G.R. No.
L-7708 May 30, 1955 PADILLA  Section 10, paragraph 1, Article VII, of the Constitution provides: "The President
JOSE MONDANO, petitioner,
vs.
FERNANDO SILVOSA, Provincial Governor of Surigao, JOSE ARREZA and
OLIMPIO EPIS, Members of the Provincial Board, respondents.
 Mondano is the duly elected and qualified mayor of the municipality of Mainit,
province of Surigao.
 27 February 1954 Consolacion Vda. de Mosende filed a sworn complaint with the
Presidential Complaints and Action Committee accusing him of (1) rape committed
on her daughter Caridad Mosende; and (2) concubinage for cohabiting with her
daughter in a place other than the conjugal dwelling.
 On 6 March the Assistant Executive Secretary indorsed the complaint to the
respondent provincial governor for immediate investigation, appropriate action and
report.
 On 10 April the petitioner appeared before the provincial governor in obedience to
his summons and was served with a copy of the complaint filed by the provincial
governor with provincial board.
 On the same day, the provincial governor issued Administrative Order No. 8
suspending the petitioner from office. Thereafter, the Provincial Board proceeded
to hear the charges preferred against the petitioner over his objection.
 answer of the respondents admits the facts alleged in the petition except those that
are inferences and conclusions of law and invokes the provisions of section 79 (c)of
the Revised Administrative Code which clothes the department head with "direct
control, direction, and supervision over all bureaus and offices under his
jurisdiction . . ." and to that end "may order the investigation of any act or conduct
of any person in the service of any bureau or office under his Department and in
connection therewith may appoint a committee or designate an official or person
who shall conduct such investigations; . . ."and the rule in the case of Villena vs.
Secretary of Interior, 67 Phil. 452, which upheld "the power of the Secretary of
Interior to conduct at its own initiative investigation of charges against local
elective municipal officials and to suspend them preventively," on the board
proposition "that under the presidential type of government which we have adopted
and considering the departmental organization established and continued in force
by paragraph 1, section 11, Article VII, of our Constitution, all executive and
administrative organizations are adjuncts of the Executive Departments, the heads
of the various executive departments are assistants and agents of the Chief
Executive."
W/N has suspension valid: NO.
 The executive departments of the Government of the Philippines created and
organized before the approval of the Constitution continued to exist as "authorized
by law until the Congress shall provide otherwise." 1
shall have control of all the executive departments, bureaus, or offices, exercise
general supervision over all local governments as may be provided by law, and take
care that the laws be faithfully executed."
 The Department head as agent of the President has direct control and supervision
over all bureaus and offices under his jurisdiction as provided for in section 79 (c)
of the Revised Administrative Code, but he does not have the same control of local
governments as that exercised by him over bureaus and offices under his
jurisdiction.
 If the provisions of section 79 (c) of the Revised Administrative Code are to be
construed as conferring upon the corresponding department head direct control,
direction, and supervision over all local governments and that for the reason he
may order the investigation of an official of a local government for malfeasance in
office, such interpretation would be contrary to the provisions of paragraph 1,
section 10, Article VII, of the Constitution. If "general supervision over all local
governments" is to be construedas the same power granted to the Department Head
in section 79 (c) of the Revised Administrative Code, then there would no longer be
a distinction or difference between the power of control and that of supervision. In
administrative law supervision means overseeing or the power or authority of an
 The Congress has expressly and specifically lodged the provincial supervision over
municipal officials in the provincial governor who is authorized to "receive and
investigate complaints made under oath against municipal officers for neglect of
duty, oppression, corruption or other form of maladministration of office, and
conviction by final judgment of any crime involving moral turpitude." 2 And if the
charges are serious, "he shall submit written charges touching the matter to the
provincial board, furnishing a copy of such charges to the accused either personally
or by registered mail, and he may in such case suspend the officer (not being the
municipal treasurer) pending action by the board, if in his opinion the charge be
one affecting the official integrity of the officer in question." 3
 Section 86 of the Revised Administrative Code adds nothing to the power of
supervision to be exercised by the Department Head over the administration of . . .
municipalities . . .. If it be construed that it does and such additional power is the
same authority as that vested in the Department Head by section 79 (c) of the
Revised Administrative Code, then such additional power must be deemed to have
been abrogated by section 10 (1), Article VII, of the Constitution.
 In the indorsement to the provincial governor the Assistant Executive Secretary
requested immediate investigation, appropriate action and report on the complaint
indorsed to him, and called his attention to section 2193 of the Revised
Administrative Code which provides for the institution of judicial proceedings by
the provincial fiscal upon direction of the provincial governor. If the indorsement
of the Assistant Executive Secretary be taken as a designation of the provincial
governor to investigate the petitioner, then he would only be acting as agent of the
Executive, but the investigation to be conducted by him would not be that which is
provided for in sections 2188, 2189 and 2190 of the Revised Administrative Code.
 The charges preferred against the respondent are not malfeasances or any of those
enumerated or specified in section 2188 of the Revised Administrative Code,
 because rape and concubinage have nothing to do with the performance of his
duties as mayor nor do they constitute or involve" neglect of duty, oppression,
corruption or any other form of maladministration of office."
 Even the provincial fiscal cannot file an information for rape without a sworn
complaint of the offended party who is 28 years of age and the crime of
concubinage cannot be prosecuted but upon sworn complaint of the offended
spouse.4
 The charges preferred against the petitioner, municipal mayor of Mainit, province
of Surigao, not being those or any of those specified in section 2188 of the Revised
Administrative Code, the investigation of such charges by the provincial board is
unauthorized and illegal. The suspension of the petitioner as mayor of the
municipality of Mainit is, consequently, unlawful and without authority of law.

The writ of prohibition prayed for is granted, without pronouncement as to costs.

G.R. No. L-9124 July 28, 1958 CONCEPCION
BERNARDO HEBRON, petitioner,
vs.
EULALIO D. REYES, respondent.
 In the general elections held in 1951, petitioner Bernardo Hebron, a member of the
Liberal Party, and respondent Eulalio D. Reyes, of the Nacionalista Party, were
elected mayor and vice-mayor, respectively, of said municipality, for a term of four
(4) years, beginning from January 1, 1952, on which date they presumably assumed
the aforementioned offices.
 May 22 or 24, 1954, he received a letter dated May 14 from the office of the
President:
 Please be advised that the President has decided for the good of the public
service, to assume directly the investigation to the administrative charges
against you for alleged oppression, grave abuse of authority and serious
misconduct in office, and has designated the Provincial Fiscal of that province
as Special Investigator of the said charges. Copy of his designation is enclosed
for your information.
 In view of the serious nature of the aforementioned charges against you, and in
order to promote a fair and impartial investigation thereof, you are hereby
suspended from office, effective immediately, your suspension, to last until the
final termination of the administrative proceedings against you
aforementioned. In this connection, please be advised that the Vice-Mayor has
been directed to assume the office of Acting Mayor during the period of your
suspension, in accordance with the provisions of Section 2195 of the Revised
Administrative Code.
 Eulalio D. Reyes acted as mayor of Carmona and the Provincial Fiscal of Cavite
investigated the charges referred to in the above-quoted letter. After holding
hearings in connection with said charges, the provincial fiscal submitted his report
thereon on July 15, 1954.
 Since then the matter has been pending in the Office of the President for decision.
Inasmuch as the same did not appear to be forthcoming, and the term of petitioner,
who remained suspended, was about to expire, on May 13, 1955, he instituted the
present action for quo warranto, upon the ground that respondent was illegally
holding the Office of Mayor of Carmona, and had unlawfully refused and still
refused to surrender said office to petitioner, who claimed to be entitled thereto.
 Dean Vicente G. Sinco of the College of Law, University of the Philippines, and
Professor Enrique M. Fernando, were allowed to intervene as amici curiae. At the
hearing of this case, the parties, as well as the Solicitor General and said amici
curiae, appeared and argued extensively.
W/N suspension proper: NO.
 The issue is whether a municipal mayor, not charged with disloyalty to the
Republic of the Philippines, may be removed or suspended directly by the President
of the Philippines, regardless of the procedure set forth in sections 2188 to 2191 of
the Revised Administrative Code.
 Lacson vs. Roque (92 Phil., 456; 49 Off. Gaz., 93, 98), that the President has no
"inherent power to remove or suspend" them.
 "the causes and . . . the fashion . . . and the procedure" prescribed by law for the
suspension of elective municipal officials? The aforementioned sections 2188 to
2191 of the Revised Administrative Code read:
SEC. 2188. Supervisory authority of provincial governor over municipal
officers. — The provincial governor shall receive and investigate complaints
made under oath against municipal officers for neglect of duty, oppression,
corruption or other form of maladministration of office, and conviction by final
judgment of any crime involving moral turpitude. For minor delinquency, he
may reprimand the offender; and if a more severe punishment seems to be
desirable, he shall submit written charges touching the matter to the provincial
board, furnishing a copy of such charges to the accused either personally or by
registered mail, and he may in such case suspend the officer (not being the
municipal treasurer) pending action by the board, if in his opinion the charge
be one affecting the official integrity of the officer in question. Where
suspension is thus effected the written charges against the officer shall be filed
with the board within five days.
SEC. 2189. Trial of municipal officer by provincial board. — When written
charges are preferred by a provincial governor against a municipal officer, the
provincial board shall, at its next meeting, regular or special, set a day, hour,
and place for the trial of the same and notify the respondent thereof; and at the
to and place appointed, the board shall proceed to hear and investigate the truth
or falsity of said charges, giving the accused official full opportunity to be
heard in his defense. The hearing shall occur as soon as may be practicable,
and in case suspension has been effected, not later than ten days from the date
the accused is furnished or has sent to him a copy of the charges, unless the
suspended official shall, on sufficient grounds, request an extension of time to
prepare his defense.
The preventive suspension of a municipal officer shall not be for more than
thirty days. At the expiration of the thirty days, the suspended officer shall be
reinstated in office without prejudice to the continuation of the proceedings
against him until their completion, unless the delay in the decision of the case
is due to the fault, neglect, or request of the accused, in which case the time of
the delay shall not be counted in computing the time of the
suspension: Provided, That the suspension of the accused may continue after
the expiration of the thirty days above mentioned in case of conviction until the
Secretary of the Interior shall otherwise direct or the case shall finally be
decided by said Secretary.
 SEC. 2190. Action by provincial board. — If, upon due consideration, the
provincial board shall adjudge that the charges are not sustained, the
proceedings shall be dismissed; if it shall adjudge that the accused has been
guilty of misconduct which would be sufficiently punished by reprimand or
further reprimand, it shall direct the provincial governor to deliver such
reprimand in pursuance of its judgment; and in either case the official, if
suspended, shall be reinstated.
If in the opinion of the board the case is one requiring more severe discipline,
and in case of appeal, it shall without unnecessary delay forward to the
Secretary of the Interior, within eight days after the date of the decision of the
provincial board, certified copies of the record in the case, including the
charges, the evidence, and the findings of the board, to which shall be added
the recommendation of the board as to whether the official ought to be
suspended, further suspended, or finally dismissed from office; and in such
case the board may exercise its direction to reinstate the official, if suspended.
The trial of a suspended municipal official and the proceedings incident thereto
shall be given preference over the current and routine business of the board.
SEC. 2191. Action by Secretary of the Interior. — Upon receiving the papers
in any such proceedings, the Secretary of the Interior shall review the
case without unnecessary delay and shall make such order for the
reinstatement, dismissal, suspension, or further suspension of the official, as
the facts shall warrant and shall render his final decision upon the matter
within thirty days after the date on which the case was received. Disciplinary
suspension made upon order of the Secretary of the Interior shall be without
pay. No final dismissal hereinunder shall take effect until recommended by the
Department Head and approved by the President of the Philippines.
 when the procedure for the suspension of an officer is specified by law, the same
must be deemed mandatory and adhered to strictly, in the absence of express or
clear provision to the contrary — which does not exist with respect to municipal
officers.
 2188 to 2191 of the Revised Administrative Code leaves no room for doubt that the
law — in the words of Mr. Justice Tuason — "frowns upon prolonged or indefinite
suspension of local elective officials"
 policy manifested by section 2188 of the Revised Administrative Code, which is
consecrated policy in other jurisdictions whose republican institutions this country
has copied, requires speedy termination of a case in which suspension has been
decreed, not only in the interest of the immediate party but of the public in general.
The electorate is vitally interested, and the public good demands, that the man it
has elevated to office be, within the shortest time possible, separated from the
service if proven unfit and unfaithful to its trust, and restored if found innocent.
Special proceedings alone, restored if found innocent.
 petitioner was suspended in May 1954. The records of the investigation by the
Provincial Fiscal of Cavite, with the report of the latter, were forwarded to the
Executive Secretary since July 15, 1954. Yet, the administrative decision on the
charges against petitioner was not rendered, either before the filing of the complaint
herein, on May 13, 1955, or before the expiration of petitioner's term of office, on
December 31, 1955. Manifestly, petitioner's continued, indefinite suspension
cannot be reconciled with the letter and spirit of aforementioned provisions of the
Revised Administrative Code.
 79 (C) and 86 of the Revised Administrative Code, which are of the following
tenor:
Sec. 79 (C). Power of direction and supervision. — The Department Head
shall have direct control, direction, and supervision over all bureaus and
offices under his jurisdiction and may, any provision of existing law to the
contrary notwithstanding, repeal or modify the decisions of the chief of said
bureaus or offices when advisable in the public interest.
The Department Head may order the investigation of any act conduct of any
person in the service of any bureau or office under his Department and in
connection therewith may appoint a committee or designate an official or
person who shall conduct such investigations, and such committee, official, or
person may summon witnesses by subpoena and subpoena duces tecum,
administer oath, and take testimony relevant to the investigation.
Sec. 86. Bureaus and offices under the Department of Interior. — The
Department of the Interior shall have executive supervision over the
administration of provinces, municipalities, chartered cities, and other local
political subdivisions, except the financial affairs and financial agencies
thereof, . . . .
W/N can be suspended directly by President: NO.
 section 79(C) was inserted in the Administrative Code by Act No. 3535, passed by
the Philippine Legislature, during the American regime, in line with section 22 of
the Jones Law, pursuant to which "all Executivefunctions of the Government must
be directly under the Governor General or within one of the Executive Departments
under the supervision and control of the Governor General." As already stated,
however, this authority of the Executive has been constricted in our Constitution,
which maintains the presidential "control of the executive departments, bureau and
offices, "but limit the powers of the Executive over local governments to
"supervision" of a "general," not particular, character, and this only "as may be
provided by law.
 If said section 79 (C) were fully applicable to local governments, the President —
who now discharges the functions of the former Secretary of the Interior — could
"alter or modify or nullify or set aside" any duly enacted municipal ordinance or
 resolution of a provincial board, or "substitute" his judgment in lieu of that of
municipal councils or provincial boards, which it cannot.
 Section 64 (c) of the Revised Administrative Code, likewise, relied upon by
respondent and the amici curiae, provides that the President shall have authority "to
order, when in his opinion the good of the public service so requires, an
investigation of any action or conduct of any person in the government services and
in connection therewith, to designate the official committee or person by whom
such investigation shall be conducted.
 the President may not apply it to members of Congress and those of the Supreme
Court, in view of the principle of separation of powers, as to both, and of the
constitutional provisions on impeachment (Article IX of the Constitution), as to
members of this Court. In other words, said section 64 (c) cannot be construed
literally without violating the Constitution. Indeed, the opening paragraphs of said
section 64 read:
In addition to his general supervisory authority, the (Governor-General)
President of the Philippines shall have such specific powers and duties as are
expressly conferred or imposed on him by law and also, in particular, the
powers and duties set forth in this chapter.
Among such special powers and duties shall be: (Emphasis ours.)
 Since the powers specified therein are given to the President, "in addition to his
general supervisory authority", it follows that the application of those powers to
municipal corporations — insofar as they may appear to sanction the assumption
by the Executive of the functions of provincial governors and provincial boards,
under said sections 2188 to 2190 — would contravene the constitutional provision
restricting the authority of the President over local government to "general
supervision."
 paragraph (b) of said section 64 — similarly stressed by the respondent and
the amici curiae — empowering the Executive “to remove officials from office
conformably to law and to declare vacant the offices held by such removed
officials. For disloyalty to the (United States), the Republic of the Philippines, the
(Governor-General) President of the Philippines may at any time remove a person
from any position of trust or authority under the Government of the (Philippines
Islands) Philippines.”
 it is not claimed that petitioner falls under the second sentence of said provision,
pursuant to which the President may "at any time remove a person from any
position of trust or authority under the Government" for "disloyalty" to our
Republic. There is no question of "disloyalty" in the present case.
 the power of removal of the President, under the first sentence of said paragraph
64 (b), must be exercised "conformably to law", which, as regards municipal
officers, is found in sections 2188 to 2191 of the Revised Administrative Code.
 petitioner herein was suspended for more than a year and seven (7) months
(representing over three-eights [3/8], or almost one-half [1/2] of his full term) and,
presumably, would have remained suspended up to the present, had his term not
expired on December 31, 1955. In Alejandrino vs. Quezon (46 Phil., 83), it was
held that the power of removal does not imply the authority to suspend for a
substantial period of time, which, in said case, was only one (1) year.2
 If there is any conflict between said sections 64 (b) and (c), 79 (c) and 86 of the
Revised Administrative Code, on the other hand, and sections 2188 to 2191 of the
same code, on the other, the latter — being specific provisions, setting forth the
procedure for the disciplinary action that may be taken, particularly,
against municipal officials — must prevail over the former, as general provisions,
dealing with the powers of the President and the department heads over the officers
of the Government.3
 The alleged authority of the Executive to suspend a municipal mayor
directly, without any opportunity on the part of the provincial governor and the
provincial board to exercise the administrative powers of both under sections 2188
to 2190 of the Administrative Code, cannot be adopted without conceding that said
powers are subject to repeal or suspension by the President. Obviously, this
cannot, and should not, be done without a legislation of the most explicit and
categorical nature, and there is none to such effect.
 If neither the Secretary of the Interior nor the President may disapprove a
resolution of the Provincial Board of Pangasinan, passed within the jurisdiction
thereof, because such disapproval would connote the assumption of control, which
is denied by the Constitution, it is manifest that greater control would be wielded
by said officers of the national government if they could either assume the powers
vested in said provincial board or act in substitution thereof, such as by suspending
municipal officials, without the administrative proceedings prescribed in sections
2188 to 2190 of the Administrative Code, before said board.
 At the time of the adoption of the Constitution, provincial governments had been in
existence for over thirty years, and their relations with the central government had
already been defined by law. Provincial governments were organized in the
Philippines way back in the year 1901 upon the approval of Act No. 82 by the
Philippines Commission on January 31, 1901. The policy enjoined by the President
of the United States in his Instructions to the Philippines Commission was for the
insular government to have "only supervision and control over local governments
as may be necessary to secure and enforce faithful and efficient administration by
local officers." (McKinley Instruction in Philippines Commission, April 7, 1900.)
The aim of the policy was to enable the Filipinos to acquire experience in the art of
self-government, with the end in view of later allowing them to assume complete
management and control of the administration of their local affairs. This policy is
the one now embodied in the above quoted provision of the Constitution.
 April 7, 1900, President McKinley, in his Instructions to the Second Philippine
Commission, laid down the policy that our municipal governments should be
"subject to the least degree of supervision and control" on the part of the national
government; that said supervision and control should be "confined within
the narrowest limits"; that in the distribution of powers among the governments to
be organized in the Philippines, "the presumption is always to be in favor of the
smaller subdivision"; that the organization of local governments should follow "the
 example of the distribution of powers between the states and the national
government of the United States"; and that, accordingly, the national government
"shall have no direct administration except of matters of purely general concern."
 It has, also, been pointed out that municipal corporations in the United States have
the power of "local self-government", which is not given to our political
subdivisions. This means simply that, whereas the former may not be deprived of
their right to local "self-government", the latter have only such autonomy, if any, as
the central government may deem fit to grant thereto, and that said autonomy shall
be under the control of the national government, which may decree its increase,
decrease, or, even, complete abolition. But, who shall exercise this power, on
behalf of the State? Not the Executive, but the Legislative department, as an
incident of its authority to create or abolish municipal corporations, and,
consequently, to define its jurisdiction and functions.
 In the present case, however, the Provincial Board of Cavite never had a to chance
to investigate the charges against petitioner herein. From the very beginning, the
office of the Executive assumed authority to act on said charges. Worse still, such
assumption of authority was made under such conditions as to give the impression
that the Provincial Governor and the Provincial Board were banned from exercising
said authority. Frankly, we are unable to see, how the aforementioned assumption
of authority may be justified, either under the power of "general supervision," or
under the duty to "take care that the laws be faithfully executed."
 "supervision means overseeing or the power or authority of an officer to see that
subordinate officers perform their duties. If the latter fails or neglects to fulfill
them, the former may take such action or step as prescribed by law to make them
perform their duties. Control, on the other hand, means the power of an official to
alter or modify or nullify or set aside what a subordinate officer had done in the
performance of his duties and to substitute the judgment of the former for that of
the latter." When the office of the Executive Department acted, in the case at bar, in
lieu, or in substitution, of the Provincial Board of Cavite, the former sought,
therefore, to "control" the latter. What is more, instead of compelling the same
to comply with its duties under sections 2188 to 2191 of the Administrative Code,
the former, in effect, restrained, prevented or prohibited it from performing said
duties.
 Villena v. Sec of Interior: said majority opinion and the aforementioned separate
opinions cited section 2191 of the Revised Administrative Code as the source of the
power of the Executive to suspend and remove municipal officials. However, said
provision deals with such power of suspension and removal on appeal from a
decision of the Provincial Board in proceedings held under sections 2188 to 2190
of the said Code. Nowhere in said opinions was anything said on the question
whether said appellate authority implies a grant of original power to suspend,
either without an appeal from said decision of the Provincial Board, or without any
proceedings before said Board calling for the exercise of its disciplinary functions
under said provisions of the Revised Administrative Code. In other words, the
Court passed this question sub silentio. Hence, the decision in Villena vs. Secretary
of the Interior (supra) does not come within the purview of the rule of stare decisis,
 In conclusion, we hold that, under the present law, the procedure prescribed in
sections 2188 to 2191 of the Revised Administrative Code, for the suspension and
removal of the municipal officials therein referred to, is mandatory; that, in the
absence of a clear and explicit provision to the contrary, relative particularly to
municipal corporations — and none has been cited to us — said procedure is
exclusive;
o that the executive department of the national government, in the exercise
of its general supervision over local governments, may conduct
investigations with a view to determining whether municipal officials are
guilty of acts or omissions warranting the administrative action referred to
in said sections, as a means only to ascertain whether the provincial
governor and the provincial board should take such action;
o that the Executive may take appropriate measures to compel the provincial
governor and the provincial board to take said action,
o if the same is warranted, and they failed to do so; that the provincial
governor and the provincial board may not be deprived by the Executive
of the power to exercise the authority conferred upon them in sections
2188 to 2190 of the Revised Administrative Code;
o that such would be the effect of the assumption of those powers by the
Executive;
o that said assumption of powers would further violate section 2191 of the
same code, for the authority therein vested in the Executive is
merely appellate in character;
 that, said assumption of powers, in the case at bar, even exceeded those of the
Provincial Governor and Provincial Board, in whom original jurisdiction is vested
by said sections 2188 to 2190, for, pursuant thereto, "the preventive suspension of a
municipal officer shall not be for more than 30 days" at the expiration of which he
shall be reinstated, unless the delay in the decision of the case is due to his fault,
neglect or request, or unless he shall have meanwhile been convicted, whereas
petitioner herein was suspended "until the final determination of the proceedings"
against him, regardless of the duration thereof and cause of the delay in its
disposition;11
Separate Opinions
PARAS, C. J., dissenting:
In the allocation of governmental powers, our Constitution ordains that "the Executive
power shall be vested in a President of the Philippines." (Sec. 1, Art. VII, Constitution).
And the President is enjoined in the same Constitution to "take care that the laws be
faithfully executed." (Sec. 10, par. 1, Art. VII, Constitution.) In the same breath, the
Constitution provides that the President shall have control of all the executive
departments, bureaus, or offices, and shall exercise general supervision over all local
governments as may be provided by law (Sec. 10, par. 1, Art. VII, Constitution).
In pursuance of the Constitution, the Revised Administrative Code declares that in (Booten vs. Pinson, LRA (NS 1917-A) 1244; 77 W. Va. 412 (1915). The result
addition to his general supervisory authority, the President shall have such specific was the recognition of the power of supervision and all its implications and the
powers and duties as are expressly conferred or imposed on him by law and among such rejection of what otherwise would be an imperium in imperio to the detriment
special powers and duties shall be: of a strong national government. (p. 78.)

