City of General Santos vs.

Commission on Audit
G.R. No. 199439
April 22, 2014

Statement of the Case:

This is a special civil action for certiorari filed by the city of General Santos
asking to find grave abuse of discretion on the part of the Commission on Audit (COA)
which affirmed the findings of its Legal Services Sector in its Opinion No. 2010-021
declaring Ordinance No. 08, series of 2009, as illegal.

Statement of the fact:

Then mayor of General Santos City, Pedro B. Acharon, Jr., issued Executive
Order No. 40, series of 2008, creating management teams pursuant to its organization
development program.
Mayor Pedro B. Acharon, Jr. declared the city’s byword of Total Quality Service
in his state of the city address in 2005. This was followed by Resolution No. 004, series
of 2009, requesting for the mayors support for GenSan SERVES, an early retirement
program to be proposed to the Sangguniang Panlungsod.
Ordinance No. 08, series of 2009, was passed together with its implementing rules
and regulations, designed "to entice those employees who were unproductive due to
health reasons to avail of the incentives being offered therein by way of early retirement
package."
This contextual background in the passing of Ordinance No. 08, series of 2009,
was not contested by respondent Commission on Audit.
In response to the endorsement of the city audit team leader, respondent
Commission’s regional director agreed that the grant lacked legal basis and was contrary
to the Government Service Insurance System (GSIS) Act. He forwarded the matter to
respondent Commission’s Office of General Counsel, Legal Services Sector.
The Office of General Counsel issued COA-LSS Opinion No. 2010-021.
Respondent Commission on Audit observed that GenSan SERVES was not based on a
law passed by Congress but on ordinances and resolutions passed and approved by the
Sangguniang Panlungsod and Executive Orders by the city mayor. Moreover, nowhere in
Section 76 of Republic Act No. 7160, otherwise known as the Local Government Code,
does it provide a specific power for local government units to establish an early
retirement program.

Issue:
Whether or not respondent Commission on Audit committed grave abuse of
discretion when it considered Ordinance No. 08, series of 2009, in the nature of an early
retirement program requiring a law authorizing it for its validity.

Held:
The petition is partially granted.
Designing and implementing a local government units own organizational
structure and staffing pattern also implies the power to revise and reorganize. Without
such power, local governments will lose the ability to adjust to the needs of its
constituents. Effective and efficient governmental services especially at the local
government level require rational and deliberate changes planned and executed in good
faith from time to time.
This was implied in Province of Negros Occidental v. Commissioners,
Commission on Audit. In that case, this court declared as valid the ordinance passed by
the province granting and releasing hospitalization and health care insurance benefits to
its officials and employees. This court held that Section 2 of Administrative Order No.
10354 requiring the Presidents prior approval before the grant of any allowance or benefit
is applicable only to offices under the executive branch. Section 2 does not mention local
government units, thus, the prohibition does not apply to them. This court then referred to
the policy of local autonomy as follows:
Thus, consistent with the state policy of local autonomy as guaranteed by the
1987 Constitution, under Section 25, Article II and Section 2, Article X, and the Local
Government Code of 1991, we declare that the grant and release of the hospitalization
and health care insurance benefits given to petitioners officials and employees were
validly enacted through an ordinance passed by petitioners Sangguniang Panlalawigan.
Local autonomy allows an interpretation of Sections 76 and 16 as granting
petitioner city the authority to create its organization development program.
Resolution No. 004, series of 2009, was later passed requesting for the mayors
support for GenSan SERVES. The third preambular clause states that in order to
transform the bureaucracy into an effective and results oriented structure, redounding to
improved governance, there is a need to entice employees aged 50-59 years old, to retire
earlier than age 65 for them to enjoy their retirement while they are still healthy.
Consequently, Ordinance No. 08, series of 2009, was passed creating the GenSan
SERVES program.

