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G.R. No. 92299 April 19, 1991

REYNALDO R. SAN JUAN, petitioner, vs.
CIVIL SERVICE COMMISSION, DEPARTMENT OF BUDGET AND MANAGEMENT and CECILIA
ALMAJOSE, respondents.
GUTIERREZ, JR., J.:
In this petition for certiorari pursuant to Section 7, Article IX (A) of the present Constitution, the petitioner Governor of the
Province of Rizal, prays for the nullification of Resolution No. 89-868 of the Civil Service Commission (CSC) dated
November 21, 1989 and its Resolution No. 90-150 dated February 9, 1990.
The dispositive portion of the questioned Resolution reads:
WHEREFORE, foregoing premises considered, the Commission resolved to dismiss, as it hereby dismisses the
appeal of Governor Reynaldo San Juan of Rizal. Accordingly, the approved appointment of Ms. Cecilia Almajose
as Provincial Budget Officer of Rizal, is upheld. (Rollo, p. 32)
The subsequent Resolution No. 90-150 reiterates CSC's position upholding the private respondent's appointment by
denying the petitioner's motion for reconsideration for lack of merit.
The antecedent facts of the case are as follows:
On March 22, 1988, the position of Provincial Budget Officer (PBO) for the province of Rizal was left vacant by its former
holder, a certain Henedima del Rosario.
In a letter dated April 18, 1988, the petitioner informed Director Reynaldo Abella of the Department of Budget and
Management (DBM) Region IV that Ms. Dalisay Santos assumed office as Acting PBO since March 22, 1988 pursuant to
a Memorandum issued by the petitioner who further requested Director Abella to endorse the appointment of the said Ms.
Dalisay Santos to the contested position of PBO of Rizal. Ms. Dalisay Santos was then Municipal Budget Officer of
Taytay, Rizal before she discharged the functions of acting PBO.
In a Memorandum dated July 26, 1988 addressed to the DBM Secretary, then Director Abella of Region IV recommended
the appointment of the private respondent as PBO of Rizal on the basis of a comparative study of all Municipal Budget
Officers of the said province which included three nominees of the petitioner. According to Abella, the private respondent
was the most qualified since she was the only Certified Public Accountant among the contenders.
On August 1, 1988, DBM Undersecretary Nazario S. Cabuquit, Jr. signed the appointment papers of the private
respondent as PBO of Rizal upon the aforestated recommendation of Abella.
In a letter dated August 3, 1988 addressed to Secretary Carague, the petitioner reiterated his request for the appointment
of Dalisay Santos to the contested position unaware of the earlier appointment made by Undersecretary Cabuquit.
On August 31, 1988, DBM Regional Director Agripino G. Galvez wrote the petitioner that Dalisay Santos and his other
recommendees did not meet the minimum requirements under Local Budget Circular No. 31 for the position of a local
budget officer. Director Galvez whether or not through oversight further required the petitioner to submit at least three
other qualified nominees who are qualified for the position of PBO of Rizal for evaluation and processing.
On November 2, 1988, the petitioner after having been informed of the private respondent's appointment wrote Secretary
Carague protesting against the said appointment on the grounds that Cabuquit as DBM Undersecretary is not legally
authorized to appoint the PBO; that the private respondent lacks the required three years work experience as provided in
Local Budget Circular No. 31; and that under Executive Order No. 112, it is the Provincial Governor, not the Regional
Director or a Congressman, who has the power to recommend nominees for the position of PBO.
On January 9, 1989 respondent DBM, through its Director of the Bureau of Legal & Legislative Affairs (BLLA) Virgilio A.
Afurung, issued a Memorandum ruling that the petitioner's letter-protest is not meritorious considering that public
respondent DBM validly exercised its prerogative in filling-up the contested position since none of the petitioner's
nominees met the prescribed requirements.
On January 27, 1989, the petitioner moved for a reconsideration of the BLLA ruling.
On February 28, 1989, the DBM Secretary denied the petitioner's motion for reconsideration.
On March 27, 1989, the petitioner wrote public respondent CSC protesting against the appointment of the private
respondent and reiterating his position regarding the matter.
Subsequently, public respondent CSC issued the questioned resolutions which prompted the petitioner to submit before
us the following assignment of errors:
A. THE CSC ERRED IN UPHOLDING THE APPOINTMENT BY DBM ASSISTANT SECRETARY CABUQUIT OF
CECILIA ALMAJOSE AS PBO OF RIZAL.
B. THE CSC ERRED IN HOLDING THAT CECILIA ALMA JOSE POSSESSES ALL THE REQUIRED
QUALIFICATIONS.
C. THE CSC ERRED IN DECLARING THAT PETITIONER'S NOMINEES ARE NOT QUALIFIED TO THE
SUBJECT POSITION.
D. THE CSC AND THE DBM GRAVELY ABUSED THEIR DISCRETION IN NOT ALLOWING PETITIONER TO
SUBMIT NEW NOMINEES WHO COULD MEET THE REQUIRED QUALIFICATION (Petition, pp. 7-8, Rollo, pp.
15-16)
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All the assigned errors relate to the issue of whether or not the private respondent is lawfully entitled to discharge the
functions of PBO of Rizal pursuant to the appointment made by public respondent DBM's Undersecretary upon the
recommendation of then Director Abella of DBM Region IV.
The petitioner's arguments rest on his contention that he has the sole right and privilege to recommend the nominees to
the position of PBO and that the appointee should come only from his nominees. In support thereof, he invokes Section 1
of Executive Order No. 112 which provides that:
Sec. 1. All budget officers of provinces, cities and municipalities shall be appointed henceforth by the Minister of
Budget and Management upon recommendation of the local chief executive concerned, subject to civil service
law, rules and regulations, and they shall be placed under the administrative control and technical supervision of
the Ministry of Budget and Management.
The petitioner maintains that the appointment of the private respondent to the contested position was made in derogation
of the provision so that both the public respondents committed grave abuse of discretion in upholding Almajose's
appointment.
There is no question that under Section 1 of Executive Order No. 112 the petitioner's power to recommend is subject to
the qualifications prescribed by existing laws for the position of PBO. Consequently, in the event that the
recommendations made by the petitioner fall short of the required standards, the appointing authority, the Minister (now
Secretary) of public respondent DBM is expected to reject the same.
In the event that the Governor recommends an unqualified person, is the Department Head free to appoint anyone he
fancies ? This is the issue before us.
Before the promulgation of Executive Order No. 112 on December 24, 1986, Batas Pambansa Blg. 337, otherwise known
as the Local Government Code vested upon the Governor, subject to civil service rules and regulations, the power to
appoint the PBO (Sec. 216, subparagraph (1), BP 337). The Code further enumerated the qualifications for the position of
PBO. Thus, Section 216, subparagraph (2) of the same code states that:
(2) No person shall be appointed provincial budget officer unless he is a citizen of the Philippines, of good moral
character, a holder of a degree preferably in law, commerce, public administration or any related course from a
recognized college or university, a first grade civil service eligibility or its equivalent, and has acquired at least five
years experience in budgeting or in any related field.
The petitioner contends that since the appointing authority with respect to the Provincial Budget Officer of Rizal was
vested in him before, then, the real intent behind Executive Order No. 112 in empowering him to recommend nominees to
the position of Provincial Budget Officer is to make his recommendation part and parcel of the appointment process. He
states that the phrase "upon recommendation of the local chief executive concerned" must be given mandatory
application in consonance with the state policy of local autonomy as guaranteed by the 1987 Constitution under Art. II,
Sec. 25 and Art. X, Sec. 2 thereof. He further argues that his power to recommend cannot validly be defeated by a mere
administrative issuance of public respondent DBM reserving to itself the right to fill-up any existing vacancy in case the
petitioner's nominees do not meet the qualification requirements as embodied in public respondent DBM's Local Budget
Circular No. 31 dated February 9, 1988.
The questioned ruling is justified by the public respondent CSC as follows:
As required by said E.O. No. 112, the DBM Secretary may choose from among the recommendees of the
Provincial Governor who are thus qualified and eligible for appointment to the position of the PBO of Rizal.
Notwithstanding, the recommendation of the local chief executive is merely directory and not a condition sine qua
non to the exercise by the Secretary of DBM of his appointing prerogative. To rule otherwise would in effect give
the law or E.O. No. 112 a different interpretation or construction not intended therein, taking into consideration
that said officer has been nationalized and is directly under the control and supervision of the DBM Secretary or
through his duly authorized representative. It cannot be gainsaid that said national officer has a similar role in the
local government unit, only on another area or concern, to that of a Commission on Audit resident auditor. Hence,
to preserve and maintain the independence of said officer from the local government unit, he must be primarily
the choice of the national appointing official, and the exercise thereof must not be unduly hampered or interfered
with, provided the appointee finally selected meets the requirements for the position in accordance with
prescribed Civil Service Law, Rules and Regulations. In other words, the appointing official is not restricted or
circumscribed to the list submitted or recommended by the local chief executive in the final selection of an
appointee for the position. He may consider other nominees for the position vis a vis the nominees of the local
chief executive. (CSC Resolution No. 89-868, p. 2; Rollo, p. 31)
The issue before the Court is not limited to the validity of the appointment of one Provincial Budget Officer. The tug of war
between the Secretary of Budget and Management and the Governor of the premier province of Rizal over a seemingly
innocuous position involves the application of a most important constitutional policy and principle, that of local autonomy.
We have to obey the clear mandate on local autonomy. Where a law is capable of two interpretations, one in favor of
centralized power in Malacañang and the other beneficial to local autonomy, the scales must be weighed in favor of
autonomy.
The exercise by local governments of meaningful power has been a national goal since the turn of the century. And yet,
inspite of constitutional provisions and, as in this case, legislation mandating greater autonomy for local officials, national
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officers cannot seem to let go of centralized powers. They deny or water down what little grants of autonomy have so far
been given to municipal corporations.
President McKinley's Instructions dated April 7, 1900 to the Second Philippine Commission ordered the new Government
"to devote their attention in the first instance to the establishment of municipal governments in which natives of the
Islands, both in the cities and rural communities, shall be afforded the opportunity to manage their own local officers to the
fullest extent of which they are capable and subject to the least degree of supervision and control which a careful study of
their capacities and observation of the workings of native control show to be consistent with the maintenance of law, order
and loyalty.
In this initial organic act for the Philippines, the Commission which combined both executive and legislative powers was
directed to give top priority to making local autonomy effective.
The 1935 Constitution had no specific article on local autonomy. However, in distinguishing between presidential control
and supervision as follows:
The President 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. (Sec. 11, Article VII, 1935 Constitution)
the Constitution clearly limited the executive power over local governments to "general supervision . . . as may be
provided by law." The President controls the executive departments. He has no such power over local governments. He
has only supervision and that supervision is both general and circumscribed by statute.
In Tecson v. Salas, 34 SCRA 275, 282 (1970), this Court stated:
. . . Hebron v. Reyes, (104 Phil. 175 [1958]) with the then Justice, now Chief Justice, Concepcion as the ponente,
clarified matters. As was pointed out, the presidential competence is not even supervision in general, but general
supervision as may be provided by law. He could not thus go beyond the applicable statutory provisions, which
bind and fetter his discretion on the matter. Moreover, as had been earlier ruled in an opinion penned by Justice
Padilla in Mondano V. Silvosa, (97 Phil. 143 [1955]) referred to by the present Chief Justice in his opinion in the
Hebron case, supervision goes no further than "overseeing or the power or authority of an officer to see that
subordinate officers perform their duties. If the latter fail or neglect to fulfill them the former may take such action
or step as prescribed by law to make them perform their duties." (Ibid, pp. 147-148) Control, on the other hand,
"means the power of an officer to alter or modify or nullify or set aside what a subordinate had done in the
performance of their duties and to substitute the judgment of the former for that of the latter." It would follow then,
according to the present Chief Justice, to go back to the Hebron opinion, that the President had to abide by the
then provisions of the Revised Administrative Code on suspension and removal of municipal officials, there being
no power of control that he could rightfully exercise, the law clearly specifying the procedure by which such
disciplinary action would be taken.
Pursuant to this principle under the 1935 Constitution, legislation implementing local autonomy was enacted. In 1959,
Republic Act No. 2264, "An Act Amending the Law Governing Local Governments by Increasing Their Autonomy and
Reorganizing Local Governments" was passed. It was followed in 1967 when Republic Act No. 5185, the Decentralization
Law was enacted, giving "further autonomous powers to local governments governments."
The provisions of the 1973 Constitution moved the country further, at least insofar as legal provisions are concerned,
towards greater autonomy. It provided under Article II as a basic principle of government:
Sec. 10. The State shall guarantee and promote the autonomy of local government units, especially the barangay
to ensure their fullest development as self-reliant communities.
An entire article on Local Government was incorporated into the Constitution. It called for a local government code
defining more responsive and accountable local government structures. Any creation, merger, abolition, or substantial
boundary alteration cannot be done except in accordance with the local government code and upon approval by a
plebiscite. The power to create sources of revenue and to levy taxes was specifically settled upon local governments.
The exercise of greater local autonomy is even more marked in the present Constitution.
Article II, Section 25 on State Policies provides:
Sec. 25. The State shall ensure the autonomy of local governments
The 14 sections in Article X on Local Government not only reiterate earlier doctrines but give in greater detail the
provisions making local autonomy more meaningful. Thus, Sections 2 and 3 of Article X provide:
Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.
Sec. 3. The Congress shall enact a local government code which shall provide for a more responsive and
accountable local government structure instituted through a system of decentralization with effective mechanisms
of recall, initiative, and referendum, allocate among the different local government units their powers,
responsibilities, and resources, and provide for the qualifications, election, appointment and removal, term,
salaries, powers and functions and duties of local officials, and all other matters relating to the organization and
operation of the local units.
When the Civil Service Commission interpreted the recommending power of the Provincial Governor as purely directory, it
went against the letter and spirit of the constitutional provisions on local autonomy. If the DBM Secretary jealously hoards
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the entirety of budgetary powers and ignores the right of local governments to develop self-reliance and resoluteness in
the handling of their own funds, the goal of meaningful local autonomy is frustrated and set back.
The right given by Local Budget Circular No. 31 which states:
Sec. 6.0 — The DBM reserves the right to fill up any existing vacancy where none of the nominees of the local
chief executive meet the prescribed requirements.
is ultra vires and is, accordingly, set aside. The DBM may appoint only from the list of qualified recommendees nominated
by the Governor. If none is qualified, he must return the list of nominees to the Governor explaining why no one meets the
legal requirements and ask for new recommendees who have the necessary eligibilities and qualifications.
The PBO is expected to synchronize his work with DBM. More important, however, is the proper administration of fiscal
affairs at the local level. Provincial and municipal budgets are prepared at the local level and after completion are
forwarded to the national officials for review. They are prepared by the local officials who must work within the constraints
of those budgets. They are not formulated in the inner sanctums of an all-knowing DBM and unilaterally imposed on local
governments whether or not they are relevant to local needs and resources. It is for this reason that there should be a
genuine interplay, a balancing of viewpoints, and a harmonization of proposals from both the local and national officials. It
is for this reason that the nomination and appointment process involves a sharing of power between the two levels of
government.
It may not be amiss to give by way of analogy the procedure followed in the appointments of Justices and
Judges.1âwphi1 Under Article VIII of the Constitution, nominations for judicial positions are made by the Judicial and Bar
Council. The President makes the appointments from the list of nominees submitted to her by the Council. She cannot
apply the DBM procedure, reject all the Council nominees, and appoint another person whom she feels is better qualified.
There can be no reservation of the right to fill up a position with a person of the appointing power's personal choice.
The public respondent's grave abuse of discretion is aggravated by the fact that Director Galvez required the Provincial
Governor to submit at least three other names of nominees better qualified than his earlier recommendation. It was a
meaningless exercise. The appointment of the private respondent was formalized before the Governor was extended the
courtesy of being informed that his nominee had been rejected. The complete disregard of the local government's
prerogative and the smug belief that the DBM has absolute wisdom, authority, and discretion are manifest.
In his classic work "Philippine Political Law" Dean Vicente G. Sinco stated that the value of local governments as
institutions of democracy is measured by the degree of autonomy that they enjoy. Citing Tocqueville, he stated that "local
assemblies of citizens constitute the strength of free nations. . . . A people may establish a system of free government but
without the spirit of municipal institutions, it cannot have the spirit of liberty." (Sinco, Philippine Political Law, Eleventh
Edition, pp. 705-706).
Our national officials should not only comply with the constitutional provisions on local autonomy but should also
appreciate the spirit of liberty upon which these provisions are based.
WHEREFORE, the petition is hereby GRANTED. The questioned resolutions of the Civil Service Commission are SET
ASIDE. The appointment of respondent Cecilia Almajose is nullified. The Department of Budget and Management is
ordered to appoint the Provincial Budget Officer of Rizal from among qualified nominees submitted by the Provincial
Governor.
SO ORDERED.
G.R. No. 110120 March 16, 1994
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,vs.
COURT OF APPEALS, HON. MANUEL JN. SERAPIO, Presiding Judge RTC, Branch 127, Caloocan City, HON.
MACARIO A. ASISTIO, JR., City Mayor of Caloocan and/or THE CITY GOVERNMENT OF CALOOCAN, respondents.
Alberto N. Hidalgo and Ma. Teresa T. Oledan for petitioner.
The City Legal Officer & Chief, Law Department for Mayor Macario A. Asistio, Jr. and the City Government of Caloocan.

ROMERO, J.:
The clash between the responsibility of the City Government of Caloocan to dispose off the 350 tons of garbage it collects
daily and the growing concern and sensitivity to a pollution-free environment of the residents of Barangay Camarin, Tala
Estate, Caloocan City where these tons of garbage are dumped everyday is the hub of this controversy elevated by the
protagonists to the Laguna Lake Development Authority (LLDA) for adjudication.
The instant case stemmed from an earlier petition filed with this Court by Laguna Lake Development Authority (LLDA for
short) docketed as G.R.
No. 107542 against the City Government of Caloocan, et al. In the Resolution of November 10, 1992, this Court referred
G.R. No. 107542 to the Court of Appeals for appropriate disposition. Docketed therein as CA-G.R. SP
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No. 29449, the Court of Appeals, in a decision promulgated on January 29, 1993 ruled that the LLDA has no power and
authority to issue a cease and desist order enjoining the dumping of garbage in Barangay Camarin, Tala Estate, Caloocan
City. The LLDA now seeks, in this petition, a review of the decision of the Court of Appeals.
The facts, as disclosed in the records, are undisputed.
On March 8, 1991, the Task Force Camarin Dumpsite of Our Lady of Lourdes Parish, Barangay Camarin, Caloocan City,
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filed a letter-complaint with the Laguna Lake Development Authority seeking to stop the operation of the 8.6-hectare
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open garbage dumpsite in Tala Estate, Barangay Camarin, Caloocan City due to its harmful effects on the health of the
residents and the possibility of pollution of the water content of the surrounding area.
3
On November 15, 1991, the LLDA conducted an on-site investigation, monitoring and test sampling of the leachate that
seeps from said dumpsite to the nearby creek which is a tributary of the Marilao River. The LLDA Legal and Technical
personnel found that the City Government of Caloocan was maintaining an open dumpsite at the Camarin area without
first securing an Environmental Compliance Certificate (ECC) from the Environmental Management Bureau (EMB) of the
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Department of Environment and Natural Resources, as required under Presidential Decree No. 1586, and clearance from
5
LLDA as required under Republic Act No. 4850, as amended by Presidential Decree No. 813 and Executive Order No.
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927, series of 1983.
After a public hearing conducted on December 4, 1991, the LLDA, acting on the complaint of Task Force Camarin
Dumpsite, found that the water collected from the leachate and the receiving streams could considerably affect the quality,
in turn, of the receiving waters since it indicates the presence of bacteria, other than coliform, which may have
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contaminated the sample during collection or handling. On December 5, 1991, the LLDA issued a Cease and Desist
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Order ordering the City Government of Caloocan, Metropolitan Manila Authority, their contractors, and other entities, to
completely halt, stop and desist from dumping any form or kind of garbage and other waste matter at the Camarin
dumpsite.
The dumping operation was forthwith stopped by the City Government of Caloocan. However, sometime in August 1992
the dumping operation was resumed after a meeting held in July 1992 among the City Government of Caloocan, the
representatives of Task Force Camarin Dumpsite and LLDA at the Office of Environmental Management Bureau Director
Rodrigo U. Fuentes failed to settle the problem.
After an investigation by its team of legal and technical personnel on August 14, 1992, the LLDA issued another order
reiterating the December 5, 1991, order and issued an Alias Cease and Desist Order enjoining the City Government of
Caloocan from continuing its dumping operations at the Camarin area.
On September 25, 1992, the LLDA, with the assistance of the Philippine National Police, enforced its Alias Cease and
Desist Order by prohibiting the entry of all garbage dump trucks into the Tala Estate, Camarin area being utilized as a
dumpsite.
Pending resolution of its motion for reconsideration earlier filed on September 17, 1992 with the LLDA, the City
Government of Caloocan filed with the Regional Trial Court of Caloocan City an action for the declaration of nullity of the
cease and desist order with prayer for the issuance of writ of injunction, docketed as Civil Case No. C-15598. In its
complaint, the City Government of Caloocan sought to be declared as the sole authority empowered to promote the health
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and safety and enhance the right of the people in Caloocan City to a balanced ecology within its territorial jurisdiction.
On September 25, 1992, the Executive Judge of the Regional Trial Court of Caloocan City issued a temporary restraining
order enjoining the LLDA from enforcing its cease and desist order. Subsequently, the case was raffled to the Regional
Trial Court, Branch 126 of Caloocan which, at the time, was presided over by Judge Manuel Jn. Serapio of the Regional
Trial Court, Branch 127, the pairing judge of the recently-retired presiding judge.
The LLDA, for its part, filed on October 2, 1992 a motion to dismiss on the ground, among others, that under Republic Act
No. 3931, as amended by Presidential Decree No. 984, otherwise known as the Pollution Control Law, the cease and
desist order issued by it which is the subject matter of the complaint is reviewable both upon the law and the facts of the
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case by the Court of Appeals and not by the Regional Trial Court.
On October 12, 1992 Judge Manuel Jn. Serapio issued an order consolidating Civil Case No. C-15598 with Civil Case No.
C-15580, an earlier case filed by the Task Force Camarin Dumpsite entitled "Fr. John Moran, et al. vs. Hon. Macario
Asistio." The LLDA, however, maintained during the trial that the foregoing cases, being independent of each other,
should have been treated separately.
On October 16, 1992, Judge Manuel Jn. Serapio, after hearing the motion to dismiss, issued in the consolidated cases an
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order denying LLDA's motion to dismiss and granting the issuance of a writ of preliminary injunction enjoining the LLDA,
its agent and all persons acting for and on its behalf, from enforcing or implementing its cease and desist order which
prevents plaintiff City of Caloocan from dumping garbage at the Camarin dumpsite during the pendency of this case
and/or until further orders of the court.
On November 5, 1992, the LLDA filed a petition for certiorari, prohibition and injunction with prayer for restraining order
with the Supreme Court, docketed as G.R. No. 107542, seeking to nullify the aforesaid order dated October 16, 1992
issued by the Regional Trial Court, Branch 127 of Caloocan City denying its motion to dismiss.
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The Court, acting on the petition, issued a Resolution on November 10, 1992 referring the case to the Court of Appeals
for proper disposition and at the same time, without giving due course to the petition, required the respondents to
comment on the petition and file the same with the Court of Appeals within ten (10) days from notice. In the meantime, the
Court issued a temporary restraining order, effective immediately and continuing until further orders from it, ordering the
respondents: (1) Judge Manuel Jn. Serapio, Presiding Judge, Regional Trial Court, Branch 127, Caloocan City to cease
and desist from exercising jurisdiction over the case for declaration of nullity of the cease and desist order issued by the
Laguna Lake Development Authority (LLDA); and (2) City Mayor of Caloocan and/or the City Government of Caloocan to
cease and desist from dumping its garbage at the Tala Estate, Barangay Camarin, Caloocan City.
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Respondents City Government of Caloocan and Mayor Macario A. Asistio, Jr. filed on November 12, 1992 a motion for
reconsideration and/or to quash/recall the temporary restraining order and an urgent motion for reconsideration alleging
that ". . . in view of the calamitous situation that would arise if the respondent city government fails to collect 350 tons of
garbage daily for lack of dumpsite (i)t is therefore, imperative that the issue be resolved with dispatch or with sufficient
leeway to allow the respondents to find alternative solutions to this garbage problem."
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On November 17, 1992, the Court issued a Resolution directing the Court of Appeals to immediately set the case for
hearing for the purpose of determining whether or not the temporary restraining order issued by the Court should be lifted
and what conditions, if any, may be required if it is to be so lifted or whether the restraining order should be maintained or
converted into a preliminary injunction.
The Court of Appeals set the case for hearing on November 27, 1992, at 10:00 in the morning at the Hearing Room, 3rd
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Floor, New Building, Court of Appeals. After the oral argument, a conference was set on December 8, 1992 at 10:00
o'clock in the morning where the Mayor of Caloocan City, the General Manager of LLDA, the Secretary of DENR or his
duly authorized representative and the Secretary of DILG or his duly authorized representative were required to appear.
It was agreed at the conference that the LLDA had until December 15, 1992 to finish its study and review of respondent's
technical plan with respect to the dumping of its garbage and in the event of a rejection of respondent's technical plan or a
failure of settlement, the parties will submit within 10 days from notice their respective memoranda on the merits of the
15
case, after which the petition shall be deemed submitted for resolution. Notwithstanding such efforts, the parties failed to
settle the dispute.
On April 30, 1993, the Court of Appeals promulgated its decision holding that: (1) the Regional Trial Court has no
jurisdiction on appeal to try, hear and decide the action for annulment of LLDA's cease and desist order, including the
issuance of a temporary restraining order and preliminary injunction in relation thereto, since appeal therefrom is within
the exclusive and appellate jurisdiction of the Court of Appeals under Section 9, par. (3), of Batas Pambansa Blg. 129;
and (2) the Laguna Lake Development Authority has no power and authority to issue a cease and desist order under its
enabling law, Republic Act No. 4850, as amended by P.D. No. 813 and Executive Order
No. 927, series of 1983.
The Court of Appeals thus dismissed Civil Case No. 15598 and the preliminary injunction issued in the said case was set
aside; the cease and desist order of LLDA was likewise set aside and the temporary restraining order enjoining the City
Mayor of Caloocan and/or the City Government of Caloocan to cease and desist from dumping its garbage at the Tala
Estate, Barangay Camarin, Caloocan City was lifted, subject, however, to the condition that any future dumping of
garbage in said area, shall be in conformity with the procedure and protective works contained in the proposal attached to
the records of this case and found on pages 152-160 of the Rollo, which was thereby adopted by reference and made an
integral part of the decision, until the corresponding restraining and/or injunctive relief is granted by the proper Court upon
LLDA's institution of the necessary legal proceedings.
Hence, the Laguna Lake Development Authority filed the instant petition for review on certiorari, now docketed as G.R.
No. 110120, with prayer that the temporary restraining order lifted by the Court of Appeals be re-issued until after final
determination by this Court of the issue on the proper interpretation of the powers and authority of the LLDA under its
enabling law.
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On July, 19, 1993, the Court issued a temporary restraining order enjoining the City Mayor of Caloocan and/or the City
Government of Caloocan to cease and desist from dumping its garbage at the Tala Estate, Barangay Camarin, Caloocan
City, effective as of this date and containing until otherwise ordered by the Court.
It is significant to note that while both parties in this case agree on the need to protect the environment and to maintain the
ecological balance of the surrounding areas of the Camarin open dumpsite, the question as to which agency can lawfully
exercise jurisdiction over the matter remains highly open to question.
The City Government of Caloocan claims that it is within its power, as a local government unit, pursuant to the general
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welfare provision of the Local Government Code, to determine the effects of the operation of the dumpsite on the
ecological balance and to see that such balance is maintained. On the basis of said contention, it questioned, from the
inception of the dispute before the Regional Trial Court of Caloocan City, the power and authority of the LLDA to issue a
cease and desist order enjoining the dumping of garbage in the Barangay Camarin over which the City Government of
Caloocan has territorial jurisdiction.
The Court of Appeals sustained the position of the City of Caloocan on the theory that Section 7 of Presidential Decree
No. 984, otherwise known as the Pollution Control law, authorizing the defunct National Pollution Control Commission to
issue an ex-parte cease and desist order was not incorporated in Presidential Decree No. 813 nor in Executive Order No.
927, series of
1983. The Court of Appeals ruled that under Section 4, par. (d), of Republic Act No. 4850, as amended, the LLDA is
instead required "to institute the necessary legal proceeding against any person who shall commence to implement or
continue implementation of any project, plan or program within the Laguna de Bay region without previous clearance from
the Authority."
The LLDA now assails, in this partition for review, the abovementioned ruling of the Court of Appeals, contending that, as
an administrative agency which was granted regulatory and adjudicatory powers and functions by Republic Act No. 4850
and its amendatory laws, Presidential Decree No. 813 and Executive Order No. 927, series of 1983, it is invested with the
7

