[G.R. No. 125646.
 September 10, 1999] To begin with, we agree with the position of the COMELEC that Civil Case No. 94-3006 involving the boundary
CITY OF PASIG, petitioner, vs. THE HONORABLE COMMISSION ON ELECTION and THE
MUNICIPALITY OF CAINTA, PROVINCE OF RIZAL, respondents.
[G.R. No. 128663. September 10, 1999]
MUNICIPALITY OF CAINTA, PROVINCE OF RIZAL, petitioner, vs. COMMISSION ON ELECTIONS
CITY OF PASIG, respondent.
DECISION
YNARES-SANTIAGO, J.:
Before us are two (2) petitions which both question the propriety of the suspension of plebiscite proceedings pending
the resolution of the issue of boundary disputes between the Municipality of Cainta and the City of Pasig.
G.R. No. 125646 involves the proposed Barangay Karangalan while G.R. No. 128663 involves the proposed
Barangay Napico. The City of Pasig claims these areas as part of its jurisdiction/territory while the Municipality of
Cainta claims that these proposed barangays encroached upon areas within its own jurisdiction/territory.
The antecedent facts are as follows:
On April 22, 1996, upon petition of the residents of Karangalan Village that they be segregated from its mother
Barangays Manggahan and Dela Paz, City of Pasig, and to be converted and separated into a distinct barangay to be
known as Barangay Karangalan, the City Council of Pasig passed and approved Ordinance No. 21, Series of 1996,
creating Barangay Karangalan in Pasig City.[1]Plebiscite on the creation of said barangay was thereafter set for June
22, 1996.
Meanwhile, on September 9, 1996, the City of Pasig similarly issued Ordinance No. 52, Series of 1996, creating
Barangay Napico in Pasig City.[2] Plebiscite for this purpose was set for March 15, 1997.
Immediately upon learning of such Ordinances, the Municipality of Cainta moved to suspend or cancel the
respective plebiscites scheduled, and filed Petitions with the Commission on Elections (hereinafter referred to as
COMELEC) on June 19, 1996 (UND No. 96-016)[3] and March 12, 1997 (UND No. 97-002), respectively. In both
Petitions, the Municipality of Cainta called the attention of the COMELEC to a pending case before the Regional
Trial Court of Antipolo, Rizal, Branch 74, for settlement of boundary dispute.[4] According to the Municipality of
Cainta, the proposed barangays involve areas included in the boundary dispute subject of said pending case; hence,
the scheduled plebiscites should be suspended or cancelled until after the said case shall have been finally decided
by the court.
In UND No. 96-016, the COMELEC accepted the position of the Municipality of Cainta and ordered the plebiscite
on the creation of Barangay Karangalan to be held in abeyance until after the court has settled with finality the
boundary dispute involving the two municipalities.[5] Hence, the filing of G.R. No. 125646 by the City of Pasig.
The COMELEC, however, ruled differently in UND No. 97-002, dismissing the Petition for being moot in view of
the holding of the plebiscite as scheduled on March 15, 1997 where the creation of Barangay Napico was ratified
and approved by the majority of the votes cast therein.[6] Hence, the filing of G.R. No. 128663 by the Municipality
of Cainta.
The issue before us is whether or not the plebiscites scheduled for the creation of Barangays Karangalan and Napico
should be suspended or cancelled in view of the pending boundary dispute between the two local governments.
dispute between the Municipality of Cainta and the City of Pasig presents a prejudicial question which must first be
decided before plebiscites for the creation of the proposed barangays may be held.
The City of Pasig argues that there is no prejudicial question since the same contemplates a civil and criminal action
and does not come into play where both cases are civil, as in the instant case. While this may be the general rule, this
Court has held in Vidad v. RTC of Negros Oriental, Br. 42,[7] that, in the interest of good order, we can very well
suspend action on one case pending the final outcome of another case closely interrelated or linked to the first.
In the case at bar, while the City of Pasig vigorously claims that the areas covered by the proposed Barangays
Karangalan and Napico are within its territory, it can not deny that portions of the same area are included in the
boundary dispute case pending before the Regional Trial Court of Antipolo. Surely, whether the areas in controversy
shall be decided as within the territorial jurisdiction of the Municipality of Cainta or the City of Pasig has material
bearing to the creation of the proposed Barangays Karangalan and Napico.  Indeed, a requisite for the creation of a
barangay is for its territorial jurisdiction to be properly identified by metes and bounds or by more or less permanent
natural boundaries.[8] Precisely because territorial jurisdiction is an issue raised in the pending civil case, until and
unless such issue is resolved with finality, to define the territorial jurisdiction of the proposed barangays would only
be an exercise in futility. Not only that, we would be paving the way for potentially ultra vires acts of such
barangays. Indeed, in Mariano, Jr. v. Commission on Elections,[9] we held that
The importance of drawing with precise strokes the territorial boundaries of a local unit of government cannot be
overemphasized. The boundaries must be clear for they define the limits of the territorial jurisdiction of a local
government unit. It can legitimately exercise powers of government only within the limits of its territorial
jurisdiction. Beyond these limits, its acts are ultra vires. Needless to state, any uncertainty in the boundaries of local
government units will sow costly conflicts in the exercise of governmental powers which ultimately will prejudice
the peoples welfare.
Moreover, considering the expenses entailed in the holding of plebiscites, it is far more prudent to hold in abeyance
the conduct of the same, pending final determination of whether or not the entire area of the proposed barangays are
truly within the territorial jurisdiction of the City of Pasig.
Neither do we agree that merely because a plebiscite had already been held in the case of the proposed Barangay
Napico, the petition of the Municipality of Cainta has already been rendered moot and academic.  The issues raised
by the Municipality of Cainta in its petition before the COMELEC against the holding of the plebiscite for the
creation of Barangay Napico are still pending determination before the Antipolo Regional Trial Court.
In Tan v. Commission on Elections,[10] we struck down the moot and academic argument as follows --
Considering that the legality of the plebiscite itself is challenged for non-compliance with constitutional requisites,
the fact that such plebiscite had been held and a new province proclaimed and its officials appointed, the case before
Us cannot truly be viewed as already moot and academic. Continuation of the existence of this newly proclaimed
province which petitioners strongly profess to have been illegally born, deserves to be inquired into by this Tribunal
so that, if indeed, illegality attaches to its creation, the commission of that error should not provide the very excuse
for perpetration of such wrong. For this Court to yield to the respondents urging that, as there has been fait accompli,
then this Court should passively accept and accede to the prevailing situation is an unacceptable
suggestion. Dismissal of the instant petition, as respondents so propose is a proposition fraught with
mischief. Respondents submission will create a dangerous precedent. Should this Court decline now to perform its
duty of interpreting and indicating what the law is and should be, this might tempt again those who strut about in the
corridors of power to recklessly and with ulterior motives, create, merge, divide and/or alter the boundaries of
political subdivisions, either brazenly or stealthily, confident that this Court will abstain from entertaining future
challenges to their acts if they manage to bring about a fait accompli.
Therefore, the plebiscite on the creation of Barangay Karangalan should be held in abeyance pending final resolution
of the boundary dispute between the City of Pasig and the Municipality of Cainta by the Regional Trial Court of
Antipolo City. In the same vein, the plebiscite held on March 15, 1997 to ratify the creation of Barangay Napico,
Pasig City, should be annulled and set aside.

WHEREFORE, premises considered,

1. The Petition of the City of Pasig in G.R. No. 125646 is DISMISSED for lack of merit; while

2. The Petition of the Municipality of Cainta in G.R. No. 128663 is GRANTED. The COMELEC Order in UND No.
97-002, dated March 21, 1997, is SET ASIDE and the plebiscite held on March 15, 1997 to ratify the creation of
Barangay Napico in the City of Pasig is declared null and void. Plebiscite on the same is ordered held in abeyance
until after the courts settle with finality the boundary dispute between the City of Pasig and the Municipality of
Cainta, in Civil Case No. 94-300.

No pronouncement as to costs.

SO ORDERED.
[G.R. No. 141375. April 30, 2003] substantially complied with, because both parties already had the occasion to meet and thresh out their
differences. In fact, both agreed to elevate the matter to the trial court via Resolution No. 97-01.  It also held that
MUNICIPALITY OF KANANGA, Represented by its Mayor, Hon. GIOVANNI M. Section 118 governed venue; hence, the parties could waive and agree upon it under Section 4(b) of Rule 4 of the
NAPARI, petitioner, vs. Hon. FORTUNITO L. MADRONA, Presiding Judge, Regional Trial Court of Ormoc Rules of Court.
City (Branch 35); and the CITY OF ORMOC, Represented by its Mayor, Hon.  EUFROCINO M. CODILLA
SR.,respondents. Not satisfied with the denial of its Motion, the Municipality of Kananga filed this Petition.[6]

DECISION Issue

PANGANIBAN, J.: In their respective Memoranda, both parties raise the lone issue of whether respondent court may
exercise original jurisdiction over the settlement of a boundary dispute between a municipality and an independent
Since there is no legal provision specifically governing jurisdiction over boundary disputes between a municipality component city.
and an independent component city, it follows that regional trial courts have the power and the authority to hear and
determine such controversy. The Courts Ruling

The Case The Petition has no merit.

Before us is a Petition for Certiorari[1] under Rule 65 of the Rules of Court, seeking to annul the October 29, 1999 Sole Issue:
Order[2] issued by the Regional Trial Court (RTC) of Ormoc City (Branch 35) in Civil Case No. 3722-O.  The
decretal portion of the assailed Order reads as follows: Jurisdiction

For the foregoing considerations, this Court is not inclined to approve and grant the motion to dismiss[,] although the
municipality has all the right to bring the matter or issue to the Supreme Court by way of certiorari purely on
question of law.[3]
The Facts
A boundary dispute arose between the Municipality of Kananga and the City of Ormoc.  By agreement, the parties
submitted the issue to amicable settlement by a joint session of the Sangguniang Panlungsod of Ormoc City and
the Sangguniang Bayan of Kananga on October 31, 1997.
No amicable settlement was reached. Instead, the members of the joint session issued Resolution No. 97-01, which
in part reads:
x x x IT IS HEREBY RESOLVED x x x to pass a resolution certifying that both the Sangguniang Panlungsod of
Ormoc City and the Sangguniang Bayan of Kananga, Leyte have failed to settle amicably their boundary dispute and
have agreed to elevate the same to the proper court for settlement by any of the interested party (sic).[4]
To settle the boundary dispute, the City of Ormoc filed before the RTC of Ormoc City (Branch 35) on September 2,
1999, a Complaint docketed as Civil Case No. 3722-O.
On September 24, 1999, petitioner filed a Motion to Dismiss on the following grounds:
Jurisdiction is the right to act on a case or the power and the authority to hear and determine a cause. [7] It is a
question of law.[8] As consistently ruled by this Court, jurisdiction over the subject matter is vested by law.
[9] Because it is a matter of substantive law, the established rule is that the statute in force at the time of the
commencement of the action determines the jurisdiction of the court.[10]
Both parties aver that the governing law at the time of the filing of the Complaint is Section 118 of the 1991 Local
Government Code (LGC),[11] which provides:
Sec. 118. Jurisdictional Responsibility for Settlement of Boundary Disputes. Boundary disputes between and among
local government units shall, as much as possible, be settled amicably.To this end:
(a) Boundary disputes involving two (2) or more barangays in the same city or municipality shall be referred for
settlement to the sangguniang panlungsod or sangguniang bayanconcerned.
(b) Boundary disputes involving two (2) or more municipalities within the same province shall be referred for
settlement to the sangguniang panlalawigan concerned.
(c) Boundary disputes involving municipalities or component cities of different provinces shall be jointly referred
for settlement to the sanggunians of the provinces concerned.
(d) Boundary disputes involving a component city or municipality on the one hand and a highly urbanized city on
the other, or two (2) or more highly urbanized cities, shall be jointly referred for settlement to the
respective sanggunians of the parties.

(1) That the Honorable Court has no jurisdiction over the subject matter of the claim;
(2) That there is no cause of action; and
(3) That a condition precedent for filing the complaint has not been complied with[.][5]
Ruling of the Trial Court
In denying the Municipality of Kanangas Motion to Dismiss, the RTC held that it had jurisdiction over the action
under Batas Pambansa Blg. 129. It further ruled that Section 118 of the Local Government Code had been
(e) In the event the sanggunian fails to effect an amicable settlement within sixty (60) days from the date the dispute
was referred thereto, it shall issue a certification to that effect.Thereafter, the dispute shall be formally tried by
the sanggunian concerned which shall decide the issue within sixty (60) days from the date of the certification
referred to above.
Under this provision, the settlement of a boundary dispute between a component city or a municipality on the one
hand and a highly urbanized city on the other -- or between two or more highly urbanized cities -- shall be jointly
referred for settlement to the respective sanggunians of the local government units involved.
There is no question that Kananga is a municipality constituted under Republic Act No. 542. [12] By virtue of In Mariano Jr. v. Commission on Elections,[22] we held that boundary disputes should be resolved with fairness and
Section 442(d) of the LGC, it continued to exist and operate as such. certainty. We ruled as follows:

However, Ormoc is not a highly urbanized, but an independent component, city created under Republic Act No. 179.
[13] Section 89 thereof reads:
Sec. 89. Election of provincial governor and members of the Provincial Board of the Province of Leyte. The
qualified voters of Ormoc City shall not be qualified and entitled to vote in the election of the provincial governor
and the members of the provincial board of the Province of Leyte.
Under Section 451 of the LGC, a city may be either component or highly urbanized.  Ormoc is deemed an
independent component city, because its charter prohibits its voters from voting for provincial elective officials. It is
a city independent of the province. In fact, it is considered a component, not a highly urbanized, city of Leyte in
Region VIII by both Batas Pambansa Blg. 643,[14] which calls for a plebiscite; and the Omnibus Election Code,
[15] which apportions representatives to the defunct Batasang Pambansa. There is neither a declaration by the
President of the Philippines nor an allegation by the parties that it is highly urbanized.  On the contrary, petitioner
asserted in its Motion to Dismiss that Ormoc was an independent chartered city.[16]
Section 118 of the LGC applies to a situation in which a component city or a municipality seeks to settle a boundary
dispute with a highly urbanized city, not with an independent component city. While Kananga is a municipality,
Ormoc is an independent component city. Clearly then, the procedure referred to in Section 118 does not apply to
them.
The importance of drawing with precise strokes the territorial boundaries of a local unit of government cannot be
overemphasized. The boundaries must be clear for they define the limits of the territorial jurisdiction of a local
government unit. It can legitimately exercise powers of government only within the limits of its territorial
jurisdiction. Beyond these limits, its acts are ultra vires. Needless to state, any uncertainty in the boundaries of local
government units will sow costly conflicts in the exercise of governmental powers which ultimately will prejudice
the peoples welfare. x x x.
Indeed, unresolved boundary disputes have sown costly conflicts in the exercise of governmental powers and
prejudiced the peoples welfare. Precisely because of these disputes, the Philippine National Oil Company has
withheld the share in the proceeds from the development and the utilization of natural wealth, as provided for in
Section 289 of the LGC.[23]
WHEREFORE, the Petition is DENIED and the challenged Order AFFIRMED. No pronouncement as to costs.
SO ORDERED.

Nevertheless, a joint session was indeed held, but no amicable settlement was reached. A resolution to that effect
was issued, and the sanggunians of both local government units mutually agreed to bring the dispute to the RTC for
adjudication. The question now is: Does the regional trial court have jurisdiction over the subject matter of the
claim?

We rule in the affirmative.

As previously stated, jurisdiction is vested by law and cannot be conferred or waived by the parties. [17] It must exist
as a matter of law and cannot be conferred by the consent of the parties or by estoppel. [18] It should not be confused
with venue.

Inasmuch as Section 118 of the LGC finds no application to the instant case, the general rules governing jurisdiction
should then be used. The applicable provision is found in Batas Pambansa Blg. 129,[19] otherwise known as the
Judiciary Reorganization Act of 1980, as amended by Republic Act No. 7691.[20] Section 19(6) of this law
provides:

Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction:

x x x x x x x x x

(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or body exercising judicial or
quasi-judicial functions[.]

