provision, a municipality
is authorized toi mpose business taxes on a whole host of business activities. Suffice it to say, unless there is another provision of
law which states otherwise, Section 1 43, broad in scope as it is, would undoubtedly cover the business of selling diesel fuels, or
any other petroleum product for that matter.
MAIN POINT:
The power to tax by LGU is liberally interpreted in its favor against the state, but is strictly construed against the local government in
favor of the taxpayer.
Yamane v. BA Lepanto Condominium, GR No. 154993, October 25, 2005
ARTICLE X Section 5: Power of Taxation
Facts:
Petitioner City Treasurer of Makati holds respondent, in a Notice of Assessment, liable to pay the correct business taxes, fees and
charges totaling to P1.6M in which the respondents protested contending that condominium does not fall under the definition of a
business, thus, they are not liable for such taxes.
Issue:
Whether or not the City Treasurer of Makati may collect business taxes on condominium corporations
Held:
Petition denied. Accordingly, and with significant degree of comfort, we hold that condominium corporations are generally exempt
from local business taxation under the LGC, irrespective of any local ordinance that seeks to declare otherwise.The power of the
local government units to impose taxes within its territorial jurisdiction derives from the Constitution itself, which recognizes the
power of these units to create its own sources of revenue and to levy taxes, fees, and charges subject to such guidelines and
limitations as the Congress may provide, consistent with the basic policy of local autonomy.
MAIN POINT:
The power of LGU to impose taxes within its jurisdiction is recognized by constitution to create its own source of revenue and to levy
taxes, fees and charges subject guidelines and limitations provided by congress, consistent with the basic policy of local autonomy.
Philippine Petroleum v. Municipality of Pililla, GR No. 90773, June 3, 1991
ARTICLE X Section 5: Power of Taxation
Facts:
Petitioner, Philippine Petroleum Corporation (PPC for short) 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 territorial jurisdiction of the Municipality of Pililla, Rizal.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 Ferdinand E. Marcos governing the exercise by provinces, cities, municipalities and barrios of
their taxing and other revenue-raising powers. 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.
Likewise, another Circular was issued by the Secretary of Finance instructing all City Treasurers to refrain from collecting any local
tax imposed in tax ordinances enacted before or after the effectivity of the Local Tax Code as provided before.Meanwhile,
Respondent Municipality of Pililla enacted Municipal Tax Ordinance No. 1 otherwise known as "The Pililla Tax Code of 1974 ".
Sections 9 and 10 of the said ordinance imposed a tax on business, except for those for which fixed taxes are provided in the Local
Tax Code. P.D. 436 was promulgated increasing the specific tax all petroleum based products levied under Sections 142, 144 and
145 of the National Internal Revenue Code, as amended, and granting provinces, cities and municipalities certain shares in the
specific tax on such products in lieu of local taxes imposed on petroleum products. Provincial Circular No. 6-77 was also issued
directing all city and municipal treasurers to refrain from collecting the so-called storage fee onflammable or combustible materials
imposed under the local tax ordinance of their respective locality, said fee partaking of the nature of a strictlyrevenue measure or
service charge. P.D.1158 otherwise known as the National Internal Revenue Code of 1977 was enacted, Section 153 of which
specifically imposes specific tax on refined and manufactured mineral oils and motor fuels. Enforcing the provisions of the above-
mentioned ordinance, the respondent filed a complaint on April 4, 1986 docketed as Civil Case No. 057-T against PPC for the
collection of the business tax from 1979 to 1986; storage permit fees from 1975 to 1986; mayor's permit and sanitary inspection fees
from 1975 to 1984. PPC, however, have already paid the last-named fees starting 1985. The trial court rendered a decision against
the petitioner. Hence, the instant petition.
Issue:
Whether or not PPC whose oil products are subject to specific tax under the NIRC, is still liable to pay taxes on business and
storage fees, considering Provincial Circular No. 6-77, mayor's permit and sanitary inspection fee under Municipal Ordinance No.1.
Held:
Yes
PPC contends that: (a) Provincial Circular No. 2673 declared as contrary to national economic policy the imposition of local taxes on
the manufacture of petroleum products as they are already subject to specific tax under the National Internal Revenue Code; (b) the
above declaration covers not only old tax ordinances but new ones, as well as those which may be enacted in the future; (c) both
Provincial Circulars (PC) 26-73 and 26 A-73 are still effective, hence, unless and until revoked, any effort on the part of the
respondent to collect the suspended tax on business from the petitioner would be illegal and unauthorized; and (d)Section 2 of P.D.
