G.R. No.
175368 April 11, 2013 dated October 8, 2004 issued by the Postmaster II of the
LEAGUE OF PROVINCES OF THE PHILIPPINES, Petitioner,
vs.
DEPARTMENT OF ENVIRONMENT and NATURAL
RESOURCES and HON. ANGELO T. REYES, in his
capacity as Secretary of DENR, Respondents.
DECISION
PERALTA, J.:
This is a petition for certiorari, prohibition and mandamus,1
praying that this Court order the following: ( 1) declare as
unconstitutional Section 17(b)(3)(iii) of Republic Act (R.A.) No.
7160, otherwise known as The Local Government Code of
1991 and Section 24 of Republic Act (R.A.) No. 7076,
otherwise known as the People's Small-Scale Mining Act of
1991; (2) prohibit and bar respondents from exercising control
over provinces; and (3) declare as illegal the respondent
Secretary of the Department of Energy and Natural Resources'
(DENR) nullification, voiding and cancellation of the Small-
Scale Mining permits issued by the Provincial Governor of
Bulacan.
The Facts are as follows:
On March 28, 1996, Golden Falcon Mineral Exploration
Corporation (Golden Falcon) filed with the DENR Mines and
Geosciences Bureau Regional Office No. III (MGB R-III) an
Application for Financial and Technical Assistance Agreement
(FTAA) covering an area of 61,136 hectares situated in the
Municipalities of San Miguel, San Ildefonso, Norzagaray and
San Jose del Monte, Bulacan.2
On April 29, 1998, the MGB R-III issued an Order denying
Golden Falcon's Application for Financial and Technical
Assistance Agreement for failure to secure area clearances
from the Forest Management Sector and Lands Management
Sector of the DENR Regional Office No. III.3
On November 11, 1998, Golden Falcon filed an appeal with the
DENR Mines and Geosciences Bureau Central Office (MGB-
Central Office), and sought reconsideration of the Order dated
April 29, 1998.4
On February 10, 2004, while Golden Falcon's appeal was
pending, Eduardo D. Mercado, Benedicto S. Cruz, Gerardo R.
Cruz and Liberato Sembrano filed with the Provincial
Environment and Natural Resources Office (PENRO) of
Bulacan their respective Applications for Quarry Permit (AQP),
which covered the same area subject of Golden Falcon's
Application for Financial and Technical Assistance
Agreement.5
On July 16, 2004, the MGB-Central Office issued an Order
denying Golden Falcon's appeal and affirming the MGB R-III's
Order dated April 29, 1998.
On September 13, 2004, Atlantic Mines and Trading
Corporation (AMTC) filed with the PENRO of Bulacan an
Application for Exploration Permit (AEP) covering 5,281
hectares of the area covered by Golden Falcon's Application
for Financial and Technical Assistance Agreement.6
On October 19, 2004, DENR-MGB Director Horacio C. Ramos,
in response to MGB R-III Director Arnulfo V. Cabantog's
memorandum query dated September 8, 2004, categorically
stated that the MGB-Central Office's Order dated July 16, 2004
became final on August 11, 2004, fifteen (15) days after
Golden Falcon received the said Order, per the Certification
Philippine Postal Corporation of Cainta, Rizal.7
Through letters dated May 5 and May 10, 2005, AMTC notified
the PENRO of Bulacan and the MGB R-III Director,
respectively, that the subject Applications for Quarry Permit fell
within its (AMTC's) existing valid and prior Application for
Exploration Permit, and the the former area of Golden Falcon
was open to mining location only on August 11, 2004 per the
Memorandum dated October 19, 2004 of the MGB Director,
Central Office.8
On June 24, 2005, Ricardo Medina, Jr., PENRO of Bulacan,
indorsed AMTC's letter to the Provincial Legal Officer, Atty.
Eugenio F. Resurreccion, for his legal opinion on which date of
denial of Golden Falcon's application/appeal – April 29, 1998
or July 16, 2004 − is to be considered in the deliberation of the
Provincial Mining Regulatory Board (PMRB) for the purpose of
determining when the land subject of the Applications for
Quarry Permit could be considered open for application.
On June 28, 2005, Provincial Legal Officer Eugenio
Resurreccion issued a legal opinion stating that the Order
dated July 16, 2004 of the MGB-Central Office was a mere
reaffirmation of the Order dated April 29, 1998 of the MGB R-
III; hence, the Order dated April 29, 1998 should be the
reckoning period of the denial of the application of Golden
Falcon.
On July 22, 2005, AMTC filed with the PMRB of Bulacan a
formal protest against the aforesaid Applications for Quarry
Permit on the ground that the subject area was already
covered by its Application for Exploration Permit.9
On August 8, 2005, MGB R-III Director Cabantog, who was the
concurrent Chairman of the PMRB, endorsed to the Provincial
Governor of Bulacan, Governor Josefina M. dela Cruz, the
aforesaid Applications for Quarry Permit that had apparently
been converted to Applications for Small-Scale Mining Permit
of Eduardo D. Mercado, Benedicto S. Cruz, Gerardo R. Cruz
and Lucila S. Valdez (formerly Liberato Sembrano).10
On August 9, 2005, the PENRO of Bulacan issued four
memoranda recommending to Governor Dela Cruz the
approval of the aforesaid Applications for Small-Scale Mining
Permit.11
On August 10, 2005, Governor Dela Cruz issued the
corresponding Small-Scale Mining Permits in favor of Eduardo
D. Mercado, Benedicto S. Cruz, Gerardo R. Cruz and Lucila S.
Valdez.12
Subsequently, AMTC appealed to respondent DENR Secretary
the grant of the aforesaid Small-Scale Mining Permits, arguing
that: (1) The PMRB of Bulacan erred in giving due course to
the Applications for Small-Scale Mining Permit without first
resolving its formal protest; (2) The areas covered by the
Small-Scale Mining Permits fall within the area covered by
AMTC's valid prior Application for Exploration Permit; (3) The
Applications for Quarry Permit were illegally converted to
Applications for Small-Scale Mining Permit; (4) DENR-MGB
Director Horacio C. Ramos' ruling that the subject areas
became open for mining location only on August 11, 2004 was
controlling; (5) The Small-Scale Mining Permits were null and
void because they covered areas that were never declared
People's Small-Scale Mining Program sites as mandated by
Section 4 of the People's Small-Scale Mining Act of 1991; and
(6) Iron ore is not considered as one of the quarry resources,
as defined by Section 43 of the Philippine Mining Act of 1995,
which could be subjects of an Application for Quarry Permit.13
On August 8, 2006, respondent DENR Secretary rendered a
Decision14 in favor of AMTC. The DENR Secretary agreed
with MGB Director Horacio C. Ramos that the area was open
to mining location only on August 11, 2004, fifteen (15) days
after the receipt by Golden Falcon on July 27, 2004 of a copy
of the MGB-Central Office's Order dated July 16, 2004, which
Order denied Golden Falcon's appeal. According to the DENR
Secretary, the filing by Golden Falcon of the letter-appeal
suspended the finality of the Order of denial issued on April 29,
1998 by the Regional Director until the resolution of the appeal
on July 16, 2004 by the MGB-Central Office. He stated that the
Applications for Quarry Permit were filed on February 10, 2004
when the area was still closed to mining location; hence, the
Small-Scale Mining Permits granted by the PMRB and the
Governor were null and void. On the other hand, the DENR
Secretary declared that AMTC filed its Application for
Exploration Permit when the area was already open to other
mining applicants; thus, AMTC’s Application for Exploration
Permit was valid. Moreover, the DENR Secretary held that the
questioned Small-Scale Mining Permits were issued in
violation of Section 4 of R.A. No. 7076 and beyond the
authority of the Provincial Governor pursuant to Section 43 of
R.A. No. 7942, because the area was never proclaimed to be
under the People's Small-Scale Mining Program. Further, the
DENR Secretary stated that iron ore mineral is not considered
among the quarry resources.
The dispositive portion of the DENR Secretary’s Decision
reads:
WHEREFORE, the Application for Exploration Permit, AEP-III-
02-04 of Atlantic Mines and Trading Corp. is declared valid and
may now be given due course. The Small-Scale Mining
Permits, SSMP-B-002-05 of Gerardo Cruz, SSMP-B-003-05 of
Eduardo D. Mercado, SSMP-B-004-05 of Benedicto S. Cruz
and SSMP-B-005-05 of Lucila S. Valdez are declared NULL
AND VOID. Consequently, the said permits are hereby
CANCELLED.15
Hence, petitioner League of Provinces filed this petition.
Petitioner is a duly organized league of local governments
incorporated under R.A. No. 7160. Petitioner declares that it is
composed of 81 provincial governments, including the
Province of Bulacan. It states that this is not an action of one
province alone, but the collective action of all provinces
through the League, as a favorable ruling will not only benefit
one province, but all provinces and all local governments.
Petitioner raises these issues:
I
WHETHER OR NOT SECTION 17(B)(3)(III) OF THE, 1991
LOCAL GOVERNMENT CODE AND SECTION 24 OF THE
PEOPLE'S SMALL-SCALE MINING ACT OF 1991 ARE
UNCONSTITUTIONAL FOR PROVIDING FOR EXECUTIVE
CONTROL AND INFRINGING UPON THE LOCAL
AUTONOMY OF PROVINCES.
II
WHETHER OR NOT THE ACT OF RESPONDENT [DENR] IN
NULLIFYING, VOIDING AND CANCELLING THE SMALL-
SCALE MINING PERMITS AMOUNTS TO EXECUTIVE
CONTROL, NOT MERELY SUPERVISION AND USURPS
THE DEVOLVED POWERS OF ALL PROVINCES.16
To start, the Court finds that petitioner has legal standing to file
this petition because it is tasked under Section 504 of the Local
Government Code of 1991 to promote local autonomy at the
provincial level;17 adopt measures for the promotion of the
welfare of all provinces and its officials and employees;18 and
exercise such other powers and perform such other duties and
functions as the league may prescribe for the welfare of the
provinces.19
Before this Court determines the validity of an act of a co-equal
and coordinate branch of the Government, it bears emphasis
that ingrained in our jurisprudence is the time-honored principle
that a statute is presumed to be valid.20 This presumption is
rooted in the doctrine of separation of powers which enjoins
upon the three coordinate departments of the Government a
becoming courtesy for each other's acts.21 This Court,
however, may declare a law, or portions thereof,
unconstitutional where a petitioner has shown a clear and
unequivocal breach of the Constitution,22 leaving no doubt or
hesitation in the mind of the Court.23
In this case, petitioner admits that respondent DENR Secretary
had the authority to nullify the Small-Scale Mining Permits
issued by the Provincial Governor of Bulacan, as the DENR
Secretary has control over the PMRB, and the implementation
of the Small-Scale Mining Program is subject to control by
respondent DENR.
Control of the DENR/DENR Secretary over small-scale mining
in the provinces is granted by three statutes: (1) R.A. No. 7061
or The Local Government Code of 1991; (2) R.A. No. 7076 or
the People's Small Scale Mining Act of 1991; and (3) R.A. No.
7942, otherwise known as the Philippine Mining Act of 1995.24
The pertinent provisions of law sought to be declared as
unconstitutional by petitioner are as follows:
R.A. No. 7061 (The Local Government Code of 1991)
SEC. 17. Basic Services and Facilities. - (a) Local government
units shall endeavor to be self-reliant and shall continue
exercising the powers and discharging the duties and functions
currently vested upon them. They shall also discharge the
functions and responsibilities of national agencies and offices
devolved to them pursuant to this Code. Local government
units shall likewise exercise such other powers and discharge
such other functions and responsibilities as are necessary,
appropriate, or incidental to efficient and effective provision of
the basic services and facilities enumerated herein.
(b) Such basic services and facilities include, but are not
limited to, the following:
xxxx
(3) For a Province:c
xxxx
(iii) Pursuant to national policies and subject to supervision,
control and review of the DENR, enforcement of forestry laws
limited to community-based forestry projects, pollution control
law, small-scale mining law, and other laws on the protection of
the environment; and mini-hydro electric projects for local
purposes; x x x25
R.A. No. 7076 (People's Small-Scale Mining Act of 1991)
Sec. 24. Provincial/City Mining Regulatory Board. - There is
hereby created under the direct supervision and control of the
Secretary a provincial/city mining regulatory board, herein
called the Board, which shall be the implementing agency of
the Department, and shall exercise the following powers and
functions, subject to review by the Secretary:

(a) Declare and segregate existing gold-rush areas for small-
scale mining;
(b) Reserve future gold and other mining areas for small-scale
mining;
(c) Award contracts to small-scale miners;
d) Formulate and implement rules and regulations related to
small-scale mining;
(e) Settle disputes, conflicts or litigations over conflicting claims
within a people’s small-scale mining area, an area that is
declared a small-mining; and
(f) Perform such other functions as may be necessary to
achieve the goals and objectives of this Act.26
Petitioner contends that the aforecited laws and DENR
Administrative Order No. 9640 (the Implementing Rules and
Regulations of the Philippine Mining Act of 1995) did not
explicitly confer upon respondents DENR and the DENR
Secretary the power to reverse, abrogate, nullify, void, or
cancel the permits issued by the Provincial Governor or small-
scale mining contracts entered into by the PMRB. The statutes
are also silent as to the power of respondent DENR Secretary
to substitute his own judgment over that of the Provincial
Governor and the PMRB.
Moreover, petitioner contends that Section 17 (b)(3)(iii) of the
Local Government Code of 1991 and Section 24 of R.A. No.
7076, which confer upon respondents DENR and the DENR
Secretary the power of control are unconstitutional, as the
Constitution states that the President (and Executive
Departments and her alter-egos) has the power of supervision
only, not control, over acts of the local government units, and
grants the local government units autonomy, thus:
The 1987 Constitution:
Article X, Section 4. The President of the Philippines shall
exercise general supervision over local governments.
Provinces with respect to component cities and municipalities,
and cities and municipalities with respect to component
barangays, shall ensure that the acts of their component units
are within the scope of their prescribed powers and
functions.27
Petitioner contends that the policy in the above-cited
constitutional provision is mirrored in the Local Government
Code, which states:
SEC. 25. National Supervision over Local Government Units. -
(a) Consistent with the basic policy on local autonomy, the
President shall exercise general supervision over local
government units to ensure that their acts are within the scope
of their prescribed powers and functions.
The President shall exercise supervisory authority directly over
provinces, highly urbanized cities, and independent component
cities; through the province with respect to component cities
and municipalities; and through the city and municipality with
respect to barangays.28
Petitioner contends that the foregoing provisions of the
Constitution and the Local Government Code of 1991 show
that the relationship between the President and the Provinces
or respondent DENR, as the alter ego of the President, and the
Province of Bulacan is one of executive supervision, not one of
executive control. The term "control" has been defined as the
power of an officer to alter or modify or set aside what a
subordinate officer had done in the performance of his/her
duties and to substitute the judgment of the former for the
latter, while the term "supervision" is the power of a superior
officer to see to it that lower officers perform their function in
accordance with law.29
Petitioner argues that respondent DENR Secretary went
beyond mere executive supervision and exercised control
when he nullified the small-scale mining permits granted by the
Provincial Governor of Bulacan, as the former substituted the
judgment of the latter.
Petitioner asserts that what is involved here is a devolved
power.
Under the Local Government Code of 1991, the power to
regulate small-scale mining has been devolved to all
provinces. In the exercise of devolved powers, departmental
approval is not necessary.30
Petitioner contends that if the provisions in Section 24 of R.A.
No. 7076 and Section 17 (b)(3)(iii) of the Local Government
Code of 1991 granting the power of control to the DENR/DENR
Secretary are not nullified, nothing would stop the DENR
Secretary from nullifying, voiding and canceling the small-scale
mining permits that have been issued by a Provincial
Governor.
Petitioner submits that the statutory grant of power of control to
respondents is unconstitutional, as the Constitution only allows
supervision over local governments and proscribes control by
the executive departments.
In its Comment, respondents, represented by the Office of the
Solicitor General, stated that contrary to the assertion of
petitioner, the power to implement the small-scale mining law
is expressly limited in Section 17 (b)(3)(iii) of the Local
Government Code, which provides that it must be carried out
"pursuant to national policies and subject to supervision,
control and review of the DENR." Moreover, the fact that the
power to implement the small-scale mining law has not been
fully devolved to provinces is further amplified by Section 4 of
the People's Small-Scale Mining Act of 1991, which provides,
among others, that the People's Small-Scale Mining Program
shall be implemented by the DENR Secretary.
The petition lacks merit.
Paragraph 1 of Section 2, Article XII (National Economy and
Patrimony) of the Constitution31 provides that "the exploration,
development and utilization of natural resources shall be under
the full control and supervision of the State."
Moreover, paragraph 3 of Section 2, Article XII of the
Constitution provides that "the Congress may, by law, allow
small-scale utilization of natural resources by Filipino citizens x
x x."
Pursuant to Section 2, Article XII of the Constitution, R.A. No.
7076 or the People's Small-Scale Mining Act of 1991, was
enacted, establishing under Section 4 thereof a People's
Small-Scale Mining Program to be implemented by the DENR
Secretary in coordination with other concerned government
agencies.
The People's Small-Scale Mining Act of 1991 defines "small-
scale mining" as "refer[ring] to mining activities, which rely
heavily on manual labor using simple implement and methods
and do not use explosives or heavy mining equipment."32
It should be pointed out that the Administrative Code of 198733
provides that the DENR is, subject to law and higher authority,
in charge of carrying out the State's constitutional mandate,
under Section 2, Article XII of the Constitution, to control and
supervise the exploration, development, utilization and
conservation of the country's natural resources. Hence, the
enforcement of small-scale mining law in the provinces is
made subject to the supervision, control and review of the
DENR under the Local Government Code of 1991, while the
People’s Small-Scale Mining Act of 1991 provides that the
People’s Small-Scale Mining Program is to be implemented by
the DENR Secretary in coordination with other concerned local
government agencies.
Indeed, Section 4, Article X (Local Government) of the
Constitution states that "[t]he President of the Philippines shall
exercise general supervision over local governments," and
Section 25 of the Local Government Code reiterates the same.
General supervision by the President means no more than
seeing to it that laws are faithfully executed or that subordinate
officers act within the law.34
The Court has clarified that the constitutional guarantee of
local autonomy in the Constitution Art. X, Sec. 2 refers to the
administrative autonomy of local government units or, cast in
more technical language, the decentralization of government
authority.35 It does not make local governments sovereign
within the State.36 Administrative autonomy may involve
devolution of powers, but subject to limitations like following
national policies or standards,37 and those provided by the
Local Government Code, as the structuring of local
governments and the allocation of powers, responsibilities, and
resources among the different local government units and local
officials have been placed by the Constitution in the hands of
Congress38 under Section 3, Article X of the Constitution.
Section 3, Article X of the Constitution mandated Congress to
"enact a local government code which shall provide for a more
responsive and accountable local government structure
instituted through a system of decentralization with effective
mechanisms of recall, initiative, and referendum, allocate
among the different local government units their powers,
responsibilities, and resources, and provide for the
qualifications, election, appointment and removal, term,
salaries, powers and functions and duties of local officials, and
all other matters relating to the organization and operation of
the local units."
In connection with the enforcement of the small-scale mining
law in the province, Section 17 of the Local Government Code
provides:
SEC. 17. Basic Services and Facilities. - (a) Local government
units shall endeavor to be self-reliant and shall continue
exercising the powers and discharging the duties and functions
currently vested upon them. They shall also discharge the
functions and responsibilities of national agencies and offices
devolved to them pursuant to this Code. Local government
units shall likewise exercise such other powers and discharge
such other functions and responsibilities as are necessary,
appropriate, or incidental to efficient and effective provision of
the basic services and facilities enumerated herein.