power and authority to issue a cease and desist order pursuant to Section 4 par. (c), (d), (e), (f) and (g) of Executive Order
No. 927 series of 1983 which provides, thus:
Sec. 4. Additional Powers and Functions. The authority shall have the following powers and functions:
xxx xxx xxx
(c) Issue orders or decisions to compel compliance with the provisions of this Executive Order and its
implementing rules and regulations only after proper notice and hearing.
(d) Make, alter or modify orders requiring the discontinuance of pollution specifying the conditions and the
time within which such discontinuance must be accomplished.
(e) Issue, renew, or deny permits, under such conditions as it may determine to be reasonable, for the
prevention and abatement of pollution, for the discharge of sewage, industrial waste, or for the installation
or operation of sewage works and industrial disposal system or parts thereof.
(f) After due notice and hearing, the Authority may also revoke, suspend or modify any permit issued
under this Order whenever the same is necessary to prevent or abate pollution.
(g) Deputize in writing or request assistance of appropriate government agencies or instrumentalities for
the purpose of enforcing this Executive Order and its implementing rules and regulations and the orders
and decisions of the Authority.
The LLDA claims that the appellate court deliberately suppressed and totally disregarded the above provisions of
Executive Order No. 927, series of 1983, which granted administrative quasi-judicial functions to LLDA on pollution
abatement cases.
In light of the relevant environmental protection laws cited which are applicable in this case, and the corresponding
overlapping jurisdiction of government agencies implementing these laws, the resolution of the issue of whether or not the
LLDA has the authority and power to issue an order which, in its nature and effect was injunctive, necessarily requires a
determination of the threshold question: Does the Laguna Lake Development Authority, under its Charter and its
amendatory laws, have the authority to entertain the complaint against the dumping of garbage in the open dumpsite in
Barangay Camarin authorized by the City Government of Caloocan which is allegedly endangering the health, safety, and
welfare of the residents therein and the sanitation and quality of the water in the area brought about by exposure to
pollution caused by such open garbage dumpsite?
The matter of determining whether there is such pollution of the environment that requires control, if not prohibition, of the
operation of a business establishment is essentially addressed to the Environmental Management Bureau (EMB) of the
18
DENR which, by virtue of Section 16 of Executive Order No. 192, series of 1987, has assumed the powers and functions
of the defunct National Pollution Control Commission created under Republic Act No. 3931. Under said Executive Order,
a Pollution Adjudication Board (PAB) under the Office of the DENR Secretary now assumes the powers and functions of
19
the National Pollution Control Commission with respect to adjudication of pollution cases.
As a general rule, the adjudication of pollution cases generally pertains to the Pollution Adjudication Board (PAB), except
in cases where the special law provides for another forum. It must be recognized in this regard that the LLDA, as a
specialized administrative agency, is specifically mandated under Republic Act No. 4850 and its amendatory laws to carry
20
out and make effective the declared national policy of promoting and accelerating the development and balanced growth
of the Laguna Lake area and the surrounding provinces of Rizal and Laguna and the cities of San Pablo, Manila, Pasay,
21
Quezon and Caloocan with due regard and adequate provisions for environmental management and control,
preservation of the quality of human life and ecological systems, and the prevention of undue ecological disturbances,
deterioration and pollution. Under such a broad grant and power and authority, the LLDA, by virtue of its special charter,
obviously has the responsibility to protect the inhabitants of the Laguna Lake region from the deleterious effects of
pollutants emanating from the discharge of wastes from the surrounding areas. In carrying out the aforementioned
declared policy, the LLDA is mandated, among others, to pass upon and approve or disapprove all plans, programs, and
projects proposed by local government offices/agencies within the region, public corporations, and private persons or
enterprises where such plans, programs and/or projects are related to those of the LLDA for the development of the
22
region.
In the instant case, when the complainant Task Force Camarin Dumpsite of Our Lady of Lourdes Parish, Barangay
Camarin, Caloocan City, filed its letter-complaint before the LLDA, the latter's jurisdiction under its charter was validly
invoked by complainant on the basis of its allegation that the open dumpsite project of the City Government of Caloocan
in Barangay Camarin was undertaken without a clearance from the LLDA, as required under Section 4, par. (d), of
Republic Act. No. 4850, as amended by P.D. No. 813 and Executive Order No. 927. While there is also an allegation that
the said project was without an Environmental Compliance Certificate from the Environmental Management Bureau
(EMB) of the DENR, the primary jurisdiction of the LLDA over this case was recognized by the Environmental
Management Bureau of the DENR when the latter acted as intermediary at the meeting among the representatives of the
City Government of Caloocan, Task Force Camarin Dumpsite and LLDA sometime in July 1992 to discuss the possibility
of
re-opening the open dumpsite.
Having thus resolved the threshold question, the inquiry then narrows down to the following issue: Does the LLDA have
the power and authority to issue a "cease and desist" order under Republic Act No. 4850 and its amendatory laws, on the
8

basis of the facts presented in this case, enjoining the dumping of garbage in Tala Estate, Barangay Camarin, Caloocan
City.
The irresistible answer is in the affirmative.
The cease and desist order issued by the LLDA requiring the City Government of Caloocan to stop dumping its garbage in
the Camarin open dumpsite found by the LLDA to have been done in violation of Republic Act No. 4850, as amended,
23
and other relevant environment laws, cannot be stamped as an unauthorized exercise by the LLDA of injunctive powers.
By its express terms, Republic Act No. 4850, as amended by P.D. No. 813 and Executive Order No. 927, series of 1983,
24
authorizes the LLDA to "make, alter or modify order requiring the discontinuance or pollution." (Emphasis supplied)
Section 4, par. (d) explicitly authorizes the LLDA to make whatever order may be necessary in the exercise of its
jurisdiction.
To be sure, the LLDA was not expressly conferred the power "to issue and ex-parte cease and desist order" in a
language, as suggested by the City Government of Caloocan, similar to the express grant to the defunct National Pollution
Control Commission under Section 7 of P.D. No. 984 which, admittedly was not reproduced in P.D. No. 813 and E.O. No.
927, series of 1983. However, it would be a mistake to draw therefrom the conclusion that there is a denial of the power to
issue the order in question when the power "to make, alter or modify orders requiring the discontinuance of pollution" is
expressly and clearly bestowed upon the LLDA by Executive Order No. 927, series of 1983.
Assuming arguendo that the authority to issue a "cease and desist order" were not expressly conferred by law, there is
25
jurisprudence enough to the effect that the rule granting such authority need not necessarily be express. While it is a
fundamental rule that an administrative agency has only such powers as are expressly granted to it by law, it is likewise a
settled rule that an administrative agency has also such powers as are necessarily implied in the exercise of its express
26
powers. In the exercise, therefore, of its express powers under its charter as a regulatory and quasi-judicial body with
respect to pollution cases in the Laguna Lake region, the authority of the LLDA to issue a "cease and desist order" is,
perforce, implied. Otherwise, it may well be reduced to a "toothless" paper agency.
27
In this connection, it must be noted that in Pollution Adjudication Board v. Court of Appeals, et al., the Court ruled that
the Pollution Adjudication Board (PAB) has the power to issue an ex-parte cease and desist order when there is prima
facie evidence of an establishment exceeding the allowable standards set by the anti-pollution laws of the country.
The ponente, Associate Justice Florentino P. Feliciano, declared:
Ex parte cease and desist orders are permitted by law and regulations in situations like that here
presented precisely because stopping the continuous discharge of pollutive and untreated effluents into
the rivers and other inland waters of the Philippines cannot be made to wait until protracted litigation over
the ultimate correctness or propriety of such orders has run its full course, including multiple and
sequential appeals such as those which Solar has taken, which of course may take several years. The
relevant pollution control statute and implementing regulations were enacted and promulgated in the
exercise of that pervasive, sovereign power to protect the safety, health, and general welfare and comfort
of the public, as well as the protection of plant and animal life, commonly designated as the police power.
It is a constitutional commonplace that the ordinary requirements of procedural due process yield to the
necessities of protecting vital public interests like those here involved, through the exercise of police
power. . . .
The immediate response to the demands of "the necessities of protecting vital public interests" gives vitality to the
statement on ecology embodied in the Declaration of Principles and State Policies or the 1987 Constitution. Article II,
Section 16 which provides:
The State shall protect and advance the right of the people to a balanced and healthful ecology in accord
with the rhythm and harmony of nature.
As a constitutionally guaranteed right of every person, it carries the correlative duty of non-impairment. This is but in
consonance with the declared policy of the state "to protect and promote the right to health of the people and instill health
28
consciousness among them." It is to be borne in mind that the Philippines is party to the Universal Declaration of Human
29
Rights and the Alma Conference Declaration of 1978 which recognize health as a fundamental human right.
The issuance, therefore, of the cease and desist order by the LLDA, as a practical matter of procedure under the
circumstances of the case, is a proper exercise of its power and authority under its charter and its amendatory laws. Had
the cease and desist order issued by the LLDA been complied with by the City Government of Caloocan as it did in the
first instance, no further legal steps would have been necessary.
The charter of LLDA, Republic Act No. 4850, as amended, instead of conferring upon the LLDA the means of directly
enforcing such orders, has provided under its Section 4 (d) the power to institute "necessary legal proceeding against any
person who shall commence to implement or continue implementation of any project, plan or program within the Laguna
de Bay region without previous clearance from the LLDA."
Clearly, said provision was designed to invest the LLDA with sufficiently broad powers in the regulation of all projects
initiated in the Laguna Lake region, whether by the government or the private sector, insofar as the implementation of
these projects is concerned. It was meant to deal with cases which might possibly arise where decisions or orders issued
pursuant to the exercise of such broad powers may not be obeyed, resulting in the thwarting of its laudabe objective. To
9

meet such contingencies, then the writs of mandamus and injunction which are beyond the power of the LLDA to issue,
may be sought from the proper courts.
Insofar as the implementation of relevant anti-pollution laws in the Laguna Lake region and its surrounding provinces,
cities and towns are concerned, the Court will not dwell further on the related issues raised which are more appropriately
addressed to an administrative agency with the special knowledge and expertise of the LLDA.
WHEREFORE, the petition is GRANTED. The temporary restraining order issued by the Court on July 19, 1993 enjoining
the City Mayor of Caloocan and/or the City Government of Caloocan from dumping their garbage at the Tala Estate,
Barangay Camarin, Caloocan City is hereby made permanent.
SO ORDERED.
Feliciano, Bidin, Melo and Vitug, JJ., concur.

#Footnotes
1 Jorge S. Imperial, J., ponente, Vicente V. Mendoza and Quirino D. Abad Santos, Jr., JJ., concurring.
2 Annex "C", Petition, G.R. No. 107542, Rollo, pp. 47-51.
3 Webster's Third International Dictionary (1986) defines "leachate" as the liquid that has percolated
through soil or other medium.
G.R. No. 111097 July 20, 1994
MAYOR PABLO P. MAGTAJAS & THE CITY OF CAGAYAN DE ORO, petitioners,
vs.
PRYCE PROPERTIES CORPORATION, INC. & PHILIPPINE AMUSEMENT AND GAMING
CORPORATION, respondents.
Aquilino G. Pimentel, Jr. and Associates for petitioners.
R.R. Torralba & Associates for private respondent.
G.R. No. 90776 June 3, 1991
PHILIPPINE PETROLEUM CORPORATION, petitioner,
vs.
MUNICIPALITY OF PILILLA, RIZAL, Represented by MAYOR NICOMEDES F. PATENIA, respondent.
Quiason, Makalintal, Barot, Torres & Ibarra for petitioner.
PARAS, J.:
This is a petition for certiorari seeking to annul and set aside: (a) the March 17, 1989 decision * of the Regional Trial
Court, Branch 80, Tanay, Rizal in Civil Case No. 057-T entitled, "Municipality of Pililla, Rizal, represented by Mayor
Nicomedes F. Patenia vs. Philippine Petroleum Corporation", (PPC for short) upholding the legality of the taxes, fees and
charges being imposed in Pililla under Municipal Tax Ordinance No. 1 and directing the herein petitioner to pay the
amount of said taxes, fees and charges due the respondent: and (b) the November 2, 1989 resolution of the same court
denying petitioner's motion for reconsideration of the said decision.
The undisputed facts of the case are:
Petitioner, Philippine Petroleum Corporation (PPC for short) is a business enterprise engaged in the manufacture of
lubricated oil basestock which is a petroleum product, with its refinery plant situated at Malaya, Pililla, Rizal, conducting its
business activities within the territorial jurisdiction of the Municipality of Pililla, Rizal and is in continuous operation up to
the present (Rollo p. 60). PPC owns and maintains an oil refinery including forty-nine storage tanks for its petroleum
products in Malaya, Pililla, Rizal (Rollo, p. 12).
Under Section 142 of the National Internal Revenue Code of 1939, manufactured oils and other fuels are subject to
specific tax.
On June 28, 1973, Presidential Decree No. 231, otherwise known as the Local Tax Code was issued by former President
Ferdinand E. Marcos governing the exercise by provinces, cities, municipalities and barrios of their taxing and other
revenue-raising powers. Sections 19 and 19 (a) thereof, provide among others, that the municipality may impose taxes on
business, except on those for which fixed taxes are provided on manufacturers, importers or producers of any article of
commerce of whatever kind or nature, including brewers, distillers, rectifiers, repackers, and compounders of liquors,
distilled spirits and/or wines in accordance with the schedule listed therein.
The Secretary of Finance issued Provincial Circular No. 26-73 dated December 27, 1973, directed to all provincial, city
and municipal treasurers to refrain from collecting any local tax imposed in old or new tax ordinances in the business of
manufacturing, wholesaling, retailing, or dealing in petroleum products subject to the specific tax under the National
Internal Revenue Code (Rollo, p. 76).
Likewise, Provincial Circular No. 26 A-73 dated January 9, 1973 was issued by the Secretary of Finance instructing all
City Treasurers to refrain from collecting any local tax imposed in tax ordinances enacted before or after the effectivity of
the Local Tax Code on July 1, 1973, on the businesses of manufacturing, wholesaling, retailing, or dealing in, petroleum
products subject to the specific tax under the National Internal Revenue Code (Rollo, p. 79).
Respondent Municipality of Pililla, Rizal, through Municipal Council Resolution No. 25, S-1974 enacted Municipal Tax
Ordinance No. 1, S-1974 otherwise known as "The Pililla Tax Code of 1974" on June 14, 1974, which took effect on July
1, 1974 (Rollo, pp. 181-182). Sections 9 and 10 of the said ordinance imposed a tax on business, except for those for
10

which fixed taxes are provided in the Local Tax Code on manufacturers, importers, or producers of any article of
commerce of whatever kind or nature, including brewers, distillers, rectifiers, repackers, and compounders of liquors,
distilled spirits and/or wines in accordance with the schedule found in the Local Tax Code, as well as mayor's permit,
sanitary inspection fee and storage permit fee for flammable, combustible or explosive substances (Rollo, pp. 183-187),
while Section 139 of the disputed ordinance imposed surcharges and interests on unpaid taxes, fees or charges (Ibid., p.
193).
On March 30, 1974, Presidential Decree No. 426 was issued amending certain provisions of P.D. 231 but retaining
Sections 19 and 19 (a) with adjusted rates and 22(b).
On April 13, 1974, P.D. 436 was promulgated increasing the specific tax on lubricating oils, gasoline, bunker fuel oil,
diesel fuel oil and other similar petroleum products levied under Sections 142, 144 and 145 of the National Internal
Revenue Code, as amended, and granting provinces, cities and municipalities certain shares in the specific tax on such
products in lieu of local taxes imposed on petroleum products.
The questioned Municipal Tax Ordinance No. 1 was reviewed and approved by the Provincial Treasurer of Rizal on
January 13, 1975 (Rollo, p. 143), but was not implemented and/or enforced by the Municipality of Pililla because of its
having been suspended up to now in view of Provincial Circular Nos. 26-73 and 26 A-73.
Provincial Circular No. 6-77 dated March 13, 1977 was also issued directing all city and municipal treasurers to refrain
from collecting the so-called storage fee on flammable or combustible materials imposed under the local tax ordinance of
their respective locality, said fee partaking of the nature of a strictly revenue measure or service charge.
On June 3, 1977, P.D. 1158 otherwise known as the National Internal Revenue Code of 1977 was enacted, Section 153
of which specifically imposes specific tax on refined and manufactured mineral oils and motor fuels.
Enforcing the provisions of the above-mentioned ordinance, the respondent filed a complaint on April 4, 1986 docketed as
Civil Case No. 057-T against PPC for the collection of the business tax from 1979 to 1986; storage permit fees from 1975
to 1986; mayor's permit and sanitary inspection fees from 1975 to 1984. PPC, however, have already paid the last-named
fees starting 1985 (Rollo, p. 74).
After PPC filed its answer, a pre-trial conference was held on August 24, 1988 where the parties thru their respective
counsel, after coming up with certain admissions and stipulations agreed to the submission of the case for decision based
on documentary evidence offered with their respective comments (Rollo, p. 41).
On March 17, 1987, the trial court rendered a decision against the petitioner, the dispositive part of which reads as
follows:
WHEREFORE, premises considered, this Court hereby renders judgment in favor of the plaintiffs as against the
defendants thereby directing the defendants to 1) pay the plaintiffs the amount of P5,301,385.00 representing the
Tax on Business due from the defendants under Sec. 9 (A) of the Municipal Tax Ordinance of the plaintiffs for the
period from 1979 to 1983 inclusive plus such amount of tax that may accrue until final determination of case; 2) to
pay storage permit fee in the amount of P3,321,730.00 due from the defendants under Sec. 10, par. z (13) (b) (1
C) of the Municipal Tax Ordinance of the plaintiffs for the period from 1975 to 1986 inclusive plus such amount of
fee that may accrue until final determination of case; 3) to pay Mayor's Permit Fee due from the defendants under
Sec. 10, par. (P) (2) of the Municipal Tax Ordinance of the plaintiffs from 1975 to 1984 inclusive in the amount of
P12,120.00 plus such amount of fee that may accrue until final determination of the case; and 4) to pay sanitary
inspection fee in the amount of P1,010.00 for the period from 1975 to 1984 plus such amount that may accrue
until final determination of case and 5) to pay the costs of suit.
SO ORDERED. (Rollo, pp. 49-50)
PPC moved for reconsideration of the decision, but this was denied by the lower court in a resolution of November 2,
1989, hence, the instant petition.
The Court resolved to give due course to the petition and required both parties to submit simultaneous memoranda (June
21, 1990 Resolution; Rollo, p. 305).
PPC assigns the following alleged errors:
1. THE RTC ERRED IN ORDERING THE PAYMENT OF THE BUSINESS TAX UNDER SECTION 9 (A) OF THE
TAX ORDINANCE IN THE LIGHT OF PROVINCIAL CIRCULARS NOS. 26-73 AND 26 A-73;.
2. THE RTC ERRED IN HOLDING THAT PETITIONER WAS LIABLE FOR THE PAYMENT OF STORAGE
PERMIT FEE UNDER SECTION 10 Z (13) (b) (1-c) OF THE TAX ORDINANCE CONSIDERING THE ISSUANCE
OF PROVINCIAL CIRCULAR NO. 6-77;
3. THE RTC ERRED IN FAILING TO HOLD THAT RESPONDENTS COMPUTATION OF TAX LIABILITY HAS
ABSOLUTELY NO BASIS;
4. THE RTC ERRED IN ORDERING THE PAYMENT OF MAYOR'S PERMIT AND SANITARY INSPECTION
FEES CONSIDERING THAT THE SAME HAS BEEN VALIDLY AND LEGALLY WAIVED BY THE MAYOR;
5. THE RTC ERRED IN FAILING TO HOLD THAT THE TAXES AND DUTIES NOT COLLECTED FROM
PETITIONER PRIOR TO THE FIVE (5) YEAR PERIOD FROM THE FILING OF THIS CASE ON APRIL 4, 1986
HAS ALREADY PRESCRIBED.
11

The crucial issue in this case is whether or not petitioner PPC whose oil products are subject to specific tax under the
NIRC, is still liable to pay (a) tax on business and (b) storage fees, considering Provincial Circular No. 6-77; and mayor's
permit and sanitary inspection fee unto the respondent Municipality of Pililla, Rizal, based on Municipal Ordinance No. 1.
Petitioner PPC contends that: (a) Provincial Circular No. 2673 declared as contrary to national economic policy the
imposition of local taxes on the manufacture of petroleum products as they are already subject to specific tax under the
National Internal Revenue Code; (b) the above declaration covers not only old tax ordinances but new ones, as well as
those which may be enacted in the future; (c) both Provincial Circulars (PC) 26-73 and 26 A-73 are still effective, hence,
unless and until revoked, any effort on the part of the respondent to collect the suspended tax on business from the
petitioner would be illegal and unauthorized; and (d) Section 2 of P.D. 436 prohibits the imposition of local taxes on
petroleum products.
PC No. 26-73 and PC No. 26 A-73 suspended the effectivity of local tax ordinances imposing a tax on business under
Section 19 (a) of the Local Tax Code (P.D. No. 231), with regard to manufacturers, retailers, wholesalers or dealers in
petroleum products subject to the specific tax under the National Internal Revenue Code NIRC, in view of Section 22 (b)
of the Code regarding non-imposition by municipalities of taxes on articles, subject to specific tax under the provisions of
the NIRC.
There is no question that Pililla's Municipal Tax Ordinance No. 1 imposing the assailed taxes, fees and charges is valid
especially Section 9 (A) which according to the trial court "was lifted in toto and/or is a literal reproduction of Section 19 (a)
of the Local Tax Code as amended by P.D. No. 426." It conforms with the mandate of said law.
But P.D. No. 426 amending the Local Tax Code is deemed to have repealed Provincial Circular Nos. 26-73 and 26 A-73
issued by the Secretary of Finance when Sections 19 and 19 (a), were carried over into P.D. No. 426 and no exemptions
were given to manufacturers, wholesalers, retailers, or dealers in petroleum products.
Well-settled is the rule that administrative regulations must be in harmony with the provisions of the law. In case of
discrepancy between the basic law and an implementing rule or regulation, the former prevails (Shell Philippines, Inc. v.
Central Bank of the Philippines, 162 SCRA 628 [1988]). As aptly held by the court a quo:
Necessarily, there could not be any other logical conclusion than that the framers of P.D. No. 426 really and
actually intended to terminate the effectivity and/or enforceability of Provincial Circulars Nos. 26-73 and 26 A-73
inasmuch as clearly these circulars are in contravention with Sec. 19 (a) of P.D. 426-the amendatory law to P.D.
No. 231. That intention to terminate is very apparent and in fact it is expressed in clear and unequivocal terms in
the effectivity and repealing clause of P.D. 426 . . .
Furthermore, while Section 2 of P.D. 436 prohibits the imposition of local taxes on petroleum products, said decree did not
amend Sections 19 and 19 (a) of P.D. 231 as amended by P.D. 426, wherein the municipality is granted the right to levy
taxes on business of manufacturers, importers, producers of any article of commerce of whatever kind or nature. A tax on
business is distinct from a tax on the article itself. Thus, if the imposition of tax on business of manufacturers, etc. in
petroleum products contravenes a declared national policy, it should have been expressly stated in P.D. No. 436.
The exercise by local governments of the power to tax is ordained by the present Constitution.1âwphi1 To allow the
continuous effectivity of the prohibition set forth in PC No. 26-73 (1) would be tantamount to restricting their power to tax
by mere administrative issuances. Under Section 5, Article X of the 1987 Constitution, only guidelines and limitations that
may be established by Congress can define and limit such power of local governments. Thus:
Each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees,
and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic
policy of local autonomy . . .
Provincial Circular No. 6-77 enjoining all city and municipal treasurers to refrain from collecting the so-called storage fee
on flammable or combustible materials imposed in the local tax ordinance of their respective locality frees petitioner PPC
from the payment of storage permit fee.
The storage permit fee being imposed by Pililla's tax ordinance is a fee for the installation and keeping in storage of any
flammable, combustible or explosive substances. Inasmuch as said storage makes use of tanks owned not by the
municipality of Pililla, but by petitioner PPC, same is obviously not a charge for any service rendered by the municipality
as what is envisioned in Section 37 of the same Code.
Section 10 (z) (13) of Pililla's Municipal Tax Ordinance No. 1 prescribing a permit fee is a permit fee allowed under
Section 36 of the amended Code.
As to the authority of the mayor to waive payment of the mayor's permit and sanitary inspection fees, the trial court did not
err in holding that "since the power to tax includes the power to exempt thereof which is essentially a legislative
prerogative, it follows that a municipal mayor who is an executive officer may not unilaterally withdraw such an expression
of a policy thru the enactment of a tax." The waiver partakes of the nature of an exemption. It is an ancient rule that
exemptions from taxation are construed in strictissimi juris against the taxpayer and liberally in favor of the taxing authority
(Esso Standard Eastern, Inc. v. Acting Commissioner of Customs, 18 SCRA 488 [1966]). Tax exemptions are looked
upon with disfavor (Western Minolco Corp. v. Commissioner of Internal Revenue, 124 SCRA 121 [1983]). Thus, in the
absence of a clear and express exemption from the payment of said fees, the waiver cannot be recognized. As already
stated, it is the law-making body, and not an executive like the mayor, who can make an exemption. Under Section 36 of
12

the Code, a permit fee like the mayor's permit, shall be required before any individual or juridical entity shall engage in any
business or occupation under the provisions of the Code.
However, since the Local Tax Code does not provide the prescriptive period for collection of local taxes, Article 1143 of
the Civil Code applies. Said law provides that an action upon an obligation created by law prescribes within ten (10) years
from the time the right of action accrues. The Municipality of Pililla can therefore enforce the collection of the tax on
business of petitioner PPC due from 1976 to 1986, and NOT the tax that had accrued prior to 1976.
PREMISES CONSIDERED, with the MODIFICATION that business taxes accruing PRIOR to 1976 are not to be paid by
PPC (because the same have prescribed) and that storage fees are not also to be paid by PPC (for the storage tanks are
owned by PPC and not by the municipality, and therefore cannot be a charge for service by the municipality), the assailed
DECISION is hereby AFFIRMED.
SO ORDERED.