(b) To remove officials from office conformably to law and to declare vacant the offices
held by such removed officials. For disloyalty to the Republic of the Philippines the
President may at any time remove a person from any position of trust or authority under
the Government of the Philippine Islands.
(c) To order, when in his opinion the good of the public service so requires, an
investigation of any action or the conduct of any person in the Government service, and
in connection therewith to designate the official, committee, or person by whom such
investigation shall be conducted (Sec. 64, Rev. Adm. Code).
In reference to the malfeasance of any person in the Government service, by virtue of
Sec. 64(b) and (c) of the Revised Administrative Code, enacted in consonance with the
totality of his executive power and, specifically, the power of supervision of all offices
in the executive branch of the government, the President has concurrent supervisory
authority with the provincial governor to order an investigation of charges against an
elective municipal official. While the provincial governor has to submit the charges to
the Provincial Board for investigation, the President may designate the official,
committee or person by whom such investigation shall be conducted (Sec. 64 [c], Rev.
Adm. Code). The President can remove even elective municipal officials subject to the
limitation that such removal must be conformable to law, which are that it must be for a
cause provided by law, as those enumerated in Sec. 2188 of the Revised Administrative
Code, and conducted in a manner in conformity with due process.
Already in Planas vs. Gil, 67 Phil. 62, an attempt was made to have this Court
distinguish the power of supervision and control of the President in relation to his power
to order the investigation of an elective municipal official. This Court, through Justice
Laurel, said:
Besides, if in administrative law supervision means overseeing or the power or
authority of an officer to see that subordinate officers perform their duties, and control
means the power of an officer to alter modify, nullify or set aside what a subordinate
officer has done in the performance of his duties and to substitute the judgment of the
former for that of the latter (Mondano vs. Silvosa, 51 Off. Gaz., 2884, 2887), how will
the foregoing distinction affect the supervisory authority of the President to cause the
investigation of the malfeasance of a municipal official relating to and affecting the
administration of his office, and directly affecting the rights and interests of the public?
If supervision and control meant by the Constitution relate to the power to oversee, or
modify, set aside or annul acts done by a subordinate officer in the performance of his
duties (Rodriguez vs. Montinola, 50 Off. Gaz., 4820), the supervisory authority to
suspend and remove a subordinate official prescribed the administrative code refers to
disciplinary action on account of his misconduct or malfeasance in office.
The act complained of in the Mondano vs. Silvosa case, supra, has no reference to the
performance of duty on the part of the Mayor and is therefore not included even under
the power of supervision of the Chief Executive.
I see no cogent reason for disturbing our ruling in Planas vs. Gil, 67 Phil. 62; Villena vs.
Sec. of Interior, 67 Phil. 451; Lacson vs. Roque, 49 O. G. 93; and Villena vs. Roque, 93
Phil., 363, upholding the explicit supervisory authority of the President under Sec. 64 of
the Revised Administrative Code to include that of ordering the investigation of elective
municipal officials, and to remove or suspend them conformably to law.
Endencia, J., concurs.

Our attention has been directed to the fact that with reference to local
governments, the Constitution speaks of general supervision which is distinct
from the control given to the President over executive departments, bureaus
and offices. This is correct. But, aside from the fact that this distinction is not
important insofar as the power of the President to order the investigation is
concerned, as hereinabove indicated, the deliberations of the Constitutional
Convention show that the grant of the supervisory authority to the Chief
Executive in this regard was in the nature of a compromise resulting from the
conflict of views in that body, mainly between the historical view which
recognizes the right of local self-government (People ex rel. Le
Roy vs. Hurlbut (1871) 24 Mich., 44), and the legal theory which sanction the
possession by the state of absolute control over local governments
G.R. No. L-11336 August 30, 1958 BAUTISTA ANGELO Nevertheless, as this Court has once said, "the rights, duties, and privileges of
municipal officers (including city officials) do not have to be embodied in the
RODOLFO GANZON, petitioner-appellant, charter, but may be regulated by provisions of general application specially if these
vs. are incorporated in the same code of which the city organic law forms a part"
UNION C. KAYANAN, respondent-appellee.  Now, the charter of Iloilo City, as we have already stated, says that the mayor
"shall hold office for six years unless removed." It does not say that he shall hold
office at the pleasure of the President unlike similar provisions appearing in other
 August 25, 1956, Ernesto V. Rosales lodged a verified complaint against petitioner
with the President city charters. The idea is to give the mayor a definite tenure of office not dependent
upon the pleasure of the President.
 Count 1. That on August 22, 1956 the respondent taking advantage of his public
position as Mayor of Iloilo City and accompanied by his armed body-guards and
henchmen, stormed into the broadcasting station of DYRI of Iloilo City, and with W/N the President has power and authority to investigate with a view to his
violence and intimidation, unjustifiably and unlawfully stopped the radio-press removal: YES.
interview program People's Forum' of said station, thus, suppressing and curtailing
for about a quarter hour the complainant's right to free speech, the radio station's  Provisions actually refer to governors
right to broadcast, and the people's right to listen to a radio-press interviews, which  Considering that the position of mayor of a chartered city may be fairly compared
acts constitute oppression or unjust exercise of authority or power and/or grave in category and stature with that of a provincial governor, we are of the opinion that
misconduct in office. the former, by analogy, may also be amenable to removal and suspension for the
 Count 2. That during the occurrence of the acts mentioned in Count 1, pushed away same causes as the latter
the microphones and hitting on the back of the neck the complainant, who is a radio  causes, under Section 2078 of the Revised Administrative Code, are: disloyalty,
commentator and program director of Station DYRI of Iloilo City, and a member of dishonesty, oppression and misconduct in office.
the panel of interrogators of the 'People's Forum', a public service press interview  And considering the allegations in the complaint to the effect that petitioner took
program of said nature, constitutive of oppression and shameful misconduct in advantage of his public position as mayor of Iloilo City in committing the acts of
office. violence and intimidation upon respondent in order to stop the radio program he
 Count 3. That during the occurrence of the acts above-stated in Counts 1 and 2, the was then conducting in his station thus suppressing and curtailing his right to free
respondent Mayor of Iloilo City, in a fit of devouring fury, unrestrainedly hurled speech, we are of the opinion that said acts constitute misconduct in office for
invectives at the complainant, calling the latter indecent bad-mannered, dammed- which he may be ordered investigated by the President within the meaning of the
no-good-Cebuano who should evacuate to Cebu and other similar names, which law. There is therefore no plausible reason to disturb the decision rendered by the
verbal acts constituted oppression and oral defamation, highly unbecoming of Iloilo lower court which we find to be in accordance with law.
City's supposedly No. 1 public official and model citizen.
 Prayers: Investigation to be ordered by president; suspension order
 September 13, 1956, the Executive Secretary, by authority of the President,
designated respondent to conduct the investigation of said complaint pursuant to
the provisions of Section 64(c) of the Revised Administrative Code granting said
respondent all the powers given to an investigating officer by Sections 71 and 580
of the same Code.
 September 24, 1956, petitioner instituted in the Court of First Instance of Iloilo an
action for prohibition with preliminary injunction questioning the authority of the
President to order his investigation and praying that respondent be enjoined to
suspend and desist from proceeding with the investigation and that, pending
decision of the case on the merits, a preliminary injunction be issued against
respondent. On September 26, 1956, the lower court declined to issue the writ and
instead set the case for hearing on the merits on September 28, 1956.
 petitioner is the duly elected mayor of the City of Iloilo whose charter, speaking of
his removal, merely provides that he "shall hold office for six years unless
removed" (Section 8, Commonwealth Act No. 158, as amended). The charter does
not contain any provision as regards the procedure by which he may be removed.
G.R. No. 90336 August 12, 1991 GANCAYCO
RUPERTO TAULE, petitioner,
vs.
SECRETARY LUIS T. SANTOS and GOVERNOR LEANDRO
VERCELES, respondents.
 June 18,1989, the Federation of Associations of Barangay Councils (FABC) of
Catanduanes, composed of eleven (11) members, in their capacities as Presidents of
the Association of Barangay Councils in their respective municipalities, convened
in Virac, Catanduanes with six members in attendance for the purpose of holding
the election of its officers.
 When the group decided to hold the election despite the absence of five (5) of its
members, the Provincial Treasurer and the Provincial Election Supervisor walked
out.
 election nevertheless proceeded with PGOO Alberto P. Molina, Jr. as presiding
officer. Chosen as members of the Board of Directors were Taule, Aquino, Avila,
Jacob and Sales.
 the following were elected officers of the FABC:
President — Ruperto Taule
Vice-President — Allan Aquino
Secretary — Vicente Avila
Treasurer — Fidel Jacob
Auditor — Leo Sales1
 June 19, 1989, respondent Leandro I. Verceles, Governor of Catanduanes, sent a
letter to respondent Luis T. Santos, the Secretary of Local Government, * protesting
the election of the officers of the FABC and seeking its nullification in view of
several flagrant irregularities in the manner it was conducted.2
 Secretary, petitioner Ruperto Taule as President of the FABC, filed his comment on
the letter-protest of respondent Governor denying the alleged irregularities and
denouncing said respondent Governor for meddling or intervening in the election of
FABC officers which is a purely non-partisan affair and at the same time requesting
for his appointment as a member of the Sangguniang Panlalawigan of the province
being the duly elected President of the FABC in Catanduanes. 3
 August 4, 1989, respondent Secretary issued a resolution nullifying the election of
the officers of the FABC in Catanduanes held on June 18, 1989 and ordering a new
one to be conducted as early as possible to be presided by the Regional Director of
Region V of the Department of Local Government.4
 Filed MR; denied
W/N Secretary had jurisdiction over election protest: NO.
 Katipunan ng mga Barangay is the organization of all sangguniang barangays in
the following levels: in municipalities to be known as katipunang bayan; in
cities, katipunang panlungsod; in provinces, katipunang panlalawigan; in
regions, katipunang pampook; and on the national level, katipunan ng mga
barangay.6
 Local Government Code provides for the manner in which the katipunan ng mga
barangay at all levels shall be organized:
Sec. 110. Organization. — (1) The katipunan at all levels shall be organized in
the following manner:
(a) The katipunan in each level shall elect a board of directors and a set of
officers. The president of each level shall represent the katipunan concerned in
the next higher level of organization.
(b) The katipunan ng mga barangay shall be composed of the katipunang
pampook, which shall in turn be composed of the presidents of the katipunang
panlalawigan and the katipunang panlungsod. The presidents of the katipunang
bayan in each province shall constitute the katipunang panlalawigan. The
katipunang panlungsod and the katipunang bayan shall be composed of the
punong barangays of cities and municipalities, respectively.
 Secretary, acting in accordance with the provision of the Local Government Code
empowering him to "promulgate in detail the implementing circulars and the rules
and regulations to carry out the various administrative actions required for the
initial implementation of this Code in such a manner as will ensure the least
disruption of on-going programs and projects7 issued Department of Local
Government Circular No. 89-09 on April 7, 1989,8 to provide the guidelines for the
conduct of the elections of officers of the Katipunan ng mga Barangay at the
municipal, city, provincial, regional and national levels.
 Petitioner – COMELEC has juris; Respondent – Secretary
 The jurisdiction of the COMELEC over contests involving elective barangay
officials is limited to appellate jurisdiction from decisions of the trial courts. Under
the law,10 the sworn petition contesting the election of a barangay officer shall be
filed with the proper Municipal or Metropolitan Trial Court by any candidate who
has duly filed a certificate of candidacy and has been voted for the same office
within 10 days after the proclamation of the results. A voter may also contest the
election of any barangay officer on the ground of ineligibility or of disloyalty to the
Republic of the Philippines by filing a sworn petition for quo warranto with the
Metropolitan or Municipal Trial Court within 10 days after the proclamation of the
 results of the election.11 Only appeals from decisions of inferior courts on election
matters as aforestated may be decided by the COMELEC.
 jurisdiction of the COMELEC is over popular elections, the elected officials of
which are determined through the will of the electorate. An election is the
embodiment of the popular will, the expression of the sovereign power of the
people.12 It involves the choice or selection of candidates to public office by
popular vote.13
 Specifically, the term "election," in the context of the Constitution, may refer to the
conduct of the polls, including the listing of voters, the holding of the electoral
campaign, and the casting and counting of the votes14 which do not characterize the
election of officers in the Katipunan ng mga barangay.
 "Election contests" would refer to adversary proceedings by which matters
involving the title or claim of title to an elective office, made before or after
proclamation of the winner, is settled whether or not the contestant is claiming the
office in dispute15 and in the case of elections of barangay officials, it is restricted
to proceedings after the proclamation of the winners as no pre-proclamation
controversies are allowed.16
 The COMELEC exercises only appellate jurisdiction over election contests
involving elective barangay officials decided by the Metropolitan or Municipal
Trial Courts which likewise have limited jurisdiction. The authority of the
COMELEC over the katipunan ng mga barangay is limited by law to supervision
of the election of the representative of the katipunan concerned to
the sanggunian in a particular level conducted by their own respective
organization.17
 Secretary of Local Government is not vested with jurisdiction to entertain any
protest involving the election of officers of the FABC.
 DLG Circular No. 89-09 was issued by respondent Secretary in pursuance of his
rule-making power conferred by law and which now has the force and effect of
law.18
 There is neither a statutory nor constitutional provision expressly or even by
necessary implication conferring upon the Secretary of Local Government the
power to assume jurisdiction over an election protect involving officers of
the katipunan ng mga barangay.
 Presidential power over local governments is limited by the Constitution to the
exercise of general supervision22 "to ensure that local affairs are administered
according to law."23
 The general supervision is exercised by the President through the Secretary of
Local Government.24
 supervision means overseeing or the power or authority of an officer to see that the
subordinate officers perform their duties. If the latter fails or neglects to fulfill them
the former may take such action or step as prescribed by law to make them perform
their duties. Control, on the other hand, means the power of an officer to alter or
modify or nullify or set aside what a subordinate officer had done in the
performance of his duties and to substitute the judgment of the former for that of
the latter.
 We hold that respondent Secretary has no authority to pass upon the validity or
regularity of the election of the officers of the katipunan. To allow respondent
Secretary to do so will give him more power than the law or the Constitution
grants. It will in effect give him control over local government officials for it will
permit him to interfere in a purely democratic and non-partisan activity aimed at
strengthening the barangay as the basic component of local governments so that the
ultimate goal of fullest autonomy may be achieved. In fact, his order that the new
elections to be conducted be presided by the Regional Director is a clear and direct
interference by the Department with the political affairs of the barangays which is
not permitted by the limitation of presidential power to general supervision over
local governments.27
 although the Department is given the power to prescribe rules, regulations and
other issuances, the Administrative Code limits its authority to merely "monitoring
compliance" by local government units of such issuances.30 To monitor means "to
watch, observe or check.31 This is compatible with the power of supervision of the
Secretary over local governments which as earlier discussed is limited to checking
whether the local government unit concerned or the officers thereof perform their
duties as provided by statutory enactments.
 n assuming jurisdiction over the election protest filed by respondent Governor and
declaring the election of the officers of the FABC on June 18, 1989 as null and
void, the respondent Secretary acted in excess of his jurisdiction. The respondent
Secretary not having the jurisdiction to hear an election protest involving officers
of the FABC, the recourse of the parties is to the ordinary courts. The Regional
Trial Courts have the exclusive original jurisdiction to hear the protest. 33
 DLG Circular No. 89-15 amending DLG Circular No. 89-09 which states that
"whenever the guidelines are not substantially complied with, the election shall be
declared null and void by the Department of Local Government and an election
shall conduct and being invoked by the Solicitor General cannot be applied. DLG
Circular No. 89-15 was issued on July 3, 1989 after the June 18, 1989 elections of
the FABC officers and it is the rule in statutory construction that laws, including
circulars and regulations34 cannot be applied retrospectively. 35Moreover, such
provision is null and void for having been issued in excess of the respondent
Secretary's jurisdiction, inasmuch as an administrative authority cannot confer
jurisdiction upon itself.
W/N elections were valid: NO.
 The elections were declared null and void primarily for failure to comply with
Section 2.4 of DLG Circular No. 89-09 which provides that "the incumbent FABC
President or the Vice-President shall preside over the reorganizational meeting,
there being a quorum." The rule specifically provides that it is the incumbent
FABC President or Vice-President who shall preside over the meeting. The word
"shall" should be taken in its ordinary signification, i.e., it must be imperative or
mandatory and not merely permissive,37 as the rule is explicit and requires no other
interpretation.
 In case at bar, PGOO Molina, the Chairman of the Board, presided over the
elections. There was direct participation by the Chairman of the Board in the
elections contrary to what is dictated by the rules. Worse, there was no Board of
Election Supervisors to oversee the elections in view of the walk out staged by its
two other members, the Provincial COMELEC Supervisor and the Provincial
Treasurer. The objective of keeping the election free and honest was therefore
compromised.
WHEREFORE, the petition is GRANTED in that the resolution of respondent Secretary
dated August 4, 1989 is hereby SET ASIDE for having been issued in excess of
jurisdiction.
The election of the officials of the ABC Federation held on June 18, 1989 is hereby
annulled.1âwphi1 A new election of officers of the federation is hereby ordered to be
conducted immediately in accordance with the governing rules and regulations.

W/N appointment of Antonio is valid: NO. The Supplemental petition is hereby GRANTED. The appointment of Augusto Antonio
as representative to the Sangguniang Panlalawigan in a temporary capacity is declared
 Local Government Secretary, in his memorandum dated June 7, 1990, designated null and void.
Augusto Antonio as temporary representative of the Federation to the sangguniang
panlalawigan of Catanduanes.41 By virtue of this memorandum, respondent No costs.
governor swore into said office Augusto Antonio on June 14, 1990. 42
 Sec. 205 (2) of the Local Government Code (B.P. Blg. 337) provides that the SO ORDERED.
sangguniang panlalawigan shall be composed of the governor, the vice-governor,
elective members of the said sanggunian and the presidents of the katipunang
panlalawigan and the kabataang barangay provincial federation who shall be
appointed by the President of the Philippines.
 Batas Pambansa Blg. 51, under Sec. 2 likewise states that the sangguniang
panlalawigan of each province shall be composed of the governor as chairman and
presiding officer, the vice-governor as presiding officer pro tempore, the elective
sangguniang panlalawigan members, and the appointive members consisting of the
president of the provincial association of barangay councils, and the president of
the provincial federation of the kabataang barangay.
 law is likewise explicit. To be appointed by the President of the Philippines to sit in
the sangguniang panlalawigan is the president of the katipunang panlalawigan.
The appointee must meet the qualifications set by law.48 The appointing power is
bound by law to comply with the requirements as to the basic qualifications of the
appointee to the sangguniang panlalawigan.
 The President of the Philippines or his alter ego, the Secretary of Local
Government, has no authority to appoint anyone who does not meet the minimum
qualification to be the president of the federation of barangay councils.
 Augusto Antonio is not the president of the federation. He is a member of the
federation but he was not even present during the elections despite notice.
 The argument that Antonio was appointed as a remedial measure in the exigency of
the service cannot be sustained. Since Antonio does not meet the basic qualification
of being president of the federation, his appointment to the sangguniang
panlalawigan is not justified notwithstanding that such appointment is merely in a
temporary capacity.
 If the intention of the respondent Secretary was to protect the interest of the
federation in the sanggunian, he should have appointed the incumbent FABC
President in a hold-over capacity.
G.R. No. 112497 August 4, 1994 CRUZ
HON. FRANKLIN M. DRILON, in his capacity as SECRETARY OF
JUSTICE, petitioner,
vs.
MAYOR ALFREDO S. LIM, VICE-MAYOR JOSE L. ATIENZA, CITY
TREASURER ANTHONY ACEVEDO, SANGGUNIANG PANGLUNSOD AND
THE CITY OF MANILA, respondents.
 Section 187 of the Local Government Code reading as follows:
Procedure For Approval And Effectivity Of Tax Ordinances And Revenue
Measures; Mandatory Public Hearings. — The procedure for approval of local
tax ordinances and revenue measures shall be in accordance with the
provisions of this Code: Provided, That public hearings shall be conducted for
the purpose prior to the enactment thereof; Provided, further, That any
question on the constitutionality or legality of tax ordinances or revenue
measures may be raised on appeal within thirty (30) days from the effectivity
thereof to the Secretary of Justice who shall render a decision within sixty (60)
days from the date of receipt of the appeal: Provided, however, That such
appeal shall not have the effect of suspending the effectivity of the ordinance
and the accrual and payment of the tax, fee, or charge levied therein: Provided,
finally, That within thirty (30) days after receipt of the decision or the lapse of
the sixty-day period without the Secretary of Justice acting upon the appeal,
the aggrieved party may file appropriate proceedings with a court of competent
jurisdiction.
 Secretary of Justice had, on appeal to him of four oil companies and a taxpayer,
declared Ordinance No. 7794, otherwise known as the Manila Revenue Code, null
and void for non-compliance with the prescribed procedure in the enactment of tax
ordinances and for containing certain provisions contrary to law and public policy.
 Regional Trial Court of Manila revoked the Secretary's resolution and sustained the
ordinance, holding inter alia that the procedural requirements had been observed.
More importantly, it declared Section 187 of the Local Government Code as
unconstitutional because of its vesture in the Secretary of Justice of the power of
control over local governments in violation of the policy of local autonomy
mandated in the Constitution and of the specific provision therein conferring on the
President of the Philippines only the power of supervision over local governments. 2
 petition was originally dismissed by the Court for non-compliance with Circular 1-
88, the Solicitor General having failed to submit a certified true copy of the
challenged decision.3 However, on motion for reconsideration with the required
certified true copy of the decision attached, the petition was reinstated in view of
the importance of the issues raised therein.
W/N Sec. 187 is unconstitutional: NO.
 Section 187 authorizes the Secretary of Justice to review only the constitutionality
or legality of the tax ordinance and, if warranted, to revoke it on either or both of
these grounds.
 When he alters or modifies or sets aside a tax ordinance, he is not also permitted to
substitute his own judgment for the judgment of the local government that enacted
the measure. Secretary Drilon did set aside the Manila Revenue Code, but he did
not replace it with his own version of what the Code should be. He did not
pronounce the ordinance unwise or unreasonable as a basis for its annulment. He
did not say that in his judgment it was a bad law. What he found only was that it
was illegal. All he did in reviewing the said measure was determine if the
petitioners were performing their functions in accordance with law, that is, with the
prescribed procedure for the enactment of tax ordinances and the grant of powers to
the city government under the Local Government Code. As we see it, that was an
act not of control but of mere supervision.
 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.
 a rule similar to Section 187 appeared in the Local Autonomy Act, which provided
in its Section 2 as follows:
A tax ordinance shall go into effect on the fifteenth day after its passage,
unless the ordinance shall provide otherwise: Provided, however, That the
Secretary of Finance shall have authority to suspend the effectivity of any
ordinance within one hundred and twenty days after receipt by him of a copy
thereof, if, in his opinion, the tax or fee therein levied or imposed is unjust,
excessive, oppressive, or confiscatory, or when it is contrary to declared
national economy policy, and when the said Secretary exercises this authority
the effectivity of such ordinance shall be suspended, either in part or as a
whole, for a period of thirty days within which period the local legislative body
may either modify the tax ordinance to meet the objections thereto, or file an
appeal with a court of competent jurisdiction; otherwise, the tax ordinance or
the part or parts thereof declared suspended, shall be considered as revoked.
Thereafter, the local legislative body may not reimpose the same tax or fee
until such time as the grounds for the suspension thereof shall have ceased to
exist.
 That section allowed the Secretary of Finance to suspend the effectivity of a tax
ordinance if, in his opinion, the tax or fee levied was unjust, excessive, oppressive
or confiscatory. Determination of these flaws would involve the exercise
of judgment or discretion and not merely an examination of whether or not the
requirements or limitations of the law had been observed; hence, it would smack of
control rather than mere supervision. That power was never questioned before this
Court but, at any rate, the Secretary of Justice is not given the same latitude under
Section 187. All he is permitted to do is ascertain the constitutionality or legality of
 the tax measure, without the right to declare that, in his opinion, it is unjust,
excessive, oppressive or confiscatory.
 The issue of non-compliance with the prescribed procedure in the enactment of the
Manila Revenue Code is another matter.
 Secretary Drilon declared that there were no written notices of public hearings on
the proposed Manila Revenue Code that were sent to interested parties as required
by Art. 276(b) of the Implementing Rules of the Local Government Code nor were
copies of the proposed ordinance published in three successive issues of a
newspaper of general circulation pursuant to Art. 276(a). No minutes were
submitted to show that the obligatory public hearings had been held. Neither were
copies of the measure as approved posted in prominent places in the city in
accordance with Sec. 511(a) of the Local Government Code. Finally, the Manila
Revenue Code was not translated into Pilipino or Tagalog and disseminated among
the people for their information and guidance, conformably to Sec. 59(b) of the
Code.
 Judge Palattao found otherwise. He declared that all the procedural requirements
had been observed in the enactment of the Manila Revenue Code and that the City
of Manila had not been able to prove such compliance before the Secretary only
because he had given it only five days within which to gather and present to him all
the evidence (consisting of 25 exhibits) later submitted to the trial court.
 Court acceded to the motion of the respondents and called for the elevation to it of
the said exhibits. We have carefully examined every one of these exhibits and agree
with the trial court that the procedural requirements have indeed been observed.
 only exceptions are the posting of the ordinance as approved but this omission does
not affect its validity, considering that its publication in three successive issues of a
newspaper of general circulation will satisfy due process. It has also not been
shown that the text of the ordinance has been translated and disseminated, but this
requirement applies to the approval of local development plans and public
investment programs of the local government unit and not to tax ordinances.
 make no ruling on the substantive provisions of the Manila Revenue Code as their
validity has not been raised in issue in the present petition.

