LAW ON LOCAL GOVERNMENTS
Constitution.
1. Mandanas vs Ochoa (2018)
 petitioners hereby challenge the manner in which the just share in
the national taxes of the local government units (LGUs) has been
computed.
 G.R. No. 199802 (Mandanas, et al.) is a special civil action for
certiorari, prohibition and mandamus assailing the manner the
General Appropriations Act (GAA) for FY 2012 computed the IRA
for the LGUs.
 Mandanas, et al. allege herein that certain collections of NIR Ts by
the Bureau of Customs (BOC) - specifically: excise taxes, value
added taxes (VATs) and documentary stamp taxes (DSTs) - have
not been included in the base amounts for the computation of the
IRA
 In G.R. No. 208488, Congressman Enrique Garcia, Jr., the lone
petitioner, seeks the writ of mandamus to compel the respondents
thereat to compute the just share of the LGUs on the basis of all
national taxes.
 His petition insists on a literal reading of Section 6, Article X of the
1987 Constitution. He avers that the insertion by Congress of the
words internal revenue in the phrase national taxes found in
Section 284 of the LGC caused the diminution of the base for
determining the just share of the LGUs, and should be declared
unconstitutional; that, moreover, the exclusion of certain taxes
and accounts pursuant to or in accordance with special laws was
similarly constitutionally untenable; that the VA Ts and excise
taxes collected by the BOC should be included in the computation
of the IRA; and that the respondents should compute the IRA on
the basis of all national tax collections, and thereafter distribute
any shortfall to the LGUs.
 On the substantive considerations, the OSG avers that Article 284
of the LGC is consistent with the mandate of Section 6, Article X of
the 1987 Constitution to the effect that the LGUs shall have a just
share in the national taxes; that the determination of the just
share is within the discretion of Congress; that the limitation under
the LGC of the basis for the just share in the NIRTs was within the
powers granted to Congress by the 1987 Constitution; that the
LGUs have been receiving their just share in the national taxes
based on the correct base amount
ISSUES:
MAIN ISSUE: Whether or not Section 284 of the LGC is unconstitutional
for being repugnant to Section 6, Article X of the 1987 Constitution;What
is the extent of the autonomy granted to the LGUs by the 1987
RULING:
 The correct resolution and fair disposition of the issues interposed
for our consideration require a review of the basic principles
underlying our system of local governments, and of the extent of
the autonomy granted to the LGUs by the 1987 Constitution.
 Municipal corporations are now commonly known as local
governments.
 there are certain notable innovations in the Constitution, like the
direct conferment on the local government units of the power to
tax, which cannot now be withdrawn by mere statute. By and
large, however, the national legislature is still the principal of the
local government units, which cannot defy its will or modify or
violate it.
 the Court has pointed out that the 1987 Constitution, in mandating
autonomy for the LGUs, did not intend to deprive Congress of its
authority and prerogatives over the LGUs.
THE EXTENT OF LOCAL AUTONOMY IN THE PHILIPPINES
 The 1987 Constitution limits Congress' control over the LGUs
by ordaining in Section 25 of its Article II that: "The State shall
ensure the autonomy of local governments." The autonomy of
the LGUs as thereby ensured does not contemplate the
fragmentation of the Philippines into a collection of mini-states,
or the creation of imperium in imperio.
 The grant of autonomy simply means that Congress will allow
the LGUs to perform certain functions and exercise certain
powers in order not for them to be overly dependent on the
National Government subject to the limitations that the 1987
Constitution or Congress may impose.
 The constitutional mandate to ensure local autonomy refers to
decentralization
 In its broad or general sense, decentralization has two forms in
the Philippine setting, namely: the decentralization of
power and the decentralization of administration.
o decentralization of power involves the abdication of
political power in favor of the autonomous LGUs as to
grant them the freedom to chart their own destinies
and to shape their futures with minimum intervention
from the central government.
 o namely, the Autonomous Region for Muslim Mindanao
[ARMM] and the constitutionally-mandated Cordillera
Autonomous Region [CAR
o the regional autonomy of the ARMM and the CAR aims
to permit determinate groups with common traditions
and shared social-cultural characteristics to freely
develop their ways of life and heritage, to exercise
their rights, and to be in charge of their own affairs
through the establishment of a special governance
regime for certain member communities who choose
their own authorities from within themselves, and
exercise the jurisdictional authority legally accorded to
them to decide their internal community affairs.