436 prohibits the imposition of local taxeson petroleum products. PC No. 26-73 and PC No. 26 A-73 suspended the effectivity of
local tax ordinances imposing a tax on business under Section 19 (a) of the Local Tax Code, with regard to manufacturers, retailers,
wholesalers or dealers in petroleum products subject to the specific tax under the NIRC, in view of Section 22 (b) of the Code
regarding non-imposition by municipalities of taxes on articles, subject tospecific tax under the provisions of the NIRC. There is no
question that Pililla's Municipal Tax Ordinance No. 1, imposing the assailed taxes, fees and charges is valide specially. Section 9 (A)
which according to the trial court "was lifted in toto and/or is a literal reproduction of Section19 (a) of the Local Tax Code as
amended by P.D. No. 426." It conforms with the mandate of said law. But P.D. No. 426 amending the Local Tax Code is deemed to
have repealed Provincial Circular Nos. 26-73 and 26 A-73 issued by the Secretary of Finance when Sections 19 and 19(a) were
carried over into P.D. No. 426 and no exemptions were given to manufacturers, wholesalers, retailers, ordealers in petroleum
products. Well-settled is the rule that administrative regulations must be in harmony with the provisions of the law. In case of
discrepancy between the basic law and an implementing rule or regulation, the former prevails. Furthermore, while Section 2 of P.D.
436 prohibits the imposition of local taxes on petroleum products, said decree did not amend Sections19 and 19 (a) of P.D. 231 as
amended by P.D. 426, wherein the municipality is granted the right to levy taxes onbusiness of manufacturers, importers, producers
of any article of commerce of whatever kind or nature. A tax on business is distinct from a tax on the article itself. Thus, if the
imposition of tax on business of manufacturers, thait is in petroleum products contravenes a declared national policy, it should have
been expressly stated in P.D. No. 436. The exercise by local governments of the power to tax is ordained by the present
Constitution. To allow the continuous effectivity of the prohibition set forth in PC No.26-73 (1) would be tantamount to restricting their
power totax by mere administrative issuances. Under Section 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. Provincial Circular No. 6-77 enjoining
all city and municipal treasurers to refrain from collecting the so-called storage fee on flammable or combustible materials imposed
in the loca ltax ordinance of their respective locality frees petitioner PPC from the payment of storage permit fee. The storage permit
fee being imposed by Pililla's tax ordinance is a fee for the installation and keeping in storage of any flammable, combustible or
explosive substances. In asmuch as said storage makes use of tanks owned not by the municipality of Pililla, but by petitioner PPC,
same is obviously not a charge for any service rendered by the municipality as what is envisioned in Section 37 of the same Code.
Section 10 (z) (13) of Pililla's Municipal Tax Ordinance No. 1 prescribing a permit fee is a permit fee allowed under Section 36 of the
amended Code. As to the authority of the mayor to waive payment of the mayor's permit and sanitary inspection fees, the trial court
did not err in holding that "since the power to tax includes the power to exempt thereof which is essentially a legislative prerogative,
it follows that a municipal mayor who is an executive officer may not unilaterally withdraw such an expression of a policy thru the
enactment of a tax." The waiver partakes of the nature of an exemption. It is anancient rule that exemptions from taxation are
construed instrictissimi juris against the taxpayer and liberally in favor of the taxing authority. Tax exemptions are looked upon with
disfavor. Thus, in the absence of a clear and express exemption from the payment of said fees, the waiver cannot be recognized. As
already stated, it is the law-making body, and not an executive like the mayor, who can make anexemption. Under Section 36 of the
Code, a permit fee like the mayor's permit, shall be required before any individualor juridical entity shall engage in any business or
occupation under the provisions of the Code. However, since the Local Tax Code does not provide the prescriptive period for
collection of local taxes, Article 1143 of the Civil Code applies. Said law provides that an action upon an obligation created by law
prescribes within ten (10) years from the time the right of action accrues. The Municipality of Pililla can therefore enforce the
collection of the tax on business of petitioner PPC due from 1976 to 1986, and NOT the tax that had accrued prior to 1976.
John Hay Peoples Alternative Coalition v. Lim, GR No. 119775, October 24, 2003
ARTICLE X Section 5: Power of Taxation
Facts:
The controversy stemmed from the issuance of Proclamation No. 420 by then President Ramos declaring a portionof
Camp John Hay as a Special Economic Zone (SEZ) and creating a regime of tax exemption within the John HaySpecial Economic Zone.