WHEREFORE, the judgment is hereby rendered REVERSING the challenged decision

of the Regional Trial Court insofar as it declared Section 187 of the Local Government
Code unconstitutional but AFFIRMING its finding that the procedural requirements in
the enactment of the Manila Revenue Code have been observed. No pronouncement as
to costs.

SO ORDERED.
 G.R. No. 139813, January 31, 2001 GONZAGA-REYES
JOELBITO-ONON, PETITIONER, VS. HON. JUDGE NELIA YAP
FERNANDEZ, R.T.C. BR. 50 - PUERTO PRINCESA CITY AND PALAWAN,
AND ELEGIO QUEJANO, JR., RESPONDENTS.
 Joel Bito-Onon is the duly elected Barangay Chairman of Barangay Tacras, Narra,
Palawan and is the Municipal Liga Chapter President for the Municipality of Narra,
Palawan.
 Elegio Quejano, Jr. on the other hand, is the duly elected Barangay Chairman of
Barangay Rizal, Magsaysay, Palawan and is the Municipal Liga Chapter President
for the Municipality of Magsaysay, Palawan.
 Both Onon and Quejano were candidates for the position of Executive Vice-
President in the August 23, 1997 election for the Liga ng Barangay Provincial
Chapter of the province of Palawan.
 Onon was proclaimed the winning candidate in the said election prompting
Quejano to file a post proclamation protest with the Board of Election Supervisors
(BES), which was decided against him on August 25, 1997.
 Quejano filed a Petition for Review of the decision of the BES with the Regional
Trial Court of Palawan and Puerto Princesa City (RTC). On April 26, 1999,
 Onon filed a motion to dismiss the Petition for Review raising the issue of
jurisdiction. Onon claimed that the RTC had no jurisdiction to review the decisions
rendered by the BES in any post proclamation electoral protest in connection with
the 1997 Liga ng mga Barangay election of officers and directors
 1997 Liga ng mga Barangay election issued by the DILG on August 11, 1997 in its
Memorandum Circular No. 97-193, providing for review of decisions or resolutions
of the BES by the regular courts of law is an ultra vires act and is void for being
issued without or in excess of jurisdiction, as its issuance is not a mere act of
supervision but rather an exercise of control over the Liga's internal organization.
 RTC ratiocinated that the Secretary of the Department of Interior and Local
Government[2] is vested with the power "to establish and prescribe rules,
regulations and other issuances and implementing laws on the general supervision
of local government units and the promotion of local autonomy and monitor
compliance thereof by said units." [3] The RTC added that DILG Circular No. 97-
193 was issued by the DILG Secretary pursuant to his rule-making power as
provided for under Section 7, Chapter II, Book IV of the Administrative Code. [4]
Consequently, the RTC ruled that it had jurisdiction over the petition for review
filed by Quejada.[5]
 Onon argues that the "Supplemental Guidelines for the 1997 Synchronized Election
of the Provincial and Metropolitan Chapters and for the Election of the National
Chapter of the Liga ng mga Barangay" contradicts the "Implementing Rules and
Guidelines for the 1997 General Elections of the Liga ng mga Barangay Officers
and Directors" and is therefore invalid. Onon alleges that the Liga ng mga
Barangay (LIGA) is not a local government unit considering that a local
government unit must have its own source of income, a certain number of
population, and a specific land area in order to exist or be created as such.
Consequently, the DILG only has a limited supervisory authority over the LIGA.
 Moreover, Onon argues that even if the DILG has supervisory authority over the
LIGA, the act of the DILG in issuing Memorandum Circular No. 97-193 or the
supplemental rules and guidelines for the conduct of the 1997 LIGA elections had
the effect of modifying, altering and nullifying the rules prescribed by the National
Liga Board.
 private respondent Quejano argues that the Secretary of the DILG has competent
authority to issue rules and regulations like Memorandum Circular No. 97-893. The
Secretary of DILG's rule-making power is conferred by the Administrative Code.
Considering that the Memorandum Circular was issued pursuant to his rule making
power, Quejano insists that the lower court did not commit any reversible error
when it denied Onon's motion to dismiss.[9]
 Memorandum Circular No. 97-193:
"Any post-proclamation protest must be filed with the BES within twenty-four (24)
hours from the closing of the election. The BES shall decide the same within forty-eight
(48) hours from receipt thereof. The decision of the BES shall be final and immediately
executory without prejudice to the filing of a Petition for Review with the regular courts
of law."[11] (emphasis supplied)
 GUIDELINES provides that the BES shall have the following among its duties:
"To resolve any post-proclamation electoral protest which must be submitted in writing
to this Board within twenty-four (24) hours from the close of election; provided said
Board shall render its decision within forty-eight (48) hours from receipt hereof; and
provided further that the decision must be submitted to the National Liga Headquarters
within twenty-four (24) hours from the said decision. The decision of the Board of
Election Supervisors in this respect shall be subject to review by the National Liga
Board the decision of which shall be final and executory."[12] (emphasis supplied)
W/N DILG Memo is valid: NO.
 Memorandum Circular No. 97-193 was issued by the DILG Secretary pursuant to
the power of general supervision of the President over all local government units
which was delegated to the DILG Secretary by virtue of Administrative Order No.
267 dated February 18, 1992.[13]
 Does the President's power of general supervision extend to the liga ng mga
barangay, which is not a local government unit? [20] We rule in the affirmative.
 In Opinion No. 41, Series of 1995, the Department of Justice ruled that the liga ng
mga barangay is a government organization, being an association, federation,
league or union created by law or by authority of law, whose members are either
appointed or elected government officials.
 The Local Government Code[21] defines the liga ng mga barangay as an
organization of all barangays for the primary purpose of determining the
representation of the liga in the sanggunians, and for ventilating, articulating and
crystallizing issues affecting barangay government administration and securing,
through proper and legal means, solutions thereto.[22] The liga shall have chapters at
the municipal, city, provincial and metropolitan political subdivision levels. The
 municipal and city chapters of the liga shall be composed of the barangay
representatives of the municipal and city barangays respectively. The duly elected
presidents of the component municipal and city chapters shall constitute the
provincial chapter or the metropolitan political subdivision chapter. The duly
elected presidents of highly urbanized cities, provincial chapters, the Metropolitan
Manila chapter and metropolitan political subdivision chapters shall constitute the
National Liga ng mga Barangay.[23]
 The ligas are primarily governed by the provisions of the Local Government
Code.[25] However, their respective constitution and by-laws shall govern all other
matters affecting the internal organization of the liga not otherwise provided for in
the Local Government Code provided that the constitution and by-laws shall be
suppletory to the provisions of Book III, Title VI of the Local Government Code
and shall always conform to the provisions of the Constitution and existing laws. [26]
 Memorandum Circular No. 97-193 of the DILG insofar as it authorizes the filing a
Petition for Review of the decision of the BES with the regular courts in a post
proclamation electoral protest is of doubtful constitutionality.
 in authorizing the filing of the petition for review of the decision of the BES with
the regular courts, the DILG Secretary in effect amended and modified the
GUIDELINES promulgated by the National Liga Board and adopted by the LIGA
which provides that the decision of the BES shall be subject to review by the
National Liga Board.
 The amendment of the GUIDELINES is more than an exercise of the power of
supervision but is an exercise of the power of control, which the President does not
have over the LIGA.
 Although the DILG is given the power to prescribe rules, regulations and other
issuances, the Administrative Code limits its authority to merely "monitoring
compliance" by local government units of such issuances. [27] To monitor means "to
watch, observe or check" and is compatible with the power of supervision of the
DILG Secretary over local governments, which is limited to checking whether the
local government unit concerned or the officers thereof perform their duties as per
statutory enactments.[28] Besides, any doubt as to the power of the DILG Secretary
to interfere with local affairs should be resolved in favor of the greater autonomy of
the local government.[29]

WHEREFORE, the instant petition is hereby GRANTED. The Order of the

Regional Trial Court dated June 22, 1999 is REVERSED and SET ASIDE. The
Petition for Review filed by the private respondent docketed as SPL. PROC. NO.
1056 is DISMISSED.

SO ORDERED.
G.R. No. 130775, September 27, 2004 TINGA
THE NATIONAL LIGA NG MGA BARANGAY, REPRESENTED BY ALEX L.
DAVID IN HIS CAPACITY AS NATIONAL PRESIDENT AND FOR HIS OWN
PERSON, PRESIDENT ALEX L. DAVID, PETITIONERS, VS. HON. VICTORIA
ISABEL A. PAREDES, PRESIDING JUDGE, REGIONAL TRIAL COURT,
BRANCH 124, CALOOCAN CITY, AND THE DEPARTMENT OF INTERIOR AND
LOCAL GOVERNMENT, REPRESENTED THE HON. SECRETARY ROBERT Z.
BARBERS AND MANUEL A. RAYOS, RESPONDENTS.
LEANDRO YANGOT, BONIFACIO LACWASAN AND BONY TACIO,
PETITIONERS, VS. DILG SECRETARY ROBERT Z. BARBERS AND DILG
UNDERSECRETARY MANUEL SANCHEZ, RESPONDENTS.
 11 June 1997, private respondent Manuel A. Rayos [as petitioner therein], Punong
Barangay of Barangay 52, District II, Zone 5, District II, Caloocan City
 Filed case with RTC alleging that respondent therein Alex L. David [now
petitioner], Punong Barangayof Barangay 77, Zone 7, Caloocan City and then
president of the LigaChapter of Caloocan City and of the Liga ng mga
Barangay National Chapter, committed certain irregularities in the notice, venue
and conduct of the proposed synchronized Liga ng mga Barangay elections in
1997.
o (1) the publication of the notice in the Manila Bulletin but without
notifying in writing the individual punong barangays of Caloocan City;[2]
o (2) the Notice of Meeting dated 08 June 1997 for the Liga Chapter of
Caloocan City did not specify whether the meeting scheduled on 14 June
1997 was to be held at 8:00 a.m. or 8:00 p.m., and worse, the meeting was
to be held in Lingayen, Pangasinan;[3] and
o (3) the deadline for the filing of the Certificates of Candidacy having been
set at 5:00 p.m. of the third day prior to the above election day, or on 11
June 1997,[4] Rayos failed to meet said deadline since he was not able to
obtain a certified true copy of the COMELEC Certificate of Canvas and
Proclamation of Winning Candidate, which were needed to be a delegate,
to vote and be voted for in the Liga election.
 On 13 June 1997, TRO was issued, effective for 72 hrs, enjoining meeting
o allegedly not properly served on herein petitioner David, and so the
election for the officers of the Liga-Caloocan was held as scheduled.[6]
 Petitioner David was proclaimed President of the Liga-Caloocan, and thereafter
took his oath and assumed the position of ex-officio member of the Sangguniang
Panlungsod of Caloocan.
 17 July 1997, respondent Rayos filed a second petition, this time for quo warranto,
against David, Nancy Quimpo, Presiding Officer of the Sangguniang
Panlungsod of Caloocan City, and Secretary Barbers.[7]
 Rayos alleged that he was elected President of the Liga Caloocan Chapter in the
elections held on 14 June 1997 by the members of the Caloocan Chapter pursuant
to their Resolution/Petition No. 001-97.[8]
 On 18 July 1997, the presiding judge granted the TRO, enjoining therein
respondents David, Quimpo and Secretary Barbers from proceeding with the
synchronized elections for the Provincial and Metropolitan Chapters of
the Liga scheduled on 19 July 1997, but only for the purpose of maintaining
the status quo and effective for a period not exceeding seventy-two (72) hours.[9]
 18 July 1997, at petitioner Davids instance, Special Civil Action (SCA) No. C-512
pending before Branch 126 was consolidated with SCA No. C-508 pending before
Branch 124.[10] Prayed also that the Department of the Interior and Local
Government (DILG), pursuant to its delegated power of general supervision, be
appointed as the Interim Caretaker to manage and administer the affairs of the Liga
o (1) the DILG Secretary exercises the power of general supervision over all
government units by virtue of Administrative Order No. 267 dated 18
February 1992;
o (2) the Liga ng mga Barangay is a government organization;
o (3) undue interference by some local elective officials during the
Municipal and City Chapter elections of the Liga ng mga Barangay;
o (4) improper issuance of confirmations of the elected LigaChapter officers
by petitioner David and the National Liga Board;
o (5) the need for the DILG to provide remedies measured in view of the
confusion and chaos sweeping the Liga ng mga Barangay and the
incapacity of the National Liga Board to address the problems properly.
 On 31 July 1997, petitioner David opposed the DILGs Urgent Motion, claiming
that the DILG, being a respondent in the case, is not allowed to seek any sanction
against a co-respondent like David, such as by filing a cross-claim, without first
seeking leave of court.[13] He also alleged that the DILGs request to be appointed
interim caretaker constitutes undue interference in the internal affairs of the Liga,
since the Liga is not subject to DILG control and supervision.[14]
 28 July 1997, and before it was acted upon by the lower court, the DILG through
then Undersecretary Manuel Sanchez, issued Memorandum Circular No. 97-176.
Which directed all provincial governors, vice governors, city mayors, city vice
mayors, members of the sangguniang panlalawiganand panlungsod, DILG
regional directors and other concerned officers, as follows:
o not to recognize and/or honor any Liga Presidents of the Provincial and
Metropolitan Chapters as ex-officio members of the sanggunian concerned
until further notice from the Courts or this Department;
o disregard any pronouncement and/or directive issued by Mr. Alex David
on any issue or matter relating to the affairs of the Liga ng mga Barangay
until further notice from the Courts or this Department.[17]
 RTC: Urgent Motion of the DILG for appointment as interim caretaker, until such
time that the regularly elected National Liga Board of Directors shall have qualified
and assumed office, to manage and administer the affairs of the National Liga
Board, is hereby GRANTED.[21]
 11 August 1997, the DILG issued Memorandum Circular No. 97-193,[24]providing
supplemental guidelines for the 1997 synchronized elections of the provincial and
 metropolitan chapters and for the election of the national chapter of the Liga ng
mga Barangay.
 12 August 1997, the DILG issued a Certificate of Appointment [25] in favor of
respondent Rayos as president of the Liga ng mga Barangay of Caloocan City. The
appointment purportedly served as Rayoss legal basis for ex-officio membership in
the Sangguniang Panlungsod of Caloocan City and to qualify and participate in the
forthcoming National Chapter Election of the Liga ng mga Barangay.[26]
 23 August 1997, the DILG conducted the synchronized elections of Provincial and
Metropolitan Liga Chapters. Thereafter, on 06 September 1997, the
National Liga Chapter held its election of officers and board of directors, wherein
James Marty L. Lim was elected as President of the National Liga.[27]
W/N Liga is under DILG: YES.
 As the basic political unit, the barangay serves as the primary planning and
implementing unit of government policies, plans, programs, projects and activities
in the community, and as a forum wherein the collective views of the people may
be expressed, crystallized and considered, and where disputes may be amicably
settled.[67]
 Liga ng mga Barangay[68] is the organization of all barangays, the primary purpose
of which is the determination of the representation of the Liga in the sanggunians,
and the ventilation, articulation, and crystallization of issues
affecting barangay government administration and securing solutions thereto,
through proper and legal means.[69]
 The Liga ng mga Barangay shall have chapters at the municipal, city and
provincial and metropolitan political subdivision levels.[70] The municipal and city
chapters of the Liga are composed of thebarangay representatives from the
municipality or city concerned. The presidents of the municipal and city chapters of
the Liga form the provincial or metropolitan political subdivision chapters of
the Liga. The presidents of the chapters of the Liga in highly urbanized cities,
provinces and the Metro Manila area and other metropolitan political subdivisions
constitute the National Liga ng mga Barangay.[71]
 the barangay is positioned to influence and direct the development of the entire
country. This was heralded by the adoption of the bottom-to-top approach process
of development which requires the development plans of thebarangay to be
considered in the development plans of the municipality, city or province, [72] whose
plans in turn are to be taken into account by the central government [73] in its plans
for the development of the entire country.[74] The Liga is the vehicle assigned to
make this new development approach materialize and produce results.
 The Liga ng mga Barangay has one principal aim, namely: to promote the
development of barangays and secure the general welfare of their inhabitants.[76]
 Ligas are primarily governed by the provisions of the Local Government Code.
However, they are empowered to make their own constitution and by-laws to
govern their operations.
 Sec. 507 of the Code provide
Constitution and By-Laws of the Liga and the Leagues. - All other matters not herein
otherwise provided for affecting the internal organization of the leagues of local
government units shall be governed by their respective constitution and by-laws which
are hereby made suppletory to the provision of this Chapter: Provided, That said
Constitution and By-laws shall always conform to the provision of the Constitution and
existing laws.
Pursuant to the Local Government Code, the Liga ng mga Barangayadopted its own
Constitution and By-Laws. It provides that the corporate powers of the Liga, expressed
or implied, shall be vested in the board of directors of each level of the Liga which
shall:
a) Have jurisdiction over all officers, directors and committees of the said Liga;
including the power of appointment, assignment and delegation;
b) Have general management of the business, property, and funds of said Liga;
c) Prepare and approve a budget showing anticipated receipts and expenditures for the
year, including the plans or schemes for funding purposes; and
d) Have the power to suspend or remove from office any officer or member of the said
board on grounds cited and in the manner provided in hereinunder provisions. [78]
 In Opinion No. 41, Series of 1995, the Department of Justice ruled that the liga ng
mga barangay is a government organization, being an association, federation,
league or union created by law or by authority of law, whose members are either
appointed or elected government officials.
 The Local Government Code defines the liga ng mga barangay as an organization
of all barangays for the primary purpose of determining the representation of the
liga in the sanggunians, and for ventilating, articulating and crystallizing issues
affecting barangay government administration and securing, through proper and
legal means, solutions thereto.[91]
 rationale for making the Liga subject to DILG supervision is quite evident, whether
from the perspectives of logic or of practicality. The Ligais an aggroupment
of barangays which are in turn represented therein by their respective punong
barangays. The representatives of the Liga sit in an Ex Officio capacity at the
municipal, city and provincial sanggunians. As such, they enjoy all the powers and
discharge all the functions of regular municipal councilors, city councilors or
provincial board members, as the case may be.
 The DILG is the topmost government agency which maintains coordination with,
and exercises supervision over local government units and its multi-level leagues.
As such, it should be forthright, circumspect and supportive in its dealings with
the Ligasespecially the Liga ng mga Barangay. The indispensable role played by
the latter in the development of the barangays and the promotion of the welfare of
the inhabitants thereof deserve no less than the full support and respect of the other
agencies of government.
W/N appointment of DILG as interim caretaker valid: NO.
 When the respondent judge eventually appointed the DILG as interim caretaker to
manage and administer the affairs of the Liga, she effectively removed the
 management from the National Liga Board and vested control of the Liga on the
DILG. Even a cursory glance at the DILGs prayer for appointment as interim
caretaker of the Liga to manage and administer the affairs of the Liga, until such
time that the new set of National Liga officers shall have been duly elected and
assumed office reveals that what the DILG wanted was to take control over
the Liga. Even if said caretakership was contemplated to last for a limited time, or
only until a new set of officers assume office, the fact remains that it was a
conferment of control in derogation of the Constitution.
 With his Department already appointed as interim caretaker of the Liga, Secretary
Barbers nullified the results of the Liga elections and promulgated DILG
Memorandum Circular No. 97-193 dated 11 August 1997, where he laid down the
supplemental guidelines for the 1997 synchronized elections of the provincial and
metropolitan chapters and for the election of the national chapter of the Liga ng
mga Barangay; scheduled dates for the new provincial, metropolitan and national
chapter elections; and appointed respondent Rayos as president of Liga-Caloocan
Chapter.
 went beyond the sphere of general supervision and constituted direct interference
with the political affairs, not only of the Liga, but more importantly, of the
barangay as an institution.
 The election of Liga officers is part of the Ligas internal organization, for which the
latter has already provided guidelines. In succession, the DILG assumed
stewardship and jurisdiction over the Liga affairs, issued supplemental guidelines
for the election, and nullified the effects of the Liga-conducted elections.
 Clearly, what the DILG wielded was the power of control which even the President
does not have.

WHEREFORE, the Petition is GRANTED. The Order of the Regional Trial Court
dated 04 August 1997 is SET ASIDE for having been issued with grave abuse of
discretion amounting to lack or excess of jurisdiction. DILG Memorandum Circulars
No. 97-176 and No. 97-193, are declared VOID for being unconstitutional and ultra
vires.

No pronouncements as to costs.