Since there is no law providing for the exclusive jurisdiction of any court or agency over the settlement of boundary
disputes between a municipality and an independent component city of the same province, respondent court
committed no grave abuse of discretion in denying the Motion to Dismiss. RTCs have general jurisdiction to
adjudicate all controversies except those expressly withheld from their plenary powers.[21] They have the power not
only to take judicial cognizance of a case instituted for judicial action for the first time, but also to do so to the
exclusion of all other courts at that stage. Indeed, the power is not only original, but also exclusive.
G.R. No. 146622               April 24, 2009
LEONORA P. CALANZA, EVA M. AMOREN, GENE P. ROÑO, SANNY C. CALANZA, GREGORIO C.
YNCIERTO II and ANGEL M. PUYO, Petitioners,  In a decision dated 26 November 1993, the RTC ruled in favor of the petitioners. The RTC opined that Barangay
vs.
PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES (picop), GOOD EARTH MINERAL
CORP. (GEMCOR), EVARISTO NARVAEZ, JR., RICARDO G. SANTIAGO, ROBERTO A. DORMENDO
and REYDANDE D. AZUCENA, Respondents.
DECISION
CHICO-NAZARIO, J.:
This Petition for Review under Rule 45 of the Rules of Court seeks to reverse and set aside the 19 June 2000
Decision1 of the Court of Appeals in CA-G.R. CV No. 45234 which annulled the Decision of the Regional Trial
Court (RTC) of Banganga, Davao Oriental, Branch 7, granting the Complaint for Injunction filed by petitioners.
On 23 August 1991, petitioners Leonora P. Calanza, Eva M. Amoren, Gene P. Roño, Sanny C. Calanza, Gregorio C.
Yncierto II, and Angel M. Puyo filed with the Mines and Geo-Sciences Development Service, Department of
Environment and Natural Resources (DENR), Region XI, of Davao City, applications for small-scale mining permits
for the purpose of extracting gold. In their applications, petitioners stated that the area where they will conduct
mining operations was in the Municipality of Boston, Davao Oriental.2
On 22 December 1992, the governor of Davao Oriental, Rosalind Y. Lopez, approved the applications and issued six
small-scale mining permits in favor of the petitioners.3 Since the mining areas applied for by petitioners were within
the respondent Paper Industries Corporation of the Philippines’ (PICOP) logging concession area under Timber
License Agreements (TLAs) that covered large tracts of forest lands of the Provinces of Surigao del Sur, Agusan del
Sur, Davao Oriental and Davao del Norte, petitioners negotiated with PICOP for their entry into the mining site at
Barangay Catihan, Municipality of Boston, Davao Oriental. PICOP, through its officer Roberto A. Dormendo,
refused petitioners’ entry into the mining area on the grounds that it has the exclusive right of occupation, possession
and control over the area being a logging concessionaire thereof; that petitioners’ mining permits are defective since
they were issued by the governor of Davao Oriental when in fact the mining area is situated in Barangay Pagtilaan,
Municipality of Lingig, Surigao del Sur; and that mining permits cannot be issued over areas covered by forest rights
such as TLAs or forest reservations unless their status as such is withdrawn by competent authority.
On 7 May 1993, petitioners filed a Complaint for Injunction with Prayer for the Issuance of a Restraining Order,
Damages and Attorney’s Fees against PICOP and its officers before the RTC of Banganga, Davao Oriental, praying
that PICOP or its agent be enjoined from preventing and prohibiting them from entering into the mining site.
PICOP countered that the RTC of Davao Oriental has no jurisdiction over the complaint of petitioners since the
disputed area is situated in the Province of Surigao del Sur. PICOP also claimed that the issuance of petitioners’
permits were void ab initio since the same violated Section 5 of Republic Act No. 7076, otherwise known as the
People’s Small-Scale Mining Act of 1991, which allegedly prohibits the issuance of mining permits over areas
covered by forest rights such as TLAs or forest reservations unless their status as such is withdrawn by the
competent authority.
In the Pre-Trial Order dated 4 October 1993, the following are identified as the issues:
1. Whether the mining areas claimed by petitioners are found within the territories of Davao Oriental or Surigao del
Sur.
2. Whether the small-scale mining permits of petitioners are valid.
3. Whether PICOP has the right and authority to deny petitioners access to, possession of and the authority to
conduct mining activities within the disputed areas.4
Pagtilaan (as claimed by PICOP) or Catihan (as claimed by petitioners) is within the territory of the Province of
Davao Oriental. Citing Section 465, paragraph (b), Sub-paragraph (3)iv of Republic Act No. 7160 or the Local
Government Code of 1991 which states to the effect that the governor has the power to issue licenses and permits,
the RTC ruled that the governor is vested with the power to issue the small-scale mining permits to the petitioners.
The decretal portion of the RTC decision provides:
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered:
1. Declaring that all the [petitioners] have the rights under the laws to extract and remove gold ore from their permit
area as particularly described by its technical descriptions found in their respective permits subject to the terms and
conditions stipulated therein;
2. Finding that [respondents] have no rights to deny [petitioners] entry into the mining permit areas and hereby
enjoining [respondents], their agents, representatives, their attorneys, the SCAA or any persons acting in their behalf
to allow petitioners/permittees, their agents, representatives and vehicles to enter, travel into the mining site areas of
plaintiffs without any restrictions, preventions and/or harassment of the purpose of conducting mining activities
thereat;
3. Further restraining and enjoining the respondents, their attorneys, agents and/or representatives, the SCAA or its
officers and such other persons acting for and in their behalf from preventing, prohibiting or harassing the
[petitioners], their agents or authorized representatives, their vehicles, tools and other mining paraphernalia’s from
entering, traveling into the mining site using and passing through the most accessible concession roads of
[respondents], such as but not limited to Road 5M and spurs within PICOP’s TLA 43 areas.
There being no evidentiary proof of actual and compensatory damages, and in the absence of fraud or evident bad
faith on the part of defendants, especially PICOP, which apparently is exercising its right to litigate, this Court
makes no finding as to actual, compensatory and moral damages nor attorney’s fees.5
Respondent PICOP appealed the RTC decision.
In a Decision dated 19 June 2000, the Court of Appeals reversed the RTC Decision and dismissed the complaint of
respondents.
In setting aside the RTC Decision, the Court of Appeals stated that the RTC erred in passing upon the issue of the
boundary dispute between the provinces of Davao Oriental and Surigao del Sur since the resolution of the boundary
dispute primarily resides with the sangguniang panlalawigans of the two provinces and the RTC has only appellate
jurisdiction over the case, pursuant to the Local Government Code of 1991. The Court of Appeals also said that the
governor has no power to issue small-scale mining permits since such authority under Section 9 of Republic Act No.
7076 is vested with the Provincial Mining Regulatory Board.
The disposition of the Court of Appeals reads:
WHEREFORE, premises considered, the appealed decision in Civil Case No. 489 is hereby REVERSED and SET
ASIDE and a new one is hereby rendered dismissing the complaint filed by [petitioners].6
Petitioners filed a motion for reconsideration, which was denied by the Court of Appeals in its Order dated 10
November 2000.
Hence, the instant petition.
The petition is not meritorious.
There is boundary dispute when a portion or the whole of the territorial area of a Local Government Unit (LGU) is
claimed by two or more LGUs.7 In settling boundary disputes, Section 118 of the 1991 Local Government Code
provides:
Sec. 118. Jurisdictional Responsibility for Settlement of Boundary Dispute. – Boundary disputes between and
among local government units shall, as much as possible, be settled amicably. To this end:
(a) Boundary disputes involving two (2) or more barangays in the same city or municipality shall be referred for
settlement to the sangguniang panlungsod or sangguniang bayan concerned.
(b) Boundary disputes involving two (2) or more municipalities within the same province shall be referred for
settlement to the sangguniang panlalawigan concerned.
(c) Boundary disputes involving municipalities or component cities of different provinces shall be jointly referred
for settlement to the sanggunians of the provinces concerned.
(d) Boundary disputes involving a component city or municipality on the one hand and a highly urbanized city on
the other, or two (2) or more highly urbanized cities, shall be jointly referred for settlement to the
respective sanggunians of the parties.
(e) In the event the sanggunian fails to effect an amicable settlement within sixty (60) days from the date the dispute
was referred thereto, it shall issue a certification to that effect. Thereafter, the dispute shall be formally tried by
the sanggunian concerned which shall decide the issue within sixty (60) days from the date of the certification
referred to above.1avvphi1
Under paragraph (c) of Section 118, the settlement of a boundary dispute involving municipalities or component
cities of different provinces shall be jointly referred for settlement to the respective sanggunians or the provincial
boards of the different provinces involved. Section 119 of the Local Government Code gives a dissatisfied party an
avenue to question the decision of the sanggunian to the RTC having jurisdiction over the area, viz:
Section 119. Appeal. - Within the time and manner prescribed by the Rules of Court, any party may elevate the
decision of the sanggunian concerned to the proper Regional Trial Court having jurisdiction over the area in dispute
x x x.
Article 17, Rule III of the Rules and Regulations Implementing The Local Government Code of 1991 outlines the
procedures governing boundary disputes, which succinctly includes the filing of the proper petition, and in case of
failure to amicably settle, a formal trial will be conducted and a decision will be rendered thereafter. An aggrieved
party can appeal the decision of the sanggunian to the appropriate RTC. Said rules and regulations state:
Article 17. Procedures for Settling Boundary Disputes. – The following procedures shall govern the settlement of
boundary disputes:
(a) Filing of petition - The sanggunian concerned may initiate action by filing a petition, in the form of a resolution,
with the sanggunian having jurisdiction over the dispute.
(b) Contents of petition - The petition shall state the grounds, reasons or justifications therefore.
(c) Documents attached to petition - The petition shall be accompanied by:
1. Duly authenticated copy of the law or statute creating the LGU or any other document showing proof of creation
of the LGU;
2. Provincial, city, municipal, or barangay map, as the case may be, duly certified by the LMB.
3. Technical description of the boundaries of the LGUs concerned;
4. Written certification of the provincial, city, or municipal assessor, as the case may be, as to territorial jurisdiction
over the disputed area according to records in custody;
5. Written declarations or sworn statements of the people residing in the disputed area; and
6. Such other documents or information as may be required by the sanggunian hearing the dispute.
(d) Answer of adverse party - Upon receipt by the sanggunian concerned of the petition together with the required
documents, the LGU or LGUs complained against shall be furnished copies thereof and shall be given fifteen (15)
working days within which to file their answers.
(e) Hearing - Within five (5) working days after receipt of the answer of the adverse party, the  sanggunianshall hear
the case and allow the parties concerned to present their respective evidences.
(f) Joint hearing - When two or more sanggunians jointly hear a case, they may sit en banc or designate their
respective representatives. Where representatives are designated, there shall be an equal number of representatives
from each sanggunian. They shall elect from among themselves a presiding officer and a secretary. In case of
disagreement, selection shall be by drawing lot.
(g) Failure to settle - In the event the sanggunian fails to amicably settle the dispute within sixty (60) days from the
date such dispute was referred thereto, it shall issue a certification to the effect and copies thereof shall be furnished
the parties concerned.
(h) Decision - Within sixty (60) days from the date the certification was issued, the dispute shall be formally tried
and decided by the sanggunian concerned. Copies of the decision shall, within fifteen (15) days from the
promulgation thereof, be furnished the parties concerned, DILG, local assessor, COMELEC, NSO, and other NGAs
concerned.
(i) Appeal - Within the time and manner prescribed by the Rules of Court, any party may elevate the decision of
the sanggunian concerned to the proper Regional Trial Court having jurisdiction over the dispute by filing therewith
the appropriate pleading, stating among others, the nature of the dispute, the decision of the  sanggunian concerned
and the reasons for appealing therefrom. The Regional Trial Court shall decide the case within one (1) year from the
filing thereof. Decisions on boundary disputes promulgated jointly by two (2) or more  sangguniang
panlalawigans shall be heard by the Regional Trial Court of the province which first took cognizance of the dispute.
The records of the case reveal that the instant case was initiated by petitioners against respondents predicated on the
latter’s refusal to allow the former entry into the disputed mining areas. This is not a case where the sangguniang
panlalawigans of Davao Oriental and Surigao del Sur jointly rendered a decision resolving the boundary dispute of
the two provinces and the same decision was elevated to the RTC. Clearly, the RTC cannot exercise appellate
jurisdiction over the case since there was no petition that was filed and decided by the sangguniang panlalawigans of
Davao Oriental and Surigao del Sur. Neither can the RTC assume original jurisdiction over the boundary dispute
since the Local Government Code allocates such power to the sangguniang panlalawigans of Davao Oriental and
Surigao del Sur. Since the RTC has no original jurisdiction on the boundary dispute between Davao Oriental and
Surigao del Sur, its decision is a total nullity. We have repeatedly ruled that a judgment rendered by a court without
jurisdiction is null and void and may be attacked anytime.8 It creates no rights and produces no effect. In fact it
remains a basic fact in law that the choice of the proper forum is crucial as the decision of a court or tribunal without
jurisdiction is a total nullity. A void judgment for want of jurisdiction is no judgment at all. It cannot be the source of
any right nor the creator of any obligation. All acts performed pursuant to it and all claims emanating from it have no
legal effect.9

Moreover, petitioners’ small-scale mining permits are legally questionable. Under Presidential Decree No. 1899,
applications of small-scale miners are processed with the Director of the Mines and Geo-Sciences Bureau. Pursuant
to Republic Act No. 7076, which took effect10 on 18 July 1991, approval of the applications for mining permits and
for mining contracts are vested in the Provincial/City Mining Regulatory Board. Composed of the DENR
representative, a representative from the small-scale mining sector, a representative from the big-scale mining
industry and a representative from an environmental group, this body is tasked to approve small-scale mining
permits and contracts.

In the case under consideration, petitioners filed their small-scale mining permits on 23 August 1991, making them
bound by the procedures provided for under the applicable and prevailing statute, Republic Act No. 7076. Instead of
processing and obtaining their permits from the Provincial Mining Regulatory Board, petitioners were able to get the
same from the governor of Davao del Norte. Considering that the governor is without legal authority to issue said
mining permits, the same permits are null and void.

Based on the discussions above, the Court of Appeals is correct in finding that petitioners have no right to enter into
and to conduct mining operations within the disputed lands under the infirmed small-scale mining permits.

In fine, this Court defers to the findings of the Court of Appeals, there being no cogent reason to veer away from
such findings.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated 19 June 2000 and its
Resolution dated 10 November 2000 reversing the 26 November 1993 Decision of the Regional Trial Court of
Banganga, Davao Oriental, Branch 7, are hereby AFFIRMED. No costs.

SO ORDERED.
STA. LUCIA REALTY & DEVELOPMENT, INC., G.R. No. 166838  

Petitioner,   On January 31, 1994, Cainta filed a petition[8] for the settlement of its land boundary dispute with Pasig before the
RTC, Branch 74 of Antipolo City (Antipolo RTC). This case, docketed as Civil Case No. 94-3006, is still pending
  Present: up to this date. 
    On November 28, 1995, Pasig filed a Complaint,[9] docketed as Civil Case No. 65420, against Sta. Lucia for the
collection of real estate taxes, including penalties and interests, on the lots covered by TCT Nos. 532250, 598424,
- versus - VELASCO, JR .,*
599131, 92869, 92870 and 38457, including the improvements thereon (the subject properties). 
  Acting Chairperson,
Sta. Lucia, in its Answer, alleged that it had been religiously paying its real estate taxes to Cainta, just like what its
  LEONARDO-DE CASTRO, predecessors-in-interest did, by virtue of the demands and assessments made and the Tax Declarations issued by
Cainta on the claim that the subject properties were within its territorial jurisdiction. Sta. Lucia further argued that
CITY OF PASIG, BERSAMIN,** since 1913, the real estate taxes for the lots covered by the above TCTs had been paid to Cainta.[10]
Respondent, DEL CASTILLO, and Cainta was allowed to file its own Answer-in-Intervention when it moved to intervene on the ground that its interest
would be greatly affected by the outcome of the case.It averred that it had been collecting the real property taxes on
  PEREZ, JJ.
the subject properties even before Sta. Lucia acquired them. Cainta further asseverated that the establishment of the
MUNICIPALITY OF CAINTA, PROVINCE OF Promulgated: boundary monuments would show that the subject properties are within its metes and bounds.[11]
RIZAL,
  Sta. Lucia and Cainta thereafter moved for the suspension of the proceedings, and claimed that the pending petition
Intervenor. in the Antipolo RTC, for the settlement of boundary dispute between Cainta and Pasig, presented a prejudicial
June 15, 2011 question to the resolution of the case.[12]

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
 D E C I S I O N
 LEONARDO-DE CASTRO, J.:
For review is the June 30, 2004 Decision[1] and the January 27, 2005 Resolution[2] of the Court of Appeals in CA-
G.R. CV No. 69603, which affirmed with modification the August 10, 1998 Decision[3] and October 9, 1998
Order[4] of the Regional Trial Court (RTC) of Pasig City, Branch 157, in Civil Case No. 65420.
Petitioner Sta. Lucia Realty & Development, Inc. (Sta. Lucia) is the registered owner of several parcels of land with
Transfer Certificates of Title (TCT) Nos. 39112, 39110 and 38457, all of which indicated that the lots were located
in Barrio Tatlong Kawayan, Municipality of Pasig[5] (Pasig).
The parcel of land covered by TCT No. 39112 was consolidated with that covered by TCT No. 518403, which was
situated in Barrio Tatlong Kawayan, Municipality of Cainta, Province of Rizal (Cainta). The two combined lots were
subsequently partitioned into three, for which TCT Nos. 532250, 598424, and 599131, now all bearing the Cainta
address, were issued.
TCT No. 39110 was also divided into two lots, becoming TCT Nos. 92869 and 92870.
The lot covered by TCT No. 38457 was not segregated, but a commercial building owned by Sta. Lucia East
Commercial Center, Inc., a separate corporation, was built on it.[6]
Upon Pasigs petition to correct the location stated in TCT Nos. 532250, 598424, and 599131, the Land Registration
Court, on June 9, 1995, ordered the amendment of the TCTs to read that the lots with respect to TCT No. 39112
were located in Barrio Tatlong Kawayan, Pasig City.[7]
The RTC denied this in an Order dated December 4, 1996 for lack of merit. Holding that the TCTs were conclusive
evidence as to its ownership and location,[13] the RTC, on August 10, 1998, rendered a Decision in favor of Pasig:
WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of [Pasig], ordering Sta. Lucia Realty
and Development, Inc. to pay [Pasig]:
1)      P273,349.14 representing unpaid real estate taxes and penalties as of 1996, plus interest of 2% per month until
fully paid;
2)      P50,000.00 as and by way of attorneys fees; and
3)      The costs of suit.
Judgment is likewise rendered against the intervenor Municipality of Cainta, Rizal, ordering it to refund to Sta.
Lucia Realty and Development, Inc. the realty tax payments improperly collected and received by the former from
the latter in the aggregate amount of P358, 403.68.[14]
After Sta. Lucia and Cainta filed their Notices of Appeal, Pasig, on September 11, 1998, filed a Motion for
Reconsideration of the RTCs August 10, 1998 Decision.
The RTC, on October 9, 1998, granted Pasigs motion in an Order[15] and modified its earlier decision to include the
realty taxes due on the improvements on the subject lots:
WHEREFORE, premises considered, the plaintiffs motion for reconsideration is hereby granted. Accordingly, the
Decision, dated August 10, 1998 is hereby modified in that the defendant is hereby ordered to pay plaintiff the
amount of P5,627,757.07 representing the unpaid taxes and penalties on the improvements on the subject parcels of
land whereon real estate taxes are adjudged as due for the year 1996.[16]
 
Accordingly, Sta. Lucia filed an Amended Notice of Appeal to include the RTCs October 9, 1998 Order in its
protest.
On October 16, 1998, Pasig filed a Motion for Execution Pending Appeal, to which both Sta. Lucia and Cainta filed
several oppositions, on the assertion that there were no good reasons to warrant the execution pending appeal.[17]
 
On April 15, 1999, the RTC ordered the issuance of a Writ of Execution against Sta. Lucia.
 
