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G.R. No. 127383 August 18, 2005

THE CITY OF DAVAO, CITY TREASURER AND THE CITY ASSESSOR OF DAVAO CITY, Petitioners,
vs.
THE REGIONAL TRIAL COURT, BRANCH XII, DAVAO CITY AND THE GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), Respondent.

DECISION

Tinga, J.:

A Davao City Regional Trial Court (RTC) upheld the tax-exempt status of the Government Service Insurance System (GSIS) for the years 1992 to 1994 in contravention of the
mandate under the Local Government Code of 1992,1 the precedent set by this Court in Mactan-Cebu International Airport Authority v. Hon. Marcos,2 and the public policy on local
autonomy enshrined in the Constitution.3

The matter was elevated to this Court directly from the trial court on a pure question of law.4 The facts are uncontroverted.

On 8 April 1994, the GSIS Davao City branch office received a Notice of Public Auction scheduling the public bidding of GSIS properties located in Matina and Ulas, Davao City
for non-payment of realty taxes for the years 1992 to 1994 totaling Two Hundred Ninety Five Thousand Seven Hundred Twenty One Pesos and Sixty One Centavos
(₱295,721.61).5 The auction was subsequently reset by virtue of a deadline extension allowed by Davao City for the payment of delinquent real property taxes.6

On 28 July 1994, the GSIS received Warrants of Levy and Notices of Levy on three parcels of land owned by the GSIS. Another Notice of Public Auction was received by the
GSIS on 29 August 1994, setting the date of auction sale for 20 September 1994.

On 13 September 1994, the GSIS filed a Petition for Certiorari, Prohibition, Mandamus And/Or Declaratory Relief with the RTC of Davao City. It also sought the issuance of a
temporary restraining order. The case was raffled to Branch 12, presided by Judge Maximo Magno Libre. On 13 September 1994, the RTC issued a temporary restraining order
for a period of twenty (20) days,7 effectively enjoining the auction sale scheduled seven days later. Following exchange of arguments, the RTC issued an Order dated 3 April 1995
issuing a writ of preliminary injunction effective for the duration of the suit.8

At the pre-trial, it was agreed that the sole issue for resolution was purely a question of law, that is, whether Sections 234 and 534 of the Local Government Code, which have
withdrawn real property tax exemptions of government owned and controlled corporations (GOCCs), have also withdrawn from the GSIS its right to be exempted from payment of
the realty taxes sought to be levied by Davao City.9 The parties submitted their respective memoranda.
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On 28 May 1996, the RTC rendered the Decision10 now assailed before this Court. It concluded that notwithstanding the enactment of the Local Government Code, the GSIS
retained its exemption from all taxes, including real estate taxes. The RTC cited Section 33 of Presidential Decree (P.D.) No. 1146, the Revised Government Service Insurance
Act of 1977, as amended by P. D. No. 1981, which mandated such exemption.

The RTC conceded that the tax exempting statute, P.D. No. 1146, was enacted prior to the Local Government Code. However, it noted that the earlier law had prescribed two
conditions in order that the tax exemption provided therein could be withdrawn by future enactments, namely: (1) that Section 33 be expressly and categorically repealed by law;
and (2) that a provision be enacted to substitute the declared policy of exemption from any and all taxes as an essential factor for the solvency of the GSIS fund.11 The RTC
concluded that

both conditions had not been satisfied by the Local Government Code. The RTC likewise accorded weight to Legal Opinion No. 165 of the Secretary of Justice dated 16
December 1996 concluding that Section 33 was not repealed by the Local Government Code, and a memorandum emanating from the Office of the President dated 14 February
1995 expressing the same opinion.12

The dispositive portion of the assailed Decision reads:

Now then, in light of the foregoing observation, the court perceives, that the cause of action asseverated by petitioner in its petition has been well established by law and
jurisprudence, and therefore the following relief should be granted:

a) The tax exemption privilege of petitioner should be upheld and continued and that the warrants of levy and notices of levy issued by the respondent Treasurer is hereby voided
and declared of no effect;

b) Let a writ of prohibition be issued restraining the City Treasurer from proceeding with the auction sale of the subject properties, as well as the respondents Register of Deeds
from annotating the warrants/notices of levy on the certificate of titles of petitioners real properties subject of this suit; and

c) Compelling the City Assessor of Davao City to include the properties of petitioner in the list of properties exempt from payment of realty tax and if the warrants and levies
issued by the City Treasurer had been annotated in the memorandum of encumbrance on the certificates of title of petitioner’s properties, to cancel such annotation so that the
certificates of titles of petitioners will be free from such liens and encumbrances.

SO ORDERED.13

Petitioners’ Motion for Reconsideration was denied by the RTC in an Order dated 30 October 1996, hence the present petition.

Petitioners argue that the exemption granted in Section 33 of P.D. No. 1146, as amended, was effectively withdrawn upon the enactment of the Local Government Code,
particularly Sections 193 and 294 thereof. These provisions made the GSIS, along with all other GOCCs, subject to realty taxes. Petitioners point out that under Section 534(f) of
the Local Government Code, even special laws, such as PD No. 1146, which are inconsistent with the Local Government Code, are repealed or modified accordingly.
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On the other hand, GSIS contends, as the RTC held, that the requisites for repeal are laid down in Section 33 of P.D. No. 1146, as amended, namely that it be done expressly
and categorically by law, and that a provision be enacted to substitute the declared policy of exemption from taxes as an essential factor for the solvency of the GSIS fund. It
stresses that it had been exempt from taxation as far back as 1936, when its original charter was enacted through Commonwealth Act No. 186.14 It asserts further that this Court
had previously recognized the "extraordinary exemption" of GSIS in Testate Estate of Concordia T. Lim v. City of Manila, 15 and such exemption has similarly been affirmed by the
Secretary of Justice and the Office of the President in the aforementioned issuances also cited by the RTC.16

GSIS likewise notes that had it been the intention of the legislature to repeal Section 33 of P.D. No. 1146 through the Local Government Code, said law would have included the
appropriate retraction in its repealing clause found in Section 534(f). However, said section, according to the GSIS, partakes the nature of a general repealing provision which is
accorded less weight in light of the rule that implied repeals are not favored. Consequently with its position that it remains exempt from realty taxation, the GSIS argues that the
Notices of Assessment, Warrants and Notices of Levy, Notices of Public Auction Sale and the Annotations of the Notice of Levy are void ab initio.

A review of the relevant statutory provisions is in order.

Presidential Decree No. 1146 was enacted in 1977 by President Marcos in the exercise of his legislative powers. Section 33, as originally enacted, read:

Sec. 33. Exemption from tax, Legal Process and Lien.- It is hereby declared to be the policy of the State that the actuarial solvency of the funds of the System shall be preserved
and maintained at all times and that the contribution rates necessary to sustain the benefits under this Act shall be kept as low as possible in order not to burden the members of
the system and/or their employees. . . . Accordingly, notwithstanding any laws to the contrary, the System, its assets, revenues including the accruals thereto, and benefits paid,
shall be exempt from all taxes. These exemptions shall continue unless expressly and specifically revoked and any assessment against the System as of the approval of this Act
are hereby considered paid.

As it stood then, Section 33 merely provided a general rule exempting the GSIS from all taxes. However, Section 33 of P.D. No. 1146 was amended in 1985 by President
Marcos, again in the exercise of his legislative powers, through P.D. No. 1981. It was through this latter decree that a second paragraph was added to Section 33 delineating the
requisites for repeal of the tax exemption enjoyed by the GSIS by incorporating the following:

Moreover, these exemptions shall not be affected by subsequent laws to the contrary, such as the provisions of Presidential Decree No. 1931 and other similar laws that have
been or will be enacted, unless this section is expressly and categorically repealed by law and a provision is enacted to substitute the declared policy of exemption from any and
all taxes as an essential factor for the solvency of the fund.17

It bears noting though, and it is perhaps key to understanding the necessity of the addendum provided under P.D. No. 1981, that a presidential decree enacted a year earlier,
P.D. No. 1931, effectively withdrew all tax exemption privileges granted to GOCCs. 18 In fact, P.D. No. 1931 was specifically named in the afore-quoted addendum as among those
laws which, despite passage, would not affect the tax exempt status of GSIS. Section 1 of P.D. No. 1931 states:
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Sec. 1. The provisions of special or general law to the contrary notwithstanding, all exemptions from the payment of duties, taxes, fees, imposts and other charges heretofore
granted in favor of government-owned or controlled corporations including their subsidiaries, are hereby withdrawn.

There is no doubt that the GSIS which was established way back in 1937 is a GOCC, a fact that GSIS itself admits in its petition for certiorari before the RTC. 19 It thus clear that
Section 1 of P.D. No. 1931 expressly withdrew those exemptions granted to the GSIS. Presidential Decree No. 1931 did allow the exemption to be restored in special cases
through an application for restoration with the Secretary of Finance, but otherwise, the exemptions granted to the GSIS prior to the enactment of P.D. No. 1931 were withdrawn.

Notably, P.D. No. 1931 was also an exercise of legislative powers then accorded to President Marcos by virtue of Amendment No. 6 to the 1973 Constitution. Whether he was
aware of the effect of P.D. No. 1931 on the GSIS’s tax-exempt status or the ramifications of the decree thereon is unknown; but apparently, he immediately reconsidered the
withdrawal of the exemptions on the GSIS. Thus, P.D. No. 1981 was enacted, expressly stating that the tax-exempt status of the GSIS under Section 33 of P.D. No. 1146
remained in place, notwithstanding the passage of P.D. No. 1931.

However, P.D. No. 1981 did not stop there, serving merely as it should to restore the previous exemptions on the GSIS. It also attempted to proscribe future attempts to alter the
tax-exempt status of the GSIS by imposing unorthodox conditions for its future repeal. Thus, as intimated earlier, a second paragraph was added to Section 33, containing the
restrictions relied upon by the RTC and presently invoked by the GSIS before this Court.

These laws have to be weighed against the Local Government Code of 1992, a landmark law which implemented the constitutional aspirations for a more extensive breadth of
local autonomy. The Court, in Mactan, was asked to consider the effect of the Local Government Code on the taxability by local governments of GOCCs such as the Mactan
Cebu International Airport Authority (MCIAA). Particularly, MCIAA invoked Section 133(o) of the Local Government Code as the basis for its claimed exemption, the provision
reading:

SECTION 133. Common Limitations on the Taxing Powers of Local Government Units.— Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities,
municipalities, and barangays shall not extend to the levy of the following:

....

(o) Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities and local government units.

However, the Court, in ruling MCIAA non-exempt from realty taxes, considered that Section 133 qualified the exemption of the National Government, its agencies and
instrumentalities from local taxation with the phrase "unless otherwise provided herein." The Court then considered the other relevant provisions of the Local Government Code,
particularly the following:

SECTION 193. Withdrawal of Tax Exemption Privileges. – Unless otherwise provided in this Code, tax exemption or incentives granted to, or enjoyed by all persons,
whether natural or juridical, including government-owned and controlled corporations, except local water districts, cooperatives duly registered under R.A. No. 6938, non-
stock and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code.
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SECTION 232. Power to Levy Real Property Tax. – A province or city or a municipality within the Metropolitan Manila area may levy an annual ad valorem tax on real property
such as land, building, machinery, and other improvements not hereafter specifically exempted.

SECTION 234. Exemptions from Real Property Tax. -- The following are exempted from payment of the real property tax:

(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or
otherwise, to a taxable person;

(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, non-profit or religious cemeteries and all lands, buildings, and improvements
actually, directly, and exclusively used for religious charitable or educational purposes;

(c) All machineries and equipment that are actually, directly and exclusively used by local water districts and government-owned and controlled corporations engaged in the
distribution of water and/or generation and transmission of electric power;

(d) All real property owned by duly registered cooperatives as provided for under R.A. No. 6938; and

(e) Machinery and equipment used for pollution control and environmental protection.

Except as provided herein, any exemption from payment of real property tax previously granted to, or presently enjoyed by, all persons, whether natural or
juridical, including all government-owned or controlled corporations are hereby withdrawn upon the effectivity of this Code. (Emphasis supplied.)

Evidently, Section 133 was not intended to be so absolute a prohibition on the power of LGUs to tax the National Government, its agencies and instrumentalities, as evidenced
by these cited provisions which "otherwise provided." But what was the extent of the limitation under Section 133? This is how the Court, in a discussion of far-reaching
consequence, defined the parameters in Mactan:

The foregoing sections of the LGC speak of: (a) the limitations on the taxing powers of local government units and the exceptions to such limitations; and (b) the rule on tax
exemptions and the exceptions thereto. The use of exceptions or provisos in these sections, as shown by the following clauses:

(1) "unless otherwise provided herein" in the opening paragraph of Section 133;

(2) "Unless otherwise provided in this Code" in Section 193;

(3) "not hereafter specifically exempted" in Section 232; and

(4) "Except as provided herein" in the last paragraph of Section 234

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initially hampers a ready understanding of the sections. Note, too, that the aforementioned clause in Section 133 seems to be inaccurately worded. Instead of the clause "unless
otherwise provided herein," with the "herein" to mean, of course, the section, it should have used the clause "unless otherwise provided in this Code." The former results in
absurdity since the section itself enumerates what are beyond the taxing powers of local government units and, where exceptions were intended, the exceptions are explicitly
indicated in the next. For instance, in item (a) which excepts income taxes "when levied on banks and other financial institutions"; item (d) which excepts "wharfage on wharves
constructed and maintained by the local government unit concerned"; and item (1) which excepts taxes, fees and charges for the registration and issuance of licenses or permits
for the driving of "tricycles." It may also be observed that within the body itself of the section, there are exceptions which can be found only in other parts of the LGC, but the
section interchangeably uses therein the clause, "except as otherwise provided herein" as in items (c) and (i), or the clause "except as provided in this Code" in item (j). These
clauses would be obviously unnecessary or mere surplusages if the opening clause of the section were "Unless otherwise provided in this Code" instead of "Unless otherwise
provided herein." In

any event, even if the latter is used, since under Section 232 local government units have the power to levy real property tax, except those exempted therefrom under Section
234, then Section 232 must be deemed to qualify Section 133.

Thus, reading together Sections 133, 232, and 234 of the LGC, we conclude that as a general rule, as laid down in Section 133, the taxing powers of local government
units cannot extend to the levy of, inter alia, "taxes, fees and charges of any kind on the National Government, its agencies and instrumentalities, and local
government units"; however, pursuant to Section 232, provinces, cities, and municipalities in the Metropolitan Manila Area may impose the real property tax except
on, inter alia, "real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for
consideration or otherwise, to a taxable person," as provided in item (a) of the first paragraph of Section 234.

As to tax exemptions or incentives granted to or presently enjoyed by natural or judicial persons, including government-owned and controlled corporations, Section 193 of the
LGC prescribes the general rule, viz., they are withdrawn upon the effectivity of the LGC, except those granted to local water districts, cooperatives duly registered under R.A.
No. 6938, non-stock and non-profit hospitals and educational institutions, and unless otherwise provided in the LGC. The latter proviso could refer to Section 234 which
enumerates the properties exempt from real property tax. But the last paragraph of Section 234 further qualifies the retention of the exemption insofar as real property taxes are
concerned by limiting the retention only to those enumerated therein; all others not included in the enumeration lost the privilege upon the effectivity of the LGC. Moreover, even
as to real property owned by the Republic of the Philippines or any of its political subdivisions covered by item (a) of the first paragraph of Section 234, the exemption is
withdrawn if the beneficial use of such property has been granted to a taxable person for consideration or otherwise.

Since the last paragraph of Section 234 unequivocally withdrew, upon the effectivity of the LGC, exemptions from payment of real property taxes granted to natural or juridical
persons, including government-owned or controlled corporations, except as provided in the said section, and the petitioner is, undoubtedly, a government-owned corporation, it
necessarily follows that its exemption from such tax granted it in Section 14 of its Charter, R.A. No. 6958, has been withdrawn. Any claim to the contrary can only be justified if
the petitioner can seek refuge under any of the exceptions provided in Section 234, but not under Section 133, as it now asserts, since, as shown above, the said section is
qualified by Sections 232 and 234.20 (Emphasis supplied.)

This Court, in Mactan, acknowledged that under Section 133, instrumentalities were generally exempt from all forms of local government taxation, unless otherwise provided in
the Code. On the other hand, Section 232 "otherwise provides" insofar as it allowed local government units to levy an ad valorem real property tax, irrespective of who owned the
property. At the same time, the imposition of real property taxes under Section 232 is in turn qualified by the phrase "not hereinafter specifically exempted." The exemptions from
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real property taxes are enumerated in Section 234, which specifically states that only real properties owned "by the Republic of the Philippines or any of its political subdivisions"
are exempted from the payment of the tax. Clearly, instrumentalities or GOCCs do not fall within the exceptions under Section 234.

Worth reckoning, however, is an essential difference between the situation of the MCIAA (and most other GOCCs, for that matter) and that of the GSIS. Unlike most other
GOCCs, there is a statutory provision— Section 33 of P.D. No. 1146, as amended—which imposes conditions on the subsequent withdrawal of the GSIS’s tax exemptions. The
RTC justified the affirmance of the tax exemptions based on the non-compliance by the Local Government Code with these conditionalities, and not by reason of a general
proposition that GOCCs or instrumentalities remain exempt from local government taxation.

Absent Section 33 of P.D. No. 1146, as amended, there would be no impediment in squarely applying the express provisions of Sections 193, 232 and 234 of the Local
Government Code, as the Court did in Mactan and recently in Philippine Rural Electric Cooperatives Association, Inc. et al. v. Secretary of Interior And Local Government, et
al.  21 and in ruling that the tax exemptions of GSIS were withdrawn by the Code. Thus, the crucial proposition is whether the GSIS tax exemptions can be deemed as withdrawn
by the Local Government Code notwithstanding Section 33 of P.D. No. 1146 as amended.

Concededly, it does not appear that at the very least, the second conditionality of Section 33 has been met. No provision has been enacted "to substitute the declared policy of
exemption from any and all taxes as an essential factor for the solvency of the fund."22 Yet the Court is averse to employing this framework, in the first place as utilized by the
RTC, for we recognize a fundamental flaw in Section 33, particularly the amendatory second paragraph introduced by P.D. No. 1981.

The second paragraph of Section 33 of P.D. No. 1146, as amended, effectively imposes restrictions on the competency of the Congress to enact future legislation on the
taxability of the GSIS. This places an undue restraint on the plenary power of the legislature to amend or repeal laws, especially considering that it is a lawmaker’s act that
imposes such burden. Only the Constitution may operate to preclude or place restrictions on the amendment or repeal of laws. Constitutional dicta is of higher order than
legislative statutes, and the latter should always yield to the former in cases of irreconcilable conflict.

It is a basic precept that among the implied substantive limitations on the legislative powers is the prohibition against the passage of irrepealable laws. 23 Irrepealable laws deprive
succeeding legislatures of the fundamental best senses carte blanche in crafting laws appropriate to the operative milieu. Their allowance promotes an unhealthy stasis in the
legislative front and dissuades dynamic democratic impetus that may be responsive to the times. As Senior Associate Justice Reynato S. Puno once observed, "[t]o be sure,
there are no irrepealable laws just as there are no irrepealable Constitutions. Change is the predicate of progress and we should not fear change."24

Moreover, it would be noxious anathema to democratic principles for a legislative body to have the ability to bind the actions of future legislative body, considering that both
assemblies are regarded with equal footing, exercising as they do the same plenary powers. Perpetual infallibility is not one of the attributes desired in a legislative body, and a
legislature which attempts to forestall future amendments or repeals of its enactments labors under delusions of omniscience.

It might be argued that Section 33 of P.D. No. 1146, as amended, does not preclude the repeal of the tax-exempt status of GSIS, but merely imposes conditions for such to
validly occur. Yet these conditions, if honored, have the precise effect of limiting the powers of Congress. Thus, the same rationale for prohibiting irrepealable laws applies in
prohibiting restraints on future amendatory laws. President Marcos, who exercised his legislative powers in amending P.D. No. 1146, could not have demanded obeisance from
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future legislators by imposing restrictions on their ability to legislate amendments or repeals. The concerns that may have militated his enactment of these restrictions need not
necessarily be shared by subsequent Congresses.

We do not mean to trivialize the need to ensure the solvency of the GSIS fund, a concern that has seen legislative expression, even with the most recently enacted Government
Service Insurance System Act of 1997.25 Yet at the same time, we recognize that Congress has the putative authority, through valid legislation, to diminish such fund, or even
abolish the GSIS itself if it so desires. The GSIS may provide vital services and security to employees of the civil service, yet it is not a sacred cow that is beyond abolition by
Congress if, for example, more innovative methods are devised to ensure stable pension funds for government employees. If Congress has the inherent power to abrogate the
GSIS itself, then it necessarily has the ability to inflict less detrimental burdens, such as abolishing its tax-exempt status. If there could be legal authority proscribing the Congress
from enacting such legislation, such should be sourced from the Constitution itself, and not from antecedent statutes which were themselves enacted by legislative power.

The Court’s position is aligned with entrenched norms of statutory construction. In Duarte v. Dade,26 the Court cited with approval Lewis’ Southerland on Statutory Construction,
which states:

A state legislature has a plenary law-making power over all subjects, whether pertaining to persons or things, within its territorial jurisdiction, either to introduce new laws or
repeal the old, unless prohibited expressly or by implication by the federal constitution or limited or restrained by its own. It cannot bind itself or its successors by enacting
irrepealable laws except when so restrained. Every legislative body may modify or abolish the acts passed by itself or its predecessors. This power of repeal may be exercised at
the same session at which the original act was passed; and even while a bill is in its progress and before it becomes a law. This legislature cannot bind a future legislature to
a particular mode of repeal. It cannot declare in advance the intent of subsequent legislatures or the effect of subsequent legislation upon existing statutes .
(Emphasis supplied.)27

The citation is particularly apropos to our present task, since the question for resolution is primarily one of statutory construction, i.e., whether or not Section 33 of P.D. No. 1146
has been repealed by the Local Government Code. It is evident that we cannot render effective the amendatory second paragraph of Section 33as the RTC did, for by doing so,
we would be giving sanction to a disingenuous means employed through legislative power to bind subsequent legislators to a particular mode of repeal.

Thus, the two conditionalities of Section 33 cannot bear relevance on whether the Local Government Code removed the tax-exempt status of the GSIS. The express withdrawal
of all tax exemptions accorded to all persons, natural or juridical, as stated in Section 193 of the Local Government Code, applies without impediment to the present case. Such
position is bolstered by the other cited provisions of the Local Government Code, and by the Mactan ruling.

There are other reasons that guide us to construe the Local Government Code in favor of the City of Davao’s position. Section 5 of the Local Government Code provides the
guidelines on how to construe the Code’s provisions in cases of doubt, and they are self-explanatory, thus:

Section 5. Rules of Interpretation. – In the interpretation of the provisions of this Code, the following rules shall apply:
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(a) Any provision on a power of a local government unit shall be liberally interpreted in its favor, and in case of doubt, any question thereon shall be resolved in
favor of devolution of powers and of the lower local government unit. Any fair and reasonable doubt as to the existence of the power shall be interpreted in favor of
the local government unit concerned;

(b) In case of doubt, any tax ordinance or revenue measure shall be construed strictly against the local government unit enacting it, and liberally in favor of the taxpayer. Any tax
exemption, incentive or relief granted by any local government unit pursuant to the provisions of this Code shall be construed strictly against the person claiming it;
(Emphasis supplied.)

Also worthy of note is that the Constitution itself promotes the principles of local autonomy as embodied in the Local Government Code. The State is mandated to ensure the
autonomy of local governments,28 and local governments are empowered to levy taxes, fees and charges that accrue exclusively to them, subject to congressional guidelines and
limitations.29 The principle of local autonomy is no mere passing dalliance but a constitutionally enshrined precept that deserves respect and appropriate enforcement by this
Court.

We are aware that this stance runs contrary to that which was adopted by the Secretary of Justice in his Opinion dated 22 July 1993, as well as the memorandum from the Office
of the President dated 14 February 1995, expressing the same opinion. However, statutory interpretations of these executive bodies do not hold decisive sway upon the judiciary
but are merely persuasive. These issuances cannot derogate from the binding precept that one legislature cannot enact irrepealable legislation or limit or restrict its own power or
the power of its successors as to the repeal of statutes.30 The act of one legislature is not binding upon and does not tie the hands of future legislatures.31

The GSIS’s tax-exempt status, in sum, was withdrawn in 1992 by the Local Government Code but restored by the Government Service Insurance System Act of 1997, the
operative provision of which is Section39. 32 The subject real property taxes for the years 1992 to 1994 were assessed against GSIS while the Local Government Code provisions
prevailed and, thus, may be collected by the City of Davao.

WHEREFORE, premises considered, the Petition for Review is hereby GRANTED. The appealed Decision of the Regional Trial Court of Davao City, Branch 12 is REVERSED
and SET ASIDE.

Costs de oficio.

SO ORDERED.

G.R. No. 129546 December 13, 2005

PROVINCE OF RIZAL, MUNICIPALITY OF SAN MATEO, PINTONG BOCAUE MULTIPURPOSE COOPERATIVE, CONCERNED CITIZENS OF RIZAL, INC., ROLANDO E.
VILLACORTE, BERNARDO HIDALGO, ANANIAS EBUENGA, VILMA T. MONTAJES, FEDERICO MUNAR, JR., ROLANDO BEÑAS, SR., ET AL., and KILOSBAYAN,
INC., Petitioners,
vs.
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EXECUTIVE SECRETARY, SECRETARY OF ENVIRONMENT & NATURAL RESOURCES, LAGUNA LAKE DEVELOPMENT AUTHORITY, SECRETARY OF PUBLIC
WORKS & HIGHWAYS, SECRETARY OF BUDGET & MANAGEMENT, METRO MANILA DEVELOPMENT AUTHORITY and THE HONORABLE COURT OF
APPEALS, Respondents.

DECISION

CHICO-NAZARIO, J.:

The earth belongs in usufruct to the living.1

At the height of the garbage crisis plaguing Metro Manila and its environs, parts of the Marikina Watershed Reservation were set aside by the Office of the President, through
Proclamation No. 635 dated 28 August 1995, for use as a sanitary landfill and similar waste disposal applications. In fact, this site, extending to more or less 18 hectares, had
already been in operation since 19 February 19902 for the solid wastes of Quezon City, Marikina, San Juan, Mandaluyong, Pateros, Pasig, and Taguig.3

This is a petition filed by the Province of Rizal, the municipality of San Mateo, and various concerned citizens for review on certiorari of the Decision of the Court of Appeals in
CA-G.R. SP No. 41330, denying, for lack of cause of action, the petition for certiorari, prohibition and mandamus with application for a temporary restraining order/writ of
preliminary injunction assailing the legality and constitutionality of Proclamation No. 635.

The facts are documented in painstaking detail.

On 17 November 1988, the respondent Secretaries of the Department of Public Works and Highways (DPWH) and the Department of Environment and Natural Resources
(DENR) and the Governor of the Metropolitan Manila Commission (MMC) entered into a Memorandum of Agreement (MOA),4 which provides in part:

1. The DENR agrees to immediately allow the utilization by the Metropolitan Manila Commission of its land property located at Pintong Bocaue in San Mateo, Rizal as a sanitary
landfill site, subject to whatever restrictions that the government impact assessment might require.

2. Upon signing of this Agreement, the DPWH shall commence the construction/development of said dumpsite.

3. The MMC shall: a) take charge of the relocation of the families within and around the site; b) oversee the development of the areas as a sanitary landfill; c) coordinate/monitor
the construction of infrastructure facilities by the DPWH in the said site; and d) ensure that the necessary civil works are properly undertaken to safeguard against any negative
environmental impact in the area.

On 7, 8 and 10 February 1989, the Sangguniang Bayan of San Mateo wrote Gov. Elfren Cruz of the MMC, Sec. Fiorello Estuar of the DPWH, the Presidential Task Force on
Solid Waste Management, Executive Secretary Catalino Macaraig, and Sec. Fulgencio Factoran, Jr., pointing out that it had recently passed a Resolution banning the creation of
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dumpsites for Metro Manila garbage within its jurisdiction, asking that their side be heard, and that the addressees "suspend and temporarily hold in abeyance all and any part of
your operations with respect to the San Mateo Landfill Dumpsite." No action was taken on these letters.

It turns out that the land subject of the MOA of 17 November 1988 and owned by the DENR was part of the Marikina Watershed Reservation Area. Thus, on 31 May 1989, forest
officers of the Forest Engineering and Infrastructure Unit of the Community Environment and Natural Resource Office, (CENRO) DENR-IV, Rizal Province, submitted a
Memorandum5 on the "On-going Dumping Site Operation of the MMC inside (the) Upper Portion of Marikina Watershed Reservation, located at Barangay Pintong Bocaue, San
Mateo, Rizal, and nearby localities." Said Memorandum reads in part:

Observations:

3.1 The subject area is arable and agricultural in nature;

3.2 Soil type and its topography are favorable for agricultural and forestry productions;

...

3.5 Said Dumping Site is observed to be confined within the said Watershed Reservation, bearing in the northeastern part of Lungsod Silangan Townsite Reservation. Such
illegal Dumping Site operation inside (the) Watershed Reservation is in violation of P.D. 705, otherwise known as the Revised Forestry Code, as amended. . .

Recommendations:

5.1 The MMC Dumping Site Inside Marikina Watershed Reservation, particularly at Brgy. Pintong Bocaue, San Mateo, Rizal and at Bo. Pinugay, Baras/Antipolo, Rizal which are
the present garbage zones must totally be stopped and discouraged without any political intervention and delay in order to save our healthy ecosystems found
therein, to avoid much destruction, useless efforts and lost (sic) of millions of public funds over the land in question; (Emphasis ours)

On 19 June 1989, the CENRO submitted another Investigation Report6 to the Regional Executive Director which states in part that:

1. About two (2) hectares had been excavated by bulldozers and garbage dumping operations are going on.

2. The dumping site is without the concurrence of the Provincial Governor, Rizal Province and without any permit from DENR who has functional jurisdiction over the Watershed
Reservation; and

3. About 1,192 families residing and cultivating areas covered by four (4) Barangays surrounding the dumping site will adversely be affected by the dumping operations of MMC
including their sources of domestic water supply. x x x x
12

On 22 January 1990, the CENRO submitted still another Investigation Report7 to the Regional Executive Director which states that:

Findings show that the areas used as Dumping Site of the MMC are found to be within the Marikina Watershed which are part of the Integrated Social Forestry Project (ISF) as
per recorded inventory of Forest Occupancy of this office.

It also appears that as per record, there was no permit issued to the MMC to utilize these portions of land for dumping purposes.

It is further observed that the use of the areas as dumping site greatly affects the ecological balance and environmental factors in this community.

On 19 February 1990, the DENR Environmental Management Bureau, through Undersecretary for Environment and Research Celso R. Roque, granted the Metro Manila
Authority (MMA [formerly MMC]) an Environmental Compliance Certificate (ECC) for the operation of a two-and-a-half-hectare garbage dumpsite.

The ECC was sought and granted to comply with the requirement of Presidential Decree No. 1586 "Establishing an Environmental Impact Statement System," Section 4 of which
states in part that, "No persons, partnership or corporation shall undertake or operate any such declared environmentally critical project or area without first securing an
Environmental Compliance Certificate." Proclamation No. 2146, passed on 14 December 1981, designates "all areas declared by law as national parks, watershed reserves,
wildlife preserves, and sanctuaries" as "Environmentally Critical Areas."

On 09 March 1990, respondent Laguna Lake Development Authority (LLDA), through its Acting General Manager, sent a letter8 to the MMA, which reads in part:

Through this letter we would like to convey our reservation on the choice of the sites for solid waste disposal inside the watershed of Laguna Lake. As you may already know, the
Metropolitan Waterworks and Sewerage System (MWSS) has scheduled the abstraction of water from the lake to serve the needs of about 1.2 million residents of
Muntinlupa, Paranaque, Las Pinas and Bacoor, Cavite by 1992. Accordingly, the Laguna Lake Development Authority (LLDA) is accelerating its environmental
management program to upgrade the water quality of the lake in order to make it suitable as a source of domestic water supply the whole year round. The said
program regards dumpsites as incompatible within the watershed because of the heavy pollution, including the risk of diseases, generated by such activities which
would negate the government’s efforts to upgrade the water quality of the lake. Consequently, please consider our objection to the proposed location of the dumpsites
within the watershed. (Emphasis supplied by petitioners)

On 31 July 1990, less than six months after the issuance of the ECC, Undersecretary Roque suspended the ECC in a letter9 addressed to the respondent Secretary of DPWH,
stating in part that:

Upon site investigation conducted by Environmental Management Bureau staff on development activities at the San Mateo Landfill Site, it was ascertained that ground
slumping and erosion have resulted from improper development of the site. We believe that this will adversely affect the environmental quality in the area if the proper
remedial measures are not instituted in the design of the landfill site. This is therefore contradictory to statements made in the Environmental Impact Statement (EIS) submitted
that above occurrences will be properly mitigated.
13

In view of this, we are forced to suspend the Environmental Compliance Certificate (ECC) issued until appropriate modified plans are submitted and approved by this Office for
implementation. (Emphasis ours)

On 21 June 1993, the Acting Mayor of San Mateo, Enrique Rodriguez, Jr., Barangay Captain Dominador Vergara, and petitioner Rolando E. Villacorte, Chairman of the Pintong
Bocaue Multipurpose Cooperative (PBMC) wrote10 then President Fidel V. Ramos expressing their objections to the continued operation of the MMA dumpsite for causing
"unabated pollution and degradation of the Marikina Watershed Reservation."

On 14 July 1993, another Investigation Report11 submitted by the Regional Technical Director to the DENR Undersecretary for Environment and Research contained the following
findings and recommendations:

Remarks and Findings:

....

5. Interview with Mr. Dayrit, whose lot is now being endangered because soil erosion have (sic) caused severe siltation and sedimentation of the Dayrit Creek which water is
greatly polluted by the dumping of soil bulldozed to the creek;

6. Also interview with Mrs. Vilma Montajes, the multi-grade teacher of Pintong Bocaue Primary School which is located only about 100 meters from the landfill site. She disclosed
that bad odor have (sic) greatly affected the pupils who are sometimes sick with respiratory illnesses. These odors show that MMA have (sic) not instituted/sprayed any
disinfectant chemicals to prevent air pollution in the area. Besides large flies (Bangaw) are swarming all over the playground of the school. The teacher also informed the
undersigned that plastic debris are being blown whenever the wind blows in their direction.

7. As per investigation report … there are now 15 hectares being used as landfill disposal sites by the MMA. The MMA is intending to expand its operation within the 50 hectares.

8. Lots occupied within 50 hectares are fully planted with fruit bearing trees like Mangoes, Santol, Jackfruit, Kasoy, Guyabano, Kalamansi and Citrus which are now bearing fruits
and being harvested and marketed to nearby San Mateo Market and Masinag Market in Antipolo.

....

Recommendations:

1. As previously recommended, the undersigned also strongly recommend(s) that the MMA be made to relocate the landfill site because the area is within the Marikina
Watershed Reservation and Lungsod Silangan. The leachate treatment plant ha(s) been eroded twice already and contaminated the nearby creeks which is the source of potable
water of the residents. The contaminated water also flows to Wawa Dam and Boso-boso River which also flows to Laguna de Bay.
14

2. The proposed Integrated Social Forestry Project be pushed through or be approved. ISF project will not only uplift the socio-economic conditions of the participants but will
enhance the rehabilitation of the Watershed considering that fruit bearing trees are vigorously growing in the area. Some timber producing species are also planted like
Mahogany and Gmelina Arboiea. There are also portions where dipterocarp residuals abound in the area.

3. The sanitary landfill should be relocated to some other area, in order to avoid any conflict with the local government of San Mateo and the nearby affected residents who have
been in the area for almost 10-20 years.

On 16 November 1993, DENR Secretary Angel C. Alcala sent MMA Chairman Ismael A. Mathay, Jr. a letter12 stating that "after a series of investigations by field officials" of the
DENR, the agency realized that the MOA entered into on 17 November 1988 "is a very costly error because the area agreed to be a garbage dumpsite is inside the Marikina
Watershed Reservation." He then strongly recommended that all facilities and infrastructure in the garbage dumpsite in Pintong Bocaue be dismantled, and the garbage disposal
operations be transferred to another area outside the Marikina Watershed Reservation to protect "the health and general welfare of the residents of San Mateo in particular and
the residents of Metro Manila in general."

On 06 June 1995, petitioner Villacorte, Chairman of the PBMC, wrote13 President Ramos, through the Executive Secretary, informing the President of the issues involved, that the
dumpsite is located near three public elementary schools, the closest of which is only fifty meters away, and that its location "violates the municipal zoning ordinance of San
Mateo and, in truth, the Housing and Land Use Regulatory Board had denied the then MMA chairman’s application for a locational clearance on this ground."

On 21 August 1995, the Sangguniang Bayan of San Mateo issued a Resolution14 "expressing a strong objection to the planned expansion of the landfill operation in Pintong
Bocaue and requesting President Ramos to disapprove the draft Presidential Proclamation segregating 71.6 Hectares from Marikina Watershed Reservation for the landfill site in
Pintong Bocaue, San Mateo, Rizal."

Despite the various objections and recommendations raised by the government agencies aforementioned, the Office of the President, through Executive Secretary Ruben Torres,
signed and issued Proclamation No. 635 on 28 August 1995, "Excluding from the Marikina Watershed Reservation Certain Parcels of Land Embraced Therein for Use as
Sanitary Landfill Sites and Similar Waste Disposal Under the Administration of the Metropolitan Manila Development Authority." The pertinent portions thereof state:

WHEREAS, to cope with the requirements of the growing population in Metro Manila and the adjoining provinces and municipalities, certain developed and open portions of the
Marikina Watershed Reservation, upon the recommendation of the Secretary of the Department of Environment and Natural Resources should now be excluded form the scope
of the reservation;

WHEREAS, while the areas delineated as part of the Watershed Reservations are intended primarily for use in projects and/or activities designed to contain and preserve the
underground water supply, other peripheral areas had been included within the scope of the reservation to provide for such space as may be needed for the construction of the
necessary structures, other related facilities, as well as other priority projects of government as may be eventually determined;

WHEREAS, there is now an urgent need to provide for, and develop, the necessary facilities for the disposal of the waste generated by the population of Metro Manila and the
adjoining provinces and municipalities, to ensure their sanitary and /or hygienic disposal;
15

WHEREAS, to cope with the requirements for the development of the waste disposal facilities that may be used, portions of the peripheral areas of the Marikina Watershed
Reservation, after due consideration and study, have now been identified as suitable sites that may be used for the purpose;

WHEREAS, the Secretary of the Department of Environment and Natural Resources has recommended the exclusion of these areas that have been so identified from the
Marikina Watershed Reservation so that they may then be developed for the purpose;

NOW, THEREFORE, for and in consideration of the aforecited premises, I, Fidel V. Ramos, President of the Philippines, by virtue of the powers vested in me by law, do hereby
ordain:

Section 1. General – That certain parcels of land, embraced by the Marikina Watershed Reservation, were found needed for use in the solid waste disposal program of the
government in Metropolitan Manila, are hereby excluded from that which is held in reserve and are now made available for use as sanitary landfill and such other related waste
disposal applications.

Section 2. Purpose – The areas being excluded from the Marikina Watershed Reservation are hereby placed under the administration of the Metropolitan Manila Development
Authority, for development as Sanitary Landfill, and/or for use in the development of such other related waste disposal facilities that may be used by the cities and municipalities
of Metro Manila and the adjoining province of Rizal and its municipalities.

Section 3. Technical Description – Specifically, the areas being hereby excluded from the Marikina Watershed Reservation consist of two (2) parcels, with an aggregate area of
approximately ONE MILLION SIXTY THOUSAND FIVE HUNDRED TWENTY NINE (1,060,529) square meters more or less, as follows: x x x x

Section 4. Reservations – The development, construction, use and/or operation of any facility that may be established within the parcel of land herein excluded from the Marikina
Watershed Reservation shall be governed by existing laws, rules and regulations pertaining to environmental control and management. When no longer needed for sanitary
landfill purposes or the related waste disposal activities, the parcels of land subject of this proclamation shall revert back as part of the Marikina Watershed Reservation, unless
otherwise authorized.

On 06 September 1995, Director Wilfrido S. Pollisco of the Protected Areas and Wildlife Bureau wrote the DENR Secretary to express the bureau’s stand against the dumpsite at
Pintong Bocaue, and that "it is our view . . . that the mere presence of a garbage dumpsite inside a watershed reservation is definitely not compatible with the very purpose and
objectives for which the reservation was established."

On 24 November 1995, the petitioners Municipality of San Mateo and the residents of Pintong Bocaue, represented by former Senator Jovito Salonga, sent a letter to President
Ramos requesting him to reconsider Proclamation No. 635. Receiving no reply, they sent another letter on 02 January 1996 reiterating their previous request.

On 04 March 1996, then chairman of the Metro Manila Development Authority (MMDA [formerly MMA]) Prospero I. Oreta addressed a letter to Senator Salonga, stating in part
that:
16

….

2. Considering the circumstances under which we are pursuing the project, we are certain you will agree that, unless we are prepared with a better alternative, the project simply
has to be pursued in the best interest of the greater majority of the population, particularly their health and welfare."

2.1 The San Mateo Sanitary Landfill services, at least, 38% of the waste disposal site requirements of Metro Manila where an estimated 9 million population reside.

2.2 Metro Manila is presently estimated to be generating, at least, 15,700 cubic meters of household or municipal waste, a 1.57 hectare of land area will be filled in a month’s
time with a pile 31 meters high of garbage, or in a year, the accumulated volume will require 18.2 hectares.

....

4. The sanitary landfill projects are now on their fifth year of implementation. The amount of effort and money already invested in the project by the government cannot easily be
disregarded, much more set aside in favor of the few settlers/squatters who chose to ignore the earlier notice given to them that the area would be used precisely for the
development of waste disposal sites, and are now attempting to arouse opposition to the project.

4.2 There is no place within the jurisdiction of Metro Manila, with an area big enough to accommodate at least 3 to 5 years of waste disposal requirements. x x x x

4.21 The present site at San Mateo was selected because, at the time consideration was being made, and up to the present, it is found to have the attributes that positively
respond to the criteria established:

4.21.1 The site was a government property and would not require any outlay for it to be acquired.

4.21.2 It is far from any sizeable community/settlements that could be affected by the development that would be introduced and yet, was within economic hauling distance from
the areas they are designed to serve.

4.21.21 At the time it was originally decided to locate the landfills at the present site, there were not more that fifteen (15) settlers in the area and they had hardly established
themselves. The community settlements were located far from the site.

4.21.22 The area was hardly accessible, especially to any public transport. The area was being served by a public utility jeep that usually made only two (2) trips daily. During the
rainy season, it could only be reached by equipping the vehicle with tire chains to traverse the slippery muddy trail roads.

4.21.3 There was, at least, seventy-three (73) hectares available at the site.
17

4.3 While the site was within the Marikina Watershed Reservation under the administration of the DENR, the site was located at the lower periphery of the buffer zone; was
evaluated to be least likely to affect the underground water supply; and could, in fact, be excluded from the reservation.

4.31 It was determined to be far from the main water containment area for it to pose any immediate danger of contaminating the underground water, in case of a failure in any of
the mitigating measures that would be installed.

4.32 It was likewise too far from the nearest body of water, the Laguna Lake, and the distance, plus the increasing accumulation of water from other tributaries toward the lake,
would serve to dilute and mitigate any contamination it may emit, in case one happened.

4.33 To resolve the recurring issue regarding its being located within the Marikina Watershed Reservation, the site had been recommended by the DENR, and approved by the
President, to already be excluded from the Marikina Watershed reservation and placed under the administration of MMDA, since the site was deemed to form part of the land
resource reserve then commonly referred to as buffer zone.

5. Contrary to the impression that you had been given, relocating the site at this point and time would not be easy, if not impracticable, because aside from the investments that
had been made in locating the present site, further investments have been incurred in:

5.1 The conduct of the technical studies for the development being implemented. Through a grant-in-aid from the World Bank, US$600,000 was initially spent for the conduct of
the necessary studies on the area and the design of the landfill. This was augmented by, at least, another P1.5 million from the government for the studies to be completed, or a
total cost at the time (1990) of approximately P20 million.

5.2. Additionally, the government has spent approximately P33 million in improving on the roadway to make the site accessible from the main road/highway.

5.3 To achieve the necessary economies in the development of the site, the utilities had been planned so that their use could be maximized. These include the access roads, the
drainage system, the leacheate collection system, the gas collection system, and the waste water treatment system. Their construction are designed so that instead of having to
construct independent units for each area, the use of existing facilities can be maximized through a system of interconnection. On the average, the government is spending P14.8
million to develop a hectare of sanitary landfill area.

6. Despite the preparations and the investments that are now being made on the project, it is estimated that the total available area, at an accelerated rate of disposal, assuming
that all open dump sites were to be closed, will only last for 39 months.

6.1 We are still hard pressed to achieve advanced development on the sites to assure against any possible crisis in garbage from again being experienced in Metro Manila, aside
from having to look for the additional sites that may be used after the capacities shall have been exhausted.

6.2 Faced with the prospects of having the 15,700 cubic meters of garbage generated daily strewn all over Metro Manila, we are certain you will agree that it would be futile to
even as much as consider a suspension of the waste disposal operations at the sanitary landfills.
18

On 22 July 1996, the petitioners filed before the Court of Appeals a civil action for certiorari, prohibition and mandamus with application for a temporary restraining order/writ of
preliminary injunction. The hearing on the prayer for preliminary injunction was held on 14 August 1996.

On 13 June 1997, the court a quo rendered a Decision,15 the dispositive part of which reads:

WHEREFORE, the petition for certiorari, prohibition and mandamus with application for a temporary restraining order/writ of preliminary injunction for lack of cause of action, is
hereby DENIED.16

Hence, this petition for review on certiorari of the above decision on the following grounds:

The Court of Appeals erred and abused its discretion in deliberately ignoring the significant fact that Presidential Proclamation No. 635 was based on a brazen forgery – it was
supposedly issued, as stated in the proclamation itself and repeatedly asserted by respondents in their comment, on the basis of the alleged recommendation of the DENR
Secretary dated June 26, 1995 but which assertion was denounced by the then Secretary Angel C. Alcala himself – in a sworn statement dated September 18, 1996 and again
during the special hearing of the case in the Court of Appeals on November 13, 1996 – as a forgery since his signature on the alleged recommendation had been falsified, as
now admitted by respondents themselves in their comment filed with the Court of Appeals, through the Office of the Solicitor General.

II

The Court of Appeals erred and abused its discretion in completely ignoring the significant fact that the respondents are operating the landfill based on a spurious Environmental
Compliance Certificate.

III

The Court of Appeals erred in ruling that the respondents did not violate R.A. 7586 when they issued and implemented Proclamation No. 635 considering that the withdrawal or
disestablishment of a protected area or the modification of the Marikina Watershed can only be done by an act of Congress.

IV

The Court of Appeals erred and abused its discretion when it deliberately and willfully brushed aside the unanimous findings and adverse recommendations of responsible
government agencies and non-partisan officials concerned with environmental protection in favor of the self-serving, gratuitous assertions found in the unsolicited, partisan letter
of former Malabon Mayor, now Chairman Prospero Oreta of the MMDA who is an interested party in this case.

V
19

The Court of Appeals erred when it readily swallowed respondents’ assertion that the San Mateo Dumpsite "is located in the ‘Buffer Zone’ of the reservation" and is therefore
outside of its boundaries, and even declared in its decision that it took "serious note" of this particular argument.

VI

The Court of Appeals erred and abused its discretion when it encroached on the function of Congress by expressing its unjustified fear of mini-smokey mountains proliferating in
Metro Manila and justifying its decision in favor of "an integrated system of solid waste management like the San Mateo Landfill.

On 05 January 1998, while the appeal was pending, the petitioners filed a Motion for Temporary Restraining Order,17 pointing out that the effects of the El Niño phenomenon
would be aggravated by the relentless destruction of the Marikina Watershed Reservation. They noted that respondent MMDA had, in the meantime, continued to expand the
area of the dumpsite inside the Marikina Watershed Reservation, cutting down thousands of mature fruit trees and forest trees, and leveling hills and mountains to clear the
dumping area. Garbage disposal operations were also being conducted on a 24-hour basis, with hundreds of metric tons of wastes being dumped daily, including toxic and
infectious hospital wastes, intensifying the air, ground and water pollution.18

The petitioners reiterated their prayer that respondent MMDA be temporarily enjoined from further dumping waste into the site and from encroaching into the area beyond its
existing perimeter fence so as not to render the case moot and academic.

On 28 January 1999, the petitioners filed a Motion for Early Resolution, 19 calling attention to the continued expansion of the dumpsite by the MMDA that caused the people of
Antipolo to stage a rally and barricade the Marcos Highway to stop the dump trucks from reaching the site for five successive days from 16 January 1999. On the second day of
the barricade, all the municipal mayors of the province of Rizal openly declared their full support for the rally, and notified the MMDA that they would oppose any further attempt
to dump garbage in their province.20

As a result, MMDA officials, headed by then Chairman Jejomar Binay, agreed to abandon the dumpsite after six months. Thus, the municipal mayors of Rizal, particularly the
mayors of Antipolo and San Mateo, agreed to the use of the dumpsite until that period, which would end on 20 July 1999.21

On 13 July 1999, the petitioners filed an Urgent Second Motion for Early Resolution22 in anticipation of violence between the conflicting parties as the date of the scheduled
closure of the dumpsite neared.

On 19 July 1999, then President Joseph E. Estrada, taking cognizance of the gravity of the problems in the affected areas and the likelihood that violence would erupt among the
parties involved, issued a Memorandum ordering the closure of the dumpsite on 31 December 2000.23 Accordingly, on 20 July 1999, the Presidential Committee on Flagship
Programs and Projects and the MMDA entered into a MOA with the Provincial Government of Rizal, the Municipality of San Mateo, and the City of Antipolo, wherein the latter
agreed to further extend the use of the dumpsite until its permanent closure on 31 December 2000.24

On 11 January 2001, President Estrada directed Department of Interior and Local Government Secretary Alfredo Lim and MMDA Chairman Binay to reopen the San Mateo
dumpsite "in view of the emergency situation of uncollected garbage in Metro Manila, resulting in a critical and imminent health and sanitation epidemic."25
20

Claiming the above events constituted a "clear and present danger of violence erupting in the affected areas," the petitioners filed an Urgent Petition for Restraining Order 26 on 19
January 2001.

On 24 January 2001, this Court issued the Temporary Restraining Order prayed for, "effective immediately and until further orders."27

Meanwhile, on 26 January 2001, Republic Act No. 9003, otherwise known as "The Ecological Solid Waste Management Act of 2000," was signed into law by President Estrada.

Thus, the petitioners raised only two issues in their Memorandum28 of 08 February 2005: 1) whether or not respondent MMDA agreed to the permanent closure of the San Mateo
Landfill as of December 2000, and 2) whether or not the permanent closure of the San Mateo landfill is mandated by Rep. Act No. 9003.

We hold that the San Mateo Landfill will remain permanently closed.

Although the petitioners may be deemed to have waived or abandoned the issues raised in their previous pleadings but not included in the memorandum, 29 certain events we
shall relate below have inclined us to address some of the more pertinent issues raised in the petition for the guidance of the herein respondents, and pursuant to our symbolic
function to educate the bench and bar.30

The law and the facts indicate that a mere MOA does not guarantee the dumpsite’s permanent closure.

The rally and barricade staged by the people of Antipolo on 28 January 1999, with the full support of all the mayors of Rizal Province caused the MMDA to agree that it would
abandon the dumpsite after six months. In return, the municipal mayors allowed the use of the dumpsite until 20 July 1999.

On 20 July 1999, with much fanfare and rhetoric, the Presidential Committee on Flagship Programs and Projects and the MMDA entered into a MOA with the Provincial
Government of Rizal, the Municipality of San Mateo, and the City of Antipolo, whereby the latter agreed to an extension for the use of the dumpsite until 31 December 2000, at
which time it would be permanently closed.

Despite this agreement, President Estrada directed Department of Interior and Local Government Secretary Alfredo Lim and MMDA Chairman Binay to reopen the San Mateo
dumpsite on 11 January 2001, "in view of the emergency situation of uncollected garbage in Metro Manila, resulting in a critical and imminent health and sanitation epidemic;" our
issuance of a TRO on 24 January 2001 prevented the dumpsite’s reopening.

Were it not for the TRO, then President Estrada’s instructions would have been lawfully carried out, for as we observed in Oposa v. Factoran, the freedom of contract is not
absolute. Thus:

….. In Abe vs. Foster Wheeler Corp., this Court stated: "The freedom of contract, under our system of government, is not meant to be absolute. The same is understood
to be subject to reasonable legislative regulation aimed at the promotion of public health, moral, safety and welfare. In other words, the constitutional guaranty of non-impairment
of obligations of contract is limited by the exercise of the police power of the State, in the interest of public health, safety, moral and general welfare."  The reason for this is
21

emphatically set forth in Nebia vs. New York, quoted in Philippine American Life Insurance Co. vs. Auditor General, to wit: "'Under our form of government the use of property
and the making of contracts are normally matters of private and not of public concern. The general rule is that both shall be free of governmental interference. But  neither
property rights nor contract rights are absolute; for government cannot exist if the citizen may at will use his property to the detriment of his fellows, or exercise his freedom of
contract to work them harm. Equally fundamental with the private right is that of the public to regulate it in the common interest .'" In short, the non-impairment clause must yield to
the police power of the state. (Citations omitted, emphasis supplied)

We thus feel there is also the added need to reassure the residents of the Province of Rizal that this is indeed a final resolution of this controversy, for a brief review of the
records of this case indicates two self-evident facts. First, the San Mateo site has adversely affected its environs, and second, sources of water should always be
protected.

As to the first point, the adverse effects of the site were reported as early as 19 June 1989, when the Investigation Report of the Community Environment and Natural Resources
Officer of DENR-IV-1 stated that the sources of domestic water supply of over one thousand families would be adversely affected by the dumping operations. 31 The succeeding
report included the observation that the use of the areas as dumping site greatly affected the ecological balance and environmental factors of the community.32 Respondent LLDA
in fact informed the MMA that the heavy pollution and risk of disease generated by dumpsites rendered the location of a dumpsite within the Marikina Watershed Reservation
incompatible with its program of upgrading the water quality of the Laguna Lake. 33

The DENR suspended the site’s ECC after investigations revealed ground slumping and erosion had resulted from improper development of the site. 34 Another Investigation
Report35 submitted by the Regional Technical Director to the DENR reported respiratory illnesses among pupils of a primary school located approximately 100 meters from the
site, as well as the constant presence of large flies and windblown debris all over the school’s playground. It further reiterated reports that the leachate treatment plant had been
eroded twice already, contaminating the nearby creeks that were sources of potable water for the residents. The contaminated water was also found to flow to the Wawa
Dam and Boso-boso River, which in turn empties into Laguna de Bay.

This brings us to the second self-evident point. Water is life, and must be saved at all costs. In Collado v. Court of Appeals,36 we had occasion to reaffirm our previous discussion
in Sta. Rosa Realty Development Corporation v. Court of Appeals,37 on the primordial importance of watershed areas, thus: "The most important product of a watershed is water,
which is one of the most important human necessities. The protection of watersheds ensures an adequate supply of water for future generations and the control of flashfloods
that not only damage property but also cause loss of lives. Protection of watersheds is an "intergenerational" responsibility that needs to be answered now.38

Three short months before Proclamation No. 635 was passed to avert the garbage crisis, Congress had enacted the National Water Crisis Act39 to "adopt urgent and effective
measures to address the nationwide water crisis which adversely affects the health and well-being of the population, food production, and industrialization process. One of the
issues the law sought to address was the "protection and conservation of watersheds."40

In other words, while respondents were blandly declaring that "the reason for the creation of the Marikina Watershed Reservation, i.e., to protect Marikina River as the source of
water supply of the City of Manila, no longer exists," the rest of the country was gripped by a shortage of potable water so serious, it necessitated its own legislation.
22

Respondents’ actions in the face of such grave environmental consequences defy all logic. The petitioners rightly noted that instead of providing solutions, they have, with
unmitigated callousness, worsened the problem. It is this readiness to wreak irrevocable damage on our natural heritage in pursuit of what is expedient that has compelled us to
rule at length on this issue. We ignore the unrelenting depletion of our natural heritage at our peril.

I.

The Reorganization Act of the DENR Defines and

Limits Its Powers over the Country’s Natural Resources

The respondents next point out that the Marikina Watershed Reservation, and thus the San Mateo Site, is located in the public domain. They allege that as such, neither the
Province of Rizal nor the municipality of San Mateo has the power to control or regulate its use since properties of this nature belong to the national, and not to the local
governments.

It is ironic that the respondents should pursue this line of reasoning.

In Cruz v. Secretary of Environment and Natural Resources,41 we had occasion to observe that "(o)ne of the fixed and dominating objectives of the 1935 Constitutional
Convention was the nationalization and conservation of the natural resources of the country. There was an overwhelming sentiment in the convention in favor of the principle of
state ownership of natural resources and the adoption of the Regalian doctrine. State ownership of natural resources was seen as a necessary starting point to secure
recognition of the state’s power to control their disposition, exploitation, development, or utilization."42

The Regalian doctrine was embodied in the 1935 Constitution, in Section 1 of Article XIII on "Conservation and Utilization of Natural Resources." This was reiterated in the 1973
Constitution under Article XIV on the "National Economy and the Patrimony of the Nation," and reaffirmed in the 1987 Constitution in Section 2 of Article XII on "National
Economy and Patrimony," to wit:

Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna,
and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development and
utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities or it may enter into co-production, joint
venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such
agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by
law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of
the grant.43

Clearly, the state is, and always has been, zealous in preserving as much of our natural and national heritage as it can, enshrining as it did the obligation to preserve and protect
the same within the text of our fundamental law.
23

It was with this objective in mind that the respondent DENR was mandated by then President Corazon C. Aquino, under Section 4 of Executive Order No. 192,  44 otherwise known
as "The Reorganization Act of the Department of Environment and Natural Resources," to be "the primary government agency responsible for the conservation, management,
development and proper use of the country’s environment and natural resources, specifically forest and grazing lands, mineral resources, including those in reservation and
watershed areas, and lands of the public domain. It is also responsible for the licensing and regulation of all natural resources as may be provided for by law in order to ensure
equitable sharing of the benefits derived therefrom for the welfare of the present and future generations of Filipinos."

We expounded on this matter in the landmark case of Oposa v. Factoran,45 where we held that the right to a balanced and healthful ecology is a fundamental legal right that
carries with it the correlative duty to refrain from impairing the environment. This right implies, among other things, the judicious management and conservation of the country’s
resources, which duty is reposed in the DENR under the aforequoted Section 4 of Executive Order No. 192. Moreover:

Section 3 (of E. O. No. 192) makes the following statement of policy:

SEC. 3. Declaration of Policy. - It is hereby declared the policy of the State to ensure the sustainable use, development, management, renewal, and conservation of the
country's forest, mineral, land, off-shore areas and other natural resources, including the protection and enhancement of the quality of the environment, and equitable access of
the different segments of the population to the development and use of the country's natural resources, not only for the present generation but for future generations as
well. It is also the policy of the state to recognize and apply a true value system including social and environmental cost implications relative to their utilization; development and
conservation of our natural resources. (Emphasis ours)

This policy declaration is substantially re-stated in Title XIV, Book IV of the Administrative Code of 1987, specifically in Section 1 thereof which reads:

SEC. 1. Declaration of Policy. - (1) The State shall ensure, for the benefit of the Filipino people, the full exploration and development as well as the judicious disposition,
utilization, management, renewal and conservation of the country's forest, mineral, land, waters, fisheries, wildlife, off-shore areas and other natural resources, consistent
with the necessity of maintaining a sound ecological balance and protecting and enhancing the quality of the environment and the objective of making the exploration,
development and utilization of such natural resources equitably accessible to the different segments of the present as well as future generations.

(2) The State shall likewise recognize and apply a true value system that takes into account social and environmental cost implications relative to the utilization, development and
conservation of our natural resources.

The above provision stresses "the necessity of maintaining a sound ecological balance and protecting and enhancing the quality of the environment."46 (Emphasis ours.)

In sum, the Administrative Code of 1987 and Executive Order No. 192 entrust the DENR with the guardianship and safekeeping of the Marikina Watershed Reservation and our
other natural treasures. However, although the DENR, an agency of the government, owns the Marikina Reserve and has jurisdiction over the same, this power is not absolute,
but is defined by the declared policies of the state, and is subject to the law and higher authority. Section 2, Title XIV, Book IV of the Administrative Code of 1987, while
specifically referring to the mandate of the DENR, makes particular reference to the agency’s being subject to law and higher authority, thus:
24

SEC. 2. Mandate. - (1) The Department of Environment and Natural Resources shall be primarily responsible for the implementation of the foregoing policy.

(2) It shall, subject to law and higher authority, be in charge of carrying out the State's constitutional mandate to control and supervise the exploration, development, utilization,
and conservation of the country's natural resources.

With great power comes great responsibility. It is the height of irony that the public respondents have vigorously arrogated to themselves the power to control the San Mateo site,
but have deftly ignored their corresponding responsibility as guardians and protectors of this tormented piece of land.

II.

The Local Government Code Gives to Local Government Units All the Necessary Powers to Promote the General Welfare of Their Inhabitants

The circumstances under which Proclamation No. 635 was passed also violates Rep. Act No. 7160, or the Local Government Code.

Contrary to the averment of the respondents, Proclamation No. 635, which was passed on 28 August 1995, is subject to the provisions of the Local Government Code, which was
approved four years earlier, on 10 October 1991.

Section 2(c) of the said law declares that it is the policy of the state " to require all national agencies and offices to conduct periodic consultations with appropriate local
government units, non-governmental and people's organizations, and other concerned sectors of the community before any project or program is implemented in their respective
jurisdictions." Likewise, Section 27 requires prior consultations before a program shall be implemented by government authorities and the prior approval of the sanggunian is
obtained.

During the oral arguments at the hearing for the temporary restraining order, Director Uranza of the MMDA Solid Waste Management Task Force declared before the Court of
Appeals that they had conducted the required consultations. However, he added that "(t)his is the problem, sir, the officials we may have been talking with at the time this was
established may no longer be incumbent and this is our difficulty now. That is what we are trying to do now, a continuing dialogue." 47

The ambivalent reply of Director Uranza was brought to the fore when, at the height of the protest rally and barricade along Marcos Highway to stop dump trucks from reaching
the site, all the municipal mayors of the province of Rizal openly declared their full support for the rally and notified the MMDA that they would oppose any further attempt to
dump garbage in their province. 48

The municipal mayors acted within the scope of their powers, and were in fact fulfilling their mandate, when they did this. Section 16 allows every local government unit to
"exercise the powers expressly granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance,
and those which are essential to the promotion of the general welfare," which involve, among other things, "promot(ing) health and safety, enhance(ing) the right of the
people to a balanced ecology, and preserv(ing) the comfort and convenience of their inhabitants. "
25

In Lina , Jr. v. Paño,49 we held that Section 2 (c), requiring consultations with the appropriate local government units, should apply to national government projects affecting the
environmental or ecological balance of the particular community implementing the project. Rejecting the petitioners’ contention that Sections 2(c) and 27 of the Local Government
Code applied mandatorily in the setting up of lotto outlets around the country, we held that:

From a careful reading of said provisions, we find that these apply only to national programs and/or projects which are to be implemented in a particular local community. Lotto is
neither a program nor a project of the national government, but of a charitable institution, the PCSO. Though sanctioned by the national government, it is far fetched to say that
lotto falls within the contemplation of Sections 2 (c) and 27 of the Local Government Code.

Section 27 of the Code should be read in conjunction with Section 26 thereof. Section 26 reads:

SECTION 26. Duty of National Government Agencies in the Maintenance of Ecological Balance. It shall be the duty of every national agency or government-owned or controlled
corporation authorizing or involved in the planning and implementation of any project or program that may cause pollution, climatic change, depletion of non-renewable
resources, loss of crop land, range-land, or forest cover, and extinction of animal or plant species, to consult with the local government units, nongovernmental organizations, and
other sectors concerned and explain the goals and objectives of the project or program, its impact upon the people and the community in terms of environmental or ecological
balance, and the measures that will be undertaken to prevent or minimize the adverse effects thereof.

Thus, the projects and programs mentioned in Section 27 should be interpreted to mean projects and programs whose effects are among those enumerated in
Section 26 and 27, to wit, those that: (1) may cause pollution; (2) may bring about climatic change; (3) may cause the depletion of non-renewable resources; (4) may
result in loss of crop land, range-land, or forest cover; (5) may eradicate certain animal or plant species from the face of the planet; and (6) other projects or
programs that may call for the eviction of a particular group of people residing in the locality where these will be implemented. Obviously, none of these effects will be
produced by the introduction of lotto in the province of Laguna. (emphasis supplied)

We reiterated this doctrine in the recent case of Bangus Fry Fisherfolk v. Lanzanas,50 where we held that there was no statutory requirement for the sangguniang bayan of Puerto
Galera to approve the construction of a mooring facility, as Sections 26 and 27 are inapplicable to projects which are not environmentally critical.

Moreover, Section 447, which enumerates the powers, duties and functions of the municipality, grants the sangguniang bayan the power to, among other things, "enact
ordinances, approve resolutions and appropriate funds for the general welfare of the municipality and its inhabitants pursuant to Section 16 of th(e) Code." These include:

(1) Approving ordinances and passing resolutions to protect the environment and impose appropriate penalties for acts which endanger the environment, such as
dynamite fishing and other forms of destructive fishing, illegal logging and smuggling of logs, smuggling of natural resources products and of endangered species of flora and
fauna, slash and burn farming, and such other activities which result in pollution, acceleration of eutrophication of rivers and lakes, or of ecological imbalance; [Section
447 (1)(vi)]

(2) Prescribing reasonable limits and restraints on the use of property within the jurisdiction of the municipality, adopting a comprehensive land use plan for the
municipality, reclassifying land within the jurisdiction of the city, subject to the pertinent provisions of this Code, enacting integrated zoning ordinances in consonance with the
26

approved comprehensive land use plan, subject to existing laws, rules and regulations; establishing fire limits or zones, particularly in populous centers; and regulating the
construction, repair or modification of buildings within said fire limits or zones in accordance with the provisions of this Code; [Section 447 (2)(vi-ix)]

(3) Approving ordinances which shall ensure the efficient and effective delivery of the basic services and facilities as provided for under Section 17 of this Code, and in addition to
said services and facilities, …providing for the establishment, maintenance, protection, and conservation of communal forests and watersheds, tree parks, greenbelts,
mangroves, and other similar forest development projects ….and, subject to existing laws, establishing and providing for the maintenance, repair and operation of an
efficient waterworks system to supply water for the inhabitants and purifying the source of the water supply; regulating the construction, maintenance, repair and use of
hydrants, pumps, cisterns and reservoirs; protecting the purity and quantity of the water supply of the municipality and, for this purpose, extending the coverage of
appropriate ordinances over all territory within the drainage area of said water supply and within one hundred (100) meters of the reservoir, conduit, canal, aqueduct,
pumping station, or watershed used in connection with the water service; and regulating the consumption, use or wastage of water." [Section 447 (5)(i) & (vii)]

Under the Local Government Code, therefore, two requisites must be met before a national project that affects the environmental and ecological balance of local communities
can be implemented: prior consultation with the affected local communities, and prior approval of the project by the appropriate sanggunian. Absent either of these mandatory
requirements, the project’s implementation is illegal.

III.

Waste Disposal Is Regulated by the Ecological

Solid Waste Management Act of 2000

The respondents would have us overlook all the abovecited laws because the San Mateo site is a very expensive - and necessary - fait accompli. The respondents cite the
millions of pesos and hundreds of thousands of dollars the government has already expended in its development and construction, and the lack of any viable alternative sites.

The Court of Appeals agreed, thus:

During the hearing on the injunction, questions were also asked. "What will happen if the San Mateo Sanitary Landfill is closed? Where will the daily collections of garbage be
disposed of and dumped?" Atty. Mendoza, one of the lawyers of the petitioners, answered that each city/municipality ‘must take care of its own.’ Reflecting on that answer, we
are troubled: will not the proliferation of separate open dumpsites be a more serious health hazard (which ha(s) to be addressed) to the residents of the community? What with
the galloping population growth and the constricting available land area in Metro Manila? There could be a ‘mini-Smokey Mountain’ in each of the ten cities…comprising Metro
Manila, placing in danger the health and safety of more people. Damage to the environment could be aggravated by the increase in number of open dumpsites. An integrated
system of solid waste management, like the San Mateo Sanitary Landfill, appears advisable to a populous metropolis like the Greater Metro Manila Area absent access to better
technology.51
27

We acknowledge that these are valid concerns. Nevertheless, the lower court should have been mindful of the legal truism that it is the legislature, by its very nature, which is the
primary judge of the necessity, adequacy, wisdom, reasonableness and expediency of any law.52

Moreover, these concerns are addressed by Rep. Act No. 9003. Approved on 26 January 2001, "The Ecological Solid Waste Management Act of 2000" was enacted pursuant to
the declared policy of the state "to adopt a systematic, comprehensive and ecological solid waste management system which shall ensure the protection of public health and
environment, and utilize environmentally sound methods that maximize the utilization of valuable resources and encourage resource conservation and recovery."53 It requires the
adherence to a Local Government Solid Waste Management Plan with regard to the collection and transfer, processing, source reduction, recycling, composting and final
disposal of solid wastes, the handling and disposal of special wastes, education and public information, and the funding of solid waste management projects.

The said law mandates the formulation of a National Solid Waste Management Framework, which should include, among other things, the method and procedure for the
phaseout and the eventual closure within eighteen months from effectivity of the Act in case of existing open dumps and/or sanitary landfills located within an aquifer,
groundwater reservoir or watershed area.54 Any landfills subsequently developed must comply with the minimum requirements laid down in Section 40, specifically that the site
selected must be consistent with the overall land use plan of the local government unit, and that the site must be located in an area where the landfill’s operation will
not detrimentally affect environmentally sensitive resources such as aquifers, groundwater reservoirs or watershed areas.55

This writes finis to any remaining aspirations respondents may have of reopening the San Mateo Site. Having declared Proclamation No. 635 illegal, we see no compelling need
to tackle the remaining issues raised in the petition and the parties’ respective memoranda.

A final word. Laws pertaining to the protection of the environment were not drafted in a vacuum. Congress passed these laws fully aware of the perilous state of both our
economic and natural wealth. It was precisely to minimize the adverse impact humanity’s actions on all aspects of the natural world, at the same time maintaining and ensuring
an environment under which man and nature can thrive in productive and enjoyable harmony with each other, that these legal safeguards were put in place. They should thus not
be so lightly cast aside in the face of what is easy and expedient.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 41330, dated 13 June 1997, is REVERSED and SET ASIDE. The temporary
restraining order issued by the Court on 24 January 2001 is hereby made permanent.

SO ORDERED.

G.R. No. 162243               December 3, 2009

HON. HEHERSON ALVAREZ substituted by HON. ELISEA G. GOZUN, in her capacity as Secretary of the Department of Environment and Natural
Resources, Petitioner,
vs.
PICOP RESOURCES, INC., Respondent.
28

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 164516

PICOP RESOURCES, INC., Petitioner,

vs.
HON. HEHERSON ALVAREZ substituted by HON. ELISEA G. GOZUN, in her capacity as Secretary of the Department of Environment and Natural
Resources Respondent.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 171875              

THE HON. ANGELO T. REYES (formerly Hon. Elisea G. Gozun), in his capacity as Secretary of the Department of Environment and Natural Resources
(DENR), Petitioner,
vs.
PAPER INDUSTRIES CORP. OF THE PHILIPPINES (PICOP), Respondent.

RESOLUTION

CHICO-NAZARIO, J.:

The cause of action of PICOP Resources, Inc. (PICOP) in its Petition for Mandamus with the trial court is clear: the government is bound by contract, a 1969 Document signed by
then President Ferdinand Marcos, to enter into an Integrated Forest Management Agreement (IFMA) with PICOP. Since the remedy of mandamus lies only to compel an officer
to perform a ministerial duty, and since the 1969 Document itself has a proviso requiring compliance with the laws and the Constitution, the issues in this Motion for
Reconsideration are the following: (1) firstly, is the 1969 Document a contract enforceable under the Non-Impairment Clause of the Constitution, so as to make the signing of the
IFMA a ministerial duty? (2) secondly, did PICOP comply with all the legal and constitutional requirements for the issuance of an IFMA?

To recall, PICOP filed with the Department of Environment and Natural Resources (DENR) an application to have its Timber License Agreement (TLA) No. 43 converted into an
IFMA. In the middle of the processing of PICOP’s application, however, PICOP refused to attend further meetings with the DENR. Instead, on 2 September 2002, PICOP filed
before the Regional Trial Court (RTC) of Quezon City a Petition for Mandamus1 against then DENR Secretary Heherson T. Alvarez. PICOP seeks the issuance of a privileged
writ of mandamus to compel the DENR Secretary to sign, execute and deliver an IFMA to PICOP, as well as to –

[I]ssue the corresponding IFMA assignment number on the area covered by the IFMA, formerly TLA No. 43, as amended; b) to issue the necessary permit allowing petitioner to
act and harvest timber from the said area of TLA No. 43, sufficient to meet the raw material requirements of petitioner’s pulp and paper mills in accordance with the warranty and
29

agreement of July 29, 1969 between the government and PICOP’s predecessor-in-interest; and c) to honor and respect the Government Warranties and contractual obligations
to PICOP strictly in accordance with the warranty and agreement dated July 29, [1969] between the government and PICOP’s predecessor-in-interest. x x x.2

On 11 October 2002, the RTC rendered a Decision granting PICOP’s Petition for Mandamus, thus:

WHEREFORE, premises considered, the Petition for Mandamus is hereby GRANTED.

The Respondent DENR Secretary Hon. Heherson Alvarez is hereby ordered:

1. to sign, execute and deliver the IFMA contract and/or documents to PICOP and issue the corresponding IFMA assignment number on the area covered by the IFMA,
formerly TLA No. 43, as amended;

2. to issue the necessary permit allowing petitioner to act and harvest timber from the said area of TLA No. 43, sufficient to meet the raw material requirements of
petitioner’s pulp and paper mills in accordance with the warranty and agreement of July 29, 1969 between the government and PICOP’s predecessor-in-interest; and

3. to honor and respect the Government Warranties and contractual obligations to PICOP strictly in accordance with the warranty and agreement dated July 29, 1999 (sic)
between the government and PICOP’s predecessor-in-interest (Exhibits "H", "H-1" to "H-5", particularly the following:

a) the area coverage of TLA No. 43, which forms part and parcel of the government warranties;

b) PICOP tenure over the said area of TLA No. 43 and exclusive right to cut, collect and remove sawtimber and pulpwood for the period ending on April 26, 1977;
and said period to be renewable for [an]other 25 years subject to compliance with constitutional and statutory requirements as well as with existing policy on timber
concessions; and

c) The peaceful and adequate enjoyment by PICOP of the area as described and specified in the aforesaid amended Timber License Agreement No. 43.

The Respondent Secretary Alvarez is likewise ordered to pay petitioner the sum of ₱10 million a month beginning May 2002 until the conversion of TLA No. 43, as amended, to
IFMA is formally effected and the harvesting from the said area is granted.3

On 25 October 2002, the DENR Secretary filed a Motion for Reconsideration. 4 In a 10 February 2003 Order, the RTC denied the DENR Secretary’s Motion for Reconsideration
and granted PICOP’s Motion for the Issuance of Writ of Mandamus and/or Writ of Mandatory Injunction. 5 The fallo of the 11 October 2002 Decision was practically copied in the
10 February 2003 Order, although there was no mention of the damages imposed against then DENR Secretary Alvarez. 6 The DENR Secretary filed a Notice of Appeal 7 from the
11 October 2002 Decision and the 10 February 2003 Order.

On 19 February 2004, the Seventh Division of the Court of Appeals affirmed8 the Decision of the RTC, to wit:
30

WHEREFORE, the appealed Decision is hereby AFFIRMED with modification that the order directing then DENR Secretary Alvarez "to pay petitioner-appellee the sum of P10
million a month beginning May, 2002 until the conversion to IFMA of TLA No. 43, as amended, is formally effected and the harvesting from the said area is granted" is hereby
deleted. 9

Challenging the deletion of the damages awarded to it, PICOP filed a Motion for Partial Reconsideration10 of this Decision, which was denied by the Court of Appeals in a 20 July
2004 Resolution.11

The DENR Secretary and PICOP filed with this Court separate Petitions for Review of the 19 February 2004 Court of Appeals Decision. These Petitions were docketed as G.R.
No. 162243 and No. 164516, respectively. These cases were consolidated with G.R. No. 171875, which relates to the lifting of a Writ of Preliminary Injunction enjoining the
execution pending appeal of the foregoing Decision.

On 29 November 2006, this Court rendered the assailed Decision on the Consolidated Petitions:

WHEREFORE, the Petition in G.R. No. 162243 is GRANTED. The Decision of the Court of Appeals insofar as it affirmed the RTC Decision granting the Petition for Mandamus
filed by Paper Industries Corp. of the Philippines (PICOP) is hereby REVERSED and SET ASIDE. The Petition in G.R. No. 164516 seeking the reversal of the same Decision
insofar as it nullified the award of damages in favor of PICOP is DENIED for lack of merit. The Petition in G.R. No. 171875, assailing the lifting of the Preliminary Mandatory
Injunction in favor of the Secretary of Environment and Natural Resources is DISMISSED on the ground of mootness.12

On 18 January 2006, PICOP filed the instant Motion for Reconsideration, based on the following grounds:

I.

THE HONORABLE COURT ERRED IN HOLDING THAT THE CONTRACT WITH PRESIDENTIAL WARRANTY SIGNED BY THE PRESIDENT OF THE REPUBLIC ON 29
JUNE 1969 ISSUED TO PICOP IS A MERE PERMIT OR LICENSE AND IS NOT A CONTRACT, PROPERTY OR PROPERTY RIGHT PROTECTED BY THE DUE PROCESS
CLAUSE OF THE CONSTITUTION

II.

THE EVALUATION OF PICOP’S MANAGEMENT OF THE TLA 43 NATURAL FOREST CLEARLY SHOWED SATISFACTORY PERFORMANCE FOR KEEPING THE
NATURAL FOREST GENERALLY INTACT AFTER 50 YEARS OF FOREST OPERATIONS. THIS COMPLETES THE REQUIREMENT FOR AUTOMATIC CONVERSION
UNDER SECTION 9 OF DAO 99-53.

III.
31

WITH DUE RESPECT, THE HONORABLE COURT, IN REVERSING THE FINDINGS OF FACTS OF THE TRIAL COURT AND THE COURT OF APPEALS, MISAPPRECIATED
THE EVIDENCE, TESTIMONIAL AND DOCUMENTARY, WHEN IT RULED THAT:

i.

PICOP FAILED TO SUBMIT A FIVE-YEAR FOREST PROTECTION PLAN AND A SEVEN-YEAR REFORESTATION PLAN FOR THE YEARS UNDER REVIEW.

ii.

PICOP FAILED TO COMPLY WITH THE PAYMENT OF FOREST CHARGES.

iii.

PICOP DID NOT COMPLY WITH THE REQUIREMENT FOR A CERTIFICATION FROM THE NCIP THAT THE AREA OF TLA 43 DOES NOT OVERLAP WITH ANY
ANCESTRAL DOMAIN.

iv.

PICOP FAILED TO HAVE PRIOR CONSULTATION WITH AND APPROVAL FROM THE SANGUNIAN CONCERNED, AS REQUIRED BY SECTION 27 OF THE REPUBLIC
ACT NO. 7160, OTHERWISE KNOWN AS THE LOCAL GOVERNMENT CODE OF 1991.

v.

PCIOP FAILED TO SECURE SOCIAL ACCEPTABILITY UNDER PRESIDENTIAL DECREE NO. 1586.

IV

THE MOTIVATION OF ALVAREZ IN RECALLING THE CLEARANCE FOR AUTOMATIC CONVERSION HE ISSUED ON 25 OCTOBER 2001 WAS NOT DUE TO ANY
SHORTCOMING FROM PICOP BUT DUE TO HIS DETERMINATION TO EXCLUDE 28,125 HECTARES FROM THE CONVERSION AND OTHER THINGS.

On 15 December 2008, on Motion by PICOP, the Third Division of this Court resolved to refer the consolidated cases at bar to the Court en banc. On 16 December 2008, this
Court sitting en banc resolved to accept the said cases and set them for oral arguments. Oral arguments were conducted on 10 February 2009.

PICOP’s Cause of Action: Matters PICOP Should Have Proven to Be Entitled to a Writ of Mandamus
32

In seeking a writ of mandamus to compel the issuance of an IFMA in its favor, PICOP relied on a 29 July 1969 Document, the so-called Presidential Warranty approved by then
President Ferdinand E. Marcos in favor of PICOP’s predecessor-in-interest, Bislig Bay Lumber Company, Inc. (BBLCI). PICOP’s cause of action is summarized in paragraphs 1.6
and 4.19 of its Petition for Mandamus:

1.6 Respondent Secretary impaired the obligation of contract under the said Warranty and Agreement of 29 July 1969 by refusing to respect the tenure; and its renewal for
another twenty five (25) years, of PICOP over the area covered by the said Agreement which consists of permanent forest lands with an aggregate area of 121,587 hectares and
alienable and disposable lands with an aggregate area of approximately 21,580 hectares, and petitioner’s exclusive right to cut, collect and remove sawtimber and pulpwood
therein and the peaceful and adequate enjoyment of the said area as described and specified in petitioner’s Timber License Agreement (TLA) No. 43 guaranteed by the
Government, under the Warranty and Agreement of 29 July 1969.13

4.19 Respondent is in violation of the Constitution and has impaired the obligation of contract by his refusal to respect: a) the tenurial rights of PICOP over the forest area
covered by TLA No. 43, as amended and its renewal for another twenty five (25) years; b) the exclusive right of PICOP to cut, collect and remove sawtimber and pulpwood
therein; and c) PICOP’s peaceful and adequate enjoyment of the said area which the government guaranteed under the Warranty and Agreement of 29 July 1969.14

The grounds submitted by PICOP in its Petition for Mandamus are as follows:

Respondent secretary has unlawfully refused and/or neglected to sign and execute the IFMA contract of PICOP even as the latter has complied with all the legal requirements for
the automatic conversion of TLA No. 43, as amended, into an IFMA.

II

Respondent Secretary acted with grave abuse of discretion and/or in excess of jurisdiction in refusing to sign and execute PICOP’s IFMA contract, notwithstanding that PICOP
had complied with all the requirements for Automatic Conversion under DAO 99-53, as in fact Automatic Conversion was already cleared in October, 2001, and was a completed
process.

III

Respondent Secretary has impaired the obligation of contract under a valid and binding warranty and agreement of 29 July 1969 between the government and PICOP’s
predecessor-in-interest, by refusing to respect: a) the tenure of PICOP, and its renewal for another twenty five (25) years, over the TLA No.43 area covered by said agreement;
b) the exclusive right to cut, collect and remove sawtimber and pulpwood timber; and c) the peaceful and adequate enjoyment of the said area.

IV
33

As a result of respondent Secretary’s unlawful refusal and/or neglect to sign and deliver the IFMA contract, and violation of the constitutional rights of PICOP against non-
impairment of the obligation of contract (Sec. 10, Art. III, 1997 [sic] Constitution), PICOP suffered grave and irreparable damages.15

Petitions for Mandamus are governed by Rule 65 of the Rules of Court, Section 3 of which provides:

SEC. 3. Petition for mandamus.—When any tribunal, corporation, board, officer or person unlawfully neglects the performance of an act which the law specifically enjoins as a
duty resulting from an office, trust, or station, or unlawfully excludes another from the use and enjoyment of a right or office to which such other is entitled, and there is no other
plain, speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and
praying that judgment be rendered commanding the respondent, immediately or at some other time to be specified by the court, to do the act required to be done to protect the
rights of the petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful acts of the respondent. (Emphasis supplied.)

PICOP is thus asking this Court to conclude that the DENR Secretary is specifically enjoined by law to issue an IFMA in its favor. An IFMA, as defined by DENR Administrative
Order (DAO) No. 99-53,16 is -

[A] production-sharing contract entered into by and between the DENR and a qualified applicant wherein the DENR grants to the latter the exclusive right to develop, manage,
protect and utilize a specified area of forestland and forest resource therein for a period of 25 years and may be renewed for another 25-year period, consistent with the principle
of sustainable development and in accordance with an approved CDMP, and under which both parties share in its produce.17

PICOP stresses the word "automatic" in Section 9 of this DAO No. 99-53:

Sec. 9. Qualifications of Applicants. – The applicants for IFMA shall be:

(a) A Filipino citizen of legal age; or,

(b) Partnership, cooperative or corporation whether public or private, duly registered under Philippine laws.

However, in the case of application for conversion of TLA into IFMA, an automatic conversion after proper evaluation shall be allowed, provided the TLA holder shall have
signified such intention prior to the expiry of the TLA, PROVIDED further, that the TLA holder has showed satisfactory performance and have complied in the terms of condition of
the TLA and pertinent rules and regulations. (Emphasis supplied.)18

This administrative regulation provision allowing automatic conversion after proper evaluation can hardly qualify as a law, much less a law specifically enjoining the execution of a
contract. To enjoin is "to order or direct with urgency; to instruct with authority; to command." 19 "‘Enjoin’ is a mandatory word, in legal parlance, always; in common parlance,
usually."20 The word "allow," on the other hand, is not equivalent to the word "must," and is in no sense a command.21
34

As an extraordinary writ, the remedy of mandamus lies only to compel an officer to perform a ministerial duty, not a discretionary one; mandamus will not issue to control the
exercise of discretion of a public officer where the law imposes upon him the duty to exercise his judgment in reference to any manner in which he is required to act, because it is
his judgment that is to be exercised and not that of the court.22

The execution of agreements, in itself, involves the exercise of discretion. Agreements are products of negotiations and mutual concessions, necessitating evaluation of their
provisions on the part of both parties. In the case of the IFMA, the evaluation on the part of the government is specifically mandated in the afore-quoted Section 3 of DAO No. 99-
53. This evaluation necessarily involves the exercise of discretion and judgment on the part of the DENR Secretary, who is tasked not only to negotiate the sharing of the profit
arising from the IFMA, but also to evaluate the compliance with the requirements on the part of the applicant.

Furthermore, as shall be discussed later, the period of an IFMA that was merely automatically converted from a TLA in accordance with Section 9, paragraph 2 of DAO No. 99-53
would only be for the remaining period of the TLA. Since the TLA of PICOP expired on 26 April 2002, the IFMA that could have been granted to PICOP via the automatic
conversion provision in DAO No. 99-53 would have expired on the same date, 26 April 2002, and the PICOP’s Petition for Mandamus would have become moot.

This is where the 1969 Document, the purported Presidential Warranty, comes into play. When PICOP’s application was brought to a standstill upon the evaluation that PICOP
had yet to comply with the requirements for such conversion, PICOP refused to attend further meetings with the DENR and instead filed a Petition for Mandamus, insisting that
the DENR Secretary had impaired the obligation of contract by his refusal to respect: a) the tenurial rights of PICOP over the forest area covered by TLA No. 43, as amended,
and its renewal for another twenty-five (25) years; b) the exclusive right of PICOP to cut, collect and remove sawtimber and pulpwood therein; and c) PICOP’s peaceful and
adequate enjoyment of the said area which the government guaranteed under the Warranty and Agreement of 29 July 1969. 23

PICOP is, thus, insisting that the government is obligated by contract to issue an IFMA in its favor because of the 1969 Document.

A contract, being the law between the parties, can indeed, with respect to the State when it is a party to such contract, qualify as a law specifically enjoining the performance of
an act. Hence, it is possible that a writ of mandamus may be issued to PICOP, but only if it proves both of the following:

1) That the 1969 Document is a contract recognized under the non-impairment clause; and

2) That the 1969 Document specifically enjoins the government to issue the IFMA.

If PICOP fails to prove any of these two matters, the grant of a privileged writ of mandamus is not warranted. This was why we pronounced in the assailed Decision that the
overriding controversy involved in the Petition was one of law. 24 If PICOP fails to prove any of these two matters, more significantly its assertion that the 1969 Document is a
contract, PICOP fails to prove its cause of action. 25 Not even the satisfactory compliance with all legal and administrative requirements for an IFMA would save PICOP’s Petition
for Mandamus.
35

The reverse, however, is not true. The 1969 Document expressly states that the warranty as to the tenure of PICOP is "subject to compliance with constitutional and statutory
requirements as well as with existing policy on timber concessions." Thus, if PICOP proves the two above-mentioned matters, it still has to prove compliance with statutory and
administrative requirements for the conversion of its TLA into an IFMA.

Exhaustion of Administrative Remedies

PICOP uses the same argument –– that the government is bound by contract to issue the IFMA –– in its refusal to exhaust all administrative remedies by not appealing the
alleged illegal non-issuance of the IFMA to the Office of the President. PICOP claimed in its Petition for Mandamus with the trial court that:

1.10 This petition falls as an exception to the exhaustion of administrative remedies. The acts of respondent DENR Secretary complained of in this petition are patently illegal; in
derogation of the constitutional rights of petitioner against non-impairment of the obligation of contracts; without jurisdiction, or in excess of jurisdiction or so capriciously as to
constitute an abuse of discretion amounting to excess or lack of jurisdiction; and moreover, the failure or refusal of a high government official such as a Department head from
whom relief is brought to act on the matter was considered equivalent to exhaustion of administrative remedies (Sanoy v. Tantuico, 50 SCRA 455 [1973]), and there are
compelling and urgent reasons for judicial intervention (Bagatsing v. Ramirez, 74 SCRA 306 [1976]).

Thus, if there has been no impairment of the obligation of contracts in the DENR Secretary’s non-issuance of the IFMA, the proper remedy of PICOP in claiming that it has
complied with all statutory and administrative requirements for the issuance of the IFMA should have been with the Office of the President. This makes the issue of the
enforceability of the 1969 Document as a contract even more significant.

The Nature and Effects of the Purported 29 July 1969 Presidential Warranty

Base Metals Case

PICOP challenges our ruling that the 1969 Document is not a contract. Before we review this finding, however, it must be pointed out that one week after the assailed Decision,
another division of this Court promulgated a Decision concerning the very same 1969 Document. Thus, in PICOP Resources, Inc. v. Base Metals Mineral Resources
Corporation,26 five other Justices who were still unaware of this Division’s Decision, 27 came up with the same conclusion as regards the same issue of whether former President
Marcos’s Presidential Warranty is a contract:

Finally, we do not subscribe to PICOP’s argument that the Presidential Warranty dated September 25, 1968 is a contract protected by the non-impairment clause of the 1987
Constitution.

An examination of the Presidential Warranty at once reveals that it simply reassures PICOP of the government’s commitment to uphold the terms and conditions of its timber
license and guarantees PICOP’s peaceful and adequate possession and enjoyment of the areas which are the basic sources of raw materials for its wood processing complex.
The warranty covers only the right to cut, collect, and remove timber in its concession area, and does not extend to the utilization of other resources, such as mineral resources,
occurring within the concession.
36

The Presidential Warranty cannot be considered a contract distinct from PTLA No. 47 and FMA No. 35. We agree with the OSG’s position that it is merely a collateral undertaking
which cannot amplify PICOP’s rights under its timber license. Our definitive ruling in Oposa v. Factoran that a timber license is not a contract within the purview of the non-
impairment clause is edifying. We declared:

Needless to say, all licenses may thus be revoked or rescinded by executive action. It is not a contract, property or a property right protected by the due process clause of the
Constitution. In Tan vs. Director of Forestry, this Court held:

"x x x A timber license is an instrument by which the State regulates the utilization and disposition of forest resources to the end that public welfare is promoted. A timber license
is not a contract within the purview of the due process clause; it is only a license or a privilege, which can be validly withdrawn whenever dictated by public interest or public
welfare as in this case.

‘A license is merely a permit or privilege to do what otherwise would be unlawful, and is not a contract between the authority, federal, state, or municipal, granting it and the
person to whom it is granted; neither is it a property or a property right, nor does it create a vested right; nor is it taxation' (C.J. 168). Thus, this Court held that the granting of
license does not create irrevocable rights, neither is it property or property rights (People vs. Ong Tin, 54 O.G. 7576). x x x"

We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy Executive Secretary:

"x x x Timber licenses, permits and license agreements are the principal instruments by which the State regulates the utilization and disposition of forest resources to the end that
public welfare is promoted. And it can hardly be gainsaid that they merely evidence a privilege granted by the State to qualified entities, and do not vest in the latter a permanent
or irrevocable right to the particular concession area and the forest products therein. They may be validly amended, modified, replaced or rescinded by the Chief Executive when
national interests so require. Thus, they are not deemed contracts within the purview of the due process of law clause [See Sections 3(ee) and 20 of Pres. Decree No. 705, as
amended. Also, Tan v. Director of Forestry, G.R. No. L-24548, October 27, 1983, 125 SCRA 302]."

Since timber licenses are not contracts, the non-impairment clause, which reads:

"SEC. 10. No law impairing the obligation of contracts shall be passed."

cannot be invoked.

The Presidential Warranty cannot, in any manner, be construed as a contractual undertaking assuring PICOP of exclusive possession and enjoyment of its concession areas.
Such an interpretation would result in the complete abdication by the State in favor of PICOP of the sovereign power to control and supervise the exploration, development and
utilization of the natural resources in the area.28

The Motion for Reconsideration was denied with finality on 14 February 2007. A Second Motion for Reconsideration filed by PICOP was denied on 23 May 2007.
37

PICOP insists that the pronouncement in Base Metals is a mere obiter dictum, which would not bind this Court in resolving this Motion for Reconsideration. In the oral arguments,
however, upon questioning from the ponente himself of Base Metals, it was agreed that the issue of whether the 1969 Document is a contract was necessary in the resolution of
Base Metals:

JUSTICE TINGA:

And do you confirm that one of the very issues raised by PICOP in that case [PICOP Resources Inc. v. Base Metal Mineral Resources Corporation] revolves around its claim that
a Presidential Warranty is protected by the non-impairment c[l]ause of the Constitution.

ATTY. AGABIN:

Yes, I believe that statement was made by the Court, your Honor.

JUSTICE TINGA:

Yes. And that claim on the part of PICOP necessarily implies that the Presidential Warranty according to PICOP is a contract protected by the non-impairment clause.

ATTY. AGABIN:

Yes, Your Honor.

JUSTICE TINGA:

Essentially, the PICOP raised the issue of whether the Presidential Warranty is a contract or not.

ATTY. AGABIN:

Yes, Your Honor.

JUSTICE TINGA:

And therefore any ruling on the part of the Court on that issue could not be an obiter dictum.

ATTY. AGABIN:
38

Your Honor, actually we believe that the basic issue in that case was whether or not Base Metals could conduct mining activities underneath the forest reserve allotted to PICOP
and the Honorable Court ruled that the Mining Act of 1995 as well as the Department Order of DENR does not disallow mining activity under a forest reserve.

JUSTICE TINGA:

But it was PICOP itself which raised the claim that a Presidential Warranty is a contract. And therefore be, should be protected on the under the non-impairment clause of the
Constitution.

ATTY. AGABIN:

Yes, Your Honor. Except that…

JUSTICE TINGA:

So, how can you say now that the Court merely uttered, declared, laid down an obiter dictum in saying that the Presidential Warranty is not a contract, and it is not being a
contract, it is not prohibited by the non-impairment clause.

ATTY. AGABIN:

This Honorable Court could have just ruled, held that the mining law allows mining activities under a forest reserve without deciding on that issue that was raised by PICOP, your
Honor, and therefore we believe….

JUSTICE TINGA:

It could have been better if PICOP has not raised that issue and had not claimed that the Presidential Warranty is not a contract.

ATTY. AGABIN:

Well, that is correct, your Honor except that the Court could have just avoided that question. Because…

JUSTICE TINGA:

Why[?]

ATTY. AGABIN:
39

It already settled the issue, the basic issue.

JUSTICE TINGA:

Yes, because the Court in saying that merely reiterated a number of rulings to the effect that the Presidential Warranty, a Timber License for that matter is not a contract
protected by the non-impairment laws.

ATTY. AGABIN:

Well, it is our submission, your Honor, that it is obiter because, that issue even a phrase by PICOP was not really fully argued by the parties for the Honorable Court and it seems
from my reading at least it was just an aside given by the Honorable Court to decide on that issue raised by PICOP but it was not necessary to the decision of the court.

JUSTICE TINGA:

It was not necessary[?]

ATTY. AGABIN:

To the decision of the Court.

JUSTICE TINGA:

It was.

ATTY. AGABIN:

It was not necessary.

JUSTICE TINGA:

It was.

ATTY. AGABIN:
40

Yes.

JUSTICE TINGA:

And PICOP devoted quite a number of pages in [its] memorandum to that issue and so did the Court [in its Decision].

ATTY. AGABIN:

Anyway, your Honor, we beg the Court to revisit, not to…29

Interpretation of the 1969 Document That Would Be in Harmony with the Constitution

To remove any doubts as to the contents of the 1969 Document, the purported Presidential Warranty, below is a complete text thereof:

Republic of the Philippines

Department of Agriculture and Natural Resources
OFFICE OF THE SECRETARY
Diliman, Quezon City

D-53, Licenses (T.L.A. No. 43)

Bislig Bay Lumber Co., Inc.
(Bislig, Surigao)

July 29, 1969

Bislig Bay Lumber Co., Inc.

[unreadable word] Bldg.
Makati, Rizal

S i r s:

This has reference to the request of the Board of Investments through its Chairman in a letter dated July 16, 1969 for a warranty on the boundaries of your concession area
under Timber License Agreement No. 43, as amended.
41

We are made to understand that your company is committed to support the first large scale integrated wood processing complex hereinafter called: "The Project") and that such
support will be provided not only in the form of the supply of pulpwood and other wood materials from your concession but also by making available funds generated out of your
own operations, to supplement PICOP’s operational sources of funds and other financial arrangements made by him. In order that your company may provide such support
effectively, it is understood that you will call upon your stockholders to take such steps as may be necessary to effect a unification of managerial, technical, economic and
manpower resources between your company and PICOP.

It is in the public interest to promote industries that will enhance the proper conservation of our forest resources as well as insure the maximum utilization thereof to the benefit of
the national economy. The administration feels that the PICOP project is one such industry which should enjoy priority over the usual logging operations hitherto practiced by
ordinary timber licensees: For this reason, we are pleased to consider favorably the request.

We confirm that your Timber License Agreement No. 43, as amended (copy of which is attached as Annex "A" hereof which shall form part and parcel of this warranty) definitely
establishes the boundary lines of your concession area which consists of permanent forest lands with an aggregate area of 121,587 hectares and alienable or disposable lands
with an aggregate area of approximately 21,580 hectares.

We further confirm that your tenure over the area and exclusive right to cut, collect and remove sawtimber and pulpwood shall be for the period ending on April 26, 1977; said
period to be renewable for other 25 years subject to compliance with constitutional and statutory requirements as well as with existing policy on timber concessions.

The peaceful and adequate enjoyment by you of your area as described and specified in your aforesaid amended Timber License Agreement No. 43 is hereby warranted
provided that pertinent laws, regulations and the terms and conditions of your license agreement are observed.

Very truly yours,

(Sgd.) FERNANDO LOPEZ

Secretary of Agriculture
and Natural Resources

Encl.:

RECOMMENDED BY:

(Sgd.) JOSE VIADO

Acting Director of Forestry

APPROVED:
42

(Sgd.) FERDINAND E. MARCOS

President of the Philippines

ACCEPTED:

BISLIG BAY LBR. CO., INC.

By:

(Sgd.) JOSE E. SORIANO

President

PICOP interprets this document in the following manner:

6.1 It is clear that the thrust of the government warranty is to establish a particular area defined by boundary lines of TLA No. 43 for the PICOP Project. In consideration for
PICOP’s commitment to pursue and establish the project requiring huge investment/funding from stockholders and lending institutions, the government provided a warranty that
ensures the continued and exclusive right of PICOP to source its raw materials needs from the forest and renewable trees within the areas established.

6.2 As a long-term support, the warranty covers the initial twenty five (25) year period and is renewable for periods of twenty five (25) years provided the project continues to exist
and operate. Very notably, the wording of the Presidential Warranty connotes that for as long as the holder complies with all the legal requirements, the term of the warranty is
not limited to fifty (50) years but other twenty five (25) years.

6.3 Note must be made that the government warranted that PICOP’s tenure over the area and exclusive right to cut, collect and remove saw timber and pulpwood shall be for the
period ending on 26 April 1977 and said period to be renewable for other 25 years subject to "compliance with constitutional and statutory requirements as well as existing policy
on timber requirements". It is clear that the renewal for other 25 years, not necessarily for another 25 years is guaranteed. This explains why on 07 October 1977, TLA No. 43, as
amended, was automatically renewed for another period of twenty five (25) years to expire on 26 April 2002.30

PICOP’s interpretation of the 1969 Document cannot be sustained. PICOP’s claim that the term of the warranty is not limited to fifty years, but that it extends to other fifty years,
perpetually, violates Section 2, Article XII of the Constitution which provides:

Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and
fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration,
development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into
co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such
citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be
43

provided by law. In cases of water rights for irrigation, water supply fisheries, or industrial uses other than the development of water power, beneficial use may be the measure
and limit of the grant.

Mr. Justice Dante O. Tinga’s interpretation of the 1969 Document is much more in accord with the laws and the Constitution. What one cannot do directly, he cannot do indirectly.
Forest lands cannot be alienated in favor of private entities. Granting to private entities, via a contract, a permanent, irrevocable, and exclusive possession of and right over forest
lands is tantamount to granting ownership thereof. PICOP, it should be noted, claims nothing less than having exclusive, continuous and uninterrupted possession of its
concession areas,31 where all other entrants are illegal,32 and where so-called "illegal settlers and squatters" are apprehended.33

IFMAs are production-sharing agreements concerning the development and utilization of natural resources. As such, these agreements "may be for a period not exceeding
twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law." Any superior "contract" requiring the State to
issue TLAs and IFMAs whenever they expire clearly circumvents Section 2, Article XII of the Constitution, which provides for the only permissible schemes wherein the full control
and supervision of the State are not derogated: co-production, joint venture, or production-sharing agreements within the time limit of twenty-five years, renewable for another
twenty-five years.

On its face, the 1969 Document was meant to expire on 26 April 2002, upon the expiration of the expected extension of the original TLA period ending on 26 April 1977:

We further confirm that your tenure over the area and exclusive right to cut, collect and remove sawtimber and pulpwood shall be for the period ending on April 26, 1977; said
period to be renewable for other 25 years subject to compliance with constitutional and statutory requirements as well as with existing policy on timber concessions.1avvphi1

Any interpretation extending the application of the 1969 Document beyond 26 April 2002 and any concession that may be granted to PICOP beyond the said date would violate
the Constitution, and no amount of legal hermeneutics can change that. Attempts of PICOP to explain its way out of this Constitutional provision only led to absurdities, as
exemplified in the following excerpt from the oral arguments:

JUSTICE CARPIO:

The maximum trend of agreement to develop and utilize natural resources like forest products is 25 years plus another 25 years or a total of 50 years correct?

ATTY. AGABIN

Yes, Your Honor.

JUSTICE CARPIO:

That is true for the 1987, 1973, 1935 Constitution, correct?

44

ATTY. AGABIN:

Yes, Your Honor.

JUSTICE CARPIO:

The TLA here, TLA 43, expired, the first 25 years expired in 1977, correct?

ATTY. AGABIN:

Yes, Your Honor.

JUSTICE CARPIO:

And it was renewed for another 25 years until 2002, the 50th year?

ATTY. AGABIN:

Yes, Your Honor.

JUSTICE CARPIO:

Now, could PICOP before the end of the 50th year let’s say in 2001, one year before the expiration, could it have asked for an extension of another 25 years of its TLA
agreement[?]

ATTY. AGABIN:

I believe so, Your Honor.

JUSTICE CARPIO:

But the Constitution says, maximum of fifty years. How could you ask for another 25 years of its TLA.

ATTY. AGABIN:
45

Well, your Honor, we believe on a question like this, this Honorable Court should balance the interest.

JUSTICE CARPIO:

The Constitution is very clear, you have only a maximum of 50 years, 25 plus another 25. PICOP could never have applied for an extension, for a third 25-year term whether
under the 1935 Constitution, the 1973 Constitution and the 1987 Constitution, correct?

ATTY. AGABIN:

Your Honor, except that we are invoking the warranty, the terms of the warranty….

JUSTICE CARPIO:

Can the warranty prevail over the Constitution?

ATTY. AGABIN:

Well, it is a vested right, your Honor.

JUSTICE CARPIO:

Yes, but whatever it is, can it prevail over the Constitution?

ATTY. AGABIN:

The Constitution itself provides that vested rights should be ….

JUSTICE CARPIO:

If it is not in violation of specific provision of the Constitution. The Constitution says, 25 years plus another 25 years, that’s the end of it. You mean to say that a President of the
Philippines can give somebody 1,000 years license?

ATTY. AGABIN:
46

Well, that is not our position, Your Honor. Because our position is that ….

JUSTICE CARPIO:

My question is, what is the maximum term, you said 50 years. So, my next question is, can PICOP apply for an extension of another 25 years after 2002, the 50th year?

ATTY. AGABIN:

Yes, based on the contract of warranty, Your Honor, because the contract of warranty….

JUSTICE CARPIO:

But in the PICOP license it is very clear, it says here, provision 28, it says the license agreement is for a total of 50 years. I mean it is very simple, the President or even Congress
cannot pass a law extending the license, whatever kind of license to utilize natural resources for more than fifty year[s]. I mean even the law cannot do that. It cannot prevail over
the Constitution. Is that correct, Counsel?

ATTY. AGABIN:

It is correct, Your Honor, except that in this case, what is actually our application is that the law provides for the conversion of existing TLA into IFMA.

JUSTICE CARPIO:

So, they file the petition for conversion before the end of the 50th year for IFMA.

ATTY. AGABIN:

Yes, Your Honor.

JUSTICE CARPIO:

But IFMA is the same, it is based on Section 2, Article 12 of the Constitution, develop and utilize natural resources because as you said when the new constitution took effect we
did away with the old licensing regime, we have now co-production, a production sharing, joint venture, direct undertaking but still the same developing and utilizing the natural
resources, still comes from section 2, Art. 12 of the Constitution. It is still a license but different format now.

ATTY. AGABIN:
47

It is correct, Your Honor, except that the regimes of joint venture, co-production and production sharing are what is referred to in the constitution, Your Honor, and still covered…

JUSTICE CARPIO:

Yes, but it is covered by same 25 year[s], you mean to say people now can circumvent the 50 year maximum term by calling their TLA as IFMA and after fifty years calling it
ISMA, after another 50 years call it MAMA.

ATTY. AGABIN:

Yes, Your Honor. Because…

JUSTICE CARPIO:

It can be done.

ATTY. AGABIN:

That is provided for by the department itself.34

PICOP is, in effect, arguing that the DENR issued DAO No. 99-53 in order to provide a way to circumvent the provisions of the Constitution limiting agreements for the utilization
of natural resources to a maximum period of fifty years. Official duties are, however, disputably considered to be regularly performed,35 and good faith is always presumed.

DAO No. 99-53 was issued to change the means by which the government enters into an agreement with private entities for the utilization of forest products. DAO No. 99-53 is a
late response to the change in the constitutional provisions on natural resources from the 1973 Constitution, which allowed the granting of licenses to private entities, 36 to the
present Constitution, which provides for co-production, joint venture, or production-sharing agreements as the permissible schemes wherein private entities may participate in the
utilization of forest products. Since the granting of timber licenses ceased to be a permissible scheme for the participation of private entities under the present Constitution, their
operations should have ceased upon the issuance of DAO No. 99-53, the rule regulating the schemes under the present Constitution. This would be iniquitous to those with
existing TLAs that would not have expired yet as of the issuance of DAO No. 99-53, especially those with new TLAs that were originally set to expire after 10 or even 20 or more
years. The DENR thus inserted a provision in DAO No. 99-53 allowing these TLA holders to finish the period of their TLAs, but this time as IFMAs, without the rigors of going
through a new application, which they have probably just gone through a few years ago.

Such an interpretation would not only make DAO No. 99-53 consistent with the provisions of the Constitution, but would also prevent possible discrimination against new IFMA
applicants:

ASSOCIATE JUSTICE DE CASTRO:

48

I ask this question because of your interpretation that the period of the IFMA, if your TLA is converted into IFMA, would cover a new a fresh period of twenty-five years renewable
by another period of twenty-five years.

DEAN AGABIN:

Yes, Your Honor.

ASSOCIATE JUSTICE DE CASTRO:

Don’t you think that will, in effect, be invidious discrimination with respect to other applicants if you are granted a fresh period of twenty-five years extendible to another twenty-
five years?

DEAN AGABIN:

I don’t think it would be, Your Honor, considering that the IFMA is different regime from the TLA. And not only that, there are considerations of public health and ecology which
should come into play in this case, and which we had explained in our opening statement and, therefore the provision of the Constitution on the twenty-five limits for renewal of
co-production, joint venture and production sharing agreements, should be balanced with other values stated in the Constitution, like the value of balanced ecology, which should
be in harmony with the rhythm of nature, or the policy of forest preservation in Article XII, Section 14 of the Constitution. These are all important policy considerations which
should be balanced against the term limits in Article II of the Constitution.

ASSOCIATE JUSTICE DE CASTRO:

The provision of this Administrative Order regarding automatic conversion may be reasonable, if, I want to know if you agree with me, if we limit this automatic conversion to the
remaining period of the TLA, because in that case there will be a valid ground to make a distinction between those with existing TLA and those who are applying for the first time
for IFMA?

DEAN AGABIN:

Well, Your Honor, we beg to disagree, because as I said TLA’s are completely different from IFMA. The TLA has no production sharing or co-production agreement or condition.
All that the licensee has to do is, to pay forest charges, taxes and other impositions from the local and national government. On the other hand, the IFMAs contained terms and
conditions which are completely different, and that they either impose co-production, production sharing or joint venture terms. So it’s a completely different regime, Your Honor.

ASSOCIATE JUSTICE DE CASTRO:

Precisely, that is the reason why there should be an evaluation of what you mentioned earlier of the development plan.
49

DEAN AGABIN:

Yes, Your Honor.

ASSOCIATE JUSTICE DE CASTRO:

So it will be reasonable to convert a TLA into an IFMA without considering the development plan submitted by other applicants or the development plan itself of one seeking
conversion into IFMA if it will only be limited to the period, the original period of the TLA. But once you go beyond the period of the TLA, then you will be, the DENR is I think
should evaluate the different proposals of the applicants if we are thinking of a fresh period of twenty-five years, and which is renewable under the Constitution by another twenty-
five years. So the development plan will be important in this case, the submission of the development plan of the different applicants must be considered. So I don’t understand
why you mentioned earlier that the development plan will later on be a subject matter of negotiation between the IFMA grantee and the government. So it seems that it will be too
late in the day to discuss that if you have already converted the TLA into IFMA or if the government has already granted the IFMA, and then it will later on study the development
plan, whether it is viable or not, or it is sustainable or not, and whether the development plan of the different applicants are, are, which of the development plan of the different
applicants is better or more advantageous to the government.37

PICOP insists that the alleged Presidential Warranty, having been signed on 29 July 1969, could not have possibly considered the limitations yet to be imposed by future
issuances, such as the 1987 Constitution. However, Section 3, Article XVIII of said Constitution, provides:

Section 3. All existing laws, decrees, executive orders, proclamations, letters of instructions, and other executive issuances not inconsistent with this Constitution shall remain
operative until amended, repealed, or revoked.

In the recent case Sabio v. Gordon,38 we ruled that "(t)he clear import of this provision is that all existing laws, executive orders, proclamations, letters of instructions and other
executive issuances inconsistent or repugnant to the Constitution are repealed."

When a provision is susceptible of two interpretations, "the one that will render them operative and effective and harmonious with other provisions of law" 39 should be adopted. As
the interpretations in the assailed Decision and in Mr. Justice Tinga’s ponencia are the ones that would not make the subject Presidential Warranty unconstitutional, these are
what we shall adopt.

Purpose of the 1969 Document: Assurance That the Boundaries of Its Concession Area Would Not Be Altered Despite the Provision in the TLA that the DENR Secretary Can
Amend Said Boundaries

In the assailed Decision, we ruled that the 1969 Document cannot be considered a contract that would bind the government regardless of changes in policy and the demands of
public interest and social welfare. PICOP claims this conclusion "did not take into consideration that PICOP already had a valid and current TLA before the contract with warranty
was signed in 1969."40 PICOP goes on: "The TLA is a license that equips any TLA holder in the country for harvesting of timber. A TLA is signed by the Secretary of the DANR
now DENR. The Court ignored the significance of the need for another contract with the Secretary of the DANR but this time with the approval of the President of the
50

Republic."41 PICOP then asks us: "If PICOP/BBLCI was only an ordinary TLA holder, why will it go through the extra step of securing another contract just to harvest timber when
the same can be served by the TLA signed only by the Secretary and not requiring the approval of the President of the Republic(?)"42

The answer to this query is found in TLA No. 43 itself wherein, immediately after the boundary lines of TLA No. 43 were established, the following conditions were given:

This license is granted to the said party of the second part upon the following express conditions:

I. That authority is granted hereunder to the party of the second part 43 to cut, collect or remove firewood or other minor forest products from the area embraced in this
license agreement except as hereinafter provided.

II. That the party of the first part44 may amend or alter the description of the boundaries of the area covered by this license agreement to conform with official surveys and
that the decision of the party of the first part as to the exact location of the said boundaries shall be final.

III. That if the party of the first part deems it necessary to establish on the ground the boundary lines of the area granted under this license agreement, the party of the
second part shall furnish to the party of the first part or its representatives as many laborers as it needs and all the expenses to be incurred on the work including the
wages of such laborers shall be paid by the party of the second part.45

Thus, BBLCI needed an assurance that the boundaries of its concession area, as established in TLA No. 43, as amended, would not be altered despite this provision. Hence,
BBLCI endeavored to obtain the 1969 Document, which provides:

We confirm that your Timber License Agreement No. 43, as amended (copy of which is attached as Annex "A" hereof which shall form part and parcel of this warranty) definitely
establishes the boundary lines of your concession area which consists of permanent forest lands with an aggregate area of 121,587 hectares and alienable or disposable lands
with an aggregate area of approximately 21,580 hectares.

We further confirm that your tenure over the area and exclusive right to cut, collect and remove sawtimber and pulpwood shall be for the period ending on April 26, 1977; said
period to be renewable for other 25 years subject to compliance with constitutional and statutory requirements as well as with existing policy on timber concessions.

The peaceful and adequate enjoyment by you of your area as described and specified in your aforesaid amended Timber License Agreement No. 43 is hereby warranted
provided that pertinent laws, regulations and the terms and conditions of your license agreement are observed.46

In Koa v. Court of Appeals, 47 we ruled that a warranty is a collateral undertaking and is merely part of a contract. As a collateral undertaking, it follows the principal wherever it
goes. When this was pointed out by the Solicitor General, PICOP changed its designation of the 1969 Document from "Presidential Warranty" or "government warranty" in all its
pleadings prior to our Decision, to "contract with warranty" in its Motion for Reconsideration. This, however, is belied by the statements in the 29 July 1969 Document, which
refers to itself as "this warranty."
51

Re: Allegation That There Were Mutual Contract Considerations

Had the 29 July 1969 Document been intended as a contract, it could have easily said so. More importantly, it could have clearly defined the mutual considerations of the parties
thereto. It could have also easily provided for the sanctions for the breach of the mutual considerations specified therein. PICOP had vigorously argued that the 1969 Document
was a contract because of these mutual considerations, apparently referring to the following paragraph of the 1969 Document:

We are made to understand that your company is committed to support the first large scale integrated wood processing complex hereinafter called: "The Project") and that such
support will be provided not only in the form of the supply of pulpwood and other wood materials from your concession but also by making available funds generated out of your
own operations, to supplement PICOP’s operational surces (sic) of funds and other financial arrangements made by him. In order that your company may provide such support
effectively, it is understood that you will call upon your stockholders to take such steps as may be necessary to effect a unification of managerial, technical, economic and
manpower resources between your company and PICOP.1avvphi1

This provision hardly evinces a contract consideration (which, in PICOP’s interpretation, is in exchange for the exclusive and perpetual tenure over 121,587 hectares of forest
land and 21,580 hectares of alienable and disposable lands). As elucidated by PICOP itself in bringing up the Investment Incentives Act which we shall discuss later, and as
shown by the tenor of the 1969 Document, the latter document was more of a conferment of an incentive for BBLCI’s investment rather than a contract creating mutual
obligations on the part of the government, on one hand, and BBLCI, on the other. There was no stipulation providing for sanctions for breach if BBLCI’s being "committed to
support the first large scale integrated wood processing complex" remains a commitment. Neither did the 1969 Document give BBLCI a period within which to pursue this
commitment.

According to Article 1350 of the Civil Code, "(i)n onerous contracts the cause is understood to be, for each contracting party, the prestation or promise of a thing or service by the
other."48 Private investments for one’s businesses, while indeed eventually beneficial to the country and deserving to be given incentives, are still principally and predominantly for
the benefit of the investors. Thus, the "mutual" contract considerations by both parties to this alleged contract would be both for the benefit of one of the parties thereto, BBLCI,
which is not obligated by the 1969 Document to surrender a share in its proceeds any more than it is already required by its TLA and by the tax laws.

PICOP’s argument that its investments can be considered as contract consideration derogates the rule that "a license or a permit is not a contract between the sovereignty and
the licensee or permittee, and is not a property in the constitutional sense, as to which the constitutional proscription against the impairment of contracts may extend." All
licensees obviously put up investments, whether they are as small as a tricycle unit or as big as those put up by multi-billion-peso corporations. To construe these investments as
contract considerations would be to abandon the foregoing rule, which would mean that the State would be bound to all licensees, and lose its power to revoke or amend these
licenses when public interest so dictates.

The power to issue licenses springs from the State’s police power, known as "the most essential, insistent and least limitable of powers, extending as it does to all the great
public needs."49 Businesses affecting the public interest, such as the operation of public utilities and those involving the exploitation of natural resources, are mandated by law to
acquire licenses. This is so in order that the State can regulate their operations and thereby protect the public interest. Thus, while these licenses come in the form of
"agreements," e.g., "Timber License Agreements," they cannot be considered contracts under the non-impairment clause.50
52

PICOP found this argument "lame," arguing, thus:

43. It is respectfully submitted that the aforesaid pronouncement in the Decision is an egregious and monumental error.

44. The Decision could not dismiss as "preposterous" the mutual covenants in the Presidential Warranty which calls for a huge investment of Php500 million at that time in 1969
out of which Php268,440,000 raised from domestic foreign lending institution to establish the first large scale integrated wood processing complex in the Philippines.

45. The Decision puts up a lame explanation that "all licensees put up investments in pursuing their business"

46. Now there are about a hundred timber licenses issued by the Government thru the DENR, but these are ordinary timber licenses which involve the mere cutting of timber in
the concession area, and nothing else. Records in the DENR shows that no timber licensee has put up an integrated large wood processing complex in the Philippines except
PICOP.51

PICOP thus argues on the basis of quantity, and wants us to distinguish between the investment of the tricycle driver and that of the multi-billion corporation. However, not even
billions of pesos in investment can change the fact that natural resources and, therefore, public interest are involved in PICOP’s venture, consequently necessitating the full
control and supervision by the State as mandated by the Constitution. Not even billions of pesos in investment can buy forest lands, which is practically what PICOP is asking for
by interpreting the 1969 Document as a contract giving it perpetual and exclusive possession over such lands. Among all TLA holders in the Philippines, PICOP has, by far, the
largest concession area at 143,167 hectares, a land area more than the size of two Metro Manilas.52 How can it not expect to also have the largest investment?

Investment Incentives Act

PICOP then claims that the contractual nature of the 1969 Document was brought about by its issuance in accordance with and pursuant to the Investment Incentives Act.
According to PICOP:

The conclusion in the Decision that to construe PICOP’s investments as a consideration in a contract would be to stealthily render ineffective the principle that a license is not a
contract between the sovereignty and the licensee is so flawed since the contract with the warranty dated 29 July 1969 was issued by the Government in accordance with and
pursuant to Republic Act No. 5186, otherwise known as "The Investment Incentives Act."53

PICOP then proceeds to cite Sections 2 and 4(d) and (e) of said act:

Section 2. Declaration of Policy – To accelerate the sound development of the national economy in consonance with the principles and objectives of economic nationalism, and in
pursuance of a planned, economically feasible and practicable dispersal of industries, under conditions which will encourage competition and discharge monopolies, it is hereby
declared to be the policy of the state to encourage Filipino and foreign investments, as hereinafter set out, in projects to develop agricultural, mining and manufacturing industries
which increase national income most at the least cost, increase exports, bring about greater economic stability, provide more opportunities for employment, raise the standards of
living of the people, and provide for an equitable distribution of wealth. It is further declared to be the policy of the state to welcome and encourage foreign capital to establish
53

pioneer enterprises that are capital intensive and would utilize a substantial amount of domestic raw materials, in joint venture with substantial Filipino capital, whenever
available.

Section 4. Basic Rights and Guarantees. – All investors and enterprises are entitled to the basic rights and guarantees provided in the constitution. Among other rights
recognized by the Government of the Philippines are the following:

xxxx

d) Freedom from Expropriation. – There shall be no expropriation by the government of the property represented by investments or of the property of enterprises except for public
use or in the interest of national welfare and defense and upon payment of just compensation. x x x.

e) Requisition of Investment. – There shall be no requisition of the property represented by the investment or of the property of enterprises, except in the event of war or national
emergency and only for the duration thereof. Just compensation shall be determined and paid either at the time of requisition or immediately after cessation of the state of war or
national emergency. Payments received as compensation for the requisitioned property may be remitted in the currency in which the investment was originally made and at the
exchange rate prevailing at the time of remittance, subject to the provisions of Section seventy-four of republic Act Numbered Two hundred sixty-five.

Section 2 speaks of the policy of the State to encourage Filipino and foreign investments. It does not speak of how this policy can be implemented. Implementation of this policy
is tackled in Sections 5 to 12 of the same law, 54 which PICOP failed to mention, and for a good reason. None of the 24 incentives enumerated therein relates to, or even remotely
suggests that, PICOP’s proposition that the 1969 Document is a contract.

PICOP could indeed argue that the enumeration is not exclusive. Certainly, granting incentives to investors, whether included in the enumeration or not, would be an
implementation of this policy. However, it is presumed that whatever incentives may be given to investors should be within the bounds of the laws and the Constitution. The
declaration of policy in Section 2 cannot, by any stretch of the imagination, be read to provide an exception to either the laws or, heaven forbid, the Constitution. Exceptions are
never presumed and should be convincingly proven. Section 2 of the Investment Incentives Act cannot be read as exempting investors from the Constitutional provisions (1)
prohibiting private ownership of forest lands; (2) providing for the complete control and supervision by the State of exploitation activities; or (3) limiting exploitation agreements to
twenty-five years, renewable for another twenty-five years.

Section 4(d) and (e), on the other hand, is a recognition of rights already guaranteed under the Constitution. Freedom from expropriation is granted under Section 9 of Article
III55 of the Constitution, while the provision on requisition is a negative restatement of Section 6, Article XII.56

Refusal to grant perpetual and exclusive possession to PICOP of its concession area would not result in the expropriation or requisition of PICOP’s property, as these forest
lands belong to the State, and not to PICOP. This is not changed by PICOP’s allegation that:
54

Since it takes 35 years before the company can go back and harvest their residuals in a logged-over area, it must be assured of tenure in order to provide an inducement for the
company to manage and preserve the residuals during their growth period. This is a commitment of resources over a span of 35 years for each plot for each cycle. No company
will undertake the responsibility and cost involved in policing, preserving and managing residual forest areas until it were sure that it had firm title to the timber.57

The requirement for logging companies to preserve and maintain forest areas, including the reforestation thereof, is one of the prices a logging company must pay for the
exploitation thereof. Forest lands are meant to be enjoyed by countless future generations of Filipinos, and not just by one logging company. The requirements of reforestation
and preservation of the concession areas are meant to protect them, the future generations, and not PICOP. Reforestation and preservation of the concession areas are not
required of logging companies so that they would have something to cut again, but so that the forest would remain intact after their operations. That PICOP would not accept the
responsibility to preserve its concession area if it is not assured of tenure thereto does not speak well of its corporate policies.

Conclusion

In sum, PICOP was not able to prove either of the two things it needed to prove to be entitled to a Writ of Mandamus against the DENR Secretary. The 1969 Document is not a
contract recognized under the non-impairment clause and, even if we assume for the sake of argument that it is, it did not enjoin the government to issue an IFMA in 2002 either.
These are the essential elements in PICOP’s cause of action, and the failure to prove the same warrants a dismissal of PICOP’s Petition for Mandamus, as not even PICOP’s
compliance with all the administrative and statutory requirements can save its Petition now.

Whether PICOP Has Complied with the Statutory and Administrative Requirements for the Conversion of the TLA to an IFMA

In the assailed Decision, our ruling was based on two distinct grounds, each one being sufficient in itself for us to rule that PICOP was not entitled to a Writ of Mandamus: (1) the
1969 Document, on which PICOP hinges its right to compel the issuance of an IFMA, is not a contract; and (2) PICOP has not complied with all administrative and statutory
requirements for the issuance of an IFMA.

When a court bases its decision on two or more grounds, each is as authoritative as the other and neither is obiter dictum. 58 Thus, both grounds on which we based our ruling in
the assailed Decision would become judicial dictum, and would affect the rights and interests of the parties to this case unless corrected in this Resolution on PICOP’s Motion for
Reconsideration. Therefore, although PICOP would not be entitled to a Writ of Mandamus even if the second issue is resolved in its favor, we should nonetheless resolve the
same and determine whether PICOP has indeed complied with all administrative and statutory requirements for the issuance of an IFMA.

While the first issue (on the nature of the 1969 Document) is entirely legal, this second issue (on PICOP’s compliance with administrative and statutory requirements for the
issuance of an IFMA) has both legal and factual sub-issues. Legal sub-issues include whether PICOP is legally required to (1) consult with and acquire an approval from the
Sanggunian concerned under Sections 26 and 27 of the Local Government Code; and (2) acquire a Certification from the National Commission on Indigenous Peoples (NCIP)
that the concession area does not overlap with any ancestral domain. Factual sub-issues include whether, at the time it filed its Petition for Mandamus, PICOP had submitted the
required Five-Year Forest Protection Plan and Seven-Year Reforestation Plan and whether PICOP had paid all forest charges.
55

For the factual sub-issues, PICOP invokes the doctrine that factual findings of the trial court, especially when upheld by the Court of Appeals, deserve great weight. However,
deserving of even greater weight are the factual findings of administrative agencies that have the expertise in the area of concern. The contentious facts in this case relate to the
licensing, regulation and management of forest resources, the determination of which belongs exclusively to the DENR:

SECTION 4. Mandate. – The Department shall be the primary government agency responsible for the conservation, management, development and proper use of the country’s
environment and natural resources, specifically forest and grazing lands, mineral resources, including those in reservation and watershed areas, and lands of the public domain,
as well as the licensing and regulation of all natural resources as may be provided for by law in order to ensure equitable sharing of the benefits derived therefrom for the welfare
of the present and future generations of Filipinos.59

When parties file a Petition for Certiorari against judgments of administrative agencies tasked with overseeing the implementation of laws, the findings of such administrative
agencies are entitled to great weight. In the case at bar, PICOP could not have filed a Petition for Certiorari, as the DENR Secretary had not yet even determined whether PICOP
should be issued an IFMA. As previously mentioned, when PICOP’s application was brought to a standstill upon the evaluation that PICOP had yet to comply with the
requirements for the issuance of an IFMA, PICOP refused to attend further meetings with the DENR and instead filed a Petition for Mandamus against the latter. By jumping the
gun, PICOP did not diminish the weight of the DENR Secretary’s initial determination.

Forest Protection and Reforestation Plans

The Performance Evaluation Team tasked to appraise PICOP’s performance on its TLA No. 43 found that PICOP had not submitted its Five-Year Forest Protection Plan and its
Seven-Year Reforestation Plan.60

In its Motion for Reconsideration, PICOP asserts that, in its Letter of Intent dated 28 August 2000 and marked as Exhibit L in the trial court, there was a reference to a Ten-Year
Sustainable Forest Management Plan (SFMP), in which a Five-Year Forest Protection Plan and a Seven-Year Reforestation Plan were allegedly incorporated. PICOP submitted
a machine copy of a certified photocopy of pages 50-67 and 104-110 of this SFMP in its Motion for Reconsideration. PICOP claims that the existence of this SFMP was
repeatedly asserted during the IFMA application process.61

Upon examination of the portions of the SFMP submitted to us, we cannot help but notice that PICOP’s concept of forest protection is the security of the area against "illegal"
entrants and settlers. There is no mention of the protection of the wildlife therein, as the focus of the discussion of the silvicultural treatments and the SFMP itself is on the
protection and generation of future timber harvests. We are particularly disturbed by the portions stating that trees of undesirable quality shall be removed.

However, when we required the DENR Secretary to comment on PICOP’s Motion for Reconsideration, the DENR Secretary did not dispute the existence of this SFMP, or
question PICOP’s assertion that a Ten-Year Forest Protection Plan and a Ten-Year Reforestation Plan are already incorporated therein. Hence, since the agency tasked to
determine compliance with IFMA administrative requirements chose to remain silent in the face of allegations of compliance, we are constrained to withdraw our pronouncement
in the assailed Decision that PICOP had not submitted a Five-Year Forest Protection Plan and a Seven-Year Reforestation Plan for its TLA No. 43. As previously mentioned, the
licensing, regulation and management of forest resources are the primary responsibilities of the DENR.62
56

The compliance discussed above is, of course, only for the purpose of determining PICOP’s satisfactory performance as a TLA holder, and covers a period within the subsistence
of PICOP’s TLA No. 43. This determination, therefore, cannot prohibit the DENR from requiring PICOP, in the future, to submit proper forest protection and reforestation plans
covering the period of the proposed IFMA.

Forest Charges

In determining that PICOP did not have unpaid forest charges, the Court of Appeals relied on the assumption that if it were true that PICOP had unpaid forest charges, it should
not have been issued an approved Integrated Annual Operation Plan (IAOP) for the year 2001-2002 by Secretary Alvarez himself.63

In the assailed Decision, we held that the Court of Appeals had been selective in its evaluation of the IAOP, as it disregarded the part thereof that shows that the IAOP was
approved subject to several conditions, not the least of which was the submission of proof of the updated payment of forest charges from April 2001 to June 2001. 64 We also held
that even if we considered for the sake of argument that the IAOP should not have been issued if PICOP had existing forestry accounts, the issuance of the IAOP could not be
considered proof that PICOP had paid the same. Firstly, the best evidence of payment is the receipt thereof. PICOP has not presented any evidence that such receipts were lost
or destroyed or could not be produced in court.65 Secondly, the government cannot be estopped by the acts of its officers. If PICOP has been issued an IAOP in violation of the
law, allegedly because it may not be issued if PICOP had existing forestry accounts, the government cannot be estopped from collecting such amounts and providing the
necessary sanctions therefor, including the withholding of the IFMA until such amounts are paid.

We therefore found that, as opposed to the Court of Appeals’ findings, which were based merely on estoppel of government officers, the positive and categorical evidence
presented by the DENR Secretary was more convincing with respect to the issue of payment of forestry charges:

1. Forest Management Bureau (FMB) Senior Forest Management Specialist (SFMS) Ignacio M. Evangelista testified that PICOP had failed to pay its regular forest
charges covering the period from 22 September 2001 to 26 April 2002 in the total amount of ₱15,056,054.0566 PICOP also allegedly paid late most of its forest charges
from 1996 onwards, by reason of which, PICOP is liable for a surcharge of 25% per annum on the tax due and interest of 20% per annum which now amounts to
₱150,169,485.02.67 Likewise, PICOP allegedly had overdue and unpaid silvicultural fees in the amount of ₱2,366,901.00 as of 30 August 2002.68 Summing up the
testimony, therefore, it was alleged that PICOP had unpaid and overdue forest charges in the sum of ₱167,592,440.90 as of 10 August 2002.69

2. Collection letters were sent to PICOP, but no official receipts are extant in the DENR record in Bislig City evidencing payment of the overdue amount stated in the said
collection letters.70 There were no official receipts for the period covering 22 September 2001 to 26 April 2002.

We also considered these pieces of evidence more convincing than the other ones presented by PICOP:

1. PICOP presented the certification of Community Environment and Natural Resources Office (CENRO) Officer Philip A. Calunsag, which refers only to PICOP’s alleged
payment of regular forest charges covering the period from 14 September 2001 to 15 May 2002. 71 We noted that it does not mention similar payment of the penalties,
surcharges and interests that PICOP incurred in paying late several forest charges, which fact was not rebutted by PICOP.
57

2. The 27 May 2002 Certification by CENRO Calunsag specified only the period covering 14 September 2001 to 15 May 2002 and the amount of P53,603,719.85 paid by
PICOP without indicating the corresponding volume and date of production of the logs. This is in contrast to the findings of SFMS Evangelista, which cover the period from
CY 1996 to 30 August 2002 and includes penalties, interests, and surcharges for late payment pursuant to DAO 80, series of 1987.

3. The 21 August 2002 PICOP-requested certification issued by Bill Collector Amelia D. Arayan, and attested to by CENRO Calunsag himself, shows that PICOP paid
only regular forest charges for its log production covering 1 July 2001 to 21 September 2001. However, there were log productions after 21 September 2001, the regular
forest charges for which have not been paid, amounting to ₱15,056,054.05.72 The same certification shows delayed payment of forest charges, thereby corroborating the
testimony of SFMS Evangelista and substantiating the imposition of penalties and surcharges.

In its Motion for Reconsideration, PICOP claims that SFMS Evangelista is assigned to an office that has nothing to do with the collection of forest charges, and that he based his
testimony on the Memoranda of Forest Management Specialist II (FMS II) Teofila Orlanes and DENR, Bislig City Bill Collector Amelia D. Arayan, neither of whom was presented
to testify on his or her Memorandum. PICOP also submitted an Addendum to Motion for Reconsideration, wherein it appended certified true copies of CENRO Summaries with
attached Official Receipts tending to show that PICOP had paid a total of ₱81,184,747.70 in forest charges for 10 January 2001 to 20 December 2002, including the period
during which SFMS Evangelista claims PICOP did not pay forest charges (22 September 2001 to 26 April 2002).

Before proceeding any further, it is necessary for us to point out that, as with our ruling on the forest protection and reforestation plans, this determination of compliance with the
payment of forest charges is exclusively for the purpose of determining PICOP’s satisfactory performance on its TLA No. 43. This cannot bind either party in a possible collection
case that may ensue.

An evaluation of the DENR Secretary’s position on this matter shows a heavy reliance on the testimony of SFMS Evangelista, making it imperative for us to strictly scrutinize the
same with respect to its contents and admissibility.

PICOP claims that SFMS Evangelista’s office has nothing to do with the collection of forest charges. According to PICOP, the entity having administrative jurisdiction over it is
CENRO, Bislig City by virtue of DENR Administrative Order No. 96-36, dated 20 November 1996, which states:

1. In order for the DENR to be able to exercise closer and more effective supervision, management and control over the forest resources within the areas covered by TLA No. 43,
PTLA No. 47 and IFMA No. 35 of the PICOP Resources, Inc., (PRI) and, at the same time, provide greater facility in the delivery of DENR services to various publics, the
aforesaid forest holdings of PRI are hereby placed under the exclusive jurisdiction of DENR Region No. XIII with the CENR Office at Bislig, Surigao del Sur, as directly
responsible thereto. x x x.

We disagree. Evangelista is an SFMS assigned at the Natural Forest Management Division of the FMB, DENR. In Evangelista’s aforementioned affidavit submitted as part of his
direct examination, Evangelista enumerated his duties and functions as SFMS:

1. As SFMS, I have the following duties and functions:

58

a) To evaluate and act on cases pertaining to forest management referred to in the Natural forest Management Division;

b) To monitor, verify and validate forest management and related activities by timber licences as to their compliance to approved plans and programs;

c) To conduct investigation and verification of compliance by timber licenses/permittees to existing DENR rules and regulations;

d) To gather field data and information to be used in the formulation of forest policies and regulations; and

e) To perform other duties and responsibilities as may be directed by superiors.73

PICOP also alleges that the testimony of SFMS Evangelista was based on the aforementioned Memoranda of Orlanes and Arayan and that, since neither Orlanes nor
Arayan was presented as a witness, SFMS Evangelista’s testimony should be deemed hearsay. SFMS Evangelista’s 1 October 2002 Affidavit, 74 which was offered as part
of his testimony, provides:

2. Sometime in September, 2001 the DENR Secretary was furnished a copy of forest Management Specialist II (FMS II) Teofila L. Orlanes’ Memorandum dated
September 24, 2001 concerning unopaid forest charges of PICOP. Attached to the said Memorandum was a Memorandum dated September 19, 2001 of Amelia D.
Arayan, Bill collector of the DENR R13-14, Bislig City. Copies of the said Memoranda are attached as Annexes 1 and 2, respectively.

3. The said Memoranda were referred to the FMB Director for appropriate action.

4. Thus, on August 5, 2002, I was directed by the FMB Director to proceed to Region 13 to gather forestry-related data and validate the report contained in the
Memoranda of Ms. Orlanes and Arayan.

5. On August 6, 2002, I proceeded to DENR Region 13 in Bislig City. A copy of my Travel Order is attached as Annex 3.

6. Upon my arrival at CENRO, Bislig, surigao del Sur, I coordinated with CENRO Officer Philip A. Calunsag and requested him to make available to me the records
regarding the forest products assessments of PICOP.

7. After I was provided with the requested records, I evaluated and collected the data.

8. After the evaluation, I found that the unpaid forest charges adverted to in the Memoranda of Mr. Orlanes and Arayan covering the period from May 8, 2001 to July 7,
2001 had already been paid but late. I further found out that PICOP had not paid its forest charges covering the period from September 22, 2001 to April 26, 2002 in the
total amount of ₱15,056,054.05.
59

9. I also discovered that from 1996 up to august 30, 2002, PICOP paid late some of its forest charges in 1996 and consistently failed to pay late its forest charges from
1997 up to the present time.

10. Under Section 7.4 of DAO No. 80 Series of 197\87 and Paragraph (4a), Section 10 of BIR revenue Regulations No. 2-81 dated November 18, 1980, PICOP is
mandated to pay a surcharge of 25% per annum of the tax due and interest of 20% per annum for late payment of forest charges.

11. The overdue unpaid forest charges of PICOP as shown in the attached tabulation marked as Annex 4 hereof is ₱150,169,485.02. Likewise, PICOP has overdue and
unpaid silvicultural fees in the amount of ₱2,366,901.00 from 1996 to the present.

12. In all, PICOP has an outstanding and overdue total obligation of ₱167,592,440.90 as of August 30, 2002 based on the attached tabulation which is marked as Annex
5 hereof.75

Clearly, SFMS Evangelista had not relied on the Memoranda of Orlanes and Arayan. On the contrary, he traveled to Surigao del Sur in order to verify the contents of these
Memoranda. SFMS Evangelista, in fact, revised the findings therein, as he discovered that certain forest charges adverted to as unpaid had already been paid.

This does not mean, however, that SFMS Evangelista’s testimony was not hearsay. A witness may testify only on facts of which he has personal knowledge; that is, those
derived from his perception, except in certain circumstances allowed by the Rules.76 Otherwise, such testimony is considered hearsay and, hence, inadmissible in evidence.77

SFMS Evangelista, while not relying on the Memoranda of Orlanes and Arayan, nevertheless relied on records, the preparation of which he did not participate in. 78 These records
and the persons who prepared them were not presented in court, either. As such, SFMS Evangelista’s testimony, insofar as he relied on these records, was on matters not
derived from his own perception, and was, therefore, hearsay.

Section 44, Rule 130 of the Rules of Court, which speaks of entries in official records as an exception to the hearsay rule, cannot excuse the testimony of SFMS Evangelista.
Section 44 provides:

SEC. 44. Entries in official records. – Entries in official records made in the performance of his duty by a public officer of the Philippines, or by a person in the performance of a
duty specially enjoined by law, are prima facie evidence of the facts therein stated.

In Africa v. Caltex,79 we enumerated the following requisites for the admission of entries in official records as an exception to the hearsay rule: (1) the entries were made by a
public officer or a private person in the performance of a duty; (2) the performance of the duty is especially enjoined by law; (3) the public officer or the private person had
sufficient knowledge of the facts stated by him, which must have been acquired by him personally or through official information.

The presentation of the records themselves would, therefore, have been admissible as an exception to the hearsay rule even if the public officer/s who prepared them was/were
not presented in court, provided the above requisites could be adequately proven. In the case at bar, however, neither the records nor the persons who prepared them were
60

presented in court. Thus, the above requisites cannot be sufficiently proven. Also, since SFMS Evangelista merely testified based on what those records contained, his testimony
was hearsay evidence twice removed, which was one step too many to be covered by the official-records exception to the hearsay rule.

SFMS Evangelista’s testimony of nonpayment of forest charges was, furthermore, based on his failure to find official receipts corresponding to billings sent to PICOP. As stated
above, PICOP attached official receipts in its Addendum to Motion for Reconsideration to this Court. While this course of action is normally irregular in judicial proceedings, we
merely stated in the assailed Decision that "the DENR Secretary has adequately proven that PICOP has, at this time, failed to comply with administrative and statutory
requirements for the conversion of TLA No. 43 into an IFMA,"80 and that "this disposition confers another chance to comply with the foregoing requirements."81

In view of the foregoing, we withdraw our pronouncement that PICOP has unpaid forestry charges, at least for the purpose of determining compliance with the IFMA
requirements.

NCIP Certification

The Court of Appeals held that PICOP need not comply with Section 59 of Republic Act No. 8371, which requires prior certification from the NCIP that the areas affected do not
overlap with any ancestral domain before any IFMA can be entered into by the government. According to the Court of Appeals, Section 59 should be interpreted to refer to
ancestral domains that have been duly established as such by the continuous possession and occupation of the area concerned by indigenous peoples since time immemorial up
to the present. The Court of Appeals held that PICOP had acquired property rights over TLA No. 43 areas, being in exclusive, continuous and uninterrupted possession and
occupation of these areas since 1952 up to the present.

In the assailed Decision, we reversed the findings of the Court of Appeals. Firstly, the Court of Appeals ruling defies the settled jurisprudence we have mentioned earlier, that a
TLA is neither a property nor a property right, and that it does not create a vested right.82

Secondly, the Court of Appeals’ resort to statutory construction is misplaced, as Section 59 of Republic Act No. 8379 is clear and unambiguous:

SEC. 59. Certification Precondition. – All departments and other governmental agencies shall henceforth be strictly enjoined from issuing, renewing or granting any concession,
license or lease, or entering into any production-sharing agreement, without prior certification from the NCIP that the area affected does not overlap with any ancestral
domain. Such certification shall only be issued after a field-based investigation is conducted by the Ancestral Domains Office of the area concerned: Provided, That no
certification shall be issued by the NCIP without the free and prior informed and written consent of the ICCs/IPs concerned: Provided, further, That no department, government
agency or government-owned or controlled corporation may issue new concession, license, lease, or production sharing agreement while there is a pending application for a
CADT: Provided, finally, That the ICCs/IPs shall have the right to stop or suspend, in accordance with this Act, any project that has not satisfied the requirement of this
consultation process.

PICOP had tried to put a cloud of ambiguity over Section 59 of Republic Act No. 8371 by invoking the definition of Ancestral Domains in Section 3(a) thereof, wherein the
possesssion by Indigenous Cultural Communities/Indigenous Peoples (ICCs/IPs) must have been continuous to the present. However, we noted the exception found in the very
same sentence invoked by PICOP:
61

a) Ancestral domains – Subject to Section 56 hereof, refers to all areas generally belonging to ICCs/IPs comprising lands, inland waters, coastal areas, and natural resources
therein, held under a claim of ownership, occupied or possessed by ICCs/IPs, by themselves or through their ancestors, communally or individually since time immemorial,
continuously to the present except when interrupted by war, force majeure or displacement by force, deceit, stealth or as a consequence of government projects or any other
voluntary dealings entered into by government and private individuals/corporations, and which are necessary to ensure their economic, social and cultural welfare. It shall include
ancestral lands, forests, pasture, residential, agricultural, and other lands individually owned whether alienable and disposable or otherwise, hunting grounds, burial grounds,
worship areas, bodies of water, mineral and other natural resources, and lands which may no longer be exclusively occupied by ICCs/IPs but from which they traditionally had
access to for their subsistence and traditional activities, particularly the home ranges of ICCs/IPs who are still nomadic and/or shifting cultivators;

Ancestral domains, therefore, remain as such even when possession or occupation of these areas has been interrupted by causes provided under the law, such as voluntary
dealings entered into by the government and private individuals/corporations. Consequently, the issuance of TLA No. 43 in 1952 did not cause the ICCs/IPs to lose their
possession or occupation over the area covered by TLA No. 43.

Thirdly, we held that it was manifestly absurd to claim that the subject lands must first be proven to be part of ancestral domains before a certification that the lands are not part of
ancestral domains can be required, and invoked the separate opinion of now Chief Justice Reynato Puno in Cruz v. Secretary of DENR83:

As its subtitle suggests, [Section 59 of R.A. No. 8371] requires as a precondition for the issuance of any concession, license or agreement over natural resources, that a
certification be issued by the NCIP that the area subject of the agreement does not lie within any ancestral domain. The provision does not vest the NCIP with power over the
other agencies of the State as to determine whether to grant or deny any concession or license or agreement. It merely gives the NCIP the authority to ensure that the ICCs/IPs
have been informed of the agreement and that their consent thereto has been obtained. Note that the certification applies to agreements over natural resources that do not
necessarily lie within the ancestral domains. For those that are found within the said domains, Sections 7(b) and 57 of the IPRA apply.

PICOP rejects the entire disposition of this Court on the matter, relying on the following theory:

84. It is quite clear that Section 59 of R.A. 8371 does not apply to the automatic conversion of TLA 43 to IFMA.

First, the automatic conversion of TLA 43 to an IFMA is not a new project. It is a mere continuation of the harvesting process in an area that PICOP had been managing,
conserving and reforesting for the last 50 years since 1952. Hence any pending application for a CADT within the area, cannot affect much less hold back the automatic
conversion. That the government now wishes to change the tenurial system to an IFMA could not change the PICOP project, in existence and operating for the last 30 (sic) years,
into a new one.84

PICOP’s position is anything but clear. What is clearly provided for in Section 59 is that it covers "issuing, renewing or granting (of) any concession, license or lease, or entering
into any production sharing agreement." PICOP is implying that, when the government changed the tenurial system to an IFMA, PICOP’s existing TLA would just be upgraded or
modified, but would be the very same agreement, hence, dodging the inclusion in the word "renewing." However, PICOP is conveniently leaving out the fact that its TLA expired
in 2002. If PICOP really intends to pursue the argument that the conversion of the TLA into an IFMA would not create a new agreement, but would only be a modification of the
old one, then it should be willing to concede that the IFMA expired as well in 2002. An automatic modification would not alter the terms and conditions of the TLA except when
62

they are inconsistent with the terms and conditions of an IFMA. Consequently, PICOP’s concession period under the renewed TLA No. 43, which is from the year 1977 to 2002,
would remain the same.

PICOP cannot rely on a theory of the case whenever such theory is beneficial to it, but refute the same whenever the theory is damaging to it. In the same way, PICOP cannot
claim that the alleged Presidential Warranty is "renewable for other 25 years" and later on claim that what it is asking for is not a renewal. Extensions of agreements must
necessarily be included in the term renewal. Otherwise, the inclusion of "renewing" in Section 59 would be rendered inoperative.

PICOP further claims:

85. Verily, in interpreting the term "held under claim of ownership," the Supreme Court could not have meant to include claims that had just been filed and not yet recognized
under the provisions of DENR Administrative Order No. 2 Series of 1993, nor to any other community / ancestral domain program prior to R.A. 8371.

xxxx

87. One can not imagine the terrible damage and chaos to the country, its economy, its people and its future if a mere claim filed for the issuance of a CADC or CADT will already
provide those who filed the application, the authority or right to stop the renewal or issuance of any concession, license or lease or any production-sharing agreement. The same
interpretation will give such applicants through a mere application the right to stop or suspend any project that they can cite for not satisfying the requirements of the consultation
process of R.A. 8371. If such interpretation gets enshrined in the statures of the land, the unscrupulous and the extortionists can put any ongoing or future project or activity to a
stop in any part of the country citing their right from having filed an application for issuance of a CADC or CADT claim and the legal doctrine established by the Supreme Court in
this PICOP case.85

We are not sure whether PICOP’s counsels are deliberately trying to mislead us, or are just plainly ignorant of basic precepts of law. The term "claim" in the phrase "claim of
ownership" is not a document of any sort. It is an attitude towards something. The phrase "claim of ownership" means "the possession of a piece of property with the intention of
claiming it in hostility to the true owner."86 It is also defined as "a party’s manifest intention to take over land, regardless of title or right." 87 Other than in Republic Act No. 8371, the
phrase "claim of ownership" is thoroughly discussed in issues relating to acquisitive prescription in Civil Law.

Before PICOP’s counsels could attribute to us an assertion that a mere attitude or intention would stop the renewal or issuance of any concession, license or lease or any
production-sharing agreement, we should stress beforehand that this attitude or intention must be clearly shown by overt acts and, as required by Section 3(a), should have been
in existence "since time immemorial, continuously to the present except when interrupted by war, force majeure or displacement by force, deceit, stealth or as a consequence of
government projects or any other voluntary dealings entered into by government and private individuals/corporations."

Another argument of PICOP involves the claim itself that there was no overlapping:

Second, there could be no overlapping with any Ancestral Domain as proven by the evidence presented and testimonies rendered during the hearings in the Regional Trial Court.
x x x.
63

x x x x.

88. The DENR issued a total of 73 CADCs as of December 11, 1996. The DENR Undersecretary for Field Operations had recommended another 11 applications for issuance of
CADCs. None of the CADCs overlap the TLA 43 area.

89. However former DENR Secretary Alvarez, in a memorandum dated 13 September, 2002 addressed to PGMA, insisted that PICOP had to comply with the requirement to
secure a Free and Prior Informed Concent because CADC 095 was issued covering 17,112 hectares of TLA 43.

90. This CADC 095 is a fake CADC and was not validly released by the DENR. While the Legal Department of the DENR was still in the process of receiving the filings for
applicants and the oppositors to the CADC application, PICOP came across filed copies of a CADC 095 with the PENRO of Davao Oriental as part of their application for a
Community Based Forest Management Agreement (CBFMA). Further research came across the same group filing copies of the alleged CADC 095 with the Mines and
Geosciences Bureau in Davao City for a mining agreement application. The two applications had two different versions of the CADCs second page. One had Mr. Romeo T.
Acosta signing as the Social reform Agenda Technical Action Officer, while the other had him signing as the Head, Community-Based Forest Management Office. One had the
word "Eight" crossed out and "Seven" written to make it appear that the CADC was issued on September 25, 1997, the other made it appear that there were no alterations and
the date was supposed to be originally 25 September 1997.

What is required in Section 59 of Republic Act No. 8379 is a Certification from the NCIP that there was no overlapping with any Ancestral Domain. PICOP cannot claim that the
DENR gravely abused its discretion for requiring this Certification, on the ground that there was no overlapping. We reiterate that it is manifestly absurd to claim that the subject
lands must first be proven to be part of ancestral domains before a certification that they are not can be required. As discussed in the assailed Decision, PICOP did not even seek
any certification from the NCIP that the area covered by TLA No. 43, subject of its IFMA conversion, did not overlap with any ancestral domain.88

Sanggunian Consultation and Approval

While PICOP did not seek any certification from the NCIP that the former’s concession area did not overlap with any ancestral domain, PICOP initially sought to comply with the
requirement under Sections 26 and 27 of the Local Government Code to procure prior approval of the Sanggunians concerned. However, only one of the many provinces
affected approved the issuance of an IFMA to PICOP. Undaunted, PICOP nevertheless submitted to the DENR the purported resolution89 of the Province of Surigao del Sur
indorsing the approval of PICOP’s application for IFMA conversion, apparently hoping either that the disapproval of the other provinces would go unnoticed, or that the Surigao
del Sur approval would be treated as sufficient compliance.

Surprisingly, the disapproval by the other provinces did go unnoticed before the RTC and the Court of Appeals, despite the repeated assertions thereof by the Solicitor General.
When we pointed out in the assailed Decision that the approval must be by all the Sanggunians concerned and not by only one of them, PICOP changed its theory of the case in
its Motion for Reconsideration, this time claiming that they are not required at all to procure Sanggunian approval.

Sections 2(c), 26 and 27 of the Local Government Code provide:

64

SEC. 2. x x x.

xxxx

(c) It is likewise the policy of the State to require all national agencies and offices to conduct periodic consultations with appropriate local government units, nongovernmental and
people’s organizations, and other concerned sectors of the community before any project or program is implemented in their respective jurisdictions.

SEC. 26. Duty of National Government Agencies in the Maintenance of Ecological Balance. – It shall be the duty of every national agency or government-owned or controlled
corporation authorizing or involved in the planning and implementation of any project or program that may cause pollution, climatic change, depletion of non-renewable
resources, loss of crop land, rangeland, or forest cover, and extinction of animal or plant species, to consult with the local government units, nongovernmental organizations, and
other sectors concerned and explain the goals and objectives of the project or program, its impact upon the people and the community in terms of environmental or ecological
balance, and the measures that will be undertaken to prevent or minimize the adverse effects thereof.

SEC. 27. Prior Consultations Required. – No project or program shall be implemented by government authorities unless the consultations mentioned in Sections 2(c) and 26
hereof are complied with, and prior approval of the sanggunian concerned is obtained: Provided, That occupants in areas where such projects are to be implemented shall not be
evicted unless appropriate relocation sites have been provided, in accordance with the provisions of the Constitution.

As stated in the assailed Decision, the common evidence of the DENR Secretary and PICOP, namely, the 31 July 2001 Memorandum of Regional Executive Director (RED) Elias
D. Seraspi, Jr., enumerated the local government units and other groups which had expressed their opposition to PICOP’s application for IFMA conversion:

7. During the conduct of the performance evaluation of TLA No. 43 issues complaints against PRI were submitted thru Resolutions and letters. It is important that these are
included in this report for assessment of what are their worth, viz:

xxxx

7.2 Joint Resolution (unnumbered), dated March 19, 2001 of the Barangay Council and Barangay Tribal Council of Simulao, Boston, Davao Oriental (ANNEX F) opposing the
conversion of TLA No. 43 into IFMA over the 17,112 hectares allegedly covered with CADC No. 095.

7.3 Resolution Nos. 10, s-2001 and 05, s-2001 (ANNEXES G & H) of the Bunawan Tribal Council of Elders (BBMTCE) strongly demanding none renewal of PICOP TLA. They
claim to be the rightful owner of the area it being their alleged ancestral land.

7.4 Resolution No. 4, S-2001 of Sitio Linao, San Jose, Bislig City (ANNEX I) requesting not to renew TLA 43 over the 900 hectares occupied by them.

7.5 Resolution No. 22, S-2001 (ANNEX J) of the Sanguniang Bayan, Lingig, Surigao del Sur not to grant the conversion of TLA 43 citing the plight of former employees of PRI
who were forced to enter and farm portion of TLA No. 43, after they were laid off.
65

7.6 SP Resolution No. 2001-113 and CDC Resolution Nos. 09-2001 of the Sanguniang Panglungsod of Bislig City (ANNEXES K & L) requesting to exclude the area of TLA No.
43 for watershed purposes.

7.7 Resolution No. 2001-164, dated June 01, 2001 (ANNEX M) Sanguniang Panglungsod of Bislig City opposing the conversion of TLA 43 to IFMA for the reason that IFMA do
not give revenue benefits to the City.90

PICOP had claimed that it complied with the Local Government Code requirement of obtaining prior approval of the Sanggunian concerned by submitting a purported
resolution91 of the Province of Surigao del Sur indorsing the approval of PICOP’s application for IFMA conversion. We ruled that this cannot be deemed sufficient compliance with
the foregoing provision. Surigao del Sur is not the only province affected by the area covered by the proposed IFMA. As even the Court of Appeals found, PICOP’s TLA No. 43
traverses the length and breadth not only of Surigao del Sur but also of Agusan del Sur, Compostela Valley and Davao Oriental.92

On Motion for Reconsideration, PICOP now argues that the requirement under Sections 26 and 27 does not apply to it:

97. PICOP is not a national agency. Neither is PICOP government owned or controlled. Thus Section 26 does not apply to PICOP.

98. It is very clear that Section 27 refers to projects or programs to be implemented by government authorities or government-owned and controlled corporations. PICOP’s project
or the automatic conversion is a purely private endevour. First the PICOP project has been implemented since 1969. Second, the project was being implemented by private
investors and financial institutions.

99. The primary government participation is to warrant and ensure that the PICOP project shall have peaceful tenure in the permanent forest allocated to provide raw materials
for the project. To rule now that a project whose foundations were commenced as early as 1969 shall now be subjected to a 1991 law is to apply the law retrospectively in
violation of Article 4 of the Civil Code that laws shall not be applied retroactively.

100. In addition, under DAO 30, Series of 1992, TLA and IFMA operations were not among those devolved function from the National Government / DENR to the local
government unit. Under its Section 03, the devolved function cover only:

a) Community Based forestry projects.

b) Communal forests of less than 5000 hectares

c) Small watershed areas which are sources of local water supply.93

We have to remind PICOP again of the contents of Section 2, Article XII of the Constitution:
66

Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and
fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration,
development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into
co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such
citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be
provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure
and limit of the grant.

All projects relating to the exploration, development and utilization of natural resources are projects of the State. While the State may enter into co-production, joint venture, or
production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by these citizens, such as PICOP, the
projects nevertheless remain as State projects and can never be purely private endeavors.

Also, despite entering into co-production, joint venture, or production-sharing agreements, the State remains in full control and supervision over such projects. PICOP, thus,
cannot limit government participation in the project to being merely its bouncer, whose primary participation is only to "warrant and ensure that the PICOP project shall have
peaceful tenure in the permanent forest allocated to provide raw materials for the project."

PICOP is indeed neither a national agency nor a government-owned or controlled corporation. The DENR, however, is a national agency and is the national agency prohibited by
Section 27 from issuing an IFMA without the prior approval of the Sanggunian concerned. As previously discussed, PICOP’s Petition for Mandamus can only be granted if the
DENR Secretary is required by law to issue an IFMA. We, however, see here the exact opposite: the DENR Secretary was actually prohibited by law from issuing an IFMA, as
there had been no prior approval by all the other Sanggunians concerned.

As regards PICOP’s assertion that the application to them of a 1991 law is in violation of the prohibition against the non-retroactivity provision in Article 4 of the Civil Code, we
have to remind PICOP that it is applying for an IFMA with a term of 2002 to 2027. Section 2, Article XII of the Constitution allows exploitation agreements to last only "for a period
not exceeding twenty-five years, renewable for not more than twenty-five years." PICOP, thus, cannot legally claim that the project’s term started in 1952 and extends all the way
to the present.

Finally, the devolution of the project to local government units is not required before Sections 26 and 27 would be applicable. Neither Section 26 nor 27 mentions such a
requirement. Moreover, it is not only the letter, but more importantly the spirit of Sections 26 and 27, that shows that the devolution of the project is not required. The approval of
the Sanggunian concerned is required by law, not because the local government has control over such project, but because the local government has the duty to protect its
constituents and their stake in the implementation of the project. Again, Section 26 states that it applies to projects that "may cause pollution, climatic change, depletion of non-
renewable resources, loss of crop land, rangeland, or forest cover, and extinction of animal or plant species." The local government should thus represent the communities in
such area, the very people who will be affected by flooding, landslides or even climatic change if the project is not properly regulated, and who likewise have a stake in the
resources in the area, and deserve to be adequately compensated when these resources are exploited.
67

Indeed, it would be absurd to claim that the project must first be devolved to the local government before the requirement of the national government seeking approval from the
local government can be applied. If a project has been devolved to the local government, the local government itself would be implementing the project. That the local
government would need its own approval before implementing its own project is patently silly.

EPILOGUE AND DISPOSITION

PICOP’c cause of action consists in the allegation that the DENR Secretary, in not issuing an IFMA, violated its constitutional right against non-impairment of contracts. We have
ruled, however, that the 1969 Document is not a contract recognized under the non-impairment clause, much less a contract specifically enjoining the DENR Secretary to issue
the IFMA. The conclusion that the 1969 Document is not a contract recognized under the non-impairment clause has even been disposed of in another case decided by another
division of this Court, PICOP Resources, Inc. v. Base Metals Mineral Resources Corporation, 94 the Decision in which case has become final and executory. PICOP’s Petition for
Mandamus should, therefore, fail.

Furthermore, even if we assume for the sake of argument that the 1969 Document is a contract recognized under the non-impairment clause, and even if we assume for the sake
of argument that the same is a contract specifically enjoining the DENR Secretary to issue an IFMA, PICOP’s Petition for Mandamus must still fail. The 1969 Document expressly
states that the warranty as to the tenure of PICOP is "subject to compliance with constitutional and statutory requirements as well as with existing policy on timber concessions."
Thus, if PICOP proves the two above-mentioned matters, it still has to prove compliance with statutory and administrative requirements for the conversion of its TLA into an
IFMA.

While we have withdrawn our pronouncements in the assailed Decision that (1) PICOP had not submitted the required forest protection and reforestation plans, and that (2)
PICOP had unpaid forestry charges, thus effectively ruling in favor of PICOP on all factual issues in this case, PICOP still insists that the requirements of an NCIP certification
and Sanggunian consultation and approval do not apply to it. To affirm PICOP’s position on these matters would entail nothing less than rewriting the Indigenous Peoples’ Rights
Act and the Local Government Code, an act simply beyond our jurisdiction.

WHEREFORE, the Motion for Reconsideration of PICOP Resources, Inc. is DENIED.

SO ORDERED.

GANZON V. CA

SARMIENTO, J.:
The petitioners take common issue on the power of the President (acting through the Secretary of Local Government), to suspend and/or remove local officials.
The petitioners are the Mayor of Iloilo City (G.R. Nos. 93252 and 95245) and a member of the Sangguniang Panglunsod thereof (G.R. No. 93746), respectively .
68

The petitions of Mayor Ganzon originated from a series of administrative complaints, ten in number, filed against him by various city officials sometime in 1988, on various charges, among
them, abuse of authority, oppression, grave misconduct, disgraceful and immoral conduct, intimidation, culpable violation of the Constitution, and arbitrary detention. 1 The personalities
involved are Joceleehn Cabaluna, a clerk at the city health office; Salvador Cabaluna, her husband; Dr. Felicidad Ortigoza, Assistant City Health Officer; Mansueto Malabor, Vice-Mayor; Rolando
Dabao, Dan Dalido, German Gonzales, Larry Ong, and Eduardo Pefia Redondo members of the Sangguniang Panglunsod; and Pancho Erbite, a barangay tanod. The complaints against the Mayor
are set forth in the opinion of the respondent Court of Appeals. 2 We quote:
x x x           x x x          x x x
In her verified complaint (Annex A), Mrs. Cabaluna, a clerk assigned to the City Health, Office of Iloilo City charged that due to political reasons, having supported the rival candidate, Mrs. Rosa
0. Caram, the petitioner City Mayor, using as an excuse the exigency of the service and the interest of the public, pulled her out from rightful office where her qualifications are best suited and
assigned her to a work that should be the function of a non-career service employee. To make matters worse, a utility worker in the office of the Public Services, whose duties are alien to the
complainant's duties and functions, has been detailed to take her place. The petitioner's act are pure harassments aimed at luring her away from her permanent position or force her to resign.
In the case of Dra. Felicidad Ortigoza, she claims that the petitioner handpicked her to perform task not befitting her position as Assistant City Health Officer of Iloilo City; that her office was
padlocked without any explanation or justification; that her salary was withheld without cause since April 1, 1988; that when she filed her vacation leave, she was given the run-around
treatment in the approval of her leave in connivance with Dr. Rodolfo Villegas and that she was the object of a well-engineered trumped-up charge in an administrative complaint filed by Dr.
Rodolfo Villegas (Annex B).
On the other hand, Mansuelo Malabor is the duly elected Vice-Mayor of Iloilo City and complainants Rolando Dabao, Dan Dalido, German Gonzales, Larry Ong and Eduardo Pefia Pedondo are
members of the Sangguniang Panglunsod of the City of Iloilo. Their complaint arose out from the case where Councilor Larry Ong, whose key to his office was unceremoniously and without
previous notice, taken by petitioner. Without an office, Councilor Ong had to hold office at Plaza Libertad, The Vice-Mayor and the other complainants sympathized with him and decided to do
the same. However, the petitioner, together with its fully-armed security men, forcefully drove them away from Plaza Libertad. Councilor Ong denounced the petitioner's actuations the
following day in the radio station and decided to hold office at the Freedom Grandstand at Iloilo City and there were so many people who gathered to witness the incident. However, before the
group could reach the area, the petitioner, together with his security men, led the firemen using a firetruck in dozing water to the people and the bystanders.
Another administrative case was filed by Pancho Erbite, a barangay tanod, appointed by former mayor Rosa O. Caram. On March 13, 1988, without the benefit of charges filed against him and
no warrant of arrest was issued, Erbite was arrested and detained at the City Jail of Iloilo City upon orders of petitioner. In jail, he was allegedly mauled by other detainees thereby causing
injuries He was released only the following day. 3
The Mayor thereafter answered4 and the cases were shortly set for hearing. The opinion of the Court of Appeals also set forth the succeeding events:
x x x           x x x          x x x
The initial hearing in the Cabaluna and Ortigoza cases were set for hearing on June 20-21, 1988 at the Regional Office of the Department of Local Government in Iloilo City. Notices, through
telegrams, were sent to the parties (Annex L) and the parties received them, including the petitioner. The petitioner asked for a postponement before the scheduled date of hearing and was
represented by counsel, Atty. Samuel Castro. The hearing officers, Atty. Salvador Quebral and Atty. Marino Bermudez had to come all the way from Manila for the two-day hearings but was
actually held only on June 20,1988 in view of the inability and unpreparedness of petitioner's counsel.
The next hearings were re-set to July 25, 26, 27,1988 in the same venue-Iloilo City. Again, the petitioner attempted to delay the proceedings and moved for a postponement under the excuse
that he had just hired his counsel. Nonetheless, the hearing officers denied the motion to postpone, in view of the fact that the parties were notified by telegrams of the scheduled hearings
(Annex M).
In the said hearings, petitioner's counsel cross-examined the complainants and their witnesses.
Finding probable grounds and reasons, the respondent issued a preventive suspension order on August 11, 1988 to last until October 11,1988 for a period of sixty (60) days.
69

Then the next investigation was set on September 21, 1988 and the petitioner again asked for a postponement to September 26,1988. On September 26, 1988, the complainants and petitioner
were present, together with their respective counsel. The petitioner sought for a postponement which was denied. In these hearings which were held in Mala the petitioner testified in Adm.
Case No. C-10298 and 10299.
The investigation was continued regarding the Malabor case and the complainants testified including their witnesses.
On October 10, 1988, petitioner's counsel, Atty. Original moved for a postponement of the October 24, 1988 hearing to November 7 to 11, 1988 which was granted. However, the motion for
change of venue as denied due to lack of funds. At the hearing on November 7, 1988, the parties and counsel were present. Petitioner reiterated his motion to change venue and moved for
postponement anew. The counsel discussed a proposal to take the deposition of witnesses in Iloilo City so the hearing was indefinitely postponed. However, the parties failed to come to terms
and after the parties were notified of the hearing, the investigation was set to December 13 to 15, 1988.
The petitioner sought for another postponement on the ground that his witnesses were sick or cannot attend the investigation due to lack of transportation. The motion was denied and the
petitioner was given up to December 14, 1988 to present his evidence.
On December 14,1988, petitioner's counsel insisted on his motion for postponement and the hearing officers gave petitioner up to December 15, 1988 to present his evidence. On December 15,
1988, the petitioner failed to present evidence and the cases were considered submitted for resolution.
In the meantime, a prima facie evidence was found to exist in the arbitrary detention case filed by Pancho Erbite so the respondent ordered the petitioner's second preventive suspension dated
October 11, 1988 for another sixty (60) days. The petitioner was able to obtain a restraining order and a writ of preliminary injunction in the Regional Trial Court, Branch 33 of Iloilo City. The
second preventive suspension was not enforced. 5
Amidst the two successive suspensions, Mayor Ganzon instituted an action for prohibition against the respondent Secretary of Local Government (now, Interior) in the Regional Trial Court, Iloilo
City, where he succeeded in obtaining a writ of preliminary injunction. Presently, he instituted CA-G.R. SP No. 16417, an action for prohibition, in the respondent Court of Appeals.
Meanwhile, on May 3, 1990, the respondent Secretary issued another order, preventively suspending Mayor Ganzon for another sixty days, the third time in twenty months, and designating
meantime Vice-Mayor Mansueto Malabor as acting mayor. Undaunted, Mayor Ganzon commenced CA-G.R. SP No. 20736 of the Court of Appeals, a petition for prohibition, 6 (Malabor it is to be
noted, is one of the complainants, and hence, he is interested in seeing Mayor Ganzon ousted.)
On September 7, 1989, the Court of Appeals rendered judgment, dismissing CA-G.R. SP No. 16417. On July 5, 1990, it likewise promulgated a decision, dismissing CA-G.R. SP No. 20736. In a
Resolution dated January 24, 1990, it issued a Resolution certifying the petition of Mary Ann Artieda, who had been similary charged by the respondent Secretary, to this Court.
On June 26,1990, we issued a Temporary Restraining Order, barring the respondent Secretary from implementing the suspension orders, and restraining the enforcement of the Court of
Appeals' two decisions.
In our Resolution of November 29, 1990, we consolidated all three cases. In our Resolutions of January 15, 1991, we gave due course thereto.
Mayor Ganzon claims as a preliminary (GR No. 93252), that the Department of Local Government in hearing the ten cases against him, had denied him due process of law and that the
respondent Secretary had been "biased, prejudicial and hostile" towards him 7 arising from his (Mayor Ganzon's) alleged refusal to join the Laban ng Demokratikong Pilipino party 8 and the
running political rivalry they maintained in the last congressional and local elections; 9 and his alleged refusal to operate a lottery in Iloilo City. 10 He also alleges that he requested the Secretary to
lift his suspension since it had come ninety days prior to an election (the barangay elections of November 14, 1988), 11 notwithstanding which, the latter proceeded with the hearing and meted
out two more suspension orders of the aforementioned cases. 12 He likewise contends that he sought to bring the cases to Iloilo City (they were held in Manila) in order to reduce the costs of
proceeding, but the Secretary rejected his request. 13 He states that he asked for postponement on "valid and justifiable" 14 grounds, among them, that he was suffering from a heart ailment
which required confinement; that his "vital" 15 witness was also hospitalized16 but that the latter unduly denied his request. 17
Mayor Ganzon's primary argument (G.R. Nos. 93252 and 95245) is that the Secretary of Local Government is devoid, in any event, of any authority to suspend and remove local officials, an
argument reiterated by the petitioner Mary Ann Rivera Artieda (G.R. No. 93746).
70

As to Mayor Ganzon's charges of denial of due process, the records do not show very clearly in what manner the Mayor might have been deprived of his rights by the respondent Secretary . His
claims that he and Secretary Luis-Santos were (are) political rivals and that his "persecution" was politically motivated are pure speculation and although the latter does not appear to have
denied these contentions (as he, Mayor Ganzon, claims), we can not take his word for it the way we would have under less political circumstances, considering furthermore that "political feud"
has often been a good excuse in contesting complaints.
The Mayor has failed furthermore to substantiate his say-so's that Secretary Santos had attempted to seduce him to join the administration party and to operate a lottery in Iloilo City. Again,
although the Secretary failed to rebut his allegations, we can not accept them, at face value, much more, as judicial admissions as he would have us accept them 18 for the same reasons above-
stated and furthermore, because his say so's were never corroborated by independent testimonies. As a responsible public official, Secretary Santos, in pursuing an official function, is presumed
to be performing his duties regularly and in the absence of contrary evidence, no ill motive can be ascribed to him.
As to Mayor Ganzon's contention that he had requested the respondent Secretary to defer the hearing on account of the ninety-day ban prescribed by Section 62 of Batas Blg. 337, the Court
finds the question to be moot and academic since we have in fact restrained the Secretary from further hearing the complaints against the petitioners. 19
As to his request, finally, for postponements, the Court is afraid that he has not given any compelling reason why we should overturn the Court of Appeals, which found no convincing reason to
overrule Secretary Santos in denying his requests. Besides, postponements are a matter of discretion on the part of the hearing officer, and based on Mayor Ganzon's above story, we are not
convinced that the Secretary has been guilty of a grave abuse of discretion.
The Court can not say, under these circumstances, that Secretary Santos' actuations deprived Mayor Ganzon of due process of law.
We come to the core question: Whether or not the Secretary of Local Government, as the President's alter ego, can suspend and/or remove local officials.
It is the petitioners' argument that the 1987 Constitution 20 no longer allows the President, as the 1935 and 1973 Constitutions did, to exercise the power of suspension and/or removal over local
officials. According to both petitioners, the Constitution is meant, first, to strengthen self-rule by local government units and second, by deleting the phrase 21 as may be provided by law to strip
the President of the power of control over local governments. It is a view, so they contend, that finds support in the debates of the Constitutional Commission . The provision in question reads as
follows:
Sec. 4. The President of the Philippines shall exercise general supervision over local Sec. 62. Notice of Hearing. — Within seven days after the complaint is filed, the Minister of
governments. Provinces with respect to component cities and municipalities, and cities local Government, or the sanggunian concerned, as the case may be, shall require the
and municipalities with respect to component barangays shall ensure that the acts of their respondent to submit his verified answer within seven days from receipt of said complaint,
component units are within the scope of their prescribed powers and functions. 22 and commence the hearing and investigation of the case within ten days after receipt of
It modifies a counterpart provision appearing in the 1935 Constitution, which we quote: such answer of the respondent. No investigation shall be held within ninety days
Sec. 10. The President shall have control of all the executive departments, bureaus, or immediately prior to an election, and no preventive suspension shall be imposed with the
offices, exercise general supervision over all Local governments as may be provided by said period. If preventive suspension has been imposed prior to the aforesaid period, the
23
law, and take care that the laws be faithfully executed. preventive suspension shall be lifted.24
The petitioners submit that the deletion (of "as may be provided by law") is significant, as Sec. 63. Preventive Suspension. — (1) Preventive suspension may be imposed by the
their argument goes, since: (1) the power of the President is "provided by law" and (2) Minister of Local Government if the respondent is a provincial or city official, by the
hence, no law may provide for it any longer. provincial governor if the respondent is an elective municipal official, or by the city or
It is to be noted that in meting out the suspensions under question, the Secretary of Local municipal mayor if the respondent is an elective barangay official.
Government acted in consonance with the specific legal provisions of Batas Blg. 337, the (2) Preventive suspension may be imposed at any time after the issues are joined, when
Local Government Code, we quote: there is reasonable ground to believe that the respondent has committed the act or acts
complained of, when the evidence of culpability is strong, when the gravity of the offense so
71
warrants, or when the continuance in office of the respondent could influence the witnesses
or pose a threat to the safety and integrity of the records and other evidence. In all cases,
preventive suspension shall not extend beyond sixty days after the start of said suspension.
(3) At the expiration of sixty days, the suspended official shall be deemed reinstated in office
without prejudice to the continuation of the proceedings against him until its termination.
However ' if the delay in the proceedings of the case is due to his fault, neglect or request,
the time of the delay shall not be counted in computing the time of suspension. 25
The issue, as the Court understands it, consists of three questions: (1) Did the 1987
Constitution, in deleting the phrase "as may be provided by law" intend to divest the
President of the power to investigate, suspend, discipline, and/or remove local officials? (2)
Has the Constitution repealed Sections 62 and 63 of the Local Government Code? (3) What
is the significance of the change in the constitutional language?
It is the considered opinion of the Court that notwithstanding the change in the
constitutional language, the charter did not intend to divest the legislature of its right or the
President of her prerogative as conferred by existing legislation to provide administrative
sanctions against local officials. It is our opinion that the omission (of "as may be provided
by law") signifies nothing more than to underscore local governments' autonomy from
congress and to break Congress' "control" over local government affairs. The Constitution
did not, however, intend, for the sake of local autonomy, to deprive the legislature of all
authority over municipal corporations, in particular, concerning discipline.
Autonomy does not, after all, contemplate making mini-states out of local government
units, as in the federal governments of the United States of America (or Brazil or Germany),
although Jefferson is said to have compared municipal corporations euphemistically to
"small republics."26 Autonomy, in the constitutional sense, is subject to the guiding star,
though not control, of the legislature, albeit the legislative responsibility under the
Constitution and as the "supervision clause" itself suggest-is to wean local government units
from over-dependence on the central government.
It is noteworthy that under the Charter, "local autonomy" is not instantly self-executing, but
subject to, among other things, the passage of a local government code, 27 a local tax
law,28 income distribution legislation,29 and a national representation law,30 and
measures31 designed to realize autonomy at the local level. It is also noteworthy that in spite
of autonomy, the Constitution places the local government under the general supervision of
the Executive. It is noteworthy finally, that the Charter allows Congress to include in the
local government code provisions for removal of local officials, which suggest that Congress
may exercise removal powers, and as the existing Local Government Code has done,
delegate its exercise to the President. Thus:
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.32
As hereinabove indicated, the deletion of "as may be provided by law" was meant to
stress, sub silencio, the objective of the framers to strengthen local autonomy by severing
congressional control of its affairs, as observed by the Court of Appeals, like the power of
local legislation.33 The Constitution did nothing more, however, and insofar as existing
legislation authorizes the President (through the Secretary of Local Government) to proceed
against local officials administratively, the Constitution contains no prohibition.
The petitioners are under the impression that the Constitution has left the President mere
supervisory powers, which supposedly excludes the power of investigation, and denied her
control, which allegedly embraces disciplinary authority. It is a mistaken impression because
legally, "supervision" is not incompatible with disciplinary authority as this Court has
held,34 thus:
x x x           x x x          x x x
It is true that in the case of Mondano vs. Silvosa, 51 Off. Gaz., No. 6 p. 2884, this Court had
occasion to discuss the scope and extent of the power of supervision by the President over
local government officials in contrast to the power of control given to him over executive
officials of our government wherein it was emphasized that the two terms, control and
supervision, are two different things which differ one from the other in meaning and extent.
Thus in that case the Court has made the following digression: "In administration law
supervision means overseeing or the power or authority of an officer to see that
subordinate officers perform their duties. If the latter fail or neglect to fulfill them the
former may take such action or step as prescribed by law to make them perform their
duties. Control, on the other hand, means the power of an officer to alter or modify or
nullify of set aside what a subordinate officer had done in the performance of his duties and
to substitute the judgment of the former for that of the latter." But from this
pronouncement it cannot be reasonably inferred that the power of supervision of the
72
President over local government officials does not include the power of investigation when
in his opinion the good of the public service so requires, as postulated in Section 64(c) of the
Revised Administrative Code. ...35
x x x           x x x          x x x
"Control" has been defined as "the power of an officer to alter or modify or nullify or set
aside what a subordinate officer had done in the performance of his duties and to substitute
the judgment of the former for test of the latter."36  "Supervision" on the other hand means
"overseeing or the power or authority of an officer to see that subordinate officers perform
their duties.37  As we held,38  however, "investigating" is not inconsistent with "overseeing",
although it is a lesser power than "altering". The impression is apparently exacerbated by
the Court's pronouncements in at least three cases,  Lacson v. Roque,39 Hebron v.
Reyes,40 and Mondano v. Silvosa,41 and possibly, a fourth one, Pelaez v. Auditor
General.42 In Lacson, this Court said that the President enjoyed no control powers but only
supervision "as may be provided by law," 43 a rule we reiterated in Hebron, and Mondano.
In Pelaez, we stated that the President "may not . . . suspend an elective official of a regular
municipality or take any disciplinary action against him, except on appeal from a decision of
the corresponding provincial board."44 However,
neither Lacson nor Hebron nor Mondano categorically banned the Chief Executive from
exercising acts of disciplinary authority because she did not exercise control powers, but
because no law allowed her to exercise disciplinary authority. Thus, according to Lacson:
The contention that the President has inherent power to remove or suspend municipal
officers is without doubt not well taken. Removal and suspension of public officers are
always controlled by the particular law applicable and its proper construction subject to
constitutional limitations.45
In Hebron we stated:
Accordingly, when the procedure for the suspension of an officer is specified by law, the
same must be deemed mandatory and adhered to strictly, in the absence of express or clear
provision to the contrary-which does not et with respect to municipal officers ... 46
In Mondano, the Court held:
... The Congress has expressly and specifically lodged the provincial supervision over
municipal officials in the provincial governor who is authorized to "receive and investigate
complaints made under oath against municipal officers for neglect of duty, oppression,
corruption or other form of maladministration of office, and conviction by final judgment of
any crime involving moral turpitude." And if the charges are serious, "he shall submit written
charges touching the matter to the provincial board, furnishing a copy of such charges to the
accused either personally or by registered mail, and he may in such case suspend the officer
(not being the municipal treasurer) pending action by the board, if in his opinion the charge
by one affecting the official integrity of the officer in question." Section 86 of the Revised
Administration Code adds nothing to the power of supervision to be exercised by the
Department Head over the administration of ... municipalities ... . If it be construed that it
does and such additional power is the same authority as that vested in the Department
Head by section 79(c) of the Revised Administrative Code, then such additional power must
be deemed to have been abrogated by Section 110(l), Article VII of the Constitution. 47
x x x           x x x          x x x
In  Pelaez, we stated that the President can not impose disciplinary measures on local
officials except on appeal from the provincial board pursuant to the Administrative Code.48
Thus, in those case that this Court denied the President the power (to suspend/remove) it
was not because we did not think that the President can not exercise it on account of his
limited power, but because the law lodged the power elsewhere. But in those cases ii which
the law gave him the power, the Court, as in Ganzon v. Kayanan, found little difficulty in
sustaining him.49
The Court does not believe that the petitioners can rightfully point to the debates of the
Constitutional Commission to defeat the President's powers. The Court believes that the
deliberations are by themselves inconclusive, because although Commissioner Jose Nolledo
would exclude the power of removal from the President, 50 Commissioner Blas Ople would
not.51
The Court is consequently reluctant to say that the new Constitution has repealed the Local
Government Code, Batas Blg. 37. As we said, "supervision" and "removal" are not
incompatible terms and one may stand with the other notwithstanding the stronger
expression of local autonomy under the new Charter. We have indeed held that in spite of
the approval of the Charter, Batas Blg. 337 is still in force and effect.52
As the Constitution itself declares, local autonomy means "a more responsive and
accountable local government structure instituted through a system of
decentralization."53 The Constitution as we observed, does nothing more than to break up
the monopoly of the national government over the affairs of local governments and as put
by political adherents, to "liberate the local governments from the imperialism of Manila."
Autonomy, however, is not meant to end the relation of partnership and inter-dependence
between the central administration and local government units, or otherwise, to user in a
73
regime of federalism. The Charter has not taken such a radical step. Local governments,
under the Constitution, are subject to regulation, however limited, and for no other purpose
than precisely, albeit paradoxically, to enhance self- government.
As we observed in one case, 54 decentralization means devolution of national administration
but not power to the local levels. Thus:
Now, autonomy is either decentralization of administration or decentralization of power.
There is decentralization of administration when the central government delegates
administrative powers to political subdivisions in order to broaden the base of government
power and in the process to make local governments "more responsive and accountable,"
and "ensure their fullest development as self-reliant communities and make them more
effective partners in the pursuit of national development and social progress." At the same
time, it relieves the central government of the burden of managing local affairs and enables
it to concentrate on national concerns. The President exercises "general supervision" over
them, but only to "ensure that local affairs are administered according to law." He has no
control over their acts in the sense that he can substitute their judgments with his own.
Decentralization of power, on the other hand, involves an abdication of political power in
the favor of local governments units declared to be autonomous, In that case, the
autonomous government is free to chart its own destiny and shape its future with minimum
intervention from central authorities. According to a constitutional author, decentralization
of power amounts to "self-immolation," since in that event, the autonomous government
becomes accountable not to the central authorities but to its constituency.55
The successive sixty-day suspensions imposed on Mayor Rodolfo Ganzon is albeit another
matter. What bothers the Court, and what indeed looms very large, is the fact that since the
Mayor is facing ten administrative charges, the Mayor is in fact facing the possibility of 600
days of suspension, in the event that all ten cases yield  prima facie  findings. The Court is not
of course tolerating misfeasance in public office (assuming that Mayor Ganzon is guilty of
misfeasance) but it is certainly another question to make him serve 600 days of suspension,
which is effectively, to suspend him out of office. As we held:56
2. Petitioner is a duly elected municipal mayor of Lianga, Surigao del Sur. His term of office
does not expire until 1986. Were it not for this information and the suspension decreed by
the Sandiganbayan according to the Anti-Graft and Corrupt Practices Act, he would have
been all this while in the full discharge of his functions as such municipal mayor. He was
elected precisely to do so. As of October 26, 1983, he has been unable to. it is a basic
assumption of the electoral process implicit in the right of suffrage that the people are
entitled to the services of elective officials of their choice. For misfeasance or malfeasance,
any of them could, of course, be proceeded against administratively or, as in this instance,
criminally. In either case, Ms culpability must be established. Moreover, if there be a
criminal action, he is entitled to the constitutional presumption of innocence. A preventive
suspension may be justified. Its continuance, however, for an unreasonable length of time
raises a due process question. For even if thereafter he were acquitted, in the meanwhile his
right to hold office had been nullified. Clearly, there would be in such a case an injustice
suffered by him. Nor is he the only victim. There is injustice inflicted likewise on the people
of Lianga They were deprived of the services of the man they had elected to serve as mayor.
In that sense, to paraphrase Justice Cardozo, the protracted continuance of this preventive
suspension had outrun the bounds of reason and resulted in sheer oppression. A denial of
due process is thus quite manifest. It is to avoid such an unconstitutional application that
the order of suspension should be lifted. 57
The plain truth is that this Court has been ill at ease with suspensions, for the above
reasons,58 and so also, because it is out of the ordinary to have a vacancy in local
government. The sole objective of a suspension, as we have held, 59 is simply "to prevent the
accused from hampering the normal cause of the investigation with his influence and
authority over possible witnesses"60 or to keep him off "the records and other evidence. 61
It is a means, and no more, to assist prosecutors in firming up a case, if any, against an
erring local official. Under the Local Government Code, it can not exceed sixty days, 62 which
is to say that it need not be exactly sixty days long if a shorter period is otherwise sufficient,
and which is also to say that it ought to be lifted if prosecutors have achieved their purpose
in a shorter span.
Suspension is not a penalty and is not unlike preventive imprisonment in which the accused
is held to insure his presence at the trial. In both cases, the accused (the respondent) enjoys
a presumption of innocence unless and until found guilty.
Suspension finally is temporary and as the Local Government Code provides, it may be
imposed for no more than sixty days. As we held, 63 a longer suspension is unjust and
unreasonable, and we might add, nothing less than tyranny.
As we observed earlier, imposing 600 days of suspension which is not a remote possibility
Mayor Ganzon is to all intents and purposes, to make him spend the rest of his term in
inactivity. It is also to make, to all intents and purposes, his suspension permanent.
It is also, in fact, to mete out punishment in spite of the fact that the Mayor's guilt has not
been proven. Worse, any absolution will be for naught because needless to say, the length
74
of his suspension would have, by the time he is reinstated, wiped out his tenure
considerably.
The Court is not to be mistaken for obstructing the efforts of the respondent Secretary to
see that justice is done in Iloilo City, yet it is hardly any argument to inflict on Mayor Ganzon
successive suspensions when apparently, the respondent Secretary has had sufficient time
to gather the necessary evidence to build a case against the Mayor without suspending him
a day longer. What is intriguing is that the respondent Secretary has been cracking down, so
to speak, on the Mayor piecemeal apparently, to pin him down ten times the pain, when he,
the respondent Secretary, could have pursued a consolidated effort.
We reiterate that we are not precluding the President, through the Secretary of Interior
from exercising a legal power, yet we are of the opinion that the Secretary of Interior is
exercising that power oppressively, and needless to say, with a grave abuse of discretion.
The Court is aware that only the third suspension is under questions, and that any talk of
future suspensions is in fact premature. The fact remains, however, that Mayor Ganzon has
been made to serve a total of 120 days of suspension and the possibility of sixty days more
is arguably around the corner (which amounts to a violation of the Local Government Code
which brings to light a pattern of suspensions intended to suspend the Mayor the rest of his
natural tenure. The Court is simply foreclosing what appears to us as a concerted effort of
the State to perpetuate an arbitrary act.
As we said, we can not tolerate such a state of affairs.
We are therefore allowing Mayor Rodolfo Ganzon to suffer the duration of his third
suspension and lifting, for the purpose, the Temporary Restraining Order earlier issued.
Insofar as the seven remaining charges are concerned, we are urging the Department of
Local Government, upon the finality of this Decision, to undertake steps to expedite the
same, subject to Mayor Ganzon's usual remedies of appeal, judicial or administrative, or
certiorari, if warranted, and meanwhile, we are precluding the Secretary from meting out
further suspensions based on those remaining complaints, notwithstanding findings
of prima facie evidence.
In resume the Court is laying down the following rules:
1. Local autonomy, under the Constitution, involves a mere decentralization of
administration, not of power, in which local officials remain accountable to the central
government in the manner the law may provide;
2. The new Constitution does not prescribe federalism;
3. The change in constitutional language (with respect to the supervision clause) was meant
but to deny legislative control over local governments; it did not exempt the latter from
legislative regulations provided regulation is consistent with the fundamental premise of
autonomy;
4. Since local governments remain accountable to the national authority, the latter may, by
law, and in the manner set forth therein, impose disciplinary action against local officials;
5. "Supervision" and "investigation" are not inconsistent terms; "investigation" does not
signify "control" (which the President does not have);
6. The petitioner, Mayor Rodolfo Ganzon. may serve the suspension so far ordered, but may
no longer be suspended for the offenses he was charged originally; provided:
a) that delays in the investigation of those charges "due to his fault, neglect or request, (the
time of the delay) shall not be counted in computing the time of suspension. [Supra, sec.
63(3)]
b) that if during, or after the expiration of, his preventive suspension, the petitioner commits
another or other crimes and abuses for which proper charges are filed against him by the
aggrieved party or parties, his previous suspension shall not be a bar to his being
preventively suspended again, if warranted under subpar. (2), Section 63 of the Local
Government Code.
WHEREFORE, premises considered, the petitions are DISMISSED. The Temporary Restraining
Order issued is LIFTED.1âwphi1 The suspensions of the petitioners are AFFIRMED, provided
that the petitioner, Mayor Rodolfo Ganzon, may not be made to serve future suspensions
on account of any of the remaining administrative charges pending against him for acts
committed prior to August 11, 1988. The Secretary of Interior is ORDERED to consolidate all
such administrative cases pending against Mayor Ganzon.
The sixty-day suspension against the petitioner, Mary Ann Rivera Artieda, is AFFIRMED. No
costs.
SO ORDERED
LIMBONAS V. MANGELIN
SARMIENTO,  J.:
The acts of the Sangguniang Pampook of Region XII are assailed in this petition. The
antecedent facts are as follows:
75
1. On September 24, 1986, petitioner Sultan Alimbusar Limbona was appointed as a
member of the Sangguniang Pampook, Regional Autonomous Government, Region XII,
representing Lanao del Sur.
2. On March 12, 1987 petitioner was elected Speaker of the Regional Legislative Assembly or
Batasang Pampook of Central Mindanao (Assembly for brevity).
3. Said Assembly is composed of eighteen (18) members. Two of said members, respondents
Acmad Tomawis and Pakil Dagalangit, filed on March 23, 1987 with the Commission on
Elections their respective certificates of candidacy in the May 11, 1987 congressional
elections for the district of Lanao del Sur but they later withdrew from the aforesaid election
and thereafter resumed again their positions as members of the Assembly.
4. On October 21, 1987 Congressman Datu Guimid Matalam, Chairman of the Committee on
Muslim Affairs of the House of Representatives, invited Mr. Xavier Razul, Pampook Speaker
of Region XI, Zamboanga City and the petitioner in his capacity as Speaker of the Assembly,
Region XII, in a letter which reads:
The Committee on Muslim Affairs well undertake consultations and dialogues with local
government officials, civic, religious organizations and traditional leaders on the recent and
present political developments and other issues affecting Regions IX and XII.
The result of the conference, consultations and dialogues would hopefully chart the
autonomous governments of the two regions as envisioned and may prod the President to
constitute immediately the Regional Consultative Commission as mandated by the
Commission.
You are requested to invite some members of the Pampook Assembly of your respective
assembly on November 1 to 15, 1987, with venue at the Congress of the Philippines. Your
presence, unstinted support and cooperation is (sic) indispensable.
5. Consistent with the said invitation, petitioner sent a telegram to Acting Secretary Johnny
Alimbuyao of the Assembly to wire all Assemblymen that there shall be no session in
November as "our presence in the house committee hearing of Congress take (sic)
precedence over any pending business in batasang pampook ... ."
6. In compliance with the aforesaid instruction of the petitioner, Acting Secretary Alimbuyao
sent to the members of the Assembly the following telegram:
TRANSMITTING FOR YOUR INFORMATION AND GUIDANCE TELEGRAM RECEIVED FROM
SPEAKER LIMBONA QUOTE CONGRESSMAN JIMMY MATALAM CHAIRMAN OF THE HOUSE
COMMITTEE ON MUSLIM AFFAIRS REQUESTED ME TO ASSIST SAID COMMITTEE IN THE
DISCUSSION OF THE PROPOSED AUTONOMY ORGANIC NOV. 1ST TO 15. HENCE WERE ALL
ASSEMBLYMEN THAT THERE SHALL BE NO SESSION IN NOVEMBER AS OUR PRESENCE IN THE
HOUSE COMMITTEE HEARING OF CONGRESS TAKE PRECEDENCE OVER ANY PENDING
BUSINESS IN BATASANG PAMPOOK OF MATALAM FOLLOWS UNQUOTE REGARDS.
7. On November 2, 1987, the Assembly held session in defiance of petitioner's advice, with
the following assemblymen present:---
After declaring the presence of a quorum, the Speaker Pro-Tempore was authorized to
preside in the session. On Motion to declare the seat of the Speaker vacant, all
Assemblymen in attendance voted in the affirmative, hence, the chair declared said seat of
the Speaker vacant. 8. On November 5, 1987, the session of the Assembly resumed with the
following Assemblymen present:---
An excerpt from the debates and proceeding of said session reads:
HON. DAGALANGIT: Mr. Speaker, Honorable Members of the House, with the presence of
our colleagues who have come to attend the session today, I move to call the names of the
new comers in order for them to cast their votes on the previous motion to declare the
position of the Speaker vacant. But before doing so, I move also that the designation of
the Speaker Pro Tempore as the Presiding Officer and Mr. Johnny Evangelists as Acting
Secretary in the session last November 2, 1987 be reconfirmed in today's session.
HON. SALIC ALI: I second the motions.
PRESIDING OFFICER: Any comment or objections on the two motions presented? Me chair
hears none and the said motions are approved. ...
Twelve (12) members voted in favor of the motion to declare the seat of the Speaker vacant;
one abstained and none voted against. 1
Accordingly, the petitioner prays for judgment as follows:
WHEREFORE, petitioner respectfully prays that-
(a) This Petition be given due course;
(b) Pending hearing, a restraining order or writ of preliminary injunction be issued enjoining
respondents from proceeding with their session to be held on November 5, 1987, and on
any day thereafter;
(c) After hearing, judgment be rendered declaring the proceedings held by respondents of
their session on November 2, 1987 as null and void;
(d) Holding the election of petitioner as Speaker of said Legislative Assembly or Batasan
Pampook, Region XII held on March 12, 1987 valid and subsisting, and
(e) Making the injunction permanent.
Petitioner likewise prays for such other relief as may be just and equitable. 2
76
Pending further proceedings, this Court, on January 19, 1988, received a resolution filed by
the Sangguniang Pampook, "EXPECTING ALIMBUSAR P. LIMBONA FROM MEMBERSHIP OF
THE SANGGUNIANG PAMPOOK AUTONOMOUS REGION XII," 3 on the grounds, among other
things, that the petitioner "had caused to be prepared and signed by him paying [sic] the
salaries and emoluments of Odin Abdula, who was considered resigned after filing his
Certificate of Candidacy for Congressmen for the First District of Maguindanao in the last
May 11, elections. . . and nothing in the record of the Assembly will show that any request
for reinstatement by Abdula was ever made . . ." 4 and that "such action of Mr. Lim bona in
paying Abdula his salaries and emoluments without authority from the Assembly . . .
constituted a usurpation of the power of the Assembly," 5 that the petitioner "had recently
caused withdrawal of so much amount of cash from the Assembly resulting to the non-
payment of the salaries and emoluments of some Assembly [sic]," 6 and that he had "filed a
case before the Supreme Court against some members of the Assembly on question which
should have been resolved within the confines of the Assembly," 7 for which the
respondents now submit that the petition had become "moot and academic". 8
The first question, evidently, is whether or not the expulsion of the petitioner (pending
litigation) has made the case moot and academic.
We do not agree that the case has been rendered moot and academic by reason simply of
the expulsion resolution so issued. For, if the petitioner's expulsion was done purposely to
make this petition moot and academic, and to preempt the Court, it will not make it
academic.
On the ground of the immutable principle of due process alone, we hold that the expulsion
in question is of no force and effect. In the first place, there is no showing that the
Sanggunian had conducted an investigation, and whether or not the petitioner had been
heard in his defense, assuming that there was an investigation, or otherwise given the
opportunity to do so. On the other hand, what appears in the records is an admission by the
Assembly (at least, the respondents) that "since November, 1987 up to this writing, the
petitioner has not set foot at the Sangguniang Pampook." 9 "To be sure, the private
respondents aver that "[t]he Assemblymen, in a conciliatory gesture, wanted him to come
to Cotabato City," 10 but that was "so that their differences could be threshed out and
settled." 11 Certainly, that avowed wanting or desire to thresh out and settle, no matter how
conciliatory it may be cannot be a substitute for the notice and hearing contemplated by
law.
While we have held that due process, as the term is known in administrative law, does not
absolutely require notice and that a party need only be given the opportunity to be
heard, 12 it does not appear herein that the petitioner had, to begin with, been made aware
that he had in fact stood charged of graft and corruption before his collegues. It cannot be
said therefore that he was accorded any opportunity to rebut their accusations. As it stands,
then, the charges now levelled amount to mere accusations that cannot warrant expulsion.
In the second place, (the resolution) appears strongly to be a bare act of vendetta by the
other Assemblymen against the petitioner arising from what the former perceive to be
abduracy on the part of the latter. Indeed, it (the resolution) speaks of "a case [having been
filed] [by the petitioner] before the Supreme Court . . . on question which should have been
resolved within the confines of the Assemblyman act which some members claimed
unnecessarily and unduly assails their integrity and character as representative of the
people" 13 an act that cannot possibly justify expulsion. Access to judicial remedies is
guaranteed by the Constitution, 14 and, unless the recourse amounts to malicious
prosecution, no one may be punished for seeking redress in the courts.
We therefore order reinstatement, with the caution that should the past acts of the
petitioner indeed warrant his removal, the Assembly is enjoined, should it still be so minded,
to commence proper proceedings therefor in line with the most elementary requirements
of due process. And while it is within the discretion of the members of the Sanggunian to
punish their erring colleagues, their acts are nonetheless subject to the moderating band of
this Court in the event that such discretion is exercised with grave abuse.
It is, to be sure, said that precisely because the Sangguniang Pampook(s) are "autonomous,"
the courts may not rightfully intervene in their affairs, much less strike down their acts. We
come, therefore, to the second issue: Are the so-called autonomous governments of
Mindanao, as they are now constituted, subject to the jurisdiction of the national courts? In
other words, what is the extent of self-government given to the two autonomous
governments of Region IX and XII?
The autonomous governments of Mindanao were organized in Regions IX and XII by
Presidential Decree No. 1618 15 promulgated on July 25, 1979. Among other things, the
Decree established "internal autonomy" 16 in the two regions "[w]ithin the framework of the
national sovereignty and territorial integrity of the Republic of the Philippines and its
Constitution," 17 with legislative and executive machinery to exercise the powers and
responsibilities 18 specified therein.
77
It requires the autonomous regional governments to "undertake all internal administrative
matters for the respective regions," 19 except to "act on matters which are within the
jurisdiction and competence of the National Government," 20 "which include, but are not
limited to, the following:
(1) National defense and security;
(2) Foreign relations;
(3) Foreign trade;
(4) Currency, monetary affairs, foreign exchange, banking and quasi-banking, and external
borrowing,
(5) Disposition, exploration, development, exploitation or utilization of all natural resources;
(6) Air and sea transport
(7) Postal matters and telecommunications;
(8) Customs and quarantine;
(9) Immigration and deportation;
(10) Citizenship and naturalization;
(11) National economic, social and educational planning; and
(12) General auditing. 21
In relation to the central government, it provides that "[t]he President shall have the power
of general supervision and control over the Autonomous Regions ..." 22
Now, autonomy is either decentralization of administration or decentralization of power.
There is decentralization of administration when the central government delegates
administrative powers to political subdivisions in order to broaden the base of government
power and in the process to make local governments "more responsive and
accountable," 23 "and ensure their fullest development as self-reliant communities and make
them more effective partners in the pursuit of national development and social
progress." 24 At the same time, it relieves the central government of the burden of managing
local affairs and enables it to concentrate on national concerns. The President exercises
"general supervision" 25 over them, but only to "ensure that local affairs are administered
according to law." 26 He has no control over their acts in the sense that he can substitute
their judgments with his own. 27
Decentralization of power, on the other hand, involves an abdication of political power in
the favor of local governments units declare to be autonomous . In that case, the
autonomous government is free to chart its own destiny and shape its future with minimum
intervention from central authorities. According to a constitutional author, decentralization
of power amounts to "self-immolation," since in that event, the autonomous government
becomes accountable not to the central authorities but to its constituency. 28
But the question of whether or not the grant of autonomy Muslim Mindanao under the
1987 Constitution involves, truly, an effort to decentralize power rather than mere
administration is a question foreign to this petition, since what is involved herein is a local
government unit constituted prior to the ratification of the present Constitution. Hence, the
Court will not resolve that controversy now, in this case, since no controversy in fact exists.
We will resolve it at the proper time and in the proper case.
Under the 1987 Constitution, local government units enjoy autonomy in these two senses,
thus:
Section 1. The territorial and political subdivisions of the Republic of the Philippines are the
provinces, cities, municipalities, and barangays. Here shall be autonomous regions in Muslim
Mindanao ,and the Cordilleras as hereinafter provided. 29
Sec. 2. The territorial and political subdivisions shall enjoy local autonomy. 30
xxx xxx xxx
See. 15. Mere shall be created autonomous regions in Muslim Mindanao and in the
Cordilleras consisting of provinces, cities, municipalities, and geographical areas sharing
common and distinctive historical and cultural heritage, economic and social structures, and
other relevant characteristics within the framework of this Constitution and the national
sovereignty as well as territorial integrity of the Republic of the Philippines. 31
An autonomous government that enjoys autonomy of the latter category [CONST. (1987),
art. X, sec. 15.] is subject alone to the decree of the organic act creating it and accepted
principles on the effects and limits of "autonomy." On the other hand, an autonomous
government of the former class is, as we noted, under the supervision of the national
government acting through the President (and the Department of Local Government). 32 If
the Sangguniang Pampook (of Region XII), then, is autonomous in the latter sense, its acts
are, debatably beyond the domain of this Court in perhaps the same way that
the internal acts, say, of the Congress of the Philippines are beyond our jurisdiction. But if it
is autonomous in the former category only, it comes unarguably under our jurisdiction. An
examination of the very Presidential Decree creating the autonomous governments of
Mindanao persuades us that they were never meant to exercise autonomy in the second
sense, that is, in which the central government commits an act of self-immolation.
Presidential Decree No. 1618, in the first place, mandates that "[t]he President shall have
the power of general supervision and control over Autonomous Regions." 33 In the second
78
place, the Sangguniang Pampook, their legislative arm, is made to discharge chiefly
administrative services, thus:
SEC. 7. Powers of the Sangguniang Pampook. The Sangguniang Pampook shall exercise local
legislative powers over regional affairs within the framework of national development plans,
policies and goals, in the following areas:
(1) Organization of regional administrative system;
(2) Economic, social and cultural development of the Autonomous Region;
(3) Agricultural, commercial and industrial programs for the Autonomous Region;
(4) Infrastructure development for the Autonomous Region;
(5) Urban and rural planning for the Autonomous Region;
(6) Taxation and other revenue-raising measures as provided for in this Decree;
(7) Maintenance, operation and administration of schools established by the Autonomous
Region;
(8) Establishment, operation and maintenance of health, welfare and other social services,
programs and facilities;
(9) Preservation and development of customs, traditions, languages and culture indigenous
to the Autonomous Region; and
(10) Such other matters as may be authorized by law,including the enactment of such
measures as may be necessary for the promotion of the general welfare of the people in the
Autonomous Region.
The President shall exercise such powers as may be necessary to assure that enactment and
acts of the Sangguniang Pampook and the Lupong Tagapagpaganap ng Pook are in
compliance with this Decree, national legislation, policies, plans and programs.
The Sangguniang Pampook shall maintain liaison with the Batasang Pambansa. 34
Hence, we assume jurisdiction. And if we can make an inquiry in the validity of the expulsion
in question, with more reason can we review the petitioner's removal as Speaker.
Briefly, the petitioner assails the legality of his ouster as Speaker on the grounds that: (1) the
Sanggunian, in convening on November 2 and 5, 1987 (for the sole purpose of declaring the
office of the Speaker vacant), did so in violation of the Rules of the Sangguniang Pampook
since the Assembly was then on recess; and (2) assuming that it was valid, his ouster was
ineffective nevertheless for lack of quorum.
Upon the facts presented, we hold that the November 2 and 5, 1987 sessions were invalid. It
is true that under Section 31 of the Region XII Sanggunian Rules, "[s]essions shall not be
suspended or adjourned except by direction of the Sangguniang Pampook," 35 but it provides
likewise that "the Speaker may, on [sic] his discretion, declare a recess of "short
intervals." 36 Of course, there is disagreement between the protagonists as to whether or
not the recess called by the petitioner effective November 1 through 15, 1987 is the "recess
of short intervals" referred to; the petitioner says that it is while the respondents insist that,
to all intents and purposes, it was an adjournment and that "recess" as used by their Rules
only refers to "a recess when arguments get heated up so that protagonists in a debate can
talk things out informally and obviate dissenssion [sic] and disunity. 37 The Court agrees with
the respondents on this regard, since clearly, the Rules speak of "short intervals." Secondly,
the Court likewise agrees that the Speaker could not have validly called a recess since the
Assembly had yet to convene on November 1, the date session opens under the same
Rules. 38 Hence, there can be no recess to speak of that could possibly interrupt any session.
But while this opinion is in accord with the respondents' own, we still invalidate the twin
sessions in question, since at the time the petitioner called the "recess," it was not a settled
matter whether or not he could. do so. In the second place, the invitation tendered by the
Committee on Muslim Affairs of the House of Representatives provided a plausible reason
for the intermission sought. Thirdly, assuming that a valid recess could not be called, it does
not appear that the respondents called his attention to this mistake. What appears is that
instead, they opened the sessions themselves behind his back in an apparent act of mutiny.
Under the circumstances, we find equity on his side. For this reason, we uphold the "recess"
called on the ground of good faith.
It does not appear to us, moreover, that the petitioner had resorted to the aforesaid
"recess" in order to forestall the Assembly from bringing about his ouster. This is not
apparent from the pleadings before us. We are convinced that the invitation was what
precipitated it.
In holding that the "recess" in question is valid, we are not to be taken as establishing a
precedent, since, as we said, a recess can not be validly declared without a session having
been first opened. In upholding the petitioner herein, we are not giving him a carte
blanche to order recesses in the future in violation of the Rules, or otherwise to prevent the
lawful meetings thereof.
Neither are we, by this disposition, discouraging the Sanggunian from reorganizing itself
pursuant to its lawful prerogatives. Certainly, it can do so at the proper time. In the event
that be petitioner should initiate obstructive moves, the Court is certain that it is armed with
enough coercive remedies to thwart them. 39
In view hereof, we find no need in dwelling on the issue of quorum.
79

WHEREFORE, premises considered, the petition is GRANTED. The Sangguniang Pampook,

Region XII, is ENJOINED to (1) REINSTATE the petitioner as Member, Sangguniang Pampook, IPINASIYA, na tutulan gaya ng dito ay mahigpit na TINUTUTULAN ang ano mang uri ng sugal
Region XII; and (2) REINSTATE him as Speaker thereof. No costs. dito sa lalawigan ng Laguna lalo’t higit ang Lotto;
SO ORDERED
IPINASIYA PA RIN na hilingin tulad ng dito ay hinihiling sa Panlalawigang pinuno ng
Philippine National Police (PNP) Col. [illegible] na mahigpit na pag-ibayuhin ang pagsugpo sa
LINA VS. PANO lahat ng uri ng illegal na sugal sa buong lalawigan ng Laguna lalo na ang "Jueteng." 3

As a result of this resolution of denial, respondent Calvento filed a complaint for declaratory
For our resolution is a petition for review on certiorari seeking the reversal of the decision 1 relief with prayer for preliminary injunction and temporary restraining order. In the said
dated February 10, 1997 of the Regional Trial Court of San Pedro, Laguna, Branch 93, complaint, respondent Calvento asked the Regional Trial Court of San Pedro Laguna, Branch
enjoining petitioners from implementing or enforcing Kapasiyahan Bilang 508, Taon 1995, of 93, for the following reliefs: (1) a preliminary injunction or temporary restraining order,
the Sangguniang Panlalawigan of Laguna and its subsequent Order 2 dated April 21, 1997 ordering the defendants to refrain from implementing or enforcing Kapasiyahan Blg. 508, T.
denying petitioners’ motion for reconsideration.chanrob1es virtua1 1aw 1ibrary 1995; (2) an order requiring Hon. Municipal Mayor Calixto R Cataquiz to issue a business
permit for the operation of a lotto outlet; and (3) an order annulling or declaring as invalid
On December 29, 1995, respondent Tony Calvento was appointed agent by the Philippine Kapasiyahan Blg. 508, T. 1995.
Charity Sweepstakes Office (PCSO) to install Terminal OM 20 for the operation of lotto. He
asked Mayor Calixto Cataquiz, Mayor of San Pedro, Laguna, for a mayor’s permit to open the On February 10, 1997, the respondent judge, Francisco Dizon Paño, promulgated his
lotto outlet. This was denied by Mayor Cataquiz in a letter dated February 19, 1996. The decision enjoining the petitioners from implementing or enforcing resolution or Kapasiyahan
ground for said denial was an ordinance passed by the Sangguniang Panlalawigan of Laguna Blg. 508, T. 1995. The dispositive portion of said decision reads:chanrob1es virtua1 1aw
entitled Kapasiyahan Blg. 508, T. 1995 which was issued on September 18, 1995. The 1ibrary
ordinance reads:chanrob1es virtual 1aw library
WHEREFORE, premises considered, Defendants, their agents and representatives are hereby
ISANG KAPASIYAHAN TINUTUTULAN ANG MGA "ILLEGAL GAMBLING" LALO NA ANG LOTTO enjoined from implementing or enforcing resolution or kapasiyahan blg. 508, T. 1995 of the
SA LALAWIGAN NG LAGUNA Sangguniang Panlalawigan ng Laguna prohibiting the operation of the lotto in the province
of Laguna.
SAPAGKA’T, ang sugal dito sa lalawigan ng Laguna ay talamak na;
SO ORDERED. 4
SAPAGKA’T, ang sugal ay nagdudulot ng masasamang impluwensiya lalo’t higit sa mga
kabataan; Petitioners filed a motion for reconsideration which was subsequently denied in an Order
dated April 21, 1997, which reads:chanrob1es virtual 1aw library
KUNG KAYA’T DAHIL DITO, at sa mungkahi nina Kgg. Kgd. Juan M. Unico at Kgg. Kgd. Gat-Ala
A. Alatiit, pinangalawahan ni Kgg. Kgd. Meliton C. Larano at buong pagkakaisang Acting on the Motion for Reconsideration filed by defendants Jose D. Lina, Jr. and the
sinangayunan ng lahat ng dumalo sa pulong; Sangguniang Panlalawigan of Laguna, thru counsel, with the opposition filed by plaintiff’s
80
counsel and the comment thereto filed by counsel for the defendants which were duly
noted, the Court hereby denies the motion for lack of merit.
SO ORDERED. 5 franchise
On May 23, 1997, petitioners filed this petition alleging that the following errors were
committed by the respondent trial court:chanrob1es virtual 1aw library
I authorized by the national government. 11 He argues that this is based on the principle that
THE TRIAL COURT ERRED IN ENJOINING THE PETITIONERS FROM IMPLEMENTING
KAPASIYAHAN BLG. 508, T. 1995 OF THE SANGGUNIANG PANLALAWIGAN OF LAGUNA
PROHIBITING THE OPERATION OF THE LOTTO IN THE PROVINCE OF LAGUNA.
II
THE TRIAL COURT FAILED TO APPRECIATE THE ARGUMENT POSITED BY THE PETITIONERS
THAT BEFORE ANY GOVERNMENT PROJECT OR PROGRAM MAY BE IMPLEMENTED BY THE
NATIONAL AGENCIES OR OFFICES, PRIOR CONSULTATION AND APPROVAL BY THE LOCAL
GOVERNMENT UNITS CONCERNED AND OTHER CONCERNED SECTORS IS REQUIRED.
Petitioners contend that the assailed resolution is a valid policy declaration of the Provincial
Government of Laguna of its vehement objection to the operation of lotto and all forms of
gambling. It is likewise a valid exercise of the provincial government’s police power under
the General Welfare Clause of Republic Act 7160, otherwise known as the Local Government
Code of 1991. 6 They also maintain that respondent’s lotto operation is illegal because no
prior consultations and approval by the local government were sought before it was
implemented contrary to the express provisions of Sections 2 (c) and 27 of R.A. 7160 .
7cralaw : red
For his part, respondent Calvento argues that the questioned resolution is, in effect, a
curtailment of the power of the state since in this case the national legislature itself had
already declared lotto as legal and permitted its operations around the country. 8 As for the
allegation that no prior consultations and approval were sought from the sangguniang
panlalawigan of Laguna, respondent Calvento contends this is not mandatory since such a
requirement is merely stated as a declaration of policy and not a self-executing provision of
the Local Government Code of 1991. 9 He also states that his operation of the lotto system
is legal because of the authority given to him by the PCSO, which in turn had been granted a
to operate the lotto by Congress. 10
The Office of the Solicitor General (OSG), for the State, contends that the Provincial
Government of Laguna has no power to prohibit a form of gambling which has been
ordinances should not contravene statutes as municipal governments are merely agents of
the national government. The local councils exercise only delegated legislative powers which
have been conferred on them by Congress. This being the case, these councils, as delegates,
cannot be superior to the principal or exercise powers higher than those of the latter. The
OSG also adds that the question of whether gambling should be permitted is for Congress to
determine, taking into account national and local interests. Since Congress has allowed the
PCSO to operate lotteries which PCSO seeks to conduct in Laguna, pursuant to its legislative
grant of authority, the province’s Sangguniang Panlalawigan cannot nullify the exercise of
said authority by preventing something already allowed by Congress.
The issues to be resolved now are the following: (1) whether Kapasiyahan Blg. 508, T. 1995
of the Sangguniang Panlalawigan of Laguna and the denial of a mayor’s permit based
thereon are valid; and (2) whether prior consultations and approval by the concerned
Sanggunian are needed before a lotto system can be operated in a given local government
unit.
The entire controversy stemmed from the refusal of Mayor Cataquiz to issue a mayor’s
permit for the operation of a lotto outlet in favor of private Respondent. According to the
mayor, he based his decision on an existing ordinance prohibiting the operation of lotto in
the province of Laguna. The ordinance, however, merely states the "objection" of the
council to the said game. It is but a mere policy statement on the part of the local council,
which is not self-executing. Nor could it serve as a valid ground to prohibit the operation of
the lotto system in the province of Laguna. Even petitioners admit as much when they
stated in their petition that:chanrob1es virtua1 1aw 1ibrary
5.7. The terms of the Resolution and the validity thereof are express and clear. The
81