SO ORDERED.
 [G.R. No. 152774. May 27, 2004.] CALLEJO SR.
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 the Interior and Local Government,respondents.
 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
 "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
 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.
 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
the 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) proponent's 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.
 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 DILG's 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 could not be released to the LGUs without the Oversight Committee's
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.
 Same happened In 2000 and 2001 GAA
 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 Committee's 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.
 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 latter's share in the IRA.
 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.
 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."
W/N provisos for LGSEF release valid: NO.
 Consistent with the principle of local autonomy, the Constitution confines the
President's power over the LGUs to one of general supervision.
 Section 6, Article X of the Constitution reads that “Local government units shall
have a just share, as determined by law, in the national taxes which shall
be automatically released to them.”
o (1) the LGUs shall have a "just share" in the national taxes;
o (2) the "just share" shall be determined by law; and
o (3) the "just share" shall be automatically released to the LGUs.
 Webster's 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."
 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."
 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 notautomatic, 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.
 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 theConstitution."
 Local autonomy includes both administrative and fiscal autonomy. The fairly
recent case of Pimentel v. Aguirre 35 is particularly instructive.
 a basic feature of local fiscal autonomy is the constitutionally
mandatedautomatic release of the shares of LGUs in the national internal revenue
W/N GAAs can amend LGC: NO.
 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. 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.
o 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
o For 2001, P3 billion of the LGSEF was allocated, thus: Provinces — 25%;
Cities — 25%; Municipalities — 35%; Barangays — 15%.
 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
 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.
 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.
 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.
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. 147402. January 14, 2004.] CARPIO
ENGR. RANULFO C. FELICIANO, in his capacity as General
Manager of the Leyte Metropolitan Water District (LMWD),
Tacloban City, petitioner, vs.COMMISSION ON AUDIT,
Chairman CELSO D. GANGAN, Commissioners RAUL C.
FLORES and EMMANUEL M. DALMAN, and Regional
Director of COARegion VIII, respondents.
 Special Audit Team from COA Regional Office No. VIII audited the accounts of
LMWD.
 Subsequently, LMWD received a letter from COA dated 19 July 1999 requesting
payment of auditing fees.
 As General Manager of LMWD, petitioner sent a reply dated 12 October 1999
informing COA's Regional Director that the water district could not pay the
auditing fees. Petitioner cited as basis for his action Sections 6 and 20
of Presidential Decree 198 ("PD 198"),2 as well as Section 18 of Republic Act No.
6758 ("RA 6758"). The Regional Director referred petitioner's reply to
the COA Chairman on 18 October 1999.
 COA ruled that this Court has already settled COA's audit jurisdiction over local
water districts in Davao City Water District v. Civil
Service Commission and Commission onAudit, 3 as follows:
The above-quoted provision [referring to Section 3(b) PD
198] definitely sets to naught petitioner's contention that they are
private corporations. It is clear therefrom that the power to appoint
the members who will comprise the members of the Board of
Directors belong to the local executives of the local subdivision unit
where such districts are located. In contrast, the members of the
Board of Directors or the trustees of a private corporation are
elected from among members or stockholders thereof. It would not
be amiss at this point to emphasize that a private corporation is
created for the private purpose, benefit, aim and end of its members
or stockholders. Necessarily, said members or stockholders should
be given a free hand to choose who will compose the governing
body of their corporation. But this is not the case here and this
clearly indicates that petitioners are not private corporations.
W/N LMWD is a GOCC: YES.
 The Constitution and existing laws 4 mandate COA to audit all government
agencies, including government-owned and controlled corporations ("GOCCs")
with original charters. An LWD is a GOCC with an original charter.
 Section 2(1), Article IX-D of the Constitution provides
for COA's audit jurisdiction, including GOCC’s
 Petitioner theorizes that what PD 198 created was the Local Waters Utilities
Administration ("LWUA") and not the LWDs. Petitioner claims that LWDs are
created "pursuant to" and not created directly by PD 198. Thus, petitioner
concludes that PD 198 is not an "original charter" that would place LWDs within
the audit jurisdiction of COA as defined in Section 2(1), Article IX-D of
the Constitution. Petitioner elaborates that PD 198 does not create LWDs since it
does not expressly direct the creation of such entities, but only provides for their
formation on an optional or voluntary basis. 8 Petitioner adds that the operative act
that creates an LWD is the approval of the Sanggunian Resolution as specified
in PD 198.
 TheConstitution recognizes two classes of corporations. The first refers to private
corporations created under a general law. The second refers to government-owned
or controlled corporations created by special charters
 The Constitution emphatically prohibits the creation of private corporations except
by a general law applicable to all citizens. 9 The purpose of this constitutional
provision is to ban private corporations created by special charters, which
historically gave certain individuals, families or groups special privileges denied to
other citizens. 10
 Congress cannot enact a law creating a private corporation with a special charter.
Such legislation would be unconstitutional. Private corporations may exist only
under a general law. If the corporation is private, it must necessarily exist under a
general law.
 The Constitution authorizes Congress to create government-owned or controlled
corporations through special charters. Since private corporations cannot have
special charters, it follows that Congress can create corporations with special
charters only if such corporations are government-owned or controlled.
 LWDs are not private corporations because they are not created under
theCorporation Code. LWDs are not registered with the Securities and
Exchange Commission.Section 14 of the Corporation Code states that "[A]ll
corporations organized under this code shall file with the Securities and
Exchange Commission articles of incorporation . . .." LWDs have no articles of
incorporation, no incorporators and no stockholders or members. There are no
stockholders or members to elect the board directors of LWDs as in the case of all
corporations registered with the Securities and Exchange Commission.
 The local mayor or the provincial governor appoints the directors of LWDs for a
fixed term of office.
 LWDs exist by virtue of PD 198, which constitutes their special charter. Since
under theConstitution only government-owned or controlled corporations may have
special charters, LWDs can validly exist only if they are government-owned or
 controlled. To claim that LWDs are private corporations with a special charter is to
admit that their existence is constitutionally infirm.
 Clearly, LWDs exist as corporations only by virtue of PD 198, which expressly
confers onLWDs corporate powers. Section 6 of PD 198 provides that LWDs "shall
exercise the powers, rights and privileges given to private corporations under
existing laws." Without PD 198, LWDs would have no corporate powers. Thus, PD
198 constitutes the special enabling charter of LWDs. The ineluctable conclusion is
that LWDs are government-owned and controlled corporations with a special
charter.
 "government-owned and controlled corporations with original charters" means
GOCCs created under special laws and not under the general incorporation law.
There is no difference between the term "original charters" and "special charters."
W/N Sanggunian can create GOCC: NO.
 Petitioner's contention that the Sangguniang Bayan resolution creates the LWDs
assumes that the Sangguniang Bayan has the power to create corporations. This is a
patently baseless assumption. The Local Government Code 17 does not vest in the
Sangguniang Bayan the power to create corporations. 18
 What the Local Government Code empowers the Sangguniang Bayan to do is to
provide for the establishment of a waterworks system "subject to existing laws." In
Section 447(5)(vii)
 The Sangguniang Bayan may establish a waterworks system only in accordance
with the provisions of PD 198. The Sangguniang Bayan has no power to create a
corporate entity that will operate its waterworks system. However, the Sangguniang
Bayan may avail of existing enabling laws, like PD 198, to form and incorporate a
water district.
 Besides, even assuming for the sake of argument that the Sangguniang Bayan has
the power to create corporations, the LWDs would remain government-owned or
controlled corporations subject to COA's auditjurisdiction. The resolution of the
Sangguniang Bayan would constitute an LWD's special charter, making the LWD a
government-owned and controlled corporation with an original charter.
 In any event, the Court has already ruled in Baguio Water District v.
Trajano 19 that the Sangguniang Bayan resolution is not the special charter of
LWDs, thus:
While it is true that a resolution of a local sanggunian is
still necessary for the final creation of a district, this Court is of the
opinion that said resolution cannot be considered as its charter, the
same being intended only to implement the provisions of said
decree.
W/N COA has jurisdiction: YES.
 Petitioner is wrong in saying that only private corporations may be deemed "quasi-
public" and not public corporations.
 constitutional criterion on the exercise of COA's audit jurisdiction depends on the
government's ownership or control of a corporation. The nature of the corporation,
whether it is private, quasi-public, or public is immaterial.
 Constitution vests in the COA audit jurisdiction over "government-owned and
controlled corporations with original charters," as well as "government-owned or
controlled corporations" without original charters.
 GOCCs with original charters are subject to COA pre-audit, while GOCCs without
original charters are subject to COA post-audit.
 determining factor of COA's audit jurisdiction is government ownership or
control of the corporation.
 Certainly, the government owns and controls LWDs.
o The government organizes LWDs in accordance with a specific law, PD
198. There is no private party involved as co-owner in the creation of an
LWD.
o Just prior to the creation of LWDs, the national or local government owns
and controls all their assets.
o the municipal or city mayor, or the provincial governor, appoints all the
board directors of an LWD for a fixed term of six years.
o board directors of LWDs are not co-owners of the LWDs.
o LWDs have no private stockholders or members.
o The board directors and other personnel of LWDs are government
employees subject to civil service laws 25 and anti-graft laws
 Section 8 of PD 198 states that "[N]o public official shall serve as director" of an
LWD, it only means that the appointees to the board of directors of LWDs shall
come from the private sector. Once such private sector representatives assume
office as directors, they become public officials governed by the civil service law
and anti-graft laws.
 If LWDs are neither GOCCs with original charters nor GOCCs without original
charters, then they would fall under the term "agencies or instrumentalities" of the
government and thus still subject to COA's audit jurisdiction. However, the stark
and undeniable fact is that the government owns LWDs. Section 45 27 of PD
198 recognizes government ownership of LWDs when Section 45 states that the
board of directors may dissolve an LWD only on the condition that "another public
entity has acquired the assets of the district and has assumed all obligations and
 liabilities attached thereto." The implication is clear that an LWD is a public and
not a private entity.
 Section 20 of PD 198 provides:
Sec. 20. System of Business Administration. — The Board
shall, as soon as practicable, prescribe and define by resolution a
system of business administration and accounting for the district,
which shall be patterned upon and conform to the standards
established by the Administration. Auditing shall be performed by a
certified public accountant not in the government service. The
Administration may, however, conduct annual audits of the fiscal
operations of the district to be performed by an auditor retained by
the Administration. Expenses incurred in connection therewith shall
be borne equally by the water district concerned and the
Administration. 35 (Emphasis supplied)
 PD 198 cannot prevail over the Constitution. No amount of clever legislation can
exclude GOCCs like LWDs from COA's audit jurisdiction. Section 3, Article IX-C
of the Constitutionoutlaws any scheme or devise to escape COA's audit jurisdiction
 There is an irreconcilable conflict between the second sentence of Section 20 of PD
198prohibiting COA auditors from auditing LWDs and Sections 2(1) and 3, Article
IX-D of theConstitution vesting in COA the power to audit all GOCCs. We rule
that the second sentence of Section 20 of PD 198 is unconstitutional since it
violates Sections 2(1) and 3, Article IX-D of theConstitution.
W/N COA can charge auditing fees: YES.
 Section 18 of RA 6758, 38 which states:
Sec. 18. Additional Compensation
of Commission on Audit Personnel and of other Agencies. — In
order to preserve the independence and integrity of
theCommission on Audit (COA), its officials and employees are
prohibited from receiving salaries, honoraria, bonuses, allowances
or other emoluments from any government entity, local government
unit, government-owned or controlled corporations, and
government financial institutions, except those compensation paid
directly by COA out of its appropriations and contributions.
Government entities, including government-owned or
controlled corporations including financial institutions and local
government units are hereby prohibited from assessing or billing
other government entities, including government-owned or
controlled corporations including financial institutions or local
government units for services rendered by its officials and
employees as part of their regular functions for purposes of paying
additional compensation to said officials and employees. (Emphasis
supplied)
 Thus, RA 6758 itself recognizes an exception to the statutory
ban on COA personnel receiving compensation from GOCCs. I
 In Tejada, the Court explained the meaning of the word "contributions" in Section
18 ofRA 6758, which allows COA to charge GOCCs the cost of its audit services:
. . . the contributions from the GOCCs are limited to the
cost of audit services which are based on the actual cost of
the audit function in the corporation concerned plus a reasonable
rate to cover overhead expenses. The actual audit cost shall include
personnel services, maintenance and other operating expenses,
depreciation on capital and equipment and out-of-pocket expenses.
In respect to the allowances and fringe benefits granted by the
GOCCs to the COA personnel assigned to the former's auditing
units, the same shall be directly defrayed by COA from its own
appropriations . . .. 41
 COA may charge GOCCs "actual audit cost" but GOCCs must pay the same
directly to COAand not to COA auditors. Petitioner has not alleged
that COA charges LWDs auditing fees in excess of COA's "actual audit cost."
Neither has petitioner alleged that the auditing fees are paid by LWDs directly to
individual COA auditors. Thus, petitioner's contention must fail.
W/N LWDs have been privatized: NO.
 Petitioner argues that upon the enactment of PD 198, LWDs became private entities
through the transfer of ownership of water facilities from local government units to
their respective water districts as mandated by PD 198.
 Privatization involves the transfer of government assets to a private entity.
Petitioner concedes that the owner of the assets transferred under Section 6 (c)
of PD 198 is no other than the LWD itself. 32
 The transfer of assets mandated by PD 198 is a transfer of the water systems
facilities "managed, operated by or under the control of such city, municipality or
province to such (water) district." 33 In short, the transfer is from one government
entity to another government entity. PD 198 is bereft of any indication that the
transfer is to privatize the operation and control of water systems.
WHEREFORE, the Resolution of the Commission on Audit dated 3 January
2000 and the Decision dated 30 January 2001 denying petitioner's Motion for
Reconsideration are AFFIRMED. The second sentence of Section 20 of Presidential
Decree No. 198 is declared VOID for being inconsistent with Sections 2 (1) and 3,
Article IX-D of the Constitution. No costs.
 [G.R. No. 175527. December 8, 2008.] TINGA
HON. GABRIEL LUIS QUISUMBING, HON. ESTRELLA P.
YAPHA, HON. VICTORIA G. COROMINAS, HON. RAUL D.
BACALTOS (Members of the Sangguniang Panlalawigan of
Cebu), petitioners, vs. HON. GWENDOLYN F. GARCIA (In her
capacity as Governor of the Province of Cebu), HON. DELFIN P.
AGUILAR (in his capacity as Director IV (Cluster Director) of
COA), Cluster IV — Visayas Local Government Sector, HON.
HELEN S. HILAYO (In her capacity as Regional Cluster
Director of COA), and HON. ROY L. URSAL (In his capacity as
Regional Legal and Adjudication Director of COA), respondents.
 (COA) conducted a financial audit on the Province of Cebu for the period ending
December 2004.
 Its audit team rendered a report, Part II of which states: "Several contracts in the
total amount of P102,092,841.47 were not supported with a Sangguniang
Panlalawigan resolution authorizing the Provincial Governor to enter into a
contract, as required under Section 22 of R.A. No. 7160." 2
 The audit team then recommended that, "Henceforth, the local chief executive
must secure a sanggunianresolution authorizing the former to enter into a
contract as provided under Section 22 ofR.A. No. 7160." 3
 Gov. Garcia, in her capacity as the Provincial Governor of Cebu, sought the
reconsideration of the findings and recommendation of the COA. However,
without waiting for the resolution of the reconsideration sought, she instituted an
action for Declaratory Relief before the RTC of Cebu City, Branch 9.
 Alleging that the infrastructure contracts 4 subject of the audit report complied
with the bidding procedures provided under R.A. No. 9184 and were entered into
pursuant to the general and/or supplemental appropriation ordinances passed by
the Sangguniang Panlalawigan, Gov. Garcia alleged that a separate authority to
enter into such contracts was no longer necessary.
 RTC declared that Gov. Garcia need not secure prior authorization from
the Sangguniang Panlalawigan of Cebu before entering into the questioned
contracts.
 he trial court declared that the Sangguniang Panlalawigan does not have
juridical personality nor is it vested by R.A. No. 7160 with authority to sue and
be sued. The trial court accordingly dismissed the case against respondent
members of the Sangguniang Panlalawigan.
 The trial court further ruled that it is only when the contract (entered into by the
local chief executive) involves obligations which are not backed by prior
ordinances that the prior authority of the sanggunian concerned is required. In
this case, the Sangguniang Panlalawigan of Cebu had already given its prior
authorization when it passed the appropriation ordinances which authorized the
expenditures in the questioned contracts.
 Petitioners further maintained that prior authorization from the Sangguniang
Panlalawigan should be secured before Gov. Garciacould validly enter into
contracts involving monetary obligations on the part of the province.
 Respondent Governor insists that at the time of the filing of the petition for
declaratory relief, there was not yet any breach of R.A. No. 7160. She further
argues that the questioned contracts were executed after a public bidding in
implementation of specific items in the regular or supplemental appropriation
ordinances passed by theSangguniang Panlalawigan. These ordinances allegedly
serve as the authorization required under R.A. No. 7160, such that the obtention
of another authorization becomes not only redundant but also detrimental to the
speedy delivery of basic services.
 (OSG) took a stand supportive of the governor's arguments. The OSG's official
position allegedly binds the COA.
 COA officials in their Comment 10 dated March 8, 2007, maintain that Sections
306 and 346 of R.A. No. 7160 cannot be considered exceptions to Sec. 22 (c)
of R.A. No. 7160. Sec. 346 allegedly refers to disbursements which must be
made in accordance with an appropriation ordinance without need of approval
from the sanggunian concerned. Sec. 306, on the other hand, refers to the
authorization for the effectivity of the budget and should not be mistaken for the
specific authorization by the Sangguniang Panlalawigan for the local chief
executive to enter into contracts under Sec. 22 (c) of R.A. No. 7160.
 COA officials also claim that the petition for declaratory relief should have been
dismissed for the failure of Gov. Garcia to exhaust administrative remedies,
rendering the petition not ripe for judicial determination.
 OSG goes on to discuss that Sec. 323 of R.A. No. 7160 allows disbursements for
salaries and wages of existing positions, statutory and contractual obligations and
essential operating expenses authorized in the annual and supplemental budgets
of the preceding year (which are deemed reenacted in case
the sanggunianconcerned fails to pass the ordinance authorizing the annual
appropriations at the beginning of the ensuing fiscal year).
 Contractual obligations not included in the preceding year's annual and
supplemental budgets allegedly require the prior approval or authorization of the
local sanggunian.
 The trial court's pronouncement that "the parties in this case all agree that the
contracts referred to in the above findings are contracts entered into pursuant to
the bidding procedures allowed in Republic Act No. 9184 or the 'Government
Procurement Reform Act' — i.e.,public bidding, and negotiated bid. The
biddings were made pursuant to the general and/or supplemental appropriation
ordinances passed by the Sangguniang Panlalawigan of Cebu . . ." 14 is clearly
 belied by the Answer 15 filed by petitioners herein. Petitioners herein actually
argue in their Answer that the contracts subject of the COA's findings did not
proceed from a public bidding. Further, there was no budget passed in 2004.
What was allegedly in force was the reenacted 2003 budget. 16
 Garcia's contention that the questioned contracts complied with the bidding
procedure in R.A. No. 9184 and were entered into pursuant to the general and
supplemental appropriation ordinances allowing these expenditures is
diametrically at odds with the facts as presented by petitioners in this case. It is
notable, however, that while Gov. Garcia insists on the existence of appropriation
ordinances which allegedly authorized her to enter into the questioned contracts,
she does not squarely deny that these ordinan
 there was no agreement among the parties with regard to the operative facts
under which the case was to be resolved. Nonetheless, we can gather from
Gov. Garcia's silence on the matter and the OSG's own discussion on the effect
of a reenacted budget on the local chief executive's ability to enter into contracts,
that during the year in question, the Province of Cebu was indeed operating
under a reenacted budget.
 two basic premises from which the Court can proceed to discuss the question of
whether prior approval by the Sangguniang Panlalawigan was required before
Gov. Garcia could have validly entered into the questioned contracts. First, the
Province of Cebu was operating under a reenacted budget in
2004. Second, Gov. Garcia entered into contracts on behalf of the province
while this reenacted budget was in force.
 Sec. 22 (c) of R.A. No. 7160 provides:
Sec. 22. Corporate Powers. — (a) Every local government
unit, as a corporation, shall have the following powers: EcATDH
xxx xxx xxx
(c) Unless otherwise provided in this Code, no contract
may be entered into by the local chief executive in behalf of the
local government unit without prior authorization by
the sanggunian concerned. A legible copy of such contract shall
be posted at a conspicuous place in the provincial capitol or the
city, municipal or barangay hall.
W/N Garcia could enter into contract under reenacted budget: NO.
 As it clearly appears from the foregoing provision, prior authorization by the
sanggunian concerned is required before the local chief executive may enter into
contracts on behalf of the local government unit.
 Garcia posits that Sections 306 and 346 of R.A. No. 7160 are the exceptions to
Sec. 22 (c) and operate to allow her to enter into contracts on behalf of the
Province of Cebu without further authority from the Sangguniang
Panlalawigan other than that already granted in the appropriation ordinance for
2003 and the supplemental ordinances which, however, she did not care to
elucidate on.
 Sec. 306 of R.A. No. 7160 merely contains a definition of terms. Read in
conjunction with Sec. 346, Sec. 306 authorizes the local chief executive to make
disbursements of funds in accordance with the ordinance authorizing the annual
or supplemental appropriations. The "ordinance" referred to in Sec. 346 pertains
to that which enacts the local government unit's budget, for which reason no
further authorization from the local council is required, the ordinance
functioning, as it does, as the legislative authorization of the budget. 17
 To construe Sections 306 and 346 of R.A. No. 7160 as exceptions to Sec. 22 (c)
would render the requirement of prior sanggunian authorization superfluous,
useless and irrelevant. There would be no instance when such prior authorization
would be required, as in contracts involving the disbursement of appropriated
funds.
 that the Province of Cebu operated under a reenacted budget in 2004 lent a
complexion to this case which the trial court did not apprehend. Sec. 323 of R.A.
No. 7160provides that in case of a reenacted budget, "only the annual
appropriations for salaries and wages of existing positions, statutory and
contractual obligations, and essential operating expenses authorized in the annual
and supplemental budgets for the preceding year shall be deemed reenacted and
disbursement of funds shall be in accordance therewith." 19
 the word "only" preceding the above enumeration in Sec. 323, the items for
which disbursements may be made under a reenacted budget are exclusive.
Clearly, contractual obligations which were not included in the previous year's
annual and supplemental budgets cannot be disbursed by the local government
unit. It follows, too, that new contracts entered into by the local chief executive
require the prior approval of the sanggunian.
 the words "disbursement" and "contract" separately referred to in Sec. 346 and
22 (c) of R.A. No. 7160 should be understood in their common signification.
Disbursement is defined as "To pay out, commonly from a fund. To make
payment in settlement of a debt or account payable." 20 Contract, on the other
hand, is defined by our Civil Code as "a meeting of minds between two persons
whereby one binds himself, with respect to the other, to give something or to
render some service." 21
 Sec. 465, Art. 1, Chapter 3 ofR.A. No. 7160 states that the provincial governor
shall "[r]epresent the province in all its business transactions and sign in its
behalf all bonds, contracts, and obligations, and such other documents upon
authority of the sangguniang panlalawigan or pursuant to law or ordinances."
 Sec. 468, Art. 3 of the same chapter also establishes thesanggunian's power, as
the province's legislative body, to authorize the provincial governor to negotiate
and contract loans, lease public buildings held in a proprietary capacity to private
parties, among other things.
 Sec. 37 provides: "The Procuring Entity shall issue the Notice to Proceed to the instance, already contain in sufficient detail the project and cost of a capital