G.R. No. 125350 December 3, 2002

HON. RTC JUDGES MERCEDES G. DADOLE (Executive Judge, Branch 28),
ULRIC R. CAÑETE (Presiding Judge, Branch 25),
AGUSTINE R. VESTIL (Presiding Judge, Branch 56),
HON. MTC JUDGES TEMISTOCLES M. BOHOLST (Presiding Judge, Branch 1),
VICENTE C. FANILAG (Judge Designate, Branch 2),
and WILFREDO A. DAGATAN (Presiding Judge, Branch 3), all of Mandaue City, petitioners,
vs.
COMMISSION ON AUDIT, respondent.
DECISION
CORONA, J.:
1 2
Before us is a petition for certiorari under Rule 64 to annul the decision and resolution , dated September 21, 1995 and
May 28, 1996, respectively, of the respondent Commission on Audit (COA) affirming the notices of the Mandaue City
Auditor which diminished the monthly additional allowances received by the petitioner judges of the Regional Trial Court
(RTC) and Municipal Trial Court (MTC) stationed in Mandaue City.
The undisputed facts are as follows:
In 1986, the RTC and MTC judges of Mandaue City started receiving monthly allowances of P1,260 each through the
yearly appropriation ordinance enacted by the Sangguniang Panlungsod of the said city. In 1991, Mandaue City increased
the amount to P1,500 for each judge.
On March 15, 1994, the Department of Budget and Management (DBM) issued the disputed Local Budget Circular No. 55
(LBC 55) which provided that:
"x x x xxx xxx
2.3.2. In the light of the authority granted to the local government units under the Local Government Code to
provide for additional allowances and other benefits to national government officials and employees assigned in
their locality, such additional allowances in the form of honorarium at rates not exceeding P1,000.00 in provinces
and cities and P700.00 in municipalities may be granted subject to the following conditions:
a) That the grant is not mandatory on the part of the LGUs;
b) That all contractual and statutory obligations of the LGU including the implementation of R.A. 6758 shall have
been fully provided in the budget;
c) That the budgetary requirements/limitations under Section 324 and 325 of R.A. 7160 should be satisfied and/or
complied with; and
3
d) That the LGU has fully implemented the devolution of functions/personnel in accordance with R.A. 7160. "
(italics supplied)
xxx xxx xxx
The said circular likewise provided for its immediate effectivity without need of publication:
"5.0 EFFECTIVITY
This Circular shall take effect immediately."
Acting on the DBM directive, the Mandaue City Auditor issued notices of disallowance to herein petitioners, namely,
Honorable RTC Judges Mercedes G. Dadole, Ulric R. Cañete, Agustin R. Vestil, Honorable MTC Judges Temistocles M.
Boholst, Vicente C. Fanilag and Wilfredo A. Dagatan, in excess of the amount authorized by LBC 55. Beginning October,
1994, the additional monthly allowances of the petitioner judges were reduced to P1,000 each. They were also asked to
reimburse the amount they received in excess of P1,000 from April to September, 1994.
The petitioner judges filed with the Office of the City Auditor a protest against the notices of disallowance. But the City
Auditor treated the protest as a motion for reconsideration and indorsed the same to the COA Regional Office No. 7. In
turn, the COA Regional Office referred the motion to the head office with a recommendation that the same be denied.
On September 21, 1995, respondent COA rendered a decision denying petitioners' motion for reconsideration. The COA
held that:
13

The issue to be resolved in the instant appeal is whether or not the City Ordinance of Mandaue which provides a higher
rate of allowances to the appellant judges may prevail over that fixed by the DBM under Local Budget Circular No. 55
dated March 15, 1994.
xxx xxx xxx
Applying the foregoing doctrine, appropriation ordinance of local government units is subject to the organizational,
budgetary and compensation policies of budgetary authorities (COA 5th Ind., dated March 17, 1994 re: Province of
Antique; COA letter dated May 17, 1994 re: Request of Hon. Renato Leviste, Cong. 1st Dist. Oriental Mindoro). In this
regard, attention is invited to Administrative Order No. 42 issued on March 3, 1993 by the President of the Philippines
clarifying the role of DBM in the compensation and classification of local government positions under RA No. 7160 vis-avis
the provisions of RA No. 6758 in view of the abolition of the JCLGPA. Section 1 of said Administrative Order provides that:
"Section 1. The Department of Budget and Management as the lead administrator of RA No. 6758 shall, through
its Compensation and Position Classification Bureau, continue to have the following responsibilities in connection
with the implementation of the Local Government Code of 1991:
a) Provide guidelines on the classification of local government positions and on the specific rates of pay
therefore;
b) Provide criteria and guidelines for the grant of all allowances and additional forms of compensation to
local government employees; xxx." (underscoring supplied)
To operationalize the aforecited presidential directive, DBM issued LBC No. 55, dated March 15, 1994, whose effectivity
clause provides that:
xxx xxx xxx
"5.0 EFFECTIVITY
This Circular shall take effect immediately."
It is a well-settled rule that implementing rules and regulations promulgated by administrative or executive officer in
accordance with, and as authorized by law, has the force and effect of law or partake the nature of a statute (Victorias
Milling Co., Inc., vs. Social Security Commission, 114 Phil. 555, cited in Agpalo's Statutory Construction, 2nd Ed. P. 16;
Justice Cruz's Phil. Political Law, 1984 Ed., p. 103; Espanol vs. Phil Veterans Administration, 137 SCRA 314; Antique
Sawmills Inc. vs. Tayco, 17 SCRA 316).
xxx xxx xxx
There being no statutory basis to grant additional allowance to judges in excess of P1,000.00 chargeable against the local
government units where they are stationed, this Commission finds no substantial grounds or cogent reason to disturb the
decision of the City Auditor, Mandaue City, disallowing in audit the allowances in question. Accordingly, the above-
captioned appeal of the MTC and RTC Judges of Mandaue City, insofar as the same is not covered by Circular Letter No.
91-7, is hereby dismissed for lack of merit.
4
xxx xxx xxx
On November 27, 1995, Executive Judge Mercedes Gozo-Dadole, for and in behalf of the petitioner judges, filed a motion
for reconsideration of the decision of the COA. In a resolution dated May 28, 1996, the COA denied the motion.
Hence, this petition for certiorari by the petitioner judges, submitting the following questions for resolution:
I
HAS THE CITY OF MANDAUE STATUTORY AND CONSTITUTIONAL BASIS TO PROVIDE ADDITIONAL
ALLOWANCES AND OTHER BENEFITS TO JUDGES STATIONED IN AND ASSIGNED TO THE CITY?
II
CAN AN ADMINISTRATIVE CIRCULAR OR GUIDELINE SUCH AS LOCAL BUDGET CIRCULAR NO. 55 RENDER
INOPERATIVE THE POWER OF THE LEGISLATIVE BODY OF A CITY BY SETTING A LIMIT TO THE EXTENT OF
THE EXERCISE OF SUCH POWER?
III
HAS THE COMMISSION ON AUDIT CORRECTLY INTERPRETED LOCAL BUDGET CIRCULAR NO. 55 TO INCLUDE
MEMBERS OF THE JUDICIARY IN FIXING THE CEILING OF ADDITIONAL ALLOWANCES AND BENEFITS TO BE
PROVIDED TO JUDGES STATIONED IN AND ASSIGNED TO MANDAUE CITY BY THE CITY GOVERNMENT AT
P1,000.00 PER MONTH NOTWITHSTANDING THAT THEY HAVE BEEN RECEIVING ALLOWANCES OF P1,500.00
MONTHLY FOR THE PAST FIVE YEARS?
IV
IS LOCAL BUDGET CIRCULAR NO. 55 DATED MARCH 15, 1994 ISSUED BY THE DEPARTMENT OF BUDGET AND
MANAGEMENT VALID AND ENFORCEABLE CONSIDERING THAT IT WAS NOT DULY PUBLISHED IN ACCODANCE
5
WITH LAW?
Petitioner judges argue that LBC 55 is void for infringing on the local autonomy of Mandaue City by dictating a uniform
amount that a local government unit can disburse as additional allowances to judges stationed therein. They maintain that
said circular is not supported by any law and therefore goes beyond the supervisory powers of the President. They further
allege that said circular is void for lack of publication.
On the other hand, the yearly appropriation ordinance providing for additional allowances to judges is allowed by Section
458, par. (a)(1)[xi], of RA 7160, otherwise known as the Local Government Code of 1991, which provides that:
14

Sec. 458. Powers, Duties, Functions and Compensation. – (a) The sangguniang panlungsod, as the legislative body of
the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the city and its
inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the city as provided
for under Section 22 of this Code, and shall:
(1) Approve ordinances and pass resolutions necessary for an efficient and effective city government, and in this
connection, shall:
xxx xxx xxx
(xi) When the finances of the city government allow, provide for additional allowances and other benefits to judges,
prosecutors, public elementary and high school teachers, and other national government officials stationed in or assigned
to the city; (italics supplied)
Instead of filing a comment on behalf of respondent COA, the Solicitor General filed a manifestation supporting the
position of the petitioner judges. The Solicitor General argues that (1) DBM only enjoys the power to review and determine
whether the disbursements of funds were made in accordance with the ordinance passed by a local government unit while
(2) the COA has no more than auditorial visitation powers over local government units pursuant to Section 348 of RA
7160 which provides for the power to inspect at any time the financial accounts of local government units.
Moreover, the Solicitor General opines that "the DBM and the respondent are only authorized under RA 7160 to
promulgate a Budget Operations Manual for local government units, to improve and systematize methods, techniques and
procedures employed in budget preparation, authorization, execution and accountability" pursuant to Section 354 of RA
7160. The Solicitor General points out that LBC 55 was not exercised under any of the aforementioned provisions.
Respondent COA, on the other hand, insists that the constitutional and statutory authority of a city government to provide
allowances to judges stationed therein is not absolute. Congress may set limitations on the exercise of autonomy. It is for
the President, through the DBM, to check whether these legislative limitations are being followed by the local government
units.
One such law imposing a limitation on a local government unit's autonomy is Section 458, par. (a) (1) [xi], of RA 7160,
which authorizes the disbursement of additional allowances and other benefits to judges subject to the condition that the
finances of the city government should allow the same. Thus, DBM is merely enforcing the condition of the law when it
sets a uniform maximum amount for the additional allowances that a city government can release to judges stationed
therein.
Assuming arguendo that LBC 55 is void, respondent COA maintains that the provisions of the yearly approved ordinance
granting additional allowances to judges are still prohibited by the appropriation laws passed by Congress every year.
COA argues that Mandaue City gets the funds for the said additional allowances of judges from the Internal Revenue
Allotment (IRA). But the General Appropriations Acts of 1994 and 1995 do not mention the disbursement of additional
allowances to judges as one of the allowable uses of the IRA. Hence, the provisions of said ordinance granting additional
allowances, taken from the IRA, to herein petitioner judges are void for being contrary to law.
To resolve the instant petition, there are two issues that we must address: (1) whether LBC 55 of the DBM is void for
going beyond the supervisory powers of the President and for not having been published and (2) whether the yearly
appropriation ordinance enacted by the City of Mandaue that provides for additional allowances to judges contravenes the
annual appropriation laws enacted by Congress.
We rule in favor of the petitioner judges.
On the first issue, we declare LBC 55 to be null and void.
6
We recognize that, although our Constitution guarantees autonomy to local government units, the exercise of local
autonomy remains subject to the power of control by Congress and the power of supervision by the President. Section 4
of Article X of the 1987 Philippine Constitution provides that:
Sec. 4. The President of the Philippines shall exercise general supervision over local governments. x x x
7
In Pimentel vs. Aguirre , we defined the supervisory power of the President and distinguished it from the power of control
exercised by Congress. Thus:
This provision (Section 4 of Article X of the 1987 Philippine Constitution) has been interpreted to exclude the power of
i5
control. In Mondano v. Silvosa, the Court contrasted the President's power of supervision over local government officials
with that of his power of control over executive officials of the national government. It was emphasized that the two terms -
- supervision and control -- differed in meaning and extent. The Court distinguished them as follows:
"x x x In administrative law, supervision means overseeing or the power or authority of an officer to see that subordinate
officers perform their duties. If the latter fail or neglect 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 ha[s] done in the performance of his duties and to substitute the judgment of
ii 6
the former for that of the latter."
iii 7
In Taule v. Santos, we further stated that the Chief Executive wielded no more authority than that of checking whether
local governments or their officials were performing their duties as provided by the fundamental law and by statutes. He
cannot interfere with local governments, so long as they act within the scope of their authority. "Supervisory power, when
contrasted with control, is the power of mere oversight over an inferior body; it does not include any restraining authority
iv 8
over such body," we said.
15
v9
In a more recent case, Drilon v. Lim, the difference between control and supervision was further delineated. Officers in
control lay down the rules in the performance or accomplishment of an act. If these rules are not followed, they may, in
their discretion, order the act undone or redone by their subordinates or even decide to do it themselves. On the other
hand, supervision does not cover such authority. Supervising officials merely see to it that the rules are followed, but they
themselves do not lay down such rules, nor do they have the discretion to modify or replace them. If the rules are not
observed, they may order the work done or redone, but only to conform to such rules. They may not prescribe their own
manner of execution of the act. They have no discretion on this matter except to see to it that the rules are followed.
vi10
Under our present system of government, executive power is vested in the President. The members of the Cabinet and
other executive officials are merely alter egos. As such, they are subject to the power of control of the President, at whose
vii 11
will and behest they can be removed from office; or their actions and decisions changed, suspended or reversed. In
contrast, the heads of political subdivisions are elected by the people. Their sovereign powers emanate from the
electorate, to whom they are directly accountable. By constitutional fiat, they are subject to the President's supervision
only, not control, so long as their acts are exercised within the sphere of their legitimate powers. By the same token, the
President may not withhold or alter any authority or power given them by the Constitution and the law.
Clearly then, the President can only interfere in the affairs and activities of a local government unit if he or she finds that
the latter has acted contrary to law. This is the scope of the President's supervisory powers over local government units.
Hence, the President or any of his or her alter egos cannot interfere in local affairs as long as the concerned local
government unit acts within the parameters of the law and the Constitution. Any directive therefore by the President or any
of his or her alter egos seeking to alter the wisdom of a law-conforming judgment on local affairs of a local government
unit is a patent nullity because it violates the principle of local autonomy and separation of powers of the executive and
legislative departments in governing municipal corporations.
Does LBC 55 go beyond the law it seeks to implement? Yes.
LBC 55 provides that the additional monthly allowances to be given by a local government unit should not exceed P1,000
in provinces and cities and P700 in municipalities. Section 458, par. (a)(1)(xi), of RA 7160, the law that supposedly serves
as the legal basis of LBC 55, allows the grant of additional allowances to judges "when the finances of the city
government allow." The said provision does not authorize setting a definite maximum limit to the additional allowances
granted to judges. Thus, we need not belabor the point that the finances of a city government may allow the grant of
additional allowances higher than P1,000 if the revenues of the said city government exceed its annual expenditures.
Thus, to illustrate, a city government with locally generated annual revenues of P40 million and expenditures of P35
million can afford to grant additional allowances of more than P1,000 each to, say, ten judges inasmuch as the finances of
the city can afford it.
Setting a uniform amount for the grant of additional allowances is an inappropriate way of enforcing the criterion found in
Section 458, par. (a)(1)(xi), of RA 7160. The DBM over-stepped its power of supervision over local government units by
imposing a prohibition that did not correspond with the law it sought to implement. In other words, the prohibitory nature of
the circular had no legal basis.
8
Furthermore, LBC 55 is void on account of its lack of publication, in violation of our ruling in Tañada vs. Tuvera where we
held that:
xxx. Administrative rules and regulations must also be published if their purpose is to enforce or implement existing law
pursuant to a valid delegation.
Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of an administrative
agency and the public, need not be published. Neither is publication required of the so-called letters of instruction issued
by administrative superiors concerning the rules or guidelines to be followed by their subordinates in the performance of
their duties.
Respondent COA claims that publication is not required for LBC 55 inasmuch as it is merely an interpretative regulation
9
applicable to the personnel of an LGU. We disagree. In De Jesus vs. Commission on Audit where we dealt with the same
issue, this Court declared void, for lack of publication, a DBM circular that disallowed payment of allowances and other
additional compensation to government officials and employees. In refuting respondent COA's argument that said circular
was merely an internal regulation, we ruled that:
On the need for publication of subject DBM-CCC No. 10, we rule in the affirmative. Following the doctrine enunciated
in Tañada v. Tuvera, publication in the Official Gazette or in a newspaper of general circulation in the Philippines is
required since DBM-CCC No. 10 is in the nature of an administrative circular the purpose of which is to enforce or
implement an existing law. Stated differently, to be effective and enforceable, DBM-CCC No. 10 must go through the
requisite publication in the Official Gazette or in a newspaper of general circulation in the Philippines.
In the present case under scrutiny, it is decisively clear that DBM-CCC No. 10, which completely disallows payment of
allowances and other additional compensation to government officials and employees, starting November 1, 1989, is not a
mere interpretative or internal regulation. It is something more than that. And why not, when it tends to deprive
government workers of their allowance and additional compensation sorely needed to keep body and soul together. At
the very least, before the said circular under attack may be permitted to substantially reduce their income, the
government officials and employees concerned should be apprised and alerted by the publication of subject
circular in the Official Gazette or in a newspaper of general circulation in the Philippines – to the end that they be
16

given amplest opportunity to voice out whatever opposition they may have, and to ventilate their stance on the
matter. This approach is more in keeping with democratic precepts and rudiments of fairness and
transparency. (emphasis supplied)
10
In Philippine International Trading Corporation vs. Commission on Audit , we again declared the same circular as void,
for lack of publication, despite the fact that it was re-issued and then submitted for publication. Emphasizing the
importance of publication to the effectivity of a regulation, we therein held that:
It has come to our knowledge that DBM-CCC No. 10 has been re-issued in its entirety and submitted for publication in the
Official Gazette per letter to the National Printing Office dated March 9, 1999. Would the subsequent publication thereof
cure the defect and retroact to the time that the above-mentioned items were disallowed in audit?
The answer is in the negative, precisely for the reason that publication is required as a condition precedent to the
effectivity of a law to inform the public of the contents of the law or rules and regulations before their rights and interests
are affected by the same. From the time the COA disallowed the expenses in audit up to the filing of herein petition the
subject circular remained in legal limbo due to its non-publication. As was stated in Tañada v. Tuvera, "prior publication of
laws before they become effective cannot be dispensed with, for the reason that it would deny the public knowledge of the
11
laws that are supposed to govern it."
We now resolve the second issue of whether the yearly appropriation ordinance enacted by Mandaue City providing for
fixed allowances for judges contravenes any law and should therefore be struck down as null and void.
According to respondent COA, even if LBC 55 were void, the ordinances enacted by Mandaue City granting additional
allowances to the petitioner judges would "still (be) bereft of legal basis for want of a lawful source of funds considering
that the IRA cannot be used for such purposes." Respondent COA showed that Mandaue City's funds consisted of locally
generated revenues and the IRA. From 1989 to 1995, Mandaue City's yearly expenditures exceeded its locally generated
revenues, thus resulting in a deficit. During all those years, it was the IRA that enabled Mandaue City to incur a surplus.
Respondent avers that Mandaue City used its IRA to pay for said additional allowances and this violated paragraph 2 of
12
the Special Provisions, page 1060, of RA 7845 (The General Appropriations Act of 1995) and paragraph 3 of the Special
13
Provision, page 1225, of RA 7663 (The General Appropriations Act of 1994) which specifically identified the objects of
expenditure of the IRA. Nowhere in said provisions of the two budgetary laws does it say that the IRA can be used for
additional allowances of judges. Respondent COA thus argues that the provisions in the ordinance providing for such
disbursement are against the law, considering that the grant of the subject allowances is not within the specified use
allowed by the aforesaid yearly appropriations acts.
We disagree.
Respondent COA failed to prove that Mandaue City used the IRA to spend for the additional allowances of the judges.
There was no evidence submitted by COA showing the breakdown of the expenses of the city government and the funds
used for said expenses. All the COA presented were the amounts expended, the locally generated revenues, the deficit,
the surplus and the IRA received each year. Aside from these items, no data or figures were presented to show that
Mandaue City deducted the subject allowances from the IRA. In other words, just because Mandaue City's locally
generated revenues were not enough to cover its expenditures, this did not mean that the additional allowances of
petitioner judges were taken from the IRA and not from the city's own revenues.
Moreover, the DBM neither conducted a formal review nor ordered a disapproval of Mandaue City's appropriation
ordinances, in accordance with the procedure outlined by Sections 326 and 327 of RA 7160 which provide that:
Section 326. Review of Appropriation Ordinances of Provinces, Highly Urbanized Cities, Independent Component Cities,
and Municipalities within the Metropolitan Manila Area. The Department of Budget and Management shall review
ordinances authorizing the annual or supplemental appropriations of provinces, highly-urbanized cities, independent
component cities, and municipalities within the Metropolitan Manila Area in accordance with the immediately
succeeding Section.
Section 327. Review of Appropriation Ordinances of Component Cities and Municipalities.- The sangguninang
panlalawigan shall review the ordinance authorizing annual or supplemental appropriations of component cities and
municipalities in the same manner and within the same period prescribed for the review of other ordinances.
If within ninety (90) days from receipt of copies of such ordinance, the sangguniang panlalawigan takes no action
thereon, the same shall be deemed to have been reviewed in accordance with law and shall continue to be in full
force and effect. (emphasis supplied)
Within 90 days from receipt of the copies of the appropriation ordinance, the DBM should have taken positive action.
Otherwise, such ordinance was deemed to have been properly reviewed and deemed to have taken effect. Inasmuch as,
in the instant case, the DBM did not follow the appropriate procedure for reviewing the subject ordinance of Mandaue City
and allowed the 90-day period to lapse, it can no longer question the legality of the provisions in the said ordinance
granting additional allowances to judges stationed in the said city.
WHEREFORE, the petition is hereby GRANTED, and the assailed decision and resolution, dated September 21, 1995
and May 28, 1996, respectively, of the Commission on Audit are hereby set aside.
No costs.
SO ORDERED.
17

Davide, Jr., C.J., Bellosillo, Vitug, Mendoza, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio,
Austria-Martinez, Carpio-Morales, and Callejo, Sr., JJ., concur.
Footnotes

6
Sec. 25, [Art. II]. The State shall ensure the autonomy of local governments.
Sec. 2, [Art. X]. The territorial and political subdivisions shall enjoy local autonomy.
7
336 SCRA 201, 214-215 (2000).
12
SPECIAL PROVISIONS
3. Use of Funds. The amount herein shall, pursuant to Section 17(g) of the Code, provide for the cost of
basic services and facilities enumerated under Section 17(b) thereof, particularly those which have been
devolved by the Department of Health, the Department of Social Welfare and Development, the
Department of Agriculture, and the Department of Environment and Natural Resources as well as other
agencies of the national government, including (1) construction/improvement, repair and maintenance of
local roads; (2) concrete barangay roads/multi-purpose pavements construction and improvement
program to be implemented in accordance with R.A. No. 6763; (3) construction, rehabilitation and
improvement of communal irrigation projects/systems; PROVIDED, That each local government unit shall,
in accordance with Section 287 of the Code, appropriate in its annual budget no less than twenty percent
(20%) of its share from internal revenue allotment for development projects; PROVIDED, FURTHER, That
enforcement of the provisions of Sections 325(a) and 331(b) of the Code shall be waived to enable local
government units to absorb national government personnel transferred on account of devolution, create
the mandatory positions specified in the Code, enable the barangay officials to receive the minimum
allowable level of remuneration provided under Section 393 of the Code as well as continue the
implementation of the salary standardization authorized under R.A. No. 6758: PROVIDED, FINALLY,
That such amounts as may be determined by the Department of Budget and Management corresponding
to the requirements of health care and services as devolved to Local Governments Units R.A. No. 7160
shall not be realigned or utilized by LGUs concerned for any other expenditure or purpose.
13
SPECIAL PROVISIONS
xxx xxx xxx
2. Use of Funds. - The amount herein appropriated shall, pursuant to Section 17(g) of the Code, provide
for the cost of basic services and facilities enumerated under Section 17(b) thereof, particularly those
devolved by the Department of Health, the Department of Social Welfare and Development, the
Department of Agriculture, and the Department of Environment and Natural Resources as well as other
agencies of the National Government, including (1) construction/improvement, repair and maintenance of
local roads; (2) concrete barangay roads/multi-purpose pavements, construction and improvement
program to be implemented in accordance with R.A. No. 6763; (2) construction, rehabilitation and
improvement of communal irrigation projects/systems; and (4) payment of not less than fifty percent
(50%) of the total requirement for the Magna Carta benefits of devolved health workers pursuant to the
provisions of R.A. No. 7305 and such other guidelines that may be issued by the Department of Health for
the purpose: PROVIDED, That each local government unit shall, in accordance with Section 287 of the
Code, appropriate in its budget no less than twenty percent (20%) of its share from Internal Revenue
Allotment for development projects; PROVIDED, FURTHER, That enforcement of the provisions of
Sections 325(a) and 331(b) of the Code shall be waived enable local government units to absorb and/or
maintain national government personnel transferred on account of devolution, create the mandatory
positions specified in the Code, enable the barangay officials to receive the minimum allowable level of
remuneration provided under Section 393 of the Code, as well as continue the implementation of the
salary standardization authorized under R.A. No. 6758 and the payment of not less than fifty percent
(50%) of the total requirement for the Magna Carta benefits of health workers mandated under R.A. No.
7305 and such other guidelines as may be issued by the Department of Health for the purpose.
CRUZ, J.:
There was instant opposition when PAGCOR announced the opening of a casino in Cagayan de Oro City. Civic
organizations angrily denounced the project. The religious elements echoed the objection and so did the women's groups
and the youth. Demonstrations were led by the mayor and the city legislators. The media trumpeted the protest,
describing the casino as an affront to the welfare of the city.
The trouble arose when in 1992, flush with its tremendous success in several cities, PAGCOR decided to expand its
operations to Cagayan de Oro City. To this end, it leased a portion of a building belonging to Pryce Properties
Corporation, Inc., one of the herein private respondents, renovated and equipped the same, and prepared to inaugurate
its casino there during the Christmas season.
The reaction of the Sangguniang Panlungsod of Cagayan de Oro City was swift and hostile. On December 7, 1992, it
enacted Ordinance No. 3353 reading as follows:
18

ORDINANCE NO. 3353

AN ORDINANCE PROHIBITING THE ISSUANCE OF BUSINESS PERMIT AND CANCELLING
EXISTING BUSINESS PERMIT TO ANY ESTABLISHMENT FOR THE USING AND ALLOWING TO BE
USED ITS PREMISES OR PORTION THEREOF FOR THE OPERATION OF CASINO.
BE IT ORDAINED by the Sangguniang Panlungsod of the City of Cagayan de Oro, in session assembled
that:
Sec. 1. — That pursuant to the policy of the city banning the operation of casino within its territorial
jurisdiction, no business permit shall be issued to any person, partnership or corporation for the operation
of casino within the city limits.
Sec. 2. — That it shall be a violation of existing business permit by any persons, partnership or
corporation to use its business establishment or portion thereof, or allow the use thereof by others for
casino operation and other gambling activities.
Sec. 3. — PENALTIES. — Any violation of such existing business permit as defined in the preceding
section shall suffer the following penalties, to wit:
a) Suspension of the business permit for sixty (60) days for the first
offense and a fine of P1,000.00/day
b) Suspension of the business permit for Six (6) months for the second
offense, and a fine of P3,000.00/day
c) Permanent revocation of the business permit and imprisonment of
One (1) year, for the third and subsequent offenses.
Sec. 4. — This Ordinance shall take effect ten (10) days from publication thereof.
Nor was this all. On January 4, 1993, it adopted a sterner Ordinance No. 3375-93 reading as follows:
ORDINANCE NO. 3375-93
AN ORDINANCE PROHIBITING THE OPERATION OF CASINO AND PROVIDING PENALTY FOR
VIOLATION THEREFOR.
WHEREAS, the City Council established a policy as early as 1990 against CASINO under its Resolution
No. 2295;
WHEREAS, on October 14, 1992, the City Council passed another Resolution No. 2673, reiterating its
policy against the establishment of CASINO;
WHEREAS, subsequently, thereafter, it likewise passed Ordinance No. 3353, prohibiting the issuance of
Business Permit and to cancel existing Business Permit to any establishment for the using and allowing
to be used its premises or portion thereof for the operation of CASINO;
WHEREAS, under Art. 3, section 458, No. (4), sub paragraph VI of the Local Government Code of 1991
(Rep. Act 7160) and under Art. 99, No. (4), Paragraph VI of the implementing rules of the Local
Government Code, the City Council as the Legislative Body shall enact measure to suppress any activity
inimical to public morals and general welfare of the people and/or regulate or prohibit such activity
pertaining to amusement or entertainment in order to protect social and moral welfare of the community;
NOW THEREFORE,
BE IT ORDAINED by the City Council in session duly assembled that:
Sec. 1. — The operation of gambling CASINO in the City of Cagayan de Oro is hereby prohibited.
Sec. 2. — Any violation of this Ordinance shall be subject to the following penalties:
a) Administrative fine of P5,000.00 shall be imposed against the proprietor, partnership or corporation
undertaking the operation, conduct, maintenance of gambling CASINO in the City and closure thereof;
b) Imprisonment of not less than six (6) months nor more than one (1) year or a fine in the amount of
P5,000.00 or both at the discretion of the court against the manager, supervisor, and/or any person
responsible in the establishment, conduct and maintenance of gambling CASINO.
Sec. 3. — This Ordinance shall take effect ten (10) days after its publication in a local newspaper of
general circulation.
Pryce assailed the ordinances before the Court of Appeals, where it was joined by PAGCOR as intervenor and
supplemental petitioner. Their challenge succeeded. On March 31, 1993, the Court of Appeals declared the ordinances
1
invalid and issued the writ prayed for to prohibit their enforcement. Reconsideration of this decision was denied on July
2
13, 1993.
Cagayan de Oro City and its mayor are now before us in this petition for review under Rule 45 of the Rules of
3
Court. They aver that the respondent Court of Appeals erred in holding that:
1. Under existing laws, the Sangguniang Panlungsod of the City of Cagayan de Oro does not have the
power and authority to prohibit the establishment and operation of a PAGCOR gambling casino within the
City's territorial limits.
2. The phrase "gambling and other prohibited games of chance" found in Sec. 458, par. (a), sub-par. (1)
— (v) of R.A. 7160 could only mean "illegal gambling."
3. The questioned Ordinances in effect annul P.D. 1869 and are therefore invalid on that point.
19