Resolution is a policy declaration of the Provincial Government of Laguna of its vehement In our system of government, the power of local government units to legislate and enact
opposition and/or objection to the operation of and/or all forms of gambling including the ordinances and resolutions is merely a delegated power coming from Congress. As held in
Lotto operation in the Province of Laguna. 12 Tatel v. Virac, 13 ordinances should not contravene an existing statute enacted by Congress.
The reasons for this is obvious, as elucidated in Magtajas v. Pryce Properties Corp.
As a policy statement expressing the local government’s objection to the lotto, such 14chanrob1es virtua1 1aw 1ibrary
resolution is valid. This is part of the local government’s autonomy to air its views which
may be contrary to that of the national government’s. However, this freedom to exercise Municipal governments are only agents of the national government. Local councils exercise
contrary views does not mean that local governments may actually enact ordinances that go only delegated legislative powers conferred upon them by Congress as the national
against laws duly enacted by Congress. Given this premise, the assailed resolution in this lawmaking body. The delegate cannot be superior to the principal or exercise powers higher
case could not and should not be interpreted as a measure or ordinance prohibiting the than those of the latter. It is a heresy to suggest that the local government units can undo
operation of lotto. the acts of Congress, from which they have derived their power in the first place, and negate
by mere ordinance the mandate of the statute.
The game of lotto is a game of chance duly authorized by the national government through
an Act of Congress. Republic Act 1169, as amended by Batas Pambansa Blg. 42, is the law Municipal corporations owe their origin to, and derive their powers and rights wholly from
which grants a franchise to the PCSO and allows it to operate the lotteries. The pertinent the legislature. It breathes into them the breath of life, without which they cannot exist. As
provision reads:chanrob1es virtual 1aw library it creates, so it may destroy. As it may destroy, it may abridge and control. Unless there is
some constitutional limitation on the right, the legislature might, by a single act, and if we
SECTION 1. The Philippine Charity Sweepstakes Office. — The Philippine Charity can suppose it capable of so great a folly and so great a wrong, sweep from existence all of
Sweepstakes Office, hereinafter designated the Office, shall be the principal government the municipal corporations in the state, and the corporation could not prevent it. We know
agency for raising and providing for funds for health programs, medical assistance and of no limitation on the right so far as the corporation themselves are concerned. They are,
services and charities of national character, and as such shall have the general powers so to phrase it, the mere tenants at will of the legislature (citing Clinton v. Ceder Rapids, etc.
conferred in section thirteen of Act Numbered One thousand four hundred fifty-nine, as Railroad Co., 24 Iowa 455).
amended, and shall have the authority:chanrob1es virtual 1aw library
Nothing in the present constitutional provision enhancing local autonomy dictates a
A. To hold and conduct charity sweepstakes races, lotteries, and other similar activities, in different conclusion.
such frequency and manner, as shall be determined, and subject to such rules and
regulations as shall be promulgated by the Board of Directors. The basic relationship between the national legislature and the local government units has
not been enfeebled by the new provisions in the Constitution strengthening the policy of
This statute remains valid today. While lotto is clearly a game of chance, the national local autonomy. Without meaning to detract from that policy, we here confirm that
government deems it wise and proper to permit it. Hence, the Sangguniang Panlalawigan of Congress retains control of the local government units although in significantly reduced
Laguna, a local government unit, cannot issue a resolution or an ordinance that would seek degree now than under our previous Constitutions. The power to create still includes the
to prohibit permits. Stated otherwise, what the national legislature expressly allows by law, power to destroy. The power to grant still includes the power to withhold or recall. True,
such as lotto, a provincial board may not disallow by ordinance or resolution. there are certain notable innovations in the Constitution, like the direct conferment on the
local government units of the power to tax (citing Art. X, Sec. 5, Constitution), which cannot
82

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.
15
Ours is still a unitary form of government, not a federal state. Being so, any form of
autonomy granted to local governments will necessarily be limited and confined within the
extent allowed by the central authority. Besides, the principle of local autonomy under the
1987 Constitution simply means "decentralization." It does not make local governments
sovereign within the state or an "imperium in imperio." 16chanrob1es virtua1 1aw 1ibrary
To conclude our resolution of the first issue, respondent mayor of San Pedro, cannot avail of
Kapasiyahan Bilang 508, Taon 1995, of the Provincial Board of Laguna as justification to
prohibit lotto in his municipality. For said resolution is nothing but an expression of the local
legislative unit concerned. The Board’s enactment, like spring water, could not rise above its
source of power, the national legislature.
As for the second issue, we hold that petitioners erred in declaring that Sections 2 (c) and 27
of Republic Act 7160, otherwise known as the Local Government Code of 1991, apply
mandatorily in the setting up of lotto outlets around the country. These provisions state.
From a careful reading of said provisions, we find that these apply only to national programs
and/or projects which are to be implemented in a particular local community. Lotto is
neither a program nor a project of the national government, but of a charitable institution,
the PCSO. Though sanctioned by the national government, it is far fetched to say that lotto
falls within the contemplation of Sections 2 (c) and 27 of the Local Government Code.
Section 27 of the Code should be read in conjunction with Section 26 thereof. 17 Section 26
reads:chanrob1es virtual 1aw library
SECTION 26. Duty of National Government Agencies in the Maintenance of Ecological
Balance. It shall be the duty of every national agency or government-owned or controlled
corporation authorizing or involved in the planning and implementation of any project or
program that may cause pollution, climatic change, depletion of non-renewable resources,
loss of crop land, range-land, or forest cover, and extinction of animal or plant species, to
consult with the local government units, nongovernmental organizations, and other sectors
concerned and explain the goals and objectives of the project or program, its impact upon
the people and the community in terms of environmental or ecological balance, and the
measures that will be undertaken to prevent or minimize the adverse effects
thereof.chanrob1es virtua1 1aw 1ibrary

SECTION 2. Declaration of Policy. — . . . Thus, the projects and programs mentioned in Section 27 should be interpreted to mean
projects and programs whose effects are among those enumerated in Section 26 and 27, to
(c) It is likewise the policy of the State to require all national agencies and offices to conduct wit, those that: (1) may cause pollution; (2) may bring about climatic change; (3) may cause
periodic consultations with appropriate local government units, non-governmental and the depletion of non-renewable resources; (4) may result in loss of crop land, range-land, or
people’s organizations, and other concerned sectors of the community before any project or forest cover; (5) may eradicate certain animal or plant species from the face of the planet;
program is implemented in their respective jurisdictions. and (6) other projects or programs that may call for the eviction of a particular group of
people residing in the locality where these will be implemented. Obviously, none of these
SECTION 27. Prior Consultations Required. — No project or program shall be implemented effects will be produced by the introduction of lotto in the province of Laguna.
by government authorities unless the consultations mentioned in Section 2 (c) and 26
hereof are complied with, and prior approval of the sanggunian concerned is obtained; Moreover, the argument regarding lack of consultation raised by petitioners is clearly an
Provided, that occupants in areas where such projects are to be implemented shall not be afterthought on their part. There is no indication in the letter of Mayor Cataquiz that this
evicted unless, appropriate relocation sites have been provided, in accordance with the was one of the reasons for his refusal to issue a permit. That refusal was predicated solely
provisions of the Constitution. but erroneously on the provisions of Kapasiyahan Blg. 508, Taon 1995, of the Sangguniang
Panlalawigan of Laguna.
83
In sum, we find no reversible error in the RTC decision enjoining Mayor Cataquiz from
enforcing or implementing the Kapasiyahan Blg. 508, T. 1995, of the Sangguniang
Panlalawigan of Laguna. That resolution expresses merely a policy statement of the Laguna
provincial board. It possesses no binding legal force nor requires any act of implementation.
It provides no sufficient legal basis for respondent mayor’s refusal to issue the permit sought
by private respondent in connection with a legitimate business activity authorized by a law
passed by Congress.
WHEREFORE, the petition is DENIED for lack of merit. The Order of the Regional Trial Court
of San Pedro, Laguna enjoining the petitioners from implementing or enforcing Resolution
or Kapasiyahan Blg. 508, T. 1995, of the Provincial Board of Laguna is hereby AFFIRMED. No
costs.
SO ORDERED.
PLAZA II v. CASSION
Re: Devolution (Sec. 17 & 24, LGC 1991)
FACTS: Upon the implementation of the LGC, some functions of agencies, like that of the
DSWD, were devolved to LGUs. The City Council of Butuan passed a resolution authorizing
its mayor to sign an MOA for the devolution of the DSWD to the city. Pursuant to said MOA,
the services, personnel. assets and liabilities and technical support systems of DSWD were
transferred to its city counterpart. By virtue of the same MOA, the mayor issued an EO,
reconstituting the City Social Services Development Office (CSSDO), devolving or adding
thereto 19 national DSWD employees headed by petitioner Virginia Tuazon who was also
designated as OIC of CSSDO. The CSSDO was originally composed of herein respondents,
headed by Carolina M. Cassion. Aggrieved by such development, they refused to recognize
petitioner Tuazon as their new head and to report at the DSWD building. They contended
that the issuance of the reconstituting EOby Mayor Plaza and the designation of petitioner
Tuazon as Officer-in-charge of the CSSDO are illegal. Despite Mayor Plazas series of orders to
respondents to report for work at the DSWD building, they failed to do so. Because of this,
Mayor Plaza issued an order dropping respondents from the rolls pursuant to the CSC
Memorandum Circular.
ISSUES:
(1) WON the dropping of respondents from the roll is legal.
(2) WON respondents were denied due process for lack of notice and hearing.
(3) WON  the contention of respondents that it was really the intention of the mayor to
systematically remove them was meritorious.
(4) WON the EO was valid.
(5) WON respondents' right to security of tenure has been violated as they were transferred
without their consent.
HELD:
(1) Yes. The CSC Memorandum Circular provides that, "officers and employees who are
absent for at least thirty (30) days without approved leave are considered on Absence
Without Official Leave (AWOL) and may be dropped from the service without prior notice."
(2)  No. The separation of an employee who is dropped from the rolls is a non-disciplinary
action wherein the respondent is entitled to notice and hearing. In the above-quoted
provision, an officer or employee may be dropped from the rolls if he was continuously
absent without official leave for a period of at least thirty days. Prior notice is not necessary.
(3) No. No evidence was submitted by the appellants to support such contention.
(4) Yes. Section 17 of the Local Government Code authorizes the devolution of personnel,
assets and liabilities, records of basic services, and facilities of a national government agency
to local government units. Under this Code, the term devolution refers to the act by which
the national government confers power and authority upon the various local government
units to perform specific functions and responsibilities. Furthemore,  devolved permanent
personnel shall be automatically reappointed by the local chief executive concerned
84
immediately upon their transfer. It is thus clear that Mayor Plaza is empowered to issue the
EO in order to give effect to the devolution decreed by the LGC. As the local chief
executive, Mayor Plaza has the authority to reappoint devolved personnel and may
designate an employee to take charge of a department until the appointment of a regular
head, as was done by the Mayor here. CSC Memorandum Circular No. 19, Series of 1992,
provides further that heads of departments appointed by the local chief executive must
have the concurrence of the majority of all the members of
the Sanggunian concerned. While initially, the Sanggunian rejected petitioner Tuazons
appointment as the City Government Department Head II of the CSSDO, however, it later
confirmed her appointment.
(5) No. There was no such transfer. Transfer is a movement from one position to another
which is of equivalent rank, level or salary without break in service and may be imposed as
an administrative penalty. The change of respondents place of work from the original CSSDO
office to the DSWD building is not a transfer. It was only a physical transfer of their office to
a new one done in the interest of public service. There were no new movements or
appointments from one position to another.
Cordillera board coalition v. coa
CORTES, J.:
In these consolidated petitions, the constitutionality of Executive Order No. 220, dated July
15, 1987, which created the (Cordillera Administrative Region, is assailed on the primary
ground that it pre-empts the enactment of an organic act by the Congress and the creation
of' the autonomous region in the Cordilleras conditional on the approval of the act through
a plebiscite.
Relative to the creation of autonomous regions, the constitution, in Article X, provides:
AUTONOMOUS REGIONS
Sec. 15. There shall be created autonomous regions in Muslim Mindanao and in the
Cordilleras consisting of provinces, cities, municipalities, and geographical areas sharing
common and distinctive historical and cultural heritage, economic and social structures, and
other relevant characteristics within the framework of this Constitution and the national
sovereignty as well as territorial integrity of the Republic of the Philippines.
SEC. 16. The President shall exercise general supervision over autonomous regions to ensure
that laws are faithfully executed.
Sec. 17. All powers, functions, and responsibilities not granted Constitution or by law to the
autonomous regions shall be vested in the National Government.
Sec. 18. The Congress shall enact an organic act for each autonomous region with the
assistance and participation of the regional consultative commission composed of
representatives appointed by the President from a list of nominees from multi-sectoral
bodies. The organic act shall define the basic structure of government for the region
consisting of the executive department and legislative assembly, both of which shall be
elective and representative of the constituent political units. The organic acts shall likewise
provide for special courts with personal, family and property law jurisdiction consistent with
the provisions of this Constitution and national laws.
The creation of the autonomous region shall be effective when approved by majority of the
votes cast by the constituent units in a plebiscite called for the purpose, provided that only
provinces, cities, and geographic areas voting favorably in such plebiscite shall be included in
the autonomous region.
Sec. 19. The first Congress elected under this Constitution shall, within eighteen months
from the time of organization of both Houses, pass the organic acts for the autonomous
regions in Muslim Mindanao and the Cordilleras.
Sec. 20. Within its territorial jurisdiction and subject to the provisions of this Constitution
and national laws, the organic act of autonomous regions shall provide for legislative powers
over:
(1) Administrative organization;
(2) Creation of sources of revenues;
(3) Ancestral domain and natural resources;
(4) Personal, family and property relations;
(5) Regional urban and rural planning development;
(6) Economic, social and tourism development ;
(7) Educational policies;
(8) Preservation and development of the cultural heritage; and
(9) Such other matters as may be authorized by law for the promotion of the general
welfare of the people of the region.
Sec. 21. The preservation of peace and order within the regions shall be the responsibility of
the local police agencies which shall be organized, maintained, supervised, and utilized in
85
accordance with applicable laws. The defense and security of the regions shall be the
responsibility of the National Government.
A study of E.O. No. 220 would be incomplete Without reference to its historical background.
In April 1986, just after the EDSA Revolution, Fr. Conrado M. Balweg, S.V.D., broke off on
ideological grounds from the Communist Party of the Philippines (CPP) and its military arm
the New People's Army. (NPA).
After President Aquino was installed into office by People Power, she advocated a policy of
national reconciliation. She called on all revolutionary forces to a peace dialogue. The CPLA
heeded this call of the President. After the preliminary negotiations, President Aquino and
some members of her Cabinet flew to Mt. Data in the Mountain Province on September 13,
1986 and signed with Fr. Conrado M. Balweg (As Commander of the CPLA and Ama Mario
Yag-ao (as President of Cordillera Bodong Administration, the civil government of the CPLA a
ceasefire agreement that signified the cessation of hostilities (WHEREAS No. 7, E.O. 220).
The parties arrived at an agreement in principle: the Cordillera people shall not undertake
their demands through armed and violent struggle but by peaceful means, such as political
negotiations. The negotiations shall be a continuing process until the demands of the
Cordillera people shall have been substantially granted.
On March 27, 1987, Ambassador Pelaez [Acting as Chief Negotiator of the government], in
pursuance of the September 13, 1986 agreement, flew to the Mansion House, Baguio City,
and signed with Fr. Balweg (as Chairman of the Cordillera panel) a joint agreement,
paragraphs 2 and 3 of which state:
Par. 2- Work together in drafting an Executive Order to create a preparatory body that could
perform policy-making and administrative functions and undertake consultations and
studies leading to a draft organic act for the Cordilleras.
Par. 3- Have representatives from the Cordillera panel join the study group of the R.P. Panel
in drafting the Executive Order.
Pursuant to the above joint agreement, E.O. 220 was drafted by a panel of the Philippine
government and of the representatives of the Cordillera people.
On July 15, 1987, President Corazon C. Aquino signed the joint draft into law, known now as
E.O. 220. [Rejoinder G.R. No. 82217, pp. 2-3].
Executive Order No. 220, issued by the President in the exercise of her legislative powers
under Art. XVIII, sec. 6 of the 1987 Constitution, created the Cordillera Administrative
Region (CAR) , which covers the provinces of Abra, Benguet, Ifugao, Kalinga-Apayao and
Mountain Province and the City of Baguio [secs. 1 and 2]. It was created to accelerate
economic and social growth in the region and to prepare for the establishment of the
autonomous region in the Cordilleras [sec. 3]. Its main function is to coordinate the planning
and implementation of programs and services in the region, particularly, to coordinate with
the local government units as well as with the executive departments of the National
Government in the supervision of field offices and in identifying, planning, monitoring, and
accepting projects and activities in the region [sec. 5]. It shall also monitor the
implementation of all ongoing national and local government projects in the region [sec.
20]. The CAR shall have a Cordillera Regional Assembly as a policy-formulating body and a
Cordillera Executive Board as an implementing arm [secs. 7, 8 and 10]. The CAR and the
Assembly and Executive Board shall exist until such time as the autonomous regional
government is established and organized [sec. 17].
Explaining the rationale for the issuance of E.O. No. 220, its last "Whereas" clause provides:
WHEREAS, pending the convening of the first Congress and the enactment of the organic act
for a Cordillera autonomous region, there is an urgent need, in the interest of national
security and public order, for the President to reorganize immediately the existing
administrative structure in the Cordilleras to suit it to the existing political realities therein
and the Government's legitimate concerns in the areas, without attempting to pre-empt the
constitutional duty of the first Congress to undertake the creation of an autonomous region
on a permanent basis.
During the pendency of this case, Republic Act No. 6766 entitled "An Act Providing for an
Organic Act for the Cordillera Autonomous Region," was enacted and signed into law. The
Act recognizes the CAR and the offices and agencies created under E.O. No. 220 and its
transitory nature is reinforced in Art. XXI of R.A. No. 6766, to wit:
SEC. 3. The Cordillera Executive Board, the Cordillera Region Assembly as well as all offices
and agencies created under Execute Order No. 220 shall cease to exist immediately upon
the ratification of this Organic Act.
All funds, properties and assets of the Cordillera Executive Board and the Cordillera Regional
Assembly shall automatically be transferred to the Cordillera Autonomous Government.
I
It is well-settled in our jurisprudence that respect for the inherent and stated powers and
prerogatives of the law-making body, as well as faithful adherence to the principle of
separation of powers, require that its enactment be accorded the presumption of
constitutionality. Thus, in any challenge to the constitutionality of a statute, the burden of
86
clearly and unequivocally proving its unconstitutionality always rests upon the challenger.
Conversely, failure to so prove will necessarily defeat the challenge.
We shall be guided by these principles in considering these consolidated petitions.
In these cases, petitioners principally argue that by issuing E.O. No. 220 the President, in the
exercise of her legislative powers prior to the convening of the first Congress under the 1987
Constitution, has virtually pre-empted Congress from its mandated task of enacting an
organic act and created an autonomous region in the Cordilleras. We have carefully studied
the Constitution and E.O. No. 220 and we have come to the conclusion that petitioners'
assertions are unfounded. Events subsequent to the issuance of E.O. No. 220 also bear out
this conclusion.
1. A reading of E.O. No. 220 will easily reveal that what it actually envisions is the
consolidation and coordination of the delivery of services of line departments and agencies
of the National Government in the areas covered by the administrative region as a step
preparatory to the grant of autonomy to the Cordilleras. It does not create the autonomous
region contemplated in the Constitution. It merely provides for transitory measures in
anticipation of the enactment of an organic act and the creation of an autonomous region.
In short, it prepares the ground for autonomy. This does not necessarily conflict with the
provisions of the Constitution on autonomous regions, as we shall show later.
The Constitution outlines a complex procedure for the creation of an autonomous region in
the Cordilleras. A regional consultative commission shall first be created. The President shall
then appoint the members of a regional consultative commission from a list of nominees
from multi-sectoral bodies. The commission shall assist the Congress in preparing the
organic act for the autonomous region. The organic act shall be passed by the first Congress
under the 1987 Constitution within eighteen months from the time of its organization and
enacted into law. Thereafter there shall be held a plebiscite for the approval of the organic
act [Art. X, sec. 18]. Only then, after its approval in the plebiscite, shall the autonomous
region be created.
Undoubtedly, all of these will take time. The President, in 1987 still exercising legislative
powers, as the first Congress had not yet convened, saw it fit to provide for some measures
to address the urgent needs of the Cordilleras in the meantime that the organic act had not
yet been passed and the autonomous region created. These measures we find in E.O. No.
220. The steps taken by the President are obviously perceived by petitioners, particularly
petitioner Yaranon who views E.O. No. 220 as capitulation to the Cordillera People's
Liberation Army (CPLA) of Balweg, as unsound, but the Court cannot inquire into the
wisdom of the measures taken by the President, We can only inquire into whether or not
the measures violate the Constitution. But as we have seen earlier, they do not.
2. Moreover, the transitory nature of the CAR does not necessarily mean that it is, as
petitioner Cordillera Broad Coalition asserts, "the interim autonomous region in the
Cordilleras" [Petition, G.R. No. 79956, p. 25].
The Constitution provides for a basic structure of government in the autonomous region
composed of an elective executive and legislature and special courts with personal, family
and property law jurisdiction [Art. X, sec. 18]. Using this as a guide, we find that E.O. No. 220
did not establish an autonomous regional government. It created a region, covering a
specified area, for administrative purposes with the main objective of coordinating the
planning and implementation of programs and services [secs. 2 and 5]. To determine policy,
it created a representative assembly, to convene yearly only for a five-day regular session,
tasked with, among others, identifying priority projects and development programs [sec. 9].
To serve as an implementing body, it created the Cordillera Executive Board composed of
the Mayor of Baguio City, provincial governors and representatives of the Cordillera Bodong
Administration, ethno-linguistic groups and non-governmental organizations as regular
members and all regional directors of the line departments of the National Government
as ex-officio members and headed by an Executive Director [secs. 10 and 11]. The bodies
created by E.O. No. 220 do not supplant the existing local governmental structure, nor are
they autonomous government agencies. They merely constitute the mechanism for an
"umbrella" that brings together the existing local governments, the agencies of the National
Government, the ethno-linguistic groups or tribes, and non-governmental organizations in a
concerted effort to spur development in the Cordilleras.
The creation of the CAR for purposes of administrative coordination is underscored by the
mandate of E.O. No. 220 for the President and appropriate national departments and
agencies to make available sources of funds for priority development programs and projects
recommended by the CAR [sec. 21] and the power given to the President to call upon the
appropriate executive departments and agencies of the National Government to assist the
CAR [sec. 24].
3. Subsequent to the issuance of E.O. No. 220, the Congress, after it was convened, enacted
Republic Act No. 6658 which created the Cordillera Regional Consultative Commission. The
President then appointed its members. The commission prepared a draft organic act which
became the basis for the deliberations of the Senate and the House of Representatives. The
result was Republic Act No. 6766, the organic act for the Cordillera autonomous region,
87
which was signed into law on October 23, 1989. A plebiscite for the approval of the organic
act, to be conducted shortly, shall complete the process outlined in the Constitution.
In the meantime, E.O. No. 220 had been in force and effect for more than two years and we
find that, despite E.O. No. 220, the autonomous region in the Cordilleras is still to be
created, showing the lack of basis of petitioners' assertion. Events have shown that
petitioners' fear that E.O. No. 220 was a "shortcut" for the creation of the autonomous
region in the Cordilleras was totally unfounded.
Clearly, petitioners' principal challenge has failed.
II
A collateral issue raised by petitioners is the nature of the CAR: whether or not it is a
territorial and political subdivision. The Constitution provides in Article X:
Section 1. The territorial and political subdivisions of the Republic of the Philippines are the
provinces, cities, municipalities, and barangays. There shall be autonomous regions in
Muslim Mindanao and the Cordilleras as hereinafter provided.
x x x           x x x          x x x
Sec. 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 approval by a majority of the votes
cast in a plebiscite in the political units directly affected.
We have seen earlier that the CAR is not the autonomous region in the Cordilleras
contemplated by the Constitution, Thus, we now address petitioners' assertion that E. 0. No.
220 contravenes the Constitution by creating a new territorial and political subdivision.
After carefully considering the provisions of E.O. No. 220, we find that it did not create a
new territorial and political subdivision or merge existing ones into a larger subdivision.
1. Firstly, the CAR is not a public corporation or a territorial and political subdivision. It does
not have a separate juridical personality, unlike provinces, cities and municipalities. Neither
is it vested with the powers that are normally granted to public corporations, e.g. the power
to sue and be sued, the power to own and dispose of property, the power to create its own
sources of revenue, etc. As stated earlier, the CAR was created primarily to coordinate the
planning and implementation of programs and services in the covered areas.
The creation of administrative regions for the purpose of expediting the delivery of services
is nothing new.1âwphi1 The Integrated Reorganization Plan of 1972, which was made as
part of the law of the land by virtue of Presidential Decree No. 1, established eleven (11)
regions, later increased to twelve (12), with definite regional centers and required
departments and agencies of the Executive Branch of the National Government to set up
field offices therein. The functions of the regional offices to be established pursuant to the
Reorganization Plan are: (1) to implement laws, policies, plans, programs, rules and
regulations of the department or agency in the regional areas; (2) to provide economical,
efficient and effective service to the people in the area; (3) to coordinate with regional
offices of other departments, bureaus and agencies in the area; (4) to coordinate with local
government units in the area; and (5) to perform such other functions as may be provided
by law. [See Part II, chap. III, art. 1, of the Reorganization Plan].
We can readily see that the CAR is in the same genre as the administrative regions created
under the Reorganization Plan, albeit under E.O. No. 220 the operation of the CAR requires
the participation not only of the line departments and agencies of the National Government
but also the local governments, ethno-linguistic groups and non-governmental organizations
in bringing about the desired objectives and the appropriation of funds solely for that
purpose.
2. Then, considering the control and supervision exercised by the President over the CAR
and the offices created under E.O. No. 220, and considering further the indispensable
participation of the line departments of the National Government, the CAR may be
considered more than anything else as a regional coordinating agency of the National
Government, similar to the regional development councils which the President may create
under the Constitution [Art. X, sec. 14]. These councils are "composed of local government
officials, regional heads of departments and other government offices, and representatives
from non-governmental organizations within the region for purposes of administrative
decentralization to strengthen the autonomy of the units therein and to accelerate the
economic and social growth and development of the units in the region." [Ibid.] In this wise,
the CAR may be considered as a more sophisticated version of the regional development
council.
III
Finally, petitioners incidentally argue that the creation of the CAR contravened the
constitutional guarantee of the local autonomy for the provinces (Abra, Benguet, Ifugao,
Kalinga-Apayao and Mountain Province) and city (Baguio City) which compose the CAR.
We find first a need to clear up petitioners' apparent misconception of the concept of local
autonomy.
It must be clarified that the constitutional guarantee of local autonomy in the Constitution
[Art. X, sec. 2] refers to the administrative autonomy of local government units or, cast in
88
more technical language, the decentralization of government authority [Villegas v. Subido,
G.R. No. L-31004, January 8, 1971, 37 SCRA 1]. Local autonomy is not unique to the 1987
Constitution, it being guaranteed also under the 1973 Constitution [Art. II, sec. 10]. And
while there was no express guarantee under the 1935 Constitution, the Congress enacted
the Local Autonomy Act (R.A. No. 2264) and the Decentralization Act (R.A. No. 5185), which
ushered the irreversible march towards further enlargement of local autonomy in the
country [Villegas v. Subido, supra.]
On the other hand, the creation of autonomous regions in Muslim Mindanao and the
Cordilleras, which is peculiar to the 1987 Constitution contemplates the grant
of political  autonomy and not just administrative autonomy these regions. Thus, the
provision in the Constitution for an autonomous regional government with a basic structure
consisting of an executive department and a legislative assembly and special courts with
personal, family and property law jurisdiction in each of the autonomous regions [Art. X,
sec. 18].
As we have said earlier, the CAR is a mere transitory coordinating agency that would
prepare the stage for political autonomy for the Cordilleras. It fills in the resulting gap in the
process of transforming a group of adjacent territorial and political subdivisions already
enjoying local or administrative autonomy into an autonomous region vested with political
autonomy.
Anent petitioners' objection, we note the obvious failure to show how the creation of the
CAR has actually diminished the local autonomy of the covered provinces and city. It cannot
be over-emphasized that pure speculation and a resort to probabilities are insufficient to
cause the invalidation of E.O. No. 220.
WHEREFORE, the petitions are DISMISSED for lack of merit.
SO ORDERED.
DISOMANGCOP V. DATUMANONG
TINGA, J.:
At stake in the present case is the fate of regional autonomy for Muslim Mindanao which is
the epoch-making, Constitution-based project for achieving national unity in diversity.
Challenged in the instant petition for certiorari, prohibition and mandamus with prayer for a
temporary restraining order and/or writ of preliminary injunction 1 (Petition) are the
constitutionality and validity of Republic Act No. 8999 (R.A. 8999), 2 entitled "An Act
Establishing An Engineering District in the First District of the Province of Lanao del Sur and
Appropriating Funds Therefor," and Department of Public Works and Highways (DPWH)
Department Order No. 119 (D.O. 119) 3 on the subject, "Creation of Marawi Sub-District
Engineering Office."
The Background
The uncontested legal and factual antecedents of the case follow.
For the first time in its history after three Constitutions, the Philippines ordained the
establishment of regional autonomy with the adoption of the 1987 Constitution. Sections
14 and 15, Article X mandate the creation of autonomous regions in Muslim Mindanao and in
the Cordilleras. Section 15 specifically provides that "[t]here shall be created autonomous
regions in Muslim Mindanao and in the Cordilleras consisting of provinces, cities,
municipalities, and geographical areas sharing common and distinctive historical and
cultural heritage, economic and social structures, and other relevant characteristics within
the framework of this Constitution and the national sovereignty as well as territorial
integrity of the Republic of the Philippines." To effectuate this mandate, the Charter devotes
a number of provisions under Article X.5
Pursuant to the constitutional mandate, Republic Act No. 6734 (R.A. 6734), entitled "An Act
Providing for An Organic Act for the Autonomous Region in Muslim Mindanao," was enacted
and signed into law on 1 August 1989. The law called for the holding of a plebiscite in the
provinces of Basilan, Cotabato, Davao del Sur, Lanao del Norte, Lanao del Sur, Maguindanao,
Palawan, South Cotabato, Sultan Kudarat, Sulu, Tawi-Tawi, Zamboanga del Norte, and
Zamboanga del Sur, and the cities of Cotabato, Dapitan, Dipolog, General Santos, Iligan,
Marawi, Pagadian, Puerto Princesa and Zamboanga. 6 In the ensuing plebiscite held on 19
November 1989, only four (4) provinces voted for the creation of an autonomous region,
namely: Lanao del Sur, Maguindanao, Sulu and Tawi-Tawi. These provinces became the
Autonomous Region in Muslim Mindanao (ARMM). 7 The law contains elaborate provisions
on the powers of the Regional Government and the areas of jurisdiction which are reserved
for the National Government.8
In accordance with R.A. 6734, then President Corazon C. Aquino issued on 12 October 1990,
Executive Order No. 426 (E.O. 426), entitled "Placing the Control and Supervision of the
Offices of the Department of Public Works and Highways within the Autonomous Region in
Muslim Mindanao under the Autonomous Regional Government, and for other purposes."
Sections 1 to 39 of the Executive Order are its operative provisions.
89
ARMM was formally organized on 6 November 1990. President Corazon C. Aquino flew to
Cotabato, the seat of the Regional Government, for the inauguration. At that point, she had
already signed seven (7) Executive Orders devolving to ARMM the powers of seven (7)
cabinet departments, namely: (1) local government; (2) labor and employment; (3) science
and technology; (4) public works and highways; (5) social welfare and development; (6)
tourism; and (7) environment and national resources. 10
Nearly nine (9) years later, on 20 May 1999, then Department of Public Works and Highways
(DPWH) Secretary Gregorio R. Vigilar issued D.O. 119 which reads, thus:
Subject: Creation of Marawi Sub-District Engineering Office
Pursuant to Sections 6 and 25 of Executive Order No. 124 dated 30 January 1987, there is
hereby created a DPWH Marawi Sub-District Engineering Office which shall have jurisdiction
over all national infrastructure projects and facilities under the DPWH within Marawi City
and the province of Lanao del Sur. The headquarters of the Marawi Sub-District Engineering
Office shall be at the former quarters of the Marawi City Engineering Office.
Personnel of the above-mentioned Sub-District Engineering Office shall be made up of
employees of the National Government Section of the former Marawi City Engineering
Office who are now assigned with the Iligan City Sub-District Engineering Office as may be
determined by the DPWH Region XII Regional Director. (Emphasis supplied)
Almost two (2) years later, on 17 January 2001, then President Joseph E. Estrada approved
and signed into law R.A. 8999. The text of the law reads:
AN ACT ESTABLISHING AN ENGINEERING DISTRICT IN THE FIRST DISTRICT OF THE PROVINCE
OF LANAO DEL SUR AND APPROPRIATING FUNDS THEREFOR
Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:
SECTION 1. The City of Marawi and the municipalities comprising the First District of the
Province of Lanao del Sur are hereby constituted into an engineering district to be known as
the First Engineering District of the Province of Lanao del Sur.
SEC. 2. The office of the engineering district hereby created shall be established in Marawi
City, Province of Lanao del Sur.
SEC. 3. The amount necessary to carry out the provisions of this Act shall be included in the
General Appropriations Act of the year following its enactment into law. Thereafter, such
sums as may be necessary for the maintenance and continued operation of the engineering
district office shall be included in the annual General Appropriations Act.
SEC. 4. This Act shall take effect upon its approval. (Emphasis supplied)
Congress later passecd Republic Act No. 9054 (R.A. 9054), entitled "An Act to Strengthen
and Expand the Organic Act for the Autonomous Region in Muslim Mindanao, Amending for
the Purpose Republic Act No. 6734, entitled An Act Providing for the Autonomous Region in
Muslim Mindanao, as Amended." Like its forerunner, R.A. 9054 contains detailed provisions
on the powers of the Regional Government and the retained areas of governance of the
National Government.11
R.A. 9054 lapsed into law12 on 31 March 2001. It was ratified in a plebiscite held on 14
August 2001. The province of Basilan and the City of Marawi also voted to join ARMM on
the same date. R.A. 6734 and R.A. 9054 are collectively referred to as the ARMM Organic
Acts.
On 23 July 2001, petitioners Arsadi M. Disomangcop (Disomangcop) and Ramir M.
Dimalotang (Dimalotang) addressed a petition to then DPWH Secretary Simeon A.
Datumanong, seeking the revocation of D.O. 119 and the non-implementation of R.A. 8999.
No action, however, was taken on the petition. 13
Consequently, petitioners Disomangcop and Dimalotang filed the instant petition, in their
capacity as Officer-in-Charge and District Engineer/Engineer II, respectively, of the First
Engineering District of the Department of Public Works and Highways, Autonomous Region
in Muslim Mindanao (DPWH-ARMM) in Lanao del Sur.
Petitioners seek the following principal reliefs: (1) to annul and set aside D.O. 119; (2) to
prohibit respondent DPWH Secretary from implementing D.O. 119 and R.A. 8999 and
releasing funds for public works projects intended for Lanao del Sur and Marawi City to the
Marawi Sub-District Engineering Office and other administrative regions of DPWH; and (3) to
compel the Secretary of the Department of Budget and Management (DBM) to release all
funds for public works projects intended for Marawi City and the First District of Lanao del
Sur to the DPWH-ARMM First Engineering District in Lanao del Sur only; and to compel
respondent DPWH Secretary to let the DPWH-ARMM First Engineering District in Lanao del
Sur implement all public works projects within its jurisdictional area. 14
The petition includes an urgent application for the issuance of a temporary restraining order
(TRO) and, after hearing, a writ of preliminary injunction, to enjoin respondent DBM
Secretary from releasing funds for public works projects in Lanao del Sur to entities other
than the DPWH-ARMM First Engineering District in Lanao del Sur, and also to restrain the
DPWH Secretary from allowing others besides the DPWH-ARMM First Engineering District in
Lanao del Sur to implement public works projects in Lanao del Sur. 15
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To support their petition, petitioners allege that D.O. 119 was issued with grave abuse of
discretion and that it violates the constitutional autonomy of the ARMM. They point out
that the challenged Department Order has tasked the Marawi Sub-District Engineering
Office with functions that have already been devolved to the DPWH-ARMM First
Engineering District in Lanao del Sur. 16
Petitioners also contend that R.A. 8999 is a piece of legislation that was not intelligently and
thoroughly studied, and that the explanatory note to House Bill No. 995 (H.B. 995) from
which the law originated is questionable. Petitioners assert as well that prior to the
sponsorship of the law, no public hearing nor consultation with the DPWH-ARMM was
made. The House Committee on Public Works and Highways (Committee) failed to invite a
single official from the affected agency. Finally, petitioners argue that the law was skillfully
timed for signature by former President Joseph E. Estrada during the pendency of the
impeachment proceedings.17
In its resolution of 8 October 2001, the Court required respondents to file their
comment.18 In compliance, respondents DPWH Secretary and DBM Secretary, through the
Solicitor General, filed on 7 January 2002, their Comment.
In their Comment,19 respondents, through the Office of the Solicitor General, maintain the
validity of D.O. 119, arguing that it was issued in accordance with Executive Order No. 124
(E.O. 124).20 In defense of the constitutionality of R.A. 8999, they submit that the powers of
the autonomous regions did not diminish the legislative power of Congress. 21 Respondents
also contend that the petitioners have no locus standi or legal standing to assail the
constitutionality of the law and the department order. They note that petitioners have no
personal stake in the outcome of the controversy. 22
Asserting their locus standi, petitioners in their Memorandum 23 point out that they will
suffer actual injury as a result of the enactments complained of. 24
Jurisdictional Considerations
First, the jurisdictional predicates.
The 1987 Constitution is explicit in defining the scope of judicial power. It establishes the
authority of the courts to determine in an appropriate action the validity of acts of the
political departments. It speaks of judicial prerogative in terms of duty. 25
Jurisprudence has laid down the following requisites for the exercise of judicial power: First,
there must be before the Court an actual case calling for the exercise of judicial review.
Second, the question before the Court must be ripe for adjudication. Third, the person
challenging the validity of the act must have standing to challenge. Fourth, the question of
constitutionality must have been raised at the earliest opportunity. Fifth, the issue of
constitutionality must be the very lis mota of the case. 26
In seeking to nullify acts of the legislature and the executive department on the ground that
they contravene the Constitution, the petition no doubt raises a justiciable controversy. As
held in Tañada v. Angara,27 "where an action of the legislative branch is seriously alleged to
have infringed the Constitution, it becomes not only the right but in fact the duty of the
judiciary to settle the dispute." But in deciding to take jurisdiction over this petition
questioning acts of the political departments of government, the Court will not review the
wisdom, merits, or propriety thereof, but will strike them down only on either of two
grounds: (1) unconstitutionality or illegality and (2) grave abuse of discretion. 28
For an abuse to be grave, the power must be exercised in an arbitrary or despotic manner
by reason of passion or personal hostility. The abuse of discretion must be patent and gross
as to amount to an evasion of a positive duty, or a virtual refusal to perform the duty
enjoined or to act in contemplation of law. There is grave abuse of discretion when
respondent acts in a capricious or whimsical manner in the exercise of its judgment as to be
equivalent to lack of jurisdiction.29
The challenge to the legal standing of petitioners cannot succeed. Legal standing or locus
standi is defined as a personal and substantial interest in the case such that the party has
sustained or will sustain direct injury as a result of the governmental act that is being
challenged. The term "interest" means a material interest, an interest in issue affected by
the decree, as distinguished from a mere interest in the question involved, or a mere
incidental interest.30
A party challenging the constitutionality of a law, act, or statute must show "not only that
the law is invalid, but also that he has sustained or is in immediate, or imminent danger of
sustaining some direct injury as a result of its enforcement, and not merely that he suffers
thereby in some indefinite way." He must show that he has been, or is about to be, denied
some right or privilege to which he is lawfully entitled, or that he is about to be subjected to
some burdens or penalties by reason of the statute complained of. 31
But following the new trend, this Court is inclined to take cognizance of a suit although it
does not satisfy the requirement of legal standing when paramount interests are involved.
In several cases, the Court has adopted a liberal stance on the locus standi of a petitioner
where the petitioner is able to craft an issue of transcendental significance to the people. 32
In the instant case, petitioner Disomangcop holds the position of Engineer IV. When he filed
this petition, he was the Officer-in-Charge, Office of the District Engineer of the First
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Engineering District of DPWH-ARMM, Lanao del Sur. On the other hand, petitioner
Dimalotang is an Engineer II and President of the rank and file employees also of the First
Engineering District of DPWH-ARMM in Lanao del Sur. Both are charged with the duty and
responsibility of supervising and implementing all public works projects to be undertaken
and being undertaken in Lanao del Sur which is the area of their jurisdiction. 33
It is thus not far-fetched that the creation of the Marawi Sub-District Engineering Office
under D.O. 119 and the creation of and appropriation of funds to the First Engineering
District of Lanao del Sur as directed under R.A. 8999 will affect the powers, functions and
responsibilities of the petitioners and the DPWH-ARMM. As the two offices have apparently
been endowed with functions almost identical to those of DPWH-ARMM First Engineering
District in Lanao del Sur, it is likely that petitioners are in imminent danger of being eased
out of their duties and, not remotely, even their jobs. Their material and substantial
interests will definitely be prejudiced by the enforcement of D.O. 119 and R.A. 8999. Such
injury is direct and immediate. Thus, they can legitimately challenge the validity of the
enactments subject of the instant case.
Points of Contention
In the petition before us, petitioners contend that R.A. 8999 and D.O. 119 are
unconstitutional and were issued with grave abuse of discretion.
We agree in part.
Republic Act No. 8999
At the outset, let it be made clear that it is not necessary to declare R.A. No. 8999
unconstitutional for the adjudication of this case. The accepted rule is that the Court will not
resolve a constitutional question unless it is the lis mota of the case, or if the case can be
disposed of or settled on other grounds. 34
The plain truth is the challenged law never became operative and was superseded or
repealed by a subsequent enactment.
The ARMM Organic Acts are deemed a part of the regional autonomy scheme. While they
are classified as statutes, the Organic Acts are more than ordinary statutes because they
enjoy affirmation by a plebiscite.35 Hence, the provisions thereof cannot be amended by an
ordinary statute, such as R.A. 8999 in this case. The amendatory law has to be submitted to
a plebiscite.
We quote excerpts of the deliberations of the Constitutional Commission:
FR. BERNAS. Yes, that is the reason I am bringing this up. This thing involves some rather far-
reaching consequences also in relation to the issue raised by Commissioner Romulo with
respect to federalism. Are we, in effect, creating new categories of laws? Generally, we have
statutes and constitutional provisions. Is this organic act equivalent to a constitutional
provision? If it is going to be equivalent to a constitutional provision, it would seem to me
that the formulation of the provisions of the organic act will have to be done by the
legislature, acting as a constituent assembly, and therefore, subject to the provisions of the
Article on Amendments. That is the point that I am trying to bring up. In effect, if we opt for
federalism, it would really involve an act of the National Assembly or Congress acting as a
constituent assembly and present amendments to this Constitution, and the end product
itself would be a constitutional provision which would only be amendable according to the
processes indicated in the Constitution.
MR. OPLE. Madam President, may I express my personal opinion in this respect.
I think to require Congress to act as a constituent body before enacting an organic act would
be to raise an autonomous region to the same level as the sovereign people of the whole
country. And I think the powers of the Congress should be quite sufficient in enacting a law,
even if it is now exalted to the level of an organic act for the purpose of providing a basic
law for an autonomous region without having to transform itself into a constituent
assembly. We are dealing still with one subordinate subdivision of the State even if it is now
vested with certain autonomous powers on which its own legislature can pass laws.
FR. BERNAS. So the questions I have raised so far with respect to this organic act are: What
segment of the population will participate in the plebiscite? In what capacity would the
legislature be acting when it passes this? Will it be a constituent assembly or merely a
legislative body? What is the nature, therefore, of this organic act in relation to ordinary
statutes and the Constitution? Finally, if we are going to amend this organic act, what
process will be followed?
MR. NOLLEDO. May I answer that, please, in the light of what is now appearing in our
report.
First, only the people who are residing in the units composing the regions should be allowed
to participate in the plebiscite. Second, the organic act has the character of a charter passed
by the Congress, not as a constituent assembly, but as an ordinary legislature and,
therefore, the organic act will still be subject to amendments in the ordinary legislative
process as now constituted, unless the Gentlemen has another purpose.
FR. BERNAS. But with plebiscite again.
MR. NOLLEDO. Those who will participate in the plebiscite are those who are directly
affected, the inhabitants of the units constitutive of the region. (Emphasis supplied) 36
92
Although R.A. 9054 was enacted later, it reaffirmed the imperativeness of the plebiscite
requirement.37 In fact, R.A. 9054 itself, being the second or later ARMM Organic Act, was
subjected to and ratified in a plebiscite.
The first ARMM Organic Act, R.A. 6074, as implemented by E.O. 426, devolved the functions
of the DPWH in the ARMM which includes Lanao del Sur (minus Marawi City at the time) 38 to
the Regional Government. By creating an office with previously devolved functions, R.A.
8999, in essence, sought to amend R.A. 6074. The amendatory law should therefore first
obtain the approval of the people of the ARMM before it could validly take effect. Absent
compliance with this requirement, R.A. 8999 has not even become operative.
From another perspective, R.A. 8999 was repealed and superseded by R.A. 9054. Where a
statute of later date clearly reveals an intention on the part of the legislature to abrogate a
prior act on the subject, that intention must be given effect.
Of course, the intention to repeal must be clear and manifest. 39 Implied repeal by
irreconcilable inconsistency takes place when the two statutes cover the same subject
matter; they are clearly inconsistent and incompatible with each other that they cannot be
reconciled or harmonized; and both cannot be given effect, that is, that one law cannot be
enforced without nullifying the other. 40
The Court has also held that statutes should be construed in light of the objective to be
achieved and the evil or mischief to be suppressed, and they should be given such
construction as will advance the object, suppress the mischief and secure the benefits
intended.41
R.A. 9054 is anchored on the 1987 Constitution. It advances the constitutional grant of
autonomy by detailing the powers of the ARG covering, among others, Lanao del Sur and
Marawi City, one of which is its jurisdiction over regional urban and rural planning. R.A.
8999, however, ventures to reestablish the National Government's jurisdiction over
infrastructure programs in Lanao del Sur. R.A. 8999 is patently inconsistent with R.A. 9054,
and it destroys the latter law's objective.
Clearly, R.A. 8999 is antagonistic to and cannot be reconciled with both ARMM Organic Acts,
R.A. 6734 and R.A. 9054. The kernel of the antagonism and disharmony lies in the regional
autonomy which the ARMM Organic Acts ordain pursuant to the Constitution. On the other
hand, R.A. 8999 contravenes true decentralization which is the essence of regional
autonomy.
Regional Autonomy Under
R.A. 6734 and R.A. 9054
The 1987 Constitution mandates regional autonomy to give a bold and unequivocal answer
to the cry for a meaningful, effective and forceful autonomy. 42 According to Commissioner
Jose Nolledo, Chairman of the Committee which drafted the provisions, it "is an indictment
against the status quo of a unitary system that, to my mind, has ineluctably tied the hands
of progress in our country . . . our varying regional characteristics are factors to capitalize on
to attain national strength through decentralization." 43
The idea behind the Constitutional provisions for autonomous regions is to allow the
separate development of peoples with distinctive cultures and traditions. 44 These cultures,
as a matter of right, must be allowed to flourish.45
Autonomy, as a national policy, recognizes the wholeness of the Philippine society in its
ethnolinguistic, cultural, and even religious diversities. It strives to free Philippine society of
the strain and wastage caused by the assimilationist approach. 46 Policies emanating from the
legislature are invariably assimilationist in character despite channels being open for
minority representation. As a result, democracy becomes an irony to the minority group. 47
Several commissioners echoed the pervasive sentiment in the plenary sessions in their own
inimitable way. Thus, Commissioner Blas Ople referred to the recognition that the Muslim
Mindanao and the Cordilleras "do not belong to the dominant national community" as the
justification for conferring on them a "measure of legal self-sufficiency, meaning self-
government, so that they will flourish politically, economically and culturally," with the hope
that after achieving parity with the rest of the country they would "give up their own
autonomous region in favor of joining the national mainstream." 48 For his part, the Muslim
delegate, Commissioner Ahmad Alonto, spoke of the diversity of cultures as the framework
for nation-building.49 Finally, excerpts of the poignant plea of Commissioner Ponciano
Bennagen deserve to be quoted verbatim:
. . . They see regional autonomy as the answer to their centuries of struggle against
oppression and exploitation. For so long, their names and identities have been debased.
Their ancestral lands have been ransacked for their treasures, for their wealth. Their
cultures have been defiled, their very lives threatened, and worse, extinguished, all in the
name of national development; all in the name of public interest; all in the name of common
good; all in the name of the right to property; all in the name of Regalian Doctrine; all in the
name of national security. These phrases have meant nothing to our indigenous
communities, except for the violation of their human rights.
...
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Honorable Commissioners, we wish to impress upon you the gravity of the decision to be
made by every single one of us in this Commission. We have the overwhelming support of
the Bangsa Moro and the Cordillera Constitution. By this we mean meaningful and authentic
regional autonomy. We propose that we have a separate Article on the autonomous regions
for the Bangsa Moro and Cordillera people clearly spelled out in this Constitution, instead of
prolonging the agony of their vigil and their struggle. This, too is a plea for national peace.
Let us not pass the buck to the Congress to decide on this. Let us not wash our hands of our
responsibility to attain national unity and peace and to settle this problem and rectify past
injustices, once and for all.50
The need for regional autonomy is more pressing in the case of the Filipino Muslims and the
Cordillera people who have been fighting for it. Their political struggle highlights their
unique cultures and the unresponsiveness of the unitary system to their aspirations. 51 The
Moros' struggle for self-determination dates as far back as the Spanish conquest in the
Philippines. Even at present, the struggle goes on. 52
Perforce, regional autonomy is also a means towards solving existing serious peace and
order problems and secessionist movements. Parenthetically, autonomy, decentralization
and regionalization, in international law, have become politically acceptable answers to
intractable problems of nationalism, separatism, ethnic conflict and threat of secession. 53
However, the creation of autonomous regions does not signify the establishment of a
sovereignty distinct from that of the Republic, as it can be installed only "within the
framework of this Constitution and the national sovereignty as well as territorial integrity of
the Republic of the Philippines."54
Regional autonomy is the degree of self-determination exercised by the local government
unit vis-à-vis the central government.
In international law, the right to self-determination need not be understood as a right to
political separation, but rather as a complex net of legal-political relations between a certain
people and the state authorities. It ensures the right of peoples to the necessary level of
autonomy that would guarantee the support of their own cultural identity, the
establishment of priorities by the community's internal decision-making processes and the
management of collective matters by themselves. 55
If self-determination is viewed as an end in itself reflecting a preference for homogeneous,
independent nation-states, it is incapable of universal application without massive
disruption. However, if self-determination is viewed as a means to an end—that end being a
democratic, participatory political and economic system in which the rights of individuals
and the identity of minority communities are protected—its continuing validity is more
easily perceived.56
Regional autonomy refers to the granting of basic internal government powers to the
people of a particular area or region with least control and supervision from the central
government.57
The objective of the autonomy system is to permit determined groups, with a common
tradition and shared social-cultural characteristics, to develop freely their ways of life and
heritage, exercise their rights, and be in charge of their own business. This is achieved
through the establishment of a special governance regime for certain member communities
who choose their own authorities from within the community and exercise the jurisdictional
authority legally accorded to them to decide internal community affairs. 58
In the Philippine setting, regional autonomy implies the cultivation of more positive means
for national integration. It would remove the wariness among the Muslims, increase their
trust in the government and pave the way for the unhampered implementation of the
development programs in the region. 59 Again, even a glimpse of the deliberations of the
Constitutional Commission could lend a sense of the urgency and the inexorable appeal of
true decentralization:
MR. OPLE. . . . We are writing a Constitution, of course, for generations to come, not only for
the present but for our posterity. There is no harm in recognizing certain vital pragmatic
needs for national peace and solidarity, and the writing of this Constitution just happens at a
time when it is possible for this Commission to help the cause of peace and reconciliation in
Mindanao and the Cordilleras, by taking advantage of a heaven-sent opportunity. . . . 60
...
MR. ABUBAKAR. . . . So in order to foreclose and convince the rest of the of the Philippines
that Mindanao autonomy will be granted to them as soon as possible, more or less, to
dissuade these armed men from going outside while Mindanao will be under the control of
the national government, let us establish an autonomous Mindanao within our effort and
capacity to do so within the shortest possible time. This will be an answer to the Misuari
clamor, not only for autonomy but for independence. 61
...
MR. OPLE. . . . The reason for this abbreviation of the period for the consideration of the
Congress of the organic acts and their passage is that we live in abnormal times. In the case
of Muslim Mindanao and the Cordilleras, we know that we deal with questions of war and
94
peace. These are momentous issues in which the territorial integrity and the solidarity of
this country are being put at stake, in a manner of speaking.
We are writing a peace Constitution. We hope that the Article on Social Justice can
contribute to a climate of peace so that any civil strife in the countryside can be more
quickly and more justly resolved. We are providing for autonomous regions so that we give
constitutional permanence to the just demands and grievances of our own fellow
countrymen in the Cordilleras and in Mindanao. One hundred thousand lives were lost in
that struggle in Mindanao, and to this day, the Cordilleras is being shaken by an armed
struggle as well as a peaceful and militant struggle.
...
Rather than give opportunity to foreign bodies, no matter how sympathetic to the
Philippines, to contribute to the settlement of this issue, I think the Constitutional
Commission ought not to forego the opportunity to put the stamp of this Commission
through definitive action on the settlement of the problems that have nagged us and our
forefathers for so long.62
A necessary prerequisite of autonomy is decentralization. 63
Decentralization is a decision by the central government authorizing its subordinates,
whether geographically or functionally defined, to exercise authority in certain areas. It
involves decision-making by subnational units. It is typically a delegated power, wherein a
larger government chooses to delegate certain authority to more local governments.
Federalism implies some measure of decentralization, but unitary systems may also
decentralize. Decentralization differs intrinsically from federalism in that the sub-units that
have been authorized to act (by delegation) do not possess any claim of right against the
central government.64
Decentralization comes in two forms—deconcentration and devolution. Deconcentration is
administrative in nature; it involves the transfer of functions or the delegation of authority
and responsibility from the national office to the regional and local offices. This mode of
decentralization is also referred to as administrative decentralization. 65
Devolution, on the other hand, connotes political decentralization, or the transfer of
powers, responsibilities, and resources for the performance of certain functions from the
central government to local government units. 66 This is a more liberal form of
decentralization since there is an actual transfer of powers and responsibilities. 67 It aims to
grant greater autonomy to local government units in cognizance of their right to self-
government, to make them self-reliant, and to improve their administrative and technical
capabilities.68
This Court elucidated the concept of autonomy in Limbona v. Mangelin, 69 thus:
Autonomy is either decentralization of administration or decentralization of power. There is
decentralization of administration when the central government delegates administrative
powers to political subdivisions in order to broaden the base of government power and in
the process to make local governments "more responsive and accountable," and "ensure
their fullest development as self-reliant communities and make them more effective
partners in the pursuit of national development and social progress." At the same time, it
relieves the central government of the burden of managing local affairs and enables it to
concentrate on national concerns. The President exercises "general supervision" over them,
but only to "ensure that local affairs are administered according to law." He has no control
over their acts in the sense that he can substitute their judgments with his own.
Decentralization of power, on the other hand, involves an abdication of political power in
the favor of local government units declared to be autonomous. In that case, the
autonomous government is free to chart its own destiny and shape its future with minimum
intervention from central authorities. According to a constitutional author, decentralization
of power amounts to "self-immolation," since in that event the autonomous government
becomes accountable not to the central authorities but to its constituency.
In the case, the Court reviewed the expulsion of a member from the Sangguniang Pampook,
Autonomous Region. It held that the Court may assume jurisdiction as the local government
unit, organized before 1987, enjoys autonomy of the former category. It refused, though, to
resolve whether the grant of autonomy to Muslim Mindanao under the 1987 Constitution
involves, truly, an effort to decentralize power rather than mere administration. 70
A year later, in Cordillera Broad Coalition v. Commission on Audit, 71 the Court, with the same
composition, ruled without any dissent that the creation of autonomous regions
contemplates the grant of political autonomy—an autonomy which is greater than the
administrative autonomy granted to local government units. It held that "the constitutional
guarantee of local autonomy in the Constitution (Art. X, Sec. 2) refers to administrative
autonomy of local government units or, cast in more technical language, the
decentralization of government authority…. On the other hand, the creation of autonomous
regions in Muslim Mindanao and the Cordilleras, which is peculiar to the 1987 Constitution,
contemplates the grant of political autonomy and not just administrative autonomy to these
regions."72
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And by regional autonomy, the framers intended it to mean "meaningful and authentic
regional autonomy."73 As articulated by a Muslim author, substantial and meaningful
autonomy is "the kind of local self-government which allows the people of the region or
area the power to determine what is best for their growth and development without undue
interference or dictation from the central government." 74
To this end, Section 16, Article X 75 limits the power of the President over autonomous
regions.76 In essence, the provision also curtails the power of Congress over autonomous
regions.77 Consequently, Congress will have to re-examine national laws and make sure that
they reflect the Constitution's adherence to local autonomy. And in case of conflicts, the
underlying spirit which should guide its resolution is the Constitution's desire for genuine
local autonomy.78
The diminution of Congress' powers over autonomous regions was confirmed in Ganzon v.
Court of Appeals,79 wherein this Court held that "the omission (of "as may be provided by
law") signifies nothing more than to underscore local governments' autonomy from
Congress and to break Congress' 'control' over local government affairs."
This is true to subjects over which autonomous regions have powers, as specified in Sections
18 and 20, Article X of the 1987 Constitution. Expressly not included therein are powers over
certain areas. Worthy of note is that the area of public works is not excluded and neither is
it reserved for the National Government. The key provisions read, thus:
SEC. 18. The Congress shall enact an organic act for each autonomous region with the
assistance and participation of the regional consultative commission composed of
representatives appointed by the President from a list of nominees from multisectoral
bodies. The organic act shall define the basic structure of government for the region
consisting of the executive department and legislative assembly, both of which shall be
elective and representative of the constituent political units. The organic acts shall likewise
provide for special courts with personal, family and property law jurisdiction consistent with
the provisions of the Constitution and national laws.
The creation of the autonomous region shall be effective when approved by majority of the
votes cast by the constituent units in a plebiscite called for the purpose, provided that only
provinces, cities, and geographic areas voting favorably in such plebiscite shall be included in
the autonomous region.
SEC. 20. Within its territorial jurisdiction and subject to the provisions of this Constitution
and national laws, the organic act of autonomous regions shall provide for legislative powers
over:
(1) Administrative organization;
(2) Creation of sources of revenues;
(3) Ancestral domain and natural resources;
(4) Personal, family and property relations;
(5) Regional urban and rural planning development;
(6) Economic, social, and tourism development;
(7) Educational policies;
(8) Preservation and development of the cultural heritage; and
(9) Such other matters as may be authorized by law for the promotion of general welfare of
the people of the region. (Emphasis supplied)
E.O. 426 officially devolved the powers and functions of the DPWH in ARMM to the
Autonomous Regional Government (ARG). Sections 1 and 2 of E.O. 426 provide:
SECTION 1. Transfer of Control and Supervision. The offices of the Department of Public
Works and Highways (DPWH) within the Autonomous Region in Muslim Mindanao (ARMM)
including their functions, powers and responsibilities, personnel, equipment, properties,
budgets and liabilities are hereby placed under the control and supervision of the
Autonomous Regional Government.
In particular, these offices are identified as the four (4) District Engineering Offices (DEO) in
each of the four provinces respectively and the three (3) Area Equipment Services (AES)
located in Tawi-Tawi, Sulu and Maguindanao (Municipality of Sultan Kudarat).
SEC. 2. Functions Transferred. The Autonomous Regional Government shall be responsible
for highways, flood control and water resource development systems, and other public
works within the ARMM and shall exercise the following functions:
1. Undertake and evaluate the planning, design, construction and works supervision for the
infrastructure projects whose location and impact are confined within the ARMM;
2. Undertake the maintenance of infrastructure facilities within the ARMM and supervise
the maintenance of such local roads and other infrastructure facilities receiving financial
assistance from the National Government;
3. Ensure the implementation of laws, policies, programs, rules and regulations regarding
infrastructure projects as well as all public and private physical structures within the ARMM;
4. Provide technical assistance related to their functions to other agencies within the
ARMM, especially the local government units;
96
5. Coordinate with other national and regional government departments, agencies,
institutions and organizations, especially the local government units within the ARMM in the
planning and implementation of infrastructure projects;
6. Conduct continuing consultations with the local communities, take appropriate measures
to make the services of the Autonomous Regional Government responsive to the needs of
the general public and recommend such appropriate actions as may be necessary; and
7. Perform such other related duties and responsibilities within the ARMM as may be
assigned or delegated by the Regional Governor or as may be provided by law. (Emphasis
supplied)
More importantly, Congress itself through R.A. 9054 transferred and devolved the
administrative and fiscal management of public works and funds for public works to the
ARG. Section 20, Article VI of R.A. 9054 provides:
ARTICLE VI
THE LEGISLATIVE DEPARTMENT
… ARMM, under the control of the Regional Government shall be responsible for highways,
SEC. 20. Annual Budget and Infrastructure Funds. – The annual budget of the Regional
Government shall be enacted by Regional Assembly. Funds for infrastructure in the
autonomous region allocated by the central government or national government shall be
appropriated through a Regional Assembly Public Works Act.
Unless approved by the Regional Assembly, no public works funds allocated by the central
government or national government for the Regional Government or allocated by the
Regional Government from its own revenues may be disbursed, distributed, realigned, or
used in any manner.
The aim of the Constitution is to extend to the autonomous peoples, the people of Muslim
Mindanao in this case, the right to self-determination—a right to choose their own path of
development; the right to determine the political, cultural and economic content of their
development path within the framework of the sovereignty and territorial integrity of the
Philippine Republic.80 Self-determination refers to the need for a political structure that will
respect the autonomous peoples' uniqueness and grant them sufficient room for self-
expression and self-construction.81
In treading their chosen path of development, the Muslims in Mindanao are to be given
freedom and independence with minimum interference from the National Government. This
necessarily includes the freedom to decide on, build, supervise and maintain the public
works and infrastructure projects within the autonomous region. The devolution of the
powers and functions of the DPWH in the ARMM and transfer of the administrative and
fiscal management of public works and funds to the ARG are meant to be true, meaningful
and unfettered. This unassailable conclusion is grounded on a clear consensus, reached at
the Constitutional Commission and ratified by the entire Filipino electorate, on the centrality
of decentralization of power as the appropriate vessel of deliverance for Muslim Filipinos
and the ultimate unity of Muslims and Christians in this country.
With R.A. 8999, however, this freedom is taken away, and the National Government takes
control again. The hands, once more, of the autonomous peoples are reined in and tied up.
The challenged law creates an office with functions and powers which, by virtue of E.O. 426,
have been previously devolved to the DPWH-ARMM, First Engineering District in Lanao del
Sur.
E.O. 426 clearly ordains the transfer of the control and supervision of the offices of the
DPWH within the ARMM, including their functions, powers and responsibilities, personnel,
equipment, properties, and budgets to the ARG. Among its other functions, the DPWH-
flood control and water resource development systems, and other public works within the
ARMM. Its scope of power includes the planning, design, construction and supervision of
public works. According to R.A. 9054, the reach of the Regional Government enables it to
appropriate, manage and disburse all public work funds allocated for the region by the
central government.
The use of the word "powers" in E.O. 426 manifests an unmistakable case of devolution.
In this regard, it is not amiss to cite Opinion No. 120, S. 1991 82 of the Secretary of Justice on
whether the national departments or their counterpart departments in the ARG are
responsible for implementation of roads, rural water supply, health, education, women in
development, agricultural extension and watershed management. Referring to Section 2,
Article V of R.A. 6734 which enumerates the powers of the ARG, he states:
It is clear from the foregoing provision of law that except for the areas of executive power
mentioned therein, all other such areas shall be exercised by the Autonomous Regional
Government ("ARG") of the Autonomous Region in Muslim Mindanao. It is noted that
programs relative to infrastructure facilities, health, education, women in development,
agricultural extension and watershed management do not fall under any of the exempted
areas listed in the abovequoted provision of law. Thus, the inevitable conclusion is that all
these spheres of executive responsibility have been transferred to the ARG.
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Reinforcing the aboveview (sic) are the various executive orders issued by the President
providing for the devolution of the powers and functions of specified executive departments
of the National Government to the ARG. These are E.O. Nos. 425 (Department of Labor and
Employment, Local Government, Tourism, Environment and Natural Resources, Social
Welfare and Development and Science and Technology), 426 (Department of Public Works
and Highways), 459 (Department of Education, Culture and Sports) and 460 (Department of
Agriculture). The execution of projects on infrastructure, education, women, agricultural
extension and watershed management within the Autonomous Region of Muslim Mindanao
normally fall within the responsibility of one of the aforementioned executive departments
of the National Government, but by virtue of the aforestated EOs, such responsibility has
been transferred to the ARG.
E.O. 426 was issued to implement the provisions of the first ARMM Organic Act, R.A. 6734—
the validity of which this Court upheld in the case of Abbas v. Commission on Elections. 83 In
Section 4, Article XVIII of said Act, "central government or national government offices and
agencies in the autonomous region which are not excluded under Section 3, Article IV 84 of
this Organic Act, shall be placed under the control and supervision of the Regional
Government pursuant to a schedule prescribed by the oversight committee."
Evidently, the intention is to cede some, if not most, of the powers of the national
government to the autonomous government in order to effectuate a veritable autonomy.
The continued enforcement of R.A. 8999, therefore, runs afoul of the ARMM Organic Acts
and results in the recall of powers which have previously been handed over. This should not
be sanctioned, elsewise the Organic Acts' desire for greater autonomy for the ARMM in
accordance with the Constitution would be quelled. It bears stressing that national laws are
subject to the Constitution one of whose state policies is to ensure the autonomy of
autonomous regions. Section 25, Article II of the 1987 Constitution states:
Sec. 25. The State shall ensure the autonomy of local governments.
R.A. 8999 has made the DPWH-ARMM effete and rendered regional autonomy illusory with
respect to infrastructure projects. The Congressional Record shows, on the other hand, that
the "lack of an implementing and monitoring body within the area" has hindered the speedy
implementation, of infrastructure projects. 85 Apparently, in the legislature's estimation, the
existing DPWH-ARMM engineering districts failed to measure up to the task. But if it was
indeed the case, the problem could not be solved through the simple legislative creation of
an incongruous engineering district for the central government in the ARMM. As it was,
House Bill No. 995 which ultimately became R.A. 8999 was passed in record time on second
reading (not more than 10 minutes), absolutely without the usual sponsorship speech and
debates.86 The precipitate speed which characterized the passage of R.A. 8999 is difficult to
comprehend since R.A. 8999 could have resulted in the amendment of the first ARMM
Organic Act and, therefore, could not take effect without first being ratified in a plebiscite.
What is more baffling is that in March 2001, or barely two (2) months after it enacted R.A.
8999 in January 2001, Congress passed R.A. 9054, the second ARMM Organic Act, where it
reaffirmed the devolution of the DPWH in ARMM, including Lanao del Sur and Marawi City,
to the Regional Government and effectively repealed R.A. 8999.
DPWH Department Order No. 119
Now, the question directly related to D.O. 119.
D.O. 119 creating the Marawi Sub-District Engineering Office which has jurisdiction over
infrastructure projects within Marawi City and Lanao del Sur is violative of the provisions of
E.O. 426. The Executive Order was issued pursuant to R.A. 6734—which initiated the
creation of the constitutionally-mandated autonomous region 87 and which defined the basic
structure of the autonomous government. 88 E.O. 426 sought to implement the transfer of
the control and supervision of the DPWH within the ARMM to the Autonomous Regional
Government. In particular, it identified four (4) District Engineering Offices in each of the
four (4) provinces, namely: Lanao del Sur, Maguindanao, Sulu and Tawi-Tawi. 89 Accordingly,
the First Engineering District of the DPWH-ARMM in Lanao del Sur has jurisdiction over the
public works within the province.
The office created under D.O. 119, having essentially the same powers, is a duplication of
the DPWH-ARMM First Engineering District in Lanao del Sur formed under the aegis of E.O.
426. The department order, in effect, takes back powers which have been previously
devolved under the said executive order. D.O. 119 runs counter to the provisions of E.O.
426. The DPWH's order, like spring water, cannot rise higher than its source of power—the
Executive.
The fact that the department order was issued pursuant to E.O. 124—signed and approved
by President Aquino in her residual legislative powers—is of no moment. It is a finely-
imbedded principle in statutory construction that a special provision or law prevails over a
general one.90 Lex specialis derogant generali. As this Court expressed in the case of Leveriza
v. Intermediate Appellate Court, 91 "another basic principle of statutory construction
mandates that general legislation must give way to special legislation on the same subject,
and generally be so interpreted as to embrace only cases in which the special provisions are
not applicable, that specific statute prevails over a general statute and that where two
98
statutes are of equal theoretical application to a particular case, the one designed therefor
specially should prevail."
E.O. No. 124, upon which D.O. 119 is based, is a general law reorganizing the Ministry of
Public Works and Highways while E.O. 426 is a special law transferring the control and
supervision of the DPWH offices within ARMM to the Autonomous Regional Government.
The latter statute specifically applies to DPWH-ARMM offices. E.O. 124 should therefore give
way to E.O. 426 in the instant case.
In any event, the ARMM Organic Acts and their ratification in a plebiscite in effect
superseded E.O. 124. In case of an irreconcilable conflict between two laws of different
vintages, the later enactment prevails because it is the later legislative will. 92
Further, in its repealing clause, R.A. 9054 states that "all laws, decrees, orders, rules and
regulations, and other issuances or parts thereof, which are inconsistent with this Organic
Act, are hereby repealed or modified accordingly." 93 With the repeal of E.O. 124 which is the
basis of D.O. 119, it necessarily follows that D.O. 119 was also rendered functus officio by
the ARMM Organic Acts.
Grave abuse of discretion
Without doubt, respondents committed grave abuse of discretion. They implemented R.A.
8999 despite its inoperativeness and repeal. They also put in place and maintained the
DPWH Marawi Sub-District Engineering Office in accordance with D.O. 119 which has been
rendered functus officio by the ARMM Organic Acts.
Still, on the issue of grave abuse of discretion, this Court, however, cannot uphold
petitioners' argument that R.A. 8999 was signed into law under suspicious circumstances to
support the assertion that there was a capricious and whimsical exercise of legislative
authority. Once more, this Court cannot inquire into the wisdom, merits, propriety or
expediency of the acts of the legislative branch.
Likewise, the alleged lack of consultation or public hearing with the affected agency during
the inception of the law does not render the law infirm. This Court holds that the Congress
did not transgress the Constitution nor any statute or House Rule in failing to invite a
resource person from the DPWH-ARMM during the Committee meeting. Section 27, Rule VII
of the Rules of the House94 only requires that a written notice be given to all the members of
a Committee seven (7) calendar days before a regularly scheduled meeting, specifying the
subject matter of the meeting and the names of the invited resource persons. And it must
be emphasized that the questions of who to invite and whether there is a need to invite
resource persons during Committee meetings should be addressed solely to Congress in its
plenary legislative powers.95
Conclusion
The repeal of R.A. 8999 and the functus officio state of D.O. 119 provide the necessary basis
for the grant of the writs of certiorari and prohibition sought by the petitioners. However,
there is no similar basis for the issuance of a writ of mandamus to compel respondent DBM
Secretary to release funds appropriated for public works projects in Marawi City and Lanao
del Sur to the DPWH-ARMM First Engineering District in Lanao del Sur and to compel
respondent DPWH Secretary to allow the DPWH-ARMM, First Engineering District in Lanao
del Sur to implement all public works projects within its jurisdictional area. Section 20,
Article VI of R.A. 9054 clearly provides that "(f)unds for infrastructure in the autonomous
region allocated by the central government or national government shall only be
appropriated through a Regional Assembly Public Works Act" passed by the Regional
Assembly. There is no showing that such Regional Assembly Public Works Act has been
enacted.
WHEREFORE, considering that Republic Act No. 9054 repealed Republic Act No. 8999 and
rendered DPWH Department Order No. 119 functus officio, the petition insofar as it seeks
the writs of certiorari and prohibition is GRANTED. Accordingly, let a writ of prohibition
ISSUE commanding respondents to desist from implementing R.A. 8999 and D.O. 119, and
maintaining the DPWH Marawi Sub-District Engineering Office and the First Engineering
District of the Province of Lanao del Sur comprising the City of Marawi and the
municipalities within the First District of Lanao del Sur. However, the petition insofar as it
seeks a writ of mandamus against respondents is DENIED.
No costs.
SO ORDERED.
DEMAALA V.COA
LEONEN, J.:
Through this Petition for Certiorari, Lucena D. Demaala (Demaala) prays that the September
22, 2008 Decision (Decision No. 2008-087) 1 and the November 16, 2011 Resolution (Decision
No. 2011-083)2 of the Commission on Audit be reversed and set aside.
The Commission on Audit’s Decision No. 2008-087 3 denied Demaala’s appeal and affirmed
with modification Local Decision No. 2006-0564 dated April 19, 2006 of the Commission on
Audit’s Legal and Adjudication Office (LAO). LAO Local Decision No. 2006-056, in turn,
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affirmed Notice of Charge (NC) No. 2004-04-101. 5 NC No. 2004-04-101 was dated August 30, The Municipal Mayor
2004 and issued by Rodolfo C. Sy (Regional Cluster Director Sy), Regional Cluster Director of Narra, Palawan
the Legal Adjudication Sector, Commission on Audit Regional Office No. IV, Quezon City. Attention: Municipal Accountant
The Commission on Audit’s Decision No. 2011-083 denied the Motion for Reconsideration We have reviewed and evaluated Audit Obersvation Memorandum (AOM) No. 03-005 dated
filed by Demaala.6 August 7, 2003 and noted the following deficiencies:
I Reference FACTS AND/OR
The Sangguniang Panlalawigan of Palawan enacted Provincial Ordinance No. 332-A, Series of AMOUNT
PAYOR Persons LIABLE REASONS FOR
1995,entitled "An Ordinance Approving and Adopting the Code Governing the Revision of No. Date CHARGED
CHARGE
Assessments, Classification and Valuation of Real Properties in the Province of Palawan"
(Ordinance).7 Chapter 5, Section 48 of the Ordinance provides for an additional levy on real 1,125,416.56 Lucena D. The additional
property tax for the special education fund at the rate of one-half percent or 0.5% as Demaala levy for SEF should
follows: Section 48- Additional Levy on Real Property Tax for Special Education Fund. There - Municipal Mayor be one per cent
is hereby levied an annual tax at the rate of one-half percent (1/2%) of the assessed value - for allowing the (1%) instead of
property tax. The proceeds thereof shall exclusively accrue to the Special Education Fund reduced rate of 0.5% as provided
(SEF).8 Please see attached additional real in RA 5447 dated
In conformity with Section 48 of the Ordinance, the Municipality of Narra, Palawan, with schedule property taxes September 25,
Demaala as mayor, collected from owners of real properties located within its territory an Municipal 1968
annual tax as special education fund at the rate of 0.5% of the assessed value of the Treasurer
property subject to tax. This collection was effected through the municipal treasurer. 9 1,125,416.56 - for collecting
On post-audit, Audit Team Leader Juanito A. Nostratis issued Audit Observation understated taxes
Memorandum (AOM) No. 03-005 dated August 7, 2003 in which he noted supposed All payors
deficiencies in the special education fund collected by the Municipality of Narra. 10 He Charge not appealed within six (6) months as prescribed under Sections 49, 50 and 51 of PD
questioned the levy of the special education fund at the rate of only 0.5% rather than at 1%, No. 1445 shall become final and executory.
the rate stated in Section 235 11 of Republic Act No. 7160, otherwise known as the Local RODOLFY C. SY (sgd.)
14
Government Code of 1991 (Local Government Code). 12 Regional Cluster Director
After evaluating AOM No. 03-005, Regional Cluster Director Sy issued NC No. 2004-04-101 The Municipality of Narra, through Demaala, filed the Motion for Reconsideration 15 dated
dated August 30, 200413 in the amount of ₱1,125,416.56. He held Demaala, the municipal December 2, 2004. It stressed that the collection of the special education fund at the rate
treasurer of Narra, and all special education fund payors liable for the deficiency in special of0.5% was merely in accordance with the Ordinance. On March 9, 2005, Regional Cluster
education fund collections. Director Sy issued an Indorsement denying this Motion for Reconsideration. 16
This Notice of Charge reads: Following this, the Municipality of Narra, through Demaala, filed an Appeal 17 with the
NC No. 2004-04-101 Commission on Audit’s Legal and Adjudication Office. In Local Decision No. 2006-056 18 dated
Date: August 30, 2004 April 19, 2006, this appeal was denied.
NOTICE OF CHARGE The Municipality of Narra, through Demaala, then filed a Petition for Review 19 with the
Commission on Audit.
100
In Decision No. 2008-08720 dated September 22, 2008, the Commission on Audit ruled
against Demaala and affirmed LAO Local Decision No. 2006-056 with the modification that
former Palawan Vice Governor Joel T. Reyes and the other members of the Sangguniang
Panlalawigan of Palawan who enacted the Ordinance 21 were held jointly and severally liable
with Demaala, the municipal treasurer of Narra, and the special education fund payors. 22
The dispositive portion of this Decision reads:
WHEREFORE, premises considered, the instant appeal is hereby DENIED for lack of merit.
Accordingly, LAO Local Decision No. 2006-056 is AFFIRMED with modification, to include
Former Vice-Governor and Presiding Officer Joel T. Reyes,Chairman Pro-Tempore Rosalino R.
Acosta, Majority Floor Leader Ernesto A. Llacuna, Asst. Majority Floor Leader Antonio C.
Alvarez, Asst. Minority Floor Leader Haide B. Barroma, Hon. Leoncio N. Ola, Hon. Ramon A.
Zabala, Hon. Belen B. Abordo, Hon. Valentin A. Baaco, Hon. Claro Ordinario, Hon. Derrick R.
Pablico, Hon. Laine C. Abogado and Hon. Joel B. Bitongon among the persons liable in the
Notice of Charge. They shall be jointly and severally liable with Mayor Lucena D. Demaala,
together with the Municipal Treasurer and all the payors of the under-collected real
property tax in the total amount of ₱1,125,416.56.
The Audit Team Leader is directed to issue a Supplemental Notice of Charge to include the
members of the Sangguniang Panlalawigan as among the persons liable. 23
Thereafter, Demaala, who was no longer the mayor of the Municipality of Narra, filed a
Motion for Reconsideration.24 Former Vice Governor Joel T. Reyes and the other members of
the Sangguniang Panlalawigan of Palawan who were held liable under Decision No. 2008-
087 filed a separate Motion for Reconsideration. 25 The Commission on Audit’s Decision No.
2011-08326 dated November 16, 2011 affirmed its September 22, 2008 Decision.
Demaala then filed with this court the present Petition for Certiorari.27
Respondent Commission on Audit, through the Office of the Solicitor General, filed its
Comment28 on April 20, 2012. Petitioner Demaala filed her Reply 29 on September 6, 2012.
Thereafter, the parties filed their respective Memoranda. 30
II
For resolution in this case are the following issues:
First, whether respondent committed grave abuse of discretion amounting to lack or excess
of jurisdiction in holding that there was a deficiency in the Municipality of Narra’s collection
of the additional levy for the special education fund. Subsumed in this issue is the matter of
whether a municipality within the Metropolitan Manila Area, a city, or a province may have
an additional levy on real property for the special education fund at the rate of less than 1%.
Second, assuming that respondent correctly held that there was a deficiency, whether
respondent committed grave abuse of discretion amounting to lack or excess or jurisdiction
in holding petitioner personally liable for the deficiency.
We find for petitioner.
Setting the rate of the additional levy for the special education fund at less than 1% is within
the taxing power of local government units. It is consistent with the guiding constitutional
principle of local autonomy.
III
The power to tax is an attribute of sovereignty. It is inherent in the state. Provinces, cities,
municipalities, and barangays are mere territorial and political subdivisions of the state.
They act only as part of the sovereign. Thus, they do not have the inherent power to
tax.31 Their power to tax must be prescribed by law.
Consistent with the view that the power to tax does not inhere in local government units,
this court has held that a reserved temperament must be adhered to in construing the
extent of a local government unit’s power to tax. As explained in Icard v. City Council of
Baguio:32
It is settled that a municipal corporation unlike a sovereign state is clothed with no inherent
power of taxation. The charter or statute must plainly show an intent to confer that power
or the municipality, cannot assume it. And the power when granted is to be construed in
strictissimi juris. Any doubt or ambiguity arising out of the term used in granting that power
must be resolved against the municipality. Inferences, implications, deductions – all these –
have no place in the interpretation of the taxing power of a municipal
corporation.33 (Emphasis supplied)
Article X, Section 5 of the 1987 Constitution is the basis of the taxing power of local
government units:
Section 5. Each local government unit shall have the power to create its own sources of
revenues and to levy taxes, fees and charges subject to such guidelines and limitations as
the Congress may provide, consistent with the basic policy of local autonomy. Such taxes,
fees, and charges shall accrue exclusively to the local governments. (Emphasis supplied)
The taxing power granted by constitutional fiat to local government units exists in the wider
context to "ensure the autonomy of local governments." 34 As Article II, Section 25 of the
1987 Constitution unequivocally provides:
Section 25. The State shall ensure the autonomy of local governments.
Article II, Section 25 is complemented by Article X, Section 2:
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Section 2. The territorial and political subdivisions shall enjoy local autonomy.
The 1935 Constitution was entirely silent on local autonomy, albeit making a distinction
between executive departments, bureaus, and offices on the one hand, and local
governments on the other. It provided that the President had control over the former but
merely "exercise[d] general supervision" 35 over the latter. Article VII, Section 10(1) of the
1935 Constitution provided: SEC. 10. (1) The President shall have control of all the executive
departments, bureaus, or offices, exercise general supervision over all local governments as
may be provided by law, and take care that the laws be faithfully executed.
Similarly, the 1935 Constitution was silent on the taxing power of local government units.
The 1973 Constitution provided for local autonomy. Article II, Section 10 of the 1973
Constitution read:
SEC. 10. The State shall guarantee and promote the autonomy of local government units,
especially the [barangays], to ensure their fullest development as self-reliant communities.
Any trend in the 1973 Constitution towards greater autonomy for local government units
"was aborted in 1972 when Ferdinand Marcos placed the entire country under martial law
[thereby] stunt[ing] the development of local governments by centralizing the government
in Manila."36 While local autonomy was provided for in the 1973 Constitution, its existence
was confined to principle and theory. Practice neutered all of Article XI of the 1973
Constitution (on local government), including Section 5 which provided for the taxing power
of local government units. Article XI, Section 5 reads:
SEC. 5. Each local government unit shall have the power to create its own sources of
revenue and to levy taxes, subject to such limitations as may be provided by law.
Article X, Section 5 of the 1987 Constitution is more emphatic in empowering local
government units in the matter of taxation compared with Article XI, Section 5 of the 1973
Constitution. In addition to stating that local government units have the power to tax
(subject to Congressional guidelines and limitations), Article X, Section 5 of the 1987
Constitution adds the phrase "consistent with the basic policy of local autonomy." Further, it
is definite with the use of funds generated by local government units through the exercise of
their taxing powers, providing that "[s]uch taxes, fees, and charges shall accrue exclusively
to the local governments."37
Apart from administrative autonomy, an equally vital facet of local governance under the
1987 Constitution is fiscal autonomy. In Pimentel v. Aguirre: 38
Under existing law, local government units, in addition to having administrative autonomy in
the exercise of their functions, enjoy fiscal autonomy as well. Fiscal autonomy means that
local governments have the power to create their own sources of revenue in addition to
their equitable share in the national taxes released by the national government, as well as
the power to allocate their resources in accordance with their own priorities. It extends to
the preparation of their budgets, and local officials in turn have to work within the
constraints thereof. They are not formulated at the national level and imposed on local
governments, whether they are relevant to local needs and resources or not. Hence, the
necessity of a balancing of viewpointsand the harmonization of proposals from both local
and national officials, who in any case are partners in the attainment of national goals. 39
IV
The taxing powers of local government units must be read in relation to their power to
effect their basic autonomy.
Consistent with the 1987 Constitution’s declared preference, the taxing powers of local
government units must be resolved in favor of their local fiscal autonomy. In City
Government of San Pablo v. Reyes:40
The power to tax is primarily vested in Congress. However, in our jurisdiction, it may be
exercised by local legislative bodies, no longer merely by virtue of a valid delegation as
before, but pursuant to direct authority conferred by Section 5, Article X of the Constitution.
Thus Article X, Section 5 of the Constitution reads:
Sec. 5 — Each Local Government unit shall have the power to create its own sources of
revenue and to levy taxes, fees and charges subject to such guidelines and limitations as the
Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees
and charges shall accrue exclusively to the Local Governments.
The important legal effect of Section 5 is that henceforth, in interpreting statutory provision
on municipal fiscal powers, doubts will have to be resolved in favor of municipal
corporations.41 (Emphasis supplied)
Similarly, in San Juan v. Civil Service Commission, 42 this court stated:
We have to obey the clear mandate on local autonomy. Where a law is capable of two
interpretations, one in favor of centralized power in Malacañang and the other beneficial to
local autonomy, the scales must be weighed in favor of autonomy. 43
The Local Government Code was enacted pursuant to the specific mandate of Article X,
Section 3 of the 1987 Constitution 44 and its requirements of decentralization. Its provisions,
including those on local taxation, must be read in light of the jurisprudentially settled
preference for local autonomy.
V
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The limits on the level of additional levy for the special education fund under Section 235 of
the Local Government Code should be read as granting fiscal flexibility to local government
units.
Book II of the Local Government Code governs local taxation and fiscal matters. Title II of
Book II governs real property taxation.
Section 235 of the Local Government Code allows provinces and cities, as well as
municipalities in Metro Manila, to collect, on top of the basic annual real property tax, an
additional levy which shall exclusively accrue to the special education fund:
Section 235. Additional Levy on Real Property for the Special Education Fund. - A province or
city, or a municipality within the Metropolitan Manila Area, may levy and collect an annual
tax of one percent (1%) on the assessed value of real property which shall be in addition to
the basic real property tax. The proceeds thereof shall exclusively accrue to the Special
Education Fund (SEF). (Emphasis supplied)
The special education fund is not an original creation of the Local Government Code. It was
initially devised by Republic Act No. 5447. 45 The rate of 1% is also not a detail that is original
to the Local Government Code. As discussed in Commission on Audit v. Province of
Cebu:46 The Special Education Fund was created by virtue of R. A. No. 5447, which is [a]n act
creating a special education fund to be constituted from the proceeds of an additional real
property tax and a certain portion of the taxes on Virginia-type cigarettes and duties on
imported leaf tobacco, defining the activities to be financed, creating school boards for the
purpose, and appropriating funds therefrom, which took effect on January 1, 1969. Pursuant
thereto, P.D. No. 464, also known as the Real Property Tax Code of the Philippines, imposed
an annual tax of 1% on real property which shall accrue to the SEF. 47 (Citations omitted)
The operative phrase in Section 235’s grant to municipalities in Metro Manila, cities, and
provinces of the power to impose an additional levy for the special education fund is
prefixed with "may," thus, "may levy and collect an annual tax of one percent (1%)."
In Buklod nang Magbubukid sa Lupaing Ramos, Inc. v. E.M. Ramos and Sons, Inc. 48 the
meaning of "may" was discussed as follows:
Where the provision reads "may," this word shows that it is not mandatory but
discretionary. It is an auxiliary verb indicating liberty, opportunity, permission and
possibility. The use of the word "may" in a statute denotes that it is directory in nature and
generally permissive only.49 Respondent concedes that Section 235’s grant to municipalities
in Metro Manila, to cities, and to provinces of the power to impose an additional levy for the
special education fund makes its collection optional. It is not mandatory that the levy be
imposed and collected. The controversy which the Commission on Audit created is not
whether these local government units have discretion to collect but whether they have
discretion on the rate at which they are to collect.
It is respondent’s position that the option granted to a local government unit is limited to
the matter of whether it shall actually collect, and that the rate at which it shall collect
(should it choose to do so) is fixed by Section 235. In contrast, it is petitioner’s contention
that the option given to a local government unit extends not only to the matter of whether
to collect but also to the rate at which collection is to be made.
We sustain the position of petitioner.
Section 235’s permissive language is unqualified. Moreover, there is no limiting qualifier to
the articulated rate of 1% which unequivocally indicates that any and all special education
fund collections must be at such rate.
At most, there is a seeming ambiguity in Section 235. Consistent with what has earlier been
discussed however, any such ambiguity must be read in favor of local fiscal autonomy. As in
San Juan v. Civil Service Commission, 50 the scales must weigh in favor of the local
government unit.
Fiscal autonomy entails "the power to create . . . own sources of revenue." 51 In turn, this
power necessarily entails enabling local government units with the capacity to create
revenue sources in accordance with the realities and contingencies present in their specific
contexts. The power to create must mean the local government units’ power to create what
is most appropriate and optimal for them; otherwise, they would be mere automatons that
are turned on and off to perform prearranged operations.
Devolving power but denying its necessary incidents and accessories is tantamount to not
devolving power at all. A local government unit with a more affluent constituency may thus
realize that it can levy taxes at rates greater than those which local government units with
more austere constituencies can collect. For the latter, collecting taxes at prohibitive rates
may be counterproductive. High tax rates can be a disincentive for doing business, rendering
it unattractive to commerce and thereby stunting, rather than facilitating, their
development. In this sense, insisting on uniformity would be a disservice to certain local
government units and would ultimately undermine the aims of local autonomy and
decentralization.
VI
Of course, fiscal autonomy entails "working within the constraints." 52 To echo the language
of Article X, Section 5 of the 1987 Constitution, this is to say that the taxing power of local
103
government units is "subject to such guidelines and limitations as the Congress may
provide."53 It is the 1% as a constraint on which the respondent Commission on Audit is
insisting.
There are, in this case, three (3) considerations that illumine our task of interpretation: (1)
the text of Section 235, which, to reiterate, is cast in permissive language; (2) the seminal
purpose of fiscal autonomy; and (3) the jurisprudentially established preference for
weighing the scales in favor of autonomy of local government units. We find it to be in
keeping with harmonizing these considerations to conclude that Section 235’s specified rate
of 1% is a maximum rate rather than an immutable edict. Accordingly, it was well within the
power of the Sangguniang Panlalawigan of Palawan to enact an ordinance providing for
additional levy on real property tax for the special education fund at the rate of 0.5% rather
than at 1%.
VII
It was an error amounting to grave abuse of discretion for respondent to hold petitioner
personally liable for the supposed deficiency.
Having established the propriety of imposing an additional levy for the special education
fund at the rate of 0.5%, it follows that there was nothing erroneous in the Municipality of
Narra’s having acted pursuant to Section 48 of the Ordinance. It could thus not be faulted
for collecting from owners of real properties located within its territory an annual tax as
special education fund at the rate of 0.5% of the assessed value subject to tax of the
property. Likewise, it follows that it was an error for respondent to hold petitioner
personally liable for the supposed deficiency in collections.
Even if a contrary ruling were to be had on the propriety of collecting at a rate less than 1%,
it would still not follow that petitioner is personally liable for deficiencies.
In its Memorandum, respondent cited the 1996 case of Salalima v. Guingona 54 as a
precedent for finding local officials liable for violations that have to do with the special
education fund.
Moreover, in Decision No. 2008-087, respondent asserted that there was "no cogent reason
to exclude [petitioner] from liability since her participation as one of the local officials who
implemented the collection of the reduced levy rate. . . led to the loss on reduction [sic] of
government income."55 It added that, "[c]orollary thereto, the government can also go
against the officials who are responsible for the passage of [the Ordinance]," 56 i.e., the
members of the Sangguniang Panlalawigan of the Province of Palawan.
Respondent’s reliance on Salalima and on petitioner’s having been incidentally the mayor of
Narra, Palawan when supposedly deficient collections were undertaken is misguided.
Per respondent’s own summation of Salalima, in that case, this court:
held that the governor, vice-governor and members of the Sangguniang Panlalawigan are
collectively responsible with other provincial officials in the administration of fiscal and
financial transactions of the province pursuant to Sections 304 and 305 of RA 7160 for
denying the other beneficiaries of their share of the SEF. These local officials cannot claim
ignorance of the law as to the sharing scheme of the real property tax and the SEF as the
same is clearly provided in RA 7160.57 (Emphasis supplied)
Salalima involved several administrative Complaints filed before the Office of the President
against the elective officials of the Province of Albay. One of these — OP Case No. 5470 —
was a Complaint for malversation, and "consistent [and] habitual violation of pars. (c) and
(d) of Section 60 of [the Local Government Code]" 58 which was filed by Tiwi, Albay Mayor
Naomi Corral against Albay Governor Romeo Salalima, Vice-Governor Danilo Azaña, and
other Sangguniang Panlalawigan members.
This Complaint was precipitated by the refusal of the provincial officials of Albay to make
available to the Municipality of Tiwi, Albay its share in the collections of the special
education fund. This was contrary to Section 272 of the Local Government Code 59 which
requires equal sharing between provincial and municipal school boards. Specifically, it was
found that the Sangguniang Panlalawigan passed Ordinance No. 09-92, which declared as
forfeited in favor of the Province of Albay (and to the exclusion of the municipalities in
Albay) all payments made by the National Power Corporation to the former pursuant to a
memorandum of agreement through which the National Power Corporation settled its real
property tax obligations.
As regards the personal liability of the respondents in that case, the Office of the President
was quoted to have anchored on the following disquisition its imposition of the penalty of
suspension on the respondent provincial officials:
It cannot be denied that the Sangguniang Panlalawigan has control over the Province’s
‘purse’ as it may approve or not resolutions or ordinances generating revenue or imposing
taxes as well as appropriating and authorizing the disbursement of funds to meet
operational requirements or for the prosecution of projects.
Being entrusted with such responsibility, the provincial governor, vice-governor and the
members of the Sangguniang Panlalawigan, must always be guided by the so-called
‘fundamental’ principles enunciated under the Local Government Code[.] . . .
104
All the respondents could not claim ignorance of the law especially with respect to the
provisions of P.D. No. 464 that lay down the sharing scheme among local government units
concerned and the national government, for both the basic real property tax and additional
tax pertaining to the Special Education Fund. Nor can they claim that the Province could
validly forfeit the ₱40,724,471.74 paid by NPC considering that the Province is only entitled
to a portion thereof and that the balance was merely being held in trust for the other
beneficiaries.
As a public officer, respondent Azaña (and the other respondents as well) has a duty to
protect the interests not only of the Province but also of the municipalities of Tiwi and
Daraga and even the national government. When the passage of an illegal or unlawful
ordinance by the Sangguniang Panlalawigan is imminent, the presiding officer has a duty to
act accordingly, but actively opposing the same by temporarily relinquishing his chair and
participating in the deliberations. If his colleagues insist on its passage, he should make
known his opposition thereto by placing the same on record. No evidence of any sort was
shown in this regard by respondent Azaña.
Clearly, all the respondents have, whether by act or omission, denied the other beneficiaries
of their rightful shares in the tax delinquency payments made by the NPC and caused the
illegal forfeiture, appropriation and disbursement of funds not belonging to the Province,
through the passage and approval of Ordinance No. 09-92 and Resolution Nos. 178-92 and
204-92.
The foregoing factual setting shows a wanton disregard of law on the part of the
respondents tantamount to abuse of authority. Moreover, the illegal disbursements made
can qualify as technical malversation.60
It is evident that the circumstances in Salalima are not analogous to the circumstances
pertinent to petitioner.
While Salalima involved the mishandling of proceeds which was "tantamount to abuse of
authority" and which "can qualify as technical malversation," this case involves the
collection of the additional levy for the special education fund at a rate which, at the time of
the collection, was pursuant to an ordinance that was yet to be invalidated.
Likewise, Salalima involved the liability of the provincial officials who were themselves the
authors of an invalid ordinance. In this case, the Municipality of Narra — as subordinate to
the Province of Palawan — merely enforced a provincial ordinance. Respondent, in its own
Memorandum, acknowledged that it was not even petitioner but the municipal treasurer
who actually effected the collection at a supposedly erroneous rate. 61
Also, Salalima entailed the imposition of the administrative penalty of suspension. In this
case, respondent is not concerned with the imposition of administrative penalties but insists
that petitioner must herself (jointly and severally with the other persons named) pay for the
deficiency in collections.
We find it improper to hold petitioner personally liable for the uncollected amount on
account of the sheer happenstance that she was the mayor of Narra, Palawan, when the
Ordinance was enforced.
VIII
The actions of the officials of the Municipality of Narra are consistent with the rule that
ordinances are presumed valid.1âwphi1 In finding liability, respondent suggests that officers
of the Municipality should not comply with an ordinance duly passed by the Sangguniang
Panlalawigan.
It is true that petitioner, as the local chief executive, was charged with fidelity to our laws.
However, it would be grossly unfair to sustain respondent's position. It implacably dwells on
supposed non-compliance with Section 235 but turns a blind eye on the context which
precipitated the collection made by the Municipality of Narra at the reduced rate of 0.5%.
The mayor's actions were done pursuant to an ordinance which, at the time of the
collection, was yet to be invalidated.
It is basic that laws and local ordinances are "presumed to be valid unless and until the
courts declare the contrary in clear and unequivocal terms." 62 Thus, the concerned officials
of the Municipality of Narra, Palawan must be deemed to have conducted themselves in
good faith and with regularity when they acted pursuant to Chapter 5, Section 48 of
Provincial Ordinance No. 332-A, Series of 1995, and collected the additional levy for the
special education fund at the rate of 0.5o/o. Accordingly, it was improper for respondent to
attribute personal liability to petitioner and to require her to personally answer to the
deficiency in special education fund collections. WHEREFORE, the Petition is GRANTED ..
Decision No. 2008-087 dated September 22, 2008 and Decision No. 2011-083 dated
November 16, 2011 of respondent Commission on Audit are ANNULLED and SET ASIDE.
SO ORDERED.
MANDANAS V. ROMULO
CALLEJO, SR., J.:
The Province of Batangas, represented by its Governor, Hermilando I. Mandanas, filed the
present petition for certiorari, prohibition and mandamus under Rule 65 of the Rules of
105
Court, as amended, to declare as unconstitutional and void certain provisos contained in the
General Appropriations Acts (GAA) of 1999, 2000 and 2001, insofar as they uniformly
earmarked for each corresponding year the amount of five billion pesos (₱5,000,000,000.00)
of the Internal Revenue Allotment (IRA) for the Local Government Service Equalization Fund
(LGSEF) and imposed conditions for the release thereof.
Named as respondents are Executive Secretary Alberto G. Romulo, in his capacity as
Chairman of the Oversight Committee on Devolution, Secretary Emilia Boncodin of the
Department of Budget and Management (DBM) and Secretary Jose Lina of the Department
of Interior and Local Government (DILG).
Background
On December 7, 1998, then President Joseph Ejercito Estrada issued Executive Order (E.O.)
No. 48 entitled "ESTABLISHING A PROGRAM FOR DEVOLUTION ADJUSTMENT AND
EQUALIZATION." The program was established to "facilitate the process of enhancing the
capacities of local government units (LGUs) in the discharge of the functions and services
devolved to them by the National Government Agencies concerned pursuant to the Local
Government Code."1 The Oversight Committee (referred to as the Devolution Committee in
E.O. No. 48) constituted under Section 533(b) of Republic Act No. 7160 (The Local
Government Code of 1991) has been tasked to formulate and issue the appropriate rules
and regulations necessary for its effective implementation. 2 Further, to address the funding
shortfalls of functions and services devolved to the LGUs and other funding requirements of
the program, the "Devolution Adjustment and Equalization Fund" was created. 3 For 1998,
the DBM was directed to set aside an amount to be determined by the Oversight Committee
based on the devolution status appraisal surveys undertaken by the DILG. 4 The initial fund
was to be sourced from the available savings of the national government for CY 1998. 5 For
1999 and the succeeding years, the corresponding amount required to sustain the program
was to be incorporated in the annual GAA. 6 The Oversight Committee has been authorized
to issue the implementing rules and regulations governing the equitable allocation and
distribution of said fund to the LGUs.7
The LGSEF in the GAA of 1999
In Republic Act No. 8745, otherwise known as the GAA of 1999, the program was renamed
as the LOCAL GOVERNMENT SERVICE EQUALIZATION FUND (LGSEF). Under said
appropriations law, the amount of ₱96,780,000,000 was allotted as the share of the LGUs in
the internal revenue taxes. Item No. 1, Special Provisions, Title XXXVI – A. Internal Revenue
Allotment of Rep. Act No. 8745 contained the following proviso:
... PROVIDED, That the amount of FIVE BILLION PESOS (₱5,000,000,000) shall be earmarked
for the Local Government Service Equalization Fund for the funding requirements of
projects and activities arising from the full and efficient implementation of devolved
functions and services of local government units pursuant to R.A. No. 7160, otherwise
known as the Local Government Code of 1991: PROVIDED, FURTHER, That such amount shall
be released to the local government units subject to the implementing rules and
regulations, including such mechanisms and guidelines for the equitable allocations and
distribution of said fund among local government units subject to the guidelines that may be
prescribed by the Oversight Committee on Devolution as constituted pursuant to Book IV,
Title III, Section 533(b) of R.A. No. 7160. The Internal Revenue Allotment shall be released
directly by the Department of Budget and Management to the Local Government Units
concerned.
On July 28, 1999, the Oversight Committee (with then Executive Secretary Ronaldo B.
Zamora as Chairman) passed Resolution Nos. OCD-99-003, OCD-99-005 and OCD-99-006
entitled as follows:
OCD-99-005
RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR THE PhP5 BILLION CY 1999 LOCAL
GOVERNMENT SERVICE EQUALIZATION FUND (LGSEF) AND REQUESTING HIS EXCELLENCY
PRESIDENT JOSEPH EJERCITO ESTRADA TO APPROVE SAID ALLOCATION SCHEME.
OCD-99-006
RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR THE PhP4.0 BILLION OF THE 1999
LOCAL GOVERNMENT SERVICE EQUALIZATION FUND AND ITS CONCOMITANT GENERAL
FRAMEWORK, IMPLEMENTING GUIDELINES AND MECHANICS FOR ITS IMPLEMENTATION
AND RELEASE, AS PROMULGATED BY THE OVERSIGHT COMMITTEE ON DEVOLUTION.
OCD-99-003
RESOLUTION REQUESTING HIS EXCELLENCY PRESIDENT JOSEPH EJERCITO ESTRADA TO
APPROVE THE REQUEST OF THE OVERSIGHT COMMITTEE ON DEVOLUTION TO SET ASIDE
TWENTY PERCENT (20%) OF THE LOCAL GOVERNMENT SERVICE EQUALIZATION FUND
(LGSEF) FOR LOCAL AFFIRMATIVE ACTION PROJECTS AND OTHER PRIORITY INITIATIVES FOR
LGUs INSTITUTIONAL AND CAPABILITY BUILDING IN ACCORDANCE WITH THE
IMPLEMENTING GUIDELINES AND MECHANICS AS PROMULGATED BY THE COMMITTEE.
These OCD resolutions were approved by then President Estrada on October 6, 1999.
Under the allocation scheme adopted pursuant to Resolution No. OCD-99-005, the five
billion pesos LGSEF was to be allocated as follows:
106
1. The PhP4 Billion of the LGSEF shall be allocated in accordance with the allocation scheme
and implementing guidelines and mechanics promulgated and adopted by the OCD. To wit:
a. The first PhP2 Billion of the LGSEF shall be allocated in accordance with the codal formula
sharing scheme as prescribed under the 1991 Local Government Code;
b. The second PhP2 Billion of the LGSEF shall be allocated in accordance with a modified
1992 cost of devolution fund (CODEF) sharing scheme, as recommended by the respective
leagues of provinces, cities and municipalities to the OCD. The modified CODEF sharing
formula is as follows:
Province : 40%
Cities : 20%
Municipalities : 40%
This is applied to the P2 Billion after the approved amounts granted to individual provinces,
cities and municipalities as assistance to cover decrease in 1999 IRA share due to reduction
in land area have been taken out.
2. The remaining PhP1 Billion of the LGSEF shall be earmarked to support local affirmative
action projects and other priority initiatives submitted by LGUs to the Oversight Committee
on Devolution for approval in accordance with its prescribed guidelines as promulgated and
adopted by the OCD.
In Resolution No. OCD-99-003, the Oversight Committee set aside the one billion pesos or
20% of the LGSEF to support Local Affirmative Action Projects (LAAPs) of LGUs. This
remaining amount was intended to "respond to the urgent need for additional funds
assistance, otherwise not available within the parameters of other existing fund sources."
For LGUs to be eligible for funding under the one-billion-peso portion of the LGSEF, the OCD
promulgated the following:
III. CRITERIA FOR ELIGIBILITY:
1. LGUs (province, city, municipality, or barangay), individually or by group or multi-LGUs or
leagues of LGUs, especially those belonging to the 5th and 6th class, may access the fund to
support any projects or activities that satisfy any of the aforecited purposes. A barangay
may also access this fund directly or through their respective municipality or city.
2. The proposed project/activity should be need-based, a local priority, with high
development impact and are congruent with the socio-cultural, economic and development
agenda of the Estrada Administration, such as food security, poverty alleviation,
electrification, and peace and order, among others.
3. Eligible for funding under this fund are projects arising from, but not limited to, the
following areas of concern:
a. delivery of local health and sanitation services, hospital services and other tertiary
services;
b. delivery of social welfare services;
c. provision of socio-cultural services and facilities for youth and community development;
d. provision of agricultural and on-site related research;
e. improvement of community-based forestry projects and other local projects on
environment and natural resources protection and conservation;
f. improvement of tourism facilities and promotion of tourism;
g. peace and order and public safety;
h. construction, repair and maintenance of public works and infrastructure, including public
buildings and facilities for public use, especially those destroyed or damaged by man-made
or natural calamities and disaster as well as facilities for water supply, flood control and river
dikes;
i. provision of local electrification facilities;
j. livelihood and food production services, facilities and equipment;
k. other projects that may be authorized by the OCD consistent with the aforementioned
objectives and guidelines;
4. Except on extremely meritorious cases, as may be determined by the Oversight
Committee on Devolution, this portion of the LGSEF shall not be used in expenditures for
personal costs or benefits under existing laws applicable to governments. Generally, this
fund shall cover the following objects of expenditures for programs, projects and activities
arising from the implementation of devolved and regular functions and services:
a. acquisition/procurement of supplies and materials critical to the full and effective
implementation of devolved programs, projects and activities;
b. repair and/or improvement of facilities;
c. repair and/or upgrading of equipment;
d. acquisition of basic equipment;
e. construction of additional or new facilities;
f. counterpart contribution to joint arrangements or collective projects among groups of
municipalities, cities and/or provinces related to devolution and delivery of basic services.
5. To be eligible for funding, an LGU or group of LGU shall submit to the Oversight
Committee on Devolution through the Department of Interior and Local Governments,
107
within the prescribed schedule and timeframe, a Letter Request for Funding Support from
the Affirmative Action Program under the LGSEF, duly signed by the concerned LGU(s) and
endorsed by cooperators and/or beneficiaries, as well as the duly signed Resolution of
Endorsement by the respective Sanggunian(s) of the LGUs concerned. The LGU-proponent
shall also be required to submit the Project Request (PR), using OCD Project Request Form
No. 99-02, that details the following:
(a) general description or brief of the project;
(b) objectives and justifications for undertaking the project, which should highlight the
benefits to the locality and the expected impact to the local program/project arising from
the full and efficient implementation of social services and facilities, at the local levels;
(c) target outputs or key result areas;
(d) schedule of activities and details of requirements;
(e) total cost requirement of the project;
(f) proponent's counterpart funding share, if any, and identified source(s) of counterpart
funds for the full implementation of the project;
(g) requested amount of project cost to be covered by the LGSEF.
Further, under the guidelines formulated by the Oversight Committee as contained in
Attachment - Resolution No. OCD-99-003, the LGUs were required to identify the projects
eligible for funding under the one-billion-peso portion of the LGSEF and submit the project
proposals thereof and other documentary requirements to the DILG for appraisal. The
project proposals that passed the DILG's appraisal would then be submitted to the Oversight
Committee for review, evaluation and approval. Upon its approval, the Oversight Committee
would then serve notice to the DBM for the preparation of the Special Allotment Release
Order (SARO) and Notice of Cash Allocation (NCA) to effect the release of funds to the said
LGUs.
The LGSEF in the GAA of 2000
Under Rep. Act No. 8760, otherwise known as the GAA of 2000, the amount of
₱111,778,000,000 was allotted as the share of the LGUs in the internal revenue taxes. As in
the GAA of 1999, the GAA of 2000 contained a proviso earmarking five billion pesos of the
IRA for the LGSEF. This proviso, found in Item No. 1, Special Provisions, Title XXXVII – A.
Internal Revenue Allotment, was similarly worded as that contained in the GAA of 1999.
The Oversight Committee, in its Resolution No. OCD-2000-023 dated June 22, 2000, adopted
the following allocation scheme governing the five billion pesos LGSEF for 2000:
1. The PhP3.5 Billion of the CY 2000 LGSEF shall be allocated to and shared by the four levels
of LGUs, i.e., provinces, cities, municipalities, and barangays, using the following percentage-
sharing formula agreed upon and jointly endorsed by the various Leagues of LGUs:
For Provinces 26% or ₱ 910,000,000
For Cities 23% or 805,000,000
For Municipalities 35% or 1,225,000,000
For Barangays 16% or 560,000,000
Provided that the respective Leagues representing the provinces, cities, municipalities and
barangays shall draw up and adopt the horizontal distribution/sharing schemes among the
member LGUs whereby the Leagues concerned may opt to adopt direct financial assistance
or project-based arrangement, such that the LGSEF allocation for individual LGU shall be
released directly to the LGU concerned;
Provided further that the individual LGSEF shares to LGUs are used in accordance with the
general purposes and guidelines promulgated by the OCD for the implementation of the
LGSEF at the local levels pursuant to Res. No. OCD-99-006 dated October 7, 1999 and
pursuant to the Leagues' guidelines and mechanism as approved by the OCD;
Provided further that each of the Leagues shall submit to the OCD for its approval their
respective allocation scheme, the list of LGUs with the corresponding LGSEF shares and the
corresponding project categories if project-based;
Provided further that upon approval by the OCD, the lists of LGUs shall be endorsed to the
DBM as the basis for the preparation of the corresponding NCAs, SAROs, and related
budget/release documents.
2. The remaining ₱1,500,000,000 of the CY 2000 LGSEF shall be earmarked to support the
following initiatives and local affirmative action projects, to be endorsed to and approved by
the Oversight Committee on Devolution in accordance with the OCD agreements, guidelines,
procedures and documentary requirements:
On July 5, 2000, then President Estrada issued a Memorandum authorizing then Executive
Secretary Zamora and the DBM to implement and release the 2.5 billion pesos LGSEF for
2000 in accordance with Resolution No. OCD-2000-023.
Thereafter, the Oversight Committee, now under the administration of President Gloria
Macapagal-Arroyo, promulgated Resolution No. OCD-2001-29 entitled "ADOPTING
RESOLUTION NO. OCD-2000-023 IN THE ALLOCATION, IMPLEMENTATION AND RELEASE OF
THE REMAINING ₱2.5 BILLION LGSEF FOR CY 2000." Under this resolution, the amount of
one billion pesos of the LGSEF was to be released in accordance with paragraph 1 of
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Resolution No. OCD-2000-23, to complete the 3.5 billion pesos allocated to the LGUs, while 2.0 Projects in consonance with the President's State of the Nation Address (SONA)/summit
the amount of 1.5 billion pesos was allocated for the LAAP. However, out of the latter commitments.
amount, ₱400,000,000 was to be allocated and released as follows: ₱50,000,000 as financial RESOLVED FURTHER, that the remaining ₱100 million LGSEF capability building fund shall be
assistance to the LAAPs of LGUs; ₱275,360,227 as financial assistance to cover the decrease distributed in accordance with the recommendation of the Leagues of Provinces, Cities,
in the IRA of LGUs concerned due to reduction in land area; and ₱74,639,773 for the LGSEF Municipalities and Barangays, and approved by the OCD.
Capability-Building Fund. Upon receipt of a copy of the above resolution, Gov. Mandanas wrote to the individual
The LGSEF in the GAA of 2001 members of the Oversight Committee seeking the reconsideration of Resolution No. OCD-
In view of the failure of Congress to enact the general appropriations law for 2001, the GAA 2002-001. He also wrote to Pres. Macapagal-Arroyo urging her to disapprove said resolution
of 2000 was deemed re-enacted, together with the IRA of the LGUs therein and the proviso as it violates the Constitution and the Local Government Code of 1991.
earmarking five billion pesos thereof for the LGSEF. On January 25, 2002, Pres. Macapagal-Arroyo approved Resolution No. OCD-2002-001.
On January 9, 2002, the Oversight Committee adopted Resolution No. OCD-2002-001 The Petitioner's Case
allocating the five billion pesos LGSEF for 2001 as follows: The petitioner now comes to this Court assailing as unconstitutional and void the provisos in
Modified Codal Formula ₱ 3.000 billion the GAAs of 1999, 2000 and 2001, relating to the LGSEF. Similarly assailed are the Oversight
Committee's Resolutions Nos. OCD-99-003, OCD-99-005, OCD-99-006, OCD-2000-023, OCD-
Priority Projects 1.900 billion 2001-029 and OCD-2002-001 issued pursuant thereto. The petitioner submits that the
Capability Building Fund .100 billion assailed provisos in the GAAs and the OCD resolutions, insofar as they earmarked the
amount of five billion pesos of the IRA of the LGUs for 1999, 2000 and 2001 for the LGSEF
₱ 5.000 billion
and imposed conditions for the release thereof, violate the Constitution and the Local
RESOLVED FURTHER, that the ₱3.0 B of the CY 2001 LGSEF which is to be allocated according Government Code of 1991.
to the modified codal formula shall be released to the four levels of LGUs, i.e., provinces, Section 6, Article X of the Constitution is invoked as it mandates that the "just share" of the
cities, municipalities and barangays, as follows: LGUs shall be automatically released to them. Sections 18 and 286 of the Local Government
Percentag Code of 1991, which enjoin that the "just share" of the LGUs shall be "automatically and
LGUs Amount
e directly" released to them "without need of further action" are, likewise, cited.
The petitioner posits that to subject the distribution and release of the five-billion-peso
Provinces 25 ₱ 0.750 billion
portion of the IRA, classified as the LGSEF, to compliance by the LGUs with the implementing
Cities 25 0.750 rules and regulations, including the mechanisms and guidelines prescribed by the Oversight
Municipalities 35 1.050 Committee, contravenes the explicit directive of the Constitution that the LGUs' share in the
national taxes "shall be automatically released to them." The petitioner maintains that the
Barangays 15 0.450 use of the word "shall" must be given a compulsory meaning.
100 ₱ 3.000 billion To further buttress this argument, the petitioner contends that to vest the Oversight
Committee with the authority to determine the distribution and release of the LGSEF, which
RESOLVED FURTHER, that the ₱1.9 B earmarked for priority projects shall be distributed
is a part of the IRA of the LGUs, is an anathema to the principle of local autonomy as
according to the following criteria:
embodied in the Constitution and the Local Government Code of 1991. The petitioner cites
1.0 For projects of the 4th, 5th and 6th class LGUs; or
as an example the experience in 2001 when the release of the LGSEF was long delayed
109
because the Oversight Committee was not able to convene that year and no guidelines were
issued therefor. Further, the possible disapproval by the Oversight Committee of the project
proposals of the LGUs would result in the diminution of the latter's share in the IRA.
Another infringement alleged to be occasioned by the assailed OCD resolutions is the
improper amendment to Section 285 of the Local Government Code of 1991 on the
percentage sharing of the IRA among the LGUs. Said provision allocates the IRA as follows:
Provinces – 23%; Cities – 23%; Municipalities – 34%; and Barangays – 20%. 8 This formula has
been improperly amended or modified, with respect to the five-billion-peso portion of the
IRA allotted for the LGSEF, by the assailed OCD resolutions as they invariably provided for a
different sharing scheme.
The modifications allegedly constitute an illegal amendment by the executive branch of a
substantive law. Moreover, the petitioner mentions that in the Letter dated December 5,
2001 of respondent Executive Secretary Romulo addressed to respondent Secretary
Boncodin, the former endorsed to the latter the release of funds to certain LGUs from the
LGSEF in accordance with the handwritten instructions of President Arroyo. Thus, the LGUs
are at a loss as to how a portion of the LGSEF is actually allocated. Further, there are still
portions of the LGSEF that, to date, have not been received by the petitioner; hence,
resulting in damage and injury to the petitioner.
The petitioner prays that the Court declare as unconstitutional and void the assailed
provisos relating to the LGSEF in the GAAs of 1999, 2000 and 2001 and the assailed OCD
resolutions (Resolutions Nos. OCD-99-003, OCD-99-005, OCD-99-006, OCD-2000-023, OCD-
2001-029 and OCD-2002-001) issued by the Oversight Committee pursuant thereto. The
petitioner, likewise, prays that the Court direct the respondents to rectify the unlawful and
illegal distribution and releases of the LGSEF for the aforementioned years and release the
same in accordance with the sharing formula under Section 285 of the Local Government
Code of 1991. Finally, the petitioner urges the Court to declare that the entire IRA should be
released automatically without further action by the LGUs as required by the Constitution
and the Local Government Code of 1991.
The Respondents' Arguments
The respondents, through the Office of the Solicitor General, urge the Court to dismiss the
petition on procedural and substantive grounds. On the latter, the respondents contend that
the assailed provisos in the GAAs of 1999, 2000 and 2001 and the assailed resolutions issued
by the Oversight Committee are not constitutionally infirm. The respondents advance the
view that Section 6, Article X of the Constitution does not specify that the "just share" of the
LGUs shall be determined solely by the Local Government Code of 1991. Moreover, the
phrase "as determined by law" in the same constitutional provision means that there exists
no limitation on the power of Congress to determine what is the "just share" of the LGUs in
the national taxes. In other words, Congress is the arbiter of what should be the "just share"
of the LGUs in the national taxes.
The respondents further theorize that Section 285 of the Local Government Code of 1991,
which provides for the percentage sharing of the IRA among the LGUs, was not intended to
be a fixed determination of their "just share" in the national taxes. Congress may enact
other laws, including appropriations laws such as the GAAs of 1999, 2000 and 2001,
providing for a different sharing formula. Section 285 of the Local Government Code of 1991
was merely intended to be the "default share" of the LGUs to do away with the need to
determine annually by law their "just share." However, the LGUs have no vested right in a
permanent or fixed percentage as Congress may increase or decrease the "just share" of the
LGUs in accordance with what it believes is appropriate for their operation. There is nothing
in the Constitution which prohibits Congress from making such determination through the
appropriations laws. If the provisions of a particular statute, the GAA in this case, are within
the constitutional power of the legislature to enact, they should be sustained whether the
courts agree or not in the wisdom of their enactment.
On procedural grounds, the respondents urge the Court to dismiss the petition outright as
the same is defective. The petition allegedly raises factual issues which should be properly
threshed out in the lower courts, not this Court, not being a trier of facts. Specifically, the
petitioner's allegation that there are portions of the LGSEF that it has not, to date, received,
thereby causing it (the petitioner) injury and damage, is subject to proof and must be
substantiated in the proper venue, i.e., the lower courts.
Further, according to the respondents, the petition has already been rendered moot and
academic as it no longer presents a justiciable controversy. The IRAs for the years 1999,
2000 and 2001, have already been released and the government is now operating under the
2003 budget. In support of this, the respondents submitted certifications issued by officers
of the DBM attesting to the release of the allocation or shares of the petitioner in the LGSEF
for 1999, 2000 and 2001. There is, therefore, nothing more to prohibit.
Finally, the petitioner allegedly has no legal standing to bring the suit because it has not
suffered any injury. In fact, the petitioner's "just share" has even increased. Pursuant to
Section 285 of the Local Government Code of 1991, the share of the provinces is 23%. OCD
Nos. 99-005, 99-006 and 99-003 gave the provinces 40% of ₱2 billion of the LGSEF. OCD Nos.
110
2000-023 and 2001-029 apportioned 26% of ₱3.5 billion to the provinces. On the other
hand, OCD No. 2001-001 allocated 25% of ₱3 billion to the provinces. Thus, the petitioner
has not suffered any injury in the implementation of the assailed provisos in the GAAs of
1999, 2000 and 2001 and the OCD resolutions.
The Ruling of the Court Procedural Issues
Before resolving the petition on its merits, the Court shall first rule on the following
procedural issues raised by the respondents: (1) whether the petitioner has legal standing or
locus standi to file the present suit; (2) whether the petition involves factual questions that
are properly cognizable by the lower courts; and (3) whether the issue had been rendered
moot and academic.
The petitioner has locus standi to maintain the present suit
The gist of the question of standing is whether a party has "alleged such a personal stake in
the outcome of the controversy as to assure that concrete adverseness which sharpens the
presentation of issues upon which the court so largely depends for illumination of difficult
constitutional questions."9 Accordingly, it has been held that the interest of a party assailing
the constitutionality of a statute must be direct and personal. Such party must be able to
show, not only that the law or any government act is invalid, but also that he has sustained
or is in imminent danger of sustaining some direct injury as a result of its enforcement, and
not merely that he suffers thereby in some indefinite way. It must appear that the person
complaining has been or is about to be denied some right or privilege to which he is lawfully
entitled or that he is about to be subjected to some burdens or penalties by reason of the
statute or act complained of.10
The Court holds that the petitioner possesses the requisite standing to maintain the present
suit. The petitioner, a local government unit, seeks relief in order to protect or vindicate an
interest of its own, and of the other LGUs. This interest pertains to the LGUs' share in the
national taxes or the IRA. The petitioner's constitutional claim is, in substance, that the
assailed provisos in the GAAs of 1999, 2000 and 2001, and the OCD resolutions contravene
Section 6, Article X of the Constitution, mandating the "automatic release" to the LGUs of
their share in the national taxes. Further, the injury that the petitioner claims to suffer is the
diminution of its share in the IRA, as provided under Section 285 of the Local Government
Code of 1991, occasioned by the implementation of the assailed measures. These
allegations are sufficient to grant the petitioner standing to question the validity of the
assailed provisos in the GAAs of 1999, 2000 and 2001, and the OCD resolutions as the
petitioner clearly has "a plain, direct and adequate interest" in the manner and distribution
of the IRA among the LGUs.
The petition involves a significant legal issue
The crux of the instant controversy is whether the assailed provisos contained in the GAAs
of 1999, 2000 and 2001, and the OCD resolutions infringe the Constitution and the Local
Government Code of 1991. This is undoubtedly a legal question. On the other hand, the
following facts are not disputed:
1. The earmarking of five billion pesos of the IRA for the LGSEF in the assailed provisos in the
GAAs of 1999, 2000 and re-enacted budget for 2001;
2. The promulgation of the assailed OCD resolutions providing for the allocation schemes
covering the said five billion pesos and the implementing rules and regulations therefor; and
3. The release of the LGSEF to the LGUs only upon their compliance with the implementing
rules and regulations, including the guidelines and mechanisms, prescribed by the Oversight
Committee.
Considering that these facts, which are necessary to resolve the legal question now before
this Court, are no longer in issue, the same need not be determined by a trial court. 11 In any
case, the rule on hierarchy of courts will not prevent this Court from assuming jurisdiction
over the petition. The said rule may be relaxed when the redress desired cannot be obtained
in the appropriate courts or where exceptional and compelling circumstances justify
availment of a remedy within and calling for the exercise of this Court's primary
jurisdiction.12
The crucial legal issue submitted for resolution of this Court entails the proper legal
interpretation of constitutional and statutory provisions. Moreover, the "transcendental
importance" of the case, as it necessarily involves the application of the constitutional
principle on local autonomy, cannot be gainsaid. The nature of the present controversy,
therefore, warrants the relaxation by this Court of procedural rules in order to resolve the
case forthwith.
The substantive issue needs to be resolved notwithstanding the supervening events
Granting arguendo that, as contended by the respondents, the resolution of the case had
already been overtaken by supervening events as the IRA, including the LGSEF, for 1999,
2000 and 2001, had already been released and the government is now operating under a
new appropriations law, still, there is compelling reason for this Court to resolve the
substantive issue raised by the instant petition. Supervening events, whether intended or
accidental, cannot prevent the Court from rendering a decision if there is a grave violation of
111
the Constitution.13 Even in cases where supervening events had made the cases moot, the
Court did not hesitate to resolve the legal or constitutional issues raised to formulate
controlling principles to guide the bench, bar and public. 14
Another reason justifying the resolution by this Court of the substantive issue now before it
is the rule that courts will decide a question otherwise moot and academic if it is "capable of
repetition, yet evading review." 15 For the GAAs in the coming years may contain provisos
similar to those now being sought to be invalidated, and yet, the question may not be
decided before another GAA is enacted. It, thus, behooves this Court to make a categorical
ruling on the substantive issue now.
Substantive Issue
As earlier intimated, the resolution of the substantive legal issue in this case calls for the
application of a most important constitutional policy and principle, that of local
autonomy.16 In Article II of the Constitution, the State has expressly adopted as a policy that:
Section 25. The State shall ensure the autonomy of local governments.
An entire article (Article X) of the Constitution has been devoted to guaranteeing and
promoting the autonomy of LGUs. Section 2 thereof reiterates the State policy in this wise:
Section 2. The territorial and political subdivisions shall enjoy local autonomy.
Consistent with the principle of local autonomy, the Constitution confines the President's
power over the LGUs to one of general supervision. 17 This provision has been interpreted to
exclude the power of control. The distinction between the two powers was enunciated in
Drilon v. Lim:18
An officer in control lays down the rules in the doing of an act. If they are not followed, he
may, in his discretion, order the act undone or re-done by his subordinate or he may even
decide to do it himself. Supervision does not cover such authority. The supervisor or
superintendent merely sees to it that the rules are followed, but he himself does not lay
down such rules, nor does he have the discretion to modify or replace them. If the rules are
not observed, he may order the work done or re-done but only to conform to the prescribed
rules. He may not prescribe his own manner for doing the act. He has no judgment on this
matter except to see to it that the rules are followed. 19
The Local Government Code of 199120 was enacted to flesh out the mandate of the
Constitution.21 The State policy on local autonomy is amplified in Section 2 thereof:
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.
Guided by these precepts, the Court shall now determine whether the assailed provisos in
the GAAs of 1999, 2000 and 2001, earmarking for each corresponding year the amount of
five billion pesos of the IRA for the LGSEF and the OCD resolutions promulgated pursuant
thereto, transgress the Constitution and the Local Government Code of 1991.
The assailed provisos in the GAAs of 1999, 2000 and 2001 and the OCD resolutions violate
the constitutional precept on local autonomy
Section 6, Article X of the Constitution reads:
Sec. 6. Local government units shall have a just share, as determined by law, in the national
taxes which shall be automatically released to them.
When parsed, it would be readily seen that this provision mandates that (1) the LGUs shall
have a "just share" in the national taxes; (2) the "just share" shall be determined by law; and
(3) the "just share" shall be automatically released to the LGUs.
The Local Government Code of 1991, among its salient provisions, underscores the
automatic release of the LGUs' "just share" in this wise:
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 revenue 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 further action;
...
Sec. 286. Automatic Release of Shares. (a) The share of each local government unit shall be
released, without need of any further action, directly to the provincial, city, municipal or
barangay treasurer, as the case may be, on a quarterly basis within five (5) days after the
end of each quarter, and which shall not be subject to any lien or holdback that may be
imposed by the national government for whatever purpose.
(b) Nothing in this Chapter shall be understood to diminish the share of local government
units under existing laws.
112
Webster's Third New International Dictionary defines "automatic" as "involuntary either
wholly or to a major extent so that any activity of the will is largely negligible; of a reflex
nature; without volition; mechanical; like or suggestive of an automaton." Further, the word
"automatically" is defined as "in an automatic manner: without thought or conscious
intention." Being "automatic," thus, connotes something mechanical, spontaneous and
perfunctory. As such, the LGUs are not required to perform any act to receive the "just
share" accruing to them from the national coffers. As emphasized by the Local Government
Code of 1991, the "just share" of the LGUs shall be released to them "without need of
further action." Construing Section 286 of the LGC, we held in Pimentel, Jr. v. Aguirre, 22 viz:
Section 4 of AO 372 cannot, however, be upheld. A basic feature of local fiscal autonomy is
the automatic release of the shares of LGUs in the National internal revenue. This is
mandated by no less than the Constitution. The Local Government Code specifies further
that the release shall be made directly to the LGU concerned within five (5) days after every
quarter of the year and "shall not be subject to any lien or holdback that may be imposed by
the national government for whatever purpose." As a rule, the term "SHALL" is a word of
command that must be given a compulsory meaning. The provision is, therefore,
IMPERATIVE.
Section 4 of AO 372, however, orders the withholding, effective January 1, 1998, of 10
percent of the LGUs' IRA "pending the assessment and evaluation by the Development
Budget Coordinating Committee of the emerging fiscal situation" in the country. Such
withholding clearly contravenes the Constitution and the law. Although temporary, it is
equivalent to a holdback, which means "something held back or withheld, often
temporarily." Hence, the "temporary" nature of the retention by the national government
does not matter. Any retention is prohibited.
In sum, while Section 1 of AO 372 may be upheld as an advisory effected in times of national
crisis, Section 4 thereof has no color of validity at all. The latter provision effectively
encroaches on the fiscal autonomy of local governments. Concededly, the President was
well-intentioned in issuing his Order to withhold the LGUs' IRA, but the rule of law requires
that even the best intentions must be carried out within the parameters of the Constitution
and the law. Verily, laudable purposes must be carried out by legal methods. 23
The "just share" of the LGUs is incorporated as the IRA in the appropriations law or GAA
enacted by Congress annually. Under the assailed provisos in the GAAs of 1999, 2000 and
2001, a portion of the IRA in the amount of five billion pesos was earmarked for the LGSEF,
and these provisos imposed the condition that "such amount shall be released to the local
government units subject to the implementing rules and regulations, including such
mechanisms and guidelines for the equitable allocations and distribution of said fund among
local government units subject to the guidelines that may be prescribed by the Oversight
Committee on Devolution." Pursuant thereto, the Oversight Committee, through the
assailed OCD resolutions, apportioned the five billion pesos LGSEF such that:
For 1999
₱2 billion - allocated according to Sec. 285 LGC
₱2 billion - Modified Sharing Formula (Provinces – 40%;
Cities – 20%; Municipalities – 40%)
₱1 billion – projects (LAAP) approved by OCD. 24
For 2000
₱3.5 billion – Modified Sharing Formula (Provinces – 26%;
Cities – 23%; Municipalities – 35%; Barangays – 16%);
₱1.5 billion – projects (LAAP) approved by the OCD. 25
For 2001
₱3 billion – Modified Sharing Formula (Provinces – 25%;
Cities – 25%; Municipalities – 35%; Barangays – 15%)
₱1.9 billion – priority projects
₱100 million – capability building fund. 26
Significantly, the LGSEF could not be released to the LGUs without the Oversight
Committee's prior approval. Further, with respect to the portion of the LGSEF allocated for
various projects of the LGUs (₱1 billion for 1999; ₱1.5 billion for 2000 and ₱2 billion for
2001), the Oversight Committee, through the assailed OCD resolutions, laid down guidelines
and mechanisms that the LGUs had to comply with before they could avail of funds from
this portion of the LGSEF. The guidelines required (a) the LGUs to identify the projects
eligible for funding based on the criteria laid down by the Oversight Committee; (b) the
LGUs to submit their project proposals to the DILG for appraisal; (c) the project proposals
that passed the appraisal of the DILG to be submitted to the Oversight Committee for
review, evaluation and approval. It was only upon approval thereof that the Oversight
Committee would direct the DBM to release the funds for the projects.
To the Court's mind, the entire process involving the distribution and release of the LGSEF is
constitutionally impermissible. The LGSEF is part of the IRA or "just share" of the LGUs in the
national taxes. To subject its distribution and release to the vagaries of the implementing
rules and regulations, including the guidelines and mechanisms unilaterally prescribed by
113
the Oversight Committee from time to time, as sanctioned by the assailed provisos in the
GAAs of 1999, 2000 and 2001 and the OCD resolutions, makes the release not automatic, a
flagrant violation of the constitutional and statutory mandate that the "just share" of the
LGUs "shall be automatically released to them." The LGUs are, thus, placed at the mercy of
the Oversight Committee.
Where the law, the Constitution in this case, is clear and unambiguous, it must be taken to
mean exactly what it says, and courts have no choice but to see to it that the mandate is
obeyed.27 Moreover, as correctly posited by the petitioner, the use of the word "shall"
connotes a mandatory order. Its use in a statute denotes an imperative obligation and is
inconsistent with the idea of discretion. 28
Indeed, the Oversight Committee exercising discretion, even control, over the distribution
and release of a portion of the IRA, the LGSEF, is an anathema to and subversive of the
principle of local autonomy as embodied in the Constitution. Moreover, it finds no statutory
basis at all as the Oversight Committee was created merely to formulate the rules and
regulations for the efficient and effective implementation of the Local Government Code of
1991 to ensure "compliance with the principles of local autonomy as defined under the
Constitution."29 In fact, its creation was placed under the title of "Transitory Provisions,"
signifying its ad hoc character. According to Senator Aquilino Q. Pimentel, the principal
author and sponsor of the bill that eventually became Rep. Act No. 7160, the Committee's
work was supposed to be done a year from the approval of the Code, or on October 10,
1992.30 The Oversight Committee's authority is undoubtedly limited to the implementation
of the Local Government Code of 1991, not to supplant or subvert the same. Neither can it
exercise control over the IRA, or even a portion thereof, of the LGUs.
That the automatic release of the IRA was precisely intended to guarantee and promote
local autonomy can be gleaned from the discussion below between Messrs. Jose N. Nolledo
and Regalado M. Maambong, then members of the 1986 Constitutional Commission, to wit:
MR. MAAMBONG. Unfortunately, under Section 198 of the Local Government Code, the
existence of subprovinces is still acknowledged by the law, but the statement of the
Gentleman on this point will have to be taken up probably by the Committee on Legislation.
A second point, Mr. Presiding Officer, is that under Article 2, Section 10 of the 1973
Constitution, we have a provision which states:
The State shall guarantee and promote the autonomy of local government units, especially
the barrio, to insure their fullest development as self-reliant communities.
This provision no longer appears in the present configuration; does this mean that the
concept of giving local autonomy to local governments is no longer adopted as far as this
Article is concerned?
MR. NOLLEDO. No. In the report of the Committee on Preamble, National Territory, and
Declaration of Principles, that concept is included and widened upon the initiative of
Commissioner Bennagen.
MR. MAAMBONG. Thank you for that.
With regard to Section 6, sources of revenue, the creation of sources as provided by
previous law was "subject to limitations as may be provided by law," but now, we are using
the term "subject to such guidelines as may be fixed by law." In Section 7, mention is made
about the "unique, distinct and exclusive charges and contributions," and in Section 8, we
talk about "exclusivity of local taxes and the share in the national wealth." Incidentally, I was
one of the authors of this provision, and I am very thankful. Does this indicate local
autonomy, or was the wording of the law changed to give more autonomy to the local
government units?31
MR. NOLLEDO. Yes. In effect, those words indicate also "decentralization" because local
political units can collect taxes, fees and charges subject merely to guidelines, as
recommended by the league of governors and city mayors, with whom I had a dialogue for
almost two hours. They told me that limitations may be questionable in the sense that
Congress may limit and in effect deny the right later on.
MR. MAAMBONG. Also, this provision on "automatic release of national tax share" points to
more local autonomy. Is this the intention?
MR. NOLLEDO. Yes, the Commissioner is perfectly right. 32
The concept of local autonomy was explained in Ganzon v. Court of Appeals 33  in this wise:
As the Constitution itself declares, local autonomy 'means a more responsive and
accountable local government structure instituted through a system of decentralization.' The
Constitution, as we observed, does nothing more than to break up the monopoly of the
national government over the affairs of local governments and as put by political adherents,
to "liberate the local governments from the imperialism of Manila." Autonomy, however, is
not meant to end the relation of partnership and interdependence between the central
administration and local government units, or otherwise, to usher in a regime of federalism.
The Charter has not taken such a radical step. Local governments, under the Constitution,
are subject to regulation, however limited, and for no other purpose than precisely, albeit
paradoxically, to enhance self-government.
114
As we observed in one case, decentralization means devolution of national administration –
but not power – to the local levels.Thus:
Now, autonomy is either decentralization of administration or decentralization of power.
There is decentralization of administration when the central government delegates
administrative powers to political subdivisions in order to broaden the base of government
power and in the process to make local governments 'more responsive and accountable'
and 'ensure their fullest development as self-reliant communities and make them more
effective partners in the pursuit of national development and social progress.' At the same
time, it relieves the central government of the burden of managing local affairs and enables
it to concentrate on national concerns. The President exercises 'general supervision' over
them, but only to 'ensure that local affairs are administered according to law.' He has no
control over their acts in the sense that he can substitute their judgments with his own.
Decentralization of power, on the other hand, involves an abdication of political power in
the [sic] favor of local governments [sic] units declared to be autonomous. In that case, the
autonomous government is free to chart its own destiny and shape its future with minimum
intervention from central authorities.According to a constitutional author, decentralization
of power amounts to 'self-immolation,' since in that event, the autonomous government
becomes accountable not to the central authorities but to its constituency. 34
Local autonomy includes both administrative and fiscal autonomy. The fairly recent case of
Pimentel v. Aguirre35 is particularly instructive. The Court declared therein that local fiscal
autonomy includes the power of the LGUs to, inter alia, allocate their resources in
accordance with their own priorities:
Under existing law, local government units, in addition to having administrative autonomy in
the exercise of their functions, enjoy fiscal autonomy as well. Fiscal autonomy means that
local governments have the power to create their own sources of revenue in addition to
their equitable share in the national taxes released by the national government, as well as
the power to allocate their resources in accordance with their own priorities. It extends to
the preparation of their budgets, and local officials in turn have to work within the
constraints thereof. They are not formulated at the national level and imposed on local
governments, whether they are relevant to local needs and resources or not ... 36
Further, a basic feature of local fiscal autonomy is the constitutionally mandated automatic
release of the shares of LGUs in the national internal revenue. 37
Following this ratiocination, the Court in Pimentel struck down as unconstitutional Section 4
of Administrative Order (A.O.) No. 372 which ordered the withholding, effective January 1,
1998, of ten percent of the LGUs' IRA "pending the assessment and evaluation by the
Development Budget Coordinating Committee of the emerging fiscal situation."
In like manner, the assailed provisos in the GAAs of 1999, 2000 and 2001, and the OCD
resolutions constitute a "withholding" of a portion of the IRA. They put on hold the
distribution and release of the five billion pesos LGSEF and subject the same to the
implementing rules and regulations, including the guidelines and mechanisms prescribed by
the Oversight Committee from time to time. Like Section 4 of A.O. 372, the assailed provisos
in the GAAs of 1999, 2000 and 2001 and the OCD resolutions effectively encroach on the
fiscal autonomy enjoyed by the LGUs and must be struck down. They cannot, therefore, be
upheld.
The assailed provisos in the GAAs of 1999, 2000
and 2001 and the OCD resolutions cannot amend
Section 285 of the Local Government Code of 1991
Section 28438 of the Local Government Code provides that, beginning the third year of its
effectivity, the LGUs' share in the national internal revenue taxes shall be 40%. This
percentage is fixed and may not be reduced except "in the event the national government
incurs an unmanageable public sector deficit" and only upon compliance with stringent
requirements set forth in the same section:
Sec. 284. ...
Provided, That in the event that the national government incurs an unmanageable public
sector deficit, the President of the Philippines is hereby authorized, upon recommendation
of Secretary of Finance, Secretary of Interior and Local Government and Secretary of Budget
and Management, and subject to consultation with the presiding officers of both Houses of
Congress and the presidents of the liga, to make the necessary adjustments in the internal
revenue allotment of local government units but in no case shall the allotment be less than
thirty percent (30%) of the collection of the national internal revenue taxes of the third fiscal
year preceding the current fiscal year; Provided, further That in the first year of the
effectivity of this Code, the local government units shall, in addition to the thirty percent
(30%) internal revenue allotment which shall include the cost of devolved functions for
essential public services, be entitled to receive the amount equivalent to the cost of
devolved personnel services.
Thus, from the above provision, the only possible exception to the mandatory automatic
release of the LGUs' IRA is if the national internal revenue collections for the current fiscal
year is less than 40 percent of the collections of the preceding third fiscal year, in which case
115
what should be automatically released shall be a proportionate amount of the collections
for the current fiscal year. The adjustment may even be made on a quarterly basis
depending on the actual collections of national internal revenue taxes for the quarter of the
current fiscal year. In the instant case, however, there is no allegation that the national
internal revenue tax collections for the fiscal years 1999, 2000 and 2001 have fallen
compared to the preceding three fiscal years.
Section 285 then specifies how the IRA shall be allocated among the LGUs:
Sec. 285. Allocation to Local Government Units. – The share of local government units in the
internal revenue allotment shall be allocated in the following manner:
(a) Provinces – Twenty-three (23%)
(b) Cities – Twenty-three percent (23%);
(c) Municipalities – Thirty-four (34%); and
(d) Barangays – Twenty percent (20%).
However, this percentage sharing is not followed with respect to the five billion pesos LGSEF
as the assailed OCD resolutions, implementing the assailed provisos in the GAAs of 1999,
2000 and 2001, provided for a different sharing scheme. For example, for 1999, ₱2 billion of
the LGSEF was allocated as follows: Provinces – 40%; Cities – 20%; Municipalities –
40%.39 For 2000, ₱3.5 billion of the LGSEF was allocated in this manner: Provinces – 26%;
Cities – 23%; Municipalities – 35%; Barangays – 26%. 40 For 2001, ₱3 billion of the LGSEF was
allocated, thus: Provinces – 25%; Cities – 25%; Municipalities – 35%; Barangays – 15%. 41
The respondents argue that this modification is allowed since the Constitution does not
specify that the "just share" of the LGUs shall only be determined by the Local Government
Code of 1991. That it is within the power of Congress to enact other laws, including the
GAAs, to increase or decrease the "just share" of the LGUs. This contention is untenable. The
Local Government Code of 1991 is a substantive law. And while it is conceded that Congress
may amend any of the provisions therein, it may not do so through appropriations laws or
GAAs. Any amendment to the Local Government Code of 1991 should be done in a separate
law, not in the appropriations law, because Congress cannot include in a general
appropriation bill matters that should be more properly enacted in a separate legislation. 42
A general appropriations bill is a special type of legislation, whose content is limited to
specified sums of money dedicated to a specific purpose or a separate fiscal unit. 43 Any
provision therein which is intended to amend another law is considered an "inappropriate
provision." The category of "inappropriate provisions" includes unconstitutional provisions
and provisions which are intended to amend other laws, because clearly these kinds of laws
have no place in an appropriations bill. 44
Increasing or decreasing the IRA of the LGUs or modifying their percentage sharing therein,
which are fixed in the Local Government Code of 1991, are matters of general and
substantive law. To permit Congress to undertake these amendments through the GAAs, as
the respondents contend, would be to give Congress the unbridled authority to unduly
infringe the fiscal autonomy of the LGUs, and thus put the same in jeopardy every year. This,
the Court cannot sanction.
It is relevant to point out at this juncture that, unlike those of 1999, 2000 and 2001, the
GAAs of 2002 and 2003 do not contain provisos similar to the herein assailed provisos. In
other words, the GAAs of 2002 and 2003 have not earmarked any amount of the IRA for the
LGSEF. Congress had perhaps seen fit to discontinue the practice as it recognizes its
infirmity. Nonetheless, as earlier mentioned, this Court has deemed it necessary to make a
definitive ruling on the matter in order to prevent its recurrence in future appropriations
laws and that the principles enunciated herein would serve to guide the bench, bar and
public.
Conclusion
In closing, it is well to note that the principle of local autonomy, while concededly
expounded in greater detail in the present Constitution, dates back to the turn of the
century when President William McKinley, in his Instructions to the Second Philippine
Commission dated April 7, 1900, ordered the new Government "to devote their attention in
the first instance to the establishment of municipal governments in which the natives of the
Islands, both in the cities and in the rural communities, shall be afforded the opportunity to
manage their own affairs to the fullest extent of which they are capable, and subject to the
least degree of supervision and control in which a careful study of their capacities and
observation of the workings of native control show to be consistent with the maintenance
of law, order and loyalty." 45 While the 1935 Constitution had no specific article on local
autonomy, nonetheless, it limited the executive power over local governments to "general
supervision ... as may be provided by law." 46 Subsequently, the 1973 Constitution explicitly
stated that "[t]he State shall guarantee and promote the autonomy of local government
units, especially the barangay to ensure their fullest development as self-reliant
communities."47 An entire article on Local Government was incorporated therein. The
present Constitution, as earlier opined, has broadened the principle of local autonomy. The
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14 sections in Article X thereof markedly increased the powers of the local governments in
order to accomplish the goal of a more meaningful local autonomy.
Indeed, the value of local governments as institutions of democracy is measured by the
degree of autonomy that they enjoy.48 As eloquently put by
M. De Tocqueville, a distinguished French political writer, "[l]ocal assemblies of citizens
constitute the strength of free nations. Township meetings are to liberty what primary
schools are to science; they bring it within the people's reach; they teach men how to use
and enjoy it. A nation may establish a system of free governments but without the spirit of
municipal institutions, it cannot have the spirit of liberty." 49
Our national officials should not only comply with the constitutional provisions on local
autonomy but should also appreciate the spirit and liberty upon which these provisions are
based.50
WHEREFORE, the petition is GRANTED. The assailed provisos in the General Appropriations
Acts of 1999, 2000 and 2001, and the assailed OCD Resolutions, are declared
UNCONSTITUTIONAL.
SO ORDERED.
PIMENTEL V. OCHOA
The Case
For the Court’s consideration in this Petition for Certiorari and Prohibition is the
constitutionality of certain provisions of Republic Act No. 10147 or the General
Appropriations Act (GAA) of 2011 1 which provides a P21 Billion budget allocation for the
Conditional Cash Transfer Program (CCTP) headed by the Department of Social Welfare &
Development (DSWD). Petitioners seek to enjoin respondents Executive Secretary Paquito
N. Ochoa and DSWD Secretary Corazon Juliano-Soliman from implementing the said
program on the ground that it amounts to a "recentralization" of government functions that
have already been devolved from the national government to the local government units.
The Facts
In 2007, the DSWD embarked on a poverty reduction strategy with the poorest of the poor
as target beneficiaries.2 Dubbed "Ahon Pamilyang Pilipino," it was pre-pilot tested in the
municipalities of Sibagat and Esperanza in Agusan del Sur; the municipalities of Lopez Jaena
and Bonifacio in Misamis Occidental, the Caraga Region; and the cities of Pasay and
Caloocan3 upon the release of the amount of P50 Million Pesos under a Special Allotment
Release Order (SARO) issued by the Department of Budget and Management. 4
On July 16, 2008, the DSWD issued Administrative Order No. 16, series of 2008 (A.O. No. 16,
s. 2008),5 setting the implementing guidelines for the project renamed "Pantawid Pamilyang
Pilipino Program" (4Ps), upon the following stated objectives, to wit:
1. To improve preventive health care of pregnant women and young children
2. To increase enrollment/attendance of children at elementary level
3. To reduce incidence of child labor
4. To raise consumption of poor households on nutrient dense foods
5. To encourage parents to invest in their children's (and their own) future
6. To encourage parent's participation in the growth and development of young children, as
well as involvement in the community. 6
This government intervention scheme, also conveniently referred to as CCTP, "provides cash
grant to extreme poor households to allow the members of the families to meet certain
human development goals."7
Eligible households that are selected from priority target areas consisting of the poorest
provinces classified by the National Statistical Coordination Board (NCSB) 8 are granted a
health assistance of P500.00/month, or P6,000.00/year, and an educational assistance of
P300.00/month for 10 months, or a total of P3,000.00/year, for each child but up to a
maximum of three children per family. 9 Thus, after an assessment on the appropriate
assistance package, a household beneficiary could receive from the government an annual
subsidy for its basic needs up to an amount of P15,000.00, under the following
conditionalities:
a) Pregnant women must get pre natal care starting from the 1st trimester, child birth is
attended by skilled/trained professional, get post natal care thereafter
b) Parents/guardians must attend family planning sessions/mother's class, Parent
Effectiveness Service and others
c) Children 0-5 years of age get regular preventive health check-ups and vaccines
d) Children 3-5 years old must attend day care program/pre-school
e) Children 6-14 years of age are enrolled in schools and attend at least 85% of the time 10
Under A.O. No. 16, s. 2008, the DSWD also institutionalized a coordinated inter-agency
network among the Department of Education (DepEd), Department of Health (DOH),
Department of Interior and Local Government (DILG), the National Anti-Poverty Commission
(NAPC) and the local government units (LGUs), identifying specific roles and functions in
order to ensure effective and efficient implementation of the CCTP. As the DSWD takes on
the role of lead implementing agency that must "oversee and coordinate the
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implementation, monitoring and evaluation of the program," the concerned LGU as partner
agency is particularly tasked to –
a. Ensure availability of the supply side on health and education in the target areas.
b. Provide necessary technical assistance for Program implementation
c. Coordinate the implementation/operationalization of sectoral activities at the
City/Municipal level to better execute Program objectives and functions
d. Coordinate with various concerned government agencies at the local level, sectoral
representatives and NGO to ensure effective Program implementation
e. Prepare reports on issues and concerns regarding Program implementation and submit to
the Regional Advisory Committee, and
f. Hold monthly committee meetings11
A Memorandum of Agreement (MOA) 12 executed by the DSWD with each participating LGU
outlines in detail the obligation of both parties during the intended five-year
implementation of the CCTP.
Congress, for its part, sought to ensure the success of the CCTP by providing it with funding
under the GAA of 2008 in the amount of Two Hundred Ninety-Eight Million Five Hundred
Fifty Thousand Pesos (P298,550,000.00). This budget allocation increased tremendously to
P5 Billion Pesos in 2009, with the amount doubling to P10 Billion Pesos in 2010. But the
biggest allotment given to the CCTP was in the GAA of 2011 at Twenty One Billion One
Hundred Ninety-Four Million One Hundred Seventeen Thousand Pesos
13 
(P21,194,117,000.00). 1âwphi1
Petitioner Aquilino Pimentel, Jr., a former Senator, joined by Sergio Tadeo, incumbent
President of the Association of Barangay Captains of Cabanatuan City, Nueva Ecija, and
Nelson Alcantara, incumbent Barangay Captain of Barangay Sta. Monica, Quezon City,
challenges before the Court the disbursement of public funds and the implementation of
the CCTP which are alleged to have encroached into the local autonomy of the LGUs.
The Issue
THE P21 BILLION CCTP BUDGET ALLOCATION UNDER THE DSWD IN THE GAA FY 2011
VIOLATES ART. II, SEC. 25 & ART. X, SEC. 3 OF THE 1987 CONSTITUTION IN RELATION TO SEC.
17 OF THE LOCAL GOVERNMENT CODE OF 1991 BY PROVIDING FOR THE RECENTRALIZATION
OF THE NATIONAL GOVERNMENT IN THE DELIVERY OF BASIC SERVICES ALREADY DEVOLVED
TO THE LGUS.
Petitioners admit that the wisdom of adopting the CCTP as a poverty reduction strategy for
the Philippines is with the legislature. They take exception, however, to the manner by
which it is being implemented, that is, primarily through a national agency like DSWD
instead of the LGUs to which the responsibility and functions of delivering social welfare,
agriculture and health care services have been devolved pursuant to Section 17 of Republic
Act No. 7160, also known as the Local Government Code of 1991, in relation to Section 25,
Article II & Section 3, Article X of the 1987 Constitution.
Petitioners assert that giving the DSWD full control over the identification of beneficiaries
and the manner by which services are to be delivered or conditionalities are to be complied
with, instead of allocating the P21 Billion CCTP Budget directly to the LGUs that would have
enhanced its delivery of basic services, results in the "recentralization" of basic government
functions, which is contrary to the precepts of local autonomy and the avowed policy of
decentralization.
Our Ruling
The Constitution declares it a policy of the State to ensure the autonomy of local
governments14 and even devotes a full article on the subject of local governance 15 which
includes the following pertinent provisions:
Section 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.
xxx
Section 14. The President shall provide for regional development councils or other similar
bodies composed of local government officials, regional heads of departments and other
government offices, and representatives from non-governmental organizations within the
regions for purposes of administrative decentralization to strengthen the autonomy of the
units therein and to accelerate the economic and social growth and development of the
units in the region. (Underscoring supplied)
In order to fully secure to the LGUs the genuine and meaningful autonomy that would
develop them into self-reliant communities and effective partners in the attainment of
national goals,16 Section 17 of the Local Government Code vested upon the LGUs the duties
and functions pertaining to the delivery of basic services and facilities, as follows:
SECTION 17. Basic Services and Facilities. –
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(a) Local government units shall endeavor to be self-reliant and shall continue exercising the
powers and discharging the duties and functions currently vested upon them. They shall also
discharge the functions and responsibilities of national agencies and offices devolved to
them pursuant to this Code. Local government units shall likewise exercise such other
powers and discharge such other functions and responsibilities as are necessary,
appropriate, or incidental to efficient and effective provision of the basic services and
facilities enumerated herein.
(b) Such basic services and facilities include, but are not limited to, x x x.
While the aforementioned provision charges the LGUs to take on the functions and
responsibilities that have already been devolved upon them from the national agencies on
the aspect of providing for basic services and facilities in their respective jurisdictions,
paragraph (c) of the same provision provides a categorical exception of cases involving
nationally-funded projects, facilities, programs and services, thus:
(c) Notwithstanding the provisions of subsection (b) hereof, public works and infrastructure
projects and other facilities, programs and services funded by the National Government
under the annual General Appropriations Act, other special laws, pertinent executive orders,
and those wholly or partially funded from foreign sources, are not covered under this
Section, except in those cases where the local government unit concerned is duly
designated as the implementing agency for such projects, facilities, programs and services.
(Underscoring supplied)
The essence of this express reservation of power by the national government is that, unless
an LGU is particularly designated as the implementing agency, it has no power over a
program for which funding has been provided by the national government under the annual
general appropriations act, even if the program involves the delivery of basic services within
the jurisdiction of the LGU.
The Court held in Ganzon v. Court of Appeals 17 that while it is through a system of
decentralization that the State shall promote a more responsive and accountable local
government structure, the concept of local autonomy does not imply the conversion of local
government units into "mini-states." 18 We explained that, with local autonomy, the
Constitution did nothing more than "to break up the monopoly of the national government
over the affairs of the local government" and, thus, did not intend to sever "the relation of
partnership and interdependence between the central administration and local government
units."19 In Pimentel v. Aguirre,20 the Court defined the extent of the local government's
autonomy in terms of its partnership with the national government in the pursuit of
common national goals, referring to such key concepts as integration and coordination.
Thus:
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.
Certainly, to yield unreserved power of governance to the local government unit as to
preclude any and all involvement by the national government in programs implemented in
the local level would be to shift the tide of monopolistic power to the other extreme, which
would amount to a decentralization of power explicated in Limbona v. Mangelin 21 as beyond
our constitutional concept of autonomy, thus:
Now, autonomy is either decentralization of administration or decentralization of
power.1âwphi1 There is decentralization of administration when the central government
delegates administrative powers to political subdivisions in order to broaden the base of
government power and in the process to make local governments ‘more responsive and
accountable’ and ‘ensure their fullest development as self-reliant communities and make
them more effective partners in the pursuit of national development and social progress.’ At
the same time, it relieves the central government of the burden of managing local affairs
and enables it to concentrate on national concerns. The President exercises ‘general
supervision’ over them, but only to ‘ensure that local affairs are administered according to
law.’ He has no control over their acts in the sense that he can substitute their judgments
with his own.
Decentralization of power, on the other hand, involves an abdication of political power in
the [sic] favor of local governments [sic] units declared to be autonomous. In that case, the
autonomous government is free to chart its own destiny and shape its future with minimum
intervention from central authorities. According to a constitutional author, decentralization
of power amounts to ‘self-immolation,’ since in that event, the autonomous government
becomes accountable not to the central authorities but to its constituency. 22
119
Indeed, a complete relinquishment of central government powers on the matter of
providing basic facilities and services cannot be implied as the Local Government Code itself
weighs against it. The national government is, thus, not precluded from taking a direct hand
in the formulation and implementation of national development programs especially where
it is implemented locally in coordination with the LGUs concerned.
Every law has in its favor the presumption of constitutionality, and to justify its nullification,
there must be a clear and unequivocal breach of the Constitution, not a doubtful and
argumentative one.23 Petitioners have failed to discharge the burden of proving the invalidity
of the provisions under the GAA of 2011. The allocation of a P21 billion budget for an
intervention program formulated by the national government itself but implemented in
partnership with the local government units to achieve the common national goal
development and social progress can by no means be an encroachment upon the autonomy
of local governments.
WHEREFORE, premises considered, the petition is hereby DISMISSED.
SO ORDERED.
CITY OF GENERAL SANTOS, REPRESENTED BY ITS MAYOR, HON.
DARLENE MAGNOLIA R. ANTONIO-CUSTODIO, Petitioner, v.
COMMISSION ON AUDIT, Respondent.
LEONEN, J.:
FACTS:
Then mayor of General Santos City, Pedro B. Acharon, Jr., issued Executive Order
No. 40, series of 2008, creating management teams pursuant to its organization
development program. This was patterned after Executive Order No. 366 dated
October 4, 2004 entitled Directing a Strategic Review of the Operations and
Organizations of the Executive Branch and Providing Options and Incentives for
Government Employees who may be Affected by the Rationalization of the Functions
and Agencies of the Executive Branch and its implementing rules and regulations.
Mayor Pedro B. Acharon, Jr. declared the citys byword of Total Quality Service in his
state of the city address in 2005. This was followed by the conduct of a process and
practice review for each department, section, and unit of the local government. The
product was an organization development masterplan adopted as Executive Order
No. 13, series of 2009. This was followed by Resolution No. 004, series of 2009,
requesting for the mayors support for GenSan SERVES, an early retirement program
to be proposed to the Sangguniang Panlungsod.
Consequently, Ordinance No. 08, series of 2009, was passed together with its
implementing rules and regulations, designed to entice those employees who were
unproductive due to health reasons to avail of the incentives being offered therein by
way of early retirement package.
This contextual background in the passing of Ordinance No. 08, series of 2009, was
not contested by respondent Commission on Audit.
The ordinance, as amended, provides that qualified employees below sixty (60) years
of age but not less than fifty (50) years and sickly employees below fifty (50) years of
age but not less than forty (40) years may avail of the incentives under the program.
In other words, the ordinance provides for separation benefits for sickly employees
who have not yet reached retirement age.
In a letter dated February 10, 2010, the citys audit team leader, through its
supervising auditor, sent a query on the legality of the ordinance to respondent
Commission on Audits director for Regional Office No. XII, Cotabato City.
In his second indorsement dated March 15, 2010, respondent Commissions regional
director agreed that the grant lacked legal basis and was contrary to the Government
Service Insurance System (GSIS) Act. He forwarded the matter to respondent
Commissions Office of General Counsel, Legal Services Sector, for a more
authoritative opinion.
The Office of General Counsel issued COA-LSS Opinion No. 2010021 on March 25,
2010. The opinion explained that Ordinance No. 08, series of 2009, partakes of a
supplementary retirement benefit plan. In its view, Section 28, paragraph (b) of
Commonwealth Act No. 186, as amended, prohibits government agencies from
establishing supplementary retirement or pension plans from the time the
Government Service Insurance System charter took effect while those plans already
existing when the charter was enacted were declared abolished.
In fine, since Ordinance No. 08 is in the nature of an ERP [Early Retirement
120

Program] of the City Government of General Santos, a law authorizing the same is a
requisite for its validity. In the absence, however, of such law, the nullity of
Ordinance No. 08 becomes a necessary consequence.
Petitioner city, through then mayor, Pedro B. Acharon, Jr., filed a letter-
reconsideration dated June 7, 2010. They followed through with two letters
addressed to respondent Commissions chairman dated July 26, 2010 and October 6,
2010, respectively, for the reconsideration of COA-LSS Opinion No. 2010-021.20
Section 5 refers to an "early retirement incentive," the amount of which is pegged on
the beneficiary’s years of service in the city government. The ordinance provides that
only those who have rendered service to the city government for at least 15 years
may apply.75 Consequently, this provision falls under the definition of a retirement
benefit. Applying the definition in Conte, it is a form of reward for an employee’s
loyalty and service to the city government, and it is intended to help the employee
enjoy the remaining years of his or her life by lessening his or her financial worries.

Respondent Commission on Audit treated these letters as an appeal. On January 20, Sec. 28 (b) as amended by RA 4968 in no uncertain terms bars the creation of any
2011, it rendered its decision denying the appeal and affirming COA-LSS Opinion No. insurance or retirement plan – other than the GSIS – for government officers and
2010-021.21 It also denied reconsideration by resolution. employees, in order to prevent the undue and inequitous proliferation of such plans.
x x x. To ignore this and rule otherwise would be tantamount to permitting every
ISSUE: Whether respondent Commission on Audit committed grave abuse of
discretion when it considered Ordinance No. 08, Series of 2009, in the nature of an other government office or agency to put up its own supplementary retirement benefit
early retirement program requiring a law for its validity. plan under the guise of such "financial assistance.71

HELD: This court has consistently held that findings of administrative

agencies are generally respected, unless found to have been tainted with
unfairness that amounted to grave abuse of discretion: The Court declares Section 6 on post-retirement incentives as valid.
HELD:

The Court agree with respondent Commission on Audit but only insofar as the
FALLO:
invalidity of Section 5 of the ordinance is concerned.

Section 5. GenSan SERVES Program Incentives On Top of Government Service

Insurance System (GSIS) and PAG-IBIG Benefits – Any personnel qualified and
approved to receive the incentives of this program shall be entitled to whatever
retirement benefits the GSIS or PAG-IBIG is granting to a retiring government
employee.
Moreover, an eligible employee shall receive an early retirement incentive provided
under this program at the rate of one and one-half (1 1/2) months of the employee’s
latest basic salary for every year of service in the City Government.9
WHEREFORE, the petition is PARTIALLY GRANTED. The assailed Commission on
Audit decision dated January 20, 2011 and resolution dated October 17, 2011 are
AFFIRMED with MODIFICATION insofar as Section 6 of Ordinance No. 08, series of
2009, as amended by Ordinance No. 11, series of 2009, is declared as VALID.
NEGROS V. COA
DECISION
CARPIO, J.:
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The Case
Before the Court is a petition for certiorari 1 assailing Decision No. 2006-0442 dated 14 July
2006 and Decision No. 2008-0103 dated 30 January 2008 of the Commission on Audit (COA)
disallowing premium payment for the hospitalization and health care insurance benefits of
1,949 officials and employees of the Province of Negros Occidental.
The Facts
On 21 December 1994, the Sangguniang Panlalawigan of Negros Occidental passed
Resolution No. 720-A4 allocating ₱4,000,000 of its retained earnings for the hospitalization
and health care insurance benefits of 1,949 officials and employees of the province. After a
public bidding, the Committee on Awards granted the insurance coverage to Philam Care
Health System Incorporated (Philam Care).
Petitioner Province of Negros Occidental, represented by its then Governor Rafael L.
Coscolluela, and Philam Care entered into a Group Health Care Agreement involving a total
payment of ₱3,760,000 representing the insurance premiums of its officials and employees.
The total premium amount was paid on 25 January 1996.
On 23 January 1997, after a post-audit investigation, the Provincial Auditor issued Notice of
Suspension No. 97-001-1015 suspending the premium payment because of lack of approval
from the Office of the President (OP) as provided under Administrative Order No. 103 6 (AO
103) dated 14 January 1994. The Provincial Auditor explained that the premium payment for
health care benefits violated Republic Act No. 6758 (RA 6758), 7 otherwise known as the
Salary Standardization Law.
Petitioner complied with the directive post-facto and sent a letter-request dated 12 January
1999 to the OP. In a Memorandum dated 26 January 1999, 8 then President Joseph E. Estrada
directed the COA to lift the suspension but only in the amount of ₱100,000. The Provincial
Auditor ignored the directive of the President and instead issued Notice of Disallowance No.
99-005-101(96)9 dated 10 September 1999 stating similar grounds as mentioned in Notice of
Suspension No. 97-001-101.
Petitioner appealed the disallowance to the COA. In a Decision dated 14 July 2006, the COA
affirmed the Provincial Auditor’s Notice of Disallowance dated 10 September 1999. 10 The
COA ruled that under AO 103, no government entity, including a local government unit, is
exempt from securing prior approval from the President granting additional benefits to its
personnel. This is in conformity with the policy of standardization of compensation laid
down in RA 6758. The COA added that Section 468(a)(1)(viii) 11 of Republic Act No. 7160 (RA
7160) or the Local Government Code of 1991 relied upon by petitioner does not stand on its
own but has to be harmonized with Section 12 12 of RA 6758.
Further, the COA stated that the insurance benefits from Philam Care, a private insurance
company, was a duplication of the benefits provided to employees under the Medicare
program which is mandated by law. Being merely a creation of a local legislative body, the
provincial health care program should not contravene but instead be consistent with
national laws enacted by Congress from where local legislative bodies draw their authority.
The COA held the following persons liable: (1) all the 1,949 officials and employees of the
province who benefited from the hospitalization and health care insurance benefits with
regard to their proportionate shares; (2) former Governor Rafael L. Coscolluela, being the
person who signed the contract on behalf of petitioner as well as the person who approved
the disbursement voucher; and (3) the Sangguniang Panlalawigan members who passed
Resolution No. 720-A. The COA did not hold Philam Care and Provincial Accountant Merly P.
Fortu liable for the disallowed disbursement. The COA explained that it was unjust to
require Philam Care to refund the amount received for services it had duly rendered since
insurance law prohibits the refund of premiums after risks had already attached to the
policy contract. As for the Provincial Accountant, the COA declared that the  Sangguniang
Panlalawigan resolution was sufficient basis for the accountant to sign the disbursement
voucher since there were adequate funds available for the purpose. However, being one of
the officials who benefited from the subject disallowance, the inclusion of the accountant’s
name in the persons liable was proper with regard to her proportionate share of the
premium.
The dispositive portion of the COA’s 14 July 2006 decision states:
WHEREFORE, premises considered, and finding no substantial ground or cogent reason to
disturb the subject disallowance, the instant appeal is hereby denied for lack of merit.
Accordingly, Notice of Disallowance No. 99-005-101(96) dated 10 September 1999 in the
total amount of ₱3,760,000.00 representing the hospitalization and insurance benefits of
the officials and employees of the Province of Negros Occidental is hereby AFFIRMED and
the refund thereof is hereby ordered.
The Cluster Director, Cluster IV-Visayas, COA Regional Office No. VII, Cebu City shall ensure
the proper implementation of this decision. 13
Petitioner filed a Motion for Reconsideration dated 23 October 2006 which the COA denied
in a Resolution dated 30 January 2008.
Hence, the instant petition.
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The Issue
The main issue is whether COA committed grave abuse of discretion in affirming the
disallowance of ₱3,760,000 for premium paid for the hospitalization and health care
insurance benefits granted by the Province of Negros Occidental to its 1,949 officials and
employees.
The Court’s Ruling
Petitioner insists that the payment of the insurance premium for the health benefits of its
officers and employees was not unlawful and improper since it was paid from an allocation
of its retained earnings pursuant to a valid appropriation ordinance. Petitioner states that
such enactment was a clear exercise of its express powers under the principle of local fiscal
autonomy which includes the power of Local Government Units (LGUs) to allocate their
resources in accordance with their own priorities. Petitioner adds that while it is true that
LGUs are only agents of the national government and local autonomy simply means
decentralization, it is equally true that an LGU has fiscal control over its own revenues
derived solely from its own tax base.
Respondents, on the other hand, maintain that although LGUs are afforded local fiscal
autonomy, LGUs are still bound by RA 6758 and their actions are subject to the scrutiny of
the Department of Budget and Management (DBM) and applicable auditing rules and
regulations enforced by the COA. Respondents add that the grant of additional
compensation, like the hospitalization and health care insurance benefits in the present
case, must have prior Presidential approval to conform with the state policy on salary
standardization for government workers.
AO 103 took effect on 14 January 1994 or eleven months before the Sangguniang
Panlalawigan of the Province of Negros Occidental passed Resolution No. 720-A. The main
purpose of AO 103 is to prevent discontentment, dissatisfaction and demoralization among
government personnel, national or local, who do not receive, or who receive less,
productivity incentive benefits or other forms of allowances or benefits. This is clear in the
Whereas Clauses of AO 103 which state:
WHEREAS, the faithful implementation of statutes, including the Administrative Code of
1987 and all laws governing all forms of additional compensation and personnel benefits is a
Constitutional prerogative vested in the President of the Philippines under Section 17,
Article VII of the 1987 Constitution;
WHEREAS, the Constitutional prerogative includes the determination of the rates, the timing
and schedule of payment, and final authority to commit limited resources of government for
the payment of personal incentives, cash awards, productivity bonus, and other forms of
additional compensation and fringe benefits;
WHEREAS, the unilateral and uncoordinated grant of productivity incentive benefits in the
past gave rise to discontentment, dissatisfaction and demoralization among government
personnel who have received less or have not received at all such benefits;
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the Philippines, by virtue
of the powers vested in me by law and in order to forestall further demoralization of
government personnel do hereby direct: x x x (Emphasis supplied)
Sections 1 and 2 of AO 103 state:
SECTION 1. All agencies of the National Government including government-owned and/or
-controlled corporations and government financial institutions, and local government
units, are hereby authorized to grant productivity incentive benefit in the maximum amount
of TWO THOUSAND PESOS (₱2,000.00) each to their permanent and full-time temporary
and casual employees, including contractual personnel with employment in the nature of a
regular employee, who have rendered at least one (1) year of service in the Government as
of December 31, 1993.
SECTION 2. All heads of government offices/agencies, including government owned and/or
controlled corporations, as well as their respective governing boards are hereby enjoined
and prohibited from authorizing/granting Productivity Incentive Benefits or any and all
forms of allowances/benefits without prior approval and authorization via Administrative
Order by the Office of the President. Henceforth, anyone found violating any of the
mandates in this Order, including all officials/agency found to have taken part thereof, shall
be accordingly and severely dealt with in accordance with the applicable provisions of
existing administrative and penal laws.
Consequently, all administrative authorizations to grant any form of allowances/benefits
and all forms of additional compensation usually paid outside of the prescribed basic salary
under R.A. 6758, the Salary Standardization Law, that are inconsistent with the legislated
policy on the matter or are not covered by any legislative action are hereby revoked.
(Emphasis supplied)
It is clear from Section 1 of AO 103 that the President authorized all agencies of the national
government as well as LGUs to grant the maximum amount of ₱2,000 productivity incentive
benefit to each employee who has rendered at least one year of service as of 31 December
1993. In Section 2, the President enjoined all heads of government offices and agencies from
123
granting productivity incentive benefits or any and all similar forms of allowances and
benefits without the President’s prior approval.
In the present case, petitioner, through an approved Sangguniang Panlalawigan resolution,
granted and released the disbursement for the hospitalization and health care insurance
benefits of the province’s officials and employees without any prior approval from the
President. The COA disallowed the premium payment for such benefits since petitioner
disregarded AO 103 and RA 6758.
We disagree with the COA. From a close reading of the provisions of AO 103, petitioner did
not violate the rule of prior approval from the President since Section 2 states that the
prohibition applies only to "government offices/agencies, including government-owned
and/or controlled corporations, as well as their respective governing boards." Nowhere is it
indicated in Section 2 that the prohibition also applies to LGUs. The requirement then of
prior approval from the President under AO 103 is applicable only to departments, bureaus,
offices and government-owned and controlled corporations under the Executive branch. In
other words, AO 103 must be observed by government offices under the President’s control
as mandated by Section 17, Article VII of the Constitution which states:
Section 17. The President shall have control of all executive departments, bureaus and
offices. He shall ensure that the laws be faithfully executed. (Emphasis supplied)
Being an LGU, petitioner is merely under the President’s general supervision pursuant to
Section 4, Article X of the Constitution:
Sec. 4. The President of the Philippines shall exercise general supervision over local
governments. Provinces with respect to component cities and municipalities, and cities and
municipalities with respect to component barangays shall ensure that the acts of their
component units are within the scope of their prescribed powers and functions. (Emphasis
supplied)
The President’s power of general supervision means the power of a superior officer to see to
it that subordinates perform their functions according to law. 14 This is distinguished from the
President’s power of control which is the power to alter or modify or set aside what a
subordinate officer had done in the performance of his duties and to substitute the
judgment of the President over that of the subordinate officer. 15 The power of control gives
the President the power to revise or reverse the acts or decisions of a subordinate officer
involving the exercise of discretion.16
Since LGUs are subject only to the power of general supervision of the President, the
President’s authority is limited to seeing to it that rules are followed and laws are faithfully
executed. The President may only point out that rules have not been followed but the
President cannot lay down the rules, neither does he have the discretion to modify or
replace the rules. Thus, the grant of additional compensation like hospitalization and health
care insurance benefits in the present case does not need the approval of the President to
be valid.
Also, while it is true that LGUs are still bound by RA 6758, the COA did not clearly establish
that the medical care benefits given by the government at the time under Presidential
Decree No. 151917 were sufficient to cover the needs of government employees especially
those employed by LGUs.
Petitioner correctly relied on the Civil Service Commission’s (CSC) Memorandum Circular No.
33 (CSC MC No. 33), series of 1997, issued on 22 December 1997 which provided the policy
framework for working conditions at the workplace. In this circular, the CSC pursuant to CSC
Resolution No. 97-4684 dated 18 December 1997 took note of the inadequate policy on
basic health and safety conditions of work experienced by government personnel. Thus,
under CSC MC No. 33, all government offices including LGUs were directed to provide a
health program for government employees which included hospitalization services and
annual mental, medical-physical examinations.
Later, CSC MC No. 33 was further reiterated in Administrative Order No. 402 18 (AO 402)
which took effect on 2 June 1998. Sections 1, 2, and 4 of AO 402 state:
Section 1. Establishment of the Annual Medical Check-up Program. – An annual medical
check-up for government of officials and employees is hereby authorized to be established
starting this year, in the meantime that this benefit is not yet integrated under the National
Health Insurance Program being administered by the Philippine Health Insurance
Corporation (PHIC).
Section 2. Coverage. – x x x Local Government Units are also encouraged to establish a
similar program for their personnel.
Section 4. Funding. – x x x Local Government Units, which may establish a similar medical
program for their personnel, shall utilize local funds for the purpose. (Emphasis supplied)
The CSC, through CSC MC No. 33, as well as the President, through AO 402, recognized the
deficiency of the state of health care and medical services implemented at the time.
Republic Act No. 787519 or the National Health Insurance Act of 1995 instituting a National
Health Insurance Program (NHIP) for all Filipinos was only approved on 14 February 1995 or
about two months after petitioner’s Sangguniang Panlalawigan passed Resolution No. 720-
A. Even with the establishment of the NHIP, AO 402 was still issued three years later
124
addressing a primary concern that basic health services under the NHIP either are still
inadequate or have not reached geographic areas like that of petitioner.
Thus, consistent with the state policy of local autonomy as guaranteed by the 1987
Constitution, under Section 25, Article II 20 and Section 2, Article X,21 and the Local
Government Code of 1991,22 we declare that the grant and release of the hospitalization and
health care insurance benefits given to petitioner’s officials and employees were validly
enacted through an ordinance passed by petitioner’s Sangguniang Panlalawigan.
In sum, since petitioner’s grant and release of the questioned disbursement without the
President’s approval did not violate the President’s directive in AO 103, the COA then
gravely abused its discretion in applying AO 103 to disallow the premium payment for the
hospitalization and health care insurance benefits of petitioner’s officials and employees.
WHEREFORE, we GRANT the petition. We REVERSE AND SET ASIDE Decision No. 2006-044
dated 14 July 2006 and Decision No. 2008-010 dated 30 January 2008 of the Commission on
Audit.
SO ORDERED.
 
LEAGUE V. DENR
PERALTA, J.:
This is a petition for certiorari, prohibition and mandamus, 1 praying that this Court order the
following: ( 1) declare as unconstitutional Section 17(b)(3)(iii) of Republic Act (R.A.) No.
7160, otherwise known as The Local Government Code of 1991 and Section 24 of Republic
Act (R.A.) No. 7076, otherwise known as the People's Small-Scale Mining Act of 1991; (2)
prohibit and bar respondents from exercising control over provinces; and (3) declare as
illegal the respondent Secretary of the Department of Energy and Natural Resources' (DENR)
nullification, voiding and cancellation of the Small-Scale Mining permits issued by the
Provincial Governor of Bulacan.
The Facts are as follows:
On March 28, 1996, Golden Falcon Mineral Exploration Corporation (Golden Falcon) filed
with the DENR Mines and Geosciences Bureau Regional Office No. III (MGB R-III) an
Application for Financial and Technical Assistance Agreement (FTAA) covering an area of
61,136 hectares situated in the Municipalities of San Miguel, San Ildefonso, Norzagaray and
San Jose del Monte, Bulacan.2
On April 29, 1998, the MGB R-III issued an Order denying Golden Falcon's Application for
Financial and Technical Assistance Agreement for failure to secure area clearances from the
Forest Management Sector and Lands Management Sector of the DENR Regional Office No.
III.3
On November 11, 1998, Golden Falcon filed an appeal with the DENR Mines and
Geosciences Bureau Central Office (MGB-Central Office), and sought reconsideration of the
Order dated April 29, 1998.4
On February 10, 2004, while Golden Falcon's appeal was pending, Eduardo D. Mercado,
Benedicto S. Cruz, Gerardo R. Cruz and Liberato Sembrano filed with the Provincial
Environment and Natural Resources Office (PENRO) of Bulacan their respective Applications
for Quarry Permit (AQP), which covered the same area subject of Golden Falcon's
Application for Financial and Technical Assistance Agreement. 5
On July 16, 2004, the MGB-Central Office issued an Order denying Golden Falcon's appeal
and affirming the MGB R-III's Order dated April 29, 1998.
On September 13, 2004, Atlantic Mines and Trading Corporation (AMTC) filed with the
PENRO of Bulacan an Application for Exploration Permit (AEP) covering 5,281 hectares of the
area covered by Golden Falcon's Application for Financial and Technical Assistance
Agreement.6
On October 19, 2004, DENR-MGB Director Horacio C. Ramos, in response to MGB R-III
Director Arnulfo V. Cabantog's memorandum query dated September 8, 2004, categorically
stated that the MGB-Central Office's Order dated July 16, 2004 became final on August 11,
2004, fifteen (15) days after Golden Falcon received the said Order, per the Certification
dated October 8, 2004 issued by the Postmaster II of the Philippine Postal Corporation of
Cainta, Rizal.7
Through letters dated May 5 and May 10, 2005, AMTC notified the PENRO of Bulacan and
the MGB R-III Director, respectively, that the subject Applications for Quarry Permit fell
within its (AMTC's) existing valid and prior Application for Exploration Permit, and the the
former area of Golden Falcon was open to mining location only on August 11, 2004 per the
Memorandum dated October 19, 2004 of the MGB Director, Central Office.8
On June 24, 2005, Ricardo Medina, Jr., PENRO of Bulacan, indorsed AMTC's letter to the
Provincial Legal Officer, Atty. Eugenio F. Resurreccion, for his legal opinion on which date of
125
denial of Golden Falcon's application/appeal – April 29, 1998 or July 16, 2004 − is to be
considered in the deliberation of the Provincial Mining Regulatory Board (PMRB) for the
purpose of determining when the land subject of the Applications for Quarry Permit could
be considered open for application.
On June 28, 2005, Provincial Legal Officer Eugenio Resurreccion issued a legal opinion
stating that the Order dated July 16, 2004 of the MGB-Central Office was a mere
reaffirmation of the Order dated April 29, 1998 of the MGB R-III; hence, the Order dated
April 29, 1998 should be the reckoning period of the denial of the application of Golden
Falcon.
On July 22, 2005, AMTC filed with the PMRB of Bulacan a formal protest against the
aforesaid Applications for Quarry Permit on the ground that the subject area was already
covered by its Application for Exploration Permit. 9
On August 8, 2005, MGB R-III Director Cabantog, who was the concurrent Chairman of the
PMRB, endorsed to the Provincial Governor of Bulacan, Governor Josefina M. dela Cruz, the
aforesaid Applications for Quarry Permit that had apparently been converted to Applications
for Small-Scale Mining Permit of Eduardo D. Mercado, Benedicto S. Cruz, Gerardo R. Cruz
and Lucila S. Valdez (formerly Liberato Sembrano). 10
On August 9, 2005, the PENRO of Bulacan issued four memoranda recommending to
Governor Dela Cruz the approval of the aforesaid Applications for Small-Scale Mining
Permit.11
On August 10, 2005, Governor Dela Cruz issued the corresponding Small-Scale Mining
Permits in favor of Eduardo D. Mercado, Benedicto S. Cruz, Gerardo R. Cruz and Lucila S.
Valdez.12
Subsequently, AMTC appealed to respondent DENR Secretary the grant of the aforesaid
Small-Scale Mining Permits, arguing that: (1) The PMRB of Bulacan erred in giving due
course to the Applications for Small-Scale Mining Permit without first resolving its formal
protest; (2) The areas covered by the Small-Scale Mining Permits fall within the area covered
by AMTC's valid prior Application for Exploration Permit; (3) The Applications for Quarry
Permit were illegally converted to Applications for Small-Scale Mining Permit; (4) DENR-
MGB Director Horacio C. Ramos' ruling that the subject areas became open for mining
location only on August 11, 2004 was controlling; (5) The Small-Scale Mining Permits were
null and void because they covered areas that were never declared People's Small-Scale
Mining Program sites as mandated by Section 4 of the People's Small-Scale Mining Act of
1991; and (6) Iron ore is not considered as one of the quarry resources, as defined by
Section 43 of the Philippine Mining Act of 1995, which could be subjects of an Application
for Quarry Permit.13
On August 8, 2006, respondent DENR Secretary rendered a Decision 14 in favor of AMTC. The
DENR Secretary agreed with MGB Director Horacio C. Ramos that the area was open to
mining location only on August 11, 2004, fifteen (15) days after the receipt by Golden Falcon
on July 27, 2004 of a copy of the MGB-Central Office's Order dated July 16, 2004, which
Order denied Golden Falcon's appeal. According to the DENR Secretary, the filing by Golden
Falcon of the letter-appeal suspended the finality of the Order of denial issued on April 29,
1998 by the Regional Director until the resolution of the appeal on July 16, 2004 by the
MGB-Central Office. He stated that the Applications for Quarry Permit were filed on
February 10, 2004 when the area was still closed to mining location; hence, the Small-Scale
Mining Permits granted by the PMRB and the Governor were null and void. On the other
hand, the DENR Secretary declared that AMTC filed its Application for Exploration Permit
when the area was already open to other mining applicants; thus, AMTC’s Application for
Exploration Permit was valid. Moreover, the DENR Secretary held that the questioned Small-
Scale Mining Permits were issued in violation of Section 4 of R.A. No. 7076 and beyond the
authority of the Provincial Governor pursuant to Section 43 of R.A. No. 7942, because the
area was never proclaimed to be under the People's Small-Scale Mining Program. Further,
the DENR Secretary stated that iron ore mineral is not considered among the quarry
resources.
The dispositive portion of the DENR Secretary’s Decision reads:
WHEREFORE, the Application for Exploration Permit, AEP-III-02-04 of Atlantic Mines and
Trading Corp. is declared valid and may now be given due course. The Small-Scale Mining
Permits, SSMP-B-002-05 of Gerardo Cruz, SSMP-B-003-05 of Eduardo D. Mercado, SSMP-B-
004-05 of Benedicto S. Cruz and SSMP-B-005-05 of Lucila S. Valdez are declared NULL AND
VOID. Consequently, the said permits are hereby CANCELLED. 15
Hence, petitioner League of Provinces filed this petition.
Petitioner is a duly organized league of local governments incorporated under R.A. No. 7160.
Petitioner declares that it is composed of 81 provincial governments, including the Province
of Bulacan. It states that this is not an action of one province alone, but the collective action
of all provinces through the League, as a favorable ruling will not only benefit one province,
but all provinces and all local governments.
Petitioner raises these issues:
I
126
WHETHER OR NOT SECTION 17(B)(3)(III) OF THE, 1991 LOCAL GOVERNMENT CODE AND
SECTION 24 OF THE PEOPLE'S SMALL-SCALE MINING ACT OF 1991 ARE UNCONSTITUTIONAL
FOR PROVIDING FOR EXECUTIVE CONTROL AND INFRINGING UPON THE LOCAL AUTONOMY
OF PROVINCES.
II
WHETHER OR NOT THE ACT OF RESPONDENT [DENR] IN NULLIFYING, VOIDING AND
CANCELLING THE SMALL-SCALE MINING PERMITS AMOUNTS TO EXECUTIVE CONTROL, NOT
MERELY SUPERVISION AND USURPS THE DEVOLVED POWERS OF ALL PROVINCES. 16
To start, the Court finds that petitioner has legal standing to file this petition because it is
tasked under Section 504 of the Local Government Code of 1991 to promote local autonomy
at the provincial level;17 adopt measures for the promotion of the welfare of all provinces
and its officials and employees;18 and exercise such other powers and perform such other
duties and functions as the league may prescribe for the welfare of the provinces. 19
Before this Court determines the validity of an act of a co-equal and coordinate branch of
the Government, it bears emphasis that ingrained in our jurisprudence is the time-honored
principle that a statute is presumed to be valid. 20 This presumption is rooted in the doctrine
of separation of powers which enjoins upon the three coordinate departments of the
Government a becoming courtesy for each other's acts. 21 This Court, however, may declare
a law, or portions thereof, unconstitutional where a petitioner has shown a clear and
unequivocal breach of the Constitution, 22 leaving no doubt or hesitation in the mind of the
Court.23
In this case, petitioner admits that respondent DENR Secretary had the authority to nullify
the Small-Scale Mining Permits issued by the Provincial Governor of Bulacan, as the DENR
Secretary has control over the PMRB, and the implementation of the Small-Scale Mining
Program is subject to control by respondent DENR.
Control of the DENR/DENR Secretary over small-scale mining in the provinces is granted by
three statutes: (1) R.A. No. 7061 or The Local Government Code of 1991; (2) R.A. No. 7076
or the People's Small Scale Mining Act of 1991; and (3) R.A. No. 7942, otherwise known as
the Philippine Mining Act of 1995. 24 The pertinent provisions of law sought to be declared as
unconstitutional by petitioner are as follows:
R.A. No. 7061 (The Local Government Code of 1991)
SEC. 17. Basic Services and Facilities. - (a) Local government units shall endeavor to be self-
reliant and shall continue exercising the powers and discharging the duties and functions
currently vested upon them. They shall also discharge the functions and responsibilities of
national agencies and offices devolved to them pursuant to this Code. Local government
units shall likewise exercise such other powers and discharge such other functions and
responsibilities as are necessary, appropriate, or incidental to efficient and effective
provision of the basic services and facilities enumerated herein.
(b) Such basic services and facilities include, but are not limited to, the following:
xxxx
(3) For a Province:c
xxxx
(iii) Pursuant to national policies and subject to supervision, control and review of the DENR,
enforcement of forestry laws limited to community-based forestry projects, pollution
control law, small-scale mining law, and other laws on the protection of the environment;
and mini-hydro electric projects for local purposes; x x x 25
R.A. No. 7076 (People's Small-Scale Mining Act of 1991)
Sec. 24. Provincial/City Mining Regulatory Board. - There is hereby created under the direct
supervision and control of the Secretary a provincial/city mining regulatory board, herein
called the Board, which shall be the implementing agency of the Department, and shall
exercise the following powers and functions, subject to review by the Secretary:
(a) Declare and segregate existing gold-rush areas for small-scale mining;
(b) Reserve future gold and other mining areas for small-scale mining;
(c) Award contracts to small-scale miners;
(d) Formulate and implement rules and regulations related to small-scale mining;
(e) Settle disputes, conflicts or litigations over conflicting claims within a people’s small-scale
mining area, an area that is declared a small-mining; and
(f) Perform such other functions as may be necessary to achieve the goals and objectives of
this Act.26
Petitioner contends that the aforecited laws and DENR Administrative Order No. 9640 (the
Implementing Rules and Regulations of the Philippine Mining Act of 1995) did not explicitly
confer upon respondents DENR and the DENR Secretary the power to reverse, abrogate,
nullify, void, or cancel the permits issued by the Provincial Governor or small-scale mining
contracts entered into by the PMRB. The statutes are also silent as to the power of
respondent DENR Secretary to substitute his own judgment over that of the Provincial
Governor and the PMRB.
Moreover, petitioner contends that Section 17 (b)(3)(iii) of the Local Government Code of
1991 and Section 24 of R.A. No. 7076, which confer upon respondents DENR and the DENR
127
Secretary the power of control are unconstitutional, as the Constitution states that the
President (and Executive Departments and her alter-egos) has the power of supervision
only, not control, over acts of the local government units, and grants the local government
units autonomy, thus:
The 1987 Constitution:
Article X, Section 4. The President of the Philippines shall exercise general supervision over
local governments. Provinces with respect to component cities and municipalities, and cities
and municipalities with respect to component barangays, shall ensure that the acts of their
component units are within the scope of their prescribed powers and functions. 27
Petitioner contends that the policy in the above-cited constitutional provision is mirrored in
the Local Government Code, which states:
SEC. 25. National Supervision over Local Government Units. - (a) Consistent with the basic
policy on local autonomy, the President shall exercise general supervision over local
government units to ensure that their acts are within the scope of their prescribed powers
and functions.
The President shall exercise supervisory authority directly over provinces, highly urbanized
cities, and independent component cities; through the province with respect to component
cities and municipalities; and through the city and municipality with respect to barangays. 28
Petitioner contends that the foregoing provisions of the Constitution and the Local
Government Code of 1991 show that the relationship between the President and the
Provinces or respondent DENR, as the alter ego of the President, and the Province of
Bulacan is one of executive supervision, not one of executive control. The term "control" has
been defined as the power of an officer to alter or modify or set aside what a subordinate
officer had done in the performance of his/her duties and to substitute the judgment of the
former for the latter, while the term "supervision" is the power of a superior officer to see to
it that lower officers perform their function in accordance with law. 29
Petitioner argues that respondent DENR Secretary went beyond mere executive supervision
and exercised control when he nullified the small-scale mining permits granted by the
Provincial Governor of Bulacan, as the former substituted the judgment of the latter.
Petitioner asserts that what is involved here is a devolved power.
Under the Local Government Code of 1991, the power to regulate small-scale mining has
been devolved to all provinces. In the exercise of devolved powers, departmental approval
is not necessary.30
Petitioner contends that if the provisions in Section 24 of R.A. No. 7076 and Section 17 (b)(3)
(iii) of the Local Government Code of 1991 granting the power of control to the DENR/DENR
Secretary are not nullified, nothing would stop the DENR Secretary from nullifying, voiding
and canceling the small-scale mining permits that have been issued by a Provincial
Governor.
Petitioner submits that the statutory grant of power of control to respondents is
unconstitutional, as the Constitution only allows supervision over local governments and
proscribes control by the executive departments.
In its Comment, respondents, represented by the Office of the Solicitor General, stated that
contrary to the assertion of petitioner, the power to implement the small-scale mining law is
expressly limited in Section 17 (b)(3)(iii) of the Local Government Code, which provides that
it must be carried out "pursuant to national policies and subject to supervision, control and
review of the DENR." Moreover, the fact that the power to implement the small-scale
mining law has not been fully devolved to provinces is further amplified by Section 4 of the
People's Small-Scale Mining Act of 1991, which provides, among others, that the People's
Small-Scale Mining Program shall be implemented by the DENR Secretary.
The petition lacks merit.
Paragraph 1 of Section 2, Article XII (National Economy and Patrimony) of the
Constitution31 provides that "the exploration, development and utilization of natural
resources shall be under the full control and supervision of the State."
Moreover, paragraph 3 of Section 2, Article XII of the Constitution provides that "the
Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens x
x x."
Pursuant to Section 2, Article XII of the Constitution, R.A. No. 7076 or the People's Small-
Scale Mining Act of 1991, was enacted, establishing under Section 4 thereof a People's
Small-Scale Mining Program to be implemented by the DENR Secretary in coordination with
other concerned government agencies.
The People's Small-Scale Mining Act of 1991 defines "small-scale mining" as "refer[ring] to
mining activities, which rely heavily on manual labor using simple implement and methods
and do not use explosives or heavy mining equipment." 32
It should be pointed out that the Administrative Code of 198733 provides that the DENR is,
subject to law and higher authority, in charge of carrying out the State's constitutional
mandate, under Section 2, Article XII of the Constitution, to control and supervise the
exploration, development, utilization and conservation of the country's natural resources.
128
Hence, the enforcement of small-scale mining law in the provinces is made subject to the
supervision, control and review of the DENR under the Local Government Code of 1991,
while the People’s Small-Scale Mining Act of 1991 provides that the People’s Small-Scale
Mining Program is to be implemented by the DENR Secretary in coordination with other
concerned local government agencies.
Indeed, Section 4, Article X (Local Government) of the Constitution states that "[t]he
President of the Philippines shall exercise general supervision over local governments," and
Section 25 of the Local Government Code reiterates the same. General supervision by the
President means no more than seeing to it that laws are faithfully executed or that
subordinate officers act within the law. 34
The Court has clarified that the constitutional guarantee of local autonomy in the
Constitution Art. X, Sec. 2 refers to the administrative autonomy of local government units
or, cast in more technical language, the decentralization of government authority. 35 It does
not make local governments sovereign within the State. 36 Administrative autonomy may
involve devolution of powers, but subject to limitations like following national policies or
standards,37 and those provided by the Local Government Code, as the structuring of local
governments and the allocation of powers, responsibilities, and resources among the
different local government units and local officials have been placed by the Constitution in
the hands of Congress38 under Section 3, Article X of the Constitution.
Section 3, Article X of the Constitution mandated Congress to "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."
In connection with the enforcement of the small-scale mining law in the province, Section
17 of the Local Government Code provides:
SEC. 17. Basic Services and Facilities. - (a) Local government units shall endeavor to be self-
reliant and shall continue exercising the powers and discharging the duties and functions
currently vested upon them. They shall also discharge the functions and responsibilities of
national agencies and offices devolved to them pursuant to this Code. Local government
units shall likewise exercise such other powers and discharge such other functions and
responsibilities as are necessary, appropriate, or incidental to efficient and effective
provision of the basic services and facilities enumerated herein.
(b) Such basic services and facilities include, but are not limited to, the following:
xxxx
(3) For a Province:c
xxxx
(iii) Pursuant to national policies and subject to supervision, control and review of the DENR,
enforcement of forestry laws limited to community-based forestry projects, pollution
control law, small-scale mining law, and other laws on the protection of the environment;
and mini-hydro electric projects for local purposes; 39
Clearly, the Local Government Code did not fully devolve the enforcement of the small-scale
mining law to the provincial government, as its enforcement is subject to the supervision,
control and review of the DENR, which is in charge, subject to law and higher authority, of
carrying out the State's constitutional mandate to control and supervise the exploration,
development, utilization of the country's natural resources. 40
Section 17 (b)(3)(iii) of the Local Government Code of 1991 is in harmony with R.A. No. 7076
or the People's Small-Scale Mining Act of 1991, 41 which established a People's Small-Scale
Mining Program to be implemented by the Secretary of the DENR, thus:
Sec. 2. Declaration of Policy. – It is hereby declared of the State to promote, develop,
protect and rationalize viable small-scale mining activities in order to generate more
employment opportunities and provide an equitable sharing of the nation's wealth and
natural resources, giving due regard to existing rights as herein provided.
xxxx
Sec. 4. People's Small-Scale Mining Program. - For the purpose of carrying out the declared
policy provided in Section 2 hereof, there is hereby established a People's Small-Scale
Mining Program to be implemented by the Secretary of the Department of Environment and
Natural Resources, hereinafter called the Department, in coordination with other concerned
government agencies, designed to achieve an orderly, systematic and rational scheme for
the small-scale development and utilization of mineral resources in certain mineral areas in
order to address the social, economic, technical, and environmental problems connected
with small-scale mining activities.
xxxx
Sec. 24. Provincial/City Mining Regulatory Board. – There is hereby created under the direct
supervision and control of the Secretary a provincial/city mining regulatory board, herein
129
called the Board, which shall be the implementing agency of the Department, and shall
exercise the following powers and functions, subject to review by the Secretary:
(a) Declare and segregate existing gold-rush areas for small-scale mining;
(b) Reserve future gold and other mining areas for small-scale mining;
(c) Award contracts to small-scale miners;
(d) Formulate and implement rules and regulations related to small-scale mining;
(e) Settle disputes, conflicts or litigations over conflicting claims within a people’s small-scale
mining area, an area that is declared a small-mining; and
(f) Perform such other functions as may be necessary to achieve the goals and objectives of
this Act.42
DENR Administrative Order No. 34, series of 1992, containing the Rules and Regulations to
implement R.A. No. 7076, provides:
SEC. 21. Administrative Supervision over the People's Small-Scale Mining Program. − The
following DENR officials shall exercise the following supervisory functions in the
implementation of the Program:
21.1 DENR Secretrary – direct supervision and control over the program and activities of the
small-scale miners within the people's small-scale mining area;
21.2 Director − the Director shall:
a. Recommend the depth or length of the tunnel or adit taking into account the: (1) size of
membership and capitalization of the cooperative; (2) size of mineralized areas; (3) quantity
of mineral deposits; (4) safety of miners; and (5) environmental impact and other
considerations;
b. Determine the right of small-scale miners to existing facilities in consultation with the
operator, claimowner, landowner or lessor of an affected area upon declaration of a small-
scale mining area;
c. Recommend to the Secretary the withdrawal of the status of the people's small-scale
mining area when it can no longer be feasibly operated on a small-scale basis; and
d. See to it that the small-scale mining contractors abide by small-scale mines safety rules
and regulations.
xxxx
SEC. 22. Provincial/City Mining Regulatory Board. − The Provincial/City Mining Regulatory
Board created under R.A. 7076 shall exercise the following powers and functions, subject to
review by the Secretary:
22.1 Declares and segregates existing gold rush area for small-scale mining;
22.2 Reserves for the future, mineralized areas/mineral lands for people's small-scale
mining;
22.3 Awards contracts to small-scale miners’ cooperative;
22.4 Formulates and implements rules and regulations related to R.A. 7076;
22.5 Settles disputes, conflicts or litigations over conflicting claims within ninety (90) days
upon filing of protests or complaints; Provided, That any aggrieved party may appeal within
five (5) days from the Board's decision to the Secretary for final resolution otherwise the
same is considered final and executory; and
22.6 Performs such other functions as may be necessary to achieve the goals and objectives
of R.A. 7076.
SEC. 6. Declaration of People's Small-Scale Mining Areas. – The Board created under R.A.
7076 shall have the authority to declare and set aside People's Small-Scale Mining Areas in
sites onshore suitable for small-scale mining operations subject to review by the DENR
Secretary thru the Director.43
DENR Administrative Order No. 23, otherwise known as the Implementing Rules and
Regulations of R.A. No. 7942, otherwise known as the Philippine Mining Act of 1995,
adopted on August 15, 1995, provides under Section 123 44 thereof that small-scale mining
applications should be filed with the PMRB 45 and the corresponding permits shall be issued
by the Provincial Governor, except small-scale mining applications within the mineral
reservations.
Thereafter, DENR Administrative Order No. 96-40, otherwise known as the Revised
Implementing Rules and Regulations of R.A. No. 7942, otherwise known as the Philippine
Mining Act of 1995, adopted on December 19, 1996, provides that applications for Small-
Scale Mining Permits shall be filed with the Provincial Governor/City Mayor through the
concerned Provincial/City Mining Regulatory Board for areas outside the Mineral
Reservations and with the Director though the Bureau for areas within the Mineral
Reservations.46 Moreover, it provides that Local Government Units shall, in coordination
with the Bureau/ Regional Offices and subject to valid and existing mining rights, "approve
applications for small-scale mining, sand and gravel, quarry x x x and gravel permits not
exceeding five (5) hectares."47
Petitioner contends that the Local Government Code of 1991, R.A. No. 7076, DENR
Administrative Orders Nos. 95-23 and 96-40 granted the DENR Secretary the broad statutory
power of control, but did not confer upon the respondents DENR and DENR Secretary the
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power to reverse, abrogate, nullify, void, cancel the permits issued by the Provincial
Governor or small-scale mining contracts entered into by the Board.
The contention does not persuade.
The settlement of disputes over conflicting claims in small-scale mining is provided for in
Section 24 of R.A. No. 7076, thus:
Sec. 24. Provincial/City Mining Regulatory Board. − There is hereby created under the direct
supervision and control of the Secretary a provincial/city mining regulatory board, herein
called the Board, which shall be the implementing agency of the Department, and shall
exercise the following powers and functions, subject to review by the Secretary:
xxxx
(e) Settle disputes, conflicts or litigations over conflicting claims within a people's small-scale
mining area, an area that is declared a small mining area; x x x
Section 24, paragraph (e) of R.A. No. 7076 cited above is reflected in Section 22, paragraph
22.5 of the Implementing Rules and Regulations of R.A. No. 7076, to wit:
SEC. 22. Provincial/City Mining Regulatory Board. – The Provincial/City Mining Regulatory
Board created under R.A. No. 7076 shall exercise the following powers and functions,
subject to review by the Secretary:
xxxx
22.5 Settles disputes, conflicts or litigations over conflicting claims within ninety (90) days
upon filing of protests or complaints; Provided, That any aggrieved party may appeal within
five (5) days from the Board's decision to the Secretary for final resolution otherwise the
same is considered final and executory; x x x
In this case, in accordance with Section 22, paragraph 22.5 of the Implementing Rules and
Regulations of R.A. No. 7076, the AMTC filed on July 22, 2005 with the PMRB of Bulacan a
formal protest against the Applications for Quarry Permits of Eduardo Mercado, Benedicto
Cruz, Liberato Sembrano (replaced by Lucila Valdez) and Gerardo Cruz on the ground that
the subject area was already covered by its Application for Exploration Permit. 48 However,
on August 8, 2005, the PMRB issued Resolution Nos. 05-8, 05-9, 05-10 and 05-11, resolving
to submit to the Provincial Governor of Bulacan the Applications for Small-Scale Mining
Permits of Eduardo Mercado, Benedicto Cruz, Lucila Valdez and Gerardo Cruz for the
granting/issuance of the said permits.49 On August 10, 2005, the Provincial Governor of
Bulacan issued the Small-Scale Mining Permits to Eduardo Mercado, Benedicto Cruz, Lucila
Valdez and Gerardo Cruz based on the legal opinion of the Provincial Legal Officer and the
Resolutions of the PMRB of Bulacan.
Hence, AMTC filed an appeal with respondent DENR Secretary, appealing from Letter-
Resolution No. 05-1317 and Resolution Nos. 05-08, 05-09, 05-10 and 05-11, all dated August
8, 2005, of the PMRB of Bulacan, which resolutions gave due course and granted, on August
10, 2005, Small-Scale Mining Permits to Eduardo D. Mercado, Benedicto S. Cruz, Lucila
Valdez and Gerardo Cruz involving parcels of mineral land situated at Camachin, Doña
Remedios Trinidad, Bulacan.
The PMRB of Bulacan filed its Answer, stating that it is an administrative body, created
under R.A. No. 7076, which cannot be equated with the court wherein a full-blown hearing
could be conducted, but it is enough that the parties were given the opportunity to present
evidence. It asserted that the questioned resolutions it issued were in accordance with the
mining laws and that the Small-Scale Mining Permits granted were registered ahead of
AMTC's Application for Exploration Permit. Further, the Board stated that the Governor of
Bulacan had the power to approve the Small-Scale Mining Permits under R.A. No. 7160.
The DENR Secretary found the appeal meritorious, and resolved these pivotal issues: (1)
when is the subject mining area open for mining location by other applicants; and (2) who
among the applicants have valid applications.1âwphi1 The pertinent portion of the decision
of the DENR Secretary reads:
We agree with the ruling of the MGB Director that the area is open only to mining location
on August 11, 2004, fifteen (15) days after the receipt by Golden Falcon on July 27, 2004 of a
copy of the subject Order of July 16, 2004.1âwphi1 The filing by Golden Falcon of the letter-
appeal suspended the finality of the Order of Denial issued on April 29, 1998 by the Regional
Director until the Resolution thereof on July 16, 2004.
Although the subject AQPs/SSMPs were processed in accordance with the procedures of the
PMRB, however, the AQPs were filed on February 10, 2004 when the area is still closed to
mining location. Consequently, the SSMPs granted by the PMRB and the Governor are null
and void making thereby AEP No. III-02-04 of the AMTC valid, it having been filed when the
area is already open to other mining applicants.
Records also show that the AQPs were converted into SSMPs. These are two (2) different
applications. The questioned SSMPs were issued in violation of Section 4 of RA 7076 and
beyond the authority of the Provincial Governor pursuant to Section 43 of RA 7942 because
the area was never proclaimed as "People's Small-Scale Mining Program." Moreover, iron
ore mineral is not considered among the quarry resources.
xxxx
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WHEREFORE, the Application for Exploration Permit, AEP-III-02-04 of Atlantic Mines and
Trading Corp. is declared valid and may now be given due course. The Small-Scale Mining
Permits, SSMP-B-002-05 of Gerardo Cruz, SSMP-B-003-05 of Eduardo D. Mercado, SSMP-B-
004-05 of Benedicto S. Cruz and SSMP-B-005-05 of Lucila S. Valdez are declared NULL AND
VOID. Consequently, the said permits are hereby CANCELLED. 50
The Court finds that the decision of the DENR Secretary was rendered in accordance with
the power of review granted to the DENR Secretary in the resolution of disputes, which is
provided for in Section 24 of R.A. No. 7076 and Section 22 of its Implementing Rules and
Regulations.52 It is noted that although AMTC filed a protest with the PMRB regarding its
superior and prior Application for Exploration Permit over the Applications for Quarry
Permit, which were converted to Small-Scale Mining Permits, the PMRB did not resolve the
same, but issued Resolution Nos. 05-08 to 05-11 on August 8, 2005, resolving to submit to
the Provincial Governor of Bulacan the Applications for Small-Scale Mining Permits of
Eduardo Mercado, Benedicto Cruz, Lucila Valdez and Gerardo Cruz for the granting of the
said permits. After the Provincial Governor of Bulacan issued the Small-Scale Mining Permits
on August 10, 2005, AMTC appealed the Resolutions of the PMRB giving due course to the
granting of the Small-Scale Mining Permits by the Provincial Governor.
Hence, the decision of the DENR Secretary, declaring that the Application for Exploration
Permit of AMTC was valid and may be given due course, and canceling the Small-Scale
Mining Permits issued by the Provincial Governor, emanated from the power of review
granted to the DENR Secretary under R.A. No. 7076 and its Implementing Rules and
Regulations. The DENR Secretary's power to review and, therefore, decide, in this case, the
issue on the validity of the issuance of the Small-Scale Mining Permits by the Provincial
Governor as recommended by the PMRB, is a quasi-judicial function, which involves the
determination of what the law is, and what the legal rights of the contending parties are,
with respect to the matter in controversy and, on the basis thereof and the facts obtaining,
the adjudication of their respective rights. 53 The DENR Secretary exercises quasi-judicial
function under R.A. No. 7076 and its Implementing Rules and Regulations to the extent
necessary in settling disputes, conflicts or litigations over conflicting claims. This quasi-
judicial function of the DENR Secretary can neither be equated with "substitution of
judgment" of the Provincial Governor in issuing Small-Scale Mining Permits nor "control"
over the said act of the Provincial Governor as it is a determination of the rights of AMTC
over conflicting claims based on the law.
In determining whether Section 17 (b)(3)(iii) of the Local Government Code of 1991 and
Section 24 of R.A. No. 7076 are unconstitutional, the Court has been guided by Beltran v.
The Secretary of Health, 54 which held:
The fundamental criterion is that all reasonable doubts should be resolved in favor of the
constitutionality of a statute. Every law has in its favor the presumption of constitutionality.
For a law to be nullified, it must be shown that there is a clear and unequivocal breach of
the Constitution. The ground for nullity must be clear and beyond reasonable doubt. Those
who petition this Court to declare a law, or parts thereof, unconstitutional must clearly
establish the basis therefor. Otherwise, the petition must fail. 55
In this case, the Court finds that the grounds raised by petitioner to challenge the
constitutionality of Section 17 (b )(3)(iii) of the Local Government Code of 1991 and Section
24 'of R.A. No.7076 failed to overcome the constitutionality of the said provisions of law.
WHEREFORE, the petition is DISMISSED for lack of merit.
No costs.
SO ORDERED.
VILLAFUERTE V. LOBRERO
DECISION
REYES, J.:
This is a petition for certiorari and prohibition 1 under Rule 65 of the 1997 Revised Rules of
Court filed by former Governor Luis Raymund F. Villafuerte, Jr. (Villafuerte) and the Province
of Camarines Sur (petitioners), seeking to annul and set aside the following issuances of the
late Honorable Jesse M. Robredo (respondent), in his capacity as then Secretary of the
Department of the Interior and Local Government (DILG), to wit:
(a) Memorandum Circular (MC) No. 2010-83dated August 31, 2010, pertaining to the full
disclosure of local budget and finances, and bids and public offerings; 2
(b) MC No. 2010-138 dated December 2, 2010, pertaining to the use of the 20% component
of the annual internal revenue allotment shares; 3 and
(c) MC No. 2011-08 dated January 13, 2011, pertaining to the strict adherence to Section 90
of Republic Act (R.A.) No. 10147 or the General Appropriations Act of 2011. 4
The petitioners seek the nullification of the foregoing issuances on the ground of
unconstitutionality and for having been issued with grave abuse of discretion amounting to
lack orexcess of jurisdiction.
The Facts
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In 1995, the Commission on Audit (COA) conducted an examination and audit on the
manner the local government units (LGUs) utilized their Internal Revenue Allotment (IRA)
for the calendar years 1993-1994. The examination yielded an official report,showing that a
substantial portion of the 20% development fund of some LGUs was not actually utilized for
development projects but was diverted to expenses properly chargeable against the
Maintenance and Other Operating Expenses (MOOE), in stark violation of Section 287 of
R.A. No. 7160, otherwise known as the Local Government Code of 1991 (LGC). Thus, on
December 14, 1995, the DILG issued MC No. 95-216, 5 enumerating the policies and
guidelines on the utilization of the development fund component of the IRA. It likewise
carried a reminder to LGUs of the strict mandate to ensure that public funds, like the 20%
development fund, "shall bespent judiciously and only for the very purpose or purposes for
which such funds are intended."6
On September 20, 2005, then DILG Secretary Angelo T. Reyes and Department of Budget
and Management Secretary Romulo L. Neri issued Joint MC No. 1, series of 2005, 7 pertaining
to the guidelines on the appropriation and utilization of the 20% of the IRA for development
projects, which aims to enhance accountability of the LGUs in undertaking development
projects. The said memorandum circular underscored that the 20% of the IRA intended for
development projects should be utilized for social development, economic development
and environmental management.8
On August 31, 2010, the respondent, in his capacity as DILG Secretary, issued the assailed
MC No. 2010-83,9 entitled "Full Disclosure of Local Budget and Finances, and Bids and Public
Offerings," which aims to promote good governance through enhanced transparency and
accountability of LGUs. The pertinent portion of the issuance reads:
Legal and Administrative Authority
Section 352 of the Local Government Code of 1991 requires the posting within 30 days from
the end of eachfiscal year in at least three (3) publicly accessible and conspicuous places in
the local government unit a summary of all revenues collected and funds received including
the appropriations and disbursements of such funds during the preceding fiscal year.
On the other hand, Republic Act No. 9184, known as the Government Procurement Reform
Act, calls for the posting of the Invitation to Bid, Notice of Award, Notice to Proceed and
Approved Contract in the procuring entity’s premises, in newspapers of general circulation,
the Philippine Government Electronic Procurement System (PhilGEPS) and the website of
the procuring entity. The declared policy of the State to promote good local governance also
calls for the posting of budgets, expenditures, contracts and loans, and procurement plans
of local government units in conspicuous places within public buildings in the locality, inthe
web, and in print media of community or general circulation.
Furthermore, the President, in his first State of the Nation Address, directed all government
agencies and entities to bring to an end luxurious spending and misappropriation ofpublic
funds and to expunge mendacious and erroneous projects, and adhere to the zero-based
approach budgetary principle.
Responsibility of the Local Chief Executive
All Provincial Governors, City Mayors and Municipal Mayors, are directed to faithfully
comply with the above cited [sic] provisions of laws, and existing national policy, by posting
in conspicuous places within public buildings in the locality, or inprint media of community
or general circulation, and in their websites, the following:
1. CY 2010 Annual Budget, information detail to the level of particulars of personal services,
maintenance and other operating expenses and capital outlay per individual offices (Source
Document - Local Budget Preparation Form No. 3, titled, Program Appropriation and
Obligation by Object of Expenditure, limited to PS, MOOE and CO. For sample form, please
visit www.naga.gov.ph);
2. Quarterly Statement of Cash Flows, information detail to the level of particulars of cash
flows from operating activities (e.g. cash inflows, total cash inflows, total cash outflows),
cash flows from investing activities (e.g. cash outflows), net increase in cash and cash at the
beginning of the period (Source Document - Statement of Cash Flows Form);
3. CY 2009 Statement of Receipts and Expenditures, information detail to the level of
particulars of beginning cash balance, receipts or income on local sources (e.g., tax revenue,
non-tax revenue), external sources, and receipts from loans and borrowings, surplus of prior
years, expenditures on general services, economic services, social services and debt
services, and total expenditures (Source Document - Local Budget Preparation Form No. 2,
titled, Statement of Receipts and Expenditures);
4. CY 2010 Trust Fund (PDAF) Utilization, information detail to the level of particulars of
object expenditures (Source Document - Local Budget Preparation Form No. 3, titled,
Program Appropriation and Obligation by Object of Expenditure, limited to PDAF
Utilization);
5. CY 2010 Special Education Fund Utilization, information detail to the level of particulars of
object expenditures (Source Document - Local Budget Preparation Form No. 3, titled,
Program Appropriation and Obligation by Object of Expenditure, limited to Special
Education Fund);
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6. CY 2010 20% Component of the IRA Utilization, information detail to the level of
particulars of objects of expenditure on social development, economic development and
environmental management (Source Document - Local Budget Preparation Form No. 3,
titled, Program Appropriation and Obligation by Object of Expenditure, limited to 20%
Component of the Internal Revenue Allotment);
7. CY 2010 Gender and Development Fund Utilization, information detail to the level of
particulars of object expenditures (Source Document - Local Budget Preparation Form No. 3,
titled, Program Appropriation and Obligation by Object of Expenditure, limited to Gender
and Development Fund);
8. CY 2010 Statement of Debt Service, information detail to the level of name of creditor,
purpose of loan, date contracted, term, principal amount, previous payment made on the
principal and interest, amount due for the budget year and balance of the principal (Source
Document - Local Budget Preparation Form No. 6, titled, Statement of Debt Service);
9. CY 2010 Annual Procurement Plan or Procurement List, information detail to the level
ofname of project, individual item or article and specification or description of goods and
services, procurement method, procuring office or fund source, unit price or estimated cost
or approved budget for the contract and procurement schedule (Source Document - LGU
Form No. 02, Makati City. For sample form, please visit www.makati.gov.ph.)[;]
10. Items to Bid, information detail to the level of individual Invitation to Bid, containing
information as prescribed in Section 21.1 of Republic Act No. 9184, or The Government
Procurement Reform Act, to be updated quarterly (Source Document - Invitation to Apply
for Eligibility and to Bid, as prescribed in Section 21.1 of R.A. No. 9184. For sample form,
please visit www.naga.gov.ph);
11. Bid Results on Civil Works, and Goods and Services, information detail to the level of
project reference number, name and location of project, name (company and proprietor)
and address of winning bidder, bid amount, approved budget for the contract, bidding date,
and contract duration, to be updated quarterly (Source Document – Infrastructure
Projects/Goods and Services Bid-Out (2010), Naga City. For sample form, please visit
www.naga.gov.ph); and
12. Abstract of Bids as Calculated, information detail to the level of project name, location,
implementing office, approved budget for the contract, quantity and items subject for
bidding, and bids of competing bidders, to be updated quarterly (Source Document -
Standard Form No. SF-GOOD-40, Revised May 24, 2004, Naga City. For sample form, please
visit www.naga.gov.ph).
The foregoing circular also statesthat non-compliance will be meted sanctions in accordance
with pertinent laws, rules and regulations. 10
On December 2, 2010, the respondent issued MC No. 2010-138,11 reiterating that 20%
component of the IRA shall be utilized for desirable social, economic and environmental
outcomes essential to the attainment of the constitutional objective of a quality oflife for all.
It also listed the following enumeration of expenses for which the fund must not be utilized,
viz:
1. Administrative expenses such ascash gifts, bonuses, food allowance, medical assistance,
uniforms, supplies, meetings, communication, water and light, petroleum products, and the
like; 2. Salaries, wages or overtime pay;
3. Travelling expenses, whether domestic or foreign;
4. Registration or participation feesin training, seminars, conferences or conventions;
5. Construction, repairor refinishing of administrative offices;
6. Purchase of administrative office furniture, fixtures, equipment or appliances; and
7. Purchase, maintenance or repair of motor vehicles or motorcycles, except
ambulances.12 On January 13, 2011, the respondent issued MC No. 2011-08, 13 directing for
the strict adherence toSection 90 of R.A. No. 10147 or the General Appropriations Act of
2011. The pertinent portion of the issuance reads as follows:
Legal and Administrative Authority
● Section 90 of Republic Act No. 10147 (General Appropriations Act) FY 2011 re "Use and
Disbursement of Internal Revenue Allotment of LGUs", [sic] stipulates: The amount
appropriated for the LGU’s share in the Internal Revenue Allotment shall be used in
accordance with Sections 17 (g) and 287 of R.A. No 7160. The annual budgets of LGUs shall
be prepared in accordance with the forms, procedures, and schedules prescribed by the
Department of Budget and Management and those jointly issued with the Commission on
Audit. Strict compliance with Sections 288 and 354 of R.A. No. 7160 and DILG Memorandum
Circular No. 2010-83, entitled "Full Disclosure of Local Budget and Finances, and Bids and
Public offering" is hereby mandated; PROVIDED, That in addition to the publication or
posting requirement under Section 352 of R.A. No. 7160 in three (3) publicly accessible and
conspicuous places in the local government unit, the LGUs shall also post the detailed
information on the use and disbursement, and status of programs and projects in the LGUS
websites. Failure to comply with these requirements shall subject the responsible officials to
disciplinary actions in accordance with existing laws. x x x 14
xxxx
134
Sanctions
Non-compliance with the foregoing shall be dealt with in accordance with pertinent laws,
rules and regulations. In particular, attention is invited to the provision of the Local
Government Code of 1991, quoted as follows:
Section 60. Grounds for Disciplinary Actions - An elective local official may be disciplined,
suspended, or removed from office on: (c) Dishonesty, oppression, misconduct in office,
gross negligence, or dereliction of duty. x x x 15 (Emphasis and underscoring in the original)
On February 21, 2011, Villafuerte, then Governor of Camarines Sur, joined by the Provincial
Government of Camarines Sur, filed the instant petition for certiorari, seeking to nullify the
assailed issuances of the respondent for being unconstitutional and having been issued with
grave abuse of discretion.
On June 2, 2011, the respondent filed his Comment on the petition. 16 Then, on June 22,
2011, the petitioners filed their Reply (With Urgent Prayer for the Issuance of a Writ of
Preliminary Injunction and/or Temporary Restraining Order). 17 In the Resolution18 dated
October 11, 2011, the Court gave due course to the petition and directed the parties to file
their respective memorandum. In compliance therewith, the respondent and the petitioners
filed their Memorandum on January 19, 2012 19 and on February 8, 201220 respectively.
The petitioners raised the following issues:
Issues
I exercise of judicial review. He contends that the mere expectation of an administrative
THE HON. SECRETARY OF THE INTERIOR AND LOCAL GOVERNMENT COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN HEISSUED
THE ASSAILED MEMORANDUM CIRCULARS IN VIOLATION OF THE PRINCIPLES OF LOCAL
AUTONOMY AND FISCAL AUTONOMY ENSHRINED IN THE 1987 CONSTITUTION AND THE
LOCAL GOVERNMENT CODE OF 1991[.]
II
THE HON. SECRETARY OF THE INTERIOR AND LOCAL GOVERNMENT COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN
HEINVALIDLY ASSUMED LEGISLATIVE POWERS IN PROMULGATING THE ASSAILED
MEMORANDUM CIRCULARS WHICH WENT BEYOND THE CLEAR AND MANIFEST INTENT OF
THE 1987 CONSTITUTION AND THE LOCAL GOVERNMENT CODE OF 1991[.] 21
Ruling of the Court
The present petition revolves around the main issue: Whether or not the assailed
memorandum circulars violate the principles of local and fiscal autonomy enshrined in the
Constitution and the LGC.
The present petition is ripe for judicial review.
At the outset, the respondent is questioning the propriety of the exercise of the Court’s
power of judicial review over the instant case. He argues that the petition is premature since
there is yet any actual controversy that is ripe for judicial determination. He points out the
lack of allegation in the petition that the assailed issuances had been fully implemented and
that the petitioners had already exhausted administrative remedies under Section 25 of the
Revised Administrative Code before filing the same in court. 22
It is well-settled that the Court’s exercise of the power of judicial review requires the
concurrence of the following elements: (1) there must be an actual case or controversy
calling for the exercise of judicial power; (2) the person challenging the act must have the
standing to question the validity of the subject act or issuance; otherwise stated, he must
have a personal and substantial interest in the case such that he has sustained, or will
sustain, direct injury as a result of its enforcement; (3) the question of constitutionality must
be raised at the earliest opportunity; and (4) the issue of constitutionality must be the very
lis motaof the case.23
The respondent claims that there isyet any actual case or controversy that calls for the
sanction does not give rise to a justiciable controversy especially, in this case, that the
petitioners have yet to exhaust administrative remedies available. 24
The Court disagrees.
In La Bugal-B’laan Tribal Association, Inc. v. Ramos, 25 the Court characterized an actual case
or controversy, viz:
An actual case or controversy means an existing case or controversy that is appropriate or
ripe for determination, not conjectural or anticipatory, lest the decision of the court would
amount to an advisory opinion. The power does not extend to hypothetical questions since
any attempt at abstraction could only lead to dialectics and barren legal questions and to
sterile conclusions unrelated to actualities. 26 (Citations omitted)
The existence of an actual controversy in the instant case cannot be overemphasized. At the
time of filing of the instant petition, the respondent had already implemented the assailed
memorandum circulars. In fact, on May 26, 2011, Villafuerte received Audit Observation
Memorandum (AOM) No. 2011-009 dated May 10, 2011 27 from the Office of the Provincial
135
Auditor of Camarines Sur, requiring him to comment on the observation of the audit team,
which states:
The Province failed to post the transactions and documents required under Department of
Interior and Local Government (DILG) Memorandum Circular No. 2010-83, thereby violating
the mandate of full disclosure of Local Budget and Finances, and Bids and Public Offering.
xxxx
The local officials concerned are reminded of the sanctions mentioned in the circular which
is quoted hereunder, thus:
"Non compliance with the foregoing shall be dealt with in accordance with pertinent laws,
rules and regulations. In particular, attention is invited to the provision of Local Government
Code of 1991, quoted as follows:
Section 60. Grounds for Disciplinary Actions – An elective local official may be disciplined,
suspended or removed from office on: (c) Dishonesty, oppression, misconduct in office,
gross negligence or dereliction of duty."28
The issuance of AOM No. 2011-009 to Villafuerte is a clear indication that the assailed
issuances of the respondent are already in the full course of implementation. The audit
memorandum specifically mentioned of Villafuerte’s alleged non-compliance with MCNo.
2010-83 regarding the posting requirements stated in the circular and reiterated the
sanctions that may be imposed for the omission. The fact that Villafuerte is being required
to comment on the contents of AOM No. 2011-009 signifies that the process of investigation
for his alleged violation has already begun. Ultimately, the investigation is expected to end
in a resolution on whether a violation has indeed been committed, together with the
appropriate sanctions that come with it. Clearly, Villafuerte’s apprehension is real and well-
founded as he stands to be sanctioned for non-compliance with the issuances.
There is likewise no merit in the respondent’s claim that the petitioners’ failure to exhaust
administrative remedies warrants the dismissal of the petition. It bears emphasizing that the
assailed issuances were issued pursuant to the rule-making or quasi-legislative power of the
DILG. This pertains to "the power to make rules and regulations which results in delegated
legislation that is within the confines of the granting statute." 29 Not to be confused with the
quasi-legislative or rule-making power of an administrative agency is its quasi-judicial or
administrative adjudicatory power. This is the power to hear and determine questions of
fact to which the legislative policy is to apply and to decide in accordance with the standards
laid down by the law itself in enforcing and administering the same law. 30 In challenging the
validity of anadministrative issuance carried out pursuant to the agency’s rule-making
power, the doctrine of exhaustion of administrative remedies does not stand as a bar in
promptly resorting to the filing of a case in court. This was made clear by the Court in Smart
Communications, Inc. (SMART) v. National Telecommunications Commission (NTC), 31 where
it was ruled, thus:
In questioning the validity or constitutionality of a rule or regulation issued by an
administrative agency, a party need not exhaust administrative remedies before going to
court. This principle applies only where the act of the administrative agency concerned was
performed pursuant to its quasi-judicial function, and not when the assailed act pertained to
its rule-making orquasi-legislative power. x x x. 32
Considering the foregoing clarification, there is thus no bar for the Court to resolve the
substantive issues raised in the petition.
The assailed memorandum
circulars do not transgress the local
and fiscal autonomy granted to
LGUs.
The petitioners argue that the assailed issuances of the respondent interfere with the local
and fiscal autonomy of LGUs embodied in the Constitution and the LGC. In particular, they
claim that MC No. 2010-138 transgressed these constitutionally-protected liberties when it
restricted the meaning of "development" and enumerated activities which the local
government must finance from the 20% development fund component of the IRA and
provided sanctions for local authorities who shall use the said component of the fund for
the excluded purposes stated therein. 33 They argue that the respondent cannot substitute
his own discretion with that of the local legislative council in enacting its annual budget and
specifying the development projects that the 20% component of its IRA should fund. 34
The argument fails to persuade.
The Constitution has expressly adopted the policy of ensuring the autonomy of LGUs. 35 To
highlight its significance, the entire Article X of the Constitution was devoted to laying down
the bedrock upon which this policy is anchored.
It is also pursuant to the mandate of the Constitution of enhancing local autonomy that the
LGC was enacted. Section 2 thereof was a reiteration of the state policy. It reads, thus:
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 ofnational goals. Toward this end,
136
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.
Verily, local autonomy means a more responsive and accountable local government
structure instituted through a system of decentralization.36 In Limbona v. Mangelin,37 the
Court elaborated on the concept of decentralization, thus:
[A]utonomy is either decentralization of administration ordecentralization of power. There
is decentralization of administration when the central government delegates administrative
powers to political subdivisions in order to broaden the base of government power and in
the process to make local governments "more responsive and accountable," and "ensure
their fullest development as self-reliant communities and make them more effective
partners in the pursuit of national development and social progress." At the same time, it
relieves the central government of the burden of managing local affairs and enables it to
concentrate on national concerns. x x x. Decentralization of power, on the other hand,
involves an abdication of political power in the favor of local governments [sic] units
declared to be autonomous. In thatcase, the autonomous government is free to chart its
own destiny and shape its future with minimum intervention from central authorities. x x
x.38 (Citations omitted)
To safeguard the state policy on local autonomy, the Constitution confines the power of the
President over LGUs to mere supervision. 39 "The President exercises ‘general supervision’
over them, but only to ‘ensure that local affairs are administered according to law.’ He has
no control over their acts in the sense that he can substitute their judgments with his
own."40 Thus, Section 4, Article X of the Constitution, states:
Section 4. The President of the Philippines shall exercise general supervision over local
governments. Provinces with respect to component cities and municipalities, and cities and
municipalities with respect to component barangays, shall ensure that the acts of their
component units are within the scope of their prescribed powers and functions.
In Province of Negros Occidental v. Commissioners, Commission on Audit, 41 the Court
distinguished general supervision from executive control in the following manner:
The President’s power of general supervision means the power of a superior officer to see to
it that subordinates perform their functions according to law. This is distinguished from the
President’s power of control which is the power to alter or modify or set aside what a
subordinate officer had done in the performance of his duties and to substitute the
judgment of the President over that of the subordinate officer. The power of control gives
the President the power to revise or reverse the acts or decisions of a subordinate officer
involving the exercise of discretion.42 (Citations omitted)
It is the petitioners’ contention that the respondent went beyond the confines of his
supervisory powers, asalter ego of the President, when he issued MC No. 2010-138. They
arguethat the mandatory nature of the circular, with the threat of imposition of sanctions
for non-compliance, evinces a clear desire to exercise control over LGUs. 43
The Court, however, perceives otherwise.
A reading of MC No. 2010-138 shows that it is a mere reiteration of an existing provision in
the LGC. It was plainly intended to remind LGUs to faithfully observe the directive stated in
Section 287 of the LGC to utilize the 20% portion of the IRA for development projects. It
was, at best, an advisory to LGUs to examine themselves if they have been complying with
the law. It must be recalled that the assailed circular was issued in response to the report of
the COA that a substantial portion of the 20% development fund of some LGUs was not
actually utilized for development projects but was diverted to expenses more properly
categorized as MOOE, in violation of Section 287 of the LGC. This intention was highlighted
in the very first paragraph of MC No. 2010-138, which reads:
Section 287 of the Local Government Code mandates every local government to appropriate
in its annual budget no less than 20% of its annual revenue allotment for development
projects. In common understanding, development means the realization of desirable social,
economic and environmental outcomes essential in the attainment of the constitutional
objective of a desired quality of life for all.44 (Underscoring in the original)
That the term developmentwas characterized asthe "realization of desirable social,
economic and environmental outcome" does not operate as a restriction of the term so as
to exclude some other activities that may bring about the same result. The definition was a
plain characterization of the concept of development as it is commonly understood. The
statement of a general definition was only necessary to illustrate among LGUs the nature of
expenses that are properly chargeable against the development fund component of the IRA.
It is expected to guide them and aid them in rethinking their ways so that they may be able
to rectify lapses in judgment, should there be any, or it may simply stand as a reaffirmation
of an already proper administration of expenses.
The same clarification may be said of the enumeration of expenses in MC No. 2010-138. To
begin with, it is erroneous to call them exclusions because such a term signifies compulsory
disallowance of a particular item or activity. This is not the contemplation of the
137
enumeration. Again, it is helpful to retrace the very reason for the issuance of the assailed
circular for a better understanding. The petitioners should be reminded that the issuance of
MC No. 2010-138 was brought about by the report of the COA that the development fund
was not being utilized accordingly. To curb the alleged misuse of the development fund, the
respondent deemed it proper to remind LGUs of the nature and purpose of the provision for
the IRA through MC No. 2010-138. To illustrate his point, heincluded the contested
enumeration of the items for which the development fund must generallynot be used. The
enumerated items comprised the expenses which the COA perceived to have been
improperly earmarked or charged against the development fund based on the audit it
conducted.
Contrary to the petitioners’ posturing, however, the enumeration was not meant to restrict
the discretion of the LGUs in the utilization of their funds. It was meant to enlighten LGUs as
to the nature of the development fund by delineating it from other types of expenses. It was
incorporated in the assailed circular in order to guide them in the proper disposition of the
IRA and avert further misuse of the fund by citing current practices which seemed to be
incompatible with the purpose of the fund. Even then, LGUs remain at liberty to map out
their respective development plans solely on the basis of their own judgment and utilize
their IRAs accordingly, with the only restriction that 20% thereof be expended for
development projects. They may even spend their IRAs for some of the enumerated items
should they partake of indirect costs of undertaking development projects. In such case,
however, the concerned LGU must ascertain that applicable rules and regulations on
budgetary allocation have been observed lest it be inviting an administrative probe.
The petitioners likewise misread the issuance by claiming that the provision of sanctions
therein is a clear indication of the President’s interference in the fiscal autonomy of LGUs.
The relevant portion of the assailed issuance reads, thus:
All local authorities are further reminded that utilizing the 20% component of the Internal
Revenue Allotment, whether willfully or through negligence, for any purpose beyond those
expressly prescribed by law or public policy shall be subject to the sanctions provided under
the Local Government Code and under such other applicable laws. 45
Significantly, the issuance itself did not provide for sanctions. It did not particularly establish
a new set ofacts or omissions which are deemed violations and provide the corresponding
penalties therefor. It simply stated a reminder to LGUs that there are existing rules to
consider in the disbursement of the 20% development fund and that non-compliance
therewith may render them liable to sanctions which are provided in the LGC and other
applicable laws. Nonetheless, this warning for possible imposition of sanctions did not alter
the advisory nature of the issuance. At any rate, LGUs must be reminded that the local
autonomy granted to them does not completely severe them from the national government
or turn them into impenetrable states. Autonomy does not make local governments
sovereign within the state.46 InGanzon v. Court of Appeals,47 the Court reiterated:
Autonomy, however, is not meant to end the relation of partnership and interdependence
between the central administration and local government units, or otherwise, to usher in a
regime of federalism. The Charter has not taken such a radical step.1avvphi1 Local
governments, under the Constitution, are subject to regulation, however limited, and for no
other purpose than precisely, albeit paradoxically, to enhance self-government. 48
Thus, notwithstanding the local fiscal autonomy being enjoyed by LGUs, they are still under
the supervision of the President and maybe held accountable for malfeasance or violations
of existing laws. "Supervision is not incompatible with discipline. And the power to discipline
and ensure that the laws be faithfully executed must be construed to authorize the
President to order an investigation of the act or conduct of local officials when in his opinion
the good of the public service so requires." 49
Clearly then, the President’s power of supervision is not antithetical to investigation and
imposition of sanctions. In Hon. Joson v. Exec. Sec. Torres, 50 the Court pointed out, thus:
"Independently of any statutory provision authorizing the President to conduct an
investigation of the nature involved in this proceeding, and in view of the nature and
character of the executive authority with which the President of the Philippines is invested,
the constitutional grant to him of power to exercise general supervision over all local
governments and to take care that the laws be faithfully executed must be construed to
authorize him to order an investigation of the act or conduct of the petitioner herein.
Supervision is not a meaningless thing. It is an active power. It is certainly not without
limitation, but it at least implies authority to inquire into facts and conditions in order to
render the power real and effective. x x x." 51 (Emphasis ours and italics in the original)
As in MC No. 2010-138, the Court finds nothing in two other questioned issuances of the
respondent, i.e., MC Nos. 2010-83 and 2011-08, that can be construed as infringing onthe
fiscal autonomy of LGUs. The petitioners claim that the requirement to post other
documents in the mentioned issuances went beyond the letter and spirit of Section 352 of
the LGC and R.A. No. 9184, otherwise known as the Government Procurement Reform Act,
by requiring that budgets, expenditures, contracts and loans, and procurement plans of
LGUs be publicly posted as well.52
138
Pertinently, Section 352 of the LGC reads:
Section 352. Posting of the Summary of Income and Expenditures.– Local treasurers,
accountants, budget officers, and other accountable officers shall, within thirty (30) days
from the end of the fiscal year, post in at least three (3) publicly accessible and conspicuous
places in the local government unit a summary of all revenues collected and funds received
including the appropriations and disbursements of such funds during the preceding fiscal
year.
R.A. No. 9184, on the other hand, requires the posting of the invitation to bid, notice of
award, notice to proceed, and approved contract in the procuring entity’s premises, in
newspapers of general circulation, and the website of the procuring entity. 53
It is well to remember that fiscal autonomy does not leave LGUs with unbridled discretion in
the disbursement of public funds. They remain accountable to their constituency. For, public
office was created for the benefit of the people and not the person who holds office.
The Court strongly enunciated in ABAKADA GURO Party List (formerly AASJS), et al. v.Hon.
Purisima, et al.,54 thus:
Public office is a public trust. It must be discharged by its holder not for his own personal
gain but for the benefit of the public for whom he holds it in trust. By demanding
accountability and service with responsibility, integrity, loyalty, efficiency, patriotism and
justice, all government officials and employees havethe duty to be responsive to the needs
of the people they are called upon to serve. 55
Thus, the Constitution strongly summoned the State to adopt and implement a policy of full
disclosure of all transactions involving public interest and provide the people with the right
to access public information. 56 Section 352 of the LGC is a response to this call for
transparency. It is a mechanism of transparency and accountability of local government
officials and is in fact incorporated under Chapter IV of the LGC which deals with
"Expenditures, Disbursements, Accounting and Accountability."
In the same manner, R.A. No. 9184 established a system of transparency in the procurement
process and in the implementation of procurement contracts in government agencies. 57 It is
the public monitoring of the procurement process and the implementation of awarded
contracts with the end in view of guaranteeing that these contracts are awarded pursuant
to the provisions of the law and its implementing rules and regulations, and that all these
contracts are performed strictly according to specifications. 58
The assailed issuances of the respondent, MC Nos. 2010-83 and 2011-08, are but
implementation of this avowed policy of the State to make public officials accountable to
the people. They are amalgamations of existing laws, rules and regulation designed to give
teeth to the constitutional mandate of transparency and accountability.
A scrutiny of the contents of the mentioned issuances shows that they do not, in any
manner, violate the fiscal autonomy of LGUs. To be clear, "[f]iscal autonomy means that
local governments have the power to create their own sources of revenue in addition to
their equitable share in the national taxes released by the national government, as well as
the power to allocate their resources in accordance withtheir own priorities.It extends to
the preparation of their budgets, and local officials in turn have to work within the
constraints thereof."59
It is inconceivable, however, how the publication of budgets, expenditures, contracts and
loans and procurement plans of LGUs required in the assailed issuances could have infringed
on the local fiscal autonomy of LGUs. Firstly, the issuances do not interfere with the
discretion of the LGUs in the specification of their priority projects and the allocation of their
budgets. The posting requirements are mere transparency measures which do not at all hurt
the manner by which LGUs decide the utilization and allocation of their funds.
Secondly, it appears that even Section 352 of the LGC that is being invoked by the
petitioners does not exclude the requirement for the posting of the additional documents
stated in MC Nos. 2010-83 and 2011-08. Apparently, the mentioned provision requires the
publication of "a summary of revenues collected and funds received, including the
appropriations and disbursements of such funds." The additional requirement for the
posting of budgets, expenditures, contracts and loans, and procurement plans are well-
within the contemplation of Section 352 of the LGC considering they are documents
necessary for an accurate presentation of a summary of appropriations and disbursements
that an LGU is required to publish.
Finally, the Court believes that the supervisory powers of the President are broad enough to
embrace the power to require the publication of certain documents as a mechanism of
transparency. In Pimentel,Jr. v. Hon. Aguirre, 60 the Court reminded that localfiscal autonomy
does not rule out any manner of national government intervention by way of supervision, in
order to ensure that local programs, fiscal and otherwise, are consistent with national goals.
The President, by constitutional fiat, is the head of the economic and planning agency of the
government, primarily responsible for formulating and implementing continuing,
coordinated and integrated social and economic policies, plans and programs for the entire
country.61 Moreover, the Constitution, which was drafted after long years of dictatorship
and abuse of power, is now replete with numerous provisions directing the adoption of
139
measures to uphold transparency and accountability in government, with a view of
protecting the nation from repeating its atrocious past. In particular, the Constitution
commands the strict adherence to full disclosure of information onall matters relating to
official transactions and those involving public interest. Pertinently, Section 28, Article II and
Section 7, Article III of the Constitution, provide: Article II
Declaration of Principles and State Policies Principles
Section 28. Subject to reasonable conditions prescribed by law, the State adopts and
implements a policy of full public disclosure of all its transactions involving public interest.
Article III
Bill of Rights
Section 7. The right of the people to information on matters of public concern shall be
recognized. Access to official records, and to documents and papers pertaining to official
acts, transactions, or decisions, as well as to government research data used as basis for
policy development, shall be afforded the citizen, subject to such limitations as may be
provided by law.
In the instant case, the assailed issuances were issued pursuant to the policy of promoting
good governance through transparency, accountability and participation. The action of the
respondent is certainly within the constitutional bounds of his power as alter ego of the
President.
It is needless to say that the power to govern is a delegated authority from the people who
hailed the public official to office through the democratic process of election. His stay in
office remains a privilege which may be withdrawn by the people should he betray his oath
of office. Thus, he must not frown upon accountability checks which aim to show how well
he is performing his delegated power. For, it is through these mechanisms of transparency
and accountability that he is able to prove to his constituency that he is worthy of the
continued privilege.
WHEREFORE, in view of the foregoing considerations, the petition is DISMISSED for lack of
merit.
SO ORDERED.
LTO V. CITY OF BUTUAN
The 1987 Constitution enunciates the policy that the territorial and
political subdivisions shall enjoy local autonomy. 1 In obedience to that,
mandate of the fundamental law, Republic Act ("R.A.") No.7160,
otherwise known as the Local Government Code, 2 expresses that the
territorial and political subdivisions of the State shall enjoy genuine and
meaningful local autonomy in order to enable them to attain their fullest
development as self-reliant communities and make them more effective
partners in the attainment of national goals, and that it is a basic aim of
the State to 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.chanrobles virtual lawlibrary
While the Constitution seeks to strengthen local units and ensure their
viability, clearly, however, it has never been the intention of that organic
law to create an imperium in imperio and install an intra sovereign
political subdivision independent of a single sovereign state.
The Court is asked in this instance to resolve the issue of whether under
the present set up the power of the Land Registration Office ("LTO") to
register, tricycles in particular, as well as to issue licenses for the driving
thereof, has likewise devolved to local government units.
The Regional Trial Court (Branch 2) of Butuan City held: 3 that the
authority to register tricycles, the grant of the corresponding franchise,
the issuance of tricycle drivers’ license, and the collection of fees
therefore had all been vested in the Local Government Units ("LGUs").
Accordingly, it decreed the issuance of a permanent writ of injunction
against LTO, prohibiting and enjoining LTO, as well as its employees and
other persons acting in its behalf, from (a) registering tricycles and (b)
issuing licenses to drivers of tricycles. The Court of Appeals, on appeal to
it, sustained the trial court.
The adverse rulings of both the court a quo and the appellate court
prompted the LTO to file the instant petition for review on certiorari to
annul and set aside the decision, 4 dated 17 November 1997, of the Court
of Appeals affirming the permanent injunctive writ order of the Regional
140