winning bidder not later than seven (7) calendar days from the date of approval outlay such that all that the local chief executive needs to do after undergoing the
of the contract by the appropriate authority..." requisite public bidding is to execute the contract, no further authorization is
required, the appropriation ordinance already being sufficient.
 R.A. No. 9184 establishes the law and procedure for public procurement. Sec. 37
thereof explicitly makes the approval of the appropriate authority which, in the
case of local government units, is the sanggunian, the point of reference for the WHEREFORE, the petition is GRANTED IN PART. The Decision dated July 11,
notice to proceed to be issued to the winning bidder. 2006, of the Regional Trial Court of Cebu City, Branch 9, in Civil Case No. CEB-
 This provision, rather than being in conflict with or providing an exception to 31560, and its Order dated October 25, 2006, are REVERSED and SET ASIDE. The
Sec. 22 (c) of R.A. No. 7160, blends seamlessly with the latter and even case is REMANDED to the courta quo for further proceedings in accordance with
acknowledges that in the exercise of the local government unit's corporate this Decision. No pronouncement as to costs.
powers, the chief executive acts merely as an instrumentality of the local council. SO ORDERED.
 Read together, the cited provisions mandate the local chief executive to secure
the sanggunian's approval before entering into procurement contracts and to
transmit the notice to proceed to the winning bidder not later than seven (7)
calendar days therefrom.
 Gov. Garcia's petition for declaratory relief should have been dismissed because
it was instituted after the COA had already found her in violation of Sec. 22 (c)
of R.A. No. 7160. One of the important requirements for a petition for
declaratory relief under Sec. 1, Rule 63 of the Rules of Court is that it be filed
before breach or violation of a deed, will, contract, other written instrument,
statute, executive order, regulation, ordinance or any other governmental
regulation.
 It cannot be overemphasized that the paramount consideration in the present
controversy is the fact that the Province of Cebu was operating under a re-
enacted budget in 2004, resulting in an altogether different set of rules as directed
by Sec. 323 of R.A. 7160. This Decision, however, should not be so construed as
to proscribe any and all contracts entered into by the local chief executive
without formal sanggunian authorization.
 In cases, for instance, where the local government unit operates under an annual
as opposed to a re-enacted budget, it should be acknowledged that the
appropriation passed by thesanggunian may validly serve as the authorization
required under Sec. 22 (c) of R.A. No. 7160. After all, an appropriation is an
authorization made by ordinance, directing the payment of goods and services
from local government funds under specified conditions or for specific purposes.
The appropriation covers the expenditures which are to be made by the local
government unit, such as current operating expenditures 26 and capital
outlays. 27
 whether a sanggunian authorization separate from the appropriation ordinance is
required should be resolved depending on the particular circumstances of the
case. Resort to the appropriation ordinance is necessary in order to determine if
there is a provision therein which specifically covers the expense to be incurred
or the contract to be entered into. Should the appropriation ordinance, for
 [G.R. No. 171873. July 9, 2010.] DEL CASTILLO
MUNICIPALITY OF TIWI, represented by Hon. Mayor
JAIME C. VILLANUEVA and the SANGGUNIANG
BAYAN of TIWI, petitioners, vs. ANTONIO
B. BETITO,respondent.
 offshoot of National Power Corporation v. Province of Albay 4and Salalima v.
Guingona, Jr. 5 It is, thus, necessary to revisit some pertinent facts from these
cases in order to provide an adequate backdrop for the present controversy.
 National Power Corporation v. Province of Albay finding, among others, the
National Power Corporation (NPC) liable for unpaid real estate taxes from June
11, 1984 to March 10, 1987 on its properties located in the Province of Albay
(Albay).
 These properties consisted ofgeothermal plants in
the Municipality of Tiwi (Tiwi) and substations in the Municipality ofDaraga.
Previously,
 the said properties were sold at an auction sale conducted by Albay to satisfy
NPC's tax liabilities. As the sole bidder at the auction, Albay acquired ownership
over said properties.
 July 29, 1992, the NPC, through its then President Pablo Malixi (President
Malixi), and Albay, represented by then Governor Romeo R. Salalima (Governor
Salalima), entered into a Memorandum of Agreement (MOA) where the former
agreed to settle its tax liabilities estimated at P214,845,104.76.
 The MOA provided, among others, that: (1) the actual amount collectible from
NPC will have to be recomputed/revalidated; (2) NPC shall make an initial
payment of P17,763,000.00 upon signing of the agreement; (3) the balanceof the
recomputed/ revalidated amount (less the aforesaid initial payment), shall be paid
in 24 equal monthly installments to commence in September 1992; and (4)
ownership over the auctioned properties shall revert to NPC upon
satisfaction of the tax liabilities.
 Mayor Naomi C. Corral (Mayor Corral) of Tiwi formally requested Governor
Salalima to remit the rightful tax shares of Tiwi and its barangayswhere the
NPC's properties were located relative to the payments already made by NPC to
Albay. On even date, the Sangguniang Bayan of Tiwi passed Resolution No. 12-
92 requesting the Sangguniang Panlalawigan of Albay to hold a joint session for
the purposeof discussing the distribution of the NPC payments.
 Salalima replied that the request cannot be granted as the initial payment
amounting to P17,763,000.00 was only an "earnest money" and that the total
amount to be collected from the NPC was still being validated.
 NPC requested a clarification from the Office of the President as to the scope and
extent of the shares of the local government units in the real estate tax
collections.
 the Sangguniang Bayan of Tiwi passed Resolution No. 15-92 authorizing Mayor
Corral to hire a lawyer to represent Tiwi and its barangays in the
recovery of their rightful share in the aforesaid realty taxes.
 Mayor Corral sought the services of respondent Atty. Antonio
B. Betito (respondent) and Atty. Alberto Lawenko (Atty. Lawenko). As a result,
on January 25, 1993, Mayor Corral, representing Tiwi, and respondent and Atty.
Lawenko entered into a Contract of Legal Services (subject contract).
 The subject contract provided, among others, that respondent and Atty. Lawenko
would receive a 10% contingent fee on whatever amount of realty taxes that
would be recovered by Tiwi through their efforts.
 December 3, 1992, the Office of the President, through then Chief Presidential
Legal Counsel Antonio T. Carpio, 6 opined that the MOA entered into by NPC
and Albay merely recognized and established NPC's realty taxes. He further
clarified that the sharing scheme and those entitled to the payments to be made
by NPC under the MOA should be that provided under the law, and since Tiwi is
entitled to share in said realty taxes, NPC may remit such share directly to Tiwi
 Because of this opinion, NPC President Malixi, through a letter dated December
9, 1992, informed Mayor Corral and Governor Salalima that starting with the
January 1993 installment, NPC will directly pay Tiwi its share in the payments
under the MOA.
 theSangguniang Panlalawigan of Albay passed Ordinance No. 09-92, which,
among others: (1) authorized the Provincial Treasurer upon the direction of the
Provincial Governor to sell the real properties (acquired by Albay at the auction
sale) at a public auction, and to cause the immediate transfer thereof to the
winning bidder; and (2) declared as forfeited in favor ofAlbay, all the payments
already made by NPC under the MOA.
 Albay's refusal to remit Tiwi's share in the aforementioned P40,724,471.74
stemmed several administrative complaints and court cases that respondent
allegedly handled on behalf of Tiwi to recover the latter's rightful share in the
unpaid realty taxes, including the case of Salalima v. Guingona, Jr. In this case,
the Court held, among others, that the elective officials of Albay are
administratively liable for abuse of authority due to their unjustified refusal to
remit the rightful share of Tiwi in the subject realty taxes.
 Under the Contractof Legal Services, respondent is entitled to 10% of whatever
amount that would be collected from the NPC. However, despite repeated
demands for the Sangguniang Bayan ofTiwi to pass an appropriate ordinance for
the payment of his attorney's fees, the former refused to pass the ordinance and to
pay what is justly owed him. Respondent prayed thatTiwi be ordered to pay
P11,000,000.00 in attorney's fees and 10% of the other amounts to be determined
 during trial plus interest and damages; that the Sangguniang Bayan be ordered to
pass the necessary appropriation ordinance; that the municipal treasurer surrender
all the receipts of payments made by the NPC to Tiwi from January 1993 to
December 1996 for the examination of the court; and that Tiwi pay P500,000.00
as attorney's fees.
 petitioners admitted that the Sangguniang Bayan of Tiwi passed Resolution No.
15-92 but denied that said resolution authorized then Mayor Corral to enter into
the subject contract.
 In particular, Mayor Corral exceeded her authority when she bound Tiwi to a
gargantuan amount equivalent to 10% of the amount of realty taxes recovered
from NPC. Further, the legal services under the subject contract should have
been limited to the execution of the decision in National Power Corporation v.
Province ofAlbay as per Resolution No. 15-92. For these reasons, the subject
contract is void, unenforceable, unconscionable and unreasonable. Petitioners
further claim that they are not aware of the cases which respondent allegedly
handled on behalf of Tiwi since these cases involved officials of the previous
administration; that some of these cases were actually handled by the
Office of the Solicitor General; and that these were personal casesof said
officials. In addition, the Contract of Legal Services was not ratified by
theSangguniang Bayan of Tiwi in order to become effective. Petitioners also
raise the defense that the realty taxes were recovered by virtue of the opinion
rendered by then Chief Presidential Legal Counsel Antonio T. Carpio and not
through the efforts of respondent.
 P110,985,181.83 in realty taxes was received by Albay and not Tiwi while the
amount of P35,594,480.00 is part of the share of Tiwi in the utilization of the
national wealth.
 Furthermore, in a Commission on Audit (COA) Memorandum dated January 15,
1996, the COA ruled that the authority to pass upon the reasonableness of the
attorney's fees claimed by respondent lies with the Sangguniang Bayan of Tiwi.
Pursuant to this memorandum, the Sangguniang Bayan of Tiwi passed
Resolution No. 27-98 which declared the subject contract invalid.
 The appellate court agreed with the trial court that the genuineness and due
execution of the Contract of Legal Services and Resolution No. 15-92 was
impliedly admitted by petitioners because of their failure to make a verified
specific denial thereof.
W/N Mayor Corral was authorized to enter into the Contract of Legal Services:
YES.
 Petitioners argue that Resolution No. 15-92 did not authorize Mayor Corral to
enter into the subject contract, hence, the contract must first be ratified to become
binding onTiwi.
 unpersuasive. Section 444 (b) (1) (vi) of the LGC provides:
SECTION 444. The Chief Executive: Powers, Duties,
Functions and Compensation. — . . .
(b) For efficient, effective and economical governance the
purpose of which is the general welfare of the municipality and its
inhabitants pursuant to Section 16 ofthis Code, the municipal mayor
shall: . . . AIDSTE
(1) Exercise general supervision and control over
all programs, projects, services, and activities of the
municipal government, and in this connection, shall: . . .
(vi) Upon authorization by
the sangguniang bayan, represent
the municipality in all its business transactions
and sign on its behalf all bonds, contracts, and
obligations, and such other documents made
pursuant to law or ordinance; . . .
 Pursuant to this provision, the municipal mayor is required to secure the prior
authorization of the Sangguniang Bayan before entering into a contract on
behalf of themunicipality. In the instant case, the Sangguniang
Bayan of Tiwi unanimously passed Resolution No. 15-92 authorizing Mayor
Corral to hire a lawyer of her choice to represent the interest of Tiwi
 authority necessarily carried with it the power to negotiate, execute and sign on
behalf of Tiwi the Contract of Legal Services. That the authorization did not set
the terms and conditions of the compensation signifies that the council
empowered Mayor Corral to reach a mutually agreeable arrangement with the
lawyer of her choice subject, ofcourse, to the general limitation that the contract's
stipulations should not be contrary to law, morals, good customs, public order or
public policy, 21 and, considering that this is a contract of legal services, to the
added restriction that the agreed attorney's fees must not be unreasonable and
unconscionable. 22
 On its face, and there is no allegation to the contrary, this prior authorization
appears to have been given by the council in good faith to the
end of expeditiously safeguarding the rights of Tiwi. Under the particular
circumstancesof this case, there is, thus, nothing objectionable to this
manner of prior authorization.
 petitioners' next contention that the subject contract should first be ratified in
order to become enforceable as against Tiwi must necessarily fail. As correctly
held by the CA, the law speaks of prior authorization and not ratification with
respect to the power of the local chief executive to enter into a contract on
behalf of the local government unit. 25 This authority, as discussed above, was
granted by the Sangguniang Bayan to Mayor Corral as per Resolution No. 15-92.
W/N services was only for NPC v. Albay: YES.
 The wording of Resolution No. 15-92 is clear. Its title and whereas clauses,  What appears then from the pleadings is that respondent, by his own admission,
previously quoted above, indicate that the hiring of a lawyer was for the sole concedes the immense importance of the aforesaid opinion to the eventual
purpose of executing the judgment in National Power Corporation v. recovery of the unpaid realty taxes. However, respondent never asserted the
Province ofAlbay, that is, to allow Tiwi to recover its rightful share in the unpaid degree of his participation in the crafting or issuance of this opinion. It is evident,
realty taxes of NPC. therefore, that the recovery of the realty taxes is not solely attributable to the
efforts of respondent. This aspect of the case is decisive because it goes into the
 In his Complaint, respondent admits that he was furnished and read a copy of the central issue of whether the 10% contingent fee is unreasonable and
said resolution before he entered into the subject contract. He cannot now feign unconscionable.
ignorance ofthe limitations of the authority of Mayor Corral to enter into the
subject contract and the purpose for which his services were employed.  Consequently, it becomes necessary to weigh, based on the evidence that will be
adduced during trial, the relative importance of the aforesaid opinion vis-à-vis the
 It could not have been the intention of the Sangguniang Bayan of Tiwi to cases allegedly handled by respondent on behalf of Tiwi insofar as they aided in
authorize the hiring of a lawyer to perform general legal services because this the eventual recovery of the unpaid realty taxes. And from here, the trial court
duty devolves upon the municipal legal officer. may reasonably determine what weight or value to assign the legal services
 The council sought the services of a lawyer because the dispute was between which were rendered by respondent.
the municipality (Tiwi) and province (Albay) so much so that it fell under the WHEREFORE, the petition is GRANTED. The October 19, 2005
exception provided in Section 481 (b) (3) (i) 27 of the LGCwhich permits a local Decision and March 10, 2006 Resolution of the Court of Appeals in CA G.R. CV
government unit to employ the services of a special legal officer. T No. 79057 are REVERSED and SET ASIDE. This case is REMANDED to the
 The subject contract stipulated that respondent's 10% fee shall be based on trial court for further proceedings to determine the reasonable amount of attorney's
"whatever amount or payment collected from the National Power Corporation fees which respondent is entitled to in accordance with the guidelines set in this
(NPC) as a result of the legal service rendered by [respondent]." 28 As will Decision.
be discussed hereunder, the extent and significance of respondent's legal services SO ORDERED.
that reasonably contributed to the recovery of Tiwi's share as well as the
amount of realty taxes recovered by Tiwi arising from these alleged services
requires a full-blown trial.
 However, we can take judicial notice of Salalima v. Guingona, Jr. where
respondent appears as the counsel of record. In Salalima v. Guingona, Jr., the
Court found, among others, that the elective officials of Albay are
administratively liable for (1) their unjustified refusal to release the
share of Tiwi in the subject realty taxes, and (2) initiating unfounded and
harassment disciplinary actions against Mayor Corral as a retaliatory tactic. This
case, at the minimum, is evidence of the efforts of respondent in
recovering Tiwi's share.
 Nevertheless, the other cases allegedly handled by respondent cannot be deemed
admitted for purposesof fixing respondent's compensation because petitioners
controverted the same on several grounds, to wit: (1) these cases where not
handled by respondent, (2) the OSG was the lead counsel in these cases, and (3)
these cases were the personal cases of Mayor Corral and other
officials of Tiwi which had no bearing in the eventual recovery of Tiwi's share in
the subject realty taxes. With our previous finding that the subject contract only
covers legal services which reasonably contributed to the recovery of Tiwi's
share, these defenses properly tender issues which should be determined in a trial
on the merits
 [G.R. No. L-9920. February 29, 1960.] GUTIERREZ DAVID
[With resolution of April 18, 1960]
BARTOLOME E. SAN DIEGO plaintiff and
appellee, vs. THE MUNICIPALITY OF
NAUJAN, PROVINCE OF ORIENTAL MINDORO, defendant
and appellant.
 Following a public bidding conducted by the municipality of Naujan, Oriental
Mindoro for the lease of its municipal waters, Resolution 46, series of 1947 was
passed by the municipal council thereof awarding the concession of the Butas
River and the Naujan Lake to the highest bidder Bartolome San Diego.
 contract was entered into between the said San Diego and the municipality,
stipulating that for a period of five (5) years, from January 1, 1948 to December
31, 1952, the former was to be the lessee of "the exclusive privilege of erecting
fish corrals along the Butas River beginning from its junction with
the San Agustin River up to the Naujan Lake itself," for an annual
rental of P26,300.00, or a total of P131,500.00 for five years.
 Upon petition by the lessee, however, the said council reduced the annual rental
by 20% by virtue of Resolution 59, series of 1949.
 September 5, 1950, the lessee requested for a five year extension of the original
lease period.
 on December 1, 1951, after the lessee had reiterated his petition for extension, for
the reason that the typhoon "Wanda", which took place that month, destroyed
most of his fish corrals, the council adopted Resolution 222, series of 1951
extending the lease for another five (5) years beginning January 1, 1952, with the
express condition that the plaintiff would waive the privilege to seek for
reduction of the amount of rent which was to be based on the original contract.
 contract was approved and confirmed on December 29, 1951 by Resolution 229,
series of 1951, of the municipal council of Naujanwhose term was then about to
expire. Pursuant to the said contract, the lessee filed a surety bond of P52,000.00
and then reconstructed his fish corrals and stocked the NaujanLake with bañgus
fingerlings.
 January 2, 1952, the municipal council of Naujan, this time composed of a new
setof members, adopted Resolution 3, series of 1952, revoking Resolution 222,
series of 1951.
 On the same date, the new council also passed Resolution 11, revoking
Resolution 229 ofthe old council which confirmed the extension of the lease
period.
 The lessee requested for reconsideration and recall of Resolution 3, on the
ground, among others, that it violated the contract executed between him and
the municipality on December 23, 1951, and, therefore, contrary to Article III,
section 1, clause 10 of the Constitution. The request, however, was not granted.
 lower court rendered judgment upholding the validity of the lease contract, as
well as its extension, and declaring Resolution 3, series of 1952, null and void.
 Resolution 222, series of 1951, is an approval ofplaintiff-appellee's petition for
extension for another five years, effective January 1, 1953, ofhis five-year lease
concession granted under Resolution 46, series of 1947. Said Resolution 222,
however, was revoked by the municipal council under a new set of members in
its Resolution 3, series of 1952, for the reason, among others, that the extension
was illegal, it having been granted without competitive public bidding. It is this
last mentioned resolution that has been declared null and void by the trial court.
W/N Resolution 3 is valid: YES.
 The law (Sec. 2323 of the Revised Administrative Code) requires that when the
exclusive privilege of fishery or the right to conduct a fish-breeding ground is
granted to a private party, the same shall be let to the highest bidder in the same
manner as is being done in exploiting a ferry, a market or a slaughterhouse
belonging to the municipality
 The requirement of competitive bidding is for the purpose of inviting
competition and to guard against favoritism, fraud and corruption in the
letting of fishery privileges
 original lease contract in this case was awarded to the highest bidder, but the
reduction of the rental and the extension of the term of the lease appear to have
been granted without previous public bidding.
 altex (Phil.), Inc., et al. vs. Delgado Bros., Inc., et al., 96 Phil., 368, the
amendment to an arrastre contract was declared null and void on the ground that
it was made without previous public bidding
 While in that case we ruled that although the "arrastre contract" therein
questioned authorized the parties to alter or amend any of the terms thereof, such
authority must be considered as being subject to the requirement of previous
public bidding, a formality observed before the original contract was awarded,
with more reason should the rule requiring such public bidding be strictly applied
in the instant case where no such authority to alter or amend the terms of the
contract was reserved.
 statutes requiring public bidding apply to amendments of any contract already
executed in compliance with the law where such amendments alter the original
contract in some vital and essential particular
 period in a lease is a vital and essential particular to the contract, we believe that
the extension of the lease period in this case, which was granted without the
essential requisite of public bidding, is not in accordance with law. And it
follows that Resolution 222, series of 1951, and the contract authorized thereby,
extending the original five-year lease to another five years are null and void as
contrary to law and public policy.
 Resolution 3 is not an impairment of the obligation of contract, because the
constitutional provision on impairment refers only to contract legally executed.
 municipal council of Naujan acted aright in adopting Resolution 3,
series of 1952, now in question.
 Resolution 59, series of 1947, reducing the rentals by 20% of the original price,
which was also passed without public bidding, should likewise be held void
 [G.R. No. L-8847. October 31, 1957.] PADILLA
PEDRO P. RIVERA, petitioner, vs. MUNICIPALITY
OF MALOLOS, respondent.
 Sometime in August 1949 the municipality of Malolos, Bulacan, called for bids
for the supply of road construction materials to repair the roads of the
municipality.
 At the public bidding held on 28 August 1949 for that purpose, the petitioner's
bid was the lowest
 acting municipal treasurer informed the petitioner that the contract had been
awarded to him and requested him to call at his office for the execution of the
contract
 31 August 1949 the contract was signed by the municipal mayor in behalf of the
municipality and the petitioner. It was stipulated that for and in consideration of
the sum of P19,235 the petitioner was to furnish and deliver to the municipality
of Malolos2,700 cubic meters of crushed adobe stone (cascajo) and 1,400 cubic
meters of gravel
 29 July 1950 the petitioner wrote to the municipal treasurer, through the
provincial auditor, calling his attention to the fact that the sum of P19,339.56 due
him as payment for the value of crushed adobe stone and gravel delivered to the
municipality had not yet been paid and that as the fiscal year 1949-1950 had
already expired
 he requested that the sum be included in the appropriations for the incoming
fiscal year 1950-1951 as an outstanding obligation
 On 2 August 1950, the principal clerk, acting in behalf of the municipal
treasurer, informed the petitioner that "The Municipal Council (had) agreed to
put said amount as standing obligation of the municipality authorizing payment
and authorizing the Municipal Treasurer to pay as soon as funds are available."
 16 October 1951 the municipal council passed Resolution No. 68 ratifying the
public bidding called by the municipal treasurer for the supply of road
construction materials, and the contract entered into by the municipal mayor in
behalf of the municipality on 31 August 1949
 30 October 1951 the petitioner filed a complaint against the municipality
of Malolos in the Court of First Instance of Bulacan to collect the sum of
P19,235 for the value of crushed adobe stone and gravel delivered by the
petitioner under the contract
 11 January 1954 the petitioner sought the intervention of the Presidential
Complaints and Action Committee, which forwarded the petitioner's claim
through proper channels to the Office of the Auditor General.
 Deputy Auditor General denied the petitioner's claim on the ground that as
o there was no sum of money appropriated to meet the obligation incurred
before the execution of the contract, as required by section 607 of the
Revised Administrative Code,
o the said contract is void, as provided in section 608 of the same Code;
and that
o even if there was such sum appropriated to meet such obligation, the
alleged deliveries of crushed adobe stone and gravel could no longer be
verified by the Provincial Auditor of Bulacan or his representative (
W/N valid contract: NO.
 Before a contract may be entered into validly by a municipality, the law requires
that there should be an appropriation of municipal funds to meet the obligation
validly passed by the municipal council and approved by the municipal mayor.
 Section 2165 provides that "Municipalities . . . are endowed with the faculties of
municipal corporations to be exercised by and through their respective municipal
governments in conformity with law." "It shall be competent for them, in their
proper corporate name, . . . to contract and be contracted with, . . . ."
 The power or authority conferred upon municipal corporations must be exercised
in conformity with law, and the law provides that such contracts must be entered
into by the district engineer. 1
 the law requires that before a contract involving the expenditure of P2,000 or
more may be entered into or authorized, the municipal treasurer must certify to
the officer entering into such contract that funds have been duly appropriated for
such purpose and that the amount necessary to cover the proposed contract is
available for expenditure on account thereof; 2 and that a purported contract
entered into contrary to the requirements just stated is wholly void
 law provides that the provincial auditor or his representative must check up the
deliveries made by a contractor pursuant to a contract lawfully and validly
entered into, 3 and there was no such check up, the petitioner's claim that there is
no longer an issue as to whether the road construction materials have been
actually delivered by the petitioner and received by the respondent is groundless.
The Auditor General is not in duty bound to pass and allow in audit the sum
claimed by the petitioner if he or his authorized representative did not check up
the delivery of the crushed adobe stone and gravel. To say that the purpose and
aim of this checking requirement is to forestall fraud and collusion is to state
what is obvious.
 [G.R. No. L-15948. January 31, 1963.] MAKALINTAL