4. The questioned Ordinances are discriminatory to casino and partial to cockfighting and are therefore
invalid on that point.
5. The questioned Ordinances are not reasonable, not consonant with the general powers and purposes
of the instrumentality concerned and inconsistent with the laws or policy of the State.
6. It had no option but to follow the ruling in the case of Basco, et al. v. PAGCOR, G.R. No. 91649, May
14, 1991, 197 SCRA 53 in disposing of the issues presented in this present case.
PAGCOR is a corporation created directly by P.D. 1869 to help centralize and regulate all games of chance, including
casinos on land and sea within the territorial jurisdiction of the Philippines. In Basco v. Philippine Amusements and
4
Gaming Corporation, this Court sustained the constitutionality of the decree and even cited the benefits of the entity to
the national economy as the third highest revenue-earner in the government, next only to the BIR and the Bureau of
Customs.
Cagayan de Oro City, like other local political subdivisions, is empowered to enact ordinances for the purposes indicated
in the Local Government Code. It is expressly vested with the police power under what is known as the General Welfare
Clause now embodied in Section 16 as follows:
Sec. 16. — General Welfare. — Every local government unit shall exercise the powers expressly granted,
those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its
efficient and effective governance, and those which are essential to the promotion of the general welfare.
Within their respective territorial jurisdictions, local government units shall ensure and support, among
other things, the preservation and enrichment of culture, promote health and safety, enhance the right of
the people to a balanced ecology, encourage and support the development of appropriate and self-reliant
scientific and technological capabilities, improve public morals, enhance economic prosperity and social
justice, promote full employment among their residents, maintain peace and order, and preserve the
comfort and convenience of their inhabitants.
In addition, Section 458 of the said Code specifically declares that:
Sec. 458. — Powers, Duties, Functions and Compensation. — (a) The Sangguniang Panlungsod, as the
legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the
general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper
exercise of the corporate powers of the city as provided for under Section 22 of this Code, and shall:
(1) Approve ordinances and pass resolutions necessary for an efficient and effective city government, and
in this connection, shall:
xxx xxx xxx
(v) Enact ordinances intended to prevent, suppress and impose
appropriate penalties for habitual drunkenness in public places,
vagrancy, mendicancy, prostitution, establishment and maintenance of
houses of ill repute, gambling and other prohibited games of chance,
fraudulent devices and ways to obtain money or property, drug addiction,
maintenance of drug dens, drug pushing, juvenile delinquency, the
printing, distribution or exhibition of obscene or pornographic materials or
publications, and such other activities inimical to the welfare and morals
of the inhabitants of the city;
This section also authorizes the local government units to regulate properties and businesses within their territorial limits
5
in the interest of the general welfare.
The petitioners argue that by virtue of these provisions, the Sangguniang Panlungsod may prohibit the operation of
casinos because they involve games of chance, which are detrimental to the people. Gambling is not allowed by general
law and even by the Constitution itself. The legislative power conferred upon local government units may be exercised
over all kinds of gambling and not only over "illegal gambling" as the respondents erroneously argue. Even if the operation
of casinos may have been permitted under P.D. 1869, the government of Cagayan de Oro City has the authority to
prohibit them within its territory pursuant to the authority entrusted to it by the Local Government Code.
It is submitted that this interpretation is consonant with the policy of local autonomy as mandated in Article II, Section 25,
and Article X of the Constitution, as well as various other provisions therein seeking to strengthen the character of the
nation. In giving the local government units the power to prevent or suppress gambling and other social problems, the
Local Government Code has recognized the competence of such communities to determine and adopt the measures best
expected to promote the general welfare of their inhabitants in line with the policies of the State.
The petitioners also stress that when the Code expressly authorized the local government units to prevent and suppress
gambling and other prohibited games of chance, like craps, baccarat, blackjack and roulette, it meant all forms of
6
gambling without distinction. Ubi lex non distinguit, nec nos distinguere debemos. Otherwise, it would have expressly
excluded from the scope of their power casinos and other forms of gambling authorized by special law, as it could have
easily done. The fact that it did not do so simply means that the local government units are permitted to prohibit all kinds
of gambling within their territories, including the operation of casinos.
20

The adoption of the Local Government Code, it is pointed out, had the effect of modifying the charter of the PAGCOR.
The Code is not only a later enactment than P.D. 1869 and so is deemed to prevail in case of inconsistencies between
them. More than this, the powers of the PAGCOR under the decree are expressly discontinued by the Code insofar as
they do not conform to its philosophy and provisions, pursuant to Par. (f) of its repealing clause reading as follows:
(f) All general and special laws, acts, city charters, decrees, executive orders, proclamations and
administrative regulations, or part or parts thereof which are inconsistent with any of the provisions of this
Code are hereby repealed or modified accordingly.
It is also maintained that assuming there is doubt regarding the effect of the Local Government Code on P.D. 1869, the
doubt must be resolved in favor of the petitioners, in accordance with the direction in the Code calling for its liberal
interpretation in favor of the local government units. Section 5 of the Code specifically provides:
Sec. 5. Rules of Interpretation. — In the interpretation of the provisions of this Code, the following rules
shall apply:
(a) Any provision on a power of a local government unit shall be liberally interpreted in its favor, and in
case of doubt, any question thereon shall be resolved in favor of devolution of powers and of the lower
local government unit. Any fair and reasonable doubt as to the existence of the power shall be interpreted
in favor of the local government unit concerned;
xxx xxx xxx
(c) The general welfare provisions in this Code shall be liberally interpreted to give more powers to local
government units in accelerating economic development and upgrading the quality of life for the people in
the community; . . . (Emphasis supplied.)
Finally, the petitioners also attack gambling as intrinsically harmful and cite various provisions of the Constitution and
several decisions of this Court expressive of the general and official disapprobation of the vice. They invoke the State
policies on the family and the proper upbringing of the youth and, as might be expected, call attention to the old case
7
of U.S. v. Salaveria, which sustained a municipal ordinance prohibiting the playing of panguingue. The petitioners decry
the immorality of gambling. They also impugn the wisdom of P.D. 1869 (which they describe as "a martial law instrument")
in creating PAGCOR and authorizing it to operate casinos "on land and sea within the territorial jurisdiction of the
Philippines."
This is the opportune time to stress an important point.
The morality of gambling is not a justiciable issue. Gambling is not illegal per se. While it is generally considered inimical
to the interests of the people, there is nothing in the Constitution categorically proscribing or penalizing gambling or, for
that matter, even mentioning it at all. It is left to Congress to deal with the activity as it sees fit. In the exercise of its own
discretion, the legislature may prohibit gambling altogether or allow it without limitation or it may prohibit some forms of
gambling and allow others for whatever reasons it may consider sufficient. Thus, it has prohibited jueteng and monte but
permits lotteries, cockfighting and horse-racing. In making such choices, Congress has consulted its own wisdom, which
this Court has no authority to review, much less reverse. Well has it been said that courts do not sit to resolve the merits
8
of conflicting theories. That is the prerogative of the political departments. It is settled that questions regarding the
wisdom, morality, or practicibility of statutes are not addressed to the judiciary but may be resolved only by the legislative
and executive departments, to which the function belongs in our scheme of government. That function is exclusive.
Whichever way these branches decide, they are answerable only to their own conscience and the constituents who will
ultimately judge their acts, and not to the courts of justice.
The only question we can and shall resolve in this petition is the validity of Ordinance No. 3355 and Ordinance No. 3375-
93 as enacted by the Sangguniang Panlungsod of Cagayan de Oro City. And we shall do so only by the criteria laid down
by law and not by our own convictions on the propriety of gambling.
9
The tests of a valid ordinance are well established. A long line of decisions has held that to be valid, an ordinance must
conform to the following substantive requirements:
1) It must not contravene the constitution or any statute.
2) It must not be unfair or oppressive.
3) It must not be partial or discriminatory.
4) It must not prohibit but may regulate trade.
5) It must be general and consistent with public policy.
6) It must not be unreasonable.
We begin by observing that under Sec. 458 of the Local Government Code, local government units are authorized to
prevent or suppress, among others, "gambling and other prohibited games of chance." Obviously, this provision excludes
games of chance which are not prohibited but are in fact permitted by law. The petitioners are less than accurate in
claiming that the Code could have excluded such games of chance but did not. In fact it does. The language of the section
is clear and unmistakable. Under the rule of noscitur a sociis, a word or phrase should be interpreted in relation to, or
given the same meaning of, words with which it is associated. Accordingly, we conclude that since the word "gambling" is
associated with "and other prohibited games of chance," the word should be read as referring to only illegal gambling
which, like the other prohibited games of chance, must be prevented or suppressed.
21

We could stop here as this interpretation should settle the problem quite conclusively. But we will not. The vigorous efforts
of the petitioners on behalf of the inhabitants of Cagayan de Oro City, and the earnestness of their advocacy, deserve
more than short shrift from this Court.
The apparent flaw in the ordinances in question is that they contravene P.D. 1869 and the public policy embodied therein
insofar as they prevent PAGCOR from exercising the power conferred on it to operate a casino in Cagayan de Oro City.
The petitioners have an ingenious answer to this misgiving. They deny that it is the ordinances that have changed P.D.
1869 for an ordinance admittedly cannot prevail against a statute. Their theory is that the change has been made by the
Local Government Code itself, which was also enacted by the national lawmaking authority. In their view, the decree has
been, not really repealed by the Code, but merely "modified pro tanto" in the sense that PAGCOR cannot now operate a
casino over the objection of the local government unit concerned. This modification of P.D. 1869 by the Local Government
Code is permissible because one law can change or repeal another law.
It seems to us that the petitioners are playing with words. While insisting that the decree has only been "modified pro
tanto," they are actually arguing that it is already dead, repealed and useless for all intents and purposes because the
Code has shorn PAGCOR of all power to centralize and regulate casinos. Strictly speaking, its operations may now be not
only prohibited by the local government unit; in fact, the prohibition is not only discretionary but mandated by Section 458
of the Code if the word "shall" as used therein is to be given its accepted meaning. Local government units have now no
choice but to prevent and suppress gambling, which in the petitioners' view includes both legal and illegal gambling.
Under this construction, PAGCOR will have no more games of chance to regulate or centralize as they must all be
prohibited by the local government units pursuant to the mandatory duty imposed upon them by the Code. In this
situation, PAGCOR cannot continue to exist except only as a toothless tiger or a white elephant and will no longer be able
to exercise its powers as a prime source of government revenue through the operation of casinos.
It is noteworthy that the petitioners have cited only Par. (f) of the repealing clause, conveniently discarding the rest of the
provision which painstakingly mentions the specific laws or the parts thereof which are repealed (or modified) by the
Code. Significantly, P.D. 1869 is not one of them. A reading of the entire repealing clause, which is reproduced below, will
disclose the omission:
Sec. 534. Repealing Clause. — (a) Batas Pambansa Blg. 337, otherwise known as the "Local
Government Code," Executive Order No. 112 (1987), and Executive Order No. 319 (1988) are hereby
repealed.
(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees, orders, instructions, memoranda
and issuances related to or concerning the barangay are hereby repealed.
(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding hospital fund; Section 3, a
(3) and b (2) of Republic Act. No. 5447 regarding the Special Education Fund; Presidential Decree No.
144 as amended by Presidential Decree Nos. 559 and 1741; Presidential Decree No. 231 as amended;
Presidential Decree No. 436 as amended by Presidential Decree No. 558; and Presidential Decree Nos.
381, 436, 464, 477, 526, 632, 752, and 1136 are hereby repealed and rendered of no force and effect.
(d) Presidential Decree No. 1594 is hereby repealed insofar as it governs locally-funded projects.
(e) The following provisions are hereby repealed or amended insofar as they are inconsistent with the
provisions of this Code: Sections 2, 16, and 29 of Presidential Decree No. 704; Sections 12 of
Presidential Decree No. 87, as amended; Sections 52, 53, 66, 67, 68, 69, 70, 71, 72, 73, and 74 of
Presidential Decree No. 463, as amended; and Section 16 of Presidential Decree No. 972, as amended,
and
(f) All general and special laws, acts, city charters, decrees, executive orders, proclamations and
administrative regulations, or part or parts thereof which are inconsistent with any of the provisions of this
Code are hereby repealed or modified accordingly.
Furthermore, it is a familiar rule that implied repeals are not lightly presumed in the absence of a clear and unmistakable
10
showing of such intention. In Lichauco & Co. v. Apostol, this Court explained:
The cases relating to the subject of repeal by implication all proceed on the assumption that if the act of
later date clearly reveals an intention on the part of the lawmaking power to abrogate the prior law, this
intention must be given effect; but there must always be a sufficient revelation of this intention, and it has
become an unbending rule of statutory construction that the intention to repeal a former law will not be
imputed to the Legislature when it appears that the two statutes, or provisions, with reference to which the
question arises bear to each other the relation of general to special.
There is no sufficient indication of an implied repeal of P.D. 1869. On the contrary, as the private respondent points out,
PAGCOR is mentioned as the source of funding in two later enactments of Congress, to wit, R.A. 7309, creating a Board
of Claims under the Department of Justice for the benefit of victims of unjust punishment or detention or of violent crimes,
and R.A. 7648, providing for measures for the solution of the power crisis. PAGCOR revenues are tapped by these two
statutes. This would show that the PAGCOR charter has not been repealed by the Local Government Code but has in fact
been improved as it were to make the entity more responsive to the fiscal problems of the government.
It is a canon of legal hermeneutics that instead of pitting one statute against another in an inevitably destructive
confrontation, courts must exert every effort to reconcile them, remembering that both laws deserve a becoming respect
22

as the handiwork of a coordinate branch of the government. On the assumption of a conflict between P.D. 1869 and the
Code, the proper action is not to uphold one and annul the other but to give effect to both by harmonizing them if possible.
This is possible in the case before us. The proper resolution of the problem at hand is to hold that under the Local
Government Code, local government units may (and indeed must) prevent and suppress all kinds of gambling within their
territories except only those allowed by statutes like P.D. 1869. The exception reserved in such laws must be read into the
Code, to make both the Code and such laws equally effective and mutually complementary.
This approach would also affirm that there are indeed two kinds of gambling, to wit, the illegal and those authorized by
law. Legalized gambling is not a modern concept; it is probably as old as illegal gambling, if not indeed more so. The
petitioners' suggestion that the Code authorizes them to prohibit all kinds of gambling would erase the distinction between
these two forms of gambling without a clear indication that this is the will of the legislature. Plausibly, following this theory,
the City of Manila could, by mere ordinance, prohibit the Philippine Charity Sweepstakes Office from conducting a lottery
as authorized by R.A. 1169 and B.P. 42 or stop the races at the San Lazaro Hippodrome as authorized by R.A. 309 and
R.A. 983.
In light of all the above considerations, we see no way of arriving at the conclusion urged on us by the petitioners that the
ordinances in question are valid. On the contrary, we find that the ordinances violate P.D. 1869, which has the character
and force of a statute, as well as the public policy expressed in the decree allowing the playing of certain games of chance
despite the prohibition of gambling in general.
The rationale of the requirement that the ordinances should not contravene a statute is obvious. Municipal governments
are only agents of the national government. Local councils exercise only delegated legislative powers conferred on them
by Congress as the national lawmaking body. The delegate cannot be superior to the principal or exercise powers higher
than those of the latter. It is a heresy to suggest that the local government units can undo the acts of Congress, from
which they have derived their power in the first place, and negate by mere ordinance the mandate of the statute.
Municipal corporations owe their origin to, and derive their powers and rights wholly from the legislature. It
breathes into them the breath of life, without which they cannot exist. As it creates, so it may destroy. As it
may destroy, it may abridge and control. Unless there is some constitutional limitation on the right, the
legislature might, by a single act, and if we can suppose it capable of so great a folly and so great a
wrong, sweep from existence all of the municipal corporations in the State, and the corporation could not
prevent it. We know of no limitation on the right so far as to the corporation themselves are concerned.
11
They are, so to phrase it, the mere tenants at will of the legislature.
This basic relationship between the national legislature and the local government units has not been enfeebled by the new
provisions in the Constitution strengthening the policy of local autonomy. Without meaning to detract from that policy, we
here confirm that Congress retains control of the local government units although in significantly reduced degree now than
under our previous Constitutions. The power to create still includes the power to destroy. The power to grant still includes
the power to withhold or recall. True, there are certain notable innovations in the Constitution, like the direct conferment
12
on the local government units of the power to tax, which cannot now be withdrawn by mere statute. By and large,
however, the national legislature is still the principal of the local government units, which cannot defy its will or modify or
violate it.
The Court understands and admires the concern of the petitioners for the welfare of their constituents and their
apprehensions that the welfare of Cagayan de Oro City will be endangered by the opening of the casino. We share the
13
view that "the hope of large or easy gain, obtained without special effort, turns the head of the workman" and that
14 15
"habitual gambling is a cause of laziness and ruin." In People v. Gorostiza, we declared: "The social scourge of
gambling must be stamped out. The laws against gambling must be enforced to the limit." George Washington called
gambling "the child of avarice, the brother of iniquity and the father of mischief." Nevertheless, we must recognize the
power of the legislature to decide, in its own wisdom, to legalize certain forms of gambling, as was done in P.D. 1869 and
impliedly affirmed in the Local Government Code. That decision can be revoked by this Court only if it contravenes the
Constitution as the touchstone of all official acts. We do not find such contravention here.
We hold that the power of PAGCOR to centralize and regulate all games of chance, including casinos on land and sea
within the territorial jurisdiction of the Philippines, remains unimpaired. P.D. 1869 has not been modified by the Local
Government Code, which empowers the local government units to prevent or suppress only those forms of gambling
prohibited by law.
Casino gambling is authorized by P.D. 1869. This decree has the status of a statute that cannot be amended or nullified
by a mere ordinance. Hence, it was not competent for the Sangguniang Panlungsod of Cagayan de Oro City to enact
Ordinance No. 3353 prohibiting the use of buildings for the operation of a casino and Ordinance No. 3375-93 prohibiting
the operation of casinos. For all their praiseworthy motives, these ordinances are contrary to P.D. 1869 and the public
policy announced therein and are therefore ultra vires and void.
WHEREFORE, the petition is DENIED and the challenged decision of the respondent Court of Appeals is AFFIRMED,
with costs against the petitioners. It is so ordered.
Narvasa, C.J., Feliciano, Bidin, Regalado, Romero, Bellosillo, Melo, Quiason, Puno, Vitug, Kapunan and
Mendoza, JJ., concur.
Separate Opinions
23

PADILLA, J., concurring:

I concur with the majority holding that the city ordinances in question cannot modify much less repeal PAGCOR's general
authority to establish and maintain gambling casinos anywhere in the Philippines under Presidential Decree No. 1869.
In Basco v. Philippine Amusement and Gaming Corporation (PAGCOR), 197 SCRA 52, I stated in a separate opinion that:
. . . I agree with the decision insofar as it holds that the prohibition, control, and regulation of the entire
activity known as gambling properly pertain to "state policy". It is, therefore, the political departments of
government, namely, the legislative and the executive that should decide on what government should do
in the entire area of gambling, and assume full responsibility to the people for such policy." (Emphasis
supplied)
However, despite the legality of the opening and operation of a casino in Cagayan de Oro City by respondent PAGCOR, I
wish to reiterate my view that gambling in any form runs counter to the government's own efforts to re-establish and
resurrect the Filipino moral character which is generally perceived to be in a state of continuing erosion.
It is in the light of this alarming perspective that I call upon government to carefully weigh the advantages and
disadvantages of setting up more gambling facilities in the country.
That the PAGCOR contributes greatly to the coffers of the government is not enough reason for setting up more gambling
casinos because, undoubtedly, this will not help improve, but will cause a further deterioration in the Filipino moral
character.
It is worth remembering in this regard that, 1) what is legal is not always moral and 2) the ends do not always justify the
means.
As in Basco, I can easily visualize prostitution at par with gambling. And yet, legalization of the former will not render it any
less reprehensible even if substantial revenue for the government can be realized from it. The same is true of gambling.
In the present case, it is my considered view that the national government (through PAGCOR) should re-examine and re-
evaluate its decision of imposing the gambling casino on the residents of Cagayan de Oro City; for it is abundantly clear
that public opinion in the city is very much against it, and again the question must be seriously deliberated: will the
prospects of revenue to be realized from the casino outweigh the further destruction of the Filipino sense of values?
DAVIDE, JR., J., concurring:
While I concur in part with the majority, I wish, however, to express my views on certain aspects of this case.
It must at once be noted that private respondent Pryce Properties Corporation (PRYCE) directly filed with the Court of
Appeals its so-called petition for prohibition, thereby invoking the said court's original jurisdiction to issue writs of
prohibition under Section 9(1) of B.P. Blg. 129. As I see it, however, the principal cause of action therein is one for
declaratory relief: to declare null and unconstitutional — for, inter alia, having been enacted without or in excess of
jurisdiction, for impairing the obligation of contracts, and for being inconsistent with public policy — the challenged
ordinances enacted by the Sangguniang Panglungsod of the City of Cagayan de Oro. The intervention therein of public
respondent Philippine Amusement and Gaming Corporation (PAGCOR) further underscores the "declaratory relief" nature
of the action. PAGCOR assails the ordinances for being contrary to the non-impairment and equal protection clauses of
the Constitution, violative of the Local Government Code, and against the State's national policy declared in P.D. No.
1869. Accordingly, the Court of Appeals does not have jurisdiction over the nature of the action. Even
assuming arguendo that the case is one for prohibition, then, under this Court's established policy relative to the hierarchy
of courts, the petition should have been filed with the Regional Trial Court of Cagayan de Oro City. I find no special or
compelling reason why it was not filed with the said court. I do not wish to entertain the thought that PRYCE doubted a
favorable verdict therefrom, in which case the filing of the petition with the Court of Appeals may have been impelled by
tactical considerations. A dismissal of the petition by the Court of Appeals would have been in order pursuant to our
decisions in People vs. Cuaresma (172 SCRA 415, [1989]) and Defensor-Santiago vs. Vasquez (217 SCRA 633 [1993]).
In Cuaresma, this Court stated:
A last word. This court's original jurisdiction to issue writs of certiorari (as well as
prohibition, mandamus, quo warranto, habeas corpus and injunction) is not exclusive. It is shared by this
Court with Regional Trial Courts (formerly Courts of First Instance), which may issue the writ, enforceable
in any part of their respective regions. It is also shared by this court, and by the Regional Trial Court, with
the Court of Appeals (formerly, Intermediate Appellate Court), although prior to the effectivity of Batas
Pambansa Bilang 129 on August 14, 1981, the latter's competence to issue the extraordinary writs was
restricted by those "in aid of its appellate jurisdiction." This concurrence of jurisdiction is not, however, to
be taken as according to parties seeking any of the writs an absolute, unrestrained freedom of choice of
the court to which application therefor will be directed. There is after all a hierarchy of courts. That
hierarchy is determinative of the revenue of appeals, and should also serve as a general determinant of
the appropriate forum for petitions for the extraordinary writs. A becoming regard for that judicial hierarchy
most certainly indicates that petitions for the issuance of extraordinary writs against first level ("inferior")
courts should be filed with the Regional Trial Court, and those against the latter, with the Court of
Appeals. A direct invocation of the Supreme Court's original jurisdiction to issue these writs should be
allowed only when there are special and important reasons therefor, clearly and specifically set out in the
petition. This is established policy. It is a policy that is necessary to prevent inordinate demands upon the
24

Court's time and attention which are better devoted to those matters within its exclusive jurisdiction, and
to prevent further over-crowding of the Court's docket. Indeed, the removal of the restriction of the
jurisdiction of the Court of Appeals in this regard, supra — resulting from the deletion of the qualifying
phrase, "in aid of its appellate jurisdiction" — was evidently intended precisely to relieve this Court pro
tanto of the burden of dealing with applications for extraordinary writs which, but for the expansion of the
Appellate Court's corresponding jurisdiction, would have had to be filed with it. (citations omitted)
And in Vasquez, this Court said:
One final observation. We discern in the proceedings in this case a propensity on the part of petitioner,
and, for that matter, the same may be said of a number of litigants who initiate recourses before us, to
disregard the hierarchy of courts in our judicial system by seeking relief directly from this Court despite
the fact that the same is available in the lower courts in the exercise of their original or concurrent
jurisdiction, or is even mandated by law to be sought therein. This practice must be stopped, not only
because of the imposition upon the previous time of this Court but also because of the inevitable and
resultant delay, intended or otherwise, in the adjudication of the case which often has to be remanded or
referred to the lower court as the proper forum under the rules of procedure, or as better equipped to
resolve the issues since this Court is not a trier of facts. We, therefore, reiterate the judicial policy that this
Court will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate
courts or where exceptional and compelling circumstances justify availment of a remedy within and calling
for the exercise of our primary jurisdiction.
II.
The challenged ordinances are (a) Ordinance No. 3353 entitled, "An Ordinance Prohibiting the Issuance of Business
Permit and Canceling Existing Business Permit To Any Establishment for the Using and Allowing to be Used Its Premises
or Portion Thereof for the Operation of Casino," and (b) Ordinance No. 3375-93 entitled, "An Ordinance Prohibiting the
Operation of Casino and Providing Penalty for Violation Therefor." They were enacted to implement Resolution No. 2295
entitled, "Resolution Declaring As a Matter of Policy to Prohibit and/or Not to Allow the Establishment of the Gambling
Casino in the City of Cagayan de Oro," which was promulgated on 19 November 1990 — nearly two years before PRYCE
and PAGCOR entered into a contract of lease under which the latter leased a portion of the former's Pryce Plaza Hotel for
the operation of a gambling casino — which resolution was vigorously reiterated in Resolution No. 2673 of 19 October
1992.
The challenged ordinances were enacted pursuant to the Sangguniang Panglungsod's express powers conferred by
Section 458, paragraph (a), subparagraphs (1)-(v), (3)-(ii), and (4)-(i), (iv), and (vii), Local Government Code, and
pursuant to its implied power under Section 16 thereof (the general welfare clause) which reads:
Sec. 16. General Welfare. — Every local government unit shall exercise the powers expressly granted,
those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its
efficient and effective governance, and those which are essential to the promotion of the general welfare.
Within their respective territorial jurisdictions, local government units shall ensure and support, among
other things, the preservation and enrichment of culture, promote health and safety, enhance the right of
the people to a balanced ecology, encourage and support the development of appropriate and self-reliant
scientific and technological capabilities, improve public morals, enhance economic prosperity and social
justice, promote full employment among their residents, maintain peace and order, and preserve the
comfort and convenience of their inhabitants.
The issue that necessarily arises is whether in granting local governments (such as the City of Cagayan de Oro) the
above powers and functions, the Local Government Code has, pro tanto, repealed P.D. No. 1869 insofar as PAGCOR's
general authority to establish and maintain gambling casinos anywhere in the Philippines is concerned.
I join the majority in holding that the ordinances cannot repeal P.D. No. 1869.
III.
The nullification by the Court of Appeals of the challenged ordinances as unconstitutional primarily because it is in
contravention to P.D. No. 1869 is unwarranted. A contravention of a law is not necessarily a contravention of the
constitution. In any case, the ordinances can still stand even if they be conceded as offending P.D. No. 1869. They can be
reconciled, which is not impossible to do. So reconciled, the ordinances should be construed as not applying to PAGCOR.
IV.
From the pleadings, it is obvious that the government and the people of Cagayan de Oro City are, for obvious reasons,
strongly against the opening of the gambling casino in their city. Gambling, even if legalized, would be inimical to the
general welfare of the inhabitants of the City, or of any place for that matter. The PAGCOR, as a government-owned
corporation, must consider the valid concerns of the people of the City of Cagayan de Oro and should not impose its will
upon them in an arbitrary, if not despotic, manner.
# Separate Opinions