In the present petition, petitioners assailed the constitutionality of the proclamation. The Court also held that it is the legislature, unless limited by a provision of the
Constitution, that has the full powerto exempt any person or corporation or class of property from taxation, its power to exempt being as
broad as itspower to tax. The challenged grant of tax exemption would circumvent the Constitution's imposition that a lawgranting any
tax exemption must have the concurrence of a majority of all the members of Congress. Moreover, theclaimed statutory exemption of the John Hay SEZ
from taxation should be manifest and unmistakable from thelanguage of the law on which it is based. Thus, the Court declared that
the grant by Proclamation No. 420 of taxexemption and other privileges to the John Hay SEZ was void for being violative of the
Constitution. However, theentire assailed proclamation cannot be declared unconstitutional, the other parts thereof not being
repugnant tothe law or the Constitution. The delineation and declaration of a portion of the area covered by Camp John Hay as aSEZ was well within the
powers of the President to do so by means of a proclamation. Where part of a statute isvoid as contrary to the Constitution, while another part is
valid, the valid portion, if separable from the invalid, as inthe case at bar, may stand and be enforced.
Issue:
WON the petitioners have legal standing to bring
Ruling:
YES.
Manila Electric v. Province of Laguna, GR No. 131359, May 5, 1999
ARTICLE X Section 5: Power of Taxation
Facts:
On various dates, certain municipalities of the Province of Laguna including, Bian, Sta Rosa, San Pedro, Luisiana,
Calauan and Cabuyao, by virtue of existing laws then in effect, issued resolutions through their respective municipal councils
granting franchise in favor of petitioner Manila Electric Company (MERALCO) for the supply of electric light, heat and power within
their concerned areas. On 19 January 1983, MERALCO was likewise granted a franchise by the National Electrification
Administration to operate an electric light and power service in the Municipality of Calamba, Laguna.
On 12 September 1991, Republic Act No. 7160, otherwise known as the Local Government Code of 1991, was enacted to take
effect on 01 January 1992 enjoining local government units to create their own sources of revenue and to levy taxes, fees and
charges, subject to the limitations expressed therein, consistent with the basic policy of local autonomy. Pursuant to the provisions
of the Code, respondent province enacted Laguna Provincial Ordinance No. 01-92, effective 01 January 1993, providing, in part, as
follows:
Sec. 2.09. Franchise Tax. There is hereby imposed a tax on businesses enjoying a franchise, at a rate of fifty percent (50%) of
one percent (1%) of the gross annual receipts, which shall include both cash sales and sales on account realized during the
preceding calendar year within this province, including the territorial limits on any city located in the province
Issue:
Whether the tax exemption privilege is to be withdrawn or not rather than on whether the law can withdraw, without
violating the Constitution, the tax exemption or not.
Held:
While the Court has, not too infrequently, referred to tax exemptions contained in special franchises as being in the nature
of contracts and a part of the inducement for carrying on the franchise, these exemptions, nevertheless, are far from being strictly
contractual in nature. Contractual tax exemptions, in the real sense of the term and where the non-impairment clause of the
Constitution can rightly be invoked, are those agreed to by the taxing authority in contracts, such as those contained in government
bonds or debentures, lawfully entered into by them under enabling laws in which the government, acting in its private capacity,
sheds its cloak of authority and waives its governmental immunity.
Batangas Power v. Batangas City, GR No. 152675, April 28, 2004
ARTICLE X Section 5: Power of Taxation
Facts:
In the early 1990s, power outages lasted 8-12 hours daily and power generation was badly needed. The government,
through the National Power Corporation (NPC), sought to attract investors in power plant operations by providing them with
incentives, oneof which was through the NPCs assumption of payment of their taxes in the Build Operate and Transfer (BOT)
Agreement.On June 29, 1992, Enron Power Development Corporation (Enron) and petitioner NPC entered into a Fast Track BOT
Project. Enronagreed to supply a power station to NPC and transfer its plant to the latter after ten (10) years of operation.