Doctrine/s:
Grave abuse of discretion is meant such capricious and whimsical exercise of judgment
as is equivalent to lack of jurisdiction. Mere abuse of discretion is not enough. It must be
grave abuse of discretion as when the power is exercised in an arbitrary or despotic
manner by reason of passion or personal hostility, and must be so patent and so gross as
to amount to an evasion of a positive duty or to a virtual refusal to perform the duty
enjoined or to act at all in contemplation of law.
 FERRER vs. BAUTISTA
G.R. No. 210551
June 30, 2015

Statement of the Case:

This is a petition for certiorari under Rule 65 of the Rules of Court with prayer
for the issuance of a temporary restraining order (TRO) seeking to declare
unconstitutional and illegal Ordinance Nos. SP-2095, S-2011 and SP-2235, S-2013 on the
Socialized Housing Tax and Garbage Fee, respectively, which are being imposed by the
respondents.

Statement of the Facts:

On October 17, 2011, respondent Quezon City Council enacted Ordinance No.
SP-2095, S-2011, or the Socialized Housing Tax of Quezon City.
Effective for five years, the Socialized Housing Tax (SHT) shall be utilized by
the Quezon City Government for the following projects: (a) land purchase/land banking;
(b) improvement of current/existing socialized housing facilities; (c) land development;
(d) construction of core houses, sanitary cores, medium-rise buildings and other similar
structures; and (e) financing of public-private partnership agreement of the Quezon City
Government and National Housing Authority (NHA) with the private sector.
On the other hand, Ordinance No. SP-2235, S-20135 was enacted on December
16, 2013 and took effect ten days after when it was approved by respondent City Mayor.
The proceeds collected from the garbage fees on residential properties shall be deposited
solely and exclusively in an earmarked special account under the general fund to be
utilized for garbage collections.
The collection of the garbage fee shall accrue on the first day of January and
shall be paid simultaneously with the payment of the real property tax, but not later than
the first quarter installment. In case a household owner refuses to pay, a penalty of 25%
of the garbage fee due, plus an interest of 2% per month or a fraction thereof, shall be
charged.
Issue/s:
1. Whether or not Ordinance No. SP-2095, S-2011, or the “Socialized Housing Tax of
Quezon City,” is constitutional and legal.
2. Whether or not Ordinance No. SP-2235, S-2013, which collects an annual garbage
fee on all domestic households in Quezon City, is constitutional and legal.

Ruling:
Per Section 5, Article X of the 1987 Constitution, “the power to tax is no longer
vested exclusively on Congress; local legislative bodies are now given direct authority to
levy taxes, fees and other charges.” Nevertheless, such authority is “subject to such
guidelines and limitations as the Congress may provide.”
The SHT charged by the Quezon City Government is a tax which is within its
power to impose. Aside from the specific authority vested by Section 43 of the UDHA,
cities are allowed to exercise such other powers and discharge such other functions and
responsibilities as are necessary, appropriate, or incidental to efficient and effective
provision of the basic services and facilities which include, among others, programs and
projects for low-cost housing and other mass dwellings. The collections made accrue to
its socialized housing programs and projects. The tax is not a pure exercise of taxing
power or merely to raise revenue; it is levied with a regulatory purpose. The levy is
primarily in the exercise of the police power for the general welfare of the entire city. It is
greatly imbued with public interest. Removing slum areas in Quezon City is not only
beneficial to the underprivileged and homeless constituents but advantageous to the real
property owners as well. The situation will improve the value of the their property
investments, fully enjoying the same in view of an orderly, secure, and safe community,
and will enhance the quality of life of the poor, making them law-abiding constituents
and better consumers of business products.
Under R.A. No. 9003, it is the declared policy of the State to adopt a systematic,
comprehensive and ecological solid waste management program which shall, among
others, ensure the proper segregation, collection, transport, storage, treatment and
disposal of solid waste through the formulation and adoption of the best environmental
practices in ecological waste management.