PADILLA, J., concurring:

I concur with the majority holding that the city ordinances in question cannot modify much less repeal PAGCOR's general
authority to establish and maintain gambling casinos anywhere in the Philippines under Presidential Decree No. 1869.
25

In Basco v. Philippine Amusement and Gaming Corporation (PAGCOR), 197 SCRA 52, I stated in a separate opinion that:
. . . I agree with the decision insofar as it holds that the prohibition, control, and regulation of the entire
activity known as gambling properly pertain to "state policy". It is, therefore, the political departments of
government, namely, the legislative and the executive that should decide on what government should do
in the entire area of gambling, and assume full responsibility to the people for such policy. (emphasis
supplied)
However, despite the legality of the opening and operation of a casino in Cagayan de Oro City by respondent PAGCOR, I
wish to reiterate my view that gambling in any form runs counter to the government's own efforts to re-establish and
resurrect the Filipino moral character which is generally perceived to be in a state of continuing erosion.
It is in the light of this alarming perspective that I call upon government to carefully weigh the advantages and
disadvantages of setting up more gambling facilities in the country.
That the PAGCOR contributes greatly to the coffers of the government is not enough reason for setting up more gambling
casinos because, undoubtedly, this will not help improve, but will cause a further deterioration in the Filipino moral
character.
It is worth remembering in this regard that, 1) what is legal is not always moral and 2) the ends do not always justify the
means.
As in Basco, I can easily visualize prostitution at par with gambling. And yet, legalization of the former will not render it any
less reprehensible even if substantial revenue for the government can be realized from it. The same is true of gambling.
In the present case, it is my considered view that the national government (through PAGCOR) should re-examine and re-
evaluate its decision of imposing the gambling casino on the residents of Cagayan de Oro City; for it is abundantly clear
that public opinion in the city is very much against it, and again the question must be seriously deliberated: will the
prospects of revenue to be realized from the casino outweigh the further destruction of the Filipino sense of values?
DAVIDE, JR., J., concurring:
While I concur in part with the majority, I wish, however, to express my views on certain aspects of this case.
I.
It must at once be noted that private respondent Pryce Properties Corporation (PRYCE) directly filed with the Court of
Appeals its so-called petition for prohibition, thereby invoking the said court's original jurisdiction to issue writs of
prohibition under Section 9(1) of B.P. Blg. 129. As I see it, however, the principal cause of action therein is one for
declaratory relief: to declare null and unconstitutional — for, inter alia, having been enacted without or in excess of
jurisdiction, for impairing the obligation of contracts, and for being inconsistent with public policy — the challenged
ordinances enacted by the Sangguniang Panglungsod of the City of Cagayan de Oro. The intervention therein of public
respondent Philippine Amusement and Gaming Corporation (PAGCOR) further underscores the "declaratory relief" nature
of the action. PAGCOR assails the ordinances for being contrary to the non-impairment and equal protection clauses of
the Constitution, violative of the Local Government Code, and against the State's national policy declared in P.D. No.
1869. Accordingly, the Court of Appeals does not have jurisdiction over the nature of the action. Even
assuming arguendo that the case is one for prohibition, then, under this Court's established policy relative to the hierarchy
of courts, the petition should have been filed with the Regional Trial Court of Cagayan de Oro City. I find no special or
compelling reason why it was not filed with the said court. I do not wish to entertain the thought that PRYCE doubted a
favorable verdict therefrom, in which case the filing of the petition with the Court of Appeals may have been impelled by
tactical considerations. A dismissal of the petition by the Court of Appeals would have been in order pursuant to our
decisions in People vs. Cuaresma (172 SCRA 415, [1989]) and Defensor-Santiago vs. Vasquez (217 SCRA 633 [1993]).
In Cuaresma, this Court stated:
A last word. This court's original jurisdiction to issue writs of certiorari (as well as
prohibition, mandamus, quo warranto, habeas corpus and injunction) is not exclusive. It is shared by this
Court with Regional Trial Courts (formerly Courts of First Instance), which may issue the writ, enforceable
in any part of their respective regions. It is also shared by this court, and by the Regional Trial Court, with
the Court of Appeals (formerly, Intermediate Appellate Court), although prior to the effectivity of Batas
Pambansa Bilang 129 on August 14, 1981, the latter's competence to issue the extraordinary writs was
restricted by those "in aid of its appellate jurisdiction." This concurrence of jurisdiction is not, however, to
be taken as according to parties seeking any of the writs an absolute, unrestrained freedom of choice of
the court to which application therefor will be directed. There is after all a hierarchy of courts. That
hierarchy is determinative of the revenue of appeals, and should also serve as a general determinant of
the appropriate forum for petitions for the extraordinary writs. A becoming regard for that judicial hierarchy
most certainly indicates that petitions for the issuance of extraordinary writs against first level ("inferior")
courts should be filed with the Regional Trial Court, and those against the latter, with the Court of
Appeals. A direct invocation of the Supreme Court's original jurisdiction to issue these writs should be
allowed only when there are special and important reasons therefor, clearly and specifically set out in the
petition. This is established policy. It is a policy that is necessary to prevent inordinate demands upon the
Court's time and attention which are better devoted to those matters within its exclusive jurisdiction, and
to prevent further over-crowding of the Court's docket. Indeed, the removal of the restriction of the
26

jurisdiction of the Court of Appeals in this regard, supra — resulting from the deletion of the qualifying
phrase, "in aid of its appellate jurisdiction" — was evidently intended precisely to relieve this Court pro
tanto of the burden of dealing with applications for extraordinary writs which, but for the expansion of the
Appellate Court's corresponding jurisdiction, would have had to be filed with it. (citations omitted)
And in Vasquez, this Court said:
One final observation. We discern in the proceedings in this case a propensity on the part of petitioner,
and, for that matter, the same may be said of a number of litigants who initiate recourses before us, to
disregard the hierarchy of courts in our judicial system by seeking relief directly from this Court despite
the fact that the same is available in the lower courts in the exercise of their original or concurrent
jurisdiction, or is even mandated by law to be sought therein. This practice must be stopped, not only
because of the imposition upon the previous time of this Court but also because of the inevitable and
resultant delay, intended or otherwise, in the adjudication of the case which often has to be remanded or
referred to the lower court as the proper forum under the rules of procedure, or as better equipped to
resolve the issues since this Court is not a trier of facts. We, therefore, reiterate the judicial policy that this
Court will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate
courts or where exceptional and compelling circumstances justify availment of a remedy within and calling
for the exercise of our primary jurisdiction.
II.
The challenged ordinances are (a) Ordinance No. 3353 entitled, "An Ordinance Prohibiting the Issuance of Business
Permit and Canceling Existing Business Permit To Any Establishment for the Using and Allowing to be Used Its Premises
or Portion Thereof for the Operation of Casino," and (b) Ordinance No. 3375-93 entitled, "An Ordinance Prohibiting the
Operation of Casino and Providing Penalty for Violation Therefor." They were enacted to implement Resolution No. 2295
entitled, "Resolution Declaring As a Matter of Policy to Prohibit and/or Not to Allow the Establishment of the Gambling
Casino in the City of Cagayan de Oro," which was promulgated on 19 November 1990 — nearly two years before PRYCE
and PAGCOR entered into a contract of lease under which the latter leased a portion of the former's Pryce Plaza Hotel for
the operation of a gambling casino — which resolution was vigorously reiterated in Resolution No. 2673 of 19 October
1992.
The challenged ordinances were enacted pursuant to the Sangguniang Panglungsod's express powers conferred by
Section 458, paragraph (a), subparagraphs (1)-(v), (3)-(ii), and (4)-(i), (iv), and (vii), Local Government Code, and
pursuant to its implied power under Section 16 thereof (the general welfare clause) which reads:
Sec. 16. General Welfare. — Every local government unit shall exercise the powers expressly granted,
those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its
efficient and effective governance, and those which are essential to the promotion of the general welfare.
Within their respective territorial jurisdictions, local government units shall ensure and support, among
other things, the preservation and enrichment of culture, promote health and safety, enhance the right of
the people to a balanced ecology, encourage and support the development of appropriate and self-reliant
scientific and technological capabilities, improve public morals, enhance economic prosperity and social
justice, promote full employment among their residents, maintain peace and order, and preserve the
comfort and convenience of their inhabitants.
The issue that necessarily arises is whether in granting local governments (such as the City of Cagayan de Oro) the
above powers and functions, the Local Government Code has, pro tanto, repealed P.D. No. 1869 insofar as PAGCOR's
general authority to establish and maintain gambling casinos anywhere in the Philippines is concerned.
I join the majority in holding that the ordinances cannot repeal P.D. No. 1869.
III.
The nullification by the Court of Appeals of the challenged ordinances as unconstitutional primarily because it is in
contravention to P.D. No. 1869 is unwarranted. A contravention of a law is not necessarily a contravention of the
constitution. In any case, the ordinances can still stand even if they be conceded as offending P.D. No. 1869. They can be
reconciled, which is not impossible to do. So reconciled, the ordinances should be construed as not applying to PAGCOR.
IV.
From the pleadings, it is obvious that the government and the people of Cagayan de Oro City are, for obvious reasons,
strongly against the opening of the gambling casino in their city. Gambling, even if legalized, would be inimical to the
general welfare of the inhabitants of the City, or of any place for that matter. The PAGCOR, as a government-owned
corporation, must consider the valid concerns of the people of the City of Cagayan de Oro and should not impose its will
upon them in an arbitrary, if not despotic, manner.

G. R. No. 119775 October 24, 2003

JOHN HAY PEOPLES ALTERNATIVE COALITION, MATEO CARIÑO FOUNDATION INC., CENTER FOR
ALTERNATIVE SYSTEMS FOUNDATION INC., REGINA VICTORIA A. BENAFIN REPRESENTED AND JOINED BY
HER MOTHER MRS. ELISA BENAFIN, IZABEL M. LUYK REPRESENTED AND JOINED BY HER MOTHER MRS.
REBECCA MOLINA LUYK, KATHERINE PE REPRESENTED AND JOINED BY HER MOTHER ROSEMARIE G. PE,
27

SOLEDAD S. CAMILO, ALICIA C. PACALSO ALIAS "KEVAB," BETTY I. STRASSER, RUBY C. GIRON, URSULA C.
PEREZ ALIAS "BA-YAY," EDILBERTO T. CLARAVALL, CARMEN CAROMINA, LILIA G. YARANON, DIANE
MONDOC, Petitioners,
vs.
VICTOR LIM, PRESIDENT, BASES CONVERSION DEVELOPMENT AUTHORITY; JOHN HAY PORO POINT
DEVELOPMENT CORPORATION, CITY OF BAGUIO, TUNTEX (B.V.I.) CO. LTD., ASIAWORLD INTERNATIONALE
GROUP, INC., DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, Respondents.
DECISION
CARPIO MORALES, J.:
By the present petition for prohibition, mandamus and declaratory relief with prayer for a temporary restraining order
(TRO) and/or writ of preliminary injunction, petitioners assail, in the main, the constitutionality of Presidential Proclamation
No. 420, Series of 1994, "CREATING AND DESIGNATING a portion of the area covered by the former Camp John [Hay]
as THE JOHN HAY Special Economic Zone pursuant to R.A. No. 7227."
R.A. No. 7227, AN ACT ACCELERATING THE CONVERSION OF MILITARY RESERVATIONS INTO OTHER
PRODUCTIVE USES, CREATING THE BASES CONVERSION AND DEVELOPMENT AUTHORITY FOR THIS
PURPOSE, PROVIDING FUNDS THEREFOR AND FOR OTHER PURPOSES, otherwise known as the "Bases
Conversion and Development Act of 1992," which was enacted on March 13, 1992, set out the policy of the government to
accelerate the sound and balanced conversion into alternative productive uses of the former military bases under the
1947 Philippines-United States of America Military Bases Agreement, namely, the Clark and Subic military reservations as
1
well as their extensions including the John Hay Station (Camp John Hay or the camp) in the City of Baguio.
2
As noted in its title, R.A. No. 7227 created public respondent Bases Conversion and Development Authority (BCDA),
vesting it with powers pertaining to the multifarious aspects of carrying out the ultimate objective of utilizing the base areas
in accordance with the declared government policy.
R.A. No. 7227 likewise created the Subic Special Economic [and Free Port] Zone (Subic SEZ) the metes and bounds of
3
which were to be delineated in a proclamation to be issued by the President of the Philippines.
R.A. No. 7227 granted the Subic SEZ incentives ranging from tax and duty-free importations, exemption of businesses
4
therein from local and national taxes, to other hallmarks of a liberalized financial and business climate.
And R.A. No. 7227 expressly gave authority to the President to create through executive proclamation, subject to the
concurrence of the local government units directly affected, other Special Economic Zones (SEZ) in the areas covered
5
respectively by the Clark military reservation, the Wallace Air Station in San Fernando, La Union, and Camp John Hay.
On August 16, 1993, BCDA entered into a Memorandum of Agreement and Escrow Agreement with private respondents
Tuntex (B.V.I.) Co., Ltd (TUNTEX) and Asiaworld Internationale Group, Inc. (ASIAWORLD), private corporations
registered under the laws of the British Virgin Islands, preparatory to the formation of a joint venture for the development
of Poro Point in La Union and Camp John Hay as premier tourist destinations and recreation centers. Four months later or
6
on December 16, 1993, BCDA, TUNTEX and ASIAWORD executed a Joint Venture Agreement whereby they bound
themselves to put up a joint venture company known as the Baguio International Development and Management
Corporation which would lease areas within Camp John Hay and Poro Point for the purpose of turning such places into
principal tourist and recreation spots, as originally envisioned by the parties under their Memorandum of Agreement.
The Baguio City government meanwhile passed a number of resolutions in response to the actions taken by BCDA as
owner and administrator of Camp John Hay.
7
By Resolution of September 29, 1993, the Sangguniang Panlungsod of Baguio City (the sanggunian) officially asked
BCDA to exclude all the barangays partly or totally located within Camp John Hay from the reach or coverage of any plan
or program for its development.
8
By a subsequent Resolution dated January 19, 1994, the sanggunian sought from BCDA an abdication, waiver or
quitclaim of its ownership over the home lots being occupied by residents of nine (9) barangays surrounding the military
reservation.
Still by another resolution passed on February 21, 1994, the sanggunian adopted and submitted to BCDA a 15-point
9
concept for the development of Camp John Hay. The sanggunian's vision expressed, among other things, a kind of
development that affords protection to the environment, the making of a family-oriented type of tourist destination, priority
in employment opportunities for Baguio residents and free access to the base area, guaranteed participation of the city
government in the management and operation of the camp, exclusion of the previously named nine barangays from the
10
area for development, and liability for local taxes of businesses to be established within the camp.
11
BCDA, Tuntex and AsiaWorld agreed to some, but rejected or modified the other proposals of the sanggunian. They
stressed the need to declare Camp John Hay a SEZ as a condition precedent to its full development in accordance with
12
the mandate of R.A. No. 7227.
On May 11, 1994, the sanggunian passed a resolution requesting the Mayor to order the determination of realty taxes
13
which may otherwise be collected from real properties of Camp John Hay. The resolution was intended to intelligently
guide the sanggunian in determining its position on whether Camp John Hay be declared a SEZ, it (the sanggunian) being
of the view that such declaration would exempt the camp's property and the economic activity therein from local or
national taxation.
28
14
More than a month later, however, the sanggunian passed Resolution No. 255, (Series of 1994), seeking and
supporting, subject to its concurrence, the issuance by then President Ramos of a presidential proclamation declaring an
area of 288.1 hectares of the camp as a SEZ in accordance with the provisions of R.A. No. 7227. Together with this
15
resolution was submitted a draft of the proposed proclamation for consideration by the President.
16
On July 5, 1994 then President Ramos issued Proclamation No. 420, the title of which was earlier indicated, which
established a SEZ on a portion of Camp John Hay and which reads as follows:
xxx
Pursuant to the powers vested in me by the law and the resolution of concurrence by the City Council of Baguio, I, FIDEL
V. RAMOS, President of the Philippines, do hereby create and designate a portion of the area covered by the former John
Hay reservation as embraced, covered, and defined by the 1947 Military Bases Agreement between the Philippines and
the United States of America, as amended, as the John Hay Special Economic Zone, and accordingly order:
SECTION 1. Coverage of John Hay Special Economic Zone. - The John Hay Special Economic Zone shall cover the area
consisting of Two Hundred Eighty Eight and one/tenth (288.1) hectares, more or less, of the total of Six Hundred Seventy-
Seven (677) hectares of the John Hay Reservation, more or less, which have been surveyed and verified by the
Department of Environment and Natural Resources (DENR) as defined by the following technical description:
A parcel of land, situated in the City of Baguio, Province of Benguet, Island of Luzon, and particularly described in survey
plans Psd-131102-002639 and Ccs-131102-000030 as approved on 16 August 1993 and 26 August 1993, respectively,
by the Department of Environment and Natural Resources, in detail containing:
Lot 1, Lot 2, Lot 3, Lot 4, Lot 5, Lot 6, Lot 7, Lot 13, Lot 14, Lot 15, and Lot 20 of Ccs-131102-000030
-and-
Lot 3, Lot 4, Lot 5, Lot 6, Lot 7, Lot 8, Lot 9, Lot 10, Lot 11, Lot 14, Lot 15, Lot 16, Lot 17, and Lot 18 of Psd-131102-
002639 being portions of TCT No. T-3812, LRC Rec. No. 87.
With a combined area of TWO HUNDRED EIGHTY EIGHT AND ONE/TENTH HECTARES (288.1 hectares); Provided
that the area consisting of approximately Six and two/tenth (6.2) hectares, more or less, presently occupied by the VOA
and the residence of the Ambassador of the United States, shall be considered as part of the SEZ only upon turnover of
the properties to the government of the Republic of the Philippines.
Sec. 2. Governing Body of the John Hay Special Economic Zone. - Pursuant to Section 15 of R.A. No. 7227, the Bases
Conversion and Development Authority is hereby established as the governing body of the John Hay Special Economic
Zone and, as such, authorized to determine the utilization and disposition of the lands comprising it, subject to private
rights, if any, and in consultation and coordination with the City Government of Baguio after consultation with its
inhabitants, and to promulgate the necessary policies, rules, and regulations to govern and regulate the zone thru the
John Hay Poro Point Development Corporation, which is its implementing arm for its economic development and optimum
utilization.
Sec. 3. Investment Climate in John Hay Special Economic Zone. - Pursuant to Section 5(m) and Section 15 of R.A. No.
7227, the John Hay Poro Point Development Corporation shall implement all necessary policies, rules, and regulations
governing the zone, including investment incentives, in consultation with pertinent government departments. Among
others, the zone shall have all the applicable incentives of the Special Economic Zone under Section 12 of R.A. No. 7227
and those applicable incentives granted in the Export Processing Zones, the Omnibus Investment Code of 1987, the
Foreign Investment Act of 1991, and new investment laws that may hereinafter be enacted.
Sec. 4. Role of Departments, Bureaus, Offices, Agencies and Instrumentalities. - All Heads of departments, bureaus,
offices, agencies, and instrumentalities of the government are hereby directed to give full support to Bases Conversion
and Development Authority and/or its implementing subsidiary or joint venture to facilitate the necessary approvals to
expedite the implementation of various projects of the conversion program.
Sec. 5. Local Authority. - Except as herein provided, the affected local government units shall retain their basic autonomy
and identity.
Sec. 6. Repealing Clause. - All orders, rules, and regulations, or parts thereof, which are inconsistent with the provisions
of this Proclamation, are hereby repealed, amended, or modified accordingly.
Sec. 7. Effectivity. This proclamation shall take effect immediately.
Done in the City of Manila, this 5th day of July, in the year of Our Lord, nineteen hundred and ninety-four.
17
The issuance of Proclamation No. 420 spawned the present petition for prohibition, mandamus and declaratory relief
which was filed on April 25, 1995 challenging, in the main, its constitutionality or validity as well as the legality of the
Memorandum of Agreement and Joint Venture Agreement between public respondent BCDA and private respondents
Tuntex and AsiaWorld.
Petitioners allege as grounds for the allowance of the petition the following:
I. PRESIDENTIAL PROCLAMATION NO. 420, SERIES OF 1990 (sic) IN SO FAR AS IT GRANTS TAX EXEMPTIONS IS
INVALID AND ILLEGAL AS IT IS AN UNCONSTITUTIONAL EXERCISE BY THE PRESIDENT OF A POWER GRANTED
ONLY TO THE LEGISLATURE.
II .PRESIDENTIAL PROCLAMATION NO. 420, IN SO FAR AS IT LIMITS THE POWERS AND INTERFERES WITH THE
AUTONOMY OF THE CITY OF BAGUIO IS INVALID, ILLEGAL AND UNCONSTITUTIONAL.
29

III. PRESIDENTIAL PROCLAMATION NO. 420, SERIES OF 1994 IS UNCONSTITUTIONAL IN THAT IT VIOLATES THE
RULE THAT ALL TAXES SHOULD BE UNIFORM AND EQUITABLE.
IV. THE MEMORANDUM OF AGREEMENT ENTERED INTO BY AND BETWEEN PRIVATE AND PUBLIC
RESPONDENTS BASES CONVERSION DEVELOPMENT AUTHORITY HAVING BEEN ENTERED INTO ONLY BY
DIRECT NEGOTIATION IS ILLEGAL.
V. THE TERMS AND CONDITIONS OF THE MEMORANDUM OF AGREEMENT ENTERED INTO BY AND BETWEEN
PRIVATE AND PUBLIC RESPONDENT BASES CONVERSION DEVELOPMENT AUTHORITY IS (sic) ILLEGAL.
VI. THE CONCEPTUAL DEVELOPMENT PLAN OF RESPONDENTS NOT HAVING UNDERGONE ENVIRONMENTAL
IMPACT ASSESSMENT IS BEING ILLEGALLY CONSIDERED WITHOUT A VALID ENVIRONMENTAL IMPACT
ASSESSMENT.
A temporary restraining order and/or writ of preliminary injunction was prayed for to enjoin BCDA, John Hay Poro Point
Development Corporation and the city government from implementing Proclamation No. 420, and Tuntex and AsiaWorld
from proceeding with their plan respecting Camp John Hay's development pursuant to their Joint Venture Agreement with
18
BCDA.
Public respondents, by their separate Comments, allege as moot and academic the issues raised by the petition, the
questioned Memorandum of Agreement and Joint Venture Agreement having already been deemed abandoned by the
inaction of the parties thereto prior to the filing of the petition as in fact, by letter of November 21, 1995, BCDA formally
19
notified Tuntex and AsiaWorld of the revocation of their said agreements.
In maintaining the validity of Proclamation No. 420, respondents contend that by extending to the John Hay SEZ
economic incentives similar to those enjoyed by the Subic SEZ which was established under R.A. No. 7227, the
proclamation is merely implementing the legislative intent of said law to turn the US military bases into hubs of business
activity or investment. They underscore the point that the government's policy of bases conversion can not be achieved
without extending the same tax exemptions granted by R.A. No. 7227 to Subic SEZ to other SEZs.
Denying that Proclamation No. 420 is in derogation of the local autonomy of Baguio City or that it is violative of the
constitutional guarantee of equal protection, respondents assail petitioners' lack of standing to bring the present suit even
as taxpayers and in the absence of any actual case or controversy to warrant this Court's exercise of its power of judicial
review over the proclamation.
Finally, respondents seek the outright dismissal of the petition for having been filed in disregard of the hierarchy of courts
and of the doctrine of exhaustion of administrative remedies.
20
Replying, petitioners aver that the doctrine of exhaustion of administrative remedies finds no application herein since
they are invoking the exclusive authority of this Court under Section 21 of R.A. No. 7227 to enjoin or restrain
implementation of projects for conversion of the base areas; that the established exceptions to the aforesaid doctrine
obtain in the present petition; and that they possess the standing to bring the petition which is a taxpayer's suit.
21
Public respondents have filed their Rejoinder and the parties have filed their respective memoranda.
Before dwelling on the core issues, this Court shall first address the preliminary procedural questions confronting the
petition.
The judicial policy is and has always been that this Court will not entertain direct resort to it except when the redress
sought cannot be obtained in the proper courts, or when exceptional and compelling circumstances warrant availment of a
22
remedy within and calling for the exercise of this Court's primary jurisdiction. Neither will it entertain an action for
declaratory relief, which is partly the nature of this petition, over which it has no original jurisdiction.
23
Nonetheless, as it is only this Court which has the power under Section 21 of R.A. No. 7227 to enjoin implementation
of projects for the development of the former US military reservations, the issuance of which injunction petitioners pray for,
petitioners' direct filing of the present petition with it is allowed. Over and above this procedural objection to the present
suit, this Court retains full discretionary power to take cognizance of a petition filed directly to it if compelling reasons, or
24
the nature and importance of the issues raised, warrant. Besides, remanding the case to the lower courts now would just
unduly prolong adjudication of the issues.
The transformation of a portion of the area covered by Camp John Hay into a SEZ is not simply a re-classification of an
area, a mere ascription of a status to a place. It involves turning the former US military reservation into a focal point for
investments by both local and foreign entities. It is to be made a site of vigorous business activity, ultimately serving as a
spur to the country's long awaited economic growth. For, as R.A. No. 7227 unequivocally declares, it is the government's
policy to enhance the benefits to be derived from the base areas in order to promote the economic and social
25
development of Central Luzon in particular and the country in general. Like the Subic SEZ, the John Hay SEZ should
26
also be turned into a "self-sustaining, industrial, commercial, financial and investment center."
More than the economic interests at stake, the development of Camp John Hay as well as of the other base areas
unquestionably has critical links to a host of environmental and social concerns. Whatever use to which these lands will
be devoted will set a chain of events that can affect one way or another the social and economic way of life of the
communities where the bases are located, and ultimately the nation in general.
Underscoring the fragility of Baguio City's ecology with its problem on the scarcity of its water supply, petitioners point out
that the local and national government are faced with the challenge of how to provide for an ecologically sustainable,
environmentally sound, equitable transition for the city in the wake of Camp John Hay's reversion to the mass of
30
27
government property. But that is why R.A. No. 7227 emphasizes the "sound and balanced conversion of the Clark and
28
Subic military reservations and their extensions consistent with ecological and environmental standards." It cannot thus
be gainsaid that the matter of conversion of the US bases into SEZs, in this case Camp John Hay, assumes importance of
a national magnitude.
Convinced then that the present petition embodies crucial issues, this Court assumes jurisdiction over the petition.
As far as the questioned agreements between BCDA and Tuntex and AsiaWorld are concerned, the legal questions being
raised thereon by petitioners have indeed been rendered moot and academic by the revocation of such agreements.
There are, however, other issues posed by the petition, those which center on the constitutionality of Proclamation No.
420, which have not been mooted by the said supervening event upon application of the rules for the judicial scrutiny of
constitutional cases. The issues boil down to:
(1) Whether the present petition complies with the requirements for this Court's exercise of jurisdiction
over constitutional issues;
(2) Whether Proclamation No. 420 is constitutional by providing for national and local tax exemption
within and granting other economic incentives to the John Hay Special Economic Zone; and
(3) Whether Proclamation No. 420 is constitutional for limiting or interfering with the local autonomy of
Baguio City;
It is settled that when questions of constitutional significance are raised, the court can exercise its power of judicial review
only if the following requisites are present: (1) the existence of an actual and appropriate case; (2) a personal and
substantial interest of the party raising the constitutional question; (3) the exercise of judicial review is pleaded at the
29
earliest opportunity; and (4) the constitutional question is the lis mota of the case.
An actual case or controversy refers to an existing case or controversy that is appropriate or ripe for determination, not
30
conjectural or anticipatory. The controversy needs to be definite and concrete, bearing upon the legal relations of parties
31
who are pitted against each other due to their adverse legal interests. There is in the present case a real clash of
interests and rights between petitioners and respondents arising from the issuance of a presidential proclamation that
converts a portion of the area covered by Camp John Hay into a SEZ, the former insisting that such proclamation contains
unconstitutional provisions, the latter claiming otherwise.
R.A. No. 7227 expressly requires the concurrence of the affected local government units to the creation of SEZs out of
32
all the base areas in the country. The grant by the law on local government units of the right of concurrence on the
bases' conversion is equivalent to vesting a legal standing on them, for it is in effect a recognition of the real interests that
communities nearby or surrounding a particular base area have in its utilization. Thus, the interest of petitioners, being
inhabitants of Baguio, in assailing the legality of Proclamation No. 420, is personal and substantial such that they have
33
sustained or will sustain direct injury as a result of the government act being challenged. Theirs is a material interest, an
interest in issue affected by the proclamation and not merely an interest in the question involved or an incidental
34
interest, for what is at stake in the enforcement of Proclamation No. 420 is the very economic and social existence of the
people of Baguio City.
Petitioners' locus standi parallels that of the petitioner and other residents of Bataan, specially of the town of Limay,
35
in Garcia v. Board of Investments where this Court characterized their interest in the establishment of a petrochemical
plant in their place as actual, real, vital and legal, for it would affect not only their economic life but even the air they
breathe.
Moreover, petitioners Edilberto T. Claravall and Lilia G. Yaranon were duly elected councilors of Baguio at the time,
engaged in the local governance of Baguio City and whose duties included deciding for and on behalf of their constituents
the question of whether to concur with the declaration of a portion of the area covered by Camp John Hay as a SEZ.
36
Certainly then, petitioners Claravall and Yaranon, as city officials who voted against the sanggunian Resolution No. 255
(Series of 1994) supporting the issuance of the now challenged Proclamation No. 420, have legal standing to bring the
present petition.
That there is herein a dispute on legal rights and interests is thus beyond doubt. The mootness of the issues concerning
the questioned agreements between public and private respondents is of no moment.
"By the mere enactment of the questioned law or the approval of the challenged act, the dispute is deemed to have
ripened into a judicial controversy even without any other overt act. Indeed, even a singular violation of the Constitution
37
and/or the law is enough to awaken judicial duty."
As to the third and fourth requisites of a judicial inquiry, there is likewise no question that they have been complied with in
the case at bar. This is an action filed purposely to bring forth constitutional issues, ruling on which this Court must take
up. Besides, respondents never raised issues with respect to these requisites, hence, they are deemed waived.
Having cleared the way for judicial review, the constitutionality of Proclamation No. 420, as framed in the second and third
issues above, must now be addressed squarely.
The second issue refers to petitioners' objection against the creation by Proclamation No. 420 of a regime of tax
exemption within the John Hay SEZ. Petitioners argue that nowhere in R. A. No. 7227 is there a grant of tax exemption to
SEZs yet to be established in base areas, unlike the grant under Section 12 thereof of tax exemption and investment
incentives to the therein established Subic SEZ. The grant of tax exemption to the John Hay SEZ, petitioners conclude,
31