On September 23, 1992, the BOI issued a certificate of registration to BPC as a pioneer enterprise entitled to a tax holiday for
aperiod of six (6) years .On October 12, 1998, Batangas City sent a letter to BPC demanding payment of business taxes and
penalties,commencing from the year 1994, BPC refused to pay, citing its tax-exempt status as a pioneer enterprise for six (6) years
under Section 133 (g) of the Local Government Code (LGC). The citys tax claim was modified and demanded payment of business
taxesfrom BPC only for the years 1998-1999. BPC still refused to pay the tax. It insisted that its 6-year tax holiday commenced from
thedate of its commercial operation on July 16, not from the date of its BOI registration in September 1992. In the alternative, BPC
asserted that the city should collect the tax from the NPC as the latter assumed responsibility for its payment under their BOT
Agreement. On August 26, 1999, the NPC intervened. While admitting assumptionof BPCs tax obligations under their BOT
Agreement, NPC refused to pay.
Issue:
Whether or not NPCs tax exemption privileges under its Charter were withdrawn by Section 193 of the Local Government
Code (LGC).
Held: Yes.
Smart Communications v. City of Davao, GR No. 155491, September 16, 2008
ARTICLE X Section 5: Power of Taxation
Facts
Smart filed a special civil action for declaratory relief for the ascertainment of its rights and obligations under the Tax Code of the
City of Davao, particularly Section 1, Article 10 thereof, the pertinent portion of which reads:
Respondents filed their Answer in which they contested the tax exemption claimed by Smart. They invoked the power granted by
the Constitution to local government units to create their own sources of revenue.
The RTC rendered its Decision denying the petition. The trial court noted that the ambiguity of the "in lieu of all taxes" provision in
R.A. No. 7294, on whether it covers both national and local taxes, must be resolved against the taxpayer. It added that while such
power may be subject to restrictions or conditions imposed by Congress, any such legislated limitation must be consistent with the
basic policy of local autonomy.
The Issue
WON Smart is liable to pay the franchise tax imposed by the City of Davao.
The Ruling of the Court
The "in lieu of all taxes" clause in Smart's franchise is put in issue before the Court. In order to ascertain its meaning, consistent with
fundamentals of statutory construction, all the words in the statute must be considered.
Smart is of the view that the only taxes it may be made to bear under its franchise are the national franchise tax (now VAT), income
tax, and real property tax. It claims exemption from the local franchise tax because the "in lieu of taxes" clause in its franchise does
not distinguish between national and local taxes.
Tax exemptions are never presumed and are strictly construed against the taxpayer and liberally in favor of the taxing
authority. They can only be given force when the grant is clear and categorical. The surrender of the power to tax, when claimed,
must be clearly shown by a language that will admit of no reasonable construction consistent with the reservation of the power. If the
intention of the legislature is open to doubt, then the intention of the legislature must be resolved in favor of the State.
In this case, the doubt must be resolved in favor of the City of Davao. The "in lieu of all taxes" clause applies only to national internal
revenue taxes and not to local taxes.
The "in lieu of all taxes" clause in Smart's franchise refers only to taxes, other than income tax, imposed under the National Internal
Revenue Code. The "in lieu of all taxes" clause does not apply to local taxes. The clear intent is for the "in lieu of all taxes" clause to
apply only to taxes under the National Internal Revenue Code and not to local taxes. Even with respect to national internal revenue
taxes, the "in lieu of all taxes" clause does not apply to income tax.
Moreover, Smart's franchise was granted with the express condition that it is subject to amendment, alteration, or repeal. In truth,
the Contract Clause has never been thought as a limitation on the exercise of the State's power of taxation save only where a tax
exemption has been granted for a valid consideration.
Pimentel v. Aguirre, 336 SCRA 201 (2000)
ARTICLE X Section 6: Share in National Taxes
FACTS: This is a petition for certiorari and prohibition seeking to annul Section 1 of Administrative Order No. 372, issued by the
President, insofar as it requires local government units to reduce their expenditures by 25% of their authorized regular
appropriations for non-personal services and to enjoin respondents from implementing Section 4 of the Order, which withholds a
portion of their internal revenue allotments.
ISSUE: WON Section 1 of AO No. 372 violates local fiscal autonomy.
HELD: Section 1 of the AO does not violate local fiscal autonomy. Local fiscal autonomy does not rule out any manner of national
government intervention by way of supervision, in order to ensure that local programs, fiscal and otherwise, are
Province of Batangas v. Executive Secretary, GR No. 152774, May 27, 2004
ARTICLE X Section 6: Share in National Taxes
Important Point:
Congress is not authorized by the Constitution to hinder or impede the automatic release of the IRA.