(b) Such basic services and facilities include, but are not
limited to, the following:
xxxx
(3) For a Province:c
xxxx
(iii) Pursuant to national policies and subject to supervision,
control and review of the DENR, enforcement of forestry laws
limited to community-based forestry projects, pollution control
law, small-scale mining law, and other laws on the protection of
the environment; and mini-hydro electric projects for local
purposes;39
Clearly, the Local Government Code did not fully devolve the
enforcement of the small-scale mining law to the provincial
government, as its enforcement is subject to the supervision,
control and review of the DENR, which is in charge, subject to
law and higher authority, of carrying out the State's
constitutional mandate to control and supervise the
exploration, development, utilization of the country's natural
resources.40
Section 17 (b)(3)(iii) of the Local Government Code of 1991 is
in harmony with R.A. No. 7076 or the People's Small-Scale
Mining Act of 1991,41 which established a People's Small-
Scale Mining Program to be implemented by the Secretary of
the DENR, thus:
Sec. 2. Declaration of Policy. – It is hereby declared of the
State to promote, develop, protect and rationalize viable small-
scale mining activities in order to generate more employment
opportunities and provide an equitable sharing of the nation's
wealth and natural resources, giving due regard to existing
rights as herein provided.
xxxx
Sec. 4. People's Small-Scale Mining Program. - For the
purpose of carrying out the declared policy provided in Section
2 hereof, there is hereby established a People's Small-Scale
Mining Program to be implemented by the Secretary of the
Department of Environment and Natural Resources,
hereinafter called the Department, in coordination with other
concerned government agencies, designed to achieve an
orderly, systematic and rational scheme for the small-scale
development and utilization of mineral resources in certain
mineral areas in order to address the social, economic,
technical, and environmental problems connected with small-
scale mining activities.
xxxx
Sec. 24. Provincial/City Mining Regulatory Board. – There is
hereby created under the direct supervision and control of the
Secretary a provincial/city mining regulatory board, herein
called the Board, which shall be the implementing agency of
the Department, and shall exercise the following powers and
functions, subject to review by the Secretary:
(a) Declare and segregate existing gold-rush areas for small-
scale mining;
(b) Reserve future gold and other mining areas for small-scale
mining;
(c) Award contracts to small-scale miners;
(d) Formulate and implement rules and regulations related to
small-scale mining;
(e) Settle disputes, conflicts or litigations over conflicting claims
within a people’s small-scale mining area, an area that is
declared a small-mining; and
(f) Perform such other functions as may be necessary to
achieve the goals and objectives of this Act.42
DENR Administrative Order No. 34, series of 1992, containing
the Rules and Regulations to implement R.A. No. 7076,
provides:
SEC. 21. Administrative Supervision over the People's Small-
Scale Mining Program. − The following DENR officials shall
exercise the following supervisory functions in the
implementation of the Program:
21.1 DENR Secretrary – direct supervision and control over the
program and activities of the small-scale miners within the
people's small-scale mining area;
21.2 Director − the Director shall:
a. Recommend the depth or length of the tunnel or adit taking
into account the: (1) size of membership and capitalization of
the cooperative; (2) size of mineralized areas; (3) quantity of
mineral deposits; (4) safety of miners; and (5) environmental
impact and other considerations;
b. Determine the right of small-scale miners to existing facilities
in consultation with the operator, claimowner, landowner or
lessor of an affected area upon declaration of a small-scale
mining area;
c. Recommend to the Secretary the withdrawal of the status of
the people's small-scale mining area when it can no longer be
feasibly operated on a small-scale basis; and
d. See to it that the small-scale mining contractors abide by
small-scale mines safety rules and regulations.
xxxx
SEC. 22. Provincial/City Mining Regulatory Board. − The
Provincial/City Mining Regulatory Board created under R.A.
7076 shall exercise the following powers and functions, subject
to review by the Secretary:
22.1 Declares and segregates existing gold rush area for
small-scale mining;
22.2 Reserves for the future, mineralized areas/mineral lands
for people's small-scale mining;
22.3 Awards contracts to small-scale miners’ cooperative;
22.4 Formulates and implements rules and regulations related
to R.A. 7076;
22.5 Settles disputes, conflicts or litigations over conflicting
claims within ninety (90) days upon filing of protests or
complaints; Provided, That any aggrieved party may appeal
within five (5) days from the Board's decision to the Secretary
for final resolution otherwise the same is considered final and
executory; and
22.6 Performs such other functions as may be necessary to
achieve the goals and objectives of R.A. 7076.
SEC. 6. Declaration of People's Small-Scale Mining Areas. –
The Board created under R.A. 7076 shall have the authority to
declare and set aside People's Small-Scale Mining Areas in
sites onshore suitable for small-scale mining operations
subject to review by the DENR Secretary thru the Director.43
DENR Administrative Order No. 23, otherwise known as the
Implementing Rules and Regulations of R.A. No. 7942,
otherwise known as the Philippine Mining Act of 1995, adopted
on August 15, 1995, provides under Section 12344 thereof that
small-scale mining applications should be filed with the
PMRB45 and the corresponding permits shall be issued by the
Provincial Governor, except small-scale mining applications
within the mineral reservations.
Thereafter, DENR Administrative Order No. 96-40, otherwise
known as the Revised Implementing Rules and Regulations of
R.A. No. 7942, otherwise known as the Philippine Mining Act of
1995, adopted on December 19, 1996, provides that
applications for Small-Scale Mining Permits shall be filed with
the Provincial Governor/City Mayor through the concerned
Provincial/City Mining Regulatory Board for areas outside the
Mineral Reservations and with the Director though the Bureau
for areas within the Mineral Reservations.46 Moreover, it
provides that Local Government Units shall, in coordination
with the Bureau/ Regional Offices and subject to valid and
existing mining rights, "approve applications for small-scale
mining, sand and gravel, quarry x x x and gravel permits not
exceeding five (5) hectares."47
Petitioner contends that the Local Government Code of 1991,
R.A. No. 7076, DENR Administrative Orders Nos. 95-23 and
96-40 granted the DENR Secretary the broad statutory power
of control, but did not confer upon the respondents DENR and
DENR Secretary the power to reverse, abrogate, nullify, void,
cancel the permits issued by the Provincial Governor or small-
scale mining contracts entered into by the Board.
The contention does not persuade.
The settlement of disputes over conflicting claims in small-
scale mining is provided for in Section 24 of R.A. No. 7076,
thus:
Sec. 24. Provincial/City Mining Regulatory Board. − There is
hereby created under the direct supervision and control of the
Secretary a provincial/city mining regulatory board, herein
called the Board, which shall be the implementing agency of
the Department, and shall exercise the following powers and
functions, subject to review by the Secretary:
xxxx
(e) Settle disputes, conflicts or litigations over conflicting claims
within a people's small-scale mining area, an area that is
declared a small mining area; x x x
Section 24, paragraph (e) of R.A. No. 7076 cited above is
reflected in Section 22, paragraph 22.5 of the Implementing
Rules and Regulations of R.A. No. 7076, to wit:
SEC. 22. Provincial/City Mining Regulatory Board. – The
Provincial/City Mining Regulatory Board created under R.A.
No. 7076 shall exercise the following powers and functions,
subject to review by the Secretary:
xxxx
22.5 Settles disputes, conflicts or litigations over conflicting
claims within ninety (90) days upon filing of protests or
complaints; Provided, That any aggrieved party may appeal
within five (5) days from the Board's decision to the Secretary
for final resolution otherwise the same is considered final and
executory; x x x
In this case, in accordance with Section 22, paragraph 22.5 of
the Implementing Rules and Regulations of R.A. No. 7076, the
AMTC filed on July 22, 2005 with the PMRB of Bulacan a
formal protest against the Applications for Quarry Permits of
Eduardo Mercado, Benedicto Cruz, Liberato Sembrano
(replaced by Lucila Valdez) and Gerardo Cruz on the ground
that the subject area was already covered by its Application for
Exploration Permit.48 However, on August 8, 2005, the PMRB
issued Resolution Nos. 05-8, 05-9, 05-10 and 05-11, resolving
to submit to the Provincial Governor of Bulacan the
Applications for Small-Scale Mining Permits of Eduardo
Mercado, Benedicto Cruz, Lucila Valdez and Gerardo Cruz for
the granting/issuance of the said permits.49 On August 10,
2005, the Provincial Governor of Bulacan issued the Small-
Scale Mining Permits to Eduardo Mercado, Benedicto Cruz,
Lucila Valdez and Gerardo Cruz based on the legal opinion of
the Provincial Legal Officer and the Resolutions of the PMRB
of Bulacan.
Hence, AMTC filed an appeal with respondent DENR
Secretary, appealing from Letter-Resolution No. 05-1317 and
Resolution Nos. 05-08, 05-09, 05-10 and 05-11, all dated
August 8, 2005, of the PMRB of Bulacan, which resolutions
gave due course and granted, on August 10, 2005, Small-
Scale Mining Permits to Eduardo D. Mercado, Benedicto S.
Cruz, Lucila Valdez and Gerardo Cruz involving parcels of
mineral land situated at Camachin, Doña Remedios Trinidad,
Bulacan.
The PMRB of Bulacan filed its Answer, stating that it is an
administrative body, created under R.A. No. 7076, which
cannot be equated with the court wherein a full-blown hearing
could be conducted, but it is enough that the parties were
given the opportunity to present evidence. It asserted that the
questioned resolutions it issued were in accordance with the
mining laws and that the Small-Scale Mining Permits granted
were registered ahead of AMTC's Application for Exploration
Permit. Further, the Board stated that the Governor of Bulacan
had the power to approve the Small-Scale Mining Permits
under R.A. No. 7160.
The DENR Secretary found the appeal meritorious, and
resolved these pivotal issues: (1) when is the subject mining
area open for mining location by other applicants; and (2) who
among the applicants have valid applications.1âwphi1 The
pertinent portion of the decision of the DENR Secretary reads:
We agree with the ruling of the MGB Director that the area is
open only to mining location on August 11, 2004, fifteen (15)
days after the receipt by Golden Falcon on July 27, 2004 of a
copy of the subject Order of July 16, 2004.1âwphi1 The filing
by Golden Falcon of the letter-appeal suspended the finality of
the Order of Denial issued on April 29, 1998 by the Regional
Director until the Resolution thereof on July 16, 2004.
Although the subject AQPs/SSMPs were processed in
accordance with the procedures of the PMRB, however, the
AQPs were filed on February 10, 2004 when the area is still
closed to mining location. Consequently, the SSMPs granted
by the PMRB and the Governor are null and void making
thereby AEP No. III-02-04 of the AMTC valid, it having been
filed when the area is already open to other mining applicants.
Records also show that the AQPs were converted into SSMPs.
These are two (2) different applications. The questioned
SSMPs were issued in violation of Section 4 of RA 7076 and
beyond the authority of the Provincial Governor pursuant to
Section 43 of RA 7942 because the area was never
proclaimed as "People's Small-Scale Mining Program."
Moreover, iron ore mineral is not considered among the quarry
resources.
xxxx
WHEREFORE, the Application for Exploration Permit, AEP-III-
02-04 of Atlantic Mines and Trading Corp. is declared valid and
may now be given due course. The Small-Scale Mining
Permits, SSMP-B-002-05 of Gerardo Cruz, SSMP-B-003-05 of
Eduardo D. Mercado, SSMP-B-004-05 of Benedicto S. Cruz
and SSMP-B-005-05 of Lucila S. Valdez are declared NULL
AND VOID. Consequently, the said permits are hereby
CANCELLED.50
The Court finds that the decision of the DENR Secretary was
rendered in accordance with the power of review granted to the
DENR Secretary in the resolution of disputes, which is
provided for in Section 24 of R.A. No. 707651 and Section 22
of its Implementing Rules and Regulations.52 It is noted that
although AMTC filed a protest with the PMRB regarding its
superior and prior Application for Exploration Permit over the
Applications for Quarry Permit, which were converted to Small-
Scale Mining Permits, the PMRB did not resolve the same, but
issued Resolution Nos. 05-08 to 05-11 on August 8, 2005,
resolving to submit to the Provincial Governor of Bulacan the
Applications for Small-Scale Mining Permits of Eduardo
Mercado, Benedicto Cruz, Lucila Valdez and Gerardo Cruz for
the granting of the said permits. After the Provincial Governor
of Bulacan issued the Small-Scale Mining Permits on August
10, 2005, AMTC appealed the Resolutions of the PMRB giving
due course to the granting of the Small-Scale Mining Permits
by the Provincial Governor.
Hence, the decision of the DENR Secretary, declaring that the
Application for Exploration Permit of AMTC was valid and may
be given due course, and canceling the Small-Scale Mining
Permits issued by the Provincial Governor, emanated from the
power of review granted to the DENR Secretary under R.A.
No. 7076 and its Implementing Rules and Regulations. The
DENR Secretary's power to review and, therefore, decide, in
this case, the issue on the validity of the issuance of the Small-
Scale Mining Permits by the Provincial Governor as
recommended by the PMRB, is a quasi-judicial function, which
involves the determination of what the law is, and what the
legal rights of the contending parties are, with respect to the
matter in controversy and, on the basis thereof and the facts
obtaining, the adjudication of their respective rights.53 The
DENR Secretary exercises quasi-judicial function under R.A.
No. 7076 and its Implementing Rules and Regulations to the
extent necessary in settling disputes, conflicts or litigations
over conflicting claims. This quasi-judicial function of the DENR
Secretary can neither be equated with "substitution of
judgment" of the Provincial Governor in issuing Small-Scale
Mining Permits nor "control" over the said act of the Provincial
Governor as it is a determination of the rights of AMTC over
conflicting claims based on the law.
In determining whether Section 17 (b)(3)(iii) of the Local
Government Code of 1991 and Section 24 of R.A. No. 7076
are unconstitutional, the Court has been guided by Beltran v.
The Secretary of Health, 54 which held:
The fundamental criterion is that all reasonable doubts should
be resolved in favor of the constitutionality of a statute. Every
law has in its favor the presumption of constitutionality. For a
law to be nullified, it must be shown that there is a clear and
unequivocal breach of the Constitution. The ground for nullity
must be clear and beyond reasonable doubt. Those who
petition this Court to declare a law, or parts thereof,
unconstitutional must clearly establish the basis therefor.
Otherwise, the petition must fail. 55
In this case, the Court finds that the grounds raised by
petitioner to challenge the constitutionality of Section 17 (b
)(3)(iii) of the Local Government Code of 1991 and Section 24
'of R.A. No.7076 failed to overcome the constitutionality of the
said provisions of law.
WHEREFORE, the petition is DISMISSED for lack of merit.
No costs.
SO ORDERED.
[G.R. No. 152774. May 27, 2004]
THE PROVINCE OF BATANGAS, represented by its
Governor, HERMILANDO I. MANDANAS, petitioner, vs.
HON. ALBERTO G. ROMULO, Executive Secretary and
Chairman of the Oversight Committee on Devolution;
HON. EMILIA BONCODIN, Secretary, Department of
Budget and Management; HON. JOSE D. LINA, JR.,
Secretary, Department of Interior and Local Government,
respondents.
DECISION
CALLEJO, SR., J.:
The Province of Batangas, represented by its Governor,
Hermilando I. Mandanas, filed the present petition for certiorari,
prohibition and mandamus under Rule 65 of the Rules of
Court, as amended, to declare as unconstitutional and void
certain provisos contained in the General Appropriations Acts
(GAA) of 1999, 2000 and 2001, insofar as they uniformly
earmarked for each corresponding year the amount of five
billion pesos (P5,000,000,000.00) of the Internal Revenue
Allotment (IRA) for the Local Government Service Equalization
Fund (LGSEF) and imposed conditions for the release thereof.
Named as respondents are Executive Secretary Alberto G.
Romulo, in his capacity as Chairman of the Oversight
Committee on Devolution, Secretary Emilia Boncodin of the
Department of Budget and Management (DBM) and Secretary
Jose Lina of the Department of Interior and Local Government
(DILG).
Background
On December 7, 1998, then President Joseph Ejercito Estrada
issued Executive Order (E.O.) No. 48 entitled ESTABLISHING
A PROGRAM FOR DEVOLUTION ADJUSTMENT AND
EQUALIZATION. The program was established to facilitate the
process of enhancing the capacities of local government units
(LGUs) in the discharge of the functions and services devolved
to them by the National Government Agencies concerned
pursuant to the Local Government Code.[1] The Oversight
Committee (referred to as the Devolution Committee in E.O.
No. 48) constituted under Section 533(b) of Republic Act No.
7160 (The Local Government Code of 1991) has been tasked
to formulate and issue the appropriate rules and regulations
necessary for its effective implementation.[2] Further, to
address the funding shortfalls of functions and services
devolved to the LGUs and other funding requirements of the
program, the Devolution Adjustment and Equalization Fund
was created.[3] For 1998, the DBM was directed to set aside
an amount to be determined by the Oversight Committee
based on the devolution status appraisal surveys undertaken
by the DILG.[4] The initial fund was to be sourced from the
available savings of the national government for CY 1998.[5]
For 1999 and the succeeding years, the corresponding amount
required to sustain the program was to be incorporated in the
annual GAA.[6] The Oversight Committee has been authorized
to issue the implementing rules and regulations governing the
equitable allocation and distribution of said fund to the
LGUs.[7]
The LGSEF in the GAA of 1999
In Republic Act No. 8745, otherwise known as the GAA of
1999, the program was renamed as the LOCAL
GOVERNMENT SERVICE EQUALIZATION FUND (LGSEF).
Under said appropriations law, the amount of P96,780,000,000
was allotted as the share of the LGUs in the internal revenue
taxes. Item No. 1, Special Provisions, Title XXXVI A. Internal
Revenue Allotment of Rep. Act No. 8745 contained the
following proviso:
... PROVIDED, That the amount of FIVE BILLION PESOS
(P5,000,000,000) shall be earmarked for the Local
Government Service Equalization Fund for the funding
requirements of projects and activities arising from the full and
efficient implementation of devolved functions and services of
local government units pursuant to R.A. No. 7160, otherwise
known as the Local Government Code of 1991: PROVIDED,
FURTHER, That such amount shall be released to the local
government units subject to the implementing rules and
regulations, including such mechanisms and guidelines for the
equitable allocations and distribution of said fund among local
government units subject to the guidelines that may be
prescribed by the Oversight Committee on Devolution as
constituted pursuant to Book IV, Title III, Section 533(b) of R.A.
No. 7160. The Internal Revenue Allotment shall be released
directly by the Department of Budget and Management to the
Local Government Units concerned.
On July 28, 1999, the Oversight Committee (with then
Executive Secretary Ronaldo B. Zamora as Chairman) passed
Resolution Nos. OCD-99-003, OCD-99-005 and OCD-99-006
entitled as follows:
OCD-99-005
RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR
THE PhP5 BILLION CY 1999 LOCAL GOVERNMENT
SERVICE EQUALIZATION FUND (LGSEF) AND
REQUESTING HIS EXCELLENCY PRESIDENT JOSEPH
EJERCITO ESTRADA TO APPROVE SAID ALLOCATION
SCHEME.
OCD-99-006
RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR
THE PhP4.0 BILLION OF THE 1999 LOCAL GOVERNMENT
SERVICE EQUALIZATION FUND AND ITS CONCOMITANT
GENERAL FRAMEWORK, IMPLEMENTING GUIDELINES
AND MECHANICS FOR ITS IMPLEMENTATION AND
RELEASE, AS PROMULGATED BY THE OVERSIGHT
COMMITTEE ON DEVOLUTION.