PEDRO P. RIVERA, plaintiff-appellant, vs. CARLOS

P. MACLANG, defendant-appellee.

 August 19, 1949 the municipality of Malolos called for bids for furnishing and
delivering materials to be used in the maintenance and repair of barrio roads.
 Appellant won in the bidding and was asked by the Municipal Treasurer to come
to his office for execution of the corresponding contract.
 On August 31, 1949 the contract was signed by appellant and by defendant-
appellee Carlos P. Maclang in his capacity as Municipal Mayor of Malolos.
 The dismissal is erroneous. Our ruling in the previous case is that the contract
was null and void vis-a-vis the Municipality of Malolos, by reason of
noncompliance with the requirement of section 607 of the Revised
Administrative Code, which states that "except in the case of a contract for
supplies to be carried in stock, no contract involving the expenditure by any
province, municipality, chartered city, or municipal district of two thousand
pesos or more shall be entered into or authorized until the treasurer of the
political division concerned shall have certified to the officer entering into such
contract that funds have been duly appropriated for such purpose and that the
amount necessary to cover the proposed contract is available for expenditure on
account thereof."
 present action is against defendant- appellee in his personal capacity on the
strength of section 608 of the same code, which provides as follows:
"SEC. 608. Void contract — Liability of officer. — A
purported contract entered into contrary to the requirements of the
next preceding section hereof shall be wholly void, and the officer
assuming to make such contract shall be liable to the Government
or other contracting party for any consequent damage to the same
extent as if the transaction had been wholly between private
parties."
 His liability is personal, as if the transaction had been entered into by him as a
private party.
 We take it that the intention of the law in this respect is to ensure that public
officers entering into transactions with private individuals calling for the
expenditure of public funds observe a high degree of caution so that the
government may not be the victim of ill-advised or improvident action by
those assuming to represent it.
G.R. No. L-9596 February 11, 1916 TRENT  It often happens that the same agent or agency has both a governmental and a
corporate character. Such, for instance, are a municipal water system designed both
MARCOS MENDOZA, plaintiff-appellee, for protection against fire (a governmental function) and to supply water to the
vs. inhabitants for profit (a corporate function); a municipal light plant both for
FRANCISCO DE LEON, ET AL., defendants-appellants. lighting the streets (a governmental function) and for furnishing light to the
inhabitants at a profit (a corporate function); an agent who is at the same time a
police officer and a caretaker of a municipal toll bridge. It is, also, sometimes the
 damages against the individual members of the municipal council of the
municipality of Villasis, Pangasinan, for the revocation of the lease of an exclusive case that considerable difficulty is experienced in determining whether a particular
ferry privilege duly awarded to the plaintiff under the provisions of Act No. 1643 municipal duty is governmental or corporate.
of the Philippine Commission.  But here is it clear that the leasing of a municipal ferry to the highest bidder for a
specified period of time is not a governmental but a corporate function. Such a
 After use of a little more than one year, the plaintiff was forcibly ejected under and
lease, when validly entered into, constitutes a contract with the lessee which the
pursuance of a resolution adopted by the herein defendants, awarding a franchise
municipality is bound to respect.
for the same ferry to another person.
 Municipalities of the Philippine Islands organized under the Municipal Code have  It seems clear, therefore, that under the provisions of Municipal Code and Act No.
1634, above referred to, the plaintiff had a vested right to the exclusive operation of
both governmental and corporate or business functions.
the ferry in question for the period of his lease. Were the municipality a party to
 Of the first class are the adoption of regulation against fire and disease,
this action, it would be patent that a judgment for damages against it for the
preservation of the public peace, maintenance of municipal prisons, establishment
rescission of the contract would be proper.
of primary schools and post-offices, etc.
 This, be it said, is the usual method of exacting damages, either ex contractu or ex
 Of the latter class are the establishment of municipal waterworks for the use of the
delictoarising from the exercise of corporate powers of municipalities. But the
inhabitants, the construction and maintenance of municipal slaughterhouses,
present action is against the members of the municipal council personally, and the
markets, stables, bathing establishments, wharves, ferries, and fisheries.
question arises: Are they liable? In administering the patrimonial property of
 Act No. 1643 provides that the use of each fishery, fish-breeding ground, ferry,
municipalities, the municipal council occupies, for most purposes, the position of a
stable, market, and slaughterhouse belonging to any municipality or township shall
board of directors of a private corporation.
be let to the highest bidder annually or for such longer period not exceeding five
 it is not at all improbable that on occasion the councilors may have reason to
years as may have been previously approved by the provincial board of the
believe that a particular contract has been rescinded by the other party or has never
province in which the municipality or township is located.
been legally entered into, in both of which cases, decisive steps must be taken to
safeguard the interest of the municipality.
W/N municipal council members liable: NO.  we do not think the councilors could have been held personally liable for their error
in resorting to forcible eviction of the lessee. Theirs was an error of judgment, and
 officers or agents of the Government not liable when charged with the performance honest mistake on their part as to the rights of the municipality in the premises.
of governmental duties which are in their nature legislative, or quasi judicial, liable  rule of personal liability should be with municipal councilors in such matters as it is
for the consequences of their official acts, unless it be shown that they act willfully with the directors or managers of an ordinary private corporation.
and maliciously, and with the express purpose of inflicting injury upon the plaintiff.
If they exercise their honest judgment in the performance of their duties, their
errors cannot be charged against them.
 a municipality is not exempt from liability for the negligent performance of its
corporate or proprietary or business functions. In the administration of its
patrimonial property, it is to be regarded as a private corporation or individual so
far as its liability to third persons on contract or in tort is concerned. Its contracts,
validly entered into, may be enforced and damages may be collected from it for the
torts of its officers or agents within the scope of their employment in precisely the
same manner and to the same extent as those of private corporations or individuals.
 As to such matters the principles of respondeat superior applies. It is for these
purposes that the municipality is made liable to suits in the courts.
G.R. No. L-52179 April 8, 1991 MEDIALDEA
MUNICIPALITY OF SAN FERNANDO, LA UNION, petitioner
vs.
HON. JUDGE ROMEO N. FIRME, JUANA RIMANDO-BANIÑA, IAUREANO
BANIÑA, JR., SOR MARIETA BANIÑA, MONTANO BANIÑA, ORJA
BANIÑA, AND LYDIA R. BANIÑA, respondents.
 Municipality of San Fernando, La Union is a municipal corporation existing under
and in accordance with the laws of the Republic of the Philippines. Respondent
Honorable Judge Romeo N. Firme is impleaded in his official capacity as the
presiding judge of the Court of First Instance of La Union, Branch IV, Bauang, La
Union. While private respondents Juana Rimando-Baniña, Laureano Baniña, Jr.,
Sor Marietta Baniña, Montano Baniña, Orja Baniña and Lydia R. Baniña are heirs
of the deceased Laureano Baniña Sr. and plaintiffs in Civil Case No. 107-Bg before
the aforesaid court.
 7 o'clock in the morning of December 16, 1965, a collision occurred involving a
passenger jeepney driven by Bernardo Balagot and owned by the Estate of Macario
Nieveras, a gravel and sand truck driven by Jose Manandeg and owned by
Tanquilino Velasquez and a dump truck of the Municipality of San Fernando, La
Union and driven by Alfredo Bislig.
 several passengers of the jeepney including Laureano Baniña Sr. died as a result of
the injuries they sustained and four (4) others suffered varying degrees of physical
injuries.
 December 11, 1966, the private respondents instituted a compliant for damages
against the Estate of Macario Nieveras and Bernardo Balagot, owner and driver,
respectively, of the passenger jeepney, which was docketed Civil Case No. 2183 in
the Court of First Instance of La Union, Branch I, San Fernando, La Union.
However, the aforesaid defendants filed a Third Party Complaint against the
petitioner and the driver of a dump truck of petitioner.
 RTC rendered judgment against plaintiffs, and defendants Municipality of San
Fernando, La Union and Alfredo Bislig are ordered to pay jointly and severally,
plaintiffs Juana Rimando-Baniña, Mrs. Priscilla B. Surell, Laureano Baniña Jr., Sor
Marietta Baniña, Mrs. Fe B. Soriano, Montano Baniña, Orja Baniña and Lydia B.
Baniña the sums of P1,500.00 as funeral expenses and P24,744.24 as the lost
expected earnings of the late Laureano Baniña Sr., P30,000.00 as moral damages,
and P2,500.00 as attorney's fees. Costs against said defendants.
 respondent judge issued an order dated December 3, 1979 providing that if
defendants municipality and Bislig further wish to pursue the matter disposed of in
the order of July 26, 1979, such should be elevated to a higher court in accordance
with the Rules of Court. Hence, this petition.
W/N should’ve dismissed for non-suability: NO.
 The doctrine of non-suability of the State is expressly provided for in Article XVI,
Section 3 of the Constitution, to wit: "the State may not be sued without its
consent."
 the general rule is that the State may not be sued except when it gives consent to be
sued. Consent takes the form of express or implied consent.
 Consent is implied when the government enters into business contracts, thereby
descending to the level of the other contracting party, and also when the State files
a complaint, thus opening itself to a counterclaim.
 Municipal corporations, for example, like provinces and cities, are agencies of the
State when they are engaged in governmental functions and therefore should enjoy
the sovereign immunity from suit.
W/N liable: NO.
 distinction should first be made between suability and liability. "Suability depends
on the consent of the state to be sued, liability on the applicable law and the
established facts. The circumstance that a state is suable does not necessarily mean
that it is liable; on the other hand, it can never be held liable if it does not first
consent to be sued. Liability is not conceded by the mere fact that the state has
allowed itself to be sued. When the state does waive its sovereign immunity, it is
only giving the plaintiff the chance to prove, if it can, that the defendant is liable."
 issue of whether or not the municipality is liable for the torts committed by its
employee, the test of liability of the municipality depends on whether or not the
driver, acting in behalf of the municipality, is performing governmental or
proprietary functions.
 municipal corporations are suable because their charters grant them the competence
to sue and be sued. Nevertheless, they are generally not liable for torts committed
by them in the discharge of governmental functions and can be held answerable
only if it can be shown that they were acting in a proprietary capacity.
 In permitting such entities to be sued, the State merely gives the claimant the right
to show that the defendant was not acting in its governmental capacity when the
injury was committed or that the case comes under the exceptions recognized by
law. Failing this, the claimant cannot recover.
 the driver of the dump truck of the municipality insists that "he was on his way to
the Naguilian river to get a load of sand and gravel for the repair of San Fernando's
municipal streets."
 the regularity of the performance of official duty is presumed; Hence, We rule that
the driver of the dump truck was performing duties or tasks pertaining to his office.
 municipality cannot be held liable for the torts committed by its regular employee,
who was then engaged in the discharge of governmental functions. Hence, the
death of the passenger –– tragic and deplorable though it may be –– imposed on the
municipality no duty to pay monetary compensation.
G.R. No. 92087 May 8, 1992 MEDIALDEA
SOFIA FERNANDO, in her behalf and as the legal guardian of her minor
children, namely: ALBERTO & ROBERTO, all surnamed FERNANDO, ANITA
GARCIA, NICOLAS LIAGOSO, ROSALIA BERTULANO, in her behalf and as
the legal guardian of her minor children, namely: EDUARDO, ROLANDO,
DANIEL, AND JOCELYN, all surnamed BERTULANO, PRIMITIVA FAJARDO
in her behalf and as legal guardian of her minor children, namely: GILBERT,
GLEN, JOCELYN AND JOSELITO, all surnamed FAJARDO, and EMETERIA
LIAGOSO, in her behalf and as guardian ad litem, of her minor grandchildren,
namely: NOEL, WILLIAM, GENEVIEVE and GERRY, all surnamed
LIAGOSO, petitioners,
vs.
THE HONORABLE COURT OF APPEALS AND CITY OF
DAVAO, respondents.
 On November 7, 1975, Bibiano Morta, market master of the Agdao Public Market
filed a requisition request with the Chief of Property of the City Treasurer's Office
for the re-emptying of the septic tank in Agdao.
 An invitation to bid was issued to Aurelio Bertulano, Lito Catarsa, Feliciano
Bascon, Federico Bolo and Antonio Suñer, Jr. Bascon won the bid.
 On November 26, 1975 Bascon was notified and he signed the purchase order.
 November 22, 1975, bidder Bertulano with four other companions namely Joselito
Garcia, William Liagoso, Alberto Fernando and Jose Fajardo, Jr. were found dead
inside the septic tank. The bodies were removed by a fireman.
 One body, that of Joselito Garcia, was taken out by his uncle, Danilo Garcia and
taken to the Regional Hospital but he expired there. The City Engineer's office
investigated the case and learned that the five victims entered the septic tank
without clearance from it nor with the knowledge and consent of the market master.
 In fact, the septic tank was found to be almost empty and the victims were
presumed to be the ones who did the re-emptying. Dr. Juan Abear of the City
Health Office autopsied the bodies and in his reports, put the cause of death of all
five victims as "asphyxia" caused by the diminution of oxygen supply in the body
working below normal conditions. The lungs of the five victims burst, swelled in
hemmorrhagic areas and this was due to their intake of toxic gas, which, in this
case, was sulfide gas produced from the waste matter inside the septic tank.
 Case was dismissed
 CA reversed and ordered payment by City; MR by City of Davao; MR granted
W/N city was guilty of gross negligence: NO.
 Negligence has been defined as the failure to observe for the protection of the
interests of another person that degree of care, precaution, and vigilance which the
circumstances justly demand, whereby such other person suffers injury
 a person who by his omission causes damage to another, there being negligence, is
obliged to pay for the damage done (Article 2176, New Civil Code). As to what
would constitute a negligent act in a given situation,
 Picart v. Smith: test by which to determine the existence of negligence in a
particular case may be stated as follows: Did the defendant in doing the alleged
negligent act use that reasonable care and caution which an ordinarily prudent
person would have used in the same situation? If not, then he is guilty of
negligence; question as to what would constitute the conduct of a prudent man in a
given situation must of course be always determined in the light of human
experience and in view of the facts involved in the particular case
 claimant must establish the relation between the omission and the damage. He must
prove under Article 2179 of the New Civil Code that the defendant's negligence
was the immediate and proximate cause of his injury. Proximate cause has been
defined as that cause, which, in natural and continuous sequence unbroken by any
efficient intervening cause, produces the injury, and without which the result would
not have occurred
 While it may be true that the public respondent has been remiss in its duty to re-
empty the septic tank annually, such negligence was not a continuing one.
 Upon learning from the report of the market master about the need to clean the
septic tank of the public toilet in Agdao Public Market, the public respondent
immediately responded by issuing invitations to bid for such service.
 absence of any accident was due to the public respondent's compliance with the
sanitary and plumbing specifications in constructing the toilet and the septic tank
 the toxic gas from the waste matter could not have leaked out because the septic
tank was air-tight
 The only indication that the septic tank in the case at bar was full and needed
emptying was when water came out from it
 even when the septic tank was full, there was no report of any casualty of gas
poisoning despite the presence of people living near it or passing on top of it or
using the public toilet for their personal necessities.
 witnesses were not expert witnesses. On the other hand, Engineer Demetrio
Alindada of the city government testified and demonstrated by drawings how the
safety requirements like emission of gases in the construction of both toilet and
septic tank have been complied with. He stated that the ventilation pipe need not be
constructed outside the building as it could also be embodied in the hollow blocks
as is usually done in residential buildings. The petitioners submitted no competent
evidence to corroborate their oral testimonies or rebut the testimony given by Engr.
Alindada.
 do not agree with the petitioner's submission that warning signs of noxious gas
should have been put up in the toilet in addition to the signs of "MEN" and
"WOMEN" already in place in that area. Toilets and septic tanks are not
nuisances per se as defined in Article 694 of the New Civil Code which would
necessitate warning signs for the protection of the public.
 an accident such as toxic gas leakage from the septic tank is unlikely to happen
unless one removes its covers. The accident in the case at bar occurred because the
 victims on their own and without authority from the public respondent opened the
septic tank.
 Considering the nature of the task of emptying a septic tank especially one which
has not been cleaned for years, an ordinarily prudent person should undoubtedly be
aware of the attendant risks. The victims are no exception; more so with Mr.
Bertulano, an old hand in this kind of service, who is presumed to know the hazards
of the job.
 His failure, therefore, and that of his men to take precautionary measures for their
safety was the proximate cause of the accident.
 Petitioners further contend that the failure of the market master to supervise the
area where the septic tank is located is a reflection of the negligence of the public
respondent.
[G.R. No. 90107. August 21, 1992.] CRUZ
DOMINGO A. TUZON and LOPE C. MAPAGU, Petitioners, v. HONORABLE
COURT OF APPEALS and SATURNINO T. JURADO, Respondents.
 damages to the private respondent for refusing to issue to him a mayor’s permit and
license to operate his palay-threshing business.
 March 14, 1977, when the Sangguniang Bayan of Camalaniugan, Cagayan,
unanimously adopted Resolution No. 9, reading pertinently as follows:
"WHEREAS, the municipality of Camalaniugan, Cagayan has embarked in the
construction of Sports and Nutrition Center, to provide the proper center wherein
the government program of Nutrition and physical development of the people,
especially the youth could be well administered:
"WHEREAS, the available funds for the construction of the said project is far (sic)
being adequate to finance its completion;
"WHEREAS, the Sangguniang Bayan have (sic) thought of fund-raising scheme, to
help finance the construction of the project, by soliciting 1% donation from the
thresher operators who will apply for a permit to thresh within the jurisdiction of
this municipality, of all the palay threshed by them to help finance the continuation
of the construction of the Sports and Nutrition Center Building.chanrobles law
library : red
RESOLVED, therefore, as it is hereby resolved, that the municipal treasurer is
hereby authorized to enter into an agreement to all thresher operators, that will
come to apply for a permit to thresh palay within the jurisdiction of this
municipality to donate 1% of all the palay threshed by them.chanrobles virtual
lawlibrary
To implement the above resolution, petitioner Lope C. Mapagu, then incumbent
municipal treasurer, prepared the following document for signature of all
thresher/owner/operators applying for a mayor’s permit:chanrob1es virtual 1aw
library
AGREEMENT
That I, _____________ thresher-owner-operator hereby voluntarily agree to donate
to the municipality of Camalaniugan, Cagayan, one percent (1%) of all palay
threshed by me within the jurisdiction of Camalaniugan, Cagayan, to help finance
the completion of the construction of the sports and nutrition center building of
Camalaniugan per Resolution No. 9 dated March 14, 1977 of the Sanggunian
Bayan;
That I also agree to report weekly the total number of palay threshed by me to the
municipal treasurer and turn over the corresponding 1% share of the municipality
for the said project mentioned above.
Signed this day of __________, 1977.
____________________
Thresher/Owner/Operator
 Soon thereafter, private respondent Saturnino T. Jurado sent his agent to the
municipal treasurer’s office to pay the license fee of P285.00 for thresher operators.
 Mapagu refused to accept the payment and required him to first secure a mayor’s
permit. For his part, Mayor Domingo Tuzon, the herein other petitioner, said that
Jurado should first comply with Resolution No. 9 and sign the agreement before the
permit could be issued.
 Jurado ignored the requirement. Instead, he sent the P285.00 license fee by postal
money order to the office of the municipal treasurer who, however, returned the
said amount. The reason given was the failure of the respondent to comply with
Resolution No. 9.
 March 31, 1982, the trial court 1 upheld the challenged measure. However, it
dismissed the claims for damages of both parties for lack of evidence.
W/N liable for damages: NO.
 The petitioners stress that they were acting in their official capacity when they
enforced the resolution, which was duly adopted by the Sangguniang Bayan and
later declared to be valid by both the trial and the appellate courts. For so acting,
they cannot be held personally liable in damages, more so because their act was not
tainted with bad faith or malice.
 Respondent claims petitioners’ unwarranted refusal to issue the permit and license
despite his offer to pay the required fee constituted bad faith on their part.
 He also claims that the measure contravenes the limitations on the taxing powers of
local government units under Section 5, of the Local Tax Code.
 need not concern ourselves at this time with the validity of Resolution No. 9 and
the implementing agreement because the issue has not been raised in this petition as
an assigned error of the respondent court. The measures have been sustained in the
challenged decision, from which the respondent has not appealed. The decision is
final and binding as to him. It is true that he did question the measures in his
Comment, but only half-heartedly and obliquely, to support his claim for damages.
 While it would appear from the wording of the resolution that the municipal
government merely intends to "solicit" the 1% contribution from the threshers, the
implementing agreement seems to make the donation obligatory and a condition
precedent to the issuance of the mayor’s permit. This goes against the nature of a
donation, which is an act of liberality and is never obligatory.
 If, on the other hand, it is to be considered a tax ordinance, then it must be shown in
view of the challenge raised by the private respondents to have been enacted in
accordance with the requirements of the Local Tax Code. These would include the
holding of a public hearing on the measure 4 and its subsequent approval by the
Secretary of Finance, 5 in addition to the usual requisites for publication of
 ordinances in general. 6

 private respondent anchors his claim for damages on Article 27 of the New Civil
Code, which reads that “any person suffering material or moral loss because a
public servant or employee refuses or neglects, without just cause, to perform his
official duty may file an action for damages and other relief against the latter,
without prejudice to any disciplinary administrative action that may be taken.”
 one purpose of this article is to end the "bribery system, where the public official,
for some flimsy excuse, delays or refuses the performance of his duty until he gets
some kind of pabagsak."
 Herem it has not even been alleged that the Mayor Tuzon’s refusal to act on the
private respondent’s application was an attempt to compel him to resort to bribery
to obtain approval of his application. It cannot be said either that the mayor and the
municipal treasurer were motivated by personal spite or were grossly negligent in
refusing to issue the permit and license to Jurado.
 petitioners acted within the scope of their authority and in consonance with their
honest interpretation of the resolution in question. We agree that it was not for them
to rule on its validity. In the absence of a judicial decision declaring it invalid, its
legality would have to be presumed (in fact, both the trial court and the appellate
court said there was nothing wrong with it). As executive officials of the
municipality, they had the duty to enforce it as long as it had not been repealed by
the Sangguniang Bayan or annulled by the courts
 The private respondent complains that as a result of the petitioners’ acts, he was
prevented from operating his business all this time and earning substantial profit
therefrom, as he had in previous years. But as the petitioners correctly observed, he
could have taken the prudent course of signing the agreement under protest and
later challenging it in court to relieve him of the obligation to "donate." Pendente
lite, he could have continued to operate his threshing business and thus avoided the
lucro cesante that he now says was the consequence of the petitioners’ wrongful
act. He could have opted for the less obstinate but still dissentient action, without
loss of face, or principle, or profit.

ACCORDINGLY, the appealed decision is reversed insofar as it holds the petitioners

liable in damages and attorney’s fees to the private Respondent. No costs.