League of Cities v. COMELEC August 24, 2010
ARTICLE X Section 6: Share in National Taxes
FACTS: On November 18, 2008, the Supreme Court En Banc struck down the subject of 16 Cityhood Laws for violating Section
10, Article X of the 1987 Constitution and the equal protection clause. On March 31, 2009, the Supreme Court denied
respondents first motion for reconsideration. On April 28, 2009, the Supreme Court denied respondents second motion
for reconsideration. Accordingly, the November 18 decision became final and executory. However, the Court En Banc,
unprecedentedly reversed the November 18 decision by upholding the constitutionality of the Cityhood Laws in its
December 21, 2009 decision.
ISSUE: Whether or not the 16 Cityhood Laws is constitutional?
RULING: The Court held that the 16 Cityhood Laws is unconstitutional, stating that Section 10, Article X of the Constitution
expressly provides that no xxx city shall be created xxx except in accordance with the criteria established in the
local government code. This provision can only be interpreted in one way, that is, all the criteria for the creation of
cities must be embodied exclusively in the Local Government Code. If the criteria in creating LGUs are not uniform
and discriminatory, there can be no fair and just distribution of the national taxes to LGUs. The unconstitutionality of the
Cityhood Laws lies in the fact that Congress provided an exemption contrary to the express language of the Constitution.
In other words, Congress exceeded and abused its law-making power, rendering the challenged Cityhood Law void for
being violative of the Constitution.
Borja v. COMELEC, 295 SCRA 157
ARTICLE X Section 8: Term of Local Officers
FACTS: Private respondent Jose Capcowas elected vice-mayor of Pateros on January 1988 for a term ending June 1992.With the
death of the incumbent mayor, Capcobecame the mayor by operation of law.
In 1992, Capco ran and was elected mayor for a term of three years ending June 1995.
In 1995, Capco was reelected mayor for another term of three years ending June 1998.
In 1998,Capco filed his COC for mayor of Pateros but petitioner Benjamin Borja Jr.contested it on the ground that
Capcohad already served as mayor for three-consecutive terms by June 1998, and therefore is ineligible to serve for
another term after that.
ISSUE: Whether or notCapco has already served three consecutive terms?
HELD: The Court held that the three term limit for local officials must be taken to the right to be electedas well as the right to
serve the same elective position. Consequently, it is not enough that an individual has served three consecutive terms in
an elective local office,he must also have been electedto the same position for the same number of times before the
disqualification can apply. In this case, the first term of Capco cannot be included in the computation because he was not elected
in that instance but rather only served the remaining term of the deceased mayor by virtue of operation of law.
Lozanida v. COMELEC, GR No. 135150, July 28, 1999
ARTICLE X Section 8: Term of Local Officers
ISSUE: WON the preventive suspension of an elected public official is an interruption of his term of office for purposes of the three-
term limit rule (ART10SEC8)
RULING: No.
A preventive suspension cannot simply be a term interruption because the suspended official continues to stay in office although he
is barred from exercising the functions and prerogatives of the office within the suspension period
David v. COMELEC, GR No. 127116, April 8, 1997
ARTICLE X Section 8: Term of Local Officers
FACTS:
Barangay Chairman David raised the question of when the barangay elections should be held and questions the COMELECs
schedule of holding such elections on the 2nd Monday of May 1997. The COMELECs basis is R.A. 7160 which mandates barangay
elections every 3 years. David contends that an earlier law, R.A. 6679, should be the one followed. R.A. 6679 provides that
barangay elections should be held every 5 years. He also contends that there is a violation of Art. 10, Sec. 8 of the Constitution.
ISSUE:
W/N there was a violation of Art. 10, Sec. 8 of the Constitution.
HELD:
No. Art. 10, Sec. 8 of the Constitution provides that, The term of office of elective local officials, except barangay officials, which
shall be determined by law, shall be three years. It is not to be construed as prohibiting a 3-year term of office for barangay officials.
Supangan Jr. v. Santos, GR No. 84662, August 24, 1990
ARTICLE X Section 9: Sectoral Representatives
FACTS:
Petitioner Supanganwas elected KB Chairman of Mabini, Pangasinan and was elected KB Provincial Federation President of the
province of Pangasinan. Petitioner was appointed by President Marcos as member of the Sangguniang Panlalawigan of Pangasinan
representing the youth sector. Respondent Domantay presented a letter written by respondent Secretary Santos advising the body
that respondent Domantay has been named as member thereof to replace Supangan. Petitioner contends that Sec. Santos hand no
authority in appointing Domantay as the latter is not qualified.