OCD-99-003
RESOLUTION REQUESTING HIS EXCELLENCY
PRESIDENT JOSEPH EJERCITO ESTRADA TO APPROVE
THE REQUEST OF THE OVERSIGHT COMMITTEE ON
DEVOLUTION TO SET ASIDE TWENTY PERCENT (20%) OF
THE LOCAL GOVERNMENT SERVICE EQUALIZATION
FUND (LGSEF) FOR LOCAL AFFIRMATIVE ACTION
PROJECTS AND OTHER PRIORITY INITIATIVES FOR LGUs
INSTITUTIONAL AND CAPABILITY BUILDING IN
ACCORDANCE WITH THE IMPLEMENTING GUIDELINES
AND MECHANICS AS PROMULGATED BY THE
COMMITTEE.
These OCD resolutions were approved by then President
Estrada on October 6, 1999.
Under the allocation scheme adopted pursuant to Resolution
No. OCD-99-005, the five billion pesos LGSEF was to be
allocated as follows:
1. The PhP4 Billion of the LGSEF shall be allocated in
accordance with the allocation scheme and implementing
guidelines and mechanics promulgated and adopted by the
OCD. To wit:
a. The first PhP2 Billion of the LGSEF shall be allocated in
accordance with the codal formula sharing scheme as
prescribed under the 1991 Local Government Code;
b. The second PhP2 Billion of the LGSEF shall be allocated in
accordance with a modified 1992 cost of devolution fund
(CODEF) sharing scheme, as recommended by the respective
leagues of provinces, cities and municipalities to the OCD. The
modified CODEF sharing formula is as follows:
Province : 40%
Cities : 20%
Municipalities : 40%
This is applied to the P2 Billion after the approved amounts
granted to individual provinces, cities and municipalities as
assistance to cover decrease in 1999 IRA share due to
reduction in land area have been taken out.
2. The remaining PhP1 Billion of the LGSEF shall be
earmarked to support local affirmative action projects and other
priority initiatives submitted by LGUs to the Oversight
Committee on Devolution for approval in accordance with its
prescribed guidelines as promulgated and adopted by the
OCD.
In Resolution No. OCD-99-003, the Oversight Committee set
aside the one billion pesos or 20% of the LGSEF to support
Local Affirmative Action Projects (LAAPs) of LGUs. This
remaining amount was intended to respond to the urgent need
for additional funds assistance, otherwise not available within
the parameters of other existing fund sources. For LGUs to be
eligible for funding under the one-billion-peso portion of the
LGSEF, the OCD promulgated the following:
III. CRITERIA FOR ELIGIBILITY:
1. LGUs (province, city, municipality, or barangay), individually
or by group or multi-LGUs or leagues of LGUs, especially
those belonging to the 5th and 6th class, may access the fund
to support any projects or activities that satisfy any of the
aforecited purposes. A barangay may also access this fund
directly or through their respective municipality or city.
2. The proposed project/activity should be need-based, a local
priority, with high development impact and are congruent with
the socio-cultural, economic and development agenda of the
Estrada Administration, such as food security, poverty
alleviation, electrification, and peace and order, among others.
3. Eligible for funding under this fund are projects arising from,
but not limited to, the following areas of concern:
a. delivery of local health and sanitation services, hospital
services and other tertiary services;
b. delivery of social welfare services;
c. provision of socio-cultural services and facilities for youth
and community development;
d. provision of agricultural and on-site related research;
e. improvement of community-based forestry projects and
other local projects on environment and natural resources
protection and conservation;
f. improvement of tourism facilities and promotion of tourism;
g. peace and order and public safety;
h. construction, repair and maintenance of public works and
infrastructure, including public buildings and facilities for public
use, especially those destroyed or damaged by man-made or
natural calamities and disaster as well as facilities for water
supply, flood control and river dikes;
i. provision of local electrification facilities;
j. livelihood and food production services, facilities and
equipment;
k. other projects that may be authorized by the OCD consistent
with the aforementioned objectives and guidelines;
4. Except on extremely meritorious cases, as may be
determined by the Oversight Committee on Devolution, this
portion of the LGSEF shall not be used in expenditures for
personal costs or benefits under existing laws applicable to
governments. Generally, this fund shall cover the following
objects of expenditures for programs, projects and activities
arising from the implementation of devolved and regular
functions and services:
a. acquisition/procurement of supplies and materials critical to
the full and effective implementation of devolved programs,
projects and activities;
b. repair and/or improvement of facilities;
c. repair and/or upgrading of equipment;
d. acquisition of basic equipment;
e. construction of additional or new facilities;
f. counterpart contribution to joint arrangements or collective
projects among groups of municipalities, cities and/or
provinces related to devolution and delivery of basic services.
5. To be eligible for funding, an LGU or group of LGU shall
submit to the Oversight Committee on Devolution through the
Department of Interior and Local Governments, within the
prescribed schedule and timeframe, a Letter Request for
Funding Support from the Affirmative Action Program under
the LGSEF, duly signed by the concerned LGU(s) and
endorsed by cooperators and/or beneficiaries, as well as the
duly signed Resolution of Endorsement by the respective
Sanggunian(s) of the LGUs concerned. The LGU-proponent
shall also be required to submit the Project Request (PR),
using OCD Project Request Form No. 99-02, that details the
following:
(a) general description or brief of the project;
(b) objectives and justifications for undertaking the project,
which should highlight the benefits to the locality and the
expected impact to the local program/project arising from the
full and efficient implementation of social services and facilities,
at the local levels;
(c) target outputs or key result areas;
(d) schedule of activities and details of requirements;
(e) total cost requirement of the project;
(f) proponents counterpart funding share, if any, and identified
source(s) of counterpart funds for the full implementation of the
project;
(g) requested amount of project cost to be covered by the
LGSEF.
Further, under the guidelines formulated by the Oversight
Committee as contained in Attachment - Resolution No. OCD-
99-003, the LGUs were required to identify the projects eligible
for funding under the one-billion-peso portion of the LGSEF
and submit the project proposals thereof and other
documentary requirements to the DILG for appraisal. The
project proposals that passed the DILGs appraisal would then
be submitted to the Oversight Committee for review, evaluation
and approval. Upon its approval, the Oversight Committee
would then serve notice to the DBM for the preparation of the
Special Allotment Release Order (SARO) and Notice of Cash
Allocation (NCA) to effect the release of funds to the said
LGUs.
The LGSEF in the GAA of 2000

Under Rep. Act No. 8760, otherwise known as the GAA of
2000, the amount of P111,778,000,000 was allotted as the
share of the LGUs in the internal revenue taxes. As in the GAA
of 1999, the GAA of 2000 contained a proviso earmarking five
billion pesos of the IRA for the LGSEF. This proviso, found in
Item No. 1, Special Provisions, Title XXXVII A. Internal
Revenue Allotment, was similarly worded as that contained in
the GAA of 1999.
The Oversight Committee, in its Resolution No. OCD-2000-023
dated June 22, 2000, adopted the following allocation scheme
governing the five billion pesos LGSEF for 2000:
1. The PhP3.5 Billion of the CY 2000 LGSEF shall be allocated
to and shared by the four levels of LGUs, i.e., provinces, cities,
municipalities, and barangays, using the following percentage-
sharing formula agreed upon and jointly endorsed by the
various Leagues of LGUs:
For Provinces 26% or P 910,000,000
For Cities 23% or 805,000,000
For Municipalities 35% or 1,225,000,000
For Barangays 16% or 560,000,000
Provided that the respective Leagues representing the
provinces, cities, municipalities and barangays shall draw up
and adopt the horizontal distribution/sharing schemes among
the member LGUs whereby the Leagues concerned may opt to
adopt direct financial assistance or project-based arrangement,
such that the LGSEF allocation for individual LGU shall be
released directly to the LGU concerned;
Provided further that the individual LGSEF shares to LGUs are
used in accordance with the general purposes and guidelines
promulgated by the OCD for the implementation of the LGSEF
at the local levels pursuant to Res. No. OCD-99-006 dated
October 7, 1999 and pursuant to the Leagues guidelines and
mechanism as approved by the OCD;
Provided further that each of the Leagues shall submit to the
OCD for its approval their respective allocation scheme, the list
of LGUs with the corresponding LGSEF shares and the
corresponding project categories if project-based;
Provided further that upon approval by the OCD, the lists of
LGUs shall be endorsed to the DBM as the basis for the
preparation of the corresponding NCAs, SAROs, and related
budget/release documents.
2. The remaining P1,500,000,000 of the CY 2000 LGSEF shall
be earmarked to support the following initiatives and local
affirmative action projects, to be endorsed to and approved by
the Oversight Committee on Devolution in accordance with the
OCD agreements, guidelines, procedures and documentary
requirements:
On July 5, 2000, then President Estrada issued a
Memorandum authorizing then Executive Secretary Zamora
and the DBM to implement and release the 2.5 billion pesos
LGSEF for 2000 in accordance with Resolution No. OCD-
2000-023.
Thereafter, the Oversight Committee, now under the
administration of President Gloria Macapagal-Arroyo,
promulgated Resolution No. OCD-2001-29 entitled ADOPTING
RESOLUTION NO. OCD-2000-023 IN THE ALLOCATION,
IMPLEMENTATION AND RELEASE OF THE REMAINING
P2.5 BILLION LGSEF FOR CY 2000. Under this resolution, the
amount of one billion pesos of the LGSEF was to be released
in accordance with paragraph 1 of Resolution No. OCD-2000-
23, to complete the 3.5 billion pesos allocated to the LGUs,
while the amount of 1.5 billion pesos was allocated for the
LAAP. However, out of the latter amount, P400,000,000 was to
be allocated and released as follows: P50,000,000 as financial
assistance to the LAAPs of LGUs; P275,360,227 as financial
assistance to cover the decrease in the IRA of LGUs
concerned due to reduction in land area; and P74,639,773 for
the LGSEF Capability-Building Fund.
The LGSEF in the GAA of 2001
In view of the failure of Congress to enact the general
appropriations law for 2001, the GAA of 2000 was deemed re-
enacted, together with the IRA of the LGUs therein and the
proviso earmarking five billion pesos thereof for the LGSEF.
On January 9, 2002, the Oversight Committee adopted
Resolution No. OCD-2002-001 allocating the five billion pesos
LGSEF for 2001 as follows:
Modified Codal Formula P 3.000 billion
Priority Projects 1.900 billion
Capability Building Fund .100 billion
P 5.000 billion
RESOLVED FURTHER, that the P3.0 B of the CY 2001
LGSEF which is to be allocated according to the modified
codal formula shall be released to the four levels of LGUs, i.e.,
provinces, cities, municipalities and barangays, as follows:
LGUs Percentage Amount
Provinces 25 P 0.750 billion
Cities 25 0.750
Municipalities 35 1.050
Barangays 15 0.450
100 P 3.000 billion
RESOLVED FURTHER, that the P1.9 B earmarked for priority
projects shall be distributed according to the following criteria:
1.0 For projects of the 4th, 5th and 6th class LGUs; or
2.0 Projects in consonance with the Presidents State of the
Nation Address (SONA)/summit commitments.
RESOLVED FURTHER, that the remaining P100 million
LGSEF capability building fund shall be distributed in
accordance with the recommendation of the Leagues of
Provinces, Cities, Municipalities and Barangays, and approved
by the OCD.
Upon receipt of a copy of the above resolution, Gov.
Mandanas wrote to the individual members of the Oversight
Committee seeking the reconsideration of Resolution No.
OCD-2002-001. He also wrote to Pres. Macapagal-Arroyo
urging her to disapprove said resolution as it violates the
Constitution and the Local Government Code of 1991.
On January 25, 2002, Pres. Macapagal-Arroyo approved
Resolution No. OCD-2002-001.
The Petitioners Case
The petitioner now comes to this Court assailing as
unconstitutional and void the provisos in the GAAs of 1999,
2000 and 2001, relating to the LGSEF. Similarly assailed are
the Oversight Committees Resolutions Nos. OCD-99-003,
OCD-99-005, OCD-99-006, OCD-2000-023, OCD-2001-029
and OCD-2002-001 issued pursuant thereto. The petitioner
submits that the assailed provisos in the GAAs and the OCD
resolutions, insofar as they earmarked the amount of five
billion pesos of the IRA of the LGUs for 1999, 2000 and 2001
for the LGSEF and imposed conditions for the release thereof,
violate the Constitution and the Local Government Code of
1991.
Section 6, Article X of the Constitution is invoked as it
mandates that the just share of the LGUs shall be
automatically released to them. Sections 18 and 286 of the
Local Government Code of 1991, which enjoin that the just
share of the LGUs shall be automatically and directly released
to them without need of further action are, likewise, cited.
The petitioner posits that to subject the distribution and release
of the five-billion-peso portion of the IRA, classified as the
LGSEF, to compliance by the LGUs with the implementing
rules and regulations, including the mechanisms and
guidelines prescribed by the Oversight Committee,
contravenes the explicit directive of the Constitution that the
LGUs share in the national taxes shall be automatically
released to them. The petitioner maintains that the use of the
word shall must be given a compulsory meaning.
To further buttress this argument, the petitioner contends that
to vest the Oversight Committee with the authority to determine
the distribution and release of the LGSEF, which is a part of
the IRA of the LGUs, is an anathema to the principle of local
autonomy as embodied in the Constitution and the Local
Government Code of 1991. The petitioner cites as an example
the experience in 2001 when the release of the LGSEF was
long delayed because the Oversight Committee was not able
to convene that year and no guidelines were issued therefor.
Further, the possible disapproval by the Oversight Committee
of the project proposals of the LGUs would result in the
diminution of the latters share in the IRA.
Another infringement alleged to be occasioned by the assailed
OCD resolutions is the improper amendment to Section 285 of
the Local Government Code of 1991 on the percentage
sharing of the IRA among the LGUs. Said provision allocates
the IRA as follows: Provinces 23%; Cities 23%; Municipalities
34%; and Barangays 20%.[8] This formula has been
improperly amended or modified, with respect to the five-
billion-peso portion of the IRA allotted for the LGSEF, by the
assailed OCD resolutions as they invariably provided for a
different sharing scheme.
The modifications allegedly constitute an illegal amendment by
the executive branch of a substantive law. Moreover, the
petitioner mentions that in the Letter dated December 5, 2001
of respondent Executive Secretary Romulo addressed to
respondent Secretary Boncodin, the former endorsed to the
latter the release of funds to certain LGUs from the LGSEF in
accordance with the handwritten instructions of President
Arroyo. Thus, the LGUs are at a loss as to how a portion of the
LGSEF is actually allocated. Further, there are still portions of
the LGSEF that, to date, have not been received by the
petitioner; hence, resulting in damage and injury to the
petitioner.
The petitioner prays that the Court declare as unconstitutional
and void the assailed provisos relating to the LGSEF in the
GAAs of 1999, 2000 and 2001 and the assailed OCD
resolutions (Resolutions Nos. OCD-99-003, OCD-99-005,
OCD-99-006, OCD-2000-023, OCD-2001-029 and OCD-2002-
001) issued by the Oversight Committee pursuant thereto. The
petitioner, likewise, prays that the Court direct the respondents
to rectify the unlawful and illegal distribution and releases of
the LGSEF for the aforementioned years and release the same
in accordance with the sharing formula under Section 285 of
the Local Government Code of 1991. Finally, the petitioner
urges the Court to declare that the entire IRA should be
released automatically without further action by the LGUs as
required by the Constitution and the Local Government Code
of 1991.
The Respondents Arguments
The respondents, through the Office of the Solicitor General,
urge the Court to dismiss the petition on procedural and
substantive grounds. On the latter, the respondents contend
that the assailed provisos in the GAAs of 1999, 2000 and 2001
and the assailed resolutions issued by the Oversight
Committee are not constitutionally infirm. The respondents
advance the view that Section 6, Article X of the Constitution
does not specify that the just share of the LGUs shall be
determined solely by the Local Government Code of 1991.
Moreover, the phrase as determined by law in the same
constitutional provision means that there exists no limitation on
the power of Congress to determine what is the just share of
the LGUs in the national taxes. In other words, Congress is the
arbiter of what should be the just share of the LGUs in the
national taxes.
The respondents further theorize that Section 285 of the Local
Government Code of 1991, which provides for the percentage
sharing of the IRA among the LGUs, was not intended to be a
fixed determination of their just share in the national taxes.
Congress may enact other laws, including appropriations laws
such as the GAAs of 1999, 2000 and 2001, providing for a
different sharing formula. Section 285 of the Local Government
Code of 1991 was merely intended to be the default share of
the LGUs to do away with the need to determine annually by
law their just share. However, the LGUs have no vested right in
a permanent or fixed percentage as Congress may increase or
decrease the just share of the LGUs in accordance with what it
believes is appropriate for their operation. There is nothing in
the Constitution which prohibits Congress from making such
determination through the appropriations laws. If the provisions
of a particular statute, the GAA in this case, are within the
constitutional power of the legislature to enact, they should be
sustained whether the courts agree or not in the wisdom of
their enactment.
On procedural grounds, the respondents urge the Court to
dismiss the petition outright as the same is defective. The
petition allegedly raises factual issues which should be
properly threshed out in the lower courts, not this Court, not
being a trier of facts. Specifically, the petitioners allegation that
there are portions of the LGSEF that it has not, to date,
received, thereby causing it (the petitioner) injury and damage,
is subject to proof and must be substantiated in the proper
venue, i.e., the lower courts.
Further, according to the respondents, the petition has already
been rendered moot and academic as it no longer presents a
justiciable controversy. The IRAs for the years 1999, 2000 and
2001, have already been released and the government is now
operating under the 2003 budget. In support of this, the
respondents submitted certifications issued by officers of the
DBM attesting to the release of the allocation or shares of the
petitioner in the LGSEF for 1999, 2000 and 2001. There is,
therefore, nothing more to prohibit.
Finally, the petitioner allegedly has no legal standing to bring
the suit because it has not suffered any injury. In fact, the
petitioners just share has even increased. Pursuant to Section
285 of the Local Government Code of 1991, the share of the
provinces is 23%. OCD Nos. 99-005, 99-006 and 99-003 gave
the provinces 40% of P2 billion of the LGSEF. OCD Nos. 2000-
023 and 2001-029 apportioned 26% of P3.5 billion to the
provinces. On the other hand, OCD No. 2001-001 allocated
25% of P3 billion to the provinces. Thus, the petitioner has not
suffered any injury in the implementation of the assailed
provisos in the GAAs of 1999, 2000 and 2001 and the OCD
resolutions.
The Ruling of the Court
Procedural Issues
Before resolving the petition on its merits, the Court shall first
rule on the following procedural issues raised by the
respondents: (1) whether the petitioner has legal standing or
locus standi to file the present suit; (2) whether the petition
involves factual questions that are properly cognizable by the
lower courts; and (3) whether the issue had been rendered
moot and academic.
The petitioner has locus standi to maintain the present suit
The gist of the question of standing is whether a party has
alleged such a personal stake in the outcome of the
controversy as to assure that concrete adverseness which
sharpens the presentation of issues upon which the court so
largely depends for illumination of difficult constitutional
questions.[9] Accordingly, it has been held that the interest of a
party assailing the constitutionality of a statute must be direct
and personal. Such party must be able to show, not only that
the law or any government act is invalid, but also that he has
sustained or is in imminent danger of sustaining some direct
injury as a result of its enforcement, and not merely that he
suffers thereby in some indefinite way. It must appear that the
person complaining has been or is about to be denied some
right or privilege to which he is lawfully entitled or that he is
about to be subjected to some burdens or penalties by reason
of the statute or act complained of.[10]
The Court holds that the petitioner possesses the requisite
standing to maintain the present suit. The petitioner, a local
government unit, seeks relief in order to protect or vindicate an
interest of its own, and of the other LGUs. This interest
pertains to the LGUs share in the national taxes or the IRA.