On May 21, 1999, Sta. Lucia filed a Petition for Certiorari under Rule 65 of the Rules of Court with the Court of
Appeals to assail the RTCs order granting the execution.Docketed as CA-G.R. SP No. 52874, the petition was
raffled to the First Division of the Court of Appeals, which on September 22, 2000, ruled in favor of Sta. Lucia, to
wit:
WHEREFORE, in view of the foregoing, the instant petition is hereby GIVEN DUE COURSE and GRANTED by
this Court. The assailed Order dated April 15, 1999 in Civil Case No. 65420 granting the motion for execution
pending appeal and ordering the issuance of a writ of execution pending appeal is hereby  SET ASIDE and
declared NULL and VOID.[18]
 
The Court of Appeals added that the boundary dispute case presented a prejudicial question which must be decided
before x x x Pasig can collect the realty taxes due over the subject properties.[19]
Pasig sought to have this decision reversed in a Petition for Certiorari filed before this Court on November 29, 2000,
but this was denied on June 25, 2001 for being filed out of time.[20]
Meanwhile, the appeal filed by Sta. Lucia and Cainta was raffled to the (former) Seventh Division of the Court of
Appeals and docketed as CA-G.R. CV No. 69603. On June 30, 2004, the Court of Appeals rendered its Decision,
wherein it agreed with the RTCs judgment:
WHEREFORE, the appealed Decision is hereby AFFIRMED with the MODIFICATION that the award of
P50,000.00 attorneys fees is DELETED.[21]
 
In affirming the RTC, the Court of Appeals declared that there was no proper legal basis to suspend the proceedings.
[22] Elucidating on the legal meaning of a prejudicial question, it held that there can be no prejudicial question when
the cases involved are both civil.[23] The Court of Appeals further held that the elements of litis pendentia and
forum shopping, as alleged by Cainta to be present, were not met.
Sta. Lucia and Cainta filed separate Motions for Reconsideration, which the Court of Appeals denied in a Resolution
dated January 27, 2005.
Undaunted, Sta. Lucia and Cainta filed separate Petitions for Certiorari with this Court. Caintas petition, docketed as
G.R. No. 166856 was denied on April 13, 2005 for Caintas failure to show any reversible error. Sta. Lucias own
petition is the one subject of this decision.[24]
 
In praying for the reversal of the June 30, 2004 judgment of the Court of Appeals, Sta. Lucia assigned the following
errors:
 
ASSIGNMENT OF ERRORS
I.THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING [WITH MODIFICATION] THE
DECISION OF THE REGIONAL TRIAL COURT IN PASIG CITY
 
II.THE HONORABLE COURT OF APPEALS ERRED IN NOT SUSPENDING THE CASE IN VIEW OF THE
PENDENCY OF THE BOUNDARY DISPUTE WHICH WILL FINALLY DETERMINE THE SITUS OF THE
SUBJECT PROPERTIES
III.THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE PAYMENT OF
REALTY TAXES THROUGH THE MUNICIPALITY OF CAINTA WAS VALID PAYMENT OF REALTY
TAXES
IV.THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT IN THE MEANTIME THAT
THE BOUNDARY DISPUTE CASE IN ANTIPOLO CITY REGIONAL TRIAL COURT IS BEING FINALLY
RESOLVED, THE PETITIONER STA. LUCIA SHOULD BE PAYING THE REALTY TAXES ON THE
SUBJECT PROPERTIES THROUGH THE INTERVENOR CAINTA TO PRESERVE THE STATUS QUO.[25]
Pasig, countering each error, claims that the lower courts correctly decided the case considering that the TCTs are
clear on their faces that the subject properties are situated in its territorial jurisdiction.  Pasig contends that the
principles of litis pendentia, forum shopping, and res judicata are all inapplicable, due to the absence of their
requisite elements. Pasig maintains that the boundary dispute case before the Antipolo RTC is independent of the
complaint for collection of realty taxes which was filed before the Pasig RTC. It avers that the doctrine of prejudicial
question, which has a definite meaning in law, cannot be invoked where the two cases involved are both civil.  Thus,
Pasig argues, since there is no legal ground to preclude the simultaneous hearing of both cases, the suspension of the
proceedings in the Pasig RTC is baseless.
Cainta also filed its own comment reiterating its legal authority over the subject properties, which fall within its
territorial jurisdiction. Cainta claims that while it has been collecting the realty taxes over the subject properties
since way back 1913, Pasig only covered the same for real property tax purposes in 1990, 1992, and 1993.  Cainta
also insists that there is a discrepancy between the locational entries and the technical descriptions in the TCTs,
which further supports the need to await the settlement of the boundary dispute case it initiated.
The errors presented before this Court can be narrowed down into two basic issues:
1) Whether the RTC and the CA were correct in deciding Pasigs Complaint without waiting for the resolution of the
boundary dispute case between Pasig and Cainta; and
 
2) Whether Sta. Lucia should continue paying its real property taxes to Cainta, as it alleged to have always done, or
to Pasig, as the location stated in Sta. Lucias TCTs.
We agree with the First Division of the Court of Appeals in CA-G.R. SP No. 52874 that the resolution of the
boundary dispute between Pasig and Cainta would determine which local government unit is entitled to collect realty
taxes from Sta. Lucia.[26]
The Local Government Unit entitled
To Collect Real Property Taxes
The Former Seventh Division of the Court of Appeals held that the resolution of the complaint lodged before the
Pasig RTC did not necessitate the assessment of the parties evidence on the metes and bounds of their respective
territories. It cited our ruling in Odsigue v. Court of Appeals[27] wherein we said that a certificate of title is
conclusive evidence of both its ownership and location.[28] The Court of Appeals even referred to specific
provisions of the 1991 Local Government Code and Act. No. 496 to support its ruling that Pasig had the right to
collect the realty taxes on the subject properties as the titles of the subject properties show on their faces that they are
situated in Pasig.[29]
 
Under Presidential Decree No. 464 or the Real Property Tax Code, the authority to collect real property taxes is
vested in the locality where the property is situated:
Sec. 5. Appraisal of Real Property. All real property, whether taxable or exempt, shall be appraised at the current and
fair market value prevailing in the locality where the property is situated.
xxxx
Sec. 57. Collection of tax to be the responsibility of treasurers. The collection of the real property tax and all
penalties accruing thereto, and the enforcement of the remedies provided for in this Code or any applicable laws,
shall be the responsibility of the treasurer of the province, city or municipality where the property is
situated. (Emphases ours.)
 
This requisite was reiterated in Republic Act No. 7160, also known as the 1991 the Local Government Code, to wit:
Section 201. Appraisal of Real Property. All real property, whether taxable or exempt, shall be appraised at the
current and fair market value prevailing in the locality where the property is situated. The Department of Finance
shall promulgate the necessary rules and regulations for the classification, appraisal, and assessment of real property
pursuant to the provisions of this Code.
 
Section 233. Rates of Levy. A province or city or a municipality within the Metropolitan Manila Area shall fix a
uniform rate of basic real property tax applicable to their respective localities as follows: x x x. (Emphases ours.)
 
The only import of these provisions is that, while a local government unit is authorized under several laws to collect
real estate tax on properties falling under its territorial jurisdiction, it is imperative to first show that these properties
are unquestionably within its geographical boundaries.
Accentuating on the importance of delineating territorial boundaries, this Court, in  Mariano, Jr. v. Commission on
Elections[30] said:
 
The importance of drawing with precise strokes the territorial boundaries of a local unit of government cannot be
overemphasized. The boundaries must be clear for they define the limits of the territorial jurisdiction of a local
government unit. It can legitimately exercise powers of government only within the limits of its territorial
jurisdiction. Beyond these limits, its acts are ultra vires. Needless to state, any uncertainty in the boundaries of local
government units will sow costly conflicts in the exercise of governmental powers which ultimately will prejudice
the people's welfare. This is the evil sought to be avoided by the Local Government Code in requiring that the land
area of a local government unit must be spelled out in metes and bounds, with technical descriptions.[31] (Emphasis
ours.)
 
The significance of accurately defining a local government units boundaries was stressed in City of Pasig v.
Commission on Elections,[32] which involved the consolidated petitions filed by the parties herein, Pasig and
Cainta, against two decisions of the Commission on Elections (COMELEC) with respect to the plebiscites scheduled
by Pasig for the ratification of its creation of two new Barangays. Ruling on the contradictory reliefs sought by Pasig
and Cainta, this Court affirmed the COMELEC decision to hold in abeyance the plebiscite to ratify the creation
of Barangay Karangalan; but set aside the COMELECs other decision, and nullified the plebiscite that ratified the
creation ofBarangay Napico in Pasig, until the boundary dispute before the Antipolo RTC had been resolved. The
aforementioned case held as follows:
1.      The Petition of the City of Pasig in G.R. No. 125646 is DISMISSED for lack of merit; while
 
2.      The Petition of the Municipality of Cainta in G.R. No. 128663 is GRANTED. The COMELEC Order in UND
No. 97-002, dated March 21, 1997, is SET ASIDE and the plebiscite held on March 15, 1997 to ratify the creation of
Barangay Napico in the City of Pasig is declared null and void. Plebiscite on the same is ordered held in abeyance
until after the courts settle with finality the boundary dispute between the City of Pasig and the Municipality of
Cainta, in Civil Case No. 94-3006.[33]
Clearly therefore, the local government unit entitled to collect real property taxes from Sta. Lucia must undoubtedly
show that the subject properties are situated within its territorial jurisdiction; otherwise, it would be acting beyond
the powers vested to it by law.
 
Certificates of Title as
Conclusive Evidence of Location
 
While we fully agree that a certificate of title is conclusive as to its ownership and location, this does not preclude
the filing of an action for the very purpose of attacking the statements therein. In De Pedro v. Romasan Development
Corporation,[34] we proclaimed that:
We agree with the petitioners that, generally, a certificate of title shall be conclusive as to all matters contained
therein and conclusive evidence of the ownership of the land referred to therein. However, it bears stressing that
while certificates of title are indefeasible, unassailable and binding against the whole world, including the
government itself, they do not create or vest title. They merely confirm or record title already existing and vested.
They cannot be used to protect a usurper from the true owner, nor can they be used as a shield for the commission of
fraud; neither do they permit one to enrich himself at the expense of other.[35]
 
In Pioneer Insurance and Surety Corporation v. Heirs of Vicente Coronado,[36] we set aside the lower courts ruling
that the property subject of the case was not situated in the location stated and described in the TCT, for lack of
adequate basis. Our decision was in line with the doctrine that the TCT is conclusive evidence of ownership and
location.However, we refused to simply uphold the veracity of the disputed TCT, and instead, we remanded the case
back to the trial court for the determination of the exact location of the property seeing that it was the issue in the
complaint filed before it.[37]
In City Government of Tagaytay v. Guerrero,[38] this Court reprimanded the City of Tagaytay for levying taxes on a
property that was outside its territorial jurisdiction, viz:
 
In this case, it is basic that before the City of Tagaytay may levy a certain property for sale due to tax delinquency,
the subject property should be under its territorial jurisdiction. The city officials are expected to know such basic
principle of law. The failure of the city officials of Tagaytay to verify if the property is within its jurisdiction before
levying taxes on the same constitutes gross negligence.[39] (Emphasis ours.)
Although it is true that Pasig is the locality stated in the TCTs of the subject properties, both Sta. Lucia and Cainta
aver that the metes and bounds of the subject properties, as they are described in the TCTs, reveal that they are
within Caintas boundaries.[40] This only means that there may be a conflict between the location as stated and the
location as technically described in the TCTs. Mere reliance therefore on the face of the TCTs will not suffice as
they can only be conclusive evidence of the subject properties locations if both the stated and described locations
point to the same area.
 
The Antipolo RTC, wherein the boundary dispute case between Pasig and Cainta is pending, would be able to best
determine once and for all the precise metes and bounds of both Pasigs and Caintas respective territorial
jurisdictions. The resolution of this dispute would necessarily ascertain the extent and reach of each local
governments authority, a prerequisite in the proper exercise of their powers, one of which is the power of
taxation. This was the conclusion reached by this Court in City of Pasig v. Commission on Elections,[41] and by the
First Division of the Court of Appeals in CA-G.R. SP No. 52874. We do not see any reason why we cannot adhere
to the same logic and reasoning in this case.
The Prejudicial Question Debate
It would be unfair to hold Sta. Lucia liable again for real property taxes it already paid simply because Pasig cannot
wait for its boundary dispute with Cainta to be decided.Pasig has consistently argued that the boundary dispute case
is not a prejudicial question that would entail the suspension of its collection case against Sta. Lucia. This was also
its argument in City of Pasig v. Commission on Elections,[42] when it sought to nullify the COMELECs ruling to
hold in abeyance (until the settlement of the boundary dispute case), the plebiscite that will ratify its creation
of Barangay Karangalan. We agreed with the COMELEC therein that the boundary dispute case presented
a prejudicial question and explained our statement in this wise:
To begin with, we agree with the position of the COMELEC that Civil Case No. 94-3006 involving the boundary
dispute between the Municipality of Cainta and the City of Pasig presents a prejudicial question which must first be
decided before plebiscites for the creation of the proposed barangays may be held.
The City of Pasig argues that there is no prejudicial question since the same contemplates a civil and criminal action
and does not come into play where both cases are civil, as in the instant case. While this may be the general rule, this
Court has held in Vidad v. RTC of Negros Oriental, Br. 42, that, in the interest of good order, we can very well
suspend action on one case pending the final outcome of another case closely interrelated or linked to the first.
In the case at bar, while the City of Pasig vigorously claims that the areas covered by the proposed Barangays
Karangalan and Napico are within its territory, it can not deny that portions of the same area are included in the
boundary dispute case pending before the Regional Trial Court of Antipolo. Surely, whether the areas in controversy
shall be decided as within the territorial jurisdiction of the Municipality of Cainta or the City of Pasig has material
bearing to the creation of the proposed Barangays Karangalan and Napico. Indeed, a requisite for the creation of
a barangay is for its territorial jurisdiction to be properly identified by metes and bounds or by more or less
permanent natural boundaries. Precisely because territorial jurisdiction is an issue raised in the pending civil case,
until and unless such issue is resolved with finality, to define the territorial jurisdiction of the
proposed barangays would only be an exercise in futility. Not only that, we would be paving the way for
potentially ultra vires acts of such barangays. x x x.[43] (Emphases ours.)
 
It is obvious from the foregoing, that the term prejudicial question, as appearing in the cases involving the parties
herein, had been used loosely. Its usage had been more in reference to its ordinary meaning, than to its strict legal
meaning under the Rules of Court.[44] Nevertheless, even without the impact of the connotation derived from the
term, our own Rules of Court state that a trial court may control its own proceedings according to its sound
discretion:
POWERS AND DUTIES OF COURTS AND JUDICIAL OFFICERS
Rule 135
 
SEC. 5. Inherent powers of courts. Every court shall have power:
 
xxxx
(g) To amend and control its process and orders so as to make them comformable to law and justice.
Furthermore, we have acknowledged and affirmed this inherent power in our own decisions, to wit:
The court in which an action is pending may, in the exercise of a sound discretion, upon proper application for a stay
of that action, hold the action in abeyance to abide the outcome of another pending in another court, especially
where the parties and the issues are the same, for there is power inherent in every court to control the disposition of
causes (sic) on its dockets with economy of time and effort for itself, for counsel, and for litigants. Where the rights
of parties to the second action cannot be properly determined until the questions raised in the first action are settled
the second action should be stayed.
The power to stay proceedings is incidental to the power inherent in every court to control the disposition of the
cases on its dockets, considering its time and effort, that of counsel and the litigants. But if proceedings must be
stayed, it must be done in order to avoid multiplicity of suits and prevent vexatious litigations, conflicting
judgments, confusion between litigants and courts. It bears stressing that whether or not the RTC would suspend the
proceedings in the SECOND CASE is submitted to its sound discretion.[45]
 
In light of the foregoing, we hold that the Pasig RTC should have held in abeyance the proceedings in Civil Case
No. 65420, in view of the fact that the outcome of the boundary dispute case before the Antipolo RTC will
undeniably affect both Pasigs and Caintas rights. In fact, the only reason Pasig had to file a tax collection case
against Sta. Lucia was not that Sta. Lucia refused to pay, but that Sta. Lucia had already paid, albeit to another local
government unit. Evidently, had the territorial boundaries of the contending local government units herein been
delineated with accuracy, then there would be no controversy at all.
In the meantime, to avoid further animosity, Sta. Lucia is directed to deposit the succeeding real property taxes due
on the subject properties, in an escrow account with the Land Bank of the Philippines.
WHEREFORE, the instant petition is GRANTED. The June 30, 2004 Decision and the January 27, 2005 Resolution
of the Court of Appeals in CA-G.R. CV No. 69603 are SET ASIDE. The City of Pasig and the Municipality of
Cainta are both directed to await the judgment in their boundary dispute case (Civil Case No. 94-3006), pending
before Branch 74 of the Regional Trial Court in Antipolo City, to determine which local government unit is entitled
to exercise its powers, including the collection of real property taxes, on the properties subject of the dispute.  In the
meantime, Sta. Lucia Realty and Development, Inc. is directed to deposit the succeeding real property taxes due on Respondent.  
the lots and improvements covered by TCT Nos. 532250, 598424, 599131, 92869, 92870 and 38457 in an escrow
account with the Land Bank of the Philippines. x----------------------------------------------------------------------------------------------------x

 
 
DECISION
SO ORDERED.
 
 
BRION, J.:
ROGELIO Z. BAGABUYO, G.R. No. 176970
 
Petitioner,  
 
  Present:
Before us is the petition for certiorari, prohibition, and mandamus,[1] with a prayer for the issuance of a temporary
    restraining order and a writ of preliminary injunction, filed by Rogelio Bagabuyo (petitioner) to prevent the
Commission on Elections (COMELEC) from implementing Resolution No. 7837 on the ground that Republic
  PUNO, C.J.,
ActNo. 9371[2] the law that Resolution No. 7837 implements is unconstitutional.
  QUISUMBING,
 
  *YNARES-SANTIAGO,
BACKGROUND FACTS
  CARPIO,
On October 10, 2006, Cagayan de Oros then Congressman Constantino G. Jaraula filed and sponsored House Bill
  AUSTRIA-MARTINEZ, No. 5859: An Act Providing for the Apportionment of the Lone Legislative District of the City of Cagayan De Oro.
[3]This law eventually became Republic Act (R.A.) No. 9371.[4] It increased Cagayan de Oros legislative district
  CORONA, from one to two. For the election of May 2007, Cagayan de Oros voters would be classified as belonging to either
the first or the second district, depending on their place of residence. The constituents of each district would elect
-       versus - CARPIO MORALES, their own representative to Congress as well as eight members of the Sangguniang Panglungsod.
  AZCUNA, Section 1 of R.A. No. 9371 apportioned the Citys barangays as follows:
  TINGA, Legislative Districts The lone legislative district of the City of Cagayan De Oro is hereby apportioned to commence
  CHICO-NAZARIO, in the next national elections after the effectivity of this Act. Henceforth, barangays Bonbon, Bayabas, Kauswagan,
Carmen, Patag, Bulua, Iponan, Baikingon, San Simon, Pagatpat, Canitoan, Balulang, Lumbia, Pagalungan,
  VELASCO, JR., Tagpangi, Taglimao, Tuburan, Pigsag-an, Tumpagon, Bayanga, Mambuaya, Dansulihon, Tignapoloan and Bisigan
shall comprise the first district while barangays Macabalan, Puntod, Consolacion, Camaman-an, Nazareth,
  NACHURA, Macasandig, Indahag, Lapasan, Gusa, Cugman, FS Catanico, Tablon, Agusan, Puerto, Bugo, and Balubal and all
urban barangays from Barangay 1 to Barangay 40 shall comprise the second district.[5]
  REYES,
 
  LEONARDO-DE CASTRO, and
 
  BRION, JJ.
On March 13, 2007, the COMELEC en Banc promulgated Resolution No. 7837[6]implementing R.A. No. 9371.
   