Doctrine/s:
Police power proceeds from the principle that every holder of property, however
absolute and unqualified may be his title, holds it under the implied liability that his use
of it shall not be injurious to the equal enjoyment of others having an equal right to the
enjoyment of their property, nor injurious to the right of the community. Rights of
property, like all other social and conventional rights, are subject to reasonable
limitations in their enjoyment as shall prevent them from being injurious, and to such
reasonable restraints and regulations established by law as the legislature, under the
governing and controlling power vested in them by the constitution, may think necessary
and expedient.
Police power, which flows from the recognition that salus populi est suprema lex
(the welfare of the people is the supreme law), is the plenary power vested in the
legislature to make statutes and ordinances to promote the health, morals, peace,
education, good order or safety and general welfare of the people. Property rights of
individuals may be subjected to restraints and burdens in order to fulfill the objectives of
the government in the exercise of police power. In this jurisdiction, it is well-entrenched
that taxation may be made the implement of the state’s police power.
Equal protection requires that all persons or things similarly situated should be
treated alike, both as to rights conferred and responsibilities imposed. The guarantee
means that no person or class of persons shall be denied the same protection of laws
which is enjoyed by other persons or other classes in like circumstances. Similar subjects
should not be treated differently so as to give undue favor to some and unjustly
discriminate against others. The law may, therefore, treat and regulate one class
differently from another class provided there are real and substantial differences to
distinguish one class from another.
 Land Transportation Office vs. City Of Butuan
G.R. No. 131512
January 20, 2000

Statement of the Case:

This is an instant petition for review on certiorari to annul and set aside the
decision, 4 dated 17 November 1997, of the Court of Appeals affirming the permanent
injunctive writ order of the Regional Trial Court (Branch 2) of Butuan City.

Statement of the Fact:

The Regional Trial Court (Branch 2) of Butuan City held that the authority to
register tricycles, the grant of the corresponding franchise, the issuance of tricycle drivers'
license, and the collection of fees therefor had all been vested in the Local Government
Units ("LGUs"). Accordingly, it decreed the issuance of a permanent writ of injunction
against LTO, prohibiting and enjoining LTO, as well as its employees and other persons
acting in its behalf, from (a) registering tricycles and (b) issuing licenses to drivers of
tricycles. The Court of Appeals, on appeal to it, sustained the trial court.
The adverse rulings of both the court a quo and the appellate court prompted the
LTO to file the instant petition for review on certiorari to annul and set aside the
decision,4 dated 17 November 1997, of the Court of Appeals affirming the permanent
injunctive writ order of the Regional Trial Court (Branch 2) of Butuan City.
Respondent City of Butuan asserts that one of the salient provisions introduced by
the Local Government Code is in the area of local taxation which allows LGUs to collect
registration fees or charges along with, in its view, the corresponding issuance of all
kinds of licenses or permits for the driving of tricycles.
The Sangguniang Panglungsod ("SP") of Butuan, on 16 August 1992, passed SP
Ordinance No. 916-92. The ordinance provided for, among other things, the payment of
franchise fees for the grant of the franchise of tricycles-for-hire, fees for the registration
of the vehicle, and fees for the issuance of a permit for the driving thereof.
Issue:
Whether or not under the present set up the power of the Land Registration Office
("LTO") to register, tricycles in particular, as well as to issue licenses for the driving
thereof, has likewise devolved to local government units.