The petitioners constitutional claim is, in substance, that the
assailed provisos in the GAAs of 1999, 2000 and 2001, and
the OCD resolutions contravene Section 6, Article X of the
Constitution, mandating the automatic release to the LGUs of
their share in the national taxes. Further, the injury that the
petitioner claims to suffer is the diminution of its share in the
IRA, as provided under Section 285 of the Local Government
Code of 1991, occasioned by the implementation of the
assailed measures. These allegations are sufficient to grant
the petitioner standing to question the validity of the assailed
provisos in the GAAs of 1999, 2000 and 2001, and the OCD
resolutions as the petitioner clearly has a plain, direct and
adequate interest in the manner and distribution of the IRA
among the LGUs.
The petition involves a significant legal issue
The crux of the instant controversy is whether the assailed
provisos contained in the GAAs of 1999, 2000 and 2001, and
the OCD resolutions infringe the Constitution and the Local
Government Code of 1991. This is undoubtedly a legal
question. On the other hand, the following facts are not
disputed:
1. The earmarking of five billion pesos of the IRA for the
LGSEF in the assailed provisos in the GAAs of 1999, 2000 and
re-enacted budget for 2001;
2. The promulgation of the assailed OCD resolutions providing
for the allocation schemes covering the said five billion pesos
and the implementing rules and regulations therefor; and
3. The release of the LGSEF to the LGUs only upon their
compliance with the implementing rules and regulations,
including the guidelines and mechanisms, prescribed by the
Oversight Committee.
Considering that these facts, which are necessary to resolve
the legal question now before this Court, are no longer in
issue, the same need not be determined by a trial court.[11] In
any case, the rule on hierarchy of courts will not prevent this
Court from assuming jurisdiction over the petition. The said
rule may be relaxed when the redress desired cannot be
obtained in the appropriate courts or where exceptional and
compelling circumstances justify availment of a remedy within
and calling for the exercise of this Courts primary
jurisdiction.[12]
The crucial legal issue submitted for resolution of this Court
entails the proper legal interpretation of constitutional and
statutory provisions. Moreover, the transcendental importance
of the case, as it necessarily involves the application of the
constitutional principle on local autonomy, cannot be gainsaid.
The nature of the present controversy, therefore, warrants the
relaxation by this Court of procedural rules in order to resolve
the case forthwith.
The substantive issue needs to be resolved notwithstanding
the supervening events
Granting arguendo that, as contended by the respondents, the
resolution of the case had already been overtaken by
supervening events as the IRA, including the LGSEF, for 1999,
2000 and 2001, had already been released and the
government is now operating under a new appropriations law,
still, there is compelling reason for this Court to resolve the
substantive issue raised by the instant petition. Supervening
events, whether intended or accidental, cannot prevent the
Court from rendering a decision if there is a grave violation of
the Constitution.[13] Even in cases where supervening events
had made the cases moot, the Court did not hesitate to resolve
the legal or constitutional issues raised to formulate controlling
principles to guide the bench, bar and public.[14]
Another reason justifying the resolution by this Court of the
substantive issue now before it is the rule that courts will
decide a question otherwise moot and academic if it is capable
of repetition, yet evading review.[15] For the GAAs in the
coming years may contain provisos similar to those now being
sought to be invalidated, and yet, the question may not be
decided before another GAA is enacted. It, thus, behooves this
Court to make a categorical ruling on the substantive issue
now.
Substantive Issue
As earlier intimated, the resolution of the substantive legal
issue in this case calls for the application of a most important
constitutional policy and principle, that of local autonomy.[16]
In Article II of the Constitution, the State has expressly adopted
as a policy that:
Section 25. The State shall ensure the autonomy of local
governments.
An entire article (Article X) of the Constitution has been
devoted to guaranteeing and promoting the autonomy of
LGUs. Section 2 thereof reiterates the State policy in this wise:
Section 2. The territorial and political subdivisions shall enjoy
local autonomy.
Consistent with the principle of local autonomy, the
Constitution confines the Presidents power over the LGUs to
one of general supervision.[17] This provision has been
interpreted to exclude the power of control. The distinction
between the two powers was enunciated in Drilon v. Lim:[18]
An officer in control lays down the rules in the doing of an act.
If they are not followed, he may, in his discretion, order the act
undone or re-done by his subordinate or he may even decide
to do it himself. Supervision does not cover such authority. The
supervisor or superintendent merely sees to it that the rules
are followed, but he himself does not lay down such rules, nor
does he have the discretion to modify or replace them. If the
rules are not observed, he may order the work done or re-done
but only to conform to the prescribed rules. He may not
prescribe his own manner for doing the act. He has no
judgment on this matter except to see to it that the rules are
followed.[19]
The Local Government Code of 1991[20] was enacted to flesh
out the mandate of the Constitution.[21] The State policy on
local autonomy is amplified in Section 2 thereof:
Sec. 2. Declaration of Policy. (a) It is hereby declared the
policy of the State that the territorial and political subdivisions
of the State shall enjoy genuine and meaningful local
autonomy to enable them to attain their fullest development as
self-reliant communities and make them more effective
partners in the attainment of national goals. Toward this end,
the State shall provide for a more responsive and accountable
local government structure instituted through a system of
decentralization whereby local government units shall be given
more powers, authority, responsibilities, and resources. The
process of decentralization shall proceed from the National
Government to the local government units.
Guided by these precepts, the Court shall now determine
whether the assailed provisos in the GAAs of 1999, 2000 and
2001, earmarking for each corresponding year the amount of
five billion pesos of the IRA for the LGSEF and the OCD
resolutions promulgated pursuant thereto, transgress the
Constitution and the Local Government Code of 1991.
The assailed provisos in the GAAs of 1999, 2000 and 2001
and the OCD resolutions violate the constitutional precept on
local autonomy
Section 6, Article X of the Constitution reads:
Sec. 6. Local government units shall have a just share, as
determined by law, in the national taxes which shall be
automatically released to them.
When parsed, it would be readily seen that this provision
mandates that (1) the LGUs shall have a just share in the
national taxes; (2) the just share shall be determined by law;
and (3) the just share shall be automatically released to the
LGUs.
The Local Government Code of 1991, among its salient
provisions, underscores the automatic release of the LGUs just
share in this wise:
Sec. 18. Power to Generate and Apply Resources. Local
government units shall have the power and authority to
establish an organization that shall be responsible for the
efficient and effective implementation of their development
plans, program objectives and priorities; to create their own
sources of revenue and to levy taxes, fees, and charges which
shall accrue exclusively for their use and disposition and which
shall be retained by them; to have a just share in national taxes
which shall be automatically and directly released to them
without need of further action;
...
Sec. 286. Automatic Release of Shares. (a) The share of each
local government unit shall be released, without need of any
further action, directly to the provincial, city, municipal or
barangay treasurer, as the case may be, on a quarterly basis
within five (5) days after the end of each quarter, and which
shall not be subject to any lien or holdback that may be
imposed by the national government for whatever purpose.
(b) Nothing in this Chapter shall be understood to diminish the
share of local government units under existing laws.
Websters Third New International Dictionary defines automatic
as involuntary either wholly or to a major extent so that any
activity of the will is largely negligible; of a reflex nature;
without volition; mechanical; like or suggestive of an
automaton. Further, the word automatically is defined as in an
automatic manner: without thought or conscious intention.
Being automatic, thus, connotes something mechanical,
spontaneous and perfunctory. As such, the LGUs are not
required to perform any act to receive the just share accruing
to them from the national coffers. As emphasized by the Local
Government Code of 1991, the just share of the LGUs shall be
released to them without need of further action. Construing
Section 286 of the LGC, we held in Pimentel, Jr. v. Aguirre,[22]
viz:
Section 4 of AO 372 cannot, however, be upheld. A basic
feature of local fiscal autonomy is the automatic release of the
shares of LGUs in the National internal revenue. This is
mandated by no less than the Constitution. The Local
Government Code specifies further that the release shall be
made directly to the LGU concerned within five (5) days after
every quarter of the year and shall not be subject to any lien or
holdback that may be imposed by the national government for
whatever purpose. As a rule, the term SHALL is a word of
command that must be given a compulsory meaning. The
provision is, therefore, IMPERATIVE.
Section 4 of AO 372, however, orders the withholding, effective
January 1, 1998, of 10 percent of the LGUs IRA pending the
assessment and evaluation by the Development Budget
Coordinating Committee of the emerging fiscal situation in the
country. Such withholding clearly contravenes the Constitution
and the law. Although temporary, it is equivalent to a holdback,
which means something held back or withheld, often
temporarily. Hence, the temporary nature of the retention by
the national government does not matter. Any retention is
prohibited.

In sum, while Section 1 of AO 372 may be upheld as an
advisory effected in times of national crisis, Section 4 thereof
has no color of validity at all. The latter provision effectively
encroaches on the fiscal autonomy of local governments.
Concededly, the President was well-intentioned in issuing his
Order to withhold the LGUs IRA, but the rule of law requires
that even the best intentions must be carried out within the
parameters of the Constitution and the law. Verily, laudable
purposes must be carried out by legal methods.[23]
The just share of the LGUs is incorporated as the IRA in the
appropriations law or GAA enacted by Congress annually.
Under the assailed provisos in the GAAs of 1999, 2000 and
2001, a portion of the IRA in the amount of five billion pesos
was earmarked for the LGSEF, and these provisos imposed
the condition that such amount shall be released to the local
government units subject to the implementing rules and
regulations, including such mechanisms and guidelines for the
equitable allocations and distribution of said fund among local
government units subject to the guidelines that may be
prescribed by the Oversight Committee on Devolution.
Pursuant thereto, the Oversight Committee, through the
assailed OCD resolutions, apportioned the five billion pesos
LGSEF such that:
For 1999
P2 billion - allocated according to Sec. 285 LGC
P2 billion - Modified Sharing Formula (Provinces 40%;
Cities 20%; Municipalities 40%)
P1 billion projects (LAAP) approved by OCD.[24]
For 2000
P3.5 billion Modified Sharing Formula (Provinces 26%;
Cities 23%; Municipalities 35%; Barangays 16%);
P1.5 billion projects (LAAP) approved by the OCD.[25]
For 2001
P3 billion Modified Sharing Formula (Provinces 25%;
Cities 25%; Municipalities 35%; Barangays 15%)
P1.9 billion priority projectsP100 million capability building
fund.[26]
Significantly, the LGSEF could not be released to the LGUs
without the Oversight Committees prior approval. Further, with
respect to the portion of the LGSEF allocated for various
projects of the LGUs (P1 billion for 1999; P1.5 billion for 2000
and P2 billion for 2001), the Oversight Committee, through the
assailed OCD resolutions, laid down guidelines and
mechanisms that the LGUs had to comply with before they
could avail of funds from this portion of the LGSEF. The
guidelines required (a) the LGUs to identify the projects eligible
for funding based on the criteria laid down by the Oversight
Committee; (b) the LGUs to submit their project proposals to
the DILG for appraisal; (c) the project proposals that passed
the appraisal of the DILG to be submitted to the Oversight
Committee for review, evaluation and approval. It was only
upon approval thereof that the Oversight Committee would
direct the DBM to release the funds for the projects.
To the Courts mind, the entire process involving the distribution
and release of the LGSEF is constitutionally impermissible.
The LGSEF is part of the IRA or just share of the LGUs in the
national taxes. To subject its distribution and release to the
vagaries of the implementing rules and regulations, including
the guidelines and mechanisms unilaterally prescribed by the
Oversight Committee from time to time, as sanctioned by the
assailed provisos in the GAAs of 1999, 2000 and 2001 and the
OCD resolutions, makes the release not automatic, a flagrant
violation of the constitutional and statutory mandate that the
just share of the LGUs shall be automatically released to them.
The LGUs are, thus, placed at the mercy of the Oversight
Committee.
Where the law, the Constitution in this case, is clear and
unambiguous, it must be taken to mean exactly what it says,
and courts have no choice but to see to it that the mandate is
obeyed.[27] Moreover, as correctly posited by the petitioner,
the use of the word shall connotes a mandatory order. Its use
in a statute denotes an imperative obligation and is
inconsistent with the idea of discretion.[28]
Indeed, the Oversight Committee exercising discretion, even
control, over the distribution and release of a portion of the
IRA, the LGSEF, is an anathema to and subversive of the
principle of local autonomy as embodied in the Constitution.
Moreover, it finds no statutory basis at all as the Oversight
Committee was created merely to formulate the rules and
regulations for the efficient and effective implementation of the
Local Government Code of 1991 to ensure compliance with the
principles of local autonomy as defined under the
Constitution.[29] In fact, its creation was placed under the title
of Transitory Provisions, signifying its ad hoc character.
According to Senator Aquilino Q. Pimentel, the principal author
and sponsor of the bill that eventually became Rep. Act No.
7160, the Committees work was supposed to be done a year
from the approval of the Code, or on October 10, 1992.[30]
The Oversight Committees authority is undoubtedly limited to
the implementation of the Local Government Code of 1991, not
to supplant or subvert the same. Neither can it exercise control
over the IRA, or even a portion thereof, of the LGUs.
That the automatic release of the IRA was precisely intended
to guarantee and promote local autonomy can be gleaned from
the discussion below between Messrs. Jose N. Nolledo and
Regalado M. Maambong, then members of the 1986
Constitutional Commission, to wit:
MR. MAAMBONG. Unfortunately, under Section 198 of the
Local Government Code, the existence of subprovinces is still
acknowledged by the law, but the statement of the Gentleman
on this point will have to be taken up probably by the
Committee on Legislation. A second point, Mr. Presiding
Officer, is that under Article 2, Section 10 of the 1973
Constitution, we have a provision which states:
The State shall guarantee and promote the autonomy of local
government units, especially the barrio, to insure their fullest
development as self-reliant communities.
This provision no longer appears in the present configuration;
does this mean that the concept of giving local autonomy to
local governments is no longer adopted as far as this Article is
concerned?
MR. NOLLEDO. No. In the report of the Committee on
Preamble, National Territory, and Declaration of Principles,
that concept is included and widened upon the initiative of
Commissioner Bennagen.
MR. MAAMBONG. Thank you for that.
With regard to Section 6, sources of revenue, the creation of
sources as provided by previous law was subject to limitations
as may be provided by law, but now, we are using the term
subject to such guidelines as may be fixed by law. In Section 7,
mention is made about the unique, distinct and exclusive
charges and contributions, and in Section 8, we talk about
exclusivity of local taxes and the share in the national wealth.
Incidentally, I was one of the authors of this provision, and I am
very thankful. Does this indicate local autonomy, or was the
wording of the law changed to give more autonomy to the local
government units?[31]
MR. NOLLEDO. Yes. In effect, those words indicate also
decentralization because local political units can collect taxes,
fees and charges subject merely to guidelines, as
recommended by the league of governors and city mayors,
with whom I had a dialogue for almost two hours. They told me
that limitations may be questionable in the sense that
Congress may limit and in effect deny the right later on.
MR. MAAMBONG. Also, this provision on automatic release of
national tax share points to more local autonomy. Is this the
intention?
MR. NOLLEDO. Yes, the Commissioner is perfectly right.[32]
The concept of local autonomy was explained in Ganzon v.
Court of Appeals[33] in this wise:
As the Constitution itself declares, local autonomy means a
more responsive and accountable local government structure
instituted through a system of decentralization. The
Constitution, as we observed, does nothing more than to break
up the monopoly of the national government over the affairs of
local governments and as put by political adherents, to liberate
the local governments from the imperialism of Manila.
Autonomy, however, is not meant to end the relation of
partnership and interdependence between the central
administration and local government units, or otherwise, to
usher in a regime of federalism. The Charter has not taken
such a radical step. Local governments, under the Constitution,
are subject to regulation, however limited, and for no other
purpose than precisely, albeit paradoxically, to enhance self-
government.
As we observed in one case, decentralization means
devolution of national administration but not power to the local
levels. Thus:
Now, 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. The President exercises general
supervision over them, but only to ensure that local affairs are
administered according to law. He has no control over their
acts in the sense that he can substitute their judgments with
his own.
Decentralization of power, on the other hand, involves an
abdication of political power in the [sic] favor of local
governments [sic] units declared 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 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.[34]
Local autonomy includes both administrative and fiscal
autonomy. The fairly recent case of Pimentel v. Aguirre[35] is
particularly instructive. The Court declared therein that local
fiscal autonomy includes the power of the LGUs to, inter alia,
allocate their resources in accordance with their own priorities:
Under existing law, local government units, in addition to
having administrative autonomy in the exercise of their
functions, enjoy fiscal autonomy as well. Fiscal autonomy
means that local governments have the power to create their
own sources of revenue in addition to their equitable share in
the national taxes released by the national government, as well
as the power to allocate their resources in accordance with
their own priorities. It extends to the preparation of their
budgets, and local officials in turn have to work within the
constraints thereof. They are not formulated at the national
level and imposed on local governments, whether they are
relevant to local needs and resources or not ...[36]
Further, a basic feature of local fiscal autonomy is the
constitutionally mandated automatic release of the shares of
LGUs in the national internal revenue.[37]
Following this ratiocination, the Court in Pimentel struck down
as unconstitutional Section 4 of Administrative Order (A.O.)
No. 372 which ordered the withholding, effective January 1,
1998, of ten percent of the LGUs IRA pending the assessment
and evaluation by the Development Budget Coordinating
Committee of the emerging fiscal situation.
In like manner, the assailed provisos in the GAAs of 1999,
2000 and 2001, and the OCD resolutions constitute a
withholding of a portion of the IRA. They put on hold the
distribution and release of the five billion pesos LGSEF and
subject the same to the implementing rules and regulations,
including the guidelines and mechanisms prescribed by the
Oversight Committee from time to time. Like Section 4 of A.O.
372, the assailed provisos in the GAAs of 1999, 2000 and
2001 and the OCD resolutions effectively encroach on the
fiscal autonomy enjoyed by the LGUs and must be struck
down. They cannot, therefore, be upheld.
The assailed provisos in the GAAs of 1999, 2000
and 2001 and the OCD resolutions cannot amend
Section 285 of the Local Government Code of 1991
Section 284[38] of the Local Government Code provides that,
beginning the third year of its effectivity, the LGUs share in the
national internal revenue taxes shall be 40%. This percentage
is fixed and may not be reduced except in the event the
national government incurs an unmanageable public sector
deficit" and only upon compliance with stringent requirements
set forth in the same section:
Sec. 284. ...
Provided, That in the event that the national government incurs
an unmanageable public sector deficit, the President of the
Philippines is hereby authorized, upon recommendation of
Secretary of Finance, Secretary of Interior and Local
Government and Secretary of Budget and Management, and
subject to consultation with the presiding officers of both
Houses of Congress and the presidents of the liga, to make the
necessary adjustments in the internal revenue allotment of
local government units but in no case shall the allotment be
less than thirty percent (30%) of the collection of the national
internal revenue taxes of the third fiscal year preceding the
current fiscal year; Provided, further That in the first year of the
effectivity of this Code, the local government units shall, in
addition to the thirty percent (30%) internal revenue allotment
which shall include the cost of devolved functions for essential
public services, be entitled to receive the amount equivalent to
the cost of devolved personnel services.