Petitioner Rogelio Bagabuyo filed the present petition against the COMELEC on March 27, 2007.[7] On 10 April
  Promulgated:
2008, the petitioner amended the petition to include the following as respondents: Executive Secretary Eduardo
    Ermita; the Secretary of the Department of Budget and Management; the Chairman of the Commission on Audit; the
Mayor and the members of the Sangguniang Panglungsod of Cagayan de Oro City; and its Board of Canvassers.[8]
COMMISSION ON ELECTIONS, December 8, 2008
In asking for the nullification of R.A. No. 9371 and Resolution No. 7837 on constitutional grounds, the petitioner
argued that the COMELEC cannot implement R.A. No. 9371 without providing for the rules, regulations and
guidelines for the conduct of a plebiscite which is indispensable for the division or conversion of a local government  
unit. He prayed for the issuance of an order directing the respondents to cease and desist from implementing R.A.
No. 9371 and COMELEC Resolution No. 7837, and to revert instead to COMELEC Resolution No. 7801 which Except for the issue of the hierarchy of courts rule, we find the petition totally without merit.
provided for a single legislative district for Cagayan de Oro.
 
Since the Court did not grant the petitioners prayer for a temporary restraining order or writ of preliminary
The hierarchy of courts principle.
injunction, the May 14 National and Local Elections proceeded according to R.A. No. 9371 and Resolution No.
7837.  
The respondents Comment on the petition, filed through the Office of the Solicitor General, argued that: 1) the The Supreme Court has original jurisdiction over petitions for certiorari, prohibition, mandamus, quo warranto,
petitioner did not respect the hierarchy of courts, as the Regional Trial Court (RTC) is vested with concurrent and habeas corpus.[11] It was pursuant to this original jurisdiction that the petitioner filed the present petition.
jurisdiction over cases assailing the constitutionality of a statute; 2) R.A. No. 9371 merely increased the
representation of Cagayan de Oro City in the House of Representatives and Sangguniang Panglungsod pursuant to  
Section 5, Article VI of the 1987 Constitution; 3) the criteria established under Section 10, Article X of the 1987
While this jurisdiction is shared with the Court of Appeals[12] and the RTCs,[13]a direct invocation of the Supreme
Constitution only apply when there is a creation, division, merger, abolition or substantial alteration of boundaries of
Courts jurisdiction is allowed only when there are special and important reasons therefor, clearly and especially set
a province, city, municipality, or barangay; in this case, no such creation, division, merger, abolition or alteration of
out in the petition.Reasons of practicality, dictated by an increasingly overcrowded docket and the need to prioritize
boundaries of a local government unit took place; and 4) R.A. No. 9371 did not bring about any change in Cagayan
in favor of matters within our exclusive jurisdiction, justify the existence of this rule otherwise known as
de Oros territory, population and income classification; hence, no plebiscite is required.
the principle of hierarchy of courts. More generally stated, the principle requires that recourse must first be made to
The petitioner argued in his reply that: 1) pursuant to the Courts ruling in Del Mar v. PAGCOR,[9] the Court may the lower-ranked court exercising concurrent jurisdiction with a higher court.[14]
take cognizance of this petition if compelling reasons, or the nature and importance of the issues raised, warrant the
 
immediate exercise of its jurisdiction; 2) Cagayan de Oro Citys reapportionment under R.A. No. 9371 falls within
the meaning of creation, division, merger, abolition or substantial alteration of boundaries of cities under Section 10, Among the cases we have considered sufficiently special and important to be exceptions to the rule, are petitions
Article X of the Constitution; 3) the creation, division, merger, abolition or substantial alteration of boundaries of for certiorari, prohibition, mandamus and quo warranto against our nations lawmakers when the validity of their
local government units involve a common denominator the material change in the political and economic rights of enactments is assailed.[15] The present petition is of this nature; its subject matter and the nature of the issues raised
the local government units directly affected, as well as of the people therein; 4) a voters sovereign power to decide among them, whether legislative reapportionment involves a division of Cagayan de Oro City as a local government
on who should be elected as the entire citys Congressman was arbitrarily reduced by at least one half because the unit are reasons enough for considering it an exception to the principle of hierarchy of courts. Additionally, the
questioned law and resolution only allowed him to vote and be voted for in the district designated by the petition assails as well a resolution of the COMELEC en banc issued to implement the legislative apportionment that
COMELEC; 5) a voter was also arbitrarily denied his right to elect the Congressman and the members of the city R.A. No. 9371 decrees.As an action against a COMELEC en banc resolution, the case falls under Rule 64 of the
council for the other legislative district, and 6) government funds were illegally disbursed without prior approval by Rules of Court that in turn requires a review by this Court via a Rule 65 petition forcertiorari.[16] For these reasons,
the sovereign electorate of Cagayan De Oro City.[10] we do not see the principle of hierarchy of courts to be a stumbling block in our consideration of the present case.
   
THE ISSUES The Plebiscite Requirement.
   
The core issues, based on the petition and the parties memoranda, can be limited to the following contentious points:  
  The petitioner insists that R.A. No. 9371 converts and divides the City of Cagayan de Oro as a local government
unit, and does not merely provide for the Citys legislative apportionment. This argument essentially proceeds from a
1)     Did the petitioner violate the hierarchy of courts rule; if so, should the instant petition be dismissed on this
misunderstanding of the constitutional concepts of apportionment of legislative districts and division of local
ground?
government units.
2)     Does R.A. No. 9371 merely provide for the legislative reapportionment of Cagayan de Oro City, or does it
 
involve the division and conversion of a local government unit?
Legislative apportionment is defined by Blacks Law Dictionary as the determination of the number of
3)     Does R.A. No. 9371 violate the equality of representation doctrine?
representatives which a State, county or other subdivision may send to a legislative body. [17] It is the allocation of
  seats in a legislative body in proportion to the population; the drawing of voting district lines so as to equalize
population and voting power among the districts.[18]Reapportionment, on the other hand, is the realignment or
OUR RULING
change in legislative districts brought about by changes in population and mandated by the constitutional
requirement of equality of representation.[19]
 
Article VI (entitled Legislative Department) of the 1987 Constitution lays down the rules on legislative
apportionment under its Section 5 which provides:
Sec. 5(1). (1) The House of Representatives shall be composed of not more than two hundred fifty members unless
otherwise fixed by law, who shall be elected from legislative districts apportioned among the provinces, cities, and
the Metropolitan Manila area in accordance with the number of their respective inhabitants, and on the basis of a
uniform and progressive ratio, and those who, as provided by law, shall be elected through a party-list system of
registered national, regional and sectoral parties or organizations.
xxx
 
(3) Each legislative district shall comprise, as far as practicable, continuous, compact, and adjacent territory.  Each
city with a population of at least two hundred fifty thousand, or each province, shall have at least one representative.
(4) Within three years following the return of every census, the Congress shall make a reapportionment of legislative
districts based on the standards provided in this section.
Separately from the legislative districts that legal apportionment or reapportionment speaks of, are the local
government units (historically and generically referred to as municipal corporations) that the Constitution itself
classified into provinces, cities, municipalities and barangays.[20] In its strict and proper sense, a municipality has
been defined as a body politic and corporate constituted by the incorporation of the inhabitants of a city or town for
the purpose of local government thereof.[21] The creation, division, merger, abolition or alteration of boundary of
local government units, i.e., of provinces, cities, municipalities, and barangays, are covered by the Article on Local
Government (Article X). Section 10 of this Article provides:
 
 
No province, city, municipality, or barangay may be created, divided, merged, abolished, or its boundary
substantially altered, except in accordance with the criteria established in the local government code and subject to
approval by a majority of the votes cast in a plebiscite in the political unit directly affected.
Under both Article VI, Section 5, and Article X, Section 10 of the Constitution, the authority to act has been vested
in the Legislature. The Legislature undertakes the apportionment and reapportionment of legislative districts,
[22] and likewise acts on local government units by setting the standards for their creation, division, merger,
abolition and alteration of boundaries and by actually creating, dividing, merging, abolishing local government units
and altering their boundaries through legislation.Other than this, not much commonality exists between the two
provisions since they are inherently different although they interface and relate with one another.
The concern that leaps from the text of Article VI, Section 5 is political representation and the means to make a
legislative district sufficiently represented so that the people can be effectively heard. As above stated, the aim of
legislative apportionment is to equalize population and voting power among districts.[23] Hence, emphasis is given
to the number of people represented; the uniform and progressive ratio to be observed among the representative
districts; and accessibility and commonality of interests in terms of each district being, as far as practicable,
continuous, compact and adjacent territory. In terms of the people represented, every city with at least 250,000
people and every province (irrespective of population) is entitled to one representative. In this sense, legislative
districts, on the one hand, and provinces and cities, on the other, relate and interface with each other. To ensure
continued adherence to the required standards of apportionment, Section 5(4) specifically mandates reapportionment
as soon as the given standards are met.
In contrast with the equal representation objective of Article VI, Section 5, Article X, Section 10 expressly speaks of
how local government units may be created, divided, merged, abolished, or its boundary substantially altered. Its
concern is the commencement, the termination, and the modification of local government units corporate existence
and territorial coverage; and it speaks of two specific standards that must be observed in implementing this concern,
namely, the criteria established in the local government code and the approval by a majority of the votes cast in a
plebiscite in the political units directly affected. Under the Local Government Code (R.A. No. 7160) passed in 1991,
the criteria of income, population and land area are specified as verifiable indicators of viability and capacity to
provide services.[24] The division or merger of existing units must comply with the same requirements (since a new
local government unit will come into being), provided that a division shall not reduce the income, population, or
land area of the unit affected to less than the minimum requirement prescribed in the Code.[25]
A pronounced distinction between Article VI, Section 5 and, Article X, Section 10 is on the requirement of a
plebiscite. The Constitution and the Local Government Code expressly require a plebiscite to carry out any creation,
division, merger, abolition or alteration of boundary of a local 
government unit.[26] In contrast, no plebiscite requirement exists under the apportionment or reapportionment
provision.In Tobias v. Abalos,[27] a case that arose from the division of the congressional district formerly
covering San Juan and Mandaluyong into separate districts, we confirmed this distinction and the fact that no
plebiscite is needed in a legislative reapportionment. The plebiscite issue came up because one was ordered and held
for Mandaluyong in the course of its conversion into a highly urbanized city, while none was held for San Juan. In
explaining why this happened, the Court ruled that no plebiscite was necessary for San Juan because the objective of
the plebiscite was the conversion of Mandaluyong into a highly urbanized city as required by Article X, Section 10
the Local Government Code; the creation of a new legislative district only followed as a consequence.  In other
words, the apportionment alone and by itself did not call for a plebiscite, so that none was needed for San
Juan where only a reapportionment took place.
The need for a plebiscite under Article X, Section 10 and the lack of requirement for one under Article VI, Section 5
can best be appreciated by a consideration of the historical roots of these two provisions, the nature of the concepts
they embody as heretofore discussed, and their areas of application.
A Bit of History.
 
In Macias v. COMELEC,[28] we first jurisprudentially acknowledged the American roots of our apportionment
provision, noting its roots from the  units, never with the concept of legislative apportionment.
Fourteenth Amendment[29] of the U.S. Constitution and from the constitutions of some American states. The
Philippine Organic Act of 1902 created the Philippine Assembly,[30] the body that acted as the lower house of the
bicameral legislature under the Americans, with the Philippine Commission acting as the upper house.While the
members of the Philippine Commission were appointed by the U.S. President with the conformity of the U.S.
Senate, the members of the Philippine Assembly were elected by representative districts previously delineated under
the Philippine Organic Act of 1902 pursuant to the mandate to apportion the seats of the Philippine Assembly among
the provinces as nearly as practicable according to population. Thus, legislative apportionment first started in our
country.
The Jones Law or the Philippine Autonomy Act of 1916 maintained the apportionment provision, dividing the
country into 12 senate districts and 90 representative districts electing one delegate each to the House of
Representatives.Section 16 of the Act specifically vested the Philippine Legislature with the authority to redistrict
the Philippine Islands.
 
Under the 1935 Constitution, Article VI, Section 5 retained the concept of legislative apportionment together with
district as the basic unit of apportionment; the concern was equality of representation . . . as an essential feature of
republican institutions as expressed in the leading case of Macias v. COMELEC.[31] The case ruled that inequality
of representation is a justiciable, not a political issue, which ruling was reiterated in  Montejo v. COMELEC.
[32]Notably, no issue regarding the holding of a plebiscite ever came up in these cases and the others that followed,
as no plebiscite was required.
 
Article VIII, Section 2 of the 1973 Constitution retained the concept of equal representation in accordance with the
number of their respective inhabitants and on the basis of a uniform and progressive ratio with each district being, as
far as practicable, contiguous, compact and adjacent territory. This formulation was essentially carried over to the
1987 Constitution, distinguished only from the previous one by the presence of party-list representatives.  In neither
Constitution was a plebiscite required.
 
The need for a plebiscite in the creation, division, merger, or abolition of local government units was not
constitutionally enshrined until the 1973 Constitution. However, as early as 1959, R.A. No. 2264[33] required, in the
creation of barrios by Provincial Boards, that the creation and definition of boundaries be upon petition of a majority
of the voters in the areas affected. In 1961, the Charter of the City of Caloocan (R.A. No. 3278) carried this further
by requiring that the Act shall take effect after a majority of voters of the Municipality of Caloocan vote in favor of
the conversion of their municipality into a city in a plebiscite. This was followed up to 1972 by other legislative
enactments requiring a plebiscite as a condition for the creation and conversion of local government units as well as
the transfer of sitios from one legislative unit to another.[34] In 1973, the plebiscite requirement was accorded
constitutional status.
 
Under these separate historical tracks, it can be seen that the holding of a plebiscite was never a requirement in
legislative apportionment or reapportionment. After it became constitutionally entrenched, a plebiscite was also
always identified with the creation, division, merger, abolition and alteration of boundaries of local government
 
Nature and Areas of Application.
The legislative district that Article VI, Section 5 speaks of may, in a sense, be called a political unit because it is the
basis for the election of a member of the House of Representatives and members of the local legislative body. It is
not, however, a political subdivision through which functions of government are carried out.  It can more
appropriately be described as a representative unit that may or may not encompass the whole of a city or a province,
but unlike the latter, it is not a corporate unit.Not being a corporate unit, a district does not act for and in behalf of
the people comprising the district; it merely delineates the areas occupied by the people who will choose a
representative in their national affairs. Unlike a province, which has a governor; a city or a municipality, which has a
mayor; and a barangay, which has a punong barangay, a district does not have its own chief executive. The role of
the congressman that it elects is to ensure that the voice of the people of the district is heard in Congress, not to
oversee the affairs of the legislative district. Not being a corporate unit also signifies that it has no legal personality
that must be created or dissolved and has no capacity to act.Hence, there is no need for any plebiscite in the creation,
dissolution or any other similar action on a legislative district.
 
The local government units, on the other hand, are political and corporate units.They are the territorial and political
subdivisions of the state.[35] They possess legal personality on the authority of the Constitution and by action of the
Legislature. The Constitution defines them as entities that Congress can, by law, create, divide, abolish, merge; or
whose boundaries can be altered based on standards again established by both the Constitution and the Legislature.
[36] Alocal government units corporate existence begins upon the election and qualification of its chief executive
and a majority of the members of its Sanggunian.[37]
 
As a political subdivision, a local government unit is an instrumentality of the state in carrying out the functions of
government.[38] As a corporate entity with a distinct and separate juridical personality from the State, it exercises
special functions for the sole benefit of its constituents. It acts as an agency of the community in the administration
of local affairs[39] and the mediums through which the people act in their corporate capacity on local concerns.
[40] In light of these roles, the Constitution saw it fit to expressly secure the consent of the people affected by the
creation, division, merger, abolition or alteration of boundaries of local government units through a plebiscite.
 
These considerations clearly show the distinctions between a legislative apportionment or reapportionment and the
division of a local government unit.Historically and by its intrinsic nature, a legislative apportionment does not
mean, and does not even imply, a division of a local government unit where the apportionment takes place. Thus, the
plebiscite requirement that applies to the division of a province, city, municipality or barangay under the Local
Government Code should not apply to and be a requisite for the validity of a legislative apportionment or
reapportionment.
 
R.A. No. 9371 and COMELEC Res. No. 7837
 
R.A. No. 9371 is, on its face, purely and simply a reapportionment legislation passed in accordance with the
authority granted to Congress under Article VI, Section 5(4) of the Constitution. Its core provision Section 1
provides:
 
SECTION 1. Legislative Districts. The lone legislative district of the City of Cagayan de Oro is hereby apportioned
to commence in the next national elections after the effectivity of this Act. Henceforth, barangays Bonbon, Bayabas,
Kauswagan, Carmen, Patag, Bulua, Iponan, Baikingon, San Simon, Pagatpat, Canitoan, Balulang, Lumbia,
Pagalungan, Tagpangi, Taglimao, Tuburan, Pigsag-an, Tumpagon, Bayanga, Mambuaya, Dansulihon, Tignapoloan
and Bisigan shall comprise the first district while barangays Macabalan, Puntod, Consolacion, Camaman-an,
Nazareth, Macansandig, Indahag, Lapasan, Gusa, Cugman, FS Catanico, Tablon, Agusan, Puerto, Bugo and Balubal
and all urban barangays from Barangay 1 to Barangay 40 shall comprise the second district.
 
Under these wordings, no division of Cagayan de Oro City as a political and corporate entity takes place or is
mandated. Cagayan de Oro City politically remains a single unit and its administration is not divided along territorial
lines. Its territory remains completely whole and intact; there is only the addition of another legislative district and
the delineation of the city into two districts for purposes of representation in the House of Representatives. Thus,
Article X, Section 10 of the Constitution does not come into play and no plebiscite is necessary to validly apportion
Cagayan de Oro City into two districts.
Admittedly, the legislative reapportionment carries effects beyond the creation of another congressional district in
the city by providing, as reflected in COMELEC Resolution No. 7837, for additional  Sangguniang Panglunsod seats
to be voted for along the lines of the congressional apportionment made. The effect on the Sangguniang Panglunsod,
however, is not directly traceable to R.A. No. 9371 but to another law R.A. No. 6636[41]whose Section 3 provides:
SECTION 3. Other Cities. The provision of any law to the contrary notwithstanding the City of Cebu, City of
Davao, and any other city with more than one representative district shall have eight (8) councilors for each
district who shall be residents thereof to be elected by the qualified voters therein, provided that the cities of
Cagayan de Oro, Zamboanga, Bacolod, Iloilo and other cities comprising a representative district shall have twelve
(12) councilors each and all other cities shall have ten (10) councilors each to be elected at large by the qualified
voters of the said cities: Provided, That in no case shall the present number of councilors according to their charters
be reduced.
 