Trial Court (Branch 2) of Butuan City. the issuance of all kinds of licenses or permits for the driving thereof,
except tricycles."cralaw virtua1aw library
Respondent City of Butuan asserts that one of the salient provisions
introduced by the Local Government Code is in the area of local taxation Relying on the foregoing provisions of the law, the Sangguniang
which allows LGUs to collect registration fees or charges along with, in its Panlungsod ("SP") of Butuan, on 16 August 1992, passed SP Ordinance
view, the corresponding issuance of all kinds of licenses or permits for the No.916-92 entitled "An Ordinance Regulating the Operation of Tricycles-
driving of tricycles. for-Hire, providing mechanism for the issuance of Franchise, Registration
and Permit, and Imposing Penalties for Violations thereof and for other
The 1987 Constitution provides:jgc:chanrobles.com.ph Purposes." The ordinance provided for, among other things, the payment
of franchise fees for the grant of the franchise of tricycles-for-hire, fees
"Each local government unit shall have the power to create its own for the registration of the vehicle, and fees for the issuance of a permit for
sources of revenues and to levy taxes, fees, and charges subject to such the driving thereof.
guidelines and limitations as the Congress may provide, consistent with
the basic policy of local autonomy. Such taxes, fees, and charges shall Petitioner LTO explains that one of the functions of the national
accrue exclusively to the local governments." 5 government that, indeed, has been transferred to local government units
is the franchising authority over tricycles-for-hire of the Land
Section 129 and Section 133 of the Local Government Code Transportation Franchising and Regulatory Board ("LTFRB") but not, it
read:jgc:chanrobles.com.ph asseverates, the authority of LTO to register all motor vehicles and to
issue to qualified persons of licenses to drive such vehicles.
"SECTION 129. Power to Create Sources of Revenue. — Each local
government unit shall exercise its power to create its own sources of In order to settle the variant positions of the parties, the City of Butuan,
revenue and to levy taxes, fees, and charges subject to the provisions represented by its City Mayor Democrito D. Plaza, filed on 28 June 1994
herein, consistent with the basic policy of local autonomy. Such taxes, with the trial court a petition for "prohibition, mandamus, injunction with
fees, and charges shall accrue exclusively to the local government a prayer for preliminary restraining order ex-parte" seeking the
units."cralaw virtua1aw library declaration of the validity of SP Ordinance No.962-93 and the prohibition
of the registration of tricycles-for-hire and the issuance of licenses for the
"SECTION 133. Common Limitations on the Taxing Powers of Local driving thereof by the LTO.
Government Units. — Unless otherwise provided herein, the exercise of
the taxing powers of provinces, cities, municipalities, and barangays shall LTO opposed the prayer in the petition.
not extend to the levy of the following:jgc:chanrobles.com.ph
On 20 March 1995, the trial court rendered a resolution; the dispositive
"x       x       x. portion read:chanroblesvirtuallawlibrary

"(I) Taxes, fees or charges for the registration of motor vehicles and for "In view of the foregoing, let a permanent injunctive writ be issued
141

against the respondent Land Transportation Office and the other
respondents, prohibiting and enjoining them, their employees, officers,
attorney’s or other persons acting in their behalf from forcing or
compelling Tricycles to be registered with, and drivers to secure their
licenses from respondent LTO or secure franchise from LTFRB and from
collecting fees thereon. It should be understood that the registration,
franchise of tricycles and driver’s license/permit granted or issued by the
City of Butuan are valid only within the territorial limits of Butuan City.
"No pronouncement as to costs." 6 franchising and regulatory responsibilities had been vested in the LTFRB.
laws pertaining to land transportation. The LTO is a line agency under the
DOTC whose powers and functions, pursuant to Article III, Section 4 (d)
(1), 10 of R.A. No.4136, otherwise known as Land Transportation and
Traffic Code, as amended, deal primarily with the registration of all motor
vehicles and the licensing of drivers thereof. The LTFRB, upon the other
hand, is the governing body tasked by E.O. No. 202, dated 19 June 1987,
to regulate the operation of public utility or "for hire" vehicles and to
grant franchises or certificates of public convenience ("CPC"). 11 Finely
put, registration and licensing functions are vested in the LTO while

Petitioners timely moved for a reconsideration of the above resolution but Under the Local Government Code, certain functions of the DOTC were
it was to no avail. Petitioners then appealed to the Court of Appeals. In its transferred to the LGUs, thusly:jgc:chanrobles.com.ph
now assailed decision, the appellate court, on 17 November 1997,
sustained the trial court. It ruled:jgc:chanrobles.com.ph "SECTION 458. Powers, Duties, Functions and Compensation. —

"WHEREFORE, the petition is hereby DISMISSED and the questioned "x       x       x

permanent injunctive writ issued by the court a quo dated March 20, 1995
AFFIRMED." 7 "(3) Subject to the provisions of Book II of this Code, enact ordinances
granting franchises and authorizing the issuance of permits or licenses,
Coming up to this Court, petitioners raise this sole assignment of error, to upon such conditions and for such purposes intended to promote the
wit:jgc:chanrobles.com.ph general welfare of the inhabitants of the city and pursuant to this
legislative authority shall:jgc:chanrobles.com.ph
"The Court of Appeals [has] erred in sustaining the validity of the writ of
injunction issued by the trial court which enjoined LTO from (1) "x       x       x.
registering tricycles-for-hire and (2) issuing licenses for the driving
thereof since the Local Government Code devolved only the franchising "(VI) Subject to the guidelines prescribed by the Department of
authority of the LTFRB. Functions of the LTO were not devolved to the Transportation and Communications, regulate the operation of tricycles
LGU’s." 8 and grant franchises for the operation thereof within the territorial
jurisdiction of the city." (Emphasis supplied)
The petition is impressed with merit.
LGUs indubitably now have the power to regulate the operation of
The Department of Transportation and Communications 9 ("DOTC"), tricycles-for-hire and to grant franchises for the operation thereof. "To
through the LTO and the LTFRB, has since been tasked with implementing regulate" means to fix, establish, or control; to adjust by rule, method, or
142

established mode; to direct by rule or restriction; or to subject to

governing principles or laws. 12 A franchise is defined to be a special "Operating Conditions:jgc:chanrobles.com.ph
privilege to do certain things conferred by government on an individual or
corporation, and which does not belong to citizens generally of common "1. For safety reasons, no tricycles should operate on national highways
right. 13 On the other hand, "to register" means to record formally and utilized by 4 wheel vehicles greater than 4 tons and where normal speed
exactly, to enroll, or to enter precisely in a list or the like, 14 and a exceed 40 KPH. However, the SB/SP may provide exceptions if there is no
"driver’s license" is the certificate or license issued by the government alternative routs.
which authorizes a person to operate a motor vehicle. 15 The devolution
of the functions of the DOTC, performed by the LTFRB, to the LGUs, as so "2. Zones must be within the boundaries of the municipality/city.
aptly observed by the Solicitor General, is aimed at curbing the alarming However, existing zones within more than one municipality/city shall be
increase of accidents in national highways involving tricycles. It has been maintained, provided that operators serving said zone shall secure MTOP’s
the perception that local governments are in good position to achieve the from each of the municipalities/cities having jurisdiction over the areas
end desired by the law-making body because of their proximity to the covered by the zone.
situation that can enable them to address that serious concern better than
the national government. "3. A common color for tricycles-for-hire operating in the same zone may
be imposed. Each unit shall be assigned and bear an identification
It may not be amiss to state, nevertheless, that under Article 458 (a)[3- number, aside from its LTO license plate number.
VI] of the Local Government Code, the power of LGUs to regulate the
operation of tricycles and to grant franchises for the operation thereof is "4. An operator wishing to stop service completely, or to suspend service
still subject to the guidelines prescribed by the DOTC. In compliance for more than one month, should report in writing such termination or
therewith, the Department of Transportation and Communications suspension to the SB/SP which originally granted the MTOP prior thereto.
("DOTC") issued "Guidelines to Implement the Devolution of LTFRBs Transfer to another zone may be permitted upon application.
Franchising Authority over Tricycles-For-Hire to Local Government units
pursuant to the Local Government Code." Pertinent provisions of the "5. The MTOP shall be valid for three (3) years, renewable for the same
guidelines state:chanrobles.com : chanrobles.com.ph period. Transfer to another zone, change of ownership of unit or transfer
of MTOP shall be construed as an amendment to an MTOP and shall
"In lieu of the Land Transportation Franchising and Regulatory Board require appropriate approval of the SB/SP.
(LTFRB) in the DOTC, the Sangguniang Bayan/Sangguniang Panlungsod
(SB/SP) shall perform the following:jgc:chanrobles.com.ph "6. Operators shall employ only drivers duly licensed by LTO for tricycles-
for-hire.
"(a) Issue, amend, revise, renew, suspend, or cancel MTOP and prescribe
the appropriate terms and conditions therefor; "7. No tricycle-for-hire shall be allowed to carry more passengers and/or
goods than it is designed for.
"x       x       x.
143
"8. A tricycle-for-hire shall be allowed to operate like a taxi service, i.e.,
service is rendered upon demand and without a fixed route within a
zone." 16
Such as can be gleaned from the explicit language of the statute, as well
as the corresponding guidelines issued by DOTC, the newly delegated
powers pertain to the franchising and regulatory powers theretofore
exercised by the LTFRB and not to the functions of the LTO relative to the
registration of motor vehicles and issuance of licenses for the driving
thereof . Clearly unaffected by the Local Government Code are the powers
of LTO under R.A. No.4136 requiring the registration of all kinds of motor
vehicles "used or operated on or upon any public highway" in the country.
Thus — documentation. Revenues raised from tricycle registration may not be
"SECTION 5. All motor vehicles and other vehicles must be registered. —
(a) No motor vehicle shall be used or operated on or upon any public
highway of the Philippines unless the same is properly registered for the
current year in accordance with the provisions of this Act (Article 1,
Chapter II, R.A. No. 4136).
The Commissioner of Land Transportation and his deputies are
empowered at anytime to examine and inspect such motor vehicles to
determine whether said vehicles are registered, or are unsightly, unsafe,
improperly marked or equipped, or otherwise unfit to be operated on
because of possible excessive damage to highways, bridges and other
infrastructures. 17 The LTO is additionally charged with being the central
repository and custodian of all records of all motor vehicles. 18
The Court shares the apprehension of the Solicitor General if the above
functions were to likewise devolve to local government units; he
states:jgc:chanrobles.com.ph
"If the tricycle registration function of respondent LTO is decentralized,
the incidence of theft of tricycles will most certainly go up, and stolen
tricycles registered in one local government could be registered in another
with ease. The determination of ownership thereof will also become very
difficult.
"Fake driver’s licenses will likewise proliferate. This likely scenario unfolds
where a tricycle driver, not qualified by petitioner LTO’s testing, could
secure a license from one municipality, and when the same is confiscated,
could just go another municipality to secure another
license.chanrobles.com : virtuallawlibrary
"Devolution will entail the hiring of additional personnel charged with
inspecting tricycles for road worthiness, testing drivers, and
enough to meet salaries of additional personnel and incidental costs for
tools and equipment." 19
The reliance made by respondents on the broad taxing power of local
government units, specifically under Section 133 of the Local Government
Code, is tangential. Police power and taxation, along with eminent
domain, are inherent powers of sovereignty which the State might share
with local government units by delegation given under a constitutional or
a statutory fiat. All these inherent powers are for a public purpose and
legislative in nature but the similarities just about end there. The basic
aim of police power is public good and welfare. Taxation, in its case,
focuses on the power of government to raise revenue in order to support
its existence and carry out its legitimate objectives. Although correlative
to each other in many respects, the grant of one does not necessarily
carry with it the grant of the other. The two powers are, by tradition and
jurisprudence, separate and distinct powers, varying in their respective
concepts, character, scopes and limitations. To construe the tax
provisions of Section 133(1) indistinctively would result in the repeal to
that extent of LTO’s regulatory power which evidently has not been
intended. If it were otherwise, the law could have just said so in Section
447 and 458 of Book III of the Local Government Code in the same
144
manner that the specific devolution of LTFRB’s power on franchising of
tricycles has been provided. Repeal by implication is not favored. 20 The
power over tricycles granted under Section 458(a)(3)(VI) of the Local
Government Code to LGUs is the power to regulate their operation and to
grant franchises for the operation thereof. The exclusionary clause
contained in the tax provisions of Section 133(1) of the Local Government
Code must not be held to have had the effect of withdrawing the express
power of LTO to cause the registration of all motor vehicles and the
issuance of licenses for the driving thereof. These functions of the LTO are
essentially regulatory in nature, exercised pursuant to the police power of
the State, whose basic objectives are to achieve road safety by insuring
the road worthiness of these motor vehicles and the competence of
drivers prescribed by R. A. 4136. Not insignificant is the rule that a
statute must not be construed in isolation but must be taken in harmony
with the extant body of laws. 21
The Court cannot end this decision without expressing its own serious
concern over the seeming laxity in the grant of franchises for the
operation of tricycles-for-hire and in allowing the indiscriminate use by
such vehicles on public highways and principal thoroughfares. Senator
Aquilino C. Pimentel, Jr., the principal author, and sponsor of the bill that
eventually has become to be known as the Local Government Code, has
aptly remarked:jgc:chanrobles.com.ph
"Tricycles are a popular means of transportation, specially in the
countryside. They are, unfortunately, being allowed to drive along
highways and principal thoroughfares where they pose hazards to their
passengers arising from potential collisions with buses, cars and jeepneys.
"The operation of tricycles within a municipality may be regulated by the
Sangguniang Bayan. In this connection, the Sangguniang concerned
would do well to consider prohibiting the operation of tricycles along or
across highways invite collisions with faster and bigger vehicles and
impede the flow of traffic." 22
The need for ensuring public safety and convenience to commuters and
pedestrians alike is paramount. It might be well, indeed, for public
officials concerned to pay heed to a number of provisions in our laws that
can warrant in appropriate cases an incurrence of criminal and civil
liabilities. Thus —
The Revised Penal Code —
"ARTICLE 208. Prosecution of offenses; negligence and tolerance. — The
penalty of prision correccional in its minimum period and suspension shall
be imposed upon any public officer, or officer of the law, who, in
dereliction of the duties of his office, shall maliciously refrain from
instituting prosecution for the punishment of violators of the law, or shall
tolerate the commission of offenses."cralaw virtua1aw library
The Civil Code —
"ARTICLE 27. Any person suffering material or moral loss because a public
servant or employee refuses or neglects, without just cause, to perform
his official duty may file an action for damages and other relief against the
latter, without prejudice to any disciplinary administrative action that may
be taken."cralaw virtua1aw library
"ARTICLE 34. When a member of a city or municipal police force refuses
or fails to render aid or protection to any person in case of danger to life
or property, such peace officer shall be primarily liable for damages, and
the city or municipality shall be subsidiarily responsible therefor. The civil
action herein recognized shall be independent of any criminal,
proceedings, and a preponderance of evidence shall suffice to support
such action."cralaw virtua1aw library
"ARTICLE 2189. Provinces, cities and municipalities shall be liable for
damages for the death of, or injuries suffered by, any person by reason of
145

the defective condition of roads, streets, bridges, public buildings, and In order to be able to deliver more effective and efficient services, the law allows
other public works under their control or supervision."cralaw virtua1aw local government units the power to reorganize. In doing so, they should be given
library leeway to entice their employees to avail of severance benefits that the local
government can afford. However, local government units may not provide such when
The Local Government Code — it amounts to a supplementary retirement benefit scheme.

"SECTION 24. Liability for Damages. — Local government units and their In this special civil action for certiorari,1 the city of General Santos asks us to find
officials are not exempt from liability for death or injury to persons or grave abuse of discretion on the part of the Commission on Audit (COA). On January
damage to property." chanroblesvirtuallawlibrary 20, 2011, respondent Commission on Audit affirmed the findings of its Legal
Services Sector in its Opinion No. 2010-021 declaring Ordinance No. 08, series of
2009, as illegal. This was reiterated in respondent Commission’s resolution denying
WHEREFORE, the assailed decision which enjoins the Land Transportation
the motion for reconsideration dated October 17, 2011.2
Office from requiring the due registration of tricycles and a license for the
driving thereof is REVERSED and SET ASIDE.
Ordinance No. 08, series of 2009, was enacted by the city of General Santos on
August 13, 2009. It is entitled An Ordinance Establishing the GenSan Scheme on
No pronouncements on costs. Early Retirement for Valued Employees Security (GenSan SERVES).3
Let copies of this decision be likewise furnished the Department of Interior It is important to view this ordinance in its proper context.
and Local Governments, the Department of Public Works and Highways
and the Department of Transportation and Communication. Then mayor of General Santos City, Pedro B. Acharon, Jr., issued Executive Order
No. 40, series of 2008, creating management teams pursuant to its organization
SO ORDERED.chanroble development program. This was patterned after Executive Order No. 366 dated
October 4, 2004 entitled Directing a Strategic Review of the Operations and
Organizations of the Executive Branch and Providing Options and Incentives for
G.R. No. 199439               April 22, 2014 Government Employees who may be Affected by the Rationalization of the Functions
and Agencies of the Executive Branch and its implementing rules and regulations.4
CITY OF GENERAL SANTOS, represented by its Mayor, HON. DARLENE
MAGNOLIA R. ANTONINO-CUSTODIO Petitioner, Mayor Pedro B. Acharon, Jr. declared the city’s byword of "Total Quality Service" in
vs. his state of the city address in 2005. This was followed by the conduct of a process
COMMISSION ON AUDIT, Respondent. and practice review for each department, section, and unit of the local government.
The product was an organization development masterplan adopted as Executive
DECISION Order No. 13, series of 2009.5

LEONEN, J.:
146
This was followed by Resolution No. 004, series of 2009, requesting for the mayor’s
support for GenSan SERVES, an early retirement program to be proposed to the
Sangguniang Panlungsod.
Consequently, Ordinance No. 08, series of 2009, was passed together with its
implementing rules and regulations, designed "to entice those employees who were
unproductive due to health reasons to avail of the incentives being offered therein by
way of early retirement package."6
This contextual background in the passing of Ordinance No. 08, series of 2009, was
not contested by respondent Commission on Audit.
The ordinance, as amended, provides that qualified employees below sixty (60)
years of age but not less than fifty (50) years and sickly employees below fifty (50)
years of age but not less than forty (40) years may avail of the incentives under the
program.7 In other words, the ordinance "provides for separation benefits for sickly
employees who have not yet reached retirement age."8 Section 5 of the ordinance
states:
Section 5. GenSan SERVES Program Incentives On Top of Government Service
Insurance System (GSIS) and PAG-IBIG Benefits – Any personnel qualified and
approved to receive the incentives of this program shall be entitled to whatever
retirement benefits the GSIS or PAG-IBIG is granting to a retiring government
employee.
Moreover, an eligible employee shall receive an early retirement incentive provided
under this program at the rate of one and one-half (1 1/2) months of the employee’s
latest basic salary for every year of service in the City Government.9
Also, the ordinance provides:
Section 6. GenSan SERVES Post-Retirement Incentives – Upon availment of early
retirement, a qualified employee shall enjoy the following in addition to the above
incentives:
(a) Cash gift of Fifty Thousand Pesos (₱50,000.00) for the sickly employees;
(b) Lifetime free medical consultation at General Santos City Hospital;
(c) Annual aid in the maximum amount of Five Thousand Pesos (₱5,000.00),
if admitted at General Santos City Hospital; and
(d) 14 karat gold ring as a token.10
As provided, payment would be made in two tranches: 50% paid in January 2010
and the remainder in July 2010.11 Petitioner city alleged that out of its 1,361 regular
employees, 50 employees applied, from which 39 employees qualified to avail of the
incentives provided by the ordinance.12 The first tranche of benefits was released in
January 2010.13
In a letter dated February 10, 2010, the city’s audit team leader, through its
supervising auditor, sent a query on the legality of the ordinance to respondent
Commission on Audit’s director for Regional Office No. XII, Cotabato City.14
In his second indorsement dated March 15, 2010, respondent Commission’s regional
director agreed that the grant lacked legal basis and was contrary to the Government
Service Insurance System (GSIS) Act. He forwarded the matter to respondent
Commission’s Office of General Counsel, Legal Services Sector, for a more
authoritative opinion.15
The Office of General Counsel issued COA-LSS Opinion No. 2010-021 on March 25,
2010. The opinion explained that Ordinance No. 08, series of 2009, partakes of a
supplementary retirement benefit plan. In its view, Section 28, paragraph (b) of
Commonwealth Act No. 186, as amended, prohibits government agencies from
establishing supplementary retirement or pension plans from the time the
Government Service Insurance System charter took effect while those plans already
existing when the charter was enacted were declared abolished.16
The opinion discussed that this prohibition was reiterated in Conte v. Commission on
Audit.17 Laraño v. Commission on Audit,18 on the other hand, ruled that an early
147
retirement program should be by virtue of a valid reorganization pursuant to law in
order to be valid. The opinion concludes as follows:
In fine, since Ordinance No. 08 is in the nature of an ERP [Early Retirement
Program] of the City Government of General Santos, a law authorizing the same is a
requisite for its validity. In the absence, however, of such law, the nullity of Ordinance
No. 08 becomes a necessary consequence.
It is hoped that the foregoing sufficiently answers the instant query.19
Petitioner city, through then mayor, Pedro B. Acharon, Jr., filed a letter-
reconsideration dated June 7, 2010. They followed through with two letters
addressed to respondent Commission’s chairman dated July 26, 2010 and October
6, 2010, respectively, for the reconsideration of COA-LSS Opinion No. 2010-021.20
Respondent Commission on Audit treated these letters as an appeal. On January 20,
2011, it rendered its decision denying the appeal and affirming COA-LSS Opinion
No. 2010-021.21 It also denied reconsideration by resolution dated October 17,
2011.22 The dispositive portion of its decision reads:
WHEREFORE, premises considered, the instant appeal is hereby DENIED for lack
of merit and COA-LSS Opinion No. 2010-021 dated March 25, 2010 of the OGC, this
Commission is hereby AFFIRMED. Accordingly, the ATL of General Santos City is
hereby directed to issue a Notice of Disallowance on the illegal disbursements made
under the Gen[S]san SERVES.23
Respondent Commission on Audit agreed that Ordinance No. 08, series of 2009,
partakes of the nature of a supplementary retirement benefit plan proscribed by
Section 28, paragraph (b) of Commonwealth Act No. 186 as amended. It also cited
Conte v. Commission on Audit24 and Laraño v. Commission on Audit.25
In its opinion, respondent Commission on Audit observed that GenSan SERVES was
not based on a law passed by Congress but on ordinances and resolutions passed
and approved by the Sangguniang Panlungsod and Executive Orders by the city
mayor.26 Moreover, nowhere in Section 76 of Republic Act No. 7160, otherwise
known as the Local Government Code, does it provide a specific power for local
government units to establish an early retirement program.
Mayor Acharon, Jr. submitted that other local government units such as Cebu in
2005 and 2008 have adopted their own early retirement programs. The resolutions of
the Sangguniang Panlungsod of Cebu invoked Republic Act No. 6683 dated
December 2, 1988, which provided for early retirement and voluntary separation. The
questioned decision mentioned that respondent Commission on Audit would look into
this program supposedly adopted by Cebu.27 Assuming Cebu’s invocation of
Republic Act No. 6683 was proper, respondent Commission on Audit explained that
this has already been amended by Republic Act No. 8291, otherwise known as the
GSIS Act of 1997. Moreover, Section 9 of Republic Act No. 6683 28 provides for
limited application.29
The present petition raises this sole issue:
WHETHER RESPONDENT COMMISSION ON AUDIT COMMITTED GRAVE
ABUSE OF DISCRETION WHEN IT CONSIDERED ORDINANCE NO. 08, SERIES
OF 2009, IN THE NATURE OF AN EARLY RETIREMENT PROGRAM REQUIRING
A LAW AUTHORIZING IT FOR ITS VALIDITY
I
This court has consistently held that findings of administrative agencies are generally
respected, unless found to have been tainted with unfairness that amounted to grave
abuse of discretion:
It is the general policy of the Court to sustain the decisions of administrative
authorities, especially one which is constitutionally-created not only on the basis of
the doctrine of separation of powers but also for their presumed expertise in the laws
they are entrusted to enforce. Findings of administrative agencies are accorded not
only respect but also finality when the decision and order are not tainted with
unfairness or arbitrariness that would amount to grave abuse of discretion. It is only
when the COA has acted without or in excess of jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, that this Court entertains a
petition questioning its rulings. There is grave abuse of discretion when there is an
148
evasion of a positive duty or a virtual refusal to perform a duty enjoined by law or to
act in contemplation of law as when the judgment rendered is not based on law and
evidence but on caprice, whim and despotism.30 (Emphasis supplied, citations
omitted)
We have ruled that "not every error in the proceedings, or every erroneous
conclusion of law or fact, constitutes grave abuse of discretion."31 Grave abuse of
discretion has been defined as follows:
By grave abuse of discretion is meant such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction. Mere abuse of discretion is not
enough. It must be grave abuse of discretion as when the power is exercised in an
arbitrary or despotic manner by reason of passion or personal hostility, and must be
so patent and so gross as to amount to an evasion of a positive duty or to a virtual
refusal to perform the duty enjoined or to act at all in contemplation of law. x x x.32
In Yap v. Commission on Audit,33 this court explained that the Commission on Audit
has the duty to make its own assessment of the merits of the disallowance and need
not be limited to a review of the grounds relied upon by the auditor of the agency
concerned:
x x x we rule that, in resolving cases brought before it on appeal, respondent COA is
not required to limit its review only to the grounds relied upon by a government
agency’s auditor with respect to disallowing certain disbursements of public funds. In
consonance with its general audit power, respondent COA is not merely legally
permitted, but is also duty-bound to make its own assessment of the merits of the
disallowed disbursement and not simply restrict itself to reviewing the validity of the
ground relied upon by the auditor of the government agency concerned. To hold
otherwise would render COA’s vital constitutional power unduly limited and thereby
useless and ineffective.34
Moreover, Article IX-A, Section 7 of the Constitution provides that "unless otherwise
provided by this Constitution or by law, any decision, order, or ruling of each
Commission may be brought to the Supreme Court on certiorari by the aggrieved
party within thirty days from receipt of a copy thereof." Rule 64, Section 2 of the
Revised Rules of Civil Procedure also provides that "a judgment or final order or
resolution of the Commission on Elections and the Commission on Audit may be
brought by the aggrieved party to the Supreme Court on certiorari under Rule 65,
except as hereinafter provided."
Thus, we proceed to determine whether respondent Commission on Audit acted with
grave abuse of discretion in affirming the opinion of its Legal Services Sector and
finding that the entire Ordinance No. 08, series of 2009, partakes of the nature of a
proscribed supplementary retirement benefit plan.
II
According to petitioner city, GenSan SERVES does not provide for supplementary
retirement benefits, and Conte does not apply.35
Petitioner city explains that unlike the facts in Conte, Ordinance No. 08, series of
2009, was designed to entice employees who are unproductive due to health
reasons to avail of the incentives by way of an early retirement package. In essence,
the incentives are severance pay. Those who have reached retirement age are
disqualified.36
Petitioner city adds that GenSan SERVES is a one-time offer. It is available only to
qualified employees who applied within two months from the ordinance’s effectivity.
In fact, out of its 1,361 regular employees, 50 employees applied. Out of all that
applied, only 39 employees qualified to avail of the incentives provided by the
ordinance.37
These incentives are independent and distinct from the Government Service
Insurance System retirement package.38
Section 5 of Ordinance No. 08, series of 2009, was amended by Ordinance No. 11,
series of 2009, "to exclude those GSIS and PAG-IBIG benefits the payment[s] of
which are passed on [to] the employer."39 This was to remove any doubt as to its
coverage and applicability and to ensure that no employee will be paid twice.40 The
amended provision reads:
149
Section 5. Gen[S]an SERVES Program Incentives On Top of Government Service
Insurance System (GSIS) and PAG-IBIG Benefits – Any personnel qualified and
approved to receive the incentives of this program shall be entitled to whatever
retirement benefits the GSIS or PAG-IBIG is granting to a retiring government
employee, except those benefits the payment of which are passed on to the
employer. In which case, the benefits granted under this ordinance shall only be
considered as one of the options available to a retiring city employee.
Moreover, an eligible employee shall receive an early retirement incentive provided
under this program at the rate of one and one-half (1 1/2) months of the employee’s
latest basic salary for every year of service in the City Government. (Emphasis
supplied)
According to petitioner city, GenSan SERVES is an initial step pursuant to its
organization development masterplan,41 which began with the city mayor’s issuance
of Executive Order No. 40, series of 2008, creating change management teams.42
Petitioner city cites Sections 16 and 76 of the Local Government Code as its
authority to reorganize. It argues that these provisions necessarily imply the authority
of petitioner city to provide retirement benefits, separation pay, and other incentives
to those affected by the reorganization.
Petitioner city also cites Republic Act No. 6656, otherwise known as An Act to
Protect the Security of Tenure of Civil Service Officers and Employees in the
Implementation of Government Reorganization.44 According to petitioner city, this not
only requires good faith in the implementation of reorganization but mandates the
payment of appropriate separation pay, retirement, and other benefits under existing
laws within 90 days from effectivity date of separation.45
Even President Gloria Macapagal-Arroyo issued Executive Order No. 184 entitled
Directing the Reorganization and Streamlining of the National Development
Company on March 10, 2003. In Section 4, it provides for a separation package
anchored on Republic Act No. 6656.46 Petitioner city submits that if the President can
reorganize in the absence of any law authorizing her to do so and provide
compensation based on Republic Act No. 6656, with more reason that a local
government unit can reorganize as its power to reorganize is expressly provided in
the Local Government Code.47
Respondent Commission on Audit counters that it correctly found Ordinance No. 08,
series of 2009, as invalid in the absence of a law passed by Congress specifically
authorizing the enactment of an ordinance granting an early retirement scheme.48
Respondent Commission on Audit contends that Sections 16 and 76 of the Local
Government Code do not confer authority upon any local government unit to create a
separate or supplementary retirement benefit plan.49 As for Republic Act No. 6656,
this contemplates situations where a government position has been abolished, or
rendered redundant, or a need to merge, divide or consolidate positions for lawful
causes allowed by the Civil Service Law exists.50
According to respondent Commission on Audit, petitioner city failed to demonstrate
arbitrariness on its part as it merely observed the proscription under Section 28,
paragraph (b) of Commonwealth Act No. 186 when it found the ordinance a nullity.51
We agree with respondent Commission on Audit but only insofar as Section 5 of the
ordinance is concerned. We declare Section 6 on post-retirement incentives as valid.
III
The constitutional mandate for local autonomy supports petitioner city’s issuance of
Executive Order No. 40, series of 2008, creating change management teams52 as an
initial step for its organization development masterplan.
Local autonomy also grants local governments the power to streamline and
reorganize. This power is inferred from Section 76 of the Local Government Code on
organizational structure and staffing pattern, and Section 16 otherwise known as the
general welfare clause:
Section 76. Organizational Structure and Staffing Pattern. - Every local government
unit shall design and implement its own organizational structure and staffing pattern
150
taking into consideration its service requirements and financial capability, subject to
the minimum standards and guidelines prescribed by the Civil Service Commission.
Section 16. General Welfare. - Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers
necessary, appropriate, or incidental for its efficient and effective governance, and
those which are essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall ensure and support,
among other things, the preservation and enrichment of culture, promote health and
safety, enhance the right of the people to a balanced ecology, encourage and
support the development of appropriate and self-reliant scientific and technological
capabilities, improve public morals, enhance economic prosperity and social justice,
promote full employment among their residents, maintain peace and order, and
preserve the comfort and convenience of their inhabitants.
Section 5, paragraph (a) of the Local Government Code states that "any provision on
a power of a local government unit shall be liberally interpreted in its favor, and in
case of doubt, any question thereon shall be resolved in favor or devolution of
powers x x x."
Section 5, paragraph (c) also provides that "the general welfare provisions in this
Code shall be liberally interpreted to give more powers to local government units in
accelerating economic development and upgrading the quality of life for the people in
the community." These rules of interpretation emphasize the policy of local autonomy
and the devolution of powers to the local government units.
Designing and implementing a local government unit’s own "organizational structure
and staffing pattern" also implies the power to revise and reorganize. Without such
power, local governments will lose the ability to adjust to the needs of its
constituents. Effective and efficient governmental services especially at the local
government level require rational and deliberate changes planned and executed in
good faith from time to time.
This was implied in Province of Negros Occidental v. Commissioners, Commission
on Audit.53 In that case, this court declared as valid the ordinance passed by the
province granting and releasing hospitalization and health care insurance benefits to
its officials and employees. This court held that Section 2 of Administrative Order No.
10354 requiring the President’s prior approval before the grant of any allowance or
benefit is applicable only to offices under the executive branch.55 Section 2 does not
mention local government units, thus, the prohibition does not apply to them. 56 This
court then referred to the policy of local autonomy as follows:
Thus, consistent with the state policy of local autonomy as guaranteed by the 1987
Constitution, under Section 25, Article II and Section 2, Article X, and the Local
Government Code of 1991, we declare that the grant and release of the
hospitalization and health care insurance benefits given to petitioner’s officials and
employees were validly enacted through an ordinance passed by petitioner’s
Sangguniang Panlalawigan.57
Local autonomy allows an interpretation of Sections 76 and 16 as granting petitioner
city the authority to create its organization development program.
Petitioner city’s vision in 2005 of "Total Quality Service" for "the improvement of the
quality of services delivered by the city to the delight of its internal and external
customers"58 is a matter within its discretion. It then conducted a process and
practice review for each and every unit within the city, resulting in the formulation of
an organization development masterplan adopted as Executive Order No. 13, series
of 2009.59
Resolution No. 004, series of 2009, was later passed requesting for the mayor’s
support for GenSan SERVES. The third preambular clause states that in order "to
transform the bureaucracy into [an] effective and result[s]-oriented structure,
redounding to improved governance, there is a need to entice employees aged 50-
59 years old, to retire earlier than [age] 65 for them to enjoy their retirement while
they are still healthy."60 Consequently, Ordinance No. 08, series of 2009, was passed
creating the GenSan SERVES program.
In Betoy v. The Board of Directors, NAPOCOR, 61 this court explained that a
streamlining of organization for a more efficient system must pass the test of good
faith in order to be valid:
151
A reorganization involves the reduction of personnel, consolidation of offices, or
abolition thereof by reason of economy or redundancy of functions. 62 It could result in
the loss of one's position through removal or abolition of an office. However, for a
reorganization for the purpose of economy or to make the bureaucracy more efficient
to be valid, it must pass the test of good faith; otherwise, it is void ab
initio.63 (Emphasis supplied)
There are indicia of bad faith, none of which are present in this case.
Republic Act No. 6656 invoked by petitioner city as authority for the creation of
GenSan SERVES, for example, enumerates situations considered as bad faith when
employees are removed as a result of any reorganization:
SECTION 2. No officer or employee in the career service shall be removed except
for a valid cause and after due notice and hearing. A valid cause for removal exists
when, pursuant to a bona fide reorganization, a position has been abolished or
rendered redundant or there is a need to merge, divide, or consolidate positions in
order to meet the exigencies of the service, or other lawful causes allowed by the
Civil Service Law. The existence of any or some of the following circumstances may
be considered as evidence of bad faith in the removals made as a result of
reorganization, giving rise to a claim for reinstatement or reappointment by an
aggrieved party:
a) Where there is a significant increase in the number of positions in the new
staffing pattern of the department or agency concerned;
b) Where an office is abolished and another performing substantially the
same functions in created;
c) Where incumbents are replaced by those less qualified in terms of status
of appointment, performance and merit;
d) Where there is a reclassification of offices in the department or agency
concerned and the reclassified offices perform substantially the same
functions as the original offices; and
e) Where the removal violates the order of separation provided in Section 3
hereof. (Emphasis supplied)
None of these badges of bad faith exist in this case.
Petitioner city followed the order of priority under Section 4 of its ordinance. 64 It
required applicants to undergo medical examination with the local hospital and
considered the hospital chief’s recommendations.65
Unfortunately, these allegations showing good faith is not enough to declare the
program created by petitioner city as a reorganization that justifies the creation of a
retirement benefit plan.
Petitioner city alleged that the positions occupied by those who qualified for GenSan
SERVES remained vacant, and it would neither hire replacements nor promote
employees earlier than June 30, 2011.66 This means the positions left by those who
availed of the program will eventually be filled up by others. Their positions were not
abolished or merged with other positions for streamlining in the service.
IV
The assailed decision by respondent Commission on Audit was anchored on Section
28, paragraph (b) of Commonwealth Act No. 186, otherwise known as the
Government Service Insurance Act,67 as amended by Republic Act No. 4968.68 This
proscribes all supplementary retirement or pension plans for government employees:
(b) Hereafter no insurance or retirement plan for officers or employees shall be
created by any employer. All supplementary retirement or pension plans heretofore
in force in any government office, agency, or instrumentality or corporation owned
and controlled by the government, are hereby declared inoperative or abolished:
Provided, That the rights of those who are already eligible to retire thereunder shall
not be affected.
Jurisprudence has discussed the nature and purpose of retirement benefits and
pension plans as follows:
152
Retirement benefits are, after all, a form of reward for an employee’s loyalty and
service to the employer, and are intended to help the employee enjoy the remaining
years of his life, lessening the burden of worrying about his financial support or
upkeep. On the other hand, a pension partakes of the nature of "retained wages" of
the retiree for a dual purpose: to entice competent people to enter the government
service, and to permit them to retire from the service with relative security, not only
for those who have retained their vigor, but more so for those who have been
incapacitated by illness or accident.69 (Emphasis supplied)
In Conte v. Commission on Audit,70 this court discussed the purpose behind the
proscription found in Section 28, paragraph (b), as amended. It was to address the
need to prevent the proliferation of inequitous plans:
x x x Sec. 28 (b) as amended by RA 4968 in no uncertain terms bars the creation of
any insurance or retirement plan – other than the GSIS – for government officers and
employees, in order to prevent the undue and inequitous proliferation of such plans.
x x x. To ignore this and rule otherwise would be tantamount to permitting every
other government office or agency to put up its own supplementary retirement benefit
plan under the guise of such "financial assistance.71
Section 2 of the ordinance, as amended, defined "applicants" as referring to
"qualified employees below sixty (60) years of age but not less than fifty (50) years
and sickly employees below fifty (50) years of age but not less than forty (40) years
old from the effectivity of this Ordinance and shall have rendered service in the City
government for at least 15 years."
This means that even employees other than those who are unproductive due to
health reasons may apply under the ordinance. Albeit last in priority, they may still
qualify to avail of the incentives pursuant to Section 4, paragraph (d), as amended:
Section 4. Prioritization. – The following applicants shall be prioritized in availing the
program:
a) First – Employees below sixty (60) years of age but not less than fifty (50)
years who are determined by the Chief of General Santos City Hospital to be
qualified to avail of the program;
b) Second – Employees below sixty (60) years of age but not less than fifty
(50) years who are under continuous medication as determined by the Chief
of General Santos City Hospital;
c) Third – Employees below fifty (50) years of age but not less than forty (40)
years who are determined by the Chief of General Santos City Hospital to be
physically or mentally incapacitated to further continue rendering service with
the City Government and recommended to avail of the program; and
d) Fourth – Employees below sixty (60) years of age but not less than fifty
(50) years who are desirous to avail of the program.
Moreover, Section 3 of the ordinance, as amended, enumerates those who are
covered by the program and may thus apply under the ordinance:
Section 3. Coverage. – GenSan SERVES program covers the following employees
of the City Government:
(a) personnel occupying permanent positions;
(b) those who are below sixty (60) years of age but not less than fifty (50)
years on the date of application;
(c) those who are below fifty (50) years of age but not less than forty (40)
years on the date of application but confirmed by the Chief of General Santos
City Hospital to be sickly and recommended to avail early retirement; and
(d) those who must have served the City Government of General Santos a
minimum of fifteen (15) continuous years.
Under paragraph (d), employees should have served for a minimum of 15 years to
qualify. This requirement is consistent with the definition of a retirement plan as a
form of reward for an employee’s loyalty and service to the employer. Moreover,
pension plans as defined permit employees to retire with relative security, especially
for those who have been incapacitated by illness.72
153
Section 5 states that "an eligible employee shall receive an early retirement incentive
provided under this program at the rate of 1 1/2 months of the employee’s latest
basic salary for every year of service in the City Government." This may be more
than the amount of annuity provided in Section 11, paragraph (a) of Commonwealth
Act No. 186 as amended,73 considering that an applicant must have rendered at least
15 years of service in the city government to qualify.74
Section 5 refers to an "early retirement incentive," the amount of which is pegged on
the beneficiary’s years of service in the city government. The ordinance provides that
only those who have rendered service to the city government for at least 15 years
may apply.75 Consequently, this provision falls under the definition of a retirement
benefit. Applying the definition in Conte, it is a form of reward for an employee’s
loyalty and service to the city government, and it is intended to help the employee
enjoy the remaining years of his or her life by lessening his or her financial worries.
V Section 6. GenSan SERVES Post-Retirement Incentives – Upon availment of early
In any case, those who availed of the GenSan SERVES were separated from the
service. Those who are separated from the service, whether compulsorily for lawful
cause,76 or voluntarily when incentivized to retire early for streamlining
purposes,77 should consequently be entitled to a form of separation or severance
pay.
Petitioner city invoked Republic Act No. 6656, which provides that employees
separated from the service as a result of any reorganization shall be entitled to
separation pay, retirement, and other benefits:
Section 9. All officers and employees who are found by the Civil Service Commission
to have been separated in violation of the provisions of this Act, shall be ordered
reinstated or reappointed as the case may be without loss of seniority and shall be
entitled to full pay for the period of separation. Unless also separated for cause, all
officers and employees, who have been separated pursuant to reorganization shall, if
entitled thereto, be paid the appropriate separation pay and retirement and other
benefits under existing laws within ninety (90) days from the date of the effectivity of
their separation or from the date of the receipt of the resolution of their appeals as
the case may be: Provided, That application for clearance has been filed and no
action thereon has been made by the corresponding department or agency. Those
who are not entitled to said benefits shall be paid a separation gratuity in the amount
equivalent to one (1) month salary for every year of service. Such separation pay
and retirement benefits shall have priority of payment out of the savings of the
department or agency concerned. (Emphasis supplied)
Separation or severance pay has been defined as "an allowance usually based on
length of service that is payable to an employee on severance x x x, or as
compensation due an employee upon the severance of his employment status with
the employer."78
Section 6 of the ordinance on post-retirement incentives provides for benefits that
are not computed based on years of service. They are lump sum amounts and
healthcare benefits:
retirement, a qualified employee shall enjoy the following in addition to the above
incentives:
(e) Cash gift of Fifty Thousand Pesos (₱50,000.00) for the sickly employees;
(f) Lifetime free medical consultation at General Santos City Hospital;
(g) Annual aid in the maximum amount of Five Thousand Pesos (₱5,000.00),
if admitted at General Santos City Hospital; and
(h) 14 karat gold ring as token.
The text of the ordinance indicates its purpose of encouraging employees, especially
those who are unproductive due to health reasons, to avail of the program even
before they reach the compulsory retirement age. Section 6 provides for a form of
severance pay to those who availed of GenSan SERVES, which was executed in
good faith.
154
We should not be misled by the use of the term "retirement" in Section 6 in
determining the nature of the benefits it provides. Labels are not determinative of
substantive content. It is the purpose behind these incentives, as read from the text
of the ordinance and as inferred from the effect of the ordinance as applied, which
must govern.
The purpose of Section 6 is also different from the benefits proscribed in Conte v.
Commission on Audit,79 and the nature of its benefits must be taken in the context of
its rationale. The benefits provided in Section 6 serve its purpose of inducing
petitioner city’s employees, who are unproductive due to health reasons, to retire
early. Respondent Commission on Audit’s observation that the benefit provided is
broader than that provided in Conte v Commission on Audit fails to take this rationale
into consideration. Furthermore, the benefits under GenSan SERVES were only
given to a select few—the sickly and unproductive due to health reasons. Certainly,
this negates the position that the benefits provide for supplementary retirement
benefits that augment existing retirement laws.
In Conte v. Commission on Audit80 cited by respondent Commission on Audit, this
court held that the "financial assistance" option for the difference of benefits under
Republic Act No. 660 and Republic Act No. 1616 violated Section 28, paragraph (b)
as amended. Social Security System (SSS) Resolution No. 56 subject of that case
provides in part:
NOW, THEREFORE, BE IT RESOLVED, That all the SSS employees who are
simultaneously qualified for compulsory retirement at age 65 or for optional
retirement at a lower age be encouraged to avail for themselves the life annuity
under R.A. 660, as amended; x x x.81
The fifth preambular clause of Resolution No. 56 also states that "it is the policy of
the Social Security Commission to promote and to protect the interest of all SSS
employees, with a view to providing for their well-being during both their working and
retirement years."82 The financial assistance provides benefits to all Social Security
System employees who are retirable under existing laws and who are qualified to
apply. It is available to all present and future Social Security System employees upon
reaching retirement age.83
Without doubt, this financial assistance of Conte augments the retirement benefits
provided under existing laws, in violation of Section 28, paragraph (b), as amended.
On the other hand, Section 3 of Ordinance No. 08, series of 2009 limits its
coverage.1a\^/phi1 Only qualified employees below sixty (60) years of age but not
less than fifty (50) years and sickly employees below fifty (50) years of age but not
less than forty (40) years from the effectivity of the ordinance, with at least 15 years
of service, are considered. Out of 1,361 regular employees of petitioner city, only 50
employees applied, from which only 39 employees qualified to avail of the ordinance
benefits.84 Petitioner city alleged that there was one more applicant who was
supposed to qualify, but she had died of acute renal failure secondary to diabetes
nephropathy before her application was acted upon.85
Furthermore, unlike in Conte, Ordinance No. 08, series of 2009, was a one-time
limited offer.86 The availment period was only within two months from the ordinance’s
effectivity.87
In any case, petitioner city is authorized by the Local Government Code to approve
ordinances to provide for the care of the sick:
SECTION 458. – Powers, Duties, Functions and Compensation. – (a) The
Sangguniang Panlungsod, as the legislative body of the city, shall enact ordinances,
approve resolutions and appropriate funds for the general welfare of the city and its
inhabitants pursuant to section 16 of this Code and in the proper exercise of the
corporate powers of the city as provided for under section 22 of this Code, and shall:
xxxx
(5) Approve ordinances which shall ensure the efficient and effective delivery of the
basic services and facilities as provided for under Section 17 of this Code, and in
addition to said services and facilities, shall:
xxxx
155
(xiv) Provide for the care of disabled persons, paupers, the aged, the sick, persons of
unsound mind, abandoned minors, juvenile delinquents, drug dependents, abused
children and other needy and disadvantaged persons, particularly children and youth
below eighteen (18) years of age; and, subject to availability of funds, establish and
provide for the operation of centers and facilities for said needy and disadvantaged
persons[.] (Emphasis supplied)
This is also consistent with the constitutional mandate for a comprehensive approach
to health development, with priority for the needs of the sick:
ARTICLE XIII
Social Justice and Human Rights
HEALTH
Section 11. The State shall adopt an integrated and comprehensive approach to
health development which shall endeavor to make essential goods, health and other
social services available to all the people at affordable cost. There shall be priority for
the needs of the underprivileged, sick, elderly, disabled, women, and children. The
State shall endeavor to provide free medical care to paupers.
Thus, the cash gift for the sickly employees, lifetime free medical consultation in
petitioner city's hospital, and other similar benefits under Section 6 of the ordinance
are valid.
The proscription under Section 28, paragraph (b) of Commonwealth Act No. 186, as
amended, does not apply to Section 6 of the ordinance.1âwphi1 Consequently, the
Commission on Audit acted with grave abuse of discretion when it declared the
entire ordinance void and of no effect.
WHEREFORE, the petition is PARTIALLY GRANTED. The assailed Commission on
Audit decision dated January 20, 2011 and resolution dated October 17, 2011 are
AFFIRMED with MODIFICATION insofar as Section 6 of Ordinance No. 08, series of
2009, as amended by Ordinance No. 11, series of 2009, is declared as VALID.
SO ORDERED
AQUILINO Q. PIMENTEL JR.,, Petitioner, v. Hon.ANDER AGUIRRE in
his capacity as Executive Secretary, Hon. EMILIA BONCODIN in
her capacity as Secretary of the Department of Budget and
Management, Respondents.
ROBERTO PAGDANGANAN, intervenor.
DECISION
PANGANIBAN,  J.:
The Constitution vests the President with the power of
supervision, not control, over local government units (LGUs). Such
power enables him to see to it that LGUs and their officials
execute their tasks in accordance with law. While he may issue
advisories and seek their cooperation in solving economic
difficulties, he cannot prevent them from performing their tasks
and using available resources to achieve their goals. He may not
withhold or alter any authority or power given them by the law.
Thus, the withholding of a portion of internal revenue allotments
legally due them cannot be directed by administrative fiat.
The Case
Before us is an original Petition for Certiorari and Prohibition
seeking (1) to annul Section 1 of Administrative Order (AO) No.
372, insofar as it requires local government units to reduce their
expenditures by 25 percent of their authorized regular
appropriations for non-personal services; and (2) to enjoin
respondents from implementing Section 4 of the Order, which
withholds a portion of their internal revenue allotments.
156
On November 17, 1998, Roberto Pagdanganan, through Counsel
Alberto C. Agra, filed a Motion for Intervention/Motion to Admit
Petition for Intervention,[1 attaching thereto his Petition in
Intervention2 joining petitioner in the reliefs sought. At the time,
intervenor was the provincial governor of Bulacan, national
president of the League of Provinces of the Philippines and
chairman of the League of Leagues of Local Governments. In a
Resolution dated December 15, 1998, the Court noted said Motion
and Petition.
The Facts and the Arguments
On December 27, 1997, the President of the Philippines issued AO
372. Its full text, with emphasis on the assailed provisions, is as
follows:
"ADMINISTRATIVE ORDER NO. 372
ADOPTION OF ECONOMY MEASURES IN GOVERNMENT FOR FY
1998
WHEREAS, the current economic difficulties brought about by the
peso depreciation requires continued prudence in government
fiscal management to maintain economic stability and sustain the
country's growth momentum;
WHEREAS, it is imperative that all government agencies adopt
cash management measures to match expenditures with available
resources;
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic
of the Philippines, by virtue of the powers vested in me by the
Constitution, do hereby order and direct:
SECTION 1. All government departments and agencies, including
state universities and colleges, government-owned and controlled
corporations and local governments units will identify and
implement measures in FY 1998 that will reduce total
expenditures for the year by at least 25% of authorized regular
appropriations for non-personal services items, along the
following suggested areas:
1. Continued implementation of the streamlining policy on
organization and staffing by deferring action on the following:
a. Operationalization of new agencies;
b. Expansion of organizational units and/or creation of positions;
c. Filling of positions; and
d. Hiring of additional/new consultants, contractual and casual
personnel, regardless of funding source.
2. Suspension of the following activities:
a. Implementation of new capital/infrastructure projects,
except those which have already been contracted out;
b. Acquisition of new equipment and motor vehicles;
c. All foreign travels of government personnel, except
those associated with scholarships and trainings
funded by grants;
d. Attendance in conferences abroad where the cost is
charged to the government except those clearly
essential to Philippine commitments in the
157
international field as may be determined by the
Cabinet;
e. Conduct of trainings/workshops/seminars, except those
conducted by government training institutions and
agencies in the performance of their regular functions
and those that are funded by grants;
f. Conduct of cultural and social celebrations and sports
activities, except those associated with the Philippine
Centennial celebration and those involving regular
competitions/events;
g. Grant of honoraria, except in cases where it constitutes
the only source of compensation from government
received by the person concerned;
h. Publications, media advertisements and related items,
except those required by law or those already being
undertaken on a regular basis;
i. Grant of new/additional benefits to employees, except
those expressly and specifically authorized by law; and
j. Donations, contributions, grants and gifts, except those
given by institutions to victims of calamities.
3. Suspension of all tax expenditure subsidies to all GOCCs and
LGUs
4. Reduction in the volume of consumption of fuel, water, office
supplies, electricity and other utilities
5. Deferment of projects that are encountering significant
implementation problems
6. Suspension of all realignment of funds and the use of savings
and reserves
SECTION 2. Agencies are given the flexibility to identify the
specific sources of cost-savings, provided the 25% minimum
savings under Section 1 is complied with.
SECTION 3. A report on the estimated savings generated from
these measures shall be submitted to the Office of the President,
through the Department of Budget and Management, on a
quarterly basis using the attached format.
SECTION 4. Pending the assessment and evaluation by the
Development Budget Coordinating Committee of the emerging
fiscal situation, the amount equivalent to 10% of the internal
revenue allotment to local government units shall be withheld.
SECTION 5. The Development Budget Coordination Committee
shall conduct a monthly review of the fiscal position of the
National Government and if necessary, shall recommend to the
President the imposition of additional reserves or the lifting of
previously imposed reserves.
SECTION 6. This Administrative Order shall take effect January 1,
1998 and shall remain valid for the entire year unless otherwise
lifted.
DONE in the City of Manila, this 27th day of December, in the year
of our Lord, nineteen hundred and ninety-seven."
158
Subsequently, on December 10, 1998, President Joseph E. Estrada
issued AO 43, amending Section 4 of AO 372, by reducing to five
percent (5%) the amount of internal revenue allotment (IRA) to
be withheld from the LGUs.
Petitioner contends that the President, in issuing AO 372, was in
effect exercising the power of control over LGUs. The Constitution
vests in the President, however, only the power of
general supervision over LGUs, consistent with the principle of
local autonomy. Petitioner further argues that the directive to
withhold ten percent (10%) of their IRA is in contravention of
Section 286 of the Local Government Code and of Section 6,
Article X of the Constitution, providing for the automatic
release to each of these units its share in the national internal
revenue.
The solicitor general, on behalf of the respondents, claims on the
other hand that AO 372 was issued to alleviate the "economic
difficulties brought about by the peso devaluation" and
constituted merely an exercise of the President's power of
supervision over LGUs. It allegedly does not violate local fiscal
autonomy, because it merely directs local governments to identify
measures that will reduce their total expenditures for non-
personal services by at least 25 percent. Likewise, the withholding
of 10 percent of the LGUs IRA does not violate the statutory
prohibition on the imposition of any lien or holdback on their
revenue shares, because such withholding is "temporary in nature
pending the assessment and evaluation by the Development
Coordination Committee of the emerging fiscal situation."
The Issues
The Petition[3 submits the following issues for the Court's
resolution:
"A. Whether or not the president committed grave abuse of
discretion [in] ordering all LGUS to adopt a 25% cost reduction
program in violation of the LGU[']S fiscal autonomy
"B. Whether or not the president committed grave abuse of
discretion in ordering the withholding of 10% of the LGU[']S IRA"
In sum, the main issue is whether (a) Section 1 of AO 372, insofar
as it "directs" LGUs to reduce their expenditures by 25 percent;
and (b) Section 4 of the same issuance, which withholds 10
percent of their internal revenue allotments, are valid exercises of
the President's power of general supervision over local
governments.
Additionally, the Court deliberated on the question whether
petitioner had the locus standi to bring this suit, despite
respondents' failure to raise the issue.[4 However, the
intervention of Roberto Pagdanganan has rendered academic any
further discussion on this matter.
The Court's Ruling
The Petition is partly meritorious.
Main Issue:
Validity of AO 372
Insofar as LGUs Are Concerned
Before resolving the main issue, we deem it important and
appropriate to define certain crucial concepts: (1) the scope of the
President's power of general supervision over local governments
and (2) the extent of the local governments' autonomy.
Scope of President's Power of Supervision Over LGUs
159
Section 4 of Article X of the Constitution confines the President's
power over local governments to one of general supervision. It
reads as follows:
"Sec. 4. The President of the Philippines shall exercise general
supervision over local governments. x x x"
This provision has been interpreted to exclude the power of
control. In Mondano v. Silvosa,[5 the Court contrasted the
President's power of supervision over local government officials
with that of his power of control over executive officials of the
national government. It was emphasized that the two terms --
supervision and control -- differed in meaning and extent. The
Court distinguished them as follows:
"x x x In administrative law, supervision means overseeing or the
power or authority of an officer to see that subordinate officers
perform their duties. If the latter fail or neglect to fulfill them, the
former may take such action or step as prescribed by law to make
them perform their duties. Control, on the other hand, means the
power of an officer to alter or modify or nullify or set aside what a
subordinate officer ha[s] done in the performance of his duties
and to substitute the judgment of the former for that of the
latter."[6
In Taule v. Santos,7 we further stated that the Chief Executive
wielded no more authority than that of checking whether local
governments or their officials were performing their duties as
provided by the fundamental law and by statutes. He cannot
interfere with local governments, so long as they act within the
scope of their authority. "Supervisory power, when contrasted
with control, is the power of mere oversight over an inferior body;
it does not include any restraining authority over such
body,"[8 we said.
In a more recent case, Drilon v. Lim,[9  the difference between
control and supervision was further delineated. Officers in control
lay down the rules in the performance or accomplishment of an
act. If these rules are not followed, they may, in their discretion,
order the act undone or redone by their subordinates or even
decide to do it themselves. On the other hand, supervision does
not cover such authority. Supervising officials merely see to it that
the rules are followed, but they themselves do not lay down such
rules, nor do they have the discretion to modify or replace them.
If the rules are not observed, they may order the work done or
redone, but only to conform to such rules. They may not prescribe
their own manner of execution of the act. They have no discretion
on this matter except to see to it that the rules are followed.
Under our present system of government, executive power is
vested in the President.[10 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.[11 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
Presidents 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.
Extent of Local Autonomy
Hand in hand with the constitutional restraint on the President's
power over local governments is the state policy of ensuring local
autonomy.[12
160
In Ganzon v. Court of Appeals,[13 we said that local
autonomy signified "a more responsive and accountable local
government structure instituted through a system of
decentralization." The grant of autonomy is intended to "break up
the monopoly of the national government over the affairs of local
governments, x x x not x x x to end the relation of partnership and
interdependence between the central administration and local
government units x x x." Paradoxically, local governments are still
subject to regulation, however limited, for the purpose of
enhancing self-government.[14
Decentralization simply means the devolution of national
administration, not power, to local governments. Local officials
remain accountable to the central government as the law may
provide.[15 The difference between decentralization of
administration and that of power was explained in detail
in Limbona v. Mangelin[16 as follows:
"Now, autonomy is either decentralization of administration or
decentralization of power. There is decentralization of
administration when the central government delegates
administrative powers to political subdivisions in order to broaden
the base of government power and in the process to make local
governments 'more responsive and accountable,'[17 and 'ensure
their fullest development as self-reliant communities and make
them more effective partners in the pursuit of national
development and social progress.'[18 At the same time, it relieves
the central government of the burden of managing local affairs
and enables it to concentrate on national concerns. The President
exercises 'general supervision'[19 over them, but only to 'ensure
that local affairs are administered according to law.'[20 He has no
control over their acts in the sense that he can substitute their
judgments with his own.[21
Decentralization of power, on the other hand, involves an
abdication of political power in the favor of local government units
declared to be autonomous. In that case, the autonomous
government is free to chart its own destiny and shape its future
with minimum intervention from central authorities. According to
a constitutional author, decentralization of power amounts to
'self-immolation,' since in that event, the autonomous government
becomes accountable not to the central authorities but to its
constituency."[22
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.[23
The Nature of AO 372
Consistent with the foregoing jurisprudential precepts, let us now
look into the nature of AO 372. As its preambular clauses declare,
the Order was a "cash management measure" adopted by the
government "to match expenditures with available resources,"
which were presumably depleted at the time due to "economic
difficulties brought about by the peso depreciation." Because of a
looming financial crisis, the President deemed it necessary to
161
"direct all government agencies, state universities and colleges,
government-owned and controlled corporations as well as local
governments to reduce their total expenditures by at least 25
percent along suggested areas mentioned in AO 372.
Under existing law, local government units, in addition to having
administrative autonomy in the exercise of their functions, enjoy
fiscal autonomy as well. Fiscal autonomy means that local
governments have the power to create their own sources of
revenue in addition to their equitable share in the national taxes
released by the national government, as well as the power to
allocate their resources in accordance with their own priorities. It
extends to the preparation of their budgets, and local officials in
turn have to work within the constraints thereof. They are not
formulated at the national level and imposed on local
governments, whether they are relevant to local needs and
resources or not. Hence, the necessity of a balancing of
viewpoints and the harmonization of proposals from both local
and national officials,[24 who in any case are partners in the
attainment of national goals.
Local fiscal autonomy does not however rule out any manner of
national government intervention by way of supervision, in order
to ensure that local programs, fiscal and otherwise, are consistent
with national goals. Significantly, the President, by constitutional
fiat, is the head of the economic and planning agency of the
government,[25 primarily responsible for formulating and
implementing continuing, coordinated and integrated social and
economic policies, plans and programs[26 for the entire country.
However, under the Constitution, the formulation and the
implementation of such policies and programs are subject to
"consultations with the appropriate public agencies, various
private sectors, and local government units." The President
cannot do so unilaterally.
Consequently, the Local Government Code provides:[27
"x x x [I]n the event the national government incurs an
unmanaged public sector deficit, the President of the Philippines
is hereby authorized, upon the recommendation of [the] Secretary
of Finance, Secretary of the Interior and Local Government and
Secretary of Budget and Management, and subject to consultation
with the presiding officers of both Houses of Congress and the
presidents of the liga, to make the necessary adjustments in the
internal revenue allotment of local government units but in no
case shall the allotment be less than thirty percent (30%) of the
collection of national internal revenue taxes of the third fiscal year
preceding the current fiscal year x x x."
There are therefore several requisites before the President may
interfere in local fiscal matters: (1) an unmanaged public sector
deficit of the national government; (2) consultations with the
presiding officers of the Senate and the House of
Representatives and the presidents of the various local
leagues; and (3) the corresponding recommendation of the
secretaries of the Department of Finance, Interior and Local
Government, and Budget and Management. Furthermore, any
adjustment in the allotment shall in no case be less than thirty
percent (30%) of the collection of national internal revenue taxes
of the third fiscal year preceding the current one.
Petitioner points out that respondents failed to comply with these
requisites before the issuance and the implementation of AO 372.
At the very least, they did not even try to show that the national
government was suffering from an unmanageable public sector
deficit. Neither did they claim having conducted consultations with
the different leagues of local governments. Without these
requisites, the President has no authority to adjust, much less to
reduce, unilaterally the LGU's internal revenue allotment.
162
The solicitor general insists, however, that AO 372 is merely
directory and has been issued by the President consistent with his
power of supervision over local governments. It is intended only
to advise all government agencies and instrumentalities to
undertake cost-reduction measures that will help maintain
economic stability in the country, which is facing economic
difficulties. Besides, it does not contain any sanction in case of
noncompliance. Being merely an advisory, therefore, Section 1 of
AO 372 is well within the powers of the President. Since it is not a
mandatory imposition, the directive cannot be characterized as an
exercise of the power of control.
While the wordings of Section 1 of AO 372 have a rather
commanding tone, and while we agree with petitioner that the
requirements of Section 284 of the Local Government Code have
not been satisfied, we are prepared to accept the solicitor
general's assurance that the directive to "identify and implement
measures x x x that will reduce total expenditures x x x by at least
25% of authorized regular appropriation" is merely advisory in
character, and does not constitute a mandatory or binding order
that interferes with local autonomy. The language used, while
authoritative, does not amount to a command that emanates from
a boss to a subaltern.
Rather, the provision is merely an advisory to prevail upon local
executives to recognize the need for fisestraint in a period of
economic difficulty. Indeed, all concerned would do well to heed
the President's call to unity, solidarity and teamwork to help
alleviate the crisis. It is understood, however, that no legal
sanction may be imposed upon LGUs and their officials who do not
follow such advice. It is in this light that we sustain the solicitor
general's contention in regard to Section 1.
Withholding a Part of LGUs' IRA
Section 4 of AO 372 cannot, however, be upheld. A basic feature
of local fiscal autonomy is the automatic release of the shares of
LGUs in the national internal revenue. This is mandated by no less
than the Constitution.[28 The Local Government Code[29 specifies
further that the release shall be made directly to the LGU
concerned within five (5) days after every quarter of the year and
"shall not be subject to any lien or holdback that may be imposed
by the national government for whatever purpose."[30 As a rule,
the term "shall" is a word of command that must be given a
compulsory meaning.[31 The provision is, therefore, imperative.
Section 4 of AO 372, however, orders the withholding, effective
January 1, 1998, of 10 percent of the LGUs' IRA "pending the
assessment and evaluation by the Development Budget
Coordinating Committee of the emerging fiscal situation" in the
country. Such withholding clearly contravenes the Constitution
and the law. Although temporary, it is equivalent to a holdback,
which means "something held back or withheld, often
temporarily."[32 Hence, the "temporary" nature of the retention
by the national government does not matter. Any retention is
prohibited.
In sum, while Section 1 of AO 372 may be upheld as an advisory
effected in times of national crisis, Section 4 thereof has no color
of validity at all. The latter provision effectively encroaches on the
fiscal autonomy of local governments. Concededly, the President
was well-intentioned in issuing his Order to withhold the LGUs
IRA, but the rule of law requires that even the best intentions
must be carried out within the parameters of the Constitution and
the law. Verily, laudable purposes must be carried out by legal
methods.
Refutation of Justice Kapunan's Dissent
163
Mr. Justice Santiago M. Kapunan dissents from our Decision on the
grounds that, allegedly, (1) the Petition is premature; (2) AO 372
falls within the powers of the President as chief fiscal officer; and
(3) the withholding of the LGUs IRA is implied in the President's
authority to adjust it in case of an unmanageable public sector
deficit.
First,  on prematurity. According to the Dissent, when "the conduct
has not yet occurred and the challenged construction has not yet
been adopted by the agency charged with administering the
administrative order, the determination of the scope and
constitutionality of the executive action in advance of its
immediate adverse effect involves too remote and abstract an
inquiry for the proper exercise of judicial function."
This is a rather novel theory -- that people should await the
implementing evil to befall on them before they can question acts
that are illegal or unconstitutional. Be it remembered that the real
issue here is whether the Constitution and the law are
contravened by Section 4 of AO 372, not whether they are violated
by the acts implementing it. In the unanimous en banc case Taada
v. Angara,33 this Court held that when an act of the legislative
department is seriously alleged to have infringed the Constitution,
settling the controversy becomes the duty of this Court. By the
mere enactment of the questioned law or the approval of the
challenged action, the dispute is said to have ripened into a
judicial controversy even without any other overt act. Indeed,
even a singular violation of the Constitution and/or the law is
enough to awaken judicial duty. Said the Court:
"In seeking to nullify an act of the Philippine Senate on the
ground that it contravenes the Constitution, the petition no doubt
raises a justiciable controversy. Where an action of the legislative
branch is seriously alleged to have infringed the Constitution, it
becomes not only the right but in fact the duty of the judiciary to
settle the dispute. 'The question thus posed is judicial rather than
political. The duty (to adjudicate) remains to assure that the
supremacy of the Constitution is upheld.'34 Once a 'controversy as to
the application or interpretation of a constitutional provision is raised before
this Court x x x , it becomes a legal issue which the Court is bound by
constitutional mandate to decide.'[35
xxx
"As this Court has repeatedly and firmly emphasized in many
cases,[36 it will not shirk, digress from or abandon its sacred duty
and authority to uphold the Constitution in matters that involve
grave abuse of discretion brought before it in appropriate cases,
committed by any officer, agency, instrumentality or department
of the government."
In the same vein, the Court also held in Tatad v. Secretary of the
Department of Energy:[37
"x x x Judicial power includes not only the duty of the courts to
settle actual controversies involving rights which are legally
demandable and enforceable, but also the duty to determine
whether or not there has been grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of government. The courts, as guardians
of the Constitution, have the inherent authority to determine
whether a statute enacted by the legislature transcends the limit
imposed by the fundamental law. Where the statute violates the
Constitution, it is not only the right but the duty of the judiciary to
declare such act unconstitutional and void."
By the same token, when an act of the President, who in our
constitutional scheme is a coequal of Congress, is seriously
164
alleged to have infringed the Constitution and the laws, as in the
present case, settling the dispute becomes the duty and the
responsibility of the courts.
Besides, the issue that the Petition is premature has not been
raised by the parties; hence it is deemed waived. Considerations
of due process really prevents its use against a party that has not
been given sufficient notice of its presentation, and thus has not
been given the opportunity to refute it.[38
Second, on the President's power as chief fiscal officer of the
country. Justice Kapunan posits that Section 4 of AO 372 conforms
with the President's role as chief fiscal officer, who allegedly "is
clothed by law with certain powers to ensure the observance of
safeguards and auditing requirements, as well as the legal
prerequisites in the release and use of IRAs, taking into account
the constitutional and statutory mandates."[39 He cites instances
when the President may lawfully intervene in the fiscal affairs of
LGUs.
Precisely, such powers referred to in the Dissent have specifically
been authorized by law and have not been challenged as violative
of the Constitution. On the other hand, Section 4 of AO 372, as
explained earlier, contravenes explicit provisions of the Local
Government Code (LGC) and the Constitution. In other words, the
acts alluded to in the Dissent are indeed authorized by law; but,
quite the opposite, Section 4 of AO 372 is bereft of any legal or
constitutional basis.
Third, on the President's authority to adjust the IRA of LGUs in
case of an unmanageable public sector deficit. It must be
emphasized that in striking down Section 4 of AO 372, this Court
is not ruling out any form of reduction in the IRAs of LGUs.
Indeed, as the President may make necessary adjustments in case
of an unmanageable public sector deficit, as stated in the main
part of this Decision, and in line with Section 284 of the LGC,
which Justice Kapunan cites. He, however, merely glances over a
specific requirement in the same provision -- that such reduction
is subject to consultation with the presiding officers of both
Houses of Congress and, more importantly, with the presidents of
the leagues of local governments.
Notably, Justice Kapunan recognizes the need for "interaction
between the national government and the LGUs at the planning
level," in order to ensure that "local development plans x x x hew
to national policies and standards." The problem is that no such
interaction or consultation was ever held prior to the issuance of
AO 372. This is why the petitioner and the intervenor (who was a
provincial governor and at the same time president of the League
of Provinces of the Philippines and chairman of the League of
Leagues of Local Governments) have protested and instituted this
action. Significantly, respondents do not deny the lack of
consultation.
In addition, Justice Kapunan cites Section 287[40 of the LGC as
impliedly authorizing the President to withhold the IRA of an LGU,
pending its compliance with certain requirements. Even a cursory
reading of the provision reveals that it is totally inapplicable to the
issue at bar. It directs LGUs to appropriate in their annual budgets
20 percent of their respective IRAs for development projects. It
speaks of no positive power granted the President to priorly
withhold any amount. Not at all.
WHEREFORE, the Petition is GRANTED. Respondents and their
successors are hereby permanently PROHIBITEDfrom
implementing Administrative Order Nos. 372 and 43, respectively
dated December 27, 1997 and December 10, 1998, insofar as local
government units are concerned.
165
SO ORDERED.
SO ORDERED.
MANDANAS V. ROMULO
CALLEJO, SR., J.:
The Province of Batangas, represented by its Governor, Hermilando I. Mandanas, filed the
present petition for certiorari, prohibition and mandamus under Rule 65 of the Rules of
Court, as amended, to declare as unconstitutional and void certain provisos contained in the
General Appropriations Acts (GAA) of 1999, 2000 and 2001, insofar as they uniformly
earmarked for each corresponding year the amount of five billion pesos (₱5,000,000,000.00)
of the Internal Revenue Allotment (IRA) for the Local Government Service Equalization Fund
(LGSEF) and imposed conditions for the release thereof.
Named as respondents are Executive Secretary Alberto G. Romulo, in his capacity as
Chairman of the Oversight Committee on Devolution, Secretary Emilia Boncodin of the
Department of Budget and Management (DBM) and Secretary Jose Lina of the Department
of Interior and Local Government (DILG).
Background
On December 7, 1998, then President Joseph Ejercito Estrada issued Executive Order (E.O.)
No. 48 entitled "ESTABLISHING A PROGRAM FOR DEVOLUTION ADJUSTMENT AND
EQUALIZATION." The program was established to "facilitate the process of enhancing the
capacities of local government units (LGUs) in the discharge of the functions and services
devolved to them by the National Government Agencies concerned pursuant to the Local
Government Code."1 The Oversight Committee (referred to as the Devolution Committee in
E.O. No. 48) constituted under Section 533(b) of Republic Act No. 7160 (The Local
Government Code of 1991) has been tasked to formulate and issue the appropriate rules
and regulations necessary for its effective implementation. 2 Further, to address the funding
shortfalls of functions and services devolved to the LGUs and other funding requirements of
the program, the "Devolution Adjustment and Equalization Fund" was created. 3 For 1998,
the DBM was directed to set aside an amount to be determined by the Oversight Committee
based on the devolution status appraisal surveys undertaken by the DILG. 4 The initial fund
was to be sourced from the available savings of the national government for CY 1998. 5 For
1999 and the succeeding years, the corresponding amount required to sustain the program
was to be incorporated in the annual GAA. 6 The Oversight Committee has been authorized
to issue the implementing rules and regulations governing the equitable allocation and
distribution of said fund to the LGUs.7
The LGSEF in the GAA of 1999
In Republic Act No. 8745, otherwise known as the GAA of 1999, the program was renamed
as the LOCAL GOVERNMENT SERVICE EQUALIZATION FUND (LGSEF). Under said
appropriations law, the amount of ₱96,780,000,000 was allotted as the share of the LGUs in
the internal revenue taxes. Item No. 1, Special Provisions, Title XXXVI – A. Internal Revenue
Allotment of Rep. Act No. 8745 contained the following proviso:
... PROVIDED, That the amount of FIVE BILLION PESOS (₱5,000,000,000) shall be earmarked
for the Local Government Service Equalization Fund for the funding requirements of
projects and activities arising from the full and efficient implementation of devolved
functions and services of local government units pursuant to R.A. No. 7160, otherwise
known as the Local Government Code of 1991: PROVIDED, FURTHER, That such amount shall
be released to the local government units subject to the implementing rules and
regulations, including such mechanisms and guidelines for the equitable allocations and
distribution of said fund among local government units subject to the guidelines that may be
prescribed by the Oversight Committee on Devolution as constituted pursuant to Book IV,
Title III, Section 533(b) of R.A. No. 7160. The Internal Revenue Allotment shall be released
directly by the Department of Budget and Management to the Local Government Units
concerned.
On July 28, 1999, the Oversight Committee (with then Executive Secretary Ronaldo B.
Zamora as Chairman) passed Resolution Nos. OCD-99-003, OCD-99-005 and OCD-99-006
entitled as follows:
OCD-99-005
RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR THE PhP5 BILLION CY 1999 LOCAL
GOVERNMENT SERVICE EQUALIZATION FUND (LGSEF) AND REQUESTING HIS EXCELLENCY
PRESIDENT JOSEPH EJERCITO ESTRADA TO APPROVE SAID ALLOCATION SCHEME.
OCD-99-006
RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR THE PhP4.0 BILLION OF THE 1999
LOCAL GOVERNMENT SERVICE EQUALIZATION FUND AND ITS CONCOMITANT GENERAL
FRAMEWORK, IMPLEMENTING GUIDELINES AND MECHANICS FOR ITS IMPLEMENTATION
AND RELEASE, AS PROMULGATED BY THE OVERSIGHT COMMITTEE ON DEVOLUTION.
OCD-99-003
166
RESOLUTION REQUESTING HIS EXCELLENCY PRESIDENT JOSEPH EJERCITO ESTRADA TO
APPROVE THE REQUEST OF THE OVERSIGHT COMMITTEE ON DEVOLUTION TO SET ASIDE
TWENTY PERCENT (20%) OF THE LOCAL GOVERNMENT SERVICE EQUALIZATION FUND
(LGSEF) FOR LOCAL AFFIRMATIVE ACTION PROJECTS AND OTHER PRIORITY INITIATIVES FOR
LGUs INSTITUTIONAL AND CAPABILITY BUILDING IN ACCORDANCE WITH THE
IMPLEMENTING GUIDELINES AND MECHANICS AS PROMULGATED BY THE COMMITTEE.
These OCD resolutions were approved by then President Estrada on October 6, 1999.
Under the allocation scheme adopted pursuant to Resolution No. OCD-99-005, the five
billion pesos LGSEF was to be allocated as follows:
1. The PhP4 Billion of the LGSEF shall be allocated in accordance with the allocation scheme
and implementing guidelines and mechanics promulgated and adopted by the OCD. To wit:
a. The first PhP2 Billion of the LGSEF shall be allocated in accordance with the codal formula
sharing scheme as prescribed under the 1991 Local Government Code;
b. The second PhP2 Billion of the LGSEF shall be allocated in accordance with a modified
1992 cost of devolution fund (CODEF) sharing scheme, as recommended by the respective
leagues of provinces, cities and municipalities to the OCD. The modified CODEF sharing
formula is as follows:
Province : 40%
Cities : 20%
Municipalities : 40%
This is applied to the P2 Billion after the approved amounts granted to individual provinces,
cities and municipalities as assistance to cover decrease in 1999 IRA share due to reduction
in land area have been taken out.
2. The remaining PhP1 Billion of the LGSEF shall be earmarked to support local affirmative
action projects and other priority initiatives submitted by LGUs to the Oversight Committee
on Devolution for approval in accordance with its prescribed guidelines as promulgated and
adopted by the OCD.
In Resolution No. OCD-99-003, the Oversight Committee set aside the one billion pesos or
20% of the LGSEF to support Local Affirmative Action Projects (LAAPs) of LGUs. This
remaining amount was intended to "respond to the urgent need for additional funds
assistance, otherwise not available within the parameters of other existing fund sources."
For LGUs to be eligible for funding under the one-billion-peso portion of the LGSEF, the OCD
promulgated the following:
III. CRITERIA FOR ELIGIBILITY:
1. LGUs (province, city, municipality, or barangay), individually or by group or multi-LGUs or
leagues of LGUs, especially those belonging to the 5th and 6th class, may access the fund to
support any projects or activities that satisfy any of the aforecited purposes. A barangay
may also access this fund directly or through their respective municipality or city.
2. The proposed project/activity should be need-based, a local priority, with high
development impact and are congruent with the socio-cultural, economic and development
agenda of the Estrada Administration, such as food security, poverty alleviation,
electrification, and peace and order, among others.
3. Eligible for funding under this fund are projects arising from, but not limited to, the
following areas of concern:
a. delivery of local health and sanitation services, hospital services and other tertiary
services;
b. delivery of social welfare services;
c. provision of socio-cultural services and facilities for youth and community development;
d. provision of agricultural and on-site related research;
e. improvement of community-based forestry projects and other local projects on
environment and natural resources protection and conservation;
f. improvement of tourism facilities and promotion of tourism;
g. peace and order and public safety;
h. construction, repair and maintenance of public works and infrastructure, including public
buildings and facilities for public use, especially those destroyed or damaged by man-made
or natural calamities and disaster as well as facilities for water supply, flood control and river
dikes;
i. provision of local electrification facilities;
j. livelihood and food production services, facilities and equipment;
k. other projects that may be authorized by the OCD consistent with the aforementioned
objectives and guidelines;
4. Except on extremely meritorious cases, as may be determined by the Oversight
Committee on Devolution, this portion of the LGSEF shall not be used in expenditures for
personal costs or benefits under existing laws applicable to governments. Generally, this
fund shall cover the following objects of expenditures for programs, projects and activities
arising from the implementation of devolved and regular functions and services:
a. acquisition/procurement of supplies and materials critical to the full and effective
implementation of devolved programs, projects and activities;
167
b. repair and/or improvement of facilities;
c. repair and/or upgrading of equipment;
d. acquisition of basic equipment;
e. construction of additional or new facilities;
f. counterpart contribution to joint arrangements or collective projects among groups of
municipalities, cities and/or provinces related to devolution and delivery of basic services.
5. To be eligible for funding, an LGU or group of LGU shall submit to the Oversight
Committee on Devolution through the Department of Interior and Local Governments,
within the prescribed schedule and timeframe, a Letter Request for Funding Support from
the Affirmative Action Program under the LGSEF, duly signed by the concerned LGU(s) and
endorsed by cooperators and/or beneficiaries, as well as the duly signed Resolution of
Endorsement by the respective Sanggunian(s) of the LGUs concerned. The LGU-proponent
shall also be required to submit the Project Request (PR), using OCD Project Request Form
No. 99-02, that details the following:
(a) general description or brief of the project;
(b) objectives and justifications for undertaking the project, which should highlight the
benefits to the locality and the expected impact to the local program/project arising from
the full and efficient implementation of social services and facilities, at the local levels;
(c) target outputs or key result areas;
(d) schedule of activities and details of requirements;
(e) total cost requirement of the project;
(f) proponent's counterpart funding share, if any, and identified source(s) of counterpart
funds for the full implementation of the project;
(g) requested amount of project cost to be covered by the LGSEF.
Further, under the guidelines formulated by the Oversight Committee as contained in
Attachment - Resolution No. OCD-99-003, the LGUs were required to identify the projects
eligible for funding under the one-billion-peso portion of the LGSEF and submit the project
proposals thereof and other documentary requirements to the DILG for appraisal. The
project proposals that passed the DILG's appraisal would then be submitted to the Oversight
Committee for review, evaluation and approval. Upon its approval, the Oversight Committee
would then serve notice to the DBM for the preparation of the Special Allotment Release
Order (SARO) and Notice of Cash Allocation (NCA) to effect the release of funds to the said
LGUs.
The LGSEF in the GAA of 2000
Under Rep. Act No. 8760, otherwise known as the GAA of 2000, the amount of
₱111,778,000,000 was allotted as the share of the LGUs in the internal revenue taxes. As in
the GAA of 1999, the GAA of 2000 contained a proviso earmarking five billion pesos of the
IRA for the LGSEF. This proviso, found in Item No. 1, Special Provisions, Title XXXVII – A.
Internal Revenue Allotment, was similarly worded as that contained in the GAA of 1999.
The Oversight Committee, in its Resolution No. OCD-2000-023 dated June 22, 2000, adopted
the following allocation scheme governing the five billion pesos LGSEF for 2000:
1. The PhP3.5 Billion of the CY 2000 LGSEF shall be allocated to and shared by the four levels
of LGUs, i.e., provinces, cities, municipalities, and barangays, using the following percentage-
sharing formula agreed upon and jointly endorsed by the various Leagues of LGUs:
For Provinces 26% or ₱ 910,000,000
For Cities 23% or 805,000,000
For Municipalities 35% or 1,225,000,000
For Barangays 16% or 560,000,000
Provided that the respective Leagues representing the provinces, cities, municipalities and
barangays shall draw up and adopt the horizontal distribution/sharing schemes among the
member LGUs whereby the Leagues concerned may opt to adopt direct financial assistance
or project-based arrangement, such that the LGSEF allocation for individual LGU shall be
released directly to the LGU concerned;
Provided further that the individual LGSEF shares to LGUs are used in accordance with the
general purposes and guidelines promulgated by the OCD for the implementation of the
LGSEF at the local levels pursuant to Res. No. OCD-99-006 dated October 7, 1999 and
pursuant to the Leagues' guidelines and mechanism as approved by the OCD;
Provided further that each of the Leagues shall submit to the OCD for its approval their
respective allocation scheme, the list of LGUs with the corresponding LGSEF shares and the
corresponding project categories if project-based;
Provided further that upon approval by the OCD, the lists of LGUs shall be endorsed to the
DBM as the basis for the preparation of the corresponding NCAs, SAROs, and related
budget/release documents.
2. The remaining ₱1,500,000,000 of the CY 2000 LGSEF shall be earmarked to support the
following initiatives and local affirmative action projects, to be endorsed to and approved by
the Oversight Committee on Devolution in accordance with the OCD agreements, guidelines,
procedures and documentary requirements:
168
On July 5, 2000, then President Estrada issued a Memorandum authorizing then Executive
Secretary Zamora and the DBM to implement and release the 2.5 billion pesos LGSEF for
2000 in accordance with Resolution No. OCD-2000-023.
Thereafter, the Oversight Committee, now under the administration of President Gloria
Macapagal-Arroyo, promulgated Resolution No. OCD-2001-29 entitled "ADOPTING
RESOLUTION NO. OCD-2000-023 IN THE ALLOCATION, IMPLEMENTATION AND RELEASE OF
THE REMAINING ₱2.5 BILLION LGSEF FOR CY 2000." Under this resolution, the amount of
one billion pesos of the LGSEF was to be released in accordance with paragraph 1 of
Resolution No. OCD-2000-23, to complete the 3.5 billion pesos allocated to the LGUs, while
the amount of 1.5 billion pesos was allocated for the LAAP. However, out of the latter
amount, ₱400,000,000 was to be allocated and released as follows: ₱50,000,000 as financial
assistance to the LAAPs of LGUs; ₱275,360,227 as financial assistance to cover the decrease
in the IRA of LGUs concerned due to reduction in land area; and ₱74,639,773 for the LGSEF
Capability-Building Fund.
The LGSEF in the GAA of 2001
In view of the failure of Congress to enact the general appropriations law for 2001, the GAA
of 2000 was deemed re-enacted, together with the IRA of the LGUs therein and the proviso
earmarking five billion pesos thereof for the LGSEF.
On January 9, 2002, the Oversight Committee adopted Resolution No. OCD-2002-001
allocating the five billion pesos LGSEF for 2001 as follows:
Modified Codal Formula ₱ 3.000 billion
Priority Projects 1.900 billion
Capability Building Fund .100 billion
₱ 5.000 billion
RESOLVED FURTHER, that the ₱3.0 B of the CY 2001 LGSEF which is to be allocated according
to the modified codal formula shall be released to the four levels of LGUs, i.e., provinces,
cities, municipalities and barangays, as follows:
Percentag
LGUs Amount
e The petitioner posits that to subject the distribution and release of the five-billion-peso
Provinces 25 ₱ 0.750 billion
Cities 25 0.750
Municipalities 35 1.050
Barangays 15 0.450
100 ₱ 3.000 billion
RESOLVED FURTHER, that the ₱1.9 B earmarked for priority projects shall be distributed
according to the following criteria:
1.0 For projects of the 4th, 5th and 6th class LGUs; or
2.0 Projects in consonance with the President's State of the Nation Address (SONA)/summit
commitments.
RESOLVED FURTHER, that the remaining ₱100 million LGSEF capability building fund shall be
distributed in accordance with the recommendation of the Leagues of Provinces, Cities,
Municipalities and Barangays, and approved by the OCD.
Upon receipt of a copy of the above resolution, Gov. Mandanas wrote to the individual
members of the Oversight Committee seeking the reconsideration of Resolution No. OCD-
2002-001. He also wrote to Pres. Macapagal-Arroyo urging her to disapprove said resolution
as it violates the Constitution and the Local Government Code of 1991.=-i
On January 25, 2002, Pres. Macapagal-Arroyo approved Resolution No. OCD-2002-001.
The Petitioner's Case
The petitioner now comes to this Court assailing as unconstitutional and void the provisos in
the GAAs of 1999, 2000 and 2001, relating to the LGSEF. Similarly assailed are the Oversight
Committee's Resolutions Nos. OCD-99-003, OCD-99-005, OCD-99-006, OCD-2000-023, OCD-
2001-029 and OCD-2002-001 issued pursuant thereto. The petitioner submits that the
assailed provisos in the GAAs and the OCD resolutions, insofar as they earmarked the
amount of five billion pesos of the IRA of the LGUs for 1999, 2000 and 2001 for the LGSEF
and imposed conditions for the release thereof, violate the Constitution and the Local
Government Code of 1991.
Section 6, Article X of the Constitution is invoked as it mandates that the "just share" of the
LGUs shall be automatically released to them. Sections 18 and 286 of the Local Government
Code of 1991, which enjoin that the "just share" of the LGUs shall be "automatically and
directly" released to them "without need of further action" are, likewise, cited.
portion of the IRA, classified as the LGSEF, to compliance by the LGUs with the implementing
rules and regulations, including the mechanisms and guidelines prescribed by the Oversight
Committee, contravenes the explicit directive of the Constitution that the LGUs' share in the
169
national taxes "shall be automatically released to them." The petitioner maintains that the
use of the word "shall" must be given a compulsory meaning.
To further buttress this argument, the petitioner contends that to vest the Oversight
Committee with the authority to determine the distribution and release of the LGSEF, which
is a part of the IRA of the LGUs, is an anathema to the principle of local autonomy as
embodied in the Constitution and the Local Government Code of 1991. The petitioner cites
as an example the experience in 2001 when the release of the LGSEF was long delayed
because the Oversight Committee was not able to convene that year and no guidelines were
issued therefor. Further, the possible disapproval by the Oversight Committee of the project
proposals of the LGUs would result in the diminution of the latter's share in the IRA.
Another infringement alleged to be occasioned by the assailed OCD resolutions is the
improper amendment to Section 285 of the Local Government Code of 1991 on the
percentage sharing of the IRA among the LGUs. Said provision allocates the IRA as follows:
Provinces – 23%; Cities – 23%; Municipalities – 34%; and Barangays – 20%. 8 This formula has
been improperly amended or modified, with respect to the five-billion-peso portion of the
IRA allotted for the LGSEF, by the assailed OCD resolutions as they invariably provided for a
different sharing scheme.
The modifications allegedly constitute an illegal amendment by the executive branch of a
substantive law. Moreover, the petitioner mentions that in the Letter dated December 5,
2001 of respondent Executive Secretary Romulo addressed to respondent Secretary
Boncodin, the former endorsed to the latter the release of funds to certain LGUs from the
LGSEF in accordance with the handwritten instructions of President Arroyo. Thus, the LGUs
are at a loss as to how a portion of the LGSEF is actually allocated. Further, there are still
portions of the LGSEF that, to date, have not been received by the petitioner; hence,
resulting in damage and injury to the petitioner.
The petitioner prays that the Court declare as unconstitutional and void the assailed
provisos relating to the LGSEF in the GAAs of 1999, 2000 and 2001 and the assailed OCD
resolutions (Resolutions Nos. OCD-99-003, OCD-99-005, OCD-99-006, OCD-2000-023, OCD-
2001-029 and OCD-2002-001) issued by the Oversight Committee pursuant thereto. The
petitioner, likewise, prays that the Court direct the respondents to rectify the unlawful and
illegal distribution and releases of the LGSEF for the aforementioned years and release the
same in accordance with the sharing formula under Section 285 of the Local Government
Code of 1991. Finally, the petitioner urges the Court to declare that the entire IRA should be
released automatically without further action by the LGUs as required by the Constitution
and the Local Government Code of 1991.
The Respondents' Arguments
The respondents, through the Office of the Solicitor General, urge the Court to dismiss the
petition on procedural and substantive grounds. On the latter, the respondents contend that
the assailed provisos in the GAAs of 1999, 2000 and 2001 and the assailed resolutions issued
by the Oversight Committee are not constitutionally infirm. The respondents advance the
view that Section 6, Article X of the Constitution does not specify that the "just share" of the
LGUs shall be determined solely by the Local Government Code of 1991. Moreover, the
phrase "as determined by law" in the same constitutional provision means that there exists
no limitation on the power of Congress to determine what is the "just share" of the LGUs in
the national taxes. In other words, Congress is the arbiter of what should be the "just share"
of the LGUs in the national taxes.
The respondents further theorize that Section 285 of the Local Government Code of 1991,
which provides for the percentage sharing of the IRA among the LGUs, was not intended to
be a fixed determination of their "just share" in the national taxes. Congress may enact
other laws, including appropriations laws such as the GAAs of 1999, 2000 and 2001,
providing for a different sharing formula. Section 285 of the Local Government Code of 1991
was merely intended to be the "default share" of the LGUs to do away with the need to
determine annually by law their "just share." However, the LGUs have no vested right in a
permanent or fixed percentage as Congress may increase or decrease the "just share" of the
LGUs in accordance with what it believes is appropriate for their operation. There is nothing
in the Constitution which prohibits Congress from making such determination through the
appropriations laws. If the provisions of a particular statute, the GAA in this case, are within
the constitutional power of the legislature to enact, they should be sustained whether the
courts agree or not in the wisdom of their enactment.
On procedural grounds, the respondents urge the Court to dismiss the petition outright as
the same is defective. The petition allegedly raises factual issues which should be properly
threshed out in the lower courts, not this Court, not being a trier of facts. Specifically, the
petitioner's allegation that there are portions of the LGSEF that it has not, to date, received,
thereby causing it (the petitioner) injury and damage, is subject to proof and must be
substantiated in the proper venue, i.e., the lower courts.
Further, according to the respondents, the petition has already been rendered moot and
academic as it no longer presents a justiciable controversy. The IRAs for the years 1999,
170
2000 and 2001, have already been released and the government is now operating under the
2003 budget. In support of this, the respondents submitted certifications issued by officers
of the DBM attesting to the release of the allocation or shares of the petitioner in the LGSEF
for 1999, 2000 and 2001. There is, therefore, nothing more to prohibit.
Finally, the petitioner allegedly has no legal standing to bring the suit because it has not
suffered any injury. In fact, the petitioner's "just share" has even increased. Pursuant to
Section 285 of the Local Government Code of 1991, the share of the provinces is 23%. OCD
Nos. 99-005, 99-006 and 99-003 gave the provinces 40% of ₱2 billion of the LGSEF. OCD Nos.
2000-023 and 2001-029 apportioned 26% of ₱3.5 billion to the provinces. On the other
hand, OCD No. 2001-001 allocated 25% of ₱3 billion to the provinces. Thus, the petitioner
has not suffered any injury in the implementation of the assailed provisos in the GAAs of
1999, 2000 and 2001 and the OCD resolutions.
The Ruling of the Court Procedural Issues
Before resolving the petition on its merits, the Court shall first rule on the following
procedural issues raised by the respondents: (1) whether the petitioner has legal standing or
locus standi to file the present suit; (2) whether the petition involves factual questions that
are properly cognizable by the lower courts; and (3) whether the issue had been rendered
moot and academic.
The petitioner has locus standi to maintain the present suit
The gist of the question of standing is whether a party has "alleged such a personal stake in
the outcome of the controversy as to assure that concrete adverseness which sharpens the
presentation of issues upon which the court so largely depends for illumination of difficult
constitutional questions."9 Accordingly, it has been held that the interest of a party assailing
the constitutionality of a statute must be direct and personal. Such party must be able to
show, not only that the law or any government act is invalid, but also that he has sustained
or is in imminent danger of sustaining some direct injury as a result of its enforcement, and
not merely that he suffers thereby in some indefinite way. It must appear that the person
complaining has been or is about to be denied some right or privilege to which he is lawfully
entitled or that he is about to be subjected to some burdens or penalties by reason of the
statute or act complained of.10
The Court holds that the petitioner possesses the requisite standing to maintain the present
suit. The petitioner, a local government unit, seeks relief in order to protect or vindicate an
interest of its own, and of the other LGUs. This interest pertains to the LGUs' share in the
national taxes or the IRA. The petitioner's constitutional claim is, in substance, that the
assailed provisos in the GAAs of 1999, 2000 and 2001, and the OCD resolutions contravene
Section 6, Article X of the Constitution, mandating the "automatic release" to the LGUs of
their share in the national taxes. Further, the injury that the petitioner claims to suffer is the
diminution of its share in the IRA, as provided under Section 285 of the Local Government
Code of 1991, occasioned by the implementation of the assailed measures. These
allegations are sufficient to grant the petitioner standing to question the validity of the
assailed provisos in the GAAs of 1999, 2000 and 2001, and the OCD resolutions as the
petitioner clearly has "a plain, direct and adequate interest" in the manner and distribution
of the IRA among the LGUs.
The petition involves a significant legal issue
The crux of the instant controversy is whether the assailed provisos contained in the GAAs
of 1999, 2000 and 2001, and the OCD resolutions infringe the Constitution and the Local
Government Code of 1991. This is undoubtedly a legal question. On the other hand, the
following facts are not disputed:
1. The earmarking of five billion pesos of the IRA for the LGSEF in the assailed provisos in the
GAAs of 1999, 2000 and re-enacted budget for 2001;
2. The promulgation of the assailed OCD resolutions providing for the allocation schemes
covering the said five billion pesos and the implementing rules and regulations therefor; and
3. The release of the LGSEF to the LGUs only upon their compliance with the implementing
rules and regulations, including the guidelines and mechanisms, prescribed by the Oversight
Committee.
Considering that these facts, which are necessary to resolve the legal question now before
this Court, are no longer in issue, the same need not be determined by a trial court. 11 In any
case, the rule on hierarchy of courts will not prevent this Court from assuming jurisdiction
over the petition. The said rule may be relaxed when the redress desired cannot be obtained
in the appropriate courts or where exceptional and compelling circumstances justify
availment of a remedy within and calling for the exercise of this Court's primary
jurisdiction.12
The crucial legal issue submitted for resolution of this Court entails the proper legal
interpretation of constitutional and statutory provisions. Moreover, the "transcendental
importance" of the case, as it necessarily involves the application of the constitutional
principle on local autonomy, cannot be gainsaid. The nature of the present controversy,
therefore, warrants the relaxation by this Court of procedural rules in order to resolve the
case forthwith.
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The substantive issue needs to be resolved notwithstanding the supervening events
Granting arguendo that, as contended by the respondents, the resolution of the case had
already been overtaken by supervening events as the IRA, including the LGSEF, for 1999,
2000 and 2001, had already been released and the government is now operating under a
new appropriations law, still, there is compelling reason for this Court to resolve the
substantive issue raised by the instant petition. Supervening events, whether intended or
accidental, cannot prevent the Court from rendering a decision if there is a grave violation of
the Constitution.13 Even in cases where supervening events had made the cases moot, the
Court did not hesitate to resolve the legal or constitutional issues raised to formulate
controlling principles to guide the bench, bar and public. 14
Another reason justifying the resolution by this Court of the substantive issue now before it
is the rule that courts will decide a question otherwise moot and academic if it is "capable of
repetition, yet evading review." 15 For the GAAs in the coming years may contain provisos
similar to those now being sought to be invalidated, and yet, the question may not be
decided before another GAA is enacted. It, thus, behooves this Court to make a categorical
ruling on the substantive issue now.
Substantive Issue
As earlier intimated, the resolution of the substantive legal issue in this case calls for the
application of a most important constitutional policy and principle, that of local
autonomy.16 In Article II of the Constitution, the State has expressly adopted as a policy that:
Section 25. The State shall ensure the autonomy of local governments.
An entire article (Article X) of the Constitution has been devoted to guaranteeing and
promoting the autonomy of LGUs. Section 2 thereof reiterates the State policy in this wise:
Section 2. The territorial and political subdivisions shall enjoy local autonomy.
Consistent with the principle of local autonomy, the Constitution confines the President's
power over the LGUs to one of general supervision. 17 This provision has been interpreted to
exclude the power of control. The distinction between the two powers was enunciated in
Drilon v. Lim:18
An officer in control lays down the rules in the doing of an act. If they are not followed, he
may, in his discretion, order the act undone or re-done by his subordinate or he may even
decide to do it himself. Supervision does not cover such authority. The supervisor or
superintendent merely sees to it that the rules are followed, but he himself does not lay
down such rules, nor does he have the discretion to modify or replace them. If the rules are
not observed, he may order the work done or re-done but only to conform to the prescribed
rules. He may not prescribe his own manner for doing the act. He has no judgment on this
matter except to see to it that the rules are followed. 19
The Local Government Code of 199120 was enacted to flesh out the mandate of the
Constitution.21 The State policy on local autonomy is amplified in Section 2 thereof:
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.
Guided by these precepts, the Court shall now determine whether the assailed provisos in
the GAAs of 1999, 2000 and 2001, earmarking for each corresponding year the amount of
five billion pesos of the IRA for the LGSEF and the OCD resolutions promulgated pursuant
thereto, transgress the Constitution and the Local Government Code of 1991.
The assailed provisos in the GAAs of 1999, 2000 and 2001 and the OCD resolutions violate
the constitutional precept on local autonomy
Section 6, Article X of the Constitution reads:
Sec. 6. Local government units shall have a just share, as determined by law, in the national
taxes which shall be automatically released to them.
When parsed, it would be readily seen that this provision mandates that (1) the LGUs shall
have a "just share" in the national taxes; (2) the "just share" shall be determined by law; and
(3) the "just share" shall be automatically released to the LGUs.
The Local Government Code of 1991, among its salient provisions, underscores the
automatic release of the LGUs' "just share" in this wise:
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 revenue 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 further action;
...
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Sec. 286. Automatic Release of Shares. (a) The share of each local government unit shall be
released, without need of any further action, directly to the provincial, city, municipal or
barangay treasurer, as the case may be, on a quarterly basis within five (5) days after the
end of each quarter, and which shall not be subject to any lien or holdback that may be
imposed by the national government for whatever purpose.
(b) Nothing in this Chapter shall be understood to diminish the share of local government
units under existing laws.
Webster's Third New International Dictionary defines "automatic" as "involuntary either
wholly or to a major extent so that any activity of the will is largely negligible; of a reflex
nature; without volition; mechanical; like or suggestive of an automaton." Further, the word
"automatically" is defined as "in an automatic manner: without thought or conscious
intention." Being "automatic," thus, connotes something mechanical, spontaneous and
perfunctory. As such, the LGUs are not required to perform any act to receive the "just
share" accruing to them from the national coffers. As emphasized by the Local Government
Code of 1991, the "just share" of the LGUs shall be released to them "without need of
further action." Construing Section 286 of the LGC, we held in Pimentel, Jr. v. Aguirre, 22 viz:
Section 4 of AO 372 cannot, however, be upheld. A basic feature of local fiscal autonomy is
the automatic release of the shares of LGUs in the National internal revenue. This is
mandated by no less than the Constitution. The Local Government Code specifies further
that the release shall be made directly to the LGU concerned within five (5) days after every
quarter of the year and "shall not be subject to any lien or holdback that may be imposed by
the national government for whatever purpose." As a rule, the term "SHALL" is a word of
command that must be given a compulsory meaning. The provision is, therefore,
IMPERATIVE.
Section 4 of AO 372, however, orders the withholding, effective January 1, 1998, of 10
percent of the LGUs' IRA "pending the assessment and evaluation by the Development
Budget Coordinating Committee of the emerging fiscal situation" in the country. Such
withholding clearly contravenes the Constitution and the law. Although temporary, it is
equivalent to a holdback, which means "something held back or withheld, often
temporarily." Hence, the "temporary" nature of the retention by the national government
does not matter. Any retention is prohibited.
In sum, while Section 1 of AO 372 may be upheld as an advisory effected in times of national
crisis, Section 4 thereof has no color of validity at all. The latter provision effectively
encroaches on the fiscal autonomy of local governments. Concededly, the President was
well-intentioned in issuing his Order to withhold the LGUs' IRA, but the rule of law requires
that even the best intentions must be carried out within the parameters of the Constitution
and the law. Verily, laudable purposes must be carried out by legal methods. 23
The "just share" of the LGUs is incorporated as the IRA in the appropriations law or GAA
enacted by Congress annually. Under the assailed provisos in the GAAs of 1999, 2000 and
2001, a portion of the IRA in the amount of five billion pesos was earmarked for the LGSEF,
and these provisos imposed the condition that "such amount shall be released to the local
government units subject to the implementing rules and regulations, including such
mechanisms and guidelines for the equitable allocations and distribution of said fund among
local government units subject to the guidelines that may be prescribed by the Oversight
Committee on Devolution." Pursuant thereto, the Oversight Committee, through the
assailed OCD resolutions, apportioned the five billion pesos LGSEF such that:
For 1999
₱2 billion - allocated according to Sec. 285 LGC
₱2 billion - Modified Sharing Formula (Provinces – 40%;
Cities – 20%; Municipalities – 40%)
₱1 billion – projects (LAAP) approved by OCD. 24
For 2000
₱3.5 billion – Modified Sharing Formula (Provinces – 26%;
Cities – 23%; Municipalities – 35%; Barangays – 16%);
₱1.5 billion – projects (LAAP) approved by the OCD. 25
For 2001
₱3 billion – Modified Sharing Formula (Provinces – 25%;
Cities – 25%; Municipalities – 35%; Barangays – 15%)
₱1.9 billion – priority projects
₱100 million – capability building fund. 26
Significantly, the LGSEF could not be released to the LGUs without the Oversight
Committee's prior approval. Further, with respect to the portion of the LGSEF allocated for
various projects of the LGUs (₱1 billion for 1999; ₱1.5 billion for 2000 and ₱2 billion for
2001), the Oversight Committee, through the assailed OCD resolutions, laid down guidelines
and mechanisms that the LGUs had to comply with before they could avail of funds from
this portion of the LGSEF. The guidelines required (a) the LGUs to identify the projects
eligible for funding based on the criteria laid down by the Oversight Committee; (b) the
LGUs to submit their project proposals to the DILG for appraisal; (c) the project proposals
173
that passed the appraisal of the DILG to be submitted to the Oversight Committee for
review, evaluation and approval. It was only upon approval thereof that the Oversight
Committee would direct the DBM to release the funds for the projects.
To the Court's mind, the entire process involving the distribution and release of the LGSEF is
constitutionally impermissible. The LGSEF is part of the IRA or "just share" of the LGUs in the
national taxes. To subject its distribution and release to the vagaries of the implementing
rules and regulations, including the guidelines and mechanisms unilaterally prescribed by
the Oversight Committee from time to time, as sanctioned by the assailed provisos in the
GAAs of 1999, 2000 and 2001 and the OCD resolutions, makes the release not automatic, a
flagrant violation of the constitutional and statutory mandate that the "just share" of the
LGUs "shall be automatically released to them." The LGUs are, thus, placed at the mercy of
the Oversight Committee.
Where the law, the Constitution in this case, is clear and unambiguous, it must be taken to
mean exactly what it says, and courts have no choice but to see to it that the mandate is
obeyed.27 Moreover, as correctly posited by the petitioner, the use of the word "shall"
connotes a mandatory order. Its use in a statute denotes an imperative obligation and is
inconsistent with the idea of discretion. 28
Indeed, the Oversight Committee exercising discretion, even control, over the distribution
and release of a portion of the IRA, the LGSEF, is an anathema to and subversive of the
principle of local autonomy as embodied in the Constitution. Moreover, it finds no statutory
basis at all as the Oversight Committee was created merely to formulate the rules and
regulations for the efficient and effective implementation of the Local Government Code of
1991 to ensure "compliance with the principles of local autonomy as defined under the
Constitution."29 In fact, its creation was placed under the title of "Transitory Provisions,"
signifying its ad hoc character. According to Senator Aquilino Q. Pimentel, the principal
author and sponsor of the bill that eventually became Rep. Act No. 7160, the Committee's
work was supposed to be done a year from the approval of the Code, or on October 10,
1992.30 The Oversight Committee's authority is undoubtedly limited to the implementation
of the Local Government Code of 1991, not to supplant or subvert the same. Neither can it
exercise control over the IRA, or even a portion thereof, of the LGUs.
That the automatic release of the IRA was precisely intended to guarantee and promote
local autonomy can be gleaned from the discussion below between Messrs. Jose N. Nolledo
and Regalado M. Maambong, then members of the 1986 Constitutional Commission, to wit:
MR. MAAMBONG. Unfortunately, under Section 198 of the Local Government Code, the
existence of subprovinces is still acknowledged by the law, but the statement of the
Gentleman on this point will have to be taken up probably by the Committee on Legislation.
A second point, Mr. Presiding Officer, is that under Article 2, Section 10 of the 1973
Constitution, we have a provision which states:
The State shall guarantee and promote the autonomy of local government units, especially
the barrio, to insure their fullest development as self-reliant communities.
This provision no longer appears in the present configuration; does this mean that the
concept of giving local autonomy to local governments is no longer adopted as far as this
Article is concerned?
MR. NOLLEDO. No. In the report of the Committee on Preamble, National Territory, and
Declaration of Principles, that concept is included and widened upon the initiative of
Commissioner Bennagen.
MR. MAAMBONG. Thank you for that.
With regard to Section 6, sources of revenue, the creation of sources as provided by
previous law was "subject to limitations as may be provided by law," but now, we are using
the term "subject to such guidelines as may be fixed by law." In Section 7, mention is made
about the "unique, distinct and exclusive charges and contributions," and in Section 8, we
talk about "exclusivity of local taxes and the share in the national wealth." Incidentally, I was
one of the authors of this provision, and I am very thankful. Does this indicate local
autonomy, or was the wording of the law changed to give more autonomy to the local
government units?31
MR. NOLLEDO. Yes. In effect, those words indicate also "decentralization" because local
political units can collect taxes, fees and charges subject merely to guidelines, as
recommended by the league of governors and city mayors, with whom I had a dialogue for
almost two hours. They told me that limitations may be questionable in the sense that
Congress may limit and in effect deny the right later on.
MR. MAAMBONG. Also, this provision on "automatic release of national tax share" points to
more local autonomy. Is this the intention?
MR. NOLLEDO. Yes, the Commissioner is perfectly right. 32
The concept of local autonomy was explained in Ganzon v. Court of Appeals 33  in this wise:
As the Constitution itself declares, local autonomy 'means a more responsive and
accountable local government structure instituted through a system of decentralization.' The
Constitution, as we observed, does nothing more than to break up the monopoly of the
174
national government over the affairs of local governments and as put by political adherents,
to "liberate the local governments from the imperialism of Manila." Autonomy, however, is
not meant to end the relation of partnership and interdependence between the central
administration and local government units, or otherwise, to usher in a regime of federalism.
The Charter has not taken such a radical step. Local governments, under the Constitution,
are subject to regulation, however limited, and for no other purpose than precisely, albeit
paradoxically, to enhance self-government.
As we observed in one case, decentralization means devolution of national administration –
but not power – to the local levels.Thus:
Now, autonomy is either decentralization of administration or decentralization of power.
There is decentralization of administration when the central government delegates
administrative powers to political subdivisions in order to broaden the base of government
power and in the process to make local governments 'more responsive and accountable'
and 'ensure their fullest development as self-reliant communities and make them more
effective partners in the pursuit of national development and social progress.' At the same
time, it relieves the central government of the burden of managing local affairs and enables
it to concentrate on national concerns. The President exercises 'general supervision' over
them, but only to 'ensure that local affairs are administered according to law.' He has no
control over their acts in the sense that he can substitute their judgments with his own.
Decentralization of power, on the other hand, involves an abdication of political power in
the [sic] favor of local governments [sic] units declared to be autonomous. In that case, the
autonomous government is free to chart its own destiny and shape its future with minimum
intervention from central authorities.According to a constitutional author, decentralization
of power amounts to 'self-immolation,' since in that event, the autonomous government
becomes accountable not to the central authorities but to its constituency. 34
Local autonomy includes both administrative and fiscal autonomy. The fairly recent case of
Pimentel v. Aguirre35 is particularly instructive. The Court declared therein that local fiscal
autonomy includes the power of the LGUs to, inter alia, allocate their resources in
accordance with their own priorities:
Under existing law, local government units, in addition to having administrative autonomy in
the exercise of their functions, enjoy fiscal autonomy as well. Fiscal autonomy means that
local governments have the power to create their own sources of revenue in addition to
their equitable share in the national taxes released by the national government, as well as
the power to allocate their resources in accordance with their own priorities. It extends to
the preparation of their budgets, and local officials in turn have to work within the
constraints thereof. They are not formulated at the national level and imposed on local
governments, whether they are relevant to local needs and resources or not ... 36
Further, a basic feature of local fiscal autonomy is the constitutionally mandated automatic
release of the shares of LGUs in the national internal revenue. 37
Following this ratiocination, the Court in Pimentel struck down as unconstitutional Section 4
of Administrative Order (A.O.) No. 372 which ordered the withholding, effective January 1,
1998, of ten percent of the LGUs' IRA "pending the assessment and evaluation by the
Development Budget Coordinating Committee of the emerging fiscal situation."
In like manner, the assailed provisos in the GAAs of 1999, 2000 and 2001, and the OCD
resolutions constitute a "withholding" of a portion of the IRA. They put on hold the
distribution and release of the five billion pesos LGSEF and subject the same to the
implementing rules and regulations, including the guidelines and mechanisms prescribed by
the Oversight Committee from time to time. Like Section 4 of A.O. 372, the assailed provisos
in the GAAs of 1999, 2000 and 2001 and the OCD resolutions effectively encroach on the
fiscal autonomy enjoyed by the LGUs and must be struck down. They cannot, therefore, be
upheld.
The assailed provisos in the GAAs of 1999, 2000
and 2001 and the OCD resolutions cannot amend
Section 285 of the Local Government Code of 1991
Section 28438 of the Local Government Code provides that, beginning the third year of its
effectivity, the LGUs' share in the national internal revenue taxes shall be 40%. This
percentage is fixed and may not be reduced except "in the event the national government
incurs an unmanageable public sector deficit" and only upon compliance with stringent
requirements set forth in the same section:
Sec. 284. ...
Provided, That in the event that the national government incurs an unmanageable public
sector deficit, the President of the Philippines is hereby authorized, upon recommendation
of Secretary of Finance, Secretary of Interior and Local Government and Secretary of Budget
and Management, and subject to consultation with the presiding officers of both Houses of
Congress and the presidents of the liga, to make the necessary adjustments in the internal
revenue allotment of local government units but in no case shall the allotment be less than
thirty percent (30%) of the collection of the national internal revenue taxes of the third fiscal
year preceding the current fiscal year; Provided, further That in the first year of the
175
effectivity of this Code, the local government units shall, in addition to the thirty percent
(30%) internal revenue allotment which shall include the cost of devolved functions for
essential public services, be entitled to receive the amount equivalent to the cost of
devolved personnel services.
Thus, from the above provision, the only possible exception to the mandatory automatic
release of the LGUs' IRA is if the national internal revenue collections for the current fiscal
year is less than 40 percent of the collections of the preceding third fiscal year, in which case
what should be automatically released shall be a proportionate amount of the collections
for the current fiscal year. The adjustment may even be made on a quarterly basis
depending on the actual collections of national internal revenue taxes for the quarter of the
current fiscal year. In the instant case, however, there is no allegation that the national
internal revenue tax collections for the fiscal years 1999, 2000 and 2001 have fallen
compared to the preceding three fiscal years.
Section 285 then specifies how the IRA shall be allocated among the LGUs:
Sec. 285. Allocation to Local Government Units. – The share of local government units in the
internal revenue allotment shall be allocated in the following manner:
(a) Provinces – Twenty-three (23%)
(b) Cities – Twenty-three percent (23%);
(c) Municipalities – Thirty-four (34%); and
(d) Barangays – Twenty percent (20%).
However, this percentage sharing is not followed with respect to the five billion pesos LGSEF
as the assailed OCD resolutions, implementing the assailed provisos in the GAAs of 1999,
2000 and 2001, provided for a different sharing scheme. For example, for 1999, ₱2 billion of
the LGSEF was allocated as follows: Provinces – 40%; Cities – 20%; Municipalities –
40%.39 For 2000, ₱3.5 billion of the LGSEF was allocated in this manner: Provinces – 26%;
Cities – 23%; Municipalities – 35%; Barangays – 26%. 40 For 2001, ₱3 billion of the LGSEF was
allocated, thus: Provinces – 25%; Cities – 25%; Municipalities – 35%; Barangays – 15%. 41
The respondents argue that this modification is allowed since the Constitution does not
specify that the "just share" of the LGUs shall only be determined by the Local Government
Code of 1991. That it is within the power of Congress to enact other laws, including the
GAAs, to increase or decrease the "just share" of the LGUs. This contention is untenable. The
Local Government Code of 1991 is a substantive law. And while it is conceded that Congress
may amend any of the provisions therein, it may not do so through appropriations laws or
GAAs. Any amendment to the Local Government Code of 1991 should be done in a separate
law, not in the appropriations law, because Congress cannot include in a general
appropriation bill matters that should be more properly enacted in a separate legislation. 42
A general appropriations bill is a special type of legislation, whose content is limited to
specified sums of money dedicated to a specific purpose or a separate fiscal unit. 43 Any
provision therein which is intended to amend another law is considered an "inappropriate
provision." The category of "inappropriate provisions" includes unconstitutional provisions
and provisions which are intended to amend other laws, because clearly these kinds of laws
have no place in an appropriations bill. 44
Increasing or decreasing the IRA of the LGUs or modifying their percentage sharing therein,
which are fixed in the Local Government Code of 1991, are matters of general and
substantive law. To permit Congress to undertake these amendments through the GAAs, as
the respondents contend, would be to give Congress the unbridled authority to unduly
infringe the fiscal autonomy of the LGUs, and thus put the same in jeopardy every year. This,
the Court cannot sanction.
It is relevant to point out at this juncture that, unlike those of 1999, 2000 and 2001, the
GAAs of 2002 and 2003 do not contain provisos similar to the herein assailed provisos. In
other words, the GAAs of 2002 and 2003 have not earmarked any amount of the IRA for the
LGSEF. Congress had perhaps seen fit to discontinue the practice as it recognizes its
infirmity. Nonetheless, as earlier mentioned, this Court has deemed it necessary to make a
definitive ruling on the matter in order to prevent its recurrence in future appropriations
laws and that the principles enunciated herein would serve to guide the bench, bar and
public.
Conclusion
In closing, it is well to note that the principle of local autonomy, while concededly
expounded in greater detail in the present Constitution, dates back to the turn of the
century when President William McKinley, in his Instructions to the Second Philippine
Commission dated April 7, 1900, ordered the new Government "to devote their attention in
the first instance to the establishment of municipal governments in which the natives of the
Islands, both in the cities and in the rural communities, shall be afforded the opportunity to
manage their own affairs to the fullest extent of which they are capable, and subject to the
least degree of supervision and control in which a careful study of their capacities and
observation of the workings of native control show to be consistent with the maintenance
of law, order and loyalty." 45 While the 1935 Constitution had no specific article on local
autonomy, nonetheless, it limited the executive power over local governments to "general
176
supervision ... as may be provided by law." 46 Subsequently, the 1973 Constitution explicitly
stated that "[t]he State shall guarantee and promote the autonomy of local government
units, especially the barangay to ensure their fullest development as self-reliant
communities."47 An entire article on Local Government was incorporated therein. The
present Constitution, as earlier opined, has broadened the principle of local autonomy. The
14 sections in Article X thereof markedly increased the powers of the local governments in
order to accomplish the goal of a more meaningful local autonomy.
Indeed, the value of local governments as institutions of democracy is measured by the
degree of autonomy that they enjoy.48 As eloquently put by
M. De Tocqueville, a distinguished French political writer, "[l]ocal assemblies of citizens
constitute the strength of free nations. Township meetings are to liberty what primary
schools are to science; they bring it within the people's reach; they teach men how to use
and enjoy it. A nation may establish a system of free governments but without the spirit of
municipal institutions, it cannot have the spirit of liberty." 49
Our national officials should not only comply with the constitutional provisions on local
autonomy but should also appreciate the spirit and liberty upon which these provisions are
based.50
WHEREFORE, the petition is GRANTED. The assailed provisos in the General Appropriations
Acts of 1999, 2000 and 2001, and the assailed OCD Resolutions, are declared
UNCONSTITUTIONAL.
G.R. No. 125350. December 3, 2002
HON. RTC JUDGES MERCEDES G. DADOLE (Executive Judge, Branch 28), ULRIC
R. CAETE (Presiding Judge, Branch 25), AGUSTINE R. VESTIL (Presiding Judge,
Branch 56), HON. MTC JUDGES TEMISTOCLES M. BOHOLST (Presiding Judge,
Branch 1), VICENTE C. FANILAG (Judge Designate, Branch 2), and WILFREDO A.
DAGATAN (Presiding Judge, Branch 3), all of Mandaue City, petitioners,
vs. COMMISSION ON AUDIT, respondent.
DECISION
CORONA, J.:
Before us is a petition for certiorari under Rule 64 to annul the decision[1 and resolution[2,
dated September 21, 1995 and May 28, 1996, respectively, of the respondent Commission on
Audit (COA) affirming the notices of the Mandaue City Auditor which diminished the
monthly additional allowances received by the petitioner judges of the Regional Trial Court
(RTC) and Municipal Trial Court (MTC) stationed in Mandaue City.
The undisputed facts are as follows:
In 1986, the RTC and MTC judges of Mandaue City started receiving monthly allowances
of P1,260 each through the yearly appropriation ordinance enacted by the Sangguniang
Panlungsod of the said city. In 1991, Mandaue City increased the amount to P1,500 for each
judge.
On March 15, 1994, the Department of Budget and Management (DBM) issued the disputed
Local Budget Circular No. 55 (LBC 55) which provided that:
xxx xxx xxx
2.3.2. In the light of the authority granted to the local government units under the Local
Government Code to provide for additional allowances and other benefits to national
government officials and employees assigned in their locality, such additional allowances in
the form of honorarium at rates not exceeding P1,000.00 in provinces and cities and P700.00
in municipalities may be granted subject to the following conditions:
a) That the grant is not mandatory on the part of the LGUs;
b) That all contractual and statutory obligations of the LGU including the implementation of
R.A. 6758 shall have been fully provided in the budget;
c) That the budgetary requirements/limitations under Section 324 and 325 of R.A. 7160
should be satisfied and/or complied with; and
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d) That the LGU has fully implemented the devolution of functions/personnel in accordance
with R.A. 7160.3 (italics supplied)
xxx xxx xxx
The said circular likewise provided for its immediate effectivity without need of publication:
5.0 EFFECTIVITY
This Circular shall take effect immediately.
Acting on the DBM directive, the Mandaue City Auditor issued notices of disallowance to
herein petitioners, namely, Honorable RTC Judges Mercedes G. Dadole, Ulric R. Caete,
Agustin R. Vestil, Honorable MTC Judges Temistocles M. Boholst, Vicente C. Fanilag and
Wilfredo A. Dagatan, in excess of the amount authorized by LBC 55. Beginning October,
1994, the additional monthly allowances of the petitioner judges were reduced to P1,000
each. They were also asked to reimburse the amount they received in excess of P1,000 from
April to September, 1994.
The petitioner judges filed with the Office of the City Auditor a protest against the notices of
disallowance. But the City Auditor treated the protest as a motion for reconsideration and
indorsed the same to the COA Regional Office No. 7. In turn, the COA Regional Office
referred the motion to the head office with a recommendation that the same be denied.
On September 21, 1995, respondent COA rendered a decision denying petitioners motion for
reconsideration. The COA held that:
The issue to be resolved in the instant appeal is whether or not the City Ordinance of
Mandaue which provides a higher rate of allowances to the appellant judges may prevail over
that fixed by the DBM under Local Budget Circular No. 55 dated March 15, 1994.
xxx xxx xxx
Applying the foregoing doctrine, appropriation ordinance of local government units is subject
to the organizational, budgetary and compensation policies of budgetary authorities (COA
5th Ind., dated March 17, 1994 re: Province of Antique; COA letter dated May 17, 1994 re:
Request of Hon. Renato Leviste, Cong. 1st Dist. Oriental Mindoro). In this regard, attention is
invited to Administrative Order No. 42 issued on March 3, 1993 by the President of the
Philippines clarifying the role of DBM in the compensation and classification of local
government positions under RA No. 7160 vis-avis the provisions of RA No. 6758 in view of
the abolition of the JCLGPA. Section 1 of said Administrative Order provides that:
Section 1. The Department of Budget and Management as the lead administrator of RA No.
6758 shall, through its Compensation and Position Classification Bureau, continue to have
the following responsibilities in connection with the implementation of the Local
Government Code of 1991:
a) Provide guidelines on the classification of local government positions
and on the specific rates of pay therefore;
b) Provide criteria and guidelines for the grant of
all allowances and additional forms of compensation to local government
employees; xxx. (underscoring supplied)
To operationalize the aforecited presidential directive, DBM issued LBC No. 55, dated March
15, 1994, whose effectivity clause provides that:
xxx xxx xxx
5.0 EFFECTIVITY
This Circular shall take effect immediately.
It is a well-settled rule that implementing rules and regulations promulgated by administrative
or executive officer in accordance with, and as authorized by law, has the force and effect of
law or partake the nature of a statute (Victorias Milling Co., Inc., vs. Social Security
Commission, 114 Phil. 555, cited in Agpalos Statutory Construction, 2nd Ed. P. 16; Justice
Cruzs Phil. Political Law, 1984 Ed., p. 103; Espanol vs. Phil Veterans Administration, 137
SCRA 314; Antique Sawmills Inc. vs. Tayco, 17 SCRA 316).
178
xxx xxx xxx
There being no statutory basis to grant additional allowance to judges in excess of P1,000.00
chargeable against the local government units where they are stationed, this Commission
finds no substantial grounds or cogent reason to disturb the decision of the City Auditor,
Mandaue City, disallowing in audit the allowances in question. Accordingly, the above-
captioned appeal of the MTC and RTC Judges of Mandaue City, insofar as the same is not
covered by Circular Letter No. 91-7, is hereby dismissed for lack of merit.
xxx xxx xxx4cräläwvirtualibräry
On November 27, 1995, Executive Judge Mercedes Gozo-Dadole, for and in behalf of the
petitioner judges, filed a motion for reconsideration of the decision of the COA. In a
resolution dated May 28, 1996, the COA denied the motion.
Hence, this petition for certiorari by the petitioner judges, submitting the following questions
for resolution:
I any law and therefore goes beyond the supervisory powers of the President. They further
HAS THE CITY OF MANDAUE STATUTORY AND CONSTITUTIONAL BASIS TO
PROVIDE ADDITIONAL ALLOWANCES AND OTHER BENEFITS TO JUDGES
STATIONED IN AND ASSIGNED TO THE CITY?
II
CAN AN ADMINISTRATIVE CIRCULAR OR GUIDELINE SUCH AS LOCAL BUDGET
CIRCULAR NO. 55 RENDER INOPERATIVE THE POWER OF THE LEGISLATIVE
BODY OF A CITY BY SETTING A LIMIT TO THE EXTENT OF THE EXERCISE OF
SUCH POWER?
III
HAS THE COMMISSION ON AUDIT CORRECTLY INTERPRETED LOCAL BUDGET
CIRCULAR NO. 55 TO INCLUDE MEMBERS OF THE JUDICIARY IN FIXING THE
CEILING OF ADDITIONAL ALLOWANCES AND BENEFITS TO BE PROVIDED TO
JUDGES STATIONED IN AND ASSIGNED TO MANDAUE CITY BY THE CITY
GOVERNMENT AT P1,000.00 PER MONTH NOTWITHSTANDING THAT THEY
HAVE BEEN RECEIVING ALLOWANCES OF P1,500.00 MONTHLY FOR THE PAST
FIVE YEARS?
IV
IS LOCAL BUDGET CIRCULAR NO. 55 DATED MARCH 15, 1994 ISSUED BY THE
DEPARTMENT OF BUDGET AND MANAGEMENT VALID AND ENFORCEABLE
CONSIDERING THAT IT WAS NOT DULY PUBLISHED IN ACCODANCE WITH
LAW?5cräläwvirtualibräry
Petitioner judges argue that LBC 55 is void for infringing on the local autonomy of Mandaue
City by dictating a uniform amount that a local government unit can disburse as additional
allowances to judges stationed therein. They maintain that said circular is not supported by
allege that said circular is void for lack of publication.
On the other hand, the yearly appropriation ordinance providing for additional allowances to
judges is allowed by Section 458, par. (a)(1)[xi], of RA 7160, otherwise known as the Local
Government Code of 1991, which provides that:
Sec. 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as
the legislative body of the city, shall enact ordinances, approve resolutions and appropriate
funds for the general welfare of the city and its inhabitants pursuant to Section 16 of this
Code and in the proper exercise of the corporate powers of the city as provided for under
Section 22 of this Code, and shall:
(1) Approve ordinances and pass resolutions necessary for an efficient and effective city
government, and in this connection, shall:
xxx xxx xxx
179
(xi) When the finances of the city government allow, provide for additional allowances and
other benefits to judges, prosecutors, public elementary and high school teachers, and other
national government officials stationed in or assigned to the city; (italics supplied)
Instead of filing a comment on behalf of respondent COA, the Solicitor General filed a
manifestation supporting the position of the petitioner judges. The Solicitor General argues
that (1) DBM only enjoys the power to review and determine whether the disbursements of
funds were made in accordance with the ordinance passed by a local government unit while
(2) the COA has no more than auditorial visitation powers over local government units
pursuant to Section 348 of RA 7160 which provides for the power to inspect at any time the
financial accounts of local government units.
Moreover, the Solicitor General opines that the DBM and the respondent are only authorized
under RA 7160 to promulgate a Budget Operations Manual for local government units, to
improve and systematize methods, techniques and procedures employed in budget
preparation, authorization, execution and accountability pursuant to Section 354 of RA 7160.
The Solicitor General points out that LBC 55 was not exercised under any of the
aforementioned provisions.
Respondent COA, on the other hand, insists that the constitutional and statutory authority of a
city government to provide allowances to judges stationed therein is not absolute. Congress
may set limitations on the exercise of autonomy. It is for the President, through the DBM, to
check whether these legislative limitations are being followed by the local government units.
One such law imposing a limitation on a local government units autonomy is Section 458,
par. (a) (1) [xi], of RA 7160, which authorizes the disbursement of additional allowances and
other benefits to judges subject to the condition that the finances of the city government
should allow the same. Thus, DBM is merely enforcing the condition of the law when it sets
a uniform maximum amount for the additional allowances that a city government can release
to judges stationed therein.
Assuming arguendo that LBC 55 is void, respondent COA maintains that the provisions of
the yearly approved ordinance granting additional allowances to judges are still prohibited by
the appropriation laws passed by Congress every year. COA argues that Mandaue City gets
the funds for the said additional allowances of judges from the Internal Revenue Allotment
(IRA). But the General Appropriations Acts of 1994 and 1995 do not mention the
disbursement of additional allowances to judges as one of the allowable uses of the IRA.
Hence, the provisions of said ordinance granting additional allowances, taken from the IRA,
to herein petitioner judges are void for being contrary to law.
To resolve the instant petition, there are two issues that we must address: (1) whether LBC 55
of the DBM is void for going beyond the supervisory powers of the President and for not
having been published and (2) whether the yearly appropriation ordinance enacted by the City
of Mandaue that provides for additional allowances to judges contravenes the annual
appropriation laws enacted by Congress.
We rule in favor of the petitioner judges.
On the first issue, we declare LBC 55 to be null and void.
We recognize that, although our Constitution guarantees autonomy to local government units,
the exercise of local autonomy remains subject to the power of control by Congress and the
power of supervision by the President. Section 4 of Article X of the 1987 Philippine
Constitution provides that:
Sec. 4. The President of the Philippines shall exercise general supervision over local
governments. x x x
In Pimentel vs. Aguirre[7], we defined the supervisory power of the President and
distinguished it from the power of control exercised by Congress. Thus:
This provision (Section 4 of Article X of the 1987 Philippine Constitution) has been
interpreted to exclude the power of control. In Mondano v. Silvosa,i[5] the Court contrasted the
President's power of supervision over local government officials with that of his power of
control over executive officials of the national government. It was emphasized that the two
terms -- supervision and control -- differed in meaning and extent. The Court distinguished
them as follows:
"x x x In administrative law, supervision means overseeing or the power or authority of an
officer to see that subordinate officers perform their duties. If the latter fail or neglect to
fulfill them, the former may take such action or step as prescribed by law to make them
180
perform their duties. Control, on the other hand, means the power of an officer to alter or
modify or nullify or set aside what a subordinate officer ha[s] done in the performance of his
duties and to substitute the judgment of the former for that of the latter."ii[6]
In Taule v. Santos,iii[7] we further stated that the Chief Executive wielded no more authority
than that of checking whether local governments or their officials were performing their
duties as provided by the fundamental law and by statutes. He cannot interfere with local
governments, so long as they act within the scope of their authority. "Supervisory power,
when contrasted with control, is the power of mere oversight over an inferior body; it does
not include any restraining authority over such body,"iv[8] we said.
In a more recent case, Drilon v. Lim,v[9] the difference between control and supervision was
further delineated. Officers in control lay down the rules in the performance or
accomplishment of an act. If these rules are not followed, they may, in their discretion, order
the act undone or redone by their subordinates or even decide to do it themselves. On the
other hand, supervision does not cover such authority. Supervising officials merely see to it
that the rules are followed, but they themselves do not lay down such rules, nor do they have
the discretion to modify or replace them. If the rules are not observed, they may order the
work done or redone, but only to conform to such rules. They may not prescribe their own
manner of execution of the act. They have no discretion on this matter except to see to it that
the rules are followed.
Under our present system of government, executive power is vested in the President. vi[10] 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.vii[11] 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 Presidents supervision only, not control, so long as their acts are
exercised within the sphere of their legitimate powers. By the same token, the President may
not withhold or alter any authority or power given them by the Constitution and the law.
Clearly then, the President can only interfere in the affairs and activities of a local
government unit if he or she finds that the latter has acted contrary to law. This is the scope of
the Presidents supervisory powers over local government units. Hence, the President or any
of his or her alter egos cannot interfere in local affairs as long as the concerned local
government unit acts within the parameters of the law and the Constitution. Any directive
therefore by the President or any of his or her alter egos seeking to alter the wisdom of a law-
conforming judgment on local affairs of a local government unit is a patent nullity because it
violates the principle of local autonomy and separation of powers of the executive and
legislative departments in governing municipal corporations.
Does LBC 55 go beyond the law it seeks to implement? Yes.
LBC 55 provides that the additional monthly allowances to be given by a local government
unit should not exceed P1,000 in provinces and cities and P700 in municipalities. Section
458, par. (a)(1)(xi), of RA 7160, the law that supposedly serves as the legal basis of LBC 55,
allows the grant of additional allowances to judges when the finances of the city government
allow. The said provision does not authorize setting a definite maximum limit to the
additional allowances granted to judges. Thus, we need not belabor the point that the finances
of a city government may allow the grant of additional allowances higher than P1,000 if the
revenues of the said city government exceed its annual expenditures. Thus, to illustrate, a city
government with locally generated annual revenues of P40 million and expenditures of P35
million can afford to grant additional allowances of more than P1,000 each to, say, ten judges
inasmuch as the finances of the city can afford it.
Setting a uniform amount for the grant of additional allowances is an inappropriate way of
enforcing the criterion found in Section 458, par. (a)(1)(xi), of RA 7160. The DBM over-
stepped its power of supervision over local government units by imposing a prohibition that
did not correspond with the law it sought to implement. In other words, the prohibitory nature
of the circular had no legal basis.
Furthermore, LBC 55 is void on account of its lack of publication, in violation of our ruling
in Taada vs. Tuvera[8] where we held that:
xxx. Administrative rules and regulations must also be published if their purpose is to enforce
or implement existing law pursuant to a valid delegation.
Interpretative regulations and those merely internal in nature, that is, regulating only the
personnel of an administrative agency and the public, need not be published. Neither is
publication required of the so-called letters of instruction issued by administrative superiors
181
concerning the rules or guidelines to be followed by their subordinates in the performance of
their duties.
Respondent COA claims that publication is not required for LBC 55 inasmuch as it is merely
an interpretative regulation applicable to the personnel of an LGU. We disagree. In De Jesus
vs. Commission on Audit[9] where we dealt with the same issue, this Court declared void,
for lack of publication, a DBM circular that disallowed payment of allowances and other
additional compensation to government officials and employees. In refuting respondent
COAs argument that said circular was merely an internal regulation, we ruled that:
On the need for publication of subject DBM-CCC No. 10, we rule in the affirmative.
Following the doctrine enunciated in Taada v. Tuvera, publication in the Official Gazette or
in a newspaper of general circulation in the Philippines is required since DBM-CCC No. 10
is in the nature of an administrative circular the purpose of which is to enforce or
implement an existing law. Stated differently, to be effective and enforceable, DBM-CCC
No. 10 must go through the requisite publication in the Official Gazette or in a newspaper of
general circulation in the Philippines.
In the present case under scrutiny, it is decisively clear that DBM-CCC No. 10, which
completely disallows payment of allowances and other additional compensation to
government officials and employees, starting November 1, 1989, is not a mere interpretative
or internal regulation. It is something more than that. And why not, when it tends to deprive
government workers of their allowance and additional compensation sorely needed to keep
body and soul together. At the very least, before the said circular under attack may be
permitted to substantially reduce their income, the government officials and employees
concerned should be apprised and alerted by the publication of subject circular in the
Official Gazette or in a newspaper of general circulation in the Philippines to the end
that they be given amplest opportunity to voice out whatever opposition they may have,
and to ventilate their stance on the matter. This approach is more in keeping with
democratic precepts and rudiments of fairness and transparency. (emphasis supplied)
In Philippine International Trading Corporation vs. Commission on Audit[10], we again
declared the same circular as void, for lack of publication, despite the fact that it was re-
issued and then submitted for publication. Emphasizing the importance of publication to the
effectivity of a regulation, we therein held that:
It has come to our knowledge that DBM-CCC No. 10 has been re-issued in its entirety and
submitted for publication in the Official Gazette per letter to the National Printing Office
dated March 9, 1999. Would the subsequent publication thereof cure the defect and retroact
to the time that the above-mentioned items were disallowed in audit?
The answer is in the negative, precisely for the reason that publication is required as
a condition precedent to the effectivity of a law to inform the public of the contents of the
law or rules and regulations before their rights and interests are affected by the same. From
the time the COA disallowed the expenses in audit up to the filing of herein petition the
subject circular remained in legal limbo due to its non-publication. As was stated in Taada v.
Tuvera, prior publication of laws before they become effective cannot be dispensed with, for
the reason that it would deny the public knowledge of the laws that are supposed to govern
it.11cräläwvirtualibräry
We now resolve the second issue of whether the yearly appropriation ordinance enacted by
Mandaue City providing for fixed allowances for judges contravenes any law and should
therefore be struck down as null and void.
According to respondent COA, even if LBC 55 were void, the ordinances enacted by
Mandaue City granting additional allowances to the petitioner judges would still (be) bereft
of legal basis for want of a lawful source of funds considering that the IRA cannot be used
for such purposes. Respondent COA showed that Mandaue Citys funds consisted of locally
generated revenues and the IRA. From 1989 to 1995, Mandaue Citys yearly expenditures
exceeded its locally generated revenues, thus resulting in a deficit. During all those years, it
was the IRA that enabled Mandaue City to incur a surplus. Respondent avers that Mandaue
City used its IRA to pay for said additional allowances and this violated paragraph 2 of the
Special Provisions, page 1060, of RA 7845 (The General Appropriations Act of 1995)
[12 and paragraph 3 of the Special Provision, page 1225, of RA 7663 (The General
Appropriations Act of 1994)[13 which specifically identified the objects of expenditure of
the IRA. Nowhere in said provisions of the two budgetary laws does it say that the IRA can
be used for additional allowances of judges. Respondent COA thus argues that the provisions
in the ordinance providing for such disbursement are against the law, considering that the
grant of the subject allowances is not within the specified use allowed by the aforesaid yearly
appropriations acts.
We disagree.
182
Respondent COA failed to prove that Mandaue City used the IRA to spend for the additional
allowances of the judges. There was no evidence submitted by COA showing the breakdown
of the expenses of the city government and the funds used for said expenses. All the COA
presented were the amounts expended, the locally generated revenues, the deficit, the surplus
and the IRA received each year. Aside from these items, no data or figures were presented to
show that Mandaue City deducted the subject allowances from the IRA. In other words, just
because Mandaue Citys locally generated revenues were not enough to cover its expenditures,
this did not mean that the additional allowances of petitioner judges were taken from the IRA
and not from the citys own revenues.
Moreover, the DBM neither conducted a formal review nor ordered a disapproval of
Mandaue Citys appropriation ordinances, in accordance with the procedure outlined by
Sections 326 and 327 of RA 7160 which provide that:
Section 326. Review of Appropriation Ordinances of Provinces, Highly Urbanized Cities,
Independent Component Cities, and Municipalities within the Metropolitan Manila Area. The
Department of Budget and Management shall review ordinances authorizing the annual or
supplemental appropriations of provinces, highly-urbanized cities, independent component
cities, and municipalities within the Metropolitan Manila Area in accordance with the
immediately succeeding Section.
Section 327. Review of Appropriation Ordinances of Component Cities and Municipalities.-
The sangguninang panlalawigan shall review the ordinance authorizing annual or
supplemental appropriations of component cities and municipalities in the same manner and
within the same period prescribed for the review of other ordinances.
If within ninety (90) days from receipt of copies of such ordinance, the sangguniang
panlalawigan takes no action thereon, the same shall be deemed to have been reviewed
in accordance with law and shall continue to be in full force and effect. (emphasis
supplied)
Within 90 days from receipt of the copies of the appropriation ordinance, the DBM should
have taken positive action. Otherwise, such ordinance was deemed to have been properly
reviewed and deemed to have taken effect. Inasmuch as, in the instant case, the DBM did not
follow the appropriate procedure for reviewing the subject ordinance of Mandaue City and
allowed the 90-day period to lapse, it can no longer question the legality of the provisions in
the said ordinance granting additional allowances to judges stationed in the said city.
WHEREFORE, the petition is hereby GRANTED, and the assailed decision and resolution,
dated September 21, 1995 and May 28, 1996, respectively, of the Commission on Audit are
hereby set aside.
No costs.
SO ORDERED.
G.R. No. 130775             September 27, 2004
THE NATIONAL LIGA NG MGA BARANGAY, represented by ALEX L. DAVID in
his capacity as National President and for his own Person, President ALEX L.
DAVID, petitioners,
vs.
HON. VICTORIA ISABEL A. PAREDES, Presiding Judge, Regional Trial Court,
Branch 124, Caloocan City, and THE DEPARTMENT OF INTERIOR and LOCAL
GOVERNMENT, represented the HON. SECRETARY ROBERT Z. BARBERS and
MANUEL A. RAYOS, respondents.
x--------------------------------------------------------------------------x
G.R. No. 131939             September 27, 2004
LEANDRO YANGOT, BONIFACIO LACWASAN and BONY TACIO, petitioners,
vs.
DILG Secretary ROBERT Z. BARBERS and DILG Undersecretary MANUEL
SANCHEZ, respondents.
DECISION
TINGA, J.:
183
At bottom, the present petition inquires into the essential nature of the Liga ng mga
Barangay and questions the extent of the power of Secretary of the Department of
Interior and Local Government (DILG), as alter ego of the President. More
immediately, the petition disputes the validity of the appointment of the DILG as
the interim caretaker of the Liga ng mga Barangay.
On 11 June 1997, private respondent Manuel A. Rayos [as petitioner
therein], Punong Barangay of Barangay 52, District II, Zone 5, District II, Caloocan
City, filed a petition for prohibition and mandamus, with prayer for a writ of
preliminary injunction and/or temporary restraining order and damages before the
Regional Trial Court (RTC) of Caloocan,1 alleging that respondent therein Alex L.
David [now petitioner], Punong Barangay of Barangay 77, Zone 7, Caloocan City
and then president of the Liga Chapter of Caloocan City and of the Liga ng mga
Barangay National Chapter, committed certain irregularities in the notice, venue and
conduct of the proposed synchronized Liga ng mga Barangay elections in 1997.
According to the petition, the irregularities consisted of the following: (1) the
publication of the notice in the Manila Bulletin but without notifying in writing the
individual punong barangays of Caloocan City;2 (2) the Notice of Meeting dated 08
June 1997 for the Liga Chapter of Caloocan City did not specify whether the meeting
scheduled on 14 June 1997 was to be held at 8:00 a.m. or 8:00 p.m., and worse, the
meeting was to be held in Lingayen, Pangasinan;3 and (3) the deadline for the filing
of the Certificates of Candidacy having been set at 5:00 p.m. of the third "day prior to
the above election day", or on 11 June 1997, 4 Rayos failed to meet said deadline
since he was not able to obtain a certified true copy of the COMELEC Certificate of
Canvas and Proclamation of Winning Candidate, which were needed to be a
delegate, to vote and be voted for in the Liga election. On 13 June 1997, the
Executive Judge issued a temporary restraining order (TRO), effective for seventy-
two (72) hours, enjoining the holding of the general membership and election
meeting of Liga Chapter of Caloocan City on 14 June 1975.5
However, the TRO was allegedly not properly served on herein petitioner David, and
so the election for the officers of the Liga-Caloocan was held as
scheduled.6 Petitioner David was proclaimed President of the Liga-Caloocan, and
thereafter took his oath and assumed the position of ex-officio member of
the Sangguniang Panlungsod of Caloocan.
On 17 July 1997, respondent Rayos filed a second petition, this time for quo
warranto, mandamus and prohibition, with prayer for a writ of preliminary injunction
and/or temporary restraining order and damages, against David, Nancy Quimpo,
Presiding Officer of the Sangguniang Panlungsod of Caloocan City, and Secretary
Barbers.7 Rayos alleged that he was elected President of the Liga Caloocan Chapter
in the elections held on 14 June 1997 by the members of the Caloocan Chapter
pursuant to their Resolution/Petition No. 001-97.8 On 18 July 1997, the presiding
judge granted the TRO, enjoining therein respondents David, Quimpo and Secretary
Barbers from proceeding with the synchronized elections for the Provincial and
Metropolitan Chapters of the Liga scheduled on 19 July 1997, but only for the
purpose of maintaining the status quo and effective for a period not exceeding
seventy-two (72) hours.9
Eventually, on 18 July 1997, at petitioner David’s instance, Special Civil Action (SCA)
No. C-512 pending before Branch 126 was consolidated with SCA No. C-508
pending before Branch 124.10
Before the consolidation of the cases, on 25 July 1997, the DILG through respondent
Secretary Barbers, filed in SCA No. C-512 an Urgent Motion,11 invoking the
President’s power of general supervision over all local government units and seeking
the following reliefs:
WHEREFORE, in the interest of the much-needed delivery of basic services
to the people, the maintenance of public order and to further protect the
interests of the forty-one thousand barangays all over the country, herein
respondent respectfully prays:
a) That the Department of the Interior and Local Government (DILG),
pursuant to its delegated power of general supervision, be appointed
as the Interim Caretaker to manage and administer the affairs of the
Liga, until such time that the new set of National Liga Officers shall
have been duly elected and assumed office; ...12
The prayer for injunctive reliefs was anchored on the following grounds: (1) the DILG
Secretary exercises the power of general supervision over all government units by
virtue of Administrative Order No. 267 dated 18 February 1992; (2) the Liga ng mga
184
Barangay is a government organization; (3) undue interference by some local
elective officials during the Municipal and City Chapter elections of the Liga ng mga
Barangay; (4) improper issuance of confirmations of the elected Liga Chapter
officers by petitioner David and the National Liga Board; (5) the need for the DILG to
provide remedies measured in view of the confusion and chaos sweeping the Liga
ng mga Barangay and the incapacity of the National Liga Board to address the
problems properly.
On 31 July 1997, petitioner David opposed the DILG’s Urgent Motion, claiming that
the DILG, being a respondent in the case, is not allowed to seek any sanction
against a co-respondent like David, such as by filing a cross-claim, without first
seeking leave of court.13 He also alleged that the DILG’s request to be appointed
interim caretaker constitutes undue interference in the internal affairs of the Liga,
since the Liga is not subject to DILG control and supervision.14
Three (3) days after filing its Urgent Motion, on 28 July 1997, and before it was acted
upon by the lower court, the DILG through then Undersecretary Manuel Sanchez,
issued Memorandum Circular No. 97-176.15 It cited the reported violations of the Liga
ng mga Barangay Constitution and By-Laws by David and "widespread chaos and
confusion" among local government officials as to who were the qualified ex-officio
Liga members in their respective sangunians.16 Pending the appointment of the
DILG "as the Interim Caretaker of the Liga ng mga Barangay by the court and until
the officers and board members of the national Liga Chapter have been elected and
have assumed office," the Memorandum Circular directed all provincial governors,
vice governors, city mayors, city vice mayors, members of the sangguniang
panlalawigan and panlungsod, DILG regional directors and other concerned officers,
as follows:
1. All concerned are directed not to recognize and/or honor any Liga
Presidents of the Provincial and Metropolitan Chapters as ex-officio members
of the sanggunian concerned until further notice from the Courts or this
Department;
2. All concerned are directed to disregard any pronouncement and/or
directive issued by Mr. Alex David on any issue or matter relating to the
affairs of the Liga ng mga Barangay until further notice from the Courts or this
Department.17
On 04 August 1997, public respondent Judge Victoria Isabel A. Paredes issued the
assailed order,18 the pertinent portions of which read, thus:
The authority of the DILG to exercise general supervisory jurisdiction over
local government units, including the different leagues created under the
Local Government Code of 1991 (RA 7160) finds basis in Administrative
Order No. 267 dated February 18, 1992. Specifically, Section 1 (a) of the said
Administrative Order provides a broad premise for the supervisory power of
the DILG. Administratively, the DILG’s supervision has been tacitly
recognized by the local barangays, municipalities, cities and provinces as
shown by the evidences presented by respondent David himself (See
Annexes "A" to "C"). The fact that the DILG has sought to refer the matters
therein to the National Liga Board/Directorate does not ipso facto mean that it
has lost jurisdiction to act directly therein. Jurisdiction is conferred by law and
cannot be claimed or lost through agreements or inaction by individuals.
What respondent David may term as "interference" should caretakership be
allowed, this Court would rather view as a necessary and desirable corollary
to the exercise of supervision.19
Political motivations must not preclude, hamper, or obstruct the delivery of basic
services and the perquisites of public service. In this case, the fact of confusion
arising from conflicting appointments, non-action, and uninformed or wavering
decisions of the incumbent National Liga Board/Directorate, having been
satisfactorily established, cannot simply be brushed aside as being politically
motivated or arising therefrom. It is incumbent, therefore, that the DILG exercise a
more active role in the supervision of the affairs and operations of the National Liga
Board/ Directorate at least until such time that the regular National Liga
Board/Directorate may have been elected, qualified and assumed office.20
xxx
WHEREFORE, premises considered, the Urgent Motion of the DILG for
appointment as interim caretaker, until such time that the regularly elected
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National Liga Board of Directors shall have qualified and assumed office, to
manage and administer the affairs of the National Liga Board, is hereby
GRANTED.21
On 11 August 1997, petitioner David filed an urgent motion for the reconsideration of
the assailed order and to declare respondent Secretary Barbers in contempt of
Court.22 David claimed that the 04 August 1997 order divested the duly elected
members of the Board of Directors of the Liga National Directorate of their positions
without due process of law. He also wanted Secretary Barbers declared in contempt
for having issued, through his Undersecretary, Memorandum Circular No. 97-176,
even before respondent judge issued the questioned order, in mockery of the justice
system. He implied that Secretary Barbers knew about respondent judge’s
questioned order even before it was promulgated.23
On 11 August 1997, the DILG issued Memorandum Circular No. 97-193,24 providing
supplemental guidelines for the 1997 synchronized elections of the provincial and
metropolitan chapters and for the election of the national chapter of the Liga ng mga
Barangay. The Memorandum Circular set the synchronized elections for the
provincial and metropolitan chapters on 23 August 1997 and for the national chapter
on 06 September 1997.
On 12 August 1997, the DILG issued a Certificate of Appointment25 in favor of
respondent Rayos as president of the Liga ng mga Barangay of Caloocan City. The
appointment purportedly served as Rayos’s "legal basis for ex-officio membership in
the Sangguniang Panlungsod of Caloocan City" and "to qualify and participate in the
forthcoming National Chapter Election of the Liga ng mga Barangay."26
On 23 August 1997, the DILG conducted the synchronized elections of Provincial
and Metropolitan Liga Chapters. Thereafter, on 06 September 1997, the
National Liga Chapter held its election of officers and board of directors, wherein
James Marty L. Lim was elected as President of the National Liga.27
On 01 October 1997, public respondent judge denied David’s motion for
reconsideration,28 ruling that there was no factual or legal basis to reconsider the
appointment of the DILG as interim caretaker of the National Liga Board and to cite
Secretary Barbers in contempt of court.29
On 10 October 1997, petitioners filed the instant Petition for Certiorari30 under Rule
65 of the Rules of Court, seeking to annul public respondent judge’s orders of 04
August 1997 and 01 October 1997. They dispute the latter’s opinion on the power of
supervision of the President under the Constitution, through the DILG over local
governments, which is the same as that of the DILG’s as shown by its application of
the power on the Liga ng mga Barangay. Specifically, they claim that the public
respondent judge’s designation of the DILG as interim caretaker and the acts which
the DILG sought to implement pursuant to its designation as such are beyond the
scope of the Chief Executive’s power of supervision.
To support the petition, petitioners argue that under Administrative Order No. 267,
Series of 1992, the power of general supervision of the President over local
government units does not apply to the Liga and its various chapters precisely
because the Liga is not a local government unit, contrary to the stance of the
respondents.31
Section 507 of the Local Government Code (Republic Act No. 7160)32 provides that
the Liga shall be governed by its own Constitution and By-laws. Petitioners posit that
the duly elected officers and directors of the National Liga elected in 1994 had a
vested right to their positions and could only be removed therefrom for cause by
affirmative vote of two-thirds (2/3) of the entire membership pursuant to
the Liga Constitution and By-Laws, and not by mere issuances of the DILG, even if
bolstered by the dubious authorization of respondent judge.33 Thus, petitioners claim
that the questioned order divested the then incumbent officers and directors of
the Liga of their right to their respective offices without due process of law.
Assuming the Liga could be subsumed under the term "local governments," over
which the President, through the DILG Secretary, has the power of
supervision,34 petitioners point out that still there is no legal or constitutional basis for
the appointment of the DILG as interim caretaker. 35 They stress that the actions
contemplated by the DILG as interim caretaker go beyond supervision, as what it
had sought and obtained was authority to alter, modify, nullify or set aside the
actions of the Liga Board of Directors and even to substitute its judgment over that of
the latter — which are all clearly one of control. 36 Petitioners question the
appointment of Rayos as Liga-Caloocan President since at that time petitioner David
was occupying that position which was still the subject of the
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quo warranto proceedings Rayos himself had instituted.37 Petitioners likewise claim
that DILG Memorandum Circular No. 97-193, providing supplemental guidelines for
the synchronized elections of the Liga, replaced the implementing rules adopted by
the Liga pursuant to its Constitution and By-laws.38 In fact, even before its
appointment as interim caretaker, DILG specifically enjoined all heads of government
units from recognizing petitioner David and/or honoring any of his pronouncements
relating to the Liga.39
Petitioners rely on decision in Taule v. Santos,40 which, they claim, already passed
upon the "extent of authority of the then Secretary of Local Government over
the katipunan ng mga barangay or the barangay councils," as it specifically ruled that
the "Secretary [of Local Government] has no authority to pass upon the validity or
regularity of the election of officers of the katipunan."41
For his part, respondent Rayos avers that since the Secretary of the DILG
supervises the acts of local officials by ensuring that they act within the scope of their
prescribed powers and functions and since members of the various leagues, such as
the Liga in this case, are themselves officials of local government units, it follows that
the Liga members are subject to the power of supervision of the DILG.42 He adds
that as the DILG’s management and administration of the Liga affairs was limited
only to the conduct of the elections, its actions were consistent with its rule-making
power and power of supervision under existing laws.43 He asserts that in assailing
the appointment of the DILG as interim caretaker, petitioners failed to cite any
provision of positive law in support of their stance. Thus, he adds, "if a law is silent,
obscure or insufficient, a judge may apply a rule he sees fit to resolve the issue, as
long as the rule chosen is in harmony with general interest, order, morals and public
policy,"44 in consonance with Article 9 of the Civil Code.45
On the other hand, it is quite significant that the Solicitor General has shared
petitioners’ position. He states that the DILG’s act of managing and administering the
affairs of the National Liga Board are not merely acts of supervision but plain
manifestations of control and direct takeover of the functions of the
National Liga Board,46 going beyond the limits of the power of general supervision of
the President over local governments.47 Moreover, while the Liga may be deemed a
government organization, it is not strictly a local government unit over which the
DILG has supervisory power.48
Meanwhile, on 24 September 1998, James Marty L. Lim, the newly elected President
of the National Liga, filed a Motion for Leave to File Comment in Intervention,49 with
his Comment in Intervention attached,50 invoking the validity of the DILG’s actions
relative to the conduct of the Liga elections.51 In addition, he sought the dismissal of
the instant petition on the following grounds: (1) the issue of validity or invalidity of
the questioned order has been rendered moot and academic by the election
of Liga officers; (2) the turn-over of the administration and management
of Liga affairs to the Liga officers; and (3) the recognition and acceptance by the
members of the Liga nationwide.52
In the interim, another petition, this time for Prohibition with Prayer for a Temporary
Restraining Order,53 was filed by several presidents of Liga Chapters, praying that
this Court declare the DILG Secretary and Undersecretary are not vested with any
constitutional or legal power to exercise control or even supervision over the
National Liga ng mga Barangay, nor to take over the functions of its officers or
suspend its constitution; and declare void any and all acts committed by respondents
therein in connection with their caretakership of the Liga.54 The petition was
consolidated with G.R. No. 130775, but it was eventually dismissed because the
petitioners failed to submit an affidavit of service and proof of service of the petition.55
Meanwhile, on 01 December 1998, petitioner David died and was substituted by his
legal representatives.56
Petitioners have raised a number of issues. 57 Integrated and simplified, these issues
boil down to the question of whether or not respondent Judge acted with grave
abuse of discretion in appointing the DILG as interim caretaker to administer and
manage the affairs of the National Liga Board, per its order dated 04 August
1997.58 In turn, the resolution of the question of grave abuse of discretion entails a
couple of definitive issues, namely: (1) whether the Liga ng mga Barangay is a
government organization that is subject to the DILG Secretary’s power of supervision
over local governments as the alter ego of the President, and (2) whether the
respondent Judge’s designation of the DILG as interim caretaker of the Liga has
invested the DILG with control over the Liga and whether DILG Memorandum
Circular No. 97-176, issued before it was designated as such interim caretaker, and
DILG Memorandum Circular No. 97-193 and other acts which the DILG made in its
capacity as interim caretaker of the Liga, involve supervision or control of the Liga.
187
However, the Court should first address the question of mootness which intervenor
Lim raised because, according to him, during the pendency of the present petition a
general election was held; the new set of officers and directors had assumed their
positions; and that supervening events the DILG had turned-over the management
and administration of the Liga to new Liga officers and directors.59 Respondent
Rayos has joined him in this regard.60 Forthwith, the Court declares that these
supervening events have not rendered the instant petition moot, nor removed it from
the jurisdiction of this Court.
This case transcends the elections ordered and conducted by the DILG as interim
caretaker of the Liga and the Liga officers and directors who were elected to replace
petitioner David and the former officers. At the core of the petition is the validity of
the DILG’s "caretakership" of the Liga and the official acts of the DILG as such
caretaker which exceeded the bounds of supervision and were exercise of control. At
stake in this case is the realization of the constitutionally ensconced principle of local
government autonomy;61 the statutory objective to enhance the capabilities of
barangays and municipalities "by providing them opportunities to participate actively
in the implementation of national programs and projects;"62 and the promotion of the
avowed aim to ensure the independence and non-partisanship of the Liga ng mga
Barangay. The mantle of local autonomy would be eviscerated and remain an empty
buzzword if unconstitutional, illegal and unwarranted intrusions in the affairs of the
local governments are tolerated and left unchecked.
Indeed, it is the declared policy of the State that its territorial and political
subdivisions should enjoy genuine 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.63 In the case of De Leon v.
Esguerra,64 the Court ruled that even barangays are meant to possess genuine and
meaningful local autonomy so that they may develop fully as self-reliant
communities.65
Furthermore, well-entrenched is the rule that courts will decide a question otherwise
moot and academic if it is "capable of repetition, yet evading review." 66 For the
question of whether the DILG may validly be appointed as interim caretaker, or
assume a similar position and perform acts pursuant thereto, is likely to resurrect
again, and yet the question may not be decided before the actual assumption, or the
termination of said assumption even.
So too, dismissing the petition on the ground of mootness could lead to the wrong
impression that the challenged order and issuances are valid. Verily, that does not
appear to be the correct conclusion to make since by applying opposite precedents
to the issues the outcome points to invalidating the assailed order and memorandum
circulars.
The resolution of the issues of whether the Liga ng mga Barangay is subject to DILG
supervision, and whether the questioned "caretakership" order of the respondent
judge and the challenged issuances and acts of the DILG constitute control in
derogation of the Constitution, necessitates a brief overview of the barangay, as the
lowest LGU, and the Liga, as a vehicle of governance and coordination.
As the basic political unit, the barangay serves as the primary planning and
implementing unit of government policies, plans, programs, projects and activities in
the community, and as a forum wherein the collective views of the people may be
expressed, crystallized and considered, and where disputes may be amicably
settled.67
On the other hand, the Liga ng mga Barangay68 is the organization of all barangays,
the primary purpose of which is the determination of the representation of the Liga in
the sanggunians, and the ventilation, articulation, and crystallization of issues
affecting barangay government administration and securing solutions thereto,
through proper and legal means.69 The Liga ng mga Barangay shall have chapters at
the municipal, city and provincial and metropolitan political subdivision levels. 70 The
municipal and city chapters of the Liga are composed of
the barangay representatives from the municipality or city concerned. The presidents
of the municipal and city chapters of the Liga form the provincial or metropolitan
political subdivision chapters of the Liga. The presidents of the chapters of
the Liga in highly urbanized cities, provinces and the Metro Manila area and other
metropolitan political subdivisions constitute the National Liga ng mga Barangay.71
As conceptualized in the Local Government Code, the barangay is positioned to
influence and direct the development of the entire country. This was heralded by the
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adoption of the bottom-to-top approach process of development which requires the
development plans of the barangay to be considered in the development plans of the
municipality, city or province,72 whose plans in turn are to be taken into account by
the central government73 in its plans for the development of the entire
country.74 The Liga is the vehicle assigned to make this new development approach
materialize and produce results.
The presidents of the Liga at the municipal, city and provincial levels, automatically
become ex-officio members of the Sangguniang Bayan, Sangguniang
Panlungsod and Sangguniang Panlalawigan, respectively. They shall serve as such
only during their term of office as presidents of the Liga chapters, which in no case
shall be beyond the term of office of the sanggunian concerned.75
The Liga ng mga Barangay has one principal aim, namely: to promote the
development of barangays and secure the general welfare of their inhabitants.76 In
line with this, the Liga is granted the following functions and duties:
a) Give priority to programs designed for the total development of the
barangays and in consonance with the policies, programs and projects of the
national government;
b) Assist in the education of barangay residents for people’s participation in
local government administration in order to promote untied and concerted
action to achieve country-wide development goals;
c) Supplement the efforts of government in creating gainful employment
within the barangay;
d) Adopt measures to promote the welfare of barangay officials;
e) Serve as forum of the barangays in order to forge linkages with
government and non-governmental organizations and thereby promote the
social, economic and political well-being of the barangays; and
f) Exercise such other powers and perform such other duties and functions
which will bring about stronger ties between barangays and promote the
welfare of the barangay inhabitants.77
The Ligas are primarily governed by the provisions of the Local Government Code.
However, they are empowered to make their own constitution and by-laws to govern
their operations. Sec. 507 of the Code provides:
Sec. 507. Constitution and By-Laws of the Liga and the Leagues. - All other
matters not herein otherwise provided for affecting the internal organization of
the leagues of local government units shall be governed by their respective
constitution and by-laws which are hereby made suppletory to the provision
of this Chapter: Provided, That said Constitution and By-laws shall always
conform to the provision of the Constitution and existing laws.
Pursuant to the Local Government Code, the Liga ng mga Barangay adopted
its own Constitution and By-Laws. It provides that the corporate powers of
the Liga, expressed or implied, shall be vested in the board of directors of
each level of the Liga which shall:
a) Have jurisdiction over all officers, directors and committees of the
said Liga; including the power of appointment, assignment and
delegation;
b) Have general management of the business, property, and funds of
said Liga;
c) Prepare and approve a budget showing anticipated receipts and
expenditures for the year, including the plans or schemes for funding
purposes; and
d) Have the power to suspend or remove from office any officer or
member of the said board on grounds cited and in the manner
provided in hereinunder provisions.78
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The National Liga Board of Directors promulgated the rules for the conduct of
its Liga’s general elections.79 And, as early as 28 April 1997, the Liga National
Chapter had already scheduled its general elections on 14 June 1997.80
The controlling provision on the issues at hand is Section 4, Article X of the
Constitution, which reads in part:
Sec. The President of the Philippines shall exercise general supervision over
local governments.
The 1935, 1973 and 1987 Constitutions uniformly differentiate the President’s power
of supervision over local governments and his power of control of the executive
departments bureaus and offices.81 Similar to the counterpart provisions in the earlier
Constitutions, the provision in the 1987 Constitution provision has been interpreted to
exclude the power of control.82
In the early case of Mondano v. Silvosa, et al.,83 this Court defined supervision as
"overseeing, or the power or authority of an officer to see that subordinate officers
perform their duties, and to take such action as prescribed by law to compel his
subordinates to perform their duties. Control, on the other hand, means the power of
an officer to alter or modify or nullify or set aside what a subordinate officer had done
in the performance of his duties and to substitute the judgment of the former for that
of the latter.84 In Taule v. Santos,85 the Court held that the Constitution permits the
President to wield no more authority than that of checking whether a local
government or its officers perform their duties as provided by statutory
enactments.86 Supervisory power, when contrasted with control, is the power of mere
oversight over an inferior body; it does not include any restraining authority over such
body.87
The case of Drilon v. Lim88 clearly defined the extent of supervisory power, thus:
…The supervisor or superintendent merely sees to it that the rules are
followed, but he himself does not lay down such rules, nor does he have the
discretion to modify or replace them. If the rules are not observed, he may
order the work done or re-done but only to conform to the prescribed rules.
He may not prescribe his own manner for the doing of the act. He has no
judgment on this matter except to see that the rules are followed…89
In Section 4, Article X of the Constitution applicable to the Liga ng mga Barangay?
Otherwise put, is the Liga legally susceptible to DILG suspension?
This question was resolved in Bito-Onon v. Fernandez,90 where the Court ruled that
the President’s power of the general supervision, as exercised therein by the DILG
Secretary as his alter ego, extends to the Liga ng mga Barangay.
Does the President’s power of general supervision extend to the liga ng mga
barangay, which is not a local government unit?
We rule in the affirmative. In Opinion No. 41, Series of 1995, the Department of
Justice ruled that the liga ng mga barangay is a government organization, being an
association, federation, league or union created by law or by authority of law, whose
members are either appointed or elected government officials. The Local
Government Code defines the liga ng mga barangay as an organization of all
barangays for the primary purpose of determining the representation of the liga in the
sanggunians, and for ventilating, articulating and crystallizing issues affecting
barangay government administration and securing, through proper and legal means,
solutions thereto.91
The rationale for making the Liga subject to DILG supervision is quite evident,
whether from the perspectives of logic or of practicality. The Liga is an aggroupment
of barangays which are in turn represented therein by their respective punong
barangays. The representatives of the Liga sit in an ex officio capacity at the
municipal, city and provincial sanggunians. As such, they enjoy all the powers and
discharge all the functions of regular municipal councilors, city councilors or
provincial board members, as the case may be. Thus, the Liga is the vehicle through
which the barangay participates in the enactment of ordinances and formulation of
policies at all the legislative local levels higher than the sangguniang barangay, at
the same time serving as the mechanism for the bottom-to-top approach of
development.
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In the case at bar, even before the respondent Judge designated the DILG as interim
caretaker of the Liga, on 28 July 1997, it issued Memorandum Circular No. 97-176,
directing local government officials not to recognize David as the National Liga
President and his pronouncements relating to the affairs of the Liga. Not only was
the action premature, it even smacked of superciliousness and injudiciousness. The
DILG is the topmost government agency which maintains coordination with, and
exercises supervision over local government units and its multi-level leagues. As
such, it should be forthright, circumspect and supportive in its dealings with
the Ligas especially the Liga ng mga Barangay. The indispensable role played by the
latter in the development of the barangays and the promotion of the welfare of the
inhabitants thereof deserve no less than the full support and respect of the other
agencies of government. As the Court held in the case of San Juan v. Civil Service
Commission,92 our national officials should not only comply with the constitutional
provisions on local autonomy but should also appreciate the spirit of liberty upon
which these provisions are based.93
When the respondent judge eventually appointed the DILG as interim caretaker to
manage and administer the affairs of the Liga, she effectively removed the
management from the National Liga Board and vested control of the Liga on the
DILG. Even a cursory glance at the DILG’s prayer for appointment as interim
caretaker of the Liga "to manage and administer the affairs of the Liga, until such
time that the new set of National Liga officers shall have been duly elected and
assumed office" reveals that what the DILG wanted was to take control over
the Liga. Even if said "caretakership" was contemplated to last for a limited time, or
only until a new set of officers assume office, the fact remains that it was a
conferment of control in derogation of the Constitution.
With his Department already appointed as interim caretaker of the Liga, Secretary
Barbers nullified the results of the Liga elections and promulgated DILG
Memorandum Circular No. 97-193 dated 11 August 1997, where he laid down the
supplemental guidelines for the 1997 synchronized elections of the provincial and
metropolitan chapters and for the election of the national chapter of the Liga ng mga
Barangay; scheduled dates for the new provincial, metropolitan and national chapter
elections; and appointed respondent Rayos as president of Liga-Caloocan Chapter.
These acts of the DILG went beyond the sphere of general supervision and
constituted direct interference with the political affairs, not only of the Liga, but more
importantly, of the barangay as an institution. The election of Liga officers is part of
the Liga’s internal organization, for which the latter has already provided guidelines.
In succession, the DILG assumed stewardship and jurisdiction over the Liga affairs,
issued supplemental guidelines for the election, and nullified the effects of the Liga-
conducted elections. Clearly, what the DILG wielded was the power of control which
even the President does not have.
Furthermore, the DILG assumed control when it appointed respondent Rayos as
president of the Liga-Caloocan Chapter prior to the newly scheduled
general Liga elections, although petitioner David’s term had not yet expired. The
DILG substituted its choice, who was Rayos, over the choice of majority of
the punong barangay of Caloocan, who was the incumbent President, petitioner
David. The latter was elected and had in fact been sitting as an ex-officio member of
the sangguniang panlungsod in accordance with the Liga Constitution and By-Laws.
Yet, the DILG extended the appointment to respondent Rayos although it was aware
that the position was the subject of a quo warranto proceeding instituted by Rayos
himself, thereby preempting the outcome of that case. It was bad enough that the
DILG assumed the power of control, it was worse when it made use of the power
with evident bias and partiality.
As the entity exercising supervision over the Liga ng mga Barangay, the DILG’s
authority over the Liga is limited to seeing to it that the rules are followed, but it
cannot lay down such rules itself, nor does it have the discretion to modify or replace
them. In this particular case, the most that the DILG could do was review the acts of
the incumbent officers of the Liga in the conduct of the elections to determine if they
committed any violation of the Liga’s Constitution and By-laws and its implementing
rules. If the National Liga Board and its officers had violated Liga rules, the DILG
should have ordered the Liga to conduct another election in accordance with
the Liga’s own rules, but not in obeisance to DILG-dictated guidelines. Neither had
the DILG the authority to remove the incumbent officers of the Liga and replace
them, even temporarily, with unelected Liga officers.
Like the local government units, the Liga ng mga Barangay is not subject to control
by the Chief Executive or his alter ego.
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In the Bito-Onon94 case, this Court held that DILG Memorandum Circular No. 97-193,
insofar as it authorized the filing of a petition for review of the decision of the Board
of Election Supervisors (BES) with the regular courts in a post-proclamation electoral
protest, involved the exercise of control as it in effect amended the guidelines
already promulgated by the Liga. The decision reads in part:
xxx. Officers in control, lay down the rules in the doing of an act. If they are
not followed, it is discretionary on his part to order the act undone or redone
by his subordinate or he may even decide to do it himself. Supervision does
not cover such authority. Supervising officers merely see to it that the rules
are followed, but he himself does not lay down such rules, nor does he have
the discretion to modify or replace them. If the rules are not observed, he may
order the work done or re-done to conform for to the prescribed rules. He
cannot prescribe his own manner the doing of the act.
xxx
xxx. The amendment of the GUIDELINES is more than an exercise of the
power of supervision but is an exercise of the power of control, which the
President does not have over the LIGA. Although the DILG is given the power
to prescribe rules, regulations and other issuances, the Administrative Code
limits its authority to merely "monitoring compliance by local government units
of such issuances. To monitor means to "watch, observe or check" and is
compatible with the power of supervision of the DILG Secretary over local
governments, which is limited to checking whether the local government unit
concerned or the officers thereof perform their duties as per statutory
enactments. Besides, any doubt as to the power of the DILG Secretary to
interfere with local affairs should be resolved in favor of the greater autonomy
of the local government.95
In Taule,96 the Court ruled that the Secretary of Local Government had no authority
to pass upon the validity or regularity of the election of officers of katipunan ng mga
barangay or barangay councils. In that case, a protest was lodged before the
Secretary of Local Government regarding several irregularities in, and seeking the
nullification of, the election of officers of the Federation of Associations of Barangay
Councils (FABC) of Catanduanes. Then Local Government Secretary Luis Santos
issued a resolution nullifying the election of officers and ordered a new one to be
conducted. The Court ruled:
Construing the constitutional limitation on the power of general supervision of
the President over local governments, We hold that respondent Secretary
has no authority to pass upon the validity or regularity of the officers of
the katipunan. To allow respondent Secretary to do so will give him more
power than the law or the Constitution grants. It will in effect give him control
over local government officials for it will permit him to interfere in a purely
democratic and non-partisan activity aimed at strengthening the barangay as
the basic component of local governments so that the ultimate goal of fullest
autonomy may be achieved. In fact, his order that the new elections to be
conducted be presided by the Regional Director is a clear and direct
interference by the Department with the political affairs of the barangays
which is not permitted by the limitation of presidential power to general
supervision over local governments.97
All given, the Court is convinced that the assailed order was issued with grave abuse
of discretion while the acts of the respondent Secretary, including DILG
Memorandum Circulars No. 97-176 and No. 97-193, are unconstitutional and ultra
vires, as they all entailed the conferment or exercise of control — a power which is
denied by the Constitution even to the President.
WHEREFORE, the Petition is GRANTED. The Order of the Regional Trial Court
dated 04 August 1997 is SET ASIDE for having been issued with grave abuse of
discretion amounting to lack or excess of jurisdiction.
DILG Memorandum Circulars No. 97-176 and No. 97-193, are declared VOID for
being unconstitutional and ultra vires.
No pronouncements as to costs.
G.R. No. 152651 August 7, 2006
192
ANDABAI T. ARIMAO, Petitioner,
vs.
SAADEA P. TAHER, Respondent.
DECISION
TINGA, J.:
Before us is a petition for review of the Decision and Order dated 16 October 2001
and 31 January 2002, respectively, of Branch 14 of the Regional Trial Court, 12th
Judicial Region, Cotabato City, in SPL. Civil Case No. 660, entitled "Saadea P.
Taher v. Gov. Nur Misuari, in his capacity as ARMM Regional Governor, Andabai T.
Arimao and Bajunaid Kamaludin, Acting Director of TESDA-ARMM," which enjoined
respondents therein, including petitioner Andabai T. Arimao, from carrying out the
effects of the Memorandum dated 04 August 2000 issued by then Autonomous
Region in Muslim Mindanao (ARMM) Governor Nur P. Misuari.
The facts of the case, as culled from the records, follow:
On 22 March 1995, petitioner was appointed as Director II, Bureau of Non-formal Education,
Department of Education, Culture and Sports (DECS-ARMM). Thereafter, on 17 July 1995,
respondent was appointed Education Supervisor II. Petitioner’s appointment, however, was
protested by a certain Alibai T. Benito, who claimed that said appointment did not pass
through any evaluation by the personnel selection board. 1 Petitioner’s appointment was
eventually disapproved by the Civil Service Commission-Field Office (CSC-FO), Cotabato City,
for failure to meet the experience required for the position. On 02 May 1996, the CSC,
through Resolution No. 96- 3101, affirmed the findings of the CSC-FO and ordered petitioner
to be reverted to her former position of Education Supervisor II. 2 Petitioner sought
reconsideration of the decision.
In the interim, petitioner applied for and was granted by the DECS-ARMM an
academic scholarship with pay effective 30 October 1996 in her capacity as
Education Supervisor II. The scholarship was limited to a period of one year. 3
Meanwhile, petitioner’s motion for reconsideration of CSC Resolution No. 96-3101
was denied. 4 Subsequently, she filed a petition for review of the two CSC
Resolutions before the Court of Appeals 5 which, however, denied due course to the
petition on 10 June 1998. 6 On 17 October 1998, the Court of Appeals issued an
Entry of Judgment declaring the denial of the petition to be final and executory. 7
In the meantime, the position of Education Supervisor II being occupied by
respondent was devolved from DECS-ARMM to the Technical Education and Skills
Development Authority (TESDA)- ARMM.
On 2 December 1998, petitioner informed the CSC Regional Office in Cotabato City
that she was already allowed by the Director of TESDA-ARMM to report for duty,
only that she and respondent are reporting to the same position. 8 On 10 December
1998, the CSC Regional Director enjoined respondent from reporting to the TESDA-
ARMM. 9 It appears, however, that respondent continued to report as Education
Supervisor II.
On 7 December 1998, respondent, unaware that petitioner was granted a study
leave from October 1996 to October 1997, filed a complaint before the Regional
Director, ARMM, relative to petitioner’s continued absence. On 24 December 1998,
upon the complaint filed by respondent, the Executive Secretary of ARMM, by
authority of the ARMM Regional Governor and per his Memorandum of even date,
declared petitioner to have been Absent Without Leave (AWOL) by reason of her
failure to report to her office for at least a year after the expiration of her study leave
and directed that she be dropped from the payroll. 10 Petitioner appealed the said
Memorandum to the Office of the ARMM Regional Governor. In Resolution No. 001-
99 dated 17 March 1999, the said office denied the appeal, finding that from 30
October 1996 up to the opening of school year 1997-1998, first semester, petitioner
failed to report to office despite the fact that she was not able to enroll immediately
upon the approval of her study leave. 11 Further, petitioner’s act of enrolling in the
second semester of school year 1997-1998 in the absence of an approved extension
of her study leave is a clear violation of the implementing guidelines of Republic Act
No. 4670, or the Magna Carta for Public School Teachers. The dispositive portion of
the Resolution reads:
193
WHEREFORE, [p]remises considered, the instant letter of Mrs. Arimao to reconsider
the action of the Executive Secretary in dropping her from the roll is hereby DENIED
and is accordingly DISMISSED for lack of merit. Thus, the Memorandum Ordered
[sic] of the Executive Secretary on Authority of the Regional Governor dated
December 24, 1998 is hereby affirmed and remained [sic] undisturbed. Nonetheless,
since the act of dropping one from the roll is non[-]disciplinary action on the ground
of being guilty of the charge of Absence Without Approved Leave (AWOL) the
respondent may be appointed to other position[s] in the Government service at the
discretion of the appointing authority.
SO ORDERED. 12
On 20 July 2000, Datu Guimid P. Matalam, Regional Vice Governor/Acting Regional
Governor, ordered petitioner to reassume her former position as Education
Supervisor II, and revoked the ARMM Executive Secretary’s Resolution dated 24
December 1998. 13 However, on 1 August 2000, the same Acting Regional Governor
issued the following order:
In the interest of the service and considering the need to observe fairness and justice
in dealing with our personnel, you are hereby directed to implement the above
mentioned resolution rendered by the Regional Solicitor General on March 17, 1999.
As such, you are likewise directed to maintain STATUS QUO on the part of Ms.
SAADEA P. TAHER, Education Supervisor II with permanent status duly approved
by the Civil Service Commission.
This Memorandum Order takes effective [sic] immediately and superscede/ revokes
all previous order inconsistent herewith. 14
However, on 4 August 2000, ARMM Regional Governor Misuari issued a
Memorandum 15 to the TESDA-ARMM, ordering petitioner’s reinstatement,
presumably in accordance with CSC Resolution No. 96-3101 and CSC-ARMM
directive dated 26 July 2000.
Respondent thus filed a Petition for Prohibition before the Regional Trial Court of
Cotabato City, claiming that she has no other plain, speedy and adequate remedy,
as she stands to suffer grave injustice and irreparable injury if she is removed from
the office which she has held for more than five years. 16 On 21 August 2000, the trial
court issued a writ of preliminary injunction commanding ARMM Regional Governor
Misuari and the TESDA-ARMM to desist from carrying out the said Memorandum. 17
On 16 October 2001, the trial court rendered the assailed Decision, 18 holding that
the 04 August 2000 Memorandum of the ARMM Regional Governor could no longer
be implemented because the CSC resolutions ordering petitioner’s reinstatement,
relied upon by ARMM Regional Governor Misuari, were superseded by the CSC
resolutions finding petitioner on AWOL and dropping her from the payroll. According
to the trial court, this controversy has to be resolved by the CSC, which has the
exclusive jurisdiction over disciplinary cases and cases involving personnel actions
affecting employees in the public service. The trial court thus ordered:
WHEREFORE, as prayed for, the respondents are ordered to cease and desist in
prosecuting or carrying out the effects of the August 4, 2000 [M]emorandum and for
respondents to cease and desist from continuance of any act which will be in
violation of the right of petitioner with respect to the subject matter of the action or
proceeding so as not to render the judgment ineffectual.
SO ORDERED. 19
Petitioner filed a motion for reconsideration but the motion was denied on 31 January
2002. 20
On 31 October 2000, petitioner moved for the issuance of a writ of execution of CSC
Resolution No. 96-3101 (ordering her reinstatement to her former office). CSC
issued Resolution No. 01-0132, 21 dated 15 January 2001, ordering the concerned
officials of the DECS-ARMM to implement CSC Resolution No. 96-3101.
Meanwhile, on 22 May 2002, the CSC, acting on the letter of the Regional Solicitor
General of the ARMM regarding the implementation of CSC Resolution No. 96-3101,
issued Resolution No. 020743. 22 According to the CSC, it issued Resolution No. 01-
194