Thus, from the above provision, the only possible exception to
the mandatory automatic release of the LGUs IRA is if the
national internal revenue collections for the current fiscal year
is less than 40 percent of the collections of the preceding third
fiscal year, in which case what should be automatically
released shall be a proportionate amount of the collections for
the current fiscal year. The adjustment may even be made on
a quarterly basis depending on the actual collections of
national internal revenue taxes for the quarter of the current
fiscal year. In the instant case, however, there is no allegation
that the national internal revenue tax collections for the fiscal
years 1999, 2000 and 2001 have fallen compared to the
preceding three fiscal years.
Section 285 then specifies how the IRA shall be allocated
among the LGUs:
Sec. 285. Allocation to Local Government Units. The share of
local government units in the internal revenue allotment shall
be allocated in the following manner:
(a) Provinces Twenty-three (23%)
(b) Cities Twenty-three percent (23%);
(c) Municipalities Thirty-four (34%); and
(d) Barangays Twenty percent (20%).
However, this percentage sharing is not followed with respect
to the five billion pesos LGSEF as the assailed OCD
resolutions, implementing the assailed provisos in the GAAs of
1999, 2000 and 2001, provided for a different sharing scheme.
For example, for 1999, P2 billion of the LGSEF was allocated
as follows: Provinces 40%; Cities 20%; Municipalities 40%.[39]
For 2000, P3.5 billion of the LGSEF was allocated in this
manner: Provinces 26%; Cities 23%; Municipalities 35%;
Barangays 26%.[40] For 2001, P3 billion of the LGSEF was
allocated, thus: Provinces 25%; Cities 25%; Municipalities
35%; Barangays 15%.[41]
The respondents argue that this modification is allowed since
the Constitution does not specify that the just share of the
LGUs shall only be determined by the Local Government Code
of 1991. That it is within the power of Congress to enact other
laws, including the GAAs, to increase or decrease the just
share of the LGUs. This contention is untenable. The Local
Government Code of 1991 is a substantive law. And while it is
conceded that Congress may amend any of the provisions
therein, it may not do so through appropriations laws or GAAs.
Any amendment to the Local Government Code of 1991
should be done in a separate law, not in the appropriations
law, because Congress cannot include in a general
appropriation bill matters that should be more properly enacted
in a separate legislation.[42]
A general appropriations bill is a special type of legislation,
whose content is limited to specified sums of money dedicated
to a specific purpose or a separate fiscal unit.[43] Any
provision therein which is intended to amend another law is
considered an inappropriate provision. The category of
inappropriate provisions includes unconstitutional provisions
and provisions which are intended to amend other laws,
because clearly these kinds of laws have no place in an
appropriations bill.[44]
Increasing or decreasing the IRA of the LGUs or modifying
their percentage sharing therein, which are fixed in the Local
Government Code of 1991, are matters of general and
substantive law. To permit Congress to undertake these
amendments through the GAAs, as the respondents contend,
would be to give Congress the unbridled authority to unduly
infringe the fiscal autonomy of the LGUs, and thus put the
same in jeopardy every year. This, the Court cannot sanction.
It is relevant to point out at this juncture that, unlike those of
1999, 2000 and 2001, the GAAs of 2002 and 2003 do not
contain provisos similar to the herein assailed provisos. In
other words, the GAAs of 2002 and 2003 have not earmarked
any amount of the IRA for the LGSEF. Congress had perhaps
seen fit to discontinue the practice as it recognizes its infirmity.
Nonetheless, as earlier mentioned, this Court has deemed it
necessary to make a definitive ruling on the matter in order to
prevent its recurrence in future appropriations laws and that
the principles enunciated herein would serve to guide the
bench, bar and public.
Conclusion
In closing, it is well to note that the principle of local autonomy,
while concededly expounded in greater detail in the present
Constitution, dates back to the turn of the century when
President William McKinley, in his Instructions to the Second
Philippine Commission dated April 7, 1900, ordered the new
Government to devote their attention in the first instance to the
establishment of municipal governments in which the natives of
the Islands, both in the cities and in the rural communities,
shall be afforded the opportunity to manage their own affairs to
the fullest extent of which they are capable, and subject to the
least degree of supervision and control in which a careful study
of their capacities and observation of the workings of native
control show to be consistent with the maintenance of law,
order and loyalty.[45] While the 1935 Constitution had no
specific article on local autonomy, nonetheless, it limited the
executive power over local governments to general supervision
... as may be provided by law.[46] Subsequently, the 1973
Constitution explicitly stated that [t]he State shall guarantee
and promote the autonomy of local government units,
especially the barangay to ensure their fullest development as
self-reliant communities.[47] An entire article on Local
Government was incorporated therein. The present
Constitution, as earlier opined, has broadened the principle of
local autonomy. The 14 sections in Article X thereof markedly
increased the powers of the local governments in order to
accomplish the goal of a more meaningful local autonomy.
Indeed, the value of local governments as institutions of
democracy is measured by the degree of autonomy that they
enjoy.[48] As eloquently put by M. De Tocqueville, a
distinguished French political writer, [l]ocal assemblies of
citizens constitute the strength of free nations. Township
meetings are to liberty what primary schools are to science;
they bring it within the peoples reach; they teach men how to
use and enjoy it. A nation may establish a system of free
governments but without the spirit of municipal institutions, it
cannot have the spirit of liberty.[49]
Our national officials should not only comply with the
constitutional provisions on local autonomy but should also
appreciate the spirit and liberty upon which these provisions
are based.[50]
WHEREFORE, the petition is GRANTED. The assailed
provisos in the General Appropriations Acts of 1999, 2000 and
2001, and the assailed OCD Resolutions, are declared
UNCONSTITUTIONAL.
SO ORDERED.
[G.R. No. 144256. June 8, 2005]
ALTERNATIVE CENTER FOR ORGANIZATIONAL
REFORMS AND DEVELOPMENT, INC. (ACORD), BALAY
MINDANAW FOUNDATION, INC. (BMFI); BARRIOS, INC.;
CAMARINES SUR NGO-PO DEVELOPMENT NETWORK,
INC. (CADENET); CENTER FOR PARTICIPATORY
GOVERNANCE (CPAG); ENVIRONMENTAL LEGAL
ASSISTANCE CENTER, INC. (ELAC); FELLOWSHIP FOR
ORGANIZING ENDEAVORS (FORGE); FOUNDATION FOR
LOCAL AUTONOMY AND GOOD GOVERNNANCE, INC.
(FLAGG); INSTITUTE OF POLITICS AND GOVERNANCE
(IPG); KAISAHAN PARA SA KAUNLARAN NG KANAYUNAN
AT REPORMANG PANSAKAHAN (KAISAHAN);
MANGGAGAGAWANG KABABAIHANG MITHI AY PAGLAYA
(MAKALAYA); NAGA CITY PEOPLES COUNCIL (NCPC);
NGO-PO COUNCIL OF CAMARINES SUR FOR COMMUNITY
PARTICIPATION AND EMPOWERMENT, INC. (NPCCS);
PAILIG DEVELOPMENT FOUNDATION INC. (PDFI);
PHILIPPINE ECUMENICAL ACTION FOR COMMUNITY
EMPOWERMENT FOUNDATION, INC. (PEACE
FOUNDATION, INC.); PHILIPPINE PARTNERSHIP FOR THE
DEVELOPMENT OF HUMAN RESOURCES IN RURAL
AREAS (PHILDHRRA); PILIPINA, INC. (ANG KILUSAN NG
KABABAIHANG PILIPINO); SENTRO NG ALTERNATIBONG
LINGAP PANLIGAL (SALIGAN); URBAN LAND REFORM
TASK FORCE (ULR-TF); ADELINO C. LAVADOR; PUNONG
BARANGAY ISABEL MENDEZ; PUNONG BARANGAY
CAROLINA ROMANOS, petitioners, vs. HON. RONALDO
ZAMORA, in his capacity as Executive Secretary, HON.
BENJAMIN DIOKNO, in his capacity as Secretary, Department
of Budget and Management, HON. LEONOR MAGTOLIS-
BRIONES, in her capacity as National Treasurer, and the
COMMISSION ON AUDIT, respondents.
DECISION
CARPIO MORALES, J.:
Pursuant to Section 22, Article VII of the Constitution[1]
mandating the President to submit to Congress a budget of
expenditures within thirty days before the opening of every
regular session, then President Joseph Ejercito Estrada
submitted the National Expenditures Program for Fiscal Year
2000. In the said Program, the President proposed an Internal
Revenue Allotment (IRA) in the amount of P121,778,000,000
following the formula provided for in Section 284 of the Local
Government Code of 1992, viz:
SECTION 284. Allotment of Internal Revenue Taxes. Local
government units shall have a share in the national internal
revenue taxes based on the collection of the third fiscal year
preceding the current fiscal year as follows:
(a) On the first year of the effectivity of this Code, thirty percent
(30%);
(b) On the second year, thirty-five percent (35%); and
(c) On the third year and thereafter, forty percent (40%).
x x x (Emphasis supplied)
On February 16, 2000, the President approved House Bill No.
8374 a bill sponsored in the Senate by then Senator John H.
Osmea who was the Chairman of the Committee on Finance.
This bill became Republic Act No. 8760, AN ACT
APPROPRIATING FUNDS FOR THE OPERATION OF THE
GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES
FROM JANUARY ONE TO DECEMBER THIRTY-ONE, TWO
THOUSAND, AND FOR OTHER PURPOSES.
The act, otherwise known as the General Appropriations Act
(GAA) for the Year 2000, provides under the heading
ALLOCATIONS TO LOCAL GOVERNMENT UNITS that the
IRA for local government units shall amount to
P111,778,000,000:
XXXVII. ALLOCATIONS TO LOCAL
GOVERNMENT UNITS
A. INTERNAL REVENUE ALLOTMENT
For apportionment of the shares of local government units in
the internal revenue taxes in accordance with the purpose
indicated hereunder ... P111,778,000,000
New Appropriations, by Purpose Current Operating
Expenditures Maintenance and Other Personal Operating
Capital Services Expenses Outlays Total
A. PURPOSE(S)
a. Internal Revenue
Allotment P111,778,000,000 P111,778,000,000
xxx
TOTAL NEW
APPROPRIATIONS P111,778,000,000
In another part of the GAA, under the heading
UNPROGRAMMED FUND, it is provided that an amount of
P10,000,000,000 (P10 Billion), apart from the
P111,778,000,000 mentioned above, shall be used to fund the
IRA, which amount shall be released only when the original
revenue targets submitted by the President to Congress can
be realized based on a quarterly assessment to be conducted
by certain committees which the GAA specifies, namely, the
Development Budget Coordinating Committee, the Committee
on Finance of the Senate, and the Committee on
Appropriations of the House of Representatives.
LIV. UNPROGRAMMED FUND
For fund requirements in accordance with the purposes
indicated hereunder P48,681,831,000
A. PURPOSE(S)
xxxx
6. Additional Operational Requirements and Projects of
P14,788,764,000
Agencies
xxxx
Special Provisions
1. Release of the Fund. The amounts herein appropriated shall
be released only when the revenue collections exceed the
original revenue targets submitted by the President of the
Philippines to Congress pursuant to Section 22, Article VII of
the Constitution or when the corresponding funding or receipts
for the purpose have been realized except in the special cases
covered by specific procedures in Special Provision Nos. 2, 3,
4, 5, 7, 8, 9, 13 and 14 herein: PROVIDED, That in cases of
foreign-assisted projects, the existence of a perfected loan
agreement shall be sufficient compliance for the issuance of a
Special Allotment Release Order covering the loan proceeds:
PROVIDED, FURTHER, That no amount of the
Unprogrammed Fund shall be funded out of the savings
generated from programmed items in this Act.
4. Additional Operational Requirements and Projects of
Agencies. The appropriations for Purpose 6 Additional
Operational Requirements and Projects of Agencies herein
indicated shall be released only when the original revenue
targets submitted by the President of the Philippines to
Congress pursuant to Section 22, Article VII of the Constitution
can be realized based on a quarterly assessment of the
Development Budget Coordinating Committee, the Committee
on Finance of the Senate and the Committee on
Appropriations of the House of Representatives and shall be
used to fund the following:
Internal Revenue Allotments Maintenance and
Other Operating Expenses P10,000,000,000
--------------------
Total, IRA P10,000,000,000
xxxx
Total P14,788,764,000
x x x x (Emphasis supplied)
Thus, while the GAA appropriates P111,778,000,000 of IRA as
Programmed Fund, it appropriates a separate amount of P10
Billion of IRA under the classification of Unprogrammed Fund,
the latter amount to be released only upon the occurrence of
the condition stated in the GAA.
On August 22, 2000, a number of non-governmental
organizations (NGOs) and peoples organizations, along with
three barangay officials filed with this Court the petition at bar,
for Certiorari, Prohibition and Mandamus With Application for
Temporary Restraining Order, against respondents then
Executive Secretary Ronaldo Zamora, then Secretary of the
Department of Budget and Management Benjamin Diokno,
then National Treasurer Leonor Magtolis-Briones, and the
Commission on Audit, challenging the constitutionality of
above-quoted provision of XXXVII (ALLOCATIONS TO LOCAL
GOVERNMENT UNITS) referred to by petitioners as Section 1,
XXXVII (A), and LIV (UNPROGRAMMED FUND) Special
Provisions 1 and 4 of the GAA (the GAA provisions).
Petitioners contend that:
1. SECTION 1, XXXVII (A) AND LIV, SPECIAL PROVISIONS
1 AND 4, OF THE YEAR 2000 GAA ARE NULL AND VOID
FOR BEING UNCONSTITUTIONAL AS THEY VIOLATE THE
AUTONOMY OF LOCAL GOVERNMENTS BY UNLAWFULLY
REDUCING BY TEN BILLION PESOS (P10 BILLION) THE
INTERNAL REVENUE ALLOTMENTS DUE TO THE LOCAL
GOVERNMENTS AND WITHHOLDING THE RELEASE OF
SUCH AMOUNT BY PLACING THE SAME UNDER
UNPROGRAMMED FUNDS. THIS VIOLATES THE
CONSTITUTIONAL MANDATE IN ART. X, SEC. 6, THAT THE
LOCAL GOVERNMENT UNITS JUST SHARE IN THE
NATIONAL TAXES SHALL BE AUTOMATICALLY RELEASED
TO THEM. IT ALSO VIOLATES THE LOCAL GOVERNMENT
CODE, SPECIFICALLY, SECS. 18, 284, AND 286.
2. SECTION 1, XXXVII (A) AND LIV, SPECIAL PROVISIONS
1 AND 4, OF THE YEAR 2000 GAA ARE NULL AND VOID
FOR BEING UNCONSTITUTIONAL AS THEY VIOLATE THE
AUTONOMY OF LOCAL GOVERNMENTS BY PLACING TEN
BILLION PESOS (P10 BILLION) OF THE INTERNAL
REVENUE ALLOTMENTS DUE TO THE LOCAL
GOVERNMENTS, EFFECTIVELY AND PRACTICALLY,
WITHIN THE CONTROL OF THE CENTRAL AUTHORITIES.
3. SECTION 1, XXXVII (A) AND LIV, SPECIAL PROVISIONS
1 AND 4, OF THE YEAR 2000 GAA ARE NULL AND VOID
FOR BEING UNCONSTITUTIONAL AS THE PLACING OF
P10 BILLION PESOS OF THE IRA UNDER
UNPROGRAMMED FUNDS CONSTITUTES AN UNDUE
DELEGATION OF LEGISLATIVE POWER TO THE
RESPONDENTS.
4. SECTION 1, XXXVII (A) AND LIV, SPECIAL PROVISIONS
1 AND 4, OF THE YEAR 2000 GAA ARE NULL AND VOID
FOR BEING UNCONSTITUTIONAL AS THE PLACING OF
P10 BILLION PESOS OF THE IRA UNDER
UNPROGRAMMED FUNDS CONSTITUTES AN
AMENDMENT OF THE LOCAL GOVERNMENT CODE OF
1991, WHICH CANNOT BE DONE IN A GENERAL
APPROPRIATIONS ACT AND WHICH PURPOSE WAS NOT
REFLECTED IN THE TITLE OF THE YEAR 2000 GAA.
5. THE YEAR 2000 GAAS REDUCTION OF THE IRA
UNDERMINES THE FOUNDATION OF OUR LOCAL
GOVERNANCE SYSTEM WHICH IS ESSENTIAL TO THE
EFFICIENT OPERATION OF THE GOVERNMENT AND THE
DEVELOPMENT OF THE NATION.
6. THE CONGRESS AND THE EXECUTIVE, IN PASSING
AND APPROVING, RESPECTIVELY, THE YEAR 2000 GAA,
AND THE RESPONDENTS, IN IMPLEMENTING THE SAID
YEAR 2000 GAA, INSOFAR AS SECTION 1, XXXVII (A) AND
LIV, SPECIAL PROVISIONS 1 AND 4, ARE CONCERNED,
ACTED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION AS
THEY TRANSGRESSED THE CONSTITUTION AND THE
LOCAL GOVERNMENT CODES PROHIBITION ON ANY
INVALID REDUCTION AND WITHHOLDING OF THE LOCAL
GOVERNMENTS IRA. (Underscoring supplied)
After the parties had filed their respective memoranda, a
MOTION FOR INTERVENTION/MOTION TO ADMIT
ATTACHED PETITION FOR INTERVENTION was filed on
October 22, 2001 by the Province of Batangas, represented by
then Governor Hermilando I. Mandanas.
On November 6, 2001, the Province of Nueva Ecija,
represented by Governor Tomas N. Joson III, likewise filed a
MOTION FOR LEAVE OF COURT TO INTERVENE AND FILE
PETITION-IN-INTERVENTION.
The motions for intervention, both of which adopted the
arguments of the main petition,[2] were granted by this
Court.[3]
Although the effectivity of the Year 2000 GAA has ceased, this
Court shall nonetheless proceed to resolve the issues raised in
the present case, it being impressed with public interest. The
ruling of this Court in the case of The Province of Batangas v.
Romulo,[4] wherein GAA provisions relating to the IRA were
likewise challenged, is in point, to wit:
Granting arguendo that, as contended by the respondents, the
resolution of the case had already been overtaken by
supervening events as the IRA, including the LGSEF, for 1999,
2000 and 2001, had already been released and the
government is now operating under a new appropriations law,
still, there is compelling reason for this Court to resolve the
substantive issue raised by the instant petition. Supervening
events, whether intended or accidental, cannot prevent the
Court from rendering a decision if there is a grave violation of
the Constitution. Even in cases where supervening events had
made the cases moot, the Court did not hesitate to resolve the
legal or constitutional issues raised to formulate controlling
principles to guide the bench, bar and public.
Another reason justifying the resolution by this Court of the
substantive issue now before it is the rule that courts will
decide a question otherwise moot and academic if it is capable
of repetition, yet evading review. For the GAAs in the coming
years may contain provisos similar to those now being sought
to be invalidated, and yet, the question may not be decided
before another GAA is enacted. It, thus, behooves this Court to
make a categorical ruling on the substantive issue now.[5]
Passing on the arguments of all parties, bearing in mind the
dictum that the court should not form a rule of constitutional
law broader than is required by the precise facts to which it is
applied,[6] this Court finds that only the following issues need
to be resolved in the present petition: (1) whether the petition
contains proper verifications and certifications against forum-
shopping, (2) whether petitioners have the requisite standing to
file this suit, and (3) whether the questioned provisions violate
the constitutional injunction that the just share of local
governments in the national taxes or the IRA shall be
automatically released.