thus contravenes Article VI, Section 28 (4) of the Constitution which provides that "No law granting any tax exemption
shall be passed without the concurrence of a majority of all the members of Congress."
Section 3 of Proclamation No. 420, the challenged provision, reads:
Sec. 3. Investment Climate in John Hay Special Economic Zone. - Pursuant to Section 5(m) and Section 15 of R.A. No.
7227, the John Hay Poro Point Development Corporation shall implement all necessary policies, rules, and regulations
governing the zone, including investment incentives, in consultation with pertinent government departments. Among
others, the zone shall have all the applicable incentives of the Special Economic Zone under Section 12 of R.A.
No. 7227 and those applicable incentives granted in the Export Processing Zones, the Omnibus Investment Code
of 1987, the Foreign Investment Act of 1991, and new investment laws that may hereinafter be enacted. (Emphasis
and underscoring supplied)
Upon the other hand, Section 12 of R.A. No. 7227 provides:
xxx
(a) Within the framework and subject to the mandate and limitations of the Constitution and the pertinent provisions of the
Local Government Code, the Subic Special Economic Zone shall be developed into a self-sustaining, industrial,
commercial, financial and investment center to generate employment opportunities in and around the zone and to attract
and promote productive foreign investments;
b) The Subic Special Economic Zone shall be operated and managed as a separate customs territory ensuring free flow
or movement of goods and capital within, into and exported out of the Subic Special Economic Zone, as well as provide
incentives such as tax and duty free importations of raw materials, capital and equipment. However, exportation or
removal of goods from the territory of the Subic Special Economic Zone to the other parts of the Philippine territory shall
be subject to customs duties and taxes under the Customs and Tariff Code and other relevant tax laws of the Philippines;
(c) The provisions of existing laws, rules and regulations to the contrary notwithstanding, no taxes, local and national,
shall be imposed within the Subic Special Economic Zone. In lieu of paying taxes, three percent (3%) of the gross
income earned by all businesses and enterprises within the Subic Special Economic Zone shall be remitted to the
National Government, one percent (1%) each to the local government units affected by the declaration of the zone in
proportion to their population area, and other factors. In addition, there is hereby established a development fund of one
percent (1%) of the gross income earned by all businesses and enterprises within the Subic Special Economic Zone to be
utilized for the Municipality of Subic, and other municipalities contiguous to be base areas. In case of conflict between
national and local laws with respect to tax exemption privileges in the Subic Special Economic Zone, the same shall be
resolved in favor of the latter;
(d) No exchange control policy shall be applied and free markets for foreign exchange, gold, securities and futures shall
be allowed and maintained in the Subic Special Economic Zone;
(e) The Central Bank, through the Monetary Board, shall supervise and regulate the operations of banks and other
financial institutions within the Subic Special Economic Zone;
(f) Banking and Finance shall be liberalized with the establishment of foreign currency depository units of local commercial
banks and offshore banking units of foreign banks with minimum Central Bank regulation;
(g) Any investor within the Subic Special Economic Zone whose continuing investment shall not be less than Two
Hundred fifty thousand dollars ($250,000), his/her spouse and dependent children under twenty-one (21) years of age,
shall be granted permanent resident status within the Subic Special Economic Zone. They shall have freedom of ingress
and egress to and from the Subic Special Economic Zone without any need of special authorization from the Bureau of
Immigration and Deportation. The Subic Bay Metropolitan Authority referred to in Section 13 of this Act may also issue
working visas renewable every two (2) years to foreign executives and other aliens possessing highly-technical skills
which no Filipino within the Subic Special Economic Zone possesses, as certified by the Department of Labor and
Employment. The names of aliens granted permanent residence status and working visas by the Subic Bay Metropolitan
Authority shall be reported to the Bureau of Immigration and Deportation within thirty (30) days after issuance thereof;
x x x (Emphasis supplied)
It is clear that under Section 12 of R.A. No. 7227 it is only the Subic SEZ which was granted by Congress with tax
exemption, investment incentives and the like. There is no express extension of the aforesaid benefits to other SEZs still
to be created at the time via presidential proclamation.
The deliberations of the Senate confirm the exclusivity to Subic SEZ of the tax and investment privileges accorded it
under the law, as the following exchanges between our lawmakers show during the second reading of the precursor bill of
R.A. No. 7227 with respect to the investment policies that would govern Subic SEZ which are now embodied in the
aforesaid Section 12 thereof:
xxx
Senator Maceda: This is what I was talking about. We get into problems here because all of these following policies are
centered around the concept of free port. And in the main paragraph above, we have declared both Clark and Subic as
special economic zones, subject to these policies which are, in effect, a free-port arrangement.
Senator Angara: The Gentleman is absolutely correct, Mr. President. So we must confine these policies only to Subic.
May I withdraw then my amendment, and instead provide that "THE SPECIAL ECONOMIC ZONE OF SUBIC SHALL BE
ESTABLISHED IN ACCORDANCE WITH THE FOLLOWING POLICIES." Subject to style, Mr. President.
32

Thus, it is very clear that these principles and policies are applicable only to Subic as a free port.
Senator Paterno: Mr. President.
The President: Senator Paterno is recognized.
Senator Paterno: I take it that the amendment suggested by Senator Angara would then prevent the establishment of
other special economic zones observing these policies.
Senator Angara: No, Mr. President, because during our short caucus, Senator Laurel raised the point that if we give this
delegation to the President to establish other economic zones, that may be an unwarranted delegation.
So we agreed that we will simply limit the definition of powers and description of the zone to Subic, but that does not
exclude the possibility of creating other economic zones within the baselands.
Senator Paterno: But if that amendment is followed, no other special economic zone may be created under authority of
this particular bill. Is that correct, Mr. President?
38
Senator Angara: Under this specific provision, yes, Mr. President. This provision now will be confined only to Subic.
x x x (Underscoring supplied).
As gathered from the earlier-quoted Section 12 of R.A. No. 7227, the privileges given to Subic SEZ consist principally of
exemption from tariff or customs duties, national and local taxes of business entities therein (paragraphs (b) and (c)), free
market and trade of specified goods or properties (paragraph d), liberalized banking and finance (paragraph f), and
relaxed immigration rules for foreign investors (paragraph g). Yet, apart from these, Proclamation No. 420 also makes
available to the John Hay SEZ benefits existing in other laws such as the privilege of export processing zone-based
39
businesses of importing capital equipment and raw materials free from taxes, duties and other restrictions; tax and duty
40
exemptions, tax holiday, tax credit, and other incentives under the Omnibus Investments Code of 1987; and the
41
applicability to the subject zone of rules governing foreign investments in the Philippines.
While the grant of economic incentives may be essential to the creation and success of SEZs, free trade zones and the
like, the grant thereof to the John Hay SEZ cannot be sustained. The incentives under R.A. No. 7227 are exclusive only
to the Subic SEZ, hence, the extension of the same to the John Hay SEZ finds no support therein. Neither does the same
grant of privileges to the John Hay SEZ find support in the other laws specified under Section 3 of Proclamation No. 420,
which laws were already extant before the issuance of the proclamation or the enactment of R.A. No. 7227.
More importantly, the nature of most of the assailed privileges is one of tax exemption. It is the legislature, unless limited
by a provision of the state constitution, that has full power to exempt any person or corporation or class of property from
42
taxation, its power to exempt being as broad as its power to tax. Other than Congress, the Constitution may itself provide
43 44
for specific tax exemptions, or local governments may pass ordinances on exemption only from local taxes.
The challenged grant of tax exemption would circumvent the Constitution's imposition that a law granting any tax
45
exemption must have the concurrence of a majority of all the members of Congress. In the same vein, the other kinds of
privileges extended to the John Hay SEZ are by tradition and usage for Congress to legislate upon.
Contrary to public respondents' suggestions, the claimed statutory exemption of the John Hay SEZ from taxation should
be manifest and unmistakable from the language of the law on which it is based; it must be expressly granted in a statute
46
stated in a language too clear to be mistaken. Tax exemption cannot be implied as it must be categorically and
47
unmistakably expressed.
If it were the intent of the legislature to grant to the John Hay SEZ the same tax exemption and incentives given to the
Subic SEZ, it would have so expressly provided in the R.A. No. 7227.
This Court no doubt can void an act or policy of the political departments of the government on either of two grounds-
48
infringement of the Constitution or grave abuse of discretion.
This Court then declares that the grant by Proclamation No. 420 of tax exemption and other privileges to the John Hay
SEZ is void for being violative of the Constitution. This renders it unnecessary to still dwell on petitioners' claim that the
same grant violates the equal protection guarantee.
With respect to the final issue raised by petitioners -- that Proclamation No. 420 is unconstitutional for being in derogation
of Baguio City's local autonomy, objection is specifically mounted against Section 2 thereof in which BCDA is set up as
49
the governing body of the John Hay SEZ.
Petitioners argue that there is no authority of the President to subject the John Hay SEZ to the governance of BCDA
which has just oversight functions over SEZ; and that to do so is to diminish the city government's power over an area
within its jurisdiction, hence, Proclamation No. 420 unlawfully gives the President power of control over the local
government instead of just mere supervision.
Petitioners' arguments are bereft of merit. Under R.A. No. 7227, the BCDA is entrusted with, among other things, the
50
following purpose:
xxx
(a) To own, hold and/or administer the military reservations of John Hay Air Station, Wallace Air Station, O'Donnell
Transmitter Station, San Miguel Naval Communications Station, Mt. Sta. Rita Station (Hermosa, Bataan) and those
portions of Metro Manila Camps which may be transferred to it by the President;
x x x (Underscoring supplied)
33

With such broad rights of ownership and administration vested in BCDA over Camp John Hay, BCDA virtually has control
over it, subject to certain limitations provided for by law. By designating BCDA as the governing agency of the John Hay
SEZ, the law merely emphasizes or reiterates the statutory role or functions it has been granted.
The unconstitutionality of the grant of tax immunity and financial incentives as contained in the second sentence of
Section 3 of Proclamation No. 420 notwithstanding, the entire assailed proclamation cannot be declared unconstitutional,
the other parts thereof not being repugnant to law or the Constitution. The delineation and declaration of a portion of the
area covered by Camp John Hay as a SEZ was well within the powers of the President to do so by means of a
51
proclamation. The requisite prior concurrence by the Baguio City government to such proclamation appears to have
been given in the form of a duly enacted resolution by the sanggunian. The other provisions of the proclamation had been
proven to be consistent with R.A. No. 7227.
Where part of a statute is void as contrary to the Constitution, while another part is valid, the valid portion, if separable
52
from the invalid, may stand and be enforced. This Court finds that the other provisions in Proclamation No. 420
converting a delineated portion of Camp John Hay into the John Hay SEZ are separable from the invalid second sentence
of Section 3 thereof, hence they stand.
WHEREFORE, the second sentence of Section 3 of Proclamation No. 420 is hereby declared NULL AND VOID and is
accordingly declared of no legal force and effect. Public respondents are hereby enjoined from implementing the aforesaid
void provision.
Proclamation No. 420, without the invalidated portion, remains valid and effective.
SO ORDERED.
R. A. 7227, Section 21 provides: "The implementation of the projects for the conversion into alternative productive
uses of the military reservations are urgent and necessary and shall not be restrained or enjoined except by an
order issued by the Supreme Court of the Philippines."
49
Proc. No. 420, Section 2. Governing Body of the John Hay Special Economic Zone. - Pursuant to Section 15 of
R.A. No. 7227, the Bases Conversion and Development Authority is hereby established as the governing body of
the John Hay Special Economic Zone and, as such, authorized to determine the utilization and disposition of the
lands comprising it, subject to private rights, if any, and in consultation and coordination with the City Government
of Baguio after consultation with its inhabitants, and to promulgate the necessary policies, rules, and regulations
to govern and regulate the zone thru the John Hay Poro Point Development Corporation, which is its
implementing arm for its economic development and optimum utilization.
G.R. No. 143596 December 11, 2003
JUDGE TOMAS C. LEYNES, petitioner,
vs.
THE COMMISSION ON AUDIT (COA), HON. GREGORIA S. ONG, DIRECTOR, COMMISSION ON AUDIT and HON.
SALVACION DALISAY, PROVINCIAL AUDITOR, respondents
DECISION
CORONA, J.:
Before us is a petition for certiorari under Rule 65 in relation to Section 2, Rule 64 of the Rules of Court, seeking to
1
reverse and set aside the decision dated September 14, 1999 of the Commission on Audit (COA), affirming the resolution
of COA Regional Director Gregoria S. Ong dated March 29, 1994 which in turn affirmed the opinion dated October 19,
1993 of the Provincial Auditor of Oriental Mindoro, Salvacion M. Dalisay. All three denied the grant of ₱1,600 monthly
allowance to petitioner Judge Tomas C. Leynes by the Municipality of Naujan, Oriental Mindoro.
FACTUAL ANTECEDENTS
Petitioner Judge Tomas C. Leynes who, at present, is the presiding judge of the Regional Trial Court of Calapan City,
Oriental Mindoro, Branch 40 was formerly assigned to the Municipality of Naujan, Oriental Mindoro as the sole presiding
judge of the Municipal Trial Court thereof. As such, his salary and representation and transportation allowance (RATA)
were drawn from the budget of the Supreme Court. In addition, petitioner received a monthly allowance of ₱944 from the
2 3
local funds of the Municipality of Naujan starting 1984.
On March 15, 1993, the Sangguniang Bayan of Naujan, through Resolution No. 057, sought the opinion of the Provincial
Auditor and the Provincial Budget Officer regarding any budgetary limitation on the grant of a monthly allowance by the
municipality to petitioner judge. On May 7, 1993, the Sangguniang Bayan unanimously approved Resolution No. 101
4
increasing petitioner judge’s monthly allowance from ₱944 to ₱1,600 (an increase of ₱656) starting May 1993. By virtue
of said resolution, the municipal government (the Municipal Mayor and the Sangguniang Bayan) approved a supplemental
budget which was likewise approved by the Sangguniang Panlalawigan and the Office of Provincial Budget and
Management of Oriental Mindoro. In 1994, the Municipal Government of Naujan again provided for petitioner judge’s
₱1,600 monthly allowance in its annual budget which was again approved by the Sangguniang Panlalawigan and the
5
Office of Provincial Budget and Management of Oriental Mindoro.
On February 17, 1994, Provincial Auditor Salvacion M. Dalisay sent a letter to the Municipal Mayor and the Sangguniang
Bayan of Naujan directing them to stop the payment of the ₱1,600 monthly allowance or RATA to petitioner judge and to
require the immediate refund of the amounts previously paid to the latter. She opined that the Municipality of Naujan could
34

not grant RATA to petitioner judge in addition to the RATA the latter was already receiving from the Supreme Court. Her
directive was based on the following:
Section 36, RA No. 7645, General Appropriations Act of 1993
Representation and Transportation Allowances. The following officials and those of equivalent rank as may be determined
by the Department of Budget and Management (DBM) while in the actual performance of their respective functions are
hereby granted monthly commutable representation and transportation allowances payable from the programmed
appropriations provided for their respective offices, not exceeding the rates indicated below . . .
National Compensation Circular No. 67 dated January 1, 1992, of the Department of Budget and Management
Subject: Representation and Transportation Allowances of National Government Officials and Employees
xxx xxx xxx
4. Funding Source: In all cases, commutable and reimbursable RATA shall be paid from the amount appropriated for the
purpose and other personal services savings of the agency or project from where the officials and employees covered
6
under this Circular draw their salaries. No one shall be allowed to collect RATA from more than one source. (emphasis
supplied)
Petitioner judge appealed to COA Regional Director Gregoria S. Ong who, however, upheld the opinion of Provincial
Auditor Dalisay and who added that Resolution No. 101, Series of 1993 of the Sangguniang Bayan of Naujan failed to
comply with Section 3 of Local Budget Circular No. 53 dated September 1, 1993 outlining the conditions for the grant of
allowances to judges and other national officials or employees by the local government units (LGUs). Section 3 of the said
budget circular provides that:
Sec. 3 Allowances. ─ LGUs may grant allowances/additional compensation to the national government
officials/employees assigned to their locality at rates authorized by law, rules and regulations and subject to the following
preconditions:
a. That the annual income or finances of the municipality, city or province as certified by the Accountant
concerned will allow the grant of the allowances/additional compensation without exceeding the general
limitations for personal services under Section 325 of RA 7160;
b. That the budgetary requirements under Section 324 of RA 7160 including the full requirement of RA 6758 have
been satisfied and provided fully in the budget as certified by the Budget Officer and COA representative in the
LGU concerned;
c. That the LGU has fully implemented the devolution of personnel/functions in accordance with the provisions of
RA 7160;
d. That the LGU has already created mandatory positions prescribed in RA 7160; and
e. That similar allowances/additional compensation are not granted by the national government to the
7
officials/employees assigned to the LGU.
Petitioner judge appealed the unfavorable resolution of the Regional Director to the Commission on Audit. In the
meantime, a disallowance of the payment of the ₱1,600 monthly allowance to petitioner was issued. Thus he received his
₱1,600 monthly allowance from the Municipality of Naujan only for the period May 1993 to January 1994.
On September 14, 1999, the COA issued its decision affirming the resolution of Regional Director Gregoria S. Ong:
The main issue . . . is whether or not the Municipality of Naujan, Oriental Mindoro can validly provide RATA to its
Municipal Judge, in addition to that provided by the Supreme Court.
Generally, the grant of (RATA) [sic] to qualified national government officials and employees pursuant to Section 36 of
R.A. 7645 [General Appropriations Act of 1993] and NCC No. 67 dated 01 January 1992 is subject to the following
conditions to wit:
1. Payable from the programmed /appropriated amount and others from personal services savings of the
respective offices where the officials or employees draw their salaries;
2. Not exceeding the rates prescribed by the Annual General Appropriations Act;
3. Officials /employees on detail with other offices or assigned to serve other offices or agencies shall be paid
from their parent agencies;
4. No one shall be allowed to collect RATA from more than one source.
On the other hand, the municipal government may provide additional allowances and other benefits to judges and other
national government officials or employees assigned or stationed in the municipality, provided, that the finances of the
municipality allow the grant thereof pursuant to Section 447, Par. 1 (xi), R.A. 7160, and provided further, that similar
allowance/additional compensation are not granted by the national government to the official/employee assigned to the
local government unit as provided under Section 3(e) of Local Budget Circular No. 53, dated 01 September 1993.
The conflicting provisions of Section 447, Par. (1) (xi) of the Local Government Code of 1991 and Section 36 of the
General Appropriations Act of 1993 [RA 7645] have been harmonized by the Local Budget Circular No. 53 dated 01
September 1993, issued by the Department of Budget and Management pursuant to its powers under Section 25 and
Section 327 of the Local Government Code. The said circular must be adhered to by the local government units
particularly Section 3 thereof which provides the implementing guidelines of Section 447, Par. (1) (xi) of the Local
Government Code of 1991 in the grant of allowances to national government officials/employees assigned or stationed in
their respective local government units.
35

Consequently, the subject SB Resolution No. 101 dated 11 May 1993 of the Sangguniang Bayan of Naujan, Oriental
Mindoro, having failed to comply with the inherent precondition as defined in Section 3 (e). . . is null and void.
Furthermore, the Honorable Judge Tomas C. Leynes, being a national government official is prohibited to receive
additional RATA from the local government fund pursuant to Section 36 of the General Appropriations Act (R.A. 7645 for
8
1993) and National Compensation Circular No. 67 dated 1 January 1992. (emphasis ours)
ASSIGNMENTS OF ERROR
Petitioner judge filed a motion for reconsideration of the above decision but it was denied by the Commission in a
resolution dated May 30, 2000. Aggrieved, petitioner filed the instant petition, raising the following assignments of error for
our consideration:
I
WHETHER OR NOT RESOLUTION NO. 1O1, SERIES OF 1993 OF NAUJAN, ORIENTAL MINDORO, WHICH
GRANTED ADDITIONAL ALLOWANCE TO THE MUNICIPAL TRIAL JUDGE OF NAUJAN, ORIENTAL MINDORO AND
INCREASING HIS CURRENT REPRESENTATION AND TRAVELLING ALLOWANCE (RATA) TO AN AMOUNT
EQUIVALENT TO THAT RECEIVED MONTHLY BY SANGGUNIANG MEMBERS IN PESOS: ONE THOUSAND SIX
HUNDRED (₱1,600.00) EFFECTIVE 1993, IS VALID.
II
WHETHER OR NOT THE POWER OF MUNICIPAL GOVERNMENTS TO GRANT ADDITIONAL ALLOWANCES AND
OTHER BENEFITS TO NATIONAL GOVERNMENT EMPLOYEES STATIONED IN THEIR MUNICIPALITY IS VERY
EXPLICIT AND UNEQUIVOCAL UNDER THE LOCAL GOVERNMENT CODE OF 1991 PARTICULARLY SECTION 447
IN RELATION TO SECTIONS 17 AND 22 THEREOF.
III
WHETHER OR NOT THE DEPARTMENT OF BUDGET AND MANAGEMENT (DBM) CAN, BY THE ISSUANCE OF
BUDGET CIRCULARS, RESTRICT A MUNICIPAL GOVERNMENT FROM EXERCISING ITS GIVEN LEGISLATIVE
POWERS OF PROVIDING ADDITIONAL ALLOWANCES AND OTHER BENEFITS TO NATIONAL EMPLOYEES
STATIONED OR ASSIGNED TO THEIR MUNICIPALITY FOR AS LONG AS THEIR FINANCES SO ALLOW.
IV
WHETHER OR NOT THE LOCAL GOVERNMENT CODE OF 1991 PARTICULARLY SECTION 447 (a) (1) (xi) WAS
EXPRESSLY OR IMPLIEDLY REPEALED OR MODIFIED BY REPUBLIC ACT 7645 AND THE GENERAL
APPROPRIATIONS ACT OF 1993.
V
WHETHER OR NOT PETITIONER WAS ENTITLED TO RECEIVE THE ADDITIONAL ALLOWANCES GRANTED TO
HIM BY THE MUNICIPALITY OF NAUJAN, ORIENTAL MINDORO BY VIRTUE OF ITS RESOLUTION NO. 101, SERIES
OF 1993.
POSITION OF COA
Respondent Commission on Audit opposes the grant by the Municipality of Naujan of the ₱1,600 monthly allowance to
petitioner Judge Leynes for the reason that the municipality could not grant RATA to judges in addition to the RATA
9
already received from the Supreme Court. Respondent bases its contention on the following:
1. National Compensation Circular No. 67 (hereafter NCC No. 67) dated January 1, 1992 of the Department of
Budget and Management (DBM) which provides that (a) the RATA of national officials and employees shall be
payable from the programmed appropriations or personal services savings of the agency where such officials or
employees draw their salary and (b) no one shall be allowed to collect RATA from more than one source;
2. the General Appropriations Act of 1993 (RA 7645) which provided that the RATA of national officials shall be
payable from the programmed appropriations of their respective offices and
3. Local Budget Circular No. 53 (hereafter LBC No. 53) dated September 1, 1993 of the DBM which prohibits local
government units from granting allowances to national government officials or employees stationed in their
localities when such allowances are also granted by the national government or are similar to the allowances
10
granted by the national government to such officials or employees.
POSITION OF PETITIONER
Petitioner judge, on the other hand, asserts that the municipality is expressly and unequivocally empowered by RA 7160
(the Local Government Code of 1991) to enact appropriation ordinances granting allowances and other benefits to judges
stationed in its territory. Section 447(a)(1)(xi) of the Local Government Code of 1991 imposes only one condition, that is,
"when the finances of the municipal government allow." The Code does not impose any other restrictions in the exercise
of such power by the municipality. Petitioner also asserts that the DBM cannot amend or modify a substantive law like the
Local Government Code of 1991 through mere budget circulars. Petitioner emphasizes that budget circulars must
11
conform to, not modify or amend, the provisions of the law it seeks to implement.
HISTORY OF GRANT OF
ALLOWANCES TO JUDGES
The power of local government units (LGUs) to grant allowances to judges stationed in their respective territories was
originally provided by Letter of Instruction No. 1418 dated July 18, 1984 (hereafter LOI No. 1418):
Whereas, the State is cognizant of the need to maintain the independence of the Judiciary;
36