0132 because petitioner did not inform the Commission that she had been declared 1. Whether a writ of prohibition lies to enjoin the directive of the ARMM Governor to
on AWOL and dropped from the rolls since 24 December 1998. 23 ARMM Regional reinstate petitioner to the position of Education Supervisor II despite petitioner’s
Governor Misuari’s Memorandum dated 04 August 2000 ordering petitioner’s having been declared on AWOL and dropped from the roll;
reinstatement is rendered moot and academic because prior to the said date she
was already separated from the service, the CSC added. 24 2. Whether the trial court erred in taking cognizance of the petition for prohibition and
whether the filing of the petition for prohibition violated the doctrine of primary
Petitioner now comes before us, arguing that a writ of prohibition does not lie to jurisdiction;
enjoin the implementation of the directive of the ARMM Governor implementing the
CSC Resolution reinstating her to her former position. 25 She claims that the trial 3. Whether the AWOL order against petitioner validated respondent’s occupancy of
court gravely erred in taking cognizance of the petition for prohibition filed by the position of Education Supervisor II;
respondent, and failed to observe the doctrine of primary jurisdiction, considering
that the case, as declared by the trial court itself, involved personnel actions which 4. Who, as between petitioner and respondent, is entitled to the position of Education
are within the CSC’s exclusive jurisdiction. 26 In addition, petitioner contends that by Supervisor II.
virtue of the disapproval of her appointment, respondent’s appointment to Education
Supervisor II was invalidated, and thus both of them are automatically restored to the The petition must be denied.
their former positions by operation of law. She further claims that the AWOL Order of
the CSC was previously revoked on 20 July 2000 by then Acting Regional Governor Petitioner cannot be reinstated by mere directive of the ARMM Regional Governor
Matalam, and that the same Memorandum revoked the 24 December 1998
Memorandum of the Executive Secretary, Atty. Randolph C. Parcasio. 27 Finally,
The assailed Memorandum issued by ARMM Regional Governor is reproduced in
petitioner argues that it is not known which position she was being declared AWOL—
full, thus:
when she was declared on AWOL, she was ordered to revert to her former position
as Education Supervisor II, which position was already occupied by respondent who
refused to yield the position, and she was also prevented from functioning as TO : TESDA –ARMM
Director II. 28
Cotabato City
29
In her Comment,   respondent claims that since no appeal was taken from the
AWOL order, it has become final and executory and thus cannot be revoked by mere SUBJECT : Implementation of CSC Resolution No. 96-3101, and CSC-ARMM
issuance of a Memorandum. 30 She argues that the doctrine of primary jurisdiction Directive Order Dated July 26, 2000
does not apply to the case a quo because it raises a purely legal question, that is,
the propriety of petitioner’s assumption of her former position despite having been DATE : August 4, 2000
declared on AWOL and dropped from the rolls. Due to the urgency of the situation
and the immediacy of the problem, recourse through the same officials who issued In the highest interest of public service and consistent with the legal and
the assailed memoranda would be futile. 31 constitutional precept of promoting social justice, the above-captioned resolutions
are hereby implemented.
The Court is thus tasked to resolve the following issues:
195
As such, you are hereby directed to re-instate ANDABAI T. ARIMAO to her former
position as Education Supervisor II pursuant to the foregoing resolution and the
provisions of Sec. 13, Rule VI, Book V of E.O. No, 292 which are further buttressed
by the series of communication of CSC Regional Office No. XII dated September 10,
1998, October 20, 1998, November 03, 1998 and December 10, 1998 and directive
order of CSC-ARMM dated July 26, 2000 respectively.
This [M]emorandum shall take effect immediately and shall take precedence over all
memoranda, orders and other issuances [sic] inconsistent herewith.
(Signed)
PROF. NUR P. MISUARI
Regional Governor 32
Even a cursory look at the Memorandum shows that the order of petitioner’s
reinstatement was made in reliance on, or in implementation of, CSC Resolution No.
96-3101 and CSC-ARMM Directive Order dated 26 July 2000, both of which
ordained her reinstatement. However, these directives relied upon by ARMM
Regional Governor Misuari were rendered functus officio by no less than the CSC
itself per its Resolution No. 020743, which, as previously noted, ruled that the
TESDA-ARMM is not under legal obligation to reinstate petitioner because she was
already dropped from the rolls effective 24 December 1998. CSC Resolution No. 01-
0132, ordering the implementation of CSC Resolution No. 96-3101, was issued
because petitioner purposely concealed and withheld from the CSC the information
that she had been declared AWOL and dropped from the rolls. 33 With Resolution No.
020743, CSC Resolution No. 01-0132 was effectively revoked.
Likewise, with the finality of the AWOL order and her having been dropped from the
rolls, petitioner legally lost her right to the position of Education Supervisor II. In any
case, she has already received from the DECS-ARMM her salaries as Education
Supervisor II for the period October 1996 to 1997, or the period corresponding to the
time the position was still with the said department. 34
Petitioner argues that the 24 December 1998 Memorandum finding her to be on
AWOL was revoked and rendered moot by subsequent issuances. We are not
persuaded. While it is true that then Acting Regional Governor Matalam revoked the
24 December 1998 order of the ARMM Executive Secretary, he recalled the
revocation via his Memorandum dated 01 August 2006. Thus, the AWOL order dated
24 December 1998 was in full force and effect when ARMM Regional Governor
Misuari issued the assailed 04 August 2000 Memorandum.
Propriety of the Petition for Prohibition
The trial court did not err in taking cognizance of the petition for prohibition.
The principal purpose for the writ of prohibition is to prevent an encroachment,
excess, usurpation or assumption of jurisdiction on the part of an inferior court or
quasi-judicial tribunal. It is granted when it is necessary for the orderly administration
of justice, or to prevent the use of the strong arm of the law in an oppressive or
vindictive manner, or to put a stop to multiplicity of actions. Thus, for a party to be
entitled to a writ of prohibition, he must establish the following requisites: (a) it must
be directed against a tribunal, corporation, board or person exercising functions,
judicial or ministerial; (b) the tribunal, corporation, board or person has acted without
or in excess of its jurisdiction, or with grave abuse of discretion; and (c) there is no
appeal or any other plain, speedy, and adequate remedy in the ordinary course of
law. 35
Under Republic Act No. 6734, 36 executive power in the ARMM is vested in the
Regional Governor, who has control of all the regional executive commissions,
boards, bureaus and offices, and exercises general supervision over the local
government units within the Autonomous Region. 37 The assailed Memorandum of
ARMM Regional Governor Misuari was presumably issued in the exercise of his
power of control and supervision. However, by ordering the reinstatement of
petitioner to her former position based upon an outdated CSC Resolution, despite
the AWOL order and her being dropped from the rolls, ARMM Regional Governor
Misuari acted with grave abuse of discretion, amounting to excess of jurisdiction.
Neither is the petition for prohibition before the trial court violative of the doctrine of
primary jurisdiction. Said doctrine precludes a court from arrogating unto itself the
196
authority to resolve a controversy the jurisdiction over which is initially lodged with an
administrative body of special competence. 38 An exception to this rule is when the
issue raised is a purely legal question, well within the competence and the
jurisdiction of the court and not the administrative
agency. 39 In the instant case, the legal question of whether a memorandum of the
ARMM Governor, ordering the reinstatement of an employee declared AWOL and
dropped from the rolls, was issued in excess of jurisdiction is a legal question which
should be resolved by the courts. For the same reason that the issues to be resolved
in this case are purely legal in nature, respondent need not abide by the doctrine of
exhaustion of administrative remedies. 40 Besides, to allow the matter to remain with
the Office of the ARMM Governor for resolution would be self-defeating and useless
and cause unnecessary delay since it was the same office which gave the conflicting
issuances on petitioner’s reinstatement. Neither petitioner nor respondents entitled to
the position of Education Supervisor II
The finality of the disapproval of petitioner’s promotion, as well as that of the Order
declaring petitioner on AWOL and dropping her from the rolls, is no longer disputed.
Thus, as found by the CSC in its Resolution No. 020743, TESDA has no legal
obligation to reinstate petitioner to the position of Education Supervisor II. This,
however, should not be construed as a declaration that respondent is entitled to the
position of Education Supervisor II.
Section 13, Rule 6 of the Omnibus Rules Implementing Book V, E.O. 292, provides:
All appointments involved in a chain of promotions must be submitted simultaneously
for approval by the Commission. The disapproval of the appointment of a person
proposed to a higher position invalidates the promotion of those in lower positions
and automatically restores them to their former positions. However, the affected
persons are entitled to the payment of salaries for services actually rendered at a
rate fixed in their promotional appointments.
Section 19 of the same rule states:
SEC. 19. An appointment though contested shall take effect immediately upon its
issuance if the appointee assumes the duties of the position and the appointee is
entitled to receive the salary attached to the position. However, the appointment,
together with the decision of the department head shall be submitted to the
Commission for appropriate action within 30 days from the date of its issuance
otherwise the appointment becomes ineffective thereafter. Likewise, such an
appointment shall become ineffective in case the protest is finally resolved against
the protestee, in which case he shall be reverted to his former position.
It must be noted that while respondent’s appointment to the position of Education
Supervisor II was approved as permanent and completed, it was nonetheless made
subject to the outcome of the protest filed against petitioner’s appointment. 41 At the
back of the appointment, the following appears:
This appointment is subject to the outcome of the protest of Alibai Benito in the
appointment of Andabai Arimao former incumbent to the position. 42
As a chain reaction of the disapproval of petitioner’s promotional appointment as
Director II, respondent’s appointment to Education Supervisor II was likewise
invalidated. The efficacy of respondent’s appointment was dependent on the validity
of petitioner’s promotional appointment which in turn was subject to the outcome of
the protest against it.
Thus, as of 17 October 1998—or the date of finality of the denial of the petition
questioning the disapproval of petitioner’s appointment as Director II—both petitioner
and respondent were reverted to their former positions. Petitioner should have been
allowed to re-assume her position of Education Supervisor II as of the said date, and
thereafter remain in the said office until she was dropped from the rolls in 1999.
Respondent, in turn, should have been made to return to her former position.
Indeed, for all intents and purposes, respondent became the Education Supervisor II
by virtue of her appointment as such on 25 July 1995. However, her tenure ended
when petitioner was reverted to the same position on 17 October 1998. Thus, during
respondent’s occupancy of the position of Education Supervisor II after petitioner’s
promotional appointment had been disapproved, respondent should be deemed a de
facto officer only. 43 A de facto officer is "one who has the reputation of being the
officer he assumes and yet is not a good officer in point of law." He is one who is in
possession of the office and discharging its duties under color of authority, and by
197

color of authority is meant that derived from an election or appointment, however WHEREFORE, the petition is DENIED and the Decision and Order dated 16 October
irregular or informal, so that the incumbent is not a mere volunteer. 44 The difference 2001 and 31 January 2002, respectively, of the RTC, 12th Judicial Region, Branch
between the basis of the authority of a de jure officer and that of a de facto officer is 14 are AFFIRMED.
that one rests on right, the other on reputation. 45
Respondent is ordered to VACATE the position of Education Supervisor II, TESDA-
In Monroy v. Court of Appeals, et al., 46 this Court ruled that a rightful incumbent of a ARMM, and turn over to petitioner the emoluments she received for the position from
public office may recover from a de facto officer the salary received by the latter 17 October 1998 to 17 March 1999.
during the time of his wrongful tenure. A de facto officer, not having a good title,
takes the salaries at his risk and must, therefore, account to the de jure officer for Costs against petitioner.
whatever salary he received during the period of his wrongful tenure. 47 In the instant
case, respondent should account to petitioner for the salaries she received from the SO ORDERED.
time the disapproval of petitioner’s promotion became final, up to the time when
petitioner was declared on AWOL and dropped from the rolls. However, respondent G.R. No. 141386            November 29, 2001
may be allowed to keep the emoluments she received during said period, there being
no de jure officer at the time, 48 following our ruling in Civil Liberties Union v. THE COMMISSION ON AUDIT OF THE PROVINCE OF CEBU, Represented by
Executive Secretary, 49 to wit: Provincial Auditor ROY L. URSAL, petitioner,
vs.
[I]n cases where there is no de jure officer, a de facto officer who, in good faith, has PROVINCE OF CEBU, Represented by Governor PABLO P.
had possession of the office and has discharged the duties pertaining thereto, is GARCIA, respondent.
legally entitled to the emoluments of the office, and may in an appropriate action
recover the salary, fees and other compensations attached to the office. 50 YNARES-SANTIAGO, J.:
There is no question that respondent discharged the duties of Education Supervisor May the salaries and personnel-related benefits of public school teachers appointed
II from the time she was appointed to the position and even after her appointment by local chief executives in Connection with the establishment and maintenance of
was invalidated as a result of the invalidation of petitioner’s promotional appointment. extension classes; as well as the expenses for college scholarship grants, be
In view of the services respondent rendered to the TESDA and the people of the charged to the Special Education Fund (SEF) of the local government unit
ARMM, it would be iniquitous to deny her the salary appertaining to the position concerned?
corresponding to the period of her service.
The instant petition for review, which raises a pure question of law, seeks to annul
All the same, however, respondent cannot continue her unauthorized occupancy, and set aside the decision1 of the Regional Trial Court of Cebu, Branch 20, in a
notwithstanding the fact that the position of Education Supervisor II has been vacant petition for declaratory relief, docketed as Civil Case No. CEB-24422.
since 1999. Absent any showing that she has been reappointed to the position after
petitioner was declared AWOL and dropped from the rolls, respondent cannot lay a
The provincial governor of the province of Cebu, as chairman of the local school
valid claim thereto.
board, under Section 98 of the Local Government Code, appointed classroom
198
teachers who have no items in the DECS plantilla to handle extension classes that
would accommodate students in the public schools.
In the audit of accounts conducted by the Commission on Audit (COA) of the
Province of Cebu, for the period January to June 1998, it appeared that the salaries
and personnel-related benefits of the teachers appointed by the province for the
extension classes were charged against the provincial SEF. Likewise charged to the
SEF were the college scholarship grants of the province. Consequently, the COA
issued Notices of Suspension to the province of Cebu,2 saying that disbursements
for the salaries of teachers and scholarship grants are not chargeable to the
provincial SEF.
Faced with the Notices of Suspension issued by the COA, the province of Cebu,
represented by its governor, filed a petition for declaratory relief with the trial court.
On December 13, 1999, the court a quo rendered a decision declaring the
questioned expenses as authorized expenditures of the SEF. The dispositive portion
thereof reads:
WHEREFORE, in view of all the foregoing premises considered, judgment is
hereby rendered giving due course to this instant petition for declaratory relief
declaring and confirming that petitioner is vested with the authority to
disburse the proceeds from the Special Educational Fund [SEF] for the
payment of salaries, allowances or honoraria for teachers and non-teaching
personnel in the public schools in the Province of Cebu and its component
cities, and, municipalities, as well as the expenses for scholarship grants of
petitioners specially to poor but deserving students therein.
Declaring, further, respondents audit findings on pages 36 and 37 in the
Annual Audit Report on the Province of Cebu: for the year ending December
31, 1999 as null and void.3
Hence, the instant petition by the Commission on Audit.
The Special Education Fund was created by virtue of R.A. No. 5447, which is An act
creating a special education fund to be constituted from the proceeds of an additional
real property tax and a certain portion of the taxes on Virginia-type cigarettes and
duties on imported leaf tobacco, defining the activities to be financed, creating school
boards for the purpose, and appropriating funds therefrom, which took effect on
January 1, 1969. Pursuant thereto, P.D. No. 464, also known as the Real Property
Tax Code of the Philippines, imposed an annual tax of 1% on real property which
shall accrue to the SEF.4
Under R.A. No. 5447, the SEF may be expended exclusively for the following
activities of the DECS —
(a) the organization and operation of such number of extension classes as
may be needed to accommodate all children of school age desiring to enter
Grade I, including the creation of positions of classroom teachers, head
teachers and principals for such extension classes x x x;
(b) the programming of the construction and repair of elementary school
buildings, acquisition of sites, and the construction and repair of workshops
and similar buildings and accessories thereof to house laboratory, technical
and similar equipment and apparatus needed by public schools offering
practical arts, home economics and vocational courses, giving priority to
elementary schools on the basis of the actual needs and total requirements of
the country x x x;
(c) the payment and adjustment of salaries of public school teachers under
and by virtue of Republic Act Numbered Five Thousand One Hundred Sixty-
Eight and all the benefits in favor of public school teachers provided under
Republic Act Numbered Four Thousand Six Hundred Seventy;
(d) preparation, printing and/or purchase of textbooks, teacher's guides.
forms and pamphlets x x x;
(e) the purchase and/or improvement, repair and refurbishing of machinery,
laboratory, technical and similar equipment and apparatus, including spare
199
parts needed by the Bureau of Vocational Education and secondary schools
offering courses;
(f) the establishment of printing plant to be used exclusively for the printing
needs of the Department of Education and the improvement of regional
printing plants in the vocational schools;
(g) the purchase of teaching materials such as work books, atlases, flip
charts, science and mathematics teaching aids, and simple laboratory
devices for elementary and secondary classes;
(h) the implementation of the existing program for citizenship development in
barrio high schools, folk schools and adult education classes;
(i) the undertaking of education research, including that of the Board of
National Education;
(j) the granting of government scholarships to poor but deserving students
under Republic Act Numbered Four Thousand Ninety; and
(k) the promotion of physical education, such as athletic meets. (Emphasis
supplied)
With the effectivity of the Local Government Code of 1991, petitioner contends that
R.A. No. 5447 was repealed, leaving Sections 235, 272 and 100 (c) of the Code to
govern the disposition of the SEF, to wit:
SEC. 235. Additional Levy on Real Property for the Special Education
Fund (SEF). — A province or city or a municipality within the Metropolitan
Manila Area, may levy and collect an annual tax of one percent (1%) on the
assessed value of real property which shall be in addition to the basic real
property tax. The proceeds thereof shall exclusively accrue to the Special
Education Fund (SEF).
SEC. 272. Application of Proceeds of the Additional One Percent SEF Tax.
— The proceeds from the additional one percent (1%) tax on real properly
accruing to the SEF shall be automatically released to the local school
boards: Provided, That, in case of provinces, the proceeds shall be divided
equally between the provincial and municipal school boards: Provided,
however, That the proceeds shall be allocated for the operation and
maintenance of public schools, construction and repair of school buildings,
facilities and equipment, educational research, purchase of books and
periodicals, and sports development as determined and approved by the
local school board. (Emphasis supplied)
SEC. 100. Meeting and Quorum; Budget
xxx           xxx           xxx
(c) The annual school board budget shall give priority to the following:
(1) Construction, repair, and maintenance of school buildings and other
facilities of public elementary and secondary schools;
(2) Establishment and maintenance of extension classes where necessary;
and
(3) Sports activities at the division, district, municipal, and barangay levels.
(Emphasis supplied)
Invoking the legal maxim "expressio unius est exclusio alterius," petitioner alleges
that since salaries, personnel-related benefits and scholarship grants are not among
those authorized as lawful expenditures of the SEF under the Local Government
Code, they should be deemed excluded therefrom.
Moreover, petitioner claims that since what is allowed for local school boards to
determine under Section 995 of the Local Government Code is only the
"annual supplementary budgetary needs; for the operation and maintenance of
public schools," as well as the "supplementary local cost to meet such needs," the
200
budget of the local school boards for the establishment and maintenance of
extension classes should be construed to refer only to the upkeep and maintenance
of public school building, facilities and similar expenses other than personnel-related
benefits. This is because, petitioner argued, the maintenance and operation of public
schools pertain principally to the DECS.
The contentions are without merit. It is a basic precept in statutory construction that
the intent of the legislature is the controlling factor in the interpretation of a
statute.6 In this connection, the following portions of the deliberations of the Senate
on the second reading of the Local Government Code on July 30, 1990 are
significant:
Senator Guingona. Mr. President.
The President. Senator Guingona is recognized.
Senator Guingona. Just for clarification, Mr. President. In this transfer, will it
include everything eventually — lock, stock and barrel, including curriculum?
Senator Pimentel. Mr. President, our stand in the Committee is to respect the
decision of the National Government in terms of curriculum.
Senator Guingona. But, supposing the Local Education Board wishes to
adopt a certain curriculum for that particular region?
Senator Pimentel. Mr. President, pursuant to the wording of the proposed
transfer of this elementary school system to local government units, what are
specifically covered here are merely the construction, repair, and
maintenance of elementary school buildings and other structures connected
with public elementary school education, payment of salaries, emoluments,
allowances et cetera, procurement of books, other teaching materials and
equipment needed for the proper implementation of the program. There is
nothing here that will indicate that the local government will have any right to-
alter the curriculum. (Emphasis supplied)
Senator Guingona. Thank you, Mr. President.
Similarly instructive are the foregoing deliberations in the House of Representatives
on August 16, 1990:
INTERPELLATION OF MS. RAYMUNDO
(Continuation)
Continuing her interpellation, Ms. Raymundo then adverted to subsection 4 of
Section 101 [now Section 100, paragraph (c)] and asked if the budget is
limited only to the three priority areas mentioned. She also asked what is
meant by the phrase "maintenance of extension classes."
In response, Mr. De Pedro clarified that the provision is not limited to the
three activities, to which may be added other sets of priorities at the proper
time. As to extension classes, he pointed out that the school boards may
provide out of its own funds, for additional teachers or other requirements if
the national government cannot provide funding therefor. Upon Ms.
Raymundo's query, Mr. de Pedro further explained that support for teacher
tools could fall under the priorities cited and is covered by certain circulars.
Undoubtedly, the aforecited exchange of views clearly demonstrates that the
legislature intended the SEF to answer for the compensation of teachers handling
extension classes.
Furthermore, the pertinent portion of the repealing clause of the Local Government
Code, provides:
SEC. 534. Repealing Clause. — x x x
(c) The provisions of . . . Sections 3, a (3) and b (2) of Republic Act No. 5447,
regarding the Special Education Fund . . . are hereby repealed and rendered
of no force and effect.
201
Evidently, what was expressly repealed by the Local Government Code was only
Section 3, of R.A. No. 5447, which deals with the "Allocation of taxes on Virginia type
cigarettes and duties on imported leaf tobacco." The legislature is presumed to know
the existing laws, such that whenever it intends to repeal a particular or specific
provision of law, it does so expressly. The failure to add a specific repealing clause
particularly mentioning the statute to be repealed indicates that the intent was not to
repeal any existing law on the matter, unless an irreconcilable inconsistency and
repugnancy exists in the terms of the new and the old laws.7 Hence, the provisions
allocating funds for the salaries of teachers under Section 1, of R.A. No. 5447, which
are not inconsistent with Sections 272 and 100 (c) of the Local Government Code,
remain in force and effect.
Even under the doctrine of necessary implication, the allocation of the SEF for the
establishment and maintenance of extension classes logically implies the hiring of
teachers who should, as a matter of course be compensated for their services. Every
statute is understood, by implication, to contain all such provisions as may be
necessary to effectuate its object and purpose, or to make effective rights, powers,
privileges or jurisdiction which it grants, including all such collateral and subsidiary
consequences as may be fairly and logically inferred from its terms. Ex necessitate
legis.8 Verily, the services and the corresponding compensation of these teachers
are necessary and indispensable to the establishment and maintenance of extension
classes.
Indeed, the operation and maintenance of public schools is lodged principally with
the DECS. This is the reason why only salaries of public school teachers appointed
in connection with the establishment and maintenance of extension classes, inter
alia, pertain to the supplementary budget of the local school boards. Thus, it should
be made clear that not every kind of personnel-related benefits of public school
teachers may be charged to the SEF. The SEF may be expended only for the
salaries and personnel-related benefits of teachers appointed by the local school
boards in connection with the establishment and maintenance of extension classes.
Extension classes as referred to mean additional classes needed to accommodate
all children of school age desiring to enter in public schools to acquire basic
education.9
With respect, however, to college scholarship grants, a reading of the pertinent laws
of the Local Government Code reveals that said grants are not among the projects
for which the proceeds of the SEF may be appropriated. It should be noted that
Sections 100 (c) and 272 of the Local Government Code substantially reproduced
Section 1, of R.A. No. 5447. But, unlike payment of salaries of teachers which falls
within the ambit of "establishment and maintenance of extension classes" and
"operation and maintenance of public schools," the "granting of government
scholarship to poor but deserving students" was omitted in Sections 100 (c) and 272
of the Local Government Code. Casus omissus pro omisso habendus est. A person,
object, or thing omitted from an enumeration in a statute must be held to have been
omitted intentionally. It is not for this Court to supply such grant of scholarship where
the legislature has omitted it.10
In the same vein, however noble the intention of the province in extending said
scholarship to deserving students, we cannot apply the doctrine of necessary
implication inasmuch as the grant of scholarship is neither necessary nor
indispensable to the operation and maintenance of public schools. Instead, such
scholarship grants may be charged to the General Funds of the province.
Pursuant to Section 1, Rule 6311 of the 1997 Rules of Civil Procedure, a petition for
declaratory relief may be filed before there is a breach or violation. The Solicitor
General claims that the Notices of Suspension issued by the COA to the respondent
province amounted to a breach or violation, and therefore, the petition for declaratory
relief should have been denied by the trial court.
We are not convinced. As held in Shell Company of the Philippines, Ltd. v.
Municipality of Sipocot,12 my breach of the statute subject of the controversy will not
affect the case; the action for declaratory relief will prosper because the applicability
of the statute in question to future transactions still remains to be resolved. Absent a
definite ruling in the instant case for declaratory relief, doubts as to the disposition of
the SEF will persist. Hence, the trial court did not err in giving due course to the
petition for declaratory relief filed by the province of Cebu.
WHEREFORE, in view of all the foregoing, the Decision of the Regional Trial Court
of Cebu City, Branch 20, in Civil Case No. CEB-24422, is AFFIRMED with
MODIFICATION. The salaries and personnel-related benefits of the teachers
202

appointed by the provincial school board of Cebu in connection with the Sec. 99. Functions of Local School Boards. --- The provincial, city or
establishment and maintenance of extension classes, are declared chargeable municipal school board shall:
against the Special Education Fund of the province. However, the expenses incurred
by the provincial government for the college scholarship grants should not be xxx - xxx - xxx.
charged against the Special Education Fund, but against the General Funds of the
province of Cebu.
The Department of Education, Culture and Sports shall consult the local
school boards on the appointment of division superintendents, district
SO ORDERED.
supervisors, school principals, and other school officials.
G.R. No. 139821 - January 30, 2002 On March 31, 1998, the Civil Service Commission issued
Resolution No. 980699, dismissing petitioner's protest-
DR. ELEANOR A. OSEA, Petitioner, vs. DR. CORAZON E. 3
complaint.  The Civil Service Commission found that on September
MALAYA, Respondent. 13, 1996, President Ramos appointed respondent, who was then
Officer-in-Charge Schools Division Superintendent of Iriga City, as
YNARES-SANTIAGO, J.: Schools Division Superintendent without any specific division.
Thus, respondent performed the functions of Schools Division
This is a petition for review from the decision of the Court of Appeals Superintendent in Iriga City. Subsequently, on November 3, 1997,
dated August 6, 1999 in CA-G.R. SP No. 49204.1 Secretary Gloria designated respondent as Schools Division
Superintendent of Camarines Sur, and petitioner as Schools
On November 20, 1997, Sur, by petitioner filed Protest Case No. 91120- Division Superintendent of Iriga City.4
004 with the Civil Service Commission. 2 She averred that she was
appointed as Officer-in-Charge, Assistant Schools Division Superintendent In dismissing petitioner's protest, the Civil Service Commission
of Camarines then Secretary Ricardo T. Gloria of the Department of held that Section 99 of the Local Government Code of 1991
Education, Culture and Sports, upon the endorsement of the Provincial contemplates a situation where the Department of Education,
School Board of Camarines Sur; that despite the recommendation of Culture and Sports issues the appointments, whereas
Secretary Gloria, President Fidel V. Ramos appointed respondent to the respondent's appointment was made by no less than the
position of Schools Division Superintendent of Camarines Sur; that President, in the exercise of his appointing power. Moreover, the
respondent's appointment was made without prior consultation with the designation of respondent as Schools Division Superintendent of
Provincial School Board, in violation of Section 99 of the Local Camarines Sur and of petitioner as Schools Division
Government Code of 1991. Hence, petitioner prayed that respondent's Superintendent of Iriga City were in the nature of reassignments,
appointment be recalled and set aside for being null and void. in which case consultation with the local school board was
unnecessary.
The pertinent portion of Section 99 of Republic Act No. 7610, also known
as the Local Government Code of 1991, states:
203
Petitioner filed a Motion for Reconsideration with the Civil Service
Commission.5 On August 3, 1998, the Civil Service Commission
issued Resolution No. 982058, denying petitioner's Motion for
Reconsideration.6
Thus, petitioner filed a petition for review of both Civil Service
Commission Resolution Nos. 980699 and 982958 dated August 3,
1998, respectively, before the Court of Appeals, docketed as CA-
G.R. SP No. 49204.7 On August 6, 1999, the Court of Appeals
dismissed the petition.
Hence, the instant petition for review on certiorari of the August
6, 1999 Decision on the following errors:
I. THE HONORABLE COURT OF APPEALS ERRED IN DECIDING THAT
THE RESPONDENT WAS MERELY RE-ASSIGNED TO CAMARINES
SUR AND DID NOT REQUIRE THE MANDATORY PRIOR
CONSULTATION WITH THE LOCAL SCHOOL BOARD UNDER
SECTION 99 OF RA 7160.
II. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE
REVERSIBLE ERROR WHEN IT DECIDED THAT THERE WAS NO
OPPOSITION MADE WHEN THE PRESIDENT APPOINTED
RESPONDENT MALAYA AS DIVISION SCHOOLS SUPERINTENDENT
BACK IN 1996 AND AS STATED BY THE CIVIL SERVICE
COMMISSION THE LAW DID NOT CONTEMPLATE THAT THE
PRESIDENT SHOULD FIRST CONSULT THE LOCAL SCHOOL BOARD
BEFORE HE MAKES ANY APPOINTMENT AND THAT SECTION 99 OF
THE NEW LOCAL GOVERNMENT CODE APPLIES ONLY TO THE
Department of Education, Culture and Sports SECRETARY, WHO,
HOWEVER, CAN ONLY MAKE RECOMMENDATION TO THE
PRESIDENT.8
The petition lacks merit.
Clearly, the afore-quoted portion of Section 99 of the Local
Government Code of 1991 applies to appointments made by the
Department of Education, Culture and Sports. This is because at
the time of the enactment of the Local Government Code, schools
division superintendents were appointed by the Department of
Education, Culture and Sports to specific division or location. In
1994, the Career Executive Service Board issued Memorandum
Circular No. 21, Series of 1994, placing the positions of schools
division superintendent and assistant schools division
superintendent within the career executive service. Consequently,
the power to appoint persons to career executive service positions
was transferred from the Department of Education, Culture and
Sports to the President.9 The appointment may not be specific as
to location. The prerogative to designate the appointees to their
particular stations was vested in the Department of Education,
Culture and Sports Secretary, pursuant to the exigencies of the
service, as provided in Department of Education, Culture and
Sports Order No. 75, Series of 1996.
In the case at bar, the appointment issued by President Ramos in
favor of respondent to the Schools Division Superintendent
position on September 3, 1996 did not specify her station. 10 It was
Secretary Gloria who, in a Memorandum dated November 3, 1997,
assigned and designated respondent to the Division of Camarines
Sur, and petitioner to the Division of Iriga City.11
We agree with the Civil Service Commission and the Court of
Appeals that, under the circumstances, the designation of
respondent as Schools Division Superintendent of Camarines Sur
was not a case of appointment. Her designation partook of the
nature of a reassignment from Iriga City, where she previously
exercised her functions as Officer-in-Charge-Schools Division
Superintendent, to Camarines Sur. Clearly, therefore, the
requirement in Section 99 of the Local Government Code of 1991
204
of prior consultation with the local school board, does not apply. It
only refers to appointments made by the Department of
Education, Culture and Sports. Such is the plain meaning of the
said law.
The "plain meaning rule" or verba legis in statutory construction
is thus applicable in this case. Where the words of a statute are
clear, plain and free from ambiguity, it must be given its literal
meaning and applied without attempted interpretation.12
Appointment should be distinguished from reassignment. An
appointment may be defined as the selection, by the authority
vested with the power, of an individual who is to exercise the
functions of a given office. When completed, usually with its
confirmation, the appointment results in security of tenure for the
person chosen unless he is replaceable at pleasure because of the
nature of his office.13
On the other hand, a reassignment is merely a movement of an
employee from one organizational unit to another in the same
department or agency which does not involve a reduction in rank,
status or salary and does not require the issuance of an
appointment.14 In the same vein, a designation connotes merely
the imposition of additional duties on an incumbent official. 15
Petitioner asserts a vested right to the position of Schools Division
Superintendent of Camarines Sur, citing her endorsement by the
Provincial School Board. Her qualification to the office, however,
lacks one essential ingredient, i.e., her appointment thereto.
While she was recommended by Secretary Gloria to President
Ramos for appointment to the position of Schools Division
Superintendent of Camarines Sur, the recommendation was not
acted upon by the President. Petitioner's designation as Officer-in-
Charge, Assistant Schools Division Superintendent, was expressly
made subject to further advice from the Department of Education,
Culture and Sports.16 Thus, her designation was temporary. In
fact, there was a need to recommend her to the President for
appointment in a permanent capacity. Inasmuch as she occupied
her position only temporarily, petitioner can be transferred or
reassigned to other positions without violating her right to
security of tenure.17 Indeed, petitioner has no vested right to the
position of Schools Division Superintendent of Camarines Sur.
WHEREFORE, in view of the foregoing, the instant petition
is DENIED for lack of merit. The assailed decision of the Court of
Appeals in CA-G.R. SP No. 49204, as well as Resolutions 980699
and 982058 of the Civil Service Commission, are AFFIRMED.
SO ORDERED.
[G.R. No. L-19870. March 18, 1967.]
MUNICIPALITY OF SAN JOAQUIN, Petitioner-Appellant, v.
NICANOR SIVA, BASILIO SAPITANAN, ET AL., Respondents-
Appellees.
Ramon A. Gonzales for Petitioner-Appellant.
1. CONSTITUTIONAL LAW; CREATION OF MUNICIPALITIES; DELEGATION
OF POWER TO PRESIDENT UNCONSTITUTIONAL. — Executive Order No.
436, of the President of the Philippines, creating the municipality of
Lawigan out of twenty-one (21) barrios theretofore forming part of the
municipality of San Joaquin, is null and void ab initio, on the ground that
Section 68 of the Revised Administrative Code, on which said Executive
Order is based, constitutes an undue delegation of legislative powers, and
hence, unconstitutional.
2. PROHIBITION; WRIT WILL LIE AGAINST THOSE APPOINTED TO ACT AS
205
OFFICERS OF A TOWN CREATED UNDER AN UNCONSTITUTIONAL
STATUTE. — Where Executive Order No. 436 creating the municipality of
Lawigan is null and void ab initio, prohibition will lie against persons
appointed by the President as mayor, vice mayor and councilors of
Lawigan and are therefore restrained from performing their functions as
such.
DECISION
CONCEPCION, C.J.:
Petitioner, Municipality of San Joaquin, seeks the reversal of a decision of
the Court of First Instance of Iloilo dismissing the former’s petition for
prohibition, contesting the legality of Executive Order No. 436 of the
President of the Philippines, dated July 10, 1961, creating the municipality
of Lawigan out of twenty-one (21) barrios theretofore forming part of said
municipality of San Joaquin. Respondents-appellees are the persons
appointed by the President as mayor, vice-mayor and councilors of
Lawigan, who are sought to be restrained from performing their functions
as such, upon the ground that Section 68 of the Revised Administrative
Code, on which said Executive Order is based, constitutes an undue
delegation of legislative powers, and, hence, unconstitutional. The lower
court, however, held otherwise. Hence, this appeal.
The issue herein has been squarely taken up and settled in Pelaez v.
Auditor General, G. R. No. L-23825, promulgated on December 24, 1965,
which upheld the theory of appellant herein, and rejected the view taken
in the appealed decision.
Wherefore, said decision is hereby reversed, and another one shall be
entered declaring the aforementioned Executive Order No. 436 null and
void ab initio, and directing herein respondents-appellees to refrain from
acting as officers of the Municipality of Lawigan, with costs against them.
It is so ordered.
G.R. No. L-59180 January 29, 1987
CLEMENTINO TORRALBA and RESOLUTION L. RUGAY, petitioners,
vs.
THE MUNICIPALITY OF SIBAGAT, PROVINCE OF AGUSAN DEL SUR and ITS
MUNICIPAL OFFICERS, respondents.
MELENCIO-HERRERA, J.:
Challenged in the instant Petition, as violative of Section 3, Article XI of the 1973
Constitution, is Batas Pambansa Blg. 56, enacted on 1 February 1980, creating the
Municipality of Sibagat, Province of Agusan del Sur. The pertinent provisions of BP
56 read:;’
Sec. 1. The barangays of Ilihan, Sinai, Sibagat, El Rio, Afga, Tabontabon, Perez,
Magsaysay, Santa Cruz, Santa Maria, San Isidro, Villangit, Del Rosario, Anahauan
Mahayahay, and San Vicente, all in the Municipality of Bayugan, Province of Agusan
del Sur, are hereby separated from said municipality to form and constitute an
independent Municipality of Sibagat without affecting in any manner the legal
existence of the mother Municipality of Bayugan.
Sec. 2. The boundaries of the new Municipality of Sibagat will be: Beginning at the
point of intersection of the Cabadbaran-Old Bayugan and Surigao del Sur
boundaries; thence in a southernly direction following the Old Bayugan and
Cabadbaran, Old Bayugan and Butuan City, Old Bayugan and Las Nieves
206
boundaries, until it reaches the point of intersection of Old Bayugan, Esperanza and
the Municipality of Las Nieves; ...
Sec. 3. The seat of government of the newly created municipality shall be in
Barangay Sibagat.
Sec. 4. Except as herein provided, all provisions of laws, now or hereafter applicable
to regular municipalities shall be applicable to the new Municipality of Sibagat.
Sec. 5. After ratification by the majority of the votes cast in a plebiscite to be
conducted in the area or areas affected within a period of ninety (90) days after the
approval of this Act, the President (Prime Minister) shall appoint the Mayor and other
Officials of the new Municipality of Sibagat.
Petitioners are residents and taxpayers of Butuan City, with petitioner, Clementino
Torralba, being a member of the Sangguniang Panglunsod of the same City.
Respondent municipal officers are the local public officials of the new Municipality.
Section 3, Article XI of the 1973 Constitution, said to have been infringed, is
reproduced hereunder:
Sec. 3. No province, city, municipality, or barrio 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 unit or units affected.
The thrust of petitioners' argument is that under the aforequoted provision, the Local
Government Code must first be enacted to determine the criteria for the creation,
division, merger, abolition, or substantial alteration of the boundary of any province,
city, municipality, or barrio; and that since no Local Government Code had as yet
been enacted as of the date BP 56 was passed, that statute could not have possibly
complied with any criteria when respondent Municipality was created, hence, it is null
and void.
It is a fact that the Local Government Code came into being only on 10 February
1983 so that when BP 56 was enacted, the code was not yet in existence. The
evidence likewise discloses that a plebiscite had been conducted among the people
of the unit/units affected by the creation of the new Municipality, who expressed
approval thereof; and that officials of the newly created Municipality had been
appointed and had assumed their respective positions as such.
We find no trace of invalidity of BP 56. The absence of the Local Government Code
at the time of its enactment did not curtail nor was it intended to cripple legislative
competence to create municipal corporations. Section 3, Article XI of the 1973
Constitution does not proscribe nor prohibit the modification of territorial and political
subdivisions before the enactment of the Local Government Code. It contains no
requirement that the Local Government Code is a condition sine qua non for the
creation of a municipality, in much the same way that the creation of a new
municipality does not preclude the enactment of a Local Government Code. What
the Constitutional provision means is that once said Code is enacted, the creation,
modification or dissolution of local government units should conform with the criteria
thus laid down. In the interregnum before the enactment of such Code, the legislative
power remains plenary except that the creation of the new local government unit
should be approved by the people concerned in a plebiscite called for the purpose.
The creation of the new Municipality of Sibagat conformed to said requisite. A
plebiscite was conducted and the people of the unit/units affected endorsed and
approved the creation of the new local government unit (parag. 5, Petition; p. 7,
Memorandum).lwphl@itç In fact, the conduct of said plebiscite is not questioned
herein. The officials of the new Municipality have effectively taken their oaths of
office and are performing their functions. A dejure entity has thus been created.
It is a long-recognized principle that the power to create a municipal corporation is
essentially legislative in nature. In the absence of any constitutional limitations a
legislative body may Create any corporation it deems essential for the more efficient
administration of government (I McQuillin, Municipal Corporations, 3rd ed., 509). The
creation of the new Municipality of Sibagat was a valid exercise of legislative power
then vested by the 1973 Constitution in the Interim Batasang Pambansa.
207

We are not unmindful of the case of Tan vs. COMELEC (142 SCRA 727 [1986]),
striking down as unconstitutional BP Blg. 885 creating a new province in the Island of
Negros known as the Province of Negros del Norte, and declaring the plebiscite held
in connection therewith as illegal There are significant differences, however, in the
two cases among which may be mentioned the following. in the Tan case, the Local
Government Code already existed at the time that the challenged statute was
enacted on 3 December 1985; not so in the case at bar. Secondly, BP Blg. 885 in
the Tan case confined the plebiscite to the "proposed new province" to the exclusion
of the voters in the remaining areas, in contravention of the Constitutional mandate
and of the Local Government Code that the plebiscite should be held "in the unit or
units affected." In contrast, BP 56 specifically provides for a plebiscite "in the area or
areas affected." In fact, as previously stated, no question is raised herein as to the
legality of the plebiscite conducted. Thirdly, in the Tan case, even the requisite area
for the creation of a new province was not complied with in BP Blg. 885. No such
issue in the creation of the new municipality has been raised here. And lastly,
"indecent haste" attended the enactment of BP Blg. 885 and the holding of the
plebiscite thereafter in the Tan case; on the other hand, BP 56 creating the
Municipality of Sibagat, was enacted in the normal course of legislation, and the
plebiscite was held within the period specified in that law.
WHEREFORE, the Petition is hereby dismissed. No costs.
SO ORDERED.
G.R. No. L-41322 September 29, 1988
MUNICIPALITY OF KAPALONG, thru its Mayor, PORFIRIO F. ROYO Vice Mayor,
TOMAS D. MANZANO, Municipal Councilors VALERIANO CLARO, CARIDAD A.
DORONIO FELICULO ESTRADA, GEORGE PEDRO JAIN, LIDO E. MONOY
SALVADOR PASPE and AGUEDO ROTOL petitioners,
vs.
HON. FELIX L. MOYA, Presiding Judge of Court of First Instance of Davao,
Branch IX, and the MUNICIPALITY OF STO. TOMAS, thru its Mayor, ANICETO
SOLIS, Vice-Mayor LEOPOLDO RECTO, Municipal Councilors DOMINGO
CAGADAS, WENCESLAO CASTRO, WILDA ESPIRITU, PASTOR FERNANDEZ,
MACROSQUE PIMENTEL, DOMINADOR SOLIS, JOSE TAGHOY and ALFONSO
VALDEZ, and Municipal Treasurer JOSE AVENIDO, respondents.
Martin V. Delgra, Jr. for petitioners.
Simeon N. Millan Jr. for respondent Santo Tomas.
PARAS, J.:
This is a petition for certiorari and prohibition with preliminary injunction seeking: (a)
the reversal (annulment) of the February 17, 1975 Order of the then Court of First
Instance of Davao denying the motion to dismiss Civil Case No. 475; and the March
17, 1975 and July 10, 1975 Orders of the same Court denying petitioner's motions
for reconsideration; and (b) the issuance of a writ of prohibition directing respondent
Judge to desist from taking cognizance of Civil Case No. 475.
From portions of the Municipality of Kapalong, President Carlos P. Garcia created
respondent Municipality of Santo Tomas, and the latter now asserts jurisdiction over
eight (8) barrios of petitioner. For many years and on several occasions, this conflict
of boundaries between the two municipalities was brought, at the instance of private
respondent, to the Provincial Board of Davao for it to consider and decide. However,
it appears that no action was taken on the same. Private respondent then filed a
complaint with the then Court of First Instance of Davao, presided over by herein
public respondent Judge Felix L. Moya against the Municipality of Kapalong, for
settlement of the municipal boundary dispute, recovery of collected taxes and
damages, docketed therein as Civil Case No. 475.
On March 7, 1974, petitioner filed its Answer (Rollo, pp. 1417).
On November 22, 1974, petitioner filed a Motion to Dismiss on the ground of lack of
jurisdiction of the lower court and lack of legal personality of the Municipality of Santo
Tomas (Ibid., pp. 18-22), which was opposed by private respondent (Ibid., pp. 23-
26). On December 12, 1974, petitioner filed its reply to the opposition (Ibid., pp. 27-
208
30), after which respondent Judge, in an Order dated February 17, 1975, denied the
motion to dismiss (Ibid., pp. 34-36).
On March 3, 1975, petitioner filed a Motion for Reconsideration (Ibid., pp. 37-40), but
in an Order dated March 17, 1975, the same was denied by respondent Judge and
so was the Second Motion for Reconsideration (Ibid., pp. 42-43), in an Order dated
July 10, 1975 (Ibid., p. 44). Hence, the instant petition (Ibid., pp. 1-10).
The Second Division of this Court, in a Resolution dated September 10, 1975,
resolved to require the respondents to answer and to issue a temporary restraining
order (Ibid., p. 49). In compliance therewith, private respondent filed its Answer on
October 28, 1975 (Ibid., pp. 53-57). In the Resolution dated November 3, 1975, the
parties were required to file their respective memoranda (Ibid., p. 65). Petitioner filed
its Memorandum on December 10, 1975 (Ibid., pp. 68-76), and private respondent
on January 5, 1975 (Ibid., pp. 77-85). Petitioner raised four (4) issues, to wit:
1. WHETHER OR NOT PRIVATE RESPONDENT HAS LEGAL PERSONALITY TO
SUE;
2. WHETHER OR NOT THE MATTER OF SETTLEMENT OF BOUNDARY
DISPUTE IS A POLITICAL QUESTION;
3. WHETHER OR NOT PRESIDENTIAL DECREE NO. 242 SUPERSEDED
REPUBLIC ACT NO. 6128; AND
4. WHETHER OR NOT THE ACTION HAS ALREADY PRESCRIBED.
The instant petition is impressed with merit.
The pivotal issue in this case is whether or not the Municipality of Santo Tomas
legally exists.
Petitioner contends that the ruling of this Court in Pelaez v. Auditor General.
(15 SCRA 569) is clear that the President has no power to create municipalities.
Thus, there is no Municipality of Santo Tomas to speak of It has no right to assert, no
cause of action, no corporate existence at all, and it must perforce remain part and
parcel of Kapalong. Based on this premise, it submits that respondent Judge should
have dismissed the case.
On the ground of jurisdiction, petitioner argues that the settlement of boundary
disputes is administrative in nature and should originate in the political or
administrative agencies of the government, and not in the courts whose power is
limited to judicial review on appropriate occasions (Ibid., pp. 73-74).
Rule 3, Section 1 of the Rules of Court expressly provides that only "entities
authorized by law may be patties in a civil action." Now then, as ruled in the Pelaez
case supra, the President has no power to create a municipality. Since private
respondent has no legal personality, it can not be a party to any civil action, and as
such, respondent Judge should have dismissed the case, since further proceedings
would be pointless.
PREMISES CONSIDERED, the petition is GRANTED; the Orders of
February 17, 1975, March 17, 1975 and July 10, 1975 of respondent Judge are SET
ASIDE; and Civil Case No. 475 is DISMISSED. The restraining order previously
issued by this Court is made permanent.
G.R. No. 103702 December 6, 1994
MUNICIPALITY OF SAN NARCISO, QUEZON; MAYOR JUAN K. UY;
COUNCILORS: DEOGRACIAS R. ARGOSINO III, BENITO T. CAPIO, EMMANUEL
R. CORTEZ, NORMANDO MONTILLA, LEONARDO C. UY, FIDEL C.
AURELLANA, PEDRO C. CARABIT, LEONARDO D. AURELLANA, FABIAN M.
MEDENILLA, TRINIDAD F. CORTEZ, SALVADOR M. MEDENILLA, CERELITO B.
AUREADA and FRANCISCA A. BAMBA, petitioners,
vs.
HON. ANTONIO V. MENDEZ, SR., Presiding Judge, Regional Trial Court,
Branch 62, 4th Judicial Region, Gumaca, Quezon; MUNICIPALITY OF SAN
ANDRES, QUEZON; MAYOR FRANCISCO DE LEON; COUNCILORS: FE
LUPINAC, TOMAS AVERIA, MANUEL O. OSAS, WILFREDO O. FONTANIL,
ENRICO U. NADRES, RODELITO LUZOIR, LENAC, JOSE L. CARABOT,
DOMING AUSA, VIDAL BANQUELES and CORAZON M. MAXIMO, respondents.
209
Manuel Laserna, Jr. for petitioners.
Florante Pamfilo for private respondents.
VITUG, J.:
On 20 August 1959, President Carlos P. Garcia, issued, pursuant to the then
Sections 68 and 2630 of the Revised Administrative Code, as amended, Executive
Order No. 353 creating the municipal district of San Andres, Quezon, by segregating
from the municipality of San Narciso of the same province, the barrios of San
Andres, Mangero, Alibijaban, Pansoy, Camflora and Tala along with their
respective sitios.
Executive Order No. 353 was issued upon the request, addressed to the President
and coursed through the Provincial Board of Quezon, of the municipal council of San
Narciso, Quezon, in its Resolution No. 8 of 24 May 1959.1
By virtue of Executive Order No. 174, dated 05 October 1965, issued by President
Diosdado Macapagal, the municipal district of San Andres was later officially
recognized to have gained the status of a fifth class municipality beginning 01 July
1963 by operation of Section 2 of Republic Act No. 1515.2 The executive order
added that "(t)he conversion of this municipal district into (a) municipality as
proposed in House Bill No. 4864 was approved by the House of Representatives."
On 05 June 1989, the Municipality of San Narciso filed a petition for quo
warranto with the Regional Trial Court, Branch 62, in Gumaca, Quezon, against the
officials of the Municipality of San Andres. Docketed Special Civil Action No. 2014-G,
the petition sought the declaration of nullity of Executive Order No. 353 and prayed
that the respondent local officials of the Municipality of San Andres be permanently
ordered to refrain from performing the duties and functions of their respective
offices.3 Invoking the ruling of this Court in Pelaez v. Auditor General,4 the petitioning
municipality contended that Executive Order No. 353, a presidential act, was a clear
usurpation of the inherent powers of the legislature and in violation of the
constitutional principle of separation of powers. Hence, petitioner municipality
argued, the officials of the Municipality or Municipal District of San Andres had no
right to exercise the duties and functions of their respective offices that righfully
belonged to the corresponding officials of the Municipality of San Narciso.
In their answer, respondents asked for the dismissal of the petition, averring, by way
of affirmative and special defenses, that since it was at the instance of petitioner
municipality that the Municipality of San Andres was given life with the issuance of
Executive Order No. 353, it (petitioner municipality) should be deemed estopped
from questioning the creation of the new municipality;5 that because the Municipality
of San Andred had been in existence since 1959, its corporate personality could no
longer be assailed; and that, considering the petition to be one for quo warranto,
petitioner municipality was not the proper party to bring the action, that prerogative
being reserved to the State acting through the Solicitor General.6
On 18 July 1991, after the parties had submitted their respective pre-trial briefs, the
trial court resolved to defer action on the motion to dismiss and to deny a judgment
on the pleadings.
On 27 November 1991, the Municipality of San Andres filed anew a motion to
dismiss alleging that the case had become moot and academic with the enactment of
Republic Act No. 7160, otherwise known as the Local Government Code of 1991,
which took effect on 01 January 1991. The movant municipality cited Section 442(d)
of the law, reading thusly:
Sec. 442. Requisites for Creation. — . . .
(d) Municipalities existing as of the date of the effectivity of this Code
shall continue to exist and operate as such. Existing municipal
districts organized pursuant to presidential issuances or executive
orders and which have their respective set of elective municipal
officials holding office at the time of the effectivity of this Code shall
henceforth be considered as regular municipalities.
The motion was opposed by petitioner municipality, contending that the
above provision of law was inapplicable to the Municipality of San Andres
210
since the enactment referred to legally existing municipalities and not to those
whose mode of creation had been void ab initio.7
In its Order of 02 December 1991, the lower court8 finally dismissed the petition9 for
lack of cause of action on what it felt was a matter that belonged to the State, adding
that "whatever defects (were) present in the creation of municipal districts by the
President pursuant to presidential issuances and executive orders, (were) cured by
the enactment of R.A. 7160, otherwise known as Local Government Code of 1991."
In an order, dated 17 January 1992, the same court denied petitioner municipality's
motion for reconsideration.
10
Hence, this petition "for review on certiorari." Petitioners   argue that in issuing the
orders of 02 December 1991 and 17 January 1992, the lower court has "acted with
grave abuse of discretion amounting to lack of or in excess of jurisdiction."
Petitioners assert that the existence of a municipality created by a null and void
presidential order may be attacked either directly or even collaterally by anyone
whose interests or rights are affected, and that an unconstitutional act is not a law,
creates no office and is inoperative such as though its has never been passed. 11
Petitioners consider the instant petition to be one for "review on certiorari" under
Rules 42 and 45 of the Rules of Court; at the same time, however, they question the
orders of the lower court for having been issued with "grave abuse of discretion
amounting to lack of or in excess of jurisdiction, and that there is no other plain,
speedy and adequate remedy in the ordinary course of law available to petitioners to
correct said Orders, to protect their rights and to secure a final and definitive
interpretation of the legal issues involved." 12 Evidently, then, the petitioners intend to
submit their case in this instance under Rule 65. We shall disregard the procedural
incongruence.
The special civil action of quo warranto is a "prerogative writ by which the
Government can call upon any person to show by what warrant he holds a public
office or exercises a public franchise." 13 When the inquiry is focused on the legal
existence of a body politic, the action is reserved to the State in a proceeding for quo
warranto or any other credit proceeding. 14 It must be brought "in the name of the
Republic of the Philippines" 15 and commenced by the Solicitor General or the fiscal
"when directed by the President of the Philippines . . . ." 16 Such officers may, under
certain circumstances, bring such an action "at the request and upon the relation of
another person" with the permission of the court. 17 The Rules of Court also allows an
individual to commence an action for quo warranto in his own name but this initiative
can be done when he claims to be "entitled to a public office or position usurped or
unlawfully held or exercised by another." 18 While the quo warranto proceedings filed
below by petitioner municipality has so named only the officials of the Municipality of
San Andres as respondents, it is virtually, however, a denunciation of the authority of
the Municipality or Municipal District of San Andres to exist and to act in that
capacity.
At any rate, in the interest of resolving any further doubt on the legal status of the
Municipality of San Andres, the Court shall delve into the merits of the petition.
While petitioners would grant that the enactment of Republic Act
No. 7160 may have converted the Municipality of San Andres into a de
facto municipality, they, however, contend that since the petition for quo
warranto had been filed prior to the passage of said law, petitioner municipality had
acquired a vested right to seek the nullification of Executive Order No. 353, and any
attempt to apply Section 442 of Republic Act 7160 to the petition would perforce be
violative of due process and the equal protection clause of the Constitution.
Petitioners' theory might perhaps be a point to consider had the case been
seasonably brought. Executive Order No. 353 creating the municipal district of San
Andres was issued on 20 August 1959 but it was only after almost thirty (30) years,
or on 05 June 1989, that the municipality of San Narciso finally decided to challenge
the legality of the executive order. In the meantime, the Municipal District, and later
the Municipality, of San Andres, began and continued to exercise the powers and
authority of a duly created local government unit. In the same manner that the failure
of a public officer to question his ouster or the right of another to hold a position
within a one-year period can abrogate an action belatedly filed, 19 so also, if not
indeed with greatest imperativeness, must a quo warranto proceeding assailing the
lawful authority of a political subdivision be timely raised. 20 Public interest
demands it.
Granting the Executive Order No. 353 was a complete nullity for being the result of
an unconstitutional delegation of legislative power, the peculiar circumstances
211

obtaining in this case hardly could offer a choice other than to consider the laws have been complied with," are validly accepted in this jurisdiction, subject to the
Municipality of San Andres to have at least attained a status uniquely of its own usual qualification against impairment of vested rights. 22
closely approximating, if not in fact attaining, that of a de facto municipal corporation.
Conventional wisdom cannot allow it to be otherwise. Created in 1959 by virtue of All considered, the de jure status of the Municipality of San Andres in the province of
Executive Order No. 353, the Municipality of San Andres had been in existence for Quezon must now be conceded.
more than six years when, on 24 December 1965, Pelaez v. Auditor General was
promulgated. The ruling could have sounded the call for a similar declaration of the WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Costs against
unconstitutionality of Executive Order No. 353 but it was not to be the case. On the petitioners.
contrary, certain governmental acts all pointed to the State's recognition of the
continued existence of the Municipality of San Andres. Thus, after more than five SO ORDERED
years as a municipal district, Executive Order No. 174 classified the Municipality of
San Andres as a fifth class municipality after having surpassed the income
[G.R. No. 125646. September 10, 1999.]
requirement laid out in Republic Act No. 1515. Section 31 of Batas Pambansa Blg.
129, otherwise known as the Judiciary Reorganization Act of 1980, constituted as
municipal circuits, in the establishment of Municipal Circuit Trial Courts in the CITY OF PASIG, Petitioner, v. THE HONORABLE COMMISSION ON
country, certain municipalities that comprised the municipal circuits organized under ELECTION and THE MUNICIPALITY OF CAINTA, PROVINCE OF
Administrative Order No. 33, dated 13 June 1978, issued by this Court pursuant to RIZAL, Respondents.
Presidential Decree No. 537. Under this administrative order, the Municipality of San
Andres had been covered by the 10th Municipal Circuit Court of San Francisco-San [G.R. No. 128663. September 10, 1999.]
Andres for the province of Quezon.
MUNICIPALITY OF CAINTA, PROVINCE OF RIZAL, Petitioner, v.
At the present time, all doubts on the de jure standing of the municipality must be COMMISSION ON ELECTIONS CITY OF PASIG, Respondent.
dispelled. Under the Ordinance (adopted on 15 October 1986) apportioning the seats
of the House of Representatives, appended to the 1987 Constitution, the Municipality
of San Andres has been considered to be one of the twelve (12) municipalities
composing the Third District of the province of Quezon. Equally significant is Section DECISION
442(d) of the Local Government Code to the effect that municipal districts "organized
pursuant to presidential issuances or executive orders and which have their
respective sets of elective municipal officials holding office at the time of the YNARES-SANTIAGO, J.:
effectivity of (the) Code shall henceforth be considered as regular municipalities." No
pretension of unconstitutionality per se of Section 442(d) of the Local Government
Code is proferred. It is doubtful whether such a pretext, even if made, would Before us are two (2) petitions which both question the propriety of the
succeed. The power to create political subdivisions is a function of the legislature. suspension of plebiscite proceedings pending the resolution of the issue of
Congress did just that when it has incorporated Section 442(d) in the boundary disputes between the Municipality of Cainta and the City of
Code. Curative laws, which in essence are retrospective, 21 and aimed at giving Pasig.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph
"validity to acts done that would have been invalid under existing laws, as if existing
212
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:chanrob1es virtual 1aw library
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.chanrobles law library
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.chanrobles
lawlibrary : rednad
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.
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, 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.chanroblesvirtuallawlibrary
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
213
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 people’s 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.chanrobles.com.ph : virtual law library
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." chanrobles virtual
lawlibrary
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.
214
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.chanrobles.com.ph : virtual law library
No pronouncement as to costs.
SO ORDERED.
G.R. No. 118577 March 7, 1995
JUANITO MARIANO, JR. et al., petitioners,
vs.
THE COMMISSION ON ELECTIONS, THE MUNICIPALITY OF MAKATI, HON.
JEJOMAR BINAY, THE MUNICIPAL TREASURER, AND SANGGUNIANG BAYAN
OF MAKATI, respondents.
G.R. No. 118627 March 7, 1995
JOHN R. OSMEÑA, petitioner,
vs.
THE COMMISSION ON ELECTIONS, THE MUNICIPALITY OF MAKATI, HON.
JEJOMAR BINAY, MUNICIPAL TREASURER, AND SANGGUNIANG BAYAN OF
MAKATI, respondents.
PUNO, J.:
At bench are two (2) petitions assailing certain provisions of Republic Act No. 7854
as unconstitutional. R.A. No. 7854 as unconstitutional. R.A. No. 7854 is entitled, "An
Act Converting the Municipality of Makati Into a Highly Urbanized City to be known
as the City of Makati."1
G.R. No. 118577 involves a petition for prohibition and declaratory relief. It was filed
by petitioners Juanito Mariano, Jr., Ligaya S. Bautista, Teresita Tibay, Camilo
Santos, Frankie Cruz, Ricardo Pascual, Teresita Abang, Valentina Pitalvero, Rufino
Caldoza, Florante Alba, and Perfecto Alba. Of the petitioners, only Mariano, Jr., is a
resident of Makati. The others are residents of Ibayo Ususan, Taguig, Metro Manila.
Suing as taxpayers, they assail as unconstitutional sections 2, 51, and 52 of R.A. No.
7854 on the following grounds:
1. Section 2 of R.A. No. 7854 did not properly identify the land area or
territorial jurisdiction of Makati by metes and bounds, with technical
descriptions, in violation of Section 10, Article X of the Constitution, in
relation to Sections 7 and 450 of the Local Government Code;
2. Section 51 of R.A. No. 7854 attempts to alter or restart the "three
consecutive term" limit for local elective officials, in violation of Section
8, Article X and Section 7, Article VI of the Constitution.
3. Section 52 of R.A. No. 7854 is unconstitutional for:
(a) it increased the legislative district of Makati only by
special law (the Charter in violation of the constitutional
provision requiring a general reapportionment law to be
passed by Congress within three (3) years following
the return of every census;
215
(b) the increase in legislative district was not expressed
in the title of the bill; and
(c) the addition of another legislative district in Makati is
not in accord with Section 5 (3), Article VI of the
Constitution for as of the latest survey (1990 census),
the population of Makati stands at only 450,000.
G.R. No. 118627 was filed by the petitioner John H. Osmeña as senator, taxpayer,
and concerned citizen. Petitioner assails section 52 of R.A. No. 7854 as
unconstitutional on the same grounds as aforestated.
We find no merit in the petitions.
I Given the facts of the cases at bench, we cannot perceive how this evil can be
Section 2, Article I of R.A. No. 7854 delineated the land areas of the proposed city of
Makati, thus:
Sec. 2. The City of Makati. — The Municipality of Makati shall be
converted into a highly urbanized city to be known as the City of
Makati, hereinafter referred to as the City, which shall comprise the
present territory of the Municipality of Makati in Metropolitan Manila
Area over which it has jurisdiction bounded on the northeast by Pasig
River and beyond by the City of Mandaluyong and the Municipality of
Pasig; on the southeast by the municipalities of Pateros and Taguig;
on the southwest by the City of Pasay and the Municipality of Taguig;
and, on the northwest, by the City of Manila.
The foregoing provision shall be without prejudice to the resolution by
the appropriate agency or forum of existing boundary disputes or
cases involving questions of territorial jurisdiction between the City of
Makati and the adjoining local government units. (Emphasis supplied)
In G.R. No. 118577, petitioners claim that this delineation violates sections 7 and 450
of the Local Government Code which require that the area of a local government unit
should be made by metes and bounds with technical descriptions.2
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, 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 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.
brought about by the description made in section 2 of R.A. No. 7854, Petitioners
have not demonstrated that the delineation of the land area of the proposed City of
Makati will cause confusion as to its boundaries. We note that said delineation did
not change even by an inch the land area previously covered by Makati as a
municipality. Section 2 did not add, subtract, divide, or multiply the established land
area of Makati. In language that cannot be any clearer, section 2 stated that, the
city's land area "shall comprise the present territory of the municipality."
The deliberations of Congress will reveal that there is a legitimate reason why the
land area of the proposed City of Makati was not defined by metes and bounds, with
technical descriptions. At the time of the consideration of R.A. No. 7854, the
territorial dispute between the municipalities of Makati and Taguig over Fort
Bonifacio was under court litigation. Out of a becoming sense of respect to co-equal
department of government, legislators felt that the dispute should be left to the courts
to decide. They did not want to foreclose the dispute by making a legislative finding
of fact which could decide the issue. This would have ensued if they defined the land
area of the proposed city by its exact metes and bounds, with technical
descriptions.3 We take judicial notice of the fact that Congress has also refrained
from using the metes and bounds description of land areas of other local government
units with unsettled boundary disputes.4
216
We hold that the existence of a boundary dispute does not per se present an
insurmountable difficulty which will prevent Congress from defining with reasonable
certitude the territorial jurisdiction of a local government unit. In the cases at bench,
Congress maintained the existing boundaries of the proposed City of Makati but as
an act of fairness, made them subject to the ultimate resolution by the courts.
Considering these peculiar circumstances, we are not prepared to hold that section 2
of R.A. No. 7854 is unconstitutional. We sustain the submission of the Solicitor
General in this regard, viz.:
Going now to Sections 7 and 450 of the Local Government Code, it is
beyond cavil that the requirement stated therein, viz.: "the territorial
jurisdiction of newly created or converted cities should be described
by meted and bounds, with technical descriptions" — was made in
order to provide a means by which the area of said cities may be
reasonably ascertained. In other words, the requirement on metes
and bounds was meant merely as tool in the establishment of local
government units. It is not an end in itself. Ergo, so long as the
territorial jurisdiction of a city may be reasonably ascertained, i.e., by
referring to common boundaries with neighboring municipalities, as in
this case, then, it may be concluded that the legislative intent behind
the law has been sufficiently served.
Certainly, Congress did not intends that laws creating new cities must
contain therein detailed technical descriptions similar to those
appearing in Torrens titles, as petitioners seem to imply. To require
such description in the law as a condition sine qua non for its validity
would be to defeat the very purpose which the Local Government
Code to seeks to serve. The manifest intent of the Code is to
empower local government units and to give them their rightful due. It
seeks to make local governments more responsive to the needs of
their constituents while at the same time serving as a vital cog in
national development. To invalidate R.A. No. 7854 on the mere
ground that no cadastral type of description was used in the law would
serve the letter but defeat the spirit of the Code. It then becomes a
case of the master serving the slave, instead of the other way around.
This could not be the intendment of the law.
Too well settled is the rule that laws must be enforced when
ascertained, although it may not be consistent with the strict letter of
the statute. Courts will not follow the letter of the statute when to do so
would depart from the true intent of the legislature or would otherwise
yield conclusions inconsistent with the general purpose of the act.
(Torres v. Limjap, 56 Phil., 141; Tañada v. Cuenco, 103 Phil. 1051;
Hidalgo v. Hidalgo, 33 SCRA 1105). Legislation is an active
instrument of government, which, for purposes of interpretation,
means that laws have ends to achieve, and statutes should be so
construed as not to defeat but to carry out such ends and purposes
(Bocolbo v. Estanislao, 72 SCRA 520). The same rule must
indubitably apply to the case at bar.
II
Petitioners in G.R. No. 118577 also assail the constitutionality of section 51, Article X
of R.A. No. 7854. Section 51 states:
Sec. 51. Officials of the City of Makati. — The represent elective
officials of the Municipality of Makati shall continue as the officials of
the City of Makati and shall exercise their powers and functions until
such time that a new election is held and the duly elected officials
shall have already qualified and assume their offices: Provided, The
new city will acquire a new corporate existence. The appointive
officials and employees of the City shall likewise continues exercising
their functions and duties and they shall be automatically absorbed by
the city government of the City of Makati.
They contend that this section collides with section 8, Article X and section 7, Article
VI of the Constitution which provide:
Sec. 8. The term of office of elective local officials, except barangay
officials, which shall be determined by law, shall be three years
and no such official shall serve for more than three consecutive terms.
Voluntary renunciation of the office for any length of time shall not be
217
considered as an interruption in the continuity of his service for the full
term for which he was elected.
xxx xxx xxx
Sec. 7. The Members of the House of Representatives shall be
elected for a term of three years which shall begin, unless otherwise
provided by law, at noon on the thirtieth day of June next following
their election.
No Member of the House of Representatives shall serve for more than
three consecutive terms. Voluntary renunciation of the office for any
length of time shall not be considered as an interruption in the
continuity of his service for the full term for which he was elected.
Petitioners stress that under these provisions, elective local officials, including
Members of the House of Representative, have a term of three (3) years and are
prohibited from serving for more than three (3) consecutive terms. They argue that
by providing that the new city shall acquire a new corporate existence, section 51 of
R.A. No. 7854 restarts the term of the present municipal elective officials of Makati
and disregards the terms previously served by them. In particular, petitioners point
that section 51 favors the incumbent Makati Mayor, respondent Jejomar Binay, who
has already served for two (2) consecutive terms. They further argue that should
Mayor Binay decide to run and eventually win as city mayor in the coming elections,
he can still run for the same position in 1998 and seek another three-year
consecutive term since his previous three-year consecutive term as municipal
mayor would not be counted. Thus, petitioners conclude that said section 51 has
been conveniently crafted to suit the political ambitions of respondent Mayor Binay.
We cannot entertain this challenge to the constitutionality of section 51. The
requirements before a litigant can challenge the constitutionality of a law are well
delineated. They are: 1) there must be an actual case or controversy; (2) the
question of constitutionality must be raised by the proper party; (3) the constitutional
question must be raised at the earliest possible opportunity; and (4) the decision on
the constitutional question must be necessary to the determination of the case itself.5
Petitioners have far from complied with these requirements. The petition is premised
on the occurrence of many contingent events, i.e., that Mayor Binay will run again in
this coming mayoralty elections; that he would be re-elected in said elections; and
that he would seek re-election for the same position in the 1998 elections.
Considering that these contingencies may or may not happen, petitioners merely
pose a hypothetical issue which has yet to ripen to an actual case or controversy.
Petitioners who are residents of Taguig (except Mariano) are not also the proper
parties to raise this abstract issue. Worse, they hoist this futuristic issue in a petition
for declaratory relief over which this Court has no jurisdiction.
III
Finally, petitioners in the two (2) cases at bench assail the constitutionality of section
52, Article X of R.A. No. 7854. Section 52 of the Charter provides:
Sec. 52. Legislative Districts. — Upon its conversion into a highly-
urbanized city, Makati shall thereafter have at least two (2) legislative
districts that shall initially correspond to the two (2) existing districts
created under Section 3(a) of Republic Act. No. 7166 as implemented
by the Commission on Elections to commence at the next national
elections to be held after the effectivity of this Act. Henceforth,
barangays Magallanes, Dasmariñas and Forbes shall be with the first
district, in lieu of Barangay Guadalupe-Viejo which shall form part of
the second district. (emphasis supplied)
They contend. that the addition of another legislative district in Makati is
unconstitutional for: (1) reapportionment6 cannot made by a special law, (2) the
addition of a legislative district is not expressed in the title of the bill7 and (3) Makati's
population, as per the 1990 census, stands at only four hundred fifty thousand
(450,000).
These issues have been laid to rest in the recent case of Tobias v. Abalos.8 In said
case, we ruled that reapportionment of legislative districts may be made through a
special law, such as in the charter of a new city. The Constitution9 clearly provides
that Congress shall be composed of not more than two hundred fifty (250)
members, unless otherwise fixed by law. As thus worded, the Constitution did not
218
preclude Congress from increasing its membership by passing a law, other than a
general reapportionment of the law. This is its exactly what was done by Congress in
enacting R.A. No. 7854 and providing for an increase in Makati's legislative district.
Moreover, to hold that reapportionment can only be made through a general
apportionment law, with a review of all the legislative districts allotted to each local
government unit nationwide, would create an inequitable situation where a new city
or province created by Congress will be denied legislative representation for an
indeterminate period of time. 10 The intolerable situations will deprive the people of a
new city or province a particle of their sovereignty. 11 Sovereignty cannot admit of
any kind of subtraction. It is indivisible. It must be forever whole or it is not
sovereignty.
Petitioners cannot insist that the addition of another legislative district in Makati is not
in accord with section 5(3), Article VI 12 of the Constitution for as of the latest survey
(1990 census), the population of Makati stands at only four hundred fifty thousand
(450,000). 13 Said section provides, inter alia, that a city with a population of at least
two hundred fifty thousand (250,000) shall have at least one representative. Even
granting that the population of Makati as of the 1990 census stood at four hundred
fifty thousand (450,000), its legislative district may still be increased since it has met
the minimum population requirement of two hundred fifty thousand (250,000). In fact,
section 3 of the Ordinance appended to the Constitution provides that a city whose
population has increased to more than two hundred fifty thousand (250,000) shall be
entitled to at least one congressional representative. 14
Finally, we do not find merit in petitioners' contention that the creation of an
additional legislative district in Makati should have been expressly stated in the title
of the bill. In the same case of Tobias v. Abalos, op cit., we reiterated the policy of
the Court favoring a liberal construction of the "one title-one subject" rule so as not to
impede legislation. To be sure, with Constitution does not command that the title of a
law should exactly mirror, fully index, or completely catalogue all its details. Hence,
we ruled that "it should be sufficient compliance if the title expresses the general
subject and all the provisions are germane to such general subject."
WHEREFORE, the petitions are hereby DISMISSED for lack of merit No costs.
SO ORDERED.
G.R. No. 118303             January 31, 1996
SENATOR HEHERSON T. ALVAREZ, SENATOR JOSE D. LINA, JR., MR.
NICASIO B. BAUTISTA, MR. JESUS P. GONZAGA, MR. SOLOMON D. MAYLEM,
LEONORA C. MEDINA, CASIANO S. ALIPON, petitioners,
vs.
HON. TEOFISTO T. GUINGONA, JR., in his capacity as Executive Secretary,
HON. RAFAEL ALUNAN, in his capacity as Secretary of Local Government,
HON. SALVADOR ENRIQUEZ, in his capacity as Secretary of Budget, THE
COMMISSION ON AUDIT, HON. JOSE MIRANDA, in his capacity as Municipal
Mayor of Santiago and HON. CHARITO MANUFAY, HON. VICTORINO
MIRANDA, JR., HON. ARTEMIO ALVAREZ, HON. DANILO VERGARA, HON.
PETER DE JESUS, HON. NELIA NATIVIDAD, HON. CELSO CALEON and HON.
ABEL MUSNGI, in their capacity as SANGGUNIANG BAYAN MEMBERS, MR.
RODRIGO L. SANTOS, in his capacity as Municipal Treasurer, and ATTY.
ALFREDO S. DIRIGE, in his capacity as Municipal Administrator, respondents.
DECISION
HERMOSISIMA, JR., J.:
Of main concern to the petitioners is whether Republic Act No. 7720, just recently
passed by Congress and signed by the President into law, is constitutionally infirm.
Indeed, in this Petition for Prohibition with prayer for Temporary Restraining Order
and Preliminary Prohibitory Injunction, petitioners assail the validity of Republic Act
No. 7720, entitled, "An Act Converting the Municipality of Santiago, Isabela into an
Independent Component City to be known as the City of Santiago," mainly because
the Act allegedly did not originate exclusively in the House of Representatives as
mandated by Section 24, Article VI of the 1987 Constitution.
Also, petitioners claim that the Municipality of Santiago has not met the minimum
average annual income required under Section 450 of the Local Government Code
of 1991 in order to be converted into a component city.
219
Undisputed is the following chronicle of the metamorphosis of House Bill No. 8817
into Republic Act No. 7720:
On April 18, 1993, HB No. 8817, entitled "An Act Converting the Municipality of
Santiago into an Independent Component City to be known as the City of Santiago,"
was filed in the House of Representatives with Representative Antonio Abaya as
principal author. Other sponsors included Representatives Ciriaco Alfelor, Rodolfo
Albano, Santiago Respicio and Faustino Dy. The bill was referred to the House
Committee on Local Government and the House Committee on Appropriations on
May 5, 1993.
On May 19, 1993, June 1, 1993, November 28, 1993, and December 1, 1993, public
hearings on HB No. 8817 were conducted by the House Committee on Local
Government. The committee submitted to the House a favorable report, with
amendments, on December 9, 1993.
On December 13, 1993, HB No. 8817 was passed by the House of Representatives
on Second Reading and was approved on Third Reading on December 17, 1993. On
January 28, 1994, HB No. 8817 was transmitted to the Senate.
Meanwhile, a counterpart of HB No. 8817, Senate Bill No. 1243, entitled, "An Act
Converting the Municipality of Santiago into an Independent Component City to be
Known as the City of Santiago," was filed in the Senate. It was introduced by Senator
Vicente Sotto III, as principal sponsor, on May 19, 1993. This was just after the
House of Representatives had conducted its first public hearing on HB No. 8817.
On February 23, 1994, or a little less than a month after HB No. 8817 was
transmitted to the Senate, the Senate Committee on Local Government conducted
public hearings on SB No. 1243. On March 1, 1994, the said committee submitted
Committee Report No. 378 on HB No. 8817, with the recommendation that it be
approved without amendment, taking into consideration the reality that H.B. No. 8817
was on all fours with SB No. 1243. Senator Heherson T. Alvarez, one of the herein
petitioners, indicated his approval thereto by signing said report as member of the
Committee on Local Government.
On March 3, 1994, Committee Report No. 378 was passed by the Senate on Second
Reading and was approved on Third Reading on March 14, 1994. On March 22,
1994, the House of Representatives, upon being apprised of the action of the
Senate, approved the amendments proposed by the Senate.
The enrolled bill, submitted to the President on April 12, 1994, was signed by the
Chief Executive on May 5, 1994 as Republic Act No. 7720. When a plebiscite on the
Act was held on July 13, 1994, a great majority of the registered voters of Santiago
voted in favor of the conversion of Santiago into a city.
The question as to the validity of Republic Act No. 7720 hinges on the following twin
issues: (I) Whether or not the Internal Revenue Allotments (IRAs) are to be included
in the computation of the average annual income of a municipality for purposes of its
conversion into an independent component city, and (II) Whether or not, considering
that the Senate passed SB No. 1243, its own version of HB No. 8817, Republic Act
No. 7720 can be said to have originated in the House of Representatives.
I
The annual income of a local
government unit includes the IRAs
Petitioners claim that Santiago could not qualify into a component city because its
average annual income for the last two (2) consecutive years based on 1991
constant prices falls below the required annual income of Twenty Million Pesos
(P20,000,000.00) for its conversion into a city, petitioners having computed
Santiago's average annual income in the following manner:
Total income (at 1991 constant prices) for P 20,379,057.07
1991
Total income (at 1991 constant prices) for P 21,570,106.87
1992
Total income for 1991 and 1992 P 41,949,163.94
220
Minus:
IRAs for 1991 and 1992 P 15,730,043.00
Total income for 1991 and 1992 P 26,219,120.94
Average Annual Income P 13,109,560.47
===============
By dividing the total income of Santiago for calendar years 1991 and 1992, after
deducting the IRAs, the average annual income arrived at would only be
P13,109,560.47 based on the 1991 constant prices. Thus, petitioners claim that
Santiago's income is far below the aforesaid Twenty Million Pesos average annual
income requirement.
The certification issued by the Bureau of Local Government Finance of the
Department of Finance, which indicates Santiago's average annual income to be
P20,974,581.97, is allegedly not accurate as the Internal Revenue Allotments were
not excluded from the computation. Petitioners asseverate that the IRAs are not
actually income but transfers and/or budgetary aid from the national government and
that they fluctuate, increase or decrease, depending on factors like population, land
and equal sharing.
In this regard, we hold that petitioners asseverations are untenable because Internal
Revenue Allotments form part of the income of Local Government Units.
It is true that for a municipality to be converted into a component city, it must, among
others, have an average annual income of at least Twenty Million Pesos for the last
two (2) consecutive years based on 1991 constant prices.1 Such income must be
duly certified by the Department of Finance.
Resolution of the controversy regarding compliance by the Municipality of Santiago
with the aforecited income requirement hinges on a correlative and contextual
explication of the meaning of internal revenue allotments (IRAs) vis-a-vis the notion
of income of a local government unit and the principles of local autonomy and
decentralization underlying the institutionalization and intensified empowerment of
the local government system.
A Local Government Unit is a political subdivision of the State which is constituted by
law and possessed of substantial control over its own affairs.3 Remaining to be an
intra sovereign subdivision of one sovereign nation, but not intended, however, to be
an imperium in imperio,4 the local government unit is autonomous in the sense that it
is given more powers, authority, responsibilities and resources.5 Power which used to
be highly centralized in Manila, is thereby deconcentrated, enabling especially the
peripheral local government units to develop not only at their own pace and
discretion but also with their own resources and assets.
The practical side to development through a decentralized local government system
certainly concerns the matter of financial resources. With its broadened powers and
increased responsibilities, a local government unit must now operate on a much
wider scale. More extensive operations, in turn, entail more expenses.
Understandably, the vesting of duty, responsibility and accountability in every local
government unit is accompanied with a provision for reasonably adequate resources
to discharge its powers and effectively carry out its functions.7 Availment of such
resources is effectuated through the vesting in every local government unit of (1) the
right to create and broaden its own source of revenue; (2) the right to be allocated a
just share in national taxes, such share being in the form of internal revenue
allotments (IRAs); and (3) the right to be given its equitable share in the proceeds of
the utilization and development of the national wealth, if any, within its territorial
boundaries.8
The funds generated from local taxes, IRAs and national wealth utilization proceeds
accrue to the general fund of the local government and are used to finance its
operations subject to specified modes of spending the same as provided for in the
Local Government Code and its implementing rules and regulations. For instance,
not less than twenty percent (20%) of the IRAs must be set aside for local
development projects.9 As such, for purposes of budget preparation, which budget
should reflect the estimates of the income of the local government unit, among
others, the IRAs and the share in the national wealth utilization proceeds are
considered items of income. This is as it should be, since income is defined in the
221
Local Government Code to be all revenues and receipts collected or received
forming the gross accretions of funds of the local government unit.10
The IRAs are items of income because they form part of the gross accretion of the
funds of the local government unit. The IRAs regularly and automatically accrue to
the local treasury without need of any further action on the part of the local
government unit.11 They thus constitute income which the local government can
invariably rely upon as the source of much needed funds.
For purposes of converting the Municipality of Santiago into a city, the Department of
Finance certified, among others, that the municipality had an average annual income
of at least Twenty Million Pesos for the last two (2) consecutive years based on 1991
constant prices. This, the Department of Finance did after including the IRAs in its
computation of said average annual income.
Furthermore, Section 450 (c) of the Local Government Code provides that "the
average annual income shall include the income accruing to the general fund,
exclusive of special funds, transfers, and non-recurring income." To reiterate, IRAs
are a regular, recurring item of income; nil is there a basis, too, to classify the same
as a special fund or transfer, since IRAs have a technical definition and meaning all
its own as used in the Local Government Code that unequivocally makes it distinct
from special funds or transfers referred to when the Code speaks of "funding support
from the national government, its instrumentalities and government-owned-or-
controlled corporations".12
Thus, Department of Finance Order No. 35-9313 correctly encapsulizes the full import
of the above disquisition when it defined ANNUAL INCOME to be "revenues and
receipts realized by provinces, cities and municipalities from regular sources of the
Local General Fund including the internal revenue allotment and other
shares provided for in Sections 284, 290 and 291 of the Code, but exclusive of non-
recurring receipts, such as other national aids, grants, financial assistance, loan
proceeds, sales of fixed assets, and similar others" (Emphasis ours).14 Such order,
constituting executive or contemporaneous construction of a statute by an
administrative agency charged with the task of interpreting and applying the same, is
entitled to full respect and should be accorded great weight by the courts, unless
such construction is clearly shown to be in sharp conflict with the Constitution, the
governing statute, or other laws.15
II
In the enactment of RA No. 7720,
there was compliance with Section 24,
Article VI of the 1987 Constitution
Although a bill of local application like HB No. 8817 should, by constitutional
prescription,16 originate exclusively in the House of Representatives, the claim of
petitioners that Republic Act No. 7720 did not originate exclusively in the House of
Representatives because a bill of the same import, SB No. 1243, was passed in the
Senate, is untenable because it cannot be denied that HB No. 8817 was filed in the
House of Representatives first before SB No. 1243 was filed in the Senate.
Petitioners themselves cannot disavow their own admission that HB No. 8817 was
filed on April 18, 1993 while SB No. 1243 was filed on May 19, 1993. The filing of HB
No. 8817 was thus precursive not only of the said Act in question but also of SB No.
1243. Thus, HB No. 8817, was the bill that initiated the legislative process that
culminated in the enactment of Republic Act No. 7720. No violation of Section 24,
Article VI, of the 1987 Constitution is perceptible under the circumstances attending
the instant controversy.
Furthermore, petitioners themselves acknowledge that HB No. 8817 was already
approved on Third Reading and duly transmitted to the Senate when the Senate
Committee on Local Government conducted its public hearing on HB No. 8817. HB
No. 8817 was approved on the Third Reading on December 17, 1993 and
transmitted to the Senate on January 28, 1994; a little less than a month thereafter,
or on February 23, 1994, the Senate Committee on Local Government conducted
public hearings on SB No. 1243. Clearly, the Senate held in abeyance any action on
SB No. 1243 until it received HB No. 8817, already approved on the Third Reading,
from the House of Representatives. The filing in the Senate of a substitute bill in
anticipation of its receipt of the bill from the House, does not contravene the
constitutional requirement that a bill of local application should originate in the House
of Representatives, for as long as the Senate does not act thereupon until it receives
the House bill.
222
We have already addressed this issue in the case of Tolentino vs. Secretary of
Finance.17 There, on the matter of the Expanded Value Added Tax (EVAT) Law,
which, as a revenue bill, is nonetheless constitutionally required to originate
exclusively in the House of Representatives, we explained:
. . . To begin with, it is not the law — but the revenue bill — which is required
by the Constitution to "originate exclusively" in the House of Representatives.
It is important to emphasize this, because a bill originating in the House may
undergo such extensive changes in the Senate that the result may be a
rewriting of the whole. . . . as a result of the Senate action, a distinct bill may
be produced. To insist that a revenue statute — and not only the bill which
initiated the legislative process culminating in the enactment of the law —
must substantially be the same as the House bill would be to deny the
Senate's power not only to "concur with amendments" but also to "propose
amendments." It would be to violate the coequality of legislative power of the
two houses of Congress and in fact make the House superior to the Senate.
xxx       xxx       xxx
It is insisted, however, that S. No. 1630 was passed not in substitution of H.
No. 11197 but of another Senate bill (S. No. 1129) earlier filed and that what
the Senate did was merely to "take [H. No. 11197] into consideration" in
enacting S. No. 1630. There is really no difference between the Senate
preserving H. No. 11197 up to the enacting clause and then writing its own
version following the enacting clause (which, it would seem petitioners admit
is an amendment by substitution), and, on the other hand, separately
presenting a bill of its own on the same subject matter. In either case the
result are two bills on the same subject.
Indeed, what the Constitution simply means is that the initiative for filing
revenue, tariff, or tax bills, bills authorizing an increase of the public debt,
private bills and bills of local application must come from the House of
Representatives on the theory that, elected as they are from the districts, the
members of the House can be expected to be more sensitive to the local
needs and problems. On the other hand, the senators, who are elected at
large, are expected to approach the same problems from the national
perspective. Both views are thereby made to bear on the enactment of such
laws.
Nor does the Constitution prohibit the filing in the Senate of a substitute bill in
anticipation of its receipt of the bill from the House, so long as action by the
Senate as a body is withheld pending receipt of the House bill. . . .18
III
Every law, including RA No. 7720,
has in its favor the presumption
of constitutionality
It is a well-entrenched jurisprudential rule that on the side of every law lies the
presumption of constitutionality.19 Consequently, for RA No. 7720 to be nullified, it
must be shown that there is a clear and unequivocal breach of the Constitution, not
merely a doubtful and equivocal one; in other words, the grounds for nullity must be
clear and beyond reasonable doubt.20 Those who petition this court to declare a law
to be unconstitutional must clearly and fully establish the basis that will justify such a
declaration; otherwise, their petition must fail. Taking into consideration the
justification of our stand on the immediately preceding ground raised by petitioners to
challenge the constitutionality of RA No. 7720, the Court stands on the holding that
petitioners have failed to overcome the presumption. The dismissal of this petition is,
therefore, inevitable.
WHEREFORE, the instant petition is DISMISSED for lack of merit with costs against
petitioners.
SO ORDERED.
G.R. No. 118303             January 31, 1996
SENATOR HEHERSON T. ALVAREZ, SENATOR JOSE D. LINA, JR., MR.
NICASIO B. BAUTISTA, MR. JESUS P. GONZAGA, MR. SOLOMON D. MAYLEM,
LEONORA C. MEDINA, CASIANO S. ALIPON, petitioners,
223
vs.
HON. TEOFISTO T. GUINGONA, JR., in his capacity as Executive Secretary,
HON. RAFAEL ALUNAN, in his capacity as Secretary of Local Government,
HON. SALVADOR ENRIQUEZ, in his capacity as Secretary of Budget, THE
COMMISSION ON AUDIT, HON. JOSE MIRANDA, in his capacity as Municipal
Mayor of Santiago and HON. CHARITO MANUFAY, HON. VICTORINO
MIRANDA, JR., HON. ARTEMIO ALVAREZ, HON. DANILO VERGARA, HON.
PETER DE JESUS, HON. NELIA NATIVIDAD, HON. CELSO CALEON and HON.
ABEL MUSNGI, in their capacity as SANGGUNIANG BAYAN MEMBERS, MR.
RODRIGO L. SANTOS, in his capacity as Municipal Treasurer, and ATTY.
ALFREDO S. DIRIGE, in his capacity as Municipal Administrator, respondents.
DECISION
HERMOSISIMA, JR., J.:
Of main concern to the petitioners is whether Republic Act No. 7720, just recently
passed by Congress and signed by the President into law, is constitutionally infirm.
Indeed, in this Petition for Prohibition with prayer for Temporary Restraining Order
and Preliminary Prohibitory Injunction, petitioners assail the validity of Republic Act
No. 7720, entitled, "An Act Converting the Municipality of Santiago, Isabela into an
Independent Component City to be known as the City of Santiago," mainly because
the Act allegedly did not originate exclusively in the House of Representatives as
mandated by Section 24, Article VI of the 1987 Constitution.
Also, petitioners claim that the Municipality of Santiago has not met the minimum
average annual income required under Section 450 of the Local Government Code
of 1991 in order to be converted into a component city.
Undisputed is the following chronicle of the metamorphosis of House Bill No. 8817
into Republic Act No. 7720:
On April 18, 1993, HB No. 8817, entitled "An Act Converting the Municipality of
Santiago into an Independent Component City to be known as the City of Santiago,"
was filed in the House of Representatives with Representative Antonio Abaya as
principal author. Other sponsors included Representatives Ciriaco Alfelor, Rodolfo
Albano, Santiago Respicio and Faustino Dy. The bill was referred to the House
Committee on Local Government and the House Committee on Appropriations on
May 5, 1993.
On May 19, 1993, June 1, 1993, November 28, 1993, and December 1, 1993, public
hearings on HB No. 8817 were conducted by the House Committee on Local
Government. The committee submitted to the House a favorable report, with
amendments, on December 9, 1993.
On December 13, 1993, HB No. 8817 was passed by the House of Representatives
on Second Reading and was approved on Third Reading on December 17, 1993. On
January 28, 1994, HB No. 8817 was transmitted to the Senate.
Meanwhile, a counterpart of HB No. 8817, Senate Bill No. 1243, entitled, "An Act
Converting the Municipality of Santiago into an Independent Component City to be
Known as the City of Santiago," was filed in the Senate. It was introduced by Senator
Vicente Sotto III, as principal sponsor, on May 19, 1993. This was just after the
House of Representatives had conducted its first public hearing on HB No. 8817.
On February 23, 1994, or a little less than a month after HB No. 8817 was
transmitted to the Senate, the Senate Committee on Local Government conducted
public hearings on SB No. 1243. On March 1, 1994, the said committee submitted
Committee Report No. 378 on HB No. 8817, with the recommendation that it be
approved without amendment, taking into consideration the reality that H.B. No. 8817
was on all fours with SB No. 1243. Senator Heherson T. Alvarez, one of the herein
petitioners, indicated his approval thereto by signing said report as member of the
Committee on Local Government.
On March 3, 1994, Committee Report No. 378 was passed by the Senate on Second
Reading and was approved on Third Reading on March 14, 1994. On March 22,
1994, the House of Representatives, upon being apprised of the action of the
Senate, approved the amendments proposed by the Senate.
224

The enrolled bill, submitted to the President on April 12, 1994, was signed by the
Chief Executive on May 5, 1994 as Republic Act No. 7720. When a plebiscite on the
Act was held on July 13, 1994, a great majority of the registered voters of Santiago
voted in favor of the conversion of Santiago into a city.
The question as to the validity of Republic Act No. 7720 hinges on the following twin
issues: (I) Whether or not the Internal Revenue Allotments (IRAs) are to be included
in the computation of the average annual income of a municipality for purposes of its
conversion into an independent component city, and (II) Whether or not, considering
that the Senate passed SB No. 1243, its own version of HB No. 8817, Republic Act
No. 7720 can be said to have originated in the House of Representatives.
I actually income but transfers and/or budgetary aid from the national government and
The annual income of a local
government unit includes the IRAs
Petitioners claim that Santiago could not qualify into a component city because its
average annual income for the last two (2) consecutive years based on 1991
constant prices falls below the required annual income of Twenty Million Pesos
(P20,000,000.00) for its conversion into a city, petitioners having computed
Santiago's average annual income in the following manner:
Total income (at 1991 constant prices) for P 20,379,057.07
1991
Total income (at 1991 constant prices) for P 21,570,106.87
1992
Total income for 1991 and 1992 P 41,949,163.94
Minus:
===============
By dividing the total income of Santiago for calendar years 1991 and 1992, after
deducting the IRAs, the average annual income arrived at would only be
P13,109,560.47 based on the 1991 constant prices. Thus, petitioners claim that
Santiago's income is far below the aforesaid Twenty Million Pesos average annual
income requirement.
The certification issued by the Bureau of Local Government Finance of the
Department of Finance, which indicates Santiago's average annual income to be
P20,974,581.97, is allegedly not accurate as the Internal Revenue Allotments were
not excluded from the computation. Petitioners asseverate that the IRAs are not
that they fluctuate, increase or decrease, depending on factors like population, land
and equal sharing.
In this regard, we hold that petitioners asseverations are untenable because Internal
Revenue Allotments form part of the income of Local Government Units.
It is true that for a municipality to be converted into a component city, it must, among
others, have an average annual income of at least Twenty Million Pesos for the last
two (2) consecutive years based on 1991 constant prices.1 Such income must be
duly certified by the Department of Finance.
Resolution of the controversy regarding compliance by the Municipality of Santiago
with the aforecited income requirement hinges on a correlative and contextual
explication of the meaning of internal revenue allotments (IRAs) vis-a-vis the notion
of income of a local government unit and the principles of local autonomy and
decentralization underlying the institutionalization and intensified empowerment of
the local government system.

IRAs for 1991 and 1992 P 15,730,043.00 A Local Government Unit is a political subdivision of the State which is constituted by
Total income for 1991 and 1992 P 26,219,120.94 law and possessed of substantial control over its own affairs.3 Remaining to be an
intra sovereign subdivision of one sovereign nation, but not intended, however, to be
Average Annual Income P 13,109,560.47 an imperium in imperio,4 the local government unit is autonomous in the sense that it
225
is given more powers, authority, responsibilities and resources.5 Power which used to
be highly centralized in Manila, is thereby deconcentrated, enabling especially the
peripheral local government units to develop not only at their own pace and
discretion but also with their own resources and assets.
The practical side to development through a decentralized local government system
certainly concerns the matter of financial resources. With its broadened powers and
increased responsibilities, a local government unit must now operate on a much
wider scale. More extensive operations, in turn, entail more expenses.
Understandably, the vesting of duty, responsibility and accountability in every local
government unit is accompanied with a provision for reasonably adequate resources
to discharge its powers and effectively carry out its functions.7 Availment of such
resources is effectuated through the vesting in every local government unit of (1) the
right to create and broaden its own source of revenue; (2) the right to be allocated a
just share in national taxes, such share being in the form of internal revenue
allotments (IRAs); and (3) the right to be given its equitable share in the proceeds of
the utilization and development of the national wealth, if any, within its territorial
boundaries.8
The funds generated from local taxes, IRAs and national wealth utilization proceeds
accrue to the general fund of the local government and are used to finance its
operations subject to specified modes of spending the same as provided for in the
Local Government Code and its implementing rules and regulations. For instance,
not less than twenty percent (20%) of the IRAs must be set aside for local
development projects.9 As such, for purposes of budget preparation, which budget
should reflect the estimates of the income of the local government unit, among
others, the IRAs and the share in the national wealth utilization proceeds are
considered items of income. This is as it should be, since income is defined in the
Local Government Code to be all revenues and receipts collected or received
forming the gross accretions of funds of the local government unit.10
The IRAs are items of income because they form part of the gross accretion of the
funds of the local government unit. The IRAs regularly and automatically accrue to
the local treasury without need of any further action on the part of the local
government unit.11 They thus constitute income which the local government can
invariably rely upon as the source of much needed funds.
For purposes of converting the Municipality of Santiago into a city, the Department of
Finance certified, among others, that the municipality had an average annual income
of at least Twenty Million Pesos for the last two (2) consecutive years based on 1991
constant prices. This, the Department of Finance did after including the IRAs in its
computation of said average annual income.
Furthermore, Section 450 (c) of the Local Government Code provides that "the
average annual income shall include the income accruing to the general fund,
exclusive of special funds, transfers, and non-recurring income." To reiterate, IRAs
are a regular, recurring item of income; nil is there a basis, too, to classify the same
as a special fund or transfer, since IRAs have a technical definition and meaning all
its own as used in the Local Government Code that unequivocally makes it distinct
from special funds or transfers referred to when the Code speaks of "funding support
from the national government, its instrumentalities and government-owned-or-
controlled corporations".12
Thus, Department of Finance Order No. 35-9313 correctly encapsulizes the full import
of the above disquisition when it defined ANNUAL INCOME to be "revenues and
receipts realized by provinces, cities and municipalities from regular sources of the
Local General Fund including the internal revenue allotment and other
shares provided for in Sections 284, 290 and 291 of the Code, but exclusive of non-
recurring receipts, such as other national aids, grants, financial assistance, loan
proceeds, sales of fixed assets, and similar others" (Emphasis ours).14 Such order,
constituting executive or contemporaneous construction of a statute by an
administrative agency charged with the task of interpreting and applying the same, is
entitled to full respect and should be accorded great weight by the courts, unless
such construction is clearly shown to be in sharp conflict with the Constitution, the
governing statute, or other laws.15
II
In the enactment of RA No. 7720,
there was compliance with Section 24,
Article VI of the 1987 Constitution
226
Although a bill of local application like HB No. 8817 should, by constitutional
prescription,16 originate exclusively in the House of Representatives, the claim of
petitioners that Republic Act No. 7720 did not originate exclusively in the House of
Representatives because a bill of the same import, SB No. 1243, was passed in the
Senate, is untenable because it cannot be denied that HB No. 8817 was filed in the
House of Representatives first before SB No. 1243 was filed in the Senate.
Petitioners themselves cannot disavow their own admission that HB No. 8817 was
filed on April 18, 1993 while SB No. 1243 was filed on May 19, 1993. The filing of HB
No. 8817 was thus precursive not only of the said Act in question but also of SB No.
1243. Thus, HB No. 8817, was the bill that initiated the legislative process that
culminated in the enactment of Republic Act No. 7720. No violation of Section 24,
Article VI, of the 1987 Constitution is perceptible under the circumstances attending
the instant controversy.
Furthermore, petitioners themselves acknowledge that HB No. 8817 was already
approved on Third Reading and duly transmitted to the Senate when the Senate
Committee on Local Government conducted its public hearing on HB No. 8817. HB
No. 8817 was approved on the Third Reading on December 17, 1993 and
transmitted to the Senate on January 28, 1994; a little less than a month thereafter,
or on February 23, 1994, the Senate Committee on Local Government conducted
public hearings on SB No. 1243. Clearly, the Senate held in abeyance any action on
SB No. 1243 until it received HB No. 8817, already approved on the Third Reading,
from the House of Representatives. The filing in the Senate of a substitute bill in
anticipation of its receipt of the bill from the House, does not contravene the
constitutional requirement that a bill of local application should originate in the House
of Representatives, for as long as the Senate does not act thereupon until it receives
the House bill.
We have already addressed this issue in the case of Tolentino vs. Secretary of
Finance.17 There, on the matter of the Expanded Value Added Tax (EVAT) Law,
which, as a revenue bill, is nonetheless constitutionally required to originate
exclusively in the House of Representatives, we explained:
. . . To begin with, it is not the law — but the revenue bill — which is required
by the Constitution to "originate exclusively" in the House of Representatives.
It is important to emphasize this, because a bill originating in the House may
undergo such extensive changes in the Senate that the result may be a
rewriting of the whole. . . . as a result of the Senate action, a distinct bill may
be produced. To insist that a revenue statute — and not only the bill which
initiated the legislative process culminating in the enactment of the law —
must substantially be the same as the House bill would be to deny the
Senate's power not only to "concur with amendments" but also to "propose
amendments." It would be to violate the coequality of legislative power of the
two houses of Congress and in fact make the House superior to the Senate.
xxx       xxx       xxx
It is insisted, however, that S. No. 1630 was passed not in substitution of H.
No. 11197 but of another Senate bill (S. No. 1129) earlier filed and that what
the Senate did was merely to "take [H. No. 11197] into consideration" in
enacting S. No. 1630. There is really no difference between the Senate
preserving H. No. 11197 up to the enacting clause and then writing its own
version following the enacting clause (which, it would seem petitioners admit
is an amendment by substitution), and, on the other hand, separately
presenting a bill of its own on the same subject matter. In either case the
result are two bills on the same subject.
Indeed, what the Constitution simply means is that the initiative for filing
revenue, tariff, or tax bills, bills authorizing an increase of the public debt,
private bills and bills of local application must come from the House of
Representatives on the theory that, elected as they are from the districts, the
members of the House can be expected to be more sensitive to the local
needs and problems. On the other hand, the senators, who are elected at
large, are expected to approach the same problems from the national
perspective. Both views are thereby made to bear on the enactment of such
laws.
Nor does the Constitution prohibit the filing in the Senate of a substitute bill in
anticipation of its receipt of the bill from the House, so long as action by the
Senate as a body is withheld pending receipt of the House bill. . . .18
III
227
Every law, including RA No. 7720,
has in its favor the presumption
of constitutionality
It is a well-entrenched jurisprudential rule that on the side of every law lies the
presumption of constitutionality.19 Consequently, for RA No. 7720 to be nullified, it
must be shown that there is a clear and unequivocal breach of the Constitution, not
merely a doubtful and equivocal one; in other words, the grounds for nullity must be
clear and beyond reasonable doubt.20 Those who petition this court to declare a law
to be unconstitutional must clearly and fully establish the basis that will justify such a
declaration; otherwise, their petition must fail. Taking into consideration the
justification of our stand on the immediately preceding ground raised by petitioners to
challenge the constitutionality of RA No. 7720, the Court stands on the holding that
petitioners have failed to overcome the presumption. The dismissal of this petition is,
therefore, inevitable.
WHEREFORE, the instant petition is DISMISSED for lack of merit with costs against
petitioners.
SO ORDERED.
BENJAMIN E. CAWALING, JR., Petitioner, v. THE COMMISSION ON
ELECTIONS, and Rep. Francis Joseph G. Escudero, Respondents.
[G.R. No. 146342. October 26, 2001.]
BENJAMIN E. CAWALING, JR., Petitioner, v. THE EXECUTIVE
SECRETARY TO THE PRESIDENT OF THE REPUBLIC OF THE
PHILIPPINES, SECRETARY OF THE INTERIOR AND LOCAL
GOVERNMENT, SECRETARY OF THE DEPARTMENT OF BUDGET AND
MANAGEMENT, SOLICITOR GENERAL, PROVINCE OF SORSOGON,
MUNICIPALITY OF SORSOGON, MUNICIPALITY OF
BACON, Respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us are two (2) separate petitions challenging the constitutionality
of Republic Act No. 8806 which created the City of Sorsogon and the
validity of the plebiscite conducted pursuant thereto.
On August 16, 2000, former President Joseph E. Estrada signed into law
R.A. No. 8806, an "Act Creating The City Of Sorsogon By Merging The
Municipalities Of Bacon And Sorsogon In The Province Of Sorsogon, And
Appropriating Funds Therefor." 1
Pursuant to Section 10, Article X of the Constitution, 2 the Commission on
Elections (COMELEC), on December 16, 2000, conducted a plebiscite in
the Municipalities of Bacon and Sorsogon and submitted the matter for
ratification.chanrob1es virtua1 1aw 1ibrary
On December 17, 2000, the Plebiscite City Board of Canvassers (PCBC)
proclaimed 3 the creation of the City of Sorsogon as having been ratified
and approved by the majority of the votes cast in the plebiscite. 4
Invoking his right as a resident and taxpayer of the former Municipality of
Sorsogon, Benjamin E. Cawaling, Jr. filed on January 2, 2001 the present
petition for certiorari (G.R. No. 146319) seeking the annulment of the
plebiscite on the following grounds:chanrob1es virtual 1aw library
A. The December 16, 2000 plebiscite was conducted beyond the required
120-day period from the approval of R.A. 8806, in violation of Section 54
thereof; and
B. Respondent COMELEC failed to observe the legal requirement of twenty
(20) day extensive information campaign in the Municipalities of Bacon
228
and Sorsogon before conducting the plebiscite.
Two days after filing the said action, or on January 4, 2001, petitioner
instituted another petition (G.R. No. 146342), this time for prohibition
seeking to enjoin the further implementation of R.A. No. 8806 for being
unconstitutional, contending, in essence, that:chanrob1es virtual 1aw
library
1. The creation of Sorsogon City by merging two municipalities violates
Section 450(a) of the Local Government Code of 1991 (in relation to
Section 10, Article X of the Constitution) which requires that only "a
municipality or a cluster of barangays may be converted into a component
city" ; and
2. R.A. No. 8806 contains two (2) subjects, namely, the (a) creation of
the City of Sorsogon and the (b) abolition of the Municipalities of Bacon
and Sorsogon, thereby violating the "one subject-one bill" rule prescribed
by Section 26(1), Article VI of the Constitution.
Hence, the present petitions which were later consolidated. 5
Significantly, during the pendency of these cases, specifically during the
May 14, 2001 elections, the newly-created Sorsogon City had the first
election of its officials. Since then, the City Government of Sorsogon has
been regularly discharging its corporate and political powers pursuant to
its charter, R.A. No. 8806.
We shall first delve on petitioner’s constitutional challenge against R.A.
No. 8806 in G.R No. 146342.
Every statute has in its favor the presumption of constitutionality. 6 This
presumption is rooted in the doctrine of separation of powers which
enjoins upon the three coordinate departments of the Government a
becoming courtesy for each other’s acts. 7 The theory is that every law,
being the joint act of the Legislature and the Executive, has passed
careful scrutiny to ensure that it is in accord with the fundamental law. 8
This Court, however, may declare a law, or portions thereof,
unconstitutional where a petitioner has shown a clear and unequivocal
breach of the Constitution, not merely a doubtful or argumentative one. 9
In other words the grounds for nullity must be beyond reasonable doubt,
10 for to doubt is to sustain. 11
Petitioner initially reject R.A. No. 8806 because it violates Section 10,
Article X of the Constitution which provides, inter
alia:jgc:chanrobles.com.ph
"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 approval by a majority of the votes cast in a
plebiscite in the political units directly affected." (Emphasis ours)
The criteria for the creation of a city is prescribed in Section 450 of the
Local Government Code of 1991 (the Code), thus:jgc:chanrobles.com.ph
"SECTION 450. Requisites for Creation. — (a) A municipality or a cluster
of barangays may be converted into a component city if it has an average
annual income, as certified by the Department of Finance, of at least
Twenty million (P20,000,000.00) for the last two (2) consecutive years
based on 1991 constant prices, and if it has either of the following
requisites:chanrob1es virtual 1aw library
(i) a contiguous territory of at least one hundred (100) square kilometers,
as certified by the Lands Management Bureau; or
(ii) a population of not less than one hundred fifty thousand (150,000)
inhabitants, as certified by the National Statistics Office:chanrob1es
virtual 1aw library
229
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.
(b) The territorial jurisdiction of a newly-created city shall be properly
identified by metes and bounds. The requirement on land area shall not
apply where the city proposed to be created is composed of one (1) or
more islands. The territory need not be contiguous if it comprises two (2)
or more islands.
(c) The average annual income shall include the income accruing to the
general fund, exclusive of specific funds, transfers, and non-recurring
income." (Emphasis ours)
Petitioner is not concerned whether the creation of Sorsogon City through
R.A. No. 8806 complied with the criteria set by the Code as to income,
population and land area. What he is assailing is its mode of creation. He
contends that under Section 450(a) of the Code, a component city may be
created only by converting "a municipality or a cluster of barangays," not
by merging two municipalities, as what R.A. No. 8806 has done.
This contention is devoid of merit.
Petitioner’s constricted reading of Section 450(a) of the Code is
erroneous. The phrase "A municipality or a cluster of barangays may be
converted into a component city" is not a criterion but simply one of the
modes by which a city may be created. Section 10, Article X of the
Constitution, quoted earlier and which petitioner cited in support of his
posture, allows the merger of local government units to create a province
city, municipality or barangay in accordance with the criteria established
by the Code. Thus, Section 8 of the Code distinctly
provides:jgc:chanrobles.com.ph
"SECTION 8. Division and Merger. — Division and merger of existing local
government units shall comply with the same requirements herein
prescribed for their creation: Provided, however, That such division shall
not reduce the income, population, or land area of the local government
unit or units concerned to less than the minimum requirements prescribed
in this Code: Provided, further, That the income classification of the
original local government unit or units shall not fall below its current
income classification prior to such division. . . . ." (Emphasis ours)
Verily, the creation of an entirely new local government unit through a
division or a merger of existing local government units is recognized
under the Constitution, provided that such merger or division shall comply
with the requirements prescribed by the Code.
Petitioner further submits that, in any case, there is no "compelling"
reason for merging the Municipalities of Bacon and Sorsogon in order to
create the City of Sorsogon considering that the Municipality of Sorsogon
alone already qualifies to be upgraded to a component city. This
argument goes into the wisdom of R.A. No. 8806, a matter which we are
not competent to rule. In Angara v. Electoral Commission, 12 this Court,
through Justice Jose P. Laurel, made it clear that "the judiciary does not
pass upon questions of wisdom, justice or expediency of legislation." In
the exercise of judicial power, we are allowed only "to settle actual
controversies involving rights which are legally demandable and
enforceable," 13 and "may not annul an act of the political departments
simply because we feel it is unwise or impractical." 14
Next, petitioner assails R.A. No. 8806 since it contravenes the "one
subject-one bill" rule enunciated in Section 26 (1), Article VI of the
Constitution, to wit:jgc:chanrobles.com.ph
"SECTION 26 (1). Every bill passed by the Congress shall embrace only
one subject which shall be expressed in the title thereof." (Emphasis ours)
230
Petitioner contends that R.A. No. 8806 actually embraces two principal
subjects which are: (1) the creation of the City of Sorsogon, and (2) the
abolition of the Municipalities of Bacon and Sorsogon. While the title of
the Act sufficiently informs the public about the creation of Sorsogon City,
petitioner claims that no such information has been provided on the
abolition of the Municipalities of Bacon and Sorsogon.chanrob1es virtua1
1aw 1ibrary
The argument is far from persuasive. Contrary to petitioner’s assertion,
there is only one subject embraced in the title of the law, that is, the
creation of the City of Sorsogon. The abolition/cessation of the corporate
existence of the Municipalities of Bacon and Sorsogon due to their merger
is not a subject separate and distinct from the creation of Sorsogon City.
Such abolition/cessation was but the logical, natural and inevitable
consequence of the merger. Otherwise put, it is the necessary means by
which the City of Sorsogon was created. Hence, the title of the law, "An
Act Creating the City of Sorsogon by Merging the Municipalities of Bacon
and Sorsogon in the Province of Sorsogon, and Appropriating Funds
Therefor," cannot be said to exclude the incidental effect of abolishing the
two municipalities, nor can it be considered to have deprived the public of
fair information on this consequence.
It is well-settled that the "one title-one subject" rule does not require the
Congress to employ in the title of the enactment language of such
precision as to mirror, fully index or catalogue all the contents and the
minute details therein. 15 The rule is sufficiently complied with if the title
is comprehensive enough as to include the general object which the
statute seeks to effect, 16 and where, as here, the persons interested are
informed of the nature, scope and consequences of the proposed law and
its operation. 17 Moreover, this Court has invariably adopted a liberal
rather than technical construction of the rule "so as not to cripple or
impede legislation." 18
Consequently, we hold that petitioner has failed to present clear and
convincing proof to defeat the presumption of constitutionality of R.A. No.
8806.
We now turn to G.R. No. 146319 wherein petitioner assails the validity of
the plebiscite conducted by the COMELEC for the ratification of the
creation of Sorsogon City.
Petitioner asserts that the plebiscite required by R.A. No. 8806 should be
conducted within 120 days from the "approval" of said Act per express
provision of its Section 54, viz:jgc:chanrobles.com.ph
"SECTION 54. Plebiscite. — The City of Sorsogon shall acquire corporate
existence upon the ratification of its creation by a majority of the votes
cast by the qualified voters in a plebiscite to be conducted in the present
municipalities of Bacon and Sorsogon within one hundred twenty (120)
days from the approval of this Act. . . . ." (Emphasis ours)
The Act was approved on August 16, 2000 by former President Joseph E.
Estrada. Thus, petitioner claims, the December 16, 2000 plebiscite was
conducted one (1) day late from the expiration of the 120-day period
after the approval of the Act. This 120-day period having expired without
a plebiscite being conducted, the Act itself expired and could no longer be
ratified and approved in the plebiscite held on December 16, 2000.
In its comment, the COMELEC asserts that it scheduled the plebiscite on
December 16, 2000 based on the date of the effectivity of the Act.
Section 65 of the Act states:jgc:chanrobles.com.ph
"SECTION 65. Effectivity. — This Act shall take effect upon its publication
in at least two (2) newspapers of general and local circulation."cralaw
virtua1aw library
The law was first published in the August 25, 2000 issue of TODAY a
newspaper of general circulation. Then on September 01, 2000, it was
231
published in a newspaper of local circulation in the Province of Sorsogon.
Thus, the publication of the law was completed on September 1, 2000,
which date, according to the COMELEC, should be the reckoning point in
determining the 120-day period within which to conduct the plebiscite,
not from the date of its approval (August 16, 2000) when the law had not
yet been published. The COMELEC argues that since publication is
indispensable for the effectivity of a law, citing the landmark case of
Tañada v. Tuvera, 19 it could only schedule the plebiscite after the Act
took effect. Thus, the COMELEC concludes, the December 16, 2000
plebiscite was well within the 120-day period from the effectivity of the
law on September 1, 2000.
The COMELEC is correct.
In addition, Section 10 of the Code provides:jgc:chanrobles.com.ph
"SECTION 10. Plebiscite Requirement. — No creation, division, merger,
abolition, or substantial alteration of boundaries of local government units
shall take effect unless approved by a majority of the votes cast in a
plebiscite called for the purpose in the political unit or units directly
affected. Such plebiscite shall be conducted by the Commission on
Elections within one hundred twenty (120) days from the date of the
effectivity of the law or ordinance affecting such action, unless said law or
ordinance fixes another date." (Emphasis ours)
Quite plainly, the last sentence of Section 10 mandates that the plebiscite
shall be conducted within 120 days from the date of the effectivity of the
law, not from its approval. While the same provision allows a law or
ordinance to fix "another date" for conducting a plebiscite, still such date
must be reckoned from the date of the effectivity of the law.
Consequently, the word "approval" in Section 54 of R.A. No. 8806, which
should be read together with Section 65 (effectivity of the Act) thereof,
could only mean "effectivity" as used and contemplated in Section 10 of
the Code. This construction is in accord with the fundamental rule that all
provisions of the laws relating to the same subject should be read
together and reconciled to avoid inconsistency or repugnancy to
established jurisprudence. As we stated in Tañada:jgc:chanrobles.com.ph
"ARTICLE 2. Laws shall take effect after fifteen days following the
completion of their publication in the Official Gazette, unless it is
otherwise provided. This Code shall take effect one year after such
publication.
After a careful study of this provision and of the arguments of the parties,
both on the original petition and on the instant motion, we have come to
the conclusion, and so hold, that the clause ‘unless it is otherwise
provided’ refers to the date of effectivity and not to the requirement of
publication itself, which cannot in any event be omitted. This clause does
not mean that the legislature may make the law effective immediately
upon approval, or on any other date, without its previous publication."
(Emphasis supplied)
To give Section 54 a literal and strict interpretation would in effect make
the Act effective even before its publication, which scenario is precisely
abhorred in Tañada.
Lastly, petitioner alleges that the COMELEC failed to conduct an extensive
information campaign on the proposed Sorsogon cityhood 20 days prior to
the scheduled plebiscite as required by Article 11 (b.4.ii), Rule II of the
Rules and Regulations Implementing the Code. However, no proof
whatsoever was presented by petitioner to substantiate his allegation.
Consequently, we sustain the presumption 20 that the COMELEC regularly
performed or complied with its duty under the law in conducting the
plebiscite.
WHEREFORE, the instant petitions are DISMISSED for lack of merit. Costs
against petitioner.chanrob1es virtua1 1aw 1ibrary
232
SO ORDERED.
G.R. No. 73155 July 11, 1986
PATRICIO TAN, FELIX FERRER, JUAN M. HAGAD, SERGIO HILADO, VIRGILIO
GASTON, CONCHITA MINAYA, TERESITA ESTACIO, DESIDERIO DEFERIA,
ROMEO GAMBOA, ALBERTO LACSON, FE HOFILENA, EMILY JISON, NIEVES
LOPEZ AND CECILIA MAGSAYSAY, petitioners,
vs.
THE COMMISSION ON ELECTIONS and THE PROVINCIAL TREASURER OF
NEGROS OCCIDENTAL, respondents.
Gamboa & Hofileña Law Office for petitioners.
ALAMPAY, J.:
Prompted by the enactment of Batas Pambansa Blg. 885-An Act Creating a New
Province in the Island of Negros to be known as the Province of Negros del Norte,
which took effect on December 3, 1985, Petitioners herein, who are residents of the
Province of Negros Occidental, in the various cities and municipalities therein, on
December 23, 1985, filed with this Court a case for Prohibition for the purpose of
stopping respondents Commission on Elections from conducting the plebiscite
which, pursuant to and in implementation of the aforesaid law, was scheduled for
January 3, 1986. Said law provides:
SECTION 1. The Cities of Silay, Cadiz, and San Carlos and the
municipalities of Calatrava, Taboso, Escalante, Sagay, Manapla,
Victorias, E.R. Magalona; and Salvador Benedicto, all in the northern
portion of the Island of Negros, are hereby separated from the
province to be known as the Province of Negros del Norte.
SEC. 2. The boundaries of the new province shall be the southern
limits of the City of Silay, the Municipality of Salvador Benedicto and
the City of San Carlos on the south and the territorial limits of the
northern portion to the Island of Negros on the west, north and east,
comprising a territory of 4,019.95 square kilometers more or less.
SEC. 3. The seat of government of the new province shall be the City
of Cadiz.
SEC. 4. A plebiscite shall be conducted in the proposed new province
which are the areas affected within a period of one hundred and
twenty days from the approval of this Act. After the ratification of the
creation of the Province of Negros del Norte by a majority of the votes
cast in such plebiscite, the President of the Philippines shall appoint
the first officials of the province.
SEC. 5. The Commission on Elections shall conduct and supervise
the plebiscite herein provided, the expenses for which shall be
charged to local funds.
SEC. 6. This Act shall takeeffect upon its approval.(Rollo, pp. 23-24)
Petitioners contend that Batas Pambansa Blg. 885 is unconstitutional
and it is not in complete accord with the Local Government Code as in
Article XI, Section 3 of our Constitution, it is expressly mandated that
—
See. 3. No province, city, municipality or barrio 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 in a plebiscite in the unit or units affected.
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Section 197 of the Local Government Code enumerates the conditions which must
exist to provide the legal basis for the creation of a provincial unit and these
requisites are:
SEC. 197. Requisites for Creation. A province may be created if it has
a territory of at least three thousand five hundred square kilometers, a
population of at least five hundred thousand persons, an average
estimated annual income, as certified by the Ministry of Finance, of
not less than ten million pesos for the last three consecutive years,
and its creation shall not reduce the population and income of the
mother province or provinces at the time of said creation to less than
the minimum requirements under this section. The territory need not
be contiguous if it comprises two or more islands.
The average estimated annual income shall include the income
alloted for both the general and infrastructural funds, exclusive of trust
funds, transfers and nonrecurring income. (Rollo, p. 6)
Due to the constraints brought about by the supervening Christmas holidays during
which the Court was in recess and unable to timely consider the petition, a
supplemental pleading was filed by petitioners on January 4, 1986, averring therein
that the plebiscite sought to be restrained by them was held on January 3, 1986 as
scheduled but that there are still serious issues raised in the instant case affecting
the legality, constitutionality and validity of such exercise which should properly be
passed upon and resolved by this Court.
The plebiscite was confined only to the inhabitants of the territory of Negros del
Nrte, namely: the Cities of Silay, Cadiz, and San Carlos, and the municipalities of
Calatrava, Taboso, Escalante, Sagay, Manapla, Victorias, E.B. Magalona and Don
Salvador Benedicto. Because of the exclusions of the voters from the rest of the
province of Negros Occidental, petitioners found need to change the prayer of their
petition "to the end that the constitutional issues which they have raised in the action
will be ventilated and given final resolution.'"At the same time, they asked that the
effects of the plebiscite which they sought to stop be suspended until the Supreme
Court shall have rendered its decision on the very fundamental and far-reaching
questions that petitioners have brought out.
Acknowledging in their supplemental petition that supervening events rendered moot
the prayer in their initial petition that the plebiscite scheduled for January 3, 1986, be
enjoined, petitioners plead, nevertheless, that-
... a writ of Prohibition be issued, directed to Respondent Commission
on Elections to desist from issuing official proclamation of the results
of the plebiscite held on January 3, 1986.
Finding that the exclusion and non-participation of the voters of the
Province of Negros Occidental other than those living within the
territory of the new province of Negros del Norte to be not in
accordance with the Constitution, that a writ of mandamus be issued,
directed to the respondent Commission on Elections, to schedule the
holding of another plebiscite at which all the qualified voters of the
entire Province of Negros Occidental as now existing shall participate,
at the same time making pronouncement that the plebiscite held on
January 3, 1986 has no legal effect, being a patent legal nullity;
And that a similar writ of Prohibition be issued, directed to the
respondent Provincial Treasurer, to desist from ordering the release of
any local funds to answer for expenses incurred in the holding of such
plebiscite until ordered by the Court. (Rollo pp. 9-10).
Petitioners further prayed that the respondent COMELEC hold in
abeyance the issuance of any official proclamation of the results of
the aforestated plebiscite.
During the pendency of this case, a motion that he be allowed to appear as amicus
curiae in this case (dated December 27, 1985 and filed with the Court on January 2,
1986) was submitted by former Senator Ambrosio Padilla. Said motion was granted
in Our resolution of January 2, 1986.
Acting on the petition, as well as on the supplemental petition for prohibition with
preliminary injunction with prayer for restraining order, the Court, on January 7, 1986
resolved, without giving due course to the same, to require respondents to comment,
not to file a motion to dismiss. Complying with said resolution, public respondents,
234
represented by the Office of the Solicitor General, on January 14, 1986, filed their
Comment, arguing therein that the challenged statute.-Batas Pambansa 885, should
be accorded the presumption of legality. They submit that the said law is not void on
its face and that the petition does not show a clear, categorical and undeniable
demonstration of the supposed infringement of the Constitution. Respondents state
that the powers of the Batasang-Pambansa to enact the assailed law is beyond
question. They claim that Batas Pambansa Big. 885 does not infringe the
Constitution because the requisites of the Local Government Code have been
complied with. Furthermore, they submit that this case has now become moot and
academic with the proclamation of the new Province of Negros del Norte.
Respondents argue that the remaining cities and municipalities of the Province of
Negros Occidental not included in the area of the new Province of Negros del Norte,
de not fall within the meaning and scope of the term "unit or units affected", as
referred to in Section 3 of Art. XI of our Constitution. On this reasoning, respondents
maintain that Batas Pambansa Blg. 885 does not violate the Constitution, invoking
and citing the case of Governor Zosimo Paredes versus the Honorable Executive
Secretary to the President, et al. (G.R. No. 55628, March 2, 1984 (128 SCRA 61),
particularly the pronouncements therein, hereunder quoted:
1. Admittedly,this is one of those cases where the discretion of the
Court is allowed considerable leeway. There is indeed an element of
ambiguity in the use of the expression 'unit or units affected'. It is
plausible to assert as petitioners do that when certain Barangays are
separated from a parent municipality to form a new one, all the voters
therein are affected. It is much more persuasive, however, to contend
as respondents do that the acceptable construction is for those voters,
who are not from the barangays to be separated, should be excluded
in the plebiscite.
2. For one thing, it is in accordance with the settled doctrine that
between two possible constructions, one avoiding a finding of
unconstitutionality and the other yielding such a result, the former is to
be preferred. That which will save, not that which will destroy,
commends itself for acceptance. After all, the basic presumption all
these years is one of validity. ...
3. ... Adherence to such philosophy compels the conclusion that when
there are indications that the inhabitants of several barangays are
inclined to separate from a parent municipality they should be allowed
to do so. What is more logical than to ascertain their will in a plebiscite
called for that purpose. It is they, and they alone, who shall constitute
the new unit. New responsibilities will be assumed. New burdens will
be imposed. A new municipal corporation will come into existence. Its
birth will be a matter of choice-their choice. They should be left alone
then to decide for themselves. To allow other voters to participate will
not yield a true expression of their will. They may even frustrate it,
That certainly will be so if they vote against it for selfish reasons, and
they constitute the majority. That is not to abide by the fundamental
principle of the Constitution to promote local autonomy, the
preference being for smaller units. To rule as this Tribunal does is to
follow an accepted principle of constitutional construction, that in
ascertaining the meaning of a particular provision that may give rise to
doubts, the intent of the framers and of the people may be gleaned
from provisions in pari materia.
Respondents submit that said ruling in the aforecited case applies equally with force
in the case at bar. Respondents also maintain that the requisites under the Local
Government Code (P.D. 337) for the creation of the new province of Negros del
Norte have all been duly complied with, Respondents discredit petitioners'
allegations that the requisite area of 3,500 square kilometers as so prescribed in the
Local Government Code for a new province to be created has not been satisfied.
Petitioners insist that the area which would comprise the new province of Negros del
Norte, would only be about 2,856.56 square kilometers and which evidently would be
lesser than the minimum area prescribed by the governing statute. Respondents, in
this regard, point out and stress that Section 2 of Batas Pambansa Blg. 885 creating
said new province plainly declares that the territorial boundaries of Negros del Norte
comprise an area of 4,019.95 square kilometers, more or less.
As a final argument, respondents insist that instant petition has been rendered moot
and academic considering that a plebiscite has been already conducted on January
3, 1986; that as a result thereof, the corresponding certificate of canvass indicated
that out of 195,134 total votes cast in said plebiscite, 164,734 were in favor of the
235
creation of Negros del Norte and 30,400 were against it; and because "the
affirmative votes cast represented a majority of the total votes cast in said plebiscite,
the Chairman of the Board of Canvassers proclaimed the new province which shall
be known as "Negros del Norte". Thus, respondents stress the fact that following the
proclamation of Negros del Norte province, the appointments of the officials of said
province created were announced. On these considerations, respondents urge that
this case should be dismissed for having been rendered moot and academic as the
creation of the new province is now a "fait accompli."
In resolving this case, it will be useful to note and emphasize the facts which appear
to be agreed to by the parties herein or stand unchallenged.
Firstly, there is no disagreement that the Provincial Treasurer of the Province of
Negros Occidental has not disbursed, nor was required to disburse any public funds
in connection with the plebiscite held on January 3, 1986 as so disclosed in the
Comment to the Petition filed by the respondent Provincial Treasurer of Negros
Occidental dated January 20, 1986 (Rollo, pp. 36-37). Thus, the prayer of the
petitioners that said Provincial Treasurer be directed by this Court to desist from
ordering the release of any public funds on account of such plebiscite should not
longer deserve further consideration.
Secondly, in Parliamentary Bill No. 3644 which led to the enactment of Batas
Pambansa Blg. 885 and the creation of the new Province of Negros del Norte, it
expressly declared in Sec. 2 of the aforementioned Parliamentary Bill, the following:
SEC. 2. The boundaries of the new province shall be the southern
limits of the City of Silay, the Municipality of Salvador Benedicto and
the City of San Carlos on the South and the natural boundaries of the
northern portion of the Island of Negros on the West, North and
East, containing an area of 285,656 hectares more or less. (Emphasis
supplied).
However, when said Parliamentary Bill No. 3644 was very quickly enacted into Batas
Pambansa Blg. 885, the boundaries of the new Province of Negros del Norte were
defined therein and its boundaries then stated to be as follows:
SECTION 1. The Cities of Silay, Cadiz, and San Carlos and the
municipalities of Calatrava, Toboso, Escalante, Sagay, Manapla,
Victorias, E.R. Magalona; and Salvador Benedicto, all in the northern
portion of the Island of Negros, are hereby separated from the
Province of Negros Occidental and constituted into a new province to
be known as the Province of Negros del Norte.
SEC. 1. The boundaries of the new province shall be the southern
limits of the City of Silay, the Municipality of Salvador Benedicto and
the City of San Carlos on the south and the territorial limits of the
northern portion of the Island of Negros on the West, North and East,
comprising a territory of 4,019.95 square kilometers more or less.
Equally accepted by the parties is the fact that under the certification issued by
Provincial Treasurer Julian L. Ramirez of the Province of Negros Occidental, dated
July 16, 1985, it was therein certified as follows:
xxx xxx xxx
This is to certify that the following cities and municipalities of Negros
Occidental have the land area as indicated hereunder based on the
Special Report No. 3, Philippines 1980, Population, Land Area and
Density: 1970, 1975 and 1980 by the National Census and Statistics
Office, Manila.
Land Area
(Sq. Km.)
1. Silay City ...................................................................214.8
2. E.B. Magalona............................................................113.3
3. Victorias.....................................................................133.9
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4. Manapla......................................................................112.9
5. Cadiz City ..................................................................516.5
6. Sagay .........................................................................389.6
7. Escalante ....................................................................124.0
8. Toboso.......................................................................123.4
9. Calatrava.....................................................................504.5
10. San Carlos City...........................................................451.3
11. Don Salvador Benedicto.................................... (not available)
This certification is issued upon the request of Dr. Patricio Y. Tan for
whatever purpose it may serve him.
(SGD.) JULIAN L. RAMIREZ
Provincial Treasurer (Exh. "C" of Petition, Rollo, p. 90).
Although in the above certification it is stated that the land area of the relatively new
municipality of Don Salvador Benedicto is not available, it is an uncontradicted fact
that the area comprising Don Salvador municipality, one of the component units of
the new province, was derived from the City of San Carlos and from the Municipality
of Calatrava, Negros Occidental, and added thereto was a portion of about one-
fourth the land area of the town of Murcia, Negros Occidental. It is significant to note
the uncontroverted submission of petitioners that the total land area of the entire
municipality of Murcia, Negros Occidental is only 322.9 square kilometers (Exh. "D",
Rollo, p. 91). One-fourth of this total land area of Murcia that was added to the
portions derived from the land area of Calatrava, Negros Occidental and San Carlos
City (Negros Occidental) would constitute, therefore, only 80.2 square kilometers.
This area of 80.2 square kilometers if then added to 2,685.2 square kilometers,
representing the total land area of the Cities of Silay, San Carlos and Cadiz and the
Municipalities of E.R. Magalona, Victorias, Manapla, Sagay, Escalante, Taboso and
Calatrava, will result in approximately an area of only 2,765.4 square kilometers
using as basis the Special Report, Philippines 1980, Population, Land Area and
Density: 1970, 1975 and 1980 of the National Census and Statistics Office, Manila
(see Exhibit "C", Rollo, p. 90).
No controversion has been made by respondent with respect to the allegations of
petitioners that the original provision in the draft legislation, Parliamentary Bill No.
3644, reads:
SEC. 4. A plebiscite shall be conducted in the areas affected within a
period of one hundred and twenty days from the approval of this Act.
After the ratification of the creation of the Province of Negros del
Norte by a majority of the votes cast in such plebiscite, the President
shall appoint the first officials of the new province.
However, when Batas Pambansa Blg. 885 was enacted, there was a significant
change in the above provision. The statute, as modified, provides that the requisite
plebiscite "shall be conducted in the proposed new province which are the areas
affected."
It is this legislative determination limiting the plebiscite exclusively to the cities and
towns which would comprise the new province that is assailed by the petitioners as
violative of the provisions of our Constitution. Petitioners submit that Sec. 3, ART XI
thereof, contemplates a plebiscite that would be held in the unit or units affected by
the creation of the new province as a result of the consequent division of and
substantial alteration of the boundaries of the existing province. In this instance, the
voters in the remaining areas of the province of Negros Occidental should have been
allowed to participate in the questioned plebiscite.
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,
237
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
perpetuation 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.
In the light of the facts and circumstances alluded to by petitioners as attending to
the unusually rapid creation of the instant province of Negros del Norte after a swiftly
scheduled plebiscite, this Tribunal has the duty to repudiate and discourage the
commission of acts which run counter to the mandate of our fundamental law, done
by whatever branch of our government. This Court gives notice that it will not look
with favor upon those who may be hereafter inclined to ram through all sorts of
legislative measures and then implement the same with indecent haste, even if such
acts would violate the Constitution and the prevailing statutes of our land. It is
illogical to ask that this Tribunal be blind and deaf to protests on the ground that what
is already done is done. To such untenable argument the reply would be that, be this
so, the Court, nevertheless, still has the duty and right to correct and rectify the
wrong brought to its attention.
On the merits of the case.
Aside from the simpler factual issue relative to the land area of the new province of
Negros del Norte, the more significant and pivotal issue in the present case revolves
around in the interpretation and application in the case at bar of Article XI, Section 3
of the Constitution, which being brief and for convenience, We again quote:
SEC. 3. No province, city, municipality or barrio 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 in a plebiscite in the unit or units affected.
It can be plainly seen that the aforecited constitutional provision makes it imperative
that there be first obtained "the approval of a majority of votes in the plebiscite in the
unit or units affected" whenever a province is created, divided or merged and there is
substantial alteration of the boundaries. It is thus inescapable to conclude that the
boundaries of the existing province of Negros Occidental would necessarily be
substantially altered by the division of its existing boundaries in order that there can
be created the proposed new province of Negros del Norte. Plain and simple logic
will demonstrate than that two political units would be affected. The first would be the
parent province of Negros Occidental because its boundaries would be substantially
altered. The other affected entity would be composed of those in the area subtracted
from the mother province to constitute the proposed province of Negros del Norte.
We find no way to reconcile the holding of a plebiscite that should conform to said
constitutional requirement but eliminates the participation of either of these two
component political units. No amount of rhetorical flourishes can justify exclusion of
the parent province in the plebiscite because of an alleged intent on the part of the
authors and implementors of the challenged statute to carry out what is claimed to be
a mandate to guarantee and promote autonomy of local government units. The
alleged good intentions cannot prevail and overrule the cardinal precept that what
our Constitution categorically directs to be done or imposes as a requirement must
first be observed, respected and complied with. No one should be allowed to pay
homage to a supposed fundamental policy intended to guarantee and promote
autonomy of local government units but at the same time transgress, ignore and
disregard what the Constitution commands in Article XI Section 3 thereof.
Respondents would be no different from one who hurries to pray at the temple but
then spits at the Idol therein.
We find no merit in the submission of the respondents that the petition should be
dismissed because the motive and wisdom in enacting the law may not be
challenged by petitioners. The principal point raised by the petitioners is not the
wisdom and motive in enacting the law but the infringement of the Constitution which
is a proper subject of judicial inquiry.
238
Petitioners' discussion regarding the motives behind the enactment of B.P. Blg. 885
to say the least, are most enlightening and provoking but are factual issues the Court
cannot properly pass upon in this case. Mention by petitioners of the unexplained
changes or differences in the proposed Parliamentary Bill No. 3644 and the enacted
Batas Pambansa Blg. 885; the swift and surreptitious manner of passage and
approval of said law; the abrupt scheduling of the plebiscite; the reference to news
articles regarding the questionable conduct of the said plebiscite held on January 3,
1986; all serve as interesting reading but are not the decisive matters which should
be reckoned in the resolution of this case.
What the Court considers the only significant submissions lending a little support to
respondents' case is their reliance on the rulings and pronouncements made by this
Court in the case of Governor Zosimo Paredes versus The Honorable Executive
Secretary to the President, et al., G.R. No. 55628, March 2, 1984 (128 SCRA 6). In
said case relating to a plebiscite held to ratify the creation of a new municipality from
existing barangays, this Court upheld the legality of the plebiscite which was
participated in exclusively by the people of the barangay that would constitute the
new municipality.
This Court is not unmindful of this solitary case alluded to by respondents. What is,
however, highly significant are the prefatory statements therein stating that said case
is "one of those cases where the discretion of the Court is allowed considerable
leeway" and that "there is indeed an element of ambiguity in the use of the
expression unit or units affected." The ruling rendered in said case was based on a
claimed prerogative of the Court then to exercise its discretion on the matter. It did
not resolve the question of how the pertinent provision of the Constitution should be
correctly interpreted.
The ruling in the aforestated case of Paredes vs. The Honorable Executive
Secretary, et al. (supra) should not be taken as a doctrinal or compelling precedent
when it is acknowledged therein that "it is plausible to assert, as petitioners do, that
when certain Barangays are separated from a parent municipality to form a new one,
all the voters therein are affected."
It is relevant and most proper to mention that in the aforecited case of Paredes vs.
Executive Secretary, invoked by respondents, We find very lucidly expressed the
strong dissenting view of Justice Vicente Abad Santos, a distinguished member of
this Court, as he therein voiced his opinion, which We hereunder quote:
2. ... when the Constitution speaks of "the unit or units affected" it
means all of the people of the municipality if the municipality is to be
divided such as in the case at bar or an of the people of two or more
municipalities if there be a merger. I see no ambiguity in the
Constitutional provision.
This dissenting opinion of Justice Vicente Abad Santos is the— forerunner of the
ruling which We now consider applicable to the case at bar, In the analogous case
of Emilio C. Lopez, Jr., versus the Honorable Commission on Elections, L-56022,
May 31, 1985, 136 SCRA 633, this dissent was reiterated by Justice Abad Santos as
he therein assailed as suffering from a constitutional infirmity a referendum which did
not include all the people of Bulacan and Rizal, when such referendum was intended
to ascertain if the people of said provinces were willing to give up some of their
towns to Metropolitan Manila. His dissenting opinion served as a useful guideline in
the instant case.
Opportunity to re-examine the views formerly held in said cases is now afforded the
present Court. The reasons in the mentioned cases invoked by respondents herein
were formerly considered acceptable because of the views then taken that local
autonomy would be better promoted However, even this consideration no longer
retains persuasive value.
The environmental facts in the case before Us readily disclose that the subject
matter under consideration is of greater magnitude with concomitant multifarious
complicated problems. In the earlier case, what was involved was a division of a
barangay which is the smallest political unit in the Local Government Code.
Understandably, few and lesser problems are involved. In the case at bar, creation of
a new province relates to the largest political unit contemplated in Section 3, Art. XI
of the Constitution. To form the new province of Negros del Norte no less than three
cities and eight municipalities will be subtracted from the parent province of Negros
Occidental. This will result in the removal of approximately 2,768.4 square kilometers
from the land area of an existing province whose boundaries will be consequently
substantially altered. It becomes easy to realize that the consequent effects cf the
239
division of the parent province necessarily will affect all the people living in the
separate areas of Negros Occidental and the proposed province of Negros del Norte.
The economy of the parent province as well as that of the new province will be
inevitably affected, either for the better or for the worse. Whatever be the case, either
or both of these political groups will be affected and they are, therefore, the unit or
units referred to in Section 3 of Article XI of the Constitution which must be included
in the plebiscite contemplated therein.
It is a well accepted rule that "in ascertaining the meaning of a particular provision
that may give rise to doubts, the intent of the framers and of the people, may be
gleaned from the provisions in pari materia." Parliamentary Bill No. 3644 which
proposed the creation of the new province of Negros del Norte recites in Sec. 4
thereof that "the plebiscite shall be conducted in the areas affected within a period of
one hundred and twenty days from the approval of this Act." As this draft legislation
speaks of "areas," what was contemplated evidently are plurality of areas to
participate in the plebiscite. Logically, those to be included in such plebiscite would
be the people living in the area of the proposed new province and those living in the
parent province. This assumption will be consistent with the requirements set forth in
the Constitution.
We fail to find any legal basis for the unexplained change made when Parliamentary
Bill No. 3644 was enacted into Batas Pambansa Blg. 885 so that it is now provided in
said enabling law that the plebiscite "shall be conducted in the proposed new
province which are the areas affected." We are not disposed to agree that by mere
legislative fiat the unit or units affected referred in the fundamental law can be
diminished or restricted by the Batasang Pambansa to cities and municipalities
comprising the new province, thereby ignoring the evident reality that there are other
people necessarily affected.
In the mind of the Court, the change made by those responsible for the enactment of
Batas Pambansa Blg. 885 betrays their own misgivings. They must have entertained
apprehensions that by holding the plebiscite only in the areas of the new proposed
province, this tactic will be tainted with illegality. In anticipation of a possible strong
challenge to the legality of such a plebiscite there was, therefore, deliberately added
in the enacted statute a self-serving phrase that the new province constitutes the
area affected. Such additional statement serves no useful purpose for the same is
misleading, erroneous and far from truth. The remaining portion of the parent
province is as much an area affected. The substantial alteration of the boundaries of
the parent province, not to mention the other adverse economic effects it might
suffer, eloquently argue the points raised by the petitioners.
Petitioners have averred without contradiction that after the creation of Negros del
Norte, the province of Negros Occidental would be deprived of the long established
Cities of Silay, Cadiz, and San Carlos, as well as the municipality of Victorias. No
controversion has been made regarding petitioners' assertion that the areas of the
Province of Negros Occidental will be diminished by about 285,656 hectares and it
will lose seven of the fifteen sugar mills which contribute to the economy of the whole
province. In the language of petitioners, "to create Negros del Norte, the existing
territory and political subdivision known as Negros Occidental has to be partitioned
and dismembered. What was involved was no 'birth' but "amputation." We agree with
the petitioners that in the case of Negros what was involved was a division, a
separation; and consequently, as Sec. 3 of Article XI of the Constitution anticipates,
a substantial alteration of boundary.
As contended by petitioners,—
Indeed, the terms 'created', 'divided', 'merged', 'abolished' as used in
the constitutional provision do not contemplate distinct situation
isolated from the mutually exclusive to each other. A Province
maybe created where an existing province is divided or two provinces
merged. Such cases necessarily will involve existing unit or
units abolished and definitely the boundary being substantially altered.
It would thus be inaccurate to state that where an existing political unit
is divided or its boundary substantially altered, as the Constitution
provides, only some and not all the voters in the whole unit which
suffers dismemberment or substantial alteration of its boundary are
affected. Rather, the contrary is true.
It is also Our considered view that even hypothetically assuming that the merits of
this case can depend on the mere discretion that this Court may exercise,
nevertheless, it is the petitioners' case that deserve to be favored.
240
It is now time for this Court to set aside the equivocations and the indecisive
pronouncements in the adverted case of Paredes vs. the Honorable Executive
Secretary, et al. (supra). For the reasons already here express, We now state that
the ruling in the two mentioned cases sanctioning the exclusion of the voters
belonging to an existing political unit from which the new political unit will be derived,
from participating in the plebiscite conducted for the purpose of determining the
formation of another new political unit, is hereby abandoned.
In their supplemental petition, dated January 4, 1986, it is prayed for by petitioners
that a writ of mandamus be issued, directing the respondent Commission on
Elections, to schedule the holding of another plebiscite at which all the qualified
voters of the entire province of Negros Occidental as now existing shall participate
and that this Court make a pronouncement that the plebiscite held on January 3,
1986 has no legal effect for being a patent nullity.
The Court is prepared to declare the said plebiscite held on January 3, 1986 as null
and void and violative of the provisions of Sec. 3, Article XI of the Constitution. The
Court is not, however, disposed to direct the conduct of a new plebiscite, because
We find no legal basis to do so. With constitutional infirmity attaching to the subject
Batas Pambansa Big. 885 and also because the creation of the new province of
Negros del Norte is not in accordance with the criteria established in the Local
Government Code, the factual and legal basis for the creation of such new province
which should justify the holding of another plebiscite does not exist.
Whatever claim it has to validity and whatever recognition has been gained by the
new province of Negros del Norte because of the appointment of the officials thereof,
must now be erased. That Negros del Norte is but a legal fiction should be
announced. Its existence should be put to an end as quickly as possible, if only to
settle the complications currently attending to its creation. As has been manifested,
the parent province of Negros del Norte has been impleaded as the defendant in a
suit filed by the new Province of Negros del Norte, before the Regional Trial Court of
Negros (del Norte), docketed as Civil Case No. 169-C, for the immediate allocation,
distribution and transfer of funds by the parent province to the new province, in an
amount claimed to be at least P10,000,000.00.
The final nail that puts to rest whatever pretension there is to the legality of the
province of Negros del Norte is the significant fact that this created province does not
even satisfy the area requirement prescribed in Section 197 of the Local Government
Code, as earlier discussed.
It is of course claimed by the respondents in their Comment to the exhibits submitted
by the petitioners (Exhs. C and D, Rollo, pp. 19 and 91), that the new province has a
territory of 4,019.95 square kilometers, more or less. This assertion is made to
negate the proofs submitted, disclosing that the land area of the new province cannot
be more than 3,500 square kilometers because its land area would, at most, be only
about 2,856 square kilometers, taking into account government statistics relative to
the total area of the cities and municipalities constituting Negros del Norte.
Respondents insist that when Section 197 of the Local Government Code speaks of
the territory of the province to be created and requires that such territory be at least
3,500 square kilometers, what is contemplated is not only the land area but also the
land and water over which the said province has jurisdiction and control. It is even
the submission of the respondents that in this regard the marginal sea within the
three mile limit should be considered in determining the extent of the territory of the
new province. Such an interpretation is strained, incorrect, and fallacious.
The last sentence of the first paragraph of Section 197 is most revealing. As so
stated therein the "territory need not be contiguous if it comprises two or more
islands." The use of the word territory in this particular provision of the Local
Government Code and in the very last sentence thereof, clearly reflects
that "territory" as therein used, has reference only to the mass of land area and
excludes the waters over which the political unit exercises control.
Said sentence states that the "territory need not be contiguous." Contiguous means
(a) in physical contact; (b) touching along all or most of one side; (c) near, text, or
adjacent (Webster's New World Dictionary, 1972 Ed., p. 307). "Contiguous", when
employed as an adjective, as in the above sentence, is only used when it describes
physical contact, or a touching of sides of two solid masses of matter. The meaning
of particular terms in a statute may be ascertained by reference to words associated
with or related to them in the statute (Animal Rescue League vs. Assessors, 138
A.L.R. p. 110). Therefore, in the context of the sentence above, what need not be
"contiguous" is the "territory" the physical mass of land area. There would arise no
241
need for the legislators to use the word contiguous if they had intended that the term
"territory" embrace not only land area but also territorial waters. It can be safely
concluded that the word territory in the first paragraph of Section 197 is meant to be
synonymous with "land area" only. The words and phrases used in a statute should
be given the meaning intended by the legislature (82 C.J.S., p. 636). The sense in
which the words are used furnished the rule of construction (In re Winton Lumber
Co., 63 p. 2d., p. 664).
The distinction between "territory" and "land area" which respondents make is an
artificial or strained construction of the disputed provision whereby the words of the
statute are arrested from their plain and obvious meaning and made to bear an
entirely different meaning to justify an absurd or unjust result. The plain meaning in
the language in a statute is the safest guide to follow in construing the statute. A
construction based on a forced or artificial meaning of its words and out of harmony
of the statutory scheme is not to be favored (Helvering vs. Hutchings, 85 L. Ed., p.
909).
It would be rather preposterous to maintain that a province with a small land area but
which has a long, narrow, extended coast line, (such as La Union province) can be
said to have a larger territory than a land-locked province (such as Ifugao or
Benguet) whose land area manifestly exceeds the province first mentioned.
Allegations have been made that the enactment of the questioned state was marred
by "dirty tricks", in the introduction and passing of Parliamentary Bill No. 3644 "in
secret haste" pursuant to sinister designs to achieve "pure and simple
gerrymandering; "that recent happenings more than amply demonstrate that far from
guaranteeing its autonomy it (Negros del Norte) has become the fiefdom of a local
strongman" (Rollo, p. 43; emphasis supplied).
It is not for this Court to affirm or reject such matters not only because the merits of
this case can be resolved without need of ascertaining the real motives and wisdom
in the making of the questioned law. No proper challenge on those grounds can also
be made by petitioners in this proceeding. Neither may this Court venture to guess
the motives or wisdom in the exercise of legislative powers. Repudiation of improper
or unwise actions taken by tools of a political machinery rests ultimately, as recent
events have shown, on the electorate and the power of a vigilant people.
Petitioners herein deserve and should receive the gratitude of the people of the
Province of Negros Occidental and even by our Nation. Commendable is the
patriotism displayed by them in daring to institute this case in order to preserve the
continued existence of their historic province. They were inspired undoubtedly by
their faithful commitment to our Constitution which they wish to be respected and
obeyed. Despite the setbacks and the hardships which petitioners aver confronted
them, they valiantly and unfalteringly pursued a worthy cause. A happy destiny for
our Nation is assured as long as among our people there would be exemplary
citizens such as the petitioners herein.
WHEREFORE, Batas Pambansa Blg. 885 is hereby declared unconstitutional. The
proclamation of the new province of Negros del Norte, as well as the appointment of
the officials thereof are also declared null and void.
SO ORDERED.
G.R. No. 176951               February 15, 2011
LEAGUE OF CITIES OF THE PHILIPPINES (LCP), Represented by LCP National
President Jerry P. Treñas; City of Calbayog, represented by Mayor Mel Senen
S. Sarmiento; and Jerry P. Treñas, in his personal capacity as
Taxpayer, Petitioners,
vs.
COMMISSION ON ELECTIONS; Municipality of Baybay, Province of Leyte;
Municipality of Bogo, Province of Cebu; Municipality of Catbalogan, Province
of Western Samar; Municipality of Tandag, Province of Surigao del Sur;
Municipality of Borongan, Province of Eastern Samar; and Municipality of
Tayabas, Province of Quezon, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 177499
LEAGUE OF CITIES OF THE PHILIPPINES (LCP), Represented by LCP National
President Jerry P. Treñas; City of Calbayog, represented by Mayor Mel Senen
242
S. Sarmiento; and Jerry P. Treñas, in his personal capacity as
Taxpayer, Petitioners,
vs.
COMMISSION ON ELECTIONS; Municipality of Lamitan, Province of Basilan;
Municipality of Tabuk, Province of Kalinga; Municipality of Bayugan, Province
of Agusan del Sur; Municipality of Batac, Province of Ilocos Norte; Municipality
of Mati, Province of Davao Oriental; and Municipality of Guihulngan, Province
of Negros Oriental, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 178056
LEAGUE OF CITIES OF THE PHILIPPINES (LCP), Represented by LCP National
President Jerry P. Treñas; City of Calbayog, represented by Mayor Mel Senen
S. Sarmiento; and Jerry P. Treñas, in his personal capacity as
Taxpayer, Petitioners,
vs.
COMMISSION ON ELECTIONS; Municipality of Cabadbaran, Province of
Agusan del Norte; Municipality of Carcar, Province of Cebu; Municipality of El
Salvador, Province of Misamis Oriental; Municipality of Naga, Cebu; and
Department of Budget and Management, Respondents.
RESOLUTION
BERSAMIN, J.:
For consideration of this Court are the following pleadings:
1. Motion for Reconsideration of the "Resolution" dated August 24, 2010
dated and filed on September 14, 2010 by respondents Municipality of
Baybay, et al.; and
2. Opposition [To the "Motion for Reconsideration of the ‘Resolution’ dated
August 24, 2010"].
Meanwhile, respondents also filed on September 20, 2010 a Motion to Set "Motion
for Reconsideration of the ‘Resolution’ dated August 24, 2010" for Hearing. This
motion was, however, already denied by the Court En Banc.
A brief background —
These cases were initiated by the consolidated petitions for prohibition filed by the
League of Cities of the Philippines (LCP), City of Iloilo, City of Calbayog, and Jerry P.
Treñas, assailing the constitutionality of the sixteen (16) laws,1 each converting the
municipality covered thereby into a component city (Cityhood Laws), and seeking to
enjoin the Commission on Elections (COMELEC) from conducting plebiscites
pursuant to the subject laws.
In the Decision dated November 18, 2008, the Court En Banc, by a 6-5
vote,2 granted the petitions and struck down the Cityhood Laws as unconstitutional
for violating Sections 10 and 6, Article X, and the equal protection clause.
In the Resolution dated March 31, 2009, the Court En Banc, by a 7-5 vote,3 denied
the first motion for reconsideration.
On April 28, 2009, the Court En Banc issued a Resolution, with a vote of 6-6,4 which
denied the second motion for reconsideration for being a prohibited pleading.
In its June 2, 2009 Resolution, the Court En Banc clarified its April 28, 2009
Resolution in this wise—
As a rule, a second motion for reconsideration is a prohibited pleading pursuant to
Section 2, Rule 52 of the Rules of Civil Procedure which provides that: "No second
motion for reconsideration of a judgment or final resolution by the same party shall
be entertained." Thus, a decision becomes final and executory after 15 days from
receipt of the denial of the first motion for reconsideration.
However, when a motion for leave to file and admit a second motion for
reconsideration is granted by the Court, the Court therefore allows the filing of the
243
second motion for reconsideration. In such a case, the second motion for
reconsideration is no longer a prohibited pleading.
In the present case, the Court voted on the second motion for reconsideration filed
by respondent cities. In effect, the Court allowed the filing of the second motion for
reconsideration. Thus, the second motion for reconsideration was no longer a
prohibited pleading. However, for lack of the required number of votes to overturn the
18 November 2008 Decision and 31 March 2009 Resolution, the Court denied the
second motion for reconsideration in its 28 April 2009 Resolution.5
Then, in another Decision dated December 21, 2009, the Court En Banc, by a vote
of 6-4,6 declared the Cityhood Laws as constitutional.
On August 24, 2010, the Court En Banc, through a Resolution, by a vote of 7-
6,7 resolved the Ad Cautelam Motion for Reconsideration and Motion to Annul the
Decision of December 21, 2009, both filed by petitioners, and the Ad Cautelam
Motion for Reconsideration filed by petitioners-in-intervention Batangas City,
Santiago City, Legazpi City, Iriga City, Cadiz City, and Oroquieta City, reinstating the
November 18, 2008 Decision. Hence, the aforementioned pleadings.
Considering these circumstances where the Court En Banc has twice changed its
position on the constitutionality of the 16 Cityhood Laws, and especially taking note
of the novelty of the issues involved in these cases, the Motion for Reconsideration
of the "Resolution" dated August 24, 2010 deserves favorable action by this Court on
the basis of the following cogent points:
1.
The 16 Cityhood Bills do not violate Article X, Section 10 of the Constitution.
Article X, Section 10 provides—
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 approval by a
majority of the votes cast in a plebiscite in the political units directly affected.
The tenor of the ponencias of the November 18, 2008 Decision and the August 24,
2010 Resolution is that the exemption clauses in the 16 Cityhood Laws are
unconstitutional because they are not written in the Local Government Code of 1991
(LGC), particularly Section 450 thereof, as amended by Republic Act (R.A.) No.
9009, which took effect on June 30, 2001, viz.—
Section 450. Requisites for Creation. –a) A municipality or a cluster of barangays
may be converted into a component city if it has a locally generated annual income,
as certified by the Department of Finance, of at least One Hundred Million Pesos
(₱100,000,000.00) for at least two (2) consecutive years based on 2000 constant
prices, and if it has either of the following requisites:
xxxx
(c) The average annual income shall include the income accruing to the general
fund, exclusive of special funds, transfers, and non-recurring income. (Emphasis
supplied)
Prior to the amendment, Section 450 of the LGC required only an average annual
income, as certified by the Department of Finance, of at least ₱20,000,000.00 for the
last two (2) consecutive years, based on 1991 constant prices.
Before Senate Bill No. 2157, now R.A. No. 9009, was introduced by Senator Aquilino
Pimentel, there were 57 bills filed for conversion of 57 municipalities into component
cities. During the 11th Congress (June 1998-June 2001), 33 of these bills were
enacted into law, while 24 remained as pending bills. Among these 24 were the 16
municipalities that were converted into component cities through the Cityhood Laws.
The rationale for the enactment of R.A. No. 9009 can be gleaned from the
sponsorship speech of Senator Pimentel on Senate Bill No. 2157, to wit—
244
Senator Pimentel. Mr. President, I would have wanted this bill to be included in the
whole set of proposed amendments that we have introduced to precisely amend the
Local Government Code. However, it is a fact that there is a mad rush of
municipalities wanting to be converted into cities. Whereas in 1991, when the Local
Government was approved, there were only 60 cities, today the number has
increased to 85 cities, with 41 more municipalities applying for conversion to the
same status. At the rate we are going, I am apprehensive that before long this nation
will be a nation of all cities and no municipalities.
It is for that reason, Mr. President, that we are proposing among other things, that
the financial requirement, which, under the Local Government Code, is fixed at P20
million, be raised to P100 million to enable a municipality to have the right to be
converted into a city, and the P100 million should be sourced from locally generated
funds.
What has been happening, Mr. President, is, the municipalities aspiring to become
cities say that they qualify in terms of financial requirements by incorporating the
Internal Revenue share of the taxes of the nation on to their regularly generated
revenue. Under that requirement, it looks clear to me that practically all municipalities
in this country would qualify to become cities.
It is precisely for that reason, therefore, that we are seeking the approval of this
Chamber to amend, particularly Section 450 of Republic Act No. 7160, the requisite
for the average annual income of a municipality to be converted into a city or cluster
of barangays which seek to be converted into a city, raising that revenue requirement
from ₱20 million to ₱100 million for the last two consecutive years based on 2000
constant prices.
While R.A. No. 9009 was being deliberated upon, Congress was well aware of the
pendency of conversion bills of several municipalities, including those covered by the
Cityhood Laws, desiring to become component cities which qualified under the ₱20
million income requirement of the old Section 450 of the LGC. The interpellation of
Senate President Franklin Drilon of Senator Pimentel is revealing, thus—
THE PRESIDENT. The Chair would like to ask for some clarificatory point.
SENATOR PIMENTEL. Yes, Mr. President.
THE PRESIDENT. This is just on the point of the pending bills in the Senate which
propose the conversion of a number of municipalities into cities and which qualify
under the present standard.
We would like to know the view of the sponsor: Assuming that this bill becomes a
law, will the Chamber apply the standard as proposed in this bill to those bills which
are pending for consideration?
SENATOR PIMENTEL. Mr. President, it might not be fair to make this bill, on the
assumption that it is approved, retroact to the bills that are pending in the Senate
conversion from municipalities to cities.
THE PRESIDENT. Will there be an appropriate language crafted to reflect that view?
Or does it not become a policy of the Chamber, assuming that this bill becomes a
law tomorrow, that it will apply to those bills which are already approved by the
House under the old version of the Local Government Code and are now pending in
the Senate? The Chair does not know if we can craft a language which will limit the
application to those which are not yet in the Senate. Or is that a policy that the
Chamber will adopt?
SENATOR PIMENTEL. Mr. President, personally, I do not think it is necessary to put
that provision because what we are saying here will form part of the interpretation of
this bill. Besides, if there is no retroactivity clause, I do not think that the bill would
have any retroactive effect.
THE PRESIDENT. So the understanding is that those bills which are already
pending in the Chamber will not be affected.
SENATOR PIMENTEL. These will not be affected, Mr. President.
THE PRESIDENT. Thank you Mr. Chairman.9
245
Clearly, based on the above exchange, Congress intended that those with pending
cityhood bills during the 11th Congress would not be covered by the new and higher
income requirement of ₱100 million imposed by R.A. No. 9009. When the LGC was
amended by R.A. No. 9009, the amendment carried with it both the letter and the
intent of the law, and such were incorporated in the LGC by which the compliance of
the Cityhood Laws was gauged.
Notwithstanding that both the 11th and 12th Congress failed to act upon the pending
cityhood bills, both the letter and intent of Section 450 of the LGC, as amended by
R.A. No. 9009, were carried on until the 13th Congress, when the Cityhood Laws
were enacted. The exemption clauses found in the individual Cityhood Laws are the
express articulation of that intent to exempt respondent municipalities from the
coverage of R.A. No. 9009.
Even if we were to ignore the above quoted exchange between then Senate
President Drilon and Senator Pimentel, it cannot be denied that Congress saw the
wisdom of exempting respondent municipalities from complying with the higher
income requirement imposed by the amendatory R.A. No. 9009. Indeed, these
municipalities have proven themselves viable and capable to become component
cities of their respective provinces. It is also acknowledged that they were centers of
trade and commerce, points of convergence of transportation, rich havens of
agricultural, mineral, and other natural resources, and flourishing tourism spots. In
this regard, it is worthy to mention the distinctive traits of each respondent
municipality, viz—
Batac, Ilocos Norte – It is the biggest municipality of the 2nd District of Ilocos Norte,
2nd largest and most progressive town in the province of Ilocos Norte and the natural
convergence point for the neighboring towns to transact their commercial ventures
and other daily activities. A growing metropolis, Batac is equipped with amenities of
modern living like banking institutions, satellite cable systems, telecommunications
systems. Adequate roads, markets, hospitals, public transport systems, sports, and
entertainment facilities. [Explanatory Note of House Bill No. 5941, introduced by Rep.
Imee R. Marcos.]
El Salvador, Misamis Oriental – It is located at the center of the Cagayan-Iligan
Industrial Corridor and home to a number of industrial companies and corporations.
Investment and financial affluence of El Salvador is aptly credited to its industrious
and preserving people. Thus, it has become the growing investment choice even
besting nearby cities and municipalities. It is home to Asia Brewery as distribution
port of their product in Mindanao. The Gokongwei Group of Companies is also doing
business in the area. So, the conversion is primarily envisioned to spur economic
and financial prosperity to this coastal place in North-Western Misamis Oriental.
[Explanatory Note of House Bill No. 6003, introduced by Rep. Augusto H. Bacullo.]
Cabadbaran, Agusan del Norte – It is the largest of the eleven (11) municipalities in
the province of Agusan del Norte. It plays strategic importance to the administrative
and socio-economic life and development of Agusan del Norte. It is the foremost in
terms of trade, commerce, and industry. Hence, the municipality was declared as the
new seat and capital of the provincial government of Agusan del Norte pursuant to
Republic Act No. 8811 enacted into law on August 16, 2000. Its conversion will
certainly promote, invigorate, and reinforce the economic potential of the province in
establishing itself as an agro-industrial center in the Caraga region and accelerate
the development of the area. [Explanatory Note of House Bill No. 3094, introduced
by Rep. Ma. Angelica Rosedell M. Amante.]
Borongan, Eastern Samar – It is the capital town of Eastern Samar and the
development of Eastern Samar will depend to a certain degree of its urbanization. It
will serve as a catalyst for the modernization and progress of adjacent towns
considering the frequent interactions between the populace. [Explanatory Note of
House Bill No. 2640, introduced by Rep. Marcelino C. Libanan.]
Lamitan, Basilan – Before Basilan City was converted into a separate province,
Lamitan was the most progressive part of the city. It has been for centuries the
center of commerce and the seat of the Sultanate of the Yakan people of Basilan.
The source of its income is agro-industrial and others notably copra, rubber, coffee
and host of income generating ventures. As the most progressive town in Basilan,
Lamitan continues to be the center of commerce catering to the municipalities of
Tuburan, Tipo-Tipo and Sumisip. [Explanatory Note of House Bill No. 5786,
introduced by Rep. Gerry A. Salapuddin.]
Catbalogan, Samar – It has always been the socio-economic-political capital of the
Island of Samar even during the Spanish era. It is the seat of government of the two
246
congressional districts of Samar. Ideally located at the crossroad between Northern
and Eastern Samar, Catbalogan also hosts trade and commerce activates among
the more prosperous cities of the Visayas like Tacloban City, Cebu City and the cities
of Bicol region. The numerous banks and telecommunication facilities showcases the
healthy economic environment of the municipality. The preeminent and sustainable
economic situation of Catbalogan has further boosted the call of residents for a more
vigorous involvement of governance of the municipal government that is inherent in a
city government. [Explanatory Note of House Bill No. 2088, introduced by Rep.
Catalino V. Figueroa.]
Bogo, Cebu – Bogo is very qualified for a city in terms of income, population and
area among others. It has been elevated to the Hall of Fame being a five-time winner
nationwide in the clean and green program. [Explanatory Note of House Bill No.
3042, introduced by Rep. Clavel A. Martinez.]
Tandag, Surigao del Sur – This over 350 year old capital town the province has long
sought its conversion into a city that will pave the way not only for its own growth and
advancement but also help in the development of its neighboring municipalities and
the province as a whole. Furthermore, it can enhance its role as the province’s trade,
financial and government center. [Explanatory Note of House Bill No. 5940,
introduced by Rep. Prospero A. Pichay, Jr.]
Bayugan, Agusan del Sur – It is a first class municipality and the biggest in terms of
population in the entire province. It has the most progressive and thickly populated
area among the 14 municipalities that comprise the province. Thus, it has become
the center for trade and commerce in Agusan del Sur. It has a more developed
infrastructure and facilities than other municipalities in the province. [Explanatory
Note of House Bill No. 1899, introduced by Rep. Rodolfo "Ompong" G. Plaza.]
Carcar, Cebu – Through the years, Carcar metamorphosed from rural to urban and
now boast of its manufacturing industry, agricultural farming, fishing and prawn
industry and its thousands of large and small commercial establishments contributing
to the bulk of economic activities in the municipality. Based on consultation with
multi-sectoral groups, political and non-government agencies, residents and common
folk in Carcar, they expressed their desire for the conversion of the municipality into
a component city. [Explanatory Note of House Bill No. 3990, introduced by Rep.
Eduardo R. Gullas.]
Guihulngan, Negros Oriental – Its population is second highest in the province, next
only to the provincial capital and higher than Canlaon City and Bais City. Agriculture
contributes heavily to its economy. There are very good prospects in agricultural
production brought about by its favorable climate. It has also the Tanon Strait that
provides a good fishing ground for its numerous fishermen. Its potential to grow
commercially is certain. Its strategic location brought about by its existing linkage
networks and the major transportation corridors traversing the municipality has
established Guihulngan as the center of commerce and trade in this part of Negros
Oriental with the first congressional district as its immediate area of influence.
Moreover, it has beautiful tourist spots that are being availed of by local and foreign
tourists. [Explanatory Note of House Bill No. 3628, introduced by Rep. Jacinto V.
Paras.]
Tayabas, Quezon – It flourished and expanded into an important politico-cultural
center in [the] Tagalog region. For 131 years (1179-1910), it served as the cabecera
of the province which originally carried the cabecera’s own name, Tayabas. The
locality is rich in culture, heritage and trade. It was at the outset one of the more
active centers of coordination and delivery of basic, regular and diverse goods and
services within the first district of Quezon Province. [Explanatory Note of House Bill
No. 3348, introduced by Rep. Rafael P. Nantes.]
Tabuk, Kalinga – It not only serves as the main hub of commerce and trade, but also
the cultural center of the rich customs and traditions of the different municipalities in
the province. For the past several years, the income of Tabuk has been steadily
increasing, which is an indication that its economy is likewise progressively growing.
[Explanatory Note of House Bill No. 3068, introduced by Rep. Laurence P.
Wacnang.]
Available information on Baybay, Leyte; Mati, Davao Oriental; and Naga, Cebu
shows their economic viability, thus:
Covering an area of 46,050 hectares, Baybay [Leyte] is composed of 92 barangays,
23 of which are in the poblacion. The remaining 69 are rural barangays. Baybay City
247
is classified as a first class city. It is situated on the western coast of the province of
Leyte. It has a Type 4 climate, which is generally wet. Its topography is generally
mountainous in the eastern portion as it slopes down west towards the shore line.
Generally an agricultural city, the common means of livelihood are farming and
fishing. Some are engaged in hunting and in forestall activities. The most common
crops grown are rice, corn, root crops, fruits, and vegetables. Industries operating
include the Specialty Products Manufacturing, Inc. and the Visayan Oil Mill. Various
cottage industries can also be found in the city such as bamboo and rattan craft,
ceramics, dress-making, fiber craft, food preservation, mat weaving, metal craft, fine
Philippine furniture manufacturing and other related activities. Baybay has great
potential as a tourist destination, especially for tennis players. It is not only rich in
biodiversity and history, but it also houses the campus of the Visayas State
University (formerly the Leyte State University/Visayas State College of
Agriculture/Visayas Agricultural College/Baybay National Agricultural School/Baybay
Agricultural High School and the Jungle Valley Park.) Likewise, it has river systems
fit for river cruising, numerous caves for spelunking, forests, beaches, and marine
treasures. This richness, coupled with the friendly Baybayanos, will be an element of
a successful tourism program. Considering the role of tourism in development,
Baybay City intends to harness its tourism potential.
(<http://en.wikipedia.org/wiki/Baybay City> visited September 19, 2008)
Mati [Davao Oriental] is located on the eastern part of the island of Mindanao. It is
one hundred sixty-five (165) kilometers away from Davao City, a one and a half-hour
drive from Tagum City. Visitors can travel from Davao City through the Madaum
diversion road, which is shorter than taking the Davao-Tagum highway. Travels by
air and sea are possible, with the existence of an airport and seaport. Mati boasts of
being the coconut capital of Mindanao if not the whole country. A large portion of its
fertile land is planted to coconuts, and a significant number of its population is largely
dependent on it. Other agricultural crops such as mango, banana, corn, coffee and
cacao are also being cultivated, as well as the famous Menzi pomelo and Valencia
oranges. Mati has a long stretch of shoreline and one can find beaches of pure,
powder-like white sand. A number of resorts have been developed and are now open
to serve both local and international tourists. Some of these resorts are situated
along the coast of Pujada Bay and the Pacific Ocean. Along the western coast of the
bay lies Mt. Hamiguitan, the home of the pygmy forest, where bonsai plants and
trees grow, some of which are believed to be a hundred years old or more. On its
peak is a lake, called "Tinagong Dagat," or hidden sea, so covered by dense
vegetation a climber has to hike trails for hours to reach it. The mountain is also host
to rare species of flora and fauna, thus becoming a wildlife sanctuary for these life
forms. (<http://mati.wetpain.com/?t=anon> accessed on September 19, 2008.)
Mati is abundant with nickel, chromite, and copper. Louie Rabat, Chamber President
of the Davao Oriental Eastern Chamber of Commerce and Industry, emphasized the
big potential of the mining industry in the province of Davao Oriental. As such, he
strongly recommends Mati as the mining hub in the Region.
(<http://www.pia.gov.ph/default.asp?
m=12&sec=reader&rp=1&fi=p080115.htm&no.=9&date, accessed on September 19,
2008)
Naga [Cebu]: Historical Background—In the early times, the place now known as
Naga was full of huge trees locally called as "Narra." The first settlers referred to this
place as Narra, derived from the huge trees, which later simply became Naga.
Considered as one of the oldest settlements in the Province of Cebu, Naga became
a municipality on June 12, 1829. The municipality has gone through a series of
classifications as its economic development has undergone changes and growth.
The tranquil farming and fishing villages of the natives were agitated as the
Spaniards came and discovered coal in the uplands. Coal was the first export of the
municipality, as the Spaniards mined and sent it to Spain. The mining industry
triggered the industrial development of Naga. As the years progressed,
manufacturing and other industries followed, making Naga one of the industrialized
municipalities in the Province of Cebu.
Class of Municipality 1st class
Province Cebu
Distance from Cebu City 22 kms.
Number of Barangays 28
248
No. of Registered Voters 44,643 as of May 14, 2007
Total No. of Precincts 237 (as of May 14, 2007)
Ann. Income (as of Dec. 31, 2006) Php112,219,718.35 Agricultural,
Industrial, Agro-Industrial, Mining Product
(<http://www.nagacebu.com/index.php?option=com.content&view=article
id=53:naga-facts-and-figures&catid=51:naga-facts-and-figures&Itemid=75>
visited September 19, 2008)
The enactment of the Cityhood Laws is an exercise by Congress of its legislative
power. Legislative power is the authority, under the Constitution, to make laws, and
to alter and repeal them.10 The Constitution, as the expression of the will of the
people in their original, sovereign, and unlimited capacity, has vested this power in
the Congress of the Philippines. The grant of legislative power to Congress is broad,
general, and comprehensive. The legislative body possesses plenary powers for all
purposes of civil government. Any power, deemed to be legislative by usage and
tradition, is necessarily possessed by Congress, unless the Constitution has lodged
it elsewhere. In fine, except as limited by the Constitution, either expressly or
impliedly, legislative power embraces all subjects, and extends to matters of general
concern or common interest.11
Without doubt, the LGC is a creation of Congress through its law-making powers.
Congress has the power to alter or modify it as it did when it enacted R.A. No. 9009.
Such power of amendment of laws was again exercised when Congress enacted the
Cityhood Laws. When Congress enacted the LGC in 1991, it provided for
quantifiable indicators of economic viability for the creation of local government units
—income, population, and land area. Congress deemed it fit to modify the income
requirement with respect to the conversion of municipalities into component cities
when it enacted R.A. No. 9009, imposing an amount of ₱100 million, computed only
from locally-generated sources. However, Congress deemed it wiser to exempt
respondent municipalities from such a belatedly imposed modified income
requirement in order to uphold its higher calling of putting flesh and blood to the very
intent and thrust of the LGC, which is countryside development and autonomy,
especially accounting for these municipalities as engines for economic growth in their
respective provinces.
Undeniably, R.A. No. 9009 amended the LGC. But it is also true that, in effect, the
Cityhood Laws amended R.A. No. 9009 through the exemption clauses found
therein. Since the Cityhood Laws explicitly exempted the concerned municipalities
from the amendatory R.A. No. 9009, such Cityhood Laws are, therefore, also
amendments to the LGC itself. For this reason, we reverse the November 18, 2008
Decision and the August 24, 2010 Resolution on their strained and stringent view
that the Cityhood Laws, particularly their exemption clauses, are not found in the
LGC.
2.
The Cityhood Laws do not violate Section 6, Article X and the equal protection
clause of the Constitution.
Both the November 18, 2008 Decision and the August 24, 2010 Resolution impress
that the Cityhood Laws violate the equal protection clause enshrined in the
Constitution. Further, it was also ruled that Section 6, Article X was violated because
the Cityhood Laws infringed on the "just share" that petitioner and petitioners-in-
intervention shall receive from the national taxes (IRA) to be automatically released
to them.
Upon more profound reflection and deliberation, we declare that there was valid
classification, and the Cityhood Laws do not violate the equal protection clause.
As this Court has ruled, the equal protection clause of the 1987 Constitution permits
a valid classification, provided that it: (1) rests on substantial distinctions; (2) is
germane to the purpose of the law; (3) is not limited to existing conditions only; and
(4) applies equally to all members of the same class.12
The petitioners argue that there is no substantial distinction between municipalities
with pending cityhood bills in the 11th Congress and municipalities that did not have
pending bills, such that the mere pendency of a cityhood bill in the 11th Congress is
249

not a material difference to distinguish one municipality from another for the purpose million income requirement, some of which have lower than the ₱20 million average
of the income requirement. This contention misses the point. annual income. Consider the list14 below—

It should be recalled from the above quoted portions of the interpellation by Senate CITY AVERAGE ANNUAL INCOME
President Drilon of Senator Pimentel that the purpose of the enactment of R.A. No
9009 was merely to stop the "mad rush of municipalities wanting to be converted into
cities" and the apprehension that before long the country will be a country of cities 1. Marawi City 5,291,522.10
and without municipalities. It should be pointed out that the imposition of the ₱100
million average annual income requirement for the creation of component cities was 2. Palayan City 6,714,651.77
arbitrarily made. To be sure, there was no evidence or empirical data, such as
inflation rates, to support the choice of this amount. The imposition of a very high
3. Sipalay City 9,713,120.00
income requirement of ₱100 million, increased from ₱20 million, was simply to make
it extremely difficult for municipalities to become component cities. And to highlight
such arbitrariness and the absurdity of the situation created thereby, R.A. No. 9009 4. Canlaon City 13,552,493.79
has, in effect, placed component cities at a higher standing than highly urbanized
cities under Section 452 of the LGC, to wit— 5. Himamaylan City 15,808,530.00

Section 452. Highly Urbanized Cities. – (a) Cities with a minimum population of two
6. Isabela City 16,811,246.79
hundred thousand (200,000) inhabitants, as certified by the National Statistics Office,
and with 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 7. Munoz City 19,693,358.61
as highly urbanized cities.
8. Dapitan City 20,529,181.08
(b) Cities which do not meet above requirements shall be considered component
cities of the province in which they are geographically located. (Emphasis supplied)
9. Tangub City 20,943,810.04
The ₱100 million income requirement imposed by R.A. No. 9009, being an arbitrary
amount, cannot be conclusively said to be the only amount "sufficient, based on 10. Bayawan City 22,943,810.04
acceptable standards, to provide for all essential government facilities and services
and special functions commensurate with the size of its population," per Section 11. Island Garden City of Samal 23,034,731.83
713 of the LGC. It was imposed merely because it is difficult to comply with. While it
could be argued that ₱100 million, being more than ₱20 million, could, of course,
provide the essential government facilities, services, and special functions vis-à-vis 12. Tanjay City 23,723,612.44
the population of a municipality wanting to become a component city, it cannot be
said that the minimum amount of ₱20 million would be insufficient. This is evident 13. Tabaco City 24,152,853.71
from the existing cities whose income, up to now, do not comply with the ₱100
250

14. Oroquieta City 24,279,966.51 29. Bais City 44, 646,826.48

15. Ligao City 28,326,745.86 30. San Carlos City 46,306,129.13

16. Sorsogon City 30,403,324.59 31. Silay City 47,351,730.00

17. Maasin City 30,572,113.65 32. Bislig City 47,360,716.24

18. Escalante City 32,113,970.00 33. Tacurong City 49,026,281.56

19. Iriga City 32,757,871.44 34. Talisay City (Negros

52,609,790.00
Occidental)
20. Gapan City 34,254,986.47
35. Kabankalan City 53,560,580.00
21. Candon City 36,327,705.86
36. Malaybalay City 54,423,408.55
22. Gingoog City 37,327,705.86
37. La Carlota City 54,760,290.00
23. Masbate City 39,454,508.28
38. Vigan City 56,831,797.19
24. Passi City 40,314,620.00
39. Balanga City 61,556,700.49
25. Calbayog City 40,943,128.73
40. Sagay City 64,266,350.00
26. Calapan City 41,870,239.21
41. Cavite City 64,566,079.05
27. Cadiz City 43,827,060.00
42. Koronadal City 66,231,717.19
28. Alaminos City 44,352,501.00
43. Cotabato City 66,302,114.52
251

44. Toledo City 70,157,331.12 59. Digos City 92,647,699.13

45. San Jose City 70,309,233.43

The undeniable fact that these cities remain viable as component cities of their
respective provinces emphasizes the arbitrariness of the amount of ₱100 million as
46. Danao City 72,621,955.30 the new income requirement for the conversion of municipalities into component
cities. This arbitrariness can also be clearly gleaned from the respective distinctive
47. Bago City 74,305,000.00 traits and level of economic development of the individual respondent municipalities
as above submitted.
48. Valencia City 74,557,298.92
Verily, the determination of the existence of substantial distinction with respect to
respondent municipalities does not simply lie on the mere pendency of their cityhood
49. Victorias City 75,757,298.92 bills during the 11th Congress. This Court sees the bigger picture. The existence of
substantial distinction with respect to respondent municipalities covered by the
50. Cauayan City 82,949,135.46 Cityhood Laws is measured by the purpose of the law, not by R.A. No. 9009, but by
the very purpose of the LGC, as provided in its Section 2 (a), thus—
51. Santiago City 83,816,025.89
SECTION 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
52. Roxas City 85,397,830.00 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
53. Dipolog City 85,503,262.85 national goals. Toward this end, the State shall provide for a more responsive and
accountable local government structure instituted through a system of
54. Trece Martires City 87,413,786.64 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.
55. Talisay City (Cebu) 87,964,972.97
Indeed, substantial distinction lies in the capacity and viability of respondent
56. Ozamis city 89,054,056.12 municipalities to become component cities of their respective provinces. Congress,
by enacting the Cityhood Laws, recognized this capacity and viability of respondent
municipalities to become the State’s partners in accelerating economic growth and
57. Surigao City 89,960,971.33
development in the provincial regions, which is the very thrust of the LGC,
manifested by the pendency of their cityhood bills during the 11th Congress and their
58. Panabo City 91,425,301.39 relentless pursuit for cityhood up to the present. Truly, the urgent need to become a
252

component city arose way back in the 11th Congress, and such condition continues
to exist.

Petitioners in these cases complain about the purported reduction of their "just Himamaylan 248,154,381.00 277,532,4
share" in the IRA. To be sure, petitioners are entitled to a "just share," not a specific
amount. But the feared reduction proved to be false when, after the implementation Iloilo 358,394,268.00 412,506,2
of the Cityhood Laws, their respective shares increased, not decreased. Consider
the table15 below— Iriga 183,132,036.00 203,072,9
1avvphi1
Legaspi 235,314,016.00 266,537,7
CY 2006 IRA CY 2008 IRA
CITY (Before Implementation of Sixteen (Actual Release After ImplementationLigao
of 215,608,112.00 239,696,4
[16] Cityhood Laws) Sixteen [16] Cityhood Laws)
Oroquieta 191,803,213.00 211,449,7
Bais 219,338,056.00
Pagadian 292,788,255.00 327,401,6
Batangas 334,371,984.00
San Carlos 239,524,249.00 260,515,7
Bayawan 353,150,158.00
San
182,320,356.00 204,140,9
Cadiz 329,491,285.00 Fernando

Calapan 227,772,199.00 Santiago 508,326,072.00 563,679,5

Calbayog 438,603,378.00 Silay 216,372,314.00 241,363,8

Cauayan 250,477,157.00 Surigao 233,968,119.00 260,708,0

Gen. Santos 518,388,557.00 Tacurong 179,795,271.00 197,880,6

Gingoog 314,425,637.00 Tagaytay 130,159,136.00 152,445,2

253

to me by the Senate has erased completely my memory as far as the Local

Government Code is concerned.

Tarlac 348,186,756.00 SENATOR PIMENTEL. Yes, Mr. President, with pleasure. There are three
requirements. One is financial.
Tangub 162,248,610.00
SENATOR SOTTO. All right. It used to be P20 million.
Urdaneta 187,721,031.00
SENATOR PIMENTEL. It is P20 million. Now we are raising it to P100 million of
locally generated funds.
Victorias 176,367,959.00
SENATOR SOTTO. In other words, the P20 million before includes the IRA.
Zamboanga 918,013,016.00 1,009,972,704.00
SENATOR PIMENTEL. No, Mr. President.

What these petitioner cities were stating as a reduction of their respective IRA shares
was based on a computation of what they would receive if respondent municipalities
were not to become component cities at all. Of course, that would mean a bigger
amount to which they have staked their claim. After considering these, it all boils
down to money and how much more they would receive if respondent municipalities
remain as municipalities and not share in the 23% fixed IRA from the national
government for cities.
Moreover, the debates in the Senate on R.A. No. 9009, should prove enlightening:
SENATOR SOTTO. Mr. President, we just want to be enlightened again on the
previous qualification and the present one being proposed. Before there were
three…
SENATOR PIMENTEL. There are three requisites for a municipality to become a
city. Let us start with the finance.
SENATOR SOTTO. Will the distinguished sponsor please refresh us? I used to be
the chairman of the Committee on Local Government, but the new job that was given
SENATOR SOTTO. It should not have been included?
SENATOR PIMENTEL. The internal revenue share should never have been
included. That was not the intention when we first crafted the Local Government
Code. The financial capacity was supposed to be demonstrated by the municipality
wishing to become a city by its own effort, meaning to say, it should not rely on the
internal revenue share that comes from the government. Unfortunately, I think what
happened in past conversions of municipalities into cities was, the Department of
Budget and Management, along with the Department of Finance, had included the
internal revenue share as a part of the municipality, demonstration that they are now
financially capable and can measure up to the requirement of the Local Government
Code of having a revenue of at least P20 million.
SENATOR SOTTO. I am glad that the sponsor, Mr. President, has spread that into
the Record because otherwise, if he did not mention the Department of Finance and
the Department of Budget and Management, then I would have been blamed for the
misinterpretation. But anyway, the gentleman is correct. That was the interpretation
given to us during the hearings.
254

So now, from P20 million, we make it P100 million from locally generated income as SENATOR PIMENTEL. There may still be municipalities which can qualify, but it will
far as population is concerned. take a little time. They will have to produce more babies. I do not know—expand their
territories, whatever, by reclamation or otherwise. But the whole proposal is geared
SENATOR PIMENTEL. As far as population is concerned, there will be no change, towards making it difficult for municipalities to convert into cities.
Mr. President. Still 150,000.
On the other hand, I would like to advert to the fact that in the amendments that we
SENATOR SOTTO. Still 150,000? are proposing for the entire Local Government Code, we are also raising the internal
revenue share of the municipalities.
SENATOR PIMENTEL. Yes.
SENATOR SOTTO. I see.
SENATOR SOTTO. And then the land area?
SENATOR PIMENTEL. So that, more or less, hindi naman sila dehado in this
SENATOR PIMENTEL. As to the land area, there is no change; it is still 100 square particular instance.
kilometers.
SENATOR SOTTO. Well, then, because of that information, Mr. President, I throw
SENATOR SOTTO. But before it was "either/or"? my full support behind the measure.

SENATOR PIMENTEL. That is correct. As long as it has one of the three Thank you, Mr. President.
requirements, basically, as long as it meets the financial requirement, then it may
meet the territorial requirement or the population requirement. SENATOR PIMENTEL. Thank you very much, Mr. President. (Emphasis supplied)16

SENATOR SOTTO. So, it remains "or"? From the foregoing, the justness in the act of Congress in enacting the Cityhood
Laws becomes obvious, especially considering that 33 municipalities were converted
SENATOR PIMENTEL. We are now changing it into AND. into component cities almost immediately prior to the enactment of R.A. No. 9009. In
the enactment of the Cityhood Laws, Congress merely took the 16 municipalities
SENATOR SOTTO. AND? covered thereby from the disadvantaged position brought about by the abrupt
increase in the income requirement of R.A. No. 9009, acknowledging the "privilege"
SENATOR PIMENTEL. Yes. that they have already given to those newly-converted component cities, which prior
to the enactment of R.A. No. 9009, were undeniably in the same footing or "class" as
the respondent municipalities. Congress merely recognized the capacity and
SENATOR SOTTO. I see.
readiness of respondent municipalities to become component cities of their
respective provinces.
SENATOR PIMENTEL. That is the proposal, Mr. President. In other words…
Petitioners complain of the projects that they would not be able to pursue and the
SENATOR SOTTO. Does the gentleman not think there will no longer be any expenditures that they would not be able to meet, but totally ignored the respondent
municipality that will qualify, Mr. President?
255
municipalities’ obligations arising from the contracts they have already entered into,
the employees that they have already hired, and the projects that they have already
initiated and completed as component cities. Petitioners have completely overlooked
the need of respondent municipalities to become effective vehicles intending to
accelerate economic growth in the countryside. It is like the elder siblings wanting to
kill the newly-borns so that their inheritance would not be diminished.
Apropos is the following parable:
There was a landowner who went out at dawn to hire workmen for his vineyard. After
reaching an agreement with them for the usual daily wage, he sent them out to his
vineyard. He came out about midmorning and saw other men standing around the
marketplace without work, so he said to them, "You too go along to my vineyard and
I will pay you whatever is fair." They went. He came out again around noon and mid-
afternoon and did the same. Finally, going out in late afternoon he found still others
standing around. To these he said, "Why have you been standing here idle all day?"
"No one has hired us," they told him. He said, "You go to the vineyard too." When
evening came, the owner of the vineyard said to his foreman, "Call the workmen and
give them their pay, but begin with the last group and end with the first." When those
hired late in the afternoon came up they received a full day’s pay, and when the first
group appeared they thought they would get more, yet they received the same daily
wage. Thereupon they complained to the owner, "This last group did only an hour’s
work, but you have paid them on the same basis as us who have worked a full day in
the scorching heat." "My friend," he said to one in reply, "I do you no injustice. You
agreed on the usual wage, did you not? Take your pay and go home. I intend to give
this man who was hired last the same pay as you. I am free to do as I please with my
money, am I not? Or are you envious because I am generous?"17
Congress, who holds the power of the purse, in enacting the Cityhood Laws, only
sought the well-being of respondent municipalities, having seen their respective
capacities to become component cities of their provinces, temporarily stunted by the
enactment of R.A. No. 9009. By allowing respondent municipalities to convert into
component cities, Congress desired only to uphold the very purpose of the LGC, i.e.,
to make the local government units "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," which is the very
mandate of the Constitution.
Finally, we should not be restricted by technical rules of procedure at the expense of
the transcendental interest of justice and equity. While it is true that litigation must
end, even at the expense of errors in judgment, it is nobler rather for this Court of last
resort, as vanguard of truth, to toil in order to dispel apprehensions and doubt, as the
following pronouncement of this Court instructs:
The right and power of judicial tribunals to declare whether enactments of the
legislature exceed the constitutional limitations and are invalid has always been
considered a grave responsibility, as well as a solemn duty. The courts invariably
give the most careful consideration to questions involving the interpretation and
application of the Constitution, and approach constitutional questions with great
deliberation, exercising their power in this respect with the greatest possible caution
and even reluctance; and they should never declare a statute void, unless its
invalidity is, in their judgment, beyond reasonable doubt. To justify a court in
pronouncing a legislative act unconstitutional, or a provision of a state constitution to
be in contravention of the Constitution x x x, the case must be so clear to be free
from doubt, and the conflict of the statute with the constitution must be irreconcilable,
because it is but a decent respect to the wisdom, the integrity, and the patriotism of
the legislative body by which any law is passed to presume in favor of its validity until
the contrary is shown beyond reasonable doubt. Therefore, in no doubtful case will
the judiciary pronounce a legislative act to be contrary to the constitution. To doubt
the constitutionality of a law is to resolve the doubt in favor of its validity.18
WHEREFORE, the Motion for Reconsideration of the "Resolution" dated August 24,
2010, dated and filed on September 14, 2010 by respondents Municipality of
Baybay, et al. is GRANTED. The Resolution dated August 24, 2010 is REVERSED
and SET ASIDE. The Cityhood Laws—Republic Acts Nos. 9389, 9390, 9391, 9392,
9393, 9394, 9398, 9404, 9405, 9407, 9408, 9409, 9434, 9435, 9436, and 9491—are
declared CONSTITUTIONAL.
SO ORDERED.
256

ORDINANCE NO. 3353

AN ORDINANCE PROHIBITING THE ISSUANCE OF BUSINESS

PERMIT AND CANCELLING EXISTING BUSINESS PERMIT TO
ANY ESTABLISHMENT FOR THE USING AND ALLOWING TO BE
USED ITS PREMISES OR PORTION THEREOF FOR THE
OPERATION OF CASINO.

G.R. No. 111097 July 20, 1994 BE IT ORDAINED by the Sangguniang Panlungsod of the City of
Cagayan de Oro, in session assembled that:
MAYOR PABLO P. MAGTAJAS & THE CITY OF CAGAYAN DE ORO, petitioners,
vs. Sec. 1. — That pursuant to the policy of the city banning the operation
PRYCE PROPERTIES CORPORATION, INC. & PHILIPPINE AMUSEMENT AND of casino within its territorial jurisdiction, no business permit shall be
GAMING CORPORATION, respondents. issued to any person, partnership or corporation for the operation of
casino within the city limits.
Aquilino G. Pimentel, Jr. and Associates for petitioners.
Sec. 2. — That it shall be a violation of existing business permit by
R.R. Torralba & Associates for private respondent. any persons, partnership or corporation to use its business
establishment or portion thereof, or allow the use thereof by others for
CRUZ, J.: casino operation and other gambling activities.

There was instant opposition when PAGCOR announced the opening of a casino in Sec. 3. — PENALTIES. — Any violation of such existing business
Cagayan de Oro City. Civic organizations angrily denounced the project. The permit as defined in the preceding section shall suffer the following
religious elements echoed the objection and so did the women's groups and the penalties, to wit:
youth. Demonstrations were led by the mayor and the city legislators. The media
trumpeted the protest, describing the casino as an affront to the welfare of the city. a) Suspension of the business permit for
sixty (60) days for the first offense and a
The trouble arose when in 1992, flush with its tremendous success in several cities, fine of P1,000.00/day
PAGCOR decided to expand its operations to Cagayan de Oro City. To this end, it
leased a portion of a building belonging to Pryce Properties Corporation, Inc., one of b) Suspension of the business permit for
the herein private respondents, renovated and equipped the same, and prepared to Six (6) months for the second offense,
inaugurate its casino there during the Christmas season. and a fine of P3,000.00/day

The reaction of the Sangguniang Panlungsod of Cagayan de Oro City was swift and c) Permanent revocation of the business
hostile. On December 7, 1992, it enacted Ordinance No. 3353 reading as follows: permit and imprisonment of One (1)
257
year, for the third and subsequent
offenses.
Sec. 4. — This Ordinance shall take effect ten (10) days from
publication thereof.
Nor was this all. On January 4, 1993, it adopted a sterner Ordinance No. 3375-93
reading as follows:
ORDINANCE NO. 3375-93
AN ORDINANCE PROHIBITING THE OPERATION OF CASINO AND
PROVIDING PENALTY FOR VIOLATION THEREFOR.
WHEREAS, the City Council established a policy as early as 1990
against CASINO under its Resolution No. 2295;
WHEREAS, on October 14, 1992, the City Council passed another
Resolution No. 2673, reiterating its policy against the establishment of
CASINO;
WHEREAS, subsequently, thereafter, it likewise passed Ordinance
No. 3353, prohibiting the issuance of Business Permit and to cancel
existing Business Permit to any establishment for the using and
allowing to be used its premises or portion thereof for the operation of
CASINO;
WHEREAS, under Art. 3, section 458, No. (4), sub paragraph VI of
the Local Government Code of 1991 (Rep. Act 7160) and under Art.
99, No. (4), Paragraph VI of the implementing rules of the Local
Government Code, the City Council as the Legislative Body shall
enact measure to suppress any activity inimical to public morals and
general welfare of the people and/or regulate or prohibit such activity
pertaining to amusement or entertainment in order to protect social
and moral welfare of the community;
NOW THEREFORE,
BE IT ORDAINED by the City Council in session duly assembled that:
Sec. 1. — The operation of gambling CASINO in the City of Cagayan
de Oro is hereby prohibited.
Sec. 2. — Any violation of this Ordinance shall be subject to the
following penalties:
a) Administrative fine of P5,000.00 shall be imposed against the
proprietor, partnership or corporation undertaking the operation,
conduct, maintenance of gambling CASINO in the City and closure
thereof;
b) Imprisonment of not less than six (6) months nor more than one (1)
year or a fine in the amount of P5,000.00 or both at the discretion of
the court against the manager, supervisor, and/or any person
responsible in the establishment, conduct and maintenance of
gambling CASINO.
Sec. 3. — This Ordinance shall take effect ten (10) days after its
publication in a local newspaper of general circulation.
Pryce assailed the ordinances before the Court of Appeals, where it was joined by
PAGCOR as intervenor and supplemental petitioner. Their challenge succeeded. On
March 31, 1993, the Court of Appeals declared the ordinances invalid and issued the
writ prayed for to prohibit their enforcement. 1 Reconsideration of this decision was
denied on July 13, 1993. 2
Cagayan de Oro City and its mayor are now before us in this petition for review
under Rule 45 of the Rules of Court. 3 They aver that the respondent Court of
Appeals erred in holding that:
258
1. Under existing laws, the Sangguniang Panlungsod of the City of
Cagayan de Oro does not have the power and authority to prohibit the
establishment and operation of a PAGCOR gambling casino within
the City's territorial limits.
2. The phrase "gambling and other prohibited games of chance" found
in Sec. 458, par. (a), sub-par. (1) — (v) of R.A. 7160 could only mean
"illegal gambling."
3. The questioned Ordinances in effect annul P.D. 1869 and are
therefore invalid on that point.
4. The questioned Ordinances are discriminatory to casino and partial
to cockfighting and are therefore invalid on that point.
In addition, Section 458 of the said Code specifically declares that:
5. The questioned Ordinances are not reasonable, not consonant with
the general powers and purposes of the instrumentality concerned
and inconsistent with the laws or policy of the State.
6. It had no option but to follow the ruling in the case of Basco, et al.
v. PAGCOR, G.R. No. 91649, May 14, 1991, 197 SCRA 53 in
disposing of the issues presented in this present case.
PAGCOR is a corporation created directly by P.D. 1869 to help centralize and
regulate all games of chance, including casinos on land and sea within the territorial
jurisdiction of the Philippines. In Basco v. Philippine Amusements and Gaming
Corporation, 4 this Court sustained the constitutionality of the decree and even cited
the benefits of the entity to the national economy as the third highest revenue-earner
in the government, next only to the BIR and the Bureau of Customs.
Cagayan de Oro City, like other local political subdivisions, is empowered to enact
ordinances for the purposes indicated in the Local Government Code. It is expressly
vested with the police power under what is known as the General Welfare Clause
now embodied in Section 16 as follows:
Sec. 16. — General Welfare. — Every local government unit shall
exercise the powers expressly granted, those necessarily implied
therefrom, as well as powers necessary, appropriate, or incidental for
its efficient and effective governance, and those which are essential to
the promotion of the general welfare. Within their respective territorial
jurisdictions, local government units shall ensure and support, among
other things, the preservation and enrichment of culture, promote
health and safety, enhance the right of the people to a balanced
ecology, encourage and support the development of appropriate and
self-reliant scientific and technological capabilities, improve public
morals, enhance economic prosperity and social justice, promote full
employment among their residents, maintain peace and order, and
preserve the comfort and convenience of their inhabitants.
Sec. 458. — Powers, Duties, Functions and Compensation. — (a)
The Sangguniang Panlungsod, as the legislative body of the city, shall
enact ordinances, approve resolutions and appropriate funds for the
general welfare of the city and its inhabitants pursuant to Section 16
of this Code and in the proper exercise of the corporate powers of the
city as provided for under Section 22 of this Code, and shall:
(1) Approve ordinances and pass resolutions necessary for an
efficient and effective city government, and in this connection, shall:
x x x           x x x          x x x
(v) Enact ordinances intended to
prevent, suppress and impose
appropriate penalties for habitual
drunkenness in public places, vagrancy,
mendicancy, prostitution, establishment
and maintenance of houses of ill
repute, gambling and other prohibited
games of chance, fraudulent devices
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and ways to obtain money or property,
drug addiction, maintenance of drug
dens, drug pushing, juvenile
delinquency, the printing, distribution or
exhibition of obscene or pornographic
materials or publications, and such other
activities inimical to the welfare and
morals of the inhabitants of the city;
This section also authorizes the local government units to regulate properties and
businesses within their territorial limits in the interest of the general welfare. 5
The petitioners argue that by virtue of these provisions, the Sangguniang
Panlungsod may prohibit the operation of casinos because they involve games of
chance, which are detrimental to the people. Gambling is not allowed by general law
and even by the Constitution itself. The legislative power conferred upon local
government units may be exercised over all kinds of gambling and not only over
"illegal gambling" as the respondents erroneously argue. Even if the operation of
casinos may have been permitted under P.D. 1869, the government of Cagayan de
Oro City has the authority to prohibit them within its territory pursuant to the authority
entrusted to it by the Local Government Code.
It is submitted that this interpretation is consonant with the policy of local autonomy
as mandated in Article II, Section 25, and Article X of the Constitution, as well as
various other provisions therein seeking to strengthen the character of the nation. In
giving the local government units the power to prevent or suppress gambling and
other social problems, the Local Government Code has recognized the competence
of such communities to determine and adopt the measures best expected to promote
the general welfare of their inhabitants in line with the policies of the State.
The petitioners also stress that when the Code expressly authorized the local
government units to prevent and suppress gambling and other prohibited games of
chance, like craps, baccarat, blackjack and roulette, it meant all forms of gambling
without distinction. Ubi lex non distinguit, nec nos distinguere debemos. 6 Otherwise,
it would have expressly excluded from the scope of their power casinos and other
forms of gambling authorized by special law, as it could have easily done. The fact
that it did not do so simply means that the local government units are permitted to
prohibit all kinds of gambling within their territories, including the operation of
casinos.
The adoption of the Local Government Code, it is pointed out, had the effect of
modifying the charter of the PAGCOR. The Code is not only a later enactment than
P.D. 1869 and so is deemed to prevail in case of inconsistencies between them.
More than this, the powers of the PAGCOR under the decree are expressly
discontinued by the Code insofar as they do not conform to its philosophy and
provisions, pursuant to Par. (f) of its repealing clause reading as follows:
(f) All general and special laws, acts, city charters, decrees, executive
orders, proclamations and administrative regulations, or part or parts
thereof which are inconsistent with any of the provisions of this Code
are hereby repealed or modified accordingly.
It is also maintained that assuming there is doubt regarding the effect of the Local
Government Code on P.D. 1869, the doubt must be resolved in favor of the
petitioners, in accordance with the direction in the Code calling for its liberal
interpretation in favor of the local government units. Section 5 of the Code
specifically provides:
Sec. 5. Rules of Interpretation. — In the interpretation of the
provisions of this Code, the following rules shall apply:
(a) Any provision on a power of a local government unit shall be
liberally interpreted in its favor, and in case of doubt, any question
thereon shall be resolved in favor of devolution of powers and of the
lower local government unit. Any fair and reasonable doubt as to the
existence of the power shall be interpreted in favor of the local
government unit concerned;
xxx xxx xxx
260

(c) The general welfare provisions in this Code shall be liberally The only question we can and shall resolve in this petition is the validity of Ordinance
interpreted to give more powers to local government units in No. 3355 and Ordinance No. 3375-93 as enacted by the Sangguniang Panlungsod
accelerating economic development and upgrading the quality of life of Cagayan de Oro City. And we shall do so only by the criteria laid down by law and
for the people in the community; . . . (Emphasis supplied.) not by our own convictions on the propriety of gambling.

Finally, the petitioners also attack gambling as intrinsically harmful and cite various
provisions of the Constitution and several decisions of this Court expressive of the
general and official disapprobation of the vice. They invoke the State policies on the
family and the proper upbringing of the youth and, as might be expected, call
attention to the old case of U.S. v. Salaveria,7 which sustained a municipal ordinance
prohibiting the playing of panguingue. The petitioners decry the immorality of
gambling. They also impugn the wisdom of P.D. 1869 (which they describe as "a
martial law instrument") in creating PAGCOR and authorizing it to operate casinos
"on land and sea within the territorial jurisdiction of the Philippines."
The tests of a valid ordinance are well established. A long line of decisions 9 has held
that to be valid, an ordinance must conform to the following substantive
requirements:
1) It must not contravene the constitution or any statute.
2) It must not be unfair or oppressive.
3) It must not be partial or discriminatory.

This is the opportune time to stress an important point. 4) It must not prohibit but may regulate trade.