Sufficiency of Verification and Certification Against Forum-
Shopping
Respondents assail as improperly executed petitioners
verifications and certifications against forum-shopping as they
merely state that the allegations of the Petition are true of our
knowledge and belief instead of true and correct of our
personal knowledge or based on authentic records as required
under Rule 7, Section 4 of the Rules of Court.[7]
Jurisprudence is on petitioners side. In Decano v. Edu,[8] this
Court held:
Respondents finally raise a technical point referring to the
allegedly defective verification of the petition filed in the trial
court, contending that the clause in the verification statement
"that I have read the contents of the said petition; and that [to]
the best of my knowledge are true and correct" is insufficient
since under section 6 of Rule 7, it is required that the person
verifying must have read the pleading and that the allegations
thereof are true of his own knowledge. We do not see any
reason for rendering the said verification void. The statement
to the best of my knowledge are true and correct referring to
the allegations in the petition does not mean mere knowledge,
information and belief. It constitutes substantial compliance
with the requirement of section 6 of Rule 7, as held in Madrigal
vs. Rodas (80 Phil. 252.). At any rate, this petty technicality
deserves scant consideration where the question at issue is
one purely of law and there is no need of delving into the
veracity of the allegations in the petition, which are not
disputed at all by respondents. As we have held time and
again, imperfections of form and technicalities of procedure are
to be disregarded except where substantial rights would
otherwise be prejudiced. (Emphasis and underscoring
supplied)
Respondents go on to claim that the same verifications were
signed by persons who were not authorized by the
incorporated cause-oriented groups which they claim to
represent, hence, the Petition should be treated as an
unsigned pleading.
Indeed, only duly authorized natural persons may execute
verifications in behalf of juridical entities such as petitioners
NGOs and peoples organizations. As this Court held in Santos
v. CA, In fact, physical actions, e.g., signing and delivery of
documents, may be performed on behalf of the corporate entity
only by specifically authorized individuals.[9]
Nonetheless, the present petition cannot be treated as an
unsigned pleading. For even if the rule that representatives of
corporate entities must present the requisite authorization were
to be strictly applied, there would remain among the multi-
group-petitioners the individuals who validly executed
verifications in their own names, namely, petitioners Adelino C.
Lavador, Punong Barangay Isabel Mendez, and Punong
Barangay Carolina Romanos.
At all events, in light of the following ruling of this Court in
Shipside Inc. v. CA:[10]
. . . in Loyola, Roadway, and Uy, the Court excused non-
compliance with the requirement as to the certificate of non-
forum shopping. With more reason should we allow the instant
petition since petitioner herein did submit a certification on non-
forum shopping, failing only to show proof that the signatory
was authorized to do so. That petitioner subsequently
submitted a secretarys certificate attesting that Balbin was
authorized to file an action on behalf of petitioner likewise
mitigates this oversight.
It must also be kept in mind that while the requirement of the
certificate of non-forum shopping is mandatory, nonetheless
the requirements must not be interpreted too literally and thus
defeat the objective of preventing the undesirable practice of
forum-shopping (Bernardo v. NLRC, 255 SCRA 108 [1996]).
Lastly, technical rules of procedure should be used to promote,
not frustrate justice. While the swift unclogging of court dockets
is a laudable objective, the granting of substantial justice is an
even more urgent ideal. (Underscoring supplied),
a too literal interpretation must be avoided if it defeats the
objective of preventing the practice of forum shopping.
Standing
Respondents assail petitioners standing in this controversy,
proffering that it is the local government units each having a
separate juridical entity which stand to be injured.
The subsequent intervention of the provinces of Batangas and
Nueva Ecija which have adopted the arguments of petitioners
has, however, made the question of standing academic.[11]
Respondents, contending that petitioners have no cause of
action against them as they claim to have no responsibility with
respect to the mandate of the GAA provisions, proffer that the
committees mentioned in the GAA provisions, namely, the
Development Budget Coordinating Committee, Committee on
Finance of the Senate, and Committee on Appropriations of
the House of Representatives, should instead have been
impleaded.
Respondents position does not lie.
The GAA provisions being challenged were not to be
implemented solely by the committees specifically mentioned
therein, for they being in the nature of appropriations
provisions, they were also to be implemented by the executive
branch, particularly the Department of Budget and
Management (DBM) and the National Treasurer. The task of
the committees related merely to the conduct of the quarterly
assessment required in the provisions, and not in the actual
release of the IRA which is the duty of the executive. Since the
present controversy centers on the proper manner of releasing
the IRA, the impleaded respondents are the proper parties to
this suit.
In fact in earlier petitions likewise involving the constitutionality
of provisions of previous general appropriations acts which this
Court granted, the therein respondent officials were the same
as those in the present case, e.g., Guingona v. Carague[12]
and PHILCONSA v. Enriquez.[13]
Constitutionality of the GAA Provisions
Article X, Section 6 of the Constitution provides:
SECTION 6. Local government units shall have a just share,
as determined by law, in the national taxes which shall be
automatically released to them.
Petitioners argue that the GAA violated this constitutional
mandate when it made the release of IRA contingent on
whether revenue collections could meet the revenue targets
originally submitted by the President, rather than making the
release automatic.
Respondents counterargue that the above constitutional
provision is addressed not to the legislature but to the
executive, hence, the same does not prevent the legislature
from imposing conditions upon the release of the IRA. They
cite the exchange between Commissioner (now Chief Justice)
Davide and Commissioner Nolledo in the deliberations of the
Constitutional Commission on the above-quoted Sec. 6, Art. X
of the Constitution, to wit:
THE PRESIDENT. How about the second sentence?
MR. DAVIDE. The second sentence would be a new section
that would be Section 13. As modified it will read as follows:
LOCAL GOVERNMENT UNITS SHALL HAVE A JUST
SHARE, AS DETERMINED BY LAW, in the national taxes
WHICH SHALL BE automatically PERIODICALLY released to
them.
MR. NOLLEDO. That will be Section 12, subsection (1) in the
amendment.
MR. DAVIDE. No, we will just delete that because the second
would be another section so Section 12 would only be this:
LOCAL GOVERNMENT UNITS SHALL HAVE A JUST
SHARE, AS DETERMINED BY LAW, in the national taxes
WHICH SHALL BE automatically PERIODICALLY released to
them.
MR. NOLLEDO. But the word PERIODICALLY may mean
possibly withholding the automatic release to them by adopting
certain periods of automatic release. If we use the word
automatically without PERIODICALLY, the latter may be
already contemplated by automatically. So, the Committee
objects to the word PERIODICALLY.
MR. DAVIDE. If we do not say PERIODICALLY, it might be
very, very difficult to comply with it because these are taxes
collected and actually released by the national government
every quarter. It is not that upon collection a portion should
immediately be released. It is quarterly. Otherwise, the national
government will have to remit everyday and that would be very
expensive.
MR. NOLLEDO. That is not hindered by the word
automatically. But if we put automatically and PERIODICALLY
at the same time, that means certain periods have to be
observed as will be set forth by the Budget Officer thereby
negating the meaning of automatically.
MR. DAVIDE. On the other hand, if we do not state
PERIODICALLY, it may be done every semester; it may be
done at the end of the year. It is still automatic release.
MR. NOLLEDO. As far as the Committee is concerned, we
vigorously object to the word PERIODICALLY.
MR. DAVIDE. Only the word PERIODICALLY?
MR. NOLLEDO. If the Commissioner is amenable to deleting
that, we will accept the amendment.
MR. DAVIDE. I will agree to the deletion of the word
PERIODICALLY.
MR. NOLLEDO. Thank you.
The Committee accepts the amendment. (Emphasis
supplied)[14]
In the above exchange of statements, it is clear that although
Commissioners Davide and Nolledo held different views with
regard to the proper wording of the constitutional provision,
they shared a common assumption that the entity which would
execute the automatic release of internal revenue was the
executive department.
Commissioner Davide referred to the national government as
the entity that collects and remits internal revenue. Similarly,
Commissioner Nolledo alluded to the Budget Officer, who is
clearly under the executive branch.
Respondents thus infer that the subject constitutional provision
merely prevents the executive branch of the government from
unilaterally withholding the IRA, but not the legislature from
authorizing the executive branch to withhold the same. In the
words of respondents, This essentially means that the
President or any member of the Executive Department cannot
unilaterally, i.e., without the backing of statute, withhold the
release of the IRA.[15]
Respondents position does not lie.
As the Constitution lays upon the executive the duty to
automatically release the just share of local governments in the
national taxes, so it enjoins the legislature not to pass laws that
might prevent the executive from performing this duty. To hold
that the executive branch may disregard constitutional
provisions which define its duties, provided it has the backing
of statute, is virtually to make the Constitution amendable by
statute a proposition which is patently absurd.
Moreover, there is merit in the argument of the intervenor
Province of Batangas that, if indeed the framers intended to
allow the enactment of statutes making the release of IRA
conditional instead of automatic, then Article X, Section 6 of
the Constitution would have been worded differently. Instead of
reading Local government units shall have a just share, as
determined by law, in the national taxes which shall be
automatically released to them (italics supplied), it would have
read as follows, so the Province of Batangas posits:
Local government units shall have a just share, as determined
by law, in the national taxes which shall be [automatically]
released to them as provided by law, or,
Local government units shall have a just share in the national
taxes which shall be [automatically] released to them as
provided by law, or
Local government units shall have a just share, as determined
by law, in the national taxes which shall be automatically
released to them subject to exceptions Congress may
provide.[16] (Italics supplied)
Since, under Article X, Section 6 of the Constitution, only the
just share of local governments is qualified by the words as
determined by law, and not the release thereof, the plain
implication is that Congress is not authorized by the
Constitution to hinder or impede the automatic release of the
IRA.
Indeed, that Article X, Section 6 of the Constitution did bind the
legislative just as much as the executive branch was presumed
in the ruling of this Court in the case of The Province of
Batangas v. Romulo[17] which is analogous in many respects
to the one at bar.
In Batangas, the petitioner therein challenged the
constitutionality of certain provisos of the GAAs for FY 1999,
2000, and 2001 which set up the Local Government Service
Equalization Fund (LGSEF). The LGSEF was a portion of the
IRA which was to be released only upon a finding of the
Oversight Committee on Devolution that the LGU concerned
had complied with the guidelines issued by said committee.
This Court measured the challenged legislative acts against
Article X, Section 6 and declared them unconstitutional a ruling
which presupposes that the legislature, like the executive, is
mandated by said constitutional provision to ensure that the
just share of local governments in the national taxes are
automatically released.
Respondents, in further support of their claim that the
automatic release requirement in the Constitution constrains
only the executive branch and not the legislature, cite three
statutory provisions whereby the legislature authorized the
executive branch to withhold the IRA in certain circumstances,
namely, Section 70 of the Philippine National Police Reform
and Reorganization Act of 1998,[18] Section 531(e) of the
Local Government Code,[19] and Section 10 of Republic Act
7924 (1995).[20] Towards the same end, respondents also cite
Rule XXXII, Article 383(c) of the Rules and Regulations
Implementing the Local Government Code.[21]
While statutes and implementing rules are entitled to great
weight in constitutional construction as indicators of
contemporaneous interpretation, such interpretation is not
necessarily binding or conclusive on the courts. In Taada v.
Cuenco, the Court held:
As a consequence, where the meaning of a constitutional
provision is clear, a contemporaneous or practical . . .
executive interpretation thereof is entitled to no weight and will
not be allowed to distort or in any way change its natural
meaning. The reason is that the application of the doctrine of
contemporaneous construction is more restricted as applied to
the interpretation of constitutional provisions than when applied
to statutory provisions, and that except as to matters
committed by the constitution itself to the discretion of some
other department, contemporaneous or practical construction
is not necessarily binding upon the courts, even in a doubtful
case. Hence, if in the judgment of the court, such construction
is erroneous and its further application is not made imperative
by any paramount considerations of public policy, it may be
rejected. (Emphasis and underscoring supplied, citations
omitted)[22]
The validity of the legislative acts assailed in the present case
should, therefore, be assessed in light of Article X, Section 6 of
the Constitution.
Again, in Batangas,[23] this Court interpreted the subject
constitutional provision as follows:
When parsed, it would be readily seen that this provision
mandates that (1) the LGUs shall have a just share in the
national taxes; (2) the just share shall be determined by law;
and (3) the just share shall be automatically released to the
LGUs.
xxx
Websters Third New International Dictionary defines automatic
as involuntary either wholly or to a major extent so that any
activity of the will is largely negligible; of a reflex nature;
without volition; mechanical; like or suggestive of an
automaton. Further, the word automatically is defined as in an
automatic manner: without thought or conscious intention.
Being automatic, thus, connotes something mechanical,
spontaneous and perfunctory. x x x (Emphasis and
underscoring supplied)[24]
Further on, the Court held:
To the Courts mind, the entire process involving the distribution
and release of the LGSEF is constitutionally impermissible.
The LGSEF is part of the IRA or just share of the LGUs in the
national taxes. To subject its distribution and release to the
vagaries of the implementing rules and regulations, including
the guidelines and mechanisms unilaterally prescribed by the
Oversight Committee from time to time, as sanctioned by the
assailed provisos in the GAAs of 1999, 2000 and 2001 and the
OCD resolutions, makes the release not automatic, a flagrant
violation of the constitutional and statutory mandate that the
just share of the LGUs shall be automatically released to them.
The LGUs are, thus, placed at the mercy of the Oversight
Committee.
Where the law, the Constitution in this case, is clear and
unambiguous, it must be taken to mean exactly what it says,
and courts have no choice but to see to it that the mandate is
obeyed. Moreover, as correctly posited by the petitioner, the
use of the word shall connotes a mandatory order. Its use in a
statute denotes an imperative obligation and is inconsistent
with the idea of discretion. x x x (Emphasis and underscoring
supplied)[25]
While automatic release implies that the just share of the local
governments determined by law should be released to them as
a matter of course, the GAA provisions, on the other hand,
withhold its release pending an event which is not even certain
of occurring. To rule that the term automatic release
contemplates such conditional release would be to strip the
term automatic of all meaning.
Additionally, to interpret the term automatic release in such a
broad manner would be inconsistent with the ruling in Pimentel
v. Aguirre.[26] In the said case, the executive withheld the
release of the IRA pending an assessment very similar to the
one provided in the GAA. This Court ruled that such
withholding contravened the constitutional mandate of an
automatic release, viz:
Section 4 of AO 372 cannot, however, be upheld. A basic
feature of local fiscal autonomy is the automatic release of the
shares of LGUs in the national internal revenue. This is
mandated by no less than the Constitution. The Local
Government Code specifies further that the release shall be
made directly to the LGU concerned within five (5) days after
every quarter of the year and shall not be subject to any lien or
holdback that may be imposed by the national government for
whatever purpose. As a rule, the term shall is a word of
command that must be given a compulsory meaning. The
provision is, therefore, imperative.
Section 4 of AO 372, however, orders the withholding, effective
January 1, 1998, of 10 percent of the LGUs' IRA pending the
assessment and evaluation by the Development Budget
Coordinating Committee of the emerging fiscal situation in the
country. Such withholding clearly contravenes the Constitution
and the law. x x x[27] (Italics in the original; underscoring
supplied)
There is no substantial difference between the withholding of
IRA involved in Pimentel and that in the present case, except
that here it is the legislature, not the executive, which has
authorized the withholding of the IRA. The distinction
notwithstanding, the ruling in Pimentel remains applicable. As
explained above, Article X, Section 6 of the Constitution the
same provision relied upon in Pimentel enjoins both the
legislative and executive branches of government. Hence, as
in Pimentel, under the same constitutional provision, the
legislative is barred from withholding the release of the IRA.
It bears stressing, however, that in light of the proviso in
Section 284 of the Local Government Code which reads:
Provided, That in the event that the national government incurs
an unmanageable public sector deficit, the President of the
Philippines is hereby authorized, upon the recommendation of
Secretary of Finance, Secretary of Interior and Local
Government and Secretary of Budget and Management, and
subject to consultation with the presiding officers of both
Houses of Congress and the presidents of the "liga," to make
the necessary adjustments in the internal revenue allotment of
local government units but in no case shall the allotment be
less than thirty percent (30%) of the collection of national
internal revenue taxes of the third fiscal year preceding the
current fiscal year: Provided, further, That in the first year of
the effectivity of this Code, the local government units shall, in
addition to the thirty percent (30%) internal revenue allotment
which shall include the cost of devolved functions for essential
public services, be entitled to receive the amount equivalent to
the cost of devolved personal services. (Underscoring
supplied),
the only possible exception to mandatory automatic release of
the IRA is, as held in Batangas:
if the national internal revenue collections for the current fiscal
year is less than 40 percent of the collections of the preceding
third fiscal year, in which case what should be automatically
released shall be a proportionate amount of the collections for
the current fiscal year. The adjustment may even be made on
a quarterly basis depending on the actual collections of
national internal revenue taxes for the quarter of the current
fiscal year. x x x[28]
A final word. This Court recognizes that the passage of the
GAA provisions by Congress was motivated by the laudable
intent to lower the budget deficit in line with prudent fiscal
management.[29] The pronouncement in Pimentel, however,
must be echoed: [T]he rule of law requires that even the best
intentions must be carried out within the parameters of the
Constitution and the law. Verily, laudable purposes must be
carried out by legal methods.[30]
WHEREFORE, the petition is GRANTED. XXXVII and LIV
Special Provisions 1 and 4 of the Year 2000 GAA are hereby
declared unconstitutional insofar as they set apart a portion of
the IRA, in the amount of P10 Billion, as part of the
UNPROGRAMMED FUND.
SO ORDERED.
G.R. No. 153974 August 7, 2006
MIGUEL BELUSO, NATIVIDAD BELUSO, PEDRO BELUSO,
ANGELITA BELUSO, RAMON BELUSO, and AMADA
DANIEL, substituted by her heirs represented by
TERESITA ARROBANG, Petitioners,
vs.
THE MUNICIPALITY OF PANAY (CAPIZ), represented by its
Mayor, VICENTE B. BERMEJO, Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Before this Court is a petition for review questioning the
Decision 1 of the Court of Appeals (CA) dated March 20, 2002
in CA-G.R. SP No. 47052, as well the Resolution 2 dated June
11, 2002 denying petitioners’ Motion for Reconsideration
thereof.
The facts are as follows:
Petitioners are owners of parcels of land with a total area of
about 20,424 square meters, covered by Free Patent Nos.