o This amounts to self-immolation because the
autonomous LGUs thereby become accountable not to
the central authorities but to their constituencies
o decentralization of administration occurs when the
central government delegates administrative powers to
the LGUs as the means of broadening the base of
governmental powers and of making the LGUs more
responsive and accountable in the process, and
thereby ensure their fullest development as self-reliant
communities and more effective partners in the pursuit
of the goals of national development and social
progress.
o The other group of LGUs (i.e., provinces, cities,
municipalities and barangays) enjoy the
decentralization of administration
o The provinces, cities, municipalities and barangays are
given decentralized administration to make governance
at the local levels more directly responsive and
effective. In turn, the economic, political and social
developments of the smaller political units are
expected to propel social and economic growth and
development.
o This form of decentralization further relieves the
central government of the burden of managing local
affairs so that it can concentrate on national concerns
 The 1987 Constitution has surely encouraged decentralization by
mandating that a system of decentralization be instituted through
the LGC in order to enable a more responsive and accountable
local government structure
 It has also delegated the power to tax to the LGUs by authorizing
them to create their own sources of income that would make them
self-reliant. It further ensures that each and every LGU will have a
just share in national taxes as well in the development of the
national wealth
 decentralization can be considered as the decision by the central
government to empower its subordinates, whether geographically
or functionally constituted, to exercise authority in certain areas. It
involves decision-making by subnational units, and is typically a
delegated power, whereby a larger government chooses to
delegate authority to more local governments. It is also a process,
being the set of policies, electoral or constitutional reforms that
transfer responsibilities, resources or authority from the higher to
the lower levels of government. It is often viewed as a shift of
authority towards local governments and away from the central
government, with total government authority over society and
economy imagined as fixed
(1) political decentralization or devolution- occurs when there is a
transfer of powers, responsibilities, and resources from the central
government to the LGU s for the performance of certain functions. It is a
more liberal form of decentralization because there is an actual transfer of
powers and responsibilities. It aims to grant greater autonomy to the LGUs
in cognizance of their right to self-government, to make them self-reliant,
and to improve their administrative and technical capabilities. It is an act
by which the National Government confers power and authority upon the
various LGUs to perform specific functions and responsibilities. It
encompasses reforms to open sub-national representation and policies to
"devolve political authority or electoral capacities to sub-national actors.
"Section 16 to Section 19 of the LGC characterize political decentralization
in the LGC as different LGUs empowered to address the different needs of
their constituents. In contrast, devolution in favor of the regional units is
more expansive because they are given the authority to regulate a wider
array of subjects, including personal, family and property relations.
(2) administrative decentralization or deconcentration- involves the
transfer of functions or the delegation of authority and responsibility from
the national office to the regional and local offices. Consistent with this
concept, the LGC has created the Local School Boards, the Local Health
Boards and the Local Development Councils, and has transferred some of
the authority from the agencies of the National Government, like the
Department of Education and the Department of Health, to such bodies to
better cope up with the needs of particular localities.
(3) fiscal decentralization- means that the LGUs have the power to
create their own sources of revenue in addition to their just share in the
national taxes released by the National Government. It includes the power
to allocate their resources in accordance with their own priorities. It thus
extends to the preparation of their budgets, so that the local officials have
to work within the constraints of their budgets. The budgets are not
formulated at the national level and imposed on local governments,
without regard as to whether or not they are relevant to local needs and
resources. Hence, the necessity of a balancing of viewpoints and the
harmonization of proposals from both local and national officials, who in
any case are partners in the attainment of national goals, is recognized
and addressed. and
(4) policy or decision-making decentralization- emanates from a
specific constitutional mandate that is expressed in several provisions of
Article X (Local Government) of the 1987 Constitution, specifically: Section
5; Section 6; and Section 7.
Certain limitations are and can be imposed by Congress in all the forms of
decentralization, for local autonomy, whether as to power or as to
administration, is not absolute. The LGUs remain to be the tenants of the
will of Congress subject to the guarantees that the Constitution itself
imposes
2. NAVARRO vs EXECUTIVE SECRETARY (2012)
FACTS:
 Urgent Motion to Recall Entry of Judgment dated October 20, 2010
filed by Movant-Intervenors dated and filed on October 29, 2010,
praying that the Court (a) recall the entry of judgment, and (b)
resolve their motion for reconsideration of the July 20, 2010
Resolution.