ISSUE:
Whether or not the the appointment of Domantay by the Sec Santos, replacing Supangan is valid.
RULING:
Supangan, having all the qualifications, was appointed by the President to his position. Domantay, not having the qualifications, who
was appointed by Sec. Santos is not valid. President is the one who makes appointments for sectoral representatives. Sec. of Local
Government can only inform the sectoral representatives their appointments
Tan v. COMELEC, 142 SCRA 727 (1986)
ARTICLE X Section 10: Changes/Abolition
FACTS:
BP 885, an act creating a new province in the island of Negros to be known as the Province of Negros del Norte was enacted.
Pursuant to and in implementation of this law, the COMELEC scheduled a plebiscite in January 3, 1986. Petitioners opposed, filing
a case for Prohibition and contending that the B.P. Blg. 885 is unconstitutional. because:1.The voters of the parent province of
Negros Occidental, other than those living within the territory of the new province of Negros del Norte, were not included in the
plebiscite.
ISSUE:
Whether or not the plebiscite conducted pursuant to BP 885 is constitutional.
RULING:
No, the court held that where a portion of an existing province was being lopped off to form a new province, both the mother
province and the proposed new province should participate in the plebiscite for the mother province will also be affected because its
boundaries is substantially altered.
League of Cities of the Philippines v. COMELEC, GR 176951, Nov. 29, 2008
ARTICLE X Section 10: Changes/Abolition
Facts:
During the 12th Congress, Congress enacted into law RA 9009 amending Section 450 of the Local Government Code by increasing
the annual income requirement for conversion of a municipality into a city from P20 million to P100 million to restrain the mad rush
of municipalities to convert into cities solely to secure a larger share in the Internal Revenue Allotment despite the fact that they are
incapable of fiscal independence. Prior to its enactment, a total of 57 municipalities had cityhood bills pending in Congress.
Congress did not act on 24 cityhood bills during the 11th Congress. During the 12 th
Congress, the House of Representatives adopted Joint Resolution No. 29. This Resolution reached the Senate. However, the 12 th
Congress adjourned without the Senate approving Joint Resolution No. 29.During the 13th Congress, 16 of the 24 municipalities
mentioned in the unapproved Joint Resolution No. 29 filed between November and December of 2006, through their respective
sponsors in Congress, individual cityhood bills containing a common provision, as follows:
Exemption from Republic Act No. 9009
. - The City of x x x shall be exempted from the income requirement prescribed under Republic Act No. 9009.These cityhood bills
lapsed into law on various dates from March to July 2007 after President Gloria Macapagal-Arroyo failed to sign them. Petitioners
filed the present petitions to declare the Cityhood Laws unconstitutional for violation of Section 10, Article X of the Constitution, as
well as for violation of the equal protection clause. Petitioners also lament that the wholesale conversion of municipalities into cities
will reduce the share of existing cities in the Internal Revenue Allotment because more cities will share the same amount of internal
revenue set aside for all cities under Section 285 of the Local Government Code.
Whether or not the Cityhood Laws violate Section 10, Article X of the Constitution and the equal protection clause
Held:
Yes, the Cityhood Laws violate both the Constitution and the equal protection clause
Section 10, Article X of the 1987 Constitution provides:
No province, city, municipality, or barangay shall be created, divided, merged, abolished or its boundary substantially altered,
except in accordance with the criteria established in the local government code
and subject to approval by a majority of the votes cast in a plebiscite in the political units directly affected. (Emphasis supplied)The
Constitution is clear. The creation of local government units must follow the criteria established in the Local Government Code
and not in any other law. There is only one Local Government Code. The Constitution requires Congress to stipulate in the Local
Government Code all the criteria necessary for the creation of a city, including the conversion of a municipality into a city. Congress
cannot write such criteria in any other law, like the Cityhood Laws.
RATIO: Republic Act No. 7924 does not empower the MMDA to enact ordinances, approve resolutions and appropriate funds for
the general welfare of the inhabitants of Manila. There is no syllable in the said act that grants MMDA police power.
MMDA v. Garin, GR No. 130230, April 15, 2005
ARTICLE X Section 11: Metropolitan Political Subdivisions
FACTS:
1. Respondent Garin was issued a traffic violation receipt (TVR) and his drivers license was confiscated for parking illegally.
2. Garin wrote to then MMDA Chairman requesting the return of his license and expressed his preference for his case to be
filed in Court.