However, neither does this law have the effect of dividing the City of Cagayan de Orointo two political and
corporate units and territories. Rather than divide the city either territorially or as a corporate entity, the effect is
merely to enhance voter representation by giving each city voter more and greater say, both in Congress and in
the Sangguniang Panglunsod.
To illustrate this effect, before the reapportionment, Cagayan de Oro had only one congressman and 12 city council
members citywide for its population of approximately 500,000.[42] By having two legislative districts, each of them
with one congressman, Cagayan de Oro now effectively has two congressmen, each one representing 250,000 of the
citys population.In terms of services for city residents, this easily means better access to their congressman since
each one now services only 250,000 constituents as against the 500,000 he used to represent. The same goes true for
the Sangguniang Panglungsod with its ranks increased from 12 to 16 since each legislative district now has 8
councilors. In representation terms, the fewer constituents represented translate to a greater voice for each individual
city resident in Congress and in the Sanggunian; each congressman and each councilor represents both a smaller area
and fewer constituents whose fewer numbers are now concentrated in each representative. The City, for its part, now
has twice the number of congressmen speaking for it and voting in the halls of Congress. Since the total number of
congressmen in the country has not increased to the point of doubling its numbers, the presence of two congressman
(instead of one) from the same city cannot but be a quantitative and proportional improvement in the representation
of Cagayan de Oro City in Congress.
 
Equality of representation.
The petitioner argues that the distribution of the legislative districts is unequal. District 1 has only 93,719 registered
voters while District 2 has 127,071. District 1 is composed mostly of rural barangays while District 2 is composed
mostly of urban barangays.[43] Thus, R.A. No. 9371 violates the principle of equality of representation.
A clarification must be made. The law clearly provides that the basis for districting shall be the number of the
inhabitants of a city or a province, not the number of registered voters therein. We settled this very same question
in Herrera v. COMELEC[44]when we interpreted a provision in R.A. No.
7166 and COMELEC Resolution No. 2313 that applied to the Province of Guimaras. We categorically ruled
that the basis fordistricting is the number of inhabitants of theProvince of Guimaras by municipality basedon the offi
cial 1995 Census of Population ascertified to by Tomas P. Africa,Administrator of the National StatisticsOffice.
The petitioner, unfortunately, did not provide information about the actual population of Cagayan de Oro City.
However, we take judicial notice of the August 2007 census of the National Statistics Office which shows
that barangays comprising Cagayan de Oros first district have a total population of 254,644, while the second district
has 299,322 residents. Undeniably, these figures show a disparity in the population sizes of the districts. [45] The
Constitution, however, does not require mathematical exactitude or rigid equality as a standard in gauging equality
of representation.[46] In fact, for cities, all it asks is that each city with a population of at least two hundred fifty
thousand shall have one representative, while ensuring representation for every province regardless of the size of its
population. To ensure quality representation through commonality of interests and ease of access by the
representative to the constituents, all that the Constitution requires is that every legislative district should
comprise, as far as practicable, contiguous, compact, and adjacent territory. Thus, the Constitution leaves the local
government units as they are found and does not require their division, merger or transfer to satisfy the numerical
standard it imposes. Its requirements are satisfied despite some numerical disparity if the units are contiguous,
compact and adjacent as far as practicable.
The petitioners contention that there is a resulting inequality in the division of Cagayan de Oro City into two districts
because the barangays in the first district are mostly rural barangays while the second district is mostly urban, is
largely unsubstantiated. But even if backed up by proper proof, we cannot question the division on the basis of the
difference in the barangays levels of development or developmental focus as these are not part of the constitutional
standards for legislative apportionment or reapportionment. What the components of the two districts of Cagayan de
Oro would be is a matter for the lawmakers to determine as a matter of policy. In the absence of any grave abuse of
discretion or violation of the established legal parameters, this Court cannot intrude into the wisdom of these
policies.[47]
WHEREFORE, we hereby DISMISS the petition for lack of merit. Costs against the petitioner.
 
SO ORDERED.
G.R. No. 174964, October 05, 2016
SANGGUNIANG PANLALAWIGAN OF BATAAN, Petitioner, v. CONGRESSMAN ENRIQUE T.
GARCIA, JR., MEMBERS OF THE FACULTY, CONCERNED STUDENTS AND THE BOARD OF
TRUSTEES OF THE BATAAN POLYTECHNIC STATE COLLEGE, Respondents.
DECISION
REYES, J.:
Before this Court is a Petition for Review on Certiorart1 of the Decision2 dated February 7, 2006 of the Court of
Appeals (CA) in CA-G.R. SP No. 85902 upholding the Decision dated November 29, 2002 of the Regional Trial
Court (RTC) of Bataan which granted the petition for a writ of mandamus in Special Civil Action No.
7043.chanroblesvirtuallawlibrary
Antecedent Facts
Lot Nos. 2193 and 2194 of the Bataan Cadastre, containing 1,222 square meters and 10,598 sq m, respectively, were
registered in the name of the Province of Bataan. Both lots were embraced in Original Certificate of Title (OCT) No.
N-182, and occupied by the Bataan Community Colleges (BCC) and the Medina Lacson de Leon School of Arts and
Trades (MLLSAT), both State-run schools.3
On February 26, 1998, the Congress of the Philippines passed Republic Act (R.A.) No. 8562, authored by
Congressman Enrique T. Garcia, Jr. (Cong. Garcia), converting the MLLSAT into a polytechnic college, to be
known as the Bataan Polytechnic State College (BPSC), and integrating thereto the BCC.4 Section 24 of R.A. No.
8562 provides that:chanRoblesvirtualLawlibrary
All parcels of land belonging to the government occupied by the Medina Lacson de Leon School of Arts and Trades
and the Bataan Community Colleges are hereby declared to be the property of the Bataan Polytechnic State College
and shall be titled under that name: Provided, That should the State College cease to exist or be abolished or should
such parcels of land aforementioned be no longer needed by the State College, the same shall revert to the Province
of Bataan.
On the basis of the above provision, Cong. Garcia wrote to then Governor of Bataan Leonardo Roman, and
the Sangguniang Panlalawigan of Bataan (petitioner), requesting them to cause the transfer of the title of the
aforesaid lots to BPSC. No transfer was effected.5
Thus, Cong. Garcia, along with the faculty members and some concerned students of BPSC (collectively, the
respondents) filed a Special Civil Action for Mandamus with the RTC of Balanga, Bataan against the Governor and
the petitioner. Initially, the Board of Trustees of the BPSC was impleaded as an unwilling plaintiff but was
eventually included as co-petitioner in the civil suit pursuant to Resolution No. 14, Series of 2000 of the BPSC.6
In their Comment, the Governor and the petitioner took issue with the standing of the respondents, arguing that they
were not the real parties in interest who would be benefited or injured by the judgment, or the party entitled to the
avails of the suit. They asserted that the subject properties were owned by the Province of Bataan and not the State,
for them to be simply transferred to the BPSC by virtue of the law.7
In its Decision dated November 29, 2002, the RTC granted the writ of mandamus. The fallo of the RTC decision
WHEREFORE, a writ of mandamus is hereby issued, ordering respondents to forthwith:
1. Deliver the owner's duplicate copy of [OCX] No. N-182 to the Register of Deeds of Bataan, free from any hen or
encumbrance;
2. Execute the corresponding deed of conveyance of the parcels of land in issue in favor of the [BPSC]; and
3. Cause the transfer and registration of the title to and in the name of the [BPSC].
SO ORDERED.8
The Governor and the petitioner appealed to the CA alleging that the subject lots were the patrimonial properties of
the Province of Bataan, and as such they cannot be taken by the National Government without due process of law
and without just compensation. They also pointed out that certain loan obligations of the Province of Bataan to the
Land Bank of the Philippines (LBP) were secured with a mortgage on the lots; and since the mortgage lien was duly
annotated on its title, OCT No. N-182, the writ of mandamus violated the non-impairment clause of the Constitution.
The Governor and the petitioner reiterated that the respondents had no legal standing since they were not the real
parties in interest.9
In the Decision10 dated February 7, 2006, the CA affirmed the RTC.
The CA rejected the claim that the subject lots were the patrimonial properties of the Province of Bataan, declaring
that the petitioner failed to provide proof that the Province of Bataan acquired them with its own private or corporate
funds, and for this reason the lots must be presumed to belong to the State, citing Salas, etc., et al. v. Hon. Jarencio,
etc., et al.11 Concerning the mortgage to the LBP, the appellate court agreed with the RTC that the consent of the
LBP to the transfer of title to BPSC must be obtained, and the mortgage lien must be carried over to the new title.
The CA also held that BPSC is a real party in interest on the basis of Section 24 of R.A. No. 8562, and was correctly
impleaded as a co-petitioner. The subsequent motion for reconsideration was denied in the CA Resolution12 dated
September 20, 2006; hence, this petition.
Issues
I. WHETHER OR NOT THE SUBJECT PARCELS OF LAND ARE PATRIMONIAL PROPERTIES OF THE
PROVINCE OF BATAAN WHICH CANNOT BE TAKEN WITHOUT DUE PROCESS OF LAW AND
WITHOUT JUST COMPENSATION.
II. WHETHER OR NOT A WRIT OF MANDAMUS MAY BE ISSUED AGAINST THE PETITIONER TO
COMPEL THE TRANSFER OF THE SUBJECT PROPERTIES WITHOUT DUE PROCESS OF LAW AND
WITHOUT JUST COMPENSATION.13
The petitioner insists that the subject lots are not communal lands, or legua comunal as they were known under the
laws of colonial Spain, but are the patrimonial properties of the Province of Bataan, which were issued a Torrens
title by the Cadastral Court on August 11, 1969 in Cadastral Case No. 5;14 that while in Salas,15 the title of the
State over the disputed lot was expressly recognized by the City of Manila, this is not so in the case at bar;16  that in
the exercise of its proprietary rights over the subject lots, the Province of Bataan has used them as collateral for its
loan obligations with the LBP;17 that in its Manifestation and Motion dated February 24, 2000, the Board of
Trustees of BPSC even acknowledged the titles of the Province of Bataan over the subject properties.18
In addition to the above contentions, the petitioner proffers an alleged novel argument that R.A. No. 8562 infringes
on the State's underlying policy of local autonomy for its territorial and political subdivisions, found in Article X of
the 1987 Constitution (formerly Article XI, 1973 Constitution) and now fleshed out in a landmark legislation, R.A.
No. 7160, better known as the Local Government Code of 1991 (LGC). Thus, for this Court to still sustain its ruling
in Salas would render the State's policy of local autonomy purely illusory.19
Ruling of the Court
devoted to governmental purposes,
such as local administration, public
education, and public health, as
may be provided under special
laws, is classified as public.
In The Province of Zamboanga del Norte v. City of Zamboanga, et al.25 cited by the CA, the Province of
Zamboanga del Norte sought to declare unconstitutional R.A. No. 3039, which ordered the transfer of properties
belonging to the Province of Zamboanga located within the territory of the City of Zamboanga to the said City, for
depriving the province of property without due process and just compensation. In said case, the Court classified
properties of local governments as either (a) properties for public use, or (b) patrimonial properties, and held that the
capacity in which the property is held by a local government is dependent on the use to which it is intended and for
which it is devoted. If the property is owned by the municipal corporation in its public and governmental capacity, it
is public and Congress has absolute control over it; but if the property is owned in its private or proprietary capacity,
then it is patrimonial and Congress has no absolute control, in which case, the municipality cannot be deprived of it
without due process and payment of just compensation.26 In upholding the validity of R.A. No. 3 039, the Court
noted that it affected "lots used as capitol site, school sites and its grounds, hospital and leprosarium sites and the
high school playground sites - a total of 24 lots - since these were held by the former Zamboanga province in its
governmental capacity and therefore are subject to the absolute control of Congress." 27
According to the Court, there are two established norms to determine the classification of the properties: that of the
Civil Code, particularly Articles 423 and 424 thereof, and that obtaining under the law of Municipal Corporations.
Articles 423 and 424 of the Civil Code provide, as follows:

The decision of the CA is affirmed. Art. 423. The property of provinces, cities and municipalities is divided into property for public use and patrimonial
property.
A. Under the well-entrenched and
time-honored Regalian Doctrine, all Art. 424. Property for public use, in the provinces, cities, and municipalities, consists of the provincial roads, city
lands of the public domain are streets, municipal streets, the squares, fountains, public waters, promenades, and public works for public service paid
under the absolute control and beyond for by said provinces, cities, or municipalities.
ownership of the State.
All other property possessed by any of them is patrimonial and shall be governed by this Code, without prejudice to
The State's ownership of and control over all lands and resources of the public domain are dispute. Reproducing the provisions of special laws.
almost verbatim from the 1973 Constitution,20 Section 2, Article XII of the 1987 Constitution provides that "[a]ll
lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy,
In Province of Zamboanga del Norte,28 properties for the free and indiscriminate use of everyone are classified
fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State, x x x." In
under the Civil Code norm as for public use, while all other properties are patrimonial in nature. In contrast, under
Section 1, Article XIII of the Amended 1935 Constitution, it was also provided that "[a]ll agricultural timber, and
the Municipal Corporations Law norm, to be considered public property, it is 'enough that a property is held and
mineral lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential
devoted to a governmental purpose, such as local administration, public education, and public health.29 Nonetheless,
energy and other natural resources of the Philippines belong to the State x x x."
the Court clarified that the classification of properties in the municipalities, other than those for public use, as
patrimonial under Article 424 of the Civil Code, is "without prejudice to the provisions of special laws,"30 holding
Thus, in Cari�o v. Insular Government,21 a case of Philippine origin, the Supreme Court of the United States of
that the principles obtaining under the Law of Municipal Corporations can be considered as "special laws"31
America acknowledged that "Spain in its earlier decrees embodied the universal feudal theory that all lands were
held from the Crown x x x." In Hong Hok v. David,22 citing Cari�o, the Court likewise said that the theory is a
Moreover, in the 2009 case of Heirs of Mario Malabanan v. Republic of the Philippines,32 the Court reiterated that
manifestation of the concept of the Regalian Doctrine, or jura regalia,23 which is enshrined in our 1935, 1973, and
Article 420(2) of the Civil Code makes clear that properties "which belong to the State, without being for public use,
1987 Constitutions. As adopted in our republican system, this medieval concept is stripped of royal overtones; and
and are intended for some public service or for the development of the national wealth," are public dominion
ownership of all lands belonging to the public domain is vested in the State.24 Under this well-entrenched and time-
property. For as long as the property belongs to the State, although already classified as alienable or disposable, it
honored Regalian Doctrine, all lands of the public domain are under the absolute control and ownership of the State.
remains property of the public dominion when it is "intended for some public service or for the development of the
national wealth."33
B. Local government property
C. Property registered in the name
of the municipal corporation but
without proof that it was acquired
with its corporate funds is deemed
held by it in trust for the State.
The Court takes instructions from the case, of Salas as to properties belonging to the municipal government.
In Salas, at issue was the constitutionality of R.A. No. 4118 passed on June 20, 1964,34whereby Congress reserved a
lot, long titled in the name of the City of Manila, as communal property, and converted it into disposable land of the
State for resale in small lots to its bona fide occupants. On February 24, 1919, Lot No. 1, Block 557 of the Cadastre
of the City of Manila, containing 9,689.80 sq m, was declared by the Court of First Instance of Manila, Branch 4,
acting as a land registration court in Case No. 18, G.L.R.O. Record No. 111, as owned by the City of Manila in fee
simple. On August 21, 1920, OCT No. 4329 was issued in the name of the City of Manila over the said lot. On
various dates in 1924, the City of Manila sold portions of Lot No. 1, Block 557 to a certain Pura Villanueva
(Villanueva). OCT No. 4329 was cancelled, and transfer certificates of title (TCT) were issued to Villanueva for the
portions sold to her, while TCT No. 22547 was issued to the City of Manila for the remainder of Lot No. 1
containing 7,490.10 sq m, now designated, as Lot No. 1-B-2-B of Block 557.35
On September 21, 1960, the local board of the City of Manila wrote to the President of the Philippines seeking
assistance in declaring the aforesaid lot as patrimonial property of the city for the purpose of reselling the same in
small lots to the actual occupants thereof. R.A. No. 4118 was passed by Congress on June 20, 1964 for this
purpose.36 On February 18, 1965, Manila Mayor Antonio Villegas (Mayor Villegas) was furnished a copy of a
subdivision plan for TCT No. 22547. He interposed no objection to the implementation of R.A. No. 4118, and TCT
No. 22547 was duly surrendered to the Land Authority.37
Inexplicably, now claiming that R.A. No. 4118 was unconstitutional, Mayor Villegas brought on December 20, 1966
an action for injunction and/or prohibition with preliminary injunction, to restrain, prohibit and enjoin the Land
Authority and the Register of Deeds of Manila from implementing R.A. No. 4118. On September 23, 1968, the RTC
declared the said law unconstitutional for depriving the City of Manila of its property without due process and just
compensation.38
Acting on the petition for review, the Court declared that Lot 1-B-2-B of Block 557 was a communal property held
in trust by the City of Manila for the State, and therefore subject to the paramount power of Congress to dispose of.
Thus:
[T]he City of Manila, although declared by the Cadastral Court as owner in fee simple, has not shown by any shred
of evidence in what manner it acquired said land as its private or patrimonial property. It is true that the City of
Manila as well as its predecessor, the Ayuntamiento de Manila, could validly acquire property in its corporate or
private capacity, following the accepted doctrine on the dual character - public and private - of a municipal
corporation. And when it acquires property in its private capacity, it acts like an ordinary person capable of entering
into contracts or making transactions for the transmission of title or other real rights. When it comes to acquisition of
land, it must have done so under any of the modes established by law for the acquisition of ownership and other real
rights. In the absence of a title deed to any land claimed by the City of Manila as its own, showing that it was
acquired with its private or corporate funds, the presumption is that such land came from the State upon the creation
of the municipality (Unson vs. Lacson, et al., 100 Phil. 695). Originally the municipality owned no patrimonial
property except those that were granted by the State not for its public but for private use. Other properties it owns are
acquired in the course of the exercise of its corporate powers as a juridical entity to which category a municipal
corporation pertains.
Communal lands or "legua comunal" came into existence when a town or pueblo was established in this country
under the laws of Spain (Law VII, Title III, Book VI, Recopilacion de las Leyes de Indios). The municipalities of the
Philippines were not entitled, as a matter of right, to any part of the public domain for use as communal lands. The
Spanish law provided that the usufruct of a portion of the public domain adjoining municipal territory might be
granted by the Government for communal purposes, upon proper petition, but, until granted, no rights therein passed
to the municipalities, and, in any event, the ultimate title remained in the sovereign (City of Manila vs. Insular
Government, 10 Phil. 327).
xxxx
It may, therefore, be laid down as a general rule that regardless of the source or classification of land in the
possession of a municipality, excepting those acquired with its own funds in its private or corporate capacity, such
property is held in trust for the State for the benefit of its inhabitants, whether it be for governmental or proprietary
purposes. It holds such lands subject to the paramount power of the legislature to dispose of the same, for after all it
owes its creation to it as an agent for the performance of a part of its public work, the municipality being but a
subdivision or instrumentality thereof for purposes of local administration. Accordingly, the legal situation is the
same as if the State itself holds the property and puts it to a different use (2 Mc Quilin, Municipal Corporations, 3rd
Ed. p. 197, citing Monagham vs. Armatage, 218 Minn. 27, 15 N. W. 2nd 241).
True it is that the legislative control over a municipal corporation is not absolute even when it comes to its property
devoted to public use, for such control must not be exercised to the extent of depriving persons of their property or
rights without due process of law, or in a manner impairing the obligations of contracts. Nevertheless, when it comes
to property of the municipality which it did not acquire in its private or corporate capacity with its own funds, the
legislature can transfer its administration and disposition to an agency of the National Government to be exposed of
according to its discretion. Here it did so in obedience to the constitutional mandate of promoting social justice to
insure the well-being and economic security of the people.39 (Underscoring ours)
D. R.A. No. 8562 was not intended
to expropriate the subject lots titled
in the name of the Province of
Bataan, but to confirm their
character as communal land of the
State and to make them available
for disposition by the National
Government.
The case of Rabuco v. Hon. Villegas,40 decided in 1974, is a virtual reprise of the 1968 case of Salas. In Rabuco, the
constitutionality of R.A. No. 312041 was challenged, which provided for the subdivision of Lot No. 21-B, Block
610 of the Cadastre of the City of Manila, containing about 10,198 sq m into residential lots, and the sale thereof to
the tenants and bona fide occupants. The law declared Lot No. 21-B "reserved as communal property" and then
ordered it converted into "disposable and alienable lands of the State."42
The Court ruled that, like R.A. No. 4118 in Salas, R.A. No. 3120 was intended to implement the social justice policy
of the Constitution and the government's program of land for the landless. Thus, the sale of the subdivided lots to the
bona fide occupants by authority of Congress was not an exercise of eminent domain or expropriation without just
compensation, which would have been in violation of Section 1(2),43Article III of the 1935 Constitution, but simply
a manifestation of its right and power to deal with State property.44 "It is established doctrine that the act of
classifying State property calls for the exercise of wide discretionary legislative power which will not be interfered
with by the courts."45 In Rabuco, the rule in Salas was reiterated that property of the public domain, although titled
to the local government, is held by it in trust for the State. It stated:
The Court [in Salas] reaffirmed the established general rule that "regardless of the source or classification of land in
the possession of a municipality, excepting those acquired with its own funds in its private or corporate capacity,
such property is held in trust for the State for the benefit of its inhabitants, whether it be for governmental or
proprietary purposes. It holds such lands subject to the paramount power of the legislature to dispose of the same, for
after all it owes its creation to it as an agent for the performance of a part of its public work, the municipality being
but a subdivision or instrumentality thereof for purposes of local administration. Accordingly, the legal situation is
the same as if the State itself holds the property and puts it to a different use" and stressed that "the property, as has
been previously shown, was not acquired by the City of Manila with its own funds in its private or proprietary
capacity. That it has in its name a registered title is not questioned, but this title should be deemed to be held in trust
for the State as the land covered thereby was part of the territory of the City of Manila granted by the sovereign upon
its creation."46
E. The State's policy to promote
local autonomy and to devolve the
powers of the National Government
to its political subdivisions has for
its purpose to improve the quality
of local governance.
Sections 2 and 3, Article X of the 1987 Constitution, relied upon by the petitioner, 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.
Pursuant to its mandate, the Congress passed the LGC in 1991 to spell out the above-declared policy of the State,
which is now amplified in Section 2 of R.A. No. 7160. It states, as follows:
Sec. 2. Declaration of Policy. - (a) It is hereby declared the policy of the State that the territorial and political
subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable them to attain their fullest
development as self-reliant communities and make them more effective partners in the attainment of national goals.
Toward this end, the State shall provide for a more responsive and accountable local government structure instituted
through a system of decentralization whereby local government units shall be given more powers, authority,
responsibilities, and resources. The process of decentralization shall proceed from the National Government to the
local government units.
xxxx
Also invoked by the petitioners are Sections 18 and 22 of the LGC, which state as follows:
Sec. 18. Power to Generate and Apply Resources. � Local government units shall have the power and authority to
establish an organization that shall be responsible for the efficient and effective implementation of their development
plans, program objectives and priorities; to create their own sources of revenues and to levy taxes, fees, and charges
which shall accrue exclusively for their use and disposition and which shall be retained by them; to have a just share
in national taxes which shall be automatically and directly released to them without need of any further action; to
have an equitable share in the, proceeds from the utilization and development of the national wealth and resources
within their respective territorial jurisdictions including sharing the same with the inhabitants by way of direct
benefits; to acquire, develop, lease, encumber, alienate, or otherwise dispose of real or personal property held by
them in their proprietary capacity and to apply their resources and assets for productive, developmental, or welfare
purposes, in the exercise or furtherance of their governmental or proprietary powers and functions and thereby
ensure their development into self-reliant communities and active participants in the attainment of national goals.
Sec. 22. Corporate Powers. - x x x
xxxx
(d) Local government units shall enjoy full autonomy in the exercise of their proprietary functions and in the
management of their economic enterprises, subject to the limitations provided in this Code and other applicable
laws.
In the instant petition, it is essentially the petitioner's assertion that the State's policy of local autonomy and
decentralization endows the Province of Bataan with patrimonial rights to use or dispose of the subject lots
according to its own development plans, program objectives and priorities.
The Court disagrees.
Local autonomy and decentralization of State powers to the local political subdivisions are the results of putting
restraints upon the exercise by the Presidents of executive powers over local governments. Section 4, Article X of
the 1987 Constitution reads in part: "The President of the Philippines shall exercise general supervision over local
governments." As with the counterpart provisions of our earlier Constitutions, the aforesaid provision has been
interpreted to exclude the President's power of control over local governments.47 The Constitutions of 1935, 1973
and 1987 have uniformly differentiated the President's power of supervision over local governments and his power
of control of the executive departments, bureaus and offices.48 In Pimentel, Jr. v. Hon. Aguirre,49 it was held that
Section 4 confines the President's power over local governments to one of general supervision, thus:
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 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.50
On the other hand, local autonomy and decentralization of State powers to the local political subdivisions have for
their object to make governance directly responsive at the local levels by giving them a free hand to chart their own
destiny and shape their future with minimum intervention from central authorities, thereby rendering them
accountable to their local constituencies.51 Thus, [h]and in hand with the constitutional restraint on the President's
power over local governments is the state policy of ensuring local autonomy"52 As farther explained in Pimentel,
Jr.:
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. As we stated in Magtajas v. Pryce
Properties Corp., Inc., municipal governments are still agents of the national government.53 (Citation omitted)
It is clear, then, that local autonomy and decentralization do not deal directly with Issues concerning ownership,
classification, use or control of properties of the public domain held by local governments. The State retains power
over property of the public domain, exercised through Congress.
F. The grant of autonomy to local
governments, although a radical
policy change under the 1973 and
1987 Constitutions, does not affect
the settled rule that they possess
property of the public domain in
trust for the State.
The 1973 Constitution devoted an entire Article, Article XI, consisting of five sections, to laying down its policy for
the empowerment of the local governments. The 1987 Constitution, in turn, fully devotes all 21 sections of its
Article X for local government. It introduces significant new provisions, such as the establishment of autonomous
regions (Section 18) and the guarantee of just share of the local governments in the national taxes and equitable
share in the proceeds from the utilization of the national wealth (Sections 6 and 7). It was unlike in the 1935
Constitution, which simply provided in Section 10 of Article VII, dealing with the Executive Department, that "[t]he
President shall have control of all executive departments, bureaus or offices, exercise general provision over all local
governments as may be provided by law, and take care that the laws be faithfully executed."
The erudite Justice Enrique Fernando (Justice Fernando), in his highly instructive separate concurring opinion
in Rabuco,54 did at first admit to doubts as to the continuing authoritativeness of Province of Zamboanga del
Norte and Salas, both promulgated before the effectivity of the 1973 Constitution, in view of the significant
innovations introduced therein pertaining to the autonomy of local governments. He stated that the goal of the 1973
Constitution was "the fullest autonomy to local government units consistent with the basic theory of a unitary, not a
federal, polity,"55 hoping thereby to attain "their fullest development as self-reliant communities."56 According to
him, under the 1973 Constitution, "[tjhings have changed radically,"57 noting that under the 1935 Constitution, "[i]t
could hardly be assumed x x x that x x x the [local governments] could justifiably lay claim to real autonomy."58 He
observed thus:
We start with the declared principle of the State guaranteeing and promoting the autonomy of local government
units. We have likewise noted the earnestness of the framers as to the attainment of such declared objective as set
forth in the specific article on the matter. It is made obligatory on the National Assembly to enact a local government
code. What is more, unlike the general run of statutes, it cannot be amended except by a majority vote of all its
members. It is made to include "a more responsive and accountable local government structure with an effective
system of recall," with an expressed reference to "qualifications, election and removal, term, salaries, powers,
functions, and duties of local officials, [as well as] all other matters relating to the organization and operation of the
local units." Mention is likewise made of the "powers, responsibilities, and resources," items that are identified with
local autonomy. As if that were not enough, the last sentence of this particular provision reads: "However, any
change in the existing form of local government shall not take effect until ratified by a majority of the votes cast in a
plebiscite called for the purpose." To the extent that the last section requires that the creation, division, merger,
abolition or alteration of a boundary of a province, city, municipality, or barrio, must be in accordance with the
criteria established in the local government code and subject to the approval by a majority of the votes cast in a
plebiscite in such unit or units, the adherence to the basic principle of local self government is quite clear. Equally
significant is the stress on the competence of a province, city, municipality or barrio "to create its own sources of
revenue and to levy taxes subject to such limitations as may be provided by law." The care and circumspection with
which the framers saw to the enjoyment of real local self-government not only in terms of administration but also in
terms of resources is thus manifest. Their intent is unmistakable. Unlike the case under the 1935 Constitution, there
is thus a clear manifestation of the presumption now in favor of a local government unit. It is a well-nigh complete
departure from what was. Nor should it be ignored that a highly urbanized city "shall be independent" not only of the
national government but also of a province. Would it not follow then that under the present dispensation, the
moment property is transferred to it by the national government, its control over the same should be as extensive and
as broad as possible, x x x.59 (Citations omitted)
Up to that point, it could almost be presumed that Justice Fernando would dissent from the lucid ponencia of Justice
Claudio Teehankee (Justice Teehankee), borne of logical doubts as to whether Province of Zamboanga del
Norte and Salas still retained their unimpaired doctrinal force under the then new 1973 Constitution. But two
considerations kept him reined in, so to speak. One was Justice Teehankee's "reference to the ratio
decidendi of [Salas] as to the trust character impressed on communal property of a municipal corporation, even if
already titled,"60 "regardless of the source of classification of land in the possession of a municipality, excepting
those acquired with its own funds in its private or corporate capacity."61 Justice Fernando acknowledged that the
local government "holds such [communal property] subject to the paramount power of the legislature to dispose of
the same, for after all it owes its creation to it as an agent for the performance of a part of its public work, the
municipality being but a subdivision or instrumentality thereof for purposes of local administration."62
Rabuco stressed that the properties in controversy were not acquired by the City of Manila with its own private
funds. Thus, according to Justice Fernando, "That [the City of Manila] has in its name a registered title is not
questioned, but this title should be deemed to be held in trust for the State as the land covered thereby was part of the
territory of the City of Manila granted by the sovereign upon its creation."63 This doctrine, according to Justice
Fernando, has its basis in the Regalian Doctrine and is unaffected by the grant of extensive local autonomy under the
1973 Constitution. "It is my view that under the [1973] Constitution, as was the case under the 1935 charter, the
holding of a municipal corporation as a unit of state does not impair the plenary power of the national government
exercising dominical rights to dispose of it in a manner it sees fit, subject to applicable constitutional limitations as
to the citizenship of the grantee."64
The other consideration noted by Justice Fernando in the ponencia of Justice Teehankee in Rabuco he found further
compelling was "the even more fundamental principle of social justice, which was given further stress and a wider
scope in the present Constitution."65 He concluded that R.A. No. 3120, like R.A. No. 4118, was intended to
implement the social justice policy of the Constitution and the government program of land for the landless, and was
not "intended to expropriate the property involved but merely to confirm its character as communal land of the State
and to make it available for disposition by the National Government."66
G. The Province of Bataan has the
duty to provide an adequate
security for its loans with the LBP,
without defeating BPSC's right to
hold title to the contested lots.
The RTC ordered the Province of Bataan to deliver the owner's duplicate copy of OCT No. N-182 to the Register of
Deeds of Bataan, free from any lien or encumbrance, to execute the corresponding deed of conveyance in favor of
BPSC, and to cause the transfer and registration of the title to and in the name of the said college. The Province of
Bataan erroneously believed that it could mortgage the subject lots, notwithstanding that it held the same in trust for
the State and despite the fact that the said lots were actually being occupied by two government schools. As the RTC
urged, then, the Province of Bataan must address this issue of security for its loans with LBP. It cannot complain that
its compliance with the order of the RTC might violate the non-impairment clause of the Constitution, since its duty
to provide a replacement security for its loans with LBP is clear.

H. BPSC is entitled to a writ of

mandamus.

Section 3, Rule 65 of the 1997 Rules of Civil Procedure provides that a writ of mandamus shall issue where a
tribunal, corporation, board, officer or person unlawfully neglects the performance of an act which the law
specifically enjoins as a duty, to command the respondent to do the act required to be done to protect the rights of
the petitioner. Herein petitioner has argued that the mandamus applicants are not entitled thereto because they are
not real parties in interest. It is a rule re-echoed in a long line of cases that every action must be prosecuted or
defended in the name of the real party in interest, meaning "the party who stands to be benefited or injured by the
judgment in the suit, or the party entitled to the avails of the suit."67

At issue in this petition is Section 24 of R.A. No. 8562, which directs that "[a]ll parcels of land belonging to the
government occupied by the [MLLSAT] and the [BCC] are hereby declared to be the property of the [BPSC] and
shall be titled under that name." There is no dispute that the Congress has expressly intended to entrust to BPSC the
titles to the subject lots. Being the sole beneficiary of Section 24 of R.A. No. 8562, BPSC is the real party in interest,
and is entitled to mandamus to enforce its right thereunder.68

WHEREFORE, in view of the foregoing, the petition for review on certiorari is DENIED. The Decision of the Court
of Appeals dated February 7, 2006 in CA-G.R. SP No. 85902 is AFFIRMED.

SO ORDERED.
HON. GABRIEL LUIS QUISUMBING, G.R. No. 175527
HON. ESTRELLA P. YAPHA, HON. VICTORIA G. COROMINAS, HON. RAUL D. BACALTOS
(Members of the
Sangguniang Panlalawigan of Cebu), Present: Petitioners,
PUNO, C.J., QUISUMBING, YNARES-SANTIAGO, CARPIO,
- versus - AUSTRIA-MARTINEZ, CORONA, CARPIO MORALES, AZCUNA, TINGA, CHICO-
NAZARIO, HON. GWENDOLYN F. GARCIA VELASCO, JR., (In her capacity as Governor of
the NACHURA, Province of Cebu), HON. DELFIN REYES, P. AGUILAR (in his capacity as LEONARDO
DE CASTRO, and Director IV (Cluster Director) of COA), BRION, JJ. Cluster IV Visayas Local
Government Sector, HON. HELEN S. HILAYO (In her capacity as Regional Cluster Director Promulgated:
of COA), and HON. ROY L. URSAL (In his capacity as Regional Legal and December 8, 2008 Adjudication
Director of COA), Respondents.
x--------------------------------------------------------------------------- x
DECISION
TINGA, J.:
Gabriel Luis Quisumbing (Quisumbing), Estrella P. Yapha, Victoria G. Corominas, and Raul D. Bacaltos (Bacaltos),
collectively petitioners, assail the Decision[1] of the Regional Trial Court (RTC) of Cebu City, Branch 9, in Civil
Case No. CEB-31560, dated July 11, 2006, which declared that under the pertinent provisions of Republic Act No.
7160 (R.A. No. 7160), or the Local Government Code, and Republic Act No. 9184 (R.A. No. 9184), or the
Government Procurement Reform Act, respondent Cebu Provincial Governor Gwendolyn F. Garcia (Gov. Garcia),
need not secure the prior authorization of the Sangguniang Panlalawigan before entering into contracts committing
the province to monetary obligations.
 
The undisputed facts gathered from the assailed Decision and the pleadings submitted by the parties are as follows:
The Commission on Audit (COA) conducted a financial audit on the Province of Cebu for the period ending
December 2004. Its audit team rendered a report, Part II of which states: Several contracts in the total amount
of P102,092,841.47 were not supported with a Sangguniang Panlalawigan resolution authorizing  contracts.
the Provincial Governor to enter into a contract, as required under Section 22 of R.A. No. 7160. [2] The audit team
then recommended that, Henceforth, the local chief executive must secure a sanggunian resolution authorizing the
former to enter into a contract as provided under Section 22 of R.A. No. 7160.[3]
Gov. Garcia, in her capacity as the Provincial Governor of Cebu, sought the reconsideration of the findings and
recommendation of the COA. However, without waiting for the resolution of the reconsideration sought, she
instituted an action for Declaratory Relief before the RTC of Cebu City, Branch 9. Impleaded as respondents were
Delfin P. Aguilar, Helen S. Hilayo and Roy L. Ursal in their official capacities as Cluster Director IV, Regional
Cluster Director and Regional Legal and Adjudication Director of the COA, respectively. The Sangguniang
Panlalawigan of the Province of Cebu, represented by Vice-Governor Gregorio Sanchez, Jr., was also impleaded as
respondent.
 
Alleging that the infrastructure contracts[4] subject of the audit report complied with the bidding procedures
provided under R.A. No. 9184 and were entered into pursuant to the general and/or supplemental appropriation
ordinances passed by the Sangguniang Panlalawigan, Gov. Garcia alleged that a separate authority to enter into such
contracts was no longer necessary.
 
On the basis of the parties respective memoranda, the trial court rendered the assailed Decision dated  July 11, 2006,
declaring that Gov. Garcia need not secure prior authorization from the Sangguniang Panlalawigan of Cebu before
entering into the questioned contracts. The dispositive portion of the Decision provides:
WHEREFORE, premises considered, this court hereby renders judgment in favor of Petitioner and against the
Respondent COA officials and declares that pursuant to Sections 22 paragraph in relation to Sections 306 and 346 of
the Local Government Code and Section 37 of the Government Procurement Reform Act, the Petitioner Governor of
Cebu need not secure prior authorization by way of a resolution from the Sangguniang Panlalawigan of the Province
of Cebu before she enters into a contract involving monetary obligations on the part of the Province of Cebu when
there is a prior appropriation ordinance enacted.
Insofar as Respondent Sangguniang Panlalawigan, this case is hereby dismissed.[5]
 
In brief, the trial court declared that the Sangguniang Panlalawigan does not have juridical personality nor is it
vested by R.A. No. 7160 with authority to sue and be sued. The trial court accordingly dismissed the case against
respondent members of the Sangguniang Panlalawigan. On the question of the remedy of declaratory relief being
improper because a breach had already been committed, the trial court held that the case would ripen into and be
treated as an ordinary civil action. The trial court further ruled that it is only when the contract (entered into by the
local chief executive) involves obligations which are not backed by prior ordinances that the prior authority of
the sanggunianconcerned is required. In this case, the Sangguniang Panlalawigan of Cebu had already given its prior
authorization when it passed the appropriation ordinances which authorized the expenditures in the questioned
The trial court denied the motion for reconsideration[6] filed by Quisumbing, Bacaltos, Carmiano Kintanar, Jose
Ma. Gastardo, and Agnes Magpale, in their capacities as members of the Sangguniang Panlalawigan of Cebu, in an
Order[7] dated October 25, 2006.
In the Petition for Review[8] dated November 22, 2006, petitioners insisted that the RTC committed reversible error
in granting due course to Gov. Garcias petition for declaratory relief despite a breach of the law subject of the
petition having already been committed. This breach was allegedly already the subject of a pending investigation by
the Deputy Ombudsman for the Visayas. Petitioners further maintained that prior authorization from
the Sangguniang Panlalawigan should be secured before Gov. Garcia could validly enter into contracts involving
monetary obligations on the part of the province.
 