 On October 2, 2006, the President of the Republic approved into
law Republic Act (R.A.) No. 9355 (An Act Creating the Province of
Dinagat Islands
 On December 3, 2006, COMELEC conducted the mandatory
plebiscite for the ratification of the creation of the province
under the Local Government Code (LGC). The plebiscite yielded
69,943 affirmative votes and 63,502 negative votes. With the
approval of the people from both the mother province of Surigao
del Norte and the Province of Dinagat Islands (Dinagat), the
President appointed the interim set of provincial officials who took
their oath of office on January 26, 2007. Later, during the May 14,
2007 synchronized elections, the Dinagatnons elected their new
set of provincial officials who assumed office on July 1, 2007.
 petitioners Rodolfo G. Navarro, Victor F. Bernal and Rene O.
Medina, former political leaders of Surigao del Norte, filed before
this Court a petition for certiorari and prohibition (G.R. No.
175158) challenging the constitutionality of R.A. No. 9355 The
Court dismissed the petition on technical grounds. Their motion for
reconsideration was also denied.
 Undaunted, petitioners, as taxpayers and residents of the Province
of Surigao del Norte, filed another petition for certiorari8 seeking
to nullify R.A. No. 9355 for being unconstitutional.
o They pointed out that when the law was passed, Dinagat
had a land area of 802.12 square kilometers only and a
population of only 106,951, failing to comply with Section
10, Article X of the Constitution and of Section 461 of the
LGC, on both counts
Article X – Local Government
o Section 10. 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 the approval by a majority of the votes cast in a
plebiscite in the political units directly affected.
LGC, Title IV, Chapter I
o Section 461. Requisites for Creation. –
(a) A province may be created if it has an average annual
income, as certified by the Department of Finance, of not
less than Twenty million pesos (₱20,000,000.00) based on
1991 constant prices and either of the following
requisites:
(i) a contiguous territory of at least two thousand (2,000)
square kilometers, as certified by the Lands Management
Bureau; or
(ii) a population of not less than two hundred fifty
thousand (250,000) inhabitants as certified by the National
Statistics Office:
Provided, That, the creation thereof shall not reduce the
land area, population, and income of the original unit or
units at the time of said creation to less than the minimum
requirements prescribed herein.
o (b) The territory need not be contiguous if it comprises two
(2) or more islands or is separated by a chartered city or
cities which do not contribute to the income of the
province.
o (c) The average annual income shall include the income
accruing to the general fund, exclusive of special funds,
trust funds, transfers, and non-recurring income.
  Ruling of Court: the Court rendered its Decision granting the
petition. The Decision declared R.A. No. 9355 unconstitutional for
failure to comply with the requirements on population and land
area in the creation of a province under the LGC. Consequently, it
declared the proclamation of Dinagat and the election of its
officials as null and void. The Decision likewise declared as null and
void the provision on Article 9(2) of the Rules and Regulations
Implementing the LGC (LGC-IRR), stating that, "[t]he land area
requirement shall not apply where the proposed province is
composed of one (1) or more islands" for being beyond the ambit
of Article 461 of the LGC, inasmuch as such exemption is not
expressly provided in the law
RULING:
 the central policy considerations in the creation of local
government units are economic viability, efficient administration,
and capability to deliver basic services to their constituents.
 the primordial criterion in the creation of local government units,
particularly of a province, is economic viability.
 The creation of a new province shall not reduce the land area,
population, and income of the original LGU or LGUs at the time of
said creation to less than the prescribed minimum requirements.
All expenses incidental to the creation shall be borne by the
petitioners.
 with respect to the creation of barangays, land area is not a
requisite indicator of viability. However, with respect to the
creation of municipalities, component cities, and provinces,
the three (3) indicators of viability and projected capacity to
provide services, i.e., income, population, and land area, are
provided for.
 the Congress, recognizing the capacity and viability of Dinagat to
become a full-fledged province, enacted R.A. No. 9355, following
the exemption from the land area requirement, which, with respect
to the creation of provinces, can only be found as an express
provision in the LGC-IRR. In effect, pursuant to its plenary
legislative powers, Congress breathed flesh and blood into that
exemption in Article 9(2) of the LGC-IRR and transformed it into
law when it enacted R.A. No. 9355 creating the Island Province of
Dinagat.