3. Without an immediate reply from the chairman, Garin filed for a preliminary injunction assailing among others that Sec 5
(f) of RA 7924 violates the constitutional prohibition against undue delegation of legislative authority, allowing MMDA to fix
and impose unspecified and unlimited fines and penalties.
4. The RTC ruled in his favor, directing MMDA to return his license and for the authority to desist from confiscating drivers
license without first giving the driver the opportunity to be heard in an appropriate proceeding.
ISSUE:
Whether or not MMDA can confiscate and suspend or revoke drivers licenses without any need of any other legislative enactment?
RULING: The court ruled that Section 5(f) of R.A. 7924 did not grant the MMDA the power to confiscate and suspend or revoke
drivers licenses without the need of any other legislative enactment. Such is an unauthorized exercise of police power.
RATIO:
It is only where there is a traffic law or regulation validly enacted by the legislature or those agencies to whom legislative powers
have been delegated, like the local government units, that MMDA is not precluded and in fact duty bound to confiscate and
suspend or revoke drivers licenses in the exercise of its mandate of transport and traffic management, as well as the administration
and implementation of all traffic enforcement operations, traffic engineering services and traffic education programs
Gancayco v. City Government of Quezon City, 658 SCRA 853
ARTICLE X Section 11: Metropolitan Political Subdivisions
Facts
The Quezon City Council issued Ordinance No. 2904 which requires property owners to relinquish a portion of their properties
located along EDSA for use as an arcade for pedestrians. The ordinance covered the property of Justice Gancayco.
Subsequently, the Metropolitan Manila Development Authority (MMDA) conducted operations to clear obstructions along the
sidewalk of EDSA pursuant to Metro Manila Councils (MMC) Resolution No. 02-28. The resolution authorized the MMDA and local
government units to clear the sidewalks, streets, avenues, alleys, bridges, parks and other public places in Metro Manila of all
illegal structures and obstructions.
The MMDA sent a notice of demolition to Justice Gancayco alleging that a portion of his building violated the National Building Code
of the Philippines in relation to Ordinance No. 2904. The MMDA gave Justice Gancayco fifteen days to clear the portion of the
building that was supposed to be an arcade along EDSA. Upon failure of Justice Gancayco to comply, the MMDA proceeded to
demolish the wing walls of the ground floor of the structure.
Issue
Whether or not the MMDA had the authority to demolish the wing walls of the ground floor of the property owned by Justice
Gancayco for alleged violation of the National Building Code and Ordinance No. 2904
Ruling
It did not.
The MMDA only exercises administrative powers. MMDAs action in this case included determination of whether or not a thing is a
nuisance and imposition of penalties should it be declared so. The power to declare, prevent and abate a nuisance and to further
impose the penalty of removal or demolition of the building or structure by the owner or by the city at the expense of the owner
constitutes police power that is outside the scope of MMDAs authority. Nor may this be delegated to the MMDA.
Abella v. COMELEC, GR No. 100710, September 3, 1991
ARTICLE X Section 12: Highly Urbanized Cities
Facts
A petition was filed against Larrazabal for disqualification from running as governor of Leyte on the ground that she was a resident
of Ormoc City and not of Kananga, Leyte as stated in her certificate of candidacy.
Failing in her contention that she is a resident and registered voter of Kananga, Leyte, she posed an alternative position that her
being a registered voter in Ormoc City was no impediment to her candidacy for the position of governor of the province of Leyte.
Under Sec. 12, Art. X of the Constitution, Ormoc City is considered independent of the province of Leyte to which it is geographically
attached because its charter prohibits its voters from voting for the provincial elective officials. Larrazabal argued that such
prohibition does not extend to running for provincial offices.
Issue
Whether or not the prohibition against the City's registered voters electing the provincial officials necessarily mean a prohibition of
these registered voters to be elected as provincial officials
Ruling
It does.
This independence from the province stated in Sec. 12 of Art. X carries with it the prohibition or mandate directed to their registered
voters not to vote and be voted for the provincial elective offices.
Abas Kida v. Senate of the Philippines, GR No. 196271, October 18, 2011
ARTICLE X Section 12: Autonomous Region
NOTE :
The issues in this case pertain to passage of bill after 3 readings and appointments by the President of OICs in ARMM.
These are relevant to our previous lessons under the Legislative and Executive Departments. The facts of the case are
presented below. For the issues and ruling, refer to previous digests.