Gov. Garcia, in her Comment[9] dated April 10, 2007, notes that the RTC had already dismissed the case against the
members of the Sangguniang Panlalawigan of Cebuon the ground that they did not have legal personality to sue and
be sued. Since the COA officials also named as respondents in the petition for declaratory relief neither filed a
motion for reconsideration nor appealed the RTC Decision, the said Decision became final and executory. Moreover,
only two of the members of the Sangguniang Panlalawigan, namely, petitioners Quisumbing and Bacaltos, originally
named as respondents in the petition for declaratory relief, filed the instant petition before the Court.
Respondent Governor insists that at the time of the filing of the petition for declaratory relief, there was not yet any
breach of R.A. No. 7160. She further argues that the questioned contracts were executed after a public bidding in
implementation of specific items in the regular or supplemental appropriation ordinances passed by the Sangguniang
Panlalawigan. These ordinances allegedly serve as the authorization required under R.A. No. 7160, such that the
obtention of another authorization becomes not only redundant but also detrimental to the speedy delivery of basic
services.
Gov. Garcia also claims that in its Comment to the petition for declaratory relief, the Office of the Solicitor General
(OSG) took a stand supportive of the governors arguments. The OSGs official position allegedly binds the COA.
 
Expressing gratitude for having been allowed by this Court to file a comment on the petition, respondent COA
officials in their Comment[10] dated March 8, 2007, maintain that Sections 306 and 346 of R.A. No. 7160 cannot be
considered exceptions to Sec. 22(c) of R.A. No. 7160. Sec. 346 allegedly refers to disbursements which must be
made in accordance with an appropriation ordinance without need of approval from the sanggunian concerned. Sec.
306, on the other hand, refers to the authorization for the effectivity of the budget and should not be mistaken for the
specific authorization by the Sangguniang Panlalawigan for the local chief executive to enter into contracts under
Sec. 22(c) of R.A. No. 7160.
The question that must be resolved by the Court should allegedly be whether the appropriation ordinance referred to
in Sec. 346 in relation to Sec. 306 of R.A. No. 7160 is the same prior authorization required under Sec. 22(c) of the
same law. To uphold the assailed Decision would allegedly give the local chief executive unbridled authority to
enter into any contract as long as an appropriation ordinance or budget has been passed by
the sanggunian concerned.
 
Respondent COA officials also claim that the petition for declaratory relief should have been dismissed for the
failure of Gov. Garcia to exhaust administrative remedies, rendering the petition not ripe for judicial determination.
 
The OSG filed a Comment[11] dated March 12, 2007, pointing out that the instant petition raises factual issues
warranting its denial. For instance, petitioners, on one hand, claim that there was no appropriation ordinance passed
for 2004 but only a reenacted appropriations ordinance and that the unauthorized contracts did not proceed from a
public bidding pursuant to R.A. No. 9184. Gov. Garcia, on the other hand, claims that the contracts were entered into
in compliance with the bidding procedures in R.A. No. 9184 and pursuant to the general and/or supplemental
appropriations ordinances passed by the Sangguniang Panlalawigan. She further asserts that there were ordinances
allowing the expenditures made.
 
On the propriety of the action for declaratory relief filed by Gov. Garcia, the OSG states in very general terms that
such an action must be brought before any breach or violation of the statute has been committed and may be treated
as an ordinary action only if the breach occurs after the filing of the action but before the termination
thereof.However, it does not say in this case whether such recourse is proper.
Nonetheless, the OSG goes on to discuss that Sec. 323 of R.A. No. 7160 allows disbursements for salaries and
wages of existing positions, statutory and contractual obligations and essential operating expenses authorized in the
annual and supplemental budgets of the preceding year (which are deemed reenacted in case
the sanggunian concerned fails to pass the ordinance authorizing the annual appropriations at the beginning of the
ensuing fiscal year). Contractual obligations not included in the preceding years annual and supplemental budgets
allegedly require the prior approval or authorization of the local sanggunian.
In their Consolidated Reply[12] dated August 8, 2007, petitioners insist that the instant petition raises only questions
of law not only because the parties have agreed during the proceedings before the trial court that the case involves
purely legal questions, but also because there is no dispute that the Province of Cebu was operating under a
reenacted budget in 2004.
 
They further defend their standing to bring suit not only as members of the sanggunian whose powers Gov. Garcia
has allegedly usurped, but also as taxpayers whose taxes have been illegally spent. Petitioners plead leniency in the
Courts ruling regarding their legal standing, as this case involves a matter of public policy.
Petitioners finally draw attention to the OSGs seeming change of heart and adoption of their argument that Gov.
Garcia has violated R.A. No. 7160.
 
It should be mentioned at the outset that a reading of the OSGs Comment[13] on the petition for declaratory relief
indeed reveals its view that Sec. 22(c) of R.A. No. 7160 admits of exceptions. It maintains, however, that the said
law is clear and leaves no room for interpretation, only application. Its Comment on the instant petition does not
reflect a change of heart but merely an amplification of its original position.
 
Although we agree with the OSG that there are factual matters that have yet to be settled in this case, the records
disclose enough facts for the Court to be able to make a definitive ruling on the basic legal arguments of the parties.
   

The trial courts pronouncement that the parties in this case all agree that the contracts  referred to in the above As it clearly appears from the foregoing provision, prior authorization by the  sanggunian concerned is required
findings are contracts entered into pursuant to the bidding procedures allowed in Republic Act No. 9184 or the before the local chief executive may enter into contracts on behalf of the local government unit.
Government Procurement Reform Acti.e., public bidding, and negotiated bid. The biddings were made pursuant to
the general and/or supplemental appropriation ordinances passed by the Sangguniang Panlalawigan of Cebu x x  
x[14] is clearly belied by the Answer[15] filed by petitioners herein.Petitioners herein actually argue in their Answer
Gov. Garcia posits that Sections 306 and 346 of R.A. No. 7160 are the exceptions to Sec. 22(c) and operate to allow
that the contracts subject of the COAs findings did not proceed from a public bidding. Further, there was no budget
her to enter into contracts on behalf of the Province of Cebu without further authority from the Sangguniang
passed in 2004. What was allegedly in force was the reenacted 2003 budget.[16]
Panlalawigan other than that already granted in the appropriation ordinance for 2003 and the supplemental
ordinances which, however, she did not care to elucidate on.
Gov. Garcias contention that the questioned contracts complied with the bidding procedure in R.A. No. 9184 and
 
were entered into pursuant to the general and supplemental appropriation ordinances allowing these expenditures is
diametrically at odds with the facts as presented by petitioners in this case. It is notable, however, that while Gov. The cited provisions state:
Garcia insists on the existence of appropriation ordinances which allegedly authorized her to enter into the
questioned contracts, she does not squarely deny that these ordinances pertain to the previous years budget which  
was reenacted in 2004.
Sec. 306. Definition of Terms.When used in this Title, the term:
 
 
Thus, contrary to the trial courts finding, there was no agreement among the parties with regard to the operative facts
(a)    Annual Budget refers to a financial plan embodying the estimates of income and expenditures for one (1) fiscal
under which the case was to be resolved. Nonetheless, we can gather from Gov. Garcias silence on the matter and
year;
the OSGs own discussion on the effect of a reenacted budget on the local chief executives ability to enter into
contracts, that during the year in question, the Province of Cebu was indeed operating under a reenacted budget.  
  (b)   Appropriation refers to an authorization made by ordinance, directing the payment of goods and services from
local government funds under specified conditions or for specific purposes;
Note should be taken of the fact that Gov. Garcia, both in her petition for declaratory relief and in her Comment on
the instant petition, has failed to point out the specific provisions in the general and supplemental appropriation  
ordinances copiously mentioned in her pleadings which supposedly authorized her to enter into the questioned
contracts. (c)    Budget Document refers to the instrument used by the local chief executive to present a comprehensive
financial plan to the sanggunian concerned;
 
 
Based on the foregoing discussion, there appear two basic premises from which the Court can proceed to discuss the
question of whether prior approval by theSangguniang Panlalawigan was required before Gov. Garcia could have (d)   Capital Outlays refers to appropriations for the purchase of goods and services, the benefits of which extend
validly entered into the questioned contracts. First, the Province of Cebu was operating under a reenacted budget in beyond the fiscal year and which add to the assets of the local government unit concerned, including investments in
2004. Second, Gov. Garcia entered into contracts on behalf of the province while this reenacted budget was in force. public utilities such as public markets and slaughterhouses;

   

Sec. 22(c) of R.A. No. 7160 provides:
Sec. 22. Corporate Powers.(a) Every local government unit, as a corporation, shall have the following powers:
xxx
(c) Unless otherwise provided in this Code, no contract may be entered into by the local chief executive in behalf of
the local government unit without prior authorization by the sanggunian concerned. A legible copy of such contract
shall be posted at a conspicuous place in the provincial capitol or the city, municipal or barangay hall.
(e)    Continuing Appropriation refers to an appropriation available to support obligations for a specified purpose or
projects, such as those for the construction of physical structures or for the acquisition of real property or equipment,
even when these obligations are incurred beyond the budget year;
(f)     Current Operating Expenditures refers to appropriations for the purchase of goods and services for the conduct
of normal government operations within the fiscal year, including goods and services that will be used or consumed
during the budget year;
(g)    Expected Results refers to the services, products, or benefits that will accrue to the public, estimated in terms of
performance measures or physical targets;
 (h)    Fund refers to a sum of money, or other assets convertible to cash, set aside for the purpose of carrying out
specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations,
and constitutes an independent fiscal and accounting entity;
 
(i)      Income refers to all revenues and receipts collected or received forming the gross accretions of funds of the
local government unit;
 
(j)     Obligations refers to an amount committed to be paid by the local government unit for any lawful act made by
an accountable officer for and in behalf of the local government unit concerned;
 
(k)   Personal Services refers to appropriations for the payment of salaries, wages and other compensation of
permanent, temporary, contractual, and casual employees of the local government unit;
(l)      Receipts refers to income realized from operations and activities of the local government or are received by it
in the exercise of its corporate functions, consisting of charges for services rendered, conveniences furnished, or the
price of a commodity sold, as well as loans, contributions or aids from other entities, except provisional advances for
budgetary purposes; and
(m)  Revenue refers to income derived from the regular system of taxation enforced under authority of law or
ordinance and, as such, accrue more or less regularly every year.
xxx
 
Sec. 346. Disbursements of Local Funds and Statement of Accounts.Disbursements shall be made in accordance
with the ordinance authorizing the annual or supplemental appropriations without the prior approval of
the sanggunian concerned. Within thirty (3) days after the close of each month, the local accountant shall furnish
the sanggunian with such financial statements as may be prescribed by the COA. In the case of the year-end
statement of accounts, the period shall be sixty (60) days after the thirty-first (31st) of December.
Sec. 306 of R.A. No. 7160 merely contains a definition of terms. Read in conjunction with Sec. 346, Sec. 306
authorizes the local chief executive to make disbursements of funds in accordance with the ordinance authorizing the
annual or supplemental appropriations. The ordinance referred to in Sec. 346 pertains to that which enacts the local
government units budget, for which reason no further authorization from the local council is required, the ordinance
functioning, as it does, as the legislative authorization of the budget.[17]
To construe Sections 306 and 346 of R.A. No. 7160 as exceptions to Sec. 22(c) would render the requirement of
prior sanggunian authorization superfluous, useless and irrelevant. There would be no instance when such prior
authorization would be required, as in contracts involving the disbursement of appropriated funds. Yet, this is
obviously not the effect Congress had in mind when it required, as a condition to the local chief executives
representation of the local government unit in business transactions, the prior authorization of
the sanggunian concerned. The requirement was deliberately added as a measure of check and balance, to temper the
authority of the local chief executive, and in recognition of the fact that the corporate powers of the local
government unit are wielded as much by its chief executive as by its council.[18] However, as will be discussed
later, the sanggunian authorization may be in the form of an appropriation ordinance passed for the year which
specifically covers the project, cost or contract to be entered into by the local government unit.
 
The fact that the Province of Cebu operated under a reenacted budget in 2004 lent a complexion to this case which
the trial court did not apprehend. Sec. 323 of R.A. No. 7160 provides that in case of a reenacted budget, only the
annual appropriations for salaries and wages of existing positions, statutory and contractual obligations, and essential
operating expenses authorized in the annual and supplemental budgets for the preceding year shall be deemed
reenacted and disbursement of funds shall be in accordance therewith.[19]
It should be observed that, as indicated by the word only preceding the above enumeration in Sec. 323, the items for
which disbursements may be made under a reenacted budget are exclusive. Clearly, contractual obligations which
were not included in the previous years annual and supplemental budgets cannot be disbursed by the local
government unit. It follows, too, that new contracts entered into by the local chief executive require the prior
approval of the sanggunian.
We agree with the OSG that the words disbursement and contract separately referred to in Sec. 346 and 22(c) of
R.A. No. 7160 should be understood in their common signification. Disbursement is defined as To pay out,
commonly from a fund. To make payment in settlement of a debt or account payable.[20] Contract, on the other
hand, is defined by our Civil Code as a meeting of minds between two persons whereby one binds himself, with
respect to the other, to give something or to render some service.[21]
 
And so, to give life to the obvious intendment of the law and to avoid a construction which would render Sec. 22(c)
of R.A. No. 7160 meaningless,[22] disbursement, as used in Sec. 346, should be understood to pertain to payments
for statutory and contractual obligations which the sanggunian has already authorized thru ordinances enacting the
annual budget and are therefore already subsisting obligations of the local government unit. Contracts, as used in
Sec. 22(c) on the other hand, are those which bind the local government unit to new obligations, with their
corresponding terms and conditions, for which the local chief executive needs prior authority from the sanggunian.
 
Elsewhere in R.A. No. 7160 are found provisions which buttress the stand taken by petitioners against Gov. Garcias
seemingly heedless actions. Sec. 465, Art. 1, Chapter 3 of R.A. No. 7160 states that the provincial governor shall
[r]epresent the province in all its business transactions and sign in its behalf all bonds, contracts, and obligations, and
such other documents upon authority of the sangguniang panlalawigan or pursuant to law or ordinances. Sec. 468,
Art. 3 of the same chapter also establishes the sanggunians power, as the provinces legislative body, to authorize the
provincial governor to negotiate and contract loans, lease public buildings held in a proprietary capacity to private
parties, among other things.
 
The foregoing inexorably confirms the indispensability of the sanggunians authorization in the execution of
contracts which bind the local government unit to new obligations. Note should be taken of the fact that R.A. No.
7160 does not expressly state the form that the authorization by the sanggunian has to take. Such authorization may
be done by resolution enacted in the same manner prescribed by ordinances, except that the resolution need not go
through a third reading for final consideration unless the majority of all the members of the sanggunian decides
otherwise.[23]
 
As regards the trial courts pronouncement that R.A. No. 9184 does not require the head of the procuring entity to
secure a resolution from the sanggunian concerned before entering into a contract, attention should be drawn to the
very same provision upon which the trial court based its conclusion. Sec. 37 provides: The Procuring Entity shall
issue the Notice to Proceed to the winning bidder not later than seven (7) calendar days from the date of approval of
the contract by the appropriate authority x x x.
 
R.A. No. 9184 establishes the law and procedure for public procurement. Sec. 37 thereof explicitly makes the
approval of the appropriate authority which, in the case of local government units, is the sanggunian, the point of
reference for the notice to proceed to be issued to the winning bidder. This provision, rather than being in conflict
with or providing an exception to Sec. 22(c) of R.A. No. 7160, blends seamlessly with the latter and even
acknowledges that in the exercise of the local government units corporate powers, the chief executive acts merely as
an instrumentality of the local council. Read together, the cited provisions mandate the local chief executive to
secure the sanggunians approval before entering into procurement contracts and to transmit the notice to proceed to
the winning bidder not later than seven (7) calendar days therefrom.
 
Parenthetically, Gov. Garcias petition for declaratory relief should have been dismissed because it was instituted
after the COA had already found her in violation of Sec. 22(c) of R.A. No. 7160.
One of the important requirements for a petition for declaratory relief under Sec. 1, Rule 63 of the Rules of Court is
that it be filed before breach or violation of a deed, will, contract, other written instrument, statute, executive order,
regulation, ordinance or any other governmental regulation.
 
In Martelino v. National Home Mortgage Finance Corporation,[24] we held that the purpose of the action is to
secure an authoritative statement of the rights and obligations of the parties under a statute, deed, contract, etc., for
their guidance in its enforcement or compliance and not to settle issues arising from its alleged breach.  It may be
entertained only before the breach or violation of the statute, deed, contract, etc. to which it refers. Where the law or
contract has already been contravened prior to the filing of an action for declaratory relief, the court can no longer
assume jurisdiction over the action. Under such circumstances, inasmuch as a cause of action has already accrued in
favor of one or the other party, there is nothing more for the court to explain or clarify, short of a judgment or final
order.
 
Thus, the trial court erred in assuming jurisdiction over the action despite the fact that the subject thereof had already
been breached by Gov. Garcia prior to the filing of the action.  Nonetheless, the conversion of the petition into an
ordinary civil action is warranted under Sec. 6, Rule 63[25] of the Rules of Court.
 
Erroneously, however, the trial court did not treat the COA report as a breach of the law and proceeded to resolve
the issues as it would have in a declaratory relief action. Thus, it ruled that prior authorization is not required if there
exist ordinances which authorize the local chief executive to enter into contracts. The problem with this ruling is that
it fails to take heed of the incongruent facts presented by the parties. What the trial court should have done, instead
of deciding the case based merely on the memoranda submitted by the parties, was to conduct a full-blown trial to
thresh out the facts and make an informed and complete decision.
 