The morality of gambling is not a justiciable issue. Gambling is not illegal per se. 5) It must be general and consistent with public policy.
While it is generally considered inimical to the interests of the people, there is
nothing in the Constitution categorically proscribing or penalizing gambling or, for 6) It must not be unreasonable.
that matter, even mentioning it at all. It is left to Congress to deal with the activity as
it sees fit. In the exercise of its own discretion, the legislature may prohibit gambling
We begin by observing that under Sec. 458 of the Local Government Code, local
altogether or allow it without limitation or it may prohibit some forms of gambling and
government units are authorized to prevent or suppress, among others, "gambling
allow others for whatever reasons it may consider sufficient. Thus, it has
and other prohibited games of chance." Obviously, this provision excludes games of
prohibited jueteng and monte but permits lotteries, cockfighting and horse-racing. In
chance which are not prohibited but are in fact permitted by law. The petitioners are
making such choices, Congress has consulted its own wisdom, which this Court has
less than accurate in claiming that the Code could have excluded such games of
no authority to review, much less reverse. Well has it been said that courts do not sit
chance but did not. In fact it does. The language of the section is clear and
to resolve the merits of conflicting theories. 8 That is the prerogative of the political
unmistakable. Under the rule of noscitur a sociis, a word or phrase should be
departments. It is settled that questions regarding the wisdom, morality, or
interpreted in relation to, or given the same meaning of, words with which it is
practicibility of statutes are not addressed to the judiciary but may be resolved only
associated. Accordingly, we conclude that since the word "gambling" is associated
by the legislative and executive departments, to which the function belongs in our
with "and other prohibited games of chance," the word should be read as referring to
scheme of government. That function is exclusive. Whichever way these branches
only illegal gambling which, like the other prohibited games of chance, must be
decide, they are answerable only to their own conscience and the constituents who
prevented or suppressed.
will ultimately judge their acts, and not to the courts of justice.
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We could stop here as this interpretation should settle the problem quite
conclusively. But we will not. The vigorous efforts of the petitioners on behalf of the
inhabitants of Cagayan de Oro City, and the earnestness of their advocacy, deserve
more than short shrift from this Court.
The apparent flaw in the ordinances in question is that they contravene P.D. 1869
and the public policy embodied therein insofar as they prevent PAGCOR from
exercising the power conferred on it to operate a casino in Cagayan de Oro City. The
petitioners have an ingenious answer to this misgiving. They deny that it is the
ordinances that have changed P.D. 1869 for an ordinance admittedly cannot prevail
against a statute. Their theory is that the change has been made by the Local
Government Code itself, which was also enacted by the national lawmaking
authority. In their view, the decree has been, not really repealed by the Code, but
merely "modified pro tanto" in the sense that PAGCOR cannot now operate a casino
over the objection of the local government unit concerned. This modification of P.D.
1869 by the Local Government Code is permissible because one law can change or
repeal another law.
It seems to us that the petitioners are playing with words. While insisting that the
decree has only been "modified pro tanto," they are actually arguing that it is already
dead, repealed and useless for all intents and purposes because the Code has shorn
PAGCOR of all power to centralize and regulate casinos. Strictly speaking, its
operations may now be not only prohibited by the local government unit; in fact, the
prohibition is not only discretionary but mandated by Section 458 of the Code if the
word "shall" as used therein is to be given its accepted meaning. Local government
units have now no choice but to prevent and suppress gambling, which in the
petitioners' view includes both legal and illegal gambling. Under this construction,
PAGCOR will have no more games of chance to regulate or centralize as they must
all be prohibited by the local government units pursuant to the mandatory duty
imposed upon them by the Code. In this situation, PAGCOR cannot continue to exist
except only as a toothless tiger or a white elephant and will no longer be able to
exercise its powers as a prime source of government revenue through the operation
of casinos.
It is noteworthy that the petitioners have cited only Par. (f) of the repealing clause,
conveniently discarding the rest of the provision which painstakingly mentions the
specific laws or the parts thereof which are repealed (or modified) by the Code.
Significantly, P.D. 1869 is not one of them. A reading of the entire repealing clause,
which is reproduced below, will disclose the omission:
Sec. 534. Repealing Clause. — (a) Batas Pambansa Blg. 337,
otherwise known as the "Local Government Code," Executive Order
No. 112 (1987), and Executive Order No. 319 (1988) are hereby
repealed.
(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees,
orders, instructions, memoranda and issuances related to or
concerning the barangay are hereby repealed.
(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939
regarding hospital fund; Section 3, a (3) and b (2) of Republic Act. No.
5447 regarding the Special Education Fund; Presidential Decree No.
144 as amended by Presidential Decree Nos. 559 and 1741;
Presidential Decree No. 231 as amended; Presidential Decree No.
436 as amended by Presidential Decree No. 558; and Presidential
Decree Nos. 381, 436, 464, 477, 526, 632, 752, and 1136 are hereby
repealed and rendered of no force and effect.
(d) Presidential Decree No. 1594 is hereby repealed insofar as it
governs locally-funded projects.
(e) The following provisions are hereby repealed or amended insofar
as they are inconsistent with the provisions of this Code: Sections 2,
16, and 29 of Presidential Decree No. 704; Sections 12 of Presidential
Decree No. 87, as amended; Sections 52, 53, 66, 67, 68, 69, 70, 71,
72, 73, and 74 of Presidential Decree No. 463, as amended; and
Section 16 of Presidential Decree No. 972, as amended, and
(f) All general and special laws, acts, city charters, decrees, executive
orders, proclamations and administrative regulations, or part or parts
thereof which are inconsistent with any of the provisions of this Code
are hereby repealed or modified accordingly.
262
Furthermore, it is a familiar rule that implied repeals are not lightly presumed in the
absence of a clear and unmistakable showing of such intention. In Lichauco & Co. v.
Apostol, 10 this Court explained:
The cases relating to the subject of repeal by implication all proceed
on the assumption that if the act of later date clearly reveals an
intention on the part of the lawmaking power to abrogate the prior law,
this intention must be given effect; but there must always be a
sufficient revelation of this intention, and it has become an unbending
rule of statutory construction that the intention to repeal a former law
will not be imputed to the Legislature when it appears that the two
statutes, or provisions, with reference to which the question arises
bear to each other the relation of general to special.
There is no sufficient indication of an implied repeal of P.D. 1869. On the contrary, as
the private respondent points out, PAGCOR is mentioned as the source of funding in
two later enactments of Congress, to wit, R.A. 7309, creating a Board of Claims
under the Department of Justice for the benefit of victims of unjust punishment or
detention or of violent crimes, and R.A. 7648, providing for measures for the solution
of the power crisis. PAGCOR revenues are tapped by these two statutes. This would
show that the PAGCOR charter has not been repealed by the Local Government
Code but has in fact been improved as it were to make the entity more responsive to
the fiscal problems of the government.
It is a canon of legal hermeneutics that instead of pitting one statute against another
in an inevitably destructive confrontation, courts must exert every effort to reconcile
them, remembering that both laws deserve a becoming respect as the handiwork of
a coordinate branch of the government. On the assumption of a conflict between
P.D. 1869 and the Code, the proper action is not to uphold one and annul the other
but to give effect to both by harmonizing them if possible. This is possible in the case
before us. The proper resolution of the problem at hand is to hold that under the
Local Government Code, local government units may (and indeed must) prevent and
suppress all kinds of gambling within their territories except only those allowed by
statutes like P.D. 1869. The exception reserved in such laws must be read into the
Code, to make both the Code and such laws equally effective and mutually
complementary.
This approach would also affirm that there are indeed two kinds of gambling, to wit,
the illegal and those authorized by law. Legalized gambling is not a modern concept;
it is probably as old as illegal gambling, if not indeed more so. The petitioners'
suggestion that the Code authorizes them to prohibit all kinds of gambling would
erase the distinction between these two forms of gambling without a clear indication
that this is the will of the legislature. Plausibly, following this theory, the City of Manila
could, by mere ordinance, prohibit the Philippine Charity Sweepstakes Office from
conducting a lottery as authorized by R.A. 1169 and B.P. 42 or stop the races at the
San Lazaro Hippodrome as authorized by R.A. 309 and R.A. 983.
In light of all the above considerations, we see no way of arriving at the conclusion
urged on us by the petitioners that the ordinances in question are valid. On the
contrary, we find that the ordinances violate P.D. 1869, which has the character and
force of a statute, as well as the public policy expressed in the decree allowing the
playing of certain games of chance despite the prohibition of gambling in general.
The rationale of the requirement that the ordinances should not contravene a statute
is obvious. Municipal governments are only agents of the national government. Local
councils exercise only delegated legislative powers conferred on them by Congress
as the national lawmaking body. The delegate cannot be superior to the principal or
exercise powers higher than those of the latter. It is a heresy to suggest that the local
government units can undo the acts of Congress, from which they have derived their
power in the first place, and negate by mere ordinance the mandate of the statute.
Municipal corporations owe their origin to, and derive their powers and
rights wholly from the legislature. It breathes into them the breath of
life, without which they cannot exist. As it creates, so it may destroy.
As it may destroy, it may abridge and control. Unless there is some
constitutional limitation on the right, the legislature might, by a single
act, and if we can suppose it capable of so great a folly and so great a
wrong, sweep from existence all of the municipal corporations in the
State, and the corporation could not prevent it. We know of no
limitation on the right so far as to the corporation themselves are
concerned. They are, so to phrase it, the mere tenants at will of the
legislature. 11
263
This basic relationship between the national legislature and the local government
units has not been enfeebled by the new provisions in the Constitution strengthening
the policy of local autonomy. Without meaning to detract from that policy, we here
confirm that Congress retains control of the local government units although in
significantly reduced degree now than under our previous Constitutions. The power
to create still includes the power to destroy. The power to grant still includes the
power to withhold or recall. True, there are certain notable innovations in the
Constitution, like the direct conferment on the local government units of the power to
tax, 12 which cannot now be withdrawn by mere statute. By and large, however, the
national legislature is still the principal of the local government units, which cannot
defy its will or modify or violate it.
The Court understands and admires the concern of the petitioners for the welfare of
their constituents and their apprehensions that the welfare of Cagayan de Oro City
will be endangered by the opening of the casino. We share the view that "the hope of
large or easy gain, obtained without special effort, turns the head of the
workman" 13 and that "habitual gambling is a cause of laziness and ruin." 14 In People
v. Gorostiza, 15 we declared: "The social scourge of gambling must be stamped out.
The laws against gambling must be enforced to the limit." George Washington called
gambling "the child of avarice, the brother of iniquity and the father of mischief."
Nevertheless, we must recognize the power of the legislature to decide, in its own
wisdom, to legalize certain forms of gambling, as was done in P.D. 1869 and
impliedly affirmed in the Local Government Code. That decision can be revoked by
this Court only if it contravenes the Constitution as the touchstone of all official acts.
We do not find such contravention here.
We hold that the power of PAGCOR to centralize and regulate all games of chance,
including casinos on land and sea within the territorial jurisdiction of the Philippines,
remains unimpaired. P.D. 1869 has not been modified by the Local Government
Code, which empowers the local government units to prevent or suppress only those
forms of gambling prohibited by law.
Casino gambling is authorized by P.D. 1869. This decree has the status of a statute
that cannot be amended or nullified by a mere ordinance. Hence, it was not
competent for the Sangguniang Panlungsod of Cagayan de Oro City to enact
Ordinance No. 3353 prohibiting the use of buildings for the operation of a casino and
Ordinance No. 3375-93 prohibiting the operation of casinos. For all their
praiseworthy motives, these ordinances are contrary to P.D. 1869 and the public
policy announced therein and are therefore ultra vires and void.
WHEREFORE, the petition is DENIED and the challenged decision of the
respondent Court of Appeals is AFFIRMED, with costs against the petitioners. It is so
ordered.
G.R. No. 40243 March 11, 1992
CELESTINO TATEL, petitioner,
vs.
MUNICIPALITY OF VIRAC, SALVADOR A. SURTIDA, in his capacity as Mayor of
Virac, Catanduanes; GAVINO V. GUERRERO, in his capacity as Vice-Mayor of
Virac, Catanduanes; JOSE T. BUEBOS, in his capacity as Councilor of Virac,
Catanduanes; ANGELES TABLIZO, in his capacity as Councilor of Virac,
Catanduanes; ELPIDIO T. ZAFE, in his capacity as Councilor of Virac,
Catanduanes; MARIANO ALBERTO, in his capacity as Councilor of Virac,
Catanduanes; JULIA A. GARCIA, in her capacity as Councilor of Virac,
Catanduanes; and PEDRO A. GUERRERO, in his capacity as Councilor of
Virac, Catanduanes, respondents.
NOCON, J.:
This is a Petition for Prohibition with Preliminary Injunction with the Court of First
Instance of Catanduanes filed by appellant, Celestino Tatel, a businessman engaged
in the import and export of abaca and other products against the Municipal Council of
Virac, Catanduanes and its municipal officials enjoining them from enforcing
Resolution No 29 1 of the Council, declaring the warehouse of petitioner in barrio Sta.
Elena of the said municipality a public nuisance within the purview of Article 694 of
the Civil Code of the Philippines and directing the petitioner to remove and transfer
said warehouse to a more suitable place within two (2) months from receipt of the
said resolution.
264
It appears from the records that on the basis of complaints received from the
residents of barrio Sta. Elena on March 18, 1966 against the disturbance caused by
the operation of the abaca bailing machine inside the warehouse of petitioner which
affected the peace and tranquility of the neighborhood due to the smoke, obnoxious
odor and dust emitted by the machine, a committee was appointed by the municipal
council of Virac to investigate the matter. The committee noted the crowded nature of
the neighborhood with narrow roads and the surrounding residential houses, so
much so that an accidental fire within the warehouse of the petitioner occasioned by
the continuance of the activity inside the warehouse and the storing of inflammable
materials created a danger to the lives and properties of the people within the
neighborhoodo.
Resultantly, Resolution No. 29 was passed by the Municipal Council of Virac on April
22, 1966 declaring the warehouse owned and operated by petitioner a public
nuisance within the purview of Article 694 of the New Civil Code. 2
His motion for reconsideration having been denied by the Municipal Council of Virac,
petitioner instituted the present petition for prohibition with preliminary injunction.
Respondent municipal officials contend that petitioner's warehouse was constructed
in violation of Ordinance No. 13, series of 1952, prohibiting the construction of
warehouses near a block of houses either in the poblacion or barrios without
maintaining the necessary distance of 200 meters from said block of houses to avoid
loss of lives and properties by accidental fire.
Seeking appellate review, petitioner raised as errors of the court a quo:
On the other hand, petitioner contends that said ordinance is unconstitutional,
contrary to the due process and equal protection clause of the Constitution and null
and void for not having been passed in accordance with law.
The issue then boils down on whether petitioner's warehouse is a nuisance within
the meaning of Article 694 of the Civil Code and whether Ordinance No. 13, S. 1952
of the Municipality of Virac is unconstitutional and void.
In a decision dated September 18, 1969, the court a quo ruled as follows:
1. The warehouse in question was legally constructed under a valid
permit issued by the municipality of Virac in accordance with existing
regulations and may not be destroyed or removed from its present
location;
2. Ordinance No. 13, series of 1952, is a legitimate and valid exercise
of police power by the Municipal Council of Virac is not (sic)
unconstitutional and void as claimed by the petitioner;
3. The storage by the petitioner of abaca and copra in the warehouse
is not only in violation of the provisions of the ordinance but poses a
grave danger to the safety of the lives and properties of the residents
of the neighborhood due to accidental fire and constitutes a public
nuisance under the provisions of Article 694 of the New Civil code of
the Philippines and may be abated;
4. Accordingly, the petitioner is hereby directed to remove from the
said warehouse all abaca and copra and other inflammable articles
stored therein which are prohibited under the provisions of Ordinance
No. 13, within a period of two (2) months from the time this decision
becomes final and that henceforth, the petitioner is enjoined from
storing such prohibited articles in the warehouse. With costs against
petitioner.
1. In holding that Ordinance No. 13, series of 1952, of the Municipality
of Virac, Catanduanes, is a legitimate and valid exercise of police
power of the Municipal Council, and therefore, constitutional;
2. In giving the ordinance a meaning other than and different from
what it provided by declaring that petitioner violated the same by
using the warehouse for storage of abaca and copra when what is
prohibited and penalized by the ordinance is the construction of
warehouses.
265
3. In refusing to take judicial notice of the fact that in the municipality,
there are numerous establishments similarly situated as appellants'
warehouses but which are not prosecuted.
We find no merit in the Petition.
Ordinance No. 13, series of 1952, was passed by the Municipal Council of Virac in
the exercise of its police power. It is a settled principle of law that municipal
corporations are agencies of the State for the promotion and maintenance of local
self-government and as such are endowed with the police powers in order to
effectively accomplish and carry out the declared objects of their creation. 3 Its
authority emanates from the general welfare clause under the Administrative Code,
which reads:
The municipal council shall enact such ordinances and make such
regulations, not repugnant to law, as may be necessary to carry into
effect and discharge the powers and duties conferred upon it by law
and such as shall seem necessary and proper to provide for the
health and safety, promote the prosperity, improve the morals, peace,
good order, comfort and convenience of the municipality and the
inhabitants thereof, and for the protection of property therein. 4
For an ordinance to be valid, it must not only be within the corporate powers of the
municipality to enact but must also be passed according to the procedure prescribed
by law, and must be in consonance with certain well established and basic principles
of a substantive nature. These principles require that a municipal ordinance (1) must
not contravene the Constitution or any statute (2) must not be unfair or oppressive
(3) must not be partial or discriminatory (4) must not prohibit but may regulate trade
(5) must be general and consistent with public policy, and (6) must not be
unreasonable. 5 Ordinance No. 13, Series of 1952, meets these criteria.
As to the petitioner's second assignment of error, the trial court did not give the
ordinance in question a meaning other than what it says. Ordinance No. 13 passed
by the Municipal Council of Virac on December 29, 1952, 6 reads:
AN ORDINANCE STRICTLY PROHIBITING THE CONSTRUCTION
OF WAREHOUSE IN ANY FORM NEAR A BLOCK OF HOUSES
EITHER IN POBLACION OR BARRIO WITH NECESSARY
DISTANCE TO AVOID GREAT LOSSES OF PROPERTY AND LIVES
BY FIRE ACCIDENT.
Section 1 provides:
It is strictly prohibited to construct warehouses in any form to any
person, persons, entity, corporation or merchants, wherein to keep or
store copra, hemp, gasoline, petroleum, alcohol, crude oil, oil of
turpentine and the like products or materials if not within the distance
of 200 meters from a block of houses either in the poblacion or barrios
to avoid great losses of properties inclusive lives by fire accident.
Section 2 provides: 7
Owners of warehouses in any form, are hereby given advice to
remove their said warehouses this ordinance by the Municipal
Council, provided however, that if those warehouses now in existence
should no longer be utilized as such warehouse for the above-
described products in Section 1 of this ordinance after a lapse of the
time given for the removal of the said warehouses now in existence,
same warehouses shall be exempted from the spirit of the provision of
section 1 of this ordinance, provided further, that these warehouses
now in existence, shall in the future be converted into non-
inflammable products and materials warehouses.
In spite of its fractured syntax, basically, what is regulated by the ordinance is the
construction of warehouses wherein inflammable materials are stored where such
warehouses are located at a distance of 200 meters from a block of houses and not
the construction per se of a warehouse. The purpose is to avoid the loss of life and
property in case of fire which is one of the primordial obligation of the government.
This was also the observation of the trial court:
266
A casual glance of the ordinance at once reveals a manifest disregard
of the elemental rules of syntax. Experience, however, will show that
this is not uncommon in law making bodies in small towns where local
authorities and in particular the persons charged with the drafting and
preparation of municipal resolutions and ordinances lack sufficient
education and training and are not well grounded even on the basic
and fundamental elements of the English language commonly used
throughout the country in such matters. Nevertheless, if one
scrutinizes the terms of the ordinance, it is clear that what is
prohibited is the construction of warehouses by any person, entity or
corporation wherein copra, hemp, gasoline and other inflammable
products mentioned in Section 1 may be stored unless at a distance
of not less than 200 meters from a block of houses either in the
poblacion or barrios in order to avoid loss of property and life due to
fire. Under Section 2, existing warehouses for the storage of the
prohibited articles were given one year after the approval of the
ordinance within which to remove them but were allowed to remain in
operation if they had ceased to store such prohibited articles.
The ambiguity therefore is more apparent than real and springs from
simple error in grammatical construction but otherwise, the meaning
and intent is clear that what is prohibited is the construction or
maintenance of warehouses for the storage of inflammable articles at
a distance within 200 meters from a block of houses either in the
poblacion or in the barrios. And the purpose of the ordinance is to
avoid loss of life and property in case of accidental fire which is one of
the primordial and basic obligation of any government. 8
Clearly, the lower court did NOT add meaning other than or differrent from what
was provided in the ordinance in question. It merely stated the purpose of the
ordinance and what it intends to prohibit to accomplish its purpose.
As to the third assignment of error, that warehouses similarly situated as that of the
petitioner were not prosecuted, suffice it to say that the mere fact that the municipal
authorities of Virac have not proceeded against other warehouses in the municipality
allegedly violating Ordinance No. 13 is no reason to claim that the ordinance is
discriminatory. A distinction must be made between the law itself and the manner in
which said law is implemented by the agencies in charge with its administration and
enforcement. There is no valid reason for the petitioner to complain, in the absence
of proof that the other bodegas mentioned by him are operating in violation of the
ordinance and that the complaints have been lodged against the bodegas concerned
without the municipal authorities doing anything about it.
The objections interposed by the petitioner to the validity of the ordinance have not
been substantiated. Its purpose is well within the objectives of sound government.
No undue restraint is placed upon the petitioner or for anybody to engage in trade
but merely a prohibition from storing inflammable products in the warehouse
because of the danger of fire to the lives and properties of the people residing in the
vicinity. As far as public policy is concerned, there can be no better policy than what
has been conceived by the municipal government.
As to petitioner's contention of want of jurisdiction by the lower court we find no merit
in the same. The case is a simple civil suit for abatement of a nuisance, the original
jurisdiction of which falls under the then Court of First Instance.
WHEREFORE, for lack of merit, the petition is hereby DISMISSED. Costs against
petitioner.
SO ORDERED.
[G.R. No. 110249. August 21, 1997]
ALFREDO TANO, BALDOMERO TANO, DANILO TANO, ROMUALDO
TANO, TEOCENES MIDELLO, ANGEL DE MESA, EULOGIO
TREMOCHA, FELIPE ONGONION, JR., ANDRES LINIJAN, ROBERT
LIM, VIRGINIA LIM, FELIMON DE MESA, GENEROSO ARAGON,
TEODORICO ANDRE, ROMULO DEL ROSARIO, CHOLITO ANDRE,
ERICK MONTANO, ANDRES OLIVA, VITTORIO SALVADOR,
LEOPOLDO ARAGON, RAFAEL RIBA, ALEJANDRO LEONILA, JOSE
DAMACINTO, RAMIRO MANAEG, RUBEN MARGATE, ROBERTO
REYES, DANILO PANGARUTAN, NOE GOLPAN,ESTANISLAO
267
ROMERO, NICANOR DOMINGO, ROLDAN TABANG, PANGANIBAN,
ADRIANO TABANG, FREDDIE SACAMAY, MIGUEL TRIMOCHA,
PACENCIO LABABIT, PABLO H. OMPAD, CELESTINO A. ABANO,
ALLAN ALMODAL, BILLY D. BARTOLAY, ALBINO D. LIQUE,
MELCHOR J. LAYSON, MELANI AMANTE, CLARO E. YATOC,
MERGELDO B. BALDEO, EDGAR M. ALMASET A., JOSELITO MANAEG,
LIBERATO ANDRADA, JR., ROBERTO BERRY, RONALD
VILLANUEVA, EDUARDO VALMORIA, WILDREDO MENDOZA,
NAPOLEON BABANGA, ROBERTO TADEPA, RUBEN ASINGUA,
SILVERIO GABO, JERRY ROMERO, DAVID PANGAGARUTAN,
DANIEL PANGGARUTAN, ROMEO AGAWIN, FERNANDO EQUIZ,
DITO LEQUIZ, RONILO ODERABLE, BENEDICTO TORRES, ROSITO
A. VALDEZ, CRESENCIO A. SAYANG, NICOMEDES S. ACOSTA,
ERENEO A. SEGARINO, JR., WILDREDO A. RAUTO, DIOSDADO A.
ACOSTA, BONIFACIO G. SISMO, TACIO ALUBA, DANIEL B.
BATERZAL, ELISEO YBAEZ, DIOSDADO E. HANCHIC, EDDIE
ESCALICAS, ELEAZAR B. BATERZAL, DOMINADOR HALICHIC,
ROOSEVELT RISMO-AN, ROBERT C. MERCADER, TIRSO ARESGADO,
DANIEL CHAVEZ, DANILO CHAVEZ, VICTOR VILLAROEL, ERNESTO
C. YABANEZ, ARMANDO T. SANTILLAN, RUDY S. SANTILLAN,
JODJEN ILUSTRISIMO, NESTOR SALANGRON, ALBERTO
SALANGRON, ROGER L. ROXAS, FRANCISCO T. ANTICANO, PASTOR
SALANGRON, BIENVENIDO SANTILLAN, GILBUENA LADDY, FIDEL
BENJAMIN JOVELITO BELGANO, HONEY PARIOL, ANTONIO
SALANGRON, NICASIO SALANGRON, & AIRLINE SHIPPERS
ASSOCIATION OF PALAWAN, Petitioners, vs. GOV. SALVADOR P.
SOCRATES, MEMBERS OF SANGGUNIAN PANLALAWIGAN OF
PALAWAN, namely, VICE-GOVERNOR JOEL T. REYES, JOSE D.
ZABALA, ROSALINO R. ACOSTA, JOSELITO A. CADLAON, ANDRES
R. BAACO, NELSON P. PENEYRA, CIPRIANO C. BARROMA, CLARO E.
ORDINARIO, ERNESTO A. LLACUN, RODOLFO C. FLORDELIZA,
GILBERT S. BAACO, WINSTON G. ARZAGA, NAPOLEON F. ORDONEZ
and GIL P. ACOSTA, CITY MAYOR EDWARD HAGEDORN, MEMBERS
OF SANGGUNIANG PANLUNGSOD NG PUERTO PRINCESA, ALL
MEMBERS OF BANTAY DAGAT, MEMBERS OF PHILIPPINE
NATIONAL POLICE OF PALAWAN, PROVINCIAL AND CITY
PROSECUTORS OF PALAWAN and PUERTO PRINCESA CITY, and
ALL JUDGES OF PALAWAN, REGIONAL, MUNICIPAL AND
METROPOLITAN, Respondents.
.
DECISION
DAVIDE, JR., J.:
Petitioners caption their petition as one for Certiorari, Injunction With
Preliminary Mandatory Injunction,with Prayer for Temporary Restraining
Order and pray that this Court: (1) declare as unconstitutional: (a)
Ordinance No. 15-92, dated 15 December 1992, of the Sangguniang
Panlungsod of Puerto Princesa; (b) Office Order No. 23, Series of 1993,
dated 22 January 1993, issued by Acting City Mayor Amado L. Lucero of
Puerto Princesa City; and (c) Resolution No. 33, Ordinance No. 2, Series
of 1993, dated 19 February 1993, of the Sangguniang Panlalawigan of
Palawan; (2) enjoin the enforcement thereof; and (3) restrain
respondents Provincial and City Prosecutors of Palawan and Puerto
Princesa City and Judges of Regional Trial Courts, Metropolitan Trial
Courts1 and Municipal Circuit Trial Courts in Palawan from assuming
jurisdiction over and hearing cases concerning the violation of the
Ordinances and of the Office Order.
More appropriately, the petition is, and shall be treated as, a special civil
action for certiorari and prohibition.
The following is petitioners summary of the factual antecedents giving rise
to the petition:
268
1. On December 15, 1992, the Sangguniang Panlungsod ng Puerto
Princesa City enacted Ordinance No. 15-92 which took effect on January
1, 1993 entitled: AN ORDINANCE BANNING THE SHIPMENT OF ALL LIVE
FISH AND LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM JANUARY 1,
1993 TO JANUARY 1, 1998 AND PROVIDING EXEMPTIONS, PENALTIES
AND FOR OTHER PURPOSES THEREOF, the full text of which reads as
follows:
Section 1. Title of the Ordinance. - This Ordinance is entitled: AN
ORDINANCE BANNING THE SHIPMENT OF ALL LIVE FISH AND LOBSTER
OUTSIDE PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY
1, 1998 AND PROVIDING EXEMPTIONS, PENALTIES AND FOR OTHER
PURPOSES THEREOF.
Section 2. Purpose, Scope and Coverage. - To effectively free our City Sea
Waters from Cyanide and other Obnoxious substance, and shall cover all
persons and/or entities operating within and outside the City of Puerto
Princesa who is are [sic] directly or indirectly in the business or shipment
of live fish and lobster outside the City.
Section 3. Definition of terms. - For purpose of this Ordinance the
following are hereby defined:
A. SEA BASS - A kind of fish under the family of Centropomidae, better
known as APAHAP;
B. CATFISH - A kind of fish under the family of Plotosidae, better known
as HITO-HITO;
C. MUDFISH - A kind of fish under the family of Orphicaphalisae better
known as DALAG
D. ALL LIVE FISH - All alive, breathing not necessarily moving of all
specie[s] use for food and for aquarium purposes.
E. LIVE LOBSTER - Several relatively, large marine crustaceans of the
genus Homarus that are alive and breathing not necessarily moving.
Section 4. It shall be unlawful [for] any person or any business enterprise
or company to ship out from Puerto Princesa City to any point of
destination either via aircraft or seacraft of any live fish and lobster
except SEA BASS, CATFISH, MUDFISH, AND MILKFISH FRIES.
Section 5. Penalty Clause. - Any person/s and or business entity violating
this Ordinance shall be penalized with a fine of not more than P5,000.00
or imprisonment of not more than twelve (12) months, cancellation of
their permit to do business in the City of Puerto Princesa or all of the
herein stated penalties, upon the discretion of the court.
Section 6. If the owner and/or operator of the establishment found
vilating the provisions of this ordinance is a corporation or a partnership,
the penalty prescribed in Section 5 hereof shall be imposed upon its
president and/or General Manager or Managing Partner and/or Manager,
as the case maybe [sic].
Section 7. Any existing ordinance or any provision of any ordinance
inconsistent to [sic] this ordinance is deemed repealed.
Section 8. This Ordinance shall take effect on January 1, 1993.
SO ORDAINED.
xxx
2. To implement said city ordinance, then Acting City Mayor Amado L.
Lucero issued Office Order No. 23, Series of 1993 dated January 22, 1993
which reads as follows:
269
In the interest of public service and for purposes of City Ordinance No.
PD426-14-74, otherwise known as AN ORDINANCE REQUIRING ANY
PERSON ENGAGED OR INTENDING TO ENGAGE IN ANY BUSINESS,
TRADE, OCCUPATION, CALLING OR PROFESSION OR HAVING IN HIS
POSSESSION ANY OF THE ARTICLES FOR WHICH A PERMIT IS REQUIRED
TO BE HAD, TO OBTAIN FIRST A MAYORS PERMIT and City Ordinance No.
15-92, AN ORDINANCE BANNING THE SHIPMENT OF ALL LIVE FISH AND
LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO
JANUARY 1, 1998, you are hereby authorized and directed to check or
conduct necessary inspections on cargoes containing live fish and lobster
being shipped out from the Puerto Princesa Airport, Puerto Princesa Wharf
or at any port within the jurisdiction of the City to any point of
destinations [sic] either via aircraft or seacraft.
The purpose of the inspection is to ascertain whether the shipper
possessed the required Mayors Permit issued by this Office and the
shipment is covered by invoice or clearance issued by the local office of
the Bureau of Fisheries and Aquatic Resources and as to compliance with
all other existing rules and regulations on the matter.
Any cargo containing live fish and lobster without the required documents
as stated herein must be held for proper disposition.
In the pursuit of this Order, you are hereby authorized to coordinate with
the PAL Manager, the PPA Manager, the local PNP Station and other
offices concerned for the needed support and cooperation. Further, that
the usual courtesy and diplomacy must be observed at all times in the
conduct of the inspection.
Please be guided accordingly.
xxx
3. On February 19, 1993, the Sangguniang Panlalawigan, Provincial
Government of Palawan enacted Resolution No. 33 entitled: A
RESOLUTION PROHIBITING THE CATCHING, GATHERING, POSSESSING,
BUYING, SELLING AND SHIPMENT OF LIVE MARINE CORAL DWELLING
AQUATIC ORGANISMS, TO WIT: FAMILY: SCARIDAE (MAMENG), EPINE
PHELUS FASCIATUS (SUNO). CROMILEPTES ALTIVELIS (PANTHER OR
SENORITA), LOBSTER BELOW 200 GRAMS AND SPAWNING, TRADACNA
GIGAS (TAKLOBO), PINCTADA MARGARITEFERA (MOTHER PEARL,
OYSTERS, GIANT CLAMS AND OTHER SPECIES), PENAEUS
MONODON (TIGER PRAWN-BREEDER SIZE OR MOTHER), EPINEPHELUS
SUILLUS (LOBA OR GREEN GROUPER) AND
FAMILY: BALISTIDAE (TROPICAL AQUARIUM FISHES) FOR A PERIOD FIVE
(5) YEARS IN AND COMING FROM PALAWAN WATERS, the full text of
which reads as follows:
WHEREAS, scientific and factual researches [sic] and studies disclose that
only five (5) percent of the corals of our province remain to be in
excellent condition as [a] habitat of marine coral dwelling aquatic
organisms;
WHEREAS, it cannot be gainsaid that the destruction and devastation of
the corals of our province were principally due to illegal fishing activities
like dynamite fishing, sodium cyanide fishing, use of other obnoxious
substances and other related activities;
WHEREAS, there is an imperative and urgent need to protect and
preserve the existence of the remaining excellent corals and allow the
devastated ones to reinvigorate and regenerate themselves into vitality
within the span of five (5) years;
WHEREAS, Sec. 468, Par. 1, Sub-Par. VI of the [sic] R.A. 7160 otherwise
known as the Local Government Code of 1991 empowers the
Sangguniang Panlalawigan to protect the environment and impose
270
appropriate penalties [upon] acts which endanger the environment such
as dynamite fishing and other forms of destructive fishing, among others.
NOW, THEREFORE, on motion by Kagawad Nelson P. Peneyra and upon
unanimous decision of all the members present;
Be it resolved as it is hereby resolved, to approve Resolution No. 33,
Series of 1993 of the Sangguniang Panlalawigan and to enact Ordinance
No. 2 for the purpose, to wit:
ORDINANCE NO. 2
Series of 1993
BE IT ORDAINED BY THE SANGGUNIANG PANLALAWIGAN IN SESSION
ASSEMBLED:
Section 1. TITLE - This Ordinance shall be known as an Ordinance
Prohibiting the catching, gathering, possessing, buying, selling and
shipment of live marine coral dwelling aquatic organisms, to wit: 1.
Family: Scaridae (Mameng), 2. Epinephelus Fasciatus (Suno), 3.
Cromileptes altivelis (Panther or Senorita), lobster below 200 grams and
spawning), 4. Tridacna Gigas (Taklobo), 5. Pinctada Margaretefera
(Mother Pearl, Oysters, Giant Clams and other species), 6. Penaeus
Monodon (Tiger Prawn-breeder size or mother), 7. Epinephelus Suillus
(Loba or Green Grouper) and 8. Family: Balistidae (Topical Aquarium
Fishes) for a period of five (5) years in and coming from Palawan Waters.
Section II. PRELIMINARY CONSIDERATIONS
1. Sec. 2-A (Rep. Act 7160). 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.
2. Sec. 5-A (R.A. 7160). Any provision on a power of [a] local
Government Unit shall be liberaly interpreted in its favor, and in case of
doubt, any question thereon shall be resolved in favor of devolution of
powers and of the lower government units. Any fair and reasonable
doubts as to the existence of the power shall be interpreted in favor of the
Local Government Unit concerned.
3. Sec. 5-C (R.A. 7160). The general welfare provisions in this Code shall
be liberally interpreted to give more powers to local government units in
accelerating economic development and upgrading the quality of life for
the people in the community.
4. Sec. 16 (R.A. 7160). General Welfare. - Every local government unit
shall exercise the powers expressly granted, those necessarily implied
therefrom, as well as powers necessary, appropriate, or incidental for its
efficient and effective governance; and those which are essential to the
promotion of the general welfare.
Section III. DECLARATION OF POLICY. - It is hereby declared to be the
policy of the Province of Palawan to protect and conserve the marine
resources of Palawan not only for the greatest good of the majority of the
present generation but with [the] proper perspective and consideration of
[sic] their prosperity, and to attain this end, the Sangguniang
Panlalawigan henceforth declares that is [sic] shall be unlawful for any
person or any business entity to engage in catching, gathering,
possessing, buying, selling and shipment of live marine coral dwelling
aquatic organisms as enumerated in Section 1 hereof in and coming out
of Palawan Waters for a period of five (5) years;
271
Section IV. PENALTY CLAUSE. - Any person and/or business entity
violating this Ordinance shall be penalized with a fine of not more than
Five Thousand Pesos (P5,000.00), Philippine Currency, and/or
imprisonment of six (6) months to twelve (12) months and confiscation
and forfeiture of paraphernalias [sic] and equipment in favor of the
government at the discretion of the Court;
Section V. SEPARABILITY CLAUSE. - If for any reason, a Section or
provision of this Ordinance shall be held as unconditional [sic] or invalid,
it shall not affect the other provisions hereof.
Section VI. REPEALING CLAUSE. - Any existing Ordinance or a provision
of any ordinance inconsistent herewith is deemed modified, amended or
repealed.
Section VII. EFFECTIVITY. - This Ordinance shall take effect ten (10) days
after its publication.
SO ORDAINED.
xxx
4. The respondents implemented the said ordinances, Annexes A and C
hereof thereby depriving all the fishermen of the whole province of
Palawan and the City of Puerto Princesa of their only means of livelihood
and the petitioners Airline Shippers Association of Palawan and other
marine merchants from performing their lawful occupation and trade;
5. Petitioners Alfredo Tano, Baldomero Tano, Teocenes Midello, Angel de
Mesa, Eulogio Tremocha, and Felipe Ongonion, Jr. were even charged
criminally under criminal case no. 93-05-C in the 1st Municipal Circuit
Trial Court of Cuyo-Agutaya-Magsaysay, an original carbon copy of the
criminal complaint dated April 12, 1993 is hereto attached as Annex D;
while xerox copies are attached as Annex D to the copies of the petition;
6. Petitioners Robert Lim and Virginia Lim, on the other hand, were
charged by the respondent PNP with the respondent City Prosecutor of
Puerto Princesa City, a xerox copy of the complaint is hereto attached as
Annex E;
Without seeking redress from the concerned local government units,
prosecutors office and courts, petitioners directly invoked our original
jurisdiction by filing this petition on 4 June 1993. In sum, petitioners
contend that:
First, the Ordinances deprived them of due process of law, their
livelihood, and unduly restricted them from the practice of their trade, in
violation of Section 2, Article XII and Sections 2 and 7 of Article XIII of
the 1987 Constitution.
Second, Office Order No. 23 contained no regulation nor condition under
which the Mayors permit could be granted or denied; in other words, the
Mayor had the absolute authority to determine whether or not to issue
permit.
Third, as Ordinance No. 2 of the Province of Palawan altogether prohibited
the catching, gathering, possession, buying, selling and shipping of live
marine coral dwelling organisms, without any distinction whether it was
caught or gathered through lawful fishing method, the Ordinance took
away the right of petitioners-fishermen to earn their livelihood in lawful
ways; and insofar as petitioners-members of Airline Shippers Association
are concerned, they were unduly prevented from pursuing their vocation
and entering into contracts which are proper, necessary, and essential to
carry out their business endeavors to a successful conclusion.
Finally, as Ordinance No. 2 of the Sangguniang Panlalawigan is null and
void, the criminal cases based thereon against petitioners Tano and the
others have to be dismissed.
272
In the Resolution of 15 June 1993 we required respondents to comment
on the petition, and furnished the Office of the Solicitor General with a
copy thereof.
In their comment filed on 13 August 1993, public respondents Governor
Socrates and Members of the Sangguniang Panlalawigan of Palawan
defended the validity of Ordinance No.2, Series of 1993, as a valid
exercise of the Provincial Governments power under the general welfare
clause (Section 16 of the Local Government Code of 1991 [hereafter,
LGC]), and its specific power to protect the environment and impose
appropriate penalties for acts which endanger the environment, such as
dynamite fishing and other forms of destructive fishing under Section 447
(a) (1) (vi), Section 458 (a) (1) (vi), and Section 468 (a) (1) (vi), of the
LGC. They claimed that in the exercise of such powers, the Province of
Palawan had the right and responsibilty to insure that the remaining coral
reefs, where fish dwells [sic], within its territory remain healthy for the
future generation. The Ordinance, they further asserted, covered only live
marine coral dwelling aquatic organisms which were enumerated in the
ordinance and excluded other kinds of live marine aquatic organisms not
dwelling in coral reefs; besides the prohibition was for only five (5) years
to protect and preserve the pristine coral and allow those damaged to
regenerate.
Aforementioned respondents likewise maintained that there was no
violation of due process and equal protection clauses of the Constitution.
As to the former, public hearings were conducted before the enactment of
the Ordinance which, undoubtedly, had a lawful purpose and employed
reasonable means; while as to the latter, a substantial distinction existed
between a fisherman who catches live fish with the intention of selling it
live, and a fisherman who catches live fish with no intention at all of
selling it live, i.e., the former uses sodium cyanide while the latter does
not. Further, the Ordinance applied equally to all those belonging to one
class.
On 25 October 1993 petitioners filed an Urgent Plea for the Immediate
Issuance of a Temporary Restraining Order claiming that despite the
pendency of this case, Branch 50 of the Regional Trial Court of Palawan
was bent on proceeding with Criminal Case No. 11223 against petitioners
Danilo Tano, Alfredo Tano, Eulogio Tremocha, Romualdo Tano, Baldomero
Tano, Andres Lemihan and Angel de Mesa for violation of Ordinance No. 2
of the Sangguniang Panlalawigan of Palawan. Acting on said plea, we
issued on 11 November 1993 a temporary restraining order directing
Judge Angel Miclat of said court to cease and desist from proceeding with
the arraignment and pre-trial of Criminal Case No. 11223.
On 12 July 1994, we excused the Office of the Solicitor General from filing
a comment, considering that as claimed by said office in its Manifestation
of 28 June 1994, respondents were already represented by counsel.
The rest of the respondents did not file any comment on the petition.
In the resolution of 15 September 1994, we resolved to consider the
comment on the petition as the Answer, gave due course to the petition
and required the parties to submit their respective
memoranda.2chanroblesvirtuallawlibrary
On 22 April 1997 we ordered impleaded as party respondents the
Department of Agriculture and the Bureau of Fisheries and Aquatic
Resources and required the Office of the Solicitor General to comment on
their behalf. But in light of the latters motion of 9 July 1997 for an
extension of time to file the comment which would only result in further
delay, we dispensed with said comment.
After due deliberation on the pleadings filed, we resolved to dismiss this
petition for want of merit, on 22 July 1997, and assigned it to
the ponente for the writing of the opinion of the Court.
I
273
There are actually two sets of petitioners in this case. The first is
composed of Alfredo Tano, Baldomero Tano, Danilo Tano, Romualdo Tano,
Teocenes Midello, Angel de Mesa, Eulogio Tremocha, Felipe Ongonion, Jr.,
Andres Linijan, and Felimon de Mesa, who were criminally charged with
violating Sangguniang Panlalawigan Resolution No. 33 and Ordinance No.
2, Series of 1993, of the Province of Palawan, in Criminal Case No. 93-05-
C of the 1st Municipal Circuit Trial Court (MCTC) of Palawan;3 and Robert
Lim and Virginia Lim who were charged with violating City Ordinance No.
15-92 of Puerto Princesa City and Ordinance No. 2, Series of 1993, of the
Province of Palawan before the Office of the City Prosecutor of Puerto
Princesa.4 All of them, with the exception of Teocenes Midello, Felipe
Ongonion, Jr., Felimon de Mesa, Robert Lim and Virginia Lim, are likewise
the accused in Criminal Case No. 11223 for the violation of Ordinance No.
2 of the Sangguniang Panlalawigan of Palawan, pending before Branch 50
of the Regional Trial Court of Palawan. 5chanroblesvirtuallawlibrary
The second set of petitioners is composed of the rest of the petitioners
numbering seventy-seven (77), all of whom, except the Airline Shippers
Association of Palawan -- an alleged private association of several marine
merchants -- are natural persons who claim to be fishermen.
The primary interest of the first set of petitioners is, of course, to prevent
the prosecution, trial and determination of the criminal cases until the
constitutionality or legality of the Ordinances they allegedly violated shall
have been resolved. The second set of petitioners merely claim that they
being fishermen or marine merchants, they would be adversely affected
by the ordinances.
As to the first set of petitioners, this special civil for certiorari must fail on
the ground of prematurity amounting to a lack of cause of action. There is
no showing that the said petitioners, as the accused in the criminal cases,
have filed motions to quash the informations therein and that the same
were denied. The ground available for such motions is that the facts
charged therein do not constitute an offense because the ordinances in
question are unconstitutional.6 It cannot then be said that the lower
courts acted without or in excess of jurisdiction or with grave abuse of
discretion to justify recourse to the extraordinary remedy of certiorari or
prohibition. It must further be stressed that even if the petitioners did file
motions to quash, the denial thereof would not forthwith give rise to a
cause of action under Rule 65 of the Rules of Court. The general rule is
that where a motion to quash is denied, the remedy therefrom is
not certiorari, but for the party aggrieved thereby to go to trial without
prejudice to reiterating special defenses involved in said motion, and if,
after trial on the merits of adverse decision is rendered, to appeal
therefrom in the manner authorized by law.7 And, even where in an
exceptional circumstance such denial may be the subject of a special civil
action for certiorari,  a motion for reconsideration must have to be filed to
allow the court concerned an opportunity to correct its errors, unless such
motion may be dispensed with because of existing exceptional
circumstances.8 Finally, even if a motion for reconsideration has been filed
and denied, the remedy under Rule 65 is still unavailable absent any
showing of the grounds provided for in Section 1 thereof. 9 For obvious
reasons, the petition at bar does not, and could not have, alleged any of
such grounds.
As to the second set of petitioners, the instant petition is obviously one
for DECLARATORY RELIEF, i.e., for a declaration that the Ordinances in
question are a nullity... for being unconstitutional. 10 As such, their petition
must likewise fail, as this Court is not possessed of original jurisdiction
over petitions for declaratory relief even if only questions of law are
involved,11 it being settled that the Court merely exercises appellate
jurisdiction over such petitions.12chanroblesvirtuallawlibrary
II
Even granting arguendo  that the first set of petitioners have a cause of
action ripe for the extraordinary writ of certiorari, there is here a clear
disregard of the hierarchy of courts, and no special and important reason
274
or exceptional or compelling circumstance has been adduced why direct
recourse to us should be allowed. While we have concurrent jurisdiction
with Regional Trial courts and with the Court of Appeals to issue writs
of certiorari, prohibition, mandamus, quo warranto, habeas corpus and
injunction, such concurrence gives petitioners no unrestricted freedom of
choice of court forum, so we held in People v.
Cuaresma:13chanroblesvirtuallawlibrary
This concurrence of jurisdiction is not to be taken as according to parties
seeking any of the writs an absolute unrestrained freedom of choice of the
court to which application therefor will be directed. There is after all
hierarchy of courts. That hierarchy is determinative of the venue of
appeals, and should also serve as a general determinant of the
appropriate forum for petitions for the extraordinary writs. A becoming
regard for that judicial hierarchy most certainly indicates that petitions for
the issuance of extraordinary writs against first level (inferior) courts
should be filed with the Regional Trial Court, and those against the latter,
with the Court of Appeals. A direct invocation of the Supreme Courts
original jurisdiction to issue these writs should be allowed only when there
are special and important reasons therefor, clearly and specifically set out
in the petition. This is established policy. It is a policy necessary to
prevent inordinate demands upon the Courts time and attention which are
better devoted to those matters within its exclusive jurisdiction, and to
prevent further over-crowding of the Courts docket.
The Court feels the need to reaffirm that policy at this time, and to enjoin
strict adherence thereto in the light of what it perceives to be a growing
tendency on the part of litigants and lawyers to have their applications for
the so-called extraordinary writs, and sometimes even their appeals,
passed upon and adjudicated directly and immediately by the highest
tribunal of the land.
In Santiago v. Vasquez,14 this Court forcefully expressed that the
propensity of litigants and lawyers to disregard the hierarchy of courts
must be put to a halt, not only because of the imposition upon the
precious time of this Court, but also because of the inevitable and
resultant delay, intended or otherwise, in the adjudication of the case
which often has to be remanded or referred to the lower court, the proper
forum under the rules of procedure, or as better equipped to resolve the
issues since this Court is not a trier of facts. We reiterated the judicial
policy that this Court will not entertain direct resort to it unless the
redress desired cannot be obtained in the appropriate courts or where
exceptional and compelling circumstances justify availment of a remedy
within and calling for the exercise of [its] primary jurisdiction.
III
Notwithstanding the foregoing procedural obstacles against the first set of
petitioners, we opt to resolve this case on its merits considering that the
lifetime of the challenged Ordinances is about to end. Ordinance No. 15-
92 of the City of Puerto Princesa is effective only up to 1 January 1998,
while Ordinance No. 2 of the Province of Palawan, enacted on 19 February
1993, is effective for only five (5) years. Besides, these Ordinances were
undoubtedly enacted in the exercise of powers under the new LGC relative
to the protection and preservation of the environment and are thus novel
and of paramount importance. No further delay then may be allowed in
the resolution of the issues raised.
It is of course settled that laws (including ordinances enacted by local
government units) enjoy the presumption of constitutionality. 15 To
overthrow this presumption, there must be a clear and unequivocal
breach of the Constitution, not merely a doubtful or argumentative
contradiction. In short, the conflict with the Constitution must be shown
beyond reasonable doubt.16 Where doubt exists, even if well founded,
there can be no finding of unconstitutionality. To doubt is to
sustain.17chanroblesvirtuallawlibrary
275
After a scrunity of the challenged Ordinances and the provisions of the
Constitution petitioners claim to have been violated, we find petitioners
contentions baseless and so hold that the former do not suffer from any
infirmity, both under the Constitution and applicable laws.
Petitioners specifically point to Section 2, Article XII and Sections 2 and 7,
Article XIII of the Constitution as having been transgressed by the
Ordinances.
The pertinent portion of Section 2 of Article XII reads:
SEC. 2. x x x
The State shall protect the nation's marine wealth in its archipelagic
waters, territorial sea, and exclusive economic zone, and reserve its use
and enjoyment exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural
resources by Filipino citizens, as well as cooperative fish farming, with
priority to subsistence fishermen and fishworkers in rivers, lakes, bays,
and lagoons.
Sections 2 and 7 of Article XIII provide:
Sec. 2. The promotion of social justice shall include the commitment to
create economic opportunities based on freedom of initiative and self-
reliance.
xxx
SEC. 7. The State shall protect the rights of subsistence fishermen,
especially of local communities, to the preferential use of the communal
marine and fishing resources, both inland and offshore. It shall provide
support to such fishermen through appropriate technology and research,
adequate financial, production, and marketing assistance, and other
services. The State shall also protect, develop, and conserve such
resources. The protection shall extend to offshore fishing grounds of
subsistence fishermen against foreign intrusion. Fishworkers shall receive
a just share from their labor in the utilization of marine and fishing
resources.
There is absolutely no showing that any of the petitioners qualifies as a
subsistence or marginal fisherman. In their petition, petitioner Airline
Shippers Association of Palawan is described as a private association
composed of Marine Merchants; petitioners Robert Lim and Virginia Lim,
as merchants; while the rest of the petitioners claim to be fishermen,
without any qualification, however, as to their status.
Since the Constitution does not specifically provide a definition of the
terms subsistence or marginal fishermen,18 they should be construed in
their general and ordinary sense. A marginal fisherman is an individual
engaged in fishing whose margin of return or reward in his harvest of fish
as measured by existing price levels is barely sufficient to yield a profit or
cover the cost of gathering the fish,19 while a subsistence fisherman is one
whose catch yields but the irreducible minimum for his
livelihood.20 Section 131(p) of the LGC (R.A. No. 7160) defines a marginal
farmer or fisherman as an individual engaged in subsistence farming or
fishing which shall be limited to the sale, barter or exchange of
agricultural or marine products produced by himself and his immediate
family. It bears repeating that nothing in the record supports a finding
that any petitioner falls within these definitions.
Besides, Section 2 of Article XII aims primarily not to bestow any right to
subsistence fishermen, but to lay stress on the duty of the State to
protect the nations marine wealth. What the provision merely recognizes
is that the State may allow, by law, cooperative fish farming, with priority
to subsistence fishermen and fishworkers in rivers, lakes, bays, and
lagoons. Our survey of the statute books reveals that the only provision of
276
law which speaks of the preferential right of marginal fishermen is Section
149 of the LGC of 1991 which pertinently provides:
SEC. 149. Fishery Rentals, Fees and Charges. -- x x x
(b) The sangguniang bayan may:
(1) Grant fishery privileges to erect fish corrals, oyster, mussels or other
aquatic beds or bangus fry areas, within a definite zone of the municipal
waters, as determined by it: Provided, however, That duly registered
organizations and cooperatives of marginal fishermen shall have
preferential right to such fishery privileges....
In a Joint Administrative Order No. 3, dated 25 April 1996, the Secretary
of the Department of Agriculture and the Secretary of the Department of
Interior and Local Government prescribed the guidelines on the
preferential treatment of small fisherfolk relative to the fishery right
mentioned in Section 149. This case, however, does not involve such
fishery right.
Anent Section 7 of Article XIII, it speaks not only of the use of communal
marine and fishing resources, but of their protection, development, and
conservation. As hereafter shown, the ordinances in question are meant
precisely to protect and conserve our marine resources to the end that
their enjoyment by the people may be guaranteed not only for the
present generation, but also for the generations to come.
The so-called preferential right of subsistence or marginal fishermen to
the use of marine resources is not at all absolute. In accordance with the
Regalian Doctrine, marine resources belong to the State, and, pursuant to
the first paragraph of Section 2, Article XII of the Constitution, their
exploration, development and utilization... shall be under the full control
and supervision of the State. Moreover, their mandated protection,
development, and conservation as necessarily recognized by the framers
of the Constitution, imply certain restrictions on whatever right of
enjoyment there may be in favor of anyone. Thus, as to the curtailment of
the preferential treatment of marginal fisherman, the following exchange
between Commissioner Francisco Rodrigo and Commissioner Jose F.S.
Bengzon, Jr., took place at the plenary session of the Constitutional
Commission:
MR. RODRIGO:
Let us discuss the implementation of this because I would not raise the
hopes of our people, and afterwards fail in the implementation. How will
this be implemented? Will there be a licensing or giving of permits so that
government officials will know that one is really a marginal fisherman? Or
if policeman say that a person is not a marginal fisherman, he can show
his permit, to prove that indeed he is one.
MR. BENGZON:
Certainly, there will be some mode of licensing insofar as this is
concerned and this particular question could be tackled when we discuss
the Article on Local Governments -- whether we will leave to the local
governments or to Congress on how these things will be implemented.
But certainly, I think our Congressmen and our local officials will not be
bereft of ideas on how to implement this mandate.
xxx
MR. RODRIGO:
So, once one is licensed as a marginal fisherman, he can go
anywhere in the Philippines and fish in any fishing grounds.
MR. BENGZON:
277
Subject to whatever rules and regulations and local laws that may be
passed, may be existing or will be passed.21 (underscoring supplied for
emphasis).
What must likewise be borne in mind is the state policy enshrined in the
Constitution regarding the duty of the State to protect and advance the
right of the people to a balanced and healthful ecology in accord with the
rhythm and harmony of nature.22 On this score, in Oposa v.
Factoran,23 this Court declared:
While the right to balanced and healthful ecology is to be found under the
Declaration of Principles the State Policies and not under the Bill of Rights,
it does not follow that it is less important than any of the civil and political
rights enumerated in the latter. Such a right belongs to a different
category of rights altogether for it concerns nothing less than self-
preservation and self-perpetuation - aptly and fittingly stressed by the
petitioners - the advancement of which may even be said to predate all
governments and constitutions. As a matter of fact, these basic rights
need not even be written in the Constitution for they are assumed to exist
from the inception of humankind. If they are now explicitly mentioned in
the fundamental charter, it is because of the well-founded fear of its
framers that unless the rights to a balanced and healthful ecology and to
health are mandated as state policies by the Constitution itself, thereby
highlighting their continuing importance and imposing upon the state a
solemn obligation to preserve the first and protect and advance the
second, the day would not be too far when all else would be lost not only
for the present generation, but also for those to come - generations which
stand to inherit nothing but parched earth incapable of sustaining life.
The right to a balanced and healthful ecology carries with it a correlative
duty to refrain from impairing the environment...
The LGC provisions invoked by private respondents merely seek to give
flesh and blood to the right of the people to a balanced and healthful
ecology. In fact, the General Welfare Clause, expressly mentions this
right:
SEC. 16. General Welfare.-- Every local government unit shall exercise
the powers expressly granted, those necessarily implied therefrom, as
well as powers necessary, appropriate, or incidental for its efficient and
effective governance, and those which are essential to the promotion of
the general welfare. Within their respective territorial jurisdictions, local
government units shall ensure and support, among other things, the
preservation and enrichment of culture, promote health and
safety, enhance the right of the people to a balanced ecology, encourage
and support the development of appropriate and self-reliant scientific and
technological capabilities, improve public morals, enhance economic
prosperity and social justice, promote full employment among their
residents, maintain peace and order, and preserve the comfort and
convenience of their inhabitants. (underscoring supplied).
Moreover, Section 5(c) of the LGC explicitly mandates that the general
welfare provisions of the LGC shall be liberally interpreted to give more
powers to the local government units in accelerating economic
development and upgrading the quality of life for the people of the
community.
The LGC vests municipalities with the power to grant fishery privileges in
municipal waters and to impose rentals, fees or charges therefor; to
penalize, by appropriate ordinances, the use of explosives, noxious or
poisonous substances, electricity, muro-ami, and other deleterious
methods of fishing; and to prosecute any violation of the provisions of
applicable fishery laws.24 Further, the sangguniang bayan,
the sangguniang panlungsod and the  sangguniang panlalawigan  are
directed to enact ordinances for the general welfare of the municipality
and its inhabitants, which shall include, inter alia, ordinances that
[p]rotect the environment and impose appropriate penalties for acts
which endanger the environment such as dynamite fishing and other
278
forms of destructive fishing... and such other activities which result in
pollution, acceleration of eutrophication of rivers and lakes or of ecological
imbalance.25chanroblesvirtuallawlibrary
Finally, the centerpiece of LGC is the system of decentralization 26 as
expressly mandated by the Constitution.27 Indispensable thereto
is devolution and the LGC expressly provides that [a]ny provision on a
power of a local government unit shall be liberally interpreted in its favor,
and in case of doubt, any question thereon shall be resolved in favor of
devolution of powers and of the lower local government unit. Any fair and
reasonable doubt as to the existence of the power shall be interpreted in
favor of the local government unit concerned,28 Devolution refers to the
act by which the National Government confers power and authority upon
the various local government units to perform specific functions and
responsibilities.29chanroblesvirtuallawlibrary
One of the devolved powers enumerated in the section of the LGC on
devolution is the enforcement of fishery laws in municipal waters including
the conservation of mangroves.30 This necessarily includes enactment of
ordinances to effectively carry out such fishery laws within the municipal
waters.
The term municipal waters, in turn, include not only streams, lakes, and
tidal waters within the municipality, not being the subject of private
ownership and not comprised within the national parks, public forest,
timber lands, forest reserves, or fishery reserves, but also marine waters
included between two lines drawn perpendicularly to the general coastline
from points where the boundary lines of the municipality or city touch the
sea at low tide and a third line parallel with the general coastline and
fifteen kilometers from it.31 Under P.D. No. 704, the marine waters
included in municipal waters is limited to three nautical miles from the
general coastline using the above perpendicular lines and a third parallel
line.
These fishery laws which local government units may enforce under
Section 17(b), (2), (i) in municipal waters include: (1) P.D. No. 704; (2)
P.D. No. 1015 which, inter alia, authorizes the establishment of a closed
season in any Philippine water if necessary for conservation or ecological
purposes; (3) P.D. No. 1219 which provides for the exploration,
exploitation, utilization, and conservation of coral resources; (4) R.A. No.
5474, as amended by B.P. Blg. 58, which makes it unlawful for any
person, association, or corporation to catch or cause to be caught, sell,
offer to sell, purchase, or have in possession any of the fish specie
called gobiidae or ipon during closed season; and (5) R.A. No. 6451 which
prohibits and punishes electrofishing, as well as various issuances of the
BFAR.
To those specifically devolved insofar as the control and regulation of
fishing in municipal waters and the protection of its marine environment
are concerned, must be added the following:
1. Issuance of permits to construct fish cages within municipal waters;
2. Issuance of permits to gather aquarium fishes within
municipal waters;
3. Issuance of permits to gather kapis shells within municipal
waters;
4. Issuance of permits to gather/culture shelled mollusks within
municipal waters;
5. Issuance of licenses to establish seaweed farms within
municipal waters;
6. Issuance of licenses to establish culture pearls within
municipal waters;
7. Issuance of auxiliary invoice to transport fish and fishery
products; and
8. Establishment of closed season in municipal waters.
279
These functions are covered in the Memorandum of Agreement of 5 April
1994 between the Department of Agriculture and the Department of
Interior and Local Government.
In light then of the principles of decentralization and devolution enshrined
in the LGC and the powers granted to local government units under
Section 16 (the General Welfare Clause), and under Sections 149, 447 (a)
(1) (vi), 458 (a) (1) (vi) and 468 (a) (1) (vi), which unquestionably
involve the exercise of police power, the validity of the questioned
Ordinances cannot be doubted.
Parenthetically, we wish to add that these Ordinances find full support
under R.A. No. 7611, otherwise known as the Strategic Environmental
Plan (SEP) for Palawan Act, approved on 19 July 1992. This statute adopts
a comprehensive framework for the sustainable development of Palawan
compatible with protecting and enhancing the natural resources and
endangered environment of the province, which shall serve to guide the
local government of Palawan and the government agencies concerned in
the formulation and implementation of plans, programs and projects
affecting said province.32chanroblesvirtuallawlibrary
At this time then, it would be appropriate to determine the relation
between the assailed Ordinances and the aforesaid powers of
the Sangguniang Panlungsod of the City of Puerto Princesa and
the Sangguniang Panlalawigan of the Province of Palawan to protect the
environment. To begin, we ascertain the purpose of the Ordinances as set
forth in the statement of purposes or declaration of policies quoted
earlier.
It is clear to the Court that both Ordinances have two principal objectives
or purposes: (1) to establish a closed season for the species of fish or
aquatic animals covered therein for a period of five years, and (2) to
protect the corals of the marine waters of the City of Puerto Princesa and
the Province of Palawan from further destruction due to illegal fishing
activities.
The accomplishment of the first objective is well within the devolved
power to enforce fishery laws in municipal waters, such as P.D. No. 1015,
which allows the establishment of closed seasons. The devolution of such
power has been expressly confirmed in the Memorandum of Agreement of
5 April 1994 between the Department of Agriculture and the Department
of Interior and Local Government.
The realization of the second objective falls within both the general
welfare clause of the LGC and the express mandate thereunder to cities
and provinces to protect the environment and impose appropriate
penalties for acts which endanger the
environment.33chanroblesvirtuallawlibrary
The destruction of the coral reefs results in serious, if not irreparable,
ecological imbalance, for coral reefs are among the natures life-support
systems.34 They collect, retain, and recycle nutrients for adjacent
nearshore areas such as mangroves, seagrass beds, and reef flats;
provide food for marine plants and animals; and serve as a protective
shelter for aquatic organisms.35 It is said that [e]cologically, the reefs are
to the oceans what forests are to continents: they are shelter and
breeding grounds for fish and plant species that will disappear without
them.36chanroblesvirtuallawlibrary
The prohibition against catching live fish stems, in part, from the modern
phenomenon of live-fish trade which entails the catching of so-called
exotic tropical species of fish not only for aquarium use in the West, but
also for the market for live banquet fish [which] is virtually insatiable in
ever more affluent Asia.37 These exotic species are coral-dwellers, and
fishermen catch them by diving in shallow water with corraline habitats
and squirting sodium cyanide poison at passing fish directly or onto coral
crevices; once affected the fish are immobilized [merely stunned] and
280
then scooped by hand.38 The diver then surfaces and dumps his catch into
a submerged net attached to the skiff. Twenty minutes later, the fish can
swim normally. Back on shore, they are placed in holding pens, and within
a few weeks, they expel the cyanide from their system and are ready to
be hauled. Then they are placed in saltwater tanks or packaged in plastic
bags filled with seawater for shipment by air freight to major markets for
live food fish.39 While the fish are meant to survive, the opposite holds
true for their former home as [a]fter the fisherman squirts the cyanide,
the first thing to perish is the reef algae, on which fish feed. Days later,
the living coral starts to expire. Soon the reef loses its function as habitat
for the fish, which eat both the algae and invertebrates that cling to the
coral. The reef becomes an underwater graveyard, its skeletal remains
brittle, bleached of all color and vulnerable to erosion from the pounding
of the waves.40 It has been found that cyanide fishing kills most hard and
soft corals within three months of repeated
application.41chanroblesvirtuallawlibrary
The nexus then between the activities barred by Ordinance No. 15-92 of
the City of Puerto Princesa and the prohibited acts provided in Ordinance
No. 2, Series of 1993 of the Province of Palawan, on one hand, and the
use of sodium cyanide, on the other, is painfully obvious. In sum, the
public purpose and reasonableness of the Ordinances may not then be
controverted.
As to Office Order No. 23, Series of 1993, issued by Acting City Mayor
Amado L. Lucero of the City of Puerto Princesa, we find nothing therein
violative of any constitutional or statutory provision. The Order refers to
the implementation of the challenged ordinance and is not the Mayors
Permit.
The dissenting opinion of Mr. Justice Josue N. Bellosillo relies upon the
lack of authority on the part of the Sangguniang Panlungsod of Puerto
Princesa to enact Ordinance No. 15, Series of 1992, on the theory that
the subject thereof is within the jurisdiction and responsibility of the
Bureau of Fisheries and Aquatic Resources (BFAR) under P.D. No. 704,
otherwise known as the Fisheries Decree of 1975; and that, in any event,
the Ordinance is unenforceable for lack of approval by the Secretary of
the Department of Natural Resources (DNR), likewise in accordance with
P.D. No. 704.
The majority is unable to accommodate this view. The jurisdiction and
responsibility of the BFAR under P. D. no. 704, over the management,
conservation, development, protection, utilization and disposition of all
fishery and aquatic resources of the country is not all-encompassing.
First, Section 4 thereof excludes from such jurisdiction and responsibility
municipal waters, which shall be under the municipal or city government
concerned, except insofar as fishpens and seaweed culture in municipal in
municipal centers are concerned. This section provides, however, that all
municipal or city ordinances and resolutions affecting fishing and fisheries
and any disposition thereunder shall be submitted to the Secretary of the
Department of Natural Resources for appropriate action and shall have full
force and effect only upon his approval. 42chanroblesvirtuallawlibrary
Second, it must at once be pointed out that the BFAR is no longer under
the Department of Natural Resources (now Department of Environment
and Natural Resources). Executive Order No. 967 of 30 June 1984
transferred the BFAR from the control and supervision of the Minister
(formerly Secretary) of Natural Resources to the Ministry of Agriculture
and Food (MAF) and converted it into a mere staff agency thereof,
integrating its functions with the regional offices of the MAF.
In Executive Order No. 116 of 30 January 1987, which reorganized the
MAF, the BFAR was retained as an attached agency of the MAF. And under
the Administrative Code of 1987,43 the BFAR is placed under the Title
concerning the Department of Agriculture.44chanroblesvirtuallawlibrary
Therefore, it is incorrect to say that the challenged Ordinance of the City
of Puerto Princesa is invalid or unenforceable because it was not approved
281
by the Secretary of the DENR. If at all, the approval that should be sought
would be that of the Secretary of the Department of Agriculture (not
DENR) of municipal ordinances affecting fishing and fisheries in municipal
waters has been dispensed with in view of the following reasons:
(1) Section 534 (Repealing Clause) of the LGC expressly repeals or
amends Section 16 and 29 of P.D. No. 70445 insofar that they are
inconsistent with the provisions of the LGC.
(2) As discussed earlier, under the general welfare clause of the LGC,
local government units have the power, inter alia, to enact ordinances to
enhance the right of the people to a balanced ecology. It likewise
specifically vests municipalities with the power to grant fishery privileges
in municipal waters, and impose rentals, fees or charges therefor; to
penalize, by appropriate ordinances, the use of explosives, noxious or
poisonous substances, electricity, muro-ami, and other deleterious
methods of fishing; and to prosecute other methods of fishing; and to
prosecute any violation of the provisions of applicable fishing
laws.46 Finally, it imposes upon the sangguniang bayan,  the sangguniang
panlungsod, and the sangguniang panlalawigan the duty to enact
ordinances to [p]rotect the environment and impose appropriate penalties
for acts which endanger the environment such as dynamite fishing and
other forms of destructive fishing and such other activities which result in
pollution, acceleration of eutrophication of rivers and lakes or of ecological
imbalance.47chanroblesvirtuallawlibrary
In closing, we commend the Sangguniang Panlungsod of the City of
Puerto Princesa and Sangguniang Panlalawigan of the Province of Palawan
for exercising the requisite political will to enact urgently needed
legislation to protect and enhance the marine environment, thereby
sharing in the herculean task of arresting the tide of ecological
destruction. We hope that other local government units shall now be
roused from their lethargy and adopt a more vigilant stand in the battle
against the decimation of our legacy to future generations. At this time,
the repercussions of any further delay in their response may prove
disastrous, if not, irreversible.
WHEREFORE, the instant petition is DISMISSED for lack of merit and the
temporary restraining order issued on 11 November 1993 is LIFTED.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 115044 January 27, 1995
HON. ALFREDO S. LIM, in his capacity as Mayor of Manila, and the City of
Manila, petitioners,
vs.
HON. FELIPE G. PACQUING, as Judge, branch 40, Regional Trial Court of
Manila and ASSOCIATED CORPORATION, respondents.
G.R. No. 117263 January 27, 1995
TEOFISTO GUINGONA, JR. and DOMINADOR R. CEPEDA, petitioners,
vs.
HON. VETINO REYES and ASSOCIATED DEVELOPMENT
CORPORATION, respondents.
PADILLA, J.:
These two (2) cases which are inter-related actually involve simple issues. if these
issues have apparently become complicated, it is not by reason of their nature
because of the events and dramatis personae involved.
The petition in G.R. No. 115044 was dismissed by the First Division of this Court on
01 September 1994 based on a finding that there was "no abuse of discretion, much
282
less lack of or excess of jurisdiction, on the part of respondent judge [Pacquing]", in
issuing the questioned orders. Judge Pacquing had earlier issued in Civil Case No.
88-45660, RTC of Manila, Branch 40, the following orders which were assailed by
the Mayor of the City of Manila, Hon. Alfredo S. Lim, in said G.R. No. 115044:
a. order dated 28 March 1994 directing Manila mayor Alfredo S. Lim
to issue the permit/license to operate the jai-alai in favor of
Associated Development Corporation (ADC).
b. order dated 11 April 1994 directing mayor Lim to explain why he
should not be cited for contempt for non-compliance with the order
dated 28 March 1994.
c. order dated 20 April 1994 reiterating the previous order directing
Mayor Lim to immediately issue the permit/license to Associated
Development Corporation (ADC).
The order dated 28 march 1994 was in turn issued upon motion by ADC for
execution of a final judgment rendered on 9 September 1988 which ordered the
Manila Mayor to immediately issue to ADC the permit/license to operate the jai-alai
in Manila, under Manila Ordinance No. 7065.
On 13 September 1994, petitioner Guingona (as executive secretary) issued a
directive to then chairman of the Games and Amusements Board (GAB) Francisco
R. Sumulong, jr. to hold in abeyance the grant of authority, or if any had been issued,
to withdraw such grant of authority, to Associated Development Corporation to
operate the jai-alai in the City of Manila, until the following legal questions are
properly resolved:
1. Whether P.D. 771 which revoked all existing Jai-Alai franchisers
issued by local governments as of 20 August 1975 is unconstitutional.
2. Assuming that the City of Manila had the power on 7 September
1971 to issue a Jai-Alai franchise to Associated Development
Corporation, whether the franchise granted is valied considering that
the franchise has no duration, and appears to be granted in
perpetuity.
3. Whether the City of Manila had the power to issue a Jai-Alai
franchise to Associated Development Corporation on 7 September
1971 in view of executive Order No. 392 dated 1 January 1951 which
transferred from local governments to the Games and Amusements
Board the power to regulate Jai-Alai.1
On 15 September 1994, respondent Associated Development Corporation (ADC)
filed a petition for prohibition, mandamus, injunction and damages with prayer for
temporary restraining order and/or writ of preliminary injunction in the Regional Trial
Court of Manila against petitioner Guingona and then GAB chairman Sumulong,
docketed as Civil Case No. 94-71656, seeking to prevent GAB from withdrawing the
provisional authority that had earlier been granted to ADC. On the same day, the
RTC of Manila, Branch 4, through presiding Judge Vetino Reyes, issued a temporary
restraining order enjoining the GAB from withdrawing ADC's provisional authority.
This temporary restraining order was converted into a writ of preliminary injunction
upon ADC's posting of a bond in the amount of P2,000,000.00.2
Subsequently, also in G.R. No. 115044, the Republic of the Philippines, through the
Games and Amusements Board, filed a "Motion for Intervention; for Leave to File a
Motion for reconsideration in Intervention; and to Refer the case to the Court En
Banc" and later a "Motion for Leave to File Supplemental Motion for
Reconsideration-in-Intervention and to Admit Attached Supplemental Motion for
Reconsideration-in-Intervention".
In an En Banc Resolution dated 20 September 1994, this Court referred G.R. No.
115044 to the Court En Banc and required the respondents therein to comment on
the aforementioned motions.
Meanwhile, Judge Reyes on 19 October 1994 issued another order, this time,
granting ADC a writ of preliminary mandatory injunction against Guingona and GAB
to compel them to issue in favor of ADC the authority to operate jai-alai.
283
Guingona, as executive secretary, and Dominador Cepeda, Jr. as the new GAB
chairman, then filed the petition in G.R. No. 117263 assailing the abovementioned
orders of respondent Judge Vetino Reyes.
On 25 October 1994, in G.R. No. 117263, this Court granted petitioner's motion
for leave to file supplemental petition and to admit attached supplemental petition
with urgent prayer for restraining order. The Court further required respondents to file
their comment on the petition and supplemental petition with urgent prayer for
restraining order. The Court likewise set the case and all incidents thereof for hearing
on 10 November 1994.
At the hearing on 10 November 1994, the issues to be resolved were formulated by
the Court as follows:
1. whether or not intervention by the Republic of the Philippines at this
stage of the proceedings is proper;
2. assuming such intervention is proper, whether or not the
Associated Development Corporation has a valid and subsisting
franchise to maintain and operate the jai-alai;
3. whether or not there was grave abuse of discretion committed by
respondent Judge Reyes in issuing the aforementioned temporary
restraining order (later writ of preliminary injunction); and
4. whether or not there was grave abuse of discretion committed by
respondent Judge Reyes in issuing the aforementioned writ of
preliminary mandatory injunction.
On the issue of the propriety of the intervention by the Republic of the Philippines, a
question was raised during the hearing on 10 November 1994 as to whether
intervention in G.R. No. 115044 was the proper remedy for the national government
to take in questioning the existence of a valid ADC franchise to operate the jai-alai or
whether a separate action for quo warranto under Section 2, Rule 66 of the Rules of
Court was the proper remedy.
We need not belabor this issue since counsel for respondent ADC agreed to the
suggestion that this Court once and for all settle all substantive issues raised by the
parties in these cases. Moreover, this Court can consider the petition filed in G.R.
No. 117263 as one for quo warranto which is within the original jurisdiction of the
Court under section 5(1), Article VIII of the Constitution. 3
On the propriety of intervention by the Republic, however, it will be recalled that this
Court in Director of Lands v. Court of Appeals (93 SCRA 238) allowed intervention
even beyond the period prescribed in Section 2 Rule 12 of the Rules of Court. The
Court ruled in said case that a denial of the motions for intervention would "lead the
Court to commit an act of injustice to the movants, to their successor-in-interest and
to all purchasers for value and in good faith and thereby open the door to fraud,
falsehood and misrepresentation, should intervenors' claim be proven to be true."
In the present case, the resulting injustice and injury, should the national
government's allegations be proven correct, are manifest, since the latter has
squarely questioned the very existence of a valid franchise to maintain and operate
the jai-alai (which is a gambling operation) in favor of ADC. As will be more
extensively discussed later, the national government contends that Manila Ordinance
No. 7065 which purported to grant to ADC a franchise to conduct jai-alai operations
is void and ultra vires since Republic Act No. 954, approved on 20 June 1953, or
very much earlier than said Ordinance No. 7065, the latter approved 7 September
1971, in Section 4 thereof, requires a legislative franchise, not a municipal franchise,
for the operation of jai-alai. Additionally, the national government argues that even
assuming, arguendo, that the abovementioned ordinance is valid, ADC's franchise
was nonetheless effectively revoked by Presidential decree No. 771, issued on 20
August 1975, Sec. 3 of which expressly revoked all existing franchises and permits
to operate all forms of gambling facilities (including the jai-alai) issued by local
governments.
On the other hand, ADC's position is that Ordinance No. 7065 was validly enacted by
the City of Manila pursuant to its delegated powers under it charter, Republic Act No.
409. ADC also squarely assails the constitutionality of PD No. 771 as violative of the
equal protection and non-impairment clauses of the Constitution. In this connection,
counsel for ADC contends that this Court should really rule on the validity of PD No.
771 to be able to determine whether ADC continues to possess a valid franchise.
284
It will undoubtedly be a grave injustice to both parties in this case if this Court were
to shirk from ruling on the issue of constitutionality of PD No. 771. Such issue has, in
our view, become the very lis mota in resolving the present controversy, in view of
ADC's insistence that it was granted a valid and legal franchise by Ordinance No.
7065 to operate the jai-alai.
The time-honored doctrine is that all laws (PD No. 771 included) are presumed valid
and constitutional until or unless otherwise ruled by this Court. Not only this; Article
XVIII Section 3 of the Constitution states:
Sec. 3. All existing laws, decrees, executive orders, proclamations,
letters of instructions and other executive issuances not inconsistent
with this Constitution shall remain operative until amended, repealed
or revoked.
There is nothing on record to show or even suggest that PD No. 771 has been
repealed, altered or amended by any subsequent law or presidential issuance (when
the executive still exercised legislative powers).
Neither can it be tenably stated that the issue of the continued existence of ADC's
franchise by reason of the unconstitutionality of PD No. 771 was settled in G.R. No.
115044, for the decision of the Court's First Division in said case, aside from not
being final, cannot have the effect of nullifying PD No. 771 as unconstitutional, since
only the Court En Banc has that power under Article VIII, Section 4(2) of the
Constitution.4
And on the question of whether or not the government is estopped from contesting
ADC's possession of a valid franchise, the well-settled rule is that the State cannot
be put in estoppel by the mistakes or errors, if any, of its officials or agents (Republic
v. Intermediate Appellate Court, 209 SCRA 90)
Consequently, in the light of the foregoing expostulation, we conclude that the
republic (in contra distinction to the City of Manila) may be allowed to intervene in
G.R. No. 115044. The Republic is intervening in G.R. No. 115044 in the exercise, not
of its business or proprietary functions, but in the exercise of its governmental
functions to protect public morals and promote the general welfare.
II
Anent the question of whether ADC has a valid franchise to operate the Jai-Alai de
Manila, a statement of the pertinent laws is in order.
1. The Charter of the City of Manila was enacted by Congress on 18 June 1949.
Section 18 thereof provides:
Sec. 18. Legislative Powers. — The Municipal Board shall have the
following legislative powers:
xxx xxx xxx
(jj) To tax, license, permit and regulate wagers or betting by the public
on boxing, sipa, bowling, billiards, pools, horse and dog races,
cockpits, jai-alai, roller or ice-skating on any sporting or athletic
contests, as well as grant exclusive rights to establishments for this
purpose, notwithstanding any existing law to the contrary.
2. On 1 January 1951, Executive Order No. 392 was issued transferring the authority
to regulate jai-alais from local government to the Games and Amusements Board
(GAB).
3. On 20 June 1953, Congress enacted Republic Act No. 954, entitled "An Act to
Prohibit With Horse Races and Basque Pelota Games (Jai-Alai), And To Prescribe
Penalties For Its Violation". The provisions of Republic Act No. 954 relating to jai-alai
are as follows:
Sec. 4. No person, or group of persons other than the operator or
maintainer of a fronton with legislative franchise to conduct basque
pelota games (Jai-alai), shall offer, to take or arrange bets on any
basque pelota game or event, or maintain or use a totalizator or other
device, method or system to bet or gamble on any basque pelota
game or event. (emphasis supplied).
285
Sec. 5. No person, operator or maintainer of a fronton with legislative
franchise to conduct basque pelota games shall offer, take, or arrange
bets on any basque pelota game or event, or maintain or use a
totalizator or other device, method or system to bet or gamble on any
basque pelota game or event outside the place, enclosure, or fronton
where the basque pelota game is held. (emphasis supplied).
4. On 07 September 1971, however, the Municipal Board of Manila nonetheless
passed Ordinance No. 7065 entitled "An Ordinance Authorizing the Mayor To Allow
And Permit The Associated Development Corporation To Establish, Maintain And
Operate A Jai-Alai In The City Of Manila, Under Certain Terms And Conditions And
For Other Purposes."
5. On 20 August 1975, Presidential Decree No. 771 was issued by then President
Marcos. The decree, entitled "Revoking All Powers and Authority of Local
Government(s) To Grant Franchise, License or Permit And Regulate Wagers Or
Betting By The Public On Horse And Dog Races, Jai-Alai Or Basque Pelota, And
Other Forms Of Gambling", in Section 3 thereof, expressly revoked all existing
franchises and permits issued by local governments.
6. On 16 October 1975, Presidential Decree No. 810, entitled "An Act granting The
Philippine Jai-Alai And Amusement Corporation A Franchise To Operate, Construct
And Maintain A Fronton For Basque Pelota And Similar Games of Skill In THE
Greater Manila Area," was promulgated.
7 On 08 May 1987, then President Aquino, by virtue of Article XVIII, Section 6, of the
Constitution, which allowed the incumbent legislative powers until the first Congress
was convened, issued Executive Order No. 169 expressly repealing PD 810 and
revoking and cancelling the franchise granted to the Philippine Jai-Alai and
Amusement Corporation.
Petitioners in G.R. No. 117263 argue that Republic Act No. 954 effectively removed
the power of the Municipal Board of Manila to grant franchises for gambling
operations. It is argued that the term "legislative franchise" in Rep. Act No. 954 is
used to refer to franchises issued by Congress.
On the other hand, ADC contends that Republic Act N. 409 (Manila Chapter) gives
legislative powers to the Municipal Board to grant franchises, and since Republic Act
No. 954 does not specifically qualify the word "legislative" as referring exclusively to
Congress, then Rep. Act No. 954 did not remove the power of the Municipal Board
under Section 18(jj) of Republic Act No. 409 and consequently it was within the
power of the City of Manila to allow ADC to operate the jai-alai in the City of Manila.
On this point, the government counter-argues that the term "legislative powers" is
used in Rep. Act No. 409 merely to distinguish the powers under Section 18 of the
law from the other powers of the Municipal Board, but that the term "legislative
franchise" in Rep. Act No. 954 refers to a franchise granted solely by Congress.
Further, the government argues that Executive Order No. 392 dated 01 January
1951 transferred even the power to regulate Jai-Alai from the local governments to
the Games and Amusements Board (GAB), a national government agency.
It is worthy of note that neither of the authorities relied upon by ADC to support its
alleged possession of a valid franchise, namely the Charter of the City of Manila
(Rep. Act No. 409) and Manila Ordinance No. 7065 uses the word "franchise". Rep.
Act No. 409 empowers the Municipal Board of Manila to "tax, license,
permit and regulate wagers or betting" and to "grant exclusive rights to
establishments", while Ordinance No. 7065 authorized the Manila City Mayor to
"allow and permit" ADC to operate jai-alai facilities in the City of Manila.
It is clear from the foregoing that Congress did not delegate to the City of Manila the
power "to franchise" wagers or betting, including the jai-alai, but retained for itself
such power "to franchise". What Congress delegated to the City of Manila in Rep.
Act No. 409, with respect to wagers or betting, was the power to "license, permit, or
regulate" which therefore means that a license or permit issued by the City of Manila
to operate a wager or betting activity, such as the jai-alai where bets are accepted,
would not amount to something meaningful UNLESS the holder of the permit or
license was also FRANCHISED by the national government to so operate. Moreover,
even this power to license, permit, or regulate wagers or betting on jai-alai was
removed from local governments, including the City of Manila, and transferred to the
GAB on 1 January 1951 by Executive Order No. 392. The net result is that the
286
authority to grant franchises for the operation of jai-alai frontons is in Congress, while
the regulatory function is vested in the GAB.
In relation, therefore, to the facts of this case, since ADC has no franchise from
Congress to operate the jai-alai, it may not so operate even if its has a license or
permit from the City Mayor to operate the jai-alai in the City of Manila.
It cannot be overlooked, in this connection, that the Revised Penal Code punishes
gambling and betting under Articles 195 to 199 thereof. Gambling is thus generally
prohibited by law, unless another law is enacted by Congress expressly exempting
or excluding certain forms of gambling from the reach of criminal law. Among these
form the reach of criminal law. Among these forms of gambling allowed by special
law are the horse races authorized by Republic Acts Nos. 309 and 983 and gambling
casinos authorized under Presidential Decree No. 1869.
While jai-alai as a sport is not illegal per se, the accepting of bets or wagers on the
results of jai-alai games is undoubtedly gambling and, therefore, a criminal offense
punishable under Articles 195-199 of the Revised Penal Code, unless it is shown
that a later or special law had been passed allowing it. ADC has not shown any such
special law.
Republic Act No. 409 (the Revised Charter of the City of Manila) which was enacted
by Congress on 18 June 1949 gave the Municipal Board certain delegated legislative
powers under Section 18. A perusal of the powers enumerated under Section 18
shows that these powers are basically regulatory in nature.5 The regulatory nature of
these powers finds support not only in the plain words of the enumerations under
Section 28 but also in this Court's ruling in People v. Vera (65 Phil. 56).
In Vera, this Court declared that a law which gives the Provincial Board the discretion
to determine whether or not a law of general application (such as, the Probation law-
Act No. 4221) would or would not be operative within the province, is unconstitutional
for being an undue delegation of legislative power.
From the ruling in Vera, it would be logical to conclude that, if ADC's arguments were
to prevail, this Court would likewise declare Section 18(jj) of the Revised Charter of
Manila unconstitutional for the power it would delegate to the Municipal Board of
Manila would give the latter the absolute and unlimited discretion to render the penal
code provisions on gambling inapplicable or inoperative to persons or entities issued
permits to operate gambling establishments in the City of Manila.
We need not go to this extent, however, since the rule is that laws must be presumed
valid, constitutional and in harmony with other laws. Thus, the relevant provisions of
Rep. Acts Nos. 409 and 954 and Ordinance No. 7065 should be taken together and
it should then be clear that the legislative powers of the Municipal Board should be
understood to be regulatory in nature and that Republic Act No. 954 should be
understood to refer to congressional franchises, as a necessity for the operation of
jai-alai.
We need not, however, again belabor this issue further since the task at hand which
will ultimately, and with finality, decide the issues in this case is to determine whether
PD No. 771 validly revoked ADC's franchise to operate the jai-alai, assuming
(without conceding) that it indeed possessed such franchise under Ordinance No.
7065.
ADC argues that PD No. 771 is unconstitutional for being violative of the equal
protection and non-impairment provisions of the Constitution. On the other hand, the
government contends that PD No. 771 is a valid exercise of the inherent police
power of the State.
The police power has been described as the least limitable of the inherent powers of
the State. It is based on the ancient doctrine — salus populi est suprema lex (the
welfare of the people is the supreme law.) In the early case of Rubi v. Provincial
Board of Mindoro (39 Phil. 660), this Court through Mr. Justice George A. Malcolm
stated thus:
The police power of the State . . . is a power co-extensive with self-
protection, and is not inaptly termed the "law of overruling necessity."
It may be said to be that inherent and plenary power in the State
which enables it to prohibit all things hurtful to the comfort, safety and
welfare of society. Carried onward by the current of legislation, the
judiciary rarely attempts to dam the onrushing power of legislative
discretion, provided the purposes of the law do not go beyond the
287
great principles that mean security for the public welfare or do not
arbitrarily interfere with the right of the individual.
In the matter of PD No. 771, the purpose of the law is clearly stated in the "whereas
clause" as follows:
WHEREAS, it has been reported that in spite of the current drive of
our law enforcement agencies against vices and illegal gambling,
these social ills are still prevalent in many areas of the country;
WHEREAS, there is need to consolidate all the efforts of the
government to eradicate and minimize vices and other forms of social
ills in pursuance of the social and economic development program
under the new society;
WHEREAS, in order to effectively control and regulate wagers or
betting by the public on horse and dog races, jai-alai and other forms
of gambling there is a necessity to transfer the issuance of permit
and/or franchise from local government to the National Government.
It cannot be argued that the control and regulation of gambling do not promote public
morals and welfare. Gambling is essentially antagonistic and self-reliance. It breeds
indolence and erodes the value of good, honest and hard work. It is, as very aptly
stated by PD No. 771, a vice and a social ill which government must minimize (if not
eradicate) in pursuit of social and economic development.
In Magtajas v. Pryce Properties Corporation (20 July 1994, G.R. No. 111097), this
Court stated thru Mr. Justice Isagani A. Cruz:
In the exercise of its own discretion, the legislative power may prohibit
gambling altogether or allow it without limitation or it may prohibit
some forms of gambling and allow others for whatever reasons it may
consider sufficient. Thus, it has prohibited jueteng and monte but
permits lotteries, cockfighting and horse-racing. In making such
choices, Congress has consulted its own wisdom, which this Court
has no authority to review, much less reverse. Well has it been said
that courts do not sit to resolve the merits of conflicting theories. That
is the prerogative of the political departments. It is settled that
questions regarding wisdom, morality and practicability of statutes are
not addressed to the judiciary but may be resolved only by the
executive and legislative departments, to which the function belongs
in our scheme of government. (Emphasis supplied)
Talks regarding the supposed vanishing line between right and privilege in American
constitutional law has no relevance in the context of these cases since the reference
there is to economic regulations. On the other hand, jai-alai is not a mere economic
activity which the law seeks to regulate. It is essentially gambling and whether it
should be permitted and, if so, under what conditions are questions primarily for the
lawmaking authority to determine, talking into account national and local interests.
Here, it is the police power of the State that is paramount.
ADC questions the motive for the issuance of PD Nos. 771. Clearly, however, this
Court cannot look into allegations that PD No. 771 was enacted to benefit a select
group which was later given authority to operate the jai-alai under PD No. 810. The
examination of legislative motivation is generally prohibited. (Palmer v. Thompson,
403 U.S. 217, 29 L. Ed. 2d 438 [1971] per Black, J.) There is, the first place,
absolute lack of evidence to support ADC's allegation of improper motivation in the
issuance of PD No. 771. In the second place, as already averred, this Court cannot
go behind the expressed and proclaimed purposes of PD No. 771, which are
reasonable and even laudable.
It should also be remembered that PD No. 771 provides that the national
government can subsequently grant franchises "upon proper application and
verification of the qualifications of the applicant." ADC has not alleged that it filed an
application for a franchise with the national government subsequent to the enactment
of PD No. 771; thus, the allegations abovementioned (of preference to a select
group) are based on conjectures, speculations and imagined biases which do not
warrant the consideration of this Court.
On the other hand, it is noteworthy that while then president Aquino issued Executive
Order No. 169 revoking PD No. 810 (which granted a franchise to a Marcos-crony to
288
operate the jai-alai), she did not scrap or repeal PD No. 771 which had revoked all
franchises to operate jai-alais issued by local governments, thereby re-affirming the
government policy that franchises to operate jai-alais are for the national government
(not local governments) to consider and approve.
On the alleged violation of the non-impairment and equal protection clauses of the
Constitution, it should be remembered that a franchise is not in the strict sense a
simple contract but rather it is more importantly, a mere privilege specially in matters
which are within the government's power to regulate and even prohibit through the
exercise of the police power. Thus, a gambling franchise is always subject to the
exercise of police power for the public welfare.
In RCPI v. NTC (150 SCRA 450), we held that:
A franchise started out as a "royal privilege or (a) branch of the King's
prerogative, subsisting in the hands of a subject." This definition was
given by Finch, adopted by Blackstone, and accepted by every
authority since . . . Today, a franchise being merely a privilege
emanating from the sovereign power of the state and owing its
existence to a grant, is subject to regulation by the state itself by virtue
of its police power through its administrative agencies.
There is a stronger reason for holding ADC's permit to be a mere privilege because
jai-alai, when played for bets, is pure and simple gambling. To analogize a gambling
franchise for the operation of a public utility, such as public transportation company,
is to trivialize the great historic origin of this branch of royal privilege.
As earlier noted, ADC has not alleged ever applying for a franchise under the
provisions of PD No. 771. and yet, the purpose of PD No. 771 is quite clear from its
provisions, i.e., to give to the national government the exclusive power to grant
gambling franchises. Thus, all franchises then existing were revoked but were made
subject to reissuance by the national government upon compliance by the applicant
with government-set qualifications and requirements.
There was no violation by PD No. 771 of the equal protection clause since the
decree revoked all franchises issued by local governments without qualification or
exception. ADC cannot allege violation of the equal protection clause simply because
it was the only one affected by the decree, for as correctly pointed out by the
government, ADC was not singled out when all jai-alai franchises were revoked.
Besides, it is too late in the day for ADC to seek redress for alleged violation of its
constitutional rights for it could have raised these issues as early as 1975, almost
twenty 920) years ago.
Finally, we do not agree that Section 3 of PD No. 771 and the requirement of a
legislative franchise in Republic Act No. 954 are "riders" to the two 92) laws and are
violative of the rule that laws should embrace one subject which shall be expressed
in the title, as argued by ADC. In Cordero v. Cabatuando (6 SCRA 418), this Court
ruled that the requirement under the constitution that all laws should embrace only
one subject which shall be expressed in the title is sufficiently met if the title is
comprehensive enough reasonably to include the general object which the statute
seeks to effect, without expressing each and every end and means necessary or
convenient for the accomplishing of the objective.
III
On the issue of whether or not there was grave abuse of discretion committed by
respondent Judge Reyes in issuing the temporary restraining order (later converted
to a writ of preliminary injunction) and the writ of preliminary mandatory injunction,
we hold and rule there was.
Section 3, Rule 58 of the rules of Court provides for the grounds for the issuance of a
preliminary injunction. While ADC could allege these grounds, respondent judge
should have taken judicial notice of Republic Act No. 954 and PD 771, under Section
1 rule 129 of the Rules of court. These laws negate the existence of any legal right
on the part of ADC to the reliefs it sought so as to justify the issuance of a writ of
preliminary injunction. since PD No. 771 and Republic Act No. 954 are presumed
valid and constitutional until ruled otherwise by the Supreme Court after due hearing,
ADC was not entitled to the writs issued and consequently there was grave abuse of
discretion in issuing them.
WHEREFORE, for the foregoing reasons, judgment is hereby rendered:
289
1. allowing the Republic of the Philippines to intervene in G.R. No.
115044.
2. declaring Presidential Decree No. 771 valid and constitutional.
3. declaring that respondent Associated Development corporation
(ADC) does not possess the required congressional franchise to
operate and conduct the jai-alai under Republic Act No. 954 and
Presidential Decree No. 771.
4. setting aside the writs of preliminary injunction and preliminary
mandatory injunction issued by respondent Judge Vetino Reyes in
civil Case No. 94-71656.
SO ORDERED.
G.R. No. 118533 October 4, 1995
MAYOR PABLO R. OLIVAREZ, petitioner,
vs.
HON. SANDIGANBAYAN (Second Division) and the HON. OMBUDSMAN,
Special Prosecutor ANIANO DESIERTO and Deputy Special Prosecutor JOSE
DE G. FERRER, respondents.
REGALADO, J.:
In this original action for certiorari and prohibition, petitioner Mayor Pablo R. Olivarez
seeks to annul the following:
1. Resolution dated February 9, 1994 issued by Special Prosecutor
(SP) Aniano Desierto and approved by Ombudsman Conrado M.
Vasquez on February 15, 1994 reversing Special Prosecution Officer
(SPO) I Cornelio Somido's recommendation to dismiss the case
against petitioner; 1
2. Resolution dated December 9, 1994 issued by Deputy Special
Prosecutor (DSP) Jose De G. Ferrer and approved by Ombudsman
Conrado Vasquez on December 23, 1994 reversing SPO III Angel
Mayoralgo's recommendation to withdraw the case against petitioner
for insufficiency of evidence; 2 and
3. Resolution dated January 16, 1995 issued by the Sandiganbayan
denying petitioner's Motion to Strike Out and/or Review Result of
Reinvestigation conducted by the Office of the Ombudsman.3
The facts are succinctly summarized in the Comment4 of the Solicitor General as
follows:
1. On December 15, 1992, Baclaran Credit Cooperative, Inc. (BCCI),
through its board member Roger de Leon, charged petitioner
Parañaque Mayor Dr. Pablo R. Olivarez with Violation of the Anti-
Graft and Corrupt Practices Act for unreasonably refusing to issue a
mayor's permit despite request and follow-ups to implement
Parañaque Sangguniang Bayan Resolution No. 744, Series of 1992
which petitioner himself approved on October 6, 1992. Resolution No.
744 authorized BCCI to set up a night manufacturer's fair during the
Christmas fiesta celebration of and at Baclaran for 60 days from
November 11, 1992 to February 15, 1993 for which they will use a
portion of the service road of Roxas Boulevard from the corner of
Opena to Rivera Streets (Annex "D", Petition). Attached to the
affidavit-complaint were: (i) a letter dated October 29, 1992 of
Councilor Winnie Esplana to Arch. Vita of Parañaque Engineering
Department;
(ii) four letters all dated November 13, 1992 of BCCI General Manager
Mr. Steve Espina to petitioner, Arch. Vita, Municipal Health Officer
Dr. Oscar de Leon and Municipal Treasurer Silvestre de Leon
requesting assistance for the issuance of a mayor's permit; (iii) Letter
dated November 24, 1992 of BCCI counsel Atty. Renato Dilag to
290
petitioner formally demanding implementation of Res. 744 (Annex
"H"); (iv) petitioner's reply letter dated November 27, 1992 to Atty.
Dilag stating among others that the non-implementation of Res. 744
was due to BCCI's failure to apply for appropriate permit and license
to operate the Night Manufacturer's Fair which was one of the
conditions in the authorization (Annex "I").
2. On March 12, 1993, petitioner filed his counter-affidavit stating that
the charge of violation of Sec. 3(f) of RA 3019 has no legal and factual
basis because (a) HCCI, which actually started operation, never
applied for a mayor's permit as evidenced by his letter reply to
Atty. Dilag and the affidavit dated March 11, 1993 of Business Permit
and License Office Officer-In-Charge Mrs. Elenita T. Paracale (Annex
"J"). Moreover, the four letters of Mr. Steve Espina requesting
assistance in the issuance of mayor's permit were not filed with the
municipal office concerned.
3. In his Reply Affidavit dated April 1, 1993, complainant BCCI denied
conducting actual operations but only commenced soliciting
participants and would-be sponsors to the fair. Allegedly, BCCI
exerted all possible efforts to secure the necessary permit but
petitioner simply refused to issue the same unless it gives money to
petitioner. Attached to the Reply-Affidavit was a copy of Executive
Order dated Nov. 23, 1992 issued by petitioner granting a group of
Baclaran-based organizations/associations of vendors the holding of
"Christmas Agro-Industrial Fair sa Baclaran" from November 28, 1992
to February 28, 1993 using certain portions of the National and Local
Government Roads/Streets in Baclaran for fund raising (Annex "L").
4. Graft Investigation Officer (GIO) III Rogelio A. Ringpis conducted a
preliminary investigation and issued on September 22, 1993 a
resolution recommending the prosecution of petitioner for violation of
Sec. 3(f) of R.A. No. 3019 as amended. The recommendation was
approved by EPIB Head Raul Arnau and endorsed by Assistant
Ombudsman Abelardo L. Aportadera to Special Prosecutor (SP)
Aniano Desierto for review and possible preparation of criminal
information. The endorsement was duly noted by Over-all Deputy
Ombudsman Francisco A. Villa.
5. On December 22, 1993, Special Prosecutor (SP) II Luz L.
Quinones-Marcos, upon review of the Ringpis resolution,
recommended the filing of information against petitioner for violation
of Sec. 3(e) instead of Sec. 3(f) of R.A. 3019. The recommendation
was approved by
Deputy Special Prosecutor (DSP) Jose De G. Ferrer and SP Desierto.
On January 11, 1994, Ombudsman Conrado Vasquez approved the
report and recommendation and directed the government prosecutors
to file the necessary information against petitioner with the
Sandiganbayan.
6. The Information for Violation of Sec. 3(e) of R.A. 3019 filed on
February 16, 1994 and docketed as Criminal Case No. 20226, reads
as follows:
That in or about the month of November, 1992 or for
sometime prior thereto, in the Municipality of
Parañaque, Metro Manila, Philippines, and within the
jurisdiction of this Honorable Court, the above-named
accused, a public officer being then the duly elected
Municipal Mayor of Parañaque, Metro Manila, with
manifest partiality and evident bad faith in the exercise
of his administrative and official functions, did then and
there wilfully, unlawfully and criminally, without valid
reason, refuse to issue a mayor's permit and/or refuse
to act favorably on the application of the Baclaran
Credit Cooperative, Inc. (BCCI) to operate a "night fair"
along the service road of Roxas Boulevard (Baclaran)
for a period of sixty (60) days in accordance with
Resolution No. 744 series of 1992 of the Municipal
Council of Parañaque, and that instead the accused
issued and signed an executive order on November 23,
1992 granting an unknown or unidentified group of
291
Baclaran-based organizations/associations of vendors
the privilege to operate a "night fair" at certain portions
of the national and local roads/streets in Baclaran,
thus, causing undue injury to the Baclaran Credit
Cooperative, Inc.
CONTRARY TO LAW.
(Annex "P").
7. On January 17, 1994, petitioner filed a Motion for Reconsideration
and/or Reinvestigation allegedly to rectify error of law and on ground
of newly discovered evidence (Annex "O"). Although opposed by the
prosecution on January 24, 1994, the same was granted.
8. On February 7, 1994, Special Prosecu(tion) Officer (SPO) I
Cornelio Somido to whorn the reinvestigation was assigned, issued an
order recommending the withdrawal of the information against
petitioner for insufficiency of evidence. This recommendation
approved by DSP de G. Ferrer was however disapproved by SP
Desierto noting that:
Respondent does not refute the allegation and
evidence that complainant and representative
approached him and he refused to issue the permit
despite follow up. Neither does respondent claim that
in refusing to issue the permit, he advised complainant
and representatives that they had failed to comply with
requirements. Bad faith is, therefore, evident in the
respondent's persistent refusal to issue permit.
On February 9, 1994, Ombudsman Vasquez concurred with Special
Prosecutor Desierto and disapproved the recommendation (Annex
"A").
9. On February 18, 1994, petitioner voluntarily surrendered and
posted a cash bail bond with the Sandiganbayan for his temporary
release.
10. On February 21, 1994, petitioner filed an Omnibus Motion for a re-
examination and re-assessment of the prosecution's report and
documentary evidence with a view to set aside the determination of
the existence of probable cause and ultimately the dismissal of the
case (Annex "Q").
11. On March 3, 1994, the Sandiganbayan, after finding that sufficient
probable cause exist(s) against petitioner, denied for lack of merit
petitioner's Omnibus Motion in open court and proceeded to arraign
him as scheduled that day. But in view of petitioner's refusal to enter
any plea, the court ordered a plea of "not guilty" entered into his
record.
12. On March 8, 1994, the prosecution filed a Motion to suspend
Accused Pendente Lite.
13. On March 9, 14 and 15, 1994, petitioner filed a Motion to Set
Aside Plea and To Reduce Denial Order Into Writing (With Entry of
Appearance) (Annex "R"), Supplemental Motion to Set Aside Plea and
Opposition to Motion to Suspend Accused and Supplemental
Pleading with Additional Opposition to Motion to Suspend Accused
(Annex "S"), respectively. Petitioner sought the following relief, to wit:
a) to set aside plea of "not guilty" entered for him by
the court during the arraignment on March 3, 1994;
b) to dismiss the case after a re-study of probable
cause;
c) to order preliminary investigation for violation of
Section 3(e) of R.A. 3019;.
292
d) to deny the motion for suspension.
14. On March 23, 1994, the prosecution opposed the supplemental
motions and prayed that the denial of petitioner's Omnibus Motion be
maintained.
15. On April 4, 1994, the Sandiganbayan denied petitioner's motion
but in the interest of justice and to avoid further delay in the prompt
adjudication of the case due to technicalities, it set aside the
proceedings conducted on March 3, 1994 including petitioner's
arraignment thus revoking the plea of "not guilty" entered in his
record. The arraignment was set to April 7, 1994 but further action on
the prosecution's motion to suspend petitioner pendente lite was
deferred, without prejudice to the reiteration or revival thereof at the
proper time and upon notice (Annex "T").
16. On April 20, 1994, petitioner filed a motion for reconsideration
which was granted on May 15, 1994 (Annex "V"). Consequently, the
case was remanded to the Office of the Ombudsman for another
reinvestigation to be terminated within 30 days from notice.
Petitioner's arraignment was again reset to July 13, 1994 in the event
of adverse resolution on the re-investigation.
17. During this reinvestigation, petitioner filed a Memorandum with
Additional Evidence to SP(O) III Berbano to whom the case was
assigned (Annex "W"). Meantime, several scheduled arraignments
were deferred on the ground that the reinvestigation has not been
terminated and, later, the recommendation has yet to be acted upon
by superior officers.
18. On September 23, 1994, SPO III Roger Berbano, Sr. issued a
memorandum recommending the withdrawal of the Information on the
ground that no probable cause exist(s) to indict petitioner for violation
of Section 3(e) of R.A. (3019). He alleged that to grant an exclusive
mayor's permit demanded by BCCI will subject petitioner to liability for
violation of R.A. 3019 for giving unwarranted benefit to BCCI.
Moreover, BCCI failed to show compliance with the requirements of
Res. 744, hence petitioner had all the reasons to refuse issuance of
mayor's permit. Also,
the issuance of Executive Order dated November 23, 1992 allowing
Baclaran-based vendors associations to hold a night fair did not in any
manner cause injury to BCCI as the authority given to them under
Res. 744 was not exclusive. Petitioner merely considered the best
interest of the municipality.
19. On October 3, 1994, complainant Manuel A. Vizcarra, formally
requested the Ombudsman to disqualify SP(O) Berbano on the
ground of lack of confidence, bias and undue delay in the
reinvestigation of the case.
20. The reinvestigation was reassigned to SPO III Angel C. Mayoralgo
who on November 3, 1994 recommended the dismissal of the case
stating that petitioner "cannot be held liable for violation of either
Section 3(f), the original charge, or Section 3(e), R.A. 3019, the
pending charge against Mayor Olivarez, because he neither
neglect[ed]/refuse[d] to act without sufficient justification on the letter
request addressed to him, nor acted through manifest partiality,
evident bad faith or gross inexcusable negligence causing undue
injury to BCCI. If ever the latter sustained injury for the non-
implementation of Council Resolution No. 744, S-92, the same is due
to the fault and indiscretion of its officers."
21. On December 9, 1994, DSP de G. Ferrer reversed the
recommendation with the following observation:
Even discounting evident bad faith on the part of
respondent for the sake of argument, he is liable under
Sec. 3(e) of R.A. 3019 by giving unwarranted benefit
THRU MANIFEST PARTIALITY, to another group on
the flimsy reason that complainant failed to apply for a
business permit.
293
The merits of respondent's justification (insufficient as it
is) should be passed upon by the court.
(Annex "B")
The reversal was concurred (in) by SP Desierto and approved by
Ombudsman Vasquez, who on December 27, 1994, directed the
prosecution to proceed under the existing information.
22. On January 13, 1995, petitioner filed a Motion for Issuance
of Subpoena Duces Tecum and Ad Testificandum to DSP Jose de G.
Ferrer, SPO III Roger Berbano, Sr., and SPO III Angel Mayoralgo, Jr.
23. On January 16, 1995, petitioner filed a Motion to Strike Out and/or
Review Result of Reinvestigation praying that:
(a) the Ombudsman's Resolution of January 9, 1995
sustaining his original finding that probable cause
(exists) against petitioner be stricken off the record;
(b) the information be dismissed
(c) or in the alternative, for the court to review
Ombudsman's finding of probable cause against him"
(Annex "X").
24. On January 16, 1995, the motion was denied by respondent
Sandiganbayan. . . . (Corrections in parentheses supplied.)
Hence, this petition.
Petitioner assails the discretionary power of the Ombudsman to review the
recommendations of the government prosecutors and to approve or disapprove the
same through a mere marginal note, without conducting another preliminary
investigation. Similarly, petitioners fault respondent Sandiganbayan for, allegedly in
grave abuse of discretion, refusing to review the finding of the Ombudsman that
there exists probable cause to hold petitioner liable for violation of Republic Act No.
3019, considering that the Ombudsman did not comply with the guidelines set forth
by respondent court in the conduct of the reinvestigation.
We shall first deal with the propriety or impropriety of the questioned marginal notes,
dated February 9, 1994 and December 9, 1994, issued by then Special Prosecutor
Aniano Desierto (now Ombudsman) and Deputy Special Prosecutor Jose de G.
Ferrer, respectively. Petitioner contends that these marginal notes are null and void
on the ground that the same were issued without the benefit of a new preliminary
investigation and that the findings therein were not based on the facts and the
evidence presented. It is likewise averred that the above-named government
prosecutors were engaging in a fishing expedition when they changed theories, that
is, from "evident bad faith" to "manifest partiality," but only after the Sandiganbayan
had issued a Resolution declaring that the original finding of bad faith was
unwarranted.
After a careful scrutiny of the issues raised in the petition for certiorari, the arguments
in support thereof, as well as the comments of the public respondents thereon, we
are not convinced that herein public respondents acted with grave abuse of
discretion or without or in excess of jurisdiction.
The mere fact that the order to file the information against petitioner was contained in
a marginal note is not sufficient to impute arbitrariness or caprice on the part of
respondent special prosecutors, absent a clear showing that they gravely abused
their discretion in disapproving the recommendation of the investigating prosecutors
to dismiss or withdraw the case against petitioner. Neither are these marginal notes
tainted with or indicative of vindictiveness or arbitrariness as imputed by petitioner.
Public respondents disapproved the recommendation of the investigating
prosecutors because they sincerely believed that there is sufficient evidence to indict
the accused.
The Ombudsman's conformity thereto is but an exercise of his powers based upon
constitutional mandate and the courts should not interfere in such exercise. The rule
is based not only upon respect for the investigatory and prosecutory powers granted
by the Constitution to the Office of the Ombudsman but upon practicality as well.
294
Otherwise, the functions of the courts will be grievously hampered by innumerable
petitions assailing the dismissal of investigatory proceedings conducted by the Office
of the Ombudsman with regard to complaints filed before it, in much the same way
that the courts would be extremely swamped if they could be compelled to review the
exercise of discretion on the part of the fiscals or prosecuting attorneys each time
they decide to file an information in court or dismiss a complaint by a private
complainant.5
It may be true that, on the face thereof, the marginal notes seem to lack any factual
or evidentiary basis for failure to specifically spell out the same. However, that is not
all there is to it. What is actually involved here is a situation wherein, on the bases of
the same findings of fact of the investigating prosecutors, respondent special
prosecutors were of the opinion that, contrary to the former's recommendation,
petitioner is probably guilty of the offense charged. Obviously, therefore, since it is
merely a review of the conclusions arrived at by the investigating prosecutor, another
or a new preliminary investigation is no longer necessary.
6
The case of Cruz, Jr. vs. People, et al.,   which involves substantially the same
issues, has ruled on the matter in this wise:
It may seem that the ratio decidendi for the Ombudsman's order may
be wanting but this is not a case of a total absence of factual and legal
bases nor a failure to appreciate the evidence presented. What is
actually involved here is merely a review of the conclusion arrived at
by the investigating prosecutor as a result of his study and analysis of
the complaint, counter-affidavits, and the evidence submitted by the
parties during the preliminary investigation. The Ombudsman here is
not conducting anew another investigation but is merely determining
the propriety and correctness of the recommendation given by the
investigating prosecutor, that is, whether probable cause actually
exists or not, on the basis of the findings of the latter. Verily, it is
discretionary upon the Ombudsman if he will rely mainly on the
findings of fact of the investigating prosecutor in making a review of
the latter's report and recommendation, as the Ombudsman can very
well make his own findings of fact. There is nothing to prevent him
from acting one way or the other. As a matter of fact, Section 4, Rule
112 of the Rules of Court provides that "where the investigating
assistant fiscal recommends the dismissal of the case but his findings
are reversed by the provincial or city fiscal or the chief state
prosecutor on the ground that a probable cause exists, the latter may,
by himself, file the corresponding information against the respondent
or direct any other assistant fiscal or state prosecutor to do so, without
conducting another preliminary investigation."
With more reason may the Ombudsman not be faulted in arriving at a
conclusion different from that of the investigating prosecutor on the
basis of the same set of facts. It cannot be said that the Ombudsman
committed a grave abuse of discretion simply because he opines
contrarily to the prosecutor that, under the facts obtaining in the case,
there is probable cause to believe that herein petitioner is guilty of the
offense charged.
. . . (f)rom the tenor of respondent Ombudsman's statement, it is clear
that he agreed with the findings of facts of the investigating
prosecutor but disagreed with the latter's conclusion on
the import and significance of said findings. On the basis of the
findings of fact of the investigating prosecutor, which were not
disputed by petitioner, respondent Ombudsman believed that there
was sufficient ground to engender a well-founded belief that a crime
had been committed and that petitioner is probably guilty thereof.
(Italics in the original text.)
The alleged shift in theory from "evident bad faith" to "manifest partiality" fails to
present a sufficient indicium that respondent prosecutors gravely abused their
discretion. Manifest partiality, evident bad faith and gross inexcusable negligence are
but elements of the offense defined in and punishable under Section 3(e) of Republic
Act No. 3019 for which petitioner stands charged. The presence or absence of the
elements of the crime are evidentiary in nature and are matters of defense, the truth
of which can be best passed upon after a full-blown trial on the merits. Thus, the
issue of whether there was bad faith or manifest partiality on the part of petitioner
should best be determined, not in the preliminary investigation, but during the trial
proper.7
295
It must here be stressed that a preliminary investigation is essentially inquisitorial,
and it is often the only means of discovering the persons who may be seasonably
charged with a crime, to enable the prosecutor to prepare his complaint or
information It is not a trial of the case on the merits and has no purpose except that
of determining whether a crime has been committed and whether there is probable
cause to believe that the accused is guilty thereof, and it does not place the persons
against whom it is taken in jeopardy. It is not the occasion for the full and exhaustive
display of the parties' evidence; it is for the presentation of such evidence only as
may engender a well-grounded belief that an offense has been committed and that
the accused is probably guilty thereof. 8
Consequently, petitioner's asseveration that the reinvestigation is null and void
because the respondent prosecutors failed to consider all the evidence presented in
his defense has no leg to stand on. A perusal of the records will show that all the
documentary evidence, as well as the additional documents submitted by petitioner
during the reinvestigation, were thoroughly examined and fully evaluated in the
determination of probable cause.
Probable cause, as explained in the aforecited case of Pilapil, is —
. . . a reasonable ground of presumption that a matter is, or may be,
well founded, such a state of facts in the mind of the prosecutor as
would lead a person of ordinary caution and prudence to believe, or
entertain an honest or strong suspicion, that a thing is so. The term
does not mean "actual and positive cause" nor does it import absolute
certainty. It is merely based on opinion and reasonable belief. Thus, a
finding of probable cause does not require an inquiry into whether
there is sufficient evidence to procure a conviction. It is enough that it
is believed that the act or omission complained of constitutes the
offense charged. Precisely, there is a trial for the reception of
evidence of the prosecution in support of the charge.
Whether an act was done causing undue injury to the government and
whether the same was done with manifest partiality or evident bad
faith can only be made out by proper and sufficient testimony.
Necessarily, a conclusion can be arrived at when the case has
already proceeded on sufficient proof.
. . . the court should not be guided by the rule that accused must be
shown to be guilty beyond a reasonable doubt, but rather whether
there is sufficient evidence which inclines the mind to believe, without
necessarily leaving room for doubt, that accused is guilty thereof.9
We have meticulously analyzed the arguments raised by the parties in the various
pleadings and motions, together with their documentary evidence, which all formed
the basis for the issuance of the questioned resolutions, and we are convinced that
there exists probable cause as to warrant the filing of charges against herein
petitioner for a violation of Section 3(e) of Republic Act
No. 3019.
Petitioner's main defense is that BCCI was not issued a mayor's permit by reason of
its failure to apply therefor and to comply with the conditions set forth
in Sangguniang Bayan Resolution No. 744. There are several flaws to this argument.
First. The purported absence of an application for the issuance of a permit is actually
more apparent than real. Initially, petitioner claims that he could not grant a permit to
BCCI, which was allegedly demanding an exclusive authority to operate, on the
pretext that he can be held liable for a violation of Republic Act No. 3019 for giving
unwarranted benefits to BCCI to the detriment of other Baclaran-based vendors'
associations. Subsequently, but in the same vein, petitioner tries to justify the
issuance of an executive order granting a permit to the unidentified Baclaran-based
vendors' associations, in that the same did not cause injury to BCCI since the
authority to operate given to the latter is not exclusive.
It would appear, therefore, that petitioner had taken it upon himself to categorize and
determine the exclusivity or non-exclusivity of the authority to operate granted to
BCCI, depending on whether or not it would suit his purpose or predilection. The
inconsistent stand taken by petitioner with regard to the true character of BCCI's
authority to operate is indeed quite perplexing and suffices to cast sufficient doubt on
the real motive behind the non-issuance of the required permit.
296
Second. It is asserted that the executive order granting a permit to the Baclaran-
based vendors' associations was issued by petitioner supposedly in the best interest
of the municipality as evidenced by its earnings from the night fair in the total amount
of P13,512,948.00. While the avowed purpose may prove noble, still it miserably
pales in contrast to what appears to be bad faith or manifest partiality on the part of
petitioner in refusing to grant a permit to BCCI. Petitioner could not plausibly
demonstrate how the issuance of a permit to BCCI would so adversely affect public
interest as to warrant its denial. On the contrary, the Sangguniang Bayan of
Parañaque had even passed a resolution, which notably was approved by herein
petitioner, expressly allowing BCCI to hold the night fair. This is concrete proof that
the grant of authority to operate in favor of BCCI was not at all contrary to law and
public policy, nor was it prejudicial to public interest.
Petitioner's suspected partiality may be gleaned from the fact that he issued a permit
in favor of the unidentified Baclaran-based vendors' associations by the mere
expedient of an executive order, whereas so many requirements were imposed on
BCCI before it could be granted the same permit. Worse, petitioner failed to show, in
apparent disregard of BCCI's right to equal protection, that BCCI and the unidentified
Baclaran-based vendors' associations were not similarly situated as to give at least a
semblance of legality to the apparent haste with which said executive order was
issued. It would seem that if there was any interest served by such executive order, it
was that of herein petitioner.
Petitioner likewise submits that no permit could be issued because BCCI never filed
an application therefor with the proper office, that is, the Business Permit and
Licensing Office. This is actually begging the question. It is not denied that on
November 13, 1992, BCCI, through its general manager, wrote petitioner requesting
for a permit to operate, but this was rejected outright by him on the theory that the
application should be made with the proper municipal official. The indifference shown
by petitioner to BCCI's application taints his actuations with dubiety.
As the mayor of the municipality, the officials referred to were definitely under his
authority and he was not without recourse to take appropriate action on the letter-
application of BCCI although the same was not strictly in accordance with normal
procedure. There was nothing to prevent him from referring said letter-application to
the licensing department, but which paradoxically he refused to do. Whether
petitioner was impelled by any material interest or ulterior motive may be beyond us
for the moment since this is a matter of evidence, but the environmental facts and
circumstances are sufficient to create a belief in the mind of a reasonable man that
this would not be completely improbable, absent countervailing clarification.
Lastly, it may not be amiss to add that petitioner, as a municipal mayor, is expressly
authorized and has the power to issue permits and licenses for the holding of
activities for any charitable or welfare purpose, pursuant to Section 444 (b) (3) (iv
and v) of the Local Government Code of 1991 (Republic Act No. 7160). Hence, he
cannot really feign total lack of authority to act on the letter-application of BCCI..
On the basis of the foregoing, we are reasonably convinced that there is enough
evidence to warrant the filing of a formal charge in court against herein petitioner for
a violation of Section 3(e) of Republic Act No. 3019.
Considering that the findings of fact by the Office of the Ombudsman are supported
by substantial evidence, the same should be considered conclusive. Furthermore,
the Ombudsman's findings are essentially factual in nature. Accordingly, in assailing
said findings on the contention that the Ombudsman committed a grave abuse of
discretion in holding that petitioner is liable for the offense charged, the petition at bar
clearly raises questions of fact. The arguments therein are anchored on the propriety
of or error in the Ombudsman's appreciation of the facts of the case.
Petitioner cannot be unaware of our oft-repeated injunction that this Court is not a
trier of facts, more so in an application for the extraordinary writ of certiorari where
neither questions of fact nor even of law are entertained, since only questions of lack
or excess of jurisdiction or grave abuse of discretion are authorized. 10 On this issue,
therefore, we find that no grave abuse of discretion has been committed by
respondents which would warrant the granting of the writ of certiorari, especially
where the circumstances attending the recourse therefor are strongly suggestive of
dilatory purposes.
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.
297
G.R. Nos. 120865-71 December 7, 1995
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS; HON. JUDGE HERCULANO TECH, PRESIDING JUDGE,
BRANCH 70, REGIONAL TRIAL COURT OF BINANGONAN RIZAL; FLEET
DEVELOPMENT, INC. and CARLITO ARROYO; THE MUNICIPALITY OF
BINANGONAN and/or MAYOR ISIDRO B. PACIS, respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS; HON. JUDGE AURELIO C. TRAMPE, PRESIDING
JUDGE, BRANCH 163, REGIONAL TRIAL COURT OF PASIG; MANILA MARINE
LIFE BUSINESS RESOURCES, INC. represented by, MR. TOBIAS REYNALD M.
TIANGCO; MUNICIPALITY OF TAGUIG, METRO MANILA and/or MAYOR
RICARDO D. PAPA, JR., respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS; HON. JUDGE ALEJANDRO A. MARQUEZ, PRESIDING
JUDGE, BRANCH 79, REGIONAL TRIAL COURT OF MORONG, RIZAL;
GREENFIELD VENTURES INDUSTRIAL DEVELOPMENT CORPORATION and R.
J. ORION DEVELOPMENT CORPORATION; MUNICIPALITY OF JALA-JALA
and/or MAYOR WALFREDO M. DE LA VEGA, respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS; HON. JUDGE MANUEL S. PADOLINA, PRESIDING
JUDGE, BRANCH 162, REGIONAL TRIAL COURT OF PASIG, METRO MANILA;
IRMA FISHING & TRADING CORP.; ARTM FISHING CORP.; BDR
CORPORATION, MIRT CORPORATION and TRIM CORPORATION;
MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B.
PACIS, respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE,
BRANCH 78, REGIONAL TRIAL COURT OF MORONG, RIZAL; BLUE LAGOON
FISHING CORP. and ALCRIS CHICKEN GROWERS, INC.; MUNICIPALITY OF
JALA-JALA and/or MAYOR WALFREDO M. DE LA VEGA, respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE,
BRANCH 78, REGIONAL TRIAL COURT OF MORONG, RIZAL; AGP FISH
VENTURES, INC., represented by its PRESIDENT ALFONSO PUYAT;
MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA
VEGA, respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS; HON. JUDGE EUGENIO S. LABITORIA, PRESIDING
JUDGE, BRANCH 161, REGIONAL TRIAL COURT OF PASIG, METRO MANILA;
SEA MAR TRADING CO. INC.; EASTERN LAGOON FISHING CORP.; MINAMAR
FISHING CORP.; MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B.
PACIS, respondents.
HERMOSISIMA, JR., J.:
It is difficult for a man, scavenging on the garbage dump created by affluence and
profligate consumption and extravagance of the rich or fishing in the murky waters of
the Pasig River and the Laguna Lake or making a clearing in the forest so that he
can produce food for his family, to understand why protecting birds, fish, and trees is
more important than protecting him and keeping his family alive.
How do we strike a balance between environmental protection, on the one hand, and
the individual personal interests of people, on the other?
298
Towards environmental protection and ecology, navigational safety, and sustainable
development, Republic Act No. 4850 created the "Laguna Lake Development
Authority." This Government Agency is supposed to carry out and effectuate the
aforesaid declared policy, so as to accelerate the development and balanced growth
of the Laguna Lake area and the surrounding provinces, cities and towns, in the act
clearly named, within the context of the national and regional plans and policies for
social and economic development.
Presidential Decree No. 813 of former President Ferdinand E. Marcos amended
certain sections of Republic Act No. 4850 because of the concern for the rapid
expansion of Metropolitan Manila, the suburbs and the lakeshore towns of Laguna
de Bay, combined with current and prospective uses of the lake for municipal-
industrial water supply, irrigation, fisheries, and the like. Concern on the part of the
Government and the general public over: — the environment impact of development
on the water quality and ecology of the lake and its related river systems; the inflow
of polluted water from the Pasig River, industrial, domestic and agricultural wastes
from developed areas around the lake; the increasing urbanization which induced the
deterioration of the lake, since water quality studies have shown that the lake will
deteriorate further if steps are not taken to check the same; and the floods in
Metropolitan Manila area and the lakeshore towns which will influence the hydraulic
system of Laguna de Bay, since any scheme of controlling the floods will necessarily
involve the lake and its river systems, — likewise gave impetus to the creation of the
Authority.
Section 1 of Republic Act No. 4850 was amended to read as follows:
Sec. 1. Declaration of Policy. It is hereby declared to be the national
policy to promote, and accelerate the development and balanced
growth of the Laguna Lake area and the surrounding provinces, cities
and towns hereinafter referred to as the region, within the context of
the national and regional plans and policies for social and economic
development and to carry out the development of the Laguna Lake
region with due regard and adequate provisions for environmental
management and control, preservation of the quality of human life and
ecological systems, and the prevention of undue ecological
disturbances, deterioration and pollution.1
Special powers of the Authority, pertinent to the issues in this case, include:
Sec. 3. Section 4 of the same Act is hereby further amended by
adding thereto seven new paragraphs to be known as paragraphs (j),
(k), (l), (m), (n), (o), and (p) which shall read as follows:
xxx xxx xxx
(j) The provisions of existing laws to the contrary
notwithstanding, to engage in fish production and other
aqua-culture projects in Laguna de Bay and other
bodies of water within its jurisdiction and in pursuance
thereof to conduct studies and make experiments,
whenever necessary, with the collaboration and
assistance of the Bureau of Fisheries and Aquatic
Resources, with the end in view of improving present
techniques and practices. Provided, that until modified,
altered or amended by the procedure provided in the
following sub-paragraph, the present laws, rules and
permits or authorizations remain in force;
(k) For the purpose of effectively regulating and
monitoring activities in Laguna de Bay, the Authority
shall have exclusive jurisdiction to issue new permit for
the use of the lake waters for any projects or activities
in or affecting the said lake including navigation,
construction, and operation of fishpens, fish
enclosures, fish corrals and the like, and to impose
necessary safeguards for lake quality control and
management and to collect necessary fees for said
activities and projects: Provided, That the fees
collected for fisheries may be shared between the
Authority and other government agencies and political
sub-divisions in such proportion as may be determined
by the President of the Philippines upon
recommendation of the Authority's Board: Provided,
299
further, That the Authority's Board may determine new
areas of fishery development or activities which it may
place under the supervision of the Bureau of Fisheries
and Aquatic Resources taking into account the overall
development plans and programs for Laguna de Bay
and related bodies of water: Provided, finally, That the
Authority shall subject to the approval of the President
of the Philippines promulgate such rules and
regulations which shall govern fisheries development
activities in Laguna de Bay which shall take into
consideration among others the following: socio-
economic amelioration of bonafide resident fishermen
whether individually or collectively in the form of
cooperatives, lakeshore town development, a master
plan for fishpen construction and operation, communal
fishing ground for lake shore town residents, and
preference to lake shore town residents in hiring
laborer for fishery projects;
(l) To require the cities and municipalities embraced
within the region to pass appropriate zoning ordinances
and other regulatory measures necessary to carry out
the objectives of the Authority and enforce the same
with the assistance of the Authority;
(m) The provisions of existing laws to the contrary
notwithstanding, to exercise water rights over public
waters within the Laguna de Bay region whenever
necessary to carry out the Authority's projects;
(n) To act in coordination with existing governmental
agencies in establishing water quality standards for
industrial, agricultural and municipal waste discharges
into the lake and to cooperate with said existing
agencies of the government of the Philippines in
enforcing such standards, or to separately pursue
enforcement and penalty actions as provided for in
Section 4 (d) and Section 39-A of this Act: Provided,
That in case of conflict on the appropriate water quality
standard to be enforced such conflict shall be resolved
thru the NEDA Board.2
To more effectively perform the role of the Authority under Republic Act No. 4850, as
though Presidential Decree No. 813 were not thought to be completely effective, the
Chief Executive, feeling that the land and waters of the Laguna Lake Region are
limited natural resources requiring judicious management to their optimal utilization
to insure renewability and to preserve the ecological balance, the competing options
for the use of such resources and conflicting jurisdictions over such uses having
created undue constraints on the institutional capabilities of the Authority in the light
of the limited powers vested in it by its charter, Executive Order No. 927 further
defined and enlarged the functions and powers of the Authority and named and
enumerated the towns, cities and provinces encompassed by the term "Laguna de
Bay Region".
Also, pertinent to the issues in this case are the following provisions of Executive
Order No. 927 which include in particular the sharing of fees:
Sec 2. Water Rights Over Laguna de Bay and Other Bodies of Water
within the Lake Region: To effectively regulate and monitor activities
in the Laguna de Bay region, the Authority shall have exclusive
jurisdiction to issue permit for the use of all surface water for any
projects or activities in or affecting the said region including
navigation, construction, and operation of fishpens, fish enclosures,
fish corrals and the like.
For the purpose of this Executive Order, the term "Laguna de Bay
Region" shall refer to the Provinces of Rizal and Laguna; the Cities of
San Pablo, Pasay, Caloocan, Quezon, Manila and Tagaytay; the
towns of Tanauan, Sto. Tomas and Malvar in Batangas Province; the
towns of Silang and Carmona in Cavite Province; the town of Lucban
in Quezon Province; and the towns of Marikina, Pasig, Taguig,
Muntinlupa, and Pateros in Metro Manila.
300
Sec 3. Collection of Fees. The Authority is hereby empowered to
collect fees for the use of the lake water and its tributaries for all
beneficial purposes including but not limited to fisheries, recreation,
municipal, industrial, agricultural, navigation, irrigation, and waste
disposal purpose; Provided, that the rates of the fees to be collected,
and the sharing with other government agencies and political
subdivisions, if necessary, shall be subject to the approval of the
President of the Philippines upon recommendation of the Authority's
Board, except fishpen fee, which will be shared in the following
manner; 20 percent of the fee shall go to the lakeshore local
governments, 5 percent shall go to the Project Development Fund
which shall be administered by a Council and the remaining 75
percent shall constitute the share of LLDA. However, after the
implementation within the three-year period of the Laguna Lake
Fishery Zoning and Management Plan, the sharing will be modified as
follows: 35 percent of the fishpen fee goes to the lakeshore local
governments, 5 percent goes to the Project Development Fund and
the remaining 60 percent shall be retained by LLDA; Provided,
however, that the share of LLDA shall form part of its corporate funds
and shall not be remitted to the National Treasury as an exception to
the provisions of Presidential Decree No. 1234. (Emphasis supplied)
It is important to note that Section 29 of Presidential Decree No. 813 defined the
term "Laguna Lake" in this manner:
Sec 41. Definition of Terms.
(11) Laguna Lake or Lake. Whenever Laguna Lake or lake is used in
this Act, the same shall refer to Laguna de Bay which is that area
covered by the lake water when it is at the average annual maximum
lake level of elevation 12.50 meters, as referred to a datum 10.00
meters below mean lower low water (M.L.L.W). Lands located at and
below such elevation are public lands which form part of the bed of
said lake.
Then came Republic Act No. 7160, the Local Government Code of 1991. The
municipalities in the Laguna Lake Region interpreted the provisions of this law to
mean that the newly passed law gave municipal governments the exclusive
jurisdiction to issue fishing privileges within their municipal waters because R.A.
7160 provides:
Sec. 149. Fishery Rentals, Fees and Charges.
(a) Municipalities shall have the exclusive authority to grant fishery
privileges in the municipal waters and impose rental fees or charges
therefor in accordance with the provisions of this Section.
(b) The Sangguniang Bayan may:
(1) Grant fishing privileges to erect fish corrals, oyster,
mussel or other aquatic beds or bangus fry areas,
within a definite zone of the municipal waters, as
determined by it; . . . .
(2) Grant privilege to gather, take or catch bangus fry,
prawn fry or kawag-kawag or fry of other species and
fish from the municipal waters by nets, traps or other
fishing gears to marginal fishermen free from any rental
fee, charges or any other imposition whatsoever.
xxx xxx xxx
Sec. 447. Power, Duties, Functions and Compensation. . . . .
xxx xxx xxx
(XI) Subject to the provisions of Book II of this Code,
grant exclusive privileges of constructing fish corrals or
fishpens, or the taking or catching of bangus fry, prawn
301
fry or kawag-kawag or fry of any species or fish within
the municipal waters.
xxx xxx xxx
Municipal governments thereupon assumed the authority to issue fishing privileges
and fishpen permits. Big fishpen operators took advantage of the occasion to
establish fishpens and fishcages to the consternation of the Authority. Unregulated
fishpens and fishcages, as of July, 1995, occupied almost one-third of the entire lake
water surface area, increasing the occupation drastically from 7,000 hectares in 1990
to almost 21,000 hectares in 1995. The Mayor's permit to construct fishpens and
fishcages were all undertaken in violation of the policies adopted by the Authority on
fishpen zoning and the Laguna Lake carrying capacity.
To be sure, the implementation by the lakeshore municipalities of separate
independent policies in the operation of fishpens and fishcages within their claimed
territorial municipal waters in the lake and their indiscriminate grant of fishpen
permits have already saturated the lake area with fishpens, thereby aggravating the
current environmental problems and ecological stress of Laguna Lake.
In view of the foregoing circumstances, the Authority served notice to the general
public that:
In compliance with the instructions of His Excellency PRESIDENT
FIDEL V. RAMOS given on June 23, 1993 at Pila, Laguna pursuant to
Republic Act 4850 as amended by Presidential Decree 813 and
Executive Order 927 series of 1983 and in line with the policies and
programs of the Presidential Task Force on Illegal Fishpens and
Illegal Fishing, the general public is hereby notified that:
1. All fishpens, fishcages and other aqua-culture structures in the
Laguna de Bay Region, which were not registered or to which no
application for registration and/or permit has been filed with Laguna
Lake Development Authority as of March 31, 1993 are hereby
declared outrightly as illegal.
2. All fishpens, fishcages and other aqua-culture structures so
declared as illegal shall be subject to demolition which shall be
undertaken by the Presidential Task Force for Illegal Fishpen and
Illegal Fishing.
3. Owners of fishpens, fishcages and other aqua-culture structures
declared as illegal shall, without prejudice to demolition of their
structures be criminally charged in accordance with Section 39-A of
Republic Act 4850 as amended by P.D. 813 for violation of the same
laws. Violations of these laws carries a penalty of imprisonment of not
exceeding 3 years or a fine not exceeding Five Thousand Pesos or
both at the discretion of the court.
All operators of fishpens, fishcages and other aqua-culture structures
declared as illegal in accordance with the foregoing Notice shall have
one (1) month on or before 27 October 1993 to show cause before the
LLDA why their said fishpens, fishcages and other aqua-culture
structures should not be demolished/dismantled.
One month, thereafter, the Authority sent notices to the concerned owners of the
illegally constructed fishpens, fishcages and other aqua-culture structures advising
them to dismantle their respective structures within 10 days from receipt thereof,
otherwise, demolition shall be effected.
Reacting thereto, the affected fishpen owners filed injunction cases against the
Authority before various regional trial courts, to wit: (a) Civil Case No. 759-B, for
Prohibition, Injunction and Damages, Regional Trial Court, Branch 70, Binangonan,
Rizal, filed by Fleet Development, Inc. and Carlito Arroyo; (b) Civil Case No. 64049,
for Injunction, Regional Trial Court, Branch 162, Pasig, filed by IRMA Fishing and
Trading Corp., ARTM Fishing Corp., BDR Corp., MIRT Corp. and TRIM Corp.; (c)
Civil Case No. 566, for Declaratory Relief and Injunction, Regional Trial Court,
Branch 163, Pasig, filed by Manila Marine Life Business Resources, Inc. and Tobias
Reynaldo M. Tianco; (d) Civil Case No. 556-M, for Prohibition, Injunction and
Damages, Regional Trial Court, Branch 78, Morong, Rizal, filed by AGP Fishing
Ventures, Inc.; (e) Civil Case No. 522-M, for Prohibition, Injunction and Damages,
Regional Trial Court, Branch 78, Morong, Rizal, filed by Blue Lagoon and Alcris
302
Chicken Growers, Inc.; (f) Civil Case No. 554-, for Certiorari and Prohibition,
Regional Trial Court, Branch 79, Morong, Rizal, filed by Greenfields Ventures
Industrial Corp. and R.J. Orion Development Corp.; and (g) Civil Case No. 64124, for
Injunction, Regional Trial Court, Branch 15, Pasig, filed by SEA-MAR Trading Co.,
Inc. and Eastern Lagoon Fishing Corp. and Minamar Fishing Corporation.
The Authority filed motions to dismiss the cases against it on jurisdictional grounds.
The motions to dismiss were invariably denied. Meanwhile, temporary restraining
order/writs of preliminary mandatory injunction were issued in Civil Cases Nos.
64124, 759 and 566 enjoining the Authority from demolishing the fishpens and
similar structures in question.
Hence, the herein petition for certiorari, prohibition and injunction, G.R. Nos. 120865-
71, were filed by the Authority with this court. Impleaded as parties-respondents are
concerned regional trial courts and respective private parties, and the municipalities
and/or respective Mayors of Binangonan, Taguig and Jala-jala, who issued permits
for the construction and operation of fishpens in Laguna de Bay. The Authority
sought the following reliefs, viz.:
(A) Nullification of the temporary restraining order/writs of preliminary
injunction issued in Civil Cases Nos. 64125, 759 and 566;
(B) Permanent prohibition against the regional trial courts from
exercising jurisdiction over cases involving the Authority which is a co-
equal body;
(C) Judicial pronouncement that R.A. 7610 (Local Government Code
of 1991) did not repeal, alter or modify the provisions of R.A. 4850, as
amended, empowering the Authority to issue permits for fishpens,
fishcages and other aqua-culture structures in Laguna de Bay and
that, the Authority the government agency vested with exclusive
authority to issue said permits.
By this Court's resolution of May 2, 1994, the Authority's consolidated petitions were
referred to the Court of Appeals.
In a Decision, dated June 29, 1995, the Court of Appeals dismissed the Authority's
consolidated petitions, the Court of Appeals holding that: (A) LLDA is not among
those quasi-judicial agencies of government whose decision or order are appealable
only to the Court of Appeals; (B) the LLDA charter does vest LLDA with quasi-judicial
functions insofar as fishpens are concerned; (C) the provisions of the LLDA charter
insofar as fishing privileges in Laguna de Bay are concerned had been repealed by
the Local Government Code of 1991; (D) in view of the aforesaid repeal, the power
to grant permits devolved to and is now vested with their respective local government
units concerned.
Not satisfied with the Court of Appeals decision, the Authority has returned to this
Court charging the following errors:
1. THE HONORABLE COURT OF APPEALS PROBABLY
COMMITTED AN ERROR WHEN IT RULED THAT THE LAGUNA
LAKE DEVELOPMENT AUTHORITY IS NOT A QUASI-JUDICIAL
AGENCY.
2. THE HONORABLE COURT OF APPEALS COMMITTED
SERIOUS ERROR WHEN IT RULED THAT R.A. 4850 AS AMENDED
BY P.D. 813 AND E.O. 927 SERIES OF 1983 HAS BEEN
REPEALED BY REPUBLIC ACT 7160. THE SAID RULING IS
CONTRARY TO ESTABLISHED PRINCIPLES AND
JURISPRUDENCE OF STATUTORY CONSTRUCTION.
3. THE HONORABLE COURT OF APPEALS COMMITTED
SERIOUS ERROR WHEN IT RULED THAT THE POWER TO ISSUE
FISHPEN PERMITS IN LAGUNA DE BAY HAS BEEN DEVOLVED
TO CONCERNED (LAKESHORE) LOCAL GOVERNMENT UNITS.
We take a simplistic view of the controversy. Actually, the main and only issue posed
is: Which agency of the Government — the Laguna Lake Development Authority or
the towns and municipalities comprising the region — should exercise jurisdiction
over the Laguna Lake and its environs insofar as the issuance of permits for fishery
privileges is concerned?
303
Section 4 (k) of the charter of the Laguna Lake Development Authority, Republic Act
No. 4850, the provisions of Presidential Decree No. 813, and Section 2 of Executive
Order No. 927, cited above, specifically provide that the Laguna Lake Development
Authority shall have exclusive jurisdiction to issue permits for the use of all surface
water for any projects or activities in or affecting the said region, including navigation,
construction, and operation of fishpens, fish enclosures, fish corrals and the like. On
the other hand, Republic Act No. 7160, the Local Government Code of 1991, has
granted to the municipalities the exclusive authority to grant fishery privileges in
municipal waters. The Sangguniang Bayan may grant fishery privileges to erect fish
corrals, oyster, mussels or other aquatic beds or bangus fry area within a definite
zone of the municipal waters.
We hold that the provisions of Republic Act No. 7160 do not necessarily repeal the
aforementioned laws creating the Laguna Lake Development Authority and granting
the latter water rights authority over Laguna de Bay and the lake region.
The Local Government Code of 1991 does not contain any express provision which
categorically expressly repeal the charter of the Authority. It has to be conceded that
there was no intent on the part of the legislature to repeal Republic Act No. 4850 and
its amendments. The repeal of laws should be made clear and expressed.
It has to be conceded that the charter of the Laguna Lake Development Authority
constitutes a special law. Republic Act No. 7160, the Local Government Code of
1991, is a general law. It is basic in statutory construction that the enactment of a
later legislation which is a general law cannot be construed to have repealed a
special law. It is a well-settled rule in this jurisdiction that "a special statute, provided
for a particular case or class of cases, is not repealed by a subsequent statute,
general in its terms, provisions and application, unless the intent to repeal or alter is
manifest, although the terms of the general law are broad enough to include the
cases embraced in the special law."3
Where there is a conflict between a general law and a special statute, the special
statute should prevail since it evinces the legislative intent more clearly than the
general statute. The special law is to be taken as an exception to the general law in
the absence of special circumstances forcing a contrary conclusion. This is because
implied repeals are not favored and as much as possible, effect must be given to all
enactments of the legislature. A special law cannot be repealed, amended or altered
by a subsequent general law by mere implication.4
Thus, it has to be concluded that the charter of the Authority should prevail over the
Local Government Code of 1991.
Considering the reasons behind the establishment of the Authority, which are
environmental protection, navigational safety, and sustainable development, there is
every indication that the legislative intent is for the Authority to proceed with its
mission.
We are on all fours with the manifestation of petitioner Laguna Lake Development
Authority that "Laguna de Bay, like any other single body of water has its own unique
natural ecosystem. The 900 km² lake surface water, the eight (8) major river
tributaries and several other smaller rivers that drain into the lake, the 2,920 km²
basin or watershed transcending the boundaries of Laguna and Rizal provinces,
greater portion of Metro Manila, parts of Cavite, Batangas, and Quezon provinces,
constitute one integrated delicate natural ecosystem that needs to be protected with
uniform set of policies; if we are to be serious in our aims of attaining sustainable
development. This is an exhaustible natural resource — a very limited one — which
requires judicious management and optimal utilization to ensure renewability and
preserve its ecological integrity and balance."
"Managing the lake resources would mean the implementation of a national policy
geared towards the protection, conservation, balanced growth and sustainable
development of the region with due regard to the inter-generational use of its
resources by the inhabitants in this part of the earth. The authors of Republic Act
4850 have foreseen this need when they passed this LLDA law — the special law
designed to govern the management of our Laguna de Bay lake resources."
"Laguna de Bay therefore cannot be subjected to fragmented concepts of
management policies where lakeshore local government units exercise exclusive
dominion over specific portions of the lake water. The garbage thrown or sewage
discharged into the lake, abstraction of water therefrom or construction of fishpens
by enclosing its certain area, affect not only that specific portion but the entire 900
km² of lake water. The implementation of a cohesive and integrated lake water
304
resource management policy, therefore, is necessary to conserve, protect and
sustainably develop Laguna de Bay."5
The power of the local government units to issue fishing privileges was clearly
granted for revenue purposes. This is evident from the fact that Section 149 of the
New Local Government Code empowering local governments to issue fishing
permits is embodied in Chapter 2, Book II, of Republic Act No. 7160 under the
heading, "Specific Provisions On The Taxing And Other Revenue Raising Power Of
Local Government Units."
On the other hand, the power of the Authority to grant permits for fishpens, fishcages
and other aqua-culture structures is for the purpose of effectively regulating and
monitoring activities in the Laguna de Bay region (Section 2, Executive Order No.
927) and for lake quality control and management.6 It does partake of the nature of
police power which is the most pervasive, the least limitable and the most
demanding of all State powers including the power of taxation. Accordingly, the
charter of the Authority which embodies a valid exercise of police power should
prevail over the Local Government Code of 1991 on matters affecting Laguna de
Bay.
There should be no quarrel over permit fees for fishpens, fishcages and other aqua-
culture structures in the Laguna de Bay area. Section 3 of Executive Order No. 927
provides for the proper sharing of fees collected.
In respect to the question as to whether the Authority is a quasi-judicial agency or
not, it is our holding that, considering the provisions of Section 4 of Republic Act No.
4850 and Section 4 of Executive Order No. 927, series of 1983, and the ruling of this
Court in Laguna Lake Development Authority vs. Court of Appeals, 231 SCRA 304,
306, which we quote:
xxx xxx xxx
As a general rule, the adjudication of pollution cases generally
pertains to the Pollution Adjudication Board (PAB), except in cases
where the special law provides for another forum. It must be
recognized in this regard that the LLDA, as a specialized
administrative agency, is specifically mandated under Republic Act
No. 4850 and its amendatory laws to carry out and make effective the
declared national policy of promoting and accelerating the
development and balanced growth of the Laguna Lake area and the
surrounding provinces of Rizal and Laguna and the cities of San
Pablo, Manila, Pasay, Quezon and Caloocan with due regard and
adequate provisions for environmental management and control,
preservation of the quality of human life and ecological systems, and
the prevention of undue ecological disturbances, deterioration and
pollution. Under such a broad grant of power and authority, the LLDA,
by virtue of its special charter, obviously has the responsibility to
protect the inhabitants of the Laguna Lake region from the deleterious
effects of pollutants emanating from the discharge of wastes from the
surrounding areas. In carrying out the aforementioned declared policy,
the LLDA is mandated, among others, to pass upon and approve or
disapprove all plans, programs, and projects proposed by local
government offices/agencies within the region, public corporations,
and private persons or enterprises where such plans, programs
and/or projects are related to those of the LLDA for the development
of the region.
xxx xxx xxx
. . . . While it is a fundamental rule that an administrative agency has
only such powers as are expressly granted to it by law, it is likewise a
settled rule that an administrative agency has also such powers as
are necessarily implied in the exercise of its express powers. In the
exercise, therefore, of its express powers under its charter, as a
regulatory and quasi-judicial body with respect to pollution cases in
the Laguna Lake region, the authority of the LLDA to issue a "cease
and desist order" is, perforce, implied. Otherwise, it may well be
reduced to a "toothless" paper agency.
there is no question that the Authority has express powers as a regulatory
and quasi-judicial body in respect to pollution cases with authority to issue a
"cease and desist order" and on matters affecting the construction of illegal
305
fishpens, fishcages and other aqua-culture structures in Laguna de Bay. The
Authority's pretense, however, that it is co-equal to the Regional Trial Courts
such that all actions against it may only be instituted before the Court of
Appeals cannot be sustained. On actions necessitating the resolution of legal
questions affecting the powers of the Authority as provided for in its charter,
the Regional Trial Courts have jurisdiction.
In view of the foregoing, this Court holds that Section 149 of Republic Act No. 7160,
otherwise known as the Local Government Code of 1991, has not repealed the
provisions of the charter of the Laguna Lake Development Authority, Republic Act
No. 4850, as amended. Thus, the Authority has the exclusive jurisdiction to issue
permits for the enjoyment of fishery privileges in Laguna de Bay to the exclusion of
municipalities situated therein and the authority to exercise such powers as are by its
charter vested on it.
Removal from the Authority of the aforesaid licensing authority will render nugatory
its avowed purpose of protecting and developing the Laguna Lake Region.
Otherwise stated, the abrogation of this power would render useless its reason for
being and will in effect denigrate, if not abolish, the Laguna Lake Development
Authority. This, the Local Government Code of 1991 had never intended to do.
WHEREFORE, the petitions for prohibition, certiorari and injunction are hereby
granted, insofar as they relate to the authority of the Laguna Lake Development
Authority to grant fishing privileges within the Laguna Lake Region.
The restraining orders and/or writs of injunction issued by Judge Arturo Marave,
RTC, Branch 78, Morong, Rizal; Judge Herculano Tech, RTC, Branch 70,
Binangonan, Rizal; and Judge Aurelio Trampe, RTC, Branch 163, Pasig, Metro
Manila, are hereby declared null and void and ordered set aside for having been
issued with grave abuse of discretion.
The Municipal Mayors of the Laguna Lake Region are hereby prohibited from issuing
permits to construct and operate fishpens, fishcages and other aqua-culture
structures within the Laguna Lake Region, their previous issuances being declared
null and void. Thus, the fishing permits issued by Mayors Isidro B. Pacis, Municipality
of Binangonan; Ricardo D. Papa, Municipality of Taguig; and Walfredo M. de la
Vega, Municipality of Jala-jala, specifically, are likewise declared null and void and
ordered cancelled.
The fishpens, fishcages and other aqua-culture structures put up by operators by
virtue of permits issued by Municipal Mayors within the Laguna Lake Region,
specifically, permits issued to Fleet Development, Inc. and Carlito Arroyo; Manila
Marine Life Business Resources, Inc., represented by, Mr. Tobias Reynald M.
Tiangco; Greenfield Ventures Industrial Development Corporation and R.J. Orion
Development Corporation; IRMA Fishing And Trading Corporation, ARTM Fishing
Corporation, BDR Corporation, Mirt Corporation and Trim Corporation; Blue Lagoon
Fishing Corporation and ALCRIS Chicken Growers, Inc.; AGP Fish Ventures, Inc.,
represented by its President Alfonso Puyat; SEA MAR Trading Co., Inc., Eastern
Lagoon Fishing Corporation, and MINAMAR Fishing Corporation, are hereby
declared illegal structures subject to demolition by the Laguna Lake Development
Authority.
SO ORDERED.
G.R. No. 92389 September 11, 1991
HON. JEJOMAR C. BINAY and the MUNICIPALITY OF MAKATI, petitioners,
vs.
HON. EUFEMIO DOMINGO and the COMMISSION ON AUDIT, respondents.
Jejomar C. Binay for himself and for his co-petitioner.
Manuel D. Tamase and Rafael C. Marquez for respondents.
PARAS, J.:
306
The only pivotal issue before Us is whether or not Resolution No. 60, re-enacted
under Resolution No. 243, of the Municipality of Makati is a valid exercise of police
power under the general welfare clause.
The pertinent facts are:
On September 27, 1988, petitioner Municipality, through its Council, approved
Resolution No. 60 which reads:
A RESOLUTION TO CONFIRM AND/OR RATIFY THE ONGOING BURIAL
ASSISTANCE PROGRAM INITIATED BY THE OFFICE OF THE MAYOR,
OF EXTENDING FINANCIAL ASSISTANCE OF FIVE HUNDRED PESOS
(P500.00) TO A BEREAVED FAMILY, FUNDS TO BE TAKEN OUT OF
UNAPPROPRIATED AVAILABLE FUNDS EXISTING IN THE MUNICIPAL
TREASURY. (Rollo, Annnex "A" p. 39)
Qualified beneficiaries, under the Burial Assistance Program, are bereaved families
of Makati whose gross family income does not exceed two thousand pesos
(P2,000.00) a month. The beneficiaries, upon fulfillment of other requirements, would
receive the amount of five hundred pesos (P500.00) cash relief from the Municipality
of Makati. (Reno, Annex "13", p. 41)
Metro Manila Commission approved Resolution No. 60. Thereafter, the municipal
secretary certified a disbursement fired of four hundred thousand pesos
(P400,000.00) for the implementation of the Burial Assistance Program. (Rollo,
Annex "C", p. 43).
Resolution No. 60 was referred to respondent Commission on Audit (COA) for its
expected allowance in audit. Based on its preliminary findings, respondent COA
disapproved Resolution No. 60 and disallowed in audit the disbursement of finds for
the implementation thereof. (Rollo, Annex "D", P. 44)
Two letters for reconsideration (Annexes "E" and "F", Rollo, pp. 45 and 48,
respectively) filed by petitioners Mayor Jejomar Binay, were denied by respondent in
its Decision No. 1159, in the following manner:
Your request for reconsideration is predicated on the following grounds, to
wit:
1. Subject Resolution No. 60, s. 1988, of the Municipal Council of Makati and
the intended disbursements fall within the twin principles of 'police power and
parens patriae and
2. The Metropolitan Manila Commission (MMC), under a Certification, dated
June 5, 1989, has already appropriated the amount of P400,000.00 to
implement the Id resolution, and the only function of COA on the matter is to
allow the financial assistance in question.
The first contention is believed untenable. Suffice it to state that:
a statute or ordinance must have a real substantial, or rational relation
to the public safety, health, morals, or general welfare to be sustained
as a legitimate exercise of the police power. The mere assertion by
the legislature that a statute relates to the public health, safety, or
welfare does not in itself bring the statute within the police power of a
state for there must always be an obvious and real connection
between the actual provisions of a police regulations and its avowed
purpose, and the regulation adopted must be reasonably adapted to
accomplish the end sought to be attained. 16 Am. Jur 2d, pp. 542-
543; emphasis supplied).
Here, we see no perceptible connection or relation between the objective
sought to be attained under Resolution No. 60, s. 1988, supra, and the
alleged public safety, general welfare, etc. of the inhabitants of Makati.
Anent the second contention, let it be stressed that Resolution No. 60 is still
subject to the limitation that the expenditure covered thereby should be for a
public purpose, i.e., that the disbursement of the amount of P500.00 as burial
assistance to a bereaved family of the Municipality of Makati, or a total of
P400,000.00 appropriated under the Resolution, should be for the benefit of
the whole, if not the majority, of the inhabitants of the Municipality and not for
the benefit of only a few individuals as in the present case. On this point
307
government funds or property shall be spent or used solely for public
purposes. (Cf. Section 4[2], P.D. 1445). (pp. 50-51, Rollo)
Bent on pursuing the Burial Assistance Program the Municipality of Makati, through
its Council, passed Resolution No. 243, re-affirming Resolution No. 60 (Rollo, Annex
"H", p. 52).
However, the Burial Assistance Program has been stayed by COA Decision No.
1159. Petitioner, through its Mayor, was constrained to file this special civil action of
certiorari praying that COA Decision No. 1159 be set aside as null and void.
The police power is a governmental function, an inherent attribute of sovereignty,
which was born with civilized government. It is founded largely on the maxims, "Sic
utere tuo et ahenum non laedas and "Salus populi est suprema lex Its fundamental
purpose is securing the general welfare, comfort and convenience of the people.
Police power is inherent in the state but not in municipal corporations (Balacuit v. CFI
of Agusan del Norte, 163 SCRA 182). Before a municipal corporation may exercise
such power, there must be a valid delegation of such power by the legislature which
is the repository of the inherent powers of the State. A valid delegation of police
power may arise from express delegation, or be inferred from the mere fact of the
creation of the municipal corporation; and as a general rule, municipal corporations
may exercise police powers within the fair intent and purpose of their creation which
are reasonably proper to give effect to the powers expressly granted, and statutes
conferring powers on public corporations have been construed as empowering them
to do the things essential to the enjoyment of life and desirable for the safety of the
people. (62 C.J.S., p. 277). The so-called inferred police powers of such corporations
are as much delegated powers as are those conferred in express terms, the
inference of their delegation growing out of the fact of the creation of the municipal
corporation and the additional fact that the corporation can only fully accomplish the
objects of its creation by exercising such powers. (Crawfordsville vs. Braden, 28 N.E.
849). Furthermore, municipal corporations, as governmental agencies, must have
such measures of the power as are necessary to enable them to perform their
governmental functions. The power is a continuing one, founded on public necessity.
(62 C.J.S. p. 273) Thus, not only does the State effectuate its purposes through the
exercise of the police power but the municipality does also. (U.S. v. Salaveria, 39
Phil. 102).
Municipal governments exercise this power under the general welfare clause:
pursuant thereto they are clothed with authority to "enact such ordinances and issue
such regulations as may be necessary to carry out and discharge the responsibilities
conferred upon it by law, and such as shall be necessary and proper to provide for
the health, safety, comfort and convenience, maintain peace and order, improve
public morals, promote the prosperity and general welfare of the municipality and the
inhabitants thereof, and insure the protection of property therein." (Sections 91, 149,
177 and 208, BP 337). And under Section 7 of BP 337, "every local government unit
shall exercise the powers expressly granted, those necessarily implied therefrom, as
well as powers necessary and proper for governance such as to promote health and
safety, enhance prosperity, improve morals, and maintain peace and order in the
local government unit, and preserve the comfort and convenience of the inhabitants
therein."
Police power is the power to prescribe regulations to promote the health, morals,
peace, education, good order or safety and general welfare of the people. It is the
most essential, insistent, and illimitable of powers. In a sense it is the greatest and
most powerful attribute of the government. It is elastic and must be responsive to
various social conditions. (Sangalang, et al. vs. IAC, 176 SCRA 719). On it depends
the security of social order, the life and health of the citizen, the comfort of an
existence in a thickly populated community, the enjoyment of private and social life,
and the beneficial use of property, and it has been said to be the very foundation on
which our social system rests. (16 C.J.S., P. 896) However, it is not confined within
narrow circumstances of precedents resting on past conditions; it must follow the
legal progress of a democratic way of life. (Sangalang, et al. vs. IAC, supra).
In the case at bar, COA is of the position that there is "no perceptible connection or
relation between the objective sought to be attained under Resolution No. 60, s.
1988, supra, and the alleged public safety, general welfare. etc. of the inhabitants of
Makati." (Rollo, Annex "G", p. 51).
Apparently, COA tries to re-define the scope of police power by circumscribing its
exercise to "public safety, general welfare, etc. of the inhabitants of Makati."
308
In the case of Sangalang vs. IAC, supra, We ruled that police power is not capable of
an exact definition but has been, purposely, veiled in general terms to underscore its
all comprehensiveness. Its scope, over-expanding to meet the exigencies of the
times, even to anticipate the future where it could be done, provides enough room for
an efficient and flexible response to conditions and circumstances thus assuring the
greatest benefits.
The police power of a municipal corporation is broad, and has been said to be
commensurate with, but not to exceed, the duty to provide for the real needs of the
people in their health, safety, comfort, and convenience as consistently as may be
with private rights. It extends to all the great public needs, and, in a broad sense
includes all legislation and almost every function of the municipal government. It
covers a wide scope of subjects, and, while it is especially occupied with whatever
affects the peace, security, health, morals, and general welfare of the community, it
is not limited thereto, but is broadened to deal with conditions which exists so as to
bring out of them the greatest welfare of the people by promoting public convenience
or general prosperity, and to everything worthwhile for the preservation of comfort of
the inhabitants of the corporation (62 C.J.S. Sec. 128). Thus, it is deemed
inadvisable to attempt to frame any definition which shall absolutely indicate the
limits of police power.
COA's additional objection is based on its contention that "Resolution No. 60 is still
subject to the limitation that the expenditure covered thereby should be for a public
purpose, ... should be for the benefit of the whole, if not the majority, of the
inhabitants of the Municipality and not for the benefit of only a few individuals as in
the present case." (Rollo, Annex "G", p. 51).
COA is not attuned to the changing of the times. Public purpose is not
unconstitutional merely because it incidentally benefits a limited number of persons.
As correctly pointed out by the Office of the Solicitor General, "the drift is towards
social welfare legislation geared towards state policies to provide adequate social
services (Section 9, Art. II, Constitution), the promotion of the general welfare
(Section 5, Ibid) social justice (Section 10, Ibid) as well as human dignity and respect
for human rights. (Section 11, Ibid." (Comment, p. 12)
The care for the poor is generally recognized as a public duty. The support for the
poor has long been an accepted exercise of police power in the promotion of the
common good.
There is no violation of the equal protection clause in classifying paupers as subject
of legislation. Paupers may be reasonably classified. Different groups may receive
varying treatment. Precious to the hearts of our legislators, down to our local
councilors, is the welfare of the paupers. Thus, statutes have been passed giving
rights and benefits to the disabled, emancipating the tenant-farmer from the bondage
of the soil, housing the urban poor, etc.
Resolution No. 60, re-enacted under Resolution No. 243, of the Municipality of
Makati is a paragon of the continuing program of our government towards social
justice. The Burial Assistance Program is a relief of pauperism, though not complete.
The loss of a member of a family is a painful experience, and it is more painful for the
poor to be financially burdened by such death. Resolution No. 60 vivifies the very
words of the late President Ramon Magsaysay 'those who have less in life, should
have more in law." This decision, however must not be taken as a precedent, or as
an official go-signal for municipal governments to embark on a philanthropic orgy of
inordinate dole-outs for motives political or otherwise.
PREMISES CONSIDERED, and with the afore-mentioned caveat, this petition is
hereby GRANTED and the Commission on Audit's Decision No. 1159 is hereby SET
ASIDE.
SO ORDERED. SALVADOR VILLACORTA as City Engineer of Dagupan
City, and JUAN S. CAGUIOA as Register of Deeds of Dagupan
City, Petitioners, v. GREGORIO BERNARDO and HON. MACARIO
OFILADA as Judge of Court of First Instance of
Pangasinan, Respondents.
Victor T. Llamas, Jr. for Respondents.
309
SYLLABUS
1. ADMINISTRATIVE LAW; DELEGATION OF POWERS; MUNICIPAL
BOARD; ORDINANCE NO. 22, NOT VALID FOR IMPOSING ADDITIONAL
REQUIREMENTS OTHER THAN THAT PROVIDED FOR BY THE NATIONAL
LAW. — To sustain the ordinance No. 22, "An Ordinance Regulating
Subdivision Plans over Parcels of Land in Dagupan City" would be to open
the floodgates to other ordinances amending and so violating national
laws in the guise of implementing them. Thus, ordinances could be passed
imposing additional requirements for the issuance of marriage licenses, to
prevent bigamy; the registration of vehicles, to minimize carnapping; the
execution of contracts, to forestall fraud; the validation of passports, to
deter imposture; the exercise of freedom of speech, to reduce disorder;
and so on. The list is endless, but the means, even if the end be valid,
would be ultra vires. Ordinance No. 22 suffers from the additional defect
of violating this authority for legislating in contravention of the national
law by adding to its requirements.
2. CONSTITUTIONAL LAW; POLICE POWER; PROTECTION OF RIGHTS OF
INDIVIDUAL, IMPORTANT AS PROTECTION OF RIGHT OF PUBLIC. — We
urge that proper care attend the exercise of the police power lest it
deteriorate into an unreasonable intrusion into the purely private affairs of
the individual. The so-called "general welfare" is too amorphous and
convenient an excuse for official arbitrariness. Let it always be
remembered that in the truly democratic state, protecting the rights of
the individual is as important as, if not more so than, protecting the rights
of the public. This advice is especially addressed to the local governments
which exercise the police power only by virtue of a valid delegation from
the national legislature under the general welfare clause.
DECISION
CRUZ, J.:
This is a petition for certiorari against a decision of the Court of First
Instance of Pangasinan annulling an ordinance adopted by the municipal
board of Dagupan City.
The ordinance reads in full as follows:jgc:chanrobles.com.ph
"ORDINANCE 22
"AN ORDINANCE REGULATING SUBDIVISION PLANS OVER PARCELS OF
LAND IN THE CITY OF DAGUPAN.
"Be it ordained by the Municipal Board of Dagupan City in session
assembled:jgc:chanrobles.com.ph
"Section 1. Every proposed subdivision plan over any lot in the City of
Dagupan, shall, before the same is submitted for approval and/or
verification by the Bureau of Lands and/or the Land Registration
Commission, be previously submitted to the City Engineer of the City who
shall see to it that no encroachment is made on any portion of the public
domain, that the zoning ordinance and all other pertinent rules and
regulations are observed.
"Section 2. As service fee thereof, an amount equivalent to P0.30 per
square meter of every lot resulting or will result from such subdivision
shall be charged by the City Engineer’s Office.
"Section 3. It shall be unlawful for the Register of Deeds of Dagupan City
to allow the registration of a subdivision plan unless there is prior written
certification issued by the City Engineer that such plan has already been
310
submitted to his office and that the same is in order.
"Section 4. Any violation of this ordinance shall be punished by a fine not
exceeding two hundred (P200.00) pesos or imprisonment not exceeding
six (6) months or both in the discretion of the judge.
"Section 5. This ordinance shall take effect immediately upon
approval."cralaw virtua1aw library
In declaring the said ordinance null and void, the court a quo
declared:jgc:chanrobles.com.ph
"From the above-recited requirements, there is no showing that would
justify the enactment of the questioned ordinance. Section 1 of said
ordinance clearly conflicts with Section 44 of Act 496, because the latter
law does not require subdivision plans to be submitted to the City
Engineer before the same is submitted for approval to and verification by
the General Land Registration Office or by the Director of Lands as
provided for in Section 58 of said Act. Section 2 of the same ordinance
also contravenes the provisions of Section 44 of Act 496, the latter being
silent on a service fee of P0.03 per square meter of every lot subject of
such subdivision application; Section 3 of the ordinance in question also
conflicts with Section 44 of Act 496, because the latter law does not
mention of a certification to be made by the City Engineer before the
Register of Deeds allows registration of the subdivision plan; and the last
section of said ordinance imposes a penalty for its violation, which Section
44 of Act 496 does not impose. In other words, Ordinance 22 of the City
of Dagupan imposes upon a subdivision owner additional conditions.
x          x           x
"The Court takes note of the laudable purpose of the ordinance in bringing
to a halt the surreptitious registration of lands belonging to the
government. But as already intimidated above, the powers of the board in
enacting such a laudable ordinance cannot be held valid when it shall
impede the exercise of rights granted in a general law and/or make a
general law subordinated to a local ordinance."cralaw virtua1aw library
We affirm.
To sustain the ordinance would be to open the floodgates to other
ordinances amending and so violating national laws in the guise of
implementing them. Thus, ordinances could be passed imposing additional
requirements for the issuance of marriage licenses, to prevent bigamy;
the registration of vehicles, to minimize carnaping; the execution of
contracts, to forestall fraud; the validation of passports, to deter
imposture; the exercise of freedom of speech, to reduce disorder; and so
on. The list is endless, but the means, even if the end be valid, would be
ultra vires.
So many excesses are attempted in the name of the police power that it
is time, we feel, for a brief admonition.
Regulation is a fact of life in any well-ordered community. As society
becomes more and more complex, the police power becomes
correspondingly ubiquitous. This has to be so for the individual must
subordinate his interests to the common good, on the time-honored
justification of Salus populi est suprema lex.
In this prolix age, practically everything a person does and owns affects
the public interest directly or at least vicariously, unavoidably drawing
him within the embrace of the police power. Increasingly, he is hemmed
in by all manner of statutory, administrative and municipal requirements
and restrictions that he may find officious and even oppressive.
It is necessary to stress that unless the creeping interference of the
government in essentially private matters is moderated, it is likely to
311
destroy that prized and peculiar virtue of the free society: individualism.
Every member of society, while paying proper deference to the general
welfare, must not be deprived of the right to be left alone or, in the idiom
of the day, "to do his thing." As long as he does not prejudice others, his
freedom as an individual must not be unduly curtailed.
We therefore urge that proper care attend the exercise of the police
power lest it deteriorate into an unreasonable intrusion into the purely
private affairs of the individual. The so-called "general welfare" is too
amorphous and convenient an excuse for official arbitrariness.
Let it always be remembered that in the truly democratic state, protecting
the rights of the individual is as important as, if not more so than,
protecting the rights of the public.
This advice is especially addressed to the local governments which
exercise the police power only by virtue of a valid delegation from the
national legislature under the general welfare clause. In the instant case,
Ordinance No. 22 suffers from the additional defect of violating this
authority for legislation in contravention of the national law by adding to
its requirements.
WHEREFORE, the decision of the lower court annulling the challenged
ordinance is AFFIRMED, without any pronouncement as to costs.
SO ORDERED.
G.R. No. 72969-70 December 17, 1986
PHILIPPINE GAMEFOWL COMMISSION AND HEE ACUSAR, petitioners,
vs.
HON. INTERMEDIATE APPELLATE COURT, MAYOR CELESTINO E. MARTINEZ,
JR., THE SANGGUNIANG BAYAN OF BOGO (CEBU), and SANTIAGO
SEVILLA, respondents.
Ramon M. Durano & Associates for petitioner Hee Acusar.
Clavel Asas-Martinez for respondents.
CRUZ, J.:
This case involves a conflict of jurisdiction between the Philippine Gamefowl
Commission and the municipal government of Bogo, Cebu, both of which claim the
power to issue licenses for the operation of cockpits in the said town.
The issue arose when Hee Acusar, who was operating the lone cockpit in Bogo, was
ordered to relocate the same pursuant to P.D. No. 449, the Cockfighting Law of
1974, on the ground that it was situated in a tertiary commercial zone, a prohibited
area. 1 Although the period of grace for such relocation was extended to June 11,
1980 by P.D. 1535, Acusar failed to comply with the requirement, as a result of which
the Philippine Constabulary considered the cockpit phased out. 2 To add to his
troubles, the Court of First Instance of Cebu, in a petition to compel the municipal
mayor to issue Acusar a permit to operate a cockpit, declared that he had waived his
right to a renewal thereof because of his failure to relocate. 3
On July 24, 1980, Santiago Sevilla, private respondent herein, was granted a license
to operate a cockpit by Mayor Celestino E. Martinez by authority of the Sangguniang
Bayan of Bogo and with subsequent approval of the PC Regional Command 7 as
required by law. 4 As only one cockpit is allowed by law in cities or municipalities with
a population of not more than one hundred thousand, 5 Acusar sued to revoke this
license. He failed, however, first before the PC Recom 7 6 and later before the Court
of First Instance of Cebu. 7 His petition for certiorari challenging the decision of the
lower court was dismissed by this Court. 8
312
Nothing daunted, Acusar went to the Philippine Gamefowl Commission seeking a
renewal of his cockpit license and the cancellation of Sevilla's in what was docketed
as PGC Case No. 10. He succeeded initially with the issuance by the PGC on
August 16, 1984, of an interlocutory order allowing him to temporarily operate his
cockpit. 9 This was challenged in two separate actions 10 filed by Sevilla and the
municipal government of Bogo in the Court of First Instance of Cebu which, on
petition of Acusar, were temporarily restrained by the Intermediate Appellate
Court. 11 This same court also temporarily restrained the enforcement of the PGC
order of August 16, 1984 pending consideration of the petition to nullify it filed by
Sevilla and the Bogo municipal officials. 12
On December 6, 1984, the Philippine Gamefowl Commission issued its resolution on
the merits of Acusar's petition and ordered Mayor Martinez and the Sangguniang
Bayan "to issue the necessary mayor's permit in favor of Hee Acusar" and "to cancel
and/or revoke the mayor's permit in favor of Engr. Santiago A. Sevilla." The
Commission also "RESOLVED to issue the Registration Certificate of Hee Acusar for
the current year 1984 and revoke the Registration Certificate of E ngr. Santiago A.
Sevilla." 13
The above-stated resolution was on appeal declared null and void by the
Intermediate Court of Appeals, 14 and its decision is now before us in a petition for
review on certiorari.
We shall first compare the powers vested respectively in the Philippine Gamefowl
Commission and the city and municipal officials under the applicable laws, to wit,
P.D. 1802, P.D. 1802-A and the Local Government Code.
The pertinent powers of the Philippine Gamefowl Commission under Section 2 of
P.D. 1802, which became effective on January 16, 1981, are the following.
a) Promulgate and enforce rules and regulations relative to the holding of
cockfight derbies and cockfights in the Philippines including the frequency
sites, conduct and operation of such derbies and cockfights;
b) Issue licenses for the holding of international derbies;
xxx xxx xxx
d) Fix and periodically revise whenever necessary, subject to the approval of
the Ministry of Finance, the rates of license fees and other levies that may be
imposed on local derbies and cockfights and international cockfight derbies,
cockpit personnel and employees;
e) To promulgate rules and regulations relative to the holding, methods,
procedures, operations and conduct of cockfighting in general as well as
accreditation of cockpit personnel and association of cockpit owners,
operators and lessees, to elevate the standard of cockfighting;
xxx xxx xxx
By contrast, P.D. 1802, as amended by P.D. 1802-A, provides as follows:
SECTION 1. Section 4 of Presidential Decree No. 1802 is hereby amended to
read as follows:
Sec. 4. City and Municipal Mayors with the concurrence of their respective
"Sanggunians" shall have the authority to license and regulate regular
cockfighting pursuant to the rules and regulations promulgated by the
Commission and subject to its review and supervision.
According to the Local Government Code, the municipal mayor has the power to
"grant licenses and permits in accordance with existing laws and municipal
ordinances and revoke them for violation of the conditions upon which they have
been granted," 15 and the Sangguniang Bayan is authorized to "regulate cockpits,
cockfighting and the keeping or training of gamecocks, subject to existing guidelines
promulgated by the Philippine Gamefowl Commission." 16
A study of the above-cited powers shows that it is the municipal mayor with the
authorization of the Sangguniang Bayan that has the primary power to issue licenses
for the operation of ordinary cockpits. Even the regulation of cockpits is vested in the
municipal officials, subject only to the guidelines laid down by the Philippine
313
Gamefowl Commission. Its power to license is limited only to international derbies
and does not extend to ordinary cockpits. Over the latter kind of cockpits, it has the
power not of control but only of review and supervision.
We have consistently held that supervision means "overseeing or the power or
authority of an officer to see that their subordinate officers perform their duties. If the
latter fail or neglect to fulfill them, the former may take such action or steps as
prescribed by law to make them perform their duties." 17 Supervision is a lesser
power than control, which connotes "the power of the officer to alter or modify or set
aside what a subordinate had done in the performance of his duties and to substitute
the judgment of the former for that of the latter. " 18 Review, on the other hand, is a
reconsideration or reexamination for purposes of correction. 19
As thus defined, the power of supervision does not snow the supervisor to annul the
acts of the subordinate, for that comes under the power of control. What it can do
only is to see to it that the subordinate performs his duties in accordance with law.
The power of review is exercised to determine whether it is necessary to correct the
acts of the subordinate. If such correction is necessary, it must be done by the
authority exercising control over the subordinate or through the instrumentality of the
courts of justice, unless the subordinate motu proprio corrects himself after his error
is called to his attention by the official exercising the power of supervision and review
over him.
At that, even the power of review vested in the Philippine Gamefowl Commission by
P.D. 1802-A may have been modified by the Local Government Code, which
became effective on February 14, 1983. Under the Code, the Sangguniang
Panlalawigan is supposed to examine the ordinances, resolutions and executive
orders issued by the municipal government and to annul the same, but only on one
ground, to wit, that it is beyond the powers of the municipality or ultra
vires. 20 Significantly, no similar authority is conferred in such categorical terms on
the Philippine Gamefowl Commission regarding the licensing and regulation of
cockpits by the municipal government.
The conferment of the power to license and regulate municipal cockpits in the
municipal authorities is in line with the policy of local autonomy embodied in Article II,
Section 10, and Article XI of the 1973 Constitution. It is also a recognition, as the
Court of Appeals correctly points out, of the superior competence of the municipal
officials in dealing with this local matter with which they can be expected to be more
knowledgeable than the national officials. Surely, the Philippine Gamefowl
Commission cannot claim to know more than the municipal mayor and the
Sangguniang Bayan of Bogo, Cebu, about the issues being disputed by the
applicants to the cockpit license.
At any rate, assuming that the resolution of the Sangguniang Bayan authorizing the
issuance of a cockpit license to Sevilla was subject to reversal by the PGC, such
action could be justified only if based upon a proven violation of law by the municipal
officials. It may not be made only for the purpose of substituting its own discretion for
the discretion exercised by the municipal authorities in determining the applicant to
which the lone cockpit license should be issued.
In the absence of a clear showing of a grave abuse of discretion, the choice of the
municipal authorities should be respected by the PGC and in any event cannot be
replaced by it simply because it believes another person should have been selected.
Stated otherwise, the PGC cannot directly exercise the power to license cockpits and
in effect usurp the authority directly conferred by law on the municipal authorities.
If at all, the power to review includes the power to disapprove; but it does not carry
the authority to substitute one's own preferences for that chosen by the subordinate
in the exercise of its sound discretion. In the instant case, the PGC did not limit itself
to vetoing the choice of Sevilla, assuming he was disqualified, but directly exercised
the authority of replacing him with its own choice. Assuming Sevilla was really
disqualified, the choice of his replacement still remained with the municipal
authorities, subject only to the review of the PGC.
In ordering the respondent municipal officials to cancel the mayor's permit in favor of
Santiago A. Sevilla and to issue another one in favor of Acusar, the PGC was
exercising not the powers of mere supervision and review but the power of control,
which had not been conferred upon it.
The other issue raised by the petitioner is easily resolved. It appearing that they are
supported by substantial evidence, we accept the factual findings of the respondent
court that Acusar's cockpit was within the prohibited area and was therefore correctly
314
considered phased out when its operator failed to relocate it as required by law.
According to the Court of Appeals, "it is not controverted that Acusar's cockpit is near
a Roman Catholic church near the Cebu Roosevelt Memorial College, near
residential dwellings and near a public market." These circumstances should be
more than enough to disqualify Acusar even under the prior-operator rule he invokes,
assuming that rule was applicable.
Under that rule, preference is given to the actual holder of the permit, but in the
instant case Acusar could not be said to be actually holding the permit at the time it
was given to Sevilla. Acusar had then already forfeited his right to renew it by reason
of his non-compliance with the requirement to relocate.
This is as good an occasion as any to stress the commitment of the Constitution to
the policy of local autonomy which is intended to provide the needed impetus and
encouragement to the development of our local political subdivisions as "self-reliant
communities." In the words of Jefferson, "Municipal corporations are the small
republics from which the great one derives its strength." The vitalization of local
governments will enable their inhabitants to fully exploit their resources and, more
important, imbue them with a deepened sense of involvement in public affairs as
members of the body politic. This objective could be blunted by undue interference
by the national government in purely local affairs which are best resolved by the
officials and inhabitants of such political units. The decision we reach today conforms
not only to the letter of the pertinent laws but also to the spirit of the Constitution.
WHEREFORE, the petition is dismissed. The decision of the respondent court of
Appeals dated May 29, 1985, is hereby affirmed in toto, with costs against petitioner
Hee Acusar.
SO ORDERED.
G.R. No. L-42571-72 July 25, 1983
VICENTE DE LA CRUZ, RENATO ALIPIO, JOSE TORRES III, LEONCIO
CORPUZ, TERESITA CALOT, ROSALIA FERNANDEZ, ELIZABETH VELASCO,
NANETTE VILLANUEVA, HONORATO BUENAVENTURA, RUBEN DE CASTRO,
VICENTE ROXAS, RICARDO DAMIAN, DOMDINO ROMDINA, ANGELINA
OBLIGACION, CONRADO GREGORIO, TEODORO REYES, LYDIA ATRACTIVO,
NAPOLEON MENDOZA, PERFECTO GUMATAY, ANDRES SABANGAN, ROSITA
DURAN, SOCORRO BERNARDEZ, and PEDRO GABRIEL, petitioners,
vs.
THE HONORABLE EDGARDO L. PARAS, MATIAS RAMIREZ as the Municipal
Mayor, MARIO MENDOZA as the Municipal Vice-Mayor, and THE MUNICIPAL
COUNCIL OF BOCAUE, BULACAN, respondents.
Federico N. Alday for petitioners.
Dakila F. Castro for respondents.
FERNANDO, C.J.:
The crucial question posed by this certiorari proceeding is whether or not a municipal
corporation, Bocaue, Bulacan, represented by respondents, 1 can, prohibit the
exercise of a lawful trade, the operation of night clubs, and the pursuit of a lawful
occupation, such clubs employing hostesses. It is contended that the ordinance
assailed as invalid is tainted with nullity, the municipality being devoid of power to
prohibit a lawful business, occupation or calling, petitioners at the same time alleging
that their rights to due process and equal protection of the laws were violated as the
licenses previously given to them was in effect withdrawn without judicial hearing. 2
The assailed ordinance 3 is worded as follows: "Section 1.— Title of Ordinance.—
This Ordinance shall be known and may be cited as the [Prohibition and Closure
Ordinance] of Bocaue, Bulacan. Section 2. — Definitions of Terms — (a) 'Night Club'
shall include any place or establishment selling to the public food or drinks where
customers are allowed to dance. (b) 'Cabaret' or 'Dance Hall' shall include any place
or establishment where dancing is permitted to the public and where professional
hostesses or hospitality girls and professional dancers are employed. (c)
'Professional hostesses' or 'hospitality girls' shall include any woman employed by
any of the establishments herein defined to entertain guests and customers at their
table or to dance with them. (d) 'Professional dancer' shall include any woman who
315
dances at any of the establishments herein defined for a fee or remuneration paid
directly or indirectly by the operator or by the persons she dances with. (e) 'Operator'
shall include the owner, manager, administrator or any person who operates and is
responsible for the operation of any night club, cabaret or dance hall. Section 3.
— Prohibition in the Issuance and Renewal of Licenses, Permits. — Being the
principal cause in the decadence of morality and because of their other adverse
effects on this community as explained above, no operator of night clubs, cabarets or
dance halls shall henceforth be issued permits/licenses to operate within the
jurisdiction of the municipality and no license/permit shall be issued to any
professional hostess, hospitality girls and professional dancer for employment in any
of the aforementioned establishments. The prohibition in the issuance of
licenses/permits to said persons and operators of said establishments shall include
prohibition in the renewal thereof. Section 4.— Revocation of Permits and Licenses.
— The licenses and permits issued to operators of night clubs, cabarets or dance
halls which are now in operation including permits issued to professional hostesses,
hospitality girls and professional dancers are hereby revoked upon the expiration of
the thirty-day period given them as provided in Section 8 hereof and thenceforth, the
operation of these establishments within the jurisdiction of the municipality shall be
illegal. Section 5.— Penalty in case of violation. — Violation of any of the provisions
of this Ordinance shall be punishable by imprisonment not exceeding three (3)
months or a fine not exceeding P200.00 or both at the discretion of the Court. If the
offense is committed by a juridical entity, the person charged with the management
and/or operation thereof shall be liable for the penalty provided herein. Section 6.
— Separability Clause.— If, for any reason, any section or provision of this
Ordinance is held unconstitutional or invalid, no other section or provision hereof
shall be affected thereby. Section 7.— Repealing Clause.— All ordinance,
resolutions, circulars, memoranda or parts thereof that are inconsistent with the
provisions of this Ordinance are hereby repealed. Section 8.— Effectivity.— This
Ordinance shall take effect immediately upon its approval; provided, however, that
operators of night clubs, cabarets and dance halls now in operation including
professional hostesses, hospitality girls and professional dancers are given a period
of thirty days from the approval hereof within which to wind up their businesses and
comply with the provisions of this Ordinance." 4
On November 5, 1975, two cases for prohibition with preliminary injunction were filed
with the Court of First Instance of Bulacan. 5 The grounds alleged follow:
1. Ordinance No. 84 is null and void as a municipality has no authority to prohibit a
lawful business, occupation or calling.
2. Ordinance No. 84 is violative of the petitioners' right to due process and the equal
protection of the law, as the license previously given to petitioners was in effect
withdrawn without judicial hearing. 3. That under Presidential Decree No. 189, as
amended, by Presidential Decree No. 259, the power to license and regulate tourist-
oriented businesses including night clubs, has been transferred to the Department of
Tourism." 6 The cases were assigned to respondent Judge, now Associate Justice
Paras of the Intermediate Appellate Court, who issued a restraining order on
November 7, 1975. The answers were thereafter filed. It was therein alleged: " 1.
That the Municipal Council is authorized by law not only to regulate but to prohibit the
establishment, maintenance and operation of night clubs invoking Section 2243 of
the RAC, CA 601, Republic Acts Nos. 938, 978 and 1224. 2. The Ordinance No. 84
is not violative of petitioners' right to due process and the equal protection of the law,
since property rights are subordinate to public interests. 3. That Presidential Decree
No. 189, as amended, did not deprive Municipal Councils of their jurisdiction to
regulate or prohibit night clubs." 7 There was the admission of the following facts as
having been established: "l. That petitioners Vicente de la Cruz, et al. in Civil Case
No. 4755-M had been previously issued licenses by the Municipal Mayor of Bocaue-
petitioner Jose Torres III, since 1958; petitioner Vicente de la Cruz, since 1960;
petitioner Renato Alipio, since 1961 and petitioner Leoncio Corpuz, since 1972; 2.
That petitioners had invested large sums of money in their businesses; 3. That the
night clubs are well-lighted and have no partitions, the tables being near each other;
4. That the petitioners owners/operators of these clubs do not allow the hospitality
girls therein to engage in immoral acts and to go out with customers; 5. That these
hospitality girls are made to go through periodic medical check-ups and not one of
them is suffering from any venereal disease and that those who fail to submit to a
medical check-up or those who are found to be infected with venereal disease are
not allowed to work; 6. That the crime rate there is better than in other parts of
Bocaue or in other towns of Bulacan." 8 Then came on January 15, 1976 the decision
upholding the constitutionality and validity of Ordinance No. 84 and dismissing the
cases. Hence this petition for certiorari by way of appeal.
In an exhaustive as well as scholarly opinion, the lower court dismissed the petitions.
Its rationale is set forth in the opening paragraph thus: "Those who lust cannot last.
316
This in essence is why the Municipality of Bocaue, Province of Bulacan, stigmatized
as it has been by innuendos of sexual titillation and fearful of what the awesome
future holds for it, had no alternative except to order thru its legislative machinery,
and even at the risk of partial economic dislocation, the closure of its night clubs
and/or cabarets. This in essence is also why this Court, obedient to the mandates of
good government, and cognizant of the categorical imperatives of the current legal
and social revolution, hereby [upholds] in the name of police power the validity and
constitutionality of Ordinance No. 84, Series of 1975, of the Municipal Council of
Bocaue, Bulacan. The restraining orders heretofore issued in these two cases are
therefore hereby rifted, effective the first day of February, 1976, the purpose of the
grace period being to enable the petitioners herein to apply to the proper appellate
tribunals for any contemplated redress."9 This Court is, however, unable to agree
with such a conclusion and for reasons herein set forth, holds that reliance on the
police power is insufficient to justify the enactment of the assailed ordinance. It must
be declared null and void.
1. Police power is granted to municipal corporations in general terms as
follows: "General power of council to enact ordinances and make regulations. - The
municipal council shall enact such ordinances and make such regulations, not
repugnant to law, as may be necessary to carry into effect and discharge the powers
and duties conferred upon it by law and such as shall seem necessary and proper to
provide for the health and safety, promote the prosperity, improve the morals, peace,
good order, comfort, and convenience of the municipality and the inhabitants thereof,
and for the protection of property therein." 10 It is practically a reproduction of the
former Section 39 of Municipal Code.11 An ordinance enacted by virtue thereof,
according to Justice Moreland, speaking for the Court in the leading case of United
States v. Abendan 12 "is valid, unless it contravenes the fundamental law of the
Philippine Islands, or an Act of the Philippine Legislature, or unless it is against
public policy, or is unreasonable, oppressive, partial, discriminating, or in derogation
of common right. Where the power to legislate upon a given subject, and the mode of
its exercise and the details of such legislation are not prescribed, the ordinance
passed pursuant thereto must be a reasonable exercise of the power, or it will be
pronounced invalid." 13 In another leading case, United States v.
Salaveria, 14 the ponente this time being Justice Malcolm, where the present
Administrative Code provision was applied, it was stated by this Court: "The general
welfare clause has two branches: One branch attaches itself to the main trunk of
municipal authority, and relates to such ordinances and regulations as may be
necessary to carry into effect and discharge the powers and duties conferred upon
the municipal council by law. With this class we are not here directly concerned. The
second branch of the clause is much more independent of the specific functions of
the council which are enumerated by law. It authorizes such ordinances as shall
seem necessary and proper to provide for the health and safety, promote the
prosperity, improve the morals, peace, good order, comfort, and convenience of the
municipality and the inhabitants thereof, and for the protection of property therein.' It
is a general rule that ordinances passed by virtue of the implied power found in the
general welfare clause must be reasonable, consonant with the general powersand
purposes of the corporation, and not inconsistent with the laws or policy of the
State." 15 If night clubs were merely then regulated and not prohibited, certainly the
assailed ordinance would pass the test of validity. In the two leading cases above set
forth, this Court had stressed reasonableness, consonant with the general powers
and purposes of municipal corporations, as well as consistency with the laws or
policy of the State. It cannot be said that such a sweeping exercise of a lawmaking
power by Bocaue could qualify under the term reasonable. The objective of fostering
public morals, a worthy and desirable end can be attained by a measure that does
not encompass too wide a field. Certainly the ordinance on its face is characterized
by overbreadth. The purpose sought to be achieved could have been attained by
reasonable restrictions rather than by an absolute prohibition. The admonition in
Salaveria should be heeded: "The Judiciary should not lightly set aside legislative
action when there is not a clear invasion of personal or property rights under the
guise of police regulation." 16 It is clear that in the guise of a police regulation, there
was in this instance a clear invasion of personal or property rights, personal in the
case of those individuals desirous of patronizing those night clubs and property in
terms of the investments made and salaries to be earned by those therein employed.
2. The decision now under review refers to Republic Act No. 938 as amended. 17 It
was originally enacted on June 20, 1953. It is entitled: "AN ACT GRANTING
MUNICIPAL OR CITY BOARDS AND COUNCILS THE POWER TO REGULATE
THE ESTABLISHMENT, MAINTENANCE AND OPERATION OF CERTAIN PLACES
OF AMUSEMENT WITHIN THEIR RESPECTIVE TERRITORIAL
JURISDICTIONS.' 18 Its first section insofar as pertinent reads: "The municipal or city
board or council of each chartered city shall have the power to regulate by ordinance
the establishment, maintenance and operation of night clubs, cabarets, dancing
317
schools, pavilions, cockpits, bars, saloons, bowling alleys, billiard pools, and other
similar places of amusement within its territorial jurisdiction: ... " 19 Then on May 21,
1954, the first section was amended to include not merely "the power to regulate, but
likewise "Prohibit ... " 20 The title, however, remained the same. It is worded exactly
as Republic Act No. 938. It is to be admitted that as thus amended, if only the above
portion of the Act were considered, a municipal council may go as far as to prohibit
the operation of night clubs. If that were all, then the appealed decision is not devoid
of support in law. That is not all, however. The title was not in any way altered. It was
not changed one whit. The exact wording was followed. The power granted remains
that of regulation, not prohibition. There is thus support for the view advanced by
petitioners that to construe Republic Act No. 938 as allowing the prohibition of the
operation of night clubs would give rise to a constitutional question. The Constitution
mandates: "Every bill shall embrace only one subject which shall be expressed in the
title thereof. " 21 Since there is no dispute as the title limits the power to regulating,
not prohibiting, it would result in the statute being invalid if, as was done by the
Municipality of Bocaue, the operation of a night club was prohibited. There is a wide
gap between the exercise of a regulatory power "to provide for the health and safety,
promote the prosperity, improve the morals, 22 in the language of the Administrative
Code, such competence extending to all "the great public needs, 23 to quote from
Holmes, and to interdict any calling, occupation, or enterprise. In accordance with the
well-settled principle of constitutional construction that between two possible
interpretations by one of which it will be free from constitutional infirmity and by the
other tainted by such grave defect, the former is to be preferred. A construction that
would save rather than one that would affix the seal of doom certainly commends
itself. We have done so before We do so again. 24
3. There is reinforcement to the conclusion reached by virtue of a specific provision
of the recently-enacted Local Government Code. 25 The general welfare clause, a
reiteration of the Administrative Code provision, is set forth in the first paragraph of
Section 149 defining the powers and duties of the sangguniang bayan. It read as
follows: "(a) Enact such ordinances and issue such regulations as may be necessary
to carry out and discharge the responsibilities conferred upon it by law, and such as
shall be necessary and proper to provide for the health, safety, comfort and
convenience, maintain peace and order, improve public morals, promote the
prosperity and general welfare of the municipality and the inhabitants thereof, and
insure the protection of property therein; ..." 26 There are in addition provisions that
may have a bearing on the question now before this Court. Thus the sangguniang
bayan shall "(rr) Regulate cafes, restaurants, beer-houses, hotels, motels, inns,
pension houses and lodging houses, except travel agencies, tourist guides, tourist
transports, hotels, resorts, de luxe restaurants, and tourist inns of international
standards which shall remain under the licensing and regulatory power of the
Ministry of Tourism which shall exercise such authority without infringing on the
taxing or regulatory powers of the municipality; (ss) Regulate public dancing schools,
public dance halls, and sauna baths or massage parlors; (tt) Regulate the
establishment and operation of billiard pools, theatrical performances, circuses and
other forms of entertainment; ..." 27 It is clear that municipal corporations cannot
prohibit the operation of night clubs. They may be regulated, but not prevented from
carrying on their business. It would be, therefore, an exercise in futility if the decision
under review were sustained. All that petitioners would have to do is to apply once
more for licenses to operate night clubs. A refusal to grant licenses, because no such
businesses could legally open, would be subject to judicial correction. That is to
comply with the legislative will to allow the operation and continued existence of night
clubs subject to appropriate regulations. In the meanwhile, to compel petitioners to
close their establishments, the necessary result of an affirmance, would amount to
no more than a temporary termination of their business. During such time, their
employees would undergo a period of deprivation. Certainly, if such an undesirable
outcome can be avoided, it should be. The law should not be susceptible to the
reproach that it displays less than sympathetic concern for the plight of those who,
under a mistaken appreciation of a municipal power, were thus left without
employment. Such a deplorable consequence is to be avoided. If it were not thus,
then the element of arbitrariness enters the picture. That is to pay less, very much
less, than full deference to the due process clause with its mandate of fairness and
reasonableness.
4. The conclusion reached by this Court is not to be interpreted as a retreat from its
resolute stand sustaining police power legislation to promote public morals. The
commitment to such an Ideal forbids such a backward step. Legislation of that
character is deserving of the fullest sympathy from the judiciary. Accordingly, the
judiciary has not been hesitant to lend the weight of its support to measures that can
be characterized as falling within that aspect of the police power. Reference is made
by respondents to Ermita-Malate Hotel and Motel Operators Association, Inc. v. City
Mayor of Manila. 28 There is a misapprehension as to what was decided by this
318
Court. That was a regulatory measure. Necessarily, there was no valid objection on
due process or equal protection grounds. It did not prohibit motels. It merely
regulated the mode in which it may conduct business in order precisely to put an end
to practices which could encourage vice and immorality. This is an entirely different
case. What was involved is a measure not embraced within the regulatory power but
an exercise of an assumed power to prohibit. Moreover, while it was pointed out in
the aforesaid Ermita-Malate Hotel and Motel Operators Association, Inc. decision
that there must be a factual foundation of invalidity, it was likewise made clear that
there is no need to satisfy such a requirement if a statute were void on its face. That
it certainly is if the power to enact such ordinance is at the most dubious and under
the present Local Government Code non-existent.
WHEREFORE, the writ of certiorari is granted and the decision of the lower court
dated January 15, 1976 reversed, set aside, and nullied. Ordinance No. 84, Series of
1975 of the Municipality of Bocaue is declared void and unconstitutional. The
temporary restraining order issued by this Court is hereby made permanent. No
costs.
Teehankee, Aquino, Concepcion Jr., Guerrero, Abad Santos, Plana, Escolin Relova
and Gutierrez, Jr., JJ., concur.
Makasiar, J, reserves his right to file a dissent.
De Castro, Melencio-Herrera and Vasquez, JJ., are on leave.
 G.R. No. L-34915 June 24, 1983
CITY GOVERNMENT OF QUEZON CITY and CITY COUNCIL OF QUEZON
CITY, petitioners,
vs.
HON. JUDGE VICENTE G. ERICTA as Judge of the Court of First Instance of
Rizal, Quezon City, Branch XVIII; HIMLAYANG PILIPINO, INC., respondents.
City Fiscal for petitioners.
Manuel Villaruel, Jr. and Feliciano Tumale for respondents.
GUTIERREZ, JR., J.:
This is a petition for review which seeks the reversal of the decision of the Court of
First Instance of Rizal, Branch XVIII declaring Section 9 of Ordinance No. 6118, S-
64, of the Quezon City Council null and void.
Section 9 of Ordinance No. 6118, S-64, entitled "ORDINANCE REGULATING THE
ESTABLISHMENT, MAINTENANCE AND OPERATION OF PRIVATE MEMORIAL
TYPE CEMETERY OR BURIAL GROUND WITHIN THE JURISDICTION OF
QUEZON CITY AND PROVIDING PENALTIES FOR THE VIOLATION THEREOF"
provides:
Sec. 9. At least six (6) percent of the total area of the memorial park
cemetery shall be set aside for charity burial of deceased persons
who are paupers and have been residents of Quezon City for at least
5 years prior to their death, to be determined by competent City
Authorities. The area so designated shall immediately be developed
and should be open for operation not later than six months from the
date of approval of the application.
For several years, the aforequoted section of the Ordinance was not enforced by city
authorities but seven years after the enactment of the ordinance, the Quezon City
Council passed the following resolution:
RESOLVED by the council of Quezon assembled, to request, as it
does hereby request the City Engineer, Quezon City, to stop any
further selling and/or transaction of memorial park lots in Quezon City
where the owners thereof have failed to donate the required 6%
space intended for paupers burial.
319
Pursuant to this petition, the Quezon City Engineer notified respondent Himlayang
Pilipino, Inc. in writing that Section 9 of Ordinance No. 6118, S-64 would be enforced
Respondent Himlayang Pilipino reacted by filing with the Court of First Instance of
Rizal Branch XVIII at Quezon City, a petition for declaratory relief, prohibition and
mandamus with preliminary injunction (Sp. Proc. No. Q-16002) seeking to annul
Section 9 of the Ordinance in question The respondent alleged that the same is
contrary to the Constitution, the Quezon City Charter, the Local Autonomy Act, and
the Revised Administrative Code.
There being no issue of fact and the questions raised being purely legal both
petitioners and respondent agreed to the rendition of a judgment on the pleadings.
The respondent court, therefore, rendered the decision declaring Section 9 of
Ordinance No. 6118, S-64 null and void.
A motion for reconsideration having been denied, the City Government and City
Council filed the instant petition.
Petitioners argue that the taking of the respondent's property is a valid and
reasonable exercise of police power and that the land is taken for a public use as it is
intended for the burial ground of paupers. They further argue that the Quezon City
Council is authorized under its charter, in the exercise of local police power, " to
make such further ordinances and resolutions not repugnant to law as may be
necessary to carry into effect and discharge the powers and duties conferred by this
Act and such as it shall deem necessary and proper to provide for the health and
safety, promote the prosperity, improve the morals, peace, good order, comfort and
convenience of the city and the inhabitants thereof, and for the protection of property
therein."
On the other hand, respondent Himlayang Pilipino, Inc. contends that the taking or
confiscation of property is obvious because the questioned ordinance permanently
restricts the use of the property such that it cannot be used for any reasonable
purpose and deprives the owner of all beneficial use of his property.
The respondent also stresses that the general welfare clause is not available as a
source of power for the taking of the property in this case because it refers to "the
power of promoting the public welfare by restraining and regulating the use of liberty
and property." The respondent points out that if an owner is deprived of his property
outright under the State's police power, the property is generally not taken for public
use but is urgently and summarily destroyed in order to promote the general welfare.
The respondent cites the case of a nuisance per se or the destruction of a house to
prevent the spread of a conflagration.
We find the stand of the private respondent as well as the decision of the respondent
Judge to be well-founded. We quote with approval the lower court's ruling which
declared null and void Section 9 of the questioned city ordinance:
The issue is: Is Section 9 of the ordinance in question a valid exercise
of the police power?
An examination of the Charter of Quezon City (Rep. Act No. 537),
does not reveal any provision that would justify the ordinance in
question except the provision granting police power to the City.
Section 9 cannot be justified under the power granted to Quezon City
to tax, fix the license fee, and regulate such other business, trades,
and occupation as may be established or practised in the City.'
(Subsections 'C', Sec. 12, R.A. 537).
The power to regulate does not include the power to prohibit (People
vs. Esguerra, 81 PhiL 33, Vega vs. Municipal Board of Iloilo, L-6765,
May 12, 1954; 39 N.J. Law, 70, Mich. 396). A fortiori, the power to
regulate does not include the power to confiscate. The ordinance in
question not only confiscates but also prohibits the operation of a
memorial park cemetery, because under Section 13 of said ordinance,
'Violation of the provision thereof is punishable with a fine and/or
imprisonment and that upon conviction thereof the permit to operate
and maintain a private cemetery shall be revoked or cancelled.' The
confiscatory clause and the penal provision in effect deter one from
operating a memorial park cemetery. Neither can the ordinance in
question be justified under sub- section "t", Section 12 of Republic Act
537 which authorizes the City Council to-
320
'prohibit the burial of the dead within the center of
population of the city and provide for their burial in such
proper place and in such manner as the council may
determine, subject to the provisions of the general law
regulating burial grounds and cemeteries and
governing funerals and disposal of the dead.' (Sub-sec.
(t), Sec. 12, Rep. Act No. 537).
There is nothing in the above provision which authorizes confiscation
or as euphemistically termed by the respondents, 'donation'
We now come to the question whether or not Section 9 of the
ordinance in question is a valid exercise of police power. The police
power of Quezon City is defined in sub-section 00, Sec. 12, Rep. Act
537 which reads as follows:
(00) To make such further ordinance and regulations
not repugnant to law as may be necessary to carry into
effect and discharge the powers and duties conferred
by this act and such as it shall deem necessary and
proper to provide for the health and safety, promote,
the prosperity, improve the morals, peace, good order,
comfort and convenience of the city and the inhabitants
thereof, and for the protection of property therein; and
enforce obedience thereto with such lawful fines or
penalties as the City Council may prescribe under the
provisions of subsection (jj) of this section.
We start the discussion with a restatement of certain basic principles.
Occupying the forefront in the bill of rights is the provision which
states that 'no person shall be deprived of life, liberty or property
without due process of law' (Art. Ill, Section 1 subparagraph 1,
Constitution).
On the other hand, there are three inherent powers of government by
which the state interferes with the property rights, namely-. (1) police
power, (2) eminent domain, (3) taxation. These are said to exist
independently of the Constitution as necessary attributes of
sovereignty.
Police power is defined by Freund as 'the power of promoting the
public welfare by restraining and regulating the use of liberty and
property' (Quoted in Political Law by Tanada and Carreon, V-11, p.
50). It is usually exerted in order to merely regulate the use and
enjoyment of property of the owner. If he is deprived of his property
outright, it is not taken for public use but rather to destroy in order to
promote the general welfare. In police power, the owner does not
recover from the government for injury sustained in consequence
thereof (12 C.J. 623). It has been said that police power is the most
essential of government powers, at times the most insistent, and
always one of the least limitable of the powers of government (Ruby
vs. Provincial Board, 39 PhiL 660; Ichong vs. Hernandez, 1,7995, May
31, 1957). This power embraces the whole system of public regulation
(U.S. vs. Linsuya Fan, 10 PhiL 104). The Supreme Court has said that
police power is so far-reaching in scope that it has almost become
impossible to limit its sweep. As it derives its existence from the very
existence of the state itself, it does not need to be expressed or
defined in its scope. Being coextensive with self-preservation and
survival itself, it is the most positive and active of all governmental
processes, the most essential insistent and illimitable Especially it is
so under the modern democratic framework where the demands of
society and nations have multiplied to almost unimaginable
proportions. The field and scope of police power have become almost
boundless, just as the fields of public interest and public welfare have
become almost all embracing and have transcended human foresight.
Since the Courts cannot foresee the needs and demands of public
interest and welfare, they cannot delimit beforehand the extent or
scope of the police power by which and through which the state seeks
to attain or achieve public interest and welfare. (Ichong vs.
Hernandez, L-7995, May 31, 1957).
321
The police power being the most active power of the government and
the due process clause being the broadest station on governmental
power, the conflict between this power of government and the due
process clause of the Constitution is oftentimes inevitable.
It will be seen from the foregoing authorities that police power is
usually exercised in the form of mere regulation or restriction in the
use of liberty or property for the promotion of the general welfare. It
does not involve the taking or confiscation of property with the
exception of a few cases where there is a necessity to confiscate
private property in order to destroy it for the purpose of protecting the
peace and order and of promoting the general welfare as for instance,
the confiscation of an illegally possessed article, such as opium and
firearms.
It seems to the court that Section 9 of Ordinance No. 6118, Series of
1964 of Quezon City is not a mere police regulation but an outright
confiscation. It deprives a person of his private property without due
process of law, nay, even without compensation.
In sustaining the decision of the respondent court, we are not unmindful of the heavy
burden shouldered by whoever challenges the validity of duly enacted legislation
whether national or local As early as 1913, this Court ruled in Case v. Board of
Health (24 PhiL 250) that the courts resolve every presumption in favor of validity
and, more so, where the ma corporation asserts that the ordinance was enacted to
promote the common good and general welfare.
In the leading case of Ermita-Malate Hotel and Motel Operators Association Inc. v.
City Mayor of Manila (20 SCRA 849) the Court speaking through the then Associate
Justice and now Chief Justice Enrique M. Fernando stated
Primarily what calls for a reversal of such a decision is the a of any
evidence to offset the presumption of validity that attaches to a statute
or ordinance. As was expressed categorically by Justice Malcolm 'The
presumption is all in favor of validity. ... The action of the elected
representatives of the people cannot be lightly set aside. The
councilors must, in the very nature of things, be familiar with the
necessities of their particular ... municipality and with all the facts and
lances which surround the subject and necessitate action. The local
legislative body, by enacting the ordinance, has in effect given notice
that the regulations are essential to the well-being of the people. ...
The Judiciary should not lightly set aside legislative action when there
is not a clear invasion of personal or property rights under the guise of
police regulation. (U.S. v. Salaveria (1918], 39 Phil. 102, at p. 111.
There was an affirmation of the presumption of validity of municipal
ordinance as announced in the leading Salaveria decision in Ebona v.
Daet, [1950]85 Phil. 369.)
We have likewise considered the principles earlier stated in Case v.
Board of Health supra :
... Under the provisions of municipal charters which are known as the
general welfare clauses, a city, by virtue of its police power, may
adopt ordinances to the peace, safety, health, morals and the best
and highest interests of the municipality. It is a well-settled principle,
growing out of the nature of well-ordered and society, that every
holder of property, however absolute and may be his title, holds it
under the implied liability that his use of it shall not be injurious to the
equal enjoyment of others having an equal right to the enjoyment of
their property, nor injurious to the rights of the community. An property
in the state is held subject to its general regulations, which are
necessary to the common good and general welfare. Rights of
property, like all other social and conventional rights, are subject to
such reasonable limitations in their enjoyment as shall prevent them
from being injurious, and to such reasonable restraints and
regulations, established by law, as the legislature, under the
governing and controlling power vested in them by the constitution,
may think necessary and expedient. The state, under the police
power, is possessed with plenary power to deal with all matters
relating to the general health, morals, and safety of the people, so
long as it does not contravene any positive inhibition of the organic
law and providing that such power is not exercised in such a manner
322
as to justify the interference of the courts to prevent positive wrong
and oppression.
but find them not applicable to the facts of this case.
There is no reasonable relation between the setting aside of at least six (6) percent
of the total area of an private cemeteries for charity burial grounds of deceased
paupers and the promotion of health, morals, good order, safety, or the general
welfare of the people. The ordinance is actually a taking without compensation of a
certain area from a private cemetery to benefit paupers who are charges of the
municipal corporation. Instead of building or maintaining a public cemetery for this
purpose, the city passes the burden to private cemeteries.
The expropriation without compensation of a portion of private cemeteries is not
covered by Section 12(t) of Republic Act 537, the Revised Charter of Quezon City
which empowers the city council to prohibit the burial of the dead within the center of
population of the city and to provide for their burial in a proper place subject to the
provisions of general law regulating burial grounds and cemeteries. When the Local
Government Code, Batas Pambansa Blg. 337 provides in Section 177 (q) that a
Sangguniang panlungsod may "provide for the burial of the dead in such place and
in such manner as prescribed by law or ordinance" it simply authorizes the city to
provide its own city owned land or to buy or expropriate private properties to
construct public cemeteries. This has been the law and practise in the past. It
continues to the present. Expropriation, however, requires payment of just
compensation. The questioned ordinance is different from laws and regulations
requiring owners of subdivisions to set aside certain areas for streets, parks,
playgrounds, and other public facilities from the land they sell to buyers of
subdivision lots. The necessities of public safety, health, and convenience are very
clear from said requirements which are intended to insure the development of
communities with salubrious and wholesome environments. The beneficiaries of the
regulation, in turn, are made to pay by the subdivision developer when individual lots
are sold to home-owners.
As a matter of fact, the petitioners rely solely on the general welfare clause or on
implied powers of the municipal corporation, not on any express provision of law as
statutory basis of their exercise of power. The clause has always received broad and
liberal interpretation but we cannot stretch it to cover this particular taking. Moreover,
the questioned ordinance was passed after Himlayang Pilipino, Inc. had
incorporated. received necessary licenses and permits and commenced operating.
The sequestration of six percent of the cemetery cannot even be considered as
having been impliedly acknowledged by the private respondent when it accepted the
permits to commence operations.
WHEREFORE, the petition for review is hereby DISMISSED. The decision of the
respondent court is affirmed.
SO ORDERED.
G.R. No. L-24153 February 14, 1983
TOMAS VELASCO, LOURDES RAMIREZ, SY PIN, EDMUNDO UNSON,
APOLONIA RAMIREZ and LOURDES LOMIBAO, as component members of the
STA. CRUZ BARBERSHOP ASSOCIATION, in their own behalf and in
representation of the other owners of barbershops in the City of
Manila, petitioners-appellants,
vs.
HON. ANTONIO J. VILLEGAS, City Mayor of Manila, HON. HERMINIO A.
ASTORGA, Vice-Mayor and Presiding Officer of the Municipal Board in relation
to Republic Act 4065, THE MUNICIPAL BOARD OF THE CITY OF MANILA and
EDUARDO QUINTOS SR., Chief of Police of the City of Manila, respondents-
appellees.
Leonardo L. Arguelles for respondent-appellant.
FERNANDO, C.J.:
323
This is an appeal from an order of the lower court dismissing a suit for declaratory
relief challenging the constitutionality based on Ordinance No. 4964 of the City of
Manila, the contention being that it amounts to a deprivation of property of
petitioners-appellants of their means of livelihood without due process of law. The
assailed ordinance is worded thus: "It shall be prohibited for any operator of any
barber shop to conduct the business of massaging customers or other persons in
any adjacent room or rooms of said barber shop, or in any room or rooms within the
same building where the barber shop is located as long as the operator of the barber
shop and the room where massaging is conducted is the same person." 1 As noted in
the appealed order, petitioners-appellants admitted that criminal cases for the
violation of this ordinance had been previously filed and decided. The lower court,
therefore, held that a petition for declaratory relief did not lie, its availability being
dependent on there being as yet no case involving such issue having been filed. 2
Even if such were not the case, the attack against the validity cannot succeed. As
pointed out in the brief of respondents-appellees, it is a police power measure. The
objectives behind its enactment are: "(1) To be able to impose payment of the
license fee for engaging in the business of massage clinic under Ordinance No. 3659
as amended by Ordinance 4767, an entirely different measure than the ordinance
regulating the business of barbershops and, (2) in order to forestall possible
immorality which might grow out of the construction of separate rooms for massage
of customers." 3 This Court has been most liberal in sustaining ordinances based on
the general welfare clause. As far back as U.S. v. Salaveria, 4 a 1918 decision, this
Court through Justice Malcolm made clear the significance and scope of such a
clause, which "delegates in statutory form the police power to a municipality. As
above stated, this clause has been given wide application by municipal authorities
and has in its relation to the particular circumstances of the case been liberally
construed by the courts. Such, it is well to really is the progressive view of Philippine
jurisprudence." 5 As it was then, so it has continued to be. 6 There is no showing,
therefore, of the unconstitutionality of such ordinance.
WHEREFORE, the appealed order of the lower court is affirmed. No costs.
G.R. No. L-24670 December 14, 1979
ORTIGAS & CO., LIMITED PARTNERSHIP, plaintiff-appellant,
vs.
FEATI BANK AND TRUST CO., defendant-appellee.
Ramirez & Ortigas for appellant.
Tañada, Teehankee & Carreon for appellee.
SANTOS, J.:
An appeal interposed on June 23, 1965 by plaintiff-appellant, Ortigas & Co., Limited
Partnership, from the decision of the Court of First Instance of Rizal, Branch VI, at
Pasig, Hon. Andres Reyes presiding, which dismissed its complaint in Civil Case No.
7706, entitled, "Ortigas & Company, Limited Partnership, plaintiff, v. Feati Bank and
Trust Company, defendant," for lack of merit.
The following facts — a reproduction of the lower court's findings, which, in turn, are
based on a stipulation of facts entered into by the parties are not disputed. Plaintiff
(formerly known as "Ortigas, Madrigal y Cia") is a limited partnership and defendant
Feati Bank and Trust Co., is a corporation duly organized and existing in accordance
with the laws of the Philippines. Plaintiff is engaged in real estate business,
developing and selling lots to the public, particularly the Highway Hills Subdivision
along Epifanio de los Santos Avenue, Mandaluyong, Rizal. 1
On March 4, 1952, plaintiff, as vendor, and Augusto Padilla y Angeles and Natividad
Angeles, as vendees, entered into separate agreements of sale on installments over
two parcels of land, known as Lots Nos. 5 and 6, Block 31, of the Highway Hills
Subdivision, situated at Mandaluyong, Rizal. On July 19, 1962, the said vendees
transferred their rights and interests over the aforesaid lots in favor of one Emma
Chavez. Upon completion of payment of the purchase price, the plaintiff executed
the corresponding deeds of sale in favor of Emma Chavez. Both the agreements (of
sale on installment) and the deeds of sale contained the stipulations or restrictions
that:
324
1. The parcel of land subject of this deed of sale shall be used the
Buyer exclusively for residential purposes, and she shall not be
entitled to take or remove soil, stones or gravel from it or any other
lots belonging to the Seller.
2. All buildings and other improvements (except the fence) which may
be constructed at any time in said lot must be, (a) of strong materials
and properly painted, (b) provided with modern sanitary installations
connected either to the public sewer or to an approved septic tank,
and (c) shall not be at a distance of less than two (2) meters from its
boundary lines. 2
The above restrictions were later annotated in TCT Nos. 101509 and 101511 of the
Register of Deeds of Rizal, covering the said lots and issued in the name of Emma
Chavez.3
Eventually, defendant-appellee acquired Lots Nos. 5 and 6, with TCT Nos. 101613
and 106092 issued in its name, respectively and the building restrictions were also
annotated therein. 4 Defendant-appellee bought Lot No. 5 directly from Emma
Chavez, "free from all liens and encumbrances as stated in Annex 'D', 5 while Lot No.
6 was acquired from Republic Flour Mills through a "Deed of Exchange," Annex
"E". 6 TCT No. 101719 in the name of Republic Flour Mills likewise contained the
same restrictions, although defendant-appellee claims that Republic Flour Mills
purchased the said Lot No. 6 "in good faith. free from all liens and encumbrances,"
as stated in the Deed of Sale, Annex "F" 7 between it and Emma Chavez.
Plaintiff-appellant claims that the restrictions annotated on TCT Nos. 101509,
101511, 101719, 101613, and 106092 were imposed as part of its general building
scheme designed for the beautification and development of the Highway Hills
Subdivision which forms part of the big landed estate of plaintiff-appellant where
commercial and industrial sites are also designated or established. 8
Defendant-appellee, upon the other hand, maintains that the area along the western
part of Epifanio de los Santos Avenue (EDSA) from Shaw Boulevard to Pasig River,
has been declared a commercial and industrial zone, per Resolution No. 27, dated
February 4, 1960 of the Municipal Council of Mandaluyong, Rizal. 9 It alleges that
plaintiff-appellant 'completely sold and transferred to third persons all lots in said
subdivision facing Epifanio de los Santos Avenue" 10 and the subject lots thereunder
were acquired by it "only on July 23, 1962 or more than two (2) years after the
area ... had been declared a commercial and industrial zone ... 11
On or about May 5, 1963, defendant-appellee began laying the foundation and
commenced the construction of a building on Lots Nos. 5 and 6, to be devoted to
banking purposes, but which defendant-appellee claims could also be devoted to,
and used exclusively for, residential purposes. The following day, plaintiff-appellant
demanded in writing that defendant-appellee stop the construction of the commerical
building on the said lots. The latter refused to comply with the demand, contending
that the building was being constructed in accordance with the zoning regulations,
defendant-appellee having filed building and planning permit applications with the
Municipality of Mandaluyong, and it had accordingly obtained building and planning
permits to proceed with the construction.12
On the basis of the foregoing facts, Civil Case No. 7706, supra, was submitted in the
lower court for decision. The complaint sought, among other things, the issuance of
"a writ of preliminary injunction ... restraining and enjoining defendant, its agents,
assigns, and those acting on its or their behalf from continuing or completing the
construction of a commercial bank building in the premises ... involved, with the view
to commanding the defendant to observe and comply with the building restrictions
annotated in the defendant's transfer certificate of title."
In deciding the said case, the trial court considered, as the fundamental issue,
whether or not the resolution of the Municipal Council of Mandaluyong declaring Lots
Nos. 5 and 6, among others, as part of the commercial and industrial zone of the
municipality, prevailed over the building restrictions imposed by plaintiff-appellant on
the lots in question. 13 The records do not show that a writ of preliminary injunction
was issued.
The trial court upheld the defendant-appellee and dismissed the complaint, holding
that the subject restrictions were subordinate to Municipal Resolution No. 27, supra.
It predicated its conclusion on the exercise of police power of the said municipality,
and stressed that private interest should "bow down to general interest and welfare. "
In short, it upheld the classification by the Municipal Council of the area along
325
Epifanio de los Santos Avenue as a commercial and industrial zone, and held that
the same rendered "ineffective and unenforceable" the restrictions in question as
against defendant-appellee.14 The trial court decision further emphasized that it
"assumes said resolution to be valid, considering that there is no issue raised by
either of the parties as to whether the same is null and void. 15
On March 2, 1965, plaintiff-appellant filed a motion for reconsideration of the above
decision, 16 which motion was opposed by defendant-appellee on March 17,
1965.17 It averred, among others, in the motion for reconsideration that defendant-
appellee "was duty bound to comply with the conditions of the contract of sale in its
favor, which conditions were duly annotated in the Transfer Certificates of Title
issued in her (Emma Chavez) favor." It also invited the trial court's attention to its
claim that the Municipal Council had (no) power to nullify the contractual obligations
assumed by the defendant corporation." 18
The trial court denied the motion for reconsideration in its order of March 26, 1965. 19
On April 2, 1965 plaintiff-appellant filed its notice of appeal from the decision
dismissing the complaint and from the order of March 26, 1965 denying the motion
for reconsideration, its record on appeal, and a cash appeal bond." 20 On April 14, the
appeal was given due course 21 and the records of the case were elevated directly to
this Court, since only questions of law are raised. 22
Plaintiff-appellant alleges in its brief that the trial court erred —
I. When it sustained the view that Resolution No. 27, series of 1960 of
the Municipal Council of Mandaluyong, Rizal declaring Lots Nos. 5
and 6, among others, as part of the commercial and industrial zone, is
valid because it did so in the exercise of its police power; and
II. When it failed to consider whether or not the Municipal Council had
the power to nullify the contractual obligations assumed by defendant-
appellee and when it did not make a finding that the building was
erected along the property line, when it should have been erected two
meters away from said property line. 23
The defendant-appellee submitted its counter-assignment of errors. In this
connection, We already had occasion to hold in Relativo v. Castro  24 that "(I)t is not
incumbent on the appellee, who occupies a purely defensive position, and is seeking
no affirmative relief, to make assignments of error, "
The only issues to be resolved, therefore, are: (1) whether Resolution No. 27 s-1960
is a valid exercise of police power; and (2) whether the said Resolution can nullify or
supersede the contractual obligations assumed by defendant-appellee.
1. The contention that the trial court erred in sustaining the validity of Resolution No.
27 as an exercise of police power is without merit. In the first place, the validity of the
said resolution was never questioned before it. The rule is that the question of law or
of fact which may be included in the appellant's assignment of errors must be those
which have been raised in the court below, and are within the issues framed by the
parties. 25 The object of requiring the parties to present all questions and issues to
the lower court before they can be presented to the appellate court is to enable the
lower court to pass thereon, so that the appellate court upon appeal may determine
whether or not such ruling was erroneous. The requirement is in furtherance of
justice in that the other party may not be taken by surprise. 26 The rule against the
practice of blowing "hot and cold" by assuming one position in the trial court and
another on appeal will, in the words of Elliot, prevent deception. 27 For it is well-
settled that issues or defenses not raised 28 or properly litigated 29 or pleaded 30 in the
Court below cannot be raised or entertained on appeal.
In this particular case, the validity of the resolution was admitted at least impliedly, in
the stipulation of facts below. when plaintiff-appellant did not dispute the same. The
only controversy then as stated by the trial court was whether or not the resolution of
the Municipal Council of Mandaluyong ... which declared lots Nos. 4 and 5 among
others, as a part of the commercial and industrial zone of the municipality, prevails
over the restrictions constituting as encumbrances on the lots in question. 31 Having
admitted the validity of the subject resolution below, even if impliedly, plaintiff-
appellant cannot now change its position on appeal.
But, assuming arguendo that it is not yet too late in the day for plaintiff-appellant to
raise the issue of the invalidity of the municipal resolution in question, We are of the
opinion that its posture is unsustainable. Section 3 of R.A. No. 2264, otherwise
326
known as the Local Autonomy Act," 32 empowers a Municipal Council "to adopt
zoning and subdivision ordinances or regulations"; 33 for the municipality. Clearly, the
law does not restrict the exercise of the power through an ordinance. Therefore,
granting that Resolution No. 27 is not an ordinance, it certainly is a regulatory
measure within the intendment or ambit of the word "regulation" under the provision.
As a matter of fact the same section declares that the power exists "(A)ny provision
of law to the contrary notwithstanding ... "
An examination of Section 12 of the same law 34 which prescribes the rules for its
interpretation likewise reveals that the implied power of a municipality should be
"liberally construed in its favor" and that "(A)ny fair and reasonable doubt as to the
existence of the power should be interpreted in favor of the local government and it
shall be presumed to exist." The same section further mandates that the general
welfare clause be liberally interpreted in case of doubt, so as to give more power to
local governments in promoting the economic conditions, social welfare and material
progress of the people in the community. The only exceptions under Section 12 are
existing vested rights arising out of a contract between "a province, city or
municipality on one hand and a third party on the other," in which case the original
terms and provisions of the contract should govern. The exceptions, clearly, do not
apply in the case at bar.
2. With regard to the contention that said resolution cannot nullify the contractual
obligations assumed by the defendant-appellee – referring to the restrictions
incorporated in the deeds of sale and later in the corresponding Transfer Certificates
of Title issued to defendant-appellee – it should be stressed, that while non-
impairment of contracts is constitutionally guaranteed, the rule is not absolute, since
it has to be reconciled with the legitimate exercise of police power, i.e., "the power to
prescribe regulations to promote the health, morals, peace, education, good order or
safety and general welfare of the people. 35 Invariably described as "the most
essential, insistent, and illimitable of powers" 36 and "in a sense, the greatest and
most powerful attribute of government, 37 the exercise of the power may be judicially
inquired into and corrected only if it is capricious, 'whimsical, unjust or unreasonable,
there having been a denial of due process or a violation of any other applicable
constitutional guarantee. 38 As this Court held through Justice Jose P. Bengzon
in Philippine Long Distance Company vs. City of Davao, et al. 39 police power "is
elastic and must be responsive to various social conditions; it is not, confined within
narrow circumscriptions of precedents resting on past conditions; it must follow the
legal progress of a democratic way of life." We were even more emphatic in Vda. de
Genuino vs. The Court of Agrarian Relations, et al., 40 when We declared: "We do not
see why public welfare when clashing with the individual right to property should not
be made to prevail through the state's exercise of its police power.
Resolution No. 27, s-1960 declaring the western part of highway 54, now E. de los
Santos Avenue (EDSA, for short) from Shaw Boulevard to the Pasig River as an
industrial and commercial zone, was obviously passed by the Municipal Council of
Mandaluyong, Rizal in the exercise of police power to safeguard or promote the
health, safety, peace, good order and general welfare of the people in the locality,
Judicial notice may be taken of the conditions prevailing in the area, especially where
lots Nos. 5 and 6 are located. The lots themselves not only front the highway;
industrial and commercial complexes have flourished about the place. EDSA, a main
traffic artery which runs through several cities and municipalities in the Metro Manila
area, supports an endless stream of traffic and the resulting activity, noise and
pollution are hardly conducive to the health, safety or welfare of the residents in its
route. Having been expressly granted the power to adopt zoning and subdivision
ordinances or regulations, the municipality of Mandaluyong, through its Municipal
'council, was reasonably, if not perfectly, justified under the circumstances, in
passing the subject resolution.
The scope of police power keeps expanding as civilization advances, stressed this
Court, speaking thru Justice Laurel in the leading case of Calalang v. Williams et
al., 41 Thus-
As was said in the case of Dobbins v. Los Angeles (195 US 223, 238
49 L. ed. 169), 'the right to exercise the police power is a continuing
one, and a business lawful today may in the future, because of
changed situation, the growth of population or other causes, become
a menace to the public health and welfare, and be required to yield to
the public good.' And in People v. Pomar (46 Phil. 440), it was
observed that 'advancing civilization is bringing within the scope of
police power of the state today things which were not thought of as
being with in such power yesterday. The development of civilization),
the rapidly increasing population, the growth of public opinion, with an
327
increasing desire on the part of the masses and of the government to
look after and care for the interests of the individuals of the state,
have brought within the police power many questions for regulation
which formerly were not so considered. 42 (Emphasis, supplied.)
Thus, the state, in order to promote the general welfare, may interfere with personal
liberty, with property, and with business and occupations. Persons may be subjected
to all kinds of restraints and burdens, in order to secure the general comfort health
and prosperity of the state 43 and to this fundamental aim of our Government, the
rights of the individual are subordinated. 44
The need for reconciling the non-impairment clause of the Constitution and the valid
exercise of police power may also be gleaned from Helvering v. Davis  45 wherein Mr.
Justice Cardozo, speaking for the Court, resolved the conflict "between one welfare
and another, between particular and general, thus —
Nor is the concept of the general welfare static. Needs that were
narrow or parochial a century ago may be interwoven in our day with
the well-being of the nation What is critical or urgent changes with the
times. 46
The motives behind the passage of the questioned resolution being reasonable, and
it being a " legitimate response to a felt public need," 47 not whimsical or oppressive,
the non-impairment of contracts clause of the Constitution will not bar the
municipality's proper exercise of the power. Now Chief Justice Fernando puts it aptly
when he declared: "Police power legislation then is not likely to succumb to the
challenge that thereby contractual rights are rendered nugatory." 48
Furthermore, We restated in Philippine American Life Ins. Co. v. Auditor
General49 that laws and reservation of essential attributes of sovereign power are
read into contracts agreed upon by the parties. Thus —
Not only are existing laws read into contracts in order to fix obligations
as between the parties, but the reservation of essential attributes of
sovereign power is also read into contracts as a postulate of the legal
order. The policy of protecting contracts against impairments
presupposes the maintenance of a government by virtue of which
contractual relations are worthwhile – a government which retains
adequate authority to secure the peace and good order of society.
Again, We held in Liberation Steamship Co., Inc. v. Court of Industrial
Relations, 50 through Justice J.B.L. Reyes, that ... the law forms part of, and is read
into, every contract, unless clearly excluded therefrom in those cases where such
exclusion is allowed." The decision in Maritime Company of the Philippines v.
Reparations Commission,  51 written for the Court by Justice Fernando, now Chief
Justice, restates the rule.
One last observation. Appellant has placed unqualified reliance on American
jurisprudence and authorities 52 to bolster its theory that the municipal resolution in
question cannot nullify or supersede the agreement of the parties embodied in the
sales contract, as that, it claims, would impair the obligation of contracts in violation
of the Constitution. Such reliance is misplaced.
In the first place, the views set forth in American decisions and authorities are
not per se controlling in the Philippines, the laws of which must necessarily be
construed in accordance with the intention of its own lawmakers and such intent may
be deduced from the language of each law and the context of other local legislation
related thereto. 53 and Burgess, et al v. Magarian, et al.,  55 two Of the cases cited by
plaintiff-appellant, lend support to the conclusion reached by the trial court, i.e. that
the municipal resolution supersedes/supervenes over the contractual undertaking
between the parties. Dolan v. Brown, states that "Equity will not, as a rule, enforce a
restriction upon the use of property by injunction where the property has so changed
in character and environment as to make it unfit or unprofitable for use should the
restriction be enforced, but will, in such a case, leave the complainant to whatever
remedy he may have at law. 56 (Emphasis supplied.) Hence, the remedy of injunction
in Dolan vs. Brown was denied on the specific holding that "A grantor may lawfully
insert in his deed conditions or restrictions which are not against public policy and do
not materially impair the beneficial enjoyment of the estate. 57 Applying the principle
just stated to the present controversy, We can say that since it is now unprofitable,
nay a hazard to the health and comfort, to use Lots Nos. 5 and 6 for strictly
residential purposes, defendants- appellees should be permitted, on the strength of
the resolution promulgated under the police power of the municipality, to use the
328
same for commercial purposes. In Burgess v. Magarian et al. it was, held that
"restrictive covenants running with the land are binding on all subsequent purchasers
... " However, Section 23 of the zoning ordinance involved therein contained
a proviso expressly declaring that the ordinance was not intended "to interfere with
or abrogate or annul any easements, covenants or other agreement between
parties." 58 In the case at bar, no such proviso is found in the subject resolution.
It is, therefore, clear that even if the subject building restrictions were assumed by
the defendant-appellee as vendee of Lots Nos. 5 and 6, in the corresponding deeds
of sale, and later, in Transfer Certificates of Title Nos. 101613 and 106092, the
contractual obligations so assumed cannot prevail over Resolution No. 27, of the
Municipality of Mandaluyong, which has validly exercised its police power through
the said resolution. Accordingly, the building restrictions, which declare Lots Nos. 5
and 6 as residential, cannot be enforced.
IN VIEW OF THE FOREGOING, the decision appealed from, dismissing the
complaint, is hereby AFFIRMED. "without pronouncement as to costs.
SO ORDERED.
G.R. No. L-38429 June 30, 1988
CARLOS BALACUIT, LAMBERTO TAN and SERGIO YU CARCEL, petitioners-
appellants,
vs.
COURT OF FIRST INSTANCE OF AGUSAN DEL NORTE AND BUTUAN CITY,
Branch 11, and the CITY OF BUTUAN, respondents-appellees.
Romeo B. Sanchez, Eduardo Deza Mercado and Wilfred D. Asis for petitioners.
The City Legal Officer for respondents-appeliees.
GANCAYCO, J.:
At issue in the petition for review before Us is the validity and constitutionality of
Ordinance No. 640 passed by the Municipal Board of the City of Butuan on April 21,
1969, the title and text of which are reproduced below:
ORDINANCE--640
ORDINANCE PENALIZING ANY PERSON, GROUP OF PERSONS,
ENTITY OR CORPORATION ENGAGED IN THE BUSINESS OF
SELLING ADMISSION TICKETS TO ANY MOVIE OR OTHER
PUBLIC EXHIBITIONS, GAMES, CONTESTS OR OTHER
PERFORMANCES TO REQUIRE CHILDREN BETWEEN SEVEN (7)
AND TWELVE (12) YEARS OF AGE TO PAY FULL PAYMENT FOR
TICKETS INTENDED FOR ADULTS BUT SHOULD CHARGE ONLY
ONE-HALF OF THE SAID TICKET
xxx xxx xxx
Be it ordained by the Municipal Board of the City of Butuan in session
assembled, that:
SECTION 1—It shall be unlawful for any person, group of persons,
entity, or corporation engaged in the business of selling admission
tickets to any movie or other public exhibitions, games, contests, or
other performances to require children between seven (7) and twelve
(12) years of age to pay full payment for admission tickets intended
for adults but should charge only one-half of the value of the said
tickets.
SECTION 2—Any person violating the provisions of this Ordinance
shall upon conviction be punished by a fine of not less than TWO
HUNDRED PESOS (P200.00) but not more than SIX HUNDRED
PESOS (P600.00) or an imprisonment of not less than TWO (2)
MONTHS or not more than SIX (6) MONTHS or both such firm and
imprisonment in the discretion of the Court.
329
If the violator be a firm or corporation the penalty shall be imposed
upon the Manager, Agent or Representative of such firm or
corporation.
SECTION 3—This ordinance shall take effect upon its approval.
Petitioners are Carlos Balacuit Lamberto Tan, and Sergio Yu Carcel managers of the
Maya and Dalisay Theaters, the Crown Theater, and the Diamond Theater,
respectively. Aggrieved by the effect of Ordinance No. 640, they filed a complaint
before the Court of First Instance of Agusan del Norte and Butuan City docketed as
Special Civil Case No. 237 on June 30, 1969 praying, inter alia, that the subject
ordinance be declared unconstitutional and, therefore, void and unenforceable. 1
Upon motion of the petitioners, 2 a temporary restraining order was issued on July
14, 1969 by the court a quo enjoining the respondent City of Butuan and its officials
from enforcing Ordinance No. 640. 3 On July 29, 1969, respondents filed their
answer sustaining the validity of the ordinance.4
On January 30, 1973, the litigants filed their stipulation of facts. 5 On June 4, 1973,
the respondent court rendered its decision, 6 the dispositive part of which reads:
IN THE LIGHT OF ALL THE FOREGOING, the Court hereby
adjudges in favor of the respondents and against the petitioners, as
follows:
1. Declaring Ordinance No. 640 of the City of Butuan constitutional
and valid: Provided, however, that the fine for a single offense shall
not exceed TWO HUNDRED PESOS, as prescribed in the
aforequoted Section 15 (nn) of Rep. Act No. 523;
2. Dissolving the restraining order issued by this Court; and;
3. Dismissing the complaint, with costs against the petitioners.
4. SO ORDERED. 7
Petitioners filed their motion for reconsideration 8 of the decision of the court a quo
which was denied in a resolution of the said court dated November 10, 1973.9
Hence, this petition.
Petitioners attack the validity and constitutionality of Ordinance No. 640 on the
grounds that it is ultra vires and an invalid exercise of police power.
Petitioners contend that Ordinance No. 640 is not within the power of' the Municipal
Board to enact as provided for in Section 15(n) of Republic Act No. 523, the Charter
of the City of Butuan, which states:
Sec. 15. General powers and duties of the Board — Except as
otherwise provided by law, and subject to the conditions and
limitations thereof, the Municipal Board shall have the following
legislative powers:
xxx xxx xxx
(n) To regulate and fix the amount of the license fees for the following;
. . . theaters, theatrical performances, cinematographs, public
exhibitions and all other performances and places of amusements ...
xxx xxx xxx
Respondent City of Butuan, on the other hand, attempts to justify the enactment of
the ordinance by invoking the general welfare clause embodied in Section 15 (nn) of
the cited law, which provides:
(nn) To enact all ordinances it may deem necessary and proper for
the sanitation and safety, the furtherance of the prosperity, and the
promotion of the morality, peace, good order, comfort, convenience,
and general welfare of the city and its inhabitants, and such others as
may be necessary to carry into effect and discharge the powers and
duties conferred by this Act, and to fix the penalties for the violation of
330
the ordinances, which shall not exceed a two hundred peso fine or six
months imprisonment, or both such fine and imprisonment, for a
single offense.
We can see from the aforecited Section 15(n) that the power to regulate and fix the
amount of license fees for theaters, theatrical performances, cinematographs, public
exhibitions and other places of amusement has been expressly granted to the City of
Butuan under its charter. But the question which needs to be resolved is this: does
this power to regulate include the authority to interfere in the fixing of prices of
admission to these places of exhibition and amusement whether under its general
grant of power or under the general welfare clause as invoked by the City?
This is the first time this Court is confronted with the question of direct interference
by the local government with the operation of theaters, cinematographs and the like
to the extent of fixing the prices of admission to these places. Previous decisions of
this Court involved the power to impose license fees upon businesses of this nature
as a corollary to the power of the local government to regulate them. Ordinances
which required moviehouses or theaters to increase the price of their admission
tickets supposedly to cover the license fees have been held to be invalid for these
impositions were considered as not merely license fees but taxes for purposes of
revenue and not regulation which the cities have no power to exact, 10 unless
expressly granted by its charter. 11
Applying the ruling in Kwong Sing v. City of Manila,  12 where the word "regulate" was
interpreted to include the power to control, to govern and to restrain, it would seem
that under its power to regulate places of exhibitions and amusement, the Municipal
Board of the City of Butuan could make proper police regulations as to the mode in
which the business shall be exercised.
While in a New York case, 13 an ordinance which regulates the business of selling
admission tickets to public exhibitions or performances by virtue of the power of
cities under the General City Law "to maintain order, enforce the laws, protect
property and preserve and care for the safety, health, comfort and general welfare of
the inhabitants of the city and visitors thereto; and for any of said purposes, to
regulate and license occupations" was considered not to be within the scope of any
duty or power implied in the charter. It was held therein that the power of regulation
of public exhibitions and places of amusement within the city granted by the charter
does not carry with it any authority to interfere with the price of admission to such
places or the resale of tickets or tokens of admission.
In this jurisdiction, it is already settled that the operation of theaters, cinematographs
and other places of public exhibition are subject to regulation by the municipal
council in the exercise of delegated police power by the local government. 14 Thus,
in People v. Chan, 15 an ordinance of the City of Manila prohibiting first run
cinematographs from selling tickets beyond their seating capacity was upheld as
constitutional for being a valid exercise of police power. Still in another case, 16 the
validity of an ordinance of the City of Bacolod prohibiting admission of two or more
persons in moviehouses and other amusement places with the use of only one ticket
was sustained as a valid regulatory police measure not only in the interest of
preventing fraud in so far as municipal taxes are concerned but also in accordance
with public health, public safety, and the general welfare.
The City of Butuan, apparently realizing that it has no authority to enact the
ordinance in question under its power to regulate embodied in Section 15(n), now
invokes the police power as delegated to it under the general welfare clause to justify
the enactment of said ordinance.
To invoke the exercise of police power, not only must it appear that the interest of the
public generally requires an interference with private rights, but the means adopted
must be reasonably necessary for the accomplishment of the purpose and not
unduly oppressive upon individuals. 17 The legislature may not, under the guise of
protecting the public interest, arbitrarily interfere with private business, or impose
unusual and unnecessary restrictions upon lawful occupations. In other words, the
determination as to what is a proper exercise of its police power is not final or
conclusive, but is subject to the supervision of the courts. 18
Petitioners maintain that Ordinance No. 640 violates the due process clause of the
Constitution for being oppressive, unfair, unjust, confiscatory, and an undue restraint
of trade, and violative of the right of persons to enter into contracts, considering that
the theater owners are bound under a contract with the film owners for just
admission prices for general admission, balcony and lodge.
331
In Homeowners' Association of the Philippines, Inc. v. Municipal Board of the City of
Manila, 19 this Court held:
The authority of municipal corporations to regulate is essentially police
power, Inasmuch as the same generally entails a curtailment of the
liberty, the rights and/or the property of persons, which are protected
and even guaranteed by the Constitution, the exercise of police power
is necessarily subject to a qualification, limitation or restriction
demanded by the regard, the respect and the obedience due to the
prescriptions of the fundamental law, particularly those forming part of
the Constitution of Liberty, otherwise known as the Bill of Rights —
the police power measure must be reasonable. In other words,
individual rights may be adversely affected by the exercise of police
power to the extent only — and only to the extent--that may be fairly
required by the legitimate demands of public interest or public welfare.
What is the reason behind the enactment of Ordinance No. 640?
A reading of the minutes of the regular session of the Municipal Board when the
ordinance in question was passed shows that a certain Councilor Calo, the
proponent of the measure, had taken into account the complaints of parents that for
them to pay the full price of admission for their children is too financially
burdensome.
The trial court advances the view that "even if the subject ordinance does not spell
out its raison d'etre in all probability the respondents were impelled by the awareness
that children are entitled to share in the joys of their elders, but that considering that,
apart from size, children between the ages of seven and twelve cannot fully grasp
the nuance of movies or other public exhibitions, games, contests or other
performances, the admission prices with respect to them ought to be reduced. 19a
We must bear in mind that there must be public necessity which demands the
adoption of proper measures to secure the ends sought to be attained by the
enactment of the ordinance, and the large discretion is necessarily vested in the
legislative authority to determine not only what the interests of the public require, but
what measures are necessary for the protection of such interests. 20 The methods or
means used to protect the public health, morals, safety or welfare, must have some
relation to the end in view, for under the guise of the police power, personal rights
and those pertaining to private property will not be permitted to be arbitralily invaded
by the legislative department. 21
We agree with petitioners that the ordinance is not justified by any necessity for the
public interest. The police power legislation must be firmly grounded on public
interest and welfare, and a reasonable relation must exist between purposes and
means.22 The evident purpose of the ordinance is to help ease the burden of cost on
the part of parents who have to shell out the same amount of money for the
admission of their children, as they would for themselves, A reduction in the price of
admission would mean corresponding savings for the parents; however, the
petitioners are the ones made to bear the cost of these savings. The ordinance does
not only make the petitioners suffer the loss of earnings but it likewise penalizes
them for failure to comply with it. Furthermore, as petitioners point out, there will be
difficulty in its implementation because as already experienced by petitioners since
the effectivity of the ordinance, children over 12 years of age tried to pass off their
age as below 12 years in order to avail of the benefit of the ordinance. The ordinance
does not provide a safeguard against this undesirable practice and as such, the
respondent City of Butuan now suggests that birth certificates be exhibited by movie
house patrons to prove the age of children. This is, however, not at all practicable.
We can see that the ordinance is clearly unreasonable if not unduly oppressive upon
the business of petitioners. Moreover, there is no discernible relation between the
ordinance and the promotion of public health, safety, morals and the general welfare.
Respondent City of Butuan claims that it was impelled to protect the youth from the
pernicious practice of movie operators and other public exhibitions promoters or the
like of demanding equal price for their admission tickets along with the adults. This
practice is allegedly repugnant and unconscionable to the interest of the City in the
furtherance of the prosperity, peace, good order, comfort, convenience and the
general well-being of its inhabitants.
There is nothing pernicious in demanding equal price for both children and adults.
The petitioners are merely conducting their legitimate businesses. The object of
every business entrepreneur is to make a profit out of his venture. There is nothing
immoral or injurious in charging the same price for both children and adults. In fact,
332
no person is under compulsion to purchase a ticket. It is a totally voluntary act on the
part of the purchaser if he buys a ticket to such performances.
Respondent City of Butuan claims that Ordinance No. 640 is reasonable and
necessary to lessen the economic burden of parents whose minor children are lured
by the attractive nuisance being maintained by the petitioners. Respondent further
alleges that by charging the full price, the children are being exploited by movie
house operators. We fail to see how the children are exploited if they pay the full
price of admission. They are treated with the same quality of entertainment as the
adults. The supposition of the trial court that because of their age children cannot
fully grasp the nuances of such entertainment as adults do fails to convince Us that
the reduction in admission ticket price is justifiable. In fact, by the very claim of
respondent that movies and the like are attractive nuisances, it is difficult to
comprehend why the municipal board passed the subject ordinance. How can the
municipal authorities consider the movies an attractive nuisance and yet encourage
parents and children to patronize them by lowering the price of admission for
children? Perhaps, there is some ,truth to the argument of petitioners that Ordinance
No. 640 is detrimental to the public good and the general welfare of society for it
encourages children of tender age to frequent the movies, rather than attend to their
studies in school or be in their homes.
Moreover, as a logical consequence of the ordinance, movie house and theater
operators will be discouraged from exhibiting wholesome movies for general
patronage, much less children's pictures if only to avoid compliance with the
ordinance and still earn profits for themselves. For after all, these movie house and
theater operators cannot be compelled to exhibit any particular kind of film except
those films which may be dictated by public demand and those which are restricted
by censorship laws. So instead of children being able to share in the joys of their
elders as envisioned by the trial court, there will be a dearth of wholesome and
educational movies for them to enjoy.
There are a number of cases decided by the Supreme Court and the various state
courts of the United States which upheld the right of the proprietor of a theater to fix
the price of an admission ticket as against the right of the state to interfere in this
regard and which We consider applicable to the case at bar.
A theater ticket has been described to be either a mere license, revocable at the will
of the proprietor of the theater or it may be evidence of a contract whereby, for a
valuable consideration, the purchaser has acquired the right to enter the theater and
observe the performance on condition that he behaves properly. 23 Such ticket,
therefore, represents a right, Positive or conditional, as the case may be, according
to the terms of the original contract of sale. This right is clearly a right of property.
The ticket which represents that right is also, necessarily, a species of property. As
such, the owner thereof, in the absence of any condition to the contrary in the
contract by which he obtained it, has the clear right to dispose of it, to sell it to whom
he pleases and at such price as he can obtain. 24 So that an act prohibiting the sale
of tickets to theaters or other places of amusement at more than the regular price
was held invalid as conflicting with the state constitution securing the right of
property. 25
In Collister vs. Hayman, 26 it was held:
The defendants were conducting a private business, which, even if
clothed with a public interest, was without a franchise to
accommodate the public, and they had the right to control it, the same
as the proprietors of any other business, subject to such obligations
as were placed upon them by statute. Unlike a carrier of passengers,
for instance, with a franchise from the state, and hence under
obligation to transport anyone who applies and to continue the
business year in and year out, the proprietors of a theater can open
and close their place at will, and no one can make a lawful complaint.
They can charge what they choose for admission to their theater.
They can limit the number admitted. They can refuse to sell tickets
and collect the price of admission at the door. They can preserve
order and enforce quiet while the performance is going on. They can
make it a part of the contract and condition of admission, by giving
due notice and printing the condition in the ticket that no one shall be
admitted under 21 years of age, or that men only or women only shall
be admitted, or that a woman cannot enter unless she is accompanied
by a male escort, and the like. The proprietors, in the control of their
business, may regulate the terms of admission in any reasonable
way. If those terms are not satisfactory, no one is obliged to buy a
333
ticket or make the contract. If the terms are satisfactory, and the
contract is made, the minds of the parties meet upon the condition,
and the purchaser impliedly promises to perform it.
In Tyson and Bro. — United Theater Ticket Officers, Inc. vs. Banton, 27 the United
States Supreme Court held:
... And certainly a place of entertainment is in no legal sense a public
utility; and quite as certainly, its activities are not such that their
enjoyment can be regarded under any conditions from the point of
view of an emergency.
The interest of the public in theaters and other places of entertainment
may be more nearly, and with better reason, assimilated to the like
interest in provision stores and markets and in the rental of houses
and apartments for residence purposes; although in importance it fails
below such an interest in the proportion that food and shelter are of
more moment than amusement or instruction. As we have shown
there is no legislative power to fix the prices of provisions or clothing,
or the rental charges for houses and apartments, in the absence of
some controlling emergency; and we are unable to perceive any
dissimilarities of such quality or degree as to justify a different rule in
respect of amusements and entertainment ...
We are in consonance with the foregoing observations and conclusions of American
courts. In this jurisdiction, legislation had been passed controlling the prices of goods
commodities and drugs during periods of emergency, 28 limiting the net profits of
public utility 29 as well as regulating rentals of residential apartments for a limited
period, 30 as a matter of national policy in the interest of public health and safety,
economic security and the general welfare of the people. And these laws cannot be
impugned as unconstitutional for being violative of the due process clause.
However, the same could not be said of theaters, cinematographs and other
exhibitions. In no sense could these businesses be considered public utilities. The
State has not found it appropriate as a national policy to interfere with the admission
prices to these performances. This does not mean however, that theaters and
exhibitions are not affected with public interest even to a certain degree. Motion
pictures have been considered important both as a medium for the communication of
Ideas and expression of the artistic impulse. Their effects on the perceptions by our
people of issues and public officials or public figures as well as the prevailing cultural
traits are considerable. 31 People of all ages flock to movie houses, games and other
public exhibitions for recreation and relaxation. The government realizing their
importance has seen it fit to enact censorship laws to regulate the movie
industry. 32 Their aesthetic entertainment and even educational values cannot be
underestimated. Even police measures regulating the operation of these businesses
have been upheld in order to safeguard public health and safety.
Nonetheless, as to the question of the subject ordinance being a valid exercise of
police power, the same must be resolved in the negative. While it is true that a
business may be regulated, it is equally true that such regulation must be within the
bounds of reason, that is, the regulatory ordinance must be reasonable, and its
provisions cannot be oppressive amounting to an arbitrary interference with the
business or calling subject of regulation. A lawful business or calling may not, under
the guise of regulation, be unreasonably interfered with even by the exercise of
police power.33 A police measure for the regulation of the conduct, control and
operation of a business should not encroach upon the legitimate and lawful exercise
by the citizens of their property rights.34 The right of the owner to fix a price at which
his property shall be sold or used is an inherent attribute of the property itself and, as
such, within the protection of the due process clause."" Hence, the proprietors of a
theater have a right to manage their property in their own way, to fix what prices of
admission they think most for their own advantage, and that any person who did not
approve could stay away. 36
Respondent City of Butuan argues that the presumption is always in favor of the
validity of the ordinance. This maybe the rule but it has already been held that
although the presumption is always in favor of the validity or reasonableness of the
ordinance, such presumption must nevertheless be set aside when the invalidity or
unreasonableness appears on the face of the ordinance itself or is established by
proper evidence.37 The exercise of police power by the local government is valid
unless it contravenes the fundamental law of the land, or an act of the legislature, or
unless it is against public policy or is unreasonable, oppressive, partial,
discriminating or in derogation of a common right.38
334

Ordinance No. 640 clearly invades the personal and property rights of petitioners for G.R. No. 76394 December 22,1988
even if We could assume that, on its face, the interference was reasonable, from the
foregoing considerations, it has been fully shown that it is an unwarranted and BEL-AIR VILLAGE ASSOCIATION, INC., petitioner,
unlawful curtailment of the property and personal rights of citizens. For being vs.
unreasonable and an undue restraint of trade, it cannot, under the guise of THE COURT OF APPEALS, and EDUARDO and BUENA
exercising police power, be upheld as valid. ROMUALDEZ respondents.