However, the present lesson on Sec. 15, Art. X only talks about the creation of the ARMM. Thus the main point in the case
so far as it relates to such provision is the fact that laws creating the ARMM were enacted by Congress.
Facts
Several laws pertaining to the Autonomous Region in Muslim Mindanao (ARMM) were enacted by Congress. Republic Act (RA) No.
6734 is the organic act that established the ARMM and scheduled the first regular elections for the ARMM regional officials. RA No.
9054 amended the ARMM Charter and reset the regular elections for the ARMM regional officials to the second Monday of
September 2001. RA No. 9140 further reset the first regular elections to November 26, 2001. RA No. 9333 reset for the third time
the ARMM regional elections to the 2nd Monday of August 2005 and on the same date every 3 years thereafter.
Pursuant to RA No. 9333, the next ARMM regional elections should have been held on August 8, 2011. COMELEC had begun
preparations for these elections and had accepted certificates of candidacies for the various regional offices to be elected. But
on June 30, 2011, RA No. 10153 was enacted, resetting the next ARMM regular elections to May 2013 to coincide with the regular
national and local elections of the country.
ISSUE:
Whether or not a tribal court of the Cordillera Bodong Administration can render a valid executor decision in a land dispute
RULING:
No. In the plebiscite that was held on January 23, 1990 pursuant to Republic Act 6766, the creation of the Cordillera
Autonomous Region was rejected by all the provinces and city of the Cordillera region, except Ifugao province, hence, the
Cordillera Autonomous Region did not come to be.As a logical consequence of that judicial declaration, the Cordillera Bodong
Administration created under Section 13 of Executive Order No. 220, the indigenous and special courts for the indigenous cultural
communities of the Cordillera region do not exist.
Cordillera Broad Coalition v. COA, GR No. 82217, Jan. 29, 1990
ARTICLE X Section 18/19: Organic Acts
Province of North Cotabato v. Government of the Philippines Peace Panel, 568 SCRA 492
ARTICLE X Section 20
FACTS:
On 8 August 2008, the Government of the Republic of the Philippines (GRP), represented by the GRP Peace Panel and the
Presidential Adviser on the Peace Process (PAPP), and the Moro Islamic Liberation Front (MILF) were scheduled to sign the
Memorandum of Agreement on the Ancestral Domain (MOA-AD) Aspect of the previous GRP-MILF Tripoli Agreement on Peace
of 2 0 0 1 in Kuala Lumpur, Malaysia. The MOA-AD included, among others, a stipulation that creates the Bangsamoro Juridical
Entity (BJE), to which the GRP grants the authority and jurisdiction over the ancestral domain and ancestral lands of the
Bangsamorodefined as the present geographic area of the ARMM constituted by Lanao del Sur, Maguindanao, Sulu, Tawi-
Tawi, Basilan, and Marawi City, as well as the municipalities of Lanao del Norte which voted for inclusion in the ARMM in the
2001 plebiscite. The BJE is then granted the power to build, develop, and maintain its own institutions. The MOA-AD also
described the relationship of the GRP and the BJE as associative, characterized by shared authority and responsibility. It
further provides that its provisions requiring amendments to the existing legal framework shall take effect upon signing of a
Comprehensive Compact.
ISSUE: W/N the MOA-AD is constitutional.
DECISION: NO. It cannot be reconciled with the present Constitution and laws. Not only its specific provisions, but the very
concept underlying them, namely, the associative relationship envisioned between the GRP and the BJE, are unconstitutional, for
the concept presupposes that the associated entity is a state and implies that the same is on its way to independence.
While there is a clause in the MOA-AD stating that the provisions thereof inconsistent with the present legal frame work will not
be effective until that framework is amended, the same does not cure its defect. The inclusion of provisions in the MOA-AD
establishing an associative relationship between the BJE and the Central Government is, itself, a violation of the Memorandum
of Instructions From The President addressed to the government peace panel. Moreover, as the clause is worded, it virtually
guarantees that the necessary amendments to the Constitution and the laws will eventually be put in place. Neither the GRP
Peace Panel nor the President herself is authorized to make such a guarantee. Upholding such an act would amount to
authorizing a usurpation of the constituent powers vested only in Congress, a Constitutional Convention, or the people
themselves through the process of initiative, for the only way that the Executive can ensure the outcome of the amendment
process is through an undue influence or interference with that process.
Bornasal, Jr. v. Montes, 280 SCRA 181 (1997)