As things stand, the declaration of the trial court to the effect that no prior authorization is required when there is a
prior appropriation ordinance enacted does not put the controversy to rest. The question which should have been
answered by the trial court, and which it failed to do was whether, during the period in question, there did exist
ordinances (authorizing Gov. Garcia to enter into the questioned contracts) which rendered the obtention of another
authorization from the Sangguniang Panlalawigansuperfluous. It should also have determined the character of the
questioned contracts, i.e., whether they were, as Gov. Garcia claims, mere disbursements pursuant to the ordinances
supposedly passed by the sanggunian or, as petitioners claim, new contracts which obligate the province without the
provincial boards authority.
 
It cannot be overemphasized that the paramount consideration in the present controversy is the fact that
the Province of Cebu was operating under a re-enacted budget in 2004, resulting in an altogether different set of
rules as directed by Sec. 323 of R.A. 7160. This Decision, however, should not be so construed as to proscribe any
and all contracts entered into by the local chief executive without formal sanggunian authorization. In cases, for
instance, where the local government unit operates under an annual as opposed to a re-enacted budget, it should be
acknowledged that the appropriation passed by the sanggunian may validly serve as the authorization required under
Sec. 22(c) of R.A. No. 7160. After all, an appropriation is an authorization made by ordinance, directing the
payment of goods and services from local government funds under specified conditions or for specific purposes.  The
appropriation covers the expenditures which are to be made by the local government unit, such as current operating
expenditures[26] and capital outlays.[27]
 
The question of whether a sanggunian authorization separate from the appropriation ordinance is required should be
resolved depending on the particular circumstances of the case. Resort to the appropriation ordinance is necessary in
order to determine if there is a provision therein which specifically covers the expense to be incurred or the contract
to be entered into. Should the appropriation ordinance, for instance, already contain in sufficient detail the project
and cost of a capital outlay such that all that the local chief executive needs to do after undergoing the requisite
public bidding is to execute the contract, no further authorization is required, the appropriation ordinance already
being sufficient.

On the other hand, should the appropriation ordinance describe the projects in generic terms such as infrastructure
projects, inter-municipal waterworks, drainage and sewerage, flood control, and irrigation systems projects,
reclamation projects or roads and bridges, there is an obvious need for a covering contract for every specific project
that in turn requires approval by the sanggunian. Specific sanggunian approval may also be required for the purchase
of goods and services which are neither specified in the appropriation ordinance nor encompassed within the regular
personal services and maintenance operating expenses.

In view of the foregoing, the instant case should be treated as an ordinary civil action requiring for its complete
adjudication the confluence of all relevant facts. Guided by the framework laid out in this Decision, the trial court
should receive further evidence in order to determine the nature of the questioned contracts entered into by Gov.
Garcia, and the existence of ordinances authorizing her acts.

WHEREFORE, the petition is GRANTED IN PART. The Decision dated July 11, 2006, of
the Regional Trial Court of Cebu City, Branch 9, in Civil Case No. CEB-31560, and its Order dated October 25,
2006, are REVERSED and SET ASIDE. The case is REMANDED to the court a quo for further proceedings in
accordance with this Decision. No pronouncement as to costs.

SO ORDERED.
TOMAS R. OSMEA, in his G.R. No. 188818 personal capacity and in his capacity as City Mayor of
Cebu Present: City, Petitioner, CORONA, C.J., CARPIO, CARPIO-MORALES, VELASCO, JR.,
NACHURA, LEONARDO-DE CASTRO, BRION,
- versus - PERALTA, BERSAMIN, *DEL CASTILLO, ABAD, VILLARAMA, JR., PEREZ, MENDOZA,
and SERENO, JJ.
 THE COMMISSION ON Promulgated:
AUDIT,
Respondent. May 31, 2011
x-----------------------------------------------------------------------------------------x
 
DECISION
 
BRION, J.:
Before the Court is the Petition for Certiorari[1] filed by Tomas R. Osmea, former mayor of the City of Cebu, under
Rule 64 of the Rules of Court. The petition seeks the reversal of the May 6, 2008 Decision[2] and the June 8, 2009
Resolution[3] of the respondent Commission on Audit (COA), which disallowed the damages, attorneys fees and
litigation expenses awarded in favor of two construction companies in the collection cases filed against the City of
Cebu, and made these charges the personal liability of Osmea for his failure to comply with the legal requirements
for the disbursement of public funds.
BACKGROUND FACTS
 
The City of Cebu was to play host to the 1994 Palarong Pambansa (Palaro). In preparation for the games, the City
engaged the services of WT Construction, Inc. (WTCI) and Dakay Construction and Development Company
(DCDC) to construct and renovate the Cebu City Sports Complex. Osmea, then city mayor, was authorized by
the Sangguniang Panlungsod (Sanggunian) of Cebu to represent the City and to execute the construction contracts.
While the construction was being undertaken, Osmea issued a total of 20 Change/Extra Work Orders to WTCI,
amounting to P35,418,142.42 (about 83% of the original contract price), and to DCDC, amounting
to P15,744,525.24 (about 31% of the original contract price). These Change/Extra Work Orders were not covered by
any Supplemental Agreement, nor was there a prior authorization from the Sanggunian. Nevertheless, the work
proceeded on account of the extreme urgency and need to have a suitable venue for the  Palaro.[4] The Palaro was
successfully held at the Cebu City Sports Complex during the first six months of 1994.
Thereafter, WTCI and DCDC demanded payment for the extra work they performed in the construction and
renovation of the sports complex. A Sanggunian member, Councilor Augustus Young, sponsored a resolution
authorizing Osmea to execute the supplemental agreements with WTCI and DCDC to cover the extra work
performed, but the other Sanggunian members refused to pass the resolution. Thus, the extra work completed by
WTCI and DCDC was not covered by the necessary appropriation to effect payment, prompting  them to file two
separate collection cases before the Regional Trial Court (RTC) of Cebu City (Civil Case Nos. CEB-17004[5] and
CEB-17155[6]). The RTC found the claims meritorious, and ordered the City to pay for the extra work
performed. The RTC likewise awarded damages, litigation expenses and attorneys fees in the amount
of P2,514,255.40 to WTCI[7] and P102,015.00 to DCDC.[8] The decisions in favor of WTCI and DCDC were
affirmed on appeal, subject to certain modifications as to the amounts due, and have become final.  To satisfy the
judgment debts, the Sanggunian finally passed the required appropriation ordinances.
 
During post-audit, the City Auditor issued two notices disallowing the payment of litigation expenses, damages, and
attorneys fees to WTCI and DCDC.[9] The City Auditor held Osmea, the members of the Sanggunian, and the City
Administrator liable for the P2,514,255.40 and P102,015.00 awarded to WTCI and DCDC, respectively, as damages,
attorneys fees, and interest charges. These amounts, the City Auditor concluded, were unnecessary expenses for
which the public officers should be held liable in their personal capacities pursuant to the law.
Osmea and the members of the Sanggunian sought reconsideration of the disallowance with the COA Regional
Office, which, through a 2nd Indorsement dated April 30, 2003,[10] modified the City Auditors Decision by
absolving the members of the sanggunian from any liability. It declared that the payment of the amounts awarded as
damages and attorneys fees should solely be Osmeas liability, as it was him who ordered the change or extra work
orders without the supplemental agreement required by law, or the prior authorization from the Sanggunian.
The Sanggunian members cannot be held liable for refusing to enact the necessary ordinance appropriating funds for
the judgment award because they are supposed to exercise their own judgment and discretion in the performance of
their functions; they cannot be mere rubber stamps of the city mayor.
The COA Regional Offices Decision was sustained by the COAs National Director for Legal and Adjudication
(Local Sector) in a Decision dated January 16, 2004.[11]Osmea filed an appeal against this Decision.
 
On May 6, 2008, the COA issued the assailed Decision which affirmed the notices of disallowance. [12] Osmea
received a copy of the Decision on May 23, 2008.Eighteen days after or on June 10, 2008, Osmea filed a motion for
reconsideration of the May 6, 2008 COA Decision.
The COA denied Osmeas motion via a Resolution dated June 8, 2009.[13] The Office of the Mayor of Cebu City
received the June 8, 2009 Resolution of the COA on June 29, 2009. A day before, however, Osmea left for
the United States of America for his check-up after his cancer surgery in April 2009 and returned to his office only
on July 15, 2009. Thus, it was only on July 27, 2009 that Osmea filed the present petition for certiorari under Rule
64 to assail the COAs Decision of May 6, 2008 and Resolution of June 8, 2009.
THE PETITION
 
Rule 64 of the Rules of Court governs the procedure for the review of judgments and final orders or resolutions of
the Commission on Elections and the COA. Section 3 of the same Rule provides for a 30-day period, counted from
the notice of the judgment or final order or resolution sought to be reviewed, to file the petition for  certiorari. The
Rule further states that the filing of a motion for reconsideration of the said judgment or final order or resolution
interrupts the 30-day period.
 
Osmea filed his motion for reconsideration, of the COAs May 6, 2008 Decision, 18 days from his receipt thereof,
leaving him with 12 days to file a Rule 64 petition against the COA ruling.  He argues that the remaining period
should be counted not from the receipt of the COAs June 8, 2009 Resolution by the Office of the Mayor of Cebu
City on June 29, 2009, but from the time he officially reported back to his office on July 15, 2009, after his trip
abroad. Since he is being made liable in his personal capacity, he reasons that the remaining period should be
counted from his actual knowledge of the denial of his motion for reconsideration. Corollary, he needed time to hire
a private counsel who would review his case and prepare the petition.
 
Osmea pleads that his petition be given due course for the resolution of the important issues he raised. The damages
and interest charges were awarded on account of the delay in the payment of the extra work done by WTCI and
DCDC, which delay Osmea attributes to the refusal of the Sanggunian to appropriate the necessary amounts.
Although Osmea acknowledges the legal necessity for a supplemental agreement for any extra work exceeding 25%
of the original contract price, he justifies the immediate execution of the extra work he ordered (notwithstanding the
lack of the supplemental agreement) on the basis of the extreme urgency to have the construction and repairs on the
sports complex completed in time for the holding of the Palaro. He claims that the contractors themselves did not
want to embarrass the City and, thus, proceeded to perform the extra work even without the supplemental agreement.
Osmea also points out that the City was already adjudged liable for the principal sum due for the extra work orders
and had already benefitted from the extra work orders by accepting and using the sports complex for the  Palaro. For
these reasons, he claims that all consequences of the liability imposed, including the payment of damages and
interest charges, should also be shouldered by the City and not by him.
THE COURTS RULING
 
Relaxation of procedural rules to give effect to a partys right to appeal
Section 3, Rule 64 of the Rules of Court states:
SEC. 3. Time to file petition.The petition shall be filed within thirty (30) days from notice of the judgment or final
order or resolution sought to be reviewed. The filing of a motion for new trial or reconsideration of said judgment or
final order or resolution, if allowed under the procedural rules of the Commission concerned, shall interrupt the
period herein fixed.If the motion is denied, the aggrieved party may file the petition within the remaining period, but
which shall not be less than five (5) days in any event, reckoned from notice of denial. [Emphasis ours.]
 
Several times in the past, we emphasized that procedural rules should be treated with utmost respect and due regard,
since they are designed to facilitate the adjudication of cases to remedy the worsening problem of delay in the
resolution of rival claims and in the administration of justice. From time to time, however, we have recognized
exceptions to the Rules but only for the most compelling reasons where stubborn obedience to the Rules would
defeat rather than serve the ends of justice. Every plea for a liberal construction of the Rules must at least be
accompanied by an explanation of why the party-litigant failed to comply with the Rules and by a justification for
the requested liberal construction.[14] Where strong considerations of substantive justice are manifest in the petition,
this Court may relax the strict application of the rules of procedure in the exercise of its legal jurisdiction.[15]
 
Osmea cites the mandatory medical check-ups he had to undergo in Houston, Texas after his cancer surgery in April
2009 as reason for the delay in filing his petition for certiorari. Due to his weakened state of health, he claims that he
could not very well be expected to be bothered by the affairs of his office and had to focus only on his medical
treatment. He could not require his office to attend to the case as he was being charged in his personal capacity.
 
We find Osmeas reasons sufficient to justify a relaxation of the Rules.  Although the service of the June 8, 2009
Resolution of the COA was validly made on June 29, 2009 through the notice sent to the Office of the Mayor of
Cebu City,[16] we consider July 15, 2009 the date he reported back to office as the effective date when he was
actually notified of the resolution, and the reckoning date of the period to appeal.  If we were to rule otherwise, we
would be denying Osmea of his right to appeal the Decision of the COA, despite the merits of his case.
Moreover, a certiorari petition filed under Rule 64 of the Rules of Court must be verified, and a verification requires
the petitioner to state under oath before an authorized officer that he has read the petition and that the allegations
therein are true and correct of his personal knowledge. Given that Osmea was out of the country to attend to his
medical needs, he could not comply with the requirements to perfect his appeal of the Decision of the COA.
While the Court has accepted verifications executed by a petitioners counsel who personally knows the truth of the
facts alleged in the pleading, this was an alternative not available to Osmea, as he had yet to secure his own
counsel. Osmea could not avail of the services of the City Attorney, as the latter is authorized to represent city
officials only in their official capacity.[17] The COA pins liability for the amount of damages paid to WTCI and
DCDC on Osmea in his personal capacity, pursuant to Section 103 of Presidential Decree No. 1445 (PD 1445).[18]
Thus, the reckoning date to count the remaining 12 days to file his Rule 64 petition should be counted from  July 15,
2009, the date Osmea had actual knowledge of the denial of his motion for reconsideration of the Decision of the
COA and given the opportunity to competently file an appeal thereto before the Court. The present petition, filed
on July 27, 2009, was filed within the reglementary period.
Personal liability for expenditures of government fund when made in violation of law  

 
The Courts decision to adopt a liberal application of the rules stems not only from humanitarian considerations
discussed earlier, but also on our finding of merit in the petition.
Section 103 of PD 1445 declares that [e]xpenditures of government funds or uses of government property in
violation of law or regulations shall be a personal liability of the official or employee found to be directly
responsible therefor. Notably, the public officials personal liability arises only if the expenditure of government
funds was made in violation of law. In this case, the damages were paid to WTCI and DCDC pursuant to final
judgments rendered against the City for its unreasonable delay in paying its obligations. The COA, however,
declared that the judgments, in the first place, would not be rendered against the City had it not been for the change
and extra work orders that Osmea made which (a) it considered as unnecessary, (b) were without
the Sanggunians approval, and (c) were not covered by a supplemental agreement.
The term unnecessary, when used in reference to expenditure of funds or uses of property, is relative.  In Dr. Teresita
L. Salva, etc. v. Guillermo N. Carague, etc., et al.,[19]we ruled that [c]ircumstances of time and place, behavioural
and ecological factors, as well as political, social and economic conditions, would influence any such determination.
x x x [T]ransactions under audit are to be judged on the basis of not only the standards of legality but also those of
regularity, necessity, reasonableness and moderation. The 10-page letter of City Administrator Juan Saul F.
Montecillo to the Sanggunian explained in detail the reasons for each change and extra work order; most of which
were made to address security and safety concerns that may arise not only during the holding of the Palaro, but also
in other events and activities that may later be held in the sports complex.Comparing this with the COAs general and
unsubstantiated declarations that the expenses were not essential[20] and not dictated by the demands of good
government,[21] we find that the expenses incurred for change and extra work orders were necessary and justified.
 
The COA considers the change and extra work orders illegal, as these failed to comply with Section III, C1 of the
Implementing Rules and Regulations of Presidential Decree No. 1594,[22] which states that:
 
5. Change Orders or Extra Work Orders may be issued on a contract upon the approval of competent
authorities provided that the cumulative amount of such Change Orders or Extra Work Orders does not exceed the
limits of the former's authority to approve original contracts.
The Pre-Qualification, Bids and Awards Committee (PBAC), upon the recommendation of the Technical Committee
and after a careful deliberation, approved the change and extra work orders. It bears pointing out that two members
of the PBAC were members of the Sanggunian as well Rodolfo Cabrera (Chairman, Committee on Finance) and
Ronald Cuenco (Minority Floor Leader). A COA representative was also present during the deliberations of the
PBAC. None of these officials voiced any objection to the lack of a prior authorization from the Sanggunian or a
supplemental agreement. The RTC Decision in fact mentioned that the Project Post Completion Report and
Acceptance was approved by an authorized representative of the City of Cebu on September 21, 1994.[23] [a]s the
projects had been completed, accepted and used by the [City of Cebu], the RTC ruled that there is no necessity of
[executing] a supplemental agreement.[24] Indeed, as we declared in Mario R. Melchor v. COA,[25] a supplemental
agreement to cover change or extra work orders is not always mandatory, since the law adopts the permissive word
may. Despite its initial refusal, the Sanggunian was eventually compelled to enact the appropriation ordinance in
order to satisfy the RTC judgments. Belated as it may be, the enactment of the appropriation ordinance, nonetheless,
constitutes as sufficient compliance with the requirements of the law. It serves as a confirmatory act signifying
the Sanggunians ratification of all the change and extra work orders issued by Osmea. In National Power
Corporation (NPC) v. Hon. Rose Marie Alonzo-Legasto, etc., et al.,[26] the Court considered the compromise
agreement between the NPC and the construction company as a ratification of the extra work performed, without
prior approval from the NPCs Board of Directors.
 
As in Melchor,[27] we find it unjust to order the petitioner to shoulder the expenditure when the government had
already received and accepted benefits from the utilization of the [sports complex], especially considering that the
City incurred no substantial loss in paying for the additional work and the damages awarded.  Apparently, the City
placed in a time deposit the entire funds allotted for the construction and renovation of the sports complex.  The
interest that the deposits earned amounted to P12,835,683.15, more than enough to cover the damages awarded to
WTCI (P2,514,255.40) and the DCDC (P102,015.00). There was no showing that [the] petitioner was ill-motivated,
or that [the petitioner] had personally profited or sought to profit from the transactions, or that the disbursements
have been made for personal or selfish ends.[28] All in all, the circumstances showed that Osmea issued the change
and extra work orders for the Citys successful hosting of the Palaro, and not for any other nefarious endeavour.[29]
 WHEREFORE, in light of the foregoing, we hereby GRANT the petitioners Petition for Certiorari filed under Rule
64 of the Rules of Court. The respondents Decision of May 6, 2008 and Resolution of June 8, 2009 are SET ASIDE.
 
SO ORDERED.

6. A separate Supplemental Agreement may be entered into for all Change Orders and Extra Work Orders if the
aggregate amount exceeds 25% of the escalated original contract price. All change orders/extra work orders beyond
100% of the escalated original contract cost shall be subject to public bidding except where the works involved are
inseparable from the original scope of the project in which case negotiation with the incumbent contractor may be
allowed, subject to approval by the appropriate authorities. [Emphases ours.]

Reviewing the facts of the case, we find that the prevailing circumstances at the time the change and extra work
orders were executed and completed indicate that the City of Cebu tacitly approved these orders, rendering a
supplemental agreement or authorization from the Sanggunian unnecessary.