Ruling:
The petition is impressed with merit.
The Department of Transportation and Communications9 ("DOTC"), through the
LTO and the LTFRB, has since been tasked with implementing laws pertaining to land
transportation. The LTO is a line agency under the DOTC whose powers and functions,
pursuant to Article III, Section 4 (d) [1],10 of R.A. No. 4136, otherwise known as Land
Transportation and Traffic Code, as amended, deal primarily with the registration of all
motor vehicles and the licensing of drivers thereof. The LTFRB, upon the other hand, is
the governing body tasked by E.O. No. 202, dated 19 June 1987, to regulate the operation
of public utility or "for hire" vehicles and to grant franchises or certificates of public
convenience ("CPC"). Finely put, registration and licensing functions are vested in the
LTO while franchising and regulatory responsibilities had been vested in the LTFRB.
LGUs indubitably now have the power to regulate the operation of tricycles-for-
hire and to grant franchises for the operation thereof. "To regulate" means to fix,
establish, or control; to adjust by rule, method, or established mode; to direct by rule or
restriction; or to subject to governing principles or laws. A franchise is defined to be a
special privilege to do certain things conferred by government on an individual or
corporation, and which does not belong to citizens generally of common right. On the
other hand, "to register" means to record formally and exactly, to enroll, or to enter
precisely in a list or the like, and a "driver's license" is the certificate or license issued by
the government which authorizes a person to operate a motor vehicle. The devolution of
the functions of the DOTC, performed by the LTFRB, to the LGUs, as so aptly observed
by the Solicitor General, is aimed at curbing the alarming increase of accidents in
national highways involving tricycles. It has been the perception that local governments
are in good position to achieve the end desired by the law-making body because of their
proximity to the situation that can enable them to address that serious concern better than
the national government.
It may not be amiss to state, nevertheless, that under Article 458 (a)[3-VI] of the
Local Government Code, the power of LGUs to regulate the operation of tricycles and to
grant franchises for the operation thereof is still subject to the guidelines prescribed by
the DOTC.

Doctrines/s:
Police power and taxation, along with eminent domain, are inherent powers of
sovereignty which the State might share with local government units by delegation given
under a constitutional or a statutory fiat. All these inherent powers are for a public
purpose and legislative in nature but the similarities just about end there. The basic aim of
police power is public good and welfare. Taxation, in its case, focuses the power of
government to raise revenue in order to support its existence and carry out its legitimate
objectives. Although correlative to each other in many respects, the grant of one does not
necessarily carry with it the grant of the other. The two powers are, by tradition and
jurisprudence, separate and distinct powers, varying in their respective concepts,
character, scopes and limitations.
 Pimentel vs. Ochoa
G.R. No. 195770
July 17, 2012

Statement of the Case:

This is a petition for certiorari and prohibition is the constitutionality of certain
provisions of Republic Act No. 10147 or the General Appropriations Act (GAA) of
20111 which provides a P21 Billion budget allocation for the Conditional Cash Transfer
Program (CCTP) headed by the Department of Social Welfare & Development (DSWD).
Petitioners seek to enjoin respondents Executive Secretary Paquito N. Ochoa and DSWD
Secretary Corazon Juliano-Soliman from implementing the said program on the ground
that it amounts to a "recentralization" of government functions that have already been
devolved from the national government to the local government units.

Statement of the Facts:

The DSWD embarked on a poverty reduction strategy with the poorest of the poor
as target beneficiaries. Dubbed "Ahon Pamilyang Pilipino," it was pre-pilot tested in the
municipalities of Sibagat and Esperanza in Agusan del Sur; the municipalities of Lopez
Jaena and Bonifacio in Misamis Occidental, the Caraga Region; and the cities of Pasay
and Caloocan upon the release of the amount of P50 Million Pesos under a Special
Allotment Release Order (SARO) issued by the Department of Budget and Management.
The DSWD issued Administrative Order No. 16, series of 2008 (A.O. No. 16, s.
2008), setting the implementing guidelines for the project renamed "Pantawid Pamilyang
Pilipino Program" (4Ps). This government intervention scheme, also conveniently
referred to as CCTP, "provides cash grant to extreme poor households to allow the
members of the families to meet certain human development goals.
A Memorandum of Agreement (MOA) executed by the DSWD with each
participating LGU outlines in detail the obligation of both parties during the intended
five-year implementation of the CCTP.
 Congress, for its part, sought to ensure the success of the CCTP by providing it
with funding under the GAA. This budget allocation increased tremendously to P5
Billion Pesos in 2009, with the amount doubling to P10 Billion Pesos in 2010. But the
biggest allotment given to the CCTP was in the GAA of 2011 at Twenty One Billion One
Hundred Ninety-Four Million One Hundred Seventeen Thousand Pesos
(P21,194,117,000.00).