WHEREFORE, the decision of the trial court in Special Civil Case No. 237 is hereby G.R. No. 78182 December 22, 1988
REVERSED and SET ASIDE and a new judgment is hereby rendered declaring
Ordinance No. 640 unconstitutional and, therefore, null and void. This decision is BEL-AIR VILLAGE ASSOCIATION, INC., petitioner,
immediately executory. vs.
COURT OF APPEALS, DOLORES FILLEY, and J. ROMERO &
SO ORDERED. ASSOCIATES, respondents.

Yap, C.J., Narvasa, Cruz, Paras, Padilla, Bidin, Sarmiento and Griño-Aquino, JJ., G.R. No. 82281 December 22, 1988
concur.
BEL-AIR VILLAGE ASSOCIATION, INC, petitioner,
  vs.
COURT OF APPEALS, VIOLETA MONCAL, and MAJAL DEVELOPMENT
G.R. No. 71169 December 22, 1988 CORPORATION, respondents.

JOSE D. SANGALANG and LUTGARDA D. SANGALANG, petitioners, FELIX C. Sangco, Anastacio, Castaneda & Duran Law Office for petitioners & private
GASTON and DOLORES R. GASTON, JOSE V. BRIONES and ALICIA R. intervenors- petitioners.
BRIONES, and BEL-AIR VILLAGE ASSOCIATION, INC., intervenors-petitioners,
vs. Raul S. Sison Law Offices for intervenor-petitioner Bel-Air Village Association, Inc.
INTERMEDIATE APPELLATE COURT, and AYALA Renato L. Dela Fuente for respondent Ayala Corporation.
CORPORATION, respondents.
G.R. No. L-74376:
G.R. No. 74376 December 22, 1988
Raul S. Sison Law Offices for petitioner.
BEL-AIR VILLAGE ASSOCIATION, INC., petitioner,
vs. Sergio L. Guadiz for private respondents.
THE INTERMEDIATE APPELLATE COURT, ROSARIO DE JESUS TENORIO, and
CECILIA GONZALVEZ, respondents. G.R. No. L-76394:
335
Raul S. Sison Law Offices for petitioner.
Gruba, Tanlimco Lamso and Apuhin Law Offices for respondents.
G.R. No. L-78182:
Funk & Associates for petitioners.
Tee Tomas & Associates for respondents.
G.R. No. L-82281:
Funk & Associates for petitioner.
Castillo, Laman, Tan & Associates for private respondents.
SARMIENTO, J.:
Before the Court are five consolidated petitions, 1 docketed as G.R. Nos. 71169,
74376, 76394, 78182, and 82281 hereof, in the nature of appeals (by certiorari under
Rule 45 of the Rules of Court) from five decisions of the Court of Appeals, denying
specific performance and damages.
The proceedings were commenced at the first instance by Jose Sangalang, joined by
his wife Lutgarda Sangalang, both residents of No. 110 Jupiter Street, Makati, Metro
Manila (G.R. No. 71169) to enforce by specific performance restrictive easement
upon property, specifically the Bel- Air Village subdivision in Makati, Metro Manila,
pursuant to stipulations embodied in the deeds of sale covering the subdivision, and
for damages. Later, the Sangalangs were joined by Felix Gaston, a resident of No.
64 Jupiter Street of the same municipality, and by Mr. and Mrs. Jose and Alicia
Briones, both of No. 66 Jupiter Street. Pending further proceedings, the Bel-Air
Village Association, Inc. (BAVA), an incorporated homeowners' association, entered
its appearance as plaintiff-in-intervention.
BAVA itself had brought its own complaints, four in number, likewise for specific
performance and damages to enforce the same 'deed restrictions.' (See G.R. Nos.
74376, 76394, 78182, and 82281.)
ANTECEDENTS FACTS
I. G.R. No. 71169
The facts are stated in the decision appealed from. We quote:
xxxxxxxxx
(1) Bel-Air Village is located north of Buendia Avenue extension (now
Sen. Gil J. Puyat Ave.) across a stretch of commercial block from
Reposo Street in the west up to Zodiac Street in the east, When Bel-
Air Village was planned, this block between Reposo and Zodiac
Streets adjoining Buendia Avenue in front of the village was
designated as a commercial block. (Copuyoc TSN, p. 10, Feb. 12,
1982).
(2) Bel-Air Village was owned and developed into a residential
subdivision in the 1950s by Makati Development Corporation
(hereinafter referred to as MDC), which in 1968 was merged with
appellant Ayala Corporation.
(3) Appellees-spouses Sangalang reside at No. 11O Jupiter Street
between Makati Avenue and Reposo Street; appellees-spouses
Gaston reside at No. 64 Jupiter Street between Makati Avenue and
Zodiac Street; appellees-spouses Briones reside at No. 66 Jupiter
Street also between Makati Avenue and Zodiac Street; while appellee
Bel-Air Village Association, Inc. (hereinafter referred to as BAVA) is
the homeowners' association in Bel-Air Village which takes care of the
sanitation, security, traffic regulations and general welfare of the
village.
336
(4) The lots which were acquired by appellees Sangalang and spouse
Gaston and spouse and Briones and spouse in 1960, 1957 and 1958,
respectively, were all sold by MDC subject to certain conditions and
easements contained in Deed Restrictions which formed a part of
each deed of sale. The pertinent provisions in said Deed Restrictions,
which are common to all lot owners in Bel-Air Village, are as follows:
I-BEL-AIR ASSOCIATION
The owner of this lot/s or his successors in interest is required to be
and is automatically a member of the Bel-Air Association and must
abide by such rules and regulations laid down by the Association in
the interest of the sanitation, security and the general welfare of the
community.
The association will also provide for and collect assessments, which
will constitute as a lien on the property junior only to liens of the
government for taxes and to voluntary mortgages for sufficient
consideration entered into in good faith.
II-USE OF LOTS
Subject to such amendments and additional restrictions, reservations,
servitudes, etc., as the Bel- Air Association may from time to time
adopt and prescribe, this lot is subject to the following restrictions:
a. This lot/s shall not be subdivided. However, three or more lots may
be consolidated and subdivided into a lesser number of lots provided
that none of the resulting lots be smaller in area than the smallest lot
before the consolidation and that the consolidation and subdivision
plan be duly approved by the governing body of the Bel-Air
Association.
b. This lot/s shall only be used for residential purposes.
c. Only one single family house may be constructed on a single lot,
although separate servants' quarters or garage may be built.
d. Commercial or advertising signs shall not be placed, constructed,
or erected on this lot. Name plates and professional signs of
homeowners are permitted so long as they do not exceed 80 x 40
centimeters in size.
e. No cattle, pigs, sheep, goats, ducks, geese, roosters or rabbits
shall be maintained in the lot, except that pets may be maintained but
must be controlled in accordance with the rulings of the Association.
The term "pets' includes chickens not in commercial quantities.
f. The property is subject to an easement of two (2) meters within the
lot and adjacent to the rear and sides thereof not fronting a street for
the purpose of drainage, sewage, water and other public facilities as
may be necessary and desirable; and the owner, lessee or his
representative shall permit access thereto by authorized
representatives of the Bel-Air Association or public utility entities for
the purposes for which the easement is created.
g. This lot shall not be used for any immoral or illegal trade or activity.
h. The owner and/or lessee of this lot/s shall at all times keep the
grass cut and trimmed to reduce the fire hazard of the property.
xxx xxx xxx
VI-TERM OF RESTRICTIONS
The foregoing restrictions shall remain in force for fifty years from
January 15, 1957, unless sooner cancelled in its entirety by two thirds
vote of members in good standing of the Bel-Air Association.
However, the Association may, from time to time, add new ones,
337
amend or abolish particular restrictions or parts thereof by majority
rule.
VII--ENFORCEMENT OF RESTRICTIONS
The foregoing restrictions may be enjoined and/or enforced by court
action by the Bel-Air Association, or by the Makati Development
Corporation or its assigns, or by any registered owner of land within
the boundaries of the Bel-Air Subdivision (Sub-division plan PSD-
49226 and Lot 7-B, Psd-47848) or by any member in good standing of
the Bel-Air association." (Exh. 1 -b; Exh. 22, Annex "B"). (Appellant's
Brief, pp. 4- 6)
(5) When MDC sold the above-mentioned lots to appellees'
predecessors-in-interest, the whole stretch of the commercial block
between Buendia Avenue and Jupiter Street, from Reposo Street in
the west to Zodiac Street in the east, was still undeveloped. Access,
therefore, to Bel-Air Village was opened to all kinds of people and
even animals. So in 1966, although it was not part of the original plan,
MDC constructed a fence or wall on the commercial block along
Jupiter Street. In 1970, the fence or wall was partly destroyed by
typhoon "Yoling." The destroyed portions were subsequently rebuilt by
the appellant. (Copuyoc TSN, pp. 31-34, Feb. 12, 1982). When
Jupiter Street was widened in 1972 by 3.5 meters, the fence or wall
had to be destroyed. Upon request of BAVA, the wall was rebuilt
inside the boundary of the commercial block. (Copuyoc TSN, pp.
4447, Feb. 12,1982).
(6) When the appellant finally decided to subdivide and sell the lots in
the commercial block between Buendia and Jupiter, BAVA wrote the
appellant on May 9, 1972, requesting for confirmation on the use of
the commercial lots. The appellant replied on May 16, 1972, informing
BAVA of the restrictions intended to be imposed in the sale and use of
the lots. Among these restrictions are: that the building shall have a
set back of 19 meters; and that with respect to vehicular traffic along
Buendia Avenue, entrance only will be allowed, and along Jupiter
Street and side streets, both entrance and exit will be allowed.
(7) On June 30, 1972, appellant informed BAVA that in a few months
it shall subdivide and sell the commercial lots bordering the north side
of Buendia Avenue Extension from Reposo Street up to Zodiac Street.
Appellant also informed BAVA that it had taken all precautions and
will impose upon the commercial lot owners deed restrictions which
will harmonize and blend with the development and welfare of Bel-Air
Village. Appellant further applied for special membership in BAVA of
the commercial lot owners. A copy of the deed restrictions for the
commercial lots was also enclosed. The proposed deed restrictions
shall include the 19 meter set back of buildings from Jupiter Street,
the requirement for parking space within the lot of one (1) parking slot
for every seventy five (75) meters of office space in the building and
the limitation of vehicular traffic along Buendia to entrance only, but
allowing both vehicular entrance and vehicular exit through Jupiter
Street and any side street.
In its letter of July 10, 1972, BAVA acknowledged the above letter of
appellant and informed the latter that the application for special
membership of the commercial lot owners in BAVA would be
submitted to BAVA's board of governors for decision.
(8) On September 25, 1972, appellant notified BAVA that, after a
careful study, it was finally decided that the height limitation of
buildings on the commercial lots shall be increased from 12.5 meters
to 15 meters. Appellant further informed BAVA that Jupiter Street shall
be widened by 3.5 meters to improve traffic flow in said street. BAVA
did not reply to said letter, but on January 22, 1973, BAVA wrote a
letter to the appellant informing the latter that the Association had
assessed the appellant, as special member of the association, the
amount of P40,795.00 (based on 81,590 square meters at P.50 per
square meter) representing the membership dues to the commercial
lot owners for the year 1973, and requested the appellant to remit the
amount which its board of governors had already included in its
338
current budget. In reply, appellant on January 31, 1973 informed
BAVA that due to the widening of Jupiter Street, the area of the lots
which were accepted by the Association as members was reduced to
76,726 square meters. Thus, the corresponding dues at P.50 per
square meter should be reduced to P38,363.00. This amount,
therefore, was remitted by the appellant to BAVA. Since then, the
latter has been collecting membership dues from the owners of the
commercial lots as special members of the Association. As a matter of
fact, the dues were increased several times. In 1980, the commercial
lot owners were already being charged dues at the rate of P3.00 per
square meter. (Domingo, TSN, p. 36, March 19, 1980). At this rate,
the total membership dues of the commercial lot owners amount to
P230,178. 00 annually based on the total area of 76,726 square
meters of the commercial lots.
(9) Meantime, on April 4, 1975, the municipal council of Makati
enacted its ordinance No. 81, providing for the zonification of Makati
(Exh. 18). Under this Ordinance, Bel-Air Village was classified as a
Class A Residential Zone, with its boundary in the south extending to
the center line of Jupiter Street (Exh. 18-A).
Thus, the Zoning District Boundaries -Makati, in Annex B of the Ordinance provides:
Thus, Chapter III, Article 1, Section 3.03, par. F. of the Ordinance
provides:
F. Bel-Air Village area, as bounded on the N by Polaris and Mercedes
streets and on the NE by Estrella Street; on the SE by Epifanio de los
Santos Avenue and on the SW by the center line of Jupiter Street.
Then bounded on the N by the abandoned MRR Pasig Line; on the E
by Makati Avenue; on the S by the center line of Jupiter Street and on
the W by the center line of Reposo Street." (Exh. 18-A)
Similarly, the Buendia Avenue Extension area was classified as
Administrative Office Zone with its boundary in the North-North East
Extending also up to the center line of Jupiter Street (Exh. 18b).
Thus, Chapter III, Article I, Section 3.05, par. C. of the Ordinance provides:
C. The Buendia Avenue Extension areas, as bounded on the N-NE by
the center line of Jupiter Street, on the SE by Epifanio de los Santos
Avenue; on the SW by Buendia Avenue and on the NW by the center
line of Reposo Street, then on the NE by Malugay Street; on the SE
by Buendia Avenue and on the W by Ayala Avenue Extension." (Exh.
18-B)
The Residential Zone and the Administrative Office Zone, therefore,
have a common boundary along the center line of Jupiter Street.
The above zoning under Ordinance No. 81 of Makati was later
followed under the Comprehensive Zoning Ordinance for the National
Capital Region adopted by the Metro Manila Commission as
Ordinance 81 -01 on March 14, 1981 (Exh. 19). However, under this
ordinance, Bel-Air Village is simply bounded in the South-Southeast
by Jupiter Street-not anymore up to the center line of Jupiter Street
(Exh. B). Likewise, the blockdeep strip along the northwest side of
Buendia Avenue Extension from Reposo to EDSA was classified as a
High Intensity Commercial Zone (Exh. 19-c).
R-I-Low Intensity Residential
xxxxxxxxx
4. Bel-Air 1, 3, 4
Bounded on the North -- J.P. Rizal and Amapola St.
South - Rockwell
Northwest - P. Burgos
Southeast - Jupiter
339
Southwest - Epifanio de los Santos Ave. (EDSA)
5. Bel-Air 2
Bounded on the Northwest - J.P. Rizal
Southwest - Makati Avenue
South --- Jupiter
Southeast -- Pasig Line
East - South Avenue" (Exh. 19-b)
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C-3-High Intensity Commercial Zone
2. A block deep strip along the northwest side of Buendia Ave. Ext.
from Reposo to EDSA." (Exh, 19-c)
Under the above zoning classifications, Jupiter Street, therefore, is a
common boundary of Bel-Air Village and the commercial zone.
(10) Meanwhile, in 1972, BAVA had installed gates at strategic
locations across Jupiter Street which were manned and operated by
its own security guards who were employed to maintain, supervise
and enforce traffic regulations in the roads and streets of the village.
(Villavicencio, TSN, pp, 22-25, Oct. 30, 1980; BAVA Petition, par. 11,
Exh. 17).
Then, on January 17, 1977, the Office of the Mayor of Makati wrote
BAVA directing that, in the interest of public welfare and for the
purpose of easing traffic congestion, the following streets in Bel-Air
Village should be opened for public use:
Amapola Street - from Estrella Street to Mercedes Street
Amapola Street -junction of Palma Street gate going to J. Villena
Street
Mercedes Street -- from EDSA to Imelda Avenue and Amapola
junction
Zodiac Street - from Mercedes Street to Buendia Avenue
Jupiter Street -- from Zodiac Street to Reposo Street connecting
Metropolitan Avenue to Pasong Tamo and V. Cruz Extension
intersection
Neptune Street - from Makati Avenue to Reposo Street Orbit Street -
from F. Zobel-Candelaria intersection to Jupiter Street
Paseo de Roxas - from Mercedes Street to Buendia Avenue (Exh. 17,
Annex A, BAVA Petition)
On February 10, 1977, BAVA wrote the Mayor of Makati, expressing
the concern of the residents about the opening of the streets to the
general public, and requesting specifically the indefinite postponement
of the plan to open Jupiter Street to public vehicles. (Exh. 17, Annex
B, BAVA Petition).
However, BAVA voluntarily opened to the public Amapola, Mercedes,
Zodiac, Neptune and Paseo de Roxas streets. (Exh. 17-A, Answer of
Makati par. 3-7).
Later, on June 17,1977, the Barangay Captain of Bel-Air Village was
advised by the Office of the Mayor that, in accordance with the
agreement entered into during the meeting on January 28, 1 977, the
Municipal Engineer and the Station Commander of the Makati Police
were ordered to open for public use Jupiter Street from Makati
340
Avenue to Reposo Street. Accordingly, he was requested to advise
the village residents of the necessity of the opening of the street in the
interest of public welfare. (Exh. 17, Annex E, BAVA Petition).
Then, on June 10, 1977, the Municipal Engineer of Makati in a letter
addressed to BAVA advised the latter to open for vehicular and
pedestrian traffic the entire portion of Jupiter Street from Makati
Avenue to Reposo Street (Exh. 17, BAVA Petition, par. 14).
Finally, on August 12, 1977, the municipal officials of Makati
concerned allegedly opened, destroyed and removed the gates
constructed/located at the corner of Reposo Street and Jupiter Street
as well as the gates/fences located/constructed at Jupiter Street and
Makati Avenue forcibly, and then opened the entire length of Jupiter
Street to public traffic. (Exh. 17, BAVA Petition, pars. 16 and 17).
(11) Before the gates were-removed, there was no parking problem or
traffic problem in Jupiter Street, because Jupiter Street was not
allowed to be used by the general public (Villavicencio, TSN, pp. 24-
25, Oct. 30, 1980). However, with the opening of Zodiac Street from
Estrella Street to Jupiter Street and also the opening to the public of
the entire length of Jupiter Street, there was a tremendous increase in
the volume of traffic passing along Jupiter Street coming from EDSA
to Estrella Street, then to Zodiac Street to Jupiter Street, and along
the entire length of Jupiter Street to its other end at Reposo Street.
(Villavicencio, TSN, pp. 30-32, Oct. 30, 1980).
In the meantime, the purchasers of the commercial lots between
Jupiter Street and Buendia Avenue extension had started constructing
their respective buildings in 1974-1975. They demolished the portions
of the fence or wall standing within the boundary of their lots. Many of
the owners constructed their own fences or walls in lieu of the wall
and they employed their own security guards. (TSN, p. 83, Feb.
20,1981; TSN, pp. 53-54; 72-74, March 20,1981; TSN, pp. 54-55, July
23, 1981).
(12) Then, on January 27, 1978, appellant donated the entire Jupiter
Street from Metropolitan Avenue to Zodiac Street to BAVA (Exh. 7)-
However, even before 1978, the Makati Police and the security force
of BAVA were already the ones regulating the traffic along Jupiter
Street after the gates were opened in 1977. Sancianco TSN, pp. 26-
30, Oct. 2,1981).
In October, 1979, the fence at the corner of Orbit and Neptune Streets
was opened and removed (BAVA Petition, par. 22, Exh. 17). The
opening of the whole stretch of Orbit Street from J.P. Rizal Avenue up
to Imelda Avenue and later to Jupiter Street was agreed to at the
conference attended by the President of BAVA in the office of the
Station Commander of Makati, subject to certain conditions, to wit:
That, maintenance of Orbit St. up to Jupiter St. shall be shouldered by
the Municipality of Makati.
That, street lights will be installed and maintenance of the same along
Orbit St. from J.P. Rizal Ave. up to Jupiter St. shall be undertaken by
the Municipality.
That for the security of the residents of San Miguel Village and Bel-Air
Village, as a result of the opening of Orbit Street, police outposts shall
be constructed by the Municipality of Makati to be headed by
personnel of Station No. 4, in close coordination with the Security
Guards of San Miguel Village and Bel-Air Village." (CF. Exh. 3 to
Counter-Affidavit, of Station Commander, Ruperto Acle p. 253,
records)" (Order, Civil Case No. 34948, Exh. 17-c).
(13) Thus, with the opening of the entire length of Jupiter Street to
public traffic, the different residential lots located in the northern side
of Jupiter Street ceased to be used for purely residential purposes.
They became, for all purposes, commercial in character.
(14) Subsequently, on October 29, 1979, the plaintiffs-appellees Jose
D. Sangalang and Lutgarda D. Sangalang brought the present action
341

for damages against the defendant-appellant Ayala Corporation 1 . The sum of P400,000.00 as consequential damages;
predicated on both breach of contract and on tort or quasi-delict A
supplemental complaint was later filed by said appellees seeking to 2 The sum of P500,000.00 as moral damages;
augment the reliefs prayed for in the original complaint because of
alleged supervening events which occurred during the trial of the 3 The sum of P500,000.00 as exemplary damages:
case. Claiming to be similarly situated as the plaintiffs-appellees, the
spouses Felix C. Gaston and Dolores R. Gaston, Jose V. Briones and 4 The sum of P50,000.00 as attorney's fees; and
Alicia R. Briones, and the homeowners' association (BAVA)
intervened in the case. 5 The costs of suit.
(15) After trial on the merits, the then Court of First Instance of Rizal, ON INTERVENORS JOSE and ALICIA BRIONES' COMPLAINT:
Pasig, Metro Manila, rendered a decision in favor of the appellees the
dispositive portion of which is as follows:
Defendant is ordered to pay to the spouses Jose and Alicia Briones,
the following damages:
WHEREFORE, judgment is hereby accordingly rendered as follows:
1 . The sum of P400,000.00 as consequential damages;
ON PLAINTIFFS' COMPLAINT:
2 The sum of P500,000.00 as moral damages;
Defendant is ordered to pay to the plaintiffs-spouses Sangalang the
following damages:
3 The sum of P500,000.00 as exemplary damages;
1. The sum of P500,000.00 as actual and consequential damages;
4 The sum of P50,000.00 as attorney's fees; and
2. The sum of P2,000,000.00 as moral damages;
5 The costs of suit.
3. The sum of P500,000.00 as exemplary damages;
ON INTERVENOR BAVA'S COMPLAINT:
4. The sum of P100,000.00 as attorney's fees; and
Defendant is ordered to pay intervenor BAVA, the following damages:
5. The costs of suit.
1. The sum of P400,000.00 as consequential damages;
ON INTERVENORS FELIX and DOLORES GASTON'S COMPLAINT:
2. The sum of P500,000.00 as exemplary damages;
Defendant is ordered to pay to the spouses Felix and Dolores Gaston,
3. The sum of P50,000.00 as attorney's fees; and
the following damages:
342
4. The costs of suit.
The above damages awarded to the plaintiffs and intervenors shall
bear legal interest from the filing of the complaint.
Defendant is further ordered to restore/reconstruct the perimeter wall
at its original position in 1966 from Reposo Street in the west to
Zodiac Street in the east, at its own expense, within SIX (6) MONTHS
from finality of judgment.
SO ORDERED.
(Record on Appeal, pp. 400-401) 2
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On appeal, the Court of Appeals 3 rendered a reversal, and disposed
as follows:
ACCORDINGLY, finding the decision appealed from as not supported
by the facts and the law on the matter, the same is hereby SET
ASIDE and another one entered dismissing the case for lack of a
cause of action. Without pronouncement as to costs.
SO ORDERED. 4
II. G.R. No. 74376
This petition was similarly brought by BAVA to enforce the aforesaid restrictions
stipulated in the deeds of sale executed by the Ayala Corporation. The petitioner
originally brought the complaint in the Regional Trial Court of Makati, 5 principally for
specific performance, plaintiff [now, petitioner] alleging that the defendant [now,
private respondent] Tenorio allowed defendant [Tenorio's co-private respondent]
Gonzalves to occupy and convert the house at 50 Jupiter Street, Bel-Air Village,
Makati, Metro Manila, into a restaurant, without its knowledge and consent, and in
violation of the deed restrictions which provide that the lot and building thereon must
be used only for residential purposes upon which the prayed for main relief was for
'the defendants to permanently refrain from using the premises as commercial and to
comply with the terms of the Deed Restrictions." 6 The trial court dismissed the
complaint on a procedural ground, i.e., pendency of an Identical action, Civil Case
No. 32346, entitled "Bel-Air Village Association, Inc. v. Jesus Tenorio." The Court of
Appeals 7 affirmed, and held, in addition, that Jupiter Street "is classified as High
density commercial (C-3) zone as per Comprehensive Zoning Ordinance No. 81-01
for National Capital Region," 8 following its own ruling in AC-G.R. No. 66649, entitled
"Bel-Air Village Association, Inc. vs. Hy-Land Realty & Development Corporation, et
al."
III. G.R. No. 76394
xxxxxxxxx
Defendants-spouses Eduardo V. Romualdez, Jr. and Buena Tioseco
are the owners of a house and lot located at 108 Jupiter St., Makati,
Metro Manila as evidenced by Transfer Certificate of Title No. 332394
of the Registry of Deeds of Rizal. The fact is undisputed that at the
time the defendants acquired the subject house and lot, several
restrictions were already annotated on the reverse side of their title;
however, for purposes of this appeal we shall quote hereunder only
the pertinent ones, to wit:
(b,) This lot/shall be used only for residential purposes.
xxxxxxxxx
IV. Term of Restriction
The foregoing restriction(s) shall remain in force for fifty years from
January 15, 1957, unless sooner cancelled in its entirety by two-thirds
vote of the members in good standing of the Bel-Air Association.
However, the Association may from time to time, add new ones,
343
amend or abolish particular restrictions or parts thereof by majority
rule.
During the early part of 1979, plaintiff noted that certain renovations
and constructions were being made by the defendants on the subject
premises, for which reason the defendants were advised to inform the
plaintiff of the kind of construction that was going on. Because the
defendants failed to comply with the request of the plaintiff, the latter's
chief security officer visited the subject premises on March 23, 1979
and found out that the defendants were putting up a bake and coffee
shop, which fact was confirmed by defendant Mrs. Romualdez herself.
Thereafter, the plaintiff reminded defendants that they were violating
the deed restriction. Despite said reminder, the defendants proceeded
with the construction of the bake shop. Consequently, plaintiff sent
defendants a letter dated April 30, 1979 warning them that if they will
not desist from using the premises in question for commercial
purposes, they will be sued for violations of the deed restrictions.
Despite the warning, the defendants proceeded with the construction
of their bake shop. 9
xxxxxxxxx
The trial court 10 adjudged in favor of BAVA. On appeal, the Court of
Appeals 11 reversed, on the strength of its holding in AC-G.R. No. 66649 earlier
referred to.
BAVA then elevated the matter to the Court by a petition for review on certiorari. The
Court 12 initially denied the petition "for lack of merit, it appearing that the conclusions
of the respondent Court of Appeals that private respondents' bake and coffee shop
lies within a commercial zone and that said private respondents are released from
their obligations to maintain the lot known as 108 Jupiter Street for residential
purposes by virtue of Ordinance No. 81 of the Municipality of Makati and
Comprehensive Zoning Ordinance No. 81-01 of the Metropolitan Manila
Commission, are in accord with law and jurisprudence," 13 for which BAVA sought a
reconsideration. Pending resolution, the case was referred to the Second Division of
this Court, 14 and thereafter, to the Court En Banc en consulta. 15 Per our Resolution,
dated April 29, 1988, we consolidated this case with G.R. Nos. 74376 and 82281. 16
IV. G.R. No. 78182.
xxxxxxxxx
The case stemmed from the leasing by defendant Dolores Filley of
her building and lot situated at No. 205 Reposo Street, Bel-Air Village
Makati, Metro Manila to her co-defendant, the advertising firm J.
Romero and Associates, in alleged violation of deed restrictions which
stipulated that Filley's lot could only be used for residential purposes.
Plaintiff sought judgment from the lower court ordering the defendants
to "permanently refrain" from using the premises in question "as
commercial" and to comply with the terms of the deed restrictions.
After the proper proceedings, the court granted the plaintiff the sought
for relief with the additional imposition of exemplary damages of
P50,000.00 and attorney's fees of P10,000.00. The trial court gave
emphasis to the restrictive clauses contained in Filley's deed of sale
from the plaintiff, which made the conversion of the building into a
commercial one a violation.
Defendants now seek review and reversal on three (3) assignments of errors,
namely:
I.
THE TRIAL COURT ERRED IN NOT FINDING THAT THE
REGULATIONS PROMULGATED BY THE MUNICIPAL
AUTHORITIES IN MAKATI AND THE MINISTRY OF HUMAN
SETTLEMENT'S CHANGING THE CHARACTER OF THE AREAS IN
QUESTION HAD RENDERED THE RESTRICTIVE EASEMENT ON
THE TITLE OF THE APPELLANTS VACATED.
344
II.
THE COURT ERRED IN NOT RULING THAT BECAUSE THE
APPELLEE(S) HAD ALLOWED THE USE OF THE PROPERTY
WITHIN THE VILLAGE FOR NON- RESIDENTIAL PURPOSES, IT IS
NOW ESTOPPED FROM ENFORCING THE RESTRICTIVE
PROHIBITIONS SUBJECT MATTER OF THIS CASE.
III.
THE COURT ERRED IN NOT FINDING THAT THERE EXISTED A
BILATERAL CONTRACT BETWEEN THE PARTIES AND THAT
SINCE APPELLEE HAD NOT PERFORMED ITS OBLIGATIONS
UNDER THIS ARRANGEMENT THE APPELLANT IN TURN WAS
UNDER NO OBLIGATION TO ANNOTATE THE RESTRICTIVE
PROHIBITIONS ON THE BACK OF THE TITLE.
Appellants anchor their appeal on the proposition that the Bel-Air
Village area, contrary to plaintiff- appellee's pretension of being a
strictly residential zone, is in fact commercial and characterize the
restrictions contained in appellant Filley's deed of sale from the
appellee as completely outmoded, which have lost all relevance to the
present-day realities in Makati, now the premier business hub of the
nation, where there is a proliferation of numerous commercial
enterprises established through the years, in fact even within the heart
of so-called "residential" villages. Thus, it may be said that appellants
base their position on the inexorable march of progress which has
rendered at naught the continued efficacy of the restrictions. Appellant
on the other hand, relies on a rigid interpretation of the contractual
stipulations agreed upon with appellant Filley, in effect arguing that
the restrictions are valid ad infinitum.
The lower court quite properly found that other commercial
establishments exist in the same area (in fact, on the same street) but
ignored it just the same and said-
The fact that defendants were able to prove the existence of several
commercial establishments inside the village does not exempt them
from liability for violating some of the restrictions evidently choosing to
accord primacy to contractual stipulation. 17
xxxxxxxxx
The Court of Appeals 18 overturned the lower court, 19 likewise based on AC-G.R. No.
66649. The respondent Court observed also that J. Romero & Associates had been
given authority to open a commercial office by the Human Settlements Regulatory
Commission.
V. G.R. No. 82281
The facts of this case have been based on stipulation. We quote:
COMES NOW, the Parties, assisted by their respective counsel and
to this Honorable Court, respectfully enter into the following
stipulations of facts, to wit:
1. The parties admit the personal circumstances of each other as well
as their capacities to sue and be sued.
2. The parties admit that plaintiff BAVA for short) is the legally
constituted homeowners' association in Bel-Air Subdivision, Makati,
Metro Manila.
3. The parties admit that defendant Violets Moncal is the registered
owner of a parcel of land with a residential house constructed thereon
situated at No. 104 Jupiter Street, Bel-Air Village, Makati, Metro
Manila; that as such lot owner, she is a member of the plaintiff
association.
345
4. The parties admit that defendant Majal Development Corporation
(Majal for short) is the lessee of defendant Moncal's house and lot
located at No. 104 Jupiter Street.
5. The parties admit that a deed restrictions is annotated on the title of
defendant Moncal, which provides, among others, that the lot in
question must be used only for residential purposes;' that at time
Moncal purchased her aforesaid lot in 1959 said deed restrictions was
already annotated in the said title.
6. The parties admit that when Moncal leased her subject property to
Majal, she did not secure the consent of BAVA to lease the said
house and lot to the present lessee.
7. The parties admit that along Jupiter Street and on the same side
where Moncal's property is located, there are restaurants, clinics
placement or employment agencies and other commercial or business
establishments. These establishments, however, were sued by BAVA
in the proper court.
8. The parties admit that at the time Moncal purchased the subject
property from the Makati Development Corporation, there was a
perimeter wall, running along Jupiter Street, which wall was
constructed by the subdivision owner; that at that time the gates of the
entrances to Jupiter Street were closed to public traffic. In short, the
entire length of Jupiter which was inside the perimeter wall was not
then open to public traffic
9. The parties admit that subsequent thereto, Ayala tore down the
perimeter wall to give way to the commercial building fronting Buendia
Avenue (now Gil J. Puyat Avenue).
10. The parties admit that on August 12, 1977, the Mayor of Makati
forcibly opened and removed the street gates constructed on Jupiter
Street and Reposo Street, thereby opening said streets to the public.
11. The parties admit plaintiffs letters of October 10, 23 and 31, 1984;
as well as defendants' letters-reply dated October 17 and 29, 1984. 20
xxxxxxxxx
The trial court 21 dismissed the petitioner's complaint, a dismissal affirmed on
appeal, 22 According to the appellate court, the opening of Jupiter Street to human
and vehicular traffic, and the commercialization of the Municipality of Makati in
general, were circumstances that had made compliance by Moncal with the
aforesaid "deed restrictions" "extremely difficult and unreasonable," 23 a development
that had excused compliance altogether under Article 1267 of the Civil Code.
VI. The cases before the Court; the Court's decision.
In brief, G.R. Nos. 74376, 76394, 78182, and 82281 are efforts to enforce the "deed
restrictions" in question against specific residents (private respondents in the
petitions) of Jupiter Street and with respect to G.R. No. 78182, Reposo Street. The
private respondents are alleged to have converted their residences into commercial
establishments (a restaurant in G.R. No. 74376, a bakery and coffee shop in G.R.
No. 76394, an advertising firm in G.R. No. 78182; and a construction company,
apparently, in G.R. No. 82281) in violation of the said restrictions. 24
Their mother case, G. R. No. 71169 is, on the other hand, a petition to hold the
vendor itself, Ayala Corporation (formerly Makati Development Corporation), liable
for tearing down the perimeter wall along Jupiter Street that had therefore closed its
commercial section from the residences of Bel-Air Village and ushering in, as a
consequence, the full "commercialization" of Jupiter Street, in violation of the very
restrictions it had authored.
As We indicated, the Court of Appeals dismissed all five appeals on the basis
primarily of its ruling in AC-G.R. No. 66649, "Bel-Air Village, Inc. v. Hy-Land Realty
Development Corporation, et al.," in which the appellate court explicitly rejected
claims under the same 'deed restrictions" as a result of Ordinance No. 81 enacted by
the Government of the Municipality of Makati, as well as Comprehensive Zoning
Ordinance No. 8101 promulgated by the Metropolitan Manila Commission, which two
ordinances allegedly allowed the use of Jupiter Street both for residential and
346
commercial purposes. It was likewise held that these twin measures were valid as a
legitimate exercise of police power.
The Court of Appeals' reliance on Ordinance Nos. 81. and 8101 is now assailed in
these petitions, particularly the Sangalang, et al. petition.
Aside from this fundamental issue, the petitioners likewise raise procedural
questions. G.R. No. 71169, the mother case, begins with one.
1. G.R. No. 71169
In this petition, the following questions are specifically put to the Court:
May the Honorable Intermediate Appellate Court reverse the decision
of the trial court on issues which were neither raised by AYALA in its
Answers either to the Complaint or Supplemental Complaint nor
specifically assigned as one of the alleged errors on appeal? 25
May the Honorable Intermediate Appellate Court arbitrarily ignore the
decisive findings of fact of the trial court, even if uncontradicted and/or
documented, and premised mainly on its own unsupported
conclusions totally reverse the trial court's decision? 26
May the Honorable Intermediate Appellate Court disregard the trial
court's documented findings that respondent Ayala for its own self-
interest and commercial purposes contrived in bad faith to do away
with the Jupiter Street perimeter wall it put up three times which wall
was really intended to separate the residential from the commercial
areas and thereby insure the privacy and security of Bel Air Village
pursuant to respondent Ayala's express continuing representation
and/or covenant to do so? 27
a.
The first question represents an attack on the appellate court's reliance on
Ordinances Nos. 81 and 81-01, a matter not supposedly taken up at the trial or
assigned as an error on appeal. As a rule, the Court of Appeals (then the
Intermediate Appellate Court) may determine only such questions as have been
properly raised to it, yet, this is not an inflexible rule of procedure. In Hernandez v.
Andal, 28 it was stated that "an unassigned error closely related to an error properly
assigned, or upon which the determination of the question raised by the error
properly assigned is dependent, will be considered by the appellate court
notwithstanding the failure to assign it as error." 29
In Baquiran v. Court of Appeals, 30 we referred to the " modern trend of procedure . . .
according] the courts broad discretionary power" 31 and in which we allowed
consideration of matters "having some bearing on the issue submitted which the
parties failed to raise or the lower court ignore[d]. 32 And in Vda. de Javellana v.
Court of Appeals, 33 we permitted the consideration of a 'patent error' of the trial court
by the Court of Appeals under Section 7, of Rule 51, of the Rules of
Court, 34 although such an error had not been raised in the brief. But what we note is
the fact that the Ayala Corporation did raise the zoning measures as affirmative
defenses, first in its answers 35 and second, in its brief, 36 and submitted at the trial as
exhibits. 37 There is accordingly no cause for complaint on the part of the petitioners
for Ayala's violation of the Rules. But while there was reason for the consideration,
on appeal, of the said zoning ordinances in question, this Court nevertheless finds as
inaccurate the Court of Appeals' holding that such measures, had "in effect, [made]
Jupiter Street ... a street which could be used not only for residential
purposes," 38 and that "[It lost its character as a street for the exclusive benefit of
those residing in Bel-Air Village completely." 39
Among other things, there is a recognition under both Ordinances Nos. 81 and 8 1-
01 that Jupiter Street lies as the boundary between Bel-Air Village and Ayala
Corporation's commercial section. And since 1957, it had been considered as a
boundary not as a part of either the residential or commercial zones of Ayala
Corporation's real estate development projects. Thus, the Bel-Air Village
Association's articles of incorporation state that Bel-Air Village is 'bounded on the
NE., from Amapola St., to de los Santos Ave., by Estrella St., on the SE from Extrella
St., to Pedestrian Lane by E. De los Santos Ave., on the SW., from Pedestrian Lane
to Reposo St., by Jupiter Street
347
. . . . 40 Hence, it cannot be said to have been "for the exclusive benefit" of Bel-Air
Village residents.
We come to the perimeter wall then standing on the commercial side of Jupiter
Street the destruction of which opened the street to the public. The petitioners
contend that the opening of the thoroughfare had opened, in turn, the floodgates to
the commercialization of Bel-Air Village. The wall, so they allege, was designed
precisely to protect the peace and privacy of Bel-Air Village residents from the din
and uproar of mercantile pursuits, and that the Ayala Corporation had committed
itself to maintain it. It was the opinion of the Court of Appeals, as we said, that
Ayala's liability therefor, if one existed, had been overtaken by the passage of
Ordinances Nos. 81 and 82-01, opening Jupiter Street to commerce.
It is our ruling, we reiterate, that Jupiter Street lies as a mere boundary, a fact
acknowledged by the authorities of Makati and the National Government and, as a
scrutiny of the records themselves reveals, by the petitioners themselves, as the
articles of incorporation of Bel-Air Village Association itself would confirm. As a
consequence, Jupiter Street was intended for the use by both -the commercial and
residential blocks. It was not originally constructed, therefore, for the exclusive use of
either block, least of all the residents of Bel-Air Village, but, we repeat, in favor of
both, as distinguished from the general public.
When the wall was erected in 1966 and rebuilt twice, in 1970 and 1972, it was not for
the purpose of physically separating the two blocks. According to Ayala Corporation,
it was put up to enable the Bel-Air Village Association "better control of the security
in the area, 41 and as the Ayala Corporation's "show of goodwill " 42 a view we find
acceptable in the premises. For it cannot be denied that at that time, the commercial
area was vacant, "open for [sic] animals and people to have access to Bel-Air
Village." 43 There was hence a necessity for a wall.
In any case, we find the petitioners' theory, that maintaining the wall was a matter of
a contractual obligation on the part of Ayala, to be pure conjecture. The records do
not establish the existence of such a purported commitment. For one, the subdivision
plans submitted did not mention anything about it. For another, there is nothing in the
"deed restrictions" that would point to any covenant regarding the construction of a
wall. There is no representation or promise whatsoever therein to that effect.
With the construction of the commercial buildings in 1974, the reason for which the
wall was built- to secure Bel-Air Village from interlopers had naturally ceased to exist.
The buildings themselves had provided formidable curtains of security for the
residents. It should be noted that the commercial lot buyers themselves were forced
to demolish parts of the wall to gain access to Jupiter Street, which they had after all
equal right to use.
In fine, we cannot hold the Ayala Corporation liable for damages for a commitment it
did not make, much less for alleged resort to machinations in evading it. The records,
on the contrary, will show that the Bel-Air Village Association had been informed, at
the very outset, about the impending use of Jupiter Street by commercial lot buyers.
We quote:
xxxxxxxxx
1. Exh. I of appellee, the memorandum of Mr. Carmelo Caluag,
President of BAVA, dated May 10, 1972, informing the BAVA Board of
Governors and Barrio Council members about the future use of
Jupiter Street by the lot owners fronting Buendia Avenue. The use of
Jupiter Street by the owners of the commercial lots would necessarily
require the demolition of the wall along the commercial block adjoining
Jupiter Street.
2. Exh. J of appellee, the minutes of the joint meeting of BAVA Board
of Governors and the Bel-Air Barrio Council where the matter that
"Buendia lot owners will have equal rights to use Jupiter Street," and
that Ayala's "plans about the sale of lots and use of Jupiter Street"
were precisely taken up. This confirms that from the start BAVA was
informed that the commercial lot owners will use Jupiter Street and
that necessarily the wall along Jupiter Street would be demolished.
3. Exh. 10, the letter of Mr. Demetrio Copuyoc to the President of
BAVA, dated May 16, 1972, expressly stating that vehicular entrance
and exit to the commercial lots would be allowed along Jupiter and
side streets.
348
4. Exhs. 27, 27-A, 27-B, the letter of Atty. Salvador J. Lorayes dated
June 30, 1972, with enclosed copy of proposed restriction for the
commercial lots to BAVA. He proposed restriction again expressly
stated that "Vehicular entrances and exits are allowed thru Jupiter and
any side streets."
5. Exh. L of appellee, the minutes of the meeting of the members of
BAVA, dated August 26, 1972, where it is stated "Recently, Ayala
Corporation informed the Board that the lots fronting Buendia Avenue
will soon be offered for sale, and that future lot owners will be given
equal rights to use Jupiter Street as well as members of the
Association."
6. Exh. 25, the letter of Atty. Lorayes dated September 25, 1972,
informing BAVA of the widening of Jupiter Street by 3.5 meters to
improve traffic flow in said street to benefit both the residents of Bel-
Air and the future owners of the commercial lots. 44
The petitioners cannot successfully rely on the alleged promise by Demetrio
Copuyoc, Ayala's manager, to build a "[f]ence along Jupiter with gate for entrance
and/or exit 45 as evidence of Ayala's alleged continuing obligation to maintain a wall
between the residential and commercial sections. It should be observed that the
fence referred to included a "gate for entrance and or exit" which would have
defeated the purpose of a wall, in the sense the petitioners would put in one, that is
to say, an impenetrable barrier. But as Ayala would point out subsequently, the
proposed fence was not constructed because it had become unnecessary when the
commercial lot owners commenced constructions thereon.
Be that as it may, the Court cannot visualize any purported obligation by Ayala
Corporation to keep the wall on the strength of this supposed promise alone. If truly
Ayala promised anything assuming that Capuyoc was authorized to bind the
corporation with a promise it would have been with respect to the fence. It would not
have established the pre-existing obligation alleged with respect to the wall.
Obligations arise, among other things, from contract. 46 If Ayala, then, were bound by
an obligation, it would have been pursuant to a contract. A contract, however, is
characterized by a "meeting of minds between two persons . 47 As a consensual
relation, it must be shown to exist as a fact, clearly and convincingly. But it cannot be
inferred from a mishmash of circumstances alone disclosing some kind of an
"understanding," when especially, those disparate circumstances are not themselves
incompatible with contentions that no accord had existed or had been reached. 48
The petitioners cannot simply assume that the wall was there for the purpose with
which they now give it, by the bare coincidence that it had divided the residential
block from the commercial section of Bel-Air. The burden of proof rests with them to
show that it had indeed been built precisely for that objective, a proof that must
satisfy the requirements of our rules of evidence. It cannot be made to stand on the
strength of plain inferences.
b.
This likewise answers the petitioners' second query, whether or not the Court of
Appeals had "arbitrarily ignore(d) the decisive findings of the trial court."49 i.e.,
findings pointing to alleged acts performed by the Ayala Corporation proving its
commitment to maintain the wall abovesaid. Specifically, the petitioners refer to,
among other things: (1) Ayala's alleged announcement to Bel- Air Village Association
members that "[the perimeter wall along Jupiter Street will not be demolished," 50 (2)
Ayala's alleged commitment "during the pendency of the case in the trial court" to
restore the wall; (3) alleged assurances by Copuyoc that the wall will not be
removed; (4) alleged contrivances by the corporation to make the association admit
as members the commercial lot buyers which provided them equal access to Jupiter
Street; and (5) Ayala's donation to the association of Jupiter Street for "private use"
of Bel-Air residents. 51
682 (1903), where it was held that "whether the plaintiffs services were solicited or
whether they were offered to the defendant for his assistance, inasmuch as these
services were accepted and made use of by the latter, we must consider that there
was a tacit and mutual consent as to the rendition of services." (At 686.) In that case,
the defendant had enormously benefitted from the services that entitled the plaintiff
to compensation on the theory that no one may unjustly enrich himself at the
expense of another (Solutio indebiti) The facts of this case differ.
349
As we stated, the Ayala Corporation's alleged conduct prior to or during the
proceedings below are not necessarily at war with claims that no commitment had
been in fact made.
With respect to Ayala's alleged announcement before the association, the Court
does not agree that Ayala had categorically assumed as an obligation to maintain the
wall "perpetually," i.e., until the year 2007 (the expiration date under the "deed
restrictions.") There is nothing in its statement that would bare any commitment. In
connection with the conference between the parties "during the pendency" of the
trial, it is to be noted that the Ayala Corporation denies having warranted the
restoration of the said wall therein. What, on the other hand, appears in the records
is the fact that Ayala did make that promise, but provided that the Mayor allowed it. It
turned out, however, that the Mayor balked at the Idea. 52 But assuming that Ayala
did promise to rebuild the wall (in that conference), it does not seem to us that it did
consequently promise to maintain it in perpetuity.
It is unfair to say, as the trial court did, that the Ayala had "contrived to make future
commercial lot owners special members of BAVA and thereby acquire equal right
with the regular members thereof to use Jupiter Street 53 since, as we stated, the
commercial lot buyers have the right, in any event, to make use of Jupiter Street,
whether or not they are members of the association. It is not their memberships that
give them the right to use it. They share that right with Bel-Air residents from the
outset.
The objective of making the commercial lot owners special members of the Bel-Air
Village Association was not to accord them equal access to Jupiter Street and
inferentially, to give them the right to knock down the perimeter wall. It was, rather, to
regulate the use of the street owing precisely to the "planned" nature of Ayala's
development project, and real estate development in general, and this could best be
done by placing the commercial lot owners under the association's jurisdiction.
Moreover, Ayala's overtures with the association concerning the membership of
commercial lot buyers therein have been shown to be neither perfidious nor unethical
nor devious (paraphrasing the lower court). We quote anew:
xxxxxxxxx
(7) On June 30, 1972, appellant informed BAVA that in a few months
it shall subdivide and sell the commercial lots bordering the north side
of Buendia Avenue Extension from Reposo Street up to Zodiac Street.
Appellant also informed BAVA that it had taken all precautions and
will impose upon the commercial lot owners deed restrictions which
will harmonize and blend with the development and welfare of Bel-Air
Village. Appellant further applied for special membership in BAVA of
the commercial lot owners. A copy of the deed restrictions for the
commercial lots was also enclosed. The proposed deed restrictions
shall include the 19 meter set back of buildings from Jupiter Street,
the requirement for parking space within the lot of one (1) parking slot
for every seventy five (75) meters of office space in the building and
the limitation of vehicular traffic along Buendia to entrance only, but
allowing both vehicular entrance and vehicular exit through Jupiter
Street and any side street.
In its letter of July 10, 1972, BAVA acknowledged the above letter of appellant and
informed the latter that the application for special membership of the commercial lot
owners in BAVA would be submitted to BAVA's board of governors for decision.
(8) On September 25,1972, appellant notified BAVA that, after a
careful study, it was finally decided that the height limitation of
buildings on the commercial lots shall be increased from 12.5 meters
to 15 meters. Appellant further informed BAVA that Jupiter Street shall
be widened by 3.5 meters to improve traffic flow in said street. BAVA
did not reply to said letter, but on January 22, 1973, BAVA wrote a
letter to the appellant informing the latter that the Association had
assessed the appellant, as special member of the association, the
amount of P40,795.00 (based on 81,590 square meters at P.50 per
square meter) representing the membership dues of the commercial
lot owners for the year 1973, and requested the appellant to remit the
amount which its board of governors had already included in its
current budget. In reply, appellant on January 31, 1973 informed
BAVA that due to the widening of Jupiter Street, the area of the lots
which were accepted by the Association as members was reduced to
76,726 square meters. Thus, the corresponding due at P.50 per
350
square meter should be reduced to P38,363.00. This amount,
therefore, was remitted by the appellant to BAVA. Since then, the
latter has been collecting membership dues from the owners of the
commercial lots as special members of the Association. As a matter of
fact, the dues were increased several times. In 1980, the commercial
lot owners were already being charged dues at the rate of P3.00 per
square meter. (Domingo, TSN, p. 36, March 19, 1980). At this rate,
the total membership dues of the commercial lot owners amount to
P230,178.00 annually based on the total area of 76,726 square
meters of the commercial lots. 54
xxxxxxxxx
The alleged undertaking, finally, by Ayala in the deed of donation (over Jupiter
Street) to leave Jupiter Street for the private use of Bel-Air residents is belied by the
very provisions of the deed. We quote:
xxxxxxxxx
IV. That the offer made by the DONOR had been accepted by the
DONEE subject to the condition that the property will be used as a
street for the use of the members of the DONEE, their families,
personnel, guests, domestic help and, under certain reasonable
conditions and restrictions, by the general public, and in the event that
said lots or parts thereof cease to be used as such, ownership thereof
shall automatically revert to the DONOR. The DONEE shall always
have Reposo Street, Makati Avenue, and Paseo de Roxas open for
the use of the general public. It is also understood that the DONOR
shall continue the maintenance of the street at its expense for a
period of three years from date hereof." (Deed of Donation, p. 6, Exh.
7) 55
xxxxxxxxx
The donation, on the contrary, gave the general public equal right to it.
The Court cannot then say, accepting the veracity of the petitioners' facts"
enumerated above, that the Ayala Corporation may be held liable for specific
performance of a demandable obligation, let alone damages.
The Court adds that Ayala can hardly be held responsible for the alleged
deterioration of "living and environmental conditions" 56 of the Bel-Air area, as a
consequence of "Ayala's authorized demolition of the Jupiter perimeter wall in 1974-
1975. " 57 We agree with Ayala that until 1976, "there was peace and quiet" at Jupiter
Street, as the petitioners' (Sangalang, Gaston, and Briones) complaints admit.
Hence, the degeneration of peace and order in Bel-Air cannot be ascribed to the
destruction of the wall in 1974 and 1975.
What Ayala submits as the real cause was the opening of Jupiter Street to vehicular
traffic in 1977., 58 But this was upon orders of the Mayor, and for which the
homeowners' association had precisely filed suit (Civil Case No. 34998) 59 to contest
the act of the Mayor.
c.
This likewise disposes of the third question presented. The petitioners' reliance on
Ayala's alleged conduct (proving its alleged commitment), so we have ruled, is not
well-taken. Ayala's alleged acts do not, by themselves, reflect a commitment to
maintain the wall in dispute. It cannot be therefore said that the Court of Appeals
"arbitrarily ignore(d]" 60 the lower court's findings. Precisely, it is the duty of the
appellate court to review the findings of the trial judge, be they of fact or law. 61 It is
not bound by the conclusions of the judge, for which reason it makes its own findings
and arrives at its own conclusions. Unless a grave abuse of discretion may be
imputed to it, it may accept or reject the lower tribunal's determinations and rely
solely on the records.
Accordingly, the Court affirms the Court of Appeals' holding that the Ayala
Corporation, in its dealings with the petitioners, the Bel-Air Village Association in
particular, had "acted with justice, gave the appellees [petitioners] their due and
observed honesty and good faith." 62 "Therefore, under both Articles 19 and 21 of the
Civil Code, the appellant [Ayala] cannot be held liable for damages." 63
351
2. G.R. Nos. 74376, 76394, 78182, & 82281
Our decision also resolves, quite anticlimactically, these companion cases. But we
do so for various other reasons. In the Sangalang case, we absolve the Ayala
Corporation primarily owing to our finding that it is not liable for the opening of Jupiter
Street to the general public. Insofar as these petitions are concerned, we likewise
exculpate the private respondents, not only because of the fact that Jupiter Street is
not covered by the restrictive easements based on the "deed restrictions" but chiefly
because the National Government itself, through the Metro Manila Commission
(MMC), had reclassified Jupiter Street into high density commercial (C-3)
zone, 64 pursuant to its Ordinance No. 81-01. Hence, the petitioners have no cause
of action on the strength alone of the said "deed restrictions.
In view thereof, we find no need in resolving the questions raised as to procedure,
since this disposition is sufficient to resolve these cases.
It is not that we are saying that restrictive easements, especially the easements
herein in question, are invalid or ineffective. As far as the Bel-Air subdivision itself is
concerned, certainly, they are valid and enforceable. But they are, like all contracts,
subject to the overriding demands, needs, and interests of the greater number as the
State may determine in the legitimate exercise of police power. Our jurisdiction
guarantees sanctity of contract and is said to be the "law between the contracting
parties, 65 but while it is so, it cannot contravene 'law, morals, good customs, public
order, or public policy. 66 Above all, it cannot be raised as a deterrent to police power,
designed precisely to promote health, safety, peace, and enhance the common
good, at the expense of contractual rights, whenever necessary. In Ortigas & Co.,
Limited Partnership v. Feati Bank and Trust Co., 67 we are told:
xxxxxxxxx
2. With regard to the contention that said resolution cannot nullify the
contractual obligations assumed by the defendant-appellee referring
to the restrictions incorporated in the deeds of sale and later in the
corresponding Transfer Certificates of Title issued to defendant-
appellee it should be stressed, that while non-impairment of contracts
is constitutionally guaranteed, the rule is not absolute, since it has to
be reconciled with the legitimate exercise of police power, i.e., "the
power to prescribe regulations to promote the health, morals, peace,
education, good order or safety and general welfare of the people.'
Invariably described as "the most essential, insistent, and illimitable of
powers" and "in a sense, the greatest and most powerful attribute of
government," the exercise of the power may be judicially inquired into
and corrected only if it is capricious, whimsical, unjust or
unreasonable, there having been a denial of due process or a
violation of any other applicable constitutional guarantee. As this
Court held through Justice Jose P. Bengson in Philippine Long
Distance Company vs. City of Davao, et al. police power 'is elastic
and must be responsive to various social conditions; it is not confined
within narrow circumscriptions of precedents resting on past
conditions; it must follow the legal progress of a democratic way of
life.' We were even more emphatic in Vda. de Genuino vs. The Court
of agrarian Relations, et al., when We declared: "We do not see why
public welfare when clashing with the individual right to property
should not be made to prevail through the state's exercise of its police
power."
Resolution No. 27, 1960 declaring the western part of High way 54,
now E. de los Santos Avenue (EDSA, for short) from Shaw Boulevard
to the Pasig River as an industrial and commercial zone, was
obviously passed by the Municipal Council of Mandaluyong, Rizal in
the exercise of police power to safeguard or promote the health,
safety, peace, good order and general welfare of the people in the
locality. Judicial notice may be taken of the conditions prevailing in the
area, especially where Lots Nos. 5 and 6 are located. The lots
themselves not only front the highway; industrial and commercial
complexes have flourished about the place. EDSA, a main traffic
artery which runs through several cities and municipalities in the
Metro Manila area, supports an endless stream of traffic and the
resulting activity, noise and pollution are hardly conducive to the
health, safety or welfare of the residents in its route. Having been
expressly granted the power to adopt zoning and subdivision
ordinances or regulations, the municipality of Mandaluyong, through
352
its Municipal Council, was reasonably, if not perfectly, justified under
the circumstances, in passing the subject resolution. 68
xxxxxxxxx
Undoubtedly, the MMC Ordinance represents a legitimate exercise of police power.
The petitioners have not shown why we should hold otherwise other than for the
supposed "non-impairment" guaranty of the Constitution, which, as we have
declared, is secondary to the more compelling interests of general welfare. The
Ordinance has not been shown to be capricious or arbitrary or unreasonable to
warrant the reversal of the judgments so appealed. In that connection, we find no
reversible error to have been committed by the Court of Appeals.
WHEREFORE, premises considered, these petitions are DENIED No
pronouncement as to costs.
IT IS SO ORDERED.
G.R. No. 100152             March 31, 2000
ACEBEDO OPTICAL COMPANY, INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS, Hon. MAMINDIARA MANGOTARA, in
his capacity as Presiding Judge of the RTC, 12th Judicial Region, Br. 1, Iligan
City; SAMAHANG OPTOMETRIST Sa PILIPINAS — Iligan City Chapter, LEO T.
CAHANAP, City Legal Officer, and Hon. CAMILO P. CABILI, City Mayor of
Iligan, respondents.
PURISIMA, J.:
At bar is a petition for review under Rule 45 of the Rules of Court seeking to nullify
the dismissal by the Court of Appeals of the original petition for certiorari, prohibition
and mandamus filed by the herein petitioner against the City Mayor and City Legal
Officer of Iligan and the Samahang Optometrist sa Pilipinas — Iligan Chapter (SOPI,
for brevity).
The antecedent facts leading to the filing of the instant petition are as follows:
Petitioner applied with the Office of the City Mayor of Iligan for a business permit.
After consideration of petitioner's application and the opposition interposed thereto
by local optometrists, respondent City Mayor issued Business Permit No. 5342
subject to the following conditions:
1. Since it is a corporation, Acebedo cannot put up an optical clinic but only a
commercial store;
2. Acebedo cannot examine and/or prescribe reading and similar optical
glasses for patients, because these are functions of optical clinics;
3. Acebedo cannot sell reading and similar eyeglasses without a prescription
having first been made by an independent optometrist (not its employee) or
independent optical clinic. Acebedo can only sell directly to the public, without
need of a prescription, Ray-Ban and similar eyeglasses;
4. Acebedo cannot advertise optical lenses and eyeglasses, but can
advertise Ray-Ban and similar glasses and frames;
5. Acebedo is allowed to grind lenses but only upon the prescription of an
independent optometrist. 1
On December 5, 1988, private respondent Samahan ng Optometrist Sa Pilipinas
(SOPI), Iligan Chapter, through its Acting President, Dr. Frances B. Apostol, lodged a
complaint against the petitioner before the Office of the City Mayor, alleging that
Acebedo had violated the conditions set forth in its business permit and requesting
the cancellation and/or revocation of such permit.
Acting on such complaint, then City Mayor Camilo P. Cabili designated City Legal
Officer Leo T. Cahanap to conduct an investigation on the matter. On July 12, 1989,
respondent City Legal Officer submitted a report to the City Mayor finding the herein
petitioner guilty of violating all the conditions of its business permit and
recommending the disqualification of petitioner from operating its business in Iligan
353
City. The report further advised that no new permit shall be granted to petitioner for
the year 1989 and should only be given time to wind up its affairs.
On July 19, 1989, the City Mayor sent petitioner a Notice of Resolution and
Cancellation of Business Permit effective as of said date and giving petitioner three
(3) months to wind up its affairs.
On October 17, 1989, petitioner brought a petition for certiorari, prohibition
and mandamus with prayer for restraining order/preliminary injunction against the
respondents, City Mayor, City Legal Officer and Samahan ng Optometrists sa
Pilipinas-Iligan City Chapter (SOPI), docketed as Civil Case No. 1497 before the
Regional Trial Court of Iligan City, Branch I. Petitioner alleged that (1) it was denied
due process because it was not given an opportunity to present its evidence during
the investigation conducted by the City Legal Officer; (2) it was denied equal
protection of the laws as the limitations imposed on its business permit were not
imposed on similar businesses in Iligan City; (3) the City Mayor had no authority to
impose the special conditions on its business permit; and (4) the City Legal Officer
had no authority to conduct the investigation as the matter falls within the exclusive
jurisdiction of the Professional Regulation Commission and the Board of Optometry.
Respondent SOPI interposed a Motion to Dismiss the Petition on the ground of non-
exhaustion of administrative remedies but on November 24, 1989, Presiding Judge
Mamindiara P. Mangotara deferred resolution of such Motion to Dismiss until after
trial of the case on the merits. However, the prayer for a writ of preliminary injunction
was granted. Thereafter, respondent SOPI filed its answer.1âwphi1.nêt
On May 30, 1990, the trial court dismissed the petition for failure to exhaust
administrative remedies, and dissolved the writ of preliminary injunction it earlier
issued. Petitioner's motion for reconsideration met the same fate. It was denied by
an Order dated June 28, 1990.
On October 3, 1990, instead of taking an appeal, petitioner filed a petition
for certiorari, prohibition and mandamus with the Court of Appeals seeking to set
aside the questioned Order of Dismissal, branding the same as tainted with grave
abuse of discretion on the part of the trial court.
On January 24, 1991, the Ninth Division 2 of the Court of Appeals dismissed the
petition for lack of merit. Petitioner's motion reconsideration was also denied in the
Resolution dated May 15, 1991.
Undaunted, petitioner has come before this court via the present petition, theorizing
that:
A.
THE RESPONDENT COURT, WHILE CORRECTLY HOLDING THAT THE
RESPONDENT CITY MAYOR ACTED BEYOND HIS AUTHORITY IN
IMPOSING THE SPECIAL CONDITIONS IN THE PERMIT AS THEY HAD
NO BASIS IN ANY LAW OR ORDINANCE, ERRED IN HOLDING THAT THE
SAID SPECIAL CONDITIONS NEVERTHELESS BECAME BINDING ON
PETITIONER UPON ITS ACCEPTANCE THEREOF AS A PRIVATE
AGREEMENT OR CONTRACT.
B.
THE RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT
THE CONTRACT BETWEEN PETITIONER AND THE CITY OF ILIGAN WAS
ENTERED INTO BY THE LATTER IN THE PERFORMANCE OF ITS
PROPRIETARY FUNCTIONS.
The petition is impressed with merit.
Although petitioner agrees with the finding of the Court of Appeals that respondent
City Mayor acted beyond the scope of his authority in imposing the assailed
conditions in subject business permit, it has excepted to the ruling of the Court of
Appeals that the said conditions nonetheless became binding on petitioner, once
accepted, as a private agreement or contract. Petitioner maintains that the said
special conditions are null and void for being ultra vires and cannot be given effect;
and therefore, the principle of estoppel cannot apply against it.
354
On the other hand, the public respondents, City Mayor and City Legal Officer, private
respondent SOPI and the Office of the Solicitor General contend that as a valid
exercise of police power, respondent City Mayor has the authority to impose, as he
did, special conditions in the grant of business permits.
Police power as an inherent attribute of sovereignty is the power to prescribe
regulations to promote the health, morals, peace, education, good order or safety
and general welfare of the people. 9 The State, through the legislature, has delegated
the exercise of police power to local government units, as agencies of the State, in
order to effectively accomplish and carry out the declared objects of their
creation. 4 This delegation of police power is embodied in the general welfare clause
of the Local Government Code which provides:
Sec. 6. General Welfare. — Every local government unit shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as
powers necessary, appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions, local government units
shall ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, improve
public morals, enhance economic prosperity and social justice, promote full
employment among their residents, maintain peace and order, and preserve
the comfort and convenience of their inhabitants.
The scope of police power has been held to be so comprehensive as to encompass
almost all matters affecting the health, safety, peace, order, morals, comfort and
convenience of the community. Police power is essentially regulatory in nature and
the power to issue licenses or grant business permits, if exercised for a regulatory
and not revenue-raising purpose, is within the ambit of this power. 5
The authority of city mayors to issue or grant licenses and business permits is
beyond cavil. It is provided for by law. Section 171, paragraph 2 (n) of Batas
Pambansa Bilang 337 otherwise known as the Local Government Code of 1983,
reads:
Sec. 171. The City Mayor shall:
x x x           x x x          x x x
n) Grant or refuse to grant, pursuant to law, city licenses or permits, and
revoke the same for violation of law or ordinance or the conditions upon
which they are granted.
However, the power to grant or issue licenses or business permits must always be
exercised in accordance with law, with utmost observance of the rights of all
concerned to due process and equal protection of the law.
Succinct and in point is the ruling of this Court, that:
. . . While a business may be regulated, such regulation must, however, be
within the bounds of reason, i.e., the regulatory ordinance must be
reasonable, and its provision cannot be oppressive amounting to an arbitrary
interference with the business or calling subject of regulation. A lawful
business or calling may not, under the guise of regulation, be unreasonably
interfered with even by the exercise of police power. . . .
x x x           x x x          x x x
. . . The exercise of police power by the local government is valid unless it
contravenes the fundamental law of the land or an act of the legislature, or
unless it is against public policy or is unreasonable, oppressive, partial,
discriminating or in derogation of a common right. 6
In the case under consideration, the business permit granted by respondent City
Mayor to petitioner was burdened with several conditions. Petitioner agrees with the
holding by the Court of Appeals that respondent City Mayor acted beyond his
authority in imposing such special conditions in its permit as the same have no basis
in the law or ordinance. Public respondents and private respondent SOPI, on the
other hand, are one in saying that the imposition of said special conditions on
355
petitioner's business permit is well within the authority of the City Mayor as a valid
exercise of police power.
As aptly discussed by the Solicitor General in his Comment, the power to issue
licenses and permits necessarily includes the corollary power to revoke, withdraw or
cancel the same. And the power to revoke or cancel, likewise includes the power to
restrict through the imposition of certain conditions. In the case of Austin-
Hardware, Inc. vs. Court of Appeals, 7 it was held that the power to license carries
with it the authority to provide reasonable terms and conditions under which the
licensed business shall be conducted. As the Solicitor General puts it:
If the City Mayor is empowered to grant or refuse to grant a license, which is
a broader power, it stands to reason that he can also exercise a lesser power
that is reasonably incidental to his express power, i.e. to restrict a license
through the imposition of certain conditions, especially so that there is no
positive prohibition to the exercise of such prerogative by the City Mayor, nor
is there any particular official or body vested with such authority. 8
However, the present inquiry does not stop there, as the Solicitor General believes.
The power or authority of the City Mayor to impose conditions or restrictions in the
business permit is indisputable. What petitioner assails are the conditions imposed in
its particular case which, it complains, amount to a confiscation of the business in
which petitioner is engaged.
Distinction must be made between the grant of a license or permit to do business
and the issuance of a license to engage in the practice of a particular profession. The
first is usually granted by the local authorities and the second is issued by the Board
or Commission tasked to regulate the particular profession. A business permit
authorizes the person, natural or otherwise, to engage in business or some form of
commercial activity. A professional license, on the other hand, is the grant of
authority to a natural person to engage in the practice or exercise of his or her
profession.
In the case at bar, what is sought by petitioner from respondent City Mayor is a
permit to engage in the business of running an optical shop. It does not purport to
seek a license to engage in the practice of optometry as a corporate body or entity,
although it does have in its employ, persons who are duly licensed to practice
optometry by the Board of Examiners in Optometry.
The case of Samahan ng Optometrists sa Pilipinas vs. Acebedo International
Corporation, G.R. No. 117097, 9 promulgated by this Court on March 21, 1997, is in
point. The factual antecedents of that case are similar to those of the case under
consideration and the issue ultimately resolved therein is exactly the same issue
posed for resolution by this Court en banc.
In the said case, the Acebedo International Corporation filed with the Office of the
Municipal Mayor an application for a business permit for the operation of a branch of
Acebedo Optical in Candon, Ilocos Sur. The application was opposed by the
Samahan ng Optometrists sa Pilipinas-Ilocos Sur Chapter, theorizing that Acebedo is
a juridical entity not qualified to practice optometry. A committee was created by the
Office of the Mayor to study private respondent's application. Upon recommendation
of the said committee, Acebedo's application for a business permit was denied.
Acebedo filed a petition with the Regional Trial Court but the same was dismissed.
On appeal, however, the Court of Appeals reversed the trial court's disposition,
prompting the Samahan ng Optometrists to elevate the matter to this Court.
The First Division of this Court, then composed of Honorable Justice Teodoro
Padilla, Josue Bellosillo, Jose Vitug and Santiago Kapunan, with Honorable Justice
Regino Hermosisima, Jr. as ponente, denied the petition and ruled in favor of
respondent Acebedo International Corporation, holding that "the fact that private
respondent hires optometrists who practice their profession in the course of their
employment in private respondent's optical shops, does not translate into a practice
of optometry by private respondent itself," 10 The Court further elucidated that in both
the old and new Optometry Law, R.A. No. 1998, superseded by R.A. No. 8050, it is
significant to note that there is no prohibition against the hiring by corporations of
optometrists. The Court concluded thus:
All told, there is no law that prohibits the hiring by corporations of optometrists
or considers the hiring by corporations of optometrists as a practice by the
corporation itself of the profession of optometry.
356
In the present case, the objective of the imposition of subject conditions on
petitioner's business permit could be attained by requiring the optometrists in
petitioner's employ to produce a valid certificate of registration as optometrist, from
the Board of Examiners in Optometry. A business permit is issued primarily to
regulate the conduct of business and the City Mayor cannot, through the issuance of
such permit, regulate the practice of a profession, like that of optometry. Such a
function is within the exclusive domain of the administrative agency specifically
empowered by law to supervise the profession, in this case the Professional
Regulations Commission and the Board of Examiners in Optometry.
It is significant to note that during the deliberations of the bicameral conference
committee of the Senate and the House of Representatives on R.A. 8050 (Senate
Bill No. 1998 and House Bill No. 14100), the committee failed to reach a consensus
as to the prohibition on indirect practice of optometry by corporations. The proponent
of the bill, former Senator Freddie Webb, admitted thus:
Senator Webb: xxx xxx xxx
The focus of contention remains to be the proposal of prohibiting the indirect
practice of optometry by corporations.1âwphi1 We took a second look and
even a third look at the issue in the bicameral conference, but a compromise
remained elusive. 11
Former Senator Leticia Ramos-Shahani likewise voted her reservation in casting her
vote:
Senator Shahani: Mr. President.
The optometry bills have evoked controversial views from the members of the
panel. While we realize the need to uplift the standards of optometry as a
profession, the consesnsus of both Houses was to avoid touching sensitive
issues which properly belong to judicial determination. Thus, the bicameral
conference committee decided to leave the issue of indirect practice of
optometry and the use of trade names open to the wisdom of the Courts
which are vested with the prerogative of interpreting the laws. 12
From the foregoing, it is thus evident that Congress has not adopted a unanimous
position on the matter of prohibition of indirect practice of optometry by corporations,
specifically on the hiring and employment of licensed optometrists by optical
corporations. It is clear that Congress left the resolution of such issue for judicial
determination, and it is therefore proper for this Court to resolve the issue.
Even in the United States, jurisprudence varies and there is a conflict of opinions
among the federal courts as to the right of a corporation or individual not himself
licensed, to hire and employ licensed optometrists. 13
Courts have distinguished between optometry as a learned profession in the
category of law and medicine, and optometry as a mechanical art. And, insofar as
the courts regard optometry as merely a mechanical art, they have tended to find
nothing objectionable in the making and selling of eyeglasses, spectacles and lenses
by corporations so long as the patient is actually examined and prescribed for by a
qualified practitioner. 14
The primary purpose of the statute regulating the practice of optometry is to insure
that optometrical services are to be rendered by competent and licensed persons in
order to protect the health and physical welfare of the people from the dangers
engendered by unlicensed practice. Such purpose may be fully accomplished
although the person rendering the service is employed by a corporation. 15
Furthermore, it was ruled that the employment of a qualified optometrist by a
corporation is not against public policy. 16 Unless prohibited by statutes, a corporation
has all the contractual rights that an individual has 17 and it does not become the
practice of medicine or optometry because of the presence of a physician or
optometrist. 18 The manufacturing, selling, trading and bartering of eyeglasses and
spectacles as articles of merchandise do not constitute the practice of optometry. 19
In the case of Dvorine vs. Castelberg Jewelry Corporation, 20 defendant corporation
conducted as part of its business, a department for the sale of eyeglasses and the
furnishing of optometrical services to its clients. It employed a registered optometrist
who was compensated at a regular salary and commission and who was furnished
instruments and appliances needed for the work, as well as an office. In holding that
corporation was not engaged in the practice of optometry, the court ruled that there
357
is no public policy forbidding the commercialization of optometry, as in law and
medicine, and recognized the general practice of making it a commercial business by
advertising and selling eyeglasses.
To accomplish the objective of the regulation, a state may provide by statute that
corporations cannot sell eyeglasses, spectacles, and lenses unless a duly licensed
physician or a duly qualified optometrist is in charge of, and in personal attendance
at the place where such articles are sold. 21 In such a case, the patient's primary and
essential safeguard lies in the optometrist's control of the "treatment" by means of
prescription and preliminary and final examination. 22
In analogy, it is noteworthy that private hospitals are maintained by corporations
incorporated for the purpose of furnishing medical and surgical treatment. In the
course of providing such treatments, these corporations employ physicians,
surgeons and medical practitioners, in the same way that in the course of
manufacturing and selling eyeglasses, eye frames and optical lenses, optical shops
hire licensed optometrists to examine, prescribe and dispense ophthalmic lenses. No
one has ever charged that these corporations are engaged in the practice of
medicine. There is indeed no valid basis for treating corporations engaged in the
business of running optical shops differently.
It also bears stressing, as petitioner has pointed out, that the public and private
respondents did not appeal from the ruling of the Court of Appeals. Consequently,
the holding by the Court of Appeals that the act of respondent City Mayor in imposing
the questioned special conditions on petitioner's business permit is ultra vires cannot
be put into issue here by the respondents. It is well-settled that:
A party who has not appealed from the decision may not obtain any
affirmative relief from the appellate court other than what he had obtain from
the lower court, if any, whose decision is brought up on appeal. 23
. . . an appellee who is not an appellant may assign errors in his brief where
his purpose is to maintain the judgment on other grounds, but he cannot seek
modification or reversal of the judgment or affirmative relief unless he has
also appealed. 24
Thus, respondents' submission that the imposition of subject special conditions on
petitioner's business permit is not ultra vires cannot prevail over the finding and
ruling by the Court of Appeals from which they (respondents) did not appeal.
Anent the second assigned error, petitioner maintains that its business permit issued
by the City Mayor is not a contract entered into by Iligan City in the exercise of its
proprietary functions, such that although petitioner agreed to such conditions, it
cannot be held in estoppel since ultra vires acts cannot be given effect.
Respondents, on the other hand, agree with the ruling of the Court of Appeals that
the business permit in question is in the nature of a contract between Iligan City and
the herein petitioner, the terms and conditions of which are binding upon agreement,
and that petitioner is estopped from questioning the same. Moreover, in the
Resolution denying petitioner's motion for reconsideration, the Court of Appeals held
that the contract between the petitioner and the City of Iligan was entered into by the
latter in the performance of its proprietary functions.
This Court holds otherwise. It had occasion to rule that a license or permit is not in
the nature of a contract but a special privilege.
. . . a license or a permit is not a contract between the sovereignty and the
licensee or permitee, and is not a property in the constitutional sense, as to
which the constitutional proscription against impairment of the obligation of
contracts may extend. A license is rather in the nature of a special privilege,
of a permission or authority to do what is within its terms. It is not in any way
vested, permanent or absolute. 25
It is therefore decisively clear that estoppel cannot apply in this case. The fact that
petitioner acquiesced in the special conditions imposed by the City Mayor in subject
business permit does not preclude it from challenging the said imposition, which
is ultra vires or beyond the ambit of authority of respondent City Mayor. Ultra
vires acts or acts which are clearly beyond the scope of one's authority are null and
void and cannot be given any effect. The doctrine of estoppel cannot operate to give
effect to an act which is otherwise null and void or ultra vires.
358
The Court of Appeals erred in adjudging subject business permit as having been
issued by responded City Mayor in the performance of proprietary functions of Iligan
City. As hereinabove elaborated upon, the issuance of business licenses and permits
by a municipality or city is essentially regulatory in nature. The authority, which
devolved upon local government units to issue or grant such licenses or permits, is
essentially in the exercise of the police power of the State within the contemplation of
the general welfare clause of the Local Government Code.
WHEREFORE, the petition is GRANTED; the Decision of the Court of Appeals in
CA-GR SP No. 22995 REVERSED: and the respondent City Mayor is hereby
ordered to reissue petitioner's business permit in accordance with law and with this
disposition. No pronouncement as to costs.
SO ORDERED.
G.R. No. 150763             July 2, 2004
RURAL BANK OF MAKATI, INC., ESTEBAN S. SILVA and MAGDALENA V.
LANDICHO, petitioners,
vs.
MUNICIPALITY OF MAKATI and ATTY. VICTOR A. L. VALERO, respondents.
DECISION
QUISUMBING, J.:
In its decision1 dated July 17, 2001, in CA-G.R. CV No. 58214, the Court of Appeals
affirmed the decision2 dated October 22, 1996 of the Regional Trial Court of Makati
City, Branch 134, in Civil Case No. 91-2866 dismissing petitioners’ complaint for
recovery of a sum of money and damages. Petitioners now assail said CA decision
as well as the Resolution3 dated November 9, 2001, which denied their Motion for
Reconsideration.
The facts are as follows:
Sometime in August 1990, Atty. Victor A.L. Valero, then the municipal attorney of the
Municipality of Makati, upon request of the municipal treasurer, went to the Rural
Bank of Makati to inquire about the bank’s payments of taxes and fees to the
municipality. He was informed, however, by petitioner Magdalena V. Landicho,
corporate secretary of the bank, that the bank was exempt from paying taxes under
Republic Act No. 720, as amended.4
On November 19, 1990, the municipality lodged a complaint with the Prosecutor’s
Office, charging petitioners Esteban S. Silva, president and general manager of the
bank and Magdalena V. Landicho for violation of Section 21(a), Chapter II, Article 3
in relation to Sections 105 and 169 of the Metropolitan Tax Code.
On April 5, 1991, an Information docketed as Criminal Case No. 140208, for violation
of Municipal Ordinance Nos. 122 and 39 for non-payment of the mayor’s permit fee,
was filed with the Metropolitan Trial Court (MeTC) of Makati against petitioners.
Another Information, docketed as Criminal Case No. 140209, for non-payment of
annual business tax, in violation of Metro Manila Commission Ordinance No. 82-03,
Section 21(a), Chapter II, Article 3, was likewise filed with the MeTC.
While said cases were pending with the municipal court, respondent municipality
ordered the closure of the bank. This prompted petitioners to pay, under protest, the
mayor’s permit fee and the annual fixed tax in the amount of P82,408.66.
On October 18, 1991, petitioners filed with the RTC of Makati a Complaint for Sum of
Money and Damages, docketed as Civil Case No. 91-2866. Petitioners alleged that
they were constrained to pay the amount of P82,408.66 because of the closure
order, issued despite the pendency of Criminal Cases Nos. 140208-09 and the lack
of any notice or assessment of the fees to be paid. They averred that the collection
of the taxes/fees was oppressive, arbitrary, unjust and illegal. Additionally, they
359
alleged that respondent Atty. Valero had no power to enforce laws and ordinances,
thus his action in enforcing the collection of the permit fees and business taxes was
ultra vires. Petitioners claimed that the bank lost expected earnings in the amount
of P19,778. Petitioners then assailed the municipal ordinances of Makati as invalid
for want of the requisite publication.
In its Answer, respondent municipality asserted that petitioners’ payment
of P82,408.66 was for a legal obligation because the payment of the mayor’s permit
fee as well as the municipal business license was required of all business concerns.
According to respondent, said requirement was in furtherance of the police power of
the municipality to regulate businesses.
For his part, Atty. Valero filed an Answer claiming that there was no coercion
committed by the municipality, that payment was a legal obligation of the bank, and
that its claim of exemption had no legal basis. He further alleged that petitioners’
action was clearly intended to harass and humiliate him and as counterclaim, he
asked for moral and other damages.
On October 22, 1996, the RTC decided Civil Case No. 91-2866 as follows:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered
dismissing the complaint.
On the counterclaim, the plaintiffs are hereby ordered jointly and severally to
pay to defendant Victor Valero the sum of P200,000.00 as moral damages
and the amount of P50,000.00 as attorney’s fees.
The counterclaim of defendant Municipality is dismissed.
Cost against the plaintiffs.
SO ORDERED.5
In finding for respondents, the RTC ruled that the bank was engaged in business as
a rural bank. Hence, it should secure the necessary permit and business license, as
well as pay the corresponding charges and fees. It found that the municipality had
authority to impose licenses and permit fees on persons engaging in business, under
its police power embodied under the general welfare clause. Also, the RTC declared
unmeritorious petitioners’ claim for exemption under Rep. Act No. 720 since said
exemption had been withdrawn by Executive Order No. 936 and the Rural Bank Act
of 1992.7 These statutes no longer exempted rural banks from paying corporate
income taxes and local taxes, fees and charges. It also found petitioners’ claim of
lack of publication of MMC Ordinance Nos. 82-03 and Municipal Ordinance No. 122
to be mere allegations unsupported by clear and convincing evidence.
In awarding damages to Atty. Valero, the RTC found that he had been maliciously
impleaded as defendant. It noted that Atty. Valero, as a municipal legal officer, was
tasked to enforce municipal ordinances. In short, he was merely an agent of the local
chief executive and should not be faulted for performing his assigned task.
Petitioners seasonably moved for reconsideration, but this was denied by the RTC in
its Order dated January 10, 1997.8
Petitioners appealed to the Court of Appeals in CA-G.R. CV No. 58214. The
appellate court sustained the lower court in this wise:
WHEREFORE, premises considered, the appealed decision is hereby
AFFIRMED in toto.
SO ORDERED.9
The Court of Appeals found the order of closure of the bank valid and justified since
the bank was operating without any permit and without having paid the requisite
permit fee. Thus, declared the Court of Appeals, "it is not merely a matter of
enforcement and collection of fees, as the appellants would have it, but a violation of
the municipality’s authority to regulate the businesses operating within its territory."10
The appellate court also brushed aside petitioners’ claim that the general welfare
clause is limited only to legislative action. It declared that the exercise of police
power by the municipality was mandated by the general welfare clause, which
360
authorizes the local government units to enact ordinances, not only to carry into
effect and discharge such duties as are conferred upon them by law, but also those
for the good of the municipality and its inhabitants. This mandate includes the
regulation of useful occupations and enterprises.
Petitioner moved for reconsideration, but the appellate court in its Resolution11 of
November 9, 2001 denied the same.
Hence, this instant petition alleging that the Honorable Court of Appeals seriously
erred in:
1) ….HOLDING THAT THE CLOSURE BY THE APPELLEE, VICTOR
VALERO, OF THE APPELLANT BANK WAS A LEGITIMATE EXERCISE OF
POLICE POWER BY THE MUNICIPALITY OF MAKATI;
2) ….NOT CONSIDERING THE FACT THAT MAKATI ORDINANCE 122
REQUIRING MAYOR’S PERMIT FOR OPERATION OF AN
ESTABLISHMENT AND MMC ORDINANCE NO. 82-03 WERE ADMITTED
AS NOT PUBLISHED AS REQUIRED IN TAÑADA, ET AL., vs. TUVERA,
NO. L-63915, DECEMBER 29, 1986 AND THAT NO TAX ASSESSMENT
WAS PRESENTED TO THE BANK;
3) ….AWARDING MORAL DAMAGES TO APPELLEE VICTOR VALERO IN
THE AMOUNT OF P200,000.00 AND ATTORNEY’S FEES IN THE SUM OF
P50,000.00;
4) ….NOT AWARDING TO THE APPELLANT BANK, THE AMOUNT OF
P57,854.00 REPRESENTING THE AMOUNT UNJUSTLY AND ILLEGALLY
COLLECTED FROM THE APPELLANT BANK;
5) ….NOT AWARDING THE AMOUNT OF P10,413.75 YEARLY
REPRESENTING THE UNREALIZED PROFIT WHICH THE APPELLANT
BANK IS BEING DEPRIVED OF IN THE USE OF THE AFORESAID
AMOUNT PLUS LEGAL INTEREST ALLOWED IN JUDGMENT FROM THE
TIME OF THE EXTRAJUDICIAL DEMAND. (DEMAND LETTER, DATED
OCTOBER 4, 1991, EXHIBIT "O" FOR THE APPELLANTS);
6) ….NOT GRANTING TO APPELLANTS ESTEBAN S. SILVA AND
MAGDALENA LANDICHO MORAL DAMAGES IN THE AMOUNT OF
P15,000.00;
7) ….NOT AWARDING TO APPELLANTS, P1,000,000.00 EXEMPLARY
DAMAGES; 25% OF THE APPELLANTS CLAIM AS AND FOR
ATTORNEYS’ FEE AND COSTS OF SUIT.12
Essentially, the following are the relevant issues for our resolution:
1. Whether or not petitioner bank is liable to pay the business taxes and
mayor’s permit fees imposed by respondent;
2. Whether or not the closure of petitioner bank is valid;
3. Whether or not petitioners are entitled to an award of unrealized profit and
damages;
4. Whether or not respondent Atty. Victor Valero is entitled to damages.
On the first issue, petitioner bank claims that of the P82,408.66 it paid under protest,
it is actually liable only for the amount of P24,154, representing taxes, fees and
charges due beginning 1987, or after the issuance of E.O. No. 93. Prior to said year,
it was exempt from paying any taxes, fees, and charges by virtue of Rep. Act No.
720.
We find the bank’s claim for refund untenable now.
Section 14 of Rep. Act No. 720, as amended by Republic Act No. 4106,13 approved
on July 19, 1964, had exempted rural banks with net assets not exceeding one
million pesos (P1,000,000) from the payment of all taxes, charges and fees. The
records show that as of December 29, 1986, petitioner bank’s net assets amounted
361
only to P745,432.2914 or below the one million ceiling provided for in Section 14 of
the old Rural Banking Act. Hence, under Rep. Act No. 720, petitioner bank could
claim to be exempt from payment of all taxes, charges and fees under the
aforementioned provision.
However, on December 17, 1986, Executive Order No. 93 was issued by then
President Corazon Aquino, withdrawing all tax and duty incentives with certain
exceptions. Notably, not included among the exceptions were those granted to rural
banks under Rep. Act No. 720. With the passage of said law, petitioner could no
longer claim any exemption from payment of business taxes and permit fees.
Now, as to the refund of P57,854 claimed by petitioners allegedly because of
overpayment of taxes and fees, we note that petitioners have not adequately
substantiated their claim. As found by the Court of Appeals:
As to the computation of the payable fees, the plaintiffs-appellants claim an
overpayment and pray for a refund. It is not clearly shown from their
argument that such overpayment exists. And from their initial complaint, they
even asked for the refund of the whole P82,408.66 paid, which complaint was
instituted in 1991. They claim having paid the fees and charges due since
1991, which is irrelevant, since the P82,408.66 was paid for the period before
1991, and thus no deduction can be made for payments after that period. It is
not clear where their computation of P57,854.00 owed them came from, and
lacking solid support, their prayer for a partial refund must fail. Plaintiffs-
appellants have failed to show that the payment of fees and charges even
covered the period before their exemption was withdrawn.15
Factual findings of the Court of Appeals, which are supported on record, are binding
and conclusive upon this Court. As repeatedly held, such findings will not be
disturbed unless they are palpably unsupported by the evidence on record or unless
the judgment itself is based on misapprehension of facts.16 Moreover, in a petition for
review, only questions of law are properly raised. On this score, the refund sought by
petitioners could not be entertained much less granted.
Anent the second issue, petitioner bank claims that the closure of respondent bank
was an improper exercise of police power because a municipal corporation has no
inherent but only delegated police power, which must be exercised not by the
municipal mayor but by the municipal council through the enactment of ordinances. It
also assailed the Court of Appeals for invoking the General Welfare Clause
embodied in Section 1617 of the Local Government Code of 1991, which took effect in
1992,18 when the closure of the bank was actually done on July 31, 1991.
Indeed the Local Government Code of 1991 was not yet in effect when the
municipality ordered petitioner bank’s closure on July 31, 1991. However, the
general welfare clause invoked by the Court of Appeals is not found on the
provisions of said law alone. Even under the old Local Government Code (Batas
Pambansa Blg. 337)19 which was then in effect, a general welfare clause was
provided for in Section 7 thereof. Municipal corporations are agencies of the State for
the promotion and maintenance of local self-government and as such are endowed
with police powers in order to effectively accomplish and carry out the declared
objects of their creation.20 The authority of a local government unit to exercise police
power under a general welfare clause is not a recent development. This was already
provided for as early as the Administrative Code of 1917.21 Since then it has been
reenacted and implemented by new statutes on the matter. Thus, the closure of the
bank was a valid exercise of police power pursuant to the general welfare clause
contained in and restated by B.P. Blg. 337, which was then the law governing local
government units. No reversible error arises in this instance insofar as the validity of
respondent municipality’s exercise of police power for the general welfare is
concerned.
The general welfare clause has two branches. The first, known as the general
legislative power, authorizes the municipal council to enact ordinances and make
regulations not repugnant to law, as may be necessary to carry into effect and
discharge the powers and duties conferred upon the municipal council by law. The
second, known as the police power proper, authorizes the municipality to enact
ordinances as may be necessary and proper for the health and safety, prosperity,
morals, peace, good order, comfort, and convenience of the municipality and its
inhabitants, and for the protection of their property.22
In the present case, the ordinances imposing licenses and requiring permits for any
business establishment, for purposes of regulation enacted by the municipal council
of Makati, fall within the purview of the first branch of the general welfare clause.
362
Moreover, the ordinance of the municipality imposing the annual business tax is part
of the power of taxation vested upon local governments as provided for under
Section 8 of B.P. Blg. 337,23 to wit:
Sec. 8. Authority to Create Sources of Revenue. – (1) Each local government
unit shall have the power to create its own sources of revenue and to levy
taxes, subject to such limitations as may be provided by law.
...
Implementation of these ordinances is vested in the municipal mayor, who is the
chief executive of the municipality as provided for under the Local Government
Code, to wit:
Sec. 141. Powers and Duties. –
(1) The mayor shall be the chief executive of the municipal government and
shall exercise such powers, duties and functions as provided in this Code and
other laws.
(2) He shall:
...
(k) Grant licenses and permits in accordance with existing laws or
municipal ordinances and revoke them for violation of the conditions
upon which they have been granted;
...
(o) Enforce laws, municipal ordinances and resolutions and issue
necessary orders for their faithful and proper enforcement and
execution;
(p) Ensure that all taxes and other revenues of the municipality
are collected, and that municipal funds are spent in accordance with
law, ordinances and regulations;
...
(t) Cause to be instituted judicial proceedings in connection with the
violation of ordinances, for the collection of taxes, fees and charges,
and for the recovery of property and funds of the municipality, and
otherwise to protect the interest of the municipality; 24 (Emphasis
supplied)
...
Consequently, the municipal mayor, as chief executive, was clothed with authority to
create a Special Task Force headed by respondent Atty. Victor A.L. Valero to
enforce and implement said ordinances and resolutions and to file appropriate
charges and prosecute violators.25 Respondent Valero could hardly be faulted for
performing his official duties under the cited circumstances.
Petitioners contend that MMC Ordinance No. 82-03 and Municipal Ordinance No.
122 are void for lack of publication. This again raises a factual issue, which this Court
may not look into. As repeatedly held, this Court is not a trier of facts.26 Besides, both
the Court of Appeals and the trial court found lack of sufficient evidence on this point
to support petitioners’ claim, thus:
And finally the matter of the lack of publication is once again alleged by the
plaintiffs-appellants, claiming that the matter was skirted by the trial court.
This argument must fail, in the light of the trial court’s squarely finding lack of
evidence to support the allegation of the plaintiffs-appellants. We quote from
the trial court’s decision:
The contention that MMC Ordinance No. 82-03 and Municipal
Ordinance No. 122 of Makati are void as they were not publishced
(sic) is untenable. The mere allegation of the plaintiff is not sufficient
363
to declare said ordinances void. The plaintiffs failed to adduce clear,
convincing and competent evidence to prove said Ordinances void.
Moreover, in this jurisdiction, an ordinance is presumed to be valid
unless declared otherwise by a Court in an appropriate proceeding
where the validity of the ordinance is directly put in issue.27
On the issue of the closure of the bank, we find that the bank was not engaged in
any illegal or immoral activities to warrant its outright closure. The appropriate
remedies to enforce payment of delinquent taxes or fees are provided for in Section
62 of the Local Tax Code, to wit:
SEC. 62. Civil Remedies. – The civil remedies available to enforce payment
of delinquent taxes shall be by distraint of personal property, and by legal
action. Either of these remedies or both simultaneously may be pursued at
the discretion of the proper authority.
The payment of other revenues accruing to local governments shall be
enforced by legal action.28
Said Section 62 did not provide for closure. Moreover, the order of closure violated
petitioner’s right to due process, considering that the records show that the bank
exercised good faith and presented what it thought was a valid and legal justification
for not paying the required taxes and fees. The violation of a municipal ordinance
does not empower a municipal mayor to avail of extrajudicial remedies.29 It should
have observed due process before ordering the bank’s closure.
Finally, on the issue of damages, we agree with both the trial and the appellate
courts that the bank is not entitled to any damages. The award of moral damages
cannot be granted to a corporation, it being an artificial person that exists only in
legal contemplation and cannot, therefore, experience physical suffering and mental
anguish, which can be experienced only by one having a nervous system.30 There is
also no sufficient basis for the award of exemplary damages. There being no moral
damages, exemplary damages could not be awarded also. As to attorney’s fees,
aside from lack of adequate support and proof on the matter, these fees are not
recoverable as a matter of right but depend on the sound discretion of the courts.31
Under the circumstances of this case, the award of damages to Atty. Valero is also
baseless. We cannot ascribe any illegal motive or malice to the bank for impleading
Atty. Valero as an officer of respondent municipality. The bank filed the case against
respondent municipality in the honest belief that it is exempt from paying taxes and
fees. Since Atty. Valero was the official charged with the implementation of the
ordinances of respondent municipality, he was rightly impleaded as a necessary
party in the case.
WHEREFORE, the assailed Decision dated July 17, 2001, of the Court of Appeals in
CA-G.R. CV No. 58214 is AFFIRMED with MODIFICATIONS, so that (1) the order
denying any claim for refunds and fees allegedly overpaid by the bank, as well as the
denial of any award for damages and unrealized profits, is hereby SUSTAINED; (2)
the order decreeing the closure of petitioner bank is SET ASIDE; and (3) the award
of moral damages and attorney’s fees to Atty. Victor A.L. Valero is DELETED. No
pronouncement as to costs.
SO ORDERED.
G.R. No. 111397            August 12, 2002
HON. ALFREDO LIM and RAFAELITO GARAYBLAS, petitioners,
vs.
THE COURT OF APPEALS, HON. WILFREDO REYES and BISTRO PIGALLE,
INC., respondents.
CARPIO, J.:
The Case
Before us is a petition for review on certiorari1 of the Decision of the Court of Appeals
dated March 25, 1993,2 and its Resolution dated July 13, 19933 which denied
petitioners’ motion for reconsideration. The assailed Decision sustained the orders
dated December 29, 1992, January 20, 1993 and March 2, 1993,4 issued by Branch
36 of the Regional Trial Court of Manila. The trial court’s orders enjoined petitioner
Alfredo Lim ("Lim" for brevity), then Mayor of Manila, from investigating, impeding or
364
closing down the business operations of the New Bangkok Club and the Exotic
Garden Restaurant owned by respondent Bistro Pigalle Inc. ("Bistro" for brevity).
The Antecedent Facts
On December 7, 1992 Bistro filed before the trial court a petition5 for mandamus and
prohibition, with prayer for temporary restraining order or writ of preliminary
injunction, against Lim in his capacity as Mayor of the City of Manila. Bistro filed the
case because policemen under Lim’s instructions inspected and investigated Bistro’s
license as well as the work permits and health certificates of its staff. This caused the
stoppage of work in Bistro’s night club and restaurant operations.6 Lim also refused
to accept Bistro’s application for a business license, as well as the work permit
applications of Bistro’s staff, for the year 1993.7
In its petition, Bistro argued that Lim’s refusal to issue the business license and work
permits violated the doctrine laid down this Court in De la Cruz vs. Paras,8 to wit:
"Municipal corporations cannot prohibit the operation of nightclubs. They may
be regulated, but not prevented from carrying on their business."
Acting on Bistro’s application for injunctive relief, the trial court issued the first
assailed temporary restraining order on December 29, 1992, the dispositive portion
of which reads:
"WHEREFORE, respondent and/or his agents and representatives are
ordered to refrain from inspecting or otherwise interfering in the operation of
the establishments of petitioner (Bistro Pigalle, Inc.)."9
At the hearing, the parties submitted their evidence in support of their respective
positions. On January 20, 1993, the trial court granted Bistro’s application for a writ
of prohibitory preliminary injunction. The dispositive portion of the trial court’s order
declared:
"WHEREFORE, in view of all the foregoing, Petitioners’ application for a writ
of prohibitory preliminary injunction is granted, and Respondent, and any/all
persons acting under his authority, are and (sic) ordered to cease and desist
from inspecting, investigating and otherwise closing or impeding the business
operations of Petitioner Corporation’s establishments while the petition here
is pending resolution on the merits.
Considering that the Respondent is a government official and this injunction
relates to his official duties, the posting of an injunction bond by the
Petitioners is not required.
On the other hand, Petitioners’ application for a writ of mandatory injunction is
hereby denied, for to grant the same would amount to granting the writ of
mandamus prayed for. The Court reserves resolution thereof until the parties
shall have been heard on the merits."10
However, despite the trial court’s order, Lim still issued a closure order on Bistro’s
operations effective January 23, 1993, even sending policemen to carry out his
closure order.
On January 25, 1993, Bistro filed an "Urgent Motion for Contempt" against Lim and
the policemen who stopped Bistro’s operations on January 23, 1993. At the hearing
of the motion for contempt on January 29, 1993, Bistro withdrew its motion on
condition that Lim would respect the court’s injunction.
However, on February 12, 13, 15, 26 and 27, and on March 1 and 2, 1993, Lim,
acting through his agents and policemen, again disrupted Bistro’s business
operations.
Meanwhile, on February 17, 1993, Lim filed a motion to dissolve the injunctive order
of January 20, 1993 and to dismiss the case. Lim insisted that the power of a mayor
to inspect and investigate commercial establishments and their staff is implicit in the
statutory power of the city mayor to issue, suspend or revoke business permits and
licenses. This statutory power is expressly provided for in Section 11 (l), Article II of
the Revised Charter of the City of Manila and in Section 455, paragraph 3 (iv) of the
Local Government Code of 1991.
365
The trial court denied Lim’s motion to dissolve the injunction and to dismiss the case
in an order dated March 2, 1993, the dispositive portion of which stated:
"WHEREFORE, premises considered, the Court hereby orders:
(1) The denial of respondent’s motion to dissolve the writ of preliminary
prohibitory injunction or the dismissal of the instant case;
(2) Petitioner-corporation is authorized to remove the wooden cross-bars or
any other impediments which were placed at its establishments, namely, New
Bangkok Club and Exotic Garden Restaurant on February 12, 1993 and
February 15, 1993, respectively, and thereafter said establishments are
allowed to resume their operations;
(3) All the other petitioners are allowed to continue working in the aforenamed
establishments of petitioner-corporation if they have not yet reported; and
(4) The hearing on the contempt proceedings is deferred to give sufficient
time to respondent to elevate the matters assailed herein to the Supreme
Court."11
On March 10, 1993, Lim filed with the Court of Appeals a petition for certiorari,
prohibition and mandamus against Bistro and Judge Wilfredo Reyes. Lim claimed
that the trial judge committed grave abuse of discretion amounting to lack of
jurisdiction in issuing the writ of prohibitory preliminary injunction.
On March 25, 1993, the Court of Appeals rendered the assailed decision.12 In a
resolution dated July 13, 1993, the Court of Appeals denied Lim’s motion for
reconsideration.13
On July 1, 1993, Manila City Ordinance No. 778314 took effect. On the same day, Lim
ordered the Western Police District Command to permanently close down the
operations of Bistro, which order the police implemented at once.15
The Ruling of the Court of Appeals
In denying Lim’s petition, the Court of Appeals held that the trial court did not commit
grave abuse of discretion since it issued the writ after hearing on the basis of the
evidence adduced.
The Court of Appeals reasoned thus:
"x x x. A writ of preliminary injunction may issue if the act sought to be
enjoined will cause irreparable injury to the movant or destroy the status quo
before a full hearing can be had on the merits of the case.
A writ of preliminary injunction, as an ancillary or preventive remedy, may
only be resorted to by a litigant to protect or preserve his rights or interests
and for no other purpose during the pendency of the principal action. It is
primarily intended to maintain the status quo between the parties existing
prior to the filing of the case.
In the case at bar, We find that the respondent Judge did not act
improvidently in issuing the assailed orders granting the writ of preliminary
injunction in order to maintain the status quo, while the petition is pending
resolution on the merits. The private respondent correctly points out that the
questioned writ was regularly issued after several hearings, in which the
parties were allowed to adduce evidence, and argue their respective
positions.
The issuance of a writ of preliminary injunction is within the limits of the sound
exercise of discretion of the court and the appellate court will not interfere,
except, in a clear case of abuse thereof. x x x.
WHEREFORE, the petition is DENIED DUE COURSE and is accordingly
DISMISSED."16
Hence, this petition.
The Issues
366
In their Memorandum, petitioners raise the following issues:
1. "DID RESPONDENT JUDGE COMMIT GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN ISSUING HIS
SAID ASSAILED ORDERS OF DECEMBER 29, 1992, JANUARY 20, 1993
AND MARCH 2, 1993?"
2. "DID RESPONDENT COURT OF APPEALS COMMIT REVERSIBLE
ERRORS IN RENDERING ITS ASSAILED DECISION OF MARCH 25, 1993
AND ITS ASSAILED RESOLUTION OF JULY 13, 1993?"
3. "DID SAID CIVIL CASE NO. 92-63712 AND SAID CA-G.R. SP NO. 30381
BECOME MOOT AND ACADEMIC WHEN THE NEW BANGKOK CLUB AND
THE EXOTIC GARDEN RESTAURANT OF PRIVATE RESPONDENT WERE
CLOSED ON JULY 1, 1993 PURSUANT TO ORDINANCE NO. 7783?"
The Ruling of the Court
The petition is without merit.
Considering that the constitutionality of Ordinance No. 7783 was not raised before
the trial court or the Court of Appeals, and this issue is still under litigation in another
case,17 the Court will deal only with the first two issues raised by petitioner.
Validity of the Preliminary Injunction
Bistro’s cause of action in the mandamus and prohibition proceedings before the trial
court is the violation of its property right under its license to operate. The violation
consists of the work disruption in Bistro’s operations caused by Lim and his
subordinates as well as Lim’s refusal to issue a business license to Bistro and work
permits to its staff for the year 1993. The primary relief prayed for by Bistro is the
issuance of writs of mandatory and prohibitory injunction. The mandatory injunction
seeks to compel Lim to accept Bistro’s 1993 business license application and to
issue Bistro’s business license. Also, the mandatory injunction seeks to compel Lim
to accept the applications of Bistro’s staff for work permits. The writ of prohibitory
injunction seeks to enjoin Lim from interfering, impeding or otherwise closing down
Bistro’s operations.
The trial court granted only the prohibitory injunction. This enjoined Lim from
interfering, impeding or otherwise closing down Bistro’s operations pending
resolution of whether Lim can validly refuse to issue Bistro’s business license and its
staff’s work permits for the year 1993.
Lim contends that the Court of Appeals erred in upholding the prohibitory injunction.
Lim relies primarily on his power, as Mayor of the City of Manila, to grant and refuse
municipal licenses and business permits as expressly provided for in the Local
Government Code and the Revised Charter of the City of Manila. Lim argues that the
powers granted by these laws implicitly include the power to inspect, investigate and
close down Bistro’s operations for violation of the conditions of its licenses and
permits.
On the other hand, Bistro asserts that the legal provisions relied upon by Lim do not
apply to the instant case. Bistro maintains that the Local Government Code and the
Revised Charter of the City of Manila do not expressly or impliedly grant Lim any
power to prohibit the operation of night clubs. Lim failed to specify any violation by
Bistro of the conditions of its licenses and permits. In refusing to accept Bistro’s
business license application for the year 1993, Bistro claims that Lim denied Bistro
due process of law.
The Court of Appeals held that the trial court did not commit grave abuse of
discretion in issuing the prohibitory preliminary injunction.
We uphold the findings of the Court of Appeals.
The authority of mayors to issue business licenses and permits is beyond question.
The law expressly provides for such authority. Section 11 (l), Article II of the Revised
Charter of the City of Manila, reads:
"Sec. 11. General duties and powers of the mayor. The general duties and
powers of the mayor shall be:
367
x x x.
(l) To grant and refuse municipal licenses or permits of all classes and
to revoke the same for violation of the conditions upon which they were
granted, or if acts prohibited by law or municipal ordinances are being
committed under the protection of such licenses or in the premises in which
the business for which the same have been granted is carried on, or for any
other reason of general interest." (Emphasis supplied)
On the other hand, Section 455 (3) (iv) of the Local Government Code provides:
"Sec. 455. Chief Executive, Powers, Duties and Compensation: xxx.
(b) For efficient, effective and economical governance the purpose of which is
the general welfare of the City and its inhabitants pursuant to Section 16 of
this Code, the City Mayor shall:
(3) x x x.
(iv) Issue licenses and permits and suspend or revoke the
same for any violation of the condition upon which said licenses
or permits had been issued, pursuant to law or ordinance."
(Emphasis supplied)
From the language of the two laws, it is clear that the power of the mayor to issue
business licenses and permits necessarily includes the corollary power to suspend,
revoke or even refuse to issue the same. However, the power to suspend or revoke
these licenses and permits is expressly premised on the violation of the conditions of
these permits and licenses. The laws specifically refer to the "violation of the
condition(s)" on which the licenses and permits were issued. Similarly, the power to
refuse to issue such licenses and permits is premised on non-compliance with the
prerequisites for the issuance of such licenses and permits. The mayor must observe
due process in exercising these powers, which means that the mayor must give the
applicant or licensee notice and opportunity to be heard.
True, the mayor has the power to inspect and investigate private commercial
establishments for any violation of the conditions of their licenses and permits.
However, the mayor has no power to order a police raid on these establishments in
the guise of inspecting or investigating these commercial establishments. Lim acted
beyond his authority when he directed policemen to raid the New Bangkok Club and
the Exotic Garden Restaurant. Such act of Lim violated Ordinance No. 771618 which
expressly prohibits police raids and inspections, to wit:
"Section 1. No member of the Western Police District shall conduct inspection
of food and other business establishments for the purpose of enforcing
sanitary rules and regulations, inspecting licenses and permits, and/or
enforcing internal revenue and customs laws and regulations. This
responsibility should be properly exercised by Local Government Authorities
and other concerned agencies." (Emphasis supplied)
These local government officials include the City Health Officer or his representative,
pursuant to the Revised City Ordinances of the City of Manila,19 and the City
Treasurer pursuant to Section 470 of the Local Government Code.20
Lim has no authority to close down Bistro’s business or any business establishment
in Manila without due process of law. Lim cannot take refuge under the Revised
Charter of the City of Manila and the Local Government Code. There is no provision
in these laws expressly or impliedly granting the mayor authority to close down
private commercial establishments without notice and hearing, and even if there is,
such provision would be void. The due process clause of the Constitution requires
that Lim should have given Bistro an opportunity to rebut the allegations that it
violated the conditions of its licenses and permits.
The regulatory powers granted to municipal corporations must always be exercised
in accordance with law, with utmost observance of the rights of the people to due
process and equal protection of the law.21 Such power cannot be exercised
whimsically, arbitrarily or despotically. In the instant case, we find that Lim’s exercise
of this power violated Bistro’s property rights that are protected under the due
process clause of the Constitution.
368
Lim did not charge Bistro with any specific violation of the conditions of its business
license or permits. Still, Lim closed down Bistro’s operations even before the
expiration of its business license on December 31, 1992. Lim also refused to accept
Bistro’s license application for 1993, in effect denying the application without
examining whether it complies with legal prerequisites.
Lim’s zeal in his campaign against prostitution is commendable. The presumption is
that he acted in good faith and was motivated by his concern for his constituents
when he implemented his campaign against prostitution in the Ermita-Malate area.
However, there is no excusing Lim for arbitrarily closing down, without due process
of law, the business operations of Bistro. For this reason, the trial court properly
restrained the acts of Lim.
Consequently, the Court of Appeals did not err in upholding the trial court’s orders.
The sole objective of a writ of preliminary injunction is to preserve the status quo until
the merits of the case can be heard fully. It is generally availed of to prevent actual or
threatened acts, until the merits of the case can be disposed of.22 In the instant case,
the issuance of the writ of prohibitory preliminary injunction did not dispose of the
main case for mandamus. The trial court issued the injunction in view of the
disruptions and stoppage in Bistro’s operations as a consequence of Lim’s closure
orders. The injunction was intended to maintain the status quo while the petition has
not been resolved on the merits.
WHEREFORE, the petition is denied for lack of merit. The assailed Decision of the
Court of Appeals in CA-G.R. SP NO. 30381 is AFFIRMED in toto.
SO ORDERED.
FIRST DIVISION
G.R. No. 128509 August 22, 2006
ROBLE ARRASTRE, INC., Petitioner,
vs.
HON. ALTAGRACIA VILLAFLOR and THE HONORABLE COURT OF
APPEALS, Respondents.
DECISION
CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari, assailing the 7 October 1996
Decision1 and the 13 February 1997 Resolution2 of the Court of Appeals in CA-G.R.
SP No. 40621, which reversed and set aside the 29 March 1995 Decision3 of the
Regional Trial Court (RTC), Branch XVIII, Hilongos, Leyte, in Special Civil Action No.
H-237.
The Antecedents
Petitioner Roble Arrastre, Inc. is a cargo handling service operator, authorized by the
Philippine Ports Authority (PPA) through Permit No. M92-005 to provide and render
arrastre and stevedoring services at the Municipal Port of Hilongos, Leyte, and on all
vessels berthed thereat, from 7 September 1992 to 15 September 1993.4 For the
years 1992 and 1993, petitioner was granted Business Permits No. 349 and No. 276,
respectively, by respondent Altagracia Villaflor as Municipal Mayor of Hilongos,
Leyte. On 14 December 1993, pending final consideration of petitioner’s application
for renewal with the PPA Office, Manila, the PPA through its Port Manager Salvador
L. Reyna of the Tacloban Port Management Office issued a 90-day hold-over
authority to petitioner. Stated therein was the proviso that notwithstanding the 90-day
period aforementioned, the authority shall be deemed ipso facto revoked if an earlier
permit/contract for cargo handling services is granted or sooner withdrawn or
cancelled for cause pursuant to PPA Administrative Order No. 10-81. On 27 January
1994, while the 90-day hold-over authority was in effect, petitioner filed with
respondent mayor an application for the renewal of its Business Permit No. 276.
However, the same was denied.
Aggrieved by the denial, petitioner filed with the RTC, a Petition for Mandamus with
Preliminary Mandatory Injunction5 against respondent mayor, raising the primary
ground that the refusal to issue the business license sought for was a neglect to
perform an act which the law enjoins her to do, by virtue of the office she occupies.
369
According to petitioner, the source of the power of the municipal mayor to issue
licenses is Section 444(b)(3)(iv)6 of Republic Act No. 7160, otherwise known as the
Local Government Code of 1991, which is merely for the purpose of revenue
generation and not regulation, hence, the municipal mayor has no discretion to
refuse the issuance of a business license following the applicant’s payment or
satisfaction of the proper license fees.7 Petitioner further alleged that it is the PPA
which is vested with the discretion to determine whether a party can render arrastre
service in a particular port area.8
In answer thereto, respondent mayor averred, inter alia, that the remedy of
mandamus does not lie as the issuance of the permit sought is not a ministerial
function, but one that requires the exercise of sound judgment and discretion.9 In
denying petitioner’s application, respondent mayor invoked Municipal Resolution No.
93-27,10 passed by the Sangguniang Bayan of Hilongos, Leyte, on 17 March 1993,
which prohibits any party which likewise operates shipping lines plying the route of
Cebu to Hilongos and vice versa, from engaging in arrastre and stevedoring services
at the port of Hilongos.11 Respondent mayor asserted that petitioner is owned and
operated by Roble Shipping Lines, a shipping company that operates along the
routes specified in Municipal Resolution No. 93-27;12 hence, effectively rendering
petitioner disqualified from operating an arrastre service therein.13 Finally, by way of
counterclaim, respondent mayor sought moral and exemplary damages, attorney’s
fees and expenses of litigation.14
On 16 May 1994, petitioner filed a Supplemental Petition,15 contending that
subsequent to the filing of the Petition for Mandamus with the RTC, it was granted by
the PPA a five-year contract16 to provide cargo handling and other related services at
the Port of Hilongos, Leyte, effective 1 March 1994. The aforesaid contract was
indorsed by the District Manager for the Visayas to the Port Manager of Tacloban.
Moreover, petitioner sought to incorporate the five-year contract as an integral part of
its Petition. The Supplemental Petition was admitted by the RTC, in the
Order17 dated 19 July 1994.
On 19 September 1994, the RTC issued a Pre-Trial Order containing the following
admitted stipulations of facts, to wit:
1. That petitioner in 1993 was issued a Mayor’s Permit No. 276 on January 29, 1993,
[as] shown by Annex "B" of the petition;
2. [That petitioner paid] for Business and License Permit for the year 1994 in the
amount of P9,789.48 under Official Receipt No. 7534455-C;
3. [That petitioner procured a] Barangay Clearance.18
In the same Order, the RTC denied the parties’ motion that the case be submitted on
the pleadings since no judgment on the pleadings could be had as there were
controverted issues material to the case.19
The Ruling of the RTC
The RTC opined that the PPA has the sole authority to grant permits in the operation
of cargo handling services in all Philippine ports, whether public or private.
Proceeding therefrom, it ruled that the refusal of respondent mayor to approve
petitioner’s application for renewal of the business permit was not based on law nor
upon her discretion.
The RTC ratiocinated in this wise, thus:
As can be read the resolution is to object to the approval of a five (5) year
management contract for Arrastre and Stevedoring Services in the port of Hilongos,
Leyte, applied by the Roble Arrastre, Inc. with the concomitant reason that the
Sangguniang Bayan finds it logical and ethical not to grant any permit to any group
or corporation in the municipal port of Hilongos who are operators of Shipping Lines
flying (sic) the route from Cebu to Hilongos and vice-versa to protect the business
interest of the shipping industry of the municipality. This resolution is signed by the
Municipal Vice Mayor as Presiding Officer of Sangguniang Bayan and approved by
the Mayor. To the mind of the court the approval of the Mayor in a resolution by the
Sangguniang Bayan is superfluous. This is not an ordinance that should be signed
by the mayor in order to become effective as a law but a resolution of that august
body. The above resolution was approved on March 17, 1993 not withstanding (sic)
the fact that as shown by the wordings thereat there was already a public hearing
370
conducted by PPA Manila on March 9, 1993 at the Municipal Multi[-] Purpose Center.
The Municipal Mayor was present and complaints were entertained by the Hearing
Officers from several shippers of Hilongos, Leyte. As appearing also in the lower
portion of the said resolution, the same was furnished PPA Manila and the
respondent admitted that she did not even know whether a copy had been sent by
the Sangguniang Bayan to the concerned offices. Granting that this resolution
reached the General Manager, PPA, Manila, she have (sic) not pursued any action
on the matter nor the Office of the Mayor and the Sangguniang Bayan received any
information of what proper action was taken therein. It is indeed unfortunate that
whatever nature of the complaints which was heard during the public hearing by the
representative of the PPA, it is not shown whether PPA lend (sic) an ear to it. The
fact remains that on March 1, 1994[,] nearly 1 year after this resolution and public
hearing, the petitioner, Roble Arrastre, Inc., was given a contract by PPA who has
the authority under P.D. 87520 (sic) to issue the same.
xxxx
x x x The law is clear that under P.D. 875 the sole authority to authorize operation of
cargo handling services in all ports of the Philippines whether public or private is
lodge (sic) with the Philippine Ports Authority. Under the said law the granting of
permits is through the PPA Board carried out by the General Manager or his
assistant. This Court has taken noticed (sic) also that no ordinance had been passed
by the Sangguniang Bayan and approved by the Municipal Mayor of Hilongos, Leyte,
in accordance with the Local Government with regards to the port operation in the
port of Hilongos nor there was [a] showing that the Executive Officer of the
municipality has anything to say on the power and jurisdiction of the PPA in the port
of Hilongos, Leyte. This goes to show that even these public officers knows (sic) the
extent of their power as regards the authority of the PPA.
This Court is of the firmed (sic) belief and so holds that the refusal of the Municipal
Mayor to approve the application for renewal is not based on law nor upon her
discretion. Under the milieu of the case the PPA is authorized and have (sic) the
exclusive jurisdiction over all ports of the Philippines and they (sic) alone can issue
cargo handling contracts.21
Finding for petitioner, the court a quo disposed as follows:
PREMISES CONSIDERED, by preponderance of evidence, this Court give (sic) due
course to this petition of Mandamus in favor of the Roble Arrastre, Inc. and against
the respondent, the Honorable Municipal Mayor of Hilongos sued in her capacity as
a Public Officer and orders her forthwith:
a) To approve the application of Roble Arrastre, Inc. for the year 1994 as he has
already paid the necessary payments in connection therewith albeit the same permit
is now functous officio as this is now 1995. Nevertheless, this approved permit to be
issued by the Mayor shall be a basis for renewal of the said 1994 permit for the year
1995 after payment of due fees required by her office.
Without pronouncement as to costs. The counterclaim of respondent is hereby
dismissed.22
Respondent mayor filed a Motion for Reconsideration thereon, which was denied for
lack of merit by the RTC, in the Order23 dated 25 October 1995.
The Ruling of the Appellate Court
Upon elevation of the case to the Court of Appeals, the appellate court rendered a
Decision dated 7 October 1996, reversing and setting aside the RTC. Moreover, it
entered a new judgment dismissing Special Civil Action No. H-237.
The Court of Appeals ruled that the pursuit of the duty of respondent mayor under
Section 444(b)(3)(iv)24 of the Local Government Code necessarily entails the
exercise of official discretion. Hence, it held that mandamus will not lie to control or
review the exercise of her discretion. Moreover, the Court of Appeals declared that
petitioner’s main prayer, i.e., to compel respondent mayor to issue a business
license for the year 1994, by the passage of time had already become moot and
academic. On this score, the appellate court declared that the issue is academic.
Courts will not adjudicate moot cases nor hear a case when the object sought is no
longer attainable.
The appellate court pronounced, thus:
371

Under Section 444(b)(3)(iv), all local chief executive officer (sic) or municipal mayors
are vested with the authority to issue licenses and permits within their jurisdiction. In
the same provision, the mayor may likewise suspend or revoke a permit for any
violation of the conditions upon which the same had been issued, pursuant to law or
ordinance. In effect, under said Section 444(b)(3)(iv), the municipal governments,
thru its chief executive, are endowed with the authority to exercise police power.
Evidently, the pursuit of its duty under the (sic) police power necessarily entails
exercise of official discretion in order for any local officials to ascertain which will
better serve their constituents who elected them into office. Full discretion must
necessarily be granted them to perform their functions and it will not be sound logic
to simply make them perform purely ministerial functions. And when the discharge of
an official duty requires the exercise of official discretion or judgment, it is never a
ministerial one (Mateo vs. CA, 196 SCRA 280 [1991]).
Furthermore, where the only power given to a municipal corporation or official is to
issue license, as in Section 444 of the Local Government Code, it is clearly
regulatory in nature rather than a revenue raising one. Conclusively, regulation being
the object of the power to issue license and permits the exercise of discretion by the
issuing authority becomes an inescapable prerogative. This could be the very same
reason why business permits and licenses are renewed almost annually in order that
the licensing officials in carrying out their functions could examine and evaluate
availing circumstances and conditions and with the exercise of discretion determine
whether to grant or deny the application or, to revoke a license or permit already
issued. It should also be understood that a municipal license is not a property such
that it is revocable when public interest so requires (Pedro vs. Provincial Board of
Rizal, 56 Phil. 126).25
The dispositive portion of the assailed Decision reads:
IN VIEW OF ALL THE FOREGOING, the appealed decision is hereby REVERSED
AND SET ASIDE and a new one entered dismissing Special Civil Action No. [H-]237.
No pronouncement as to costs.26
Petitioner filed a Motion for Reconsideration but the same was denied by the Court of
Appeals in its Resolution dated 13 February 1997.
Hence, the instant Petition.
The Issues
Petitioner, in its Memorandum, presented the following statement of issues, to wit:
I
Whether or not it was valid for the Court of Appeals to have relied on the cases of
Mateo v. Court of Appeals and Pedro v. Provincial Board of Rizal, in ruling that
respondent Mayor had full discretion in issuing or renewing the Business Permit
even after the petitioner duly complied with all documentary requirements and fully
paid the corresponding permit fees.
II
Whether or not the Court of Appeals validly interpreted Section 444, (3) (iv), R.A.
7160, otherwise known as the Local Government Code of 1991, as a grant of police
power and full discretion to the respondent mayor to refuse the issuance of the
permit despite due compliance of all documentary requirements and full payment of
the required permit fees by the petitioner.
III
Whether or not the Court of Appeals validly rendered its Decision when it refused to
apply the precedent in Symaco v. Aquino wherein this Honorable Supreme Court
held that even in the absence of any ordinance granting the respondent Mayor such
discretion, she cannot refuse issuance of the permit if there is prior compliance by
the petitioner with all documentary requirement and full payment of the required
permit fees.
IV
Whether or not the Court of Appeals validly rendered its Decision when it dismissed
the [Petition] allegedly on the ground that it became (sic) moot and academic.27
372
The Ruling of the Court
At the outset, we state our concurrence with the Court of Appeals when it entered a
new judgment dismissing Special Civil Action No. H-237 on the ground of mootness.
The appellate court ratiocinated, to wit:
Lastly, it would seem that the main prayer of the complaint, that is, to compel the
respondent mayor to issue a business license for the year 1994, by the passage of
time during which this case pends, had already become moot and academic. A new
application is necessary for the year 1995 and the year 1996 which is about to end.
And in the grant or denial of such application for business permits or licenses, the
respondent mayor must examine closely the circumstances prevailing and again use
her discretion in the exercise of her official function. Accordingly, the issue at hand is
already academic and it is well established that courts will not adjudicate moot cases
nor hear a case when the object sought is not attainable (State vs. Lambert, 52 W.
Va. 248, 43 S. E. 176) and it will decline jurisdiction over moot cases which must
involve only actual interests. (In re: Estate of Caballos, 12 Phil. 271; Beech vs.
Crossfield, 12 Phil. 555).28
Indeed, Courts will not determine a moot question in a case in which no practical
relief can be granted. It is unnecessary to indulge in academic discussion of a case
presenting a moot question as a judgment thereon cannot have any practical legal
effect or, in the nature of things, cannot be enforced.29 However, we are constrained
to render judgment herein pursuant to our symbolic function of educating the bench
and the bar.30 For another, this case comes within the rule that courts will decide a
question otherwise moot and academic if it is "capable of repetition yet evading
review."31
The crux of the instant controversy is whether respondent mayor can be compelled
by a writ of mandamus to grant petitioner’s application for a renewal of a business
permit to operate an arrastre service at the Municipal Port of Hilongos in Leyte.
Ostensibly, it is petitioner’s contention that respondent mayor’s power to issue
permits as contained in the aforesaid law is ministerial; hence, mandamus lies.
It bears to reiterate this Court’s ruling on the nature of the writ of mandamus. The writ
of mandamus serves to compel a respondent who fails to perform a legal duty or
unlawfully excludes another from the enjoyment of an entitled right or office to do the
act required to be done to protect the rights of the petitioner.32 Otherwise stated,
mandamus is issued to command the performance of a ministerial, but not a
discretionary duty.
With that settled, we make a determination of the nature of the power of respondent
mayor to grant petitioner a permit to operate an arrastre service. Central to the
resolution of the case at bar is a reading of Section 444(b)(3)(iv) of the Local
Government Code of 1991, which provides, thus:
SEC. 444. The Chief Executive: Powers, Duties, Functions and Compensation.
(b) For efficient, effective and economical governance the purpose of which is the
general welfare of the municipality and its inhabitants pursuant to Section 16 of this
Code, the Municipal mayor shall:
xxxx
(3) Initiate and maximize the generation of resources and revenues, and apply the
same to the implementation of development plans, program objectives and priorities
as provided for under Section 18 of this Code, particularly those resources and
revenues programmed for agro-industrial development and country-wide growth and
progress, and relative thereto, shall:
xxxx
(iv) Issue licenses and permits and suspend or revoke the same for any violation of
the conditions upon which said licenses or permits had been issued, pursuant to law
or ordinance. (Italics supplied.)
As Section 444(b)(3)(iv) so states, the power of the municipal mayor to issue
licenses is pursuant to Section 16 of the Local Government Code of 1991, which
declares:
373
SEC. 16. General Welfare. - Every local government unit shall
exercise the powers expressly granted, those necessarily
implied therefrom, as well as powers necessary, appropriate, or
incidental for its efficient and effective governance, and
those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions,
local government units shall ensure and support, among other
things, the preservation and enrichment of culture, promote
health and safety, enhance the right of the people to a
balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and
technological capabilities, improve public morals, enhance
economic prosperity and social justice, promote full
employment among their residents, maintain peace and order, and
preserve the comfort and convenience of their inhabitants.
Section 16, known as the general welfare clause, encapsulates the delegated police
power to local governments. Local government units exercise police power through
their respective legislative bodies.33 Evidently, the Local Government Code of 1991 is
unequivocal that the municipal mayor has the power to issue licenses and permits
and suspend or revoke the same for any violation of the conditions upon which said
licenses or permits had been issued, pursuant to law or ordinance. On this matter,
petitioner maintains that under the Local Government Code of 1991, a suspension or
revocation of permits shall be premised on a finding of violation of the conditions
upon which the permits were issued pursuant to a law or ordinance, which is
independent of the Code itself. Petitioner asseverates further that there was no law
or ordinance that conferred upon the respondent mayor the power to refuse the
issuance of the permit despite compliance of petitioner with all documentary
requirements and payment of all the fees.
First. On petitioner’s assertion that the power to issue license should be pursuant to
law other than the Local Government Code of 1991, we so hold that the language of
the law did not find the need to distinguish between other laws and that of the Local
Government Code of 1991 itself. When the law does not distinguish, we must not
distinguish.34 Ubi lex non distinguit nec nos distinguere debemus. Hence, even the
Local Government Code of 1991, specifically Section 16 thereof, can be utilized to
determine the bounds of the exercise of the municipal mayor in issuing licenses and
permits.
Second. While we agree with petitioner that there is no ordinance conferring upon
the respondent mayor the power to refuse the issuance of the permit for the
operation of an arrastre service, we are, as yet, unprepared to declare that the power
of the municipal mayor as enunciated under Section 444(b)(3)(iv) is ministerial. What
can be deduced from the aforesaid section is that the limits in the exercise of the
power of a municipal mayor to issue licenses, and permits and suspend or revoke
the same can be contained in a law or an ordinance. Otherwise stated, a law or an
ordinance can provide the conditions upon which the power of the municipal mayor
under Section 444(b)(3)(iv) can be exercised. Section 444(b)(3)(iv) of the Local
Government Code of 1991 takes its cue from Section 16 thereof, which is largely an
exercise of delegated police power. We said:
The general welfare clause is the delegation in statutory form of the police power of
the State to LGUs. Through this, LGUs may prescribe regulations to protect the lives,
health, and property of their constituents and maintain peace and order within their
respective territorial jurisdictions. Accordingly, we have upheld enactments providing,
for instance, the regulation of gambling, the occupation of rig drivers, the installation
and operation of pinball machines, the maintenance and operation of cockpits, the
exhumation and transfer of corpses from public burial grounds, and the operation of
hotels, motels, and lodging houses as valid exercises by local legislatures of the
police power under the general welfare clause.35
Section 444(b)(3)(iv) of the Local Government Code of 1991, whereby the power of
the respondent mayor to issue license and permits is circumscribed, is a
manifestation of the delegated police power of a municipal
corporation.36 Necessarily, the exercise thereof cannot be deemed ministerial. As to
the question of whether the power is validly exercised, the matter is within the
province of a writ of certiorari, but certainly, not of mandamus.
It may be true, as argued by petitioner, that Resolution No. 93-27, which was
enacted by the Sangguniang Bayan of Hilongos, is not an ordinance but merely a
resolution. A municipal ordinance is different from a resolution. An ordinance is a
law, but a resolution is merely a declaration of the sentiment or opinion of a
374
lawmaking body on a specific matter. An ordinance possesses a general and
permanent character, but a resolution is temporary in nature. Additionally, the two
are enacted differently - a third reading is necessary for an ordinance, but not for a
resolution, unless decided otherwise by a majority of all the Sanggunian members.37
However, the fact that Resolution No. 93-27 is a "mere" resolution can do nil to
support petitioner’s cause. As stated earlier, the proper action is certiorari to
determine whether grave abuse of discretion had been committed on the part of
respondent mayor in the refusal to grant petitioner’s application. Petitioner’s petition
for mandamus is incompetent against respondent mayor’s discretionary power.
Thus:
"Discretion," when applied to public functionaries, means a power or right conferred
upon them by law or acting officially, under certain circumstances, uncontrolled by
the judgment or conscience of others. A purely ministerial act or duty in contradiction
to a discretional act is one which an officer or tribunal performs in a given state of
facts, in a prescribed manner, in obedience to the mandate of a legal authority,
without regard to or the exercise of his own judgment upon the propriety or
impropriety of the act done. If the law imposes a duty upon a public officer and gives
him the right to decide how or when the duty shall be performed, such duty is
discretionary and not ministerial. The duty is ministerial only when the discharge of
the same requires neither the exercise of official discretion or judgment.38
The Fallo
WHEREFORE, the Petition is DENIED. The assailed Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 40621, dated 7 October 1996 and 13 February
1997, respectively, dismissing Special Civil Action No. H-237 are AFFIRMED. Costs
against petitioner.
SO ORDERED.
G.R. No. L-33169 July 30, 1982
GLICERIO JAVELLANA, petitioner,
vs.
HON. CESAR KINTANAR, Judge of the Court of First Instance of Negros
Occidental, CITY OF BAGO, CITY COUNCIL, CITY MAYOR, and CITY
TREASURER, all of the City of Bago, respondents.
G.R. No. L-33212 July 30, 1982
GLICERIO JAVELLANA, petitioner, JUANITO NOVILLAS, ET AL., petitioners-
intervenors,
vs.
HON. CESAR KINTANAR, Judge of the Court of First Instance of Negros
Occidental, CITY OF BAGO, CITY COUNCIL, CITY MAYOR, and CITY
TREASURER, all of the City of Bago, respondents.
San Juan, Africa, Gonzales & San Agustin Law Offices for petitioner.
Feliciano E. Escaran, Rolando N. Medalla, Fernando C. Divinagracia and Yulo &
Associates for respondents.
ABAD SANTOS, J.:
These are appeals from a decision of the Court of First Instance of Negros
Occidental dated January 12, 1971, which dismissed a petition that sought a
declaration of nullity of Ordinances Nos. 142, 145 and 150, Series of 1968, of the
City of B ago, and to enjoin their enforcement.
Glicerio Javellana is the owner of a market (building and lot) in Crossing Bago, Bago
City, which consists of store spaces and of permanent and movable stalls all leased
to vendors. Serving the general population of the City of Bago and of the adjoining
municipalities, for more than twenty years, said market had been operating under a
Mayor's permit of the City of Bago up to the second quarter of 1968 when the
Treasurer of that city refused to accept the payment of Javellana for a municipal
375
license for the third quarter on the ground that Ordinance No. 150 had been enacted
prohibiting the establishment, maintenance or operation of a public market in the City
of Bago by any person, entity, association or corporation other than the city
government of Bago. This prompted Javellana, as owner of said market, to file the
petition aforementioned.
Juanito Novillas and other store owners, stall holders and fish vendors in Javellana's
market joined in the petition by means of a complaint in intervention.
The appeal of Javellana is docketed as G.R. No. L-33169 while that of Novillas, et al.
is docketed as G.R. No. L-33212.
The ordinances which are the subject of the petition and the present appeal were
enacted by the Municipal Board of Bago City in 1968 and insofar as relevant are
couched in the following language:
Ordinance No. 142.
SECTION 1. — Section 1 of Ordinance No. 10, Series of 1954, as
amended by Resolution No. 39, Series of 1955, and adopted by
Ordinance No. 4, Series of 1966, is hereby amended to read as
follows:
Section 1. — No person or persons, except peddlers thereof who
have paid the corresponding inspection and other market fee, shall
sell or offer for sale, fish, meat and other foodstuffs which are
perishable in nature, outside of the public markets within the City
Proper of the City of Bago and its barrios.
SECTION 2. — This ordinance shall take effect upon its approval.
Ordinance No. 145.
SECTION 1. — Section 3, Paragraph C of City Ordinance No. 134,
Series of 1968, is hereby amended to read as follows:
Section 3. ...
C — Inspection and Inspection Fees:
I — All fish, seafoods and other foodstuffs which are perishable in
nature to be sold or offered for sale within the jurisdiction of the City of
Bago shag first be submitted for inspection of the City Health Officer
of the City and/or his duly authorized representatives before the same
shall be sold or offered for sale to the public; and such inspection shall
be made in the city-owned public market within the City Proper of the
City of Bago and the corresponding inspection fee of PO.20 is hereby
imposed on every case of fresh fish thus inspected payable by the fish
wholesalers, dealers or 'commissionists' concerned.
SECTION 2. — This Ordinance shall take effect upon its approval.
Ordinance No. 150.
Section 1. — It shall be unlawful for any person, entity, association or
corporation other than the City Government of Bago to establish,
maintain or operate a public market or markets within the city limits or
territorial jurisdiction of the City of Bago.
Section 2. — Any person found guilty of violation of the provisions of
this ordinance shall be punished by a fine of not more than Two
Hundred Pesos (P200.00) or imprisonment of not more than six (6)
months, or both such fine and imprisonment in the discretion of the
Court. In case the offender is a juridical person, the president,
manager, chief or head of the entity, association or corporation shall
be liable.
Section 3. — This Ordinance shall take effect upon its approval.
The appellants claim that the ordinances are unreasonable and Bago City has no
power to enact them.
376
It is obvious that the key ordinance is No. 150 for if the appellants do not succeed in
assailing it, their assault on the other ordinances becomes moot and academic.
Stated differently, the principal concern of the appellants is the continued operation
of Javellana's market and if it is adjudged that the operation be discontinued they
should have no further interest in the other ordinances. However, it would not be
amiss for Us to state that We do not hesitate and see no need for an extended
discussion in holding that Ordinances Nos. 142 and 145 are manifestly valid; No. 142
because it is a regulatory and revenue ordinance; No. 145 because it is promotive of
general welfare and both are authorized by Section 15 of R.A. No. 4382, otherwise
known as the Charter of Bago, which spells out in detail the general powers and
duties of the Municipal Board of Bago City. And as the lower court said:
The enactment of these ordinances by the City Council of the City of
Bago is clearly authorized under Section 15 of the said City Charter,
as follows:
(a) Paragraph (n) which authorizes said Board 'to
regulate and fix the amount of the license fees for
peddlers, and the keeping, preservation and sale of
meat, poultry, fish, game, butter, cheese, lard,
vegetables, bread, and other provisions;
(b) Paragraph (cc) which authorizes said Board 'to
provide for the establishment, maintenance and
regulation, and to fix the fees for the use of public
markets;
(c) Paragraph (jj) which authorizes said Board 'to
regulate any other business or occupation, not
specifically mentioned in the preceding paragraphs,
and to impose a license fee upon all persons engaged
in the same or who enjoy privileges in the city; and
(d) Paragraph (mm) the general welfare clause, which
authorizes said Board 'to enact an ordinances it may
deem necessary and proper for the sanitation and
safety, the furtherance of the prosperity, and the
promotion of the morality, peace, good order, comfort,
convenience, and general welfare of the city, and its
inhabitants, and such others as may be necessary to
carry into effect and discharge the powers and duties
conferred by this Charter.
Coming now to Ordinance No. 150, there is no question that it was enacted pursuant
to Section 15, paragraph (cc) of the Charter of Bago which empowers the Municipal
Board "... to prohibit the establishment or operation within the city limits of public
markets by any person, entity, association, or corporation other than the city."
The appellants claim that Javellana's market is not covered by the charter provision
nor by the ordinance because it is not a public market. They assert that Javellana's
market is a private market because Javellana "owns the land and the building on
which the market is being maintained and operated." In other words, to the
appellants whether or not a market is "'public" depends on who owns it. It thus
appears that the resolution of the appeals hinges on the meaning of the term "public
market." The appellants claim that a public market is one that is not owned privately;
whereas the appellees say that it is one that serves the general public. Viewed in this
light, the validity of Ordinance No. 150, whether on the basis of its reasonableness or
on the power of the City of Bago to enact it, is not in issue; what has to be resolved is
only its application to the appellants.
We agree with trial court that the test of a "public market" is its dedication to the
service of the general public and -not its ownership. Thus this Court has had
occasion to state:
Petitioners allege that the Aranque Market Extension is not a public
market within the meaning of all laws, ordinances, orders and
regulations governing public markets because said market stands on
private property and its building was erected with private funds. This
contention is not well taken. A market is a public market when it is
dedicated to the service of the general public and is operated under
government control and supervision as a public utility, whether it be
owned by the government or any instrumentality thereof or by any
377
private individual. (Vda. de Salgado vs. De la Fuente, 87 Phil. 343,
345 [1950].)
Also, a scrutiny of the charter provision win readily show that by public market is
meant one that is intended to serve the public in general. This is the only conclusion
which can be drawn when it used the word "Public" to modify the word 1 "market" for
if the meaning sought to be conveyed is the ownership thereof then the phrase "by
any, person, entity, association, or corporation other than the city" win serve no
useful purpose.
That Javellana's market is a public market is indubitable. According to the decision of
the lower court, "the petitioner himself so declared when he testified that his market
is engaged in servicing the public, not only in Bago City, but also those coming from
other municipalities; that he is renting stalls in his market to the public; that there are
around 60 permanent stalls and 50 movable stalls being leased by him; and that his
market services about 3,000 people."
We hold that Javellana's market fans within the scope of Ordinance No. 150 and the
trial court committed no error in so holding and in dismissing the petition as well as
the complaint in intervention.
WHEREFORE, the appeals are dismissed for lack of merit. No special
pronouncement as to costs.
SO ORDERED.
G.R. No. L-27247 April 20, 1983
IN THE MATTER OF THE PETITION FOR DECLARATORY JUDGMENT
REGARDING THE VALIDITY OF ORDINANCE NO. 386 OF THE CITY OF
BAGUIO, BAGUIO CITIZENS ACTION INC., and JUNIOR CHAMBER OF BAGUIO
CITY, INC., petitioners-appellants,
vs.
THE CITY COUNCIL AND CITY MAYOR OF THE CITY OF BAGUIO, respondents-
appellees.
DE CASTRO, J:
In this petition for declaratory relief originally filed in the Court of First Instance of
Baguio, Branch II, what is involved is the validity of Ordinance 386 passed by the
City Council of Baguio City which took effect on February 23, 1967, quoted together
with the explanatory note, as follows:
ORDINANCE 386
AN ORDINANCE CONSIDERING ALL SQUATTERS OF PUBLIC
LAND, OTHER THAN THOSE EARMARKED FOR PUBLIC USE IN
THE CITY OF BAGUIO WHO ARE DULY REGISTERED AS SUCH
AT THE TIME OF THE PROMULGATION OF THIS ORDINANCE AS
BONAFIDE OCCUPANTS OF THEIR RESPECTIVE LOTS AND
WHICH SHALL HEREAFTER BE EMBRACED AS A CITY
GOVERNMENT HOUSING PROJECT AND PROVIDING FOR
OTHER PURPOSES.
Upon strong recommendation of the Vice-Mayor and Presiding
Officer, on Motion of all the Councilors, seconded by the same, be it
ordained by the City Council assembled:
Section l.—All public lands within Baguio townsite which are occupied
by squatters who are duly registered as such at the time of the
promulgation of this Ordinance such public lands not designated by
city and national authorities for public use, shall be considered as
embraced and comprising a City Government Housing Project;
PROVIDED, HOWEVER, That areas covered by Executive Orders or
Presidential Proclamations but the city had made official
representation for the lifting of such orders or proclamation shall be
deemed to be part of the Baguio Townsite for the purposes of this
ordinance;
378
Section 2.—Building permits shall have been deemed issued to all
squatters as contemplated by this Ordinance, giving such squatters
five years from the approval of this Ordinance to satisfactorily comply
with city building specifications and payment of the corresponding city
building permit fees;
Section 3.—All cases pending in court against squatters be dropped
without prejudice to the full prosecution of all subsequent violations in
relation to the provisions of existing city ordinances and/or resolutions;
Section 4.—All squatters be given all the necessary and needed
protection of the City Government against the stringent provisions of
the Public Land Act, particularly on public bidding, in that the lots
occupied by said squatters be awarded to them by direct sale through
Presidential Proclamation;
Section 5.—The City Government shall not be interested in making
financial profit out of the project and that the appraisal and evaluation
of the said lots shall be made at minimum cost per square meters, the
total cost of the lots made payable within the period of ten years;
Section 6.—The minimum lot area requirements shall be disregarded
in cases where it could not be implemented due to existing congestion
of houses, and that, if necessary, areas applied for under this
ordinance shall be reduced to that which is practical under the
circumstances; PROVIDED, HOWEVER, That squatters in congested
areas shall be given preference in the transfer to resettlement areas
or government housing projects earmarked as such under the
provisions of this ordinance, if and when it becomes necessary to
ease congestion or when their lots shall be traversed by the laying of
roads or are needed for public use;
Section 7.—The amount of P20,000.00 or so much as is necessary,
for the lot survey of each squatter's lot be appropriated, such survey
of which shall be conducted by licensed private surveyors through
public biddings; PROVIDED, That, said expenses for survey shall be
included in the overall cost of each lot;
Section 8.—The three-man control committed for the Quirino-
Magsaysay housing project which was previously created under City
Ordinance No. 344, shall exercise administration and supervision of
the city government housing projects created under this Ordinance
shall, furthermore, be entrusted with the duty of: (1) Consolidating a
list of all city squatters who shall be benefitted in contemplation and
under the provisions of this Ordinance; (2) To assist and help the
squatters in the preparation of all the necessary and required paper
work and relative items in connection with their application over their
respective lots; (3) To seek and locate other areas within the Baguio
Townsite conveniently situated and which will be earmarked as
subsequently housing projects of the city for landless bonafide city
residents; and (4) To carry out and implement the provisions of this
Ordinance without the least possible delay.
EXPLANATORY NOTE
This ordinance is primarily designed to extend a helping hand to the
numerous landless city residents and the called 'Squatters' within the
Baguio Townsite in their desire to acquire residential lots which they
may rightly call their own.
The reported people who have violated the City's building ordinances
were not so guarded by any criminal perversity, but where given to it
more by circumstances of necessity and that they are, therefore,
entitled to a more human treatment, more of understanding and more
of pity rather than be herded before the courts, likened to hardened
criminals and deliberate violators of our laws and ordinances.
PRESENT AND VOTING:
Hon. Norberto de Guzman — Vice Mayor Presiding Officer Hon.
Gaudencio Floresca — Councilor Hon. Jose S. Florendo — Councilor
379
Hon. Francisco G. Mayo — Councilor Hon. Braulio D. Yaranon —
Councilor Hon. Sinforoso Fañgonil — Councilor
The petition for declaratory relief filed with the Court of First Instance of Baguio,
Branch II, prays for a judgment declaring the Ordinance as invalid and illegal ab
initio. The respondents-appellees, the City Council and the City Mayor, filed motions
to dismiss the petition which were denied. Nonetheless, in the decision thereafter
rendered, the petition was dismissed on the grounds that: 1) another court, the Court
of First Instance of Baguio, Branch I, had declared the Ordinance valid in a criminal
case filed against the squatters for illegal construction, and the Branch II of the same
court cannot, in a declaratory proceeding, review and determine the validity of said
judgment pursuant to the policy of judicial respect and stability; 2) those who come
within the protection of the ordinance have not been made parties to the suit in
accordance with Section 2 of Rule 64 and it has been held that the non-joinder of
such parties is a jurisdictional defect; and 3) the court is clothed with discretion to
refuse to make any declaration where the declaration is not necessary and proper at
the time under all circumstances, e.g. where the declaration would be of no practical
help in ending the controversy or would not stabilize the disputed legal relation, citing
Section 5 of Rule 64; ICJS 1033-1034; 16 AM. JUR 287-289; Hoskyns vs. National
City Bank of New York, 85 Phil. 201.
Hence, the instant appeal which was perfected in accordance with the provisions of
Rule 42, before the approval of Republic Act No. 5440 on September 9, 1968.
1. The case before the Court of First Instance of Baguio, Branch 1, dealt with the
criminal liability of the accused for constructing their houses without obtaining
building permits, contrary to Section 47 in relation to Section 52 of the Revised
Ordinances of Baguio, which act the said court considered as pardoned by Section 2
of Ordinance 386. The court in said case upheld the power of the Municipal Council
to legalize the acts punished by the aforesaid provisions of the Revised Ordinances
of Baguio, stating that the Municipal Council is the policy determining body of Baguio
City and therefore it can amend, repeal, alter or modify its own laws as it did when it
enacted Ordinance 386. In deciding the case, the first branch of the court a quo did
not declare the whole Ordinance valid. This is clear when it stated that "had the issue
been the legalization of illegal occupation of public land, covered by Republic Act No.
947, ... the Ordinance in question should have been ultra vires and
unconstitutional." 1 Said court merely confined itself to Sections 2 and 3 of Ordinance
386. It did not make any definite pronouncement whether or not the City Council has
the power to legalize the illegal occupation of public land which is the issue in the
instant case. It is noteworthy that the court, in passing upon the validity of the
aforesaid sections, was apparently guided by the rule that where part of a statute is
void as repugnant to the organic law, while another part is valid, the valid portion, if
separable from the invalid may stand and be enforced. Contrary to what was said in
the decision under review, the second branch of the court a quo was not called upon
to determine the validity of the judgment of the first branch.
2. The non-inclusion of the squatters mentioned in the Ordinance in question as
party defendants in this case cannot defeat the jurisdiction of the Court of First
Instance of Baguio. There is nothing in Section 2 of Rule 64 of the Rules of Court
which says that the non-joinder of persons who have or claim any interest which
would be affected by the declaration is a jurisdictional defect. Said section merely
states that "All persons shall be made parties who have or claim any interest which
would be affected by the declaration; and no declaration shall, except or otherwise
provided in these rules, prejudice the rights of persons not parties to the action." This
section contemplates a situation where there are other persons who would be
affected by the declaration, but were not impleaded as necessary parties, in which
case the declaration shall not prejudice them. If at all, the case may be dismissed not
on the ground of lack of jurisdiction but for the reason stated in Section 5 of the same
Rule stating that "the Court may refuse to exercise the power to declare rights and to
construe instruments in any case where a decision would not terminate the
uncertainty or controversy which gave rise to the action, or any case where the
declaration or construction is not necessary and proper at the time under all
circumstances."
It must be noted that the reason for the law requiring the joinder of all necessary
parties is that failure to do so would deprive the declaration of the final and pacifying
function the action for declaratory relief is calculated to subserve, as they would not
be bound by the declaration and may raise the Identical issue.2 In the case at bar,
although it is true that any declaration by the court would affect the squatters, the
latter are not necessary parties because the question involved is the power of the
Municipal Council to enact the Ordinances in question. Whether or not they are
380
impleaded, any determination of the controversy would be binding upon the
squatters.
A different situation obtains in the case of Degala v. Reyes 3 cited in the decision
under review. The Degala case involves the validity of the trust created in the will of
the testator. In the said case, the Roman Catholic Church which was a necessary
party, being the one which would be most vitally affected by the declaration of the
nullity of the will was not brought in as party. The Court therefore, refused to make
any declaratory judgment on ground of jurisdictional defect, for there can be no final
judgment that could be rendered and the Roman Catholic not being bound by such
judgment might raise the Identical issue, making therefore the declaration a mere
exercise in futility.
This is not true in the instant case. A declaration on the nullity of the ordinance,
would give the squatters no right which they are entitled to protect. The party most
interested to sustain and defend the legality of the Ordinance is the body that passed
it, the City Council, and together with the City Mayor, is already a party in these
proceedings.
3. The Ordinance in question is a patent nullity. It considered all squatters of public
land in the City of Baguio as bona-fide occupants of their respective lots. As we have
stated in City of Manila v. Garcia, 4 et al.:
Squatting is unlawful and no amount of acquiescence on the part of
the city officials will elevate it into a lawful act. In principle, a
compound of illegal entry and official permit to stay is obnoxious to
our concept of proper official norm of conduct. Because, such permit
does not serve social justice; it fosters moral decadence. It does not
promote public welfare; it abets disrespect for the law. It has its roots
in vice; so it is an infected bargain. Official approval of squatting
should not, therefore, be permitted to obtain in this country where
there is an orderly form of government.
In the same case, squatting was characterized as a widespread vice and a blight
Thus:
Since the last global war, squatting on another's property in this
country has become a widespread vice. It was and is a blight
Squatter's areas pose problems of health, sanitation. They are
breeding places for crime. They constitute proof that respect for the
law and the rights of others, even those of the government are being
flouted. Knowingly, squatters have embarked on the pernicious act of
occupying property whenever and wherever convenient to their
interests without as much as leave, and even against the will, of the
owner. They are emboldened seemingly because of their belief that
they could violate the law with impunity. The pugnaciousness of some
of them has tied up the hands of legitimate owners. The latter are thus
prevented from recovering possession by peaceful means.
Government lands have not been spared by them. They know, of
course, that instrusion into property, government or private, is wrong.
But, then the wheels of justice grind slow, mainly because of lawyers
who, by means, fair or foul, are quite often successful in procuring
delay of the day of reckoning. Rampancy of forcible entry into
government lands particularly, is abetted by the apathy of some public
officials to enforce the government's rights. Obstinacy of these
squatters is difficult to explain unless it is spawned by official
tolerance, if not outright encouragement or protection. Said squatters
have become insensible to the difference between right and wrong.
To them, violation of law means nothing. With the result that squatters
still exists, much to the detriment of public interest. It is high time that,
in this aspect, sanity and the rule of law be restored. It is in this
environment that we look into the validity of the permits granted
defendants herein.
In the above cited case, the land occupied by the squatters belongs to the City of
Manila. In the instant case, the land occupied by the squatters are portions of water
sheds, reservations, scattered portions of the public domain within the Baguio
townsite. Certainly, there is more reason then to void the actions taken by the City of
Baguio through the questioned ordinance.
Being unquestionably a public land, no disposition thereof could be made by the City
of Baguio without prior legislative authority. It is the fundamental principle that the
381

state possesses plenary power in law to determine who shall be favored recipients of
public domain, as well as under what terms such privilege may be granted not
excluding the placing of obstacles in the way of exercising what otherwise would be
ordinary acts of ownership. And the law has laid in the Director of Lands the power of
exclusive control, administrations, disposition and alienation of public land that
includes the survey, classification, lease, sale or any other form of concessions or
disposition and management of the lands of public domains. 5
this country has become a widespread vice. (City of Manila vs..
Garcia, L-26053, Feb. 21, 1967, 19 SCRA 413, 418).
WHEREFORE, in view of the foregoing, Ordinance 386 is hereby rendered nullified
and without force and effect.
SO ORDERED.