 The land area, while considered as an indicator of viability of a
local government unit, is not conclusive in showing that Dinagat
cannot become a province, taking into account its average annual
income of P82,696,433.23 at the time of its creation, as certified
by the Bureau of Local Government Finance, which is four times
more than the minimum requirement of P20,000,000.00 for the
creation of a province. The delivery of basic services to its
constituents has been proven possible and sustainable. Rather
than looking at the results of the plebiscite and the May 10, 2010
elections as mere fait accompli circumstances which cannot
operate in favor of Dinagat’s existence as a province, they must be
seen from the perspective that Dinagat is ready and capable of
becoming a province. This Court should not be instrumental in
stunting such capacity.
 Ratio legis est anima. The spirit rather than the letter of the law. A
statute must be read according to its spirit or intent, for what is
within the spirit is within the statute although it is not within its
letter, and that which is within the letter but not within the spirit is
not within the statute. Put a bit differently, that which is within the
intent of the lawmaker is as much within the statute as if within
the letter, and that which is within the letter of the statute is not
within the statute unless within the intent of the lawmakers.
Withal, courts ought not to interpret and should not accept an
interpretation that would defeat the intent of the law and its
legislators.
3. UMALI vs COMELEC (2014)
 the Sangguniang Panglungsod of Cabanatuan City passed
Resolution No. 183-2011, requesting the President to declare the
conversion of Cabanatuan City from a component city of the
province of Nueva Ecija into a highly urbanized city (HUC).
 Acceding to the request, the President issued Presidential
Proclamation No. 418, Series of 2012, proclaiming the City of
Cabanatuan as an HUC subject to "ratification in a plebiscite
by the qualified voters therein, as provided for in Section 453
of the Local Government Code of 1991."
 the Commission RESOLVED, for purposes of the plebiscite for the
conversion of Cabanatuan City from component city to highly-
urbanized city, only those registered residents of Cabanatuan City
should participate in the said plebiscite.
 petitioner Aurelio M. Umali, Governor of Nueva Ecija, filed a
Verified Motion for Reconsideration, maintaining that the proposed
conversion in question will necessarily and directly affect the
mother province of Nueva Ecija. His main argument is that Section
453 of the LGC should be interpreted in conjunction with Sec. 10,
Art. X of the Constitution. He argues that while the conversion in
question does not involve the creation of a new or the dissolution
of an existing city, the spirit of the Constitutional provision calls for
the people of the local government unit (LGU) directly affected to
 vote in a plebiscite whenever there is a material change in their
rights and responsibilities.
o The phrase "qualified voters therein" used in Sec. 453
of the LGC should then be interpreted to refer to the
qualified voters of the units directly affected by the
conversion and not just those in the component city
proposed to be upgraded.
 private respondent Julius Cesar Vergara, city mayor of
Cabanatuan, interposed an opposition on the ground that Sec. 10,
Art. X does not apply to conversions, which is the meat of the
matter.
 public respondent COMELEC, through the Office of the Solicitor
General, maintained in its Comment that Cabanatuan City is
merely being converted from a component city into an HUC and
that the political unit directly affected by the conversion will only
be the city itself.
 It argues that in this instance, no political unit will be created,
merged with another, or will be removed from another LGU, and
that no boundaries will be altered. The conversion would merely
reinforce the powers and prerogatives already being exercised by
the city, with the political unit’s probable elevation to that of an
HUC as demanded by its compliance with the criteria established
under the LGC. Thus, the participation of the voters of the entire
province in the plebiscite will not be necessary.
ISSUE: whether the qualified registered voters of the entire province of
Nueva Ecija or only those in Cabanatuan City can participate in the
plebiscite called for the conversion of Cabanatuan City from a component
city into an HUC.
RULING:
Petition for Certiorari is meritorious.
 The power to create, divide, merge, abolish or substantially alter
boundaries of provinces, cities, municipalities or barangays, which
is pertinent in the case at bar, is essentially legislative in nature
 The framers of the Constitution have, however, allowed for the
delegation of such power in Sec. 10, Art. X of the Constitution as
long as (1) the criteria prescribed in the LGC is met and (2) the
creation, division, merger, abolition or the substantial alteration of
the boundaries is subject to the approval by a majority vote in a
plebiscite.