Issue:
Whether or not the CCTP budget allocation under the DSWD in the GAA FY
2011 violates Art. II, Sec. 25 & Art. X, Sec. 3 of the 1987 constitution in relation to Sec.
17 of the Local Government Code of 1991 by providing for the recentralization of the
National Government in the delivery of basic services already devolved to the LGUs.

Ruling:
The petition is hereby dismissed.
Under the Philippine concept of local autonomy, the national government has not
completely relinquished all its powers over local governments, including autonomous
regions. Only administrative powers over local affairs are delegated to political
subdivisions. The purpose of the delegation is to make governance more directly
responsive and effective at the local levels. In turn, economic, political and social
development at the smaller political units are expected to propel social and economic
growth and development. But to enable the country to develop as a whole, the programs
and policies effected locally must be integrated and coordinated towards a common
national goal. Thus, policy-setting for the entire country still lies in the President and
Congress.
Every law has in its favor the presumption of constitutionality, and to justify its
nullification, there must be a clear and unequivocal breach of the Constitution, not a
doubtful and argumentative one.

Doctrine/s:
 There is decentralization of administration when the central government delegates
administrative powers to political subdivisions in order to broaden the base of
government power and in the process to make local governments ‘more responsive and
accountable’ and ‘ensure their fullest development as self-reliant communities and make
them more effective partners in the pursuit of national development and social progress.’
At the same time, it relieves the central government of the burden of managing local
affairs and enables it to concentrate on national concerns. The President exercises
‘general supervision’ over them, but only to ‘ensure that local affairs are administered
according to law.’ He has no control over their acts in the sense that he can substitute
their judgments with his own.
Decentralization of power, on the other hand, involves an abdication of political power in
the favor of local governments units declared to be autonomous. In that case, the
autonomous government is free to chart its own destiny and shape its future with
minimum intervention from central authorities.

Mandanas Vs. Ochoa

 G.R. No. 208488
July 3, 2018

Statement of the Case:

G.R. No. 199802 (Mandanas, et al.) is a special civil action for certiorari,
prohibition and mandamus assailing the manner the General Appropriations Act (GAA)
for FY 2012 computed the IRA for the LGUs.

Statement of the Facts:

I mplementing the constitutional mandate for decentralization and local autonomy,
Congress enacted Republic Act No. 7160, otherwise known as the Local Government
Code (LGC).
Provided, That in the event that the National Government incurs an unmanageable
public sector deficit, the President of the Philippines is hereby authorized, upon the
recommendation of Secretary of Finance, Secretary of Interior and Local Government,
and Secretary of Budget and Management, and subject to consultation with the presiding
officers of both Houses of Congress and the presidents of the "liga", to make the
necessary adjustments in the internal revenue allotment of local government units but in
no case shall the allotment be less than thirty percent (30%) of the collection of national
internal revenue taxes of the third fiscal year preceding the current fiscal year: Provided,
further, That in the first year of the effectivity of this Code, the local government units
shall, in addition to the thirty percent (30%) internal revenue allotment which shall
include the cost of devolved functions for essential public services, be entitled to receive
the amount equivalent to the cost of devolved personal services.
The share of the LGUs, heretofore known as the Internal Revenue Allotment
(IRA), has been regularly released to the LGUs. According to the implementing rules and
regulations of the LGC, the IRA is determined on the basis of the actual collections of the
National Internal Revenue Taxes (NIRTs) as certified by the Bureau of Internal Revenue
(BIR).
Mandanas, et al. allege herein that certain collections of NIRTs by the Bureau of Customs
(BOC) – specifically: excise taxes, value added taxes (VATs) and documentary stamp
taxes (DSTs) – have not been included in the base amounts for the computation of the
IRA; that such taxes, albeit collected by the BOC, should form part of the base from
which the IRA should be computed because they constituted NIRTs.
In G.R. No. 208488, Congressman Enrique Garcia, Jr., the lone petitioner, seeks
the writ of mandamus to compel the respondents thereat to compute the just share of the
LGUs on the basis of all national taxes.