SO ORDERED.
[G.R. No. L-29993. October 23, 1978.] MUÑOZ PALMA
LAUDENCIO TORIO, GUILLERMO EVANGELISTA, MANUEL DE
GUZMAN, ALFONSO R. MAGSANOC, JESUS MACARANAS, MAXIMO
MANANGAN, FIDEL MONTEMAYOR, MELCHOR VIRAY, RAMON
TULAGAN, all Members of the Municipal Council of Malasiqui in 1959,
Malasiqui, Pangasinan, Petitioners, v. ROSALINA, ANGELINA, LEONARDO,
EDUARDO, ARTEMIO, ANGELITA, ANITA, ERNESTO, NORMA, VIRGINIA,
REMEDIOS and ROBERTO, all surnamed FONTANILLA, and THE
HONORABLE COURT OF APPEALS, Respondents.
[G.R. No. L-30183. October 23, 1978.]
MUNICIPALITY OF MALASIQUI, Petitioner, v. ROSALINA, ANGELINA,
LEONARDO, EDUARDO, ARTEMIO, ANGELITA, ANITA, ERNESTO,
NORMA, VIRGINIA, REMEDIOS and ROBERTO, all surnamed
FONTANILLA, and the Honorable COURT OF APPEALS, Respondents.
 October 21, 1958, the Municipal Council of Malasiqui, Pangasinan, passed
Resolution No. 159 whereby "it resolved to manage the 1959 Malasiqui town fiesta
celebration on January 21, 22, and 23, 1959."
 Resolution No. 182 was also passed creating the "1959 Malasiqui Town Fiesta
Executive Committee" which in turn organized a subcommittee on entertainment
and stage, with Jose Macaraeg as Chairman.
 The council appropriated the amount of P100.00 for the construction of 2 stages,
one for the "zarzuela" and another for the "cancionan." Jose Macaraeg supervised
the construction of the stage and as constructed the stage for the "zarzuela" was "5-
1/2 meters by 8 meters in size, had a wooden floor high at the rear and was
supported by 24 bamboo posts — 4 in a row in front, 4 in the rear and 5 on each
side — with bamboo braces."
 "zarzuela" entitled "Midas Extravanganza" was donated by an association of
Malasiqui employees of the Manila Railroad Company in Caloocan, Rizal. The
troupe arrived in the evening of January 22 for the performance and one of the
members of the group was Vicente Fontanilla. The program started at about 10:15
o’clock that evening with some speeches, and many persons went up the stage.
 The "zarzuela" then began but before the dramatic part of the play was reached, the
stage collapsed and Vicente Fontanilla who was at the rear of the stage was pinned
underneath. Fontanilla was taken to the San Carlos General Hospital where he died
in the afternoon of the following day.
 heirs of Vicente Fontanilla filed a complaint with the Court of First Instance of
Manila on September 11, 1959 to recover damages. Named party-defendants were
the Municipality of Malasiqui, the Municipal Council of Malasiqui and all the
individual members of the Municipal Council in 1959.
 municipality invoked inter alia the principal defense that as a legally and duly
organized public corporation it performs sovereign functions and the holding of a
town fiesta was an exercise of its governmental functions from which no liability
can arise to answer for the negligence of any of its agents.
 defendant councilors in turn maintained that they merely acted as agents of the
municipality in carrying out the municipal ordinance providing for the management
of the town fiesta celebration and as such they are likewise not liable for damages
as the undertaking was not one for profit; furthermore. they had exercised due care
and diligence in implementing the municipal ordinance.
 RTC: the Executive Committee appointed by the municipal council had exercised
due diligence and care like a good father of the family in selecting a competent man
to construct a stage strong enough for the occasion and that if it collapsed that was
due to forces beyond the control of the committee on entertainment, consequently,
the defendants were not liable for damages for the death of Vicente Fontanilla. The
complaint was accordingly dismissed in a decision dated July 10, 1962.
W/N Municipality can be liable: YES.
 We hold that the holding of the town fiesta in 1959 by the municipality of
Malasiqui Pangasinan, was an exercise of a private or proprietary function of the
municipality.
 Admin Code, Section 2282. Celebration of fiesta. — A fiesta may be held in each
municipality not oftener than once a year upon a date fixed by the municipal
council. A fiesta shall not be held upon any other date than that lawfully fixed
therefor, except when, for weighty reasons, such as typhoons, inundations,
earthquakes, epidemics, or other public calamities, the fiesta cannot be held in the
date fixed, in which case it may be held at a later date in the same year, by
resolution of the council."
 gives authority to the municipality to accelebrate a yearly fiesta but it does not
impose upon it a duty to observe one. Holding a fiesta even if the purpose is to
commemorate a religious or historical event of the town is in essence an act for the
special benefit of the community and not for the general welfare of the public
performed in pursuance of a policy of the state.
 The mere fact that the celebration, as claimed, was not to secure profit or gain but
merely to provide entertainment to the town inhabitants is not a conclusive test. For
instance, the maintenance of parks is not a source of income for the town,
nonetheless it is private undertaking as distinguished from the maintenance of
public schools, jails, and the like which are for public service.
 basic element, however beneficial to the public the undertaking may be, is that it is
governmental in essence, otherwise, the function becomes private or proprietary in
character. Easily, no governmental or public policy of the state is involved in the
celebration of a town fiesta.
 under the doctrine of respondent superior, petitioner-municipality is to be held
liable for damages for the death of Vicente Fontanilla if that was attributable to the
negligence of the municipality’s officers, employees, or agents, following 2176 and
2180
 RTC: a member of the "extravaganza troupe" removed two principal braces located
on the front portion of the stage and used them to hang the screen or "telon", and
that when many people went up the stage the latter collapsed.
 This testimony was not believed however by respondent appellate court, and rightly
so. According to said defendants, those two braces were "mother" or "principal"
braces located semi-diagonally from the front ends of the stage to the front posts of
the ticket booth located at the rear of the stage and were fastened with a bamboo
twine. That being the case, it becomes incredible that any person in his right mind
would remove those principal braces and leave the front portion of the stage
practically unsupported. Moreover, if that did happen, there was indeed negligence
as there was lack of supervision over the use of the stage to prevent such an
occurrence.
 guitarist who was pointed to by Novado as the person who removed the two
bamboo braces denied having done so. "Amor by himself alone could not have
removed the two braces which must be about ten meters long and fastened them on
top of the stage for the curtain. The stage was only five and a half meters wide
Surely, it would be impractical and unwieldy to use a ten meter bamboo pole, much
more two poles, for the stage curtain."
 appellate court also found that the stage was not strong enough considering that
only P100.00 was appropriate for the construction of two stages and while the floor
of the "zarzuela" stage was of wooden planks, the posts and braces used were of
bamboo material.
 We likewise observe that although the stage was described by the petitioners as
being supported by "24" posts, nevertheless there were only 4 in front, 4 at the rear,
and 5 on each side. Where were the rest?
 Liability rests on negligence which is "the want of such care as a person of ordinary
prudence would exercise under the circumstances of the case."
 "Midas Extravaganza" which was to be performed during the town fiesta was a
"donation" offered by an association of Malasiqui employees of the Manila
Railroad Co. in Caloocan, and that when the Municipality of Malasiqui accepted
the donation of services and constructed precisely a "zarzuela stage" for the
purpose, the participants in the stage show had the right to expect that the
Municipality through its "Committee on entertainment and stage" would build or
put up a stage or platform strong enough to sustain the weight or burden of the
performance and take the necessary measures to insure the personal safety of the
participants.
 Municipality cannot evade responsibility and/or liability under the claim that it was
Jose Macaraeg who constructed the stage. The municipality acting through its
municipal council appointed Macaraeg as chairman of the sub-committee on
entertainment and in charge of the construction of the "zarzuela" stage. Macaraeg
acted merely as an agent of the Municipality. Under the doctrine of respondent
superior mentioned earlier, petitioner is responsible or liable for the negligence of
its agent acting within his assigned tasks.
neglects, without just cause, to perform his official duty may file an action for
damages and other relief against the latter."
 CA erred in applying Article 27 of the Civil Code against them, for this particular
article covers a case of non-feasance or non-performance by a public officer of his
official duty; it does not apply to a case of negligence or misfeasance in carrying
out an official duty.
 "Officers of a corporation ‘are not held liable for the negligence of the corporation
merely because of their official relation to it, but because of some wrongful or
negligent act by such officer amounting to a breach of duty which resulted in an
injury . . . To make an officer of a corporation liable for the negligence of the
corporation there must have been upon his part such a breach of duty as contributed
to, or helped to bring about, the injury; that is to say, he must be a participant in the
wrongful act.."
 "Directors who merely employ one to give n fireworks exhibition on the corporate
grounds are not personally liable for the negligent acts of the exhibitor." (p. 211,
ibid.)
 absolve the municipal councilors from any liability for the death of Vicente
Fontanilla. The records do not show that said petitioners directly participated in the
defective construction of the "zarzuela" stage or that they personally permitted
spectators to go up the platform.
PREMISES CONSIDERED, We AFFIRM in toto the decision of the Court of Appeals
insofar as the Municipality of Malasiqui is concerned (L-30183), and We absolve the
municipal councilors from liability and SET ASIDE the judgment against them (L-
29993).
Without pronouncement as to costs.
SO ORDERED.

W/N Councilors can be liable: NO.

 CA held the councilors jointly and solidarily liable with the municipality for
damages under Article 27 of the Civil Code which provides that "any person
suffering material or moral loss because a public servant or employee refuses or
G.R. No. L-23052 January 29, 1968 CONCEPCION
CITY OF MANILA, petitioner,
vs.
GENARO N. TEOTICO and COURT OF APPEALS, respondents.
 January 27, 1958, at about 8:00 p.m., Genaro N. Teotico was at the corner of the
Old Luneta and P. Burgos Avenue, Manila, within a "loading and unloading" zone,
waiting for a jeepney to take him down town.
 After waiting for about five minutes, he managed to hail a jeepney that came along
to a stop. As he stepped down from the curb to board the jeepney, and took a few
steps, he fell inside an uncovered and unlighted catch basin or manhole on P.
Burgos Avenue.
 Due to the fall, his head hit the rim of the manhole breaking his eyeglasses and
causing broken pieces thereof to pierce his left eyelid. As blood flowed therefrom,
impairing his vision, several persons came to his assistance and pulled him out of
the manhole.
 One of them brought Teotico to the Philippine General Hospital, where his injuries
were treated, after which he was taken home. In addition to the lacerated wound in
his left upper eyelid, Teotico suffered contusions on the left thigh, the left upper
arm, the right leg and the upper lip apart from an abrasion on the right infra-patella
region. These injuries and the allergic eruption caused by anti-tetanus injections
administered to him in the hospital, required further medical treatment by a private
practitioner who charged therefor P1,400.00.
 Filed for damages against the City of Manila, its mayor, city engineer, city health
officer, city treasurer and chief of police.
 plaintiff was a practicing public accountant, a businessman and a professor at the
University of the East. He held responsible positions in various business firms like
the Philippine Merchandising Co., the A.U. Valencia and Co., the Silver Swan
Manufacturing Company and the Sincere Packing Corporation. He was also
associated with several civic organizations such as the Wack Wack Golf Club, the
Chamber of Commerce of the Philippines, Y's Men Club of Manila and the Knights
of Rizal. As a result of the incident, plaintiff was prevented from engaging in his
customary occupation for twenty days. Plaintiff has lost a daily income of about
P50.00 during his incapacity to work. Because of the incident, he was subjected to
humiliation and ridicule by his business associates and friends. During the period of
his treatment, plaintiff was under constant fear and anxiety for the welfare of his
minor children since he was their only support.
 defense presented evidence, oral and documentary, to prove that the Storm Drain
Section, Office of the City Engineer of Manila, received a report of the uncovered
condition of a catchbasin at the corner of P. Burgos and Old Luneta Streets, Manila,
on January 24, 1958, but the same was covered on the same day (Exhibit 4); that
again the iron cover of the same catch basin was reported missing on January 30,
1958, but the said cover was replaced the next day (Exhibit 5); that the Office of
the City Engineer never received any report to the effect that the catchbasin in
question was not covered between January 25 and 29, 1968; that it has always been
a policy of the said office, which is charged with the duty of installation, repair and
care of storm drains in the City of Manila, that whenever a report is received from
whatever source of the loss of a catchbasin cover, the matter is immediately
attended to, either by immediately replacing the missing cover or covering the
catchbasin with steel matting that because of the lucrative scrap iron business then
prevailing, stealing of iron catchbasin covers was rampant; that the Office of the
City Engineer has filed complaints in court resulting from theft of said iron covers;
that in order to prevent such thefts, the city government has changed the position
and layout of catchbasins in the City by constructing them under the sidewalks with
concrete cement covers and openings on the side of the gutter; and that these
changes had been undertaken by the city from time to time whenever funds were
available.
 Section 4 of Republic Act No. 409 (Charter of the City of Manila) reading:
The city shall not be liable or held for damages or injuries to persons or
property arising from the failure of the Mayor, the Municipal Board, or any
other city officer, to enforce the provisions of this chapter, or any other law or
ordinance, or from negligence of said Mayor, Municipal Board, or other
officers while enforcing or attempting to enforce said provisions.
 Article 2189 of the Civil Code of the Philippines which provides:
Provinces, cities and municipalities shall be liable for damages for the death of,
or injuries suffered by, any person by reason of defective conditions of road,
streets, bridges, public buildings, and other public works under their control or
supervision.
W/N liable: YES.
 Section 4 of Republic Act 409 establishes a general rule regulating the liability of
the City of Manila for: "damages or injury to persons or property arising from the
failure of" city officers "to enforce the provisions of" said Act "or any other law or
ordinance, or from negligence" of the city "Mayor, Municipal Board, or other
officers while enforcing or attempting to enforce said provisions." Upon the other
hand, Article 2189 of the Civil Code constitutes a particular prescription making
"provinces, cities and municipalities . . . liable for damages for the death of, or
injury suffered by any person by reason" — specifically — "of the defective
condition of roads, streets, bridges, public buildings, and other-public works under
their control or supervision." In other words, said section 4 refers to liability
arising from negligence, in general, regardless of the object thereof, whereas
Article 2189 governs liability due to "defective streets," in particular. Since the
present action is based upon the alleged defective condition of a road, said Article
2189 is decisive thereon.
 Teotico alleged in his complaint, as well as in his amended complaint, that his
injuries were due to the defective condition of a street which is "under the
 supervision and control" of the City. In its answer to the amended complaint, the
City, in turn, alleged that "the streets aforementioned were and have been
constantly kept in good condition and regularly inspected and the storm drains and
manholes thereof covered by the defendant City and the officers concerned" who
"have been ever vigilant and zealous in the performance of their respective
functions and duties as imposed upon them by law." Thus, the City had, in effect,
admitted that P. Burgos Avenue was and is under its control and supervision.
 under Article 2189 of the Civil Code, it is not necessary for the liability therein
established to attach that the defective roads or streets belong to the province, city
or municipality from which responsibility is exacted.
 What said article requires is that the province, city or municipality have either
"control or supervision" over said street or road. Even if P. Burgos Avenue were,
therefore, a national highway, this circumstance would not necessarily detract from
its "control or supervision" by the City of Manila, under Republic Act 409.
 This authority has been neither withdrawn nor restricted by Republic Act No. 917
and Executive Order No. 113, dated May 2, 1955, upon which the City relies. Said
Act governs the disposition or appropriation of the highway funds and the giving of
aid to provinces, chartered cities and municipalities in the construction of roads and
streets within their respective boundaries, and Executive Order No. 113 merely
implements the provisions of said Republic Act No. 917, concerning the disposition
and appropriation of the highway funds. Moreover, it provides that "the
construction, maintenance and improvement of national primary, national
secondary and national aid provincial and city roads shall be accomplished by the
Highway District Engineers and Highway City Engineers under the supervision of
the Commissioner of Public Highways and shall be financed from such
appropriations as may be authorized by the Republic of the Philippines in annual or
special appropriation Acts."
 whether or not P. Burgos Avenue is under the control or supervision of the City of
Manila and whether the latter is guilty of negligence, in connection with the
maintenance of said road, which were decided by the Court of Appeals in the
affirmative, is one of fact, and the findings of said Court thereon are not subject to
our review.

WHEREFORE, the decision appealed from should be as it is hereby affirmed, with

costs against the City of Manila. It is so ordered.1äwphï1.ñët
[G.R. No. L-3738. November 20, 1951.] TUASON

CONCEPCION ABELLA, Plaintiff-Appellee, v. MUNICIPALITY OF NAGA, ET

AL., Defendants. MUNICIPALITY OF NAGA, Defendant-Appellant.
 two causes of action and the parties submitted in the court below an agreed
statement of facts on both.
 defendant municipality by resolution ordered the closing of that part of a municipal
street which ran between the public market and the plaintiff’s property, and used
the closed thoroughfare to expand the market. "
 As a consequence of this resolution, and immediately after the passage of the same,
— says the agreement — permanent, semi-permanent, as well as temporary
constructions were allowed by the defendant municipality of Naga along the
sidewalk of plaintiff’s property and abutting to said property, facing P. Prieto
Street, and extending out in the middle of the same street, hence depriving the
plaintiff’s property of access to said street, and consequently retarding her
reconstructions." It was further stipulated "that if at all damages is to be awarded
the plaintiff, the same should not exceed the sum of Three hundred pesos (P300)."
 appellant is the municipality of or city of Naga and the burden of its contention is
that "it acted and exercised its police power" "prompted to preserve the peace and
good order of the community and promote the general welfare;" and this being the
case, it believes that it is not liable for damages.
 municipality or city of Naga was not charged with any unlawful act, or with acting
without authority, or with invasion of plaintiff’s property rights; the basis of the
lower court’s decision is Section 2246 of the Revised Administrative Code copied
in appellant’s brief, which provides that no municipal road, street, etc. or any part
thereof "shall be closed without indemnifying any person prejudiced thereby."
 question then for determination by the court below was reduced to whether the
plaintiff was prejudiced by defendant municipality’s action. That she was
economically damaged, the stipulation of facts admits; and that the indemnity
assessed is within the bounds of the damages suffered, there is no dispute. As a
matter of fact, the damages awarded seem to be nominal judged by the description
of the plaintiff’s interests adversely affected by the conversion of P. Prieto Street
into a market.

The appeal is absolutely without merit, and the appealed decision will be affirmed,
with costs against the Appellant.
G.R. No. L-24950 March 25, 1926 VILLAMOR
VIUDA DE TAN TOCO, plaintiff-appellant,
vs.
THE MUNICIPAL COUNCIL OF ILOILO, defendant-appellee.
 widow of Tan Toco had sued the municipal council of Iloilo for the amount of
P42,966.40, being the purchase price of two strips of land, one on Calle J. M. Basa
consisting of 592 square meters, and the other on Calle Aldiguer consisting of 59
square meters, which the municipality of Iloilo had appropriated for widening said
street.
 On account of lack of funds the municipality of Iloilo was unable to pay the said
judgment, wherefore plaintiff had a writ of execution issue against the property of
the said municipality, by virtue of which the sheriff attached two auto trucks used
for street sprinkling, one police patrol automobile, the police stations on Mabini
street, and in Molo and Mandurriao and the concrete structures, with the
corresponding lots, used as markets by Iloilo, Molo, and Mandurriao.
 After notice of the sale of said property had been made, and a few days before the
sale, the provincial fiscal of Iloilo filed a motion which the Court of First Instance
praying that the attachment on the said property be dissolved, that the said
attachment be declared null and void as being illegal and violative of the rights of
the defendant municipality.
 The fundamental question raised by appellant in her four assignments of error is
whether or not the property levied upon is exempt from execution.
 section 2165 of the Administrative Code, provides that:
common benefit and that which is private property of the town. The first differs
from property for public use in that generally its enjoyment is less, as it is limited to
neighbors or to a group or class thereof; and, furthermore, such use, more or less
general, is not intrinsic with this kind of property, for by its very nature it may be
enjoyed as though it were private property. The third group, that is, private
property, is used in the name of the town or province by the entities representing it
and, like and private property, giving a source of revenue."
 Distinction is of little practical importance in this jurisdiction in view of the
different principles underlying the functions of a municipality under the American
rule. Notwithstanding this, we believe that the principle governing property of the
public domain of the State is applicable to property for public use of the
municipalities as said municipal is similar in character. The principle is that the
property for public use of the State is not within the commerce of man and,
consequently, is inalienable and not subject to prescription. Likewise, property for
public of the municipality is not within the commerce of man so long as it is used
by the public and, consequently, said property is also inalienable.
 American Law is more explicit about this matter as expounded by Mcquilin in
Municipal Corporations, volume 3, paragraph 1160, where he says that: property
owned by a municipality, where not used for a public purpose but for quasi private
purposes, is subject to execution on a judgment against the municipality, and may
be sold. This rule applies to shares of stock owned by a municipal corporation, and
the like. But the mere fact that corporate property held for public uses is being
temporarily used for private purposes does not make it subject execution.
 For the reasons contained in the authorities above quoted we believe that this court
would have reached the same conclusion if the debtor had been municipality of
Guinobatan and the public market had been levied upon by virtue of the execution.

Municipalities are political bodies corporate, and as such are endowed with the
W/N property could be attached: NO.
faculties of municipal corporations, to be exercised by and through their
respective municipal government in conformity with law.
 It is evident that the movable and immovable property of a municipality, necessary
for governmental purpose, may not be attached and sold for the payment of a
It shall be competent for them, in their proper corporate name, to sue and be
judgment against the municipality.
sued, to contract and be contracted with, to acquire and hold real and personal
 The supreme reason for this rule is the character of the public use to which such
property for municipal purposes, and generally to exercise the powers
kind of property is devoted. The necessity for government service justifies that the
hereinafter specified or otherwise conferred upon them by law.
property of public of the municipality be exempt from execution just as it is
necessary to exempt certain property of private individuals in accordance with
 article 343 of the Civil Code divides the property of provinces and towns section 452 of the Code of Civil Procedure.
(municipalities) into property for public use and patrimonial property. According to  Even the municipal income, according to the above quoted authorities, is exempt
article 344 of the same Code, provincial roads and foot-path, squares, streets, from levy and execution.
fountains and public waters, drives and public improvements of general benefit
built at the expense of the said towns or provinces, are property for public use.
 All other property possessed by the said towns and provinces is patrimonial and
shall be subject to the provisions of the Civil Code except as provided by special
laws.
 Mr. Manresa says that "In accordance with administrative legislation" (Spanish)
we must distinguish, as to the patrimonial property of the towns, "between that a
G.R. Nos. 89898-99 October 1, 1990 CORTES
MUNICIPALITY OF MAKATI, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, HON. SALVADOR P. DE
GUZMAN, JR., as Judge RTC of Makati, Branch CXLII ADMIRAL FINANCE
CREDITORS CONSORTIUM, INC., and SHERIFF SILVINO R.
PASTRANA, respondents.
 action for eminent domain was filed on May 20, 1986, docketed as Civil Case No.
13699. Attached to petitioner's complaint was a certification that a bank account
(Account No. S/A 265-537154-3) had been opened with the PNB Buendia Branch
under petitioner's name containing the sum of P417,510.00, made pursuant to the
provisions of Pres. Decree No. 42.
 After due hearing where the parties presented their respective appraisal reports
regarding the value of the property, respondent RTC judge rendered a decision on
June 4, 1987, fixing the appraised value of the property at P5,291,666.00, and
ordering petitioner to pay this amount minus the advanced payment of P338,160.00
which was earlier released to private respondent.
 private respondent moved for the issuance of a writ of execution. This motion was
granted by respondent RTC judge. After issuance of the writ of execution, a Notice
of Garnishment dated January 14, 1988 was served by respondent sheriff Silvino R.
Pastrana upon the manager of the PNB Buendia Branch. However, respondent
sheriff was informed that a "hold code" was placed on the account of petitioner. As
a result of this, private respondent filed a motion dated January 27, 1988 praying
that an order be issued directing the bank to deliver to respondent sheriff the
amount equivalent to the unpaid balance due under the RTC decision dated June 4,
1987.
 Petitioner filed a motion to lift the garnishment, on the ground that the manner of
payment of the expropriation amount should be done in installments which the
respondent RTC judge failed to state in his decision. Private respondent filed its
opposition to the motion.
 petitioner filed on July 20, 1988 a "Manifestation" informing the court that private
respondent was no longer the true and lawful owner of the subject property because
a new title over the property had been registered in the name of Philippine Savings
Bank, Inc. (PSB)
 Respondent RTC judge issued an order requiring PSB to make available the
documents pertaining to its transactions over the subject property, and the PNB
Buendia Branch to reveal the amount in petitioner's account which was garnished
by respondent sheriff. PSB filed a manifestation informing the court that it had
consolidated its ownership over the property as mortgagee/purchaser at an
extrajudicial foreclosure sale held on April 20, 1987.
 After several conferences, PSB and private respondent entered into a compromise
agreement whereby they agreed to divide between themselves the compensation
due from the expropriation proceedings.
 During the hearings conducted for the above motions, the general manager of the
PNB Buendia Branch, a Mr. Antonio Bautista, informed the court that he was still
waiting for proper authorization from the PNB head office enabling him to make a
disbursement for the amount so ordered. For its part, petitioner contended that its
funds at the PNB Buendia Branch could neither be garnished nor levied upon
execution, for to do so would result in the disbursement of public funds without the
proper appropriation required under the law
 trial judge issued an order dated December 21, 1988 denying petitioner's motion for
reconsideration on the ground that the doctrine enunciated in Republic v.
Palacio did not apply to the case because petitioner's PNB Account No. S/A 265-
537154-3 was an account specifically opened for the expropriation proceedings of
the subject property pursuant to Pres. Decree No. 42.
 Respondent RTC judge likewise declared Mr. Antonio Bautista guilty of contempt
of court for his inexcusable refusal to obey the order dated September 8, 1988, and
thus ordered his arrest and detention until his compliance with the said order.
 two accounts with the PNB Buendia Branch, to wit:
(1) Account No. S/A 265-537154-3 — exclusively for the expropriation of the
subject property, with an outstanding balance of P99,743.94.
(2) Account No. S/A 263-530850-7 — for statutory obligations and other
purposes of the municipal government, with a balance of P170,098,421.72, as
of July 12, 1989.
 petitioner poses no objection to the garnishment or the levy under execution of the
funds deposited in account made for expropriation amounting to P99,743.94.
However, it is petitioner's main contention that inasmuch as the assailed orders of
respondent RTC judge involved the net amount of P4,965,506.45, the funds
garnished by respondent sheriff in excess of P99,743.94, which are public funds
earmarked for the municipal government's other statutory obligations, are exempted
from execution without the proper appropriation required under the law.
W/N garnishment is valid: NO.
 public funds of the municipal government. In this jurisdiction, well-settled is the
rule that public funds are not subject to levy and execution, unless otherwise
provided for by statute
 he properties of a municipality, whether real or personal, which are necessary for
public use cannot be attached and sold at execution sale to satisfy a money
judgment against the municipality. Municipal revenues derived from taxes, licenses
and market fees, and which are intended primarily and exclusively for the purpose
of financing the governmental activities and functions of the municipality, are
exempt from execution
 Absent a showing that the municipal council of Makati has passed an ordinance
appropriating from its public funds an amount corresponding to the balance due
 under the RTC decision dated June 4, 1987, less the sum of P99,743.94 deposited
in Account No. S/A 265-537154-3, no levy under execution may be validly
effected on the public funds of petitioner deposited in Account No. S/A 263-
530850-7.
 Where a municipality fails or refuses, without justifiable reason, to effect payment
of a final money judgment rendered against it, the claimant may avail of the
remedy of mandamus in order to compel the enactment and approval of the
necessary appropriation ordinance, and the corresponding disbursement of
municipal funds therefor
 The State's power of eminent domain should be exercised within the bounds of fair
play and justice. In the case at bar, considering that valuable property has been
taken, the compensation to be paid fixed and the municipality is in full possession
and utilizing the property for public purpose, for three (3) years, the Court finds
that the municipality has had more than reasonable time to pay full compensation.