 True enough, Congress delegated such power to the Sangguniang
Panlalawigan or Sangguniang Panlungsod to create barangays
 With the twin criteria of standard and plebiscite satisfied, the
delegation to LGUs of the power to create, divide, merge, abolish
or substantially alter boundaries has become a recognized
exception to the doctrine of non-delegation of legislative powers.
 Likewise, legislative power to to Declare Highly Urbanized Status
was delegated to the President
o In this case, the provision merely authorized the President
to make a determination on whether or not the
requirements under Sec. 45210 of the LGC are complied
with. The provision makes it ministerial for the President,
upon proper application, to declare a component city as
highly urbanized once the minimum requirements, which
are based on certifiable and measurable indices under Sec.
452, are satisfied. The mandatory language "shall" used in
the provision leaves the President with no room for
discretion.
 Sec. 453, in effect, automatically calls for the conduct of a
plebiscite for purposes of conversions once the requirements are
met. No further legislation is necessary before the city proposed to
be converted becomes eligible to become an HUC through
ratification, as the basis for the delegation of the legislative
authority is the very LGC.
 conversions were found to result in material changes in the
economic and political rights of the people and LGUs affected.
Given the far-reaching ramifications of converting the status of a
city, we held that the plebiscite requirement under the
constitutional provision should equally apply to conversions as
well.
 while conversion to an HUC is not explicitly provided in Sec. 10,
Art. X of the Constitution we nevertheless observe that the
conversion of a component city into an HUC is substantial
alteration of boundaries
 "substantial alteration of boundaries" involves and necessarily
entails a change in the geographical configuration of a local
government unit or units. However, the phrase "boundaries"
should not be limited to the mere physical one, referring to the
metes and bounds of the LGU, but also to its political boundaries.
It also connotes a modification of the demarcation lines between
political subdivisions, where the LGU’s exercise of corporate power
ends and that of the other begins. And as a qualifier, the alteration
must be "substantial" for it to be within the ambit of the
constitutional provision.
 the upward conversion of a component city, in this case
Cabanatuan City, into an HUC will come at a steep price. It can be
gleaned from the above-cited rule that the province will inevitably
 suffer a corresponding decrease in territory brought about by
Cabanatuan City’s gain of independence.
 the alteration of boundaries would necessarily follow Cabanatuan
City’s conversion in the same way that creations, divisions,
mergers, and abolitions generally cannot take place without
entailing the alteration. The enumerated acts, after all, are not
mutually exclusive, and more often than not, a combination of
these acts attends the reconfiguration of LGUs.
 the Court rules that conversion to an HUC is substantial alternation
of boundaries governed by Sec. 10, Art. X and resultantly, said
provision applies, governs and prevails over Sec. 453 of the LGC.
 the Court treats the phrase "by the qualified voters therein" in Sec.
453 to mean the qualified voters not only in the city proposed to
be converted to an HUC but also the voters of the political units
directly affected by such conversion in order to harmonize Sec.
453 with Sec. 10, Art. X of the Constitution.
 the province of Nueva Ecija will suffer a substantial reduction of its
share in IRA once Cabanatuan City attains autonomy. In view of
the economic impact of Cabanatuan City’s conversion, petitioner
Umali’s contention, that its effect on the province is not only direct
but also adverse, deserves merit.
Section 452. Highly Urbanized Cities.
(a) Cities with a minimum population of two hundred thousand (200,000)
inhabitants as certified by the National Statistics Office, and within the
latest annual income of at least Fifty Million Pesos (₱50,000,000.00) based
on 1991 constant prices, as certified by the city treasurer, shall be
classified as highly urbanized cities.
Section 461. Requisites for Creation.
(a) A province may be created if it has an average annual income, as
certified by the Department of Finance, of not less than Twenty million
pesos (₱20,000,000.00) based on 1991 constant prices and either of the
following requisites:
(i) a contiguous territory of at least two thousand (2,000) square
kilometers, as certified by the Lands Management Bureau; or
(ii) a population of not less than two hundred fifty thousand (250,000)
inhabitants as certified by the National Statistics Office:
Provided, That, the creation thereof shall not reduce the land area,
population, and income of the original unit or units at the time of said
creation to less than the minimum requirements prescribed herein.
 Aside from the alteration of economic rights, the political rights of
Nueva Ecija and those of its residents will also be affected by
Cabanatuan’s conversion into an HUC.