Whereas, the budgetary allotment of the Judiciary constitutes only a small percentage of the national budget;
Whereas, present economic conditions adversely affected the livelihood of the members of the Judiciary;
Whereas, some local government units are ready, willing and able to pay additional allowances to Judges of various
courts within their respective territorial jurisdiction;
Now, therefore, I, Ferdinand E. Marcos, President of the Republic of the Philippines, do hereby direct:
1. Section 3 of Letter of Implementation No. 96 is hereby amended to read as follows:
"3. The allowances provided in this letter shall be borne exclusively by the National Government. However, provincial, city
and municipal governments may pay additional allowances to the members and personnel of the Judiciary assigned in
their respective areas out of available local funds but not to exceed ₱1,500.00; Provided, that in Metropolitan Manila, the
12
city and municipal governments therein may pay additional allowances not exceeding ₱3,000.00. (emphasis ours)"
On June 25, 1991, the DBM issued Circular No. 91-7 outlining the guidelines for the continued receipt of allowances by
judges from LGUs:
Consistent with the constitutional provision on the fiscal autonomy of the judiciary and the policy of the National
Government of allowing greater autonomy to local government units, judges of the Judiciary are hereby allowed to
continue to receive allowances at the same rates which they have been receiving from the Local Government Units as of
June 30, 1989, subject to the following guidelines:
1. That the continuance of payment of subject allowance to the recipient judge shall be entirely voluntary and non-
compulsory on the part of the Local Government Units;
2. That payment of the above shall always be subject to the availability of local funds;
3. That it shall be made only in compliance with the policy of non-diminution of compensation received by the
recipient judge before the implementation of the salary standardization;
4. That the subject allowance shall be given only to judges who were receiving the same as of June 30, 1989 and
shall be co-terminous with the incumbent judges; and
5. That the subject allowance shall automatically terminate upon transfer of a judge from one local government
unit to another local government unit. (emphasis ours)
13
On October 10, 1991, Congress enacted RA 7160, otherwise known as the Local Government Code of 1991. The power
of the LGUs to grant allowances and other benefits to judges and other national officials stationed in their respective
territories was expressly provided in Sections 447(a)(1)(xi), 458(a)(1)(xi) and 468(a)(1)(xi) of the Code.
On March 15, 1994, the DBM issued Local Budget Circular No. 55 (hereafter LBC No. 55) setting out the maximum
amount of allowances that LGUs may grant to judges. For provinces and cities, the amount should not exceed ₱1,000 and
for municipalities, ₱700.
14
On December 3, 2002, we struck down the above circular in Dadole, et al. vs. COA. We ruled there that the Local
Government Code of 1991 clearly provided that LGUs could grant allowances to judges, subject only to the condition that
the finances of the LGUs allowed it. We held that "setting a uniform amount for the grant of allowances (was) an
inappropriate way of enforcing said criterion." Accordingly, we declared that the DBM exceeded its power of supervision
15
over LGUs by imposing a prohibition that did not jibe with the Local Government Code of 1991.
ESTABLISHED PRINCIPLES INVOLVED
From the foregoing history of the power of LGUs to grant allowances to judges, the following principles should be noted:
1. the power of LGUs to grant allowances to judges has long been recognized (since 1984 by virtue of LOI No.
1418) and, at present, it is expressly and unequivocally provided in Sections 447, 458 and 468 of the Local
Government Code of 1991;
2. the issuance of DBM Circular No. 91-7 dated June 25, 1991 and LBC No. 55 dated March 15, 1994 indicates
that the national government recognizes the power of LGUs to grant such allowances to judges;
3. in Circular No. 91-7, the national government merely provides the guidelines for the continued receipt of
allowances by judges from LGUs while in LBC No. 55, the national government merely tries to limit the amount of
allowances LGUs may grant to judges and
4. in the recent case of Dadole, et al. vs. COA, the Court upheld the constitutionally enshrined autonomy of LGUs
to grant allowances to judges in any amount deemed appropriate, depending on availability of funds, in
accordance with the Local Government Code of 1991.
OUR RULING
We rule in favor of petitioner judge. Respondent COA erred in opposing the grant of the ₱1,600 monthly allowance by the
Municipality of Naujan to petitioner Judge Leynes.
DISCUSSION OF OUR RULING
Section 447(a)(1)(xi) of RA 7160, the Local Government Code of 1991, provides:
(a) The sangguniang bayan, as the legislative body of the municipality, shall enact ordinances, approve resolutions and
appropriate funds for the general welfare of the municipality and its inhabitants . . ., and shall:
(1) Approve ordinances and pass resolutions necessary for an efficient and effective municipal
government, and in this connection shall:
xxx xxx xxx
37

(xi) When the finances of the municipal government allow, provide for additional allowances and other
benefits to judges, prosecutors, public elementary and high school teachers, and other national
government officials stationed in or assigned to the municipality; (emphasis ours)
Respondent COA, however, contends that the above section has been repealed, modified or amended by NCC No. 67
16
dated January 1, 1992, RA 7645 (the General Appropriations Act of 1993) and LBC No. 53 dated September 1, 1993.
It is elementary in statutory construction that an administrative circular cannot supersede, abrogate, modify or nullify a
17
statute. A statute is superior to an administrative circular, thus the latter cannot repeal or amend it. In the present case,
NCC No. 67, being a mere administrative circular, cannot repeal a substantive law like RA 7160.
It is also an elementary principle in statutory construction that repeal of statutes by implication is not favored, unless it is
manifest that the legislature so intended. The legislature is assumed to know the existing laws on the subject and cannot
18
be presumed to have enacted inconsistent or conflicting statutes. Respondent COA alleges that Section 36 of RA 7645
(the GAA of 1993) repealed Section 447(a)(l)(xi) of RA 7160 (the LGC of 1991). A review of the two laws, however, shows
that this was not so. Section 36 of RA 7645 merely provided for the different rates of RATA payable to national
government officials or employees, depending on their position, and stated that these amounts were payable from the
programmed appropriations of the parent agencies to which the concerned national officials or employees belonged.
Furthermore, there was no other provision in RA 7645 from which a repeal of Section 447(a) (l)(xi) of RA 7160 could be
implied. In the absence, therefore, of any clear repeal of Section 447(a)(l)(xi) of RA 7160, we cannot presume such
intention on the part of the legislature.
Moreover, the presumption against implied repeal becomes stronger when, as in this case, one law is special and the
19
other is general. The principle is expressed in the maxim generalia specialibus non derogant, a general law does not
nullify a specific or special law. The reason for this is that the legislature, in passing a law of special character, considers
and makes special provisions for the particular circumstances dealt with by the special law. This being so, the legislature,
by adopting a general law containing provisions repugnant to those of the special law and without making any mention of
its intention to amend or modify such special law, cannot be deemed to have intended an amendment, repeal or
20
modification of the latter.
21
In this case, RA 7160 (the LGC of 1991) is a special law which exclusively deals with local government units (LGUs),
outlining their powers and functions in consonance with the constitutionally mandated policy of local autonomy. RA 7645
22
(the GAA of 1993), on the other hand, was a general law which outlined the share in the national fund of all branches of
the national government. RA 7645 therefore, being a general law, could not have, by mere implication, repealed RA 7160.
Rather, RA 7160 should be taken as the exception to RA 7645 in the absence of circumstances warranting a contrary
23
conclusion.
The controversy actually centers on the seemingly sweeping provision in NCC No. 67 which states that "no one shall be
allowed to collect RATA from more than one source." Does this mean that judges cannot receive allowances from LGUs
in addition to the RATA from the Supreme Court? For reasons that will hereinafter be discussed, we answer in the
negative.
The pertinent provisions of NCC No. 67 read:
3. Rules and Regulations:
3.1.1 Payment of RATA, whether commutable or reimbursable, shall be in accordance with the rates prescribed for each
of the following officials and employees and those of equivalent ranks, and the conditions enumerated under the pertinent
sections of the General Provisions of the annual General Appropriations Act (GAA):
xxx xxx xxx
4. Funding Source:
In all cases, commutable and reimbursable RATA shall be paid from the amount appropriated for the purpose and other
personal services savings of the agency or project from where the officials and employees covered under this Circular
draw their salaries. No one shall be allowed to collect RATA from more than one source. (emphasis ours)
In construing NCC No. 67, we apply the principle in statutory construction that force and effect should not be narrowly
given to isolated and disjoined clauses of the law but to its spirit, broadly taking all its provisions together in one rational
24
view. Because a statute is enacted as a whole and not in parts or sections, that is, one part is as important as the others,
the statute should be construed and given effect as a whole. A provision or section which is unclear by itself may be
25
clarified by reading and construing it in relation to the whole statute.
Taking NCC No. 67 as a whole then, what it seeks to prevent is the dual collection of RATA by a national official from the
budgets of "more than one national agency." We emphasize that the other source referred to in the prohibition is another
national agency. This can be gleaned from the fact that the sentence "no one shall be allowed to collect RATA from more
than one source" (the controversial prohibition) immediately follows the sentence that RATA shall be paid from the budget
of the national agency where the concerned national officials and employees draw their salaries. The fact that the other
source is another national agency is supported by RA 7645 (the GAA of 1993) invoked by respondent COA itself and, in
fact, by all subsequent GAAs for that matter, because the GAAs all essentially provide that (1) the RATA of national
officials shall be payable from the budgets of their respective national agencies and (2) those officials on detail with other
national agencies shall be paid their RATA only from the budget of their parent national agency:
Section 36, RA 7645, General Appropriations Act of 1993:
38

Representation and Transportation Allowances. The following officials and those of equivalent rank as may be determined
by the Department of Budget and Management (DBM) while in the actual performance of their respective functions are
hereby granted monthly commutable representation and transportation allowances payable from the programmed
appropriations provided for their respective offices, not exceeding the rates indicated below, which shall apply to each
type of allowance:
xxx xxx xxx
Officials on detail with other offices, including officials of the Commission of Audit assigned to serve other offices or
agencies, shall be paid the allowance herein authorized from the appropriations of their parent agencies. (emphasis ours)
Clearly therefore, the prohibition in NCC No. 67 is only against the dual or multiple collection of RATA by a national official
from the budgets of two or more national agencies. Stated otherwise, when a national official is on detail with another
national agency, he should get his RATA only from his parent national agency and not from the other national agency he
is detailed to.
Since the other source referred in the controversial prohibition is another national agency, said prohibition clearly does not
apply to LGUs like the Municipality of Naujan. National agency of course refers to the different offices, bureaus and
departments comprising the national government. The budgets of these departments or offices are fixed annually by
26
Congress in the General Appropriations Act. An LGU is obviously not a national agency. Its annual budget is fixed by its
own legislative council (Sangguniang Bayan, Panlungsod or Panlalawigan), not by Congress. Without doubt, NCC No. 67
does not apply to LGUs.
The prohibition in NCC No. 67 is in fact an administrative tool of the DBM to prevent the much-abused practice of multiple
allowances, thus standardizing the grant of RATA by national agencies. Thus, the purpose clause of NCC No. 67 reads:
This Circular is being issued to ensure uniformity and consistency of actions on claims for representation and
transportation allowance (RATA) which is primarily granted by law to national government officials and employees to
cover expenses incurred in the discharge or performance of their duties and responsibilities.
By no stretch of the imagination can NCC No. 67 be construed as nullifying the power of LGUs to grant allowances to
judges under the Local Government Code of 1991. It was issued primarily to make the grant of RATA to national officials
under the national budget uniform. In other words, it applies only to the national funds administered by the DBM, not the
local funds of LGUs.
To rule against the power of LGUs to grant allowances to judges as what respondent COA would like us to do will subvert
27
the principle of local autonomy zealously guaranteed by the Constitution. The Local Government Code of 1991 was
specially promulgated by Congress to ensure the autonomy of local governments as mandated by the Constitution. By
upholding, in the present case, the power of LGUs to grant allowances to judges and leaving to their discretion the
amount of allowances they may want to grant, depending on the availability of local funds, we ensure the genuine and
meaningful local autonomy of LGUs.
We now discuss the next contention of respondent COA: that the resolution of the Sangguniang Bayan of Naujan granting
the ₱1,600 monthly allowance to petitioner judge was null and void because it failed to comply with LBC No. 53 dated
September 1, 1993:
Sec. 3 Allowances. ─ LGUs may grant allowances/additional compensation to the national government
officials/employees assigned to their locality at rates authorized by law, rules and regulations and subject to the following
preconditions:
a. That the annual income or finances of the municipality, city or province as certified by the Accountant
concerned will allow the grant of the allowances/additional compensation without exceeding the general
limitations for personal services under Section 325 of RA 7160;
b. That the budgetary requirements under Section 324 of RA 7160 including the full requirement of RA 6758 have
been satisfied and provided fully in the budget as certified by the Budget Officer and COA representative in the
LGU concerned;
c. That the LGU has fully implemented the devolution of personnel/functions in accordance with the provisions of
RA 7160;
d. That the LGU has already created mandatory positions prescribed in RA 7160.
e. That similar allowances/additional compensation are not granted by the national government to the
officials/employees assigned to the LGU.
Though LBC No. 53 of the DBM may be considered within the ambit of the President's power of general supervision over
28
LGUs, we rule that Section 3, paragraph (e) thereof is invalid. RA 7160, the Local Government Code of 1991, clearly
provides that provincial, city and municipal governments may grant allowances to judges as long as their finances allow.
Section 3, paragraph (e) of LBC No. 53, by outrightly prohibiting LGUs from granting allowances to judges whenever such
allowances are (1) also granted by the national government or (2) similar to the allowances granted by the national
29
government, violates Section 447(a)(l)(xi) of the Local Government Code of 1991. As already stated, a circular must
30
conform to the law it seeks to implement and should not modify or amend it.
Moreover, by prohibiting LGUs from granting allowances similar to the allowances granted by the national government,
Section 3 (e) of LBC No. 53 practically prohibits LGUs from granting allowances to judges and, in effect, totally nullifies
their statutory power to do so. Being unduly restrictive therefore of the statutory power of LGUs to grant allowances to
39

judges and being violative of their autonomy guaranteed by the Constitution, Section 3, paragraph (e) of LBC No. 53 is
hereby declared null and void.1avvphi1
31 32
Paragraphs (a) to (d) of said circular, however, are valid as they are in accordance with Sections 324 and 325 of the
Local Government Code of 1991; these respectively provide for the budgetary requirements and general limitations on the
use of provincial, city and municipal funds. Paragraphs (a) to (d) are proper guidelines for the condition provided in
Sections 447, 458 and 468 of the Local Government Code of 1991 that LGUs may grant allowances to judges if their
33
funds allow.
Respondent COA also argues that Resolution No. 101 of the Sangguniang Bayan of Naujan failed to comply with
paragraphs (a) to (d) of LBC No. 53, thus it was null and void.
The argument is misplaced.
Guidelines (a) to (d) were met when the Sangguniang Panlalawigan of Oriental Mindoro approved Resolution No. 101 of
the Sangguniang Bayan of Naujan granting the ₱1,600 monthly allowance to petitioner judge as well as the corresponding
budgets of the municipality providing for the said monthly allowance to petitioner judge. Under Section 327 of the Local
Government Code of 1991, the Sangguniang Panlalawigan was specifically tasked to review the appropriation ordinances
of its component municipalities to ensure compliance with Sections 324 and 325 of the Code. Considering said duty of the
Sangguniang Panlalawigan, we will assume, in the absence of proof to the contrary, that the Sangguniang
Panlalawigan of Oriental Mindoro performed what the law required it to do, that is, review the resolution and the
corresponding budgets of the Municipality of Naujan to make sure that they complied with Sections 324 and 325 of the
34
Code. We presume the regularity of the Sangguniang Panlalawigan’s official act.
Moreover, it is well-settled that an ordinance must be presumed valid in the absence of evidence showing that it is not in
35
accordance with the law. Respondent COA had the burden of proving that Resolution No. 101 of the Sangguniang
Bayan of Naujan did not comply with the condition provided in Section 447 of the Code, the budgetary requirements and
general limitations on the use of municipal funds provided in Sections 324 and 325 of the Code and the implementing
guidelines issued by the DBM, i.e., paragraphs (a) to (d), Section 3 of LBC No. 53. Respondent COA also had the burden
of showing that the Sangguniang Panlalawigan of Oriental Mindoro erroneously approved said resolution despite its non-
compliance with the requirements of the law. It failed to discharge such burden. On the contrary, we find that the
resolution of the Municipality of Naujan granting the ₱1,600 monthly allowance to petitioner judge fully complied with the
law. Thus, we uphold its validity.1âwphi1
In sum, we hereby affirm the power of the Municipality of Naujan to grant the questioned allowance to petitioner Judge
Leynes in accordance with the constitutionally mandated policy of local autonomy and the provisions of the Local
Government Code of 1991. We also sustain the validity of Resolution No. 101, Series of 1993, of the Sangguniang
Bayan of Naujan for being in accordance with the law.
WHEREFORE, the petition is hereby GRANTED. The assailed decision dated September 14, 1999 of the Commission of
Audit is hereby SET ASIDE and Section 3, paragraph (e) of LBC No. 53 is hereby declared NULL and VOID.No costs.
SO ORDERED.
Footnotes
9
Respondent COA erroneously considered the ₱944 monthly allowance being received by petitioner judge from
the local funds of the municipality since 1984 as RATA from the Supreme Court. Thus, in 1993 when the
municipality increased said allowance to ₱1,600 (an increase of ₱656), COA opposed the grant of the whole
₱1,600 monthly allowance because the municipality supposedly could not grant RATA to petitioner judge in
addition to the RATA already granted by the Supreme Court. See Comment dated October 23, 2000 and
Memorandum dated June 26, 2001, Rollo, pp. 53, 103.
10
Rollo, pp. 22-25, 31-33, 36-38, 57-64.
11
Rollo, pp. 10-17.
12
In Allarde vs. Commission on Audit, 218 SCRA 227 [1993], we ruled that the use of the word "may" in LOI No.
1418 signifies that the allowance may not be demanded as a matter of right, but
is entirely dependent on the will of the municipality concerned. It should be treated as an honorarium, an amount
that is "given not as a matter of obligation but in appreciation of services rendered, a voluntary donation in
consideration for services which admit of no compensation in money (Santiago vs. Commission on Audit, 199
SCRA 128, 130)."
13
The law took effect on January 1, 1992.
14
G.R. No. 125350, December 3, 2002.
15
Instead of filing a comment on behalf of respondent COA in this case, the Solicitor General filed a
manifestation supporting the position of petitioner judges. The Solicitor General argued that (1) DBM only
enjoyed the power to review and determine whether disbursement of funds were made in accordance with the
ordinance passed by a LGU while (2) the COA had no more than auditorial visitation powers over the LGUs
pursuant to Section 348 of RA 7160 which provides for the power to inspect at any time the financial accounts of
LGUs. Moreover, the Solicitor General opined that "the DBM and the respondent are only authorized under RA
7160 to promulgate a Budget Operations Manual for LGUs, to improve and systematize methods, techniques and
procedures employed in budget preparation, authorization, execution and accountability" pursuant to Section 354
40

of RA 7160. The Solicitor General pointed out that LBC 55 was not exercised under any of the aforementioned
provisions.
21
A special law is one which relates to particular persons or things of a class, or to a particular portion or section
of the state only. U.S. vs. Serapio, 23 Phil 584 [1912].
22
A general law is one which affects all people of the state or all of a particular class of persons in the state or
embraces a class of subjects or places and does not omit any subject or place naturally belonging to such class.
26
National agencies included in the national budget are Congress, Office of the President, Office of the Vice-
President, DA, DAR, DBM, DECS, DENR, DOF, DFA, DOH, DILG, DOJ, DOLE, DND, DPWH, DOST, DSWD,
DOT, DTI, DOTC, NEDA, Office of the Press Secretary, the Judiciary, Constitutional Offices, Commission on
Human Rights, State Universities and Colleges and Autonomous Regions. See the GAA of 1993 as example.
27
Section 25, Article II; Section 2, Article X, 1987 Constitution.
28
The LBC No. 53 was issued by the DBM by virtue of Administrative Order No. 42 which clarified
the role of the DBM in the administration of the compensation and position classification systems in the LGUs and
mandated it, among other things, to provide guidelines for the grant of allowances and additional forms of
compensation by the LGUs. AO No. 42 was issued by the President by virtue of his power of general supervision
over the LGUs under Section 25 of the Local Government Code of 1991.
29
Also Section 458(a)(1)(xi) and Section 468(a)(1)(xi), Local Government Code of 1991.
30
Supra note 17.
31
Section 324. Budgetary Requirements. - The budgets of local government units for any fiscal year shall comply
with the following requirements:
(a) The aggregate amount appropriated shall not exceed the estimates of income;
(b) Full provision shall be made for all statutory and contractual obligations of the local government unit
concerned: Provided, however, that the amount of appropriations for debt servicing shall not exceed
twenty percent (20%) of the regular income of the local government unit concerned;
(c) In the case of provinces, cities, and municipalities, aid to component barangays shall be provided in
amounts of not less than One thousand pesos (₱1,000.00) per barangay; and
(d) Five percent (5%) of the estimated revenue from regular sources shall be set aside as an annual lump
sum appropriation for unforeseen expenditures arising from the occurrence of calamities: Provided,
however, that such appropriation shall be used only in the area, or a portion thereof, of the local
government unit or other areas declared in a state of calamity by the President.
32
Section 325. General Limitations. - The use of the provincial, city and municipal funds shall be subject to the
following limitations:
(a) The total appropriations, whether annual or supplemental, for personal services of a local government
unit for one (1) fiscal year shall not exceed forty-five (45%) in the case of first to third class provinces,
cities, and municipalities, and fifty-five percent (55%) in the case of fourth class or lower, of the total
annual income from regular sources realized in the next preceding fiscal year. The appropriations for
salaries, wages, representation and transportation allowances of officials and employees of the public
utilities and economic enterprises owned, operated, and maintained by the local government unit
concerned shall not be included in the annual budget or in the computation of the maximum amount for
personal services. The appropriations for the personal services of such economic enterprises shall be
charged to their respective budgets;
(b) No official or employee shall be entitled to a salary rate higher than the maximum fixed for his position
or other positions of equivalent rank by applicable laws or rules and regulations issued thereunder;
(c) No local fund shall be appropriated to increase or adjust salaries or wages of officials and employees
of the national government, except as may be expressly authorized by law;
(d) In cases of abolition of positions and the creation of new ones resulting from the abolition of existing
positions in the career service, such abolition or creation shall be made in accordance with pertinent
provisions of this code and the civil service law, rules and regulations;
(e) Positions in the official plantilla for career positions which are occupied by incumbents holding
permanent appointments shall be covered by adequate appropriations;
(f) No changes in designation or nomenclature of positions resulting in a promotion or demotion in rank or
increase or decrease in compensation shall be allowed, except when the position is actually vacant, and
the filling of such positions shall be strictly made in accordance with the civil service law, rules and
regulations;
(g) The creation of new positions and salary increases or adjustments shall in no case be made
retroactive; and
(h) The annual appropriations for discretionary purposes of the local chief executive shall not exceed two
percent (2%) of the actual receipts derived from basic real property tax in the next preceding calendar
year. Discretionary funds shall be disbursed only for public purposes to be supported by appropriate
41

vouchers and subject to such guidelines as may be prescribed by law. No amount shall be appropriated
for the same purpose except as authorized under this Section.
33
Paragraph (a) should be read in conjunction with the recent circular of the DBM, Local Budget
Circular No. 75 dated July 12, 2002 entitled Guidelines on Personal Services Limitation. Section 5.5
thereof entitled Honoraria of National Government Personnel provides: "The appropriation intended to be
granted as honoraria and similar benefits to national government personnel shall be classified as
Maintenance and Other Operating Expenses (MOOE) since these are not personal services costs of the
local government unit."
G.R. No. 138810 September 29, 2004
BATANGAS CATV, INC., petitioner,
vs.
THE COURT OF APPEALS, THE BATANGAS CITY SANGGUNIANG PANLUNGSOD and BATANGAS CITY
MAYOR, respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
In the late 1940s, John Walson, an appliance dealer in Pennsylvania, suffered a decline in the sale of television (tv) sets
because of poor reception of signals in his community. Troubled, he built an antenna on top of a nearby mountain. Using
coaxial cable lines, he distributed the tv signals from the antenna to the homes of his customers. Walson’s innovative idea
improved his sales and at the same time gave birth to a new telecommunication system -- the Community Antenna
1
Television (CATV) or Cable Television.
This technological breakthrough found its way in our shores and, like in its country of origin, it spawned legal
controversies, especially in the field of regulation. The case at bar is just another occasion to clarify a shady area. Here,
we are tasked to resolve the inquiry -- may a local government unit (LGU) regulate the subscriber rates charged by CATV
operators within its territorial jurisdiction?
This is a petition for review on certiorari filed by Batangas CATV, Inc. (petitioner herein) against the Sangguniang
2
Panlungsod and the Mayor of Batangas City (respondents herein) assailing the Court of Appeals (1) Decision dated
3 4
February 12, 1999 and (2) Resolution dated May 26, 1999, in CA-G.R. CV No. 52361. The Appellate Court reversed and
5
set aside the Judgment dated October 29, 1995 of the Regional Trial Court (RTC), Branch 7, Batangas City in Civil Case
6
No. 4254, holding that neither of the respondents has the power to fix the subscriber rates of CATV operators, such
being outside the scope of the LGU’s power.
The antecedent facts are as follows:
7
On July 28, 1986, respondent Sangguniang Panlungsod enacted Resolution No. 210 granting petitioner
a permit to construct, install, and operate a CATV system in Batangas City. Section 8 of the Resolution provides
that petitioner is authorized to charge its subscribers the maximum rates specified therein, "provided, however,
8
that any increase of rates shall be subject to the approval of the Sangguniang Panlungsod."
Sometime in November 1993, petitioner increased its subscriber rates from ₱88.00 to ₱180.00 per month. As a result,
9
respondent Mayor wrote petitioner a letter threatening to cancel its permit unless it secures the approval of respondent
Sangguniang Panlungsod, pursuant to Resolution No. 210.
Petitioner then filed with the RTC, Branch 7, Batangas City, a petition for injunction docketed as Civil Case No. 4254. It
alleged that respondent Sangguniang Panlungsod has no authority to regulate the subscriber rates charged by CATV
operators because under Executive Order No. 205, the National Telecommunications Commission (NTC) has the sole
authority to regulate the CATV operation in the Philippines.
On October 29, 1995, the trial court decided in favor of petitioner, thus:
"WHEREFORE, as prayed for, the defendants, their representatives, agents, deputies or other persons acting on
their behalf or under their instructions, are hereby enjoined from canceling plaintiff’s permit to operate a
Cable Antenna Television (CATV) system in the City of Batangas or its environs or in any manner, from
interfering with the authority and power of the National Telecommunications Commission to grant
franchises to operate CATV systems to qualified applicants, and the right of plaintiff in fixing its service
rates which needs no prior approval of the Sangguniang Panlungsod of Batangas City.
The counterclaim of the plaintiff is hereby dismissed. No pronouncement as to costs.
10
IT IS SO ORDERED."
The trial court held that the enactment of Resolution No. 210 by respondent violates the State’s deregulation policy as set
forth by then NTC Commissioner Jose Luis A. Alcuaz in his Memorandum dated August 25, 1989. Also, it pointed out that
the sole agency of the government which can regulate CATV operation is the NTC, and that the LGUs cannot exercise
regulatory power over it without appropriate legislation.
Unsatisfied, respondents elevated the case to the Court of Appeals, docketed as CA-G.R. CV No. 52361.
On February 12, 1999, the Appellate Court reversed and set aside the trial court’s Decision, ratiocinating as follows:
"Although the Certificate of Authority to operate a Cable Antenna Television (CATV) System is granted by
the National Telecommunications Commission pursuant to Executive Order No. 205, this does not
preclude the Sangguniang Panlungsod from regulating the operation of the CATV in their locality under
42