WHEREFORE, the Court Resolved to ORDER petitioner Municipality of Makati to

immediately pay Philippine Savings Bank, Inc. and private respondent the amount of
P4,953,506.45. Petitioner is hereby required to submit to this Court a report of its
compliance with the foregoing order within a non-extendible period of SIXTY (60)
DAYS from the date of receipt of this resolution.

The order of respondent RTC judge dated December 21, 1988, which was rendered in
Civil Case No. 13699, is SET ASIDE and the temporary restraining order issued by the
Court on November 20, 1989 is MADE PERMANENT.

SO ORDERED.
G.R. No. L-32162 September 28, 1984 MAKASIAR
THE PASAY CITY GOVERNMENT, THE CITY MAYOR OF DEFENDANT
PASAY CITY GOVERNMENT, THE MEMBERS OF THE MUNICIPAL
BOARD OF PASAY ClTY and THE CITY TREASURER OF PASAY CITY
GOVERNMENT, petitioners-appellants,
vs.
THE HONORABLE COURT OF FIRST INSTANCE OF MANILA, BRANCH X
and VICENTE DAVID ISIP (doing business under the firm name V.D. ISIP SONS
& ASSOCIATES), respondents-appellees.
 August 12, 1964, respondent-appellee V.D. Isip, Sons & Associates represented by
Vicente David Isip entered into a contract with the City of Pasay represented by the
then Mayor Pablo Cuneta.
 The contract entitled "Contract and Agreement" was for the construction of a new
Pasay City Hall at F.B. Harrison St., Pasay City.
 Pertinent provision of the said contract is as follows:
Whereas one of the conditions set forth in the proposal is that the Contractor
shag start the construction of the Pasay City Hall Building as per plans and
specifications by stages advancing the necessary amount needed for each stage
of work and the Party of the First Part (Pasay City) to reimburse the amount
spent on the work accomplished by the Contractor before proceeding on the
next stage ... ...
2. That the work shall be done in stages to be determined by the City Engineer
considering structural and functional criteria and consistent with funds
immediately available for the purpose;
3. That the Contractor shall advance the necessary amount needed for each
stage of work; Provided that the Contractor, shall before starting each stage of
work, inform the First Party in writing as to the amount necessary to be
advanced by the former; ... ...
4. That the Party of the First Part shall reimburse the Contractor the cost of the
work completed as estimated by the City Engineer for back stage of work
before the Contractor proceed to the next stage; ... ... (pp. 33-34, rec.).
 Pursuant to the aforesaid contract, the respondent-appellee proceeded with the
construction of the new Pasay City Hall building as per duly approved plans and
specifications. The respondent-appellee accomplished under various stages of
construction the amount of work (including supplies and materials) equivalent to an
estimated value of (P1,713,096.00) of the total contract price of (P4,914,500.80).
 paid only (P1,100,000.00) to the respondent-appellee leaving an amount of
P613,096.00
 failed to remit the aforesaid amount of P613,096.00 to the respondent-appellee.
 May 16, 1968, respondent appellee filed an action for specific performance with
damages against herein petitioners-appellants before the respondent Court.
 parties arrived at a draft of amicable agreement which was submitted to the
Municipal Board of Pasay City for its consideration. Protracted pre-trial hearings
and conferences were held where the respondent Court suggested and advised that
"under the principle of quantum meruit, the plaintiff is forthwith entitled to at least
that which is due to him for defendants under the contract and that public interest
must perforce require the continuity of construction of a public work project,
instead of delaying its immediate completion by litigating upon technical grounds
which would undoubtedly redound to public detriment
 February 25, 1969, the Municipal Board of Pasay enacted Ordinance No. 1012
which approved the Compromise Agreement and also authorized and empowered
the incumbent City Mayor Jovito Claudio to represent the appellant Pasay City
Government, subject to the final approval of the respondent Court herein.
 March 12, 1969, the respondent Court approved the said Compromise Agreement
including a Manifestation and Addendum thereto. Relevant provisions of the said
compromise agreement are as follows:
1. That the contract and agreement, Annex "A" here of dated August 12, 1964
... is hereby formally confirmed and officially approved by the parties hereto,
subject to the following changes and/or modification only:
B. That immediately upon final approval hereof by this Honorable
Court, the plaintiff contractor will submit and file in favor of Pasay
City Government a new performance bond in the amount required
by pertinent law, rules and regulations, in proportion to the remaining
value or cost of the unfinished work of the construction as per
approved plans and specification
D. That if and when warranted by the finances and income of the
Pasay City Government and subject to the pertinent and applicable
government auditing and accounting rules and procedure, the plaintiff
contractor shall without delay finish and complete the construction as
per attached plans and specifications ... within a period of one (1) year
from the date of final approval of this compromise agreement by this
Honorable Court, provided, however that in any case or event the
construction herein contemplated shall not extend beyond one and a
half (1 1/2) years from the date of the final approval hereof by this
Honorable Court;
2. That within a reasonable period of time, at least ninety (90) days from the
final approval of this Compromise Agreement by this Honorable Court, the
defendant Pasay City Government shall pay and remit the amount of SIX
HUNDRED THIRTEEN THOUSAND NINETY-SIX PESOS (P613,096.00)
 ... to the plaintiff contractor, who, in turn, immediately upon receipt thereof,
shall be bound and obliged to commence and start the construction work
corresponding to the next stage thereof;
3. That within a similar period, the defendant Pasay City Government shall pay
and remit to plaintiff contractor an amount equivalent to three (3%) per cent of
the above mentioned amount of SIX HUNDRED THIRTEEN THOUSAND
NINETY-SIX PESOS (P613,096.00), for and as adverse attorney's fees in this
case;
4. That any and all other of plaintiff contractor in its complaint relative to and
arising out of the contract, Annex "A" hereof, are hereby waived and
relinquished and the case against the defendants City Mayor, Jovito 0. Claudio,
City Treasurer and Members of the Municipal Board of Pasay City, either in
their official or personal capacities, are hereby likewise waived, relinquished
and dismissed with prejudice;
5. That any willful, gross, deliberate and wanton violation and/or avoidance of
the terms and conditions of this Compromise Agreement by either of the
parties herein shall, with due notice, forthwith entitle the aggrieved party to an
immediate execution hereof and to the necessary and corresponding reliefs and
remedies therefor (pp. 43-46, rec.).
 On April 10, 1969, the appellants filed an urgent motion seeking a declaration of
legality of the original contract and agreement dated August 4, 1964 from the
respondent Court. On May 10, 1969, the respondent Court issued an order
declaring that the original contract is legal and valid
 June 21, 1969, at the instance of the appellee, the respondent Court granted an
order of execution pursuant to which a writ of execution
 July 9, 1969, an application for and notice of garnishment were made and effected
upon the funds of appellant Pasay City Government with the Philippine National
Bank
 July 11, 1969, the appellant filed an urgent motion to set aside the respondent
Court's order of June 21, 1969 and to quash the writ of execution issued pursuant
thereto upon the following grounds: 1) that the execution sought was then still
premature, the period of 90 days stipulated not having elapsed as yet; 2) that the
obligations of the parties under the Compromise Agreement were reciprocal and
the appellee not having put up a new performance bond in the sufficient amount
equivalent to 20% of the remaining cost of construction as per agreement, the
appellants cannot be obliged to pay the sum due appellee as yet; 3) that the Sheriff
has no power or authority to levy or garnish on execution the general funds,
especially more so, the trust funds of the defendant Pasay City
 July 24, 1969, the appellants filed their manifestation and petition to suspend the
writ of execution and garnishment
 two purposes of a compromise agreement are enunciated in Article 2028 of the
New Civil Code, to wit:
A. 2028. A compromise is a contract where by the parties,by making
reciprocal concessions, avoid a litigation or put an end to one already
commenced.
 The first purpose — "to avoid a litigation" — occurs when there is a threat of an
impending litigation. At this point, no case has yet reached the courts. The moment
a case has been filed in court then the second purpose — "to put an end to one
already commenced" — applies.
 The latter purpose is given effect in Article 2037 of the New Civil Code which
reads:
Article 2037. A compromise has upon the parties the effect and authority of res
judicata; but there shall be no execution except in compliance with a judicial
compromise.
 A compromise agreement not contrary to law, public order, public policy, morals or
good customs is a valid contract which is the law between the parties themselves in
the absence of a motion to set the same aside on the ground of fraud, mistake or
duress
 Article 2041 of the New Civil Code, to wit:
Art. 2041. If one of the parties fails or refuses to abide by the compromise, the
other party may either enforce the compromise or regard it as rescinded and
insist upon his original demand.,
W/N can rescind agreement: NO.
 respondent-appellee did not only succeed in enforcing the compromise but said
plaintiff-appellee likewise wants to rescind the said compromise. It is clear from
the language of the law, specifically Article 2041 of the New Civil Code that one of
the parties to a compromise has two options: 1) to enforce the compromise; or 2) to
rescind the same and insist upon his original demand. The respondent-appellee in
the case herein before Us wants to avail of both of these options. This can not be
done.
 The respondent-appellee cannot ask for rescission of the compromise agreement
after it has already enjoyed the first option of enforcing the compromise by asking
for a writ of execution resulting thereby in the garnishment of the Pasay City funds
deposited with the Philippine National Bank which eventually was delivered to the
respondent-appellee.
W/N valid garnishment: YES.
 inasmuch as an ordinance has already been enacted expressly appropriating the  Right now, many contractors cannot proceed with the implementation of their
amount of P613,096.00 of payment to the respondent-appellee, then the herein case contracts because of the extraordinary rise in cost of materials and labor. No
is covered by the exception to the general nile stated in the case of Republic vs. contractor would be willing to bid for public works contracts under the oppressive
Palacio (L-20322, 23 SCRA 899 [May 29,1968]), to wit: interpretation by petitioners-appellants.
 submission of the bond was not a condition precedent to the payment of
Judgments against a State in cases where it has consented to be sued, generally P613,096.00 to the plaintiff. Nowhere in the Contract and Agreement nor in the
operate merely to liquidate and establish plaintiff's claim in the absence of Compromise Agreement could be found the fact that payment by the petitioners-
express provision; otherwise they cannot be enforced by processes of the law; appellants of the amount of P613,096.00 was dependent upon the submission by
and it is for the legislature to provide for the payment in such manner as it sees the respondent-appellee of the performance bond.
fit.  It cannot be argued that reciprocal obligation was created in the Compromise
Agreement, for the obligation to pay on the part of the petitioners-appellants was
 Hence, the respondent Court was correct in refusing to quash the writ of execution established several years ago when the respondent-appellee finished some of the
it has issued. stages of construction. And, this argument is already moot and academic, for the
 After the perfection of an appeal, the trial court loses jurisdiction over its judgment amount of P613,096.00 has already been collected through execution and
garnishment upon the funds of Pasay City with the Philippine National Bank.
and cannot vacate the same
 Moreover, supplemental pleadings are meant to supply deficiencies in aid of
original pleading, not to entirely substitute the latter. Here, the respondent-appellee WHEREFORE, THE ORDER OF THE RESPONDENT COURT DATED JULY 23,
originally asked for specific performance which was later settled through a 1969 IS HEREBY AFFIRMED AND THE PETITIONERS-APPELLANTS ARE
compromise agreement. HEREBY DIRECTED TO PAY ATTORNEY'S FEES IN THE AMOUNT OF
 read together with the stage-by-stage construction and payment approach, would EIGHTEEN THOUSAND THREE HUNDRED NINETY-TWO AND 78/100
inevitably lead to the conclusion that the parties to the compromise contemplated a (P18,392.78) PESOS. COSTS AGAINST PETITIONERS-APPELLANTS.
divisible obligation necessitating therefore a performance bond "in proportion to"
the uncompleted work. SO ORDERED.
 sub-paragraph B of paragraph 1 of the compromise agreement are the words "in
proportion." If the parties really intended the legal rate of 20% performance bond
to refer to the whole unfinished work, then the provision should have required the
plaintiff contractor to submit and file a new performance bond to cover the
remaining value cost of the unfinished work of the construction. Using the words in
proportion then significantly changed the meaning of the paragraph to ultimately
mean a performance bond equal to 20% of the next stage of work to be done.
 the respondent-appellee was allowed to file a performance bond of P222,250.00
which is but 5% of the total bid of P4,914,500.80. A security bond was likewise
filed with an amount of P97,290.00. The sum total of bond then filed was
P320,540.00 which is just 6.5% of the total Ibid. It is rather curious why all of a
sudden the petitioners-appellants are insisting on a 20% performance bond of the
entire unfinished work when they were quite content with a bond just 5% of the
entire work. For Us to allow the petitioners-appellants to adamantly stick to the
20% performance bond would be tantamount to allowing them to evade their
obligation in the compromise agreement. This cannot be allowed. The bond of a
contractor for a public work should not be extended beyond the reasonable intent as
gathered from the purpose and language of the instrument construed in connection
with the proposals, plans and specifications, and contract
 premium of the bond will be sizeable and will eat up the profit of the contractor,
who is faced with the fluctuation of prices of materials due to inflation and
devaluation.
G.R. No. L-3485 June 30, 1950 MONTEMAYOR
THE MUNICIPALITY OF PAOAY, ILOCOS NORTE, petitioner,
vs.
TEODORO MANAOIS and EULOGIO F. DE GUZMAN, Judge of the Court of
First Instance of Pangasinan,respondents.
 Teodoro Manaois having obtained a judgment against the municipality of Paoay,
Ilocos Norte in civil case No. 8026 of the Court of First Instance of Pangasinan,
Judge De Guzman of said province issued a writ of execution against the defendant
municipality.
 In compliance with said writ the Provincial Sheriff of Ilocos Norte levied upon and
attached the following properties:
(1) The amount of One thousand seven hundred twelve pesos and one centavo
(P1,712.01) in the Municipal Treasury of Paoay, Ilocos Norte, representing the
rental paid by Mr. Demetrio Tabije of a fishery lot belonging to the defendant
municipality;
(2) About forty fishery lots leased to thirty-five different persons by the
Municipality.
 July 26, 1949, the Provincial Fiscal of Ilocos Norte in representation of the
municipality of Paoay, filed a petition in the Court of First Instance of Pangasinan
asking for the dissolution of that attachment of levy of the properties above-
mentioned.
 Judge De Guzman in his order of October 6, 1949, denied the petition for the
dissolution of the attachment; a motion for reconsideration was also denied. Instead
of appealing from that order the municipality of Paoay has filed the present petition
for certiorari with the writ of preliminary injunction, asking that the order of
respondent Judge dated October 6, 1946, be reversed and that the attachment of the
properties of the municipality already mentioned be dissolved.
 petitioner goes on the theory that the properties attached by the sheriff for purposes
of execution are not subject to levy because they are properties for public use. It is
therefore necessary to ascertain the nature and status back a few years, specifically,
to the year 1937.
 municipality of Paoay is and for many years has been operating or rather leasing
fishery lots on municipal waters.
 These waters have been parceled out in lots, either singly or in groups and let out or
rented after public bidding to the highest bidders, ordinarily, for a year, but
sometimes, for a longer period of time.
 On April 4, 1937, the municipality of Paoay entered into a contract with one
Francisco V. Duque for the lease of fishery lots 3, 4, 5, 6, 7, and 8 at a rental of
P1,218.79 per annum, for a period of four years from January 1, 1937 to December
31, 1940. In 1938, the municipal council of Paoay approved a resolution
confiscating said fishery lots on the ground that Duque had failed to comply with
the terms of the lease contract.
 Thereafter, the municipality advertised the lease of its fishery lots for public
bidding, including the lots above mentioned. Teodoro Manaois being the highest
bidder for said lots 3 to 8, was awarded the lease thereof as per resolution of the
municipality council of Paoay of December 1, 1938.
 when Manaois and his men tried to enter the property in order to exercise his rights
as lessee and to catch fish, particularly bañgos fry, he found therein Duque and his
men who claimed that he (Duque) was still the lessee, and despite the appeal of
Manaois to the Municipality of Paoay to put him in possession and the efforts of
the municipality to oust Duque, the latter succeeded in continuing in his possession
and keeping Manaois and his men out.
 Manaois brought an action against the Municipality of Paoay to recover not only
the sum paid by him for the lease of the fishery lots but also damages. He obtained
judgment in his favor in June, 1940 in the Court of First Instance of Pangasinan,
civil case No. 8026, which decision has long become final. The writ of execution
and the attachment and levy mentioned at the beginning of this decision were
issued and effected to enforce the judgment just mentioned.
W/N usufruct is subject to execution: NO.
 There can be no question that properties for public use held by municipal
corporation are not subject to levy and execution.
 Property however, which is patrimonial and which is held by municipality in its
proprietary capacity is treated by great weight of authority as the private asset of
the town and may be levied upon and sold under an ordinary execution. The same
rule applies to municipal funds derived from patrimonial properties, for instance, it
has been held that shares of stocks held by municipal corporations are subject to
execution. If this is true, with more reason should income or revenue coming from
these shares of stock, in the form of interest or dividends, be subject to execution?
 The fishery or municipal waters of the town of Paoay, Ilocos Norte, which had
been parceled out or divided into lots and later let out to private persons for fishing
purposes at an annual rental are clearly not subject to execution.
 In the first place, they do not belong to the municipality. They may well be
regarded as property of State.
 What the municipality of Paoay hold is merely what may be considered the
usufruct or the right to use said municipal waters, granted to it by section 2321 of
the Revised Administrative Code which reads as follows:
1. SEC. 2321. Grant of fishery. — A municipal council shall have authority,
for purposes of profit, to grant the exclusive privileges of fishery or right to
conduct a fish-breeding ground within any definite portion, or area, of the
municipal waters.
 "Municipal waters", as herein used, include not only streams, lakes, and tidal
waters, include within the municipality, not being the subject of private
ownership, but also marine waters include between two lines drawn
perpendicular to the general coast line from points where the boundary lines of
the municipality touch the sea at high tide, and third line parallel with the
general coast line and distant from it three marine leagues.
Where two municipalities are so situated on opposite shores that there is less
than six marine leagues of marine waters between them the third line shall be a
line equally distant from the opposite shores of the respective municipalities.
 Now, is this particular usufruct of the municipality of Paoay over its municipal
waters, subject to execution to enforce a judgment against the town? We are not
prepared to answer this question in the affirmative because there are powerful
reasons against its propriety and legality. In the first place, it is not a usufruct based
on or derived from an inherent right of the town. It is based merely on a grant, more
or less temporary, made by the Legislature.
 Take the right of fishery over the sea or marine waters bordering a certain
municipality. These marine waters are ordinarily for public use, open to navigation
and fishing by the people.
 The Legislature thru section 2321 of the Administrative Code, as already stated,
saw fit to grant the usufruct of said marine waters for fishery purpose, to the towns
bordering said waters. Said towns have no visited right over said marine waters.
 The Legislature, for reasons it may deem valid or as a matter of public policy, may
at any time, repeal or modify said section 2321 and revoke this grant to coastal
towns and open these marine waters to the public. Or the Legislature may grant the
usufruct or right of fishery to the provinces concerned so that said provinces may
operate or administer them by leasing them to private parties.
 municipality of Paoay is not holding this usufruct or right of fishery in a permanent
or absolute manner so as to enable it to dispose of it or to allow it to be taken away
from it as its property through execution.
 if this were to be allowed and this right sold on execution, the buyer would
immediately step into the shoes of the judgment-debtor municipality. Such buyer
presumably buys only the right of the municipality. He does not buy the fishery
itself nor the municipal waters because that belongs to the State. All that the buyer
might do would be to let out or rent to private individuals the fishery rights over the
lots into which the municipal waters had been parceled out or divided, and that is,
after public bidding. This, he must do because that is the only right granted to the
municipality by the Legislature, a right to be exercised in the manner provided by
law, namely, to rent said fishery lots after public bidding.
 situation rather anomalous to be sure, of a private individual conducting public
bidding, renting to the highest bidders fishery lots over municipal waters which are
property of the State, and appropriating the results to his own private use. The
impropriety, if not illegality, of such a contingency is readily apparent. But that is
not all. The situation imagined implies the deprivation of the municipal corporation
of a source of a substantial income, expressly provide by law.
 right or usufruct of the town of Paoay over its municipal waters, particularly, the
forty odd fishery lots included in the attachment by the Sheriff, is not subject to
execution.
W/N income from renting fishery subject to execution: YES.
 But we hold that the revenue or income coming from the renting of these fishery
lots is certainly subject to execution.
 It may be profitable, if not necessary, to distinguish this kind of revenue from that
derived from taxes, municipal licenses and market fees are provided for and
imposed by the law, they are intended primarily and exclusively for the purpose of
financing the governmental activities and functions of municipal corporations.
 In fact, the real estate taxes collected by a municipality do not all go to it. A portion
thereof goes to the province, in the proportion provided for by law. For the same
reason, municipal markets are established not only to provide a place where the
people may sell and buy commodities but also to provide public revenues for the
municipality.
 To many towns, market fees constitute the bulk of their assets and incomes.
 These revenues are fixed and definite, so much so that the annual appropriations for
the expenses of the municipalities are based on these revenues. Not so with the
income derived form fisheries. In the first place, the usufruct over municipal waters
was granted by the Legislature merely to help or bolster up the economy of
municipal government.
 We call this activity of municipalities in renting municipal waters for fishing
purposes as a business for the reasons that the law itself (Sec. 2321, Administrative
Code already mentioned and quoted) allowed said municipalities to engage in it
for profit. And it is but just that a town so engaged should pay and liquidate
obligations contracted in connection with said fishing business, with the income
derived therefrom.
In conclusion, we hold that the fishery lots numbering about forty in the municipality of
Paoay, mentioned at the beginning of this decision are not subject to execution. For this
reason, the levy and attachment made by the Provincial Sheriff of Ilocos Norte of theses
fishery lots is void and the order of the Court of First Instance of Pangasinan insofar as
it failed to dissolve the attachment made on these lots is reversed. However, the amount
of P1,712.01 in the municipal treasury of Paoay representing the rental paid by
Demetrio Tabije on fishery lots let out by the municipality of Paoay is a proper subject
of levy, and the attachment made thereon by the Sheriff is valid. We may add that other
amounts coming or due from lessees of the forty odd fishery lots leased by the
municipality to different persons may also be attached or garnished to satisfy the
judgement against the municipality of Paoay.