7265, 7266, 7267, 7268, 7269, and 7270. 3 On November 8,
1995, the Sangguniang Bayan of the Municipality of Panay
issued Resolution No. 95-29 authorizing the municipal
government through the mayor to initiate expropriation
proceedings. 4 A petition for expropriation was thereafter filed
on April 14, 1997 by the Municipality of Panay (respondent)
before the Regional Trial Court (RTC), Branch 18 of Roxas
City, docketed as Civil Case No. V-6958. 5
Petitioners filed a Motion to Dismiss alleging that the taking is
not for public use but only for the benefit of certain individuals;
that it is politically motivated because petitioners voted against
the incumbent mayor and vice-mayor; and that some of the
supposed beneficiaries of the land sought to be expropriated
have not actually signed a petition asking for the property but
their signatures were forged or they were misled into signing
the same. 6
On July 31, 1997, the trial court denied petitioners’ Motion to
Dismiss and declared that the expropriation in this case is for
"public use" and the respondent has the lawful right to take the
property upon payment of just compensation. 7
Petitioners filed an Answer on August 12, 1997 reasserting the
issues they raised in their Motion to Dismiss. 8
On October 1, 1997, the trial court issued an Order appointing
three persons as Commissioners to ascertain the amount of
just compensation for the property. 9 Petitioners filed a "Motion
to Hold in Abeyance the Hearing of the Court Appointed
Commissioners to Determine Just Compensation and for
Clarification of the Court’s Order dated October 1, 1997" which
was denied by the trial court on November 3, 1997. 10
Petitioners’ Motion for Reconsideration was also denied on
December 9, 1997. 11
Petitioners then filed on March 2, 1998 a Petition for Certiorari
before the CA claiming that they were denied due process
when the trial court declared that the taking was for public
purpose without receiving evidence on petitioners’ claim that
the Mayor of Panay was motivated by politics in expropriating
their property and in denying their Motion to Hold in Abeyance
the Hearing of the Court Appointed Commissioners; and that
the trial court also committed grave abuse of discretion when it
disregarded the affidavits of persons denying that they signed
a petition addressed to the municipal government of Panay. 12
On January 17, 2001, petitioners filed a Motion to Admit
Attached Memorandum and the Memorandum itself where they
argued that based on the Petition for Expropriation filed by
respondent, such expropriation was based only on a resolution
and not on an ordinance contrary to Sec. 19 of Republic Act
(R.A.) No. 7160; there was also no valid and definite offer to
buy the property as the price offered by respondent to the
petitioners was very low. 13
On March 20, 2002, the CA rendered its Decision dismissing
the Petition for Certiorari. It held that the petitioners were not
denied due process as they were able to file an answer to the
complaint and were able to adduce their defenses therein; and
that the purpose of the taking in this case constitutes "public
use". 14 Petitioners filed a Motion for Reconsideration which
was denied on June 11, 2002. 15
Thus, the present petition claiming that:
A. RESPONDENT IS WITHOUT, LACKS AND DOES NOT
HAVE THE LAWFUL POWER TO ACQUIRE ANY OR ALL OF
THE SUBJECT PROPERTIES THROUGH EMINENT
DOMAIN, IT BEING EXERCISED BY MEANS OF A MERE
RESOLUTION, AND NOT THROUGH AN ORDINANCE AS
REQUIRED BY LAW AND APPLICABLE JURISPRUDENCE;
B. RESPONDENT IS LIKEWISE WITHOUT, LACKS AND
DOES NOT HAVE THE LAWFUL POWER TO ACQUIRE ANY
OR ALL OF THE SUBJECT PROPERTIES THROUGH
EMINENT DOMAIN, ITS PREVIOUS OFFER TO BUY THEM
BEING NOT VALID; and
C. IT WAS A SERIOUS ERROR ON THE PART OF THE
HONORABLE COURT OF APPEALS NOT TO DISCUSS,
MUCH LESS RULE ON, BOTH IN ITS QUESTIONED
DECISION AND ITS RESOLUTION PROMULGATED ON 11
JUNE 2002 PETITIONERS’ ARGUMENTS THAT
RESPONDENT IS WITHOUT, LACKS AND DOES NOT HAVE
THE LAWFUL POWER TO ACQUIRE ANY OR ALL OF THE
SUBJECT PROPERTIES THROUGH EMINENT DOMAIN, IT
BEING EXERCISED BY MEANS OF A MERE RESOLUTION,
AND NOT THROUGH AN ORDINANCE AS REQUIRED BY
LAW AND APPLICABLE JURISPRUDENCE, AND ITS
PREVIOUS OFFER TO BUY THEM BEING NOT VALID,
DESPITE THE FACT THAT THESE OBJECTIONS WERE
PROPERLY PLEADED IN PETITIONERS’ MEMORANDUM
WHICH WAS DULY ADMITTED IN ITS RESOLUTION
PROMULGATED ON 29 JANUARY 2001; and
D. PETITIONERS WERE UTTERLY DENIED PROCEDURAL
DUE PROCESS OF LAW BY THE COURT A QUO, WHEN IT
SIMPLY DECLARED IN ITS ORDER DATED 31 JULY 1997
THAT THE TAKING BY RESPONDENT OF PETITIONERS’
PROPERTIES IS PURPORTEDLY FOR PUBLIC PURPOSE
WITHOUT RECEIVING EVIDENCE ON THEIR ASSERTED
CLAIM THAT RESPONDENT’S MUNICIPAL MAYOR WAS
POLITICALLY MOTIVATED IN SEEKING THE
EXPROPRIATION OF THEIR PROPERTIES AND NOT FOR
PUBLIC PURPOSE. 16
Petitioners argue that: contrary to Sec. 19 of R.A. No. 7160 of
the Local Government Code, which provides that a local
government may exercise the power of eminent domain only
by "ordinance," respondent’s expropriation in this case is
based merely on a "resolution"; while objection on this ground
was neither raised by petitioners in their Motion to Dismiss nor
in their Answer, such objection may still be considered by this
Court since the fact upon which it is based is apparent from the
petition for expropriation itself; a defense may be favorably
considered even if not raised in an appropriate pleading so
long as the facts upon which it is based are undisputed; courts
have also adopted a more censorious attitude in resolving
questions involving the proper exercise of local bodies of the
delegated power of expropriation, as compared to instances
when it is directly exercised by the national legislature;
respondent failed to give, prior to the petition for expropriation,
a previous valid and definite offer to petitioners as the amount
offered in this case was only P10.00 per square meter, when
the properties are residential in nature and command a much
higher price; the CA failed to discuss and rule upon the
arguments raised by petitioners in their Memorandum;
attached to the Motion to Dismiss were affidavits and death
certificates showing that there were people whose names were
in the supposed petition asking respondent for land, but who
did not actually sign the same, thus showing that the present
expropriation was not for a public purpose but was merely
politically motivated; considering the conflicting claims
regarding the purpose for which the properties are being
expropriated and inasmuch as said issue may not be rightfully
ruled upon merely on the basis of petitioners’ Motion to
Dismiss and Answer as well as respondent’s Petition for
Expropriation, what should have been done was for the RTC to
conduct hearing where each party is given ample opportunity
to prove its claim. 17
Respondent for its part contends that its power to acquire
private property for public use upon payment of just
compensation was correctly upheld by the trial court; that the
CA was correct in finding that the petitioners were not denied
due process, even though no hearing was conducted in the
trial court, as petitioners were still able to adduce their
objections and defenses therein; and that petitioners’
arguments have been passed upon by both the trial court and
the CA and were all denied for lack of substantial merit. 18

Respondent filed a Memorandum quoting at length the
decision of the CA to support its position. 19 Petitioners
meanwhile opted to have the case resolved based on the
pleadings already filed. 20
We find the petition to be impressed with merit.
Eminent domain, which is the power of a sovereign state to
appropriate private property to particular uses to promote
public welfare, is essentially lodged in the legislature. 21 While
such power may be validly delegated to local government units
(LGUs), other public entities and public utilities the exercise of
such power by the delegated entities is not absolute. 22 In fact,
the scope of delegated legislative power is narrower than that
of the delegating authority and such entities may exercise the
power to expropriate private property only when authorized by
Congress and subject to its control and restraints imposed
through the law conferring the power or in other legislations. 23
Indeed, LGUs by themselves have no inherent power of
eminent domain. 24 Thus, strictly speaking, the power of
eminent domain delegated to an LGU is in reality not eminent
but "inferior" since it must conform to the limits imposed by the
delegation and thus partakes only of a share in eminent
domain. 25 The national legislature is still the principal of the
LGUs and the latter cannot go against the principal’s will or
modify the same. 26
The exercise of the power of eminent domain necessarily
involves a derogation of a fundamental right. 27 It greatly
affects a landowner’s right to private property which is a
constitutionally protected right necessary for the preservation
and enhancement of personal dignity and is intimately
connected with the rights to life and liberty. 28 Thus, whether
such power is exercised directly by the State or by its
authorized agents, the exercise of such power must undergo
painstaking scrutiny. 29
Indeed, despite the existence of legislative grant in favor of
local governments, it is still the duty of the courts to determine
whether the power of eminent domain is being exercised in
accordance with the delegating law.
Sec. 19 of R.A. No. 7160, which delegates to LGUs the power
of eminent domain expressly provides:
SEC. 19. Eminent Domain. - A local government unit may,
through its chief executive and acting pursuant to an
ordinance, exercise the power of eminent domain for public
use, or purpose, or welfare for the benefit of the poor and the
landless, upon payment of just compensation, pursuant to the
provisions of the Constitution and pertinent laws: Provided,
however, That the power of eminent domain may not be
exercised unless a valid and definite offer has been previously
made to the owner, and such offer was not accepted:
Provided, further, That the local government unit may
immediately take possession of the property upon the filing of
the expropriation proceedings and upon making a deposit with
the proper court of at least fifteen percent (15%) of the fair
market value of the property based on the current tax
declaration of the property to be expropriated: Provided, finally,
That, the amount to be paid for the expropriated property shall
be determined by the proper court, based on the fair market
value at the time of the taking of the property.
It is clear therefore that several requisites must concur before
an LGU can exercise the power of eminent domain, to wit:
1. An ordinance is enacted by the local legislative council
authorizing the local chief executive, in behalf of the local
government unit, to exercise the power of eminent domain or
pursue expropriation proceedings over a particular private
property.
2. The power of eminent domain is exercised for public use,
purpose or welfare, or for the benefit of the poor and the
landless.
3. There is payment of just compensation, as required under
Section 9, Article III of the Constitution, and other pertinent
laws.
4. A valid and definite offer has been previously made to the
owner of the property sought to be expropriated, but said offer
was not accepted. 30
The Court in no uncertain terms have pronounced that a local
government unit cannot authorize an expropriation of private
property through a mere resolution of its lawmaking body. 31
R.A. No. 7160 otherwise known as the Local Government
Code expressly requires an ordinance for the purpose and a
resolution that merely expresses the sentiment of the municipal
council will not suffice. 32
A resolution will not suffice for an LGU to be able to
expropriate private property; and the reason for this is settled:
x x x A municipal ordinance is different from a resolution. An
ordinance is a law, but a resolution is merely a declaration of
the sentiment or opinion of a lawmaking body on a specific
matter. An ordinance possesses a general and permanent
character, but a resolution is temporary in nature. Additionally,
the two are enacted differently -- a third reading is necessary
for an ordinance, but not for a resolution, unless decided
otherwise by a majority of all the Sanggunian members.
If Congress intended to allow LGUs to exercise eminent
domain through a mere resolution, it would have simply
adopted the language of the previous Local Government Code.
But Congress did not. In a clear divergence from the previous
Local Government Code, Sec. 19 of R.A. [No.] 7160
categorically requires that the local chief executive act
pursuant to an ordinance. x x x 33
As respondent’s expropriation in this case was based merely
on a resolution, such expropriation is clearly defective. While
the Court is aware of the constitutional policy promoting local
autonomy, the court cannot grant judicial sanction to an LGU’s
exercise of its delegated power of eminent domain in
contravention of the very law giving it such power. 34
The Court notes that petitioners failed to raise this point at the
earliest opportunity. Still, we are not precluded from
considering the same. This Court will not hesitate to consider
matters even those raised for the first time on appeal in clearly
meritorious situations, 35 such as in this case.
Thus, the Court finds it unnecessary to resolve the other issues
raised by petitioners.
It is well to mention however that despite our ruling in this case
respondent is not barred from instituting similar proceedings in
the future, provided that it complies with all legal requirements.
36
WHEREFORE, the petition is GRANTED. The decision of the
Court of Appeals in CA-G.R. SP No. 47052 is REVERSED and
SET ASIDE. The Complaint in Civil Action No. V-6958 is
DISMISSED without prejudice.
No costs.
SO ORDERED.
G.R. No. 155746 October 13, 2004
DIOSDADO LAGCAO, DOROTEO LAGCAO and URSULA
LAGCAO, petitioners,
vs.
JUDGE GENEROSA G. LABRA, Branch 23, Regional Trial
Court, Cebu, and the CITY OF CEBU, respondent.
DECISION
CORONA, J.:
Before us is a petition for review of the decision dated July 1,
2002 of the Regional Trial Court, Branch 23, Cebu City1
upholding the validity of the City of Cebu’s Ordinance No.
1843, as well as the lower court’s order dated August 26, 2002
denying petitioner’s motion for reconsideration.
In 1964, the Province of Cebu donated 210 lots to the City of
Cebu. One of these lots was Lot 1029, situated in Capitol Hills,
Cebu City, with an area of 4,048 square meters. In 1965,
petitioners purchased Lot 1029 on installment basis. But then,
in late 1965, the 210 lots, including Lot 1029, reverted to the
Province of Cebu.2 Consequently, the province tried to annul
the sale of Lot 1029 by the City of Cebu to the petitioners. This
prompted the latter to sue the province for specific
performance and damages in the then Court of First Instance.
On July 9, 1986, the court a quo ruled in favor of petitioners
and ordered the Province of Cebu to execute the final deed of
sale in favor of petitioners. On June 11, 1992, the Court of
Appeals affirmed the decision of the trial court. Pursuant to the
ruling of the appellate court, the Province of Cebu executed on
June 17, 1994 a deed of absolute sale over Lot 1029 in favor
of petitioners. Thereafter, Transfer Certificate of Title (TCT) No.
129306 was issued in the name of petitioners and Crispina
Lagcao.3
After acquiring title, petitioners tried to take possession of the
lot only to discover that it was already occupied by squatters.
Thus, on June 15, 1997, petitioners instituted ejectment
proceedings against the squatters. The Municipal Trial Court in
Cities (MTCC), Branch 1, Cebu City, rendered a decision on
April 1, 1998, ordering the squatters to vacate the lot. On
appeal, the RTC affirmed the MTCC’s decision and issued a
writ of execution and order of demolition.1avvphi1
However, when the demolition order was about to be
implemented, Cebu City Mayor Alvin Garcia wrote two letters4
to the MTCC, requesting the deferment of the demolition on
the ground that the City was still looking for a relocation site for
the squatters. Acting on the mayor’s request, the MTCC issued
two orders suspending the demolition for a period of 120 days
from February 22, 1999. Unfortunately for petitioners, during
the suspension period, the Sangguniang Panlungsod (SP) of
Cebu City passed a resolution which identified Lot 1029 as a
socialized housing site pursuant to RA 7279.5 Then, on June
30, 1999, the SP of Cebu City passed Ordinance No. 17726
which included Lot 1029 among the identified sites for
socialized housing. On July, 19, 2000, Ordinance No. 18437
was enacted by the SP of Cebu City authorizing the mayor of
Cebu City to initiate expropriation proceedings for the
acquisition of Lot 1029 which was registered in the name of
petitioners. The intended acquisition was to be used for the
benefit of the homeless after its subdivision and sale to the
actual occupants thereof. For this purpose, the ordinance
appropriated the amount of ₱6,881,600 for the payment of the
subject lot. This ordinance was approved by Mayor Garcia on
August 2, 2000.
On August 29, 2000, petitioners filed with the RTC an action
for declaration of nullity of Ordinance No. 1843 for being
unconstitutional. The trial court rendered its decision on July 1,
2002 dismissing the complaint filed by petitioners whose
subsequent motion for reconsideration was likewise denied on
August 26, 2002.
In this appeal, petitioners argue that Ordinance No. 1843 is
unconstitutional as it sanctions the expropriation of their
property for the purpose of selling it to the squatters, an
endeavor contrary to the concept of "public use" contemplated
in the Constitution.8 They allege that it will benefit only a
handful of people. The ordinance, according to petitioners, was
obviously passed for politicking, the squatters undeniably being
a big source of votes.1avvphi1
In sum, this Court is being asked to resolve whether or not the
intended expropriation by the City of Cebu of a 4,048-square-
meter parcel of land owned by petitioners contravenes the
Constitution and applicable laws.
Under Section 48 of RA 7160,9 otherwise known as the Local
Government Code of 1991,10 local legislative power shall be
exercised by the Sangguniang Panlungsod of the city. The
legislative acts of the Sangguniang Panlungsod in the exercise
of its lawmaking authority are denominated ordinances.
Local government units have no inherent power of eminent
domain and can exercise it only when expressly authorized by
the legislature.11 By virtue of RA 7160, Congress conferred
upon local government units the power to expropriate.
Ordinance No. 1843 was enacted pursuant to Section 19 of RA
7160:
SEC. 19. Eminent Domain. − A local government unit may,
through its chief executive and acting pursuant to an
ordinance, exercise the power of eminent domain for public
use, or purpose, or welfare for the benefit of the poor and the
landless, upon payment of just compensation, pursuant to the
provisions of the Constitution and pertinent laws xxx. (italics
supplied).
Ordinance No. 1843 which authorized the expropriation of
petitioners’ lot was enacted by the SP of Cebu City to provide
socialized housing for the homeless and low-income residents
of the City.
However, while we recognize that housing is one of the most
serious social problems of the country, local government units
do not possess unbridled authority to exercise their power of
eminent domain in seeking solutions to this problem.
There are two legal provisions which limit the exercise of this
power: (1) no person shall be deprived of life, liberty, or
property without due process of law, nor shall any person be
denied the equal protection of the laws;12 and (2) private
property shall not be taken for public use without just
compensation.13 Thus, the exercise by local government units
of the power of eminent domain is not absolute. In fact, Section
19 of RA 7160 itself explicitly states that such exercise must
comply with the provisions of the Constitution and pertinent
laws.
The exercise of the power of eminent domain drastically affects
a landowner’s right to private property, which is as much a
constitutionally-protected right necessary for the preservation
and enhancement of personal dignity and intimately connected
with the rights to life and liberty.14 Whether directly exercised
by the State or by its authorized agents, the exercise of
eminent domain is necessarily in derogation of private rights.15
For this reason, the need for a painstaking scrutiny cannot be
overemphasized.
The due process clause cannot be trampled upon each time an
ordinance orders the expropriation of a private individual’s
property. The courts cannot even adopt a hands-off policy
simply because public use or public purpose is invoked by an
ordinance, or just compensation has been fixed and
determined. In De Knecht vs. Bautista,16 we said:
It is obvious then that a land-owner is covered by the mantle of
protection due process affords. It is a mandate of reason. It
frowns on arbitrariness, it is the antithesis of any governmental
act that smacks of whim or caprice. It negates state power to
act in an oppressive manner. It is, as had been stressed so
often, the embodiment of the sporting idea of fair play. In that
sense, it stands as a guaranty of justice. That is the standard
that must be met by any governmental agency in the exercise
of whatever competence is entrusted to it. As was so
emphatically stressed by the present Chief Justice, "Acts of
Congress, as well as those of the Executive, can deny due
process only under pain of nullity. xxx.
The foundation of the right to exercise eminent domain is
genuine necessity and that necessity must be of public
character.17 Government may not capriciously or arbitrarily
choose which private property should be expropriated. In this
case, there was no showing at all why petitioners’ property was
singled out for expropriation by the city ordinance or what
necessity impelled the particular choice or selection. Ordinance
No. 1843 stated no reason for the choice of petitioners’
property as the site of a socialized housing project.
Condemnation of private lands in an irrational or piecemeal
fashion or the random expropriation of small lots to
accommodate no more than a few tenants or squatters is
certainly not the condemnation for public use contemplated by
the Constitution. This is depriving a citizen of his property for
the convenience of a few without perceptible benefit to the
public.18
RA 7279 is the law that governs the local expropriation of
property for purposes of urban land reform and housing.
Sections 9 and 10 thereof provide:
SEC 9. Priorities in the Acquisition of Land. − Lands for
socialized housing shall be acquired in the following order:
(a) Those owned by the Government or any of its subdivisions,
instrumentalities, or agencies, including government-owned or
controlled corporations and their subsidiaries;
(b) Alienable lands of the public domain;
(c) Unregistered or abandoned and idle lands;
(d) Those within the declared Areas or Priority Development,
Zonal Improvement Program sites, and Slum Improvement and
Resettlement Program sites which have not yet been acquired;
(e) Bagong Lipunan Improvement of Sites and Services or
BLISS which have not yet been acquired; and
(f) Privately-owned lands.