Issues:
1. Whether or not mandamus is the proper vehicle to assail the constitutionality of the
relevant provisions of the GAA and the LGC;
2. Whether or not Section 284 of the LGC is unconstitutional for being repugnant to
Section 6, Article X of the 1987 Constitution;

Ruling:
The petitions are partly meritorious.
1. Mandanas, et al. seek the writs of certiorari, prohibition and mandamus, while Garcia
prays for the writ of mandamus. Both groups of petitioners impugn the validity of Section
284 of the LGC.
The remedy of mandamus is defined in Section 3, Rule 65 of the Rules of Court.
2. Section 6, Article X the 1987 Constitution textually commands the allocation to the
LGUs of a just share in the national taxes.
Congress has sought to carry out the second mandate of Section 6 by enacting Section
284, Title III (Shares of Local Government Units in the Proceeds of National Taxes), of
the LGC.
Although the power of Congress to make laws is plenary in nature, congressional
lawmaking remains subject to the limitations stated in the 1987 Constitution. The phrase
national internal revenue taxes engrafted in Section 284 is undoubtedly more restrictive
than the term national taxes written in Section 6. As such, Congress has actually departed
from the letter of the 1987 Constitution stating that national taxes should be the base from
which the just share of the LGU comes. Such departure is impermissible. Verba legis non
est recedendum (from the words of a statute there should be no departure). Equally
impermissible is that Congress has also thereby curtailed the guarantee of fiscal
autonomy in favor of the LGUs under the 1987 Constitution.
In view of the foregoing enumeration of what are the national internal revenue taxes,
Section 284 has effectively deprived the LGUs from deriving their just share from other
national taxes, like the customs duties.
It is clear from the foregoing clarification that the exclusion of other national taxes like
customs duties from the base for determining the just share of the LGUs contravened the
express constitutional edict in Section 6, Article X the 1987 Constitution.
Still, the OSG posits that Congress can manipulate, by law, the base of the allocation of
the just share in the national taxes of the LGUs.
The position of the OSG cannot be sustained. Although it has the primary discretion to
determine and fix the just share of the LGUs in the national taxes (e.g., Section 284 of the
LGC), Congress cannot disobey the express mandate of Section 6, Article X of the 1987
Constitution for the just share of the LGUs to be derived from the national taxes. The
phrase as determined by law in Section 6 follows and qualifies the phrase just share, and
cannot be construed as qualifying the succeeding phrase in the national taxes. The intent
of the people in respect of Section 6 is really that the base for reckoning the just share of
the LGUs should includes all national taxes. To read Section 6 differently as requiring
that the just share of LGUs in the national taxes shall be determined by law is tantamount
to the unauthorized revision of the 1987 Constitution.

Doctrine/s:
The constitutional mandate to ensure local autonomy refers to decentralization.20 In its
broad or general sense, decentralization has two forms in the Philippine setting, namely:
the decentralization of power and the decentralization of administration. The
decentralization of power involves the abdication of political power in favor of the
autonomous LGUs as to grant them the freedom to chart their own destinies and to shape
their futures with minimum intervention from the central government. This amounts to
self-immolation because the autonomous LGUs thereby become accountable not to the
central authorities but to their constituencies. On the other hand, the decentralization of
administration occurs when the central government delegates administrative powers to
the LGUs as the means of broadening the base of governmental powers and of making
the LGUs more responsive and accountable in the process, and thereby ensure their
fullest development as self-reliant communities and more effective partners in the pursuit
of the goals of national development and social progress. This form of decentralization
further relieves the central government of the burden of managing local affairs so that it
can concentrate on national concerns.