Nor could the enactment of Ordinance 386 be justified by stating that "this Ordinance
is primarily designed to extend a helping hand to the numerous landless city
residents and the so called squatters within the Baguio townsite in their desire to G.R. No. 138810             September 29, 2004
acquire residential lots which they may rightly call their own and that the reported
people who have violated the City's building ordinances were not so guided by any BATANGAS CATV, INC., petitioner,
criminal perversity, but were given to it more by circumstances of necessity and that vs.
they are, therefore, entitled to a more human treatment, more understanding and THE COURT OF APPEALS, THE BATANGAS CITY SANGGUNIANG
more of pity rather than be herded before the courts, likened to hardened criminals PANLUNGSOD and BATANGAS CITY MAYOR, respondents.
and deliberate violators of our laws and ordinances."6
DECISION
Our pronouncement in Astudillo vs. Board of Directors of PHHC 7 is relevant to this
case. Thus—
SANDOVAL-GUTIERREZ, J.:
In carrying out its social re-adjustment policies, the government could
In the late 1940s, John Walson, an appliance dealer in Pennsylvania, suffered a
not simply lay aside moral standards, and aim to favor usurpers,
decline in the sale of television (tv) sets because of poor reception of signals in his
squatters, and intruders, unmindful of the lawful and unlawful origin
community. Troubled, he built an antenna on top of a nearby mountain. Using coaxial
and character of their occupancy. Such a policy would perpetuate
cable lines, he distributed the tv signals from the antenna to the homes of his
conflicts instead of attaining their just solution. (Bernardo vs.
customers. Walson’s innovative idea improved his sales and at the same time gave
Bernardo, 96 Phil. 202, 206.)
birth to a new telecommunication system -- the Community Antenna Television
(CATV) or Cable Television.1
Indeed, the government has enunciated a militant policy against
squatters. Thus, Letter of Instruction No. 19 dated October 2, 1972
This technological breakthrough found its way in our shores and, like in its country of
orders city and district engineers 'to remove all illegal constructions
origin, it spawned legal controversies, especially in the field of regulation. The case
including buildings ... and those built without permits on public or
at bar is just another occasion to clarify a shady area. Here, we are tasked to resolve
private property' and providing for the relocation of squatters (68 O.G.
the inquiry -- may a local government unit (LGU) regulate the subscriber rates
7962. See Letter of Instruction No. 19-A). As noted by Justice
charged by CATV operators within its territorial jurisdiction?
Sanchez, since the last global war, squatting on another's property in
382
This is a petition for review on certiorari filed by Batangas CATV, Inc. (petitioner
herein) against the Sangguniang Panlungsod and the Mayor of Batangas City
(respondents herein) assailing the Court of Appeals (1) Decision2 dated February 12,
1999 and (2) Resolution3 dated May 26, 1999, in CA-G.R. CV No. 52361.4 The
Appellate Court reversed and set aside the Judgment5 dated October 29, 1995 of the
Regional Trial Court (RTC), Branch 7, Batangas City in Civil Case No. 4254,6 holding
that neither of the respondents has the power to fix the subscriber rates of CATV
operators, such being outside the scope of the LGU’s power.
The antecedent facts are as follows:
On July 28, 1986, respondent Sangguniang Panlungsod enacted Resolution
No. 2107 granting petitioner a permit to construct, install, and operate a
CATV system in Batangas City. Section 8 of the Resolution provides that
petitioner is authorized to charge its subscribers the maximum rates specified
therein, "provided, however, that any increase of rates shall be subject to the
approval of the Sangguniang Panlungsod."8
Sometime in November 1993, petitioner increased its subscriber rates from ₱88.00
to ₱180.00 per month. As a result, respondent Mayor wrote petitioner a
letter9 threatening to cancel its permit unless it secures the approval of respondent
Sangguniang Panlungsod, pursuant to Resolution No. 210.
Petitioner then filed with the RTC, Branch 7, Batangas City, a petition for injunction
docketed as Civil Case No. 4254. It alleged that respondent Sangguniang
Panlungsod has no authority to regulate the subscriber rates charged by CATV
operators because under Executive Order No. 205, the National
Telecommunications Commission (NTC) has the sole authority to regulate the CATV
operation in the Philippines.
On October 29, 1995, the trial court decided in favor of petitioner, thus:
"WHEREFORE, as prayed for, the defendants, their representatives, agents,
deputies or other persons acting on their behalf or under their
instructions, are hereby enjoined from canceling plaintiff’s permit to
operate a Cable Antenna Television (CATV) system in the City of
Batangas or its environs or in any manner, from interfering with the
authority and power of the National Telecommunications Commission
to grant franchises to operate CATV systems to qualified applicants,
and the right of plaintiff in fixing its service rates which needs no prior
approval of the Sangguniang Panlungsod of Batangas City.
The counterclaim of the plaintiff is hereby dismissed. No pronouncement as
to costs.
IT IS SO ORDERED."10
The trial court held that the enactment of Resolution No. 210 by respondent violates
the State’s deregulation policy as set forth by then NTC Commissioner Jose Luis A.
Alcuaz in his Memorandum dated August 25, 1989. Also, it pointed out that the sole
agency of the government which can regulate CATV operation is the NTC, and that
the LGUs cannot exercise regulatory power over it without appropriate legislation.
Unsatisfied, respondents elevated the case to the Court of Appeals, docketed as CA-
G.R. CV No. 52361.
On February 12, 1999, the Appellate Court reversed and set aside the trial court’s
Decision, ratiocinating as follows:
"Although the Certificate of Authority to operate a Cable Antenna
Television (CATV) System is granted by the National
Telecommunications Commission pursuant to Executive Order No. 205,
this does not preclude the Sangguniang Panlungsod from regulating
the operation of the CATV in their locality under the powers vested
upon it by Batas Pambansa Bilang 337, otherwise known as the Local
Government Code of 1983. Section 177 (now Section 457 paragraph 3
(ii) of Republic Act 7160) provides:
‘Section 177. Powers and Duties – The Sangguniang Panlungsod
shall:
383
a) Enact such ordinances as may be necessary to carry into
effect and discharge the responsibilities conferred upon it by
law, and such as shall be necessary and proper to provide for
health and safety, comfort and convenience, maintain peace
and order, improve the morals, and promote the prosperity and
general welfare of the community and the inhabitants thereof,
and the protection of property therein;
xxx
d) Regulate, fix the license fee for, and tax any business or
profession being carried on and exercised within the territorial
jurisdiction of the city, except travel agencies, tourist guides,
tourist transports, hotels, resorts, de luxe restaurants, and
tourist inns of international standards which shall remain under
the licensing and regulatory power of the Ministry of Tourism
which shall exercise such authority without infringement on the
taxing and regulatory powers of the city government;’
Under cover of the General Welfare Clause as provided in this section, Local
Government Units can perform just about any power that will benefit their
constituencies. Thus, local government units can exercise powers that
are: (1) expressly granted; (2) necessarily implied from the power that is
expressly granted; (3) necessary, appropriate or incidental for its efficient and
effective governance; and (4) essential to the promotion of the general
welfare of their inhabitants. (Pimentel, The Local Government Code of 1991,
p. 46)
Verily, the regulation of businesses in the locality is expressly provided
in the Local Government Code. The fixing of service rates is lawful
under the General Welfare Clause.
Resolution No. 210 granting appellee a permit to construct, install and
operate a community antenna television (CATV) system in Batangas City as
quoted earlier in this decision, authorized the grantee to impose charges
which cannot be increased except upon approval of the Sangguniang Bayan.
It further provided that in case of violation by the grantee of the terms and
conditions/requirements specifically provided therein, the City shall have the
right to withdraw the franchise.
Appellee increased the service rates from EIGHTY EIGHT PESOS (₱88.00)
to ONE HUNDRED EIGHTY PESOS (₱180.00) (Records, p. 25) without the
approval of appellant. Such act breached Resolution No. 210 which gives
appellant the right to withdraw the permit granted to appellee."11
Petitioner filed a motion for reconsideration but was denied.12
Hence, the instant petition for review on certiorari anchored on the following
assignments of error:
"I
THE COURT OF APPEALS ERRED IN HOLDING THAT THE GENERAL
WELFARE CLAUSE of the LOCAL GOVERNMENT CODE AUTHORIZES
RESPONDENT SANGGUNIANG PANLUNGSOD TO EXERCISE THE
REGULATORY FUNCTION SOLELY LODGED WITH THE NATIONAL
TELECOMMUNICATIONS COMMISSION UNDER EXECUTIVE ORDER
NO. 205, INCLUDING THE AUTHORITY TO FIX AND/OR APPROVE THE
SERVICE RATES OF CATV OPERATORS; AND
II
THE COURT OF APPEALS ERRED IN REVERSING THE DECISION
APPEALED FROM AND DISMISSING PETITIONER’S COMPLAINT."13
Petitioner contends that while Republic Act No. 7160, the Local Government Code of
1991, extends to the LGUs the general power to perform any act that will benefit their
constituents, nonetheless, it does not authorize them to regulate the CATV
operation. Pursuant to E.O. No. 205, only the NTC has the authority to regulate the
CATV operation, including the fixing of subscriber rates.
384
Respondents counter that the Appellate Court did not commit any reversible error in
rendering the assailed Decision. First, Resolution No. 210 was enacted pursuant to
Section 177(c) and (d) of Batas Pambansa Bilang 337, the Local Government Code
of 1983, which authorizes LGUs to regulate businesses. The term "businesses"
necessarily includes the CATV industry. And second, Resolution No. 210 is in the
nature of a contract between petitioner and respondents, it being a grant to the
former of a franchise to operate a CATV system. To hold that E.O. No. 205 amended
its terms would violate the constitutional prohibition against impairment of contracts.14
The petition is impressed with merit.
Earlier, we posed the question -- may a local government unit (LGU) regulate the
subscriber rates charged by CATV operators within its territorial jurisdiction? A
review of pertinent laws and jurisprudence yields a negative answer.
President Ferdinand E. Marcos was the first one to place the CATV industry under
the regulatory power of the national government.15 On June 11, 1978, he
issued Presidential Decree (P.D.) No. 151216 establishing a monopoly of the
industry by granting Sining Makulay, Inc., an exclusive franchise to operate CATV
system in any place within the Philippines. Accordingly, it terminated all franchises,
permits or certificates for the operation of CATV system previously granted by local
governments or by any instrumentality or agency of the national
government.17 Likewise, it prescribed the subscriber rates to be charged by Sining
Makulay, Inc. to its customers.18
On July 21, 1979, President Marcos issued Letter of Instruction (LOI) No. 894
vesting upon the Chairman of the Board of Communications direct supervision over
the operations of Sining Makulay, Inc. Three days after, he issued E.O. No.
54619 integrating the Board of Communications20 and the Telecommunications
Control Bureau21 to form a single entity to be known as the "National
Telecommunications Commission." Two of its assigned functions are:
"a. Issue Certificate of Public Convenience for the operation of
communications utilities and services, radio communications systems, wire or
wireless telephone or telegraph systems, radio and television broadcasting
system and other similar public utilities;
b. Establish, prescribe and regulate areas of operation of particular operators
of public service communications; and determine and prescribe charges or
rates pertinent to the operation of such public utility facilities and services
except in cases where charges or rates are established by international
bodies or associations of which the Philippines is a participating member or
by bodies recognized by the Philippine Government as the proper arbiter of
such charges or rates;"
Although Sining Makulay Inc.’s exclusive franchise had a life term of 25 years, it was
cut short by the advent of the 1986 Revolution. Upon President Corazon C. Aquino’s
assumption of power, she issued E.O. No. 20522 opening the CATV industry to all
citizens of the Philippines. It mandated the NTC to grant Certificates of Authority
to CATV operators and to issue the necessary implementing rules and
regulations.
On September 9, 1997, President Fidel V. Ramos issued E.O. No. 43623 prescribing
policy guidelines to govern CATV operation in the Philippines. Cast in more definitive
terms, it restated the NTC’s regulatory powers over CATV operations, thus:
"SECTION 2. The regulation and supervision of the cable television
industry in the Philippines shall remain vested solely with the National
Telecommunications Commission (NTC).
SECTION 3. Only persons, associations, partnerships, corporations or
cooperatives, granted a Provisional Authority or Certificate of Authority by the
Commission may install, operate and maintain a cable television system or
render cable television service within a service area."
Clearly, it has been more than two decades now since our national government,
through the NTC, assumed regulatory power over the CATV industry. Changes in the
political arena did not alter the trend. Instead, subsequent presidential issuances
further reinforced the NTC’s power. Significantly, President Marcos and President
Aquino, in the exercise of their legislative power, issued P.D. No. 1512, E.O. No. 546
and E.O. No. 205. Hence, they have the force and effect of statutes or laws passed
by Congress.24 That the regulatory power stays with the NTC is also clear from
President Ramos’ E.O. No. 436 mandating that the regulation and supervision of the
385
CATV industry shall remain vested "solely" in the NTC. Black’s Law Dictionary
defines "sole" as "without another or others."25 The logical conclusion, therefore,
is that in light of the above laws and E.O. No. 436, the NTC exercises
regulatory power over CATV operators to the exclusion of other bodies.
But, lest we be misunderstood, nothing herein should be interpreted as to strip LGUs
of their general power to prescribe regulations under the general welfare clause of
the Local Government Code. It must be emphasized that when E.O. No. 436 decrees
that the "regulatory power" shall be vested "solely" in the NTC, it pertains to the
"regulatory power" over those matters which are peculiarly within the NTC’s
competence, such as, the: (1) determination of rates, (2) issuance of "certificates of
authority, (3) establishment of areas of operation, (4) examination and assessment of
the legal, technical and financial qualifications of applicant operators, (5) granting of
permits for the use of frequencies, (6) regulation of ownership and operation, (7)
adjudication of issues arising from its functions, and (8) other similar
matters.26 Within these areas, the NTC reigns supreme as it possesses the exclusive
power to regulate -- a power comprising varied acts, such as "to fix, establish, or
control; to adjust by rule, method or established mode; to direct by rule or restriction;
or to subject to governing principles or laws."27
Coincidentally, respondents justify their exercise of regulatory power over petitioner’s
CATV operation under the general welfare clause of the Local Government Code of
1983. The Court of Appeals sustained their stance.
There is no dispute that respondent Sangguniang Panlungsod, like other local
legislative bodies, has been empowered to enact ordinances and approve
resolutions under the general welfare clause of B.P. Blg. 337, the Local Government
Code of 1983. That it continues to posses such power is clear under the new law,
R.A. No. 7160 (the Local Government Code of 1991). Section 16 thereof provides:
"SECTION 16. General Welfare. – Every local government unit shall exercise
the powers expressly granted, those necessarily implied therefrom, as well as
powers necessary, appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions, local government units
shall ensure and support, among others, the preservation and enrichment of
culture, promote health and safety, enhance the right of the people to a
balanced ecology, encourage and support the development of appropriate
and self-reliant, scientific and technological capabilities, improve public
morals, enhance economic prosperity and social justice, promote full
employment among their residents, maintain peace and order, and preserve
the comfort and convenience of their inhabitants."
In addition, Section 458 of the same Code specifically mandates:
"SECTION 458. Powers, Duties, Functions and Compensation. — (a)
The Sangguniang Panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general
welfare of the city and its inhabitants pursuant to Section 16 of this Code and
in the proper exercise of the corporate powers of the city as provided for
under Section 22 of this Code, x x x:"
The general welfare clause is the delegation in statutory form of the police
power of the State to LGUs.28 Through this, LGUs may prescribe regulations to
protect the lives, health, and property of their constituents and maintain peace and
order within their respective territorial jurisdictions. Accordingly, we have upheld
enactments providing, for instance, the regulation of gambling,29 the occupation of rig
drivers,30 the installation and operation of pinball machines,31 the maintenance and
operation of cockpits,32 the exhumation and transfer of corpses from public burial
grounds,33 and the operation of hotels, motels, and lodging houses34 as valid
exercises by local legislatures of the police power under the general welfare clause.
Like any other enterprise, CATV operation maybe regulated by LGUs under the
general welfare clause. This is primarily because the CATV system commits the
indiscretion of crossing public properties. (It uses public properties in order to reach
subscribers.) The physical realities of constructing CATV system – the use of public
streets, rights of ways, the founding of structures, and the parceling of large regions
– allow an LGU a certain degree of regulation over CATV operators.35 This is the
same regulation that it exercises over all private enterprises within its territory.
But, while we recognize the LGUs’ power under the general welfare clause, we
cannot sustain Resolution No. 210. We are convinced that respondents strayed from
386
the well recognized limits of its power. The flaws in Resolution No. 210 are: (1) it
violates the mandate of existing laws and (2) it violates the State’s deregulation
policy over the CATV industry.
I.
Resolution No. 210 is an enactment of an LGU acting only as agent of the national
legislature. Necessarily, its act must reflect and conform to the will of its principal. To
test its validity, we must apply the particular requisites of a valid ordinance as laid
down by the accepted principles governing municipal corporations.36
Speaking for the Court in the leading case of United States vs. Abendan,37 Justice
Moreland said: "An ordinance enacted by virtue of the general welfare clause is
valid, unless it contravenes the fundamental law of the Philippine Islands, or an Act
of the Philippine Legislature, or unless it is against public policy, or is unreasonable,
oppressive, partial, discriminating, or in derogation of common right." In De la Cruz
vs. Paraz,38 we laid the general rule "that ordinances passed by virtue of the implied
power found in the general welfare clause must be reasonable, consonant with the
general powers and purposes of the corporation, and not inconsistent with the laws
or policy of the State."
The apparent defect in Resolution No. 210 is that it contravenes E.O. No. 205 and
E.O. No. 436 insofar as it permits respondent Sangguniang Panlungsod to usurp a
power exclusively vested in the NTC, i.e., the power to fix the subscriber rates
charged by CATV operators. As earlier discussed, the fixing of subscriber rates is
definitely one of the matters within the NTC’s exclusive domain.
In this regard, it is appropriate to stress that where the state legislature has made
provision for the regulation of conduct, it has manifested its intention that the subject
matter shall be fully covered by the statute, and that a municipality, under its general
powers, cannot regulate the same conduct.39 In Keller vs. State,40 it was held that:
"Where there is no express power in the charter of a municipality authorizing it to
adopt ordinances regulating certain matters which are specifically covered by a
general statute, a municipal ordinance, insofar as it attempts to regulate the subject
which is completely covered by a general statute of the legislature, may be rendered
invalid. x x x Where the subject is of statewide concern, and the legislature has
appropriated the field and declared the rule, its declaration is binding throughout the
State." A reason advanced for this view is that such ordinances are in excess of the
powers granted to the municipal corporation.41
Since E.O. No. 205, a general law, mandates that the regulation of CATV operations
shall be exercised by the NTC, an LGU cannot enact an ordinance or approve a
resolution in violation of the said law.
It is a fundamental principle that municipal ordinances are inferior in status and
subordinate to the laws of the state. An ordinance in conflict with a state law of
general character and statewide application is universally held to be invalid.42 The
principle is frequently expressed in the declaration that municipal authorities, under a
general grant of power, cannot adopt ordinances which infringe the spirit of a state
law or repugnant to the general policy of the state.43 In every power to pass
ordinances given to a municipality, there is an implied restriction that the ordinances
shall be consistent with the general law.44 In the language of Justice Isagani Cruz
(ret.), this Court, in Magtajas vs. Pryce Properties Corp., Inc.,45 ruled that:
"The rationale of the requirement that the ordinances should not contravene a
statute is obvious. Municipal governments are only agents of the national
government. Local councils exercise only delegated legislative powers
conferred on them by Congress as the national lawmaking body. The
delegate cannot be superior to the principal or exercise powers higher than
those of the latter. It is a heresy to suggest that the local government units
can undo the acts of Congress, from which they have derived their power in
the first place, and negate by mere ordinance the mandate of the statute.
‘Municipal corporations owe their origin to, and derive their powers
and rights wholly from the legislature. It breathes into them the breath
of life, without which they cannot exist. As it creates, so it may
destroy. As it may destroy, it may abridge and control. Unless there is
some constitutional limitation on the right, the legislature might, by a
single act, and if we can suppose it capable of so great a folly and so
great a wrong, sweep from existence all of the municipal corporations
in the State, and the corporation could not prevent it. We know of no
limitation on the right so far as to the corporation themselves are
387
concerned. They are, so to phrase it, the mere tenants at will of the
legislature.’
This basic relationship between the national legislature and the local
government units has not been enfeebled by the new provisions in the
Constitution strengthening the policy of local autonomy. Without meaning to
detract from that policy, we here confirm that Congress retains control of the
local government units although in significantly reduced degree now than
under our previous Constitutions. The power to create still includes the power
to destroy. The power to grant still includes the power to withhold or recall.
True, there are certain notable innovations in the Constitution, like the direct
conferment on the local government units of the power to tax, which cannot
now be withdrawn by mere statute. By and large, however, the national
legislature is still the principal of the local government units, which
cannot defy its will or modify or violate it."
Respondents have an ingenious retort against the above disquisition. Their theory is
that the regulatory power of the LGUs is granted by R.A. No. 7160 (the Local
Government Code of 1991), a handiwork of the national lawmaking authority. They
contend that R.A. No. 7160 repealed E.O. No. 205 (issued by President Aquino).
Respondents’ argument espouses a bad precedent. To say that LGUs exercise the
same regulatory power over matters which are peculiarly within the NTC’s
competence is to promote a scenario of LGUs and the NTC locked in constant clash
over the appropriate regulatory measure on the same subject matter. LGUs must
recognize that technical matters concerning CATV operation are within the
exclusive regulatory power of the NTC.
At any rate, we find no basis to conclude that R.A. No. 7160 repealed E.O. No. 205,
either expressly or impliedly. It is noteworthy that R.A. No. 7160 repealing clause,
which painstakingly mentions the specific laws or the parts thereof which are
repealed, does not include E.O. No. 205, thus:
"SECTION 534. Repealing Clause. — (a) Batas Pambansa Blg. 337,
otherwise known as the Local Government Code." Executive Order No. 112
(1987), and Executive Order No. 319 (1988) are hereby repealed.
(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees,
orders, instructions, memoranda and issuances related to or concerning the
barangay are hereby repealed.
(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding
hospital fund; Section 3, a (3) and b (2) of Republic Act. No. 5447 regarding
the Special Education Fund; Presidential Decree No. 144 as amended by
Presidential Decree Nos. 559 and 1741; Presidential Decree No. 231 as
amended; Presidential Decree No. 436 as amended by Presidential Decree
No. 558; and Presidential Decree Nos. 381, 436, 464, 477, 526, 632, 752,
and 1136 are hereby repealed and rendered of no force and effect.
(d) Presidential Decree No. 1594 is hereby repealed insofar as it governs
locally-funded projects.
(e) The following provisions are hereby repealed or amended insofar as they
are inconsistent with the provisions of this Code: Sections 2, 16, and 29 of
Presidential Decree No. 704; Section 12 of Presidential Decree No. 87, as
amended; Sections 52, 53, 66, 67, 68, 69, 70, 71, 72, 73, and 74 of
Presidential Decree No. 463, as amended; and Section 16 of Presidential
Decree No. 972, as amended, and
(f) All general and special laws, acts, city charters, decrees, executive orders,
proclamations and administrative regulations, or part or parts thereof which
are inconsistent with any of the provisions of this Code are hereby repealed
or modified accordingly."
Neither is there an indication that E.O. No. 205 was impliedly repealed by R.A. No.
7160. It is a settled rule that implied repeals are not lightly presumed in the absence
of a clear and unmistakable showing of such intentions. In Mecano vs. Commission
on Audit,46 we ruled:
"Repeal by implication proceeds on the premise that where a statute of later
date clearly reveals an intention on the part of the legislature to abrogate a
prior act on the subject, that intention must be given effect. Hence, before
there can be a repeal, there must be a clear showing on the part of the
388
lawmaker that the intent in enacting the new law was to abrogate the old one.
The intention to repeal must be clear and manifest; otherwise, at least, as a
general rule, the later act is to be construed as a continuation of, and not a
substitute for, the first act and will continue so far as the two acts are the
same from the time of the first enactment."
As previously stated, E.O. No. 436 (issued by President Ramos) vests upon the NTC
the power to regulate the CATV operation in this country. So also Memorandum
Circular No. 8-9-95, the Implementing Rules and Regulations of R.A. No. 7925 (the
"Public Telecommunications Policy Act of the Philippines"). This shows that the
NTC’s regulatory power over CATV operation is continuously recognized.
It is a canon of legal hermeneutics that instead of pitting one statute against another
in an inevitably destructive confrontation, courts must exert every effort to reconcile
them, remembering that both laws deserve a becoming respect as the handiwork of
coordinate branches of the government.47 On the assumption of a conflict between
E.O. No. 205 and R.A. No. 7160, the proper action is not to uphold one and annul
the other but to give effect to both by harmonizing them if possible. This recourse
finds application here. Thus, we hold that the NTC, under E.O. No. 205, has
exclusive jurisdiction over matters affecting CATV operation, including specifically
the fixing of subscriber rates, but nothing herein precludes LGUs from exercising its
general power, under R.A. No. 7160, to prescribe regulations to promote the health,
morals, peace, education, good order or safety and general welfare of their
constituents. In effect, both laws become equally effective and mutually
complementary.
The grant of regulatory power to the NTC is easily understandable. CATV system is
not a mere local concern. The complexities that characterize this new technology
demand that it be regulated by a specialized agency. This is particularly true in the
area of rate-fixing. Rate fixing involves a series of technical
operations.48 Consequently, on the hands of the regulatory body lies the ample
discretion in the choice of such rational processes as might be appropriate to the
solution of its highly complicated and technical problems. Considering that the CATV
industry is so technical a field, we believe that the NTC, a specialized agency, is in a
better position than the LGU, to regulate it. Notably, in United States vs.
Southwestern Cable Co.,49 the US Supreme Court affirmed the Federal
Communications Commission’s (FCC’s) jurisdiction over CATV operation. The Court
held that the FCC’s authority over cable systems assures the preservation of the
local broadcast service and an equitable distribution of broadcast services among
the various regions of the country.
II.
Resolution No. 210 violated the State’s deregulation policy.
Deregulation is the reduction of government regulation of business to permit freer
markets and competition.50 Oftentimes, the State, through its regulatory agencies,
carries out a policy of deregulation to attain certain objectives or to address certain
problems. In the field of telecommunications, it is recognized that many areas in the
Philippines are still "unserved" or "underserved." Thus, to encourage private sectors
to venture in this field and be partners of the government in stimulating the growth
and development of telecommunications, the State promoted the policy of
deregulation.
In the United States, the country where CATV originated, the Congress observed,
when it adopted the Telecommunications Act of 1996, that there was a need to
provide a pro-competitive, deregulatory national policy framework designed to
accelerate rapidly private sector deployment of advanced telecommunications and
information technologies and services to all Americans by opening all
telecommunications markets to competition. The FCC has adopted regulations to
implement the requirements of the 1996 Act and the intent of the Congress.
Our country follows the same policy. The fifth Whereas Clause of E.O. No. 436
states:
"WHEREAS, professionalism and self-regulation among existing operators,
through a nationally recognized cable television operator’s association, have
enhanced the growth of the cable television industry and must therefore be
maintained along with minimal reasonable government regulations;"
389
This policy reaffirms the NTC’s mandate set forth in the Memorandum dated August
25, 1989 of Commissioner Jose Luis A. Alcuaz, to wit:
"In line with the purpose and objective of MC 4-08-88, Cable Television
System or Community Antenna Television (CATV) is made part of the
broadcast media to promote the orderly growth of the Cable Television
Industry it being in its developing stage. Being part of the Broadcast Media,
the service rates of CATV are likewise considered deregulated in accordance
with MC 06-2-81 dated 25 February 1981, the implementing guidelines for the
authorization and operation of Radio and Television Broadcasting
stations/systems.
Further, the Commission will issue Provisional Authority to existing CATV
operators to authorize their operations for a period of ninety (90) days until
such time that the Commission can issue the regular Certificate of Authority."
When the State declared a policy of deregulation, the LGUs are bound to follow. To
rule otherwise is to render the State’s policy ineffective. Being mere creatures of the
State, LGUs cannot defeat national policies through enactments of contrary
measures. Verily, in the case at bar, petitioner may increase its subscriber rates
without respondents’ approval.
At this juncture, it bears emphasizing that municipal corporations are bodies politic
and corporate, created not only as local units of local self-government, but as
governmental agencies of the state.51 The legislature, by establishing a municipal
corporation, does not divest the State of any of its sovereignty; absolve itself from its
right and duty to administer the public affairs of the entire state; or divest itself of any
power over the inhabitants of the district which it possesses before the charter was
granted.52
Respondents likewise argue that E.O. No. 205 violates the constitutional prohibition
against impairment of contracts, Resolution No. 210 of Batangas City Sangguniang
Panlungsod being a grant of franchise to petitioner.
We are not convinced.
There is no law specifically authorizing the LGUs to grant franchises to operate
CATV system. Whatever authority the LGUs had before, the same had been
withdrawn when President Marcos issued P.D. No. 1512 "terminating all franchises,
permits or certificates for the operation of CATV system previously granted by local
governments." Today, pursuant to Section 3 of E.O. No. 436, "only persons,
associations, partnerships, corporations or cooperatives granted a Provisional
Authority or Certificate of Authority by the NTC may install, operate and maintain a
cable television system or render cable television service within a service area." It is
clear that in the absence of constitutional or legislative authorization, municipalities
have no power to grant franchises.53 Consequently, the protection of the
constitutional provision as to impairment of the obligation of a contract does not
extend to privileges, franchises and grants given by a municipality in excess of its
powers, or ultra vires.54
One last word. The devolution of powers to the LGUs, pursuant to the Constitutional
mandate of ensuring their autonomy, has bred jurisdictional tension between said
LGUs and the State. LGUs must be reminded that they merely form part of the
whole. Thus, when the Drafters of the 1987 Constitution enunciated the policy of
ensuring the autonomy of local governments,55 it was never their intention to create
an imperium in imperio and install an intra-sovereign political subdivision
independent of a single sovereign state.
WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of
Appeals dated February 12, 1999 as well as its Resolution dated May 26, 1999 in
CA-G.R. CV No. 52461, are hereby REVERSED. The RTC Decision in Civil Case
No. 4254 is AFFIRMED.
G.R. No. 149743             February 18, 2005
LEONARDO TAN, ROBERT UY and LAMBERTO TE, petitioners,
vs.
SOCORRO Y. PEREÑA, Respondent.
DECISION
TINGA, J.:
390
The resolution of the present petition effectively settles the question of how many
cockpits may be allowed to operate in a city or municipality.
There are two competing values of high order that come to fore in this case—the
traditional power of the national government to enact police power measures, on one
hand, and the vague principle of local autonomy now enshrined in the Constitution
on the other. The facts are simple, but may be best appreciated taking into account
the legal milieu which frames them.
In 1974, Presidential Decree (P.D.) No. 449, otherwise known as the Cockfighting
Law of 1974, was enacted. Section 5(b) of the Decree provided for limits on the
number of cockpits that may be established in cities and municipalities in the
following manner:
Section 5. Cockpits and Cockfighting in General. –
(b) Establishment of Cockpits. – Only one cockpit shall be allowed in each city or
municipality, except that in cities or municipalities with a population of over one
hundred thousand, two cockpits may be established, maintained and operated.
With the enactment of the Local Government Code of 1991,1 the municipal
sangguniang bayan were empowered, "[a]ny law to the contrary notwithstanding," to
"authorize and license the establishment, operation and maintenance of cockpits,
and regulate cockfighting and commercial breeding of gamecocks."2
In 1993, the Sangguniang Bayan of the municipality of Daanbantayan,3 Cebu
Province, enacted Municipal Ordinance No. 6 (Ordinance No. 6), Series of 1993,
which served as the Revised Omnibus Ordinance prescribing and promulgating the
rules and regulations governing cockpit operations in Daanbantayan.4 Section 5
thereof, relative to the number of cockpits allowed in the municipality, stated:
Section 5. There shall be allowed to operate in the Municipality of Daanbantayan,
Province of Cebu, not more than its equal number of cockpits based upon the
population provided for in PD 449, provided however, that this specific section can
be amended for purposes of establishing additional cockpits, if the Municipal
population so warrants.5
Shortly thereafter, the Sangguniang Bayan passed an amendatory ordinance,
Municipal Ordinance No. 7 (Ordinance No. 7), Series of 1993, which amended the
aforequoted Section 5 to now read as follows:
Section 5. Establishment of Cockpit. There shall be allowed to operate in the
Municipality of Daanbantayan, Province of Cebu, not more than three (3) cockpits.6
On 8 November 1995, petitioner Leonardo Tan (Tan) applied with the Municipal
Gamefowl Commission for the issuance of a permit/license to establish and operate
a cockpit in Sitio Combado, Bagay, in Daanbantayan. At the time of his application,
there was already another cockpit in operation in Daanbantayan, operated by
respondent Socorro Y. Pereña (Pereña), who was the duly franchised and licensed
cockpit operator in the municipality since the 1970s. Pereña’s franchise, per records,
was valid until 2002.7
The Municipal Gamefowl Commission favorably recommended to the mayor of
Daanbantayan, petitioner Lamberto Te (Te), that a permit be issued to Tan. On 20
January 1996, Te issued a mayor’s permit allowing Tan "to
establish/operate/conduct" the business of a cockpit in Combado, Bagay,
Daanbantayan, Cebu for the period from 20 January 1996 to 31 December 1996.8
This act of the mayor served as cause for Pereña to file a Complaint for damages
with a prayer for injunction against Tan, Te, and Roberto Uy, the latter allegedly an
agent of Tan.9 Pereña alleged that there was no lawful basis for the establishment of
a second cockpit. She claimed that Tan conducted his cockpit fights not in Combado,
but in Malingin, at a site less than five kilometers away from her own cockpit. She
insisted that the unlawful operation of Tan’s cockpit has caused injury to her own
legitimate business, and demanded damages of at least Ten Thousand Pesos
(₱10,000.00) per month as actual damages, One Hundred Fifty Thousand Pesos
(₱150,000.00) as moral damages, and Fifty Thousand Pesos (₱50,000.00) as
exemplary damages. Pereña also prayed that the permit issued by Te in favor of Tan
be declared as null and void, and that a permanent writ of injunction be issued
391
against Te and Tan preventing Tan from conducting cockfights within the
municipality and Te from issuing any authority for Tan to pursue such activity.10
The case was heard by the Regional Trial Court (RTC),11 Branch 61 of Bogo, Cebu,
which initially granted a writ of preliminary injunction.12 During trial, herein petitioners
asserted that under the Local Government Code of 1991, the sangguniang bayan of
each municipality now had the power and authority to grant franchises and enact
ordinances authorizing the establishment, licensing, operation and maintenance of
cockpits.13 By virtue of such authority, the Sangguniang Bayan of Daanbantayan
promulgated Ordinance Nos. 6 and 7. On the other hand, Pereña claimed that the
amendment authorizing the operation of not more than three (3) cockpits in
Daanbantayan violated Section 5(b) of the Cockfighting Law of 1974, which allowed
for only one cockpit in a municipality with a population as Daanbantayan.14
In a Decision dated 10 March 1997, the RTC dismissed the complaint. The court
observed that Section 5 of Ordinance No. 6, prior to its amendment, was by specific
provision, an implementation of the Cockfighting Law.15 Yet according to the RTC,
questions could be raised as to the efficacy of the subsequent amendment under
Ordinance No. 7, since under the old Section 5, an amendment allowing additional
cockpits could be had only "if the municipal population so warrants."16 While the RTC
seemed to doubt whether this condition had actually been fulfilled, it nonetheless
declared that since the case was only for damages, "the [RTC] cannot grant more
relief than that prayed for."17 It ruled that there was no evidence, testimonial or
documentary, to show that plaintiff had actually suffered damages. Neither was there
evidence that Te, by issuing the permit to Tan, had acted in bad faith, since such
issuance was pursuant to municipal ordinances that nonetheless remained in
force.18 Finally, the RTC noted that the assailed permit had expired on 31 December
1996, and there was no showing that it had been renewed.19
Pereña filed a Motion for Reconsideration which was denied in an Order dated 24
February 1998. In this Order, the RTC categorically stated that Ordinance Nos. 6 and
7 were "valid and legal for all intents and purpose[s]."20 The RTC also noted that the
Sangguniang Bayan had also promulgated Resolution No. 78-96, conferring on Tan
a franchise to operate a cockpit for a period of ten (10) years from February 1996 to
2006.21 This Resolution was likewise affirmed as valid by the RTC. The RTC noted
that while the ordinances seemed to be in conflict with the Cockfighting Law, any
doubt in interpretation should be resolved in favor of the grant of more power to the
local government unit, following the principles of devolution under the Local
Government Code.22
The Decision and Order of the RTC were assailed by Pereña on an appeal with the
Court of Appeals which on 21 May 2001, rendered the Decision now assailed.23 The
perspective from which the Court of Appeals viewed the issue was markedly different
from that adopted by the RTC. Its analysis of the Local Government Code,
particularly Section 447(a)(3)(V), was that the provision vesting unto the
sangguniang bayan the power to authorize and license the establishment of cockpits
did not do away with the Cockfighting Law, as these two laws are not necessarily
inconsistent with each other. What the provision of the Local Government Code did,
according to the Court of Appeals, was to transfer to the sangguniang bayan powers
that were previously conferred on the Municipal Gamefowl Commission.24
Given these premises, the appellate court declared as follows:
Ordinance No. 7 should [be] held invalid for allowing, in unconditional terms, the
operation of "not more than three cockpits in Daan Bantayan" (sic), clearly
dispensing with the standard set forth in PD 449. However, this issue appears to
have been mooted by the expiration of the Mayor’s Permit granted to the defendant
which has not been renewed.25
As to the question of damages, the Court of Appeals agreed with the findings of the
RTC that Pereña was not entitled to damages. Thus, it affirmed the previous ruling
denying the claim for damages. However, the Court of Appeals modified the RTC’s
Decision in that it now ordered that Tan be enjoined from operating a cockpit and
conducting any cockfights within Daanbantayan.26
Thus, the present Petition for Review on Certiorari.
Petitioners present two legal questions for determination: whether the Local
Government Code has rendered inoperative the Cockfighting Law; and whether the
validity of a municipal ordinance may be determined in an action for damages which
does not even contain a prayer to declare the ordinance invalid.27 As the denial of the
392
prayer for damages by the lower court is not put in issue before this Court, it shall not
be passed upon on review.
The first question raised is particularly interesting, and any definitive resolution on
that point would have obvious ramifications not only to Daanbantayan, but all other
municipalities and cities. However, we must first determine the proper scope of
judicial inquiry that we could engage in, given the nature of the initiatory complaint
and the rulings rendered thereupon, the exact point raised in the second question.
Petitioners claim that the Court of Appeals, in declaring Ordinance No. 7 as invalid,
embarked on an unwarranted collateral attack on the validity of a municipal
ordinance.28 Pereña’s complaint, which was for damages with preliminary injunction,
did not pray for the nullity of Ordinance No. 7. The Municipality of Daanbantayan as
a local government unit was not made a party to the case, nor did any legal counsel
on its behalf enter any appearance. Neither was the Office of the Solicitor General
given any notice of the case.29
30 
These concerns are not trivial. Yet, we must point out that the Court of Appeals did
not expressly nullify Ordinance No. 7, or any ordinance for that matter. What the
appellate court did was to say that Ordinance No. 7 "should therefore be held
invalid" for being in violation of the Cockfighting Law.31 In the next breath though, the
Court of Appeals backtracked, saying that "this issue appears to have been mooted
by the expiration of the Mayor’s Permit granted" to Tan.32
But our curiosity is aroused by the dispositive portion of the assailed Decision,
wherein the Court of Appeals enjoined Tan "from operating a cockpit and conducting
any cockfights within" Daanbantayan.33 Absent the invalidity of Ordinance No. 7,
there would be no basis for this injunction. After all, any future operation of a cockpit
by Tan in Daanbantayan, assuming all other requisites are complied with, would be
validly authorized should Ordinance No. 7 subsist.
So it seems, for all intents and purposes, that the Court of Appeals did deem
Ordinance No. 7 a nullity. Through such resort, did the appellate court in effect allow
a collateral attack on the validity of an ordinance through an action for damages, as
the petitioners argue?
The initiatory Complaint filed by Pereña deserves close scrutiny. Immediately, it can
be seen that it is not only an action for damages, but also one for injunction. An
action for injunction will require judicial determination whether there exists a right
in esse which is to be protected, and if there is an act constituting a violation of such
right against which injunction is sought. At the same time, the mere fact of injury
alone does not give rise to a right to recover damages. To warrant the recovery of
damages, there must be both a right of action for a legal wrong inflicted by the
defendant, and damage resulting to the plaintiff therefrom. In other words, in order
that the law will give redress for an act causing damage, there must be damnum et
injuria¾that act must be not only hurtful, but wrongful.34
Indubitably, the determination of whether injunction or damages avail in this case
requires the ascertainment of whether a second cockpit may be legally allowed in
Daanbantayan. If this is permissible, Pereña would not be entitled either to injunctive
relief or damages.
Moreover, an examination of the specific allegations in the Complaint reveals that
Pereña therein puts into question the legal basis for allowing Tan to operate another
cockpit in Daanbantayan. She asserted that "there is no lawful basis for the
establishment of a second cockpit considering the small population of
[Daanbantayan],"35 a claim which alludes to Section 5(b) of the Cockfighting Law
which prohibits the establishment of a second cockpit in municipalities of less than
ten thousand (10,000) in population. Pereña likewise assails the validity of the permit
issued to Tan and prays for its annulment, and also seeks that Te be enjoined from
issuing any special permit not only to Tan, but also to "any other person outside of a
duly licensed cockpit in Daanbantayan, Cebu."36
It would have been preferable had Pereña expressly sought the annulment of
Ordinance No. 7. Yet it is apparent from her Complaint that she sufficiently alleges
that there is no legal basis for the establishment of a second cockpit. More
importantly, the petitioners themselves raised the valid effect of Ordinance No. 7 at
the heart of their defense against the complaint, as adverted to in their Answer.37 The
averment in the Answer that Ordinance No. 7 is valid can be considered as an
affirmative defense, as it is the allegation of a new matter which, while hypothetically
admitting the material allegations in the complaint, would nevertheless bar
recovery.38 Clearly then, the validity of Ordinance No. 7 became a justiciable matter
393
for the RTC, and indeed Pereña squarely raised the argument during trial that said
ordinance violated the Cockfighting Law.39 1awphi1.nét
Moreover, the assailed rulings of the RTC, its Decision and
subsequent Order denying Pereña’s Motion for Reconsideration, both discuss the
validity of Ordinance No. 7. In the Decision, the RTC evaded making a categorical
ruling on the ordinance’s validity because the case was "only for damages, [thus the
RTC could] not grant more relief than that prayed for." This reasoning is unjustified,
considering that Pereña also prayed for an injunction, as well as for the annulment of
Tan’s permit. The resolution of these two questions could very well hinge on the
validity of Ordinance No. 7.
Still, in the Order denying Pereña’s Motion for Reconsideration, the RTC felt less
inhibited and promptly declared as valid not only Ordinance No. 7, but also
Resolution No. 78-96 of the Sangguniang Bayan dated 23 February 1996, which
conferred on Tan a franchise to operate a cockpit from 1996 to 2006.40 In the Order,
the RTC ruled that while Ordinance No. 7 was in apparent conflict with the
Cockfighting Law, the ordinance was justified under Section 447(a)(3)(v) of the Local
Government Code.
This express affirmation of the validity of Ordinance No. 7 by the RTC was the first
assigned error in Pereña’s appeal to the Court of Appeals.41 In their Appellee’s
Brief before the appellate court, the petitioners likewise argued that Ordinance No. 7
was valid and that the Cockfighting Law was repealed by the Local Government
Code.42 On the basis of these arguments, the Court of Appeals rendered its
assailed Decision, including its ruling that the Section 5(b) of the Cockfighting Law
remains in effect notwithstanding the enactment of the Local Government Code.
Indubitably, the question on the validity of Ordinance No. 7 in view of the continuing
efficacy of Section 5(b) of the Cockfighting Law is one that has been fully litigated in
the courts below. We are comfortable with reviewing that question in the case at bar
and make dispositions proceeding from that key legal question. This is militated by
the realization that in order to resolve the question whether injunction should be
imposed against the petitioners, there must be first a determination whether Tan may
be allowed to operate a second cockpit in Daanbantayan. Thus, the conflict between
Section 5(b) of the Cockfighting Law and Ordinance No. 7 now ripens for
adjudication.
In arguing that Section 5(b) of the Cockfighting Law has been repealed, petitioners
cite the following provisions of Section 447(a)(3)(v) of the Local Government Code:
Section 447. Powers, Duties, Functions and Compensation. (a) The sangguniang
bayan, as the legislative body of the municipality, shall enact ordinances, approve
resolutions and appropriate funds for the general welfare of the municipality and its
inhabitants pursuant to Section 16 of this Code and in the proper exercise of the
corporate powers of the municipality as provided for under Section 22 of this Code,
and shall:
....
(3) Subject to the provisions of Book II of this Code, grant franchises, enact
ordinances authorizing the issuance of permits or licenses, or enact ordinances
levying taxes, fees and charges upon such conditions and for such purposes
intended to promote the general welfare of the inhabitants of the municipality, and
pursuant to this legislative authority shall:
....
(v) Any law to the contrary notwithstanding, authorize and license the
establishment, operation, and maintenance of cockpits, and regulate
cockfighting and commercial breeding of gamecocks; Provided, that existing
rights should not be prejudiced;
For the petitioners, Section 447(a)(3)(v) sufficiently repeals Section 5(b) of the
Cockfighting Law, vesting as it does on LGUs the power and authority to issue
franchises and regulate the operation and establishment of cockpits in their
respective municipalities, any law to the contrary notwithstanding.
However, while the Local Government Code expressly repealed several laws, the
Cockfighting Law was not among them. Section 534(f) of the Local Government
394
Code declares that all general and special laws or decrees inconsistent with the
Code are hereby repealed or modified accordingly, but such clause is not an express
repealing clause because it fails to identify or designate the acts that are intended to
be repealed.43 It is a cardinal rule in statutory construction that implied repeals are
disfavored and will not be so declared unless the intent of the legislators is
manifest.44 As laws are presumed to be passed with deliberation and with knowledge
of all existing ones on the subject, it is logical to conclude that in passing a statute it
is not intended to interfere with or abrogate a former law relating to the same subject
matter, unless the repugnancy between the two is not only irreconcilable but also
clear and convincing as a result of the language used, or unless the latter Act fully
embraces the subject matter of the earlier.45
Is the one-cockpit-per-municipality rule under the Cockfighting Law clearly and
convincingly irreconcilable with Section 447(a)(3)(v) of the Local Government Code?
The clear import of Section 447(a)(3)(v) is that it is the sangguniang bayan which is
empowered to authorize and license the establishment, operation and maintenance
of cockpits, and regulate cockfighting and commercial breeding of gamecocks,
notwithstanding any law to the contrary. The necessity of the qualifying phrase "any
law to the contrary notwithstanding" can be discerned by examining the history of
laws pertaining to the authorization of cockpit operation in this country.
Cockfighting, or sabong in the local parlance, has a long and storied tradition in our
culture and was prevalent even during the Spanish occupation. When the newly-
arrived Americans proceeded to organize a governmental structure in the
Philippines, they recognized cockfighting as an activity that needed to be regulated,
and it was deemed that it was the local municipal council that was best suited to
oversee such regulation. Hence, under Section 40 of Act No. 82, the general act for
the organization of municipal governments promulgated in 1901, the municipal
council was empowered "to license, tax or close cockpits". This power of the
municipal council to authorize or license cockpits was repeatedly recognized even
after the establishment of the present Republic in 1946.46 Such authority granted unto
the municipal councils to license the operation of cockpits was generally unqualified
by restrictions.47 The Revised Administrative Code did impose restrictions on what
days cockfights could be held.48
However, in the 1970s, the desire for stricter licensing requirements of cockpits
started to see legislative fruit. The Cockfighting Law of 1974 enacted several of these
restrictions. Apart from the one-cockpit-per-municipality rule, other restrictions were
imposed, such as the limitation of ownership of cockpits to Filipino citizens.49 More
importantly, under Section 6 of the Cockfighting Law, it was the city or municipal
mayor who was authorized to issue licenses for the operation and maintenance of
cockpits, subject to the approval of the Chief of Constabulary or his authorized
representatives.50 Thus, the sole discretion to authorize the operation of cockpits was
removed from the local government unit since the approval of the Chief of
Constabulary was now required.
P.D. No. 1802 reestablished the Philippine Gamefowl Commission51 and imposed
further structure in the regulation of cockfighting. Under Section 4 thereof, city and
municipal mayors with the concurrence of their respective sangguniang panglunsod
or sangguniang bayan, were given the authority to license and regulate cockfighting,
under the supervision of the City Mayor or the Provincial Governor. However,
Section 4 of P.D. No. 1802 was subsequently amended, removing the supervision
exercised by the mayor or governor and substituting in their stead the Philippine
Gamefowl Commission. The amended provision ordained:
Sec. 4. City and Municipal Mayors with the concurrence of their respective
"Sanggunians" shall have the authority to license and regulate regular cockfighting
pursuant to the rules and regulations promulgated by the Commission and subject to
its review and supervision.
The Court, on a few occasions prior to the enactment of the Local Government Code
in 1991, had opportunity to expound on Section 4 as amended. A discussion of these
cases will provide a better understanding of the qualifier "any law to the contrary
notwithstanding" provided in Section 447(a)(3)(v).
In Philippine Gamefowl Commission v. Intermediate Appellate Court,52 the Court,
through Justice Cruz, asserted that the conferment of the power to license and
regulate municipal cockpits in municipal authorities is in line with the policy of local
autonomy embodied in the Constitution.53 The Court affirmed the annulment of a
resolution of the Philippine Gamefowl Commission which ordered the revocation of a
permit issued by a municipal mayor for the operation of a cockpit and the issuance of
395
a new permit to a different applicant. According to the Court, the Philippine
Gamefowl Commission did not possess the power to issue cockpit licenses, as this
was vested by Section 4 of P.D. No. 1802, as amended, to the municipal mayor with
the concurrence of the sanggunian. It emphasized that the Philippine Gamefowl
Commission only had review and supervision powers, as distinguished from control,
over ordinary cockpits.54 The Court also noted that the regulation of cockpits was
vested in municipal officials, subject only to the guidelines laid down by the Philippine
Gamefowl Commission.55 The Court conceded that "[if] at all, the power to review
includes the power to disapprove; but it does not carry the authority to substitute
one’s own preferences for that chosen by the subordinate in the exercise of its sound
discretion."
The twin pronouncements that it is the municipal authorities who are empowered to
issue cockpit licenses and that the powers of the Philippine Gamefowl Commission
were limited to review and supervision were affirmed in Deang v. Intermediate
Appellate Court,56 Municipality of Malolos v. Libangang Malolos Inc.57 and Adlawan v.
Intermediate Appellate Court.58 But notably in Cootauco v. Court of Appeals,59 the
Court especially noted that Philippine Gamefowl Commission did indicate that the
Commission’s "power of review includes the power to disapprove."60 Interestingly,
Justice Cruz, the writer of Philippine Gamefowl Commission, qualified his
concurrence in Cootauco "subject to the reservations made in [Philippine Gamefowl
Commission] regarding the review powers of the PGC over cockpit licenses issued
by city and municipal mayors."61 1awphi1.nét
These cases reiterate what has been the traditional prerogative of municipal officials
to control the issuances of licenses for the operation of cockpits. Nevertheless, the
newly-introduced role of the Philippine Gamefowl Commission vis-à-vis the operation
of cockpits had caused some degree of controversy, as shown by the cases above
cited.
Then, the Local Government Code of 1991 was enacted. There is no more forceful
authority on this landmark legislation than Senator Aquilino Pimentel, Jr., its principal
author. In his annotations to the Local Government Code, he makes the following
remarks relating to Section 447(a)(3)(v):
12. Licensing power. In connection with the power to grant licenses lodged with it,
the Sangguniang Bayan may now regulate not only businesses but also occupations,
professions or callings that do not require government examinations within its
jurisdiction.l^vvphi1.net It may also authorize and license the establishment,
operation and maintenance of cockpits, regulate cockfighting, and the commercial
breeding of gamecocks. Existing rights however, may not be prejudiced. The power
to license cockpits and permits for cockfighting has been removed completely
from the Gamefowl Commission.
Thus, that part of the ruling of the Supreme Court in the case of Municipality of
Malolos v. Libangang Malolos, Inc. et al., which held that "…the regulation of
cockpits is vested in the municipal councils guidelines laid down by the
Philippine Gamefowl Commission" is no longer controlling. Under [Section
447(a)(3)(v)], the power of the Sanggunian concerned is no longer subject to
the supervision of the Gamefowl Commission.62
The above observations may be faulted somewhat in the sense that they fail to
acknowledge the Court’s consistent position that the licensing power over cockpits
belongs exclusively to the municipal authorities and not the Philippine Gamefowl
Commission. Yet these views of Senator Pimentel evince the apparent confusion
regarding the role of the Philippine Gamefowl Commission as indicated in the cases
previously cited, and accordingly bring the phrase Section 447(a)(3)(v) used in "any
law to the contrary notwithstanding" into its proper light. The qualifier serves notice,
in case it was still doubtful, that it is the sanggunian bayan concerned alone which
has the power to authorize and license the establishment, operation and
maintenance of cockpits, and regulate cockfighting and commercial breeding of
gamecocks within its territorial jurisdiction.
Given the historical perspective, it becomes evident why the legislature found the
need to use the phrase "any law to the contrary notwithstanding" in Section 447(a)(3)
(v). However, does the phrase similarly allow the Sangguniang Bayan to authorize
more cockpits than allowed under Section 5(d) of the Cockfighting Law? Certainly,
applying the test of implied repeal, these two provisions can stand together. While
the sanggunian retains the power to authorize and license the establishment,
operation, and maintenance of cockpits, its discretion is limited in that it cannot
authorize more than one cockpit per city or municipality, unless such cities or
396
municipalities have a population of over one hundred thousand, in which case two
cockpits may be established. Considering that Section 447(a)(3)(v) speaks
essentially of the identity of the wielder of the power of control and supervision over
cockpit operation, it is not inconsistent with previous enactments that impose
restrictions on how such power may be exercised. In short, there is no dichotomy
between affirming the power and subjecting it to limitations at the same time.
Perhaps more essential than the fact that the two controverted provisions are not
inconsistent when put together, the Court recognizes that Section 5(d) of the
Cockfighting Law arises from a valid exercise of police power by the national
government. Of course, local governments are similarly empowered under Section
16 of the Local Government Code.l^vvphi1.net The national government ought to be
attuned to the sensitivities of devolution and strive to be sparing in usurping the
prerogatives of local governments to regulate the general welfare of their
constituents.
We do not doubt, however, the ability of the national government to implement police
power measures that affect the subjects of municipal government, especially if the
subject of regulation is a condition of universal character irrespective of territorial
jurisdictions. Cockfighting is one such condition. It is a traditionally regulated activity,
due to the attendant gambling involved63 or maybe even the fact that it essentially
consists of two birds killing each other for public amusement. Laws have been
enacted restricting the days when cockfights could be held,64 and legislation has
even been emphatic that cockfights could not be held on holidays celebrating
national honor such as Independence Day65 and Rizal Day.66
The Whereas clauses of the Cockfighting Law emphasize that cockfighting "should
neither be exploited as an object of commercialism or business enterprise, nor made
a tool of uncontrolled gambling, but more as a vehicle for the preservation and
perpetuation of native Filipino heritage and thereby enhance our national
identity."67 The obvious thrust of our laws designating when cockfights could be held
is to limit cockfighting and imposing the one-cockpit-per-municipality rule is in line
with that aim. Cockfighting is a valid matter of police power regulation, as it is a form
of gambling essentially antagonistic to the aims of enhancing national productivity
and self-reliance.68 Limitation on the number of cockpits in a given municipality is a
reasonably necessary means for the accomplishment of the purpose of controlling
cockfighting, for clearly more cockpits equals more cockfights.
If we construe Section 447(a)(3)(v) as vesting an unlimited discretion to the
sanggunian to control all aspects of cockpits and cockfighting in their respective
jurisdiction, this could lead to the prospect of daily cockfights in municipalities, a
certain distraction in the daily routine of life in a municipality. This certainly goes
against the grain of the legislation earlier discussed. If the arguments of the
petitioners were adopted, the national government would be effectively barred from
imposing any future regulatory enactments pertaining to cockpits and cockfighting
unless it were to repeal Section 447(a)(3)(v).
A municipal ordinance must not contravene the Constitution or any statute, otherwise
it is void.69 Ordinance No. 7 unmistakably contravenes the Cockfighting Law in
allowing three cockpits in Daanbantayan. Thus, no rights can be asserted by the
petitioners arising from the Ordinance. We find the grant of injunction as ordered by
the appellate court to be well-taken.
WHEREFORE, the petition is DENIED. Costs against petitioners.
SO ORDERED.
G.R. No. 148339             February 23, 2005
LUCENA GRAND CENTRAL TERMINAL, INC., petitioner,
vs.
JAC LINER, INC., Respondent.
DECISION
CARPIO MORALES, J.:
397
Respondent, JAC Liner, Inc., a common carrier operating buses which ply various
routes to and from Lucena City, assailed, via a petition for prohibition and
injunction1 against the City of Lucena, its Mayor, and the Sangguniang Panlungsod of
Lucena before the Regional Trial Court (RTC) of Lucena City, City Ordinance Nos.
1631 and 1778 as unconstitutional on the ground that, inter alia, the same
constituted an invalid exercise of police power, an undue taking of private property,
and a violation of the constitutional prohibition against monopolies. The salient
provisions of the ordinances are:
Ordinance No. 16312
AN ORDINANCE GRANTING THE LUCENA GRAND CENTRAL TERMINAL, INC.,
A FRANCHISE TO CONSTRUCT, FINANCE, ESTABLISH, OPERATE AND
MAINTAIN A COMMON BUS-JEEPNEY TERMINAL FACILITY IN THE CITY OF
LUCENA
xxx
SECTION 1. – There is hereby granted to the Lucena Grand Central Terminal, Inc.,
its successors or assigns, hereinafter referred to as the "grantee", a franchise to
construct, finance, establish, operate, and maintain a common bus-jeepney terminal
facility in the City of Lucena.
SECTION 2. – This franchise shall continue for a period of twenty-five years, counted
from the approval of this Ordinance, and renewable at the option of the grantee for
another period of twenty-five (25) years upon such expiration.
xxx
SECTION 4. – Responsibilities and Obligations of the City Government of Lucena.
– During the existence of the franchise, the City Government of Lucena shall have
the following responsibilities and obligations:
xxx
(c) It shall not grant any third party any privilege and/or concession to operate a bus,
mini-bus and/or jeepney terminal.
xxx
Ordinance No. 17783
AN ORDINANCE REGULATING THE ENTRANCE TO THE CITY OF LUCENA OF
ALL BUSES, MINI-BUSES AND OUT-OF-TOWN PASSENGER JEEPNEYS AND
FOR THIS PURPOSE, AMENDING ORDINACE NO. 1420, SERIES OF 1993, AND
ORDINANCE NO. 1557, SERIES OF 1995
xxx
SECTION 1. – The entrance to the City of Lucena of all buses, mini-buses and out-
of-town passenger jeepneys is hereby regulated as follows:
(a) All buses, mini-buses and out-of-town passenger jeepneys shall
be prohibited from entering the city and are hereby directed to proceed to
the common terminal, for picking-up and/or dropping of their passengers.
(b) All temporary terminals in the City of Lucena are hereby declared
inoperable starting from the effectivity of this ordinance.
xxx
SECTION 3. – a) Section 1 of Ordinance No. 1557, Series of 1995, is hereby
amended to read as follows:
Buses, mini-buses, and jeepney type mini-buses from other municipalities and/or
local government units going to Lucena City are directed to proceed to the Common
Terminal located at Diversion Road, Brgy. Ilayang Dupay, to unload and load
passengers.
xxx
398
c) Section 3 of Ordinance No. 1557, Series of 1995, is hereby amended to
read as follows:
Passenger buses, mini-buses, and jeepney type mini-buses coming from
other municipalities and/or local government units shall utilize the facilities of
the Lucena Grand Central Terminal at Diversion Road, Brgy. Ilayang Dupay,
this City, and no other terminals shall be situated inside or within the
City of Lucena;
d) Section 4 of Ordinance No. 1557, Series of 1995, is hereby amended to
read as follows:
Passenger buses, mini-buses, and jeepney type mini-buses coming from
other municipalities and/or local government units shall avail of the facilities of
the Lucena Grand Central Terminal which is hereby designated as the
officially sanctioned common terminal for the City of Lucena;
e) Section 5 of Ordinance No. 1557, Series of 1995, is hereby amended to
read as follows:
The Lucena Grand Central Terminal is the permanent common terminal as this  1. Declaring City Ordinance No. 1631 as valid, having been issued in the
is the entity which was given the exclusive franchise by the Sangguniang Pang
lungsod under Ordinance No. 1631; (Emphasis and underscoring supplied)
These ordinances, by granting an exclusive franchise for twenty five years,
renewable for another twenty five years, to one entity for the construction and
operation of one common bus and jeepney terminal facility in Lucena City, to be
located outside the city proper, were professedly aimed towards alleviating the traffic
congestion alleged to have been caused by the existence of various bus and jeepney
terminals within the city, as the "Explanatory Note"-Whereas Clause adopting
Ordinance No. 1778 states:
WHEREAS, in line with the worsening traffic condition of the City of Lucena, and with
the purpose of easing and regulating the flow of the same, it is imperative that the
Buses, Mini-Buses and out-of-town jeepneys be prohibited from maintaining
terminals within the City, but instead directing to proceed to the Lucena Grand
Central Terminal for purposes of picking-up and/or dropping off their passengers;4
Respondent, who had maintained a terminal within the city, was one of those
affected by the ordinances.
Petitioner, Lucena Grand Central Terminal, Inc., claiming legal interest as the
grantee of the exclusive franchise for the operation of the common terminal,5 was
allowed to intervene in the petition before the trial court.
In the hearing conducted on November 25, 1998, all the parties agreed to dispense
with the presentation of evidence and to submit the case for resolution solely on the
basis of the pleadings filed.6
By Order of March 31, 1999,7 Branch 54 of the Lucena RTC rendered judgment, the
dispositive portion of which reads:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered, as
follows:
exercise of the police power of the City Government of Lucena insofar as the
grant of franchise to the Lucena Grand Central Terminal, Inc., to construct,
finance, establish, operate and maintain common bus-jeepney terminal
facility in the City of Lucena;
2. But however, declaring the provision of Sec. 4(c) of Ordinance No. 1631 to
the effect that the City Government shall not grant any third party any
privilege and/or concession to operate a bus, mini-bus and/or jeepney
terminal, as illegal and ultra vires because it contravenes the provisions of
Republic Act No. 7160, otherwise known as "The Local Government Code";
3. Declaring City Ordinance No. 1778 as null and void, the same being also
an ultra vires act of the City Government of Lucena arising from an invalid,
399
oppressive and unreasonable exercise of the police power, more specifically,
declaring illegal [sections 1(b), 3(c) and 3(e)];
4. Ordering the issuance of a Writ of Prohibition and/or Injunction directing
the respondents public officials, the City Mayor and the Sangguniang
Panglungsod of Lucena, to cease and desist from implementing
Ordinance No. 1778 insofar as said ordinance prohibits or curtails
petitioner from maintaining and operating its own bus terminal subject to
the conditions provided for in Ordinance No. 1557, Sec. 3, which authorizes
the construction of terminal outside the poblacion of Lucena City; and
likewise, insofar as said ordinance directs and compels the petitioner to
use the Lucena Grand Central Terminal Inc., and furthermore, insofar as
it declares that no other terminals shall be situated, constructed,
maintained or established inside or within the City of Lucena; and
furthermore,
5. The Motion to Dismiss filed by the Intervenor, Lucena Grand Central
Terminal Inc., dated October 19, 1998, is hereby DENIED for lack of merit.
SO ORDERED. (Emphasis and underscoring supplied)8
Petitioner’s Motion for Reconsideration9 of the trial court’s order having been denied
by Order of August 6, 1999,10 it elevated it via petition for review under Rule 45
before this Court.11 This Court, by Resolution of November 24, 1999,12 referred the
petition to the Court of Appeals with which it has concurrent jurisdiction, no special
and important reason having been cited for it to take cognizance thereof in the first
instance.
By Decision of December 15, 2000,13 the appellate court dismissed the petition and
affirmed the challenged orders of the trial court. Its motion for
reconsideration14 having been denied by the appellate court by Resolution dated
June 5, 2001,15 petitioner once again comes to this Court via petition for review,16 this
time assailing the Decision and Resolution of the Court of Appeals.
Decision on the petition hinges on two issues, to wit: (1) whether the trial court has
jurisdiction over the case, it not having furnished the Office of the Solicitor General
copy of the orders it issued therein, and (2) whether the City of Lucena properly
exercised its police power when it enacted the subject ordinances.
Petitioner argues that since the trial court failed to serve a copy of its assailed orders
upon the Office of the Solicitor General, it never acquired jurisdiction over the case, it
citing Section 22, Rule 3 of the Rules which provides:
SEC. 22. Notice to the Solicitor General.—In any action involving the validity of any
treaty, law, ordinance, executive order, presidential decree, rules or regulations, the
court in its discretion, may require the appearance of the Solicitor General who
may be heard in person or through representative duly designated by him.
(Emphasis and underscoring supplied)
Furthermore, petitioner invokes Sections 3 and 4 of Rule 63 which respectively
provide:
SEC. 3. Notice on Solicitor General. – In any action which involves the validity of a
statute, executive order or regulation, or any other governmental regulation,
the Solicitor General shall be notified by the party assailing the same and shall be
entitled to be heard upon such question.
SEC. 4. Local government ordinances. – In any action involving the validity of a local
government ordinance, the corresponding prosecutor or attorney of the local
government unit involved shall be similarly notified and entitled to be heard. If such
ordinance is alleged to be unconstitutional, the Solicitor General shall also be
notified and entitled to be heard. (Emphasis and underscoring supplied)
Nowhere, however, is it stated in the above-quoted rules that failure to notify the
Solicitor General about the action is a jurisdictional defect.
In fact, Rule 3, Section 22 gives the courts in any action involving the "validity" of
any ordinance, inter alia, "discretion" to notify the Solicitor General.
Section 4 of Rule 63, which more specifically deals with cases assailing
the constitutionality, not just the validity, of a local government ordinance, directs that
400
the Solicitor General "shall also be notified and entitled to be heard." Who will notify
him, Sec. 3 of the same rule provides — it is the party which is assailing the local
government’s ordinance.
More importantly, however, this Court finds that no procedural defect, fatal or
otherwise, attended the disposition of the case. For respondent actually served a
copy of its petition upon the Office of the Solicitor General on October 1, 1998, two
days after it was filed. The Solicitor General has issued a Certification to that
effect.17 There was thus compliance with above-quoted rules.
Respecting the issue of whether police power was properly exercised when the
subject ordinances were enacted: As with the State, the local government may be
considered as having properly exercised its police power only if the following
requisites are met: (1) the interests of the public generally, as distinguished from
those of a particular class, require the interference of the State, and (2) the means
employed are reasonably necessary for the attainment of the object sought to be
accomplished and not unduly oppressive upon individuals. Otherwise stated, there
must be a concurrence of a lawful subject and lawful method.18
That traffic congestion is a public, not merely a private, concern, cannot be gainsaid.
In Calalang v. Williams19 which involved a statute authorizing the Director of Public
Works to promulgate rules and regulations to regulate and control traffic on national
roads, this Court held:
In enacting said law, therefore, the National Assembly was prompted by
considerations of public convenience and welfare. It was inspired by a desire to
relieve congestion of traffic, which is, to say the least, a menace to public safety.
Public welfare, then, lies at the bottom of the enactment of said law, and the state in
order to promote the general welfare may interfere with personal liberty, with
property, and with business and occupations.20 (Emphasis supplied)
The questioned ordinances having been enacted with the objective of relieving traffic
congestion in the City of Lucena, they involve public interest warranting the
interference of the State. The first requisite for the proper exercise of police power is
thus present.
Respondent’s suggestion to have this Court look behind the explicit objective of the
ordinances which, to it, was actually to benefit the private interest of petitioner by
coercing all bus operators to patronize its terminal does not lie.21 Lim v.
Pacquing22 instructs:
. . . [T]his Court cannot look into allegations that PD No. 771 was enacted to benefit
a select group which was later given authority to operate the jai-alai under PD No.
810. The examination of legislative motivation is generally prohibited. (Palmer v.
Thompson, 403 U.S. 217, 29 L. Ed. 2d 438 [1971] per Black, J.) There is, in the first
place, absolute lack of evidence to support ADC’s allegation of improper motivation
in the issuance of PD No. 771. In the second place, as already averred, this Court
cannot go behind the expressed and proclaimed purposes of PD No. 771, which are
reasonable and even laudable. (Underscoring supplied)23
This leaves for determination the issue of whether the means employed by the
Lucena Sangguniang Panlungsod to attain its professed objective were reasonably
necessary and not unduly oppressive upon individuals.
With the aim of localizing the source of traffic congestion in the city to a single
location,24 the subject ordinances prohibit the operation of all bus and jeepney
terminals within Lucena, including those already existing, and allow the operation of
only one common terminal located outside the city proper, the franchise for which
was granted to petitioner. The common carriers plying routes to and from Lucena
City are thus compelled to close down their existing terminals and use the facilities of
petitioner.
In De la Cruz v. Paras,25 this Court declared unconstitutional an ordinance
characterized by overbreadth. In that case, the Municipality of Bocaue, Bulacan
prohibited the operation of all night clubs, cabarets and dance halls within its
jurisdiction for the protection of public morals. Held the Court:
It cannot be said that such a sweeping exercise of a lawmaking power by Bocaue co
uld qualify under the term reasonable. The objective of fostering public morals, a wor
thy and desirable end can be attained by a measure that does not encompass too wi
de a field. Certainly the ordinance on its face is characterized by overbreadth. The pu
rpose sought to be achieved could have been attained by reasonable restrictions rat
401
her than by an absolute prohibition. The admonition in Salaveria should be heeded:
"The Judiciary should not lightly set aside legislative action when there is not a clear
invasion of personal or property rights under the guise of police regulation." It is clear
that in the guise of a police regulation, there was in this instance a clear invasion of
personal or property rights, personal in the case of those individuals desirous of
patronizing those night clubs and property in terms of the investments made and
salaries to be earned by those therein employed. (Underscoring supplied)26
In Lupangco v. Court of Appeals,27 this Court, in declaring unconstitutional the
resolution subject thereof, advanced a similar consideration. That case involved a
resolution issued by the Professional Regulation Commission which prohibited
examinees from attending review classes and receiving handout materials, tips, and
the like three days before the date of examination in order to preserve the integrity
and purity of the licensure examinations in accountancy. Besides being
unreasonable on its face and violative of academic freedom, the measure was found
to be more sweeping than what was necessary, viz:
Needless to say, the enforcement of Resolution No. 105 is not a guarantee that the
alleged leakages in the licensure examinations will be eradicated or at least
minimized. Making the examinees suffer by depriving them of legitimate means of
review or preparation on those last three precious days when they should be
refreshing themselves with all that they have learned in the review classes and
preparing their mental and psychological make-up for the examination day itself
— would be like uprooting the tree to get rid of a rotten branch. What is needed
to be done by the respondent is to find out the source of such leakages and
stop it right there. If corrupt officials or personnel should be terminated from their
loss, then so be it. Fixers or swindlers should be flushed out. Strict guidelines to be
observed by examiners should be set up and if violations are committed, then
licenses should be suspended or revoked. x x x (Emphasis and underscoring
supplied)28
As in De la Cruz29 and Lupangco,30 the ordinances assailed herein are characterized
by overbreadth. They go beyond what is reasonably necessary to solve the traffic
problem. Additionally, since the compulsory use of the terminal operated by
petitioner would subject the users thereof to fees, rentals and charges, such
measure is unduly oppressive, as correctly found by the appellate court. 31 What
should have been done was to determine exactly where the problem lies and then to
stop it right there.
The true role of Constitutional Law is to effect an equilibrium between authority and
liberty so that rights are exercised within the framework of the law and the laws are
enacted with due deference to rights. (Underscoring supplied)32
A due deference to the rights of the individual thus requires a more careful
formulation of solutions to societal problems.
From the memorandum33 filed before this Court by petitioner, it is gathered that the
Sangguniang Panlungsod had identified the cause of traffic congestion to be the
indiscriminate loading and unloading of passengers by buses on the streets of the
city proper, hence, the conclusion that the terminals contributed to the proliferation of
buses obstructing traffic on the city streets.
Bus terminals per se do not, however, impede or help impede the flow of traffic. How
the outright proscription against the existence of all terminals, apart from that
franchised to petitioner, can be considered as reasonably necessary to solve the
traffic problem, this Court has not been enlightened. If terminals lack adequate space
such that bus drivers are compelled to load and unload passengers on the streets
instead of inside the terminals, then reasonable specifications for the size of
terminals could be instituted, with permits to operate the same denied those which
are unable to meet the specifications.
In the subject ordinances, however, the scope of the proscription against the
maintenance of terminals is so broad that even entities which might be able to
provide facilities better than the franchised terminal are barred from operating at all.
Petitioner argues, however, that other solutions for the traffic problem have already
been tried but proven ineffective. But the grant of an exclusive franchise to petitioner
has not been shown to be the only solution to the problem.
While the Sangguniang Panlungsod, via Ordinance No. 1557,34 previously directed
bus owners and operators to put up their terminals "outside the poblacion of Lucena
402
City," petitioner informs that said ordinance only resulted in the relocation of
terminals to other well-populated barangays, thereby giving rise to traffic congestion
in those areas.35 Assuming that information to be true, the Sangguniang Panlungsod
was not without remedy. It could have defined, among other considerations, in a
more precise manner, the area of relocation to avoid such consequences.
As for petitioner’s argument that the challenged ordinances were enacted pursuant
to the power of the Sangguniang Panlungsod to "[r]egulate traffic on all streets and
bridges; prohibit encroachments or obstacles thereon and, when necessary in the
interest of public welfare, authorize the removal of encroachments and illegal
constructions in public places":36 Absent any showing, nay allegation, that the
terminals are encroaching upon public roads, they are not obstacles. The buses
which indiscriminately load and unload passengers on the city streets are. The power
then of the Sangguniang Panlungsod to prohibit encroachments and obstacles does
not extend to terminals.1a\^/phi1.net
Neither are terminals public nuisances as petitioner argues. For their operation is a
legitimate business which, by itself, cannot be said to be injurious to the rights of
property, health, or comfort of the community.
But even assuming that terminals are nuisances due to their alleged indirect effects
upon the flow of traffic, at most they are nuisance per accidens, not per se.
Unless a thing is nuisance per se, however, it may not be abated via an ordinance,
without judicial proceedings, as was done in the case at bar.
In Estate of Gregoria Francisco v. Court of Appeals,37 this Court held:
Respondents can not seek cover under the general welfare clause authorizing the
abatement of nuisances without judicial proceedings. That tenet applies to a
nuisance per se, or one which affects the immediate safety of persons and property
and may be summarily abated under the undefined law of necessity (Monteverde v.
Generoso, 52 Phil. 123 [1982]). The storage of copra in the quonset building is a
legitimate business. By its nature, it can not be said to be injurious to rights of
property, of health or of comfort of the community. If it be a nuisance per accidens it
may be so proven in a hearing conducted for that purpose. It is not per se a nuisance
warranting its summary abatement without judicial
intervention.l^vvphi1.net (Underscoring supplied)38 1awphi1.nét
In Pampanga Bus Co., Inc. v. Municipality of Tarlac39 where the appellant-
municipality similarly argued that the terminal involved therein is a nuisance that may
be abated by the Municipal Council via an ordinance, this Court held: "Suffice it to
say that in the abatement of nuisances the provisions of the Civil Code (Articles 694-
707) must be observed and followed. This appellant failed to do."
As for petitioner’s claim that the challenged ordinances have actually been proven
effective in easing traffic congestion: Whether an ordinance is effective is an issue
different from whether it is reasonably necessary. It is its reasonableness, not its
effectiveness, which bears upon its constitutionality. If the constitutionality of a law
were measured by its effectiveness, then even tyrannical laws may be justified
whenever they happen to be effective.
The Court is not unaware of the resolutions of various barangays in Lucena City
supporting the establishment of a common terminal, and similar expressions of
support from the private sector, copies of which were submitted to this Court by
petitioner. The weight of popular opinion, however, must be balanced with that of an
individual’s rights.
There is no question that not even the strongest moral conviction or the most urgent
public need, subject only to a few notable exceptions, will excuse the bypassing of
an individual's rights. It is no exaggeration to say that a person invoking a right
guaranteed under Article III of the Constitution is a majority of one even as against
the rest of the nation who would deny him that right.40
WHEREFORE, the petition is hereby DENIED.
G.R. No. 132834             November 24, 2006
RUPERTO LUCERO, JR., PABLO LUCERO and ANTONIO TENORIO, Petitioners,
vs.
403
CITY GOVERNMENT OF PASIG, as represented by the Market
Administrator, Respondent.
DECISION
CORONA, J.:
In this petition for review on certiorari, petitioners seek the review and reversal of the
Court of Appeals (CA) decision1 and resolution2 in CA-G.R. SP. No. 42131.
Petitioners were granted lease contracts to occupy and operate stalls3 in the public
market of Pasig by virtue of Municipal Ordinance No. 25, series of 1983.
Sometime in 1993, the municipal government of Pasig renovated the market facilities
and constructed annex buildings to the old public market. The Sangguniang Bayan of
Pasig then enacted Municipal Ordinance No. 56, series of 1993, entitled "An
Ordinance Prescribing the Rules and Regulations in Occupying and Using Market
Stalls and Providing Penalties for Violations Thereof." The ordinance took effect 30
days after its enactment on October 20, 1993.
Pursuant to the new ordinance, municipal officials urged all stall occupants to fill up
and submit the necessary application forms. The application form contained the
terms and conditions for the occupation and operation of the stalls. If approved, the
application would serve as the lease contract.
Petitioners, however, refused to apply for a new lease on their market stalls. They
were given a deadline to comply with the new ordinance but petitioners were
adamant.
On November 14, 1995, the city government of Pasig4 filed a complaint for ejectment
against petitioners in the Metropolitan Trial Court (MTC), Branch 68, Pasig City. The
case was docketed as Civil Case No. 5043.
In its complaint, the city government alleged that petitioners failed to pay the required
₱10,000 performance bond and their rental fees since January 1994 as required by
the municipal ordinance.
In their answer, petitioners claimed that they had faithfully complied with their
obligations as set forth in their 1983 lease contracts. They alleged that it was the city
government which refused to accept their rental payments from January 1994
onwards because of petitioners’ failure to submit new applications to lease their
market stalls. They did not pay the performance bond because, as previous stall
occupants, they were not required to do so. With due notice to the city treasurer,
petitioners deposited their payments in a bank when their offer to pay was not acted
upon.
Finding the ejectment suit to be without merit, the MTC ruled in favor of petitioners
and dismissed the complaint.5
Dissatisfied with the lower court’s decision, the city government appealed to the
Regional Trial Court (RTC), Branch 162, Pasig City.6 The RTC reversed the MTC
decision and decided in favor of the city government.
WHEREFORE, PREMISES CONSIDERED, this Court hereby renders judgment in
this case in favor of [the City Government of Pasig] and against [petitioners] by:
(1) Reversing, amending and/or modifying the decision of the trial court dated
March 29, 1996 subject of this appeal, and entering a new judgment directing
the herein [petitioners] and all persons claiming right under them to vacate
the Market Stalls Nos. 28 and 29, Commercial Section, and Stall [Nos.] 456
and 457, Grocery Section, and to restore possession thereof to [the city
government];
(2) Ordering the [petitioners] to pay the rent for the use and occupancy of the
subject stalls, as follows:
(a) Ruperto Lucero – the amount of ₱49,980.00 representing
arrearages for the whole year of [January 1994 up to September
404
1995]; and the further sum in the same amount representing rents for
the inclusive period of [October 1995 up to and until September 1996];
(b) Pablo Lucero – the amount of ₱20,050.00 representing arrearages
from [February 1995 up to September 1995]; and the further sum in
the same amount representing rents for the duration of October 1995
to September 1996;
(c) Antonio Tenorio – the amount of ₱38,587.50 representing
arrearages from January 1994 to September 1995; and the further
sum in the same amount representing rents for the inclusive period
[of] October 1995 to September 1996.
(3) Ordering [petitioners] to pay jointly and severally the amount of
₱15,000.00 for and as attorney’s fees.
With costs against [petitioners].
SO ORDERED.7
Petitioners appealed the RTC decision to the CA. The appeal was, however,
dismissed for lack of merit.8 Their motion for reconsideration was similarly
denied;9 hence, this petition.
Petitioners mainly assail the non-renewal of their lease contracts on stalls in the
public market when they did not comply with the requirements of Municipal
Ordinance No. 56, series of 1993.10 They claim to have a vested right to the
possession, use and enjoyment of the market stalls based on their 1983 lease
contracts. This, they assert, could not be impaired by the enactment of Municipal
Ordinance No. 56 in 1993.
The only issue for our resolution is: can petitioners claim a vested right to the market
stalls they were occupying by virtue of their lease contracts under Municipal
Ordinance No. 25, series of 1983? They cannot.
"A right is vested when the right to enjoyment has become the property of some
particular person or persons as a present interest."11 It is unalterable, absolute,
complete and unconditional.12 This right is perfect in itself; it is not dependent upon a
contingency.13 The concept of "vested right" expresses a "present fixed
interest which in right reason and natural justice is protected against arbitrary state
action."14 It includes not only legal and equitable title to the enforcement of a demand
but also exemptions from new obligations created after the right has become
vested.15
Contrary to petitioners’ contention that they were no longer covered by the 1993
ordinance requiring payment of a performance bond and submission of new
application forms, their 1983 lease contracts did not grant them irrefutable rights to
the market stalls. They were mere grantees of a privilege to occupy and operate
such booths.
What petitioners had was a license to occupy and operate particular stalls over a
period of time. Their possession and use of these facilities could not be
characterized as fixed and absolute. Indeed, petitioners did not have any vested right
to the stalls.
It was within the ambit of the Sanggunian’s authority in the exercise of police power
to regulate the enjoyment of the privilege to lease the market stalls. The enactment
of the Municipal Ordinance No. 56, series of 1993 repealing Municipal Ordinance No.
25, series of 1983 (the basis of petitioners’ lease) was a valid exercise of such
governmental authority to
regulate the possession and use of the public market and its facilities.16
The lease (and occupation) of a stall in a public market is not a right but a purely
statutory privilege governed by laws and ordinances.17 The operation of a market
stall by virtue of a license is always subject to the police power of the city
government.18 An application for this privilege may be granted or refused for reasons
of public policy and sound public administration.19 The city government, through its
market administrator, is not duty-bound to grant lease privileges to any applicant,
least of all those who refuse to obey the new ordinance prescribing the rules and
regulations for the market stalls.
405
Moreover, a public market is one dedicated to the service of the general public and
operated under government control and supervision as a public utility.20 Hence, the
operation of a public market and its facilities is imbued with public interest.
Petitioners’ 1983 lease contracts contained an implied reservation of the police
power as a postulate of the existing legal order.21 This power could be exercised any
time to change the provisions of the contracts or even abrogate them entirely, for the
protection of the general welfare.22 Such an act did not violate the non-impairment
clause which is anyway subject to and limited by the paramount police power.
WHEREFORE, the petition is hereby DENIED.
[ G.R. NO. 166744, November 02, 2006 ]
AC ENTERPRISES, INC., PETITIONER, VS. FRABELLE PROPERTIES
CORPORATION, RESPONDENT.
DECISION
CALLEJO, SR., J.:
Before the Court is a petition for review on certiorari of the Decision[1] of the Court of
Appeals (CA) in CA G.R. SP No. 82166, affirming the Order[2] of the Regional Trial
Court (RTC) of Malabon City in Civil Case No. 3742-MH, which denied the Motion to
Dismiss of petitioner AC Enterprises, Inc. (ACEI), as well as the Resolution of the CA
denying the motion for reconsideration thereof.
Petitioner, a corporation duly organized under domestic laws doing business in the
Philippines, owns the 10-storey Feliza Building located along Herrera Street, Legaspi
Village, Makati City. The building was subdivided into commercial/office units which
were leased to private persons and entities. There are 36 blowers from 18 air-cooled
type airconditioning units in the building, four blowers on each floor, from the 2nd to
the 10th floors. The blowers are aesthetically covered by vertical concrete type
baffles.
Respondent Frabelle Properties Corporation (FPC), formerly FTL & Sons
Development Corporation,[3] is the developer of Frabella I Condominium (Frabella I),
a 29-storey commercial/residential condominium located at 109 Rada Street,
Legaspi Village, Makati City. It owned some units in the condominium which it
leased to its tenants. The building is managed by the Frabella I Condominium
Corporation (FCC).
Rada and Herrera streets lie parallel to each other such that Feliza Building is
situated at the back of Frabella I. Feliza Building is at the back of Frabella I and is
separated by Rodriguez Street, a two-lane road approximately 12 meters
wide[4] The street is bounded by the Thailand Embassy on the side of the street of
Frabella I. The exhaust of the blowers from the airconditioning units at the Feliza
Building were directed towards the rear of Frabella I.
On April 11, 1995, respondent wrote petitioner demanding that the latter abate the
daily continuous, intense and ''unbearable noise" and the hot air blast coming from
the 36 blowers in the Feliza Building. Petitioner rejected the demand in a letter dated
May 15, 1995. Respondent reiterated its demand for ACEI to abate the nuisance in a
letter dated June 6, 1995.
On June 29, 1995, respondent requested that the 36 blowers of Feliza Building be
tested by the NCR Environmental Management Bureau (EMB) of the Department of
Environment and Natural Resources (DENR). On August 11, 1995, it received a
report from the EMB that the noise generated by the blowers of Feliza Building is
beyond the legal allowable level under Section 78(b) of Presidential Decree (P.D.) No.
984, as amended. FPC had the blowers tested anew by the EMB on December 8, 1995
and July 1, 1996 with the same results. Despite repeated demands, petitioner refused
to act on the matter.
On August 14, 2000, respondent again wrote petitioner, demanding that it abate the
nuisance. Petitioner ignored the letter anew. Respondent then had the blowers tested
again by the EMB with same results as evidenced by its report dated August 29, 2000
and November 4, 2000.
On March 11, 2001, Frabelle I Condominum Corporation, through counsel, Ang &
Associates, as complainant, filed a complaint against petitioner with the Pollution
Adjudication Board (PAB) for the abatement of noise and/or air pollution and
damages with a plea for injunctive relief. The complainant alleged therein that it
406
managed the Frabella 1 and that its members own units in the condominium. It
alleged, inter alia, that:
6. Feliza Building's airconditioning system is served by some 36 blowers,
installed 4 blowers to each floor, all located on the same sidedirectly facing
Frabella I.
7. Everytime the Feliza Building's airconditioning system is turned on, all or a
good number of the 36 blowers operate at the same time. As a direct result of
the operation of the blowers, unbearable hot air is generated and blown
towards Frabella I.
8. Apart from the hot air, the blowers also generate a continuous, deafening,
intolerable and irritating, vibrating noise which makes normal conversation
across the street and at the Frabella I difficult if not impossible.
9. As a consequence of such hot air, vibrating and intolerable noise, the
occupants of Frabella I have been, and still are, prevented from enjoying
peaceful and comfortable use of their property thereby forcing them to vacate
and/or transfer elsewhere.
10. Such intolerable noise, hot air, and vibration constitute noise and/or air
pollution violative of P.D. 984, the Clean Air Act and other related
environmental laws.
11. In all good faith without any desire to cause any unnecessary inconvenience
or trouble, the complainant, for the last several years, has written and made
numerous contacts with the respondent complaining about this pollution,
even soliciting the help and intercession of the Makati Commercial Estate
Association, Inc. (MACEA) and the Metro Manila Development Authority
(MMDA) to try to settle the matter amicably.
12. On the other hand, the DENR, over a span of several years, has conducted
several tests. As shown by the results, the noise and vibration generated by
the Feliza Building blowers exceeds the DENR and Local Government
ambient noise standards hence, it undoubtedly constitutes pollution. [5]
The complainant prayed that judgment be rendered in its favor, thus:
WHEREFORE, it is respectfully prayed that after notice and hearing, a Decision be
rendered in favor of complainant and against the respondent:
1. Declaring the intolerable noise, hot air and vibration generated by the Feliza
Building blowers as a noise and/or air pollution and ordering the respondent
to abate the same and in case of failure to do so, that the establishment be
closed or ordered to cease operations.
2. After arbitration, ordering the respondent to indemnify the complaint for
actual damages at not less thanP5,000,000.00 and to reimburse it for
attorney's fees and expenses of litigation at not less than P400,000.00.
3. Condemning the respondent to pay the corresponding fines and other
administrative penalties for each day of continuing pollution.
Complainant prays for other relief just and equitable in the premises. [6]
While the case was pending, respondent, through its Vice-President, wrote Dr. Maria
Leonor B. Soledad, City Health Officer of Makati City, requesting her intervention to
order petitioner to abate the noise and hot air coming from the blowers of the Feliza
Building. On March 5, 2002, Dr. Soledad replied that a panel must be formed to
settle the matter.
In a letter dated March 7, 2002, respondent requested Makati City Mayor Jejomar C.
Binay not to renew or to cancel the Mayor's License and Business Permits of Feliza
Building and to compel petitioner to comply with the law. [7] Copies of the letter were
forwarded to Engr. Nelson B. Morales, the City Building Official, and Atty. Enrico
Lainez, City Attorney.
Engr. Morales acted on the letter and wrote the EMB on April 30, 2002, requesting
the investigation of the complaint relative to the noise from the airconditioning units
of the Feliza Building.[8] A panel from the EMB conducted tests on the 36 blowers of
Feliza Building from 10:30 a.m. to 12:50 p.m. on May 24, 2002. On June 28, 2002,
the Panel submitted its Investigation Report, stating that the passing of vehicles
along the street and the blowers of nearby building contributed to the ambient noise
407
quality in the area. The report stated that since DENR Administrative Order No. 30
devolved the functions of the DENR on the abatement of noise nuisance to the Local
Government Unit, the case should be endorsed to the City Government of Makati for
appropriate action.[9]
Regional Director Sixto E. Tolentino, Jr. of the EMB forwarded the report to Engr.
Morales on July 2, 2002.[10] In a letter dated July 19, 2002, Engr. Morales informed
respondent that based on the result of investigation conducted by the DENR
Management Bureau on Sound Pressure Levels (SPL) measured on the different
sampling stations, the excess in the noise quality standard within the vicinity does
not come from the airconditioning system with 36 blowers of Feliza Building alone;
there were other prevailing factors to consider," which is beyond the control of said
building and since the final result has been rendered and resolved by the concerned
government agency, it is properly advised that further inquiry or anything involving a
sound environment process which is not sanctioned by this office, be addressed
directly to the said agency. "[11]
Copies of the letter were furnished to the City Mayor, the City Attorney and
petitioner. Respondent then wrote Engr. Morales seeking clarification, wanting to
find out why the matter should be referred to the EMB when the latter had already
endorsed the matter to the City of Makati. A conference was held between the
executives of respondent and Engr. Morales. The latter insisted on the report of the
EMB and his July 19, 2002 letter and dared it to go to court if it was not satisfied
with the report and his resolution of the matter.
Respondent then wrote another letter to the EMB relative to the May 24, 2002
Report of the Panel. The EMB conducted SPL measurements anew on February 4,
2003. Per its Report submitted on November 24, 2003, the EMB declared that, from
the table, it is evident that the SPL measurements were high when the doors were
opened compared to the readings when the doors were closed. However, the EMB
emphasized that the standards in Section 78 (b) of the Implementing Rules and
Regulations of P.D. No. 984 could not be applied since the provisions were for
ambient noise. It pointed out that the SPL measurements were taken inside the
building. The EMB opined that since the nature of complaint is regarding noise
nuisance generated from the firm's blowers, the SPL measurements were not the
critical factor in the resolution of the issue. It stated that the noise needs not to be
high or low to annoy or cause nuisance to the receptor, for as long as the complainant
is disturbed with the level of sound coming from the firm, it was considered a
nuisance.[12]
On July 1, 2003, respondent filed a complaint for the abatement of nuisance with
damages with prayer for the issuance of a writ of preliminary and permanent
injunction before the RTC of Malabon City against petitioner. The complaint alleged
the following:
6. The Feliza Building's airconditioning units are served by some 36 blowers, 4
blowers to each floor located outside the windows of the building facing
directly towards the Frabella I Condominium. The 36 blowers were installed
from the 2nd floor to the 10th floor of the building and these blowers are
aesthetically covered by a vertical concrete sun baffles.
7. [Every time] the Feliza Building's airconditioning system is turned on, all or a
good number of the 36 blowers are made to operate simultaneously. The
operation of the Feliza's blowers generates a continuous deafening
unbearable vibrating and stressful noise affecting the tenants of the Frabella I
Condominium. Hot air is also blasted from the [Feliza] Building's blowers to
the direction of the Frabella 1Condominium.
8. The tenants occupying the 5th to the 16th floors of the Frabella I
Condominium facing Feliza Building are directly subjected to a daily
continuous intense noise and hot air blast coming from the blowers of the[10-
storey] Feliza Building. Some are tenants of plaintiff, who have complained to
plaintiff about the matter. Tenants who could not bear the nuisance any
longer have vacated their units, and as a result, many units of plaintiff have
remained vacant, and unoccupied or uninhabitable, thereby depriving
plaintiff with rental income that it should have otherwise be receiving.
9. In all good faith, without any desire to cause any unnecessary inconvenience
or trouble, plaintiff has written and made numerous contacts with defendant
to complain about this nuisance, even soliciting the help and intercession of
the Barangay San Lorenzo, Makati Commercial Estate Association, Inc.
(MACEA), Metro Manila Development Authority (MMDA), Makati City
Government, Makati Pollution Office and Department of Environment and
408

Natural Resources(DENR), to try to settle the matter amicably. Several part of this Complaint as follows:
meetings have taken place, as well as many correspondences made by
plaintiff to defendant. But reasonable and lawful demands by plaintiff to
abate the nuisance have been repeatedly ignored/refused by defendant. The Date Annex
demand letters, and the response of defendant to these letters, are herein 29 June 1995 "G"
attached and made integral part of this Complaint as follows: 11 August 1995 "H"
08 December 1995 "I"
01 July 1996 "J"
Date 04 November 1996 "K"
Remarks
Annex 29 August 2000 "L"
11 April 1995
Demand letter to abate nuisance
"A" 14.
15 May 1995 15. Please note that the testing done on 08 December 1995 (Annex - "I") was even
Response to demand letter
"B" requested by defendant.
06 June 1995
Follow-up demand letter
"C" 16. On 04 February 2003, another test by the DENR was conducted, and a copy
14 August 2000 of the results are herein attached and marked as Annex -"M." Although the
Follow-up demand letter
"D" latest test would seem to indicate that there was a reduction in the decibel
readings as compared with the previous tests, this is actually misleading. For
10. one, 28 blowers were operational at the time of the testing, as opposed to the
11. There [are] more letters that were exchanged between plaintiff and defendant previous testing done when all 36 blowers were functioning. This is rather
and/or their lawyers, but they will not be attached to this Complaint at this exceptional because ordinarily, all 36 blowers of the Feliza Building are in
time to simplify the facts. operation. The fact that only 28 blowers were operational at the time of the
testing resulted in the lower decibel reading.
12. Even the Metro Manila Development Authority (MMDA) and Makati
Commercial Estate Association, Inc. (MACEA) wrote defendant letters urging 17. Plaintiff will also demonstrate by expert testimony during the course of the
it to rectify and abate the nuisance. Copies of the letters of the MMDA dated trial that there were lapses committed during the latest testing that materially
29 April 1996 and the MACEA dated 10 October 1996 are herein attached and influenced the results. But be that as it may, defendant did not perform any
marked as Annexes - "E" and "F"[,] respectively. remedial or rectification works to lower the noise being generated by the
blowers, hence[,| it was not responsible for any imagined or actual reduction
13. On the other hand, the DENR, over a span of 7 years, has conducted several in the decibel readings.
noise sampling tests. As shown by the results, the unbearable noise generated
by the Feliza's blowers is beyond the legally allowable level under Sec. 78(b) 18. As a consequence of such unbearable, hot air and stressful noise, the
of P.D. 984, as indicated in their reports, hence[,] it undoubtedly constitutes occupants of the Frabella I, including the tenants of plaintiff, have been and
nuisance. Copies of the test results are herein attached and made an integral still are, prevented from enjoying peaceful and comfortable use of their
409
property thereby forcing them to vacate and or to transfer elsewhere.
19. Notwithstanding the foregoing results, repeated requests/demands from the
plaintiff and recommendations of the DENR, MACEA and MMDA to abate
the pollution and nuisance, the defendant has ignored and still continues to
ignore such requests/demands/ recommendation. [13]
Respondent prayed for injunction and the following other reliefs, thus:
WHEREFORE, premises considered, it is respectfully prayed that upon the filing of
this Complaint, after notice and hearing, and after the payment of a bond in an
amount to be fixed by the Honorable Court, a Writ of Preliminary Injunction be
issued enjoining defendant from operating the airconditioning system of the Feliza
Building and/or turning on the blowers subject matter of this suit while the instant
case remains pending.
After trial and hearing, judgment be rendered against the defendant and for the
plaintiff, ordering the former:
1. To abate the noise and air pollution being generated by all the blowers of the
airconditioning system of Feliza Building, and/or to make the Writ of
Preliminary Injunction permanent;
2. To pay plaintiff the amount of P1,000,000.00 in temperate or moderate
damages[;]
3. To pay the plaintiff the amount of P1,000,000.00 as and by way of exemplary
damages;
4. To pay the plaintiff the amount of P500,000.00 as and by way of attorney's
fees; and
5. [To pay] the cost of the suit.[14]
Petitioner moved for the dismissal of the complaint on the following grounds: (1) lack
of jurisdiction of the court over the subject matter of the complaint; (2) the complaint
does not state a cause of action; and (3) the action is barred by res judicata, litis
pendentia, and forum shopping.[15]
Petitioner averred that it was the Makati City Government that had jurisdiction over
the complaint pursuant to Republic Act (R.A.) No. 7160. It also pointed out that
DENR Administrative Order (A.O.) No. 30 issued on June 30, 1992 devolved to the
local government units the power to determine matters pertaining to environmental
management such as: (a) enforcement of pollution control and environmental
protection laws, rules and regulations; (b) abatement of noise and other forms of
nuisance; and (c) implementation of cease and desist orders issued by the PAB. It
maintained that respondent had filed a similar action before the Makati City
Government concerning the same issues presented in the complaint and that the City
Building Official, Engr. Morales, had ruled in his letter dated July 19, 2002 that the
excess in the noise quality standard within the vicinity was caused not only by the
air-conditioning system of Feliza Building but also by other prevailing factors which
were beyond its control. Respondent had failed to appeal the resolution; hence, the
resolution of the City Building Official barred the complaint.
Petitioner further averred that, aside from the action brought before the City
Government, the Frabella Condominium Corporation (FCC) filed a case for
Abatement of Noise and/or Air Pollution and Damages with Prayer for Interim Cease
and Desist Order, docketed as PAB Case No. 01-0009-NCR. As gleaned from the
material averments of the two complaints, both involved the same set of facts and
issues. Consequently, the petition is barred by litis pendentia, and respondent was
guilty of violating Section 5, Rule 7 of the Rules of Court for failure to include in its
certification against forum-shopping of the pendency of the PAB case or the prior
resolution by the City Government of the complaint before the City Building
Official/City Engineer.
Petitioner further claimed that the complaint stated no cause of action because it
failed to allege any right of respondent which it was obliged to respect, and any act or
omission of defendant in violation of such right. As gleaned from the EMB's report to
the City Engineer on May 24, 2002, the passing of vehicles along the street and
blowers in the nearby building contributed to the ambient noise quality in the area. [16]
In compliance with the order of the court, the parties submitted their respective
Position Papers. Respondent averred that the provisions of R.A. No. 7160 cited by
petitioner apply not to abatements of nuisance but to pollution control cases. [17] The
410
local government units (LGUs) are only granted administrative and executive
powers, not judicial or quasi-judicial functions to abate a nuisance. While admitting
that DENR A.O. No. 30 devolved to the LGUs the function of abating noise and other
forms of nuisance as defined by law, plaintiff posited that said A.O. is not a law and
the DENR cannot deprive the court of its jurisdiction over the abatement of nuisance.
Respondent alleged that in filing a motion to dismiss, petitioner hypothetically
admitted the factual allegations in the complaint and, thus, only questions of law
remained; hence, the doctrine of primary jurisdiction and the need for exhaustion of
administrative remedies do not apply. Moreover, petitioner itself had even admitted
that respondent had tried to seek administrative relief before the Makati City
Government, but the City Building Official denied the same. It insisted that to
require the further exhaust of administrative remedies beyond what it had tried in
the past years would be an injustice. It claimed that the proper application of P.D.
No. 984 was in issue, specifically Section 78(b) of the Rules and Regulations of the
National Pollution Control Commission (NPCC) which were adopted and
promulgated pursuant to Section 6 of P.D. No. 984 and Title VIII of the Civil Code.
Respondent maintained that Engr. Morales' letter to it could not be considered as
final as to constitute res judicata between the parties. It was only a reply-letter.
Besides, the City Engineer/Building Official could not exercise quasi-judicial
functions. Due process was not also observed because no proceedings were
conducted. It insisted that it wrote follow-up letters to know the basis of his findings
and to confirm the fact that the Makati City Government did not issue a permit to
operate its airconditioning unit. However, Engr. Morales refused to acknowledge the
same and did not reply thereto.
Respondent asserted that it did not engage in forum shopping as the complainant in
the PAB case was FCC, a corporation of unit owners of Frabella I. ft is a totally
different corporate entity, the stockholders and officers of which are not similar to
FPC. On petitioner's claim that there was no cause of action for the abatement of
nuisance, it declared that the material allegations of its complaint and the answer
thereto show otherwise. Petitioner had the obligation to abate the nuisance caused by
the blowers of Feliza Building. Although under the DENR Report on May 24, 2002,
the DENR conducted noise sampling, and noted that the passing vehicles along the
street and blowers of nearby building contributed to the noise, the basis of its
complaint was the noise generated by the blowers of Feliza Building.
Before the RTC court could resolve the motion to dismiss of petitioner, the PAB
resolved, on July 29, 2003[18] to dismiss the complaint filed by Frabelle. The matter
was then endorsed to the LGU concerned in accordance with Section IV, Rule III of
PAB Resolution 1-C, Series of 1997, as amended. It noted that based on the pleadings
of the parties, and the testimonial evidence, the case is more of a nuisance, and
"[e]xcept where such would constitute a pollution case, local government units shall
have the power to abate nuisance within their respective areas pursuant to the
Republic Act No. 386 (Civil Code of the Philippines), Republic Act 7160 (the Local
Government Code), Presidential Decree 856 (the Code of Sanitation of the
Philippines), DENR Department Administrative Order No. 30, Series of 1992 and
other pertinent laws, rules and regulations" without prejudice to the institution of a
pollution case, upon proof that respondent had failed to comply with DENR
standards and the presentation of other evidence that would warrant the PAB to take
cognizance of and assert jurisdiction over the case.[19]
Thereafter, the RTC denied petitioner's motion to dismiss in an Order [20] dated
September 15, 2003. It ruled that the doctrine of primary jurisdiction simply calls for
the determination of administrative questions, which are ordinarily questions of facts
and not of law. Likewise, the trial court is not divested of its jurisdiction simply
because of plaintiff's failure to observe the doctrine of exhaustion of administrative
remedies. Moreover, as gleaned from the averments of the complaint, there was an
urgency of abating the noise and air pollution generated by the blowers of petitioner's
airconditioning system such that respondent prayed for injunctive relief. The RTC
took note of the allegations of respondent that it would suffer great and irreparable
injury; hence, to require it to exhaust further administrative remedies would be, in
effect, a nullification of its claim.
According to the RTC, the doctrine of res judicata applies only to judicial and quasi-
judicial proceedings and not to the exercise of administrative powers. Thus, no forum
shopping was also committed. Since the findings of the City Building Official appear
to be a complete disavowal of the previous results gathered from the numerous tests
conducted by the EMB, the court could not be deprived of its inherent power to
review the factual findings of the administrative official in order to determine the
regularity of the procedure used.
On the merits of the complaint, the RTC declared that the factual allegations were
sufficient in themselves to constitute a cause of action against respondent and, if
411
admitting the facts, the court can render valid judgment on the basis thereof in
accordance with the relief prayed for:
Undeniably, the instant complaint is one for abatement of nuisance. Plaintiff alleges
that the operation of defendant's blowers generates a continuous, deafening,
unbearable, vibrating and stressful noise affecting its tenants. Some have already
vacated their units while others refused to pay rents and threaten plaintiff to be sued
because of the unabated nuisance. Plaintiff has been deprived of rental income. It
had written and made numerous contacts with the defendant to complain about the
nuisance and further solicited intervention from government agencies including the
Government of Makati City. Defendant allegedly failed or refused to abate the
nuisance which is in total disregard of the right of the plaintiff over its property.
Contested findings of the EMB and City Building Official of Makati City are, likewise,
put in issue. These are sufficient to constitute a cause of action against the defendant
and, if admitting the facts, this Court can render valid judgment upon the same in
accordance with the relief prayed for.[21]
The court denied the motion for reconsideration filed by petitioner [22] and the latter
sought: relief from the CA via a petition for certiorari. Petitioner averred that:
THE PUBLIC RESPONDENT ACTED WITHOUT JURISDICTION, OR WITH
GRAVE ABUSE OF DISCRETION SO GRAVE AS TO LOSE JURISDICTION IN
ASSUMING AND EXERCISING ITS JURISDICTION IN CIVIL CASE NO. 03-3745-
MN, CONSIDERING THAT:
A. THE HONORABLE COURT HAS NO JURISDICTION OVER THE SUBJECT
MATTER OF THE COMPLAINT. JURISDICTION IS VESTED WITH THE
MAKATI CITY GOVERNMENT, THE LOCAL GOVERNMENT UNIT
CONCERNED.
B. THE COMPLAINT IS BARRED BY RES JUDICATA. THE MAKATI CITY
GOVERNMENT HAS ALREADY DECIDED A COMPLAINT FILED BY
FRABELLE. FRABELLE DID NOT ELEVATE THE SAME ON APPEAL, OR,
IN ANY WAY, QUESTION SUCH DECISION. THUS, THE DECISION BY
THE MAKATI CITY GOVERNMENT IS NOW FINAL AND EXECUTORY.
C. AT THE TIME THE COMPLAINT WAS FILED, IT WAS BARRED BY LITIS
PENDENTIA. A SIMILAR ACTION WAS PENDING WITH THE
POLLUTION ADJUDICATION BOARD (PAB) WHICH, SUBSEQUENTLY,
FOUND NO LIABILITY ON THE PART OF AC. FRABELLE IS CLEARLY
AND UNDENIABLY GUILTY OF FORUM-SHOPPING.
D. PLAINTIFF FRABELLE HAS NO CAUSE OF ACTION AND THE
COMPLAINT FAILS TO STATE A CAUSE OF ACTION AGAINST AC
ENTERPRISES.[23]
Petitioner asserted that, by express provision of law, the City of Makati has primary
jurisdiction over the complaint and is the competent authority to determine the
existence of any incidence of pollution, the special standards and regulations
controlling the same and the resolution whether a party has complied with the
regulations. The complaint does not fall under any of the exceptions to the rule on
exhaustion of administrative remedies. Respondent is guilty of short-circuiting the
whole process without requisite justification. Contrary to the contention of
respondent, the proceedings before the City Government are quasi-judicial in nature.
It pointed out that the City Government had already made its findings, which
respondent did not contest in the proper tribunal within the reglementary period. It
did not appeal the decision of the City Building Official conformably with DENR
Administrative Order No. 37-45 (General Manual of Operations for Devolved
Functions from the Department of Environment and Natural Resources to the Local
Government Units); hence, the resolution became final and executory. It insisted that
the complaint is but a desperate attempt to revive what is otherwise a dead issue.
On September 21, 2004, the CA rendered judgment denying the petition.
[24]
 The fallo of the decision reads:
WHEREFORE, premises considered, the petition is DISMISSED for lack of merit.
Accordingly, the dismissal of the petition rendered the application for a temporary
restraining order or writ of preliminary injunction moot and academic.
SO ORDERED.[25]
The CA ruled that the action of respondent was one for the abatement of a nuisance
within the exclusive jurisdiction of the RTC. It agreed with respondents' contention
that, under R.A. No. 7160, the LGUs are not divested of its jurisdiction over an action
for the abatement of a nuisance. Section 17, sub-paragraphs (b)(3)(iii) in relation to
(b)(4) of the law pertain to the enforcement of pollution control law and not to the
abatement of nuisance. While DENR A.O. No. 30 devolved to the LGUs the
412
abatement of noise and other forms of nuisance as defined by law, this does not
necessarily deprive the courts to hear and decide actions pertaining thereon. It was
thus proper for respondent to bring the case before the court since it had already
sought the intercession of Barangay San Lorenzo, Makati Commercial Estate
Corporation (MACEA), DENR, and the Makati City Government to no avail.
Further, the doctrine of primary jurisdiction and the principle of exhaustion of
administrative remedies need not be adhered to when the question between the
parties is purely legal. In this case, petitioner, in filing a motion to dismiss, is deemed
to have hypothetically admitted all the factual averments of respondent. Hence, what
is left for the court to adjudicate is only the application of laws dealing with nuisance.
The CA also declared that the filing of the case below was not barred by res
judicata for the reason that the decision adverted to by petitioner was only a letter of
the City Building Official to respondent; no adversarial proceedings or submission of
evidence and position papers took place before said office. At best, the letter is only
an exercise of the City Government's administrative powers, not judicial or quasi-
judicial functions which the City Building Official does not possess. Respondent's
filing of the complaint before the Malabon RTC is also not barred by litis pendentia.
FCC, as complainant, initiated the action before the PAB, while the respondent filed
the pending case before the court; there is no identity of parties since FCC has a
personality separate and distinct from that of respondent.
Finally, the CA held that all the requisites for the existence of a cause of action were
present in the case at bar. Due to the unbearable noise and hot air allegedly produced
by the blowers installed at petitioner's building, tenants of respondent have been
complaining, forcing them to vacate their units while others refused to pay their rent
and threatened to take legal action. Respondent had the right to abate such nuisance
in order to avert future business losses. Since petitioner refused to heed its demands,
respondent was well within its right to file a case protecting its property and
proprietary rights.
On January 18, 2005, the appellate court resolved to deny petitioner's motion for
reconsideration[26] for lack of merit.[27]
Petitioner forthwith filed the instant petition for review on certiorari, praying for the
reversal of the CA decision and resolution on the following grounds:
I.
THE COURT OF APPEALS ERRONEOUSLY RULED THAT THE LOWER COURT
HAS JURISDICTION OVER THE INSTANT CASE, CONSIDERING THAT THE
EXCLUSIVE AUTHORITY TO DETERMINE THE ISSUES INVOLVED IN THE
CASE A QUO LIES WITH THE CITY OF MAKATI.
A.
THE COURT OF APPEALS ERRED IN NOT RULING THAT THE POWER TO
ABATE NUISANCES AND CONTROL NOISE POLLUTION HAS BEEN DEVOLVED
TO THE LOCAL GOVERNMENT UNIT CONCERNED IN ACCORDANCE WITH
REPUBLIC ACT 7160 OTHERWISE KNOWN AS THE LOCAL GOVERNMENT
CODE.
II.
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE ISSUES
INVOLVED IN THE INSTANT CASE NECESSARILY INVOLVE A QUESTION OF
FACT, AND, THEREFORE, THE DOCTRINE OF PRIMARY JURISDICTION AND
THE DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES ARE BOTH
APPLICABLE.
III.
THE COURT OF APPEALS ERRONEOUSLY RULED THAT THE COMPLAINT IS
NOT BARRED BY (1) LITIS PENDENTIA; (2) RES JUDICATA; AND (3) FORUM-
SHOPPING.
IV.
THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT'S
COMPLAINT STATES A CAUSE OF ACTION.[28]
Petitioner insists that, under Section 17(b)(4) in relation to Section 17(b)(3)(III) of
R.A. No. 7160, the City of Makati is obliged to enforce the Pollution Control Law, and
under Section 458(4)(I) of the said law, the Sanggnniang Panghmgsod is
empowered to declare, prevent or abate any nuisance. Thus, the City of Makati has
exclusive jurisdiction over respondent's complaint for the abatement of the noise
from the blowers of the airconditioning unit of the Feliza Building and of the hot air
413
generated by the said blowers. Petitioner avers that the issues before the trial court
were factual in nature. By its motion to dismiss the complaint, it did not
hypothetically admit the allegations of respondent in its complaint that the noise and
hot air emitted by the blowers of the Feliza Building constitute a nuisance or air
pollution because the allegations are mere conclusions of law and not mere
statements of facts. Respondent's complaint before the trial court and its several
complaints against petitioner before quasi-judicial bodies is an implied admission of
the availability of administrative remedies under the law. Since respondent failed to
pursue and exhaust all administrative remedies before filing its complaint below, its
action was premature. While there were exceptions to the requirement of exhaustion
of administrative remedies, nevertheless, respondent failed to establish any of them.
Moreover, respondent's action before the RTC was barred by the letter of the City
Engineer's Office of Makati City on July 19, 2002 which ruled that there was no
factual basis for respondent's complaint; hence, respondent's complaint was barred
by res judicata. The complainant in PAB Case No. 01-0009-NCR involved the same
set of issues and circumstances, and the complainant therein and respondent
represented the same interests, alleged the same rights and prayed for the same
reliefs. Consequently, the RTC erred in denying its motion to dismiss the complaint
on the ground of res judicata, litis pendentia and forum shopping.
Finally, respondent had no cause of action against petitioner because, as shown by
the tests conducted by the EMB on May 24, 2002, based on noise sampling tests, the
noise and air pollution did not emanate from Feliza Building but from passing cars.
In its comment on the petition, respondent maintained that the assailed orders of the
RTC and decision of the CA are in accord with law and the rulings of this Court.
Respondent maintains that the only issue before the trial court was how to apply P.D.
No. 984 and Section 78(b) and the Rules and Regulations of the NPCC and the
provisions of the New Civil Code governing the abatement of nuisance. By filing a
motion to dismiss the complaint on the ground that it stated no cause of action, the
petitioner thereby hypothetically admitted the factual allegations therein. The court
must hear the case to be able to finally resolve the factual issues that may be raised in
the Answer of the petitioner after the denial of its motion to dismiss.
Respondent avers that it was not obliged to first exhaust all administrative remedies.
It pointed out that the Building Official of Makati City ignored its right to due process
when he dismissed its complaint without conducting an investigation based solely on
the July 2, 2002 Report of the EMB Panel. The issues between the parties are legal,
that is, whether there is irreparable injury. It likewise points out that to require
exhaustion of administrative remedies would be unreasonable as the rule does not
provide a plain, speedy and adequate remedy. It insists that it could not have
appealed the letters of the City Mayor and the Building Official of Makati because
there are no rules promulgated by the City governing appeals from said letters. It
points out that the City Engineer and City Mayor did not grant its letter requesting
for a clarification of petitioner's letters denying its letter-complaint.
The petition is denied for lack of merit.
The Order of the RTC dated September 15, 2003 denying the motion to dismiss of
petitioner (as defendant below) is interlocutory in nature. The general rule is that an
order denying a motion to dismiss a complaint cannot be questioned via a special
civil action for certiorari until a final judgment on the merits of the case is rendered.
A party must exhaust all remedies available before resorting to certiorari. A writ
for certiorari is not intended to correct every controversial interlocutory ruling. It is
resorted only to correct a grave abuse of discretion or a whimsical exercise of
judgment equivalent to lack of jurisdiction. It is a remedy narrow in scope, limited
only to keeping an inferior court within its jurisdiction and to relieve persons from
arbitrary acts which courts have no power or authority to perform. [29] The remedy of
petitioner was to go to trial and appeal from an adverse decision.
Moreover, the CA correctly ruled that the RTC did not commit grave abuse of its
discretion in denying the motion to dismiss filed by respondent. Indeed, the assailed
orders of the RTC are in accord with the law and rulings of this Court, taking into
account the averments of the complaint and the answer appended thereto and the
other pleadings of the parties.
The RTC Has Jurisdiction
Over the Action of the
Respondent for Abatement
Of Nuisance
It is axiomatic that the nature of an action and whether the tribunal has exclusive
jurisdiction over such action are to be determined from the material allegations of
the complaint, the law in force at the time the complaint is filed, and the character of
414
the relief sought irrespective of whether plaintiff is entitled to all or some of the
claims averred. Jurisdiction is not affected by the pleas or the theories set up by
defendant in an answer to the complaint or a motion to dismiss the same. Otherwise,
jurisdiction would be dependent almost entirely upon the whims of defendants. [30]
We agree with the ruling of the RTC, as affirmed by the CA, that as gleaned from the
material averments of the complaint as well as the character of the relief prayed for
by respondent in its complaint before the RTC, the petition is one for the judicial
abatement of a private nuisance, more specifically the noise generated by the blowers
of the airconditioning system of the Feliza Building owned by petitioner, with a plea
for a writ of preliminary and permanent injunction, plus damages. Such action of
respondent is incapable of pecuniary estimation because the basic issue is something
other than the right to recover a sum of money. Although respondent prayed for
judgment for temperate or moderate damages and exemplary damages, such claims
are merely incidental to or as a consequence of, the principal relief sought by
respondent. An action incapable of pecuniary estimation is within the exclusive
jurisdiction of the RTC as provided in Batas Pambansa Bilang (B.P. Blg.) 129, as
amended by R.A. No. 7691.[31] In Tatel v. Municipality of Virac,[32] the Court ruled
that a simple suit for abatement of a nuisance is within the exclusive jurisdiction of
the Court of First Instance, now the RTC.
Article 694 of the New Civil Code defines a nuisance as follows:
Art. 694. A nuisance is any act., omission, establishment, business, condition of
property, or anything else which:
(1) Injures or endangers the health or safety of others; or
(2) Annoys or offends the senses; or
(3) Shocks, defies or disregards decency or morality; or
(4) Obstructs or interferes with the free passage of any public highway or street, or
any body of water; or
(5) Hinders or impairs the use of property.
The term "nuisance" is so comprehensive that it has been applied to almost all ways
which have interfered with the rights of the citizens, either in person, property, the
enjoyment of his property, or his comfort.[33] According to Article 695 of the Civil
Code, a nuisance may be either public or private:
Art. 695. Nuisance is either public or private. A public nuisance affects a community
or neighborhood or any considerable number of persons, although the extent of the
annoyance, danger or damage upon individuals may be unequal. A private nuisance
is one that is not included in the foregoing definition.
A private nuisance has been defined as one which violates only private rights and
produces damages to but one or a few persons.[34] A nuisance is public when it
interferes with the exercise of public right by directly encroaching on public property
or by causing a common injury.[35] It is an unreasonable interference with the right
common to the general public.[36]
Under Article 705 of the New Civil Code, a party aggrieved by a private nuisance has
two alternative remedies: (1) a civil action; or (2) abatement, without judicial
proceedings. A person injured by a private nuisance may abate it as provided in
Article 706:
Art. 706. Any person injured by a private nuisance may abate it by removing, or if
necessary by destroying the thing which constitutes the nuisance, without
committing a breach of the peace or doing unnecessary injury. However, it is
indispensable that the procedure for extrajudicial abatement of a public nuisance by
a private person be followed.
A private nuisance action is the remedy for an invasion of a property right. On the
other hand, the action for the abatement of a public nuisance should be commenced
by the city or municipality.[37] A private person may institute an action for the
abatement of a public nuisance in cases wherein he suffered a special injury of a
direct and substantial character other than that-which the general public shares.
[38]
 The district health officer shall determine whether or not abatement, without
judicial proceedings, is the best remedy against a public nuisance. [39]
In the present case, respondent opted to file an action in the RTC for abatement of
the private nuisance complained of and damages under Article 697 of the New Civil
Code for its past existence.
One has an action to recover personal damages arising from a private nuisance. The
gist of the action is the unreasonable interference by the defendant with the use and
415
enjoyment of properties. Indeed, petitioner may be compelled to adopt the necessary
measures to reduce or deaden the nuisance emanating from the blowers of the
airconditioning system at the Feliza Building.
The PAB has no primary jurisdiction over the noise complained of by ihe respondent.
The resolution of the issue before the RTC, which is whether the noise complained of
is actionable nuisance, does not require any special technical knowledge, expertise
and experience of the PAB or even of Makati City requiring the determination of
technical and intricate matters of fact. Indeed, the PAB dismissed the complaint of
the Frabelle I Condominium Corporation declaring that, based on the pleadings
before it and the evidence of the parties, the case is more of an abatement of a
nuisance under the New Civil Code and DENR Order No. 30, Series of 1992. It
declared that it was not a pollution case. The Resolution reads:
After considering the evidence adduced and the arguments of both parties in their
pleadings, the Board, likewise giving due importance to the technical findings giving
rise to the conclusion that the nature of the case is more of a nuisance, hereby
resolves to DISMISS the pending complaint of pollution in accordance with Rule
III, Section IV of PAB Resolution 1-C, Series of 1997 as amended, which categorically
states that "Except where such would constitute a pollution case, local government
units shall have the power to abate a nuisance within their respective areas
pursuant to the Republic Act No. 386 (Civil Code of the Philippines), Republic Act
7160 (the Local Government Code), Presidential Decree 856 (the Code on Sanitation
of the Philippines), DENR Department Administrative Order No. 30, Series of 1992
and other pertinent laws, rules and regulations. " (underscoring supplied)
Accordingly, the issues raised by the complainant are hereby endorsed to the Local
Government Unit concerned for appropriate action consistent with above cited laws,
and without prejudice to the institution of a pollution case upon definite findings that
herein respondent had failed to comply with the DENR Standards, and presentation
of other evidence that would warrant the Board to take cognizance of the matter as a
pollution case.[40]
The power of the NPCC to resolve pollution cases under Section 6, paragraphs (e),
(f), (g), (j), (k) and (p) of P.D. No. 984 is vested in the Pollution Adjudication Board
(PAB) under Title XIV, Chapter 2, Section 13 of the 1987 Administrative Code, which
reads:
SEC. 13. Pollution Adjudication Board. - The Pollution Adjudication Board, under
the Office of the Secretary, shall be composed of the Secretary as Chairman, two
Undersecretaries as may be designated by the Secretary, the Director of
Environmental Management, and three others to be designated by the Secretary as
members. The Board shall assume the powers and functions of the Commission
Commissioners of the National Pollution Control Commission with respect to the
adjudication of pollution cases under Republic Act 3931 and Presidential Decree
984, particularly with respect to Section 6 letters (e), (f), (g), (j), (k) and (p) of P.D.
984. The Environment Management Bureau shall serve as the Secretariat of the
Board. These powers and functions may be delegated to the regional officers of the
Department in accordance with the rules and regulations to be promulgated by the
Board.
The cases referred to in Section 6 of P.D. No. 984 are as follows:
(e) Issue orders or decisions to compel compliance with the provisions of this Decree
and its implementing rules and regulations only after proper notice and hearing.
(f) Make, alter or modify orders requiring the discontinuance of pollution specifying
the conditions and the time within such discontinuance must be accomplished.
(g) Issue, renew or deny permits, under such conditions as it may determine to be
reasonable, for the prevention and abatement of pollution, for the discharge of
sewage, industrial waste, or for the installation or operation of sewage works and
industrial disposal system or parts thereof: Provided, however, That the Commission,
by rules and regulations, may require subdivisions, condominium, hospitals, public
buildings and other similar human settlements to put up appropriate central
sewerage system and sewage treatment works, except that no permits shall be
required of any new sewage works or changes to or extensions of existing works that
discharge only domestic or sanitary wastes from a single residential building
provided with septic tanks or their equivalent. The Commission may impose
reasonable fees and charges for the issuance or renewal of all permits herein
required.
xxx
(j) Serve as arbitrator for the determination of reparations, or restitution of the
damages and losses resulting from pollution.
416

government confers powers and authority upon the various local government units to
(k) Deputize in writing or request assistance of appropriate government agencies or perform specific functions and responsibilities.
instrumentalities for the purpose of enforcing this Decree and its implementing rules
and regulations and the orders and decision of the Commission. What were devolved by the DENR to the LGUs under DENR Administrative Order
No. 30 dated June 30, 1992, in relation to R.A. No. 7160, were the regulatory
xxx functions/duties of the National Pollution Control Commission (NPCC) which were
absorbed and integrated by the EMB, as provided in Title No. XIV, Chapter 2,
(p) Exercise such powers and perform such other functions as may be necessary to Section 17 of the 1987 Administrative Code. However, the DENR exercises
carry out its duties and responsibilities under this Decree. administrative supervision and control over the LGUs. Enumerated in Chapter IV,
Article 1, Sections 74 to 79 of the Rules and Regulations promulgated by the NPCC
Section 2(a) of P.D. No. 984 defines pollution as: implementing P.D. 984 are the regulations relative to noise control, specifically, the
(a) "Pollution" means any alteration of the physical, chemical and biological noise quality standards.
properties of any water, air and/or land resources of the Philippines, or any
discharge thereto of any liquid, gaseous or solid wastes as will or is likely to create or Under Section 78 of said Rules, as amended by NPCC Memorandum Circular No.
to render such water, air and land resources harmful, detrimental or injuries to 002, dated May 12, 1980, the Environmental Quality Standards for Noise in General
public health, safety or welfare or which will adversely affect their utilization for Areas are:melo
domestic, commercial, industrial, agricultural, recreational or other legitimate
purposes. Category Morning&
Daytime Nighttime
Of Area Evening
We agree with petitioner's contention that, under Section 447(a)(3)(i) of R.A. No.
AA 50 dB 45 dB 40 dB
7160, otherwise known as the Local Government Code, the Sangguniang
A 55 " 50 " 45 "
Panglungsod is empowered to enact ordinances declaring, preventing or abating
B 65 " 60 " 55 "
noise and other forms of nuisance. It bears stressing, however, that the Sangguniang
C 70 " 65 " 60 "
Bayan cannot declare a particular thing as a nuisance per se and order its
D 75 " 70 " 65 "
condemnation. It does not have the power to find, as a fact, that a particular thing is
a nuisance when such thing is not a nuisance per se; nor can it authorize the
Class ''A" area refers to that section or contiguous area which is primarily used for
extrajudicial condemnation and destruction of that as a nuisance which in its nature,
residential purposes, while Class "B" refers to that section or contiguous area which
situation or use is not such. Those things must be determined and resolved in the
is primarily a commercial area. Frabelle I and Feliza Buildings are located in Makati
ordinary courts of law. If a thing be in fact, a nuisance due to the manner of its
City, an area which is classified as a commercial district.
operation, that question cannot be determined by a mere resolution of
the Sangguniang Bayan.[41]
The division of the 24-hour period shall be as follows:
Morning..............5:00 A.M. to 9:00 A.M.
Section 17 of R.A. No. 7160 provides that local government units shall discharge the
Daytime............. 8:00 A.M. to 10:00 P.M.
functions and responsibilities of national agencies and offices devolved to them
Evening.............. 6:00 P.M. to 10:00 P.M.
pursuant to the law; and such other powers, functions and responsibilities as are
Nighttime......... 10:00 P.M. to 5:00 P.M.
necessary, appropriate or incidental to efficient and effective provisions of the basic
services and facilities in the Code. Devolution refers to the act by which the national
417
The LGUs may conduct inspections, at all reasonable times, without doing damage,
after due notice to the owners of buildings to ascertain compliance with the noise
standards under the law; and to order them to comply therewith if they fail to do so;
or suspend or cancel any building permits or clearance certificates issued by it for
said units/buildings after due hearing as required by P.D. No. 984.
However, the LGUs have no power to declare a particular thing as a nuisance unless
such as thing is a nuisance per se; nor can they effect the extrajudicial abatement of
that as a nuisance which in its nature or use is not such. Those things must be
resolved by the courts in the ordinary course of law.
Whether or not noise emanating from a blower of the airconditioning units of the
Feliza Building is nuisance is to be resolved only by the court in due course of
proceedings. The plaintiff must prove that the noise is a nuisance and the
consequences thereof. Noise is not a nuisance per se. It may be of such a character as
to constitute a nuisance, even though it arises from the operation of a lawful
business, only if it affects injuriously the health or comfort of ordinary people in the
vicinity to an unreasonable extent. Injury to a particular person in a peculiar position
or of especially sensitive characteristics will not render the noise an actionable
nuisance. In the conditions of present living, noise seems inseparable from the
conduct of many necessary occupations. Its presence is a nuisance in the popular
sense in which that word is used, but in the absence of statute, noise becomes
actionable only when it passes the limits of reasonable adjustment to the conditions
of the locality and of the needs of the maker to the needs of the listener. What those
limits are cannot be fixed by any definite measure of quantity or quality; they depend
upon the circumstances of the particular case. They may be affected, but are not
controlled, by zoning ordinances. The delimitation of designated areas to use for
manufacturing, industry or general business is not a license to emit every noise
profitably attending the conduct of any one of them.
The test is whether rights of property, of health or of comfort are so injuriously
affected by the noise in question that the sufferer is subjected to a loss which goes
beyond the reasonable limit imposed upon him by the condition of living, or of
holding property, in a particular locality in fact devoted to uses which involve the
emission of noise although ordinary care is taken to confine it within reasonable
bounds; or in the vicinity of property of another owner who, though creating a noise,
is acting with reasonable regard for the rights of those affected by it. [42]
Commercial and industrial activities which are lawful in themselves may become
nuisances if they are so offensive to the senses that they render the enjoyment of life
and property uncomfortable. The fact that the cause of the complaint must be
substantial has often led to expressions in the opinions that to be a nuisance the
noise must be deafening or loud or excessive and unreasonable. The determining
factor when noise alone is the cause of complaint is not its intensity or volume. It is
that the noise is of such character as to produce actual physical discomfort and
annoyance to a person of ordinary sensibilities, rendering adjacent property less
comfortable and valuable. If the noise does that it can well be said to be substantial
and unreasonable in degree; and reasonableness is a question of fact dependent
upon all the circumstances and conditions. There can be no fixed standard as to
what kind of noise constitutes a nuisance.[43]
The courts have made it clear that in every case the question is one of
reasonableness. What is a reasonable use of one's property and whether a particular
use is an unreasonable invasion of another's use and enjoyment of his property so as
to constitute a nuisance cannot be determined by exact rules, but must necessarily
depend upon the circumstances of each case, such as locality and the character of the
surroundings, the nature, utility and social value of the use, the extent and nature of
the harm involved, the nature, utility and social value of the use or enjoyment
invaded, and the like.[44]
Persons who live or work in thickly populated business districts must necessarily
endure the usual annoyances and of those trades and businesses which are properly
located and carried on in the neighborhood where they live or work. But these
annoyances and discomforts must not be more than those ordinarily to be expected
in the community or district, and which are incident to the lawful conduct of such
trades and businesses. If they exceed what might be reasonably expected and cause
unnecessary harm, then the court will grant relief.[45]
A finding by the LGU that the noise quality standards under the law have not been
complied with is not a prerequisite nor constitutes indispensable evidence to prove
that the defendant is or is not liable for a nuisance and for damages. Such finding is
merely corroborative to the testimonial and/or other evidence to be presented by the
parties. The exercise of due care by the owner of a business in its operation does not
constitute a defense where, notwithstanding the same, the business as conducted,
418
seriously affects the rights of those in its vicinity. [46]
We reject petitioner's contention that respondent's complaint does not state a cause
of action for abatement of a private nuisance and for damages. Under Section 1(g),
Rule 16 of the Rules of Court, a complaint may be dismissed upon motion if the
complaint states no cause of action, or that a condition precedent for filing the claim
has not been complied with.[47]
A cause of action is the act or omission by which a party violates a right of another.
[48]
 A cause of action exists if the following elements are present: (1) a right in favor of
the plaintiff by whatever means and under whatever law it arises or is created; (2) an
obligation on the part of the named defendant to respect or not to violate such right;
and (3) an act or omission on the part of such defendant violative of the right of
plaintiff or constituting a breach of the obligation of defendant to plaintiff for which
the latter may maintain an action for recovery of damages.[49]
The fundamental test for failure to state a cause of action is whether, admitting the
veracity of what appears on the face and within the four corners of the complaint,
plaintiff is entitled to the relief prayed for. Stated otherwise, may the court render a
valid judgment upon the facts alleged therein?[50] Indeed, the inquiry is into the
sufficiency, not the veracity of the material allegations.[51] If the allegations in the
complaint furnish sufficient basis on which it can be maintained, it should not be
dismissed regardless of the defenses that may be presented by defendants. [52] As the
Court emphasized:
In determining whether allegations of a complaint are sufficient to support a cause of
action, it must be borne in mind that the complaint does not have to establish or
allege facts proving the existence of a cause of action at the outset; this will have to be
done at the trial on the merits of the case. To sustain a motion to dismiss for lack of
cause of action, the complaint must show that the claim for relief does not exist,
rather than that a claim has been defectively stated, or is ambiguous, indefinite or
uncertain.
Equally important, a defendant moving to dismiss a complaint on the ground of lack
of cause of action is regarded as having hypothetically admitted all the averments
thereof.[53]
The general rule is that the facts asserted in the complaint must be taken into
account without modification although with reasonable inferences therefrom.
[54]
 However, all the pleadings filed may be considered, including annexes, motions
and the other evidence on record, to wit:
However, in so doing, the .trial court does not rule on the truth or falsity of such
documents. It merely includes such documents in the hypothetical admission. Any
review of a finding of lack of cause of action based on these documents would not
involve a calibration of the probative value of such pieces of evidence but would only
limit itself to the inquiry of whether the law was properly applied given the facts and
these supporting documents. Therefore, what would inevitably arise from such a
review are pure questions of law, and not questions of fact. [55]
Section 2, Rule 3, of the Revised Rules of Civil Procedure provides that every action
must be prosecuted or defended in the name of the real party-in-interest.
SEC. 2. Parties in interest. - A real party in interest is 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. Unless otherwise authorized by law or these Rules, every action must be
prosecuted or defended in the name of the real party in interest. (2a)
"Interest" within the meaning of the rule means material interest, an interest in
essence to be affected by the judgment as distinguished from mere interest in the
question involved, or a mere incidental interest. By real interest is meant a present
substantial interest, as distinguished from a mere expectancy or a future, contingent,
subordinate or consequential interest.[56] A real party in interest-plaintiff is one who
has a legal right while a real party defendant is one who has a correlative legal
obligation whose act or omission violate the legal right of the former. [57]
A person injured by a nuisance may bring an action in his own name and in behalf of
others similarly affected to abate the same.[58] One who has an interest in the
property affected such as the owner thereof or fix interest therein are proper parties
as plaintiffs.[59] Possession alone of real estate is sufficient to sustain an action to
recover damages from the maintenance of a nuisance by the adjoining property in
such manner as to injure the enjoyment of the former.
In the present case, respondent made the following allegations in its complaint
below:
419
[Every time] the Feliza Building's airconditioning system is turned on, all or a good
number of the 36 blowers are made to operate simultaneously. The operation of the
Feliza's blowers generates a continuous defeaning unbearable vibrating and stressful
noise affecting the tenants of Frabella I Condominium. Hot air is also blasted from
the [Feliza Building's blowers to the direction of the Frabella 1 Condominium.
xxxx
The tenants occupying the 5th to the 16th floors of the Frabella 1 Condominium
facing Feliza Building are directly subjected to a daily continuous intense noise and
hot air blast coming from the blowers of the [10-storey] Feliza Building. Some are
tenants of plaintiff, who have complained to plaintiff about the matter. Tenants who
could not bear the nuisance any longer have vacated their units, and as a result,
many units of plaintiff have remained vacant, and unoccupied or uninhabitable
thereby depriving plaintiff with rental income that it should have otherwise be
receiving.
xxxx
Defendant did not perform any remedial or rectification works to lower the noise
being generated by the blowers;
As a consequence of such unbearable, hot air and stressful noise, the occupants of the
Frabella I, including the tenants of plaintiff, have been and still are, prevented from
enjoying peaceful and comfortable use of their property thereby forcing them to
vacate and or to transfer elsewhere.
Notwithstanding the foregoing results, repeated requests/demands from the plaintiff
and recommendation of the DENR, MACEA and MMDA to abate nuisance, the
defendant has ignored and still continues to ignore such
requests/demands/recommendation.
Appended to respondent's complaint are its letters of demand to the petitioner for
the latter to abate the nuisance complained of, as well as the results of the tests
conducted by the DENR showing that the noise generated by the blowers of the
Feliza Building is beyond the legally allowable level standards under Section 78 of
P.D. No. 984.
By filing a motion to dismiss the complaint on the ground that the complaint does
not state a sufficient cause of action for abatement of nuisance and damages,
petitioner hypothetically admitted the material allegations of the complaint. A plain
reading of the material averments therein and its appendages will readily show that
respondent had a cause of action for abatement of a private nuisance and for
damages.
Respondent is the real party-in-interest as party plaintiff in the complaint below
because it owned several units in Frabelle I and, as a result of the defeaning and
unbearable noise from the blowers of the airconditioning units of the Feliza Building
owned by petitioner, many tenants of the respondent vacated their units. The units
remained unoccupied, thereby depriving respondent of income. Some of the tenants
even threatened to sue respondent on account of the noise from the Feliza Building.
In fine, respondent is obliged to maintain its tenants in the peaceful and adequate
enjoyment of the units.[60]
Under Article 697 of the New Civil Code, the aggrieved party is entitled to damages
for the present and past existence of a nuisance.[61] He is entitled to actual or
compensatory damages[62] or indemnification for damages inclusive of the value of
the loss suffered and profits which respondent failed to obtain.
Liability for nuisance may be imposed upon one who sets in motion the force which
entirely caused the tortuous act; upon one who sets in motion a force or a chain of
events resulting in the nuisance. In an action for damages resulting from a nuisance,
responsibility arises not only from the creator of the nuisance but from its continued
maintenance as well[63]. One is entitled to damages on account of the conduct by
another of his business which unreasonably and substantially interferes with the
quiet enjoyment of his premises by himself or of his tenants. [64] It is sufficient to
maintain an action for abatement of a nuisance if his buildings is rendered
valueless for the purpose it was devoted.
A negligent act may constitute a nuisance. An intentional act may also constitute a
nuisance. A nuisance may be formed from a continuous, known invasion, where,
after complaint, and notice of damage, the defendant continues to offend and refuses
to correct or discontinue the nuisance. In such a case, the nuisance is deemed
intentional.[65] An unreasonable use, perpetrated and uncorrected even after
420
complaint and notice of damage is deemed intentional. [66]
In this case, as alleged in the complaint, the subject nuisance had been existing
continuously since 1995 and, despite repeated demands by respondent, petitioner
intransigently refused to abate the same.
We reject petitioner's contention that considering the Report of the EMB Team dated
July 2, 2002 that the noise complained of by the respondent did not necessarily come
from the blowers but also from passing cars, it follows that respondent has no cause
of action against it for abatement of nuisance. As gleaned from the Report, the panel
of investigators found that the passing of vehicles along the street and blowers of
nearby buildings were merely contributory to the ambient noise quality in
the area. To what extent the passing of vehicles contributed to the noise is not
indicated in the Report, nor is it stated that the noise coming from the blowers of the
airconditioning unit of the Feliza Building were at par with or lower than the Level
Standards under the property Rules and regulations of P.D. No. 984.
The July 2, 2002 Report of the EMB Panel should not be considered in isolation of
other Reports of the EMB since 1995 up to 2000, showing that the noise level from
the blowers of the Feliza Building exceeded the allowable level under P.D. No. 984.
The July 2, 2002 Report is not decisive on the issue of whether petitioner had abated
the nuisance complained of by respondent or that the nuisance does not exist at all.
Indeed, in Velasco v. Manila Electric Company,[67] this Court cited the ruling
in Kentucky & West Virginia Power Co. v. Anderson,[68] thus:
xxx The determinating factor when noise alone is the cause of complaint
is not its intensity or volume. It is that the noise is of such character as to
produce actual physical discomfort and annoyance to a person of ordinary
sensibilities, rendering adjacent property less comfortable and valuable. If the noise
does that it can well be said to be substantial and unreasonable in degree; and
reasonableness is a question of fact dependent upon all the circumstances and
conditions. 20 R.C.L. 445, 453; Wheat Culvert Company v. Jenkins, supra. There can
be no fixed standard as to what kind of noise constitutes a nuisance. xxx
Besides, even if it is assumed for the nonce that petitioner had abated the nuisance in
2002, still the complaint of the respondent states a cause of action for damages based
upon the past existence of the nuisance, from 1995. Where the injury from the
alleged nuisance is temporary in its nature; or is of a continuing or recurring
character, the damages are ordinarily regarded as continuing and one recovery
against the wrongdoer is not a bar to sanction an action for damages thereafter
accruing from the same wrong.[69]
The Complaint of the
Respondent Not Premature
Admittedly, respondent did not appeal the July 19, 2002 letter of Engr. Morales.
However, the letter was not appealable. It bears stressing that the letter-complaint of
the respondent to Mayor Jejomar Binay against petitioner was referred to Engr.
Morales for investigation of the complaint; the latter was required to submit his
Report thereon to the City Mayor for final disposition. Engr. Morales did secure the
July 2, 2002 Report of the EMB but failed to make a Report on his findings. Until
after the City Mayor shall have acted on the findings and recommendation of Engr.
Morales an appeal therefrom would be premature.
Obviously, Engr. Morales gave respondent another chance to have the EMB reverse
or revise its July 2, 2002 Report. However, when the officials of respondent sought a
clarification of his Order, Engr. Morales was piqued and even dared them to go to
court if they were not satisfied with the EMB Report. Respondent then sought
another test by the EMB. In its November 24, 2003, Report, the EMB confirmed that
the SPL was higher when the doors were open; as it was, the SPL readings were taken
from inside the Frabelle I. The EMB added that the noise quality standards in Section
78 of the Implementing Rules and Regulations of P.D. No. 984 could not be applied
since it is for ambient noise. It even emphasized that the SPL are not the actual
factors in the resolution of the issues. Conformably with case law, the EMB opined,
noise need not be high or low to annoy or cause nuisance to the receptor; as long as
the complainant is disturbed with the level of sound coming from the firm, the same
is a nuisance. Clearly, the EMB was of the view that the EMB Reports are not decisive
on the issue between petitioner and respondent, and that said issue is one beyond the
competence of the LGUs, by implying that the issue is a matter to be presented to and
resolved by the ordinary courts. By returning the records to Makati City, the EMB
expected the City to dismiss the complaint and just allow respondent, as
complainant, to seek relief from the courts. Respondent then took its cue from the
EMB Report and filed its complaint in the RTC. There is, thus, no basis for the
contention of petitioner that respondent failed to exhaust all administrative remedies
before filing its complaint with the RTC.
421
Also barren of merit are the petitioner's contention that the action of respondent was
barred by the decision of the PAB AM No. 01-0009-FLC. While it is true that the
Frabella 1 Condominium Corporation filed its complaint against petitioner before the
PAB for and in behalf of the tenants/owners of units of Frabella I, including those
owned by respondent, however, the PAB dismissed the complaint on the ground of
lack of jurisdiction and without prejudice. The PAB ruled that respondent's action
was for abatement of a nuisance which was already devolved to the local government.
As gleaned from the Resolution, the dismissal was without prejudice. Since the PAB
had no jurisdiction over the complaint and the dismissal was without prejudice,
respondent's action before the RTC was not barred by res judicata or litis
pendentia[70]. The decision of the PAB was not a decision on the merits of the case.
[71]
 Consequently, the contention of petitioner that respondent is guilty of forum
shopping has no factual basis.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit.
Costs against the petitioner.
SO ORDERED.
G.R. No. 187298               July 03, 2012
JAMAR M. KULAYAN, TEMOGEN S. TULAWIE, HJI. MOH. YUSOP ISMI,
JULHAJAN AWADI, and SPO1 SATTAL H. JADJULI, Petitioners,
vs.
GOV. ABDUSAKUR M. TAN, in his capacity as Governor of Sulu; GEN.
JUANCHO SABAN, COL. EUGENIO CLEMEN PN, P/SUPT. JULASIRIM KASIM
and P/SUPT. BIENVENIDO G. LATAG, in their capacity as officers of the Phil.
Marines and Phil. National Police, respectively, Respondents.
DECISION
SERENO, J.:
On 15 January 2009, three members from the International Committee of the Red
Cross (ICRC) were kidnapped in the vicinity of the Provincial Capitol in Patikul,
Sulu.1 Andres Notter, a Swiss national and head of the ICRC in Zamboanga City,
Eugenio Vagni, an Italian national and ICRC delegate, and Marie Jean Lacaba, a
Filipino engineer, were purportedly inspecting a water and sanitation project for the
Sulu Provincial Jail when inspecting a water and sanitation project for the Sulu
Provincial Jail when they were seized by three armed men who were later confirmed
to be members of the Abu Sayyaf Group (ASG).2 The leader of the alleged
kidnappers was identified as Raden Abu, a former guard at the Sulu Provincial Jail.
News reports linked Abu to Albader Parad, one of the known leaders of the Abu
Sayyaf.
On 21 January 2009, a task force was created by the ICRC and the Philippine
National Police (PNP), which then organized a parallel local group known as the
Local Crisis Committee.3 The local group, later renamed Sulu Crisis Management
Committee, convened under the leadership of respondent Abdusakur Mahail Tan,
the Provincial Governor of Sulu. Its armed forces component was headed by
respondents General Juancho Saban, and his deputy, Colonel Eugenio Clemen. The
PNP component was headed by respondent Police Superintendent Bienvenido G.
Latag, the Police Deputy Director for Operations of the Autonomous Region of
Muslim Mindanao (ARMM).4
Governor Tan organized the Civilian Emergency Force (CEF), a group of armed
male civilians coming from different municipalities, who were redeployed to
surrounding areas of Patikul.5 The organization of the CEF was embodied in a
"Memorandum of Understanding"6 entered into
between three parties: the provincial government of Sulu, represented by Governor
Tan; the Armed Forces of the Philippines, represented by Gen. Saban; and the
Philippine National Police, represented by P/SUPT. Latag. The Whereas clauses of
the Memorandum alluded to the extraordinary situation in Sulu, and the willingness
of civilian supporters of the municipal mayors to offer their services in order that "the
early and safe rescue of the hostages may be achieved."7
This Memorandum, which was labeled ‘secret’ on its all pages, also outlined the
responsibilities of each of the party signatories, as follows:
422
Responsibilities of the Provincial Government:
1) The Provincial Government shall source the funds and logistics needed for
the activation of the CEF;
2) The Provincial Government shall identify the Local Government Units
which shall participate in the operations and to propose them for the approval
of the parties to this agreement;
3) The Provincial Government shall ensure that there will be no unilateral
action(s) by the CEF without the knowledge and approval by both parties.
Responsibilities of AFP/PNP/ TF ICRC (Task Force ICRC):
1) The AFP/PNP shall remain the authority as prescribed by law in military
operations and law enforcement;
2) The AFP/PNP shall ensure the orderly deployment of the CEF in the
performance of their assigned task(s);
3) The AFP/PNP shall ensure the safe movements of the CEF in identified
areas of operation(s);
4) The AFP/PNP shall provide the necessary support and/or assistance as
called for in the course of operation(s)/movements of the CEF.8
Meanwhile, Ronaldo Puno, then Secretary of the Department of Interior and Local
Government, announced to the media that government troops had cornered some
one hundred and twenty (120) Abu Sayyaf members along with the three (3)
hostages.9 However, the ASG made
contact with the authorities and demanded that the military pull its troops back from
the jungle area.10 The government troops yielded and went back to their barracks; the
Philippine Marines withdrew to their camp, while police and civilian forces pulled
back from the terrorists’ stronghold by ten (10) to fifteen (15) kilometers. Threatening
that one of the hostages will be beheaded, the ASG further demanded the
evacuation of the military camps and bases in the different barangays in Jolo.11 The
authorities were given no later than 2:00 o’clock in the afternoon of 31 March 2009 to
comply.12
On 31 March 2009, Governor Tan issued Proclamation No. 1, Series of 2009
(Proclamation 1-09), declaring a state of emergency in the province of Sulu.13 It cited
the kidnapping incident as a ground for the said declaration, describing it as a
terrorist act pursuant to the Human Security
Act (R.A. 9372). It also invoked Section 465 of the Local Government Code of 1991
(R.A. 7160), which bestows on the Provincial Governor the power to carry out
emergency measures during man-made and natural disasters and calamities, and to
call upon the appropriate national law enforcement agencies to suppress disorder
and lawless violence.
In the same Proclamation, respondent Tan called upon the PNP and the CEF to set
up checkpoints and chokepoints, conduct general search and seizures including
arrests, and other actions necessary to ensure public safety. The pertinent portion of
the proclamation states:
NOW, THEREFORE, BY VIRTUE OF THE POWERS VESTED IN ME BY LAW, I,
ABDUSAKUR MAHAIL TAN, GOVERNOR OF THE PROVINCE OF SULU, DO
HEREBY DECLARE A STATE OF EMERGENCY IN THE PROVINCE OF SULU,
AND CALL ON THE PHILIPPINE NATIONAL POLICE WITH THE ASSISTANCE OF
THE ARMED FORCES OF THE PHILIPPINES AND THE CIVILIAN EMERGENCY
FORCE TO IMPLEMENT THE FOLLOWING:
1. The setting-up of checkpoints and chokepoints in the province;
2. The imposition of curfew for the entire province subject to such Guidelines
as may be issued by proper authorities;
3. The conduct of General Search and Seizure including arrests in the pursuit
of the kidnappers and their supporters; and
423
4. To conduct such other actions or police operations as may be necessary to
ensure public safety.
DONE AT THE PROVINCIAL CAPITOL, PROVINCE OF SULU THIS
31STDAY OF MARCH 2009. Sgd. Abdusakur M. Tan Governor.14
On 1 April 2009, SPO1 Sattal Jadjuli was instructed by his superior to report to
respondent P/SUPT. Julasirim Kasim.15 Upon arriving at the police station, he was
booked, and interviewed about his relationship to Musin, Jaiton, and Julamin, who
were all his deceased relatives. Upon admitting that he was indeed related to the
three, he was detained. After a few hours, former Punong Barangay Juljahan Awadi,
Hadji Hadjirul Bambra, Abdugajir Hadjirul, as well as PO2 Marcial Hajan, SPO3
Muhilmi Ismula, Punong Barangay Alano Mohammad and jeepney driver Abduhadi
Sabdani, were also arrested.16 The affidavit17 of the apprehending officer alleged that
they were suspected ASG supporters and were being arrested under Proclamation
1-09. The following day, 2 April 2009, the hostage Mary Jane Lacaba was released
by the ASG.
On 4 April 2009, the office of Governor Tan distributed to civic organizations, copies
of the "Guidelines for the Implementation of Proclamation No. 1, Series of 2009
Declaring a State of Emergency in the Province of Sulu."18 These Guidelines
suspended all Permits to Carry
Firearms Outside of Residence (PTCFORs) issued by the Chief of the PNP, and
allowed civilians to seek exemption from the gun ban only by applying to the Office of
the Governor and obtaining the appropriate identification cards. The said guidelines
also allowed general searches and seizures in designated checkpoints and
chokepoints.
On 16 April 2009, Jamar M. Kulayan, Temogen S. Tulawie, Hadji Mohammad Yusop
Ismi, Ahajan Awadi, and SPO1 Sattal H. Jadjuli, residents of Patikul, Sulu, filed the
present Petition for Certiorari and Prohibition,19 claiming that Proclamation 1-09 was
issued with grave abuse of discretion amounting to lack or excess of jurisdiction, as it
threatened fundamental freedoms guaranteed under Article III of the 1987
Constitution.
Petitioners contend that Proclamation No. 1 and its Implementing Guidelines were
issued ultra vires, and thus null and void, for violating Sections 1 and 18, Article VII
of the Constitution, which grants the President sole authority to exercise emergency
powers and calling-out powers as the chief executive of the Republic and
commander-in-chief of the armed forces.20 Additionally, petitioners claim that the
Provincial Governor is not authorized by any law to create civilian armed forces
under his command, nor regulate and limit the issuances of PTCFORs to his own
private army.
In his Comment, Governor Tan contended that petitioners violated the doctrine on
hierarchy of courts when they filed the instant petition directly in the court of last
resort, even if both the Court of Appeals (CA) and the Regional Trial Courts (RTC)
possessed concurrent jurisdiction with the
Supreme Court under Rule 65.21 This is the only procedural defense raised by
respondent Tan. Respondents Gen. Juancho Saban, Col. Eugenio Clemen, P/SUPT.
Julasirim Kasim, and P/SUPT. Bienvenido Latag did not file their respective
Comments.1âwphi1
On the substantive issues, respondents deny that Proclamation 1-09 was issued
ultra vires, as Governor Tan allegedly acted pursuant to Sections 16 and 465 of the
Local Government Code, which empowers the Provincial Governor to carry out
emergency measures during calamities and disasters, and to call upon the
appropriate national law enforcement agencies to suppress disorder, riot, lawless
violence, rebellion or sedition.22 Furthermore, the Sangguniang Panlalawigan of Sulu
authorized the declaration of a state of emergency as evidenced by Resolution No.
4, Series of 2009 issued on 31 March 2009 during its regular session.23
The threshold issue in the present case is whether or not Section 465, in relation to
Section 16, of the Local Government Code authorizes the respondent governor to
declare a state of emergency, and exercise the powers enumerated under
Proclamation 1-09, specifically the conduct of general searches and seizures.
Subsumed herein is the secondary question of whether or not the provincial governor
is similarly clothed with authority to convene the CEF under the said provisions.
We grant the petition.
424
I. Transcendental public Importance warrants a relaxation of the Doctrine of
Hierarchy of Courts
We first dispose of respondents’ invocation of the doctrine of hierarchy of courts
which allegedly prevents judicial review by this Court in the present case, citing for
this specific purpose, Montes v. Court of Appeals and Purok Bagong Silang
Association, Inc. v. Yuipco.24 Simply put, the
doctrine provides that where the issuance of an extraordinary writ is also within the
competence of the CA or the RTC, it is in either of these courts and not in the
Supreme Court, that the specific action for the issuance of such writ must be sought
unless special and important laws are clearly and specifically set forth in the petition.
The reason for this is that this Court is a court of last resort and must so remain if it is
to perform the functions assigned to it by the Constitution and immemorial tradition. It
cannot be burdened with deciding cases in the first instance.25
26 
The said rule, however, is not without exception. In Chavez v. PEA-Amari, the Court
stated:
PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief
directly from the Court. The principle of hierarchy of courts applies generally to cases
involving factual questions. As it is not a trier of facts, the Court cannot entertain
cases involving factual issues. The instant case, however, raises constitutional
questions of transcendental importance to the public. The Court can resolve this
case without determining any factual issue related to the case. Also, the instant case
is a petition for mandamus which falls under the original jurisdiction of the Court
under Section 5, Article VIII of the Constitution. We resolve to exercise primary
jurisdiction over the instant case.27
The instant case stems from a petition for certiorari and prohibition, over which the
Supreme Court possesses original jurisdiction.28 More crucially, this case involves
acts of a public official which pertain to restrictive custody, and is thus impressed
with transcendental public importance that would warrant the relaxation of the
general rule. The Court would be remiss in its constitutional duties were it to dismiss
the present petition solely due to claims of judicial hierarchy.
In David v. Macapagal-Arroyo,29 the Court highlighted the transcendental public
importance involved in cases that concern restrictive custody, because judicial
review in these cases serves as "a manifestation of the crucial defense of civilians ‘in
police power’ cases due to the diminution of their basic liberties under the guise of a
state of emergency."30 Otherwise, the importance of the high tribunal as the court of
last resort would be put to naught, considering the nature of "emergency" cases,
wherein the proclamations and issuances are inherently short-lived. In finally
disposing of the claim that the issue had become moot and academic, the Court also
cited transcendental public importance as an exception, stating:
Sa kabila ng pagiging akademiko na lamang ng mga isyu tungkol sa mahigpit na
pangangalaga (restrictive custody) at pagmonitor ng galaw (monitoring of
movements) ng nagpepetisyon, dedesisyunan namin ito (a) dahil sa nangingibabaw
na interes ng madla na nakapaloob dito,
(b) dahil sa posibilidad na maaaring maulit ang pangyayari at (c) dahil kailangang
maturuan ang kapulisan tungkol dito.
The moot and academic principle is not a magical formula that can automatically
dissuade the courts in resolving a case. Courts will decide cases, otherwise moot
and academic, if: first, there is a grave violation of the Constitution; second, the
exceptional character of the situation and the paramount public interest is involved;
third, when [the] constitutional issue raised requires formulation of controlling
principles to guide the bench, the bar, and the public; and fourth, the case is capable
of repetition yet evading review.
…There is no question that the issues being raised affect the public interest,
involving as they do the people’s basic rights to freedom of expression, of assembly
and of the press. Moreover, the
Court has the duty to formulate guiding and controlling constitutional precepts,
doctrines or rules. It has the symbolic function of educating the bench and the bar,
and in the present petitions, the military and the police, on the extent of the
protection given by constitutional guarantees. And lastly, respondents contested
actions are capable of repetition. Certainly, the petitions are subject to judicial
review.
425
Evidently, the triple reasons We advanced at the start of Our ruling are justified
under the foregoing exceptions. Every bad, unusual incident where police officers
figure in generates public interest and people watch what will be done or not done to
them. Lack of disciplinary steps taken against them erode public confidence in the
police institution. As petitioners themselves assert, the restrictive custody of
policemen under investigation is an existing practice, hence, the issue is bound to
crop up every now and then. The matter is capable of repetition or susceptible of
recurrence. It better be resolved now for the education and guidance of all
concerned.31 (Emphasis supplied)
Hence, the instant petition is given due course, impressed as it is with transcendental
public importance.
II. Only the President is vested with calling-out powers, as the commander-in-chief of
the Republic
i. One executive, one commander-in-chief
As early as Villena v. Secretary of Interior,32 it has already been established that
there is one repository of executive powers, and that is the President of the Republic.
This means that when Section 1, Article VII of the Constitution speaks of executive
power, it is granted to the President and no one else.33 As emphasized by Justice
Jose P. Laurel, in his ponencia in Villena:
With reference to the Executive Department of the government, there is one purpose
which is crystal-clear and is readily visible without the projection of judicial
searchlight, and that is the establishment of a single, not plural, Executive. The first
section of Article VII of the Constitution, dealing with the Executive Department,
begins with the enunciation of the principle that "The executive power shall be vested
in a President of the Philippines." This means that the President of the Philippines is
the Executive of the Government of the Philippines, and no other.34
Corollarily, it is only the President, as Executive, who is authorized to exercise
emergency powers as provided under Section 23, Article VI, of the Constitution, as
well as what became known as the calling-out powers under Section 7, Article VII
thereof.
ii. The exceptional character of Commander-in-Chief powers dictate that they are
exercised by one president
Springing from the well-entrenched constitutional precept of One President is the
notion that there are certain acts which, by their very nature, may only be performed
by the president as the Head of the State. One of these acts or prerogatives is the
bundle of Commander-in-Chief powers to which the "calling-out" powers constitutes
a portion. The President’s Emergency Powers, on the other hand, is balanced only
by the legislative act of Congress, as embodied in the second paragraph of Section
23, Article 6 of the Constitution:
Article 6, Sec 23(2). In times of war or other national emergency, the Congress may,
by law, authorize the President, for a limited period and subject to such restrictions
as it may prescribe, to exercise powers necessary and proper to carry out a declared
national policy. Unless sooner withdrawn by resolution of the Congress, such powers
shall cease upon the next adjournment thereof.35
Article 7, Sec 18. The President shall be the Commander-in-Chief of all armed forces
of the Philippines and whenever it becomes necessary, he may call out such armed
forces to prevent or suppress lawless violence, invasion or rebellion. In case of
invasion or rebellion, when the public safety requires it, he may, for a period not
exceeding sixty days, suspend the privilege of the writ of habeas corpus or place the
Philippines or any part thereof under martial law. Within forty-eight hours from the
proclamation of martial law or the suspension of the privilege of the writ of habeas
corpus, the President shall submit a report in person or in writing to the Congress.
The Congress, voting jointly, by a vote of at least a majority of all its Members in
regular or special session, may revoke such proclamation or suspension, which
revocation shall not be set aside by the President. Upon the initiative of the
President, the Congress may, in the same manner, extend such proclamation or
suspension for a period to be determined by the Congress, if the invasion or rebellion
shall persist and public safety requires it.
The Congress, if not in session, shall, within twenty-four hours following such
proclamation or suspension, convene in accordance with its rules without need of a
call.36
426
The power to declare a state of martial law is subject to the Supreme Court’s
authority to review the factual basis thereof. 37 By constitutional fiat, the calling-out
powers, which is of lesser gravity than the power to declare martial law, is bestowed
upon the President alone. As noted in Villena, "(t)here are certain constitutional
powers and prerogatives of the Chief Executive of the Nation which must be
exercised by him in person and no amount of approval or ratification will validate the
exercise of any of those powers by any other person. Such, for instance, is his power
to suspend the writ of habeas corpus and proclaim martial law x x x.38
Indeed, while the President is still a civilian, Article II, Section 339 of the Constitution
mandates that civilian authority is, at all times, supreme over the military, making the
civilian president the nation’s supreme military leader. The net effect of Article II,
Section 3, when read with Article VII,
Section 18, is that a civilian President is the ceremonial, legal and administrative
head of the armed forces. The Constitution does not require that the President must
be possessed of military training and talents, but as Commander-in-Chief, he has the
power to direct military operations and to determine military strategy. Normally, he
would be expected to delegate the actual command of the armed forces to military
experts; but the ultimate power is his.40 As Commander-in-Chief, he is authorized to
direct the movements of the naval and military forces placed by law at his command,
and to employ them in the manner he may deem most effectual.41
In the case of Integrated Bar of the Philippines v. Zamora,42 the Court had occasion
to rule that the calling-out powers belong solely to the President as commander-in-
chief:
When the President calls the armed forces to prevent or suppress lawless violence,
invasion or rebellion, he necessarily exercises a discretionary power solely vested in
his wisdom. This is clear from the intent of the framers and from the text of the
Constitution itself. The Court, thus, cannot be called upon to overrule the President’s
wisdom or substitute its own. However, this does not prevent an examination of
whether such power was exercised within permissible constitutional limits or whether
it was exercised in a manner constituting grave abuse of discretion. In view of the
constitutional intent to give the President full discretionary power to determine the
necessity of calling out the armed forces, it is incumbent upon the petitioner to show
that the President’s decision is totally bereft of factual basis.
There is a clear textual commitment under the Constitution to bestow on the
President full discretionary power to call out the armed forces and to determine the
necessity for the exercise of such power.43 (Emphasis supplied)
Under the foregoing provisions, Congress may revoke such proclamation or
suspension and the Court may review the sufficiency of the factual basis thereof.
However, there is no such equivalent provision dealing with the revocation or review
of the President’s action to call out the armed forces. The distinction places the
calling out power in a different category from the power to declare martial law and
the power to suspend the privilege of the writ of habeas corpus, otherwise, the
framers of the Constitution would have simply lumped together the three powers and
provided for their revocation and review without any qualification.44
That the power to call upon the armed forces is discretionary on the president is
clear from the deliberation of the Constitutional Commission:
FR. BERNAS. It will not make any difference. I may add that there is a graduated
power of the President as Commander-in-Chief. First, he can call out such Armed
Forces as may be necessary to suppress lawless violence; then he can suspend the
privilege of the writ of habeas corpus, then he can impose martial law. This is a
graduated sequence.
When he judges that it is necessary to impose martial law or suspend the privilege of
the writ of habeas corpus, his judgment is subject to review. We are making it subject
to review by the Supreme Court and subject to concurrence by the National
Assembly. But when he exercises this lesser power of calling on the Armed Forces,
when he says it is necessary, it is my opinion that his judgment cannot be reviewed
by anybody.
x x x           x x x          x x x
427
MR. REGALADO. That does not require any concurrence by the legislature nor is it
subject to judicial review.
The reason for the difference in the treatment of the aforementioned powers
highlights the intent to grant the President the widest leeway and broadest discretion
in using the power to call out because it is considered as the lesser and more benign
power compared to the power to suspend the privilege of the writ of habeas corpus
and the power to impose martial law, both of which involve the curtailment and
suppression of certain basic civil rights and individual freedoms, and thus
necessitating safeguards by Congress and review by this Court.
x x x Thus, it is the unclouded intent of the Constitution to vest upon the President,
as Commander-in-Chief of the Armed Forces, full discretion to call forth the military
when in his judgment it is necessary to do so in order to prevent or suppress lawless
violence, invasion or rebellion.45 (Emphasis Supplied)
In the more recent case of Constantino, Jr. v. Cuisia,46 the Court characterized these
powers as exclusive to the President, precisely because they are of exceptional
import:
These distinctions hold true to this day as they remain embodied in our fundamental
law. There are certain presidential powers which arise out of exceptional
circumstances, and if exercised, would involve the suspension of fundamental
freedoms, or at least call for the supersedence of executive prerogatives over those
exercised by co-equal branches of government. The declaration of martial law, the
suspension of the writ of habeas corpus, and the exercise of the pardoning power,
notwithstanding the judicial determination of guilt of the accused, all fall within this
special class that demands the exclusive exercise by the President of the
constitutionally vested power. The list is by no means exclusive, but there must be a
showing that the executive power in question is of similar gravitas and exceptional
import.47
In addition to being the commander-in-chief of the armed forces, the President also
acts as the leader of the country’s police forces, under the mandate of Section 17,
Article VII of the Constitution, which provides that, "The President shall have control
of all the executive departments, bureaus, and offices. He shall ensure that the laws
be faithfully executed." During the deliberations of the Constitutional Commission on
the framing of this provision, Fr. Bernas defended the retention of the word "control,"
employing the same rationale of singularity of the office of the president, as the only
Executive under the presidential form of government.48
Regarding the country’s police force, Section 6, Article XVI of the Constitution states
that: "The State shall establish and maintain one police force, which shall be national
in scope and civilian in character, to be administered and controlled by a national
police commission. The authority of local executives over the police units in their
jurisdiction shall be provided by law."49
A local chief executive, such as the provincial governor, exercises operational
supervision over the police,50 and may exercise control only in day-to-day
operations, viz:
Mr. Natividad: By experience, it is not advisable to provide either in our Constitution
or by law full control of the police by the local chief executive and local executives,
the mayors. By our experience, this has spawned warlordism, bossism and
sanctuaries for vices and abuses. If the national government does not have a
mechanism to supervise these 1,500 legally, technically separate police forces, plus
61 city police forces, fragmented police system, we will have a lot of difficulty in
presenting a modern professional police force. So that a certain amount of
supervision and control will have to be exercised by the national government.
For example, if a local government, a town cannot handle its peace and order
problems or police problems, such as riots, conflagrations or organized crime, the
national government may come in, especially if requested by the local executives.
Under that situation, if they come in under such an extraordinary situation, they will
be in control. But if the day-to-day business of police investigation of crime, crime
prevention, activities, traffic control, is all lodged in the mayors, and if they are in
complete operational control of the day-to-day business of police service, what the
national government would control would be the administrative aspect.
x x x           x x x          x x x
428
Mr. de los Reyes: so the operational control on a day-to-day basis, meaning, the
usual duties being performed by the ordinary policemen, will be under the
supervision of the local executives?
Mr. Natividad: Yes, Madam President.
x x x           x x x          x x x
Mr. de los Reyes: But in exceptional cases, even the operational control can be
taken over by the National Police Commission?
Mr. Natividad: If the situation is beyond the capacity of the local
governments.51 (Emphases supplied)
Furthermore according to the framers, it is still the President who is authorized to
exercise supervision and control over the police, through the National Police
Commission:
Mr. Rodrigo: Just a few questions. The President of the Philippines is the
Commander-in-Chief of all the armed forces.
Mr. Natividad: Yes, Madam President.
Mr. Rodrigo: Since the national police is not integrated with the armed forces, I do
not suppose they come under the Commander-in-Chief powers of the President of
the Philippines.
Mr. Natividad: They do, Madam President. By law, they are under the supervision
and control of the President of the Philippines.
Mr. Rodrigo: Yes, but the President is not the Commander-in-Chief of the national
police.
Mr. Natividad: He is the President.
Mr. Rodrigo: Yes, the Executive. But they do not come under that specific provision
that the President is the Commander-in-Chief of all the armed forces.
Mr. Natividad: No, not under the Commander-in-Chief provision.
Mr. Rodrigo: There are two other powers of the President. The
President has control over ministries, bureaus and offices, and supervision over local
governments. Under which does the police fall, under control or under supervision?
Mr. Natividad: Both, Madam President.
Mr. Rodrigo: Control and supervision.
Mr. Natividad: Yes, in fact, the National Police Commission is under the Office of the
President.52
In the discussions of the Constitutional Commission regarding the above provision it
is clear that the framers never intended for local chief executives to exercise
unbridled control over the police in emergency situations. This is without prejudice to
their authority over police units in their jurisdiction as provided by law, and their
prerogative to seek assistance from the police in day to day situations, as
contemplated by the Constitutional Commission. But as a civilian agency of the
government, the police, through the NAPOLCOM, properly comes within, and is
subject to, the exercise by the President of the power of executive control.53
iii. The provincial governor does not possess the same calling-out powers as the
President
Given the foregoing, respondent provincial governor is not endowed with the power
to call upon the armed forces at his own bidding. In issuing the assailed
proclamation, Governor Tan exceeded his authority when he declared a state of
emergency and called upon the Armed Forces, the police, and his own Civilian
Emergency Force. The calling-out powers contemplated under the Constitution is
exclusive to the President. An exercise by another official, even if he is the local chief
429
executive, is ultra vires, and may not be justified by the invocation of Section 465 of
the Local Government Code, as will be discussed subsequently.
Respondents, however, justify this stance by stating that nowhere in the seminal
case of David v. Arroyo, which dealt squarely with the issue of the declaration of a
state of emergency, does it limit the said authority to the President alone.
Respondents contend that the ruling in David expressly limits the authority to declare
a national emergency, a condition which covers the entire country, and does not
include emergency situations in local government units.54 This claim is belied by the
clear intent of the framers that in all situations involving threats to security, such as
lawless violence, invasion or rebellion, even in localized areas, it is still the President
who possesses the sole authority to exercise calling-out powers. As reflected in the
Journal of the Constitutional Commission:
Thereafter, Mr. Padilla proposed on line 29 to insert the phrase OR PUBLIC
DISORDER in lieu of "invasion or rebellion." Mr. Sumulong stated that the committee
could not accept the amendment because under the first section of Section 15, the
President may call out and make use of the armed forces to prevent or suppress not
only lawless violence but even invasion or rebellion without declaring martial law. He
observed that by deleting "invasion or rebellion" and substituting PUBLIC
DISORDER, the President would have to declare martial law before he can make
use of the armed forces to prevent or suppress lawless invasion or rebellion.
Mr. Padilla, in reply thereto, stated that the first sentence contemplates a lighter
situation where there is some lawless violence in a small portion of the country or
public disorder in another at which times, the armed forces can be called to prevent
or suppress these incidents. He noted that the Commander-in-Chief can do so in a
minor degree but he can also exercise such powers should the situation worsen. The
words "invasion or rebellion" to be eliminated on line 14 are covered by the following
sentence which provides for "invasion or rebellion." He maintained that the proposed
amendment does not mean that under such circumstances, the President cannot call
on the armed forces to prevent or suppress the same.55 (Emphasis supplied)
III. Section 465 of the Local
Government Code cannot be invoked to justify the powers enumerated under
Proclamation 1-09
Respondent governor characterized the kidnapping of the three ICRC workers as a
terroristic act, and used this incident to justify the exercise of the powers enumerated
under Proclamation 1-09.56 He invokes Section 465, in relation to Section 16, of the
Local Government Code, which purportedly allows the governor to carry out
emergency measures and call upon the appropriate national law enforcement
agencies for assistance. But a closer look at the said proclamation shows that there
is no provision in the Local Government Code nor in any law on which the broad and
unwarranted powers granted to the Governor may be based.
Petitioners cite the implementation of "General Search and Seizure including arrests
in the pursuit of the kidnappers and their supporters,"57 as being violative of the
constitutional proscription on general search warrants and general seizures.
Petitioners rightly assert that this alone would be sufficient to render the proclamation
void, as general searches and seizures are proscribed, for being violative of the
rights enshrined in the Bill of Rights, particularly:
The right of the people to be secure in their persons, houses, papers, and effects
against unreasonable searches and seizures of whatever nature and for any purpose
shall be inviolable, and no search warrant or warrant of arrest shall issue except
upon probable cause to be determined personally by the judge after examination
under oath or affirmation of the complainant and the witnesses he may produce, and
particularly describing the place to be searched and the persons or things to be
seized.58
In fact, respondent governor has arrogated unto himself powers exceeding even the
martial law powers of the President, because as the Constitution itself declares, "A
state of martial law does not suspend the operation of the Constitution, nor supplant
the functioning of the civil courts or legislative assemblies, nor authorize the
conferment of the jurisdiction on military courts and agencies over civilians where
civil courts are able to function, nor automatically suspend the privilege of the writ."59
430
We find, and so hold, that there is nothing in the Local Government Code which
justifies the acts sanctioned under the said Proclamation. Not even Section 465 of
the said Code, in relation to Section 16, which states:
Section 465. The Chief Executive: Powers, Duties, Functions, and Compensation.
x x x           x x x          x x x
(b) For efficient, effective and economical governance the purpose of which is the
general welfare of the province and its inhabitants pursuant to Section 16 of this
Code, the provincial governor shall:
(1) Exercise general supervision and control over all programs, projects, services,
and activities of the provincial government, and in this connection, shall:
x x x           x x x          x x x
(vii) Carry out such emergency measures as may be necessary during and in the
aftermath of man-made and natural disasters and calamities;
(2) Enforce all laws and ordinances relative to the governance of the province and
the exercise of the appropriate corporate powers provided for under Section 22 of
this Code, implement all approved policies, programs, projects, services and
activities of the province and, in addition to the foregoing, shall:
x x x           x x x          x x x
(vi) Call upon the appropriate national law enforcement agencies to suppress
disorder, riot, lawless violence, rebellion or sedition or to apprehend violators of the
law when public interest so requires and the police forces of the component city or
municipality where the disorder or violation is happening are inadequate to cope with
the situation or the violators.
Section 16. General Welfare. - Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers
necessary, appropriate, or incidental for its efficient and effective governance, and
those which are essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall ensure and support,
among other things, the preservation and enrichment of culture, promote health and
safety, enhance the right of the people to a balanced ecology, encourage and
support the development of appropriate and self-reliant scientific and technological
capabilities, improve public morals, enhance economic prosperity and social justice,
promote full employment among their residents, maintain peace and order, and
preserve the comfort and convenience of their inhabitants. (Emphases supplied)
Respondents cannot rely on paragraph 1, subparagraph (vii) of Article 465 above, as
the said provision expressly refers to calamities and disasters, whether man-made or
natural. The governor, as local chief executive of the province, is certainly
empowered to enact and implement emergency measures during these occurrences.
But the kidnapping incident in the case at bar cannot be considered as a calamity or
a disaster. Respondents cannot find any legal mooring under this provision to justify
their actions.
Paragraph 2, subparagraph (vi) of the same provision is equally inapplicable for two
reasons. First, the Armed Forces of the Philippines does not fall under the category
of a "national law enforcement agency," to which the National Police Commission
(NAPOLCOM) and its departments belong.
Its mandate is to uphold the sovereignty of the Philippines, support the Constitution,
and defend the Republic against all enemies, foreign and domestic. Its aim is also to
secure the integrity of the national territory.60
Second, there was no evidence or even an allegation on record that the local police
forces were inadequate to cope with the situation or apprehend the violators. If they
were inadequate, the recourse of the provincial governor was to ask the assistance
of the Secretary of Interior and Local Government, or such other authorized officials,
for the assistance of national law enforcement agencies.
The Local Government Code does not involve the diminution of central powers
inherently vested in the National Government, especially not the prerogatives solely
granted by the Constitution to the President in matters of security and defense.
431
The intent behind the powers granted to local government units is fiscal, economic,
and administrative in nature.1âwphi1 The Code is concerned only with powers that
would make the delivery of basic services more effective to the constituents,61 and
should not be unduly stretched to confer calling-out powers on local executives.
In the sponsorship remarks for Republic Act 7160, it was stated that the devolution of
powers is a step towards the autonomy of local government units (LGUs), and is
actually an experiment whose success heavily relies on the power of taxation of the
LGUs. The underpinnings of the Code can be found in Section 5, Article II of the
1973 Constitution, which allowed LGUs to create their own sources of
revenue.62 During the interpellation made by Mr. Tirol addressed to Mr. de Pedro, the
latter emphasized that "Decentralization is an administrative concept and the
process of shifting and delegating power from a central point to subordinate levels to
promote independence, responsibility, and quicker decision-making. … (I)t does not
involve any transfer of final authority from the national to field levels, nor diminution
of central office powers and responsibilities. Certain government agencies, including
the police force, are exempted from the decentralization process because their
functions are not inherent in local government units."63
IV. Provincial governor is not authorized to convene CEF
Pursuant to the national policy to establish one police force, the organization of
private citizen armies is proscribed. Section 24 of Article XVIII of the Constitution
mandates that:
Private armies and other armed groups not recognized by duly constituted authority
shall be dismantled. All paramilitary forces including Civilian Home Defense Forces
(CHDF) not consistent with the citizen armed force established in this Constitution,
shall be dissolved or, where appropriate, converted into the regular force.
Additionally, Section 21of Article XI states that, "The preservation of peace and order
within the regions shall be the responsibility of the local police agencies which shall
be organized, maintained, supervised, and utilized in accordance with applicable
laws. The defense and security of the regions shall be the responsibility of the
National Government."
Taken in conjunction with each other, it becomes clear that the Constitution does not
authorize the organization of private armed groups similar to the CEF convened by
the respondent Governor. The framers of the Constitution were themselves wary of
armed citizens’ groups, as shown in the following proceedings:
MR. GARCIA: I think it is very clear that the problem we have here is a paramilitary
force operating under the cloak, under the mantle of legality is creating a lot of
problems precisely by being able to operate as an independent private army for
many regional warlords. And at the same time, this I think has been the thrust, the
intent of many of the discussions and objections to the paramilitary units and the
armed groups.
MR. PADILLA: My proposal covers two parts: the private armies of political warlords
and other armed torces not recognized by constituted authority which shall be
dismantled and dissolved. In my trips to the provinces, I heard of many abuses
committed by the CHDF (Civilian Home Defense Forces), specially in Escalante,
Negros Occidental. But I do not know whether a particular CHDF is approved or
authorized by competent authority. If it is not authorized, then the CHDF will have to
be dismantled. If some CHDFs, say in other provinces, are authorized by constituted
authority, by the Armed Forces of the Philippines, through the Chief of Staff or the
Minister of National Defense, if they are recognized and authorized, then they will not
be dismantled. But I cannot give a categorical answer to any specific CHDF unit, only
the principle that if they are armed forces which are not authorized, then they should
be dismantled. 64 (Emphasis supplied)
Thus, with the discussions in the Constitutional Commission as guide, the creation of
the Civilian Emergency Force (CEF) in the present case, is also invalid.
WHEREFORE, the instant petition is GRANTED. Judgment is rendered commanding
respondents to desist from further proceedings m implementing Proclamation No. 1,
Series of 2009, and its Implementing Guidelines. The said proclamation and
guidelines are hereby declared NULL and VOID for having been issued in grave
abuse of discretion, amounting to lack or excess of jurisdiction.
SO ORDERED.
432
G.R. No. 198860               July 23, 2012
ABRAHAM RIMANDO, Petitioner,
vs.
NAGUILIAN EMISSION TESTING CENTER, INC., represented by its President,
ROSEMARIE LLARENAS and HON. COURT OF APPEALS, Respondents.
RESOLUTION
REYES, J.:
Before us is a petition for review on certiorari1 under Rule 45 of the Rules of Court
seeking to annul and set aside Decision2 dated March 30, 2011 of the Court of
Appeals (CA) in CA-G.R. SP NO. 112152.
The Facts
The present controversy stemmed from a petition for mandamus and damages filed
before Branch 67 of the Regional Trial Court (RTC) of Bauang, La Union, by
Naguilian Emission Testing Center, Inc., represented by its President, Rosemarie
Llarenas (respondent) against Abraham P. Rimando (petitioner), who, at the time
material to the case, was the sitting mayor of the Municipality of Naguilian, La Union.
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.
In support of its plea, the respondent claimed that its business is being conducted on
a parcel of land which formerly belonged to the national government but later on
certified by the Department of Environment and Natural Resources (DENR) as an
alienable and disposable land of the public domain. The respondent had operated its
business of emission testing on the land from 2005 to 2007. On January 18, 2008,
the respondent filed an application for the renewal of its business permit and paid the
corresponding fees therefor.
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
respondent was amenable to signing such contract subject to some proposed
revisions, which, however, were not acceptable to the petitioner. The parties did not
reach a common ground hence, the petition for mandamus.
The Ruling of the RTC
On May 26, 2009, the RTC denied the petition3 for lack of merit based on the
ratiocinations that: (a) the Municipality of Naguilian is the declared owner of the
subject parcel of land by virtue of Tax Declaration No. 002-01197; (b) under Section
6A.01 of the Revenue Code of the Municipality of Naguilian, the municipality has the
right to require the petitioner to sign a contract of lease because its business
operation is being conducted on a real property owned by the municipality; and (c) a
mayor’s duty to issue business permits is discretionary in nature which may not be
enforced by a mandamus writ. The decretal portion of the decision reads:
WHEREFORE, premises considered, the petition is DENIED for lack of merit.
SO ORDERED.4
The Ruling of the CA
Unwaivering, the respondent appealed to the CA. In its Decision5 dated March 30,
2011, the CA held that the appeal was dismissible on the ground of mootness
considering that the period for which the business period was being sought had
already lapsed. As such, any ruling on the matter would bring no practical relief.
Nonetheless, the CA proceeded to resolve the issues involved in the appeal for
academic purposes.
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. The CA
further observed that Sangguniang Bayan Resolution No. 2007-81, upon which the
433
municipality anchored its imposition of rental fees, was void because it failed to
comply with the requirements of the Local Government Code and its Implementing
Rules and Regulations.
The CA held that the petitioner may not be held liable for damages since his action
or inaction, for that matter, was done in the performance of official duties that are
legally protected by the presumption of good faith. The CA likewise stressed that the
civil action filed against the petitioner had already become moot and academic upon
the expiration of his term as the mayor of Naguilian, La Union.
Despite its incessant declarations on the mootness of the case, the CA disposed of
the appeal in this wise:
WHEREFORE, the Decision dated 26 May 2009 of the Regional Trial Court, First
Judicial Region, Bauang, La Union, Branch 67, in Special Civil Action Case No. 72-
BG, is hereby REVERSED and SET ASIDE.
SO ORDERED.6
The petitioner moved for reconsideration7 questioning the pronouncement of the CA
that Sangguniang Bayan Resolution No. 2007-81 was void and arguing that a
petition for mandamus is not the proper vehicle to determine the issue on the
ownership of the subject land. The motion was denied in the CA Resolution8 dated
September 30, 2011.
The petitioner is now before this Court reiterating the arguments raised in his motion
for reconsideration.
Our Ruling
We agree with the CA that the petition for mandamus has already become moot and
academic owing to the expiration of the period intended to be covered by the
business permit.
An issue or a case becomes moot and academic when it ceases to present a
justiciable controversy so that a determination thereof would be without practical use
and value9 or in the nature of things, cannot be enforced.10 In such cases, there is no
actual substantial relief to which the applicant would be entitled to and which would
be negated by the dismissal of the petition.11 As a rule, courts decline jurisdiction
over such case, or dismiss it on ground of mootness.12
The objective of the petition for mandamus to compel the petitioner to grant a
business permit in favor of respondent corporation for the period 2008 to 2009 has
already been superseded by the passage of time and the expiration of the
petitioner’s term as mayor. Verily then, the issue as to whether or not the petitioner,
in his capacity as mayor, may be compelled by a writ of mandamus to release the
respondent’s business permit ceased to present a justiciable controversy such that
any ruling thereon would serve no practical value. Should the writ be issued, the
petitioner can no longer abide thereby; also, the effectivity date of the business
permit no longer subsists.
While the CA is not precluded from proceeding to resolve the otherwise moot appeal
of the respondent, we find that the decretal portion of its decision was erroneously
couched.
The CA’s conclusions on the issue of ownership over the subject land and the
invalidity of Sangguniang Bayan Resolution No. 2007-81, aside from being
unsubstantiated by convincing evidence, can no longer be practically utilized in favor
of the petitioner. Thus, the overriding and decisive factor in the final disposition of the
appeal was its mootness and the CA should have dismissed the same along with the
petition for mandamus that spawned it.
More importantly, a mayor cannot be compelled by mandamus to issue a business
permit since the exercise of the same is a delegated police power hence,
discretionary in nature. This was the pronouncement of this Court in Roble Arrastre,
Inc. v. Hon. Villaflor13 where a determination was made on the nature of the power of
a mayor to grant business permits under the Local Government Code,14 viz:
Central to the resolution of the case at bar is a reading of Section 444(b)(3)(iv) of the
Local Government Code of 1991, which provides, thus:
434
SEC. 444. The Chief Executive: Powers, Duties, Functions and Compensation.
(b) For efficient, effective and economical governance the purpose of which is
the general welfare of the municipality and its inhabitants pursuant to Section
16 of this Code, the municipal mayor shall:
xxxx
3) Initiate and maximize the generation of resources and revenues, and apply
the same to the implementation of development plans, program objectives
and priorities as provided for under Section 18 of this Code, particularly those
resources and revenues programmed for agro-industrial development and
country-wide growth and progress, and relative thereto, shall:
xxxx
(iv) Issue licenses and permits and suspend or revoke the same for any
violation of the conditions upon which said licenses or permits had been
issued, pursuant to law or ordinance.
As Section 444(b)(3)(iv) so states, the power of the municipal mayor to issue
licenses is pursuant to Section 16 of the Local Government Code of 1991, which
declares:
SEC. 16. General Welfare. – Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers
necessary, appropriate, or incidental for its efficient and effective governance, and
those which are essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall ensure and support,
among other things, the preservation and enrichment of culture, promote health and
safety, enhance the right of the people to a balanced ecology, encourage and
support the development of appropriate and self-reliant scientific and technological
capabilities, improve public morals, enhance economic prosperity and social justice,
promote full employment among their residents, maintain peace and order, and
preserve the comfort and convenience of their inhabitants.
Section 16, known as the general welfare clause, encapsulates the delegated police
power to local governments.1âwphi1 Local government units exercise police power
through their respective legislative bodies. Evidently, the Local Government Code of
1991 is unequivocal that the municipal mayor has the power to issue licenses and
permits and suspend or revoke the same for any violation of the conditions upon
which said licenses or permits had been issued, pursuant to law or ordinance. x x x
xxxx
Section 444(b)(3)(iv) of the Local Government Code of 1991, whereby the power of
the respondent mayor to issue license and permits is circumscribed, is a
manifestation of the delegated police power of a municipal corporation. Necessarily,
the exercise thereof cannot be deemed ministerial. As to the question of whether the
power is validly exercised, the matter is within the province of a writ of certiorari, but
certainly, not of mandamus.15 (Citations omitted)
Indeed, as correctly ruled by the RTC, the petition for mandamus filed by the
respondent is incompetent to compel the exercise of a mayor’s discretionary duty to
issue business permits.
WHEREFORE, premises considered, the Decision dated March 30, 2011 of the
Court of Appeals in CA-G.R. SP No. 112152 is hereby SET ASIDE. The Decision
dated May 26, 2009 of the Regional Trial Court of Bauang, La Union is
REINSTATED.
SO ORDERED.
G.R. No. 141010             February 7, 2007
UNITED BF HOMEOWNERS’ ASSOCIATIONS, INC., ROMEO T. VILLAMEJOR,
RAUL S. LANUEVO, ROBERTO ARNALDO, FLORENTINO CONCEPCION, BF
NORTHWEST HOMEOWNERS’ ASSOCIATION, INC., KK HOMEOWNERS’
ASSOCIATION, INC., and BF (CRAB) HOMEOWNERS’ ASSOCIATION,
INC., Petitioners,
vs.
435

THE (MUNICIPAL) CITY MAYOR, THE (MUNICIPAL) CITY PLANNING AND xxxx
DEVELOPMENT COORDINATING OFFICER OR ZONING ADMINISTRATOR, THE
(MUNICIPAL) CITY ENGINEER AND/OR BUILDING OFFICIAL, THE CHIEF OF BARANGAY BF HOMES
THE PERMITS AND LICENSES DIVISION, THE SANGGUNIANG (BAYAN)
PANGLUNGSOD, and BARANGAY BF HOMES, ALL OF PARAÑAQUE CITY, Lot deep both side[s] along Aguirre Avenue from Governor A. Santos Street
METRO MANILA, Respondents, eastward to Gng. Elsie Gatches Street
EL GRANDE AGUIRRE COMMERCE AND TRADE ASSOCIATION (EL
ACTO), Respondent-Intervenor. Lot deep both side[s] along El Grande Avenue from Lopez Avenue gate
southward to corner Aguirre Avenue
DECISION
xxxx
CARPIO, J.:
11.6 C-2 MAJOR COMMERCIAL ZONES
The Case
xxxx
This is a petition for review1 of the 28 June 1999 Decision2 and the 16 November
1999 Resolution3 of the Court of Appeals in CA-G.R. SP No. 46624. The Court of BARANGAY BF HOMES
Appeals held that Municipal Ordinance No. 97-08 is a valid exercise of police power
by the Municipality of Parañaque.4 Lot deep both side[s] along Aguirre Avenue from Dallas to El Grande Avenue
The Facts Lot deep both side[s] along Aguirre Avenue from El Grande Avenue to Gov.
A. Santos Street
BF Homes Parañaque Subdivision (BF Homes Parañaque), with a land area
straddling the cities of Parañaque, Las Piñas, and Muntinlupa, is the largest BF Parañaque Commercial Plaza
subdivision in the country.
Area bounded on the
On 11 November 1997, the Municipal Council of Parañaque enacted Municipal
Ordinance No. 97-085 entitled, "An Ordinance Prescribing the Comprehensive Land
North - Pres. Quezon Street
Use Plan & Zoning of the Municipality of Parañaque Pursuant to the Local
Government Code of 1991 and Other Pertinent Laws." Sections 11.5 and 11.6 of
Municipal Ordinance No. 97-08, reclassifying El Grande and Aguirre Avenues in BF South - A. Aguirre Avenue
Homes Parañaque from residential to commercial areas, read:
East - President’s Avenue
11.5 C-1 LOW INTENSITY COMMERCIAL ZONES
West - MMP, Creek along BF Homeowner’s Association clubhouse
436
Lot deep east side along President’s Avenue from Mac Donald southward to
M. Rufino Street
Area bounded on the
North - A. Aguirre Avenue
South - A. Soriano Sr. & M. Rufino Street
East - President’s Avenue
West - Gng. Elsie Ga[t]ches Street
x x x x6
On 27 January 1998, the United BF Homeowners’ Associations, Inc.
(UBFHAI),7 several homeowners’ associations, and residents of BF Homes
Parañaque (collectively petitioners) filed with the Court of Appeals a petition for
prohibition with an application for temporary restraining order and preliminary
injunction. Petitioners questioned the constitutionality of Sections 11.5, 11.6,
15,8 17,9 and 19.610 of Municipal Ordinance No. 97-08.
Petitioners alleged that the reclassification of certain portions of BF Homes
Parañaque from residential to commercial zone is unconstitutional because it
amounts to impairment of the contracts between the developer of BF Homes
Parañaque and the lot buyers. Petitioners cited the annotation on the lot buyers’ titles
which provides that "the property shall be used for residential purposes only and for
no other purpose."
On the other hand, public respondents alleged that the passage of Municipal
Ordinance No. 97-08 is a valid exercise of police power by the Municipal Council of
Parañaque and that such ordinance can nullify or supersede the contractual
obligations entered into by the petitioners and the developer.
Meanwhile, El Grande Aguirre Commerce and Trade Organization (EL ACTO), a
non-stock, non-profit corporation, intervened as respondent. EL ACTO claimed that
its members are lot owners, residents, and operators of commercial establishments
along El Grande and Aguirre Avenues in BF Homes Parañaque, who will be affected
if Municipal Ordinance No. 97-08 is declared unconstitutional. EL ACTO asserted
that Municipal Ordinance No. 97-08 is a valid exercise of police power and that
petitioners are guilty of estoppel since petitioners endorsed the opening of many of
these commercial establishments in BF Homes Parañaque. EL ACTO further alleged
that the instant petition should have been initially filed with the Regional Trial Court in
accordance with the principle of hierarchy of courts.1awphi1.net
On 28 June 1999, the Court of Appeals dismissed the petition. Petitioners moved for
reconsideration, which the Court of Appeals denied.
Hence, this petition.
The Ruling of the Court of Appeals
Citing the General Welfare Clause11 of Republic Act No. 7160 (RA 7160), the Court
of Appeals held that the enactment of Municipal Ordinance No. 97-08 which, among
others, reclassified El Grande and Aguirre Avenues in BF Homes Parañaque as
commercial zones, was a valid exercise of police power by the Municipality of
Parañaque.
The Court of Appeals took judicial notice of the fact that El Grande and Aguirre
Avenues are main streets of BF Homes Parañaque which have long been
commercialized, thus:
The declaration of El Grande and Aguirre Avenues as commercial zones through
Municipal Ordinance No. 97-08 is an exercise of police power.
Obviously, because of the rapid and tremendous increase in population, the needs of
the homeowners in the BF Parañaque Subdivision grew. The commercial zones in
the area proved inadequate to service the needs of its residents. There was
therefore a need to open more commercial districts. In fact, records show that
437
several homeowners along El Grande and Aguirre Avenues converted their
residences into business establishments. El Acto’s members are among them.
Aside from the increasing number of commercial establishments therein, judicial
notice may be taken of the fact that El Grande and Aguirre Avenues are main
thoroughfares of BF Homes Parañaque which have long been commercialized. The
local government therefore responded to these changes in the community by
enacting Ordinance No. 97-08 x x x.12
The Issues
Petitioners raise the following issues:
1. Whether R.A. 7160, the Local Government Code of 1991 has repealed PD
957, the Subdivision and Condominium Buyer’s Protective Decree;
2. Whether the power of local government units to enact comprehensive
zoning ordinances has legal limitations;
3. Whether Municipal Ordinance No. 97-08 is a legitimate exercise of police
power;
4. Whether Municipal Ordinance No. 97-08 is constitutional considering that it
impairs a contractual obligation annotated in homeowners’ titles and violates
the doctrine of separation of powers;
5. Whether Municipal Ordinance No. 97-08 is enforceable pending review by
the MMDA, the Metro Manila Mayor’s Council and the HLURB.13
The resolution of these issues turns on the validity of Municipal Ordinance No. 97-08.
The Ruling of the Court
The petition is without merit.
Power to Enact Zoning Ordinances
The Municipal Council of Parañaque enacted Municipal Ordinance No. 97-08
pursuant to the provisions of RA 7160 and Executive Order No. 72.14
Under Section 447 of RA 7160, the Sangguniang Bayan or the Municipal Council, as
the legislative body of the municipality, has the power to enact ordinances for the
general welfare of the municipality and its inhabitants.
Among the functions of the Sangguniang Bayan enumerated under Section 447 of
RA 7160 are:
(2) Generate and maximize the use of resources and revenues for the development
plans, program objectives and priorities of the municipality as provided for under
Section 18 of this Code with particular attention to agro-industrial development and
countryside growth and progress, and relative thereto, shall:
xxxx
(vii) Adopt a comprehensive land use plan for the municipality: Provided,
That the formulation, adoption, or modification of said plan shall be in
coordination with the approved provincial comprehensive land use plan;
(viii) Reclassify land within the jurisdiction of the municipality subject to
the pertinent provision of this Code;
(ix) Enact integrated zoning ordinances in consonance with the
approved comprehensive land use plan, subject to existing laws, rules
and regulations; establish fire limits or zones, particularly in populous
centers; and regulate the construction, repair or modification of buildings
within said fire limits or zones in accordance with the provisions of the Fire
Code; (Emphasis supplied)
On the other hand, Executive Order No. 72 provides:
438
SECTION 1. Plan formulation or updating. – (a) Cities and municipalities shall
continue to formulate or update their respective comprehensive land use
plans, in conformity with the land use planning and zoning standards and
guidelines prescribed by the HLURB pursuant to national policies.
As a policy recommending body of the LGU, the city or municipal development
council (CDC/MDC) shall initiate the formulation or updating of its land use plan, in
consultation with the concerned sectors in the community. For this purpose, the
CDC/MDC may seek the assistance of any local official or field officer of NGA’s
operation in the LGU.
The city or municipal planning and development coordinator (CPDC/MPDC) and/or
the city or municipal agriculturist, if there is any, shall provide the technical support
services and such other assistance as may be required by the CDC/MDC to
effectively carry out this function.
The comprehensive land use plan prepared by the CDC/MDC shall be
submitted to the sangguniang panglungsod or sangguniang bayan, as the
case may be, for enactment into a zoning ordinance. Such ordinance shall be
enacted and approved in accordance with Articles 107 and 108 of the Implementing
Rules and Regulations (IRR) of the LGC.
(b) The comprehensive land use plans of component cities and municipalities shall
be formulated, adopted, or modified in accordance with the approved provincial
comprehensive land use plans.
(c) Cities and municipalities of metropolitan Manila shall continue to formulate or
update their respective comprehensive land use plans, in accordance with the land
use planning and zoning standards and guidelines prescribed by the HLURB
pursuant to EO 392, S. of 1990, and other pertinent national policies.
x x x x (Emphasis supplied)
Under Section 3(m), Rule 131 of the Rules of Court, there is a presumption that
official duty has been regularly performed. Thus, in the absence of evidence to the
contrary, there is a presumption that public officers performed their official duties
regularly and legally and in compliance with applicable laws, in good faith, and in the
exercise of sound judgment.15
We find no sufficient evidence disputing the regularity of the enactment of Municipal
Ordinance No. 97-08. Before the Municipal Council of Parañaque passed Municipal
Ordinance No. 97-08,16 it has been the subject of barangay consultations and
committee hearings in accordance with Executive Order No. 72.
Reclassification of El Grande and Aguirre Avenues
Contrary to petitioners’ allegations, we find Municipal Ordinance No. 97-08
reasonable and not discriminating or oppressive with respect to BF Homes
Parañaque. As held by the Court of Appeals, the increasing number of homeowners
in BF Homes Parañaque necessitated the addition of commercial areas in the
subdivision to service the needs of the homeowners. In fact, several homeowners
along El Grande and Aguirre Avenues already converted their residences into
business establishments. Furthermore, as found by the Court of Appeals, El Grande
and Aguirre Avenues are main thoroughfares in BF Homes Parañaque which have
long been commercialized.
Even petitioner UBFHAI, the recognized umbrella organization of all homeowners’
associations in BF Homes Parañaque, acknowledged the need for additional
commercial area. Records reveal that as early as 30 July 1989, UBFHAI
recommended for approval an "Amended Integrated Zoning Policies and Guidelines
for BF Homes Parañaque."17 UBFHAI proposed another commercial zone in BF
Homes Parañaque to accommodate the growing needs of the residents, thus:
Subject to the approval of BF Homes, Inc., the Local Zoning Official/Planning Officer
of Parañaque and the Metro Manila Commission and in recognition of the fact that
the subdivision has tremendously grown in size and population since 1983
when the above-mentioned guidelines of the MMC [Ordinance 81-01] were
promulgated, such that one commercial zone for the entire subdivision is now
inadequate vis-a-vis the needs of the residents, the UBFHAI is proposing
another commercial zone in Phase III of the Subdivision, in the vicinity of the
Parish of the Presentation of the Child Jesus as follows:
439
One lot deep along Aguirre Avenue from Gov. Santos St., to the end of Aguirre
Avenue and two lots deep along El Grande from where it intersects Aguirre
Avenue.
Pending approval of the aforesaid proposal, commercial buildings constructed
and existing in the aforesaid area will be given temporary-use permits good for
five (5) years from December 31, 1986 or until December 31, 1991, after which,
the same must revert to residential status, unless, in the meantime the proposal is
approved, provided all such buildings must comply with the set-back and parking
provision of the Metro Manila Commission Ordinance 81-01; I.M. 09-83.
xxxx
The term for temporary use permits of the designated commercial area shall be
considered extended for 8 years from December 31, 1991 to December 31,
1998; without prejudice to the official conversion of the area under existing
MMA/LGC guidelines to commercial.18 (Emphasis supplied)
Thus, UBFHAI’s proposed new commercial area, encompassing El Grande and
Aguirre Avenues, is substantially the same area, which Municipal Ordinance No. 97-
08 later reclassified as a commercial zone.
Furthermore, in the subsequent years, UBFHAI and its member homeowners’
associations endorsed the issuance of municipal and barangay permits for
commercial establishments along El Grande and Aguirre Avenues. Contrary to
petitioners’ allegations, the commercial establishments endorsed by UBFHAI were
not mere convenience stores, which Metro Manila Commission Ordinance No. 81-
0119 and Municipal Ordinance No. 97-08 allow in residential areas. Among the
commercial establishments which UBFHAI endorsed were a trading
business,20 electronics repair shop,21 mini-grocery store,22 beauty
salon,23 school,24 dress shop,25 and consultancy or management services business.26
Clearly, the reclassification of El Grande and Aguirre Avenues in BF Homes
Parañaque as commercial area was reasonable and justified under the
circumstances.
Non-Impairment of Contract
Petitioners invoke Presidential Decree No. 957 (PD 957),27 otherwise known as the
Subdivision and Condominium Buyers’ Protective Decree. Petitioners maintain that
PD 957 is intended primarily to protect the buyers and to ensure that subdivision
developers keep their promises and representations. Petitioners allege that one of
the promises of the developer of BF Homes Parañaque is that the property shall be
used for residential purposes only. Petitioners assert that the reclassification of
certain portions of BF Homes Parañaque from residential to commercial zone is
unconstitutional because it impairs the contracts between the developer of BF
Homes Parañaque and the lot buyers.
The Court has upheld in several cases the superiority of police power over the non-
impairment clause.28 The constitutional guaranty of non-impairment of contracts is
limited by the exercise of the police power of the State, in the interest of public
health, safety, morals and general welfare.29
In Ortigas & Co., Limited Partnership v. Feati Bank and Trust Co.,30 the Court held
that contractual restrictions on the use of property could not prevail over the
reasonable exercise of police power through zoning regulations. The Court held:
With regard to the contention that said resolution cannot nullify the contractual
obligations assumed by the defendant-appellee–referring to the restrictions
incorporated in the deeds of sale and later in the corresponding Transfer Certificates
of Title issued to defendant-appellee–it should be stressed, that while non-
impairment of contracts is constitutionally guaranteed, the rule is not absolute,
since it has to be reconciled with the legitimate exercise of police power, i.e.,
"the power to prescribe regulations to promote the health, morals, peace,
education, good order or safety and general welfare of the people." Invariably
described as "the most essential, insistent, and illimitable of powers" and "in a
sense, the greatest and most powerful attribute of government," the exercise
of the power may be judicially inquired into and corrected only if it is
capricious, whimsical, unjust or unreasonable, there having been a denial of
due process or a violation of any other applicable constitutional guarantee. As
this Court held through Justice Jose P. Bengzon in Philippine Long Distance
Company v. City of Davao, et al., police power "is elastic and must be responsive to
440
various social conditions; it is not confined within narrow circumscriptions of
precedents resting on past conditions; it must follow the legal progress of a
democratic way of life." We were even more emphatic in Vda. De Genuino v. The
Court of Agrarian Relations, et al., when We declared: "We do not see why the
public welfare when clashing with the individual right to property should not
be made to prevail through the state’s exercise of its police power."
Resolution No. 27. s-1960 declaring the western part of Highway 54, now E. de los
Santos Avenue (EDSA, for short) from Shaw Boulevard to the Pasig River as an
industrial and commercial zone, was obviously passed by the Municipal Council of
Mandaluyong, Rizal in the exercise of police power to safeguard or promote the
health, safety, peace, good order and general welfare of the people in the locality.
Judicial notice may be taken of the conditions prevailing in the area, especially where
Lots Nos. 5 and 6 are located. The lots themselves not only front the highway;
industrial and commercial complexes have flourished about the place. EDSA, a main
traffic artery which runs through several cities and municipalities in the Metro Manila
area, supports an endless stream of traffic and the resulting activity, noise and
pollution are hardly conducive to the health, safety or welfare of the residents in its
route. Having been expressly granted the power to adopt zoning and subdivision
ordinances or regulations, the municipality of Mandaluyong, through its Municipal
Council, was reasonably, if not perfectly, justified under the circumstances, in
passing the subject resolution.31 (Emphasis supplied)
Likewise, in Sangalang v. Intermediate Appellate Court,32 the Court upheld Metro
Manila Commission Ordinance No. 81-01, which reclassified Jupiter Street in Makati
into a high-density commercial zone, as a legitimate exercise of police power. The
Court held that the power of the Metro Manila Commission and the Makati Municipal
Council to enact zoning ordinances for the general welfare prevails over the deed
restrictions on the lot owners in Bel-Air Village which restricted the use of the lots for
residential purposes only. The Court held:
It is not that we are saying that restrictive easements, especially the easements
herein in question, are invalid or ineffective. As far as the Bel-Air subdivision itself is
concerned, certainly, they are valid and enforceable. But they are, like all contracts,
subject to the overriding demands, needs, and interests of the greater number as the
State may determine in the legitimate exercise of police power. Our jurisdiction
guarantees sanctity of contract and is said to be the "law between the
contracting parties," but while it is so, it cannot contravene "law, morals, good
customs, public order, or public policy." Above all, it cannot be raised as a
deterrent to police power, designed precisely to promote health, safety, peace,
and enhance the common good, at the expense of contractual rights,
whenever necessary. x x x33 (Emphasis supplied)
Similarly, in this case, Municipal Ordinance No. 97-08 is a legitimate exercise of
police power and the reclassification of El Grande and Aguirre Avenues in BF Homes
Parañaque is not arbitrary or unreasonable.
WHEREFORE, we AFFIRM the Decision dated 28 June 1999 and the Resolution
dated 16 November 1999 of the Court of Appeals in CA-G.R. SP No. 46624.
SO ORDERED.
G.R. No. 187836               November 25, 2014
SOCIAL JUSTICE SOCIETY (SJS) OFFICERS, NAMELY, SAMSON S.
ALCANTARA, and VLADIMIR ALARIQUE T. CABIGAO, Petitioners,
vs.
ALFREDO S. LIM, in his capacity as mayor of the City of Manila, Respondent.
x-----------------------x
G.R. No. 187916
JOSE L. ATIENZA, JR., BIENVINIDO M. ABANTE, MA. LOURDES M. ISIP-
GARCIA, RAFAEL P. BORROMEO JOCELYN DAWIS-ASUNCION, minors
MARIAN REGINA B. TARAN, MACAILA RICCI B. TARAN, RICHARD KENNETH
B. TARAN, represented and joined by their parents RICHARD AND MARITES
TARAN, minors CZARINA ALYSANDRA C. RAMOS, CEZARAH ADRIANNA C.
RAMOS, and CRISTEN AIDAN C. RAMOS represented and joined by their
mother DONNA C. RAMOS, minors JAZMIN SYLLITA T. VILA AND ANTONIO T.
CRUZ IV, represented and joined by their mother MAUREEN C.
441

TOLENTINO, Petitioners, BOUNDED BY THE PASIGRIVER IN THE NORTH, PNR RAILROAD TRACK IN

vs.
MAYOR ALFREDO S. LIM, VICE MAYOR FRANCISCO DOMAGOSO,
COUNCILORS ARLENE W. KOA, MOISES T. LIM, JESUS FAJARDO LOUISITO
N. CHUA, VICTORIANO A. MELENDEZ, JOHN MARVIN C. NIETO, ROLANDO M.
VALERIANO, RAYMUNDO R. YUPANGCO, EDWARD VP MACEDA, RODERICK
D. V ALBUENA, JOSEFINA M. SISCAR, SALVADOR PHILLIP H. LACUNA,
LUCIANO M. VELOSO, CARLO V. LOPEZ, ERNESTO F. RIVERA,1 DANILO
VICTOR H. LACUNA, JR., ERNESTO G. ISIP, HONEY H. LACUNA-PANGAN,
ERNESTO M. DIONISO, JR. and ERICK IAN O. NIEVA, Respondents.
x-----------------------x
CHEVRON PHILIPPINES INC., PETRON CORPORATION AND PILIPINAS SHELL
PETROLEUM CORPORATION, Intervenors.
THE EAST, BEATA ST. IN THE SOUTH, PALUMPONG ST. IN THE SOUTHWEST
AND ESTERO DE PANDACAN IN THE WEST, PNR RAILROAD IN THE
NORTHWEST AREA, ESTERO DE PANDACAN IN THE NORTHEAST, PASIG
RIVER IN THE SOUTHEAST AND DR. M. L. CARREON IN THE SOUTHWEST,
THE AREA OF PUNTA, STA.ANA BOUNDED BY THE PASIG RIVER, MARCELINO
OBRERO ST., MAYO 28 ST. AND THE F. MANALO STREET FROM INDUSTRIAL
II TO COMMERCIAL I," and Ordinance No. 81195 entitled "AN ORDINANCE
ADOPTING THE MANILA COMPREHENSIVE LAND USE PLAN AND ZONING
REGULATIONS OF 2006 AND PROVIDING FOR THE ADMINISTRATION,
ENFORCEMENT AND AMENDMENT THERETO."
The Parties
Petitioners allege the parties’ respective capacity to sue and be sued, viz:

DECISION Petitioners Residence Suing capacity aside from being

in Manila residents of Manila other personal
PEREZ, J.: circumstances

Challenged in these consolidated petitions2 is the validity of Ordinance No.

81873 entitled "AN ORDINANCE AMENDING ORDINANCE NO. 8119, OTHERWISE G.R. No. 187836
KNOWN AS ‘THE MANILA COMPREHENSIVE LAND USE PLAN AND ZONING
ORDINANCE OF 2006,’ BY CREATING A MEDIUM INDUSTRIAL ZONE (1-2) AND
HEAVY INDUSTRIAL ZONE (1-3), AND PROVIDING FOR ITS ENFORCEMENT" SJS Officer Samson S. Alcantara Not mentioned Manila taxpayer;
enacted by the Sangguniang Panlungsod of Manila (Sangguniang Panlungsod) on (Alcantara) in the petition; One of the petitioners in SJS v.
14 May 2009. holding office in Atienza (G.R. No. 156052);*
Ermita, Manila Pesident of ABAKADA GURO
The creation of a medium industrial zone (1-2) and heavy industrial zone (1-3) PARTY LIST with members who
effectively lifted the prohibition against owners and operators of businesses, are residents of the City of Manila
including herein intervenors Chevron Philippines, Inc. (Chevron), Pilipinas Shell
Petroleum Corporation (Shell), and Petron Corporation (Petron), collectively referred
to as the oil companies, from operating in the designated commercial zone – an SJS Officer Vladimir Alarique T. Pandacan One of the petitioners in SJS v.
industrial zone prior to the enactment of Ordinance No. 80274 entitled "AN Cabigao (Cabigao) Atienza (G.R. No. 156052)
ORDINANCE RECLASSIFYING THE LAND USE OF THAT PORTION OF LAND
 442

* The allegation is inaccurate. SJS Officer Alcantara is actually one of the counsels Ramos, Cezarah Adrianna C. taxpayers
for petitioner SJS in G.R. No. 156052. The petitioners in that case are the SJS itself,
Ramos, and Cristen Aidan C.
Cabigao and Bonifacio S. Tumbokon (Tumbokon).
Ramos represented and joined by
G.R. No. 187916 their mother Donna c. Ramos

Former Mayor Jose L. Atienza, Jr. San Andres Former Mayor of Manila; Minors Jasmin Syllita T. Vila and Sta. Ana Citizens, real estate owners and
(Mayor Atienza) Secretary of Department of Antonio T. Cruz IV, represented taxpayers
Environment and Natural and joined by their mother
Resources (DENR) Maureen C. Tolentino

Bienvinido M. Abante Sta. Ana Citizen and taxpayer;

member of the House of Respondents Sued in their capacity as
Representatives

Ma. Lourdes M. Isip-Garcia
Rafael P. Borromeo
San Miguel Incumbent City Councilor of the G.R. Nos. 187836 and 187916
City of Manila
Former Mayor Alfredo S. Lim (Mayor Lim) Incumbent Mayor of Manila at
Paco Incumbent City Councilor of the the time of the filing of the
City of Manila present petitions

Jocelyn Dawis-Asuncion Sta. Mesa Incumbent City Councilor of the

City of Manila
Respondents Sued in their capacity as
Minors Marian Regina B. Taran, Paco Citizens, real estate owners and
Macalia Ricci B. Taran, Richard taxpayers
Kenneth B. Taran, represented and
joined by their parents Richard and
G.R. No. 187916
Marites Taran

Minors Czarina Alysandra C. Tondo Citizens, real estate owners and

 443

Vice-Mayor Francisco Domagoso (Vice-Mayor
Domagoso)
Arlene Woo Koa
Moises T. Lim, Jesus Fajardo, Louisito N. Chua,
Victoriano A. Melendez, John Marvin Nieto, Rolando councilors who voted and
M. Valeriano, Raymondo R. Yupangco, Edward VP
Maceda, Roderick D. Valbuena, Josefina M. Siscar,
Phillip H. Lacuna, Luciano M. Veloso, Carlo V. Lopez,
Ernesto F. Rivera,6 Danilo Victor H. Lacuna, Jr.,
Ernesto G. Isip, Honey H. Lacuna-Pangan, Ernesto
M. Dionisio, Jr., Erick Ian O. Nieva
The following intervenors, all of which are corporations organized under Philippine
laws, intervened:7
Intervenors
Vice-Mayor and Presiding Officer
of the City Council of Manila
Principal author of City
Ordinance No. 8187
Personal and official capacities as
approved City Ordinance No. 8187
Nature of Business
They claim that their rights with respect to the oil depots in Pandacan would be
directly affected by the outcome of these cases.
The Antecedents
These petitions are a sequel to the case of Social Justice Society v. Mayor Atienza,
Jr.8 (hereinafter referred to asG.R. No. 156052), where the Court found: (1) that the
ordinance subject thereof – Ordinance No. 8027 – was enacted "to safeguard the
rights to life, security and safety of the inhabitants of Manila;"9 (2) that it had passed
the tests of a valid ordinance; and (3) that it is not superseded by Ordinance No.
8119.10 Declaring that it is constitutional and valid,11 the Court accordingly ordered its
immediate enforcement with a specific directive on the relocation and transfer of the
Pandacan oil terminals.12
Highlighting that the Court has soruled that the Pandacan oil depots should leave,
herein petitioners now seek the nullification of Ordinance No. 8187, which contains
provisions contrary to those embodied in Ordinance No. 8027. Allegations of
violation of the right to health and the right to a healthful and balanced environment
are also included.
For a better perspective of the facts of these cases, we again trace the history of the
Pandacan oil terminals, aswell as the intervening events prior to the reclassification
of the land use from Industrial II to Commercial I under Ordinance No. 8027 until the
creation of Medium Industrial Zone and Heavy Industrial Zone pursuant to Ordinance
No. 8187.

Chevron Philippines, importing, distributing and marketing of petroleum History of the Pandacan
Inc. (CHEVRON) products in the Philippines since 1922 Oil Terminals

Pilipinas Shell Petroleum
Corporation (SHELL)
Petron Corporation (PETRON)
manufacturing, refining, importing, distributing and
marketing of petroleum products in the Philippines
manufacturing, refining, importing, distributing and
marketing of petroleum products in the Philippines
We quote the following from the Resolution of the Court in G.R. No. 156052:
Pandacan (one of the districts of the City of Manila) is situated along the banks of the
Pasig [R]iver. Atthe turn of the twentieth century, Pandacan was unofficially
designated as the industrial center of Manila. The area, then largely uninhabited, was
ideal for various emerging industries as the nearby river facilitated the transportation
444
of goods and products. In the 1920s, it was classifiedas an industrial zone. Among its
early industrial settlers werethe oil companies. x x x On December 8, 1941, the
Second World War reached the shores of the Philippine Islands. x x x [I]n their
zealous attempt to fend off the Japanese Imperial Army, the United States Army took
control of the Pandacan Terminals and hastily made plans to destroy the storage
facilities to deprive the advancing Japanese Army of a valuable logistics weapon.
The U.S. Army burned unused petroleum, causing a frightening conflagration.
Historian Nick Joaquin recounted the events as follows:
After the USAFFE evacuated the City late in December 1941, all army fuel storage
dumps were set on fire. The flames spread, enveloping the City in smoke, setting
even the rivers ablaze, endangering bridges and all riverside buildings. … For one
week longer, the "open city" blazed—a cloud of smoke by day, a pillar of fire by
night.
The fire consequently destroyed the Pandacan Terminals and rendered its network
of depots and service stations inoperative.
After the war, the oil depots were reconstructed. Pandacan changed as Manila
rebuilt itself. The three major oil companies resumed the operation of their depots.
But the district was no longer a sparsely populated industrial zone; it had evolved
into a bustling, hodgepodge community. Today, Pandacan has become a densely
populated area inhabited by about 84,000 people, majority of whom are urban poor
who call it home. Aside from numerous industrial installations, there are also small
businesses, churches, restaurants, schools, daycare centers and residences situated
there. Malacañang Palace, the official residence of the President of the Philippines
and the seat of governmental power, is just two kilometers away. There is a private
school near the Petron depot. Along the walls of the Shell facility are shanties of
informal settlers. More than 15,000 students are enrolled in elementary and high
schools situated near these facilities. A university with a student population of about
25,000 is located directly across the depot on the banks of the Pasig [R]iver.
The 36-hectare Pandacan Terminals house the oil companies’ distribution terminals
and depot facilities.1âwphi1 The refineries of Chevron and Shell in Tabangao and
Bauan, both in Batangas, respectively, are connected to the Pandacan Terminals
through a 114-kilometer underground pipeline system. Petron’s refinery in Limay,
Bataan, on the other hand, also services the depot. The terminals store fuel and
other petroleum products and supply 95% of the fuel requirements of Metro Manila,
50% of Luzon’s consumption and 35% nationwide. Fuel can also be transported
through barges along the Pasig [R]iver ortank trucks via the South Luzon
Expressway.13 (Citations omitted)
Memorandum of Agreement (MOA)
dated 12 October 2001 between the oil companies
and the Department of Energy (DOE)
On 12 October 2001, the oil companies and the DOE entered into a MOA14 "in light
of recent international developments involving acts of terrorism on civilian and
government landmarks,"15 "potential new security risks relating to the Pandacan oil
terminals and the impact on the surrounding community which may be
affected,"16 and "to address the perceived risks posed by the proximity of
communities, businesses and offices to the Pandacan oil terminals, consistent with
the principle of sustainable development."17 The stakeholders acknowledged that
"there is a need for a comprehensive study to address the economic, social,
environmental and security concerns with the end in view of formulating a Master
Plan to address and minimize the potential risks and hazards posed by the proximity
of communities, businesses and offices to the Pandacan oil terminals without
adversely affecting the security and reliability of supply and distribution of petroleum
products to Metro Manila and the rest of Luzon, and the interests of consumers and
users of such petroleum products in those areas."18
The enactment of Ordinance No. 8027
against the continued stay of the oil depots
The MOA, however, was short-lived.
On 20 November 2001, during the incumbency of former Mayor Jose L. Atienza, Jr.
(Mayor Atienza) – nowone of the petitioners in G.R. No. 187916 – the Sangguniang
Panlungsod enacted Ordinance No. 802719 reclassifying the use of the land in
Pandacan, Sta. Ana, and its adjoining areas from Industrial II to Commercial I.
445
The owners and operators of the businesses thus affected by the reclassification
were given six months from the date of effectivity of the Ordinance within which to
stop the operation of their businesses.
Nevertheless, the oil companies weregranted an extension of until 30 April 2003
within which to comply with the Ordinance pursuant to the following:
(1) Memorandum of Understanding (MOU)20 dated 26 June 2002 between the
City of Manila and the Department of Energy (DOE), on the one hand, and
the oil companies, on the other, where the parties agreed that "the scaling
down of the Pandacan Terminals [was] the most viable and practicable
option"21 and committed to adopt specific measures22 consistent with the said
objective;
(2) Resolution No. 97 dated 25 July 200223 of the Sangguniang Panlungsod,
which ratified the 26 June 2002 MOU but limited the extension of the period
within which to comply to six months from 25 July 2002; and
(3) Resolution No. 13 dated 30 January 200324 of the Sanguniang
Panlungsod, which extended the validity of Resolution No. 97 to 30 April
2003, authorized then Mayor Atienza to issue special business permits to the
oil companies, and called for a reassessment of the ordinance.
Social Justice Society v. Atienza (G.R. No. 156052):
The filing of an action for mandamus
before the Supreme Court
to enforce Ordinance No. 8027
In the interim, an original action for mandamus entitled Social Justice Society v.
Atienza, Jr. docketed as G.R. No. 15605225 was filed on 4 December 2002 by
Tumbokon and herein petitioners SJS and Cabigao against then Mayor Atienza. The
petitioners sought to compel former Mayor Atienza to enforce Ordinance No. 8027
and cause the immediate removal of the terminals of the oil companies.26
Issuance by the Regional Trial Court (RTC)
of writs of preliminary prohibitory injunction
and preliminary mandatory injunction,
and status quo order in favor of the oil companies
Unknown to the Court, during the pendency of G.R. No. 156052, and before the
expiration of the validity ofResolution No. 13, the oil companies filed the following
actions before the Regional Trial Court of Manila: (1) an action for the annulment of
Ordinance No. 8027 with application for writs of preliminary prohibitory injunction and
preliminary mandatory injunction – by Chevron; (2) a petition for prohibition and
mandamus also for the annulment of the Ordinance with application for writs of
preliminary prohibitory injunction and preliminary mandatory injunction – by Shell;
and (3) a petition assailing the validity of the Ordinance with prayer for the issuance
of a writ of preliminary injunction and/or temporary restraining order (TRO) – by
Petron.27
Writs of preliminary prohibitory injunction and preliminary mandatory injunction were
issued in favor of Chevron and Shell on 19 May 2003. Petron, on the other hand,
obtained a status quo order on 4 August 2004.28
The Enactment of Ordinance No. 8119 defining the Manila land use plan and zoning
regulations
On 16 June 2006, then Mayor Atienza approved Ordinance No. 8119 entitled "An
Ordinance Adopting the Manila Comprehensive Land Use Plan and Zoning
Regulations of 2006 and Providing for the Administration, Enforcement and
Amendment thereto."29
Pertinent provisions relative to these cases are the following:
(a) Article IV, Sec. 730 enumerating the existing zones or districts in the City of
Manila;
(b) Article V, Sec. 2331 designating the Pandacan oil depot area as a
"Planned Unit Development/Overlay Zone" (O-PUD); and
446
(c) the repealing clause, which reads:
SEC. 84. Repealing Clause. – All ordinances, rules, regulations in conflict with the
provisions of this Ordinance are hereby repealed; PROVIDED, That the rights that
are vested upon the effectivity of this Ordinance shall not be impaired.32
7 March 2007 Decision in G.R. No. 156052;
The mayor has the mandatory legal duty to enforce
Ordinance No. 8027 and order the removal of the Pandacan terminals
On 7 March 2007, the Court granted the petition for mandamus, and directed then
respondent Mayor Atienza to immediately enforce Ordinance No. 8027.33
Confined to the resolution of the following issues raised by the petitioners, to wit:
1. whether respondent [Mayor Atienza]has the mandatory legal duty to
enforce Ordinance No. 8027 and order the removal of the Pandacan
Terminals, and
2. whether the June 26, 2002 MOU and the resolutions ratifying it can amend
or repeal Ordinance No. 8027.34
the Court declared:
x x x [T]he Local Government Code imposes upon respondent the duty, as city
mayor, to "enforce all laws and ordinances relative to the governance of the city."
One of these is Ordinance No. 8027. As the chief executive of the city, he has the
duty to enforce Ordinance No. 8027 as long as it has not been repealed by the
Sanggunian or annulled by the courts. He has no other choice. It is his ministerial
duty to do so. x x x
xxxx
The question now is whether the MOU entered into by respondent with the oil
companies and the subsequent resolutions passed by the Sanggunianhave made
the respondent’s duty to enforce Ordinance No. 8027 doubtful, unclear or uncertain.
xxx
We need not resolve this issue. Assuming that the terms of the MOU were
inconsistent with Ordinance No. 8027, the resolutions which ratified it and made it
binding on the Cityof Manila expressly gave it full force and effect only until April 30,
2003. Thus, at present, there is nothing that legally hinders respondent from
enforcing Ordinance No. 8027.
Ordinance No. 8027 was enacted right after the Philippines, along with the rest of the
world, witnessed the horror of the September 11, 2001 attack on the Twin Towers of
the World Trade Center in New York City. The objective of the ordinance is toprotect
the residents of Manila from the catastrophic devastation that will surely occur in
case of a terrorist attack on the Pandacan Terminals. No reason exists why such a
protective measure should be delayed.35 (Emphasis supplied; citations omitted)
13 February 2008 Resolution in G.R. No. 156052;
Ordinance No. 8027 is constitutional
The oil companies and the Republic of the Philippines, represented by the DOE, filed
their motions for leave to intervene and for reconsideration of the 7 March 2007
Decision. During the oral arguments, the parties submitted to the power of the Court
torule on the constitutionality and validity of the assailed Ordinance despite the
pendency of the cases in the RTC.36
On 13 February 2008, the Court granted the motions for leave to intervene of the oil
companies and the Republic of the Philippines but denied their respective motions
for reconsideration. The dispositive portion of the Resolution reads:
WHEREFORE, x x x
We reiterate our order to respondent Mayor of the City of Manila to enforce
Ordinance No. 8027. In coordination with the appropriate agencies and other parties
involved, respondent Mayor is hereby ordered to oversee the relocation and transfer
of the Pandacan Terminals out of its present site.37
447
13 February 2008 Resolution in G.R. No. 156052;
Ordinance No. 8027 was not impliedly repealed
by Ordinance No. 8119
The Court also ruled that Ordinance No. 8027 was not impliedly repealed by
Ordinance No. 8119. On this score, the Court ratiocinated:
For the first kind of implied repeal, there must be an irreconcilable conflict between
the two ordinances. There is no conflict between the two ordinances. Ordinance No.
8027 reclassified the Pandacan area from Industrial II to Commercial I. Ordinance
No. 8119, Section 23, designated it as a "Planned Unit Development/Overlay Zone
(O-PUD)." In its Annex "C" which defined the zone boundaries, the Pandacan area
was shown to be within the "High Density Residential/Mixed Use Zone (R-3/MXD)." x
x x [B]oth ordinances actually have a common objective, i.e., to shift the zoning
classification from industrial to commercial (Ordinance No. 8027) or mixed residential
commercial (Ordinance No. 8119)
xxxx
Ordinance No. 8027 is a special law since it deals specifically with a certain area
described therein (the Pandacan oil depot area) whereas Ordinance No. 8119 can
be considered a general law as it covers the entire city of Manila.
xxxx
x x x The repealing clause of Ordinance No. 8119 cannot be taken to indicate the
legislative intent to repeal all prior inconsistent laws on the subject matter, including
Ordinance No. 8027, a special enactment, since the aforequoted minutes (an official
record of the discussions in the Sanggunian) actually indicated the clear intent to
preserve the provisions of Ordinance No. 8027.38
Filing of a draft Resolution amending Ordinance No. 8027 effectively allowing
the oil depots to stay in the Pandacan area; Manifestation and
Motion to forestall the passing of the new Ordinance filed in G.R. No. 156052
On 5 March 2009, respondent then Councilor Arlene W. Koa, filed with the
Sangguniang Panlungsod a draft resolution entitled "An Ordinance Amending
Ordinance No. 8119 Otherwise Known as ‘The Manila Comprehensive Land Use
Plan and Zoning Ordinance of 2006’ by Creating a Medium Industrial Zone (1-2) and
Heavy Industrial Zone (1-3) and Providing for its Enforcement."39 Initially numbered
as Draft Ordinance No. 7177, this was later renumbered as Ordinance No. 8187, the
assailed Ordinance in these instant petitions.
Considering that the provisions thereof run contrary to Ordinance No. 8027, the
petitioners in G.R. No. 156052 filed a "Manifestation and Motion to: a) Stop the City
Council of Manila from further hearing the amending ordinance to Ordinance No.
8027; [and] b) Transfer the monitoring of the enforcement of the Resolution of the
Honorable Court on this case dated 13 February 2008 from Branch 39, Manila
Regional Trial Court to the Supreme Court."40
28 April 2009 Resolution in G.R. No. 156052;
Second Motion for Reconsideration denied with finality;
succeeding motions likewise denied or otherwise noted without action
On 28 April 2009, pending the resolution of the Manifestation and Motion, the Court
denied with finalitythe second motion for reconsideration dated 27 February 2008 of
the oil companies.41
It further ruled that no further pleadings shall be entertained in the case.42
Succeeding motions were thus deniedand/or noted without action. And, after the
"Very Urgent Motion to Stop the Mayor of the City of Manila from Signing Draft
Ordinance No. 7177 and to Cite Him for Contempt if He Would Do So" filed on 19
May 2009 was denied on 2 June 2009 for being moot,43 all pleadings pertaining to
the earlier motion against the drafting of an ordinance to amend Ordinance No. 8027
were noted without action.44
The Enactment of Ordinance No. 8187
allowing the continued stay of the oil depots
448
On 14 May 2009, during the incumbency of former Mayor Alfredo S. Lim (Mayor
Lim), who succeeded Mayor Atienza, the Sangguniang Panlungsod enacted
Ordinance No. 8187.45
The new Ordinance repealed, amended, rescinded or otherwise modified Ordinance
No. 8027, Section 23 of Ordinance No. 8119, and all other Ordinances or provisions
inconsistent therewith46 thereby allowing, once again, the operation of "Pollutive/Non-
Hazardous and Pollutive/Hazardous manufacturing and processing establishments"
and "Highly Pollutive/Non-Hazardous[,] Pollutive/Hazardous[,] Highly
Pollutive/Extremely Hazardous[,] Non-Pollutive/Extremely Hazardous; and
Pollutive/Extremely Hazardous; and Pollutive/Extremely Hazardous manufacturing
and processing establishments" within the newly created Medium Industrial Zone (1-
2) and Heavy Industrial Zone (1-3) in the Pandacan area.
Thus, where the Industrial Zoneunder Ordinance No. 8119 was limited to Light
Industrial Zone (I-1), Ordinance No. 8187 appended to the list a Medium Industrial
Zone (I-2) and a Heavy Industrial Zone (I-3), where petroleum refineries and oil
depots are now among those expressly allowed.
Hence these petitions.
The Petitions
G.R. No. 187836
To support their petition for prohibition against the enforcement of Ordinance No.
8187, the petitioner Social Justice Society (SJS) officers allege that:
1. The enactment of the assailed Ordinance is not a valid exercise of police
power because the measures provided therein do not promote the general
welfare of the people within the contemplation of the following provisions of
law:
a) Article III, Section 18 (kk)47 of Republic Act No. 409 otherwise
known as the "Revised Charter of the City of Manila," which provides
that the Municipal Board shall have the legislative power to enact all
ordinances it may deem necessary and proper;
b) Section 1648 of Republic Act No. 7160 known as the Local
Government Code, which defines the scope of the general welfare
clause;
2. The conditions at the time the Court declared Ordinance No. 8027
constitutional in G.R. No. 156052 exist to this date;
3. Despite the finality of the Decision in G.R. No. 156052, and
notwithstanding that the conditions and circumstances warranting the validity
of the Ordinance remain the same, the Manila City Council passed a contrary
Ordinance, thereby refusing to recognize that "judicial decisions applying or
interpreting the laws or the Constitution form part of the legal system of the
Philippines;"49 and
4. Ordinance No. 8187 is violative of Sections 15 and 16, Article II of the
Constitution of the Philippines on the duty of the State "to protect and
promote the right to health of the people"50 and "protect and advance the right
of the people to a balanced and healthful ecology."51 Petitioners pray that
Ordinance No. 8187 of the City of Manila be declared null and void, and that
respondent, and all persons acting under him, be prohibited from enforcing
the same.
G.R. No. 187916
The petition for Prohibition, Mandamus and Certiorari with Prayer for Temporary
Restraining Order and/or Injunction against the enforcement of Ordinance No. 8187
of former Secretary of Department of Environment and Natural Resources and then
Mayor Atienza, together with other residents and taxpayers of the City of Manila, also
alleges violation of the right to health of the people and the right to a healthful and
balanced environment under Sections 15 and 16 of the Constitution.
449
Petitioners likewise claim that the Ordinance is in violation of the following health and
environment-related municipal laws, and international conventions and treaties to
which the Philippines is a state party:
1. Municipal Laws –
(a) Sections 4,52 12,53 1954 and 3055 of Republic Act No. 8749
otherwise known as the Philippine Clean Air Act;
(b) Environment Code (Presidential Decree No. 1152);
(c) Toxic and Hazardous Wastes Law (Republic Act No. 6969); and
(d) Civil Code provisions on nuisance and human relations;
2. International Conventions and Treaties to which the Philippines is a state
party –
a. Section 1 of the Universal Declaration of Human Rights, which
states that "[e]veryone has the right to life, liberty and security of
person;"
b. Articles 6,56 2457 and 2758 of the Convention on the Rights of the
Child, summarized by the petitioners in the following manner:
1. the human right to safe and healthy environment[;]
2. human right to the highest attainable standard of health[;]
3. the human right to ecologically sustainable development[;]
4. the human right to an adequate standard of living, including access to safe
food and water[;]
5. the human right of the child to live in an environment appropriate for
physical and mental development[; and]
6. the human right to full and equal participation for all persons in
environmental decision-making and development planning, and in shaping
decisions and policies affecting one’s community, at the local, national and
international levels.59
Petitioners likewise posit that the title of Ordinance No. 8187 purports to amend or
repeal Ordinance No. 8119 when it actually intends to repeal Ordinance No. 8027.
According to them, Ordinance No. 8027 was never mentioned in the title and the
body of the new ordinance in violation of Section 26, Article VI of the 1987
Constitution, which provides that every bill passed by Congress shall embrace only
one subject which shall be expressed in the title thereof.
Also pointed out by the petitioners is a specific procedure outlined in Ordinance No.
8119 that should be observed when amending the zoning ordinance. This is provided
for under Section 81 thereof, which reads:
SEC. 81. Amendments to the Zoning Ordinance. The proposed amendments to the
Zoning Ordinance asreviewed and evaluated by the City Planning and Development
Office (CPDO)shall be submitted to the City Council for approval of the majority of
the Sangguniang Panlungsod members. The amendments shall be acceptable and
eventually approved: PROVIDED, That there is sufficient evidence and justification
for such proposal; PROVIDED FURTHER,That such proposal is consistent with the
development goals, planning objectives, and strategies of the Manila Comprehensive
Land Use Plan. Said amendments shall take effect immediately upon approval or
after thirty (30) days from application.
Petitioners thus pray that:
1. upon filing of [the] petition, [the] case be referred to the Court [E]n Banc,
and setting (sic) the case for oral argument;
450
2. upon the filing of [the] petition, a temporary restraining order be issued
enjoining the respondents from publishing and posting Manila City Ordinance
No. 8187 and/or posting of Manila City Ordinance No. 8187; and/or taking
any steps to implementing (sic) and/or enforce the same and after due
hearing, the temporary restraining order be converted to a permanent
injunction;
3. x x x Manila City Ordinance 8187 [be declared] as null and void for being
repugnant to the Constitution and existing municipal laws and international
covenants;
4. x x x the respondents [be ordered] to refrain from enforcing and/or
implementing Manila City Ordinance No. 8187;
5. x x x respondent City Mayor Alfredo S. Lim [be enjoined] from issuing any
permits (business or otherwise) to all industries whose allowable uses are
anchored under the provisions of Manila Ordinance No. 8187; and
6. x x x respondent Mayor of Manila Alfredo S. Lim [be ordered] to comply
with the Order of the Honorable Court in G.R. 156052 dated February 13,
2008.60
The Respondents’ Position on the Consolidated Petitions
Respondent former Mayor Lim
In his Memorandum,61 former Mayor Lim, through the City Legal Officer, attacks the
petitioners’ lack of legal standing to sue. He likewise points out that the petitioners
failed to observe the principle of hierarchy of courts.
Maintaining that Ordinance No. 8187 is valid and constitutional, he expounds on the
following arguments:
On the procedural issues, he contends that: (1) it is the function of the Sangguniang
Panlungsod to enact zoning ordinances, for which reason, it may proceed to amend
or repeal Ordinance No. 8119 without prior referral to the Manila Zoning Board of
Adjustment and Appeals (MZBAA) as prescribed under Section 80 (Procedure for
Re-Zoning) and the City Planning and Development Office (CPDO) pursuant to
Section 81 (Amendments to the Zoning Ordinance) of Ordinance No. 8119,
especially when the action actually originated from the Sangguniang Panlungsod
itself; (2) the Sangguniang Panlungsod may, in the later ordinance, expressly repeal
all or part of the zoning ordinance sought to be modified; and (3) the provision
repealing Section 23 of Ordinance No. 8119 is not violative of Section 26, Article VI
of the 1987 Constitution, which requires that every bill must embrace only one
subject and that such shall be expressed in the title.
On the substantive issues, he posits that the petitions are based on unfounded fears;
that the assailed ordinance is a valid exercise of police power; that it is consistent
with the general welfare clause and public policy, and is not unreasonable; that it
does not run contrary to the Constitution, municipal laws, and international
conventions; and that the petitioners failed to overcome the presumption of validity of
the assailed ordinance.
Respondents Vice-Mayor Domagoso and the City Councilors who voted in favor of
the assailed ordinance
On 14 September 2012, after the Court gave the respondents several chances to
submit their Memorandum,62 they, through the Secretary of the Sangguniang
Panlungsod, prayed that the Court dispense with the filing thereof.
In their Comment,63 however, respondents offered a position essentially similar to
those proffered by former Mayor Lim.
The Intervenors’ Position on the Consolidated Petitions
On the other hand, the oil companies sought the outright dismissal of the petitions
based on alleged procedural infirmities, among others, incomplete requisites of
judicial review, violation of the principle of hierarchy of courts, improper remedy,
submission of a defective verification and certification against forum shopping, and
forum shopping.
451
As to the substantive issues, they maintain, among others, that the assailed
ordinance is constitutional and valid; that the Sangguniang Panlalawigan is in the
best position to determine the needs of its constituents; that it is a valid exercise of
legislative power; that it does not violate health and environment-related provisions
of the Constitution, laws, and international conventions and treaties to which the
Philippines is a party; that the oil depots are not likely targets of terrorists; that the
scaling down of the operations in Pandacan pursuant to the MOU has been followed;
and that the people are safe in view of the safety measures installed in the Pandacan
terminals.
Incidentally, in its Manifestation dated 30 November 2010,64 Petron informed the
Court that it will "cease [the] operation of its petroleum product storage facilities"65 in
the Pandacan oil terminal not later than January 2016 on account of the following:
2.01 Environmental issues, many of which are unfounded, continually crop up and
tarnish the Company’s image.
2.02. The location of its Pandacanterminal is continually threatened, and made
uncertain preventing long-term planning, by the changing local government
composition. Indeed, the relevant zoning ordinances have been amended three (3)
times, and their validity subjected to litigation.66
Intervening Events
On 28 August 2012, while the Court was awaiting the submission of the
Memorandum of respondents Vice-Mayor Domagoso and the councilors who voted
in favor of the assailed Ordinance, the Sangguniang Panlungsod, which composition
had already substantially changed, enacted Ordinance No. 828367 entitled "AN
ORDINANCE AMENDING SECTION 2 OF ORDINANCE NO. 8187 BY
RECLASSIFYING THE AREA WHERE PETROLEUM REFINERIES AND OIL
DEPOTS ARE LOCATED FROM HEAVY INDUSTRIAL (1-3) TO HIGH INTENSITY
COMMERCIAL/MIXED USE ZONE (C3/MXD).
The new ordinance essentially amended the assailed ordinance to exclude the area
where petroleum refineries and oil depots are located from the Industrial Zone.
Ordinance No. 8283 thus permits the operation of the industries operating within the
Industrial Zone. However, the oil companies, whose oil depots are located in the
High Intensity Commercial/Mixed Use Zone (C3/MXD), are given until the end of
January 2016 within which to relocate their terminals.
Former Mayor Lim, who was then the incumbent mayor, did not support the
amendment. Maintaining that the removal of the oil depots was prejudicial to public
welfare, and, on account of the pending cases in the Supreme Court, he vetoed
Ordinance No. 8283 on 11 September 2012.68
On 28 November 2012, former Mayor Lim filed a Manifestation informing this Court
that the Sangguniang Panlungsod voted to override the veto, and that he, in turn,
returned it again with his veto. He likewise directed the Sangguniang Panlungsod to
append his written reasons for his veto of the Ordinance, so that the same will be
forwarded to the President for his consideration in the event that his veto is
overridden again.69
On 11 December 2012, Shell also filed a similar Manifestation.70
Meanwhile, three days after former Mayor Lim vetoed the new ordinance, Atty. Luch
R. Gempis, Jr. (Atty. Gempis), Secretary of the Sangguniang Panlungsod, writing on
behalf of respondents Vice-Mayor Domagoso and the City Councilors of Manila who
voted in favor of the assailed Ordinance, finally complied with this Court’s Resolution
dated 17 July 2012 reiterating its earlier directives71 to submit the said respondents’
Memorandum.
In his Compliance/Explanation with Urgent Manifestation72 dated 13 September
2012, Atty. Gempis explained that it was not his intention to show disrespect to this
Court or to delay or prejudice the disposition of the cases.
According to him, he signed the Comment prepared by respondents Vice-Mayor and
the City Councilors only to attest that the pleading was personally signed by the
respondents. He clarified that he was not designated as the legal counsel of the
respondents as, in fact, he was of the impression that, pursuant to Section 481(b)(3)
of the Local Government Code,73 it is the City Legal Officer who isauthorized to
represent the local government unit or any official thereof in a litigation. It was for the
452
same reason that he thought that the filing of a Memorandum may already be
dispensed with when the City Legal Officer filed its own on 8 February 2010. He
further explained that the Ordinance subject of these cases was passed during the
7th Council (2007-2010); that the composition of the 8th Council (2010-2013) had
already changed after the 2010 elections; and that steps were already taken to
amend the ordinance again. Hence, he was in a dilemma as to the position of the
Sangguniang Panlungsod at the time he received the Court’s Resolution of 31 May
2011.
Atty. Gempis, thus, prayed that the Court dispense with the filing of the required
memorandum in view of the passing of Ordinance No. 8283.
Issue
The petitioners’ arguments are primarily anchored on the ruling of the Court in G. R.
No. 156052 declaring Ordinance No. 8027 constitutional and valid after finding that
the presence of the oil terminals in Pandacan is a threat to the life and security of the
people of Manila. From thence, the petitioners enumerated constitutional provisions,
municipal laws and international treaties and conventions on health and environment
protection allegedly violated by the enactment of the assailed Ordinance to support
their position.
The resolution of the present controversy is, thus, confined to the determination of
whether or not the enactment of the assailed Ordinance allowing the continued stay
of the oil companies in the depots is, indeed, invalid and unconstitutional.
Our Ruling
We see no reason why Ordinance No. 8187 should not be stricken down insofar as
the presence of the oil depots in Pandacan is concerned.
I Rule 65 specifically requires that the remedy may be availed of only when "there is
We first rule on the procedural issues raised by the respondents and the oil
companies.
At the outset, let it be emphasized that the Court, in G.R. No. 156052, has already
pronounced that the matter of whether or not the oil depots should remain in the
Pandacan area is of transcendental importance to the residents of Manila.74
We may, thus, brush aside procedural infirmities, if any, as we had in the past, and
take cognizance of the cases75 if only to determine if the acts complained of are no
longer within the bounds of the Constitution and the laws in place.76
Put otherwise, there can be no valid objection to this Court’s discretion to waive one
or some procedural requirements if only to remove any impediment to address and
resolve the serious constitutional question77 raised in these petitions of
transcendental importance, the same having farreaching implications insofar as the
safety and general welfare of the residents of Manila, and even its neighboring
communities, are concerned.
Proper Remedy
Respondents and intervenors argue that the petitions should be outrightly dismissed
for failure on the part of the petitioners to properly apply related provisions of the
Constitution, the Rules of Court, and/or the Rules of Procedure for Environmental
Cases relative to the appropriate remedy available to them.
To begin with, questioned is the applicability of Rule 6578 of the Rules of Court to
assail the validity and constitutionality of the Ordinance.
… there is no appeal, or any plain,
speedy, and adequate remedy
in the ordinary course of law…
no appeal, or any plain, speedy, and adequate remedy in the ordinary course of
law."79
453
Shell argues that the petitioners should have sought recourse before the first and
second level courts under the Rules of Procedure for Environmental Cases,80 which
govern "the enforcement or violations of environmental and other related laws, rules
and regulations."81 Petron additionally submits that the most adequate remedy
available to petitioners is to have the assailed ordinance repealed by the
Sangguniang Panlungsod. In the alternative, a local referendum may be had. And,
assuming that there were laws violated, the petitioners may file an action for each
alleged violation of law against the particular individuals that transgressed the law.
It would appear, however, that the remedies identified by the intervenors prove to be
inadequate toresolve the present controversies in their entirety owing to the
intricacies of the circumstances herein prevailing.
The scope of the Rules of Procedure for Environmental Cases is embodied in Sec. 2,
Part I, Rule I thereof. It states that the Rules shall govern the procedure in civil,
criminal and special civil actions before the Metropolitan Trial Courts, Municipal Trial
Courts in Cities, Municipal Trial Courts and Municipal Circuit Trial Courts, and the
Regional Trial Courts involving enforcement or violations of environmental and other
related laws, rules and regulations such as but not limited to the following:
(k) R.A. No. 6969, Toxic Substances and Hazardous Waste Act;
xxxx
(r) R.A. No. 8749, Clean Air Act;
xxxx
(y) Provisions in C.A. No. 141, x x x; and other existing laws that relate to the
conservation, development, preservation, protection and utilization of the
environment and natural resources.82 (Emphasis supplied)
Notably, the aforesaid Rules are limited in scope. While, indeed, there are
allegations of violations of environmental laws in the petitions, these only serve as
collateral attacks that would support the other position of the petitioners – the
protection of the rightto life, security and safety. Moreover, it bears emphasis that the
promulgation of the said Rules was specifically intended to meet the following
objectives:
SEC. 3. Objectives.—The objectives of these Rules are:
(a) To protect and advance the constitutional right of the people to a balanced
and healthful ecology;
(b) To provide a simplified, speedy and inexpensive procedure for the
enforcement of environmental rights and duties recognized under the
Constitution, existing laws, rules and regulations, and international
agreements;
(c) To introduce and adopt innovations and best practices ensuring the
effective enforcement of remedies and redress for violation of environmental
laws; and
(d) To enable the courts to monitor and exact compliance with orders and
judgments in environmental cases.83
Surely, the instant petitions are not within the contemplation of these Rules.
Relative to the position of Petron, it failed to consider that these petitions are already
a sequel to G.R. No. 156052, and that there are some issues herein raised that the
remedies available at the level of the Sangguniang Panlungsod could not address.
Neither could the filing of an individual action for each law violated be harmonized
with the essence of a "plain, speedy, and adequate" remedy.
From another perspective, Shell finds fault with the petitioners’ direct recourse to this
Court when, pursuant to Section 5, Article VIII of the Constitution, the Supreme Court
exercises only appellate jurisdiction over cases involving the constitutionality or
validity of an ordinance.84 Thus:
Section 5.The Supreme Court shall have the following powers:
454
xxxx
2. Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or the
Rules of Court may provide, final judgments and orders of lower courtsin:
a. All cases in which the constitutionality or validity of any treaty, international or
executive agreement, law, presidential decree, proclamation, order, instruction,
ordinance, or regulation is in question. (Emphasis supplied)
To further support its position, it cites the case of Liga ng mga Barangay National v.
City Mayor of Manila,85 where the petitioners sought the nullification of the mayor’s
executive order and the council’s ordinance concerning certain functions of the
petitioners that are vested in them by law. There, the Court held:
Second, although the instant petition is styled as a petition for certiorari, in essence,
it seeks the declaration by this Court of the unconstitutionality or illegality of the
questioned ordinance and executive order. It, thus, partakes of the nature of a
petition for declaratory relief over which this Court has only appellate, not original,
jurisdiction.86 Section 5, Article VIII of the Constitution provides: x x x
As such, this petition must necessary fail, as this Court does not have original
jurisdiction over a petition for declaratory relief even if only questions of law are
involved.87
Assuming that a petition for declaratory relief is the proper remedy, and that the
petitions should have been filed with the Regional Trial Court, we have, time and
again, resolved to treat such a petition as one for prohibition, provided that the case
has far-reaching implications and transcendental issues that need to be
resolved,88 as in these present petitions.
On a related issue, we initially found convincing the argument that the petitions
should have been filed with the Regional Trial Court, it having concurrent jurisdiction
with this Court over a special civil action for prohibition, and original jurisdiction over
petitions for declaratory relief. However, as we have repeatedly said, the petitions at
bar are of transcendental importance warranting a relaxation of the doctrine of
hierarchy of courts.89 In the case of Jaworski v. PAGCOR,90 the Court ratiocinated:
Granting arguendothat the present action cannot be properly treated as a petition for
prohibition, the transcendental importance of the issues involved in this case
warrants that weset aside the technical defects and take primary jurisdiction over the
petition at bar. x x x This is in accordance with the well-entrenched principle that
rules of procedure are not inflexible tools designed to hinder or delay, but to facilitate
and promote the administration of justice.Their strict and rigid application, which
would result in technicalities that tend to frustrate, rather than promote substantial
justice, must always be eschewed. (Emphasis supplied)
…persons aggrieved thereby…
As to who may file a petition for certiorari, prohibition or mandamus, Petron posits
that petitioners are not among the "persons aggrieved" contemplated under Sections
1 to 3 of Rule 65 of the Rules of Court.
Chevron argues that petitioners, whether as "citizens," taxpayers," or legislators,"
lack the legal standing toassail the validity and constitutionality of Ordinance No.
8187. It further claims that petitioners failed to show that they have suffered any
injury and/or threatened injury as a result of the act complained of.91
Shell also points out that the petitions cannot be considered taxpayers’ suit, for then,
there should be a claim that public funds were illegally disbursed and that petitioners
have sufficient interest concerning the prevention of illegal expenditure of public
money.92 In G.R. No. 187916, Shell maintains that the petitioners failed to show their
personal interest in the case and/or to establish that they may represent the general
sentiments of the constituents of the City of Manila so as to be treated as a class
suit. Even the minors, it argues, are not numerous and representative enough for the
petition to be treated as a class suit. Asto the city councilors who joined the
petitioners in assailing the validity of Ordinance No. 8187, Shell posits that they
cannot invoke the ruling in Prof. David v. Pres. Macapagal-Arroyo,93 where the Court
held that legislators may question the constitutionality of a statute, if and when it
infringes upon their prerogatives as legislators, because of the absence of the
allegation that the assailed ordinance indeed infringes upon their prerogatives.
455
Former Mayor Lim submitted a similar position supported by a number of cases on
the concept of locus standi,94 the direct injury test,95 an outline of the stringent
requirements of legal standing when suing as a citizen,96 as a taxpayer,97 as a
legislator and in cases where class suits are filed in behalf of all citizens.98
Their arguments are misplaced.
In G.R. No. 156052, we ruled that the petitioners in that case have a legal right to
seek the enforcement of Ordinance No. 8027 because the subject of the petition
concerns a public right, and they, as residents of Manila, have a direct interest in the
implementation of the ordinances of the city. Thus:
To support the assertion that petitioners have a clear legal right to the enforcement
of the ordinance, petitioner SJS states that it is a political party registered with the
Commission on Elections and has its offices in Manila. It claims to have many
members who are residents of Manila. The other petitioners, Cabigao and
Tumbokon, are allegedly residents of Manila.
We need not belabor this point. We have ruled in previous cases that when
a mandamus proceeding concerns a public right and its object is to compel a public
duty, the people who are interested in the execution of the laws are regarded as the
real parties in interest and they need not show any specific interest. Besides, as
residents of Manila, petitioners have a direct interest in the enforcement of the city’s
ordinances.99 x x x (Citations omitted)
No different are herein petitioners who seek to prohibit the enforcement of the
assailed ordinance, and who deal with the same subject matter that concerns a
public right. Necessarily, the people who are interested in the nullification of such an
ordinance are themselves the real parties in interest, for which reason, they are no
longer required to show any specific interest therein. Moreover, it is worth mentioning
that SJS, now represented by SJS Officer Alcantara, has been recognized by the
Court in G.R. No. 156052 to have legal standing to sue in connection with the same
subject matter herein considered. The rest of the petitioners are residents of Manila.
Hence, all of them have a direct interest in the prohibition proceedings against the
enforcement of the assailed ordinance.
In the case of Initiatives for Dialogue and Empowerment through Alternative Legal
Services, Inc. (IDEALS, INC.) v. Power Sector Assets and Liabilities Management
Corporation (PSALM),100 involving a petition for certiorari and prohibition to
permanently enjoin PSALM from selling the Angat Hydro-Electric Power Plant
(AHEPP) to Korea Water Resources Corporation (K-Water), the Court ruled:
"Legal standing" or locus standihas been defined as a personal and substantial
interest in the case such that the party has sustained or will sustain direct injury as a
result of the governmental act that is being challenged, alleging more than a
generalized grievance. x x x This Court, however, has adopted a liberal attitude on
the locus standi of a petitioner where the petitioner is able to craft anissue of
transcendental significance to the people, as when the issues raised are of
paramount importance to the public. Thus, when the proceeding involves the
assertion of a public right, the mere fact that the petitioner is a citizen satisfies the
requirement of personal interest.
There can be no doubt that the matter of ensuring adequate water supply for
domestic use is one of paramount importance to the public. That the continued
availability of potable water in Metro Manila might be compromised if PSALM
proceeds with the privatization of the hydroelectric power plant in the Angat Dam
Complex confers upon petitioners such personal stake in the resolution of legal
issues in a petition to stop its implementation.101 (Emphasis supplied; citations
omitted)
In like manner, the preservation of the life, security and safety of the people is
indisputably a right of utmost importance to the public. Certainly, the petitioners, as
residents of Manila, have the required personal interest to seek relief from this Court
to protect such right.
… in excess of its or his jurisdiction,
or with grave abuse of discretion
amounting to lack or excess of jurisdiction…
Petron takes issue with the alleged failure of the petitioners to establish the facts with
certainty that would show that the acts of the respondents fall within the parameters
of the grave abuse of discretion clause settled by jurisprudence, to wit:
456
x x x "[G]rave abuse of discretion" means such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction. The abuse of discretion must be
grave as where the power is exercised in an arbitrary or despotic manner by reason
of passion or personal hostility and must be so patent and gross asto amount to an
evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to
act all in contemplation of law.102
It is pointless to discuss the matter at length in these instant cases of transcendental
importance in view of the Court’s pronouncement, in Magallona v. Ermita.103 There it
held that the writs of certiorariand prohibition are proper remedies to test the
constitutionality of statutes, notwithstanding the following defects:
In praying for the dismissal of the petition on preliminary grounds, respondents seek
a strict observance of the offices of the writs of certiorari and prohibition, noting that
the writs cannot issue absent any showing of grave abuse of discretion in the
exercise of judicial, quasi-judicial or ministerial powers on the part of
respondents and resulting prejudice on the part of petitioners.
Respondents’ submission holds true in ordinary civil proceedings. When this Court
exercises its constitutional power of judicial review, however, we have, by tradition,
viewed the writs of certiorariand prohibition as proper remedial vehicles to test the
constitutionality of statutes, and indeed, of acts of other branches of
government. Issues of constitutional importx x x carry such relevance in the
life of this nation that the Court inevitably finds itself constrained to take
cognizance of the case and pass upon the issues raised, noncompliance with
the letter of procedural rules notwithstanding. The statute sought to be reviewed
here is one such law.104 (Emphasis supplied; citations omitted)
Requisites of judicial review
For a valid exercise of the power of judicial review, the following requisites shall
concur: (1) the existence of a legal controversy; (2) legal standing to sue of the party
raising the constitutional question; (3) a plea that judicial review be exercised at the
earliest opportunity; and (4) the constitutional question is the lis mota of the case.105
Only the first two requisites are put in issue in these cases.
On the matter of the existence of a legal controversy, we reject the contention that
the petitions consist of bare allegations based on speculations, surmises,
conjectures and hypothetical grounds.
The Court declared Ordinance No. 8027 valid and constitutional and ordered its
implementation. Withthe passing of the new ordinance containing the contrary
provisions, it cannot be any clearer that here lies an actual case or controversy for
judicial review. The allegation on this, alone, is sufficient for the purpose.
The second requisite has already been exhaustively discussed.
Proof of identification required in the notarization
of the verification and certification against forum
shopping in G.R. No. 187916
At the bottom of the Verification and Certification against Forum Shopping of the
petition in G.R. No. 187916 is the statement of the notary public to the effect that the
affiant, in his presence and after presenting "an integrally competent proof of
identification with signature and photograph,"106 signed the document under oath.
Citing Sec. 163 of the Local Government Code,107 which provides that an individual
acknowledging any document before a notary public shall present his Community
Tax Certificate (CTC), Chevron posits that the petitioner’s failure to present his CTC
rendered the petition fatally defective warranting the outright dismissal of the petition.
We disagree.
The verification and certification against forum shopping are governed specifically by
Sections 4 and 5,Rule 7 of the Rules of Court.
Section 4 provides that a pleading, when required to be verified, shall be treated as
an unsigned pleading if it lacks a proper verification while Section 5 requires that the
certification to be executed by the plaintiff or principal party be under oath.
457
These sections, in turn, should be read together with Sections 6 and 12, Rule 2 of
the 2004 Rules on Notarial Practice.
Section 6108 of the latter Rules, specifically, likewise provides that any competent
evidence of identity specified under Section 12 thereof may now be presented before
the notary public, to wit:
SEC. 12. Competent Evidence of Identity. - The phrase "competent evidence of
identity" refers to the identification of an individual based on:
(a) at least one current identification document issued by an official agency
bearing the photograph and signature of the individual, such as but not
limited to passport, driver’s license, Professional Regulations Commission ID,
National Bureau of Investigation clearance, police clearance, postal ID,
voter’s ID, Barangay certification, Government Service and Insurance System
(GSIS) e-card, Social Security System (SSS) card, Philhealth card, senior
citizen card, Overseas Workers Welfare Administration (OWWA) ID, OFW ID,
seaman’s book, alien certificate of registration/immigrant certificate of
registration, government office ID, certification from the National Council for
the Welfare of Disable Persons (NCWDP), Department of Social Welfare and
Development (DSWD) certification; or
(b) x x x.109
Forum shopping
Shell contends that the petitioners in G.R. No. 187836 violated the rule against forum
shopping allegedly because all the elements thereof are present in relation to G.R.
No. 156052, to wit:
1. "identity of parties, or at least such parties who represent the same
interests in both actions" – According to Shell, the interest of petitioner SJS in
G.R. No. 156052 and the officers of SJS in G.R. No. 187836 are clearly the
same. Moreover, both actions implead the incumbent mayor of the City of
Manila as respondent. Both then respondent Mayor Atienza in G.R. No.
156052 and respondent former Mayor Lim in G.R. No. 187836 are sued in
their capacity as Manila mayor.
2. "identity of rights asserted and relief prayed for, the relief being founded on
the same fact(s)" – Shell contends that, in both actions, petitioners assert the
same rights to health and to a balanced and healthful ecology relative to the
fate of the Pandacan terminal, and seek essentially the same reliefs, that is,
the removal of the oil depots from the present site.
3. "the identity of the two preceding particulars is such that any judgment
rendered in the pending case, regardless of which party is successful, would
amount to res judicata in the other" – Relative to the filing of the Manifestation
and Motion to: a) Stop the City Council of Manila from further hearing the
amending ordinance to Ordinance No. 8027 x x x (Manifestation and Motion)
and Very Urgent Motion to Stop the Mayor of the City of Manila from Signing
Draft Ordinance No. 7177 [now Ordinance No. 8187] and to Cite Him for
Contempt if He Would Do So (Urgent Motion) both in G.R. No. 156052, Shell
points out the possibility that the Court would have rendered conflicting
rulings "on cases involving the same facts, parties, issues and reliefs prayed
for."110
We are not persuaded.
In Spouses Cruz v. Spouses Caraos,111 the Court expounded on the nature of forum
shopping. Thus:
Forum shopping is an act of a party, against whom an adverse judgment or order
has been rendered in one forum, of seeking and possibly getting a favorable opinion
in another forum, other than by appeal or special civil action for certiorari. It may also
be the institution of two or more actions or proceedings grounded on the same cause
on the supposition that one or the other court would make a favorable disposition.
The established rule is that for forum shopping to exist, both actions must involve the
same transactions, same essential facts and circumstances and must raise identical
causes of actions, subject matter, and issues. x x x112 (Citations omitted) It bears to
stress that the present petitions were initially filed, not to secure a judgment adverse
458
to the first decision, but, precisely, to enforce the earlier ruling to relocate the oil
depots from the Pandacan area.
As to the matter of the denial of the petitioners’ Manifestation and Urgent Motion in
G.R. No. 156052, which wereboth incidental to the enforcement of the decision
favorable to them brought about by the intervening events after the judgment had
become final and executory, and which involve the same Ordinance assailed in
these petitions, we so hold that the filing of the instant petitions is not barred by res
judicata.
In the same case of Spouses Cruz v. Spouses Caraos involving the refiling of a
complaint, which had been earlier dismissed without qualification that the dismissal
was with prejudice, and which had not been decided on the merits, the Court
declared that such re-filing did not amount to forum shopping. It ratiocinated:
It is not controverted that the allegations of the respective complaints in both Civil
Case No. 95-1387 and Civil Case No. 96-0225 are similarly worded, and are
identical in all relevant details, including typographical errors, except for the
additional allegations in support of respondents’ prayer for the issuance of
preliminary injunction in Civil Case No. 95-1387. It is similarly not disputed that both
actions involve the same transactions; same essential facts and circumstances; and
raise identical causes of actions, subject matter, and issues.
xxxx
x x x The dismissal of Civil Case No. 95-1387 was without prejudice. Indeed, the
Order dated 20 November 1995, dismissing Civil Case No. 95-1387 was an
unqualified dismissal. More significantly, its dismissal was not based on grounds
under paragraphs (f), (h), and (i) of Section 1 of Rule 16 of the Rules of Court, which
dismissal shall bar the refiling of the same action or claim as crystallized in Section 5
of Rule 16 thereof, thus:
SEC. 5. Effect of dismissal. – Subject to the right of appeal, an order granting a
motion to dismiss based on paragraphs (f), (h), and (i) of section 1 hereof shall bar
the refiling of the same action or claim.
From the foregoing, it is clear that dismissals under paragraphs (f), (h), and (i) of
Section 1 of Rule 16 of the Rules of Court constitute res judicata, to wit:
(f) That the cause of action isbarred by a prior judgment or by the statute of
limitations;
xxxx
(h) That the claim or demand set forth in the plaintiff’s pleading has been paid,
waived, abandoned, or otherwise extinguished;
(i) That the claim on which the action is founded is unenforceable under the
provisions of the statute of frauds.
Res judicata or bar by prior judgmentis a doctrine which holds that a matter that has
been adjudicated by a court of competent jurisdiction must be deemed to have been
finally and conclusively settled if it arises in any subsequent litigation between the
same parties and for the same cause. Res judicata exists when the following
elements are present: (a) the former judgment must be final; (b) the court which
rendered judgment had jurisdiction over the parties and the subject matter; (3)it must
be a judgment on the merits; and (d) and there must be, between the first and
second actions, identity ofparties, subject matter, and cause of action.113 (Emphasis
supplied; citations omitted)
Here, it should be noted that this Court denied the said Manifestation and Urgent
Motion, and refused to act on the succeeding pleadings, for being moot.114 Clearly,
the merits of the motion were not considered by the Court. The following disquisition
of the Court in Spouses Cruz v. Spouses Caraosis further enlightening:
The judgment of dismissal in Civil Case No. 95-1387 does not constitute res judicata
to sufficiently bar the refiling thereof in Civil Case No. 96-0225. As earlier
underscored, the dismissal was one without prejudice. Verily, it was not a judgment
on the merits. It bears reiterating that a judgment on the merits is one rendered after
a determination of which party is right, as distinguished from a judgment rendered
upon some preliminary or formal or merely technical point. The dismissal of the case
459
without prejudice indicates the absence of a decision on the merits and leaves the
parties free to litigate the matter in a subsequent action asthough the dismissed
action had not been commenced.115 (Emphasis supplied; citations omitted)
Considering that there is definitely no forum shopping in the instant cases, we need
not discuss in detail the elements of forum shopping.
II
The Local Government Code of 1991 expressly provides that the Sangguniang
Panlungsod is vested with the power to "reclassify land within the jurisdiction of the
city"116 subject to the pertinent provisions of the Code. It is also settled that an
ordinance may be modified or repealed by another ordinance.117 These have been
properly applied in G.R. No. 156052, where the Court upheld the position of the
Sangguniang Panlungsod to reclassify the land subject of the Ordinance,118 and
declared that the mayor has the duty to enforce Ordinance No. 8027, provided that it
has not been repealed by the Sangguniang Panlungsod or otherwise annulled by the
courts.119 In the same case, the Court also used the principle that the Sanguniang
Panlungsod is in the best position to determine the needs of its Constituents120 – that
the removal of the oil depots from the Pandacan area is necessary "to protect the
residents of Manila from catastrophic devastation in case of a terrorist attack on the
Pandacan Terminals."121
Do all these principles equally apply to the cases at bar involving the same subject
matter to justify the contrary provisions of the assailed Ordinance?
We answer in the negative.
We summarize the position of the Sangguniang Panlungsodon the matter subject of
these petitions. In 2001, the Sanggunian found the relocation of the Pandacan oil
depots necessary. Hence, the enactment of Ordinance No. 8027.
In 2009, when the composition of the Sanggunian had already changed, Ordinance
No. 8187 was passed in favor of the retention of the oil depots. In 2012, again when
some of the previous members were no longer re-elected, but with the Vice-Mayor
still holding the same seat, and pending the resolution of these petitions, Ordinance
No. 8283 was enacted to give the oil depots until the end of January 2016 within
which to transfer to another site. Former Mayor Lim stood his groundand vetoed the
last ordinance.
In its Comment, the 7th Council (2007-2010) alleged that the assailed Ordinance
was enacted to alleviate the economic condition of its constituents.122
Expressing the same position, former Mayor Lim even went to the extent of detailing
the steps123 he took prior to the signing of the Ordinance, if only to show his honest
intention to make the right decision.
The fact remains, however, that notwithstanding that the conditions with respect to
the operations of the oil depots existing prior to the enactment of Ordinance No.
8027 do not substantially differ to this day, as would later be discussed, the position
of the Sangguniang Panlungsod on the matter has thrice changed, largely depending
on the new composition of the council and/or political affiliations. The foregoing, thus,
shows that its determination of the "general welfare" of the city does not after all gear
towards the protection of the people in its true sense and meaning, but is, one way or
another, dependent on the personal preference of the members who sit in the council
as to which particular sector among its constituents it wishes to favor.
Now that the City of Manila, through the mayor and the city councilors, has changed
its view on the matter, favoring the city’s economic related benefits, through the
continued stay of the oil terminals, over the protection of the very lives and safety of
its constituents, it is imperative for this Court to make a final determination on the
basis of the facts on the table as to which specific right of the inhabitants of Manila
should prevail. For, in this present controversy, history reveals that there is truly no
such thing as "the will of Manila" insofar as the general welfare of the people is
concerned.
If in sacrilege, in free translation of Angara124 by Justice Laurel, we say when the
judiciary mediates we do notin reality nullify or invalidate an act of the Manila
Sangguniang Panlungsod, but only asserts the solemn and sacred obligation
assigned to the Court by the Constitution to determine conflicting claims of authority
460
under the Constitution and to establish for the parties in an actual controversy the
rights which that instrument secures and guarantees to them.
III
The measures taken by the intervenors to lend support to their position that Manila is
now safe despite the presence of the oil terminals remain ineffective. These have not
completely removed the threat to the lives of the in habitants of Manila.
In G.R. No. 156052, the validity and constitutionality of Ordinance No. 8027 was
declared as a guarantee for the protection of the constitutional right to life of the
residents of Manila. There, the Court said that the enactment of the said ordinance
was a valid exercise of police power with the concurrence of the two requisites: a
lawful subject – "to safeguard the rights to life, security and safety of all the
inhabitants of Manila;"125 and a lawful method – the enactment of Ordinance No.
8027 reclassifying the land use from industrial to commercial, which effectively ends
the continued stay of the oil depots in Pandacan.126
In the present petitions, the respondents and the oil companies plead that the
Pandacan Terminal has never been one of the targets of terrorist attacks;127 that the
petitions were based on unfounded fears and mere conjectures;128 and that the
possibility that it would be picked by the terrorists is nil given the security measures
installed thereat.129
The intervenors went on to identify the measures taken to ensure the safety of the
people even with the presence of the Pandacan Terminals. Thus:
1. Chevron claims that it, together with Shell and Petron, continues to
enhance the safety and security features of the terminals. They likewise
adopt fire and product spill prevention measures in accordance with the local
standards set by the Bureau of Fire Protection, among others, and with the
international standards of the American Petroleum Industry ("API") and the
National Fire Prevention and Safety Association ("NFPSA"); that since 1914,
the oil depots had not experienced "any incident beyond the ordinary risks
and expectations"130 of the residents of Manila; and that it received a passing
grade on the safety measures they installed in the facilities from the
representatives of the City of Manila who conducted an ocular inspection on
22 May 2009; and
2. Referring to the old MOU entered into between the City of Manila and the
DOE, on the one hand, and the oil companies, on the other, where the parties
thereto conceded and acknowledged that the scale-down option for the
Pandacan Terminal operations is the best alternative to the relocation of the
terminals, Shell enumeratesthe steps taken to scale down its operations.
As to the number of main fuel tanks, the entire Pandacan Terminal has already
decommissioned twenty-eight out of sixty-four tanks. Speaking for Shell alone, its
LPG Spheres, which it claims is the only product that may cause explosion, was part
of those decommissioned, thereby allegedly removing the danger of explosion.
Safety buffer zones and linear/green parks were likewise created to separate the
terminal from the nearest residential area. Shell’s portion of the oil depot is likewise
allegedly equipped with the latest technology to ensure air-quality control and
waterquality control, and to prevent and cope with possible oil spills with a crisis
management plan in place in the event that an oil spill occurs. Finally, Shell claims
that the recommendations of EQE International in its Quantitative Risk Assessment
(QRA) study, which it says is one of the leading independent risk assessment
providers in the world and largest risk management consultancy, were sufficiently
complied with; and that, on its own initiative, it adopted additional measures for the
purpose, for which reason, "the individual risk level resulting from any incident
occurring from the Pandacan Terminal, per the QRA study, is twenty (20) times lower
compared to the individual risk level of an average working or domestic
environment."131
We are not persuaded.
The issue of whether or not the Pandacan Terminal is not a likely target of terrorist
attacks has already been passed upon in G. R. No. 156052. Based on the
assessment of the Committee on Housing, Resettlement and Urban Development of
the City of Manila and the then position of the Sangguniang Panlungsod,132 the Court
was convinced that the threat of terrorism is imminent. It remains so convinced.
461
Even assuming that the respondents and intervenors were correct, the very nature of
the depots where millions of liters of highly flammable and highly volatile products,
regardless of whether ornot the composition may cause explosions, has no place in
a densely populated area. Surely, any untoward incident in the oil depots, beit
related to terrorism of whatever origin or otherwise, would definitely cause not only
destruction to properties within and among the neighboring communities but certainly
mass deaths and injuries.
With regard to the scaling down of the operations in the Pandacan Terminals, which
the oil companies continue to insist to have been validated and recognized by the
MOU, the Court,in G.R. No. 156052, has already put this issue to rest. It specifically
declared that even assuming that the terms of the MOU and Ordinance No. 8027
were inconsistent, the resolutions ratifying the MOU gave it full force and effect only
until 30 April 2003.133
The steps taken by the oil companies, therefore, remain insufficient to convince the
Court that the dangers posed by the presence of the terminals in a thickly populated
area have already been completely removed.
For, given that the threat sought to be prevented may strike at one point or another,
no matter how remote it is as perceived by one or some, we cannot allow the right to
life to bedependent on the unlikelihood of an event. Statistics and theories of
probability have no place in situations where the very life of not just an individual but
of residents of big neighborhoods is at stake.
IV
It is the removal of the danger to life not the mere subdual of risk of catastrophe, that
we saw in and made us favor Ordinance No. 8027. That reason, unaffected by
Ordinance No. 8187, compels the affirmance of our Decision in G.R. No. 156052.
In striking down the contrary provisions of the assailed Ordinance relative to the
continued stay of the oil depots, we follow the same line of reasoning used in G.R.
No. 156052, to wit: Ordinance No. 8027 was enacted "for the purpose of promoting
sound urban planning, ensuring health, public safety and general welfare" of the
residents of Manila. The Sanggunian was impelled to take measures to protect the
residents of Manila from catastrophic devastation in case of a terrorist attack on the
Pandacan Terminals. Towards this objective, the Sanggunian reclassified the area
defined in the ordinance from industrial to commercial.
The following facts were found by the Committee on Housing, Resettlement and
Urban Development of the City of Manila which recommended the approval of the
ordinance:
(1) the depot facilities contained 313.5 million liters of highly flammable and
highly volatile products which include petroleum gas, liquefied petroleum gas,
aviation fuel, diesel, gasoline, kerosene and fuel oil among others;
(2) the depot is open to attack through land, water or air;
(3) it is situated in a densely populated place and near Malacañang Palace;
and
(4) in case of an explosion or conflagration in the depot, the fire could spread
to the neighboring communities.
The ordinance was intended to safeguard the rights to life, security and safety of all
the inhabitants of Manila and not just of a particular class. The depot is perceived,
rightly or wrongly, as a representation of western interests which means that it is a
terrorist target. As long as it (sic) there is such a target in their midst, the residents of
Manila are not safe. It therefore became necessary to remove these terminals to
dissipate the threat. According to respondent:
Such a public need became apparent after the 9/11 incident which showed that what
was perceived to be impossible to happen, to the most powerful country in the world
at that, is actually possible. The destruction of property and the loss of thousands of
lives on that fateful day became the impetus for a public need. Inthe aftermath of the
9/11 tragedy, the threats of terrorism continued [such] that it became imperative for
governments to take measures to combat their effects.
xxxx
462
Both law and jurisprudence support the constitutionality and validity of Ordinance No.
8027. Without a doubt, there are no impediments to its enforcement and
implementation. Any delay is unfair to the inhabitants of the City of Manila and its
leaders who have categorically expressed their desire for the relocation of the
terminals. Their power to chart and control their own destiny and preserve their lives
and safety should not be curtailed by the intervenors’ warnings of doomsday
scenarios and threats of economic disorder if the ordinance is enforced.134
The same best interest of the public guides the present decision. The Pandacan oil
depot remains a terrorist target even if the contents have been lessened. In the
absence of any convincing reason to persuade this Court that the life, security and
safety of the inhabitants of Manila are no longer put at risk by the presence of the oil
depots, we hold that Ordinance No. 8187 in relation to the Pandacan Terminals is
invalid and unconstitutional.
There is, therefore, no need to resolve the rest of the issues.
Neither is it necessary to discuss at length the test of police power against the
assailed ordinance. Suffice it to state that the objective adopted by the Sangguniang
Panlungsod to promote the constituents’ general welfare in terms of economic
benefits cannot override the very basic rights to life, security and safety of the
people.
In. G.R. No. 156052, the Court explained:
Essentially, the oil companies are fighting for their right to property. They allege that
they stand tolose billions of pesos if forced to relocate. However, based on the
hierarchy of constitutionally protected rights, the right to life enjoys precedence over
the right to property. The reason is obvious: life is irreplaceable, property is not.
When the state or LGU’s exercise of police power clashes with a few individuals’
right to property, the former should prevail.135
We thus conclude with the very final words in G.R. No. 156052:
On Wednesday, January 23, 2008, a defective tanker containing 2,000 liters of
gasoline and 14,000 liters of diesel exploded in the middle of the street a short
distance from the exit gate of the Pandacan Terminals, causing death, extensive
damage and a frightening conflagration in the vicinity of the incident. Need we say
anthing about what will happen if it is the estimated 162 to 211 million liters [or
whatever is left of the 26 tanks] of petroleum products in the terminal complex will
blow up?136
V
As in the prequel case, we note that as early as October 2001, the oil companies
signed a MOA with the DOE obliging themselves to:
... undertake a comprehensive and comparative study ... [which] shall include the
preparation ofa Master Plan, whose aim is to determine the scope and timing of the
feasible location of the Pandacan oil terminals and all associated facilities and
infrastructure including government support essential for the relocation such as the
necessary transportation infrastructure, land and right of way acquisition,
resettlement of displaced residents and environmental and social acceptability which
shall be based on mutual benefit of the Parties and the public.
such that:
Now that they are being compelled to discontinue their operations in the Pandacan
Terminals, they cannot feign unreadiness considering that they had years to prepare
for this eventuality.137
On the matter of the details of the relocation, the Court gave the oil companies the
following time frames for compliance:
To ensure the orderly transfer, movement and relocation of assets and personnel,
the intervenors Chevron Philippines Inc., Petron Corporation and Pilipinas Shell
Petroleum Corporation shall, within a nonextendible period of ninety (90) days,
submit to the Regional Trial Court of Manila, Branch 39, the comprehensive plan and
463
relocation schedule which have allegedly been prepared. The presiding judge of
Manila RTC, Branch 39 will monitor the strict enforcement of this resolution.138
The periods were given in the Decision in G.R. No. 156052 which became final on 23
April 2009. Five years have passed, since then. The years of non-compliance may
be excused by the swing of local legislative leads. We now stay the sway and begin
a final count.
A comprehensive and well-coordinated plan within a specific timeframe shall,
therefore, be observed in the relocation of the Pandacan Terminals. The oil
companies shall begiven a fresh non-extendible period of forty-five (45) days from
notice within which to submit to the Regional Trial Court, Branch 39, Manila an
updated comprehensive plan and relocation schedule. The relocation, inturn, shall be
completed not later than six months from the date of their submission. Finally, let it
be underscored that after the last Manifestation filed by Shell informing this Court
that respondent former Mayor Lim vetoed Ordinance No. 8283 for the second time,
and was anticipating its referral to the President for the latter’s consideration, nothing
was heard from any of the parties until the present petitions as to the status of the
approval or disapproval of the said ordinance. As it is, the fate of the Pandacan
Terminals remains dependent on this final disposition of these cases.
VI
On the matter of the failure of Atty. Gempis to immediately comply with the directives
of this Court to file the Memorandum for the Vice-Mayor and the city councilors who
voted in favor of the assailed Ordinance, the records do not bear proof that he
received a copy of any of the resolutions pertaining to the filing of the Memorandum.
A narration of the events from his end would show, however, that he was aware of
the directive issued in 2009 when he stated that "when the City Legal Officer filed its
Memorandum dated 8 February 2010, [he] thought the filing of a Memorandum for
the other respondent city officials could be dispensed with."139 There was also a
categorical admission that he received the later Resolution of 31 May 2011 but that
he could not prepare a Memorandum defending the position of respondents vice-
mayor and the city councilors who voted in favor of Ordinance No. 8187 in view of
the ongoing drafting of Ordinance No. 8283, which would change the position of the
Sanggunian, if subsequently approved.
The reasons he submitted are notimpressed with merit.
That he was not officially designated as the counsel for the vicemayor and the city
councilors is beside the point. As an officer of the court, he cannot feign ignorance of
the fact that"a resolution of this Court is not a mere request but an order which
should be complied with promptly and completely."140 As early as 2009, he should
have immediately responded and filed a Manifestation and therein set forth his
reasons why he cannot represent the vice-mayor and the city councilors. And, even
assuming that the 31 May 2011 Resolution was the first directive he personally
received, he had no valid excuse for disregarding the same. Worse, the Court had to
issue a show cause order before he finally heeded.
Atty. Gempis should "strive harderto live up to his duties of observing and
maintaining the respect dueto the courts, respect for law and for legal processes and
of upholding the integrity and dignity of the legal profession in order to perform his
responsibilities asa lawyer effectively."141
In Sibulo v. Ilagan,142 which involves a lawyer’s repeated failure to comply with the
directives of the Court, the penalty recommended by the Integrated Bar of the
Philippines was reduced from suspension to reprimand and a warning. The Court
ratiocinated:
Considering, however, that respondent was absolved of the administrative charge
against him and is being taken to task for his intransigence and lack of respect, the
Court finds that the penalty of suspension would not be warranted under the
circumstances.
xxxx
To the Court’s mind, a reprimand and a warning are sufficient sanctions for
respondent’s disrespectful actuations directed against the Court and the IBP. The
imposition of these sanctions in the present case would be more consistent with the
464
avowed purpose of disciplinary case, which is "not so much to punish the individual
attorney as to protect the dispensation of justice by sheltering the judiciary and the
public from the misconduct or inefficiency of officers of the court."143
We consider the participation of Atty. Gempis in this case and opt to be lenient even
as we reiterate the objective of protecting the dispensation of justice. We deem it
sufficient to remind Atty. Gempis to be more mindful of his duty as a lawyer towards
the Court.
WHEREFORE, in light of all the foregoing, Ordinance No. 8187 is hereby declared
UNCONSTITUTIONAL and INVALID with respect to the continued stay of the
Pandacan Oil Terminals.
The incumbent mayor of the City of Manila is hereby ordered to CEASE and DESIST
from enforcing Ordinance No. 8187.1âwphi1 In coordination with the appropriate
government agencies and the parties herein involved, he is further ordered to
oversee the relocation and transfer of the oil terminals out of the Pandacan area.
As likewise required in G.R. No. 156052, the intervenors Chevron Philippines, Inc.,
Pilipinas Shell Petroleum Corporation, and Petron Corporation shall, within a non-
extendible period of forty-five (45) days, submit to the Regional Trial Court, Branch
39, Manila an updated comprehensive plan and relocation schedule, which
relocation shall be completed not later than six (6) months from the date the required
documents are submitted. The presiding judge of Branch 39 shall monitor the strict
enforcement of this Decision.
For failure to observe the respect due to the Court, Atty. Luch R. Gempis, Jr.,
Secretary of the Sangguniang Panlungsod, is REMINDED of his duties towards the
Court and WARNED that a repetition of an act similar to that here committed shall be
dealt with more severely.
SO ORDERED.
G.R. No. 210551               June 30, 2015
JOSE J. FERRER, JR., Petitioner,
vs.
CITY MAYOR HERBERT BAUTISTA, CITY COUNCIL OF QUEZON CITY, CITY
TREASURER OF QUEZON CITY, and CITY ASSESSOR OF QUEZON
CITY, Respondents.
DECISION
PERALTA, J.:
Before this Court is a petition for certiorari under Rule 65 of the Rules of Court with
prayer for the issuance of a temporary restraining order (TRO) seeking to declare
unconstitutional and illegal Ordinance Nos. SP-2095, S-2011 and SP-2235, S-2013
on the Socialized Housing Tax and Garbage Fee, respectively, which are being
imposed by the respondents.
The Case
On October 17, 2011,1 respondent Quezon City Council enacted Ordinance No. SP-
2095, S-2011,2 or the Socialized Housing Tax of Quezon City, Section 3 of which
provides:
SECTION 3. IMPOSITION. A special assessment equivalent to one-half percent
(0.5%) on the assessed value of land in excess of One Hundred Thousand Pesos
(Php100,000.00) shall be collected by the City Treasurer which shall accrue to the
Socialized Housing Programs of the Quezon City Government. The special
assessment shall accrue to the General Fund under a special account to be
established for the purpose.
Effective for five (5) years, the Socialized Housing Tax ( SHT ) shall be utilized by the
Quezon City Government for the following projects: (a) land purchase/land banking;
(b) improvement of current/existing socialized housing facilities; (c) land
development; (d) construction of core houses, sanitary cores, medium-rise buildings
and other similar structures; and (e) financing of public-private partners hip
465

agreement of the Quezon City Government and National Housing Authority ( NHA )
with the private sector.3
Under certain conditions, a tax credit shall be enjoyed by taxpayers regularly paying
the special assessment:
SECTION 1. The City Government of Quezon City in conformity with and in relation
to Republic Act No. 7160, otherwise known as the Local Government Code of 1991
HEREBY IMPOSES THE FOLLOWING SCHEDULE AND MANNER FOR THE
ANNUAL COLLECTION OF GARBAGE FEES, AS FOLLOWS: On all domestic
households in Quezon City;