Where on-site development is found more practicable and
advantageous to the beneficiaries, the priorities mentioned in
this section shall not apply. The local government units shall
give budgetary priority to on-site development of government
lands. (Emphasis supplied).
SEC. 10. Modes of Land Acquisition. − The modes of acquiring
lands for purposes of this Act shall include, among others,
community mortgage, land swapping, land assembly or
consolidation, land banking, donation to the Government, joint
venture agreement, negotiated purchase, and expropriation:
Provided, however, That expropriation shall be resorted to only
when other modes of acquisition have been exhausted:
Provided further, That where expropriation is resorted to,
parcels of land owned by small property owners shall be
exempted for purposes of this Act: xxx. (Emphasis supplied).
In the recent case of Estate or Heirs of the Late Ex-Justice
Jose B.L. Reyes et al. vs. City of Manila,19 we ruled that the
above-quoted provisions are strict limitations on the exercise of
the power of eminent domain by local government units,
especially with respect to (1) the order of priority in acquiring
land for socialized housing and (2) the resort to expropriation
proceedings as a means to acquiring it. Private lands rank last
in the order of priority for purposes of socialized housing. In the
same vein, expropriation proceedings may be resorted to only
after the other modes of acquisition are exhausted.
Compliance with these conditions is mandatory because these
are the only safeguards of oftentimes helpless owners of
private property against what may be a tyrannical violation of
due process when their property is forcibly taken from them
allegedly for public use.
We have found nothing in the records indicating that the City of
Cebu complied strictly with Sections 9 and 10 of RA 7279.
Ordinance No. 1843 sought to expropriate petitioners’ property
without any attempt to first acquire the lands listed in (a) to (e)
of Section 9 of RA 7279. Likewise, Cebu City failed to establish
that the other modes of acquisition in Section 10 of RA 7279
were first exhausted. Moreover, prior to the passage of
Ordinance No. 1843, there was no evidence of a valid and
definite offer to buy petitioners’ property as required by Section
19 of RA 7160.20 We therefore find Ordinance No. 1843 to be
constitutionally infirm for being violative of the petitioners’ right
to due process.
It should also be noted that, as early as 1998, petitioners had
already obtained a favorable judgment of eviction against the
illegal occupants of their property. The judgment in this
ejectment case had, in fact, already attained finality, with a writ
of execution and an order of demolition. But Mayor Garcia
requested the trial court to suspend the demolition on the
pretext that the City was still searching for a relocation site for
the squatters. However, instead of looking for a relocation site
during the suspension period, the city council suddenly
enacted Ordinance No. 1843 for the expropriation of
petitioners’ lot. It was trickery and bad faith, pure and simple.
The unconscionable manner in which the questioned
ordinance was passed clearly indicated that respondent City
transgressed the Constitution, RA 7160 and RA 7279.
For an ordinance to be valid, it must not only be within the
corporate powers of the city or municipality to enact but must
also be passed according to the procedure prescribed by law.
It must be in accordance with certain well-established basic
principles of a substantive nature. These principles require that
an ordinance (1) must not contravene the Constitution or any
statute (2) must not be unfair or oppressive (3) must not be
partial or discriminatory (4) must not prohibit but may regulate
trade (5) must be general and consistent with public policy, and
(6) must not be unreasonable.21
Ordinance No. 1843 failed to comply with the foregoing
substantive requirements. A clear case of constitutional
infirmity having been thus established, this Court is constrained
to nullify the subject ordinance. We recapitulate:
first, as earlier discussed, the questioned ordinance is
repugnant to the pertinent provisions of the Constitution, RA
7279 and RA 7160;
second, the precipitate manner in which it was enacted was
plain oppression masquerading as a pro-poor ordinance;
third, the fact that petitioners’ small property was singled out
for expropriation for the purpose of awarding it to no more than
a few squatters indicated manifest partiality against petitioners,
and
fourth, the ordinance failed to show that there was a
reasonable relation between the end sought and the means
adopted. While the objective of the City of Cebu was to provide
adequate housing to slum dwellers, the means it employed in
pursuit of such objective fell short of what was legal, sensible
and called for by the circumstances.
Indeed, experience has shown that the disregard of basic
liberties and the use of short-sighted methods in expropriation
proceedings have not achieved the desired results. Over the
years, the government has tried to remedy the worsening
squatter problem. Far from solving it, however, government’s
kid-glove approach has only resulted in the multiplication and
proliferation of squatter colonies and blighted areas. A pro-poor
program that is well-studied, adequately funded, genuinely
sincere and truly respectful of everyone’s basic rights is what
this problem calls for, not the improvident enactment of politics-
based ordinances targeting small private lots in no rational
fashion.
WHEREFORE, the petition is hereby GRANTED. The July 1,
2002 decision of Branch 23 of the Regional Trial Court of Cebu
City is REVERSED and SET ASIDE.
SO ORDERED.
LOURDES DE LA PAZ MASIKIP, Petitioner,
- versus -
THE CITY OF PASIG, HON. MARIETTA A. LEGASPI, in her
capacity as Presiding Judge of the Regional Trial Court of
Pasig City, Branch 165 and THE COURT OF APPEALS,
Respondents.
G.R. No. 136349
Promulgated: January 23, 2006
x----------------------------------------------------------------------------------
-------x
DECISION
SANDOVAL GUTIERREZ, J.:
Where the taking by the State of private property is done for
the benefit of a small community which seeks to have its own
sports and recreational facility, notwithstanding that there is
such a recreational facility only a short distance away, such
taking cannot be considered to be for public use. Its
expropriation is not valid. In this case, the Court defines what
constitutes a genuine necessity for public use.
This petition for review on certiorari assails the Decision[1] of
the Court of Appeals dated October 31, 1997 in CA-G.R. SP
No. 41860 affirming the Order[2] of the Regional Trial Court,
Branch 165, Pasig City, dated May 7, 1996 in S.C.A. No. 873.
Likewise assailed is the Resolution[3] of the same court dated
November 20, 1998 denying petitioners Motion for
Reconsideration.
The facts of the case are:
Petitioner Lourdes Dela Paz Masikip is the registered owner of
a parcel of land with an area of 4,521 square meters located at
Pag-Asa, Caniogan, Pasig City, Metro Manila.
In a letter dated January 6, 1994, the then Municipality of
Pasig, now City of Pasig, respondent, notified petitioner of its
intention to expropriate a 1,500 square meter portion of her
property to be used for the sports development and
recreational activities of the residents of Barangay Caniogan.
This was pursuant to Ordinance No. 42, Series of 1993
enacted by the then Sangguniang Bayan of Pasig.
Again, on March 23, 1994, respondent wrote another letter to
petitioner, but this time the purpose was allegedly in line with
the program of the Municipal Government to provide land
opportunities to deserving poor sectors of our community.
On May 2, 1994, petitioner sent a reply to respondent stating
that the intended expropriation of her property is
unconstitutional, invalid, and oppressive, as the area of her lot
is neither sufficient nor suitable to provide land opportunities to
deserving poor sectors of our community.
In its letter of December 20, 1994, respondent reiterated that
the purpose of the expropriation of petitioners property is to
provide sports and recreational facilities to its poor residents.
Subsequently, on February 21, 1995, respondent filed with the
trial court a complaint for expropriation, docketed as SCA No.
873. Respondent prayed that the trial court, after due notice
and hearing, issue an order for the condemnation of the
property; that commissioners be appointed for the purpose of
determining the just compensation; and that judgment be
rendered based on the report of the commissioners.
On April 25, 1995, petitioner filed a Motion to Dismiss the
complaint on the following grounds:
I. PLAINTIFF HAS NO CAUSE OF ACTION FOR THE
EXERCISE OF THE POWER OF EMINENT DOMAIN,
CONSIDERING THAT:
(A) THERE IS NO GENUINE NECESSITY FOR THE TAKING
OF THE PROPERTY SOUGHT TO BE EXPROPRIATED.
(B) PLAINTIFF HAS ARBITRARILY AND CAPRICIOUSLY
CHOSEN THE PROPERTY SOUGHT TO BE
EXPROPRIATED.

(C) EVEN ASSUMING ARGUENDO THAT DEFENDANTS
PROPERTY MAY BE EXPROPRIATED BY PLAINTIFF, THE
FAIR MARKET VALUE OF THE PROPERTY TO BE
EXPROPRIATED FAR EXCEEDS SEVENTY-EIGHT
THOUSAND PESOS (P78,000.00)
II. PLAINTIFFS COMPLAINT IS DEFECTIVE IN FORM AND
SUBSTANCE, CONSIDERING THAT:
(A) PLAINTIFF FAILS TO ALLEGE WITH CERTAINTY THE
PURPOSE OF THE EXPROPRIATION.
(B) PLAINTIFF HAS FAILED TO COMPLY WITH THE
PREREQUISITES LAID DOWN IN SECTION 34, RULE VI OF
THE RULES AND REGULATIONS IMPLEMENTING THE
LOCAL GOVERNMENT CODE; THUS, THE INSTANT
EXPROPRIATION PROCEEDING IS PREMATURE.
III. THE GRANTING OF THE EXPROPRIATION WOULD
VIOLATE SECTION 261 (V) OF THE OMNIBUS ELECTION
CODE.
IV. PLAINTIFF CANNOT TAKE POSSESSION OF THE
SUBJECT PROPERTY BY MERELY DEPOSITING AN
AMOUNT EQUAL TO FIFTEEN PERCENT (15%) OF THE
VALUE OF THE PROPERTY BASED ON THE CURRENT
TAX DECLARATION OF THE SUBJECT PROPERTY.[4]
On May 7, 1996, the trial court issued an Order denying the
Motion to Dismiss,[5] on the ground that there is a genuine
necessity to expropriate the property for the sports and
recreational activities of the residents of Pasig. As to the issue
of just compensation, the trial court held that the same is to be
determined in accordance with the Revised Rules of Court.
Petitioner filed a motion for reconsideration but it was denied
by the trial court in its Order of July 31, 1996. Forthwith, it
appointed the City Assessor and City Treasurer of Pasig City
as commissioners to ascertain the just compensation. This
prompted petitioner to file with the Court of Appeals a special
civil action for certiorari, docketed as CA-G.R. SP No. 41860.
On October 31, 1997, the Appellate Court dismissed the
petition for lack of merit. Petitioners Motion for Reconsideration
was denied in a Resolution dated November 20, 1998.
Hence, this petition anchored on the following grounds:
THE QUESTIONED DECISION DATED 31 OCTOBER 1997
(ATTACHMENT A) AND RESOLUTION DATED 20
NOVEMBER 1998 (ATTACHMENT B) ARE CONTRARY TO
LAW, THE RULES OF COURT AND JURISPRUDENCE
CONSIDERING THAT:
I. A. THERE IS NO EVIDENCE TO PROVE THAT THERE IS
GENUINE NECESSITY FOR THE TAKING OF THE
PETITIONERS PROPERTY.
B. THERE IS NO EVIDENCE TO PROVE THAT THE PUBLIC
USE REQUIREMENT FOR THE EXERCISE OF THE POWER
OF EMINENT DOMAIN HAS BEEN COMPLIED WITH.
C. THERE IS NO EVIDENCE TO PROVE THAT
RESPONDENT CITY OF PASIG HAS COMPLIED WITH ALL
CONDITIONS PRECEDENT FOR THE EXERCISE OF THE
POWER OF EMINENT DOMAIN.
THE COURT A QUOS ORDER DATED 07 MAY 1996 AND 31
JULY 1996, WHICH WERE AFFIRMED BY THE COURT OF
APPEALS, EFFECTIVELY AMOUNT TO THE TAKING OF
PETITIONERS PROPERTY WITHOUT DUE PROCESS OF
LAW:
II. THE COURT OF APPEALS GRAVELY ERRED IN
APPLYING OF RULE ON ACTIONABLE DOCUMENTS TO
THE DOCUMENTS ATTACHED TO RESPONDENT CITY OF
PASIGS COMPLAINT DATED 07 APRIL 1995 TO JUSTIFY
THE COURT A QUOS DENIAL OF PETITIONERS
RESPONSIVE PLEADING TO THE COMPLAINT FOR
EXPROPRIATION (THE MOTION TO DISMISS DATED 21
APRIL 1995).
III. THE COURT OF APPEALS GRAVELY ERRED IN
APPLYING THE RULE ON HYPOTHETICAL ADMISSION OF
FACTS ALLEGED IN A COMPLAINT CONSIDERING THAT
THE MOTION TO DISMISS FILED BY PETITIONER IN THE
EXPROPRIATION CASE BELOW WAS THE RESPONSIVE
PLEADING REQUIRED TO BE FILED UNDER THE THEN
RULE 67 OF THE RULES OF COURT AND NOT AN
ORIDNARY MOTION TO DISMISS UNDER RULE 16 OF THE
RULES OF COURT.
The foregoing arguments may be synthesized into two main
issues one substantive and one procedural. We will first
address the procedural issue.
Petitioner filed her Motion to Dismiss the complaint for
expropriation on April 25, 1995. It was denied by the trial court
on May 7, 1996. At that time, the rule on expropriation was
governed by Section 3, Rule 67 of the Revised Rules of Court
which provides:
SEC. 3. Defenses and objections. Within the time specified in
the summons, each defendant, in lieu of an answer, shall
present in a single motion to dismiss or for other appropriate
relief, all his objections and defenses to the right of the plaintiff
to take his property for the use or purpose specified in the
complaint. All such objections and defenses not so presented
are waived. A copy of the motion shall be served on the
plaintiffs attorney of record and filed with the court with proof of
service.
The motion to dismiss contemplated in the above Rule clearly
constitutes the responsive pleading which takes the place of an
answer to the complaint for expropriation. Such motion is the
pleading that puts in issue the right of the plaintiff to
expropriate the defendants property for the use specified in the
complaint. All that the law requires is that a copy of the said
motion be served on plaintiffs attorney of record. It is the court
that at its convenience will set the case for trial after the filing
of the said pleading.[6]
The Court of Appeals therefore erred in holding that the motion
to dismiss filed by petitioner hypothetically admitted the truth of
the facts alleged in the complaint, specifically that there is a
genuine necessity to expropriate petitioners property for public
use. Pursuant to the above Rule, the motion is a responsive
pleading joining the issues. What the trial court should have
done was to set the case for the reception of evidence to
determine whether there is indeed a genuine necessity for the
taking of the property, instead of summarily making a finding
that the taking is for public use and appointing commissioners
to fix just compensation. This is especially so considering that
the purpose of the expropriation was squarely challenged and
put in issue by petitioner in her motion to dismiss.
Significantly, the above Rule allowing a defendant in an
expropriation case to file a motion to dismiss in lieu of an
answer was amended by the 1997 Rules of Civil Procedure,
which took effect on July 1, 1997. Section 3, Rule 67 now
expressly mandates that any objection or defense to the taking
of the property of a defendant must be set forth in an answer.
The fact that the Court of Appeals rendered its Decision in CA-
G.R. SP No. 41860 on October 31, after the 1997 Rules of
Civil Procedure took effect, is of no moment. It is only fair that
the Rule at the time petitioner filed her motion to dismiss
should govern. The new provision cannot be applied
retroactively to her prejudice.
We now proceed to address the substantive issue.
In the early case of US v. Toribio,[7] this Court defined the
power of eminent domain as the right of a government to take
and appropriate private property to public use, whenever the
public exigency requires it, which can be done only on
condition of providing a reasonable compensation therefor. It
has also been described as the power of the State or its
instrumentalities to take private property for public use and is
inseparable from sovereignty and inherent in government.[8]
The power of eminent domain is lodged in the legislative
branch of the government. It delegates the exercise thereof to
local government units, other public entities and public utility
corporations,[9] subject only to Constitutional limitations. Local
governments have no inherent power of eminent domain and
may exercise it only when expressly authorized by statute.[10]
Section 19 of the Local Government Code of 1991 (Republic
Act No. 7160) prescribes the delegation by Congress of the
power of eminent domain to local government units and lays
down the parameters for its exercise, thus:
SEC. 19. Eminent Domain. A local government unit may,
through its chief executive and acting pursuant to an
ordinance, exercise the power of eminent domain for public
use, purpose or welfare for the benefit of the poor and the
landless, upon payment of just compensation, pursuant to the
provisions of the Constitution and pertinent laws: Provided,
however, That, the power of eminent domain may not be
exercised unless a valid and definite offer has been previously
made to the owner and such offer was not accepted: Provided,
further, That, the local government unit may immediately take
possession of the property upon the filing of expropriation
proceedings and upon making a deposit with the proper court
of at least fifteen percent (15%) of the fair market value of the
property based on the current tax declaration of the property to
be expropriated: Provided, finally, That, the amount to be paid
for expropriated property shall be determined by the proper
court, based on the fair market value at the time of the taking
of the property.
Judicial review of the exercise of eminent domain is limited to
the following areas of concern: (a) the adequacy of the
compensation, (b) the necessity of the taking, and (c) the
public use character of the purpose of the taking.[11]
In this case, petitioner contends that respondent City of Pasig
failed to establish a genuine necessity which justifies the
condemnation of her property. While she does not dispute the
intended public purpose, nonetheless, she insists that there
must be a genuine necessity for the proposed use and
purposes. According to petitioner, there is already an
established sports development and recreational activity center
at Rainforest Park in Pasig City, fully operational and being
utilized by its residents, including those from Barangay
Caniogan. Respondent does not dispute this. Evidently, there
is no genuine necessity to justify the expropriation.
The right to take private property for public purposes
necessarily originates from the necessity and the taking must
be limited to such necessity. In City of Manila v. Chinese
Community of Manila,[12] we held that the very foundation of
the right to exercise eminent domain is a genuine necessity
and that necessity must be of a public character. Moreover, the
ascertainment of the necessity must precede or accompany
and not follow, the taking of the land. In City of Manila v.
Arellano Law College,[13] we ruled that necessity within the
rule that the particular property to be expropriated must be
necessary, does not mean an absolute but only a reasonable
or practical necessity, such as would combine the greatest
benefit to the public with the least inconvenience and expense
to the condemning party and the property owner consistent
with such benefit.
Applying this standard, we hold that respondent City of Pasig
has failed to establish that there is a genuine necessity to
expropriate petitioners property. Our scrutiny of the records
shows that the Certification[14] issued by the Caniogan
Barangay Council dated November 20, 1994, the basis for the
passage of Ordinance No. 42 s. 1993 authorizing the
expropriation, indicates that the intended beneficiary is the
Melendres Compound Homeowners Association, a private,
non-profit organization, not the residents of Caniogan. It can be
gleaned that the members of the said Association are desirous
of having their own private playground and recreational facility.
Petitioners lot is the nearest vacant space available. The
purpose is, therefore, not clearly and categorically public. The
necessity has not been shown, especially considering that
there exists an alternative facility for sports development and
community recreation in the area, which is the Rainforest Park,
available to all residents of Pasig City, including those of
Caniogan.
The right to own and possess property is one of the most
cherished rights of men. It is so fundamental that it has been
written into organic law of every nation where the rule of law
prevails. Unless the requisite of genuine necessity for the
expropriation of ones property is clearly established, it shall be
the duty of the courts to protect the rights of individuals to their
private property. Important as the power of eminent domain
may be, the inviolable sanctity which the Constitution attaches
to the property of the individual requires not only that the
purpose for the taking of private property be specified. The
genuine necessity for the taking, which must be of a public
character, must also be shown to exist.
WHEREFORE, the petition for review is GRANTED. The
challenged Decision and Resolution of the Court of Appeals in
CA-G.R. SP No. 41860 are REVERSED. The complaint for
expropriation filed before the trial court by respondent City of
Pasig, docketed as SCA No. 873, is ordered DISMISSED.
SO ORDERED.