 In view of these changes in the economic and political rights of the
province of Nueva Ecija and its residents, the entire province
certainly stands to be directly affected by the conversion of
Cabanatuan City into an HUC.
 Following the doctrines in Tan and Padilla, all the qualified
registered voters of Nueva Ecija should then be allowed to
participate in the plebiscite called for that purpose.
4. HON. PAJE vs HON. CASINO (2015)
 In February 2006, Subic Bay Metropolitan Authority• (SBMA), a
government agency organized and established under Republic Act
No. (RA) 7227,4 and Taiwan Cogeneration Corporation (TCC)
entered into a Memorandum of Understanding (MOU) expressing
their intention to build a power plant in Subic Bay which would
supply reliable and affordable power to Subic Bay Industrial Park
 Court a Petition for Writ of Kalikasan against RP Energy, SBMA,
and Hon. Ramon Jesus P. Paje, in his capacity as Secretary of the
DENR.
ISSUE: Whether x x x RP Energy can proceed with the construction and
operation of the 1x300 MW Power Plant without prior consultation with and
approval of the concerned local government units (‘LGUs,’ x x x ),
pursuant to Sections 26 and 27 of Republic Act No. 7160 or the Local
Government Code
Whether x x x the LGU’s approval under Sections 26 and 27 of the Local
Government Code is necessaryfor the issuance of the DENR ECC and its
amendments, and what constitutes LGU approval;
RULING:
 the alleged lack of approval of the concerned sanggunians over the
subject project would not lead to or is not reasonably connected
with environmental damage but, rather, it is an affront to the local
autonomy of LGUs. However, the writ of kalikasan would not be
the appropriate remedy to address and resolve such issues.
 For Section 27, in relation to Section 26, to apply, the following
requisites must concur: (1) the planning and implementation of
the project or program is vested in a national agency or
government-owned and-controlled corporation, i.e., national
programs and/or projects which are to be implemented in a
particular local community; and (2) the project or program may
cause pollution, climatic change, depletion of non-renewable
resources, loss of cropland, rangeland, or forest cover, extinction
 of animal or plant species, or call for the eviction of a particular
group of people residing in the locality where the project will be
implemented.219
 In the case at bar, the two requisites are evidently present: (1)
the planning and implementation of the subject project involves
the Department of Energy, DENR, and SBMA; and (2) the subject
project may cause pollution, climatic change, depletion of non-
renewable resources, loss of cropland, rangeland, or forest cover,
and extinction of animal or plant species,or call for the eviction of
a particular group of people residing in the locality where the
project will be implemented. Hence, Section 27 of the LGC should
ordinarily apply.
 It is not disputed that no approval was sought from the concerned
sangguniansrelative to the subject project.1a\^/phi1 Whatis more,
the affected LGUs have expressed their strong oppositions to the
project through various sanggunian resolutions.220 However, it is
also undisputed that the subject project is located within the SSEZ
and, thus, under the territorial jurisdiction of the SBMA pursuant to
RA 7227.
 Thus, we are tasked to determine the applicability of the prior
approval of the concerned sanggunian requirement, under Section
27 of the LGC, relative to a project within the territorial jurisdiction
of the SBMA under RA 7227.
 RA 7227 was passed on March 13, 1992 in the aftermath of the
Mount Pinatubo eruption and the closure of the Subic Naval Base
ofthe U.S. Armed Forces. It sought to revivethe affected areas by
creating and developing the SSEZ into a "self-sustaining industrial,
commercial, financial and investment center to generate
employment opportunities in and around the zone and to attract
and promote productive foreign investments."221 The SSEZ
covered the City of Olangapo and Municipality of Subic in the
Province ofZambales and the lands and its contiguous extensions
occupied by the former U.S. Naval Base, which traversed the
territories of the Municipalities of Hermosa and Morong in the
Province of Bataan. Under Section 12 of RA 7227, the creation of
the SSEZ was made subject to the concurrence by resolution of
the respective sanggunians of the City of Olongapo and the
Municipalities of Subic, Morong and Hermosa, viz:
 SECTION 12. Subic Special Economic Zone. — Subject to the
concurrence by resolution of the sangguniang panlungsod of the
City of Olongapo and the sangguniang bayanof the Municipalities
of Subic, Morong and Hermosa, there is hereby created a Special
Economic and Free-port Zone consisting of the City of Olongapo
and the Municipality of Subic, Province of Zambales, the lands
occupied by the Subic Naval Base and its contiguous extensions as
embraced, covered, and defined by the 1947 Military Bases
Agreement between the Philippines and the United States of
America as amended, and within the territorial jurisdiction of the
Municipalities of Morong and Hermosa, Province of Bataan,
hereinafter referred to as the Subic Special Economic Zone whose
metes and bounds shall be delineated in a proclamation to be
issued by the President of the Philippines. Within thirty (30) days
after the approval of this Act, each local government unit shall
submit its resolution of concurrence to join the Subic Special
Economic Zone to the office of the President. Thereafter, the
President of the Philippines shall issue a proclamation defining the
metes and bounds of the Zone as provided herein.