the powers vested upon it by Batas Pambansa Bilang 337, otherwise known as the Local Government
Code of 1983. Section 177 (now Section 457 paragraph 3 (ii) of Republic Act 7160) provides:
‘Section 177. Powers and Duties – The Sangguniang Panlungsod shall:
a) Enact such ordinances as may be necessary to carry into effect and discharge the
responsibilities conferred upon it by law, and such as shall be necessary and proper to provide for
health and safety, comfort and convenience, maintain peace and order, improve the morals, and
promote the prosperity and general welfare of the community and the inhabitants thereof, and the
protection of property therein;
xxx
d) Regulate, fix the license fee for, and tax any business or profession being carried on and
exercised within the territorial jurisdiction of the city, except travel agencies, tourist guides, tourist
transports, hotels, resorts, de luxe restaurants, and tourist inns of international standards which
shall remain under the licensing and regulatory power of the Ministry of Tourism which shall
exercise such authority without infringement on the taxing and regulatory powers of the city
government;’
Under cover of the General Welfare Clause as provided in this section, Local Government Units can perform just
about any power that will benefit their constituencies. Thus, local government units can exercise powers that
are: (1) expressly granted; (2) necessarily implied from the power that is expressly granted; (3) necessary,
appropriate or incidental for its efficient and effective governance; and (4) essential to the promotion of the
general welfare of their inhabitants. (Pimentel, The Local Government Code of 1991, p. 46)
Verily, the regulation of businesses in the locality is expressly provided in the Local Government Code.
The fixing of service rates is lawful under the General Welfare Clause.
Resolution No. 210 granting appellee a permit to construct, install and operate a community antenna television
(CATV) system in Batangas City as quoted earlier in this decision, authorized the grantee to impose charges
which cannot be increased except upon approval of the Sangguniang Bayan. It further provided that in case of
violation by the grantee of the terms and conditions/requirements specifically provided therein, the City shall have
the right to withdraw the franchise.
Appellee increased the service rates from EIGHTY EIGHT PESOS (₱88.00) to ONE HUNDRED EIGHTY PESOS
(₱180.00) (Records, p. 25) without the approval of appellant. Such act breached Resolution No. 210 which
11
gives appellant the right to withdraw the permit granted to appellee."
12
Petitioner filed a motion for reconsideration but was denied.
Hence, the instant petition for review on certiorari anchored on the following assignments of error:
"I
THE COURT OF APPEALS ERRED IN HOLDING THAT THE GENERAL WELFARE CLAUSE of the LOCAL
GOVERNMENT CODE AUTHORIZES RESPONDENT SANGGUNIANG PANLUNGSOD TO EXERCISE THE
REGULATORY FUNCTION SOLELY LODGED WITH THE NATIONAL TELECOMMUNICATIONS
COMMISSION UNDER EXECUTIVE ORDER NO. 205, INCLUDING THE AUTHORITY TO FIX AND/OR
APPROVE THE SERVICE RATES OF CATV OPERATORS; AND
II
THE COURT OF APPEALS ERRED IN REVERSING THE DECISION APPEALED FROM AND DISMISSING
13
PETITIONER’S COMPLAINT."
Petitioner contends that while Republic Act No. 7160, the Local Government Code of 1991, extends to the LGUs the
general power to perform any act that will benefit their constituents, nonetheless, it does not authorize them to regulate
the CATV operation. Pursuant to E.O. No. 205, only the NTC has the authority to regulate the CATV operation, including
the fixing of subscriber rates.
Respondents counter that the Appellate Court did not commit any reversible error in rendering the assailed
Decision. First, Resolution No. 210 was enacted pursuant to Section 177(c) and (d) of Batas Pambansa Bilang 337, the
Local Government Code of 1983, which authorizes LGUs to regulate businesses. The term "businesses" necessarily
includes the CATV industry. And second, Resolution No. 210 is in the nature of a contract between petitioner and
respondents, it being a grant to the former of a franchise to operate a CATV system. To hold that E.O. No. 205 amended
14
its terms would violate the constitutional prohibition against impairment of contracts.
The petition is impressed with merit.
Earlier, we posed the question -- may a local government unit (LGU) regulate the subscriber rates charged by CATV
operators within its territorial jurisdiction? A review of pertinent laws and jurisprudence yields a negative answer.
President Ferdinand E. Marcos was the first one to place the CATV industry under the regulatory power of the national
15 16
government. On June 11, 1978, he issued Presidential Decree (P.D.) No. 1512 establishing a monopoly of the
industry by granting Sining Makulay, Inc., an exclusive franchise to operate CATV system in any place within the
Philippines. Accordingly, it terminated all franchises, permits or certificates for the operation of CATV system previously
17
granted by local governments or by any instrumentality or agency of the national government. Likewise, it prescribed the
18
subscriber rates to be charged by Sining Makulay, Inc. to its customers.
43

On July 21, 1979, President Marcos issued Letter of Instruction (LOI) No. 894 vesting upon the Chairman of the Board of
Communications direct supervision over the operations of Sining Makulay, Inc. Three days after, he issued E.O. No.
19 20 21
546 integrating the Board of Communications and the Telecommunications Control Bureau to form a single entity to
be known as the "National Telecommunications Commission." Two of its assigned functions are:
"a. Issue Certificate of Public Convenience for the operation of communications utilities and services, radio
communications systems, wire or wireless telephone or telegraph systems, radio and television broadcasting
system and other similar public utilities;
b. Establish, prescribe and regulate areas of operation of particular operators of public service communications;
and determine and prescribe charges or rates pertinent to the operation of such public utility facilities and services
except in cases where charges or rates are established by international bodies or associations of which the
Philippines is a participating member or by bodies recognized by the Philippine Government as the proper arbiter
of such charges or rates;"
Although Sining Makulay Inc.’s exclusive franchise had a life term of 25 years, it was cut short by the advent of the 1986
22
Revolution. Upon President Corazon C. Aquino’s assumption of power, she issued E.O. No. 205 opening the CATV
industry to all citizens of the Philippines. It mandated the NTC to grant Certificates of Authority to CATV operators
and to issue the necessary implementing rules and regulations.
23
On September 9, 1997, President Fidel V. Ramos issued E.O. No. 436 prescribing policy guidelines to govern CATV
operation in the Philippines. Cast in more definitive terms, it restated the NTC’s regulatory powers over CATV operations,
thus:
"SECTION 2. The regulation and supervision of the cable television industry in the Philippines shall remain
vested solely with the National Telecommunications Commission (NTC).
SECTION 3. Only persons, associations, partnerships, corporations or cooperatives, granted a Provisional
Authority or Certificate of Authority by the Commission may install, operate and maintain a cable television system
or render cable television service within a service area."
Clearly, it has been more than two decades now since our national government, through the NTC, assumed regulatory
power over the CATV industry. Changes in the political arena did not alter the trend. Instead, subsequent presidential
issuances further reinforced the NTC’s power. Significantly, President Marcos and President Aquino, in the exercise of
their legislative power, issued P.D. No. 1512, E.O. No. 546 and E.O. No. 205. Hence, they have the force and effect of
24
statutes or laws passed by Congress. That the regulatory power stays with the NTC is also clear from President Ramos’
E.O. No. 436 mandating that the regulation and supervision of the CATV industry shall remain vested "solely" in the NTC.
25
Black’s Law Dictionary defines "sole" as "without another or others." The logical conclusion, therefore, is that in light
of the above laws and E.O. No. 436, the NTC exercises regulatory power over CATV operators to the exclusion of
other bodies.
But, lest we be misunderstood, nothing herein should be interpreted as to strip LGUs of their general power to prescribe
regulations under the general welfare clause of the Local Government Code. It must be emphasized that when E.O. No.
436 decrees that the "regulatory power" shall be vested "solely" in the NTC, it pertains to the "regulatory power" over
those matters which are peculiarly within the NTC’s competence, such as, the: (1) determination of rates, (2) issuance of
"certificates of authority, (3) establishment of areas of operation, (4) examination and assessment of the legal, technical
and financial qualifications of applicant operators, (5) granting of permits for the use of frequencies, (6) regulation of
26
ownership and operation, (7) adjudication of issues arising from its functions, and (8) other similar matters. Within these
areas, the NTC reigns supreme as it possesses the exclusive power to regulate -- a power comprising varied acts, such
as "to fix, establish, or control; to adjust by rule, method or established mode; to direct by rule or restriction; or to subject
27
to governing principles or laws."
Coincidentally, respondents justify their exercise of regulatory power over petitioner’s CATV operation under the general
welfare clause of the Local Government Code of 1983. The Court of Appeals sustained their stance.
There is no dispute that respondent Sangguniang Panlungsod, like other local legislative bodies, has been empowered to
enact ordinances and approve resolutions under the general welfare clause of B.P. Blg. 337, the Local Government Code
of 1983. That it continues to posses such power is clear under the new law, R.A. No. 7160 (the Local Government Code
of 1991). Section 16 thereof provides:
"SECTION 16. General Welfare. – Every local government unit shall exercise the powers expressly granted,
those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and
effective governance, and those which are essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall ensure and support, among others, the
preservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced
ecology, encourage and support the development of appropriate and self-reliant, scientific and technological
capabilities, improve public morals, enhance economic prosperity and social justice, promote full employment
among their residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants."
In addition, Section 458 of the same Code specifically mandates:
"SECTION 458. Powers, Duties, Functions and Compensation. — (a) The Sangguniang Panlungsod, as the
legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the general
44

welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the
corporate powers of the city as provided for under Section 22 of this Code, x x x:"
28
The general welfare clause is the delegation in statutory form of the police power of the State to LGUs. Through
this, LGUs may prescribe regulations to protect the lives, health, and property of their constituents and maintain peace
and order within their respective territorial jurisdictions. Accordingly, we have upheld enactments providing, for instance,
29 30 31
the regulation of gambling, the occupation of rig drivers, the installation and operation of pinball machines, the
32 33
maintenance and operation of cockpits, the exhumation and transfer of corpses from public burial grounds, and the
34
operation of hotels, motels, and lodging houses as valid exercises by local legislatures of the police power under the
general welfare clause.
Like any other enterprise, CATV operation maybe regulated by LGUs under the general welfare clause. This is primarily
because the CATV system commits the indiscretion of crossing public properties. (It uses public properties in order to
reach subscribers.) The physical realities of constructing CATV system – the use of public streets, rights of ways, the
founding of structures, and the parceling of large regions – allow an LGU a certain degree of regulation over CATV
35
operators. This is the same regulation that it exercises over all private enterprises within its territory.
But, while we recognize the LGUs’ power under the general welfare clause, we cannot sustain Resolution No. 210. We
are convinced that respondents strayed from the well recognized limits of its power. The flaws in Resolution No. 210
are: (1) it violates the mandate of existing laws and (2) it violates the State’s deregulation policy over the CATV industry.
I.
Resolution No. 210 is an enactment of an LGU acting only as agent of the national legislature. Necessarily, its act must
reflect and conform to the will of its principal. To test its validity, we must apply the particular requisites of a valid
36
ordinance as laid down by the accepted principles governing municipal corporations.
37
Speaking for the Court in the leading case of United States vs. Abendan, Justice Moreland said: "An ordinance enacted
by virtue of the general welfare clause is valid, unless it contravenes the fundamental law of the Philippine Islands, or an
Act of the Philippine Legislature, or unless it is against public policy, or is unreasonable, oppressive, partial,
38
discriminating, or in derogation of common right." In De la Cruz vs. Paraz, we laid the general rule "that ordinances
passed by virtue of the implied power found in the general welfare clause must be reasonable, consonant with the general
powers and purposes of the corporation, and not inconsistent with the laws or policy of the State."
The apparent defect in Resolution No. 210 is that it contravenes E.O. No. 205 and E.O. No. 436 insofar as it permits
respondent Sangguniang Panlungsod to usurp a power exclusively vested in the NTC, i.e., the power to fix the subscriber
rates charged by CATV operators. As earlier discussed, the fixing of subscriber rates is definitely one of the matters within
the NTC’s exclusive domain.
In this regard, it is appropriate to stress that where the state legislature has made provision for the regulation of conduct, it
has manifested its intention that the subject matter shall be fully covered by the statute, and that a municipality, under its
39 40
general powers, cannot regulate the same conduct. In Keller vs. State, it was held that: "Where there is no express
power in the charter of a municipality authorizing it to adopt ordinances regulating certain matters which are specifically
covered by a general statute, a municipal ordinance, insofar as it attempts to regulate the subject which is completely
covered by a general statute of the legislature, may be rendered invalid. x x x Where the subject is of statewide concern,
and the legislature has appropriated the field and declared the rule, its declaration is binding throughout the State." A
41
reason advanced for this view is that such ordinances are in excess of the powers granted to the municipal corporation.
Since E.O. No. 205, a general law, mandates that the regulation of CATV operations shall be exercised by the NTC, an
LGU cannot enact an ordinance or approve a resolution in violation of the said law.
It is a fundamental principle that municipal ordinances are inferior in status and subordinate to the laws of the state. An
42
ordinance in conflict with a state law of general character and statewide application is universally held to be invalid. The
principle is frequently expressed in the declaration that municipal authorities, under a general grant of power, cannot
43
adopt ordinances which infringe the spirit of a state law or repugnant to the general policy of the state. In every power to
pass ordinances given to a municipality, there is an implied restriction that the ordinances shall be consistent with the
44
general law. In the language of Justice Isagani Cruz (ret.), this Court, in Magtajas vs. Pryce Properties Corp.,
45
Inc., ruled that:
"The rationale of the requirement that the ordinances should not contravene a statute is obvious. Municipal
governments are only agents of the national government. Local councils exercise only delegated legislative
powers conferred on them by Congress as the national lawmaking body. The delegate cannot be superior to the
principal or exercise powers higher than those of the latter. It is a heresy to suggest that the local government
units can undo the acts of Congress, from which they have derived their power in the first place, and negate by
mere ordinance the mandate of the statute.
‘Municipal corporations owe their origin to, and derive their powers and rights wholly from the legislature.
It breathes into them the breath of life, without which they cannot exist. As it creates, so it may destroy.
As it may destroy, it may abridge and control. Unless there is some constitutional limitation on the right,
the legislature might, by a single act, and if we can suppose it capable of so great a folly and so great a
wrong, sweep from existence all of the municipal corporations in the State, and the corporation could not
45

prevent it. We know of no limitation on the right so far as to the corporation themselves are concerned.
They are, so to phrase it, the mere tenants at will of the legislature.’
This basic relationship between the national legislature and the local government units has not been enfeebled by
the new provisions in the Constitution strengthening the policy of local autonomy. Without meaning to detract from
that policy, we here confirm that Congress retains control of the local government units although in significantly
reduced degree now than under our previous Constitutions. The power to create still includes the power to
destroy. The power to grant still includes the power to withhold or recall. True, there are certain notable
innovations in the Constitution, like the direct conferment on the local government units of the power to tax, which
cannot now be withdrawn by mere statute. By and large, however, the national legislature is still the
principal of the local government units, which cannot defy its will or modify or violate it."
Respondents have an ingenious retort against the above disquisition. Their theory is that the regulatory power of the
LGUs is granted by R.A. No. 7160 (the Local Government Code of 1991), a handiwork of the national lawmaking
authority. They contend that R.A. No. 7160 repealed E.O. No. 205 (issued by President Aquino). Respondents’ argument
espouses a bad precedent. To say that LGUs exercise the same regulatory power over matters which are peculiarly within
the NTC’s competence is to promote a scenario of LGUs and the NTC locked in constant clash over the appropriate
regulatory measure on the same subject matter. LGUs must recognize that technical matters concerning CATV
operation are within the exclusive regulatory power of the NTC.
At any rate, we find no basis to conclude that R.A. No. 7160 repealed E.O. No. 205, either expressly or impliedly. It is
noteworthy that R.A. No. 7160 repealing clause, which painstakingly mentions the specific laws or the parts thereof which
are repealed, does not include E.O. No. 205, thus:
"SECTION 534. Repealing Clause. — (a) Batas Pambansa Blg. 337, otherwise known as the Local Government
Code." Executive Order No. 112 (1987), and Executive Order No. 319 (1988) are hereby repealed.
(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees, orders, instructions, memoranda and
issuances related to or concerning the barangay are hereby repealed.
(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding hospital fund; Section 3, a (3) and b
(2) of Republic Act. No. 5447 regarding the Special Education Fund; Presidential Decree No. 144 as amended by
Presidential Decree Nos. 559 and 1741; Presidential Decree No. 231 as amended; Presidential Decree No. 436
as amended by Presidential Decree No. 558; and Presidential Decree Nos. 381, 436, 464, 477, 526, 632, 752,
and 1136 are hereby repealed and rendered of no force and effect.
(d) Presidential Decree No. 1594 is hereby repealed insofar as it governs locally-funded projects.
(e) The following provisions are hereby repealed or amended insofar as they are inconsistent with the provisions
of this Code: Sections 2, 16, and 29 of Presidential Decree No. 704; Section 12 of Presidential Decree No. 87, as
amended; Sections 52, 53, 66, 67, 68, 69, 70, 71, 72, 73, and 74 of Presidential Decree No. 463, as amended;
and Section 16 of Presidential Decree No. 972, as amended, and
(f) All general and special laws, acts, city charters, decrees, executive orders, proclamations and administrative
regulations, or part or parts thereof which are inconsistent with any of the provisions of this Code are hereby
repealed or modified accordingly."
Neither is there an indication that E.O. No. 205 was impliedly repealed by R.A. No. 7160. It is a settled rule that implied
repeals are not lightly presumed in the absence of a clear and unmistakable showing of such intentions. In Mecano vs.
46
Commission on Audit, we ruled:
"Repeal by implication proceeds on the premise that where a statute of later date clearly reveals an intention on
the part of the legislature to abrogate a prior act on the subject, that intention must be given effect. Hence, before
there can be a repeal, there must be a clear showing on the part of the lawmaker that the intent in enacting the
new law was to abrogate the old one. The intention to repeal must be clear and manifest; otherwise, at least, as a
general rule, the later act is to be construed as a continuation of, and not a substitute for, the first act and will
continue so far as the two acts are the same from the time of the first enactment."
As previously stated, E.O. No. 436 (issued by President Ramos) vests upon the NTC the power to regulate the CATV
operation in this country. So also Memorandum Circular No. 8-9-95, the Implementing Rules and Regulations of R.A. No.
7925 (the "Public Telecommunications Policy Act of the Philippines"). This shows that the NTC’s regulatory power over
CATV operation is continuously recognized.
It is a canon of legal hermeneutics that instead of pitting one statute against another in an inevitably destructive
confrontation, courts must exert every effort to reconcile them, remembering that both laws deserve a becoming respect
47
as the handiwork of coordinate branches of the government. On the assumption of a conflict between E.O. No. 205 and
R.A. No. 7160, the proper action is not to uphold one and annul the other but to give effect to both by harmonizing them if
possible. This recourse finds application here. Thus, we hold that the NTC, under E.O. No. 205, has exclusive jurisdiction
over matters affecting CATV operation, including specifically the fixing of subscriber rates, but nothing herein precludes
LGUs from exercising its general power, under R.A. No. 7160, to prescribe regulations to promote the health, morals,
peace, education, good order or safety and general welfare of their constituents. In effect, both laws become equally
effective and mutually complementary.
46

The grant of regulatory power to the NTC is easily understandable. CATV system is not a mere local concern. The
complexities that characterize this new technology demand that it be regulated by a specialized agency. This is
48
particularly true in the area of rate-fixing. Rate fixing involves a series of technical operations. Consequently, on the
hands of the regulatory body lies the ample discretion in the choice of such rational processes as might be appropriate to
the solution of its highly complicated and technical problems. Considering that the CATV industry is so technical a field,
we believe that the NTC, a specialized agency, is in a better position than the LGU, to regulate it. Notably, in United
49
States vs. Southwestern Cable Co., the US Supreme Court affirmed the Federal Communications Commission’s
(FCC’s) jurisdiction over CATV operation. The Court held that the FCC’s authority over cable systems assures the
preservation of the local broadcast service and an equitable distribution of broadcast services among the various regions
of the country.
II.
Resolution No. 210 violated the State’s deregulation policy.
50
Deregulation is the reduction of government regulation of business to permit freer markets and competition. Oftentimes,
the State, through its regulatory agencies, carries out a policy of deregulation to attain certain objectives or to address
certain problems. In the field of telecommunications, it is recognized that many areas in the Philippines are still "unserved"
or "underserved." Thus, to encourage private sectors to venture in this field and be partners of the government in
stimulating the growth and development of telecommunications, the State promoted the policy of deregulation.
In the United States, the country where CATV originated, the Congress observed, when it adopted the
Telecommunications Act of 1996, that there was a need to provide a pro-competitive, deregulatory national policy
framework designed to accelerate rapidly private sector deployment of advanced telecommunications and information
technologies and services to all Americans by opening all telecommunications markets to competition. The FCC has
adopted regulations to implement the requirements of the 1996 Act and the intent of the Congress.
Our country follows the same policy. The fifth Whereas Clause of E.O. No. 436 states:
"WHEREAS, professionalism and self-regulation among existing operators, through a nationally recognized cable
television operator’s association, have enhanced the growth of the cable television industry and must therefore be
maintained along with minimal reasonable government regulations;"
This policy reaffirms the NTC’s mandate set forth in the Memorandum dated August 25, 1989 of Commissioner Jose Luis
A. Alcuaz, to wit:
"In line with the purpose and objective of MC 4-08-88, Cable Television System or Community Antenna Television
(CATV) is made part of the broadcast media to promote the orderly growth of the Cable Television Industry it
being in its developing stage. Being part of the Broadcast Media, the service rates of CATV are likewise
considered deregulated in accordance with MC 06-2-81 dated 25 February 1981, the implementing guidelines for
the authorization and operation of Radio and Television Broadcasting stations/systems.
Further, the Commission will issue Provisional Authority to existing CATV operators to authorize their operations
for a period of ninety (90) days until such time that the Commission can issue the regular Certificate of Authority."
When the State declared a policy of deregulation, the LGUs are bound to follow. To rule otherwise is to render the State’s
policy ineffective. Being mere creatures of the State, LGUs cannot defeat national policies through enactments of contrary
measures. Verily, in the case at bar, petitioner may increase its subscriber rates without respondents’ approval.
At this juncture, it bears emphasizing that municipal corporations are bodies politic and corporate, created not only as
51
local units of local self-government, but as governmental agencies of the state. The legislature, by establishing a
municipal corporation, does not divest the State of any of its sovereignty; absolve itself from its right and duty to
administer the public affairs of the entire state; or divest itself of any power over the inhabitants of the district which it
52
possesses before the charter was granted.
Respondents likewise argue that E.O. No. 205 violates the constitutional prohibition against impairment of contracts,
Resolution No. 210 of Batangas City Sangguniang Panlungsod being a grant of franchise to petitioner.
We are not convinced.
There is no law specifically authorizing the LGUs to grant franchises to operate CATV system. Whatever authority the
LGUs had before, the same had been withdrawn when President Marcos issued P.D. No. 1512 "terminating all franchises,
permits or certificates for the operation of CATV system previously granted by local governments." Today, pursuant to
Section 3 of E.O. No. 436, "only persons, associations, partnerships, corporations or cooperatives granted a Provisional
Authority or Certificate of Authority by the NTC may install, operate and maintain a cable television system or render cable
television service within a service area." It is clear that in the absence of constitutional or legislative authorization,
53
municipalities have no power to grant franchises. Consequently, the protection of the constitutional provision as to
impairment of the obligation of a contract does not extend to privileges, franchises and grants given by a municipality in
54
excess of its powers, or ultra vires.
One last word. The devolution of powers to the LGUs, pursuant to the Constitutional mandate of ensuring their autonomy,
has bred jurisdictional tension between said LGUs and the State. LGUs must be reminded that they merely form part of
the whole. Thus, when the Drafters of the 1987 Constitution enunciated the policy of ensuring the autonomy of local
55
governments, it was never their intention to create an imperium in imperio and install an intra-sovereign political
subdivision independent of a single sovereign state.
47

WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals dated February 12, 1999 as well
as its Resolution dated May 26, 1999 in CA-G.R. CV No. 52461, are hereby REVERSED. The RTC Decision in Civil Case
No. 4254 is AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
Davide, Jr., Puno, Panganiban, Quisumbing, Ynares-Santiago, Carpio, Austria-Martinez, Corona, Carpio Morales, Callejo,
Sr., Azcuna, Tinga, and Chico-Nazario*, JJ., concur.
Footnotes
14
Section 10. Article III of the 1987 Constitution provides that: "No law impairing the obligation of contracts shall
be passed."
15
The fourth Whereas Clause of P.D. 1512 reads:
"WHEREAS, because of technological advances in equipment and facilities, CATV systems have
acquired a more significant role in the socio-political life of the nation, requiring the exercise of regulatory
power by the national government."
16
"Decree Creating an Exclusive Franchise to Construct, Operate and Maintain a Community Antenna Television
System in the Philippines in favor of Sining Makulay, Incorporated."
19
"Creating a Ministry of Public Works and a Ministry of Transportation and Communications."
20
Created under Article III, Chapter I, Part X of the Integrated Reorganization Plan, as amended.
21
Created under Article IX, id.
22
Dated June 30, 1987.
23
"Prescribing Policy Guidelines to Govern the Operations of Cable Television in the Philippines."
24
Miners Association of the Philippines vs. Factoran, G.R. No. 98332, January 16, 1995, 240 SCRA 100.
25
Sixth Edition at 1391.
26
See National Telecommunications Commission Practices & Procedures Manual, April 27,1992; PLDT vs.
National Telecommunication Commission, G.R. No. 94374, February 21, 1995, 241 SCRA 486.
27
Black’s Law Dictionary, Sixth Edition at 1286.
28
US vs. Salaveria, 39 Phil. 102 (1918).
29
Id.
30
People vs. Felisarta, G.R. No. 15346, June 29, 1962, 5 SCRA 389.
31
Miranda vs. City of Manila, G.R. Nos. L-17252 & L-17276, May 31, 1961, 2 SCRA 613.
32
Chief of the Philippine Constabulary vs. Sabungan Bagong Silang, Inc., G.R. No. L-22609, February 28, 1966,
16 SCRA 336; Chief of P.C. vs. Judge of CFI of Rizal, G.R. Nos. L-22308 & L-22343-4, March 31, 1966, 16
SCRA 607.
33
Viray vs. City of Caloocan, G.R. No. L-23118, July 26, 1967, 20 SCRA 791.
34
Ermita-Malate Hotel and Motel Operators Association, Inc. vs. City Mayor of Manila¸ G.R. No. L-24693, July 31,
1967, 20 SCRA 849.
35
See New York State Commission on Cable Television vs. Federal Communication Commission.
36
According to Elliot, a municipal ordinance, to be valid: 1) must not contravene the Constitution or any
statute; 2) must not be unfair or oppressive; 3) must not be partial or discriminatory; 4) must not prohibit but may
regulate trade; 5) must not be unreasonable; and 6) must be general and consistent with public policy. The
Solicitor General vs. The Metropolitan Manila Authority, G.R. No. 102782, December 11, 1991, 204 SCRA 837.
Though designated as resolution, Resolution No. 210 is actually an ordinance as it concerns a subject
that is inherently legislative in character, 37 Am. Jur. p. 667. Dillon comments, thus: "A resolution
concerning a subject which is inherently legislative in its character and for which an ordinance is required,
will, if adopted with all the formalities required in the case of an ordinance, be regarded as an ordinance
and given effect accordingly. The substance, and not the form, of the corporate act is what governs.
Dillon, Municipal Corporations, 5th ed., Vol. II, pp. 594-897