 Subsequently, the aforesaid sanggunians submitted their
respective resolutions of concurrence and the President issued
Presidential Proclamation No. 532, Series of 1995, defining the
metes and bounds of the SSEZ.
 In Executive Secretary v. Southwing Heavy Industries, Inc.,222 we
described the concept of SSEZ as a Freeport:
 The Freeport was designed to ensurefree flow or movement of
goods and capital within a portion of the Philippine territory in
order to attract investors to invest their capital in a business
climate with the least governmental intervention.
 the SBMA was given broad administrative powers over the SSEZ
and these necessarily include the power to approve or disapprove
the subject project, which is within its territorial jurisdiction. But,
as previously discussed, the LGC grants the concerned
sangguniansthe power to approve and disapprove this same
project.
 Sec. 12. Subic Special Economic Zone. out the basic policies
underlying the creation of the SSEZ. Indeed, as noted by the
appellate court, Section 12(i) expressly recognizes the basic
autonomy and identity of the LGUscomprising the SSEZ. However,
the clause "[e]xcept as herein provided" unambiguously provides
that the LGUs do not retain their basic autonomy and identitywhen
it comes to matters specified by the law as falling under the
powers, functions and prerogatives of the SBMA.
 In the case at bar, we find that the power to approve or
disapprove projects within the SSEZ is one such power over which
the SBMA’s authority prevails over the LGU’s autonomy. Hence,
there isno need for the SBMA to secure the approval of the
concerned sangguniansprior to the implementation of the subject
project.
 Equally important, under Section 14, other than those involving
defense and security, the SBMA’s decision prevails in case of
 conflict between the SBMA and the LGUs in all matters concerning
the SSEZ, viz.:
 Sec. 14. Relationship with the Conversion Authority and the Local
Government Units.
 (a) The provisions of existing laws, rules and regulations to the
contrary notwithstanding, the Subic Authority shall exercise
administrative powers, rule-making and disbursement of funds
over the Subic Special Economic Zonein conformity with the
oversight function of the Conversion Authority.
 (b) In case of conflict between the Subic Authority and the local
government units concerned on matters affecting the Subic Special
Economic Zone other than defense and security, the decision of
the SubicAuthority shall prevail. (Emphasis supplied)
 Clearly, the subject project does not involve defense or security,
but rather business and investment to further the development of
the SSEZ. Such is in line with the objective of RA 7227 to develop
the SSEZ into a self-sustaining industrial, commercial, financial
and investment center. Hence, the decision of the SBMA would
prevail over the apparent objections of the concerned sanggunians
of the LGUs.
 the legislature rejected the attempts to engraft Section 27’s prior
approval of the concerned sanggunian requirement under the LGC
into RA 7227. Hence, the clear intent was to do away with the
approval requirement of the concerned sanggunians relative to the
power of the SBMA to approve or disapprove a project within the
SSEZ.
 When the concerned sanggunians opted to join the SSEZ, they
were, thus, fully aware that this would lead to some diminution of
their local autonomy in order to gain the benefits and privileges of
being a part of the SSEZ.

5. RIMANDO vs NAGUILAN EMISSION

 The petition prayed for the issuance of a writ of mandamus to
compel the petitioner to issue a business permit in favor of the
respondent.
 The petitioner, however, refused to issue a business permit unless
and until the respondent executes a contract of lease with the
Municipality of Naguilian
 The CA disagreed with the RTC and found that the factual milieu of
the case justifies the issuance of a writ of mandamus. The CA
reasoned that the tax declaration in the name of the municipality
was insufficient basis to require the execution of a contract of
lease as a condition sine qua non for the renewal of a business
permit.