SECTION 7. TAX CREDIT. Taxpayers dutifully paying the special assessment tax as LAND AREA
imposed by this ordinance shall enjoy a tax credit. The tax credit may be availed of IMPOSABLE FEE
only after five (5) years of continue[d] payment. Further, the taxpayer availing this tax
credit must be a taxpayer in good standing as certified by the City Treasurer and City Less than 200 sq. m. PHP 100.00
Assessor.
201 sq. m. – 500 sq. m. PHP 200.00
The tax credit to be granted shall be equivalent to the total amount of the special
assessment paid by the property owner, which shall be given as follows: 501 sq. m. – 1,000 sq. m. PHP 300.00

1. 6th year - 20%

1,001 sq. m. – 1,500 sq. m. PHP 400.00
2. 7th year - 20%
1,501 sq. m. – 2,000 sq. m. or more PHP 500.00
3. 8th year - 20%

4. 9th year - 20%

5. 10th year - 20% On all condominium unit and socialized housing projects/units in Quezon City;

Furthermore, only the registered owners may avail of the tax credit and may not be FLOOR AREA
continued by the subsequent property owners even if they are buyers in good faith, IMPOSABLE FEE
heirs or possessor of a right in whatever legal capacity over the subject property.4
Less than 40 sq. m. PHP 25.00
5
On the other hand, Ordinance No. SP-2235, S-2013  was enacted on December 16,
2013 and took effect ten days after when it was approved by respondent City 41 sq. m. – 60 sq. m. PHP 50.00
Mayor.6 The proceeds collected from the garbage fees on residential properties shall
be deposited solely and exclusively in an earmarked special account under the 61 sq. m. – 100 sq. m. PHP 75.00
general fund to be utilized for garbage collections.7 Section 1 of the Ordinance se t
forth the schedule and manner for the collection of garbage fees:
 466
101 sq. m. – 150 sq. m. PHP 100.00
151 sq. m. – 200 sq. [m.] or more PHP 200.00
On high-rise Condominium Units
a) High-rise Condominium – The Homeowners Association of high- rise
condominiums shall pay the annual garbage fee on the total size of the entire
condominium and socialized Housing Unit and an additional garbage fee
shall be collected based on area occupied for every unit already so ld or
being amortized.
b) High-rise apartment units – Owners of high-rise apartment units shall pay
the annual garbage fee on the total lot size of the entire apartment and an
additional garbage fee based on the schedule prescribed herein for every unit
occupied.
The collection of the garbage fee shall accrue on the first day of January and shall be
paid simultaneously with the payment of the real property tax, but not later than the
first quarter installment.8 In case a household owner refuses to pay, a penalty of 25%
of the garbage fee due, plus an interest of 2% per month or a fraction thereof, shall
be charged.9
Petitioner alleges that he is a registered co-owner of a 371-square-meter residential
property in Quezon City which is covered by Transfer Certificate of Title (TCT ) No.
216288, and that, on January 7, 2014, he paid his realty tax which already included
the garbage fee in the sum of
Php100.00.10
The instant petition was filed on January 17, 2014. We issued a TRO on February 5,
2014, which enjoined the enforcement of Ordinance Nos. SP-2095 and SP-2235 and
required respondents to comment on the petition without necessarily giving due
course thereto.11
Respondents filed their Comment12 with urgent motion to dissolve the TRO on
February 17, 2014. Thereafter, petitioner filed a Reply and a Memorandum on March
3, 2014 and September 8, 2014, respectively.
Procedural Matters
A. Propriety of a Petition for Certiorari
Respondents are of the view that this petition for certiorari is improper since they are
not tribunals, boards or officers exercising judicial or quasi-judicial functions.
Petitioner, however, counters that in enacting Ordinance Nos. SP-2095 and SP-
2235, the Quezon City Council exercised quasi-judicial function because the
ordinances ruled against the property owners who must pay the SHT and the
garbage fee, exacting from them funds for basic essential public services that they
should not be held liable. Even if a Rule 65 petition is improper, petitioner still asserts
that this Court, in a number of cases like in Rosario v. Court of Appeals,13 has taken
cognizance of an improper remedy in the interest of justice.
We agree that respondents neither acted in any judicial or quasi-judicial capacity nor
arrogated unto themselves any judicial or quasi-judicial prerogatives.
A respondent is said to be exercising judicial function where he has the power to
determine what the law is and what the legal rights of the parties are, and then
undertakes to determine these questions and adjudicate upon the rights of the
parties.
Quasi-judicial function, on the other hand, is "a term which applies to the actions,
discretion, etc., of public administrative officers or bodies … required to investigate
facts or ascertain the existence of facts, hold hearings, and draw conclusions from
them as a basis for their official action and to exercise discretion of a judicial nature."
Before a tribunal, board, or officer may exercise judicial or quasi-judicial acts, it is
necessary that there be a law that gives rise to some specific rights of person s or
property under which adverse claims to such rights are made, and the controversy
en suing therefrom is brought before a tribunal, board, or officer clothed with power
467
and authority to determine the law and adjudicate the respective rights of the
contending parties.14
For a writ of certiorari to issue, the following requisites must concur: (1) it must be
directed against a tribunal, board, or officer exercising judicial or quasi-judicial
functions; (2) the tribunal, board, or officer must have acted without or in excess of
jurisdiction or with grave abuse of discretion amounting to lack or excess of
jurisdiction; and (3) there is no appeal or any plain, speedy, and adequate remedy in
the ordinary course of law. The enactment by the Quezon City Council of the
assailed ordinances was done in the exercise of its legislative, not judicial or quasi-
judicial, function. Under Republic Act (R.A.) No.7160, or the Local Government Code
of 1991 (LGC), local legislative power shall be exercised by the Sangguniang
Panlungsod for the city.15Said law likewise is specific in providing that the power to
impose a tax, fee, or charge , or to generate revenue shall be exercised by the
sanggunian of the local government unit concerned through an appropriate
ordinance.16
Also, although the instant petition is styled as a petition for certiorari, it essentially
seeks to declare the unconstitutionality and illegality of the questioned ordinances. It,
thus, partakes of the nature of a petition for declaratory relief, over which this Court
has only appellate, not original, jurisdiction.17
Despite these, a petition for declaratory relief may be treated as one for prohibition or
mandamus, over which we exercise original jurisdiction, in cases with far-reaching
implications or one which raises transcendental issues or questions that need to be
resolved for the public good.18The judicial policy is that this Court will entertain direct
resort to it when the redress sought cannot be obtained in the proper courts or when
exceptional and compelling circumstances warrant availment of a remedy within and
calling for the exercise of Our primary jurisdiction.19
Section 2, Rule 65 of the Rules of Court lay down under what circumstances a
petition for prohibition may be filed:
SEC. 2. Petition for prohibition. - When the proceedings of any tribunal, corporation,
board, officer or person, whether exercising judicial, quasi-judicial or ministerial
functions, are without or in excess of its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, and there is no appeal or any
other plain, speedy, and adequate remedy in the ordinary course of law, a person
aggrieved thereby may file a verified petition in the proper court, alleging the facts
with certainty and praying that judgment be rendered commanding the respondent to
desist from further proceeding in the action or matter specified therein, or otherwise
granting such incidental reliefs as law and justice may require.
In a petition for prohibition against any tribunal, corporation, board, or person –
whether exercising judicial, quasi-judicial, or ministerial functions – who has acted
without or in excess of jurisdiction or with grave abuse of discretion, the petitioner
prays that judgment be rendered, commanding the respondents to desist from further
proceeding in the action or matter specified in the petition. In this case, petitioner's
primary intention is to prevent respondents from implementing Ordinance Nos. SP-
2095 and SP-2235. Obviously, the writ being sought is in the nature of a prohibition,
commanding desistance.
We consider that respondents City Mayor, City Treasurer, and City Assessor are
performing ministerial functions. A ministerial function is one that an officer or tribunal
performs in the context of a given set of facts, in a prescribed manner and without
regard for the exercise of his or its own judgment, upon the propriety or impropriety
of the act done.20 Respondent Mayor, as chief executive of the city government,
exercises such powers and performs such duties and functions as provided for by
the LGC and other laws.21 Particularly, he has the duty to ensure that all taxes and
other revenues of the city are collected, and that city funds are applied to the
payment of expenses and settlement of obligations of the city, in accordance with
law or ordinance.22 On the other hand, under the LGC, all local taxes, fees, and
charges shall be collected by the provincial, city, municipal, or barangay treasurer, or
their duly-authorized deputies, while the assessor shall take charge, among others,
of ensuring that all laws and policies governing the appraisal and assessment of real
properties for taxation purposes are properly executed.23 Anent the SHT, the
Department of Finance (DOF) Local Finance Circular No. 1-97, dated April 16, 1997,
is more specific:
6.3 The Assessor’s office of the Identified LGU shall:
468
a. immediately undertake an inventory of lands within its jurisdiction
which shall be subject to the levy of the Social Housing Tax (SHT) by
the local sanggunian concerned;
b. inform the affected registered owners of the effectivity of the SHT; a
list of the lands and registered owners shall also be posted in 3
conspicuous places in the city/municipality;
c. furnish the Treasurer’s office and the local sanggunian concerned
of the list of lands affected;
6.4 The Treasurer’s office shall:
a. collect the Social Housing Tax on top of the Real Property Tax,
SEF Tax and other special assessments;
b. report to the DOF, thru the Bureau of Local Government Finance,
and the Mayor’s office the monthly collections on Social Housing Tax
(SHT). An annual report should likewise be submitted to the HUDCC
on the total revenues raised during the year pursuant to Sec. 43, R.A.
7279 and the manner in which the same was disbursed.
Petitioner has adduced special and important reasons as to why direct recourse to
us should be allowed. Aside from presenting a novel question of law, this case calls
for immediate resolution since the challenged ordinances adversely affect the
property interests of all paying constituents of Quezon City. As well, this petition
serves as a test case for the guidance of other local government units
(LGUs).Indeed, the petition at bar is of transcendental importance warranting a
relaxation of the doctrine of hierarchy of courts. In Social Justice Society (SJS)
Officers, et al. v. Lim ,24the Court cited the case of Senator Jaworski v. Phil.
Amusement & Gaming Corp.,25 where We ratiocinated:
Granting arguendo that the present action cannot be properly treated as a petition for
prohibition, the transcendental importance of the issues involved in this case
warrants that we set aside the technical defects and take primary jurisdiction over the
petition at bar . x x x This is in accordance with the well entrenched principle that
rules of procedure are not inflexible tools designed to hinder or delay, but to facilitate
and promote the administration of justice. Their strict and rigid application, which
would result in technicalities that tend to frustrate, rather than promote substantial
justice, must always be eschewed.26
B. Locus Standi of Petitioner
Respondents challenge petitioner’s legal standing to file this case on the ground that,
in relation to Section 3 of Ordinance No. SP-2095, petitioner failed to allege his
ownership of a property that has an assessed value of more than Php100,000.00
and, with respect to Ordinance No. SP-2335, by what standing or personality he filed
the case to nullify the same. According to respondents, the petition is not a class suit,
and that, for not having specifically alleged that petitioner filed the case as a
taxpayer, it could only be surmised whether he is a party-in-interest who stands to be
directly benefited or injured by the judgment in this case.
It is a general rule that every action must be prosecuted or defended in the name of
the real party-in-interest, who stands to be benefited or injured by the judgment in the
suit, or the party entitled to the avails of the suit.
Jurisprudence defines interest as "material interest, an interest in issue and to be
affected by the decree, as distinguished from mere interest in the question involved,
or a mere incidental interest. By real interest is meant a present substantial interest,
as distinguished from a mere expectancy or a future, contingent, subordinate, or
consequential interest." "To qualify a person to be a real party-in-interest in whose
name an action must be prosecuted, he must appear to be the present real owner of
the right sought to be enforced."27
"Legal standing" or locus standi calls for more than just a generalized
grievance.28 The concept has been define d as a personal and substantial interest in
the case such that the party has sustained or will sustain direct injury as a result of
the government al act that is being challenged.29 The gist of the question of standing
is whether a party alleges such personal stake in the outcome of the controversy as
to assure that concrete adverseness which sharpens the presentation of issues upon
which the court depends for illumination of difficult constitutional questions.30
469
A party challenging the constitutionality of a law, act, or statute must show "not only
that the law is invalid, but also that he has sustained or is in immediate, or imminent
danger of sustaining some direct injury as a result of its enforcement, and not merely
that he suffers thereby in some indefinite way." It must be shown that he has been,
or is about to be, denied some right or privilege to which he is lawfully entitled, or that
he is about to be subjected to some burdens or penalties by reason of the statute
complained of.31
Tested by the foregoing, petitioner in this case clearly has legal standing to file the
petition. He is a real party-in-interest to assail the constitutionality and legality of
Ordinance Nos. SP-2095 and SP-2235 because respondents did not dispute that he
is a registered co-owner of a residential property in Quezon City an d that he paid
property tax which already included the SHT and the garbage fee. He has substantial
right to seek a refund of the payments he made and to stop future imposition. While
he is a lone petitioner, his cause of action to declare the validity of the subject
ordinances is substantial and of paramount interest to similarly situated property
owners in Quezon City.
C. Litis Pendentia
Respondents move for the dismissal of this petition on the ground of litis pendentia.
They claim that, as early as February 22, 2012, a case entitled Alliance of Quezon
City Homeowners, Inc., et al., v. Hon. Herbert Bautista, et al. , docketed as Civil
Case No. Q-12- 7-820, has been pending in the Quezon City Regional Trial Court,
Branch 104, which assails the legality of Ordinance No. SP-2095. Relying on City of
Makati, et al. v. Municipality (now City) of Taguig, et al.,32 respondents assert that
there is substantial identity of parties between the two cases because petitioner
herein and plaintiffs in the civil case filed their respective cases as taxpayers of
Quezon City.
For petitioner, however, respondents’ contention is untenable since he is not a party
in Alliance and does not even have the remotest identity or association with the
plaintiffs in said civil case. Moreover, respondents’ arguments would deprive this
Court of its jurisdiction to determine the constitutionality of laws under Section 5,
Article VIII of the 1987 Constitution.33
Litis pendentia is a Latin term which literally means "a pending suit" and is variously
referred to in some decisions as lis pendens and auter action pendant.34 While it is
normally connected with the control which the court has on a property involved in a
suit during the continuance proceedings, it is more interposed as a ground for the
dismissal of a civil action pending in court.35 In Film Development Council of the
Philippines v. SM Prime Holdings, Inc.,36 We elucidated:
Litis pendentia, as a ground for the dismissal of a civil action, refers to a situation
where two actions are pending between the same parties for the same cause of
action, so that one of them becomes unnecessary and vexatious. It is based on the
policy against multiplicity of suit and authorizes a court to dismiss a case motu
proprio.
xxxx
The requisites in order that an action may be dismissed on the ground of litis
pendentia are: (a) the identity of parties, or at least such as representing the same
interest in both actions; (b) the identity of rights asserted and relief prayed for, the
relief being founded on the same facts, and (c) the identity of the two cases such that
judgment in one, regardless of which party is successful, would amount to res
judicata in the other.
The underlying principle of litis pendentia is the theory that a party is not allowed to
vex another more than once regarding the same subject matter and for the same
cause of action. This theory is founded on the public policy that the same subject
matter should not be the subject of controversy in courts more than once, in order
that possible conflicting judgments may be avoided for the sake of the stability of the
rights and status of persons, and also to avoid the costs and expenses incident to
numerous suits.
Among the several tests resorted to in ascertaining whether two suits relate to a
single or common cause of action are: (1) whether the same evidence would support
and sustain both the first and second causes of action; and (2) whether the defenses
in one case may be used to substantiate the complaint in the other.
470
The determination of whether there is an identity of causes of action for purposes of
litis pendentia is inextricably linked with that of res judicata , each constituting an
element of the other. In either case, both relate to the sound practice of including, in
a single litigation, the disposition of all issues relating to a cause of action that is
before a court.37
There is substantial identity of the parties when there is a community of interest
between a party in the first case and a party in the second case albeit the latter was
not impleaded in the first case.38 Moreover, the fact that the positions of the parties
are reversed, i.e., the plaintiffs in the first case are the defendants in the second case
or vice-versa, does not negate the identity of parties for purposes of determining
whether the case is dismissible on the ground of litis pendentia .39
In this case, it is notable that respondents failed to attach any pleading connected
with the alleged civil case pending before the Quezon City trial
court.1âwphi1 Granting that there is substantial identity of parties between said case
and this petition, dismissal on the ground of litis pendentia still cannot be had in view
of the absence of the second and third requisites. There is no way for us to
determine whether both cases are based on the same set of facts that require the
presentation of the same evidence. Even if founded on the same set of facts, the
rights asserted and reliefs prayed for could be different. Moreover, there is no basis
to rule that the two cases are intimately related and/or intertwined with one another
such that the judgment that may be rendered in one, regardless of which party would
be successful, would amount to res judicata in the other.
D. Failure to Exhaust Administrative Remedies
Respondents contend that petitioner failed to exhaust administrative remedies for his
non-compliance with Section 187 of the LGC, which mandates:
Section 187. Procedure for Approval and Effectivity of Tax Ordinances and Revenue
Measures; Mandatory Public Hearings. – The procedure for approval of local tax
ordinances and revenue measures shall be in accordance with the provisions of this
Code: Provided, That public hearings shall be conducted for the purpose prior to the
enactment thereof: Provided, further, That any question on the constitutionality or
legality of tax ordinances or revenue measures may be raised on appeal within thirty
(30) days from the effectivity thereof to the Secretary of Justice who shall render a
decision within sixty (60) days from the date of receipt of the appeal: Provided,
however, That such appeal shall not have the effect of suspending the effectivity of
the ordinance and the accrual and payment of the tax, fee, or charge levied therein:
Provided, finally, That within thirty (30) days after receipt of the decision or the lapse
of the sixty-day period without the Secretary of Justice acting upon the appeal, the
aggrieved party may file appropriate proceedings with a court of competent
jurisdiction.
The provision, the constitutionality of which was sustained in Drilon v. Lim ,40 has
been construed as mandatory41 considering that –
A municipal tax ordinance empowers a local government unit to impose taxes. The
power to tax is the most effective instrument to raise needed revenues to finance and
support the myriad activities of local government units for the delivery of basic
services essential to the promotion of the general welfare and enhancement of
peace, progress, and prosperity of the people. Consequently, any delay in
implementing tax measures would be to the detriment of the public. It is for this
reason that protests over tax ordinances are required to be done within certain time
frames. x x x.42
The obligatory nature of Section 187 was underscored in Hagonoy Market Vendor
Asso. v. Municipality of Hagonoy:43
x x x [T]he timeframe fixed by law fo r parties to avail of their legal remedies before
competent courts is not a "mere technicality" that can be easily brushed aside. The
periods stated in Section 187 of the Local Government Code are mandatory. x x x
Being its lifeblood, collection of revenues by the government is of paramount
importance. The funds for the operation of its agencies and provision of basic
services to its inhabitants are largely derived from its revenues and collections. Thus,
it is essential that the validity of revenue measures is not left uncertain for a
considerable length of time. Hence, the law provided a time limit for an aggrieved
party to assail the legality of revenue measures and tax ordinances."44
Despite these cases, the Court, in Ongsuco, et al. v. Hon. Malones,45held that there
was no need for petitioners therein to exhaust administrative remedies before
471
resorting to the courts, considering that there was only a pure question of law, the
parties did not dispute any factual matter on which they had to present evidence.
Likewise, in Cagayan Electric Power and Light Co., Inc. v. City of Cagayan de
Oro,46 We relaxed the application of the rules in view of the more substantive
matters. For the same reasons, this petition is an exception to the general rule.
Substantive Issues
Petitioner asserts that the protection of real properties from informal settlers and the
collection of garbage are basic and essential duties and functions of the Quezon City
Government. By imposing the SHT and the garbage fee, the latter has shown a
penchant and pattern to collect taxes to pay for public services that could be covered
by its revenues from taxes imposed on property, idle land, business, transfer,
amusement, etc., as well as the Internal Revenue Allotment (IRA ) from the National
Government. For petitioner, it is noteworthy that respondents did not raise the issue
that the Quezon City Government is in dire financial state and desperately needs
money to fund housing for informal settlers and to pay for garbage collection. In fact,
it has not denied that its revenue collection in 2012 is in the sum of ₱13.69 billion.
Moreover, the imposition of the SHT and the garbage fee cannot be justified by the
Quezon City Government as an exercise of its power to create sources of income
under Section 5, Article X of the 1987 Constitution.47 According to petitioner, the
constitutional provision is not a carte blanche for the LGU to tax everything under its
territorial and political jurisdiction as the provision itself admits of guidelines and
limitations.
Petitioner further claims that the annual property tax is an ad valorem tax, a
percentage of the assessed value of the property, which is subject to revision every
three (3) years in order to reflect an increase in the market value of the property. The
SHT and the garbage fee are actually increases in the property tax which are not
based on the assessed value of the property or its reassessment every three years;
hence, in violation of Sections 232 and 233 of the LGC.48
For their part, respondents relied on the presumption in favor of the constitutionality
of Ordinance Nos. SP-2095 and SP-2235, invoking Victorias Milling Co., Inc. v.
Municipality of Victorias, etc.,49 People v. Siton, et al.,50 and Hon. Ermita v. Hon.
Aldecoa-Delorino .51 They argue that the burden of establishing the invalidity of an
ordinance rests heavily upon the party challenging its constitutionality. They insist
that the questioned ordinances are proper exercises of police power similar to
Telecom. & Broadcast Attys. of the Phils., Inc. v. COMELEC52 and Social Justice
Society (SJS), et al. v. Hon. Atienza, Jr.53 and that their enactment finds basis in the
social justice principle enshrined in Section 9,54 Article II of the 1987 Constitution.
As to the issue of publication, respondents argue that where the law provides for its
own effectivity, publication in the Official Gazette is not necessary so long as it is not
punitive in character, citing Balbuna, et al. v. Hon. Secretary of Education, et
al.55 and Askay v. Cosalan .[56]] Thus, Ordinance No. SP-2095 took effect after its
publication, while Ordinance No. SP-2235 became effective after its approval on
December 26, 2013.
Additionally, the parties articulate the following positions:
On the Socialized Housing Tax
Respondents emphasize that the SHT is pursuant to the social justice principle found
in Sections 1 and 2, Article XIII57 of the 1987 Constitution and Sections 2 (a)58 and
4359 of R.A. No. 7279, or the "Urban Development and Housing Act of 1992
( UDHA ).
Relying on Manila Race Horse Trainers Assn., Inc. v. De La Fuente,60and Victorias
Milling Co., Inc. v. Municipality of Victorias, etc.,61respondents assert that Ordinance
No. SP-2095 applies equally to all real property owners without discrimination. There
is no way that the ordinance could violate the equal protection clause because real
property owners and informal settlers do not belong to the same class.
Ordinance No. SP-2095 is also not oppressive since the tax rate being imposed is
consistent with the UDHA. While the law authorizes LGUs to collect SHT on
properties with an assessed value of more than ₱50,000.00, the questioned
ordinance only covers properties with an assessed value exceeding ₱100,000.00. As
well, the ordinance provides for a tax credit equivalent to the total amount of the
special assessment paid by the property owner beginning in the sixth (6th) year of
the effectivity of the ordinance.
472
On the contrary, petitioner claims that the collection of the SHT is tantamount to a
penalty imposed on real property owners due to the failure of respondent Quezon
City Mayor and Council to perform their duty to secure and protect real property
owners from informal settlers, thereby burdening them with the expenses to provide
funds for housing. For petitioner, the SHT cannot be viewed as a "charity" from real
property owners since it is forced, not voluntary.
Also, petitioner argues that the collection of the SHT is a kind of class legislation that
violates the right of property owners to equal protection of the laws since it favors
informal settlers who occupy property not their own and pay no taxes over law-
abiding real property owners w ho pay income and realty taxes.
Petitioner further contends that respondents’ characterization of the SHT as "nothing
more than an advance payment on the real property tax" has no statutory basis.
Allegedly, property tax cannot be collected before it is due because, under the LGC,
chartered cities are authorized to impose property tax based on the assessed value
and the general revision of assessment that is made every three (3) years.
As to the rationale of SHT stated in Ordinance No. SP-2095, which, in turn, was
based on Section 43 of the UDHA, petitioner asserts that there is no specific
provision in the 1987 Constitution stating that the ownership and enjoyment of
property bear a social function. And even if there is, it is seriously doubtful and far-
fetched that the principle means that property owners should provide funds for the
housing of informal settlers and for home site development. Social justice and police
power, petitioner believes, does not mean imposing a tax on one, or that one has to
give up something, for the benefit of another. At best, the principle that property
ownership and enjoyment bear a social function is but a reiteration of the Civil Law
principle that property should not be enjoyed and abused to the injury of other
properties and the community, and that the use of the property may be restricted by
police power, the exercise of which is not involved in this case.
Finally, petitioner alleges that 6 Bistekvilles will be constructed out of the SHT
collected. Bistek is the monicker of respondent City Mayor. The Bistekvilles makes it
clear, therefore, that politicians will take the credit for the tax imposed on real
property owners.
On the Garbage Fee
Respondents claim that Ordinance No. S-2235, which is an exercise of police power,
collects on the average from every household a garbage fee in the meager amount
of thirty-three (33) centavos per day compared with the sum of ₱1,659.83 that the
Quezon City Government annually spends for every household for garbage
collection and waste management.62
In addition, there is no double taxation because the ordinance involves a fee. Even
assuming that the garbage fee is a tax, the same cannot be a direct duplicate tax as
it is imposed on a different subject matter and is of a different kind or character.
Based on Villanueva, et al. v. City of Iloilo63 and Victorias Milling Co., Inc. v.
Municipality of Victorias, etc.,64 there is no "taxing twice" because the real property
tax is imposed on ownership based on its assessed value, while the garbage fee is
required on the domestic household. The only reference to the property is the
determination of the applicable rate and the facility of collection.
Petitioner argues, however, that Ordinance No. S-2235 cannot be justified as an
exercise of police power. The cases of Calalang v. Williams,65 Patalinghug v. Court
of Appeals,66 and Social Justice Society (SJS), et al. v. Hon. Atienza, Jr.,67 which
were cited by respondents, are inapplicable since the assailed ordinance is a
revenue measure and does not regulate the disposal or other aspect of garbage.
The subject ordinance, for petitioner, is discriminatory as it collects garbage fee only
from domestic households and not from restaurants, food courts, fast food chains,
and other commercial dining places that spew garbage much more than residential
property owners.
Petitioner likewise contends that the imposition of garbage fee is tantamount to
double taxation because garbage collection is a basic and essential public service
that should be paid out from property tax, business tax, transfer tax, amusement tax,
community tax certificate, other taxes, and the IRA of the Quezon City Government.
To bolster the claim, he states that the revenue collection of the Quezon City
Government reached Php13.69 billion in 2012. A small portion of said amount could
be spent for garbage collection and other essential services.
473
It is further noted that the Quezon City Government already collects garbage fee
under Section 4768 of R.A. No. 9003, or the Ecological Solid Waste Management Act
of 2000, which authorizes LGUs to impose fees in amounts sufficient to pay the costs
of preparing, adopting, and implementing a solid waste management plan, and that
LGUs have access to the Solid Waste Management (SWM) Fund created under
Section 4669 of the same law. Also, according to petitioner, it is evident that
Ordinance No. S2235 is inconsistent with R.A. No. 9003 for whil e the law
encourages segregation, composting, and recycling of waste, the ordinance only
emphasizes the collection and payment of garbage fee; while the law calls for an
active involvement of the barangay in the collection, segregation, and recycling of
garbage, the ordinance skips such mandate. Lastly, in challenging the ordinance,
petitioner avers that the garbage fee was collected even if the required publication of
its approval had not yet elapsed. He notes that on January 7, 2014, he paid his realty
tax which already included the garbage fee.
The Court's Ruling
Respondents correctly argued that an ordinance, as in every law, is presumed valid.
An ordinance carries with it the presumption of validity. The question of
reasonableness though is open to judicial inquiry. Much should be left thus to the
discretion of municipal authorities. Courts will go slow in writing off an ordinance as
unreasonable unless the amount is so excessive as to be prohibitive, arbitrary,
unreasonable, oppressive, or confiscatory. A rule which has gained acceptance is
that factors relevant to such an inquiry are the municipal conditions as a whole and
the nature of the business made subject to imposition.70
For an ordinance to be valid though, it must not only be within the corporate powers
of the LGU to enact and must be passed according to the procedure prescribed by
law, it should also conform to the following requirements: (1) not contrary to the
Constitution or any statute; (2) not unfair or oppressive; (3) not partial or
discriminatory; (4) not prohibit but may regulate trade; (5) general and consistent with
public policy; and (6) not unreasonable.71 As jurisprudence indicates, the tests are
divided into the formal (i.e., whether the ordinance was enacted within the corporate
powers of the LGU and whether it was passed in accordance with the procedure
prescribed by law), and the substantive ( i.e., involving inherent merit, like the
conformity of the ordinance with the limitations under the Constitution and the
statutes, as well as with the requirements of fairness and reason, and its consistency
with public policy).72
An ordinance must pass muster under the test of constitutionality and the test of
consistency with the prevailing laws.73 If not, it is void.74
Ordinance should uphold the principle of the supremacy of the Constitution.75 As to
conformity with existing statutes,
Batangas CATV, Inc. v. Court of Appeals76 has this to say:
It is a fundamental principle that municipal ordinances are inferior in status and
subordinate to the laws of the state. An ordinance in conflict with a state law of
general character and statewide application is universally held to be invalid. The
principle is frequently expressed in the declaration that municipal authorities, under a
general grant of power, cannot adopt ordinances which infringe the spirit of a state
law or repugnant to the general policy of the state. In every power to pass
ordinances given to a municipality, there is an implied restriction that the ordinances
shall be consistent with the general law. In the language of Justice Isagani Cruz
(ret.), this Court, in Magtajas vs. Pryce Properties Corp., Inc., ruled that:
The rationale of the requirement that the ordinances should not contravene a statute
is obvious. Municipal governments are only agents of the national government. Local
councils exercise only delegated legislative powers conferred on them by Congress
as the national lawmaking body. The delegate cannot be superior to the principal or
exercise powers higher than those of the latter. It is a heresy to suggest that the local
government units can undo the acts of Congress, from which they have derived their
power in the first place, and negate by mere ordinance the mandate of the statute.
Municipal corporations owe their origin to, and derive their powers and rights wholly
from the legislature. It breathes into them the breath of life, without which they cannot
exist. As it creates, so it may destroy. As it may destroy, it may abridge and control.
Unless there is some constitutional limitation on the right, the legislature might, by a
single act, and if we can suppose it capable of so great a folly and so great a wrong,
sweep from existence all of the municipal corporations in the State, and the
474
corporation could not prevent it. We know of no limitation on the right so far as to the
corporation themselves are concerned. They are so to phrase it, the mere tenants at
will of the legislature.
This basic relationship between the national legislature and the local government
units has not been enfeebled by the new provisions in the Constitution strengthening
the policy of local autonomy. Without meaning to detract from that policy, we here
confirm that Congress retains control of the local government units although in
significantly reduced degree now than under our previous Constitutions. The power
to create still includes the power to destroy. The power to grant still includes the
power to withhold or recall. True, there are certain notable innovations in the
Constitution, like the direct conferment on the local government units of the power to
tax, which cannot now be withdrawn by mere statute. By and large, however, the
national legislature is still the principal of the local government units, which cannot
defy its will or modify or violate it.77
LGUs must be reminded that they merely form part of the whole; that the policy of
ensuring the autonomy of local governments was never intended by the drafters of
the 1987 Constitution to create an imperium in imperio and install an intra-sovereign
political subdivision independent of a single sovereign state.78
"[M]unicipal corporations are bodies politic and corporate, created not only as local
units of local self-government, but as governmental agencies of the state. The
legislature, by establishing a municipal corporation, does not divest the State of any
of its sovereignty; absolve itself from its right and duty to administer the public affairs
of the entire state; or divest itself of any power over the inhabitants of the district
which it possesses before the charter was granted."79
LGUs are able to legislate only by virtue of a valid delegation of legislative power
from the national legislature; they are mere agents vested with what is called the
power of subordinate legislation.80 "Congress enacted the LGC as the implementing
law for the delegation to the various LGUs of the State’s great powers, namely: the
police power, the power of eminent domain, and the power of taxation. The LGC was
fashioned to delineate the specific parameters and limitations to be complied with by
each LGU in the exercise of these delegated powers with the view of making each
LGU a fully functioning subdivision of the State subject to the constitutional and
statutory limitations."81
Specifically, with regard to the power of taxation, it is indubitably the most effective
instrument to raise needed revenues in financing and supporting myriad activities of
the LGUs for the delivery of basic services essential to the promotion of the general
welfare and the enhancement of peace, progress, and prosperity of the people.82 As
this Court opined in National Power Corp. v. City of Cabanatuan:83
In recent years, the increasing social challenges of the times expanded the scope of
state activity, and taxation has become a tool to realize social justice and the
equitable distribution of wealth, economic progress and the protection of local
industries as well as public welfare and similar objectives. Taxation assume s even
greater significance with the ratification of the 1987 Constitution. Thenceforth, the
power to tax is no longer vested exclusively on Congress; local legislative bodies are
now given direct authority to levy taxes, fees and other charges pursuant to Article X,
Section 5 of the 1987 Constitution, viz: "Section 5. Each Local Government unit shall
have the power to create its own sources of revenue, to levy taxes, fees and charges
subject to such guidelines and limitations as the Congress may provide, consistent
with the basic policy of local autonomy. Such taxes, fees and charges shall accrue
exclusively to the local governments."
This paradigm shift results from the realization that genuine development can be
achieved only by strengthening local autonomy and promoting decentralization of
governance. For a long time, the country’s highly centralized government structure
has bred a culture of dependence among local government leaders upon the
national leadership. It has also "dampened the spirit of initiative, innovation and
imaginative resilience in matters of local development on the part of local
government leaders." The only way to shatter this culture of dependence is to give
the LGUs a wider role in the delivery of basic services, and confer them sufficient
powers to generate their own sources for the purpose. To achieve this goal, Section
3 of Article X of the 1987 Constitution mandates Congress to enact a local
government code that will, consistent with the basic policy of local autonomy , set the
guidelines and limitations to this grant of taxing powers x x x84
475
Fairly recently, We also stated in Pelizloy Realty Corporation v. Province of
Benguet85 that:
The rule governing the taxing power of provinces, cities, municipalities and
barangays is summarized in Icard v. City Council of Baguio :
It is settled that a municipal corporation unlike a sovereign state is clothed with no
inherent power of taxation. The charter or statute must plainly show an intent to
confer that power or the municipality, cannot assume it. And the power when granted
is to be construed in strictissimi juris . Any doubt or ambiguity arising out of the term
used in granting that power must be resolved against the municipality. Inferences,
implications, deductions – all these – have no place in the interpretation of the taxing
power of a municipal corporation. [Underscoring supplied]
xxxx
Per Section 5, Article X of the 1987 Constitution, "the power to tax is no longer
vested exclusively on Congress; local legislative bodies are now given direct
authority to levy taxes, fees and other charges." Nevertheless, such authority is
"subject to such guidelines and limitations as the Congress may provide."
In conformity with Section 3, Article X of the 1987 Constitution, Congress enacted
Republic Act No. 7160, otherwise known as the Local Government Code of 1991.
Book II of the LGC governs local taxation and fiscal matters.86
Indeed, LGUs have no inherent power to tax except to the extent that such power
might be delegated to them either by the basic law or by the statute.87 "Under the
now prevailing Constitution , where there is neither a grant nor a prohibition by
statute , the tax power must be deemed to exist although Congress may provide
statutory limitations and guidelines. The basic rationale for the current rule is to
safeguard the viability and self-sufficiency of local government units by directly
granting them general and broad tax powers. Nevertheless, the fundamental law did
not intend the delegation to be absolute and unconditional; the constitutional
objective obviously is to ensure that, while the local government units are being
strengthened and made more autonomous , the legislature must still see to it that (a)
the taxpayer will not be over-burdened or saddled with multiple and unreasonable
impositions; (b) each local government unit will have its fair share of available
resources; (c) the resources of the national government will not be unduly disturbed;
and (d) local taxation will be fair, uniform, and just."88
Subject to the provisions of the LGC and consistent with the basic policy of local
autonomy, every LGU is now empowered and authorized to create its own sources
of revenue and to levy taxes, fees, and charges which shall accrue exclusively to the
local government unit as well as to apply its resources and assets for productive,
developmental, or welfare purposes, in the exercise or furtherance of their
governmental or proprietary powers and functions.89 The relevant provisions of the
LGC which establish the parameters of the taxing power of the LGUs are as follows:
SECTION 130. Fundamental Principles. – The following fundamental principles shall
govern th e exercise of the taxing and other revenue-raising powers of local
government units:
(a) Taxation shall be uniform in each local government unit;
(b) Taxes, fees, charges and other impositions shall:
(1) be equitable and based as far as practicable on the taxpayer’s
ability to pay;
(2) be levied and collected only for public purposes;
(3) not be unjust, excessive, oppressive, or confiscatory;
(4) not be contrary to law, public policy, national economic policy, or in
restraint of trade;
(c) The collection of local taxes, fees, charges and other impositions shall in
no case be left to any private person;
(d) The revenue collected pursuant to the provisions of this Code shall inure
solely to the benefit of, and be subject to the disposition by, the local
476
government unit levying the tax, fee, charge or other imposition unless
otherwise specifically provided herein; and,
(e) Each local government unit shall, as far as practicable, evolve a
progressive system of taxation.
SECTION 133. Common Limitations on the Taxing Powers of Local Government
Units. – Unless otherwise provided herein, the exercise of the taxing powers of
provinces, cities, municipalities, and barangays shall not extend to the levy of the
following:
(a) Income tax, except when levied on banks and other financial institutions;
(b) Documentary stamp tax;
(c) Taxes on estates, inheritance, gifts, legacies and other acquisitions mortis
causa, except as otherwise provided herein;
(d) Customs duties, registration fees of vessel and wharage on wharves,
tonnage dues, and all other kinds of customs fees, charges and dues except
wharfage on wharves constructed and maintained by the local government
unit concerned;
(e) Taxes, fees, and charges and other impositions upon goods carried into
or out of, or passing through, the territorial jurisdictions of local government
units in the guise of charges for wharfage, tolls for bridges or otherwise, or
other taxes, fees, or charges in any form whatsoever upon such goods or
merchandise;
(f) Taxes, fees or charges on agricultural and aquatic products when sold by
marginal farmers or fishermen;
(g) Taxes on business enterprises certified to by the Board of Investments as
pioneer or non-pioneer for a period of six (6) and four (4) years, respectively
from the date of registration;
(h) Excise taxes on articles enumerated under the National Internal Revenue
Code, as amended, and taxes, fees or charges on petroleum products;
(i) Percentage or value-added tax (VAT) on sales, barters or exchanges or
similar transactions on goods or services except as otherwise provided
herein;
(j) Taxes on the gross receipts of transportation contractors and persons
engaged in the transportation of passengers or freight by hire and common
carriers by air, land or water, except as provided in this Code;
(k) Taxes on premiums paid by way of reinsurance or retrocession;
(l) Taxes, fees or charges for the registration of motor vehicles and for the
issuance of all kinds of licenses or permits for the driving thereof, except
tricycles;
(m) Taxes, fees, or other charges on Philippine products actually exported,
except as otherwise provided herein;
(n) Taxes, fees, or charges, on Countryside and Barangay Business
Enterprises and cooperatives duly registered under R.A. No. 6810 and
Republic Act Numbered Sixty-nine hundred thirty-eight (R.A. No. 6938)
otherwise known as the "Cooperative Code of the Philippines" respectively;
and
(o) Taxes, fees or charges of any kind on the National Government, its
agencies and instrumentalities, and local government units.
SECTION 151. Scope of Taxing Powers. – Except as otherwise provided in this
Code, the city, may levy the taxes, fees, and charges which the province or
municipality may impose: Provided, however, That the taxes, fees and charges
levied and collected by highly urbanized and independent component cities shall
accrue to them and distributed in accordance with the provisions of this Code.
477
The rates of taxes that the city may levy may exceed the maximum rates allowed for
the province or municipality by not more than fifty percent (50%) except the rates of
professional and amusement taxes.
SECTION 186. Power to Levy Other Taxes, Fees or Charges. – Local government
units may exercise the power to levy taxes, fees or charges on any base or subject
not otherwise specifically enumerated herein or taxed under the provisions of the
National Internal Revenue Code, as amended, or other applicable laws: Provided,
That the taxes, fees, or charges shall not be unjust, excessive, oppressive,
confiscatory or contrary to declared national policy: Provided, further, That the
ordinance levying such taxes, fees or charges shall not be enacted without any prior
public hearing conducted for the purpose.
On the Socialized Housing Tax
Contrary to petitioner’s submission, the 1987 Constitution explicitly espouses the
view that the use of property bears a social function and that all economic agents
shall contribute to the common good.90 The Court already recognized this in Social
Justice Society (SJS), et al. v. Hon. Atienza, Jr.:91
Property has not only an individual function, insofar as it has to provide for the needs
of the owner, but also a social function insofar as it has to provide for the needs of
the other members of society. The principle is this:
Police power proceeds from the principle that every holder of property, however
absolute and unqualified may be his title, holds it under the implied liability that his
use of it shall not be injurious to the equal enjoyment of others having an equal right
to the enjoyment of their property, no r injurious to the right of the community. Rights
of property, like all other social and conventional rights, are subject to reasonable
limitations in their enjoyment as shall prevent them from being injurious, and to such
reasonable restraints and regulations established by law as the legislature, under the
governing an d controlling power vested in them by the constitution, may think
necessary and expedient.92
Police power, which flows from the recognition that salus populi est suprema lex (the
welfare of the people is the supreme law), is the plenary power vested in the
legislature to make statutes and ordinances to promote the health, morals, peace,
education, good order or safety and general welfare of the people.93 Property rights
of individuals may be subjected to restraints and burdens in order to fulfill the
objectives of the government in the exercise of police power. 94 In this jurisdiction, it
is well-entrenched that taxation may be made the implement of the state’s police
power.95
Ordinance No. SP-2095 imposes a Socialized Housing Tax equivalent to 0.5% on
the assessed value of land in excess of Php100,000.00. This special assessment is
the same tax referred to in R.A. No. 7279 or the UDHA.96 The SHT is one of the
sources of funds for urban development and housing program.97 Section 43 of the
law provides:
Sec. 43. Socialized Housing Tax . – Consistent with the constitutional principle that
the ownership and enjoyment of property bear a social function and to raise funds for
the Program, all local government units are hereby authorized to impose an
additional one-half percent (0.5%) tax on the assessed value of all lands in urban
areas in excess of Fifty thousand pesos (₱50,000.00).
The rationale of the SHT is found in the preambular clauses of the subject ordinance,
to wit:
WHEREAS, the imposition of additional tax is intended to provide the City
Government with sufficient funds to initiate, implement and undertake Socialized
Housing Projects and other related preliminary activities;
WHEREAS, the imposition of 0.5% tax will benefit the Socialized Housing Programs
and Projects of the City Government, specifically the marginalized sector through the
acquisition of properties for human settlements;
WHEREAS, the removal of the urban blight will definitely increase fair market value
of properties in the city[.]
The above-quoted are consistent with the UDHA, which the LGUs are charged to
implement in their respective localities in coordination with the Housing and Urban
478
Development Coordinating Council, the national housing agencies, the Presidential
Commission for the Urban Poor, the private sector, and other non-government
organizations.98 It is the declared policy of the State to undertake a comprehensive
and continuing urban development and housing program that shall, among others,
uplift the conditions of the underprivileged and homeless citizens in urban areas and
in resettlement areas, and provide for the rational use and development of urban
land in order to bring a bout, among others, reduction in urban dysfunctions,
particularly those that adversely affect public health, safety and ecology, and access
to land and housing by the underprivileged and homeless citizens.99 Urban renewal
and resettlement shall include the rehabilitation and development of blighted and
slum areas100 and the resettlement of program beneficiaries in accordance with the
provisions of the UDHA.101 Under the UDHA, socialized housing102 shall be the
primary strategy in providing shelter for the underprivileged and homeless.103 The
LGU or the NHA, in cooperation with the private developers and concerned
agencies, shall provide socialized housing or re settlement areas with basic services
and facilities such as potable water, power and electricity, and an adequate power
distribution system, sewerage facilities, and an efficient and adequate solid waste
disposal system; and access to primary roads and transportation facilities.104 The
provisions for health, education, communications, security, recreation, relief and
welfare shall also be planned and be given priority for implementation by the LGU
and concerned agencies in cooperation with the private sector and the beneficiaries
themselves.105
Moreover, within two years from the effectivity of the UDHA, the LGUs, in
coordination with the NHA, are directed to implement the relocation and resettlement
of persons living in danger areas such as esteros , railroad tracks, garbage dumps,
riverbanks, shorelines, waterways, and other public places like sidewalks, roads,
parks, and playgrounds.106 In coordination with the NHA, the LG Us shall provide
relocation or resettlement sites with basic services and facilities and access to
employment and livelihood opportunities sufficient to meet the basic needs of the
affected families.107
Clearly, the SHT charged by the Quezon City Government is a tax which is within its
power to impose. Aside from the specific authority vested by Section 43 of the
UDHA, cities are allowed to exercise such other powers and discharge such other
functions and responsibilities as are necessary, appropriate, or incidental to efficient
and effective provision of the basic services and facilities which include, among
others, programs and projects for low-cost housing and other mass dwellings.108 The
collections made accrue to its socialized housing programs and projects.
The tax is not a pure exercise of taxing power or merely to raise revenue; it is levied
with a regulatory purpose. The levy is primarily in the exercise of the police power for
the general welfare of the entire city. It is greatly imbued with public interest.
Removing slum areas in Quezon City is not only beneficial to the underprivileged and
homeless constituents but advantageous to the real property owners as well. The
situation will improve the value of the their property investments, fully enjoying the
same in view of an orderly, secure, and safe community, and will enhance the quality
of life of the poor, making them law-abiding constituents and better consumers of
business products.
Though broad and far-reaching, police power is subordinate to constitutional
limitations and is subject to the requirement that its exercise must be reasonable and
for the public good.109 In the words of City of Manila v. Hon. Laguio, Jr.:110
The police power granted to local government units must always be exercised with
utmost observance of the rights of the people to due process and equal protection of
the law. Such power cannot be exercised whimsically, arbitrarily or despotically as its
exercise is subject to a qualification, limitation or restriction demanded by the respect
and regard due to the prescription of the fundamental law, particularly those forming
part of the Bill of Rights. Individual rights, it bears emphasis, may be adversely
affected only to the extent that may fairly be required by the legitimate demands of
public interest or public welfare. Due process requires the intrinsic validity of the law
in interfering with the rights of the person to his life, liberty and property.
xxxx
To successfully invoke the exercise of police power as the rationale for the
enactment of the Ordinance, and to free it from the imputation of constitutional
infirmity, not only must it appear that the interests of the public generally, as
distinguished from those of a particular class, require an interference with private
rights, but the means adopted must be reasonably necessary for the
accomplishment of the purpose and not unduly oppressive upon individuals. It must
479
be evident that no other alternative for the accomplishment of the purpose less
intrusive of private rights can work. A reasonable relation must exist between the
purposes of the police measure and the means employed for its accomplishment, for
even under the guise of protecting the public interest, personal rights and those
pertaining to private property will not be permitted to be arbitrarily invaded.
Lacking a concurrence of these two requisites, the police measure shall be struck
down as an arbitrary intrusion into private rights – a violation of the due process
clause.111
As with the State, LGUs may be considered as having properly exercised their police
power only if there is a lawful subject and a lawful method or, to be precise, if the
following requisites are met: (1) the interests of the public generally, as distinguished
from those of a particular class, require its exercise and (2) the mean s employed are
reasonably necessary for the accomplishment of the purpose and not unduly
oppressive upon individuals.112
In this case, petitioner argues that the SHT is a penalty imposed on real property
owners because it burdens them with expenses to provide funds for the housing of
informal settlers, and that it is a class legislation since it favors the latter who occupy
properties which is not their own and pay no taxes.
We disagree.
Equal protection requires that all persons or things similarly situated should be
treated alike, both as to rights conferred and responsibilities imposed.113 The
guarantee means that no person or class of persons shall be denied the same
protection of laws which is enjoyed by other persons or other classes in like
circumstances.114 Similar subjects should not be treated differently so as to give
undue favor to some and unjustly discriminate against others.115 The law may,
therefore, treat and regulate one class differently from another class provided there
are real and substantial differences to distinguish one class from another.116
An ordinance based on reasonable classification does not violate the constitutional
guaranty of the equal protection of the law. The requirements for a valid and
reasonable classification are: (1) it must rest on substantial distinctions; (2) it must be
germane to the purpose of the law; (3) it must not be limited to existing conditions
only; and (4) it must apply equally to all members of the same class.117For the
purpose of undertaking a comprehensive and continuing urban development and
housing program, the disparities between a real property owner and an informal
settler as two distinct classes are too obvious and need not be discussed at length.
The differentiation conforms to the practical dictates of justice and equity and is not
discriminatory within the meaning of the Constitution. Notably, the public purpose of
a tax may legally exist even if the motive which impelled the legislature to impose the
tax was to favor one over another.118 It is inherent in the power to tax that a State is
free to select the subjects of taxation.119 Inequities which result from a singling out of
one particular class for taxation or exemption infringe no constitutional limitation.120
Further, the reasonableness of Ordinance No. SP-2095 cannot be disputed. It is not
confiscatory or oppressive since the tax being imposed therein is below what the
UDHA actually allows. As pointed out by respondents, while the law authorizes LGUs
to collect SHT on lands with an assessed value of more than ₱50,000.00, the
questioned ordinance only covers lands with an assessed value exceeding
₱100,000.00. Even better, on certain conditions, the ordinance grants a tax credit
equivalent to the total amount of the special assessment paid beginning in the sixth
(6th) year of its effectivity. Far from being obnoxious, the provisions of the subject
ordinance are fair and just.
On the Garbage Fee
In the United States of America, it has been held that the authority of a municipality
to regulate garbage falls within its police power to protect public health, safety, and
welfare.121 As opined, the purposes and policy underpinnings of the police power to
regulate the collection and disposal of solid waste are: (1) to preserve and protect
the public health and welfare as well as the environment by minimizing or eliminating
a source of disease and preventing and abating nuisances; and (2) to defray costs
and ensure financial stability of the system for the benefit of the entire community,
with the sum of all charges marshalled and designed to pay for the expense of a
systemic refuse disposal scheme.122
Ordinances regulating waste removal carry a strong presumption of
480
validity.123 Not surprisingly, the overwhelming majority of U.S. cases addressing a
city's authority to impose mandatory garbage service and fees have upheld the
ordinances against constitutional and statutory challenges.124
A municipality has an affirmative duty to supervise and control the collection of
garbage within its corporate limits.125 The LGC specifically assigns the responsibility
of regulation and oversight of solid waste to local governing bodies because the
Legislature determined that such bodies were in the best position to develop efficient
waste management programs.126 To impose on local governments the responsibility
to regulate solid waste but not grant them the authority necessary to fulfill the same
would lead to an absurd result."127 As held in one U.S. case:
x x x When a municipality has general authority to regulate a particular subject
matter, the manner and means of exercising those powers, where not specifically
prescribed by the legislature, are left to the discretion of the municipal authorities. x x
x Leaving the manner of exercising municipal powers to the discretion of municipal
authorities "implies a range of reasonableness within which a municipality's exercise
of discretion will not be interfered with or upset by the judiciary."128
In this jurisdiction, pursuant to Section 16 of the LGC and in the proper exercise of its
corporate powers under Section 22 of the same, the Sangguniang Panlungsod of
Quezon City, like other local legislative bodies, is empowered to enact ordinances,
approve resolutions, and appropriate funds for the genera l welfare of the city and its
inhabitants.129Section 16 of the LGC provides:
SECTION 16. General Welfare . – Every local government unit shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as powers
necessary, appropriate, or incidental for its efficient and effective governance, and
those which are essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall ensure and support,
among other things, the preservation and enrichment of culture, promote health and
safety, enhance the right of the people to a balanced ecology, encourage and
support the development of appropriate and self-reliant scientific and technological
capabilities, improve public morals, enhance economic prosperity and social justice,
promote full employment among their residents, maintain peace and order, and
preserve the comfort and convenience of their inhabitants.
The general welfare clause is the delegation in statutory form of the police power of
the State to LGUs.130 The provisions related thereto are liberally interpreted to give
more powers to LGUs in accelerating economic development and upgrading the
quality of life for the people in the community.131 Wide discretion is vested on the
legislative authority to determine not only what the interests of the public require but
also what measures are necessary for the protection of such interests since the
Sanggunian is in the best position to determine the needs of its constituents.132
One of the operative principles of decentralization is that, subject to the provisions of
the LGC and national policies, the LGUs shall share with the national government
the responsibility in the management and maintenance of ecological balance within
their territorial jurisdiction.133 In this regard, cities are allowed to exercise such other
powers and discharge such other functions and responsibilities as are necessary,
appropriate, or incidental to efficient and effective provision of the basic services and
facilities which include, among others, solid waste disposal system or environmental
management system and services or facilities related to general hygiene and
sanitation.134 R.A. No. 9003, or the Ecological Solid Waste Management Act of
2000,135 affirms this authority as it expresses that the LGUs shall be primarily
responsible for the implementation and enforcement of its provisions within their
respective jurisdictions while establishing a cooperative effort among the national
government, other local government units, non-government organizations, and the
private sector.136
Necessarily, LGUs are statutorily sanctioned to impose and collect such reasonable
fees and charges for services rendered.137 "Charges" refer to pecuniary liability, as
rents or fees against persons or property, while "Fee" means a charge fixed by law
or ordinance for the regulation or inspection of a business or activity.138
The fee imposed for garbage collections under Ordinance No. SP-2235 is a charge
fixed for the regulation of an activity. The basis for this could be discerned from the
foreword of said Ordinance, to wit:
WHEREAS, Quezon City being the largest and premiere city in the Philippines in
terms of population and urban geographical areas, apart from being competent and
efficient in the delivery of public service, apparently requires a big budgetary
allocation in order to address the problems relative and connected to the prompt and
481
efficient delivery of basic services such as the effective system of waste
management, public information programs on proper garb age and proper waste
disposal, including the imposition of waste regulatory measures;
WHEREAS, to help augment the funds to be spent for the city’s waste management
system, the City Government through the Sangguniang Panlungsod deems it
necessary to impose a schedule of reasonable fees or charges for the garbage
collection services for residential (domestic household) that it renders to the public.
Certainly, as opposed to petitioner’s opinion, the garbage fee is not a tax. In Smart
Communications, Inc. v. Municipality of Malvar, Batangas ,139the Court had the
occasion to distinguish these two concepts:
In Progressive Development Corporation v. Quezon City, the Court declared that "if
the generating of revenue is the primary purpose and regulation is merely incidental,
the imposition is a tax; but if regulation is the primary purpose, the fact that
incidentally revenue is also obtained does not make the imposition a tax."
In Victorias Milling Co., Inc. v. Municipality of Victorias, the Court reiterated that the
purpose and effect of the imposition determine whether it is a tax or a fee, and that
the lack of any standards for such imposition gives the presumption that the same is
a tax.
We accordingly say that the designation given by the municipal authorities does not
decide whether the imposition is properly a license tax or a license fee.1awp++i1 The
determining factors are the purpose and effect of the imposition as may be apparent
from the provisions of the ordinance. Thus, "[w]hen no police inspection, supervision,
or regulation is provided, nor any standard set for the applicant to establish, or that
he agrees to attain or maintain, but any and all persons engaged in the business
designated, without qualification or hindrance, may come, and a license on payment
of the stipulated sum will issue, to do business, subject to no prescribed rule of
conduct and under no guardian eye, but according to the unrestrained judgment or
fancy of the applicant and licensee, the presumption is strong that the power of
taxation, and not the police power, is being exercised."
In Georgia, U.S.A., assessments for garbage collection services have been
consistently treated as a fee and not a tax.140
In another U.S. case,141 the garbage fee was considered as a "service charge" rather
than a tax as it was actually a fee for a service given by the city which had previously
been provided at no cost to its citizens.
Hence, not being a tax, the contention that the garbage fee under Ordinance No. SP-
2235 violates the rule on double taxation142 must necessarily fail.
Nonetheless, although a special charge, tax, or assessment may be imposed by a
municipal corporation, it must be reasonably commensurate to the cost of providing
the garbage service.143 To pass judicial scrutiny, a regulatory fee must not produce
revenue in excess of the cost of the regulation because such fee will be construed as
an illegal tax when the revenue generated by the regulation exceeds the cost of the
regulation.144
Petitioner argues that the Quezon City Government already collects garbage fee
under Section 47 of R.A. No. 9003, which authorizes LGUs to impose fees in
amounts sufficient to pay the costs of preparing, adopting, and implementing a solid
waste management plan, and that it has access to the SWM Fund under Section 46
of the same law. Moreover, Ordinance No. S-2235 is inconsistent with R.A. No.
9003, because the ordinance emphasizes the collection and payment of garbage fee
with no concern for segregation, composting and recycling of wastes. It also skips
the mandate of the law calling for the active involvement of the barangay in the
collection, segregation, and recycling of garbage.
We now turn to the pertinent provisions of R.A. No. 9003.
Under R.A. No. 9003, it is the declared policy of the State to adopt a systematic,
comprehensive and ecological solid waste management program which shall, among
others, ensure the proper segregation, collection, transport, storage, treatment and
disposal of solid waste through the formulation and adoption of the best
environmental practices in ecological waste management.145 The law provides that
segregation and collection of solid waste shall be conducted at the barangay level,
specifically for biodegradable, compostable and reusable wastes, while the collection
482
of non-recyclable materials and special wastes shall be the responsibility of the
municipality or city.146 Mandatory segregation of solid wastes shall primarily be
conducted at the source, to include household, institutional, industrial, commercial
and agricultural sources.147 Segregation at source refers to a solid waste
management practice of separating, at the point of origin, different materials found in
soli d waste in order to promote recycling and re-use of resources and to reduce the
volume of waste for collection and disposal.148 Based on Rule XVII of the Department
of Environment and Natural Resources (DENR) Administrative Order No. 2001-34,
Series of 2001,149 which is the Implementing Rules and Regulations ( IRR ) of R.A.
No. 9003, barangays shall be responsible for the collection, segregation, and
recycling of biodegradable, recyclable , compostable and reusable wastes.150
For the purpose, a Materials Recovery Facility (MRF), which shall receive
biodegradable wastes for composting and mixed non-biodegradable wastes for final
segregation, re-use and recycling, is to be established in every barangay or cluster of
barangays.151
According to R.A. 9003, an LGU, through its local solid waste management board, is
mandated by law to prepare a 10-year solid waste management plan consistent with
the National Solid Waste Management Framework.152 The plan shall be for the re-
use, recycling and composting of wastes generated in its jurisdiction; ensure the
efficient management of solid waste generated within its jurisdiction; and place
primary emphasis on implementation of all feasible re-use, recycling, and
composting programs while identifying the amount of landfill and transformation
capacity that will be needed for solid waste which cannot be re-used, recycled, or
composted.153 One of the components of the so lid waste management plan is
source reduction:
(e) Source reduction – The source reduction component shall include a program and
implementation schedule which shows the methods by which the LGU will, in
combination with the recycling and composting components, reduce a sufficient
amount of solid waste disposed of in accordance with the diversion requirements of
Section 20.
The source reduction component shall describe the following:
(1) strategies in reducing the volume of solid waste generated at source;
(2) measures for implementing such strategies and the resources necessary
to carry out such activities;
(3) other appropriate waste reduction technologies that may also be
considered, provide d that such technologies conform with the standards set
pursuant to this Act;
(4) the types of wastes to be reduced pursuant to Section 15 of this Act;
(5) the methods that the LGU will use to determine the categories of solid
wastes to be diverted from disposal at a disposal facility through re-use ,
recycling and composting; and
(6) new facilities and of expansion of existing facilities which will be needed to
implement re-use, recycling and composting.
The LGU source reduction component shall include the evaluation and identification
of rate structures and fees for the purpose of reducing the amount of waste
generated, and other source reduction strategies, including but not limited to,
program s and economic incentives provided under Sec. 45 of this Act to reduce the
use of non-recyclable materials, replace disposable materials and products with
reusable materials and products, reduce packaging, and increase the efficiency of
the use of paper, cardboard, glass, metal, and other materials. The waste reduction
activities of the community shall al so take into account, among others, local
capability, economic viability, technical requirements, social concerns, disposition of
residual waste and environmental impact: Provided , That, projection of future
facilities needed and estimated cost shall be incorporated in the plan. x x x154
The solid waste management pl an shall also include an implementation schedule for
solid waste diversion:
SEC. 20. Establishing Mandatory Solid Waste Diversion. – Each LGU plan shall
include an implementation schedule which shows that within five (5) years after the
483
effectivity of this Act, the LGU shall divert at least 25% of all solid waste from waste
disposal facilities through re-use, recycling, and composting activities and other
resource recovery activities: Provided , That the waste diversion goals shall be
increased every three (3) years thereafter: Provided , further, That nothing in this
Section prohibits a local government unit from implementing re-use, recycling, and
composting activities designed to exceed the goal.
The baseline for the twenty-five percent (25%) shall be derived from the waste
characterization result155 that each LGU is mandated to undertake.156In accordance
with Section 46 of R.A. No. 9003, the LGUs are entitled to avail of the SWM Fund on
the basis of their approved solid waste management plan. Aside from this, they may
also impose SWM Fees under Section 47 of the law, which states:
SEC. 47. Authority to Collect Solid Waste Management Fees – The local government
unit shall impose fees in amounts sufficient to pay the costs of preparing, adopting,
and implementing a solid waste management plan prepared pursuant to this Act. The
fees shall be based on the following minimum factors:
(a) types of solid waste;
(b) amount/volume of waste; and
(c) distance of the transfer station to the waste management facility.
The fees shall be used to pay the actual costs incurred by the LGU in collecting the
local fees. In determining the amounts of the fees, an LGU shall include only those
costs directly related to the adoption and implementation of the plan and the setting
and collection of the local fees.
Rule XVII of the IRR of R.A. No. 9003 sets forth the details:
Section 1. Power to Collect Solid Waste Management Fees . – The Local SWM
Board/Local SWM Cluster Board shall impose fees on the SWM services provided
for by the LGU and/or any authorized organization or unit. In determining the
amounts of the fees, a Local SWM Board/Local SWM Cluster Board shall include
only those costs directly related to the adoption and implementation of the SWM Plan
and the setting and collection of the local fees. This power to impose fees may be
ceded to the private sector and civil society groups which have been duly accredited
by the Local SWM Boar d/Local SWM Cluster Board; provided, the SWM fees shall
be covered by a Contract or Memorandum of Agreement between the respective boa
rd and the private sector or civil society group.
The fees shall pay for the costs of preparing, adopting and implementing a SWM
Plan prepared pursuant to the Act. Further, the fees shall also be used to pay the
actual costs incurred in collecting the local fees and for project sustainability.
Section 2. Basis of SWM Service Fees
Reasonable SWM service fees shall be computed based on but not limited to the
following minimum factors:
a) Types of solid waste to include special waste
b) amount/volume of waste
c) distance of the transfer station to the waste management facility
d) capacity or type of LGU constituency
e) cost of construction
f) cost of management
g) type of technology
Section 3. Collection of Fees. – Fees may be collected corresponding to the
following levels:
a) Barangay – The Barangay may impose fees for collection and segregation
of biodegradable, compostable and reusable wastes from households,
484
commerce, other sources of domestic wastes, and for the use of Barangay
MRFs. The computation of the fees shall be established by the respective
SWM boards. The manner of collection of the fees shall be dependent on the
style of administration of respective Barangay Councils. However, all
transactions shall follow the Commission on Audit rules on collection of fees.
b) Municipality – The municipal and city councils may impose fees on the
barangay MRFs for the collection and transport of non-recyclable and special
wastes and for the disposal of these into the sanitary landfill. The level and
procedure for exacting fees shall be defined by the Local SWM Board/Local
SWM Cluster Board and supported by LGU ordinances; however, payments
shall be consistent with the accounting system of government.
c) Private Sector/Civil Society Group – On the basis of the stipulations of
contract or Memorandum of Agreement, the private sector or civil society
group shall impose fees for collection, transport and tipping in their SLFs.
Receipts and invoices shall be issued to the paying public or to the
government.
From the afore-quoted provisions, it is clear that the authority of a municipality or city
to impose fees is limited to the collection and transport of non-recyclable and special
wastes and for the disposal of these into the sanitary landfill. Barangays, on the other
hand, have the authority to impose fees for the collection and segregation of
biodegradable, compostable and reusable wastes from households, commerce,
other sources of domestic wastes, and for the use of barangay MRFs. This is but
consistent with
Section 10 of R.A. No. 9003 directing that segregation and collection of
biodegradable, compostable and reusable wastes shall be conducted at the
barangay level, while the collection of non-recyclable materials and special wastes
shall be the responsibility of the municipality or city.
In this case, the alleged bases of Ordinance No. S-2235 in imposing the garbage fee
is the volume of waste currently generated by each person in Quezon City, which
purportedly stands at 0.66 kilogram per day, and the increasing trend of waste
generation for the past three years.157 Respondents
did not elaborate any further. The figure presented does not reflect the specific types
of wastes generated – whether residential, market, commercial, industrial,
construction/demolition, street waste, agricultural, agro-industrial, institutional, etc. It
is reasonable, therefore, for the Court to presume that such amount pertains to the
totality of wastes, without any distinction, generated by Quezon City constituents. To
reiterate, however, the authority of a municipality or city to impose fees extends only
to those related to the collection and transport of non-recyclable and special wastes.
Granting, for the sake of argument, that the 0.66 kilogram of solid waste per day
refers only to non-recyclable and special wastes, still, We cannot sustain the validity
of Ordinance No. S-2235. It violates the equal protection clause of the Constitution
and the provisions of the LGC that an ordinance must be equitable and based as far
as practicable on the taxpayer’s ability to pay, and not unjust, excessive, oppressive,
confiscatory.158
In the subject ordinance, the rates of the imposable fee depend on land or floor area
and whether the payee is an occupant of a lot, condominium, social housing project
or apartment. For easy reference, the relevant provision is again quoted below:
On all domestic households in Quezon City;
LAND AREA IMPOSABLE FEE
Less than 200 sq. m. PHP 100.00
201 sq. m. – 500 sq. m. PHP 200.00
501 sq. m. – 1,000 sq. m. PHP 300.00
1,001 sq. m. – 1,500 sq. m. PHP 400.00
1,501 sq. m. – 2,000 sq. m. or more PHP 500.00
 485

On all condominium unit and socialized housing projects/units in Quezon City; The rates being charged by the ordinance are unjust and inequitable: a resident of a
200 sq. m. unit in a condominium or socialized housing project has to pay twice the
FLOOR AREA amount than a resident of a lot similar in size; unlike unit occupants, all occupants of
IMPOSABLE FEE a lot with an area of 200 sq. m. and less have to pay a fixed rate of Php100.00; and
the same amount of garbage fee is imposed regardless of whether the resident is
Less than 40 sq. m. PHP 25.00 from a condominium or from a socialized housing project.

41 sq. m. – 60 sq. m. PHP 50.00
61 sq. m. – 100 sq. m. PHP 75.00
101 sq. m. – 150 sq. m. PH₱100.00
151 sq. m. – 200 sq. [m.] or more PHP 200.00
On high-rise Condominium Units
a) High-rise Condominium – The Homeowners Association of high rise
condominiums shall pay the annual garbage fee on the total size of the entire
condominium and socialized Housing Unit and an additional garbage fee
shall be collected based on area occupied for every unit already so ld or
being amortized.
b) High-rise apartment units – Owners of high-rise apartment units shall pay
the annual garbage fee on the total lot size of the entire apartment and an
additional garbage fee based on the schedule prescribed herein for every unit
occupied.
For the purpose of garbage collection, there is, in fact, no substantial distinction
between an occupant of a lot, on one hand, and an occupant of a unit in a
condominium, socialized housing project or apartment, on the other hand. Most
likely, garbage output produced by these types of occupants is uniform and does not
vary to a large degree; thus, a similar schedule of fee is both just and equitable.159
Indeed, the classifications under Ordinance No. S-2235 are not germane to its
declared purpose of "promoting shared responsibility with the residents to attack
their common mindless attitude in over-consuming the present resources and in
generating waste."160 Instead of simplistically categorizing the payee into land or floor
occupant of a lot or unit of a condominium, socialized housing project or apartment,
respondent City Council should have considered factors that could truly measure the
amount of wastes generated and the appropriate fee for its collection. Factors
include, among others, household age and size, accessibility to waste collection,
population density of the barangay or district, capacity to pay, and actual occupancy
of the property. R.A. No. 9003 may also be looked into for guidance. Under said law,
WM service fees may be computed based on minimum factors such as type s of
solid waste to include special waste, amount/volume of waste, distance of the
transfer station to the waste management facility, capacity or type of LGU
constituency, cost of construction, cost of management, and type of technology. With
respect to utility rates set by municipalities, a municipality has the right to classify
consumers under reasonable classifications based upon factors such as the cost of
service, the purpose for which the service or the product is received, the quantity or
the amount received, the different character of the service furnished, the time of its
use or any other matter which presents a substantial difference as a ground of
distinction.161[A] lack of uniformity in the rate charged is not necessarily unlawful
discrimination. The establishment of classifications and the charging of different rates
for the several classes is not unreasonable and does not violate the requirements of
equality and uniformity. Discrimination to be unlawful must draw an unfair line or
strike an unfair balance between those in like circumstances having equal rights and
privileges. Discrimination with respect to rates charged does not vitiate unless it is
arbitrary and without a reasonable fact basis or justification.162
On top of an unreasonable classification, the penalty clause of Ordinance No. SP-
2235, which states:
486
SECTION 3. Penalty Clause – A penalty of 25% of the garbage fee due plus an
interest of 2% per month or a fraction thereof (interest) shall be charged against a
household owner who refuses to pay the garbage fee herein imposed. lacks the
limitation required by Section 168 of the LGC, which provides:
SECTION 168. Surcharges and Penalties on Unpaid Taxes, Fees, or Charges. – The
sanggunian may impose a surcharge not exceeding twenty-five (25%) of the amount
of taxes, fees or charges not paid on time and an interest at the rate not exceeding
two percent (2%) per month of the unpaid taxes, fees or charges including
surcharges, until such amount is fully paid but in no case shall the total interest on
the unpaid amount or portion thereof exceed thirty-six (36) months. (Emphasis
supplied)
Finally, on the issue of publication of the two challenged ordinances.
Petitioner argues that the garbage fee was collected even if the required publication
of its approval had not yet elapsed. He notes that he paid his realty tax on January 7,
2014 which already included the garbage fee. Respondents counter that if the law
provides for its own effectivity, publication in the Official Gazette is not necessary so
long as it is not penal in nature. Allegedly, Ordinance No. SP-2095 took effect after
its publication while Ordinance No. SP-2235 became effective after its approval on
December 26, 2013.
The pertinent provisions of the LGC state:
SECTION 59. Effectivity of Ordinances or Resolutions. – (a) Unless otherwise stated
in the ordinance or the resolution approving the local development plan and public
investment program, the same shall take effect after ten (10) days from the date a
copy thereof is posted in a bulletin board at the entrance of the provincial capital or
city, municipal, or barangay hall, as the case may be, and in at least two (2) other
conspicuous places in the local government unit concerned.
(b) The secretary to the sanggunian concerned shall cause the posting of an
ordinance or resolution in the bulletin board at the entrance of the provincial
capital and the city, municipal, or barangay hall in at least two
(2) conspicuous places in the local government unit concerned not later than
five (5) days after approval thereof.
The text of the ordinance or resolution shall be disseminated and posted in
Filipino or English and in the language or dialect understood by the majority
of the people in the local government unit concerned, and the secretary to the
sanggunian shall record such fact in a book kept for the purpose, stating the
dates of approval and posting.
(c) The gist of all ordinances with penal sanctions shall be published in a
newspaper of general circulation within the province where the local
legislative body concerned belongs. In the absence of any newspaper of
general circulation within the province, posting of such ordinances shall be
made in all municipalities and cities of the province where the sanggunian of
origin is situated.
(d) In the case of highly urbanized and independent component cities, the
main features of the ordinance or resolution duly enacted or adopted shall, in
addition to being posted, be published once in a local newspaper of general
circulation within the city: Provided, That in the absence thereof the ordinance
or resolution shall be published in any newspaper of general circulation.
SECTION 188. Publication of Tax Ordinances and Revenue Measures. – Within ten
(10) days after their approval, certified true copies of all provincial, city, and
municipal tax ordinances or revenue measures shall be published in full for three (3)
consecutive days in a newspaper of local circulation: Provided, however, That in
provinces, cities and municipalities where there are no newspapers of local
circulation, the same may be posted in at least two (2) conspicuous and publicly
accessible places. (Emphasis supplied)
On October 17, 2011, respondent Quezon City Council enacted Ordinance No. SP-
2095, which provides that it would take effect after its publication in a newspaper of
general circulation.163 On the other hand, Ordinance No. SP-2235, which was passed
by the City Council on December 16, 2013, provides that it would be effective upon
its approval.164
487
Ten (10) days after its enactment, or on December 26, 2013, respondent City Mayor
approved the same.165
The case records are bereft of any evidence to prove petitioner’s negative allegation
that respondents did not comply with the posting and publication requirements of the
law. Thus, We are constrained not to give credit to his unsupported claim.
WHEREFORE, the petition is PARTIALLY GRANTED. The constitutionality and
legality of Ordinance No. SP-2095, S-2011, or the "Socialized Housing Tax of
Quezon City," is· SUSTAINED for being consistent ·with Section·43 of Republic Act
No. ·7279. On the other hand, Ordinance No. SP-2235, S-2013, which collects an
annual garbage fee on all domestic households in Quezon City, is hereby declared
as UNCONSTITUTIONAL AND ILLEGAL. Respondents are DIRECTED to REFUND
with reasonable dispatch the sums of money collected relative to its enforcement.
The temporary restraining order issued by the Court on February 5, 2014 is LIFTED
with respect to Ordinance No. SP-2095. In contrast, respondents are
PERMANENTLY ENJOINED from taking any further action to enforce Ordinance No.
SP. 2235.
SO ORDERED.
G.R. No. 177807               October 11, 2011
EMILIO GANCAYCO, Petitioner,
vs.
CITY GOVERNMENT OF QUEZON CITY AND METRO MANILA DEVELOPMENT
AUTHORITY, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 177933
METRO MANILA DEVELOPMENT AUTHORITY, Petitioner,
vs.
JUSTICE EMILIO A. GANCAYCO (Retired), Respondent,
DECISION
SERENO, J.:
Before us are consolidated Petitions for Review under Rule 45 of the Rules of Court
assailing the Decision1 promulgated on 18 July 2006 and the Resolution2 dated 10
May 2007 of the Court of Appeals in CA-G.R. SP No. 84648.
The Facts
In the early 1950s, retired Justice Emilio A. Gancayco bought a parcel of land
located at 746 Epifanio delos Santos Avenue (EDSA),3 Quezon City with an area of
375 square meters and covered by Transfer Certificate of Title (TCT) No. RT114558.
On 27 March 1956, the Quezon City Council issued Ordinance No. 2904, entitled
"An Ordinance Requiring the Construction of Arcades, for Commercial Buildings to
be Constructed in Zones Designated as Business Zones in the Zoning Plan of
Quezon City, and Providing Penalties in Violation Thereof."4
An arcade is defined as any portion of a building above the first floor projecting over
the sidewalk beyond the first storey wall used as protection for pedestrians against
rain or sun.5
Ordinance No. 2904 required the relevant property owner to construct an arcade with
a width of 4.50 meters and height of 5.00 meters along EDSA, from the north side of
Santolan Road to one lot after Liberty Avenue, and from one lot before Central
Boulevard to the Botocan transmission line.
At the outset, it bears emphasis that at the time Ordinance No. 2904 was passed by
the city council, there was yet no building code passed by the national legislature.
Thus, the regulation of the construction of buildings was left to the discretion of local
government units. Under this particular ordinance, the city council required that the
arcade is to be created by constructing the wall of the ground floor facing the
sidewalk a few meters away from the property line. Thus, the building owner is not
allowed to construct his wall up to the edge of the property line, thereby creating a
488
space or shelter under the first floor. In effect, property owners relinquish the use of
the space for use as an arcade for pedestrians, instead of using it for their own
purposes.
The ordinance was amended several times. On 8 August 1960, properties located at
the Quezon City-San Juan boundary were exempted by Ordinance No. 60-4477 from
the construction of arcades. This ordinance was further amended by Ordinance No.
60-4513, extending the exemption to commercial buildings from Balete Street to
Seattle Street. Ordinance No. 6603 dated 1 March 1966 meanwhile reduced the
width of the arcades to three meters for buildings along V. Luna Road, Central
District, Quezon City.
The ordinance covered the property of Justice Gancayco. Subsequently, sometime
in 1965, Justice Gancayco sought the exemption of a two-storey building being
constructed on his property from the application of Ordinance No. 2904 that he be
exempted from constructing an arcade on his property.
On 2 February 1966, the City Council acted favorably on Justice Gancayco’s request
and issued Resolution No. 7161, S-66, "subject to the condition that upon notice by
the City Engineer, the owner shall, within reasonable time, demolish the enclosure of
said arcade at his own expense when public interest so demands."6
Decades after, in March 2003, the Metropolitan Manila Development Authority
(MMDA) conducted operations to clear obstructions along the sidewalk of EDSA in
Quezon City pursuant to Metro Manila Council’s (MMC) Resolution No. 02-28, Series
of 2002.7 The resolution authorized the MMDA and local government units to "clear
the sidewalks, streets, avenues, alleys, bridges, parks and other public places in
Metro Manila of all illegal structures and obstructions."8
On 28 April 2003, the MMDA sent a notice of demolition to Justice Gancayco
alleging that a portion of his building violated the National Building Code of the
Philippines (Building Code)9 in relation to Ordinance No. 2904. The MMDA gave
Justice Gancayco fifteen (15) days to clear the portion of the building that was
supposed to be an arcade along EDSA.10
Justice Gancayco did not comply with the notice. Soon after the lapse of the fifteen
(15) days, the MMDA proceeded to demolish the party wall, or what was referred to
as the "wing walls," of the ground floor structure. The records of the present case are
not entirely clear on the extent of the demolition; nevertheless, the fact of demolition
was not disputed. At the time of the demolition, the affected portion of the building
was being used as a restaurant.
On 29 May 2003, Justice Gancayco filed a Petition11 with prayer for a temporary
restraining order and/or writ of preliminary injunction before the Regional Trial Court
(RTC) of Quezon City, docketed as Civil Case No. Q03-49693, seeking to prohibit
the MMDA and the City Government of Quezon City from demolishing his property.
In his Petition,12 he alleged that the ordinance authorized the taking of private
property without due process of law and just compensation, because the
construction of an arcade will require 67.5 square meters from the 375 square meter
property. In addition, he claimed that the ordinance was selective and discriminatory
in its scope and application when it allowed the owners of the buildings located in the
Quezon City-San Juan boundary to Cubao Rotonda, and Balete to Seattle Streets to
construct arcades at their option. He thus sought the declaration of nullity of
Ordinance No. 2904 and the payment of damages. Alternately, he prayed for the
payment of just compensation should the court hold the ordinance valid.
The City Government of Quezon City claimed that the ordinance was a valid exercise
of police power, regulating the use of property in a business zone. In addition, it
pointed out that Justice Gancayco was already barred by estoppel, laches and
prescription.
Similarly, the MMDA alleged that Justice Gancayco could not seek the nullification of
an ordinance that he had already violated, and that the ordinance enjoyed the
presumption of constitutionality. It further stated that the questioned property was a
public nuisance impeding the safe passage of pedestrians. Finally, the MMDA
claimed that it was merely implementing the legal easement established by
Ordinance No. 2904.13
The RTC rendered its Decision on 30 September 2003 in favor of Justice
Gancayco.14 It held that the questioned ordinance was unconstitutional, ruling that it
allowed the taking of private property for public use without just compensation. The
489
RTC said that because 67.5 square meters out of Justice Gancayco’s 375 square
meters of property were being taken without compensation for the public’s benefit,
the ordinance was confiscatory and oppressive. It likewise held that the ordinance
violated owners’ right to equal protection of laws. The dispositive portion thus states:
WHEREFORE, the petition is hereby granted and the Court hereby declares Quezon
City Ordinance No. 2094,15 Series of 1956 to be unconstitutional, invalid and void ab
initio. The respondents are hereby permanently enjoined from enforcing and
implementing the said ordinance, and the respondent MMDA is hereby directed to
immediately restore the portion of the party wall or wing wall of the building of the
petitioner it destroyed to its original condition.
IT IS SO ORDERED.
The MMDA thereafter appealed from the Decision of the trial court. On 18 July 2006,
the Court of Appeals (CA) partly granted the appeal.16 The CA upheld the validity of
Ordinance No. 2904 and lifted the injunction against the enforcement and
implementation of the ordinance. In so doing, it held that the ordinance was a valid
exercise of the right of the local government unit to promote the general welfare of its
constituents pursuant to its police powers. The CA also ruled that the ordinance
established a valid classification of property owners with regard to the construction of
arcades in their respective properties depending on the location. The CA further
stated that there was no taking of private property, since the owner still enjoyed the
beneficial ownership of the property, to wit:
Even with the requirement of the construction of arcaded sidewalks within his
commercial lot, appellee still retains the beneficial ownership of the said property.
Thus, there is no "taking" for public use which must be subject to just compensation.
While the arcaded sidewalks contribute to the public good, for providing safety and
comfort to passersby, the ultimate benefit from the same still redounds to appellee,
his commercial establishment being at the forefront of a busy thoroughfare like
EDSA. The arcaded sidewalks, by their nature, assure clients of the commercial
establishments thereat some kind of protection from accidents and other hazards.
Without doubt, this sense of protection can be a boon to the business activity therein
engaged. 17
Nevertheless, the CA held that the MMDA went beyond its powers when it
demolished the subject property. It further found that Resolution No. 02-28 only
refers to sidewalks, streets, avenues, alleys, bridges, parks and other public places
in Metro Manila, thus excluding Justice Gancayco’s private property. Lastly, the CA
stated that the MMDA is not clothed with the authority to declare, prevent or abate
nuisances. Thus, the dispositive portion stated:
WHEREFORE, the appeals are PARTLY GRANTED. The Decision dated September
30, 2003 of the Regional Trial Court, Branch 224, Quezon City, is MODIFIED, as
follows:
1) The validity and constitutionality of Ordinance No. 2094,18 Series of 1956,
issued by the City Council of Quezon City, is UPHELD; and
2) The injunction against the enforcement and implementation of the said
Ordinance is LIFTED.
SO ORDERED.
This ruling prompted the MMDA and Justice Gancayco to file their respective
Motions for Partial Reconsideration.19
On 10 May 2007, the CA denied the motions stating that the parties did not present
new issues nor offer grounds that would merit the reconsideration of the Court.20
Dissatisfied with the ruling of the CA, Justice Gancayco and the MMDA filed their
respective Petitions for Review before this Court. The issues raised by the parties
are summarized as follows:
I. WHETHER OR NOT JUSTICE GANCAYCO WAS ESTOPPED FROM
ASSAILING THE VALIDITY OF ORDINANCE NO. 2904.
II. WHETHER OR NOT ORDINANCE NO. 2904 IS CONSTITUTIONAL.
490
III. WHETHER OR NOT THE WING WALL OF JUSTICE GANCAYCO’S
BUILDING IS A PUBLIC NUISANCE.
IV. WHETHER OR NOT THE MMDA LEGALLY DEMOLISHED THE
PROPERTY OF JUSTICE GANCAYCO.
The Court’s Ruling
Estoppel
The MMDA and the City Government of Quezon City both claim that Justice
Gancayco was estopped from challenging the ordinance, because, in 1965, he
asked for an exemption from the application of the ordinance. According to them,
Justice Gancayco thereby recognized the power of the city government to regulate
the construction of buildings.
To recall, Justice Gancayco questioned the constitutionality of the ordinance on two
grounds: (1) whether the ordinance "takes" private property without due process of
law and just compensation; and (2) whether the ordinance violates the equal
protection of rights because it allowed exemptions from its application.
On the first ground, we find that Justice Gancayco may still question the
constitutionality of the ordinance to determine whether or not the ordinance
constitutes a "taking" of private property without due process of law and just
compensation. It was only in 2003 when he was allegedly deprived of his property
when the MMDA demolished a portion of the building. Because he was granted an
exemption in 1966, there was no "taking" yet to speak of.
Moreover, in Acebedo Optical Company, Inc. v. Court of Appeals,21 we held:
It is therefore decisively clear that estoppel cannot apply in this case. The fact that
petitioner acquiesced in the special conditions imposed by the City Mayor in subject
business permit does not preclude it from challenging the said imposition, which
is ultra vires or beyond the ambit of authority of respondent City Mayor. Ultra
vires acts or acts which are clearly beyond the scope of one's authority are null and
void and cannot be given any effect. The doctrine of estoppel cannot operate to give
effect to an act which is otherwise null and void or ultra vires. (Emphasis supplied.)
Recently, in British American Tobacco v. Camacho,22 we likewise held:
We find that petitioner was not guilty of estoppel. When it made the undertaking to
comply with all issuances of the BIR, which at that time it considered as valid,
petitioner did not commit any false misrepresentation or misleading act. Indeed,
petitioner cannot be faulted for initially undertaking to comply with, and subjecting
itself to the operation of Section 145(C), and only later on filing the subject case
praying for the declaration of its unconstitutionality when the circumstances change
and the law results in what it perceives to be unlawful discrimination. The mere fact
that a law has been relied upon in the past and all that time has not been attacked as
unconstitutional is not a ground for considering petitioner estopped from assailing its
validity. For courts will pass upon a constitutional question only when presented
before it in bona fide cases for determination, and the fact that the question has not
been raised before is not a valid reason for refusing to allow it to be raised later.
(Emphasis supplied.)
Anent the second ground, we find that Justice Gancayco may not question the
ordinance on the ground of equal protection when he also benefited from the
exemption. It bears emphasis that Justice Gancayco himself requested for an
exemption from the application of the ordinance in 1965 and was eventually granted
one. Moreover, he was still enjoying the exemption at the time of the demolition as
there was yet no valid notice from the city engineer. Thus, while the ordinance may
be attacked with regard to its different treatment of properties that appears to be
similarly situated, Justice Gancayco is not the proper person to do so.
Zoning and the regulation of the
construction of buildings are valid
exercises of police power .
491
In MMDA v. Bel-Air Village Association,23 we discussed the nature of police powers
exercised by local government units, to wit:
Police power is an inherent attribute of sovereignty. It has been defined as the power
vested by the Constitution in the legislature to make, ordain, and establish all manner
of wholesome and reasonable laws, statutes and ordinances, either with penalties or
without, not repugnant to the Constitution, as they shall judge to be for the good and
welfare of the commonwealth, and for the subjects of the same. The power is plenary
and its scope is vast and pervasive, reaching and justifying measures for public
health, public safety, public morals, and the general welfare.
It bears stressing that police power is lodged primarily in the National Legislature. It
cannot be exercised by any group or body of individuals not possessing legislative
power. The National Legislature, however, may delegate this power to the President
and administrative boards as well as the lawmaking bodies of municipal corporations
or local government units. Once delegated, the agents can exercise only such
legislative powers as are conferred on them by the national lawmaking body.
To resolve the issue on the constitutionality of the ordinance, we must first determine
whether there was a valid delegation of police power. Then we can determine
whether the City Government of Quezon City acted within the limits of the delegation.
It is clear that Congress expressly granted the city government, through the city
council, police power by virtue of Section 12(oo) of Republic Act No. 537, or the
Revised Charter of Quezon City,24 which states:
To make such further ordinances and regulations not repugnant to law as may be
necessary to carry into effect and discharge the powers and duties conferred by this
Act and such as it shall deem necessary and proper to provide for the health and
safety, promote the prosperity, improve the morals, peace, good order, comfort, and
convenience of the city and the inhabitants thereof, and for the protection of property
therein; and enforce obedience thereto with such lawful fines or penalties as the City
Council may prescribe under the provisions of subsection (jj) of this section.
Specifically, on the powers of the city government to regulate the construction of
buildings, the Charter also expressly provided that the city government had the
power to regulate the kinds of buildings and structures that may be erected within fire
limits and the manner of constructing and repairing them.25
With regard meanwhile to the power of the local government units to issue zoning
ordinances, we apply Social Justice Society v. Atienza.26 In that case, the
Sangguniang Panlungsod of Manila City enacted an ordinance on 28 November
2001 reclassifying certain areas of the city from industrial to commercial. As a result
of the zoning ordinance, the oil terminals located in those areas were no longer
allowed. Though the oil companies contended that they stood to lose billions of
pesos, this Court upheld the power of the city government to pass the assailed
ordinance, stating:
In the exercise of police power, property rights of individuals may be subjected to
restraints and burdens in order to fulfil the objectives of the government. Otherwise
stated, the government may enact legislation that may interfere with personal liberty,
property, lawful businesses and occupations to promote the general
welfare. However, the interference must be reasonable and not arbitrary. And to
forestall arbitrariness, the methods or means used to protect public health, morals,
safety or welfare must have a reasonable relation to the end in view.
The means adopted by the Sanggunian was the enactment of a zoning ordinance
which reclassified the area where the depot is situated from industrial to commercial.
A zoning ordinance is defined as a local city or municipal legislation which logically
arranges, prescribes, defines and apportions a given political subdivision into specific
land uses as present and future projection of needs. As a result of the zoning, the
continued operation of the businesses of the oil companies in their present location
will no longer be permitted. The power to establish zones for industrial, commercial
and residential uses is derived from the police power itself and is exercised for the
protection and benefit of the residents of a locality. Consequently, the enactment of
Ordinance No. 8027 is within the power of the Sangguniang Panlungsod of the City
of Manila and any resulting burden on those affected cannot be said to be unjust...
(Emphasis supplied)
In Carlos Superdrug v. Department of Social Welfare and Development,27 we also
held:
492
For this reason, when the conditions so demand as determined by the legislature,
property rights must bow to the primacy of police power because property rights,
though sheltered by due process, must yield to general welfare.
Police power as an attribute to promote the common good would be diluted
considerably if on the mere plea of petitioners that they will suffer loss of earnings
and capital, the questioned provision is invalidated. Moreover, in the absence of
evidence demonstrating the alleged confiscatory effect of the provision in question,
there is no basis for its nullification in view of the presumption of validity which every
law has in its favor. (Emphasis supplied.)
In the case at bar, it is clear that the primary objectives of the city council of Quezon
City when it issued the questioned ordinance ordering the construction of arcades
were the health and safety of the city and its inhabitants; the promotion of their
prosperity; and the improvement of their morals, peace, good order, comfort, and the
convenience. These arcades provide safe and convenient passage along the
sidewalk for commuters and pedestrians, not just the residents of Quezon City. More
especially so because the contested portion of the building is located on a busy
segment of the city, in a business zone along EDSA.
Corollarily, the policy of the Building Code,28 which was passed after the Quezon City
Ordinance, supports the purpose for the enactment of Ordinance No. 2904. The
Building Code states:
Section 102. Declaration of Policy. – It is hereby declared to be the policy of the
State to safeguard life, health, property, and public welfare, consistent with the
principles of sound environmental management and control; and to this end, make it
the purpose of this Code to provide for all buildings and structures, a framework of
minimum standards and requirements to regulate and control their location, site,
design quality of materials, construction, occupancy, and maintenance.
Section 1004 likewise requires the construction of arcades whenever existing or
zoning ordinances require it. Apparently, the law allows the local government units to
determine whether arcades are necessary within their respective jurisdictions.
Justice Gancayco argues that there is a three-meter sidewalk in front of his property
line, and the arcade should be constructed above that sidewalk rather than within his
property line. We do not need to address this argument inasmuch as it raises the
issue of the wisdom of the city ordinance, a matter we will not and need not delve
into.
To reiterate, at the time that the ordinance was passed, there was no national
building code enforced to guide the city council; thus, there was no law of national
application that prohibited the city council from regulating the construction of
buildings, arcades and sidewalks in their jurisdiction.
The "wing walls" of the building are not
nuisances per se.
The MMDA claims that the portion of the building in question is a nuisance per se.
We disagree.
The fact that in 1966 the City Council gave Justice Gancayco an exemption from
constructing an arcade is an indication that the wing walls of the building are not
nuisances per se. The wing walls do not per se immediately and adversely affect the
safety of persons and property. The fact that an ordinance may declare a structure
illegal does not necessarily make that structure a nuisance.
Article 694 of the Civil Code defines nuisance as any act, omission, establishment,
business, condition or property, or anything else that (1) injures or endangers the
health or safety of others; (2) annoys or offends the senses; (3) shocks, defies or
disregards decency or morality; (4) obstructs or interferes with the free passage of
any public highway or street, or any body of water; or, (5) hinders or impairs the use
of property. A nuisance may be per se or per accidens. A nuisance per se is that
which affects the immediate safety of persons and property and may summarily be
abated under the undefined law of necessity.29
493
Clearly, when Justice Gancayco was given a permit to construct the building, the city
council or the city engineer did not consider the building, or its demolished portion, to
be a threat to the safety of persons and property. This fact alone should have warned
the MMDA against summarily demolishing the structure.
Neither does the MMDA have the power to declare a thing a nuisance. Only courts of
law have the power to determine whether a thing is a nuisance. In AC Enterprises v.
Frabelle Properties Corp.,30 we held:
We agree with petitioner's contention that, under Section 447(a)(3)(i) of R.A. No.
7160, otherwise known as the Local Government Code, the Sangguniang
Panglungsod is empowered to enact ordinances declaring, preventing or abating
noise and other forms of nuisance. It bears stressing, however, that
the Sangguniang Bayan cannot declare a particular thing as a nuisance per se and
order its condemnation. It does not hav e the power to find, as a fact, that a particular
thing is a nuisance when such thing is not a nuisance per se; nor can it authorize the
extrajudicial condemnation and destruction of that as a nuisance which in its nature,
situation or use is not such. Those things must be determined and resolved in the
ordinary courts of law. If a thing be in fact, a nuisance due to the manner of its
operation, that question cannot be determined by a mere resolution of
the Sangguniang Bayan. (Emphasis supplied.)
MMDA illegally demolishedthe property of Justice Gancayco.
MMDA alleges that by virtue of MMDA Resolution No. 02-28, Series of 2002, it is
empowered to demolish Justice Gancayco’s property. It insists that the Metro Manila
Council authorized the MMDA and the local government units to clear the sidewalks,
streets, avenues, alleys, bridges, parks and other public places in Metro Manila of all
illegal structures and obstructions. It further alleges that it demolished the property
pursuant to the Building Code in relation to Ordinance No. 2904 as amended.
However, the Building Code clearly provides the process by which a building may be
demolished. The authority to order the demolition of any structure lies with the
Building Official. The pertinent provisions of the Building Code provide:
SECTION 205. Building Officials. — Except as otherwise provided herein, the
Building Official shall be responsible for carrying out the provisions of this Code in
the field as well as the enforcement of orders and decisions made pursuant thereto.
Due to the exigencies of the service, the Secretary may designate incumbent Public
Works District Engineers, City Engineers and Municipal Engineers act as Building
Officials in their respective areas of jurisdiction.
The designation made by the Secretary under this Section shall continue until regular
positions of Building Official are provided or unless sooner terminated for causes
provided by law or decree.
xxx xxx xxx
SECTION 207. Duties of a Building Official. — In his respective territorial jurisdiction,
the Building Official shall be primarily responsible for the enforcement of the
provisions of this Code as well as of the implementing rules and regulations issued
therefor. He is the official charged with the duties of issuing building permits.
In the performance of his duties, a Building Official may enter any building or its
premises at all reasonable times to inspect and determine compliance with the
requirements of this Code, and the terms and conditions provided for in the building
permit as issued.
When any building work is found to be contrary to the provisions of this Code, the
Building Official may order the work stopped and prescribe the terms and/or
conditions when the work will be allowed to resume. Likewise, the Building Official is
authorized to order the discontinuance of the occupancy or use of any building or
structure or portion thereof found to be occupied or used contrary to the provisions of
this Code.
xxx xxx xxx
SECTION 215. Abatement of Dangerous Buildings. — When any building or
structure is found or declared to be dangerous or ruinous, the Building Official shall
494
order its repair, vacation or demolition depending upon the degree of danger to life,
health, or safety. This is without prejudice to further action that may be taken under
the provisions of Articles 482 and 694 to 707 of the Civil Code of the Philippines.
(Emphasis supplied.)
MMDA v. Trackworks Rail Transit Advertising, Vending and Promotions, Inc.31 is
applicable to the case at bar. In that case, MMDA, invoking its charter and the
Building Code, summarily dismantled the advertising media installed on the Metro
Rail Transit (MRT) 3. This Court held:
It is futile for MMDA to simply invoke its legal mandate to justify the dismantling of
Trackworks' billboards, signages and other advertising media. MMDA simply had no
power on its own to dismantle, remove, or destroy the billboards, signages and other
advertising media installed on the MRT3 structure by Trackworks. In Metropolitan
Manila Development Authority v. Bel-Air Village Association, Inc., Metropolitan
Manila Development Authority v. Viron Transportation Co., Inc., and Metropolitan
Manila Development Authority v. Garin, the Court had the occasion to rule that
MMDA's powers were limited to the formulation, coordination, regulation,
implementation, preparation, management, monitoring, setting of policies, installing a
system, and administration. Nothing in Republic Act No. 7924 granted MMDA police
power, let alone legislative power.
Clarifying the real nature of MMDA, the Court held:
...The MMDA is, as termed in the charter itself, a "development authority". It is an
agency created for the purpose of laying down policies and coordinating with the
various national government agencies, people's organizations, non-governmental
organizations and the private sector for the efficient and expeditious delivery of basic
services in the vast metropolitan area. All its functions are administrative in
nature and these are actually summed up in the charter itself, viz:
Sec.2. Creation of the Metropolitan Manila Development Authority.- xxx.
The MMDA shall perform planning, monitoring and coordinative functions, and in the
process exercise regulatory and supervisory authority over the delivery of metro-wide
services within Metro Manila, without diminution of the autonomy of local government
units concerning purely local matters.
The Court also agrees with the CA's ruling that MMDA Regulation No. 96-009 and
MMC Memorandum Circular No. 88-09 did not apply to Trackworks' billboards,
signages and other advertising media. The prohibition against posting, installation
and display of billboards, signages and other advertising media applied only to public
areas, but MRT3, being private property pursuant to the BLT agreement between the
Government and MRTC, was not one of the areas as to which the prohibition
applied. Moreover, MMC Memorandum Circular No. 88-09 did not apply to
Trackworks' billboards, signages and other advertising media in MRT3, because it
did not specifically cover MRT3, and because it was issued a year prior to the
construction of MRT3 on the center island of EDSA. Clearly, MMC Memorandum
Circular No. 88-09 could not have included MRT3 in its prohibition.
MMDA's insistence that it was only implementing Presidential Decree No. 1096
(Building Code) and its implementing rules and regulations is not persuasive. The
power to enforce the provisions of the Building Code was lodged in the Department
of Public Works and Highways (DPWH), not in MMDA, considering the law's
following provision, thus:
Sec. 201. Responsibility for Administration and Enforcement. -
The administration and enforcement of the provisions of this Code including the
imposition of penalties for administrative violations thereof is hereby vested in the
Secretary of Public Works, Transportation and Communications, hereinafter referred
to as the "Secretary."
There is also no evidence showing that MMDA had been delegated by DPWH to
implement the Building Code. (Emphasis supplied.)
Additionally, the penalty prescribed by Ordinance No. 2904 itself does not include the
demolition of illegally constructed buildings in case of violations. Instead, it merely
prescribes a punishment of "a fine of not more than two hundred pesos (₱200.00) or
by imprisonment of not more than thirty (30) days, or by both such fine and
imprisonment at the discretion of the Court, Provided, that if the violation is
committed by a corporation, partnership, or any juridical entity, the Manager,
495
managing partner, or any person charged with the management thereof shall be held
responsible therefor." The ordinance itself also clearly states that it is the regular
courts that will determine whether there was a violation of the ordinance.
As pointed out in Trackworks, the MMDA does not have the power to enact
ordinances. Thus, it cannot supplement the provisions of Quezon City Ordinance No.
2904 merely through its Resolution No. 02-28.
Lastly, the MMDA claims that the City Government of Quezon City may be
considered to have approved the demolition of the structure, simply because then
Quezon City Mayor Feliciano R. Belmonte signed MMDA Resolution No. 02-28. In
effect, the city government delegated these powers to the MMDA. The powers
referred to are those that include the power to declare, prevent and abate a
nuisance32 and to further impose the penalty of removal or demolition of the building
or structure by the owner or by the city at the expense of the owner.33
MMDA’s argument does not hold water. There was no valid delegation of powers to
the MMDA. Contrary to the claim of the MMDA, the City Government of Quezon City
washed its hands off the acts of the former. In its Answer,34 the city government
stated that "the demolition was undertaken by the MMDA only, without the
participation and/or consent of Quezon City." Therefore, the MMDA acted on its own
and should be held solely liable for the destruction of the portion of Justice
Gancayco’s building.
WHEREFORE, in view of the foregoing, the Decision of the Court of Appeals in CA-
G.R. SP No. 84648 is AFFIRMED.
SO ORDERED.
.R. No. 118127             April 12, 2005
CITY OF MANILA, HON. ALFREDO S. LIM as the Mayor of the City of Manila,
HON. JOSELITO L. ATIENZA, in his capacity as Vice-Mayor of the City of
Manila and Presiding Officer of the City Council of Manila, HON. ERNESTO A.
NIEVA, HON. GONZALO P. GONZALES, HON. AVELINO S. CAILIAN, HON.
ROBERTO C. OCAMPO, HON. ALBERTO DOMINGO, HON. HONORIO U.
LOPEZ, HON. FRANCISCO G. VARONA, JR., HON. ROMUALDO S. MARANAN,
HON. NESTOR C. PONCE, JR., HON. HUMBERTO B. BASCO, HON. FLAVIANO
F. CONCEPCION, JR., HON. ROMEO G. RIVERA, HON. MANUEL M. ZARCAL,
HON. PEDRO S. DE JESUS, HON. BERNARDITO C. ANG, HON. MANUEL L.
QUIN, HON. JHOSEP Y. LOPEZ, HON. CHIKA G. GO, HON. VICTORIANO A.
MELENDEZ, HON. ERNESTO V.P. MACEDA, JR., HON. ROLANDO P. NIETO,
HON. DANILO V. ROLEDA, HON. GERINO A. TOLENTINO, JR., HON. MA. PAZ
E. HERRERA, HON. JOEY D. HIZON, HON. FELIXBERTO D. ESPIRITU, HON.
KARLO Q. BUTIONG, HON. ROGELIO P. DELA PAZ, HON. BERNARDO D.
RAGAZA, HON. MA. CORAZON R. CABALLES, HON. CASIMIRO C. SISON,
HON. BIENVINIDO M. ABANTE, JR., HON. MA. LOURDES M. ISIP, HON.
ALEXANDER S. RICAFORT, HON. ERNESTO F. RIVERA, HON. LEONARDO L.
ANGAT, and HON. JOCELYN B. DAWIS, in their capacity as councilors of the
City of Manila, Petitioner,
vs.
HON. PERFECTO A.S. LAGUIO, JR., as Presiding Judge, RTC, Manila and
MALATE TOURIST DEVELOPMENT CORPORATION, Respondents.
DECISION
TINGA, J.:
I know only that what is moral is what you feel good after and what is immoral
is what you feel bad after.
Ernest Hermingway
Death in the Afternoon, Ch. 1
It is a moral and political axiom that any dishonorable act, if performed by
oneself, is less immoral than if performed by someone else, who would be
well-intentioned in his dishonesty.
J. Christopher  Gerald
Bonaparte in Egypt, Ch. I
496

The Court's commitment to the protection of morals is secondary to its fealty to the SECTION 1. Any provision of existing laws and ordinances to the contrary
fundamental law of the land. It is foremost a guardian of the Constitution but not the notwithstanding, no person, partnership, corporation or entity shall, in
conscience of individuals. And if it need be, the Court will not hesitate to "make the the Ermita-Malate area bounded by Teodoro M. Kalaw Sr. Street in the
hammer fall, and heavily" in the words of Justice Laurel, and uphold the North, Taft Avenue in the East, Vito Cruz Street in the South and Roxas
constitutional guarantees when faced with laws that, though not lacking in zeal to Boulevard in the West, pursuant to P.D. 499 be allowed or authorized to
promote morality, nevertheless fail to pass the test of constitutionality. contract and engage in, any business providing certain forms of
amusement, entertainment, services and facilities where women are
The pivotal issue in this Petition1 under Rule 45 (then Rule 42) of the Revised Rules used as tools in entertainment and which tend to disturb the
on Civil Procedure seeking the reversal of the Decision2 in Civil Case No. 93-66511 community, annoy the inhabitants, and adversely affect the social and
of the Regional Trial Court (RTC) of Manila, Branch 18 (lower court),3 is the validity of moral welfare of the community, such as but not limited to:
Ordinance No. 7783 (the Ordinance) of the City of Manila.4
1. Sauna Parlors
The antecedents are as follows:
2. Massage Parlors
Private respondent Malate Tourist Development Corporation (MTDC) is a corporation
engaged in the business of operating hotels, motels, hostels and lodging houses.5 It 3. Karaoke Bars
built and opened Victoria Court in Malate which was licensed as a motel although
duly accredited with the Department of Tourism as a hotel.6 On 28 June 1993, MTDC 4. Beerhouses
filed a Petition for Declaratory Relief with Prayer for a Writ of Preliminary Injunction
and/or Temporary Restraining Order7 (RTC Petition) with the lower court impleading 5. Night Clubs
as defendants, herein petitioners City of Manila, Hon. Alfredo S. Lim (Lim), Hon.
Joselito L. Atienza, and the members of the City Council of Manila (City Council).  6. Day Clubs
MTDC prayed that the Ordinance, insofar as it includes motels and inns as among its
prohibited establishments, be declared invalid and unconstitutional.8 7. Super Clubs
Enacted by the City Council9 on 9 March 1993 and approved by petitioner City Mayor 8. Discotheques
on 30 March 1993, the said Ordinance is entitled–
9. Cabarets
AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION
OF BUSINESSES PROVIDING CERTAIN FORMS OF AMUSEMENT,
10. Dance Halls
ENTERTAINMENT, SERVICES AND FACILITIES IN THE ERMITA-MALATE
AREA, PRESCRIBING PENALTIES FOR VIOLATION THEREOF, AND FOR
OTHER PURPOSES.10 11. Motels

The Ordinance is reproduced in full, hereunder: 12. Inns

497
SEC. 2 The City Mayor, the City Treasurer or any person acting in behalf of
the said officials are prohibited from issuing permits, temporary or
otherwise, or from granting licenses and accepting payments for the
operation of business enumerated in the preceding section.
SEC. 3. Owners and/or operator of establishments engaged in, or devoted
to, the businesses enumerated in Section 1 hereof are hereby given three
(3) months from the date of approval of this ordinance within which to
wind up business operations or to transfer to any place outside of the
Ermita-Malate area or convert said businesses to other kinds of
business allowable within the area, such as but not limited to:
1. Curio or antique shop
2. Souvenir Shops
3. Handicrafts display centers
4. Art galleries
5. Records and music shops
6. Restaurants
7. Coffee shops
8. Flower shops
9. Music lounge and sing-along restaurants, with well-defined
activities for wholesome family entertainment that cater to both local
and foreign clientele.
10. Theaters engaged in the exhibition, not only of motion pictures but
also of cultural shows, stage and theatrical plays, art exhibitions,
concerts and the like.
11. Businesses allowable within the law and medium intensity districts
as provided for in the zoning ordinances for Metropolitan Manila,
except new warehouse or open-storage depot, dock or yard, motor
repair shop, gasoline service station, light industry with any
machinery, or funeral establishments.
SEC. 4. Any person violating any provisions of this ordinance, shall
upon conviction, be punished by imprisonment of one (1) year or fine of
FIVE THOUSAND (P5,000.00) PESOS, or both, at the discretion of the
Court, PROVIDED, that in case of juridical person, the President, the General
Manager, or person-in-charge of operation shall be liable thereof; PROVIDED
FURTHER, that in case of subsequent violation and conviction, the
premises of the erring establishment shall be closed and padlocked
permanently.
SEC. 5. This ordinance shall take effect upon approval.
Enacted by the City Council of Manila at its regular session today, March 9,
1993.
Approved by His Honor, the Mayor on March 30, 1993. (Emphasis supplied)
In the RTC Petition, MTDC argued that the Ordinance erroneously and improperly
included in its enumeration of prohibited establishments, motels and inns such as
MTDC's Victoria Court considering that these were not establishments for
"amusement" or "entertainment" and they were not "services or facilities for
entertainment," nor did they use women as "tools for entertainment," and neither did
they "disturb the community," "annoy the inhabitants" or "adversely affect the social
and moral welfare of the community."11
MTDC further advanced that the Ordinance was invalid and unconstitutional for the
following reasons: (1) The City Council has no power to prohibit the operation of
motels as Section 458 (a) 4 (iv)12 of the Local Government Code of 1991 (the Code)
grants to the City Council only the power to regulate the establishment, operation
and maintenance of hotels, motels, inns, pension houses, lodging houses and other
similar establishments; (2) The Ordinance is void as it is violative of Presidential
498
Decree (P.D.) No. 49913 which specifically declared portions of the Ermita-Malate
area as a commercial zone with certain restrictions; (3) The Ordinance does not
constitute a proper exercise of police power as the compulsory closure of the motel
business has no reasonable relation to the legitimate municipal interests sought to
be protected; (4) The Ordinance constitutes an ex post facto law by punishing the
operation of Victoria Court which was a legitimate business prior to its enactment; (5)
The Ordinance violates MTDC's constitutional rights in that: (a) it is confiscatory and
constitutes an invasion of plaintiff's property rights; (b) the City Council has no power
to find as a fact that a particular thing is a nuisance per se nor does it have the power
to extrajudicially destroy it; and (6) The Ordinance constitutes a denial of equal
protection under the law as no reasonable basis exists for prohibiting the operation of
motels and inns, but not pension houses, hotels, lodging houses or other similar
establishments, and for prohibiting said business in the Ermita-Malate area but not
outside of this area.14
In their Answer15 dated 23 July 1993, petitioners City of Manila and Lim maintained
that the City Council had the power to "prohibit certain forms of entertainment in
order to protect the social and moral welfare of the community" as provided for in
Section 458 (a) 4 (vii) of the Local Government Code,16 which  reads,  thus:
Section 458. Powers, Duties, Functions and Compensation. (a) The
sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general
welfare of the city and its inhabitants pursuant to Section 16 of this Code and
in the proper exercise of the corporate powers of the city as provided for
under Section 22 of this Code, and shall:
....
(4) Regulate activities relative to the use of land, buildings and structures
within the city in order to promote the general welfare and for said purpose
shall:
....
(vii) Regulate the establishment, operation, and maintenance of any
entertainment or amusement facilities, including theatrical
performances, circuses, billiard pools, public dancing schools, public
dance halls, sauna baths, massage parlors, and other places for
entertainment or amusement; regulate such other events or activities
for amusement or entertainment, particularly those which tend to
disturb the community or annoy the inhabitants, or require the
suspension or suppression of the same; or, prohibit certain forms of
amusement or entertainment in order to protect the social and moral
welfare of the community.
Citing Kwong Sing v. City of Manila,17 petitioners insisted that the power of regulation
spoken of in the above-quoted provision included the power to control, to govern and
to restrain places of exhibition and amusement.18
Petitioners likewise asserted that the Ordinance was enacted by the City Council of
Manila to protect the social and moral welfare of the community in conjunction with
its police power as found in Article III, Section 18(kk) of Republic Act No.
409,19 otherwise known as the Revised Charter of the City of Manila (Revised
Charter of Manila)20 which reads, thus:
ARTICLE III
THE MUNICIPAL BOARD
.  .  .
Section 18. Legislative powers. – The Municipal Board shall have the
following legislative powers:
.  .  .
(kk) To enact all ordinances it may deem necessary and proper for the
sanitation and safety, the furtherance of the prosperity, and the promotion of
the morality, peace, good order, comfort, convenience, and general welfare of
499
the city and its inhabitants, and such others as may be necessary to carry
into effect and discharge the powers and duties conferred by this chapter;
and to fix penalties for the violation of ordinances which shall not exceed two
hundred pesos fine or six months' imprisonment, or both such fine and
imprisonment, for a single offense.
Further, the petitioners noted, the Ordinance had the presumption of validity; hence,
private respondent had the burden to prove its illegality or unconstitutionality.21
Petitioners also maintained that there was no inconsistency between P.D. 499 and
the Ordinance as the latter simply disauthorized certain forms of businesses and
allowed the Ermita-Malate area to remain a commercial zone.22 The Ordinance, the
petitioners likewise claimed, cannot be assailed as ex post facto as it was
prospective in operation.23 The Ordinance also did not infringe the equal protection
clause and cannot be denounced as class legislation as there existed substantial
and real differences between the Ermita-Malate area and other places in the City of
Manila.24
On 28 June 1993, respondent Judge Perfecto A.S. Laguio, Jr. (Judge Laguio) issued
an ex-parte temporary restraining order against the enforcement of
the Ordinance.25 And on 16 July 1993, again in an intrepid gesture, he granted the
writ of preliminary injunction prayed for by MTDC.26
After trial, on 25 November 1994, Judge Laguio rendered the assailed Decision,
enjoining the petitioners from implementing the Ordinance. The dispositive portion of
said Decision reads:27
WHEREFORE, judgment is hereby rendered declaring Ordinance No. 778[3],
Series of 1993, of the City of Manila null and void, and making permanent the
writ of preliminary injunction that had been issued by this Court against the
defendant. No costs.
SO ORDERED.28
Petitioners filed with the lower court a Notice of Appeal29 on 12 December 1994,
manifesting that they are elevating the case to this Court under then Rule 42 on pure
questions of law.30
On 11 January 1995, petitioners filed the present Petition, alleging that the following
errors were committed by the lower court in its ruling: (1) It erred in concluding that
the subject ordinance is ultra vires, or otherwise, unfair, unreasonable and
oppressive exercise of police power; (2) It erred in holding that the
questioned Ordinance contravenes P.D. 49931 which allows operators of all kinds of
commercial establishments, except those specified therein; and (3) It erred in
declaring the Ordinance void and unconstitutional.32
In the Petition and in its Memorandum,33 petitioners in essence repeat the assertions
they made before the lower court. They contend that the assailed Ordinance was
enacted in the exercise of the inherent and plenary power of the State and the
general welfare clause exercised by local government units provided for in Art. 3,
Sec. 18 (kk) of the Revised Charter of Manila and conjunctively, Section 458 (a) 4
(vii) of the Code.34 They allege that the Ordinance is a valid exercise of police power;
it does not contravene P.D. 499; and that it enjoys the presumption of validity.35
In its Memorandum36 dated 27 May 1996, private respondent maintains that
the Ordinance is ultra vires and that it is void for being repugnant to the general law.
It reiterates that the questioned Ordinance is not a valid exercise of police power;
that it is violative of due process, confiscatory and amounts to an arbitrary
interference with its lawful business; that it is violative of the equal protection clause;
and that it confers on petitioner City Mayor or any officer unregulated discretion in
the execution of the Ordinance absent rules to guide and control his actions.
This is an opportune time to express the Court's deep sentiment and tenderness for
the Ermita-Malate area being its home for several decades. A long-time resident, the
Court witnessed the area's many turn of events. It relished its glory days and
endured its days of infamy. Much as the Court harks back to the resplendent era of
the Old Manila and yearns to restore its lost grandeur, it believes that
the Ordinance is not the fitting means to that end.  The Court is of the opinion, and
so holds, that the lower court did not err in declaring the Ordinance, as it did, ultra
vires and therefore null and void.
500
The Ordinance is so replete with constitutional infirmities that almost every sentence
thereof violates a constitutional provision. The prohibitions and sanctions therein
transgress the cardinal rights of persons enshrined by the Constitution. The Court is
called upon to shelter these rights from attempts at rendering them worthless.
The tests of a valid ordinance are well established. A long line of decisions has held
that for an ordinance to be valid, it must not only be within the corporate powers of
the local government unit to enact and must be passed according to the procedure
prescribed by law, it  must also conform to the following substantive requirements:
(1) must not contravene the Constitution or any statute; (2) must not be unfair or
oppressive; (3) must not be partial or discriminatory; (4) must not prohibit but may
regulate trade; (5) must be general and consistent with public policy; and (6) must
not be unreasonable.37
Anent the first criterion, ordinances shall only be valid when they are not contrary to
the Constitution and to the laws.38 The Ordinance must satisfy two requirements: it
must pass muster under the test of constitutionality and the test of consistency with
the prevailing laws. That ordinances should be constitutional uphold the principle of
the supremacy of the Constitution. The requirement that the enactment must not
violate existing law gives stress to the precept that local government units are able to
legislate only by virtue of their derivative legislative power, a delegation of legislative
power from the national legislature.  The delegate cannot be superior to the principal
or exercise powers higher than those of the latter.39
This relationship between the national legislature and the local government units has
not been enfeebled by the new provisions in the Constitution strengthening the policy
of local autonomy. The national legislature is still the principal of the local
government units, which cannot defy its will or modify or violate it.40
The Ordinance was passed by the City Council in the exercise of its police power, an
enactment of the City Council acting as agent of Congress. Local government units,
as agencies of the State, are endowed with police power in order to effectively
accomplish and carry out the declared objects of their creation.41 This delegated
police power is found in Section 16 of the Code, known as the general welfare
clause, viz:
SECTION 16. General Welfare.Every local government unit shall exercise
the powers expressly granted, those necessarily implied therefrom, as well as
powers necessary, appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions, local government units
shall ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, improve
public morals, enhance economic prosperity and social justice, promote full
employment among their residents, maintain peace and order, and preserve
the comfort and convenience of their inhabitants.
Local government units exercise police power through their respective legislative
bodies; in this case, the sangguniang panlungsod or the city council. The Code
empowers the legislative bodies to "enact ordinances, approve resolutions and
appropriate funds for the general welfare of the province/city/municipality and its
inhabitants pursuant to Section 16 of the Code and in the proper exercise of the
corporate powers of the province/city/ municipality provided under the Code.42 The
inquiry in this Petition is concerned with the validity of the exercise of such delegated
power.
The Ordinance contravenes
the Constitution
The police power of the City Council, however broad and far-reaching, is subordinate
to the constitutional limitations thereon; and is subject to the limitation that its
exercise must be reasonable and for the public good.43 In the case at bar, the
enactment of the Ordinance was an invalid exercise of delegated power as it is
unconstitutional and repugnant to general laws.
The relevant constitutional provisions are the following:
SEC. 5. The maintenance of peace and order, the protection of life, liberty,
and property, and the promotion of the general welfare are essential for the
enjoyment by all the people of the blessings of democracy.44
501
SEC. 14. The State recognizes the role of women in nation-building, and shall
ensure the fundamental equality before the law of women and men.45
SEC. 1. No person shall be deprived of life, liberty or property without due
process of law, nor shall any person be denied the equal protection of laws.46
Sec. 9. Private property shall not be taken for public use without just
compensation.47
A. The Ordinance infringes
the Due Process Clause
The constitutional safeguard of due process is embodied in the fiat "(N)o person
shall be deprived of life, liberty or property without due process of law. . . ."48
There is no controlling and precise definition of due process.  It furnishes though a
standard to which governmental action should conform in order that deprivation of
life, liberty or property, in each appropriate case, be valid.  This standard is aptly
described as a responsiveness to the supremacy of reason, obedience to the
dictates of justice,49 and as such it is a limitation upon the exercise of the police
power.50
The purpose of the guaranty is to prevent governmental encroachment against the
life, liberty and property of individuals; to secure the individual from the arbitrary
exercise of the powers of the government, unrestrained by the established principles
of private rights and distributive justice; to protect property from confiscation by
legislative enactments, from seizure, forfeiture, and destruction without a trial and
conviction by the ordinary mode of judicial procedure; and to secure to all persons
equal and impartial justice and the benefit of the general law.51
The guaranty serves as a protection against arbitrary regulation, and private
corporations and partnerships are "persons" within the scope of the guaranty insofar
as their property is concerned.52
This clause has been interpreted as imposing two separate limits on government,
usually called "procedural due process" and "substantive due process."
Procedural due process, as the phrase implies, refers to the procedures that the
government must follow before it deprives a person of life, liberty, or property.
Classic procedural due process issues are concerned with what kind of notice and
what form of hearing the government must provide when it takes a particular action.53
Substantive due process, as that phrase connotes, asks whether the government
has an adequate reason for taking away a person's life, liberty, or property. In other
words, substantive due process looks to whether there is a sufficient justification for
the government's action.54 Case law in the United States (U.S.) tells us that whether
there is such a justification depends very much on the level of scrutiny used.55 For
example, if a law is in an area where only rational basis review is applied,
substantive due process is met so long as the law is rationally related to a legitimate
government purpose.  But if it is an area where strict scrutiny is used, such as for
protecting fundamental rights, then the government will meet substantive due
process only if it can prove that the law is necessary to achieve a compelling
government purpose.56
The police power granted to local government units must always be exercised with
utmost observance of the rights of the people to due process and equal protection of
the law. Such power cannot be exercised whimsically, arbitrarily or despotically57 as
its exercise is subject to a qualification, limitation or restriction demanded by the
respect and regard due to the prescription of the fundamental law, particularly those
forming part of the Bill of Rights. Individual rights, it bears emphasis, may be
adversely affected only to the extent that may fairly be required by the legitimate
demands of public interest or public welfare.58 Due process requires the intrinsic
validity of the law in interfering with the rights of the person to his life, liberty and
property.59
Requisites for the valid exercise
of Police Power are not met
To successfully invoke the exercise of police power as the rationale for the
enactment of the Ordinance, and to free it from the imputation of constitutional
502
infirmity, not only must it appear that the interests of the public generally, as
distinguished from those of a particular class, require an interference with private
rights, but the means adopted must be reasonably necessary for the
accomplishment of the purpose and not unduly oppressive upon individuals.60 It must
be evident that no other alternative for the accomplishment of the purpose less
intrusive of private rights can work.  A reasonable relation must exist between the
purposes of the police measure and the means employed for its accomplishment, for
even under the guise of protecting the public interest, personal rights and those
pertaining to private property will not be permitted to be arbitrarily invaded.61
Lacking a concurrence of these two requisites, the police measure shall be struck
down as an arbitrary intrusion into private rights62 a violation of the due process
clause.
The Ordinance was enacted to address and arrest the social ills purportedly
spawned by the establishments in the Ermita-Malate area which are allegedly
operated under the deceptive veneer of legitimate, licensed and tax-paying
nightclubs, bars, karaoke bars, girlie houses, cocktail lounges, hotels and motels.  sexual immorality, being a human frailty, may take place in the most innocent of
Petitioners insist that even the Court in the case of Ermita-Malate Hotel and Motel
Operators Association, Inc. v. City Mayor of Manila63 had already taken judicial notice
of the "alarming increase in the rate of prostitution, adultery and fornication in Manila
traceable in great part to existence of motels, which provide a necessary atmosphere
for clandestine entry, presence and exit and thus become the ideal haven for
prostitutes and thrill-seekers."64
The object of the Ordinance was, accordingly, the promotion and protection of the
social and moral values of the community. Granting for the sake of argument that the
objectives of the Ordinance are within the scope of the City Council's police powers,
the means employed for the accomplishment thereof were unreasonable and unduly
oppressive.
It is undoubtedly one of the fundamental duties of the City of Manila to make all
reasonable regulations looking to the promotion of the moral and social values of the
community. However, the worthy aim of fostering public morals and the eradication
of the community's social ills can be achieved through means less restrictive of
private rights; it can be attained by reasonable restrictions rather than by an absolute
prohibition. The closing down and transfer of businesses or their conversion into
businesses "allowed" under the Ordinance have no reasonable relation to the
accomplishment of its purposes. Otherwise stated, the prohibition of the enumerated
establishments will not per se protect and promote the social and moral welfare of
the community; it will not in itself eradicate the alluded social ills of prostitution,
adultery, fornication nor will it arrest the spread of sexual disease in Manila.
Conceding for the nonce that the Ermita-Malate area teems with houses of ill-repute
and establishments of the like which the City Council may lawfully prohibit,65 it is
baseless and insupportable to bring within that classification sauna parlors, massage
parlors, karaoke bars, night clubs, day clubs, super clubs, discotheques, cabarets,
dance halls, motels and inns. This is not warranted under the accepted definitions of
these terms. The enumerated establishments are lawful pursuits which are not per
se offensive to the moral welfare of the community.
That these are used as arenas to consummate illicit sexual affairs and as venues to
further the illegal prostitution is of no moment. We lay stress on the acrid truth that
places that it may even take place in the substitute establishments enumerated
under Section 3 of the Ordinance.  If the flawed logic of the Ordinance were to be
followed, in the remote instance that an immoral sexual act transpires in a church
cloister or a court chamber, we would behold the spectacle of the City of Manila
ordering the closure of the church or court concerned.  Every house, building, park,
curb, street or even vehicles for that matter will not be exempt from the prohibition.
Simply because there are no "pure" places where there are impure men. Indeed,
even the Scripture and the Tradition of Christians churches continually recall the
presence and universality of sin in man's history.66
The problem, it needs to be pointed out, is not the establishment, which by its nature
cannot be said to be injurious to the health or comfort of the community and which in
itself is amoral, but the deplorable human activity that may occur within its premises.
While a motel may be used as a venue for immoral sexual activity, it cannot for that
reason alone be punished. It cannot be classified as a house of ill-repute or as a
nuisance per se on a mere likelihood or a naked assumption. If that were so and if
that were allowed, then the Ermita-Malate area would not only be purged of its
supposed social ills, it would be extinguished of its soul as well as every human
503
activity, reprehensible or not, in its every nook and cranny would be laid bare to the
estimation of the authorities.
The Ordinance seeks to legislate morality but fails to address the core issues of
morality. Try as the Ordinance may to shape morality, it should not foster the illusion
that it can make a moral man out of it because immorality is not a thing, a building or
establishment; it is in the hearts of men. The City Council instead should regulate
human conduct that occurs inside the establishments, but not to the detriment of
liberty and privacy which are covenants, premiums and blessings of democracy.
While petitioners' earnestness at curbing clearly objectionable social ills is
commendable, they unwittingly punish even the proprietors and operators of
"wholesome," "innocent" establishments. In the instant case, there is a clear invasion
of personal or property rights, personal in the case of those individuals desirous of
owning, operating and patronizing those motels and property in terms of the
investments made and the salaries to be paid to those therein employed. If the City
of Manila so desires to put an end to prostitution, fornication and other social ills, it
can instead impose reasonable regulations such as daily inspections of the
establishments for any violation of the conditions of their licenses or permits; it may
exercise its authority to suspend or revoke their licenses for these violations;67 and it
may even impose increased license fees. In other words, there are other means to
reasonably accomplish the desired end.
Means employed are
constitutionally infirm
The Ordinance disallows the operation of sauna parlors, massage parlors, karaoke
bars, beerhouses, night clubs, day clubs, super clubs, discotheques, cabarets, dance
halls, motels and inns in the Ermita-Malate area. In Section 3 thereof, owners and/or
operators of the enumerated establishments are given three (3) months from the
date of approval of the Ordinance within which "to wind up business operations or to
transfer to any place outside the Ermita-Malate area or convert said businesses to
other kinds of business allowable within the area." Further, it states in Section 4 that
in cases of subsequent violations of the provisions of the Ordinance, the "premises
of the erring establishment shall be closed and padlocked permanently."
It is readily apparent that the means employed by the Ordinance for the achievement
of its purposes, the governmental interference itself, infringes on the constitutional
guarantees of a person's fundamental right to liberty and property.
Liberty as guaranteed by the Constitution was defined by Justice Malcolm to include
"the right to exist and the right to be free from arbitrary restraint or servitude. The
term cannot be dwarfed into mere freedom from physical restraint of the person of
the citizen, but is deemed to embrace the right of man to enjoy the facilities with
which he has been endowed by his Creator, subject only to such restraint as are
necessary for the common welfare."68 In accordance with this case, the rights of the
citizen to be free to use his faculties in all lawful ways; to live and work where he will;
to earn his livelihood by any lawful calling; and to pursue any avocation are all
deemed embraced in the concept of liberty.69
The U.S. Supreme Court in the case of Roth v. Board of Regents,70 sought to clarify
the meaning of "liberty."  It said:
While the Court has not attempted to define with exactness the liberty. . .
guaranteed [by the Fifth and Fourteenth Amendments], the term denotes not
merely freedom from bodily restraint but also the right of the individual to
contract, to engage in any of the common occupations of life, to acquire
useful knowledge, to marry, establish a home and bring up children, to
worship God according to the dictates of his own conscience, and generally
to enjoy those privileges long recognized…as essential to the orderly pursuit
of happiness by free men. In a Constitution for a free people, there can be no
doubt that the meaning of "liberty" must be broad indeed.
In another case, it also confirmed that liberty protected by the due process clause
includes personal decisions relating to marriage, procreation, contraception, family
relationships, child rearing, and education. In explaining the respect the Constitution
demands for the autonomy of the person in making these choices, the U.S. Supreme
Court explained:
These matters, involving the most intimate and personal choices a person
may make in a lifetime, choices central to personal dignity and autonomy, are
central to the liberty protected by the Fourteenth Amendment. At the heart of
504
liberty is the right to define one's own concept of existence, of meaning, of
universe, and of the mystery of human life. Beliefs about these matters could
not define the attributes of personhood where they formed under compulsion
of the State.71
Persons desirous to own, operate and patronize the enumerated establishments
under Section 1 of the Ordinance may seek autonomy for these purposes.
Motel patrons who are single and unmarried may invoke this right to autonomy to
consummate their bonds in intimate sexual conduct within the motel's premisesbe
it stressed that their consensual sexual behavior does not contravene any
fundamental state policy as contained in the Constitution.72   Adults have a right to
choose to forge such relationships with others in the confines of their own private
lives and still retain their dignity as free persons. The liberty protected by the
Constitution allows persons the right to make this choice.73 Their right to liberty under
the due process clause gives them the full right to engage in their conduct without
intervention of the government, as long as they do not run afoul of the law. Liberty
should be the rule and restraint the exception.
Liberty in the constitutional sense not only means freedom from unlawful government
restraint; it must include privacy as well, if it is to be a repository of freedom. The
right to be let alone is the beginning of all freedomit is the most comprehensive of
rights and the right most valued by civilized men.74
The concept of liberty compels respect for the individual whose claim to privacy and
interference demands respect. As the case of Morfe v. Mutuc,75 borrowing the words
of Laski, so very aptly stated:
Man is one among many, obstinately refusing reduction to unity. His
separateness, his isolation, are indefeasible; indeed, they are so fundamental
that they are the basis on which his civic obligations are built. He cannot
abandon the consequences of his isolation, which are, broadly speaking, that
his experience is private, and the will built out of that experience personal to
himself. If he surrenders his will to others, he surrenders himself. If his will is
set by the will of others, he ceases to be a master of himself. I cannot believe
that a man no longer a master of himself is in any real sense free.
Indeed, the right to privacy as a constitutional right was recognized in Morfe, the
invasion of which should be justified by a compelling state interest. Morfe accorded
recognition to the right to privacy independently of its identification with liberty; in
itself it is fully deserving of constitutional protection. Governmental powers should
stop short of certain intrusions into the personal life of the citizen.76
There is a great temptation to have an extended discussion on these civil liberties
but the Court chooses to exercise restraint and restrict itself to the issues presented
when it should. The previous pronouncements of the Court are not to be interpreted
as a license for adults to engage in criminal conduct. The reprehensibility of such
conduct is not diminished. The Court only reaffirms and guarantees their right to
make this choice. Should they be prosecuted for their illegal conduct, they should
suffer the consequences of the choice they have made. That, ultimately, is their
choice.
Modality employed is
unlawful taking
In addition, the Ordinance is unreasonable and oppressive as it substantially divests
the respondent of the beneficial use of its property.77 The Ordinance in Section 1
thereof forbids the running of the enumerated businesses in the Ermita-Malate area
and in Section 3 instructs its owners/operators to wind up business operations or to
transfer outside the area or convert said businesses into allowed businesses. An
ordinance which permanently restricts the use of property that it can not be used for
any reasonable purpose goes beyond regulation and must be recognized as a taking
of the property without just compensation.78 It is intrusive and violative of the private
property rights of individuals.
The Constitution expressly provides in Article III, Section 9, that "private property
shall not be taken for public use without just compensation." The provision is the
most important protection of property rights in the Constitution. This is a restriction on
the general power of the government to take property. The constitutional provision is
about ensuring that the government does not confiscate the property of some to give
505
it to others. In part too, it is about loss spreading. If the government takes away a
person's property to benefit society, then society should pay. The principal purpose
of the guarantee is "to bar the Government from forcing some people alone to bear
public burdens which, in all fairness and justice, should be borne by the public as a
whole.79
There are two different types of taking that can be identified. A "possessory" taking
occurs when the government confiscates or physically occupies property. A
"regulatory" taking occurs when the government's regulation leaves no reasonable
economically viable use of the property.80
In the landmark case of Pennsylvania Coal v. Mahon,81 it was held that a taking also
could be found if government regulation of the use of property went "too far."  When
regulation reaches a certain magnitude, in most if not in all cases there must be an
exercise of eminent domain and compensation to support the act. While property
may be regulated to a certain extent, if regulation goes too far it will be recognized as
a taking.82
No formula or rule can be devised to answer the questions of what is too far and
when regulation becomes a taking. In Mahon, Justice Holmes recognized that it was
"a question of degree and therefore cannot be disposed of by general propositions."
On many other occasions as well, the U.S. Supreme Court has said that the issue of
when regulation constitutes a taking is a matter of considering the facts in each case.
The Court asks whether justice and fairness require that the economic loss caused
by public action must be compensated by the government and thus borne by the
public as a whole, or whether the loss should remain concentrated on those few
persons subject to the public action.83
What is crucial in judicial consideration of regulatory takings is that government
regulation is a taking if it leaves no reasonable economically viable use of property in
a manner that interferes with reasonable expectations for use.84 A regulation that
permanently denies all economically beneficial or productive use of land is, from the
owner's point of view, equivalent to a "taking" unless principles of nuisance or
property law that existed when the owner acquired the land make the use
prohibitable.85 When the owner of real property has been called upon to sacrifice all
economically beneficial uses in the name of the common good, that is, to leave his
property economically idle, he has suffered a taking.86
A regulation which denies all economically beneficial or productive use of land will
require compensation under the takings clause. Where a regulation places limitations
on land that fall short of eliminating all economically beneficial use, a taking
nonetheless may have occurred, depending on a complex of factors including the
regulation's economic effect on the landowner, the extent to which the regulation
interferes with reasonable investment-backed expectations and the character of
government action. These inquiries are informed by the purpose of the takings
clause which is to prevent the government from forcing some people alone to bear
public burdens which, in all fairness and justice, should be borne by the public as a
whole.87
A restriction on use of property may also constitute a "taking" if not reasonably
necessary to the effectuation of a substantial public purpose or if it has an unduly
harsh impact on the distinct investment-backed expectations of the owner.88
The Ordinance gives the owners and operators of the "prohibited" establishments
three (3) months from its approval within which to "wind up business operations or to
transfer to any place outside of the Ermita-Malate area or convert said businesses to
other kinds of business allowable within the area." The directive to "wind up business
operations" amounts to a closure of the establishment, a permanent deprivation of
property, and is practically confiscatory.  Unless the owner converts his
establishment to accommodate an "allowed" business, the structure which housed
the previous business will be left empty and gathering dust. Suppose he transfers it
to another area, he will likewise leave the entire establishment idle. Consideration
must be given to the substantial amount of money invested to build the edifices
which the owner reasonably expects to be returned within a period of time. It is
apparent that the Ordinance leaves no reasonable economically viable use of
property in a manner that interferes with reasonable expectations for use.
The second and third options to transfer to any place outside of the Ermita-Malate
area or to convert into allowed businessesare confiscatory as well. The penalty of
permanent closure in cases of subsequent violations found in Section 4 of
the Ordinance is also equivalent to a "taking" of private property.
506
The second option instructs the owners to abandon their property and build another
one outside the Ermita-Malate area.  In every sense, it qualifies as a taking without
just compensation with an additional burden imposed on the owner to build another
establishment solely from his coffers. The proffered solution does not put an end to
the "problem," it merely relocates it. Not only is this impractical, it is unreasonable,
onerous and oppressive. The conversion into allowed enterprises is just as
ridiculous. How may the respondent convert a motel into a restaurant or a coffee
shop, art gallery or music lounge without essentially destroying its property? This is a
taking of private property without due process of law, nay, even without
compensation.
The penalty of closure likewise constitutes unlawful taking that should be
compensated by the government. The burden on the owner to convert or transfer his
business, otherwise it will be closed permanently after a subsequent violation should
be borne by the public as this end benefits them as a whole.
Petitioners cannot take refuge in classifying the measure as a zoning ordinance. A
zoning ordinance, although a valid exercise of police power, which limits a
"wholesome" property to a use which can not reasonably be made of it constitutes
the taking of such property without just compensation.  Private property which is not
noxious nor intended for noxious purposes may not, by zoning, be destroyed without
compensation. Such principle finds no support in the principles of justice as we know
them.  The police powers of local government units which have always received
broad and liberal interpretation cannot be stretched to cover this particular taking.
Distinction should be made between destruction from necessity and eminent
domain.  It needs restating that the property taken in the exercise of police power is
destroyed because it is noxious or intended for a noxious purpose while the property
taken under the power of eminent domain is intended for a public use or purpose and
is therefore "wholesome."89 If it be of public benefit that a "wholesome" property
remain unused or relegated to a particular purpose, then certainly the public should
bear the cost of reasonable compensation for the condemnation of private property
for public use.90
Further, the Ordinance fails to set up any standard to guide or limit the petitioners'
actions. It in no way controls or guides the discretion vested in them. It provides no
definition of the establishments covered by it and it fails to set forth the conditions
when the establishments come within its ambit of prohibition. The Ordinance confers
upon the mayor arbitrary and unrestricted power to close down establishments.
Ordinances such as this, which make possible abuses in its execution, depending
upon no conditions or qualifications whatsoever other than the unregulated arbitrary
will of the city authorities as the touchstone by which its validity is to be tested, are
unreasonable and invalid. The Ordinance should have established a rule by which its
impartial enforcement could be secured.91
Ordinances placing restrictions upon the lawful use of property must, in order to be
valid and constitutional, specify the rules and conditions to be observed and conduct
to avoid; and must not admit of the exercise, or of an opportunity for the exercise, of
unbridled discretion by the law enforcers in carrying out its provisions.92
Thus, in Coates v. City of Cincinnati,93 as cited in People v. Nazario,94      the U.S.
Supreme Court struck down an ordinance that had made it illegal for "three or more
persons to assemble on any sidewalk and there conduct themselves in a manner
annoying to persons passing by." The ordinance was nullified as it imposed no
standard at all "because one may never know in advance what 'annoys some people
but does not annoy others.' "
Similarly, the Ordinance does not specify the standards to ascertain which
establishments "tend to disturb the community," "annoy the inhabitants," and
"adversely affect the social and moral welfare of the community." The cited case
supports the nullification of the Ordinance for lack of comprehensible standards to
guide the law enforcers in carrying out its provisions.
Petitioners cannot therefore order the closure of the enumerated establishments
without infringing the due process clause. These lawful establishments may be
regulated, but not prevented from carrying on their business.  This is a sweeping
exercise of police power that is a result of a lack of imagination on the part of the City
Council and which amounts to an interference into personal and private rights which
the Court will not countenance. In this regard, we take a resolute stand to uphold the
constitutional guarantee of the right to liberty and property.
507
Worthy of note is an example derived from the U.S. of a reasonable regulation which
is a far cry from the ill-considered Ordinance enacted by the City Council.
In FW/PBS, INC. v. Dallas,95 the city of Dallas adopted a comprehensive ordinance
regulating "sexually oriented businesses," which are defined to include adult
arcades, bookstores, video stores, cabarets, motels, and theaters as well as escort
agencies, nude model studio and sexual encounter centers. Among other things, the
ordinance required that such businesses be licensed. A group of motel owners were
among the three groups of businesses that filed separate suits challenging the
ordinance. The motel owners asserted that the city violated the due process clause
by failing to produce adequate support for its supposition that renting room for fewer
than ten (10) hours resulted in increased crime and other secondary effects. They
likewise argued than the ten (10)-hour limitation on the rental of motel rooms placed
an unconstitutional burden on the right to freedom of association. Anent the first
contention, the U.S. Supreme Court held that the reasonableness of the legislative
judgment combined with a study which the city considered, was adequate to support
the city's determination that motels permitting room rentals for fewer than ten (10 )
hours should be included within the licensing scheme. As regards the second point,
the Court held that limiting motel room rentals to ten (10) hours will have no
discernible effect on personal bonds as those bonds that are formed from the use of
a motel room for fewer than ten (10) hours are not those that have played a critical
role in the culture and traditions of the nation by cultivating and transmitting shared
ideals and beliefs.
The ordinance challenged in the above-cited case merely regulated the targeted
businesses. It imposed reasonable restrictions; hence, its validity was upheld.
The case of Ermita Malate Hotel and Motel Operators Association, Inc. v. City Mayor
of Manila,96 it needs pointing out, is also different from this case in that what was
involved therein was a measure which regulated the mode in which motels may
conduct business in order to put an end to practices which could encourage vice and
immorality. Necessarily, there was no valid objection on due process or equal
protection grounds as the ordinance did not prohibit motels. The Ordinance in this
case however is not a regulatory measure but is an exercise of an assumed power to
prohibit.97
The foregoing premises show that the Ordinance is an unwarranted and unlawful
curtailment of property and personal rights of citizens. For being unreasonable and
an undue restraint of trade, it cannot, even under the guise of exercising police
power, be upheld as valid.
B.  The Ordinance violates Equal
Protection Clause
Equal protection requires that all persons or things similarly situated should be
treated alike, both as to rights conferred and responsibilities imposed. Similar
subjects, in other words, should not be treated differently, so as to give undue favor
to some and unjustly discriminate against others.98 The guarantee means that no
person or class of persons shall be denied the same protection of laws which is
enjoyed by other persons or other classes in like circumstances.99 The "equal
protection of the laws is a pledge of the protection of equal laws."100 It limits
governmental discrimination. The equal protection clause extends to artificial
persons but only insofar as their property is concerned.101
The Court has explained the scope of the equal protection clause in this wise:
… What does it signify? To quote from J.M. Tuason & Co. v. Land Tenure
Administration: "The ideal situation is for the law's benefits to be available to
all, that none be placed outside the sphere of its coverage. Only thus could
chance and favor be excluded and the affairs of men governed by that serene
and impartial uniformity, which is of the very essence of the idea of law."
There is recognition, however, in the opinion that what in fact exists "cannot
approximate the ideal. Nor is the law susceptible to the reproach that it does
not take into account the realities of the situation. The constitutional
guarantee then is not to be given a meaning that disregards what is, what
does in fact exist. To assure that the general welfare be promoted, which is
the end of law, a regulatory measure may cut into the rights to liberty and
property. Those adversely affected may under such circumstances invoke the
equal protection clause only if they can show that the governmental act
assailed, far from being inspired by the attainment of the common weal was
prompted by the spirit of hostility, or at the very least, discrimination that finds
no support in reason." Classification is thus not ruled out, it being sufficient to
508
quote from the Tuason decision anew "that the laws operate equally and
uniformly on all persons under similar circumstances or that all persons must
be treated in the same manner, the conditions not being different, both in the
privileges conferred and the liabilities imposed. Favoritism and undue
preference cannot be allowed. For the principle is that equal protection and
security shall be given to every person under circumstances which, if not
identical, are analogous. If law be looked upon in terms of burden or charges,
those that fall within a class should be treated in the same fashion, whatever
restrictions cast on some in the group equally binding on the rest.102
Legislative bodies are allowed to classify the subjects of legislation. If the
classification is reasonable, the law may operate only on some and not all of the
people without violating the equal protection clause.103 The classification must, as an
indispensable requisite, not be arbitrary. To be valid, it must conform to the following
requirements:
1) It must be based on substantial distinctions.
2) It must be germane to the purposes of the law.
3) It must not be limited to existing conditions only.
4) It must apply equally to all members of the class.104
In the Court's view, there are no substantial distinctions between motels, inns,
pension houses, hotels, lodging houses or other similar establishments. By definition,
all are commercial establishments providing lodging and usually meals and other
services for the public. No reason exists for prohibiting motels and inns but not
pension houses, hotels, lodging houses or other similar establishments. The
classification in the instant case is invalid as similar subjects are not similarly treated,
both as to rights conferred and obligations imposed. It is arbitrary as it does not rest
on substantial distinctions bearing a just and fair relation to the purpose of
the Ordinance.
The Court likewise cannot see the logic for prohibiting the business and operation of
motels in the Ermita-Malate area but not outside of this area.  A noxious
establishment does not become any less noxious if located outside the area.
The standard "where women are used as tools for entertainment" is also
discriminatory as prostitutionone of the hinted ills the Ordinance aims to banishis
not a profession exclusive to women. Both men and women have an equal
propensity to engage in prostitution. It is not any less grave a sin when men engage
in it. And why would the assumption that there is an ongoing immoral activity apply
only when women are employed and be inapposite when men are in harness? This
discrimination based on gender violates equal protection as it is not substantially
related to important government objectives.105 Thus, the discrimination is invalid.
Failing the test of constitutionality, the Ordinance likewise failed to pass the test of
consistency with prevailing laws.
C.    The Ordinance is repugnant
to general laws; it is ultra vires
The Ordinance is in contravention of the Code as the latter merely empowers local
government units to regulate, and not prohibit, the establishments enumerated in
Section 1 thereof.
The power of the City Council to regulate by ordinances the establishment,
operation, and maintenance of motels, hotels and other similar establishments is
found in Section 458 (a) 4 (iv), which provides that:
Section 458. Powers, Duties, Functions and Compensation. (a) The
sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general
welfare of the city and its inhabitants pursuant to Section 16 of this Code and
in the proper exercise of the corporate powers of the city as provided for
under Section 22 of this Code, and shall:
.  .  .
509
(4) Regulate activities relative to the use of land, buildings and structures
within the city in order to promote the general welfare and for said purpose
shall:
.  .  .
(iv) Regulate the establishment, operation and maintenance of cafes,
restaurants, beerhouses, hotels, motels, inns, pension houses, lodging
houses, and other similar establishments, including tourist guides and
transports .  .  .  .
While its power to regulate the establishment, operation and maintenance of any
entertainment or amusement facilities, and to prohibit certain forms of amusement or
entertainment is provided under Section 458 (a) 4 (vii) of the Code, which reads as
follows:
Section 458. Powers, Duties, Functions and Compensation. (a) The
sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general
welfare of the city and its inhabitants pursuant to Section 16 of this Code and
in the proper exercise of the corporate powers of the city as provided for
under Section 22 of this Code, and shall:
.  .  .
(4) Regulate activities relative to the use of land, buildings and structures
within the city in order to promote the general welfare and for said purpose
shall:
.  .  .
(vii) Regulate the establishment, operation, and maintenance of any
entertainment or amusement facilities, including theatrical
performances, circuses, billiard pools, public dancing schools, public
dance halls, sauna baths, massage parlors, and other places for
entertainment or amusement; regulate such other events or activities
for amusement or entertainment, particularly those which tend to
disturb the community or annoy the inhabitants, or require the
suspension or suppression of the same; or, prohibit certain forms of
amusement or entertainment in order to protect the social and moral
welfare of the community.
Clearly, with respect to cafes, restaurants, beerhouses, hotels, motels, inns, pension
houses, lodging houses, and other similar establishments, the only power of the City
Council to legislate relative thereto is to regulate them to promote the general
welfare. The Code still withholds from cities the power to suppress and prohibit
altogether the establishment, operation and maintenance of such establishments. It
is well to recall the rulings of the Court in Kwong Sing v. City of Manila106 that:
The word "regulate," as used in subsection (l), section 2444 of the
Administrative Code, means and includes the power to control, to govern,
and to restrain; but "regulate" should not be construed as synonymous with
"suppress" or "prohibit." Consequently, under the power to regulate laundries,
the municipal authorities could make proper police regulations as to the mode
in which the employment or business shall be exercised.107
And in People v. Esguerra,108 wherein the Court nullified an ordinance of the
Municipality of Tacloban which prohibited the selling, giving and dispensing of liquor
ratiocinating that the municipality is empowered only to regulate the same and not
prohibit. The Court therein declared that:
(A)s a general rule when a municipal corporation is specifically given
authority or power to regulate or to license and regulate the liquor traffic,
power to prohibit is impliedly withheld.109
These doctrines still hold contrary to petitioners' assertion110 that they were modified
by the Code vesting upon City Councils prohibitory powers.
Similarly, the City Council exercises regulatory powers over public dancing schools,
public dance halls, sauna baths, massage parlors, and other places for
entertainment or amusement as found in the first clause of Section 458 (a) 4 (vii). Its
510
powers to regulate, suppress and suspend "such other events or activities for
amusement or entertainment, particularly those which tend to disturb the community
or annoy the inhabitants" and to "prohibit certain forms of amusement or
entertainment in order to protect the social and moral welfare of the community" are
stated in the second and third clauses, respectively of the same Section.  The
several powers of the City Council as provided in Section 458 (a) 4 (vii) of the Code,
it is pertinent to emphasize, are separated by semi-colons (;), the use of which
indicates that the clauses in which these powers are set forth are independent of
each other albeit closely related to justify being put together in a single enumeration
or paragraph.111 These powers, therefore, should not be confused, commingled or
consolidated as to create a conglomerated and unified power of regulation,
suppression and prohibition.112
The Congress unequivocably specified the establishments and forms of amusement
or entertainment subject to regulation among which are beerhouses, hotels, motels,
inns, pension houses, lodging houses, and other similar establishments (Section 458
(a) 4 (iv)), public dancing schools, public dance halls, sauna baths, massage parlors,
and other places for entertainment or amusement (Section 458 (a) 4 (vii)). This
enumeration therefore cannot be included as among "other events or activities for
amusement or entertainment, particularly those which tend to disturb the community
or annoy the inhabitants" or "certain forms of amusement or entertainment" which
the City Council may suspend, suppress or prohibit.
The rule is that the City Council has only such powers as are expressly granted to it
and those which are necessarily implied or incidental to the exercise thereof.  By
reason of its limited powers and the nature thereof, said powers are to be
construed strictissimi juris and any doubt or ambiguity arising out of the terms used
in granting said powers must be construed against the City Council.113 Moreover, it is
a general rule in statutory construction that the express mention of one person, thing,
or consequence is tantamount to an express exclusion of all others. Expressio unius
est exclusio alterium. This maxim is based upon the rules of logic and the natural
workings of human mind. It is particularly applicable in the construction of such
statutes as create new rights or remedies, impose penalties or punishments, or
otherwise come under the rule of strict construction.114
The argument that the City Council is empowered to enact the Ordinance by virtue of
the general welfare clause of the Code and of Art. 3, Sec. 18 (kk) of the Revised
Charter of Manila is likewise without merit. On the first point, the ruling of the Court
in People v. Esguerra,115 is instructive. It held that:
The powers conferred upon a municipal council in the general welfare clause,
or section 2238 of the Revised Administrative Code, refers to matters not
covered by the other provisions of the same Code, and therefore it can not be
applied to intoxicating liquors, for the power to regulate the selling, giving
away and dispensing thereof is granted specifically by section 2242 (g) to
municipal councils. To hold that, under the general power granted by section
2238,  a municipal council may enact the ordinance in question,
notwithstanding the provision of section 2242 (g), would be to make the latter
superfluous and nugatory, because the power to prohibit, includes the power
to regulate, the selling, giving away and dispensing of intoxicating liquors.
On the second point, it suffices to say that the Code being a later expression of the
legislative will must necessarily prevail and override the earlier law, the Revised
Charter of Manila. Legis posteriores priores contrarias abrogant, or later statute
repeals prior ones which are repugnant thereto. As between two laws on the same
subject matter, which are irreconcilably inconsistent, that which is passed later
prevails, since it is the latest expression of legislative will.116 If there is an
inconsistency or repugnance between two statutes, both relating to the same subject
matter, which cannot be removed by any fair and reasonable method of
interpretation, it is the latest expression of the legislative will which must prevail and
override the earlier.117
Implied repeals are those which take place when a subsequently enacted law
contains provisions contrary to those of an existing law but no provisions expressly
repealing them. Such repeals have been divided into two general classes: those
which occur where an act is so inconsistent or irreconcilable with an existing prior act
that only one of the two can remain in force and those which occur when an act
covers the whole subject of an earlier act and is intended to be a substitute therefor.
The validity of such a repeal is sustained on the ground that the latest expression of
the legislative will should prevail.118
511
In addition, Section 534(f) of the Code states that "All general and special laws, acts,
city charters, decrees, executive orders, proclamations and administrative
regulations, or part or parts thereof which are inconsistent with any of the provisions
of this Code are hereby repealed or modified accordingly." Thus, submitting to
petitioners' interpretation that the Revised Charter of Manila empowers the City
Council to prohibit motels, that portion of the Charter stating such must be
considered repealed by the Code as it is at variance with the latter's provisions
granting the City Council mere regulatory powers.
It is well to point out that petitioners also cannot seek cover under the general
welfare clause authorizing the abatement of nuisances without judicial proceedings.
That tenet applies to a nuisance per se, or one which affects the immediate safety of
persons and property and may be summarily abated under the undefined law of
necessity. It can not be said that motels are injurious to the rights of property, health
or comfort of the community. It is a legitimate business. If it be a nuisance per
accidens it may be so proven in a hearing conducted for that purpose. A motel is
not per se a nuisance warranting its summary abatement without judicial
intervention.119
Notably, the City Council was conferred powers to prevent and prohibit certain
activities and establishments in another section of the Code which is reproduced as
follows:
Section 458. Powers, Duties, Functions and Compensation. (a) The
sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general
welfare of the city and its inhabitants pursuant to Section 16 of this Code and
in the proper exercise of the corporate powers of the city as provided for
under Section 22 of this Code, and shall:
(1) Approve ordinances and pass resolutions necessary for an efficient and
effective city government, and in this connection, shall:
.  .  .
(v) Enact ordinances intended to prevent, suppress and impose  appropriate
penalties for habitual drunkenness in public places, vagrancy, mendicancy, 
prostitution, establishment and maintenance of      houses of ill repute,
gambling and other prohibited games of chance,  fraudulent devices and
ways to obtain money or property, drug addiction, maintenance of drug dens,
drug pushing, juvenile delinquency, the printing, distribution or exhibition of
obscene or pornographic materials or publications, and such other activities
inimical  to the welfare and morals of the inhabitants of the city;
.  .  .
If it were the intention of Congress to confer upon the City Council the power to
prohibit the establishments enumerated in Section 1 of the Ordinance, it would have
so declared in uncertain terms by adding them to the list of the matters it may
prohibit under the above-quoted Section. The Ordinance now vainly attempts to lump
these establishments with houses of ill-repute and expand the City Council's powers
in the second and third clauses of Section 458 (a) 4 (vii) of the Code in an effort to
overreach its prohibitory powers. It is evident that these establishments may only be
regulated in their establishment, operation and maintenance.
It is important to distinguish the punishable activities from the establishments
themselves. That these establishments are recognized legitimate enterprises can be
gleaned from another Section of the Code. Section 131 under the Title on Local
Government Taxation expressly mentioned proprietors or operators of massage
clinics, sauna, Turkish and Swedish baths, hotels, motels and lodging houses as
among the "contractors" defined in paragraph (h) thereof.  The same Section also
defined "amusement" as a "pleasurable diversion and entertainment," "synonymous
to relaxation, avocation, pastime or fun;" and "amusement places" to include
"theaters, cinemas, concert halls, circuses and other places of amusement where
one seeks admission to entertain oneself by seeing or viewing the show or
performances." Thus, it can be inferred that the Code considers these
establishments as legitimate enterprises and activities. It is well to recall the maxim
reddendo singula singulis which means that words in different parts of a statute must
be referred to their appropriate connection, giving to each in its place, its proper force
and effect, and, if possible, rendering none of them useless or superfluous, even if
strict grammatical construction demands otherwise. Likewise, where words under
512
consideration appear in different sections or are widely dispersed throughout an act
the same principle applies.120
Not only does the Ordinance contravene the Code, it likewise runs counter to the
provisions of P.D. 499. As correctly argued by MTDC, the statute had already
converted the residential Ermita-Malate area into a commercial area. The decree
allowed the establishment and operation of all kinds of commercial establishments
except warehouse or open storage depot, dump or yard, motor repair shop, gasoline
service station, light industry with any machinery or funeral establishment. The rule is
that for an ordinance to be valid and to have force and effect, it must not only be
within the powers of the council to enact but the same must not be in conflict with or
repugnant to the general law.121 As succinctly illustrated in Solicitor General v.
Metropolitan Manila Authority:122
The requirement that the enactment must not violate existing law explains
itself. Local political subdivisions are able to legislate only by virtue of a valid
delegation of legislative power from the national legislature (except only that
the power to create their own sources of revenue and to levy taxes is
conferred by the Constitution itself). They are mere agents vested with what
is called the power of subordinate legislation. As delegates of the Congress,
the local government units cannot contravene but must obey at all times the
will of their principal. In the case before us, the enactment in question, which
are merely local in origin cannot prevail against the decree, which has the
force and effect of a statute.123
Petitioners contend that the Ordinance enjoys the presumption of validity. While this
may be the rule, it has already been held that although the presumption is always in
favor of the validity or reasonableness of the ordinance, such presumption must
nevertheless be set aside when the invalidity or unreasonableness appears on the
face of the ordinance itself or is established by proper evidence. The exercise of
police power by the local government is valid unless it contravenes the fundamental
law of the land, or an act of the legislature, or unless it is against public policy or is
unreasonable, oppressive, partial, discriminating or in derogation of a common
right.124
Conclusion
All considered, the Ordinance invades fundamental personal and property rights and
impairs personal privileges. It is constitutionally infirm. The Ordinance contravenes
statutes; it is discriminatory and unreasonable in its operation; it is not sufficiently
detailed and explicit that abuses may attend the enforcement of its sanctions. And
not to be forgotten, the City Council under the Code had no power to enact
the Ordinance and is therefore ultra vires, null and void.
Concededly, the challenged Ordinance was enacted with the best of motives and
shares the concern of the public for the cleansing of the Ermita-Malate area of its
social sins. Police power legislation of such character deserves the full endorsement
of the judiciary we reiterate our support for it. But inspite of its virtuous aims, the
enactment of the Ordinance has no statutory or constitutional authority to stand on.
Local legislative bodies, in this case, the City Council, cannot prohibit the operation
of the enumerated establishments under Section 1 thereof or order their transfer or
conversion without infringing the constitutional guarantees of due process and equal
protection of laws not even under the guise of police power.
WHEREFORE, the Petition is hereby DENIED and the decision of the Regional Trial
Court declaring the Ordinance void is AFFIRMED.  Costs against petitioners.
SO ORDERED.
G.R. No. 149110            April 9, 2003
NATIONAL POWER CORPORATION, petitioner,
vs.
CITY OF CABANATUAN, respondent.
PUNO, J.:
This is a petition for review1 of the Decision2 and the Resolution3 of the Court of
Appeals dated March 12, 2001 and July 10, 2001, respectively, finding petitioner
National Power Corporation (NPC) liable to pay franchise tax to respondent City of
Cabanatuan.
513
Petitioner is a government-owned and controlled corporation created under
Commonwealth Act No. 120, as amended.4 It is tasked to undertake the
"development of hydroelectric generations of power and the production of electricity
from nuclear, geothermal and other sources, as well as, the transmission of electric
power on a nationwide basis."5 Concomitant to its mandated duty, petitioner has,
among others, the power to construct, operate and maintain power plants, auxiliary
plants, power stations and substations for the purpose of developing hydraulic power
and supplying such power to the inhabitants.6
For many years now, petitioner sells electric power to the residents of Cabanatuan
City, posting a gross income of P107,814,187.96 in 1992.7 Pursuant to section 37 of
Ordinance No. 165-92,8 the respondent assessed the petitioner a franchise tax
amounting to P808,606.41, representing 75% of 1% of the latter's gross receipts for
the preceding year.9
Petitioner, whose capital stock was subscribed and paid wholly by the Philippine
Government,10 refused to pay the tax assessment. It argued that the respondent has
no authority to impose tax on government entities. Petitioner also contended that as
a non-profit organization, it is exempted from the payment of all forms of taxes,
charges, duties or fees11 in accordance with sec. 13 of Rep. Act No. 6395, as
amended, viz:
"Sec.13. Non-profit Character of the Corporation; Exemption from all Taxes,
Duties, Fees, Imposts and Other Charges by Government and Governmental
Instrumentalities.- The Corporation shall be non-profit and shall devote all its
return from its capital investment, as well as excess revenues from its
operation, for expansion. To enable the Corporation to pay its indebtedness
and obligations and in furtherance and effective implementation of the policy
enunciated in Section one of this Act, the Corporation is hereby exempt:
(a) From the payment of all taxes, duties, fees, imposts, charges, costs and
service fees in any court or administrative proceedings in which it may be a
party, restrictions and duties to the Republic of the Philippines, its provinces,
cities, municipalities and other government agencies and instrumentalities;
(b) From all income taxes, franchise taxes and realty taxes to be paid to the
National Government, its provinces, cities, municipalities and other
government agencies and instrumentalities;
(c) From all import duties, compensating taxes and advanced sales tax, and
wharfage fees on import of foreign goods required for its operations and
projects; and
(d) From all taxes, duties, fees, imposts, and all other charges imposed by
the Republic of the Philippines, its provinces, cities, municipalities and other
government agencies and instrumentalities, on all petroleum products used
by the Corporation in the generation, transmission, utilization, and sale of
electric power."12
The respondent filed a collection suit in the Regional Trial Court of Cabanatuan City,
demanding that petitioner pay the assessed tax due, plus a surcharge equivalent to
25% of the amount of tax, and 2% monthly interest.13 Respondent alleged that
petitioner's exemption from local taxes has been repealed by section 193 of Rep. Act
No. 7160,14 which reads as follows:
"Sec. 193. Withdrawal of Tax Exemption Privileges.- Unless otherwise
provided in this Code, tax exemptions or incentives granted to, or presently
enjoyed by all persons, whether natural or juridical, including government
owned or controlled corporations, except local water districts, cooperatives
duly registered under R.A. No. 6938, non-stock and non-profit hospitals and
educational institutions, are hereby withdrawn upon the effectivity of this
Code."
On January 25, 1996, the trial court issued an Order15 dismissing the case. It ruled
that the tax exemption privileges granted to petitioner subsist despite the passage of
Rep. Act No. 7160 for the following reasons: (1) Rep. Act No. 6395 is a particular law
and it may not be repealed by Rep. Act No. 7160 which is a general law; (2) section
193 of Rep. Act No. 7160 is in the nature of an implied repeal which is not favored;
and (3) local governments have no power to tax instrumentalities of the national
government. Pertinent portion of the Order reads:
514
"The question of whether a particular law has been repealed or not by a
subsequent law is a matter of legislative intent. The lawmakers may
expressly repeal a law by incorporating therein repealing provisions which
expressly and specifically cite(s) the particular law or laws, and portions
thereof, that are intended to be repealed. A declaration in a statute, usually in
its repealing clause, that a particular and specific law, identified by its number
or title is repealed is an express repeal; all others are implied repeal. Sec.
193 of R.A. No. 7160 is an implied repealing clause because it fails to identify
the act or acts that are intended to be repealed. It is a well-settled rule of
statutory construction that repeals of statutes by implication are not favored.
The presumption is against inconsistency and repugnancy for the legislative
is presumed to know the existing laws on the subject and not to have enacted
inconsistent or conflicting statutes. It is also a well-settled rule that, generally,
general law does not repeal a special law unless it clearly appears that the
legislative has intended by the latter general act to modify or repeal the
earlier special law. Thus, despite the passage of R.A. No. 7160 from which
the questioned Ordinance No. 165-92 was based, the tax exemption
privileges of defendant NPC remain.
Another point going against plaintiff in this case is the ruling of the Supreme
Court in the case of Basco vs. Philippine Amusement and Gaming
Corporation, 197 SCRA 52, where it was held that:
'Local governments have no power to tax instrumentalities of the
National Government. PAGCOR is a government owned or controlled
corporation with an original charter, PD 1869. All of its shares of
stocks are owned by the National Government. xxx Being an
instrumentality of the government, PAGCOR should be and actually is
exempt from local taxes. Otherwise, its operation might be burdened,
impeded or subjected to control by mere local government.'
Like PAGCOR, NPC, being a government owned and controlled corporation
with an original charter and its shares of stocks owned by the National
Government, is beyond the taxing power of the Local Government. Corollary
to this, it should be noted here that in the NPC Charter's declaration of Policy,
Congress declared that: 'xxx (2) the total electrification of the Philippines
through the development of power from all services to meet the needs of
industrial development and dispersal and needs of rural electrification are
primary objectives of the nations which shall be pursued coordinately and
supported by all instrumentalities and agencies of the government, including
its financial institutions.' (underscoring supplied). To allow plaintiff to subject
defendant to its tax-ordinance would be to impede the avowed goal of this
government instrumentality.
Unlike the State, a city or municipality has no inherent power of taxation. Its
taxing power is limited to that which is provided for in its charter or other
statute. Any grant of taxing power is to be construed strictly, with doubts
resolved against its existence.
From the existing law and the rulings of the Supreme Court itself, it is very
clear that the plaintiff could not impose the subject tax on the defendant."16
On appeal, the Court of Appeals reversed the trial court's Order17 on the ground that
section 193, in relation to sections 137 and 151 of the LGC, expressly withdrew the
exemptions granted to the petitioner.18 It ordered the petitioner to pay the respondent
city government the following: (a) the sum of P808,606.41 representing the franchise
tax due based on gross receipts for the year 1992, (b) the tax due every year
thereafter based in the gross receipts earned by NPC, (c) in all cases, to pay a
surcharge of 25% of the tax due and unpaid, and (d) the sum of P 10,000.00 as
litigation expense.19
On April 4, 2001, the petitioner filed a Motion for Reconsideration on the Court of
Appeal's Decision. This was denied by the appellate court, viz:
"The Court finds no merit in NPC's motion for reconsideration. Its arguments
reiterated therein that the taxing power of the province under Art. 137 (sic) of
the Local Government Code refers merely to private persons or corporations
in which category it (NPC) does not belong, and that the LGC (RA 7160)
which is a general law may not impliedly repeal the NPC Charter which is a
special law—finds the answer in Section 193 of the LGC to the effect that 'tax
exemptions or incentives granted to, or presently enjoyed by all persons,
whether natural or juridical, including government-owned or controlled
515
corporations except local water districts xxx are hereby withdrawn.' The
repeal is direct and unequivocal, not implied.
IN VIEW WHEREOF, the motion for reconsideration is hereby DENIED.
SO ORDERED."20
In this petition for review, petitioner raises the following issues:
"A. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT NPC,
A PUBLIC NON-PROFIT CORPORATION, IS LIABLE TO PAY A
FRANCHISE TAX AS IT FAILED TO CONSIDER THAT SECTION 137 OF
THE LOCAL GOVERNMENT CODE IN RELATION TO SECTION 131
APPLIES ONLY TO PRIVATE PERSONS OR CORPORATIONS ENJOYING
A FRANCHISE.
B. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT
NPC'S EXEMPTION FROM ALL FORMS OF TAXES HAS BEEN
REPEALED BY THE PROVISION OF THE LOCAL GOVERNMENT CODE
AS THE ENACTMENT OF A LATER LEGISLATION, WHICH IS A GENERAL
LAW, CANNOT BE CONSTRUED TO HAVE REPEALED A SPECIAL LAW.
C. THE COURT OF APPEALS GRAVELY ERRED IN NOT CONSIDERING
THAT AN EXERCISE OF POLICE POWER THROUGH TAX EXEMPTION
SHOULD PREVAIL OVER THE LOCAL GOVERNMENT CODE."21
It is beyond dispute that the respondent city government has the authority to issue
Ordinance No. 165-92 and impose an annual tax on "businesses enjoying a
franchise," pursuant to section 151 in relation to section 137 of the LGC, viz:
"Sec. 137. Franchise Tax. - Notwithstanding any exemption granted by any
law or other special law, the province may impose a tax on businesses
enjoying a franchise, at a rate not exceeding fifty percent (50%) of one
percent (1%) of the gross annual receipts for the preceding calendar year
based on the incoming receipt, or realized, within its territorial jurisdiction.
In the case of a newly started business, the tax shall not exceed one-
twentieth (1/20) of one percent (1%) of the capital investment. In the
succeeding calendar year, regardless of when the business started to
operate, the tax shall be based on the gross receipts for the preceding
calendar year, or any fraction thereof, as provided herein." (emphasis
supplied)
x   x   x
Sec. 151. Scope of Taxing Powers.- Except as otherwise provided in this
Code, the city, may levy the taxes, fees, and charges which the province or
municipality may impose: Provided, however, That the taxes, fees and
charges levied and collected by highly urbanized and independent
component cities shall accrue to them and distributed in accordance with the
provisions of this Code.
The rates of taxes that the city may levy may exceed the maximum rates
allowed for the province or municipality by not more than fifty percent (50%)
except the rates of professional and amusement taxes."
Petitioner, however, submits that it is not liable to pay an annual franchise tax to the
respondent city government. It contends that sections 137 and 151 of the LGC in
relation to section 131, limit the taxing power of the respondent city government to
private entities that are engaged in trade or occupation for profit.22
Section 131 (m) of the LGC defines a "franchise" as "a right or privilege, affected
with public interest which is conferred upon private persons or corporations, under
such terms and conditions as the government and its political subdivisions may
impose in the interest of the public welfare, security and safety." From the
phraseology of this provision, the petitioner claims that the word "private" modifies
the terms "persons" and "corporations." Hence, when the LGC uses the term
"franchise," petitioner submits that it should refer specifically to franchises granted to
private natural persons and to private corporations.23 Ergo, its charter should not be
considered a "franchise" for the purpose of imposing the franchise tax in question.
516
On the other hand, section 131 (d) of the LGC defines "business" as "trade or
commercial activity regularly engaged in as means of livelihood or with a view to
profit." Petitioner claims that it is not engaged in an activity for profit, in as much as
its charter specifically provides that it is a "non-profit organization." In any case,
petitioner argues that the accumulation of profit is merely incidental to its operation;
all these profits are required by law to be channeled for expansion and improvement
of its facilities and services.24
Petitioner also alleges that it is an instrumentality of the National Government,25 and
as such, may not be taxed by the respondent city government. It cites the doctrine
in Basco vs. Philippine Amusement and Gaming Corporation26 where this Court held
that local governments have no power to tax instrumentalities of the National
Government, viz:
"Local governments have no power to tax instrumentalities of the National
Government.
PAGCOR has a dual role, to operate and regulate gambling casinos. The
latter role is governmental, which places it in the category of an agency or
instrumentality of the Government. Being an instrumentality of the
Government, PAGCOR should be and actually is exempt from local taxes.
Otherwise, its operation might be burdened, impeded or subjected to control
by a mere local government.
'The states have no power by taxation or otherwise, to retard, impede,
burden or in any manner control the operation of constitutional laws
enacted by Congress to carry into execution the powers vested in the
federal government. (MC Culloch v. Maryland, 4 Wheat 316, 4 L Ed.
579)'
This doctrine emanates from the 'supremacy' of the National Government
over local governments.
'Justice Holmes, speaking for the Supreme Court, made reference to
the entire absence of power on the part of the States to touch, in that
way (taxation) at least, the instrumentalities of the United States
(Johnson v. Maryland, 254 US 51) and it can be agreed that no state
or political subdivision can regulate a federal instrumentality in such a
way as to prevent it from consummating its federal responsibilities, or
even seriously burden it from accomplishment of them.'
(Antieau, Modern Constitutional Law, Vol. 2, p. 140, italics supplied)
Otherwise, mere creatures of the State can defeat National policies thru
extermination of what local authorities may perceive to be undesirable
activities or enterprise using the power to tax as ' a tool regulation' (U.S. v.
Sanchez, 340 US 42).
The power to tax which was called by Justice Marshall as the 'power to
destroy' (Mc Culloch v. Maryland, supra) cannot be allowed to defeat an
instrumentality or creation of the very entity which has the inherent power to
wield it."27
Petitioner contends that section 193 of Rep. Act No. 7160, withdrawing the tax
privileges of government-owned or controlled corporations, is in the nature of an
implied repeal. A special law, its charter cannot be amended or modified impliedly by
the local government code which is a general law. Consequently, petitioner claims
that its exemption from all taxes, fees or charges under its charter subsists despite
the passage of the LGC, viz:
"It is a well-settled rule of statutory construction that repeals of statutes by
implication are not favored and as much as possible, effect must be given to
all enactments of the legislature. Moreover, it has to be conceded that the
charter of the NPC constitutes a special law. Republic Act No. 7160, is a
general law. It is a basic rule in statutory construction that the enactment of a
later legislation which is a general law cannot be construed to have repealed
a special law. Where there is a conflict between a general law and a special
statute, the special statute should prevail since it evinces the legislative intent
more clearly than the general statute."28
Finally, petitioner submits that the charter of the NPC, being a valid exercise of police
power, should prevail over the LGC. It alleges that the power of the local government
to impose franchise tax is subordinate to petitioner's exemption from taxation; "police
517
power being the most pervasive, the least limitable and most demanding of all
powers, including the power of taxation."29
The petition is without merit.
Taxes are the lifeblood of the government,30 for without taxes, the government can
neither exist nor endure. A principal attribute of sovereignty,31 the exercise of taxing
power derives its source from the very existence of the state whose social contract
with its citizens obliges it to promote public interest and common good. The theory
behind the exercise of the power to tax emanates from necessity;32 without taxes,
government cannot fulfill its mandate of promoting the general welfare and well-being
of the people.
In recent years, the increasing social challenges of the times expanded the scope of
state activity, and taxation has become a tool to realize social justice and the
equitable distribution of wealth, economic progress and the protection of local
industries as well as public welfare and similar objectives.33 Taxation assumes even
greater significance with the ratification of the 1987 Constitution. Thenceforth, the
power to tax is no longer vested exclusively on Congress; local legislative bodies are
now given direct authority to levy taxes, fees and other charges34 pursuant to Article
X, section 5 of the 1987 Constitution, viz:
"Section 5.- Each Local Government unit shall have the power to create its
own sources of revenue, to levy taxes, fees and charges subject to such
guidelines and limitations as the Congress may provide, consistent with the
basic policy of local autonomy. Such taxes, fees and charges shall accrue
exclusively to the Local Governments."
This paradigm shift results from the realization that genuine development can be
achieved only by strengthening local autonomy and promoting decentralization of
governance. For a long time, the country's highly centralized government structure
has bred a culture of dependence among local government leaders upon the
national leadership. It has also "dampened the spirit of initiative, innovation and
imaginative resilience in matters of local development on the part of local
government leaders."35 The only way to shatter this culture of dependence is to give
the LGUs a wider role in the delivery of basic services, and confer them sufficient
powers to generate their own sources for the purpose. To achieve this goal, section
3 of Article X of the 1987 Constitution mandates Congress to enact a local
government code that will, consistent with the basic policy of local autonomy, set the
guidelines and limitations to this grant of taxing powers, viz:
"Section 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."
To recall, prior to the enactment of the Rep. Act No. 7160,36 also known as the Local
Government Code of 1991 (LGC), various measures have been enacted to promote
local autonomy. These include the Barrio Charter of 1959,37 the Local Autonomy Act
of 1959,38 the Decentralization Act of 196739 and the Local Government Code of
1983.40 Despite these initiatives, however, the shackles of dependence on the
national government remained. Local government units were faced with the same
problems that hamper their capabilities to participate effectively in the national
development efforts, among which are: (a) inadequate tax base, (b) lack of fiscal
control over external sources of income, (c) limited authority to prioritize and approve
development projects, (d) heavy dependence on external sources of income, and (e)
limited supervisory control over personnel of national line agencies.41
Considered as the most revolutionary piece of legislation on local autonomy,42 the
LGC effectively deals with the fiscal constraints faced by LGUs. It widens the tax
base of LGUs to include taxes which were prohibited by previous laws such as the
imposition of taxes on forest products, forest concessionaires, mineral products,
mining operations, and the like. The LGC likewise provides enough flexibility to
impose tax rates in accordance with their needs and capabilities. It does not
prescribe graduated fixed rates but merely specifies the minimum and maximum tax
rates and leaves the determination of the actual rates to the respective sanggunian.43
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One of the most significant provisions of the LGC is the removal of the blanket
exclusion of instrumentalities and agencies of the national government from the
coverage of local taxation. Although as a general rule, LGUs cannot impose taxes,
fees or charges of any kind on the National Government, its agencies and
instrumentalities, this rule now admits an exception, i.e., when specific provisions of
the LGC authorize the LGUs to impose taxes, fees or charges on the aforementioned
entities, viz:
"Section 133. Common Limitations on the Taxing Powers of the Local
Government Units.- Unless otherwise provided herein, the exercise of the
taxing powers of provinces, cities, municipalities, and barangays shall not
extend to the levy of the following:
x   x   x
(o) Taxes, fees, or charges of any kind on the National Government, its
agencies and instrumentalities, and local government units." (emphasis
supplied)
In view of the afore-quoted provision of the LGC, the doctrine in Basco vs. Philippine
Amusement and Gaming Corporation44 relied upon by the petitioner to support its
claim no longer applies. To emphasize, the Basco case was decided prior to the
effectivity of the LGC, when no law empowering the local government units to tax
instrumentalities of the National Government was in effect. However, as this Court
ruled in the case of Mactan Cebu International Airport Authority (MCIAA) vs.
Marcos,45 nothing prevents Congress from decreeing that even instrumentalities or
agencies of the government performing governmental functions may be subject to
tax.46 In enacting the LGC, Congress exercised its prerogative to tax instrumentalities
and agencies of government as it sees fit. Thus, after reviewing the specific
provisions of the LGC, this Court held that MCIAA, although an instrumentality of the
national government, was subject to real property tax, viz:
"Thus, reading together sections 133, 232, and 234 of the LGC, we conclude
that as a general rule, as laid down in section 133, the taxing power of local
governments cannot extend to the levy of inter alia, 'taxes, fees and charges
of any kind on the national government, its agencies and instrumentalities,
and local government units'; however, pursuant to section 232, provinces,
cities and municipalities in the Metropolitan Manila Area may impose the real
property tax except on, inter alia, 'real property owned by the Republic of the
Philippines or any of its political subdivisions except when the beneficial use
thereof has been granted for consideration or otherwise, to a taxable person
as provided in the item (a) of the first paragraph of section 12.'"47
In the case at bar, section 151 in relation to section 137 of the LGC clearly
authorizes the respondent city government to impose on the petitioner the franchise
tax in question.
In its general signification, a franchise is a privilege conferred by government
authority, which does not belong to citizens of the country generally as a matter of
common right.48 In its specific sense, a franchise may refer to a general or primary
franchise, or to a special or secondary franchise. The former relates to the right to
exist as a corporation, by virtue of duly approved articles of incorporation, or a
charter pursuant to a special law creating the corporation.49 The right under a primary
or general franchise is vested in the individuals who compose the corporation and
not in the corporation itself.50 On the other hand, the latter refers to the right or
privileges conferred upon an existing corporation such as the right to use the streets
of a municipality to lay pipes of tracks, erect poles or string wires.51 The rights under
a secondary or special franchise are vested in the corporation and may ordinarily be
conveyed or mortgaged under a general power granted to a corporation to dispose
of its property, except such special or secondary franchises as are charged with a
public use.52
In section 131 (m) of the LGC, Congress unmistakably defined a franchise in the
sense of a secondary or special franchise. This is to avoid any confusion when the
word franchise is used in the context of taxation. As commonly used, a franchise
tax is "a tax on the privilege of transacting business in the state and exercising
corporate franchises granted by the state."53 It is not levied on the corporation simply
for existing as a corporation, upon its property54 or its income,55 but on its exercise of
the rights or privileges granted to it by the government. Hence, a corporation need
not pay franchise tax from the time it ceased to do business and exercise its
franchise.56 It is within this context that the phrase "tax on businesses enjoying a
franchise" in section 137 of the LGC should be interpreted and understood. Verily, to
519
determine whether the petitioner is covered by the franchise tax in question, the
following requisites should concur: (1) that petitioner has a "franchise" in the sense of
a secondary or special franchise; and (2) that it is exercising its rights or privileges
under this franchise within the territory of the respondent city government.
Petitioner fulfills the first requisite. Commonwealth Act No. 120, as amended by Rep.
Act No. 7395, constitutes petitioner's primary and secondary franchises. It serves as
the petitioner's charter, defining its composition, capitalization, the appointment and
the specific duties of its corporate officers, and its corporate life span.57 As its
secondary franchise, Commonwealth Act No. 120, as amended, vests the petitioner
the following powers which are not available to ordinary corporations, viz:
"x x x
(e) To conduct investigations and surveys for the development of water
power in any part of the Philippines;
(f) To take water from any public stream, river, creek, lake, spring or waterfall
in the Philippines, for the purposes specified in this Act; to intercept and divert
the flow of waters from lands of riparian owners and from persons owning or
interested in waters which are or may be necessary for said purposes, upon
payment of just compensation therefor; to alter, straighten, obstruct or
increase the flow of water in streams or water channels intersecting or
connecting therewith or contiguous to its works or any part thereof: Provided,
That just compensation shall be paid to any person or persons whose
property is, directly or indirectly, adversely affected or damaged thereby;
(g) To construct, operate and maintain power plants, auxiliary plants, dams,
reservoirs, pipes, mains, transmission lines, power stations and substations,
and other works for the purpose of developing hydraulic power from any river,
creek, lake, spring and waterfall in the Philippines and supplying such power
to the inhabitants thereof; to acquire, construct, install, maintain, operate, and
improve gas, oil, or steam engines, and/or other prime movers, generators
and machinery in plants and/or auxiliary plants for the production of electric
power; to establish, develop, operate, maintain and administer power and
lighting systems for the transmission and utilization of its power generation; to
sell electric power in bulk to (1) industrial enterprises, (2) city, municipal or
provincial systems and other government institutions, (3) electric
cooperatives, (4) franchise holders, and (5) real estate subdivisions x x x;
(h) To acquire, promote, hold, transfer, sell, lease, rent, mortgage, encumber
and otherwise dispose of property incident to, or necessary, convenient or
proper to carry out the purposes for which the Corporation was created:
Provided, That in case a right of way is necessary for its transmission lines,
easement of right of way shall only be sought: Provided, however, That in
case the property itself shall be acquired by purchase, the cost thereof shall
be the fair market value at the time of the taking of such property;
(i) To construct works across, or otherwise, any stream, watercourse, canal,
ditch, flume, street, avenue, highway or railway of private and public
ownership, as the location of said works may require xxx;
(j) To exercise the right of eminent domain for the purpose of this Act in the
manner provided by law for instituting condemnation proceedings by the
national, provincial and municipal governments;
x   x   x
(m) To cooperate with, and to coordinate its operations with those of the
National Electrification Administration and public service entities;
(n) To exercise complete jurisdiction and control over watersheds
surrounding the reservoirs of plants and/or projects constructed or proposed
to be constructed by the Corporation. Upon determination by the Corporation
of the areas required for watersheds for a specific project, the Bureau of
Forestry, the Reforestation Administration and the Bureau of Lands shall,
upon written advice by the Corporation, forthwith surrender jurisdiction to the
Corporation of all areas embraced within the watersheds, subject to existing
private rights, the needs of waterworks systems, and the requirements of
domestic water supply;
520
(o) In the prosecution and maintenance of its projects, the Corporation shall
adopt measures to prevent environmental pollution and promote the
conservation, development and maximum utilization of natural resources xxx
"58
With these powers, petitioner eventually had the monopoly in the generation and
distribution of electricity. This monopoly was strengthened with the issuance of Pres.
Decree No. 40,59 nationalizing the electric power industry. Although Exec. Order No.
21560 thereafter allowed private sector participation in the generation of electricity,
the transmission of electricity remains the monopoly of the petitioner.
Petitioner also fulfills the second requisite. It is operating within the respondent city
government's territorial jurisdiction pursuant to the powers granted to it by
Commonwealth Act No. 120, as amended. From its operations in the City of
Cabanatuan, petitioner realized a gross income of P107,814,187.96 in 1992.
Fulfilling both requisites, petitioner is, and ought to be, subject of the franchise tax in
question.
Petitioner, however, insists that it is excluded from the coverage of the franchise tax
simply because its stocks are wholly owned by the National Government, and its
charter characterized it as a "non-profit" organization.
These contentions must necessarily fail.
To stress, a franchise tax is imposed based not on the ownership but on the exercise
by the corporation of a privilege to do business. The taxable entity is the corporation
which exercises the franchise, and not the individual stockholders. By virtue of its
charter, petitioner was created as a separate and distinct entity from the National
Government. It can sue and be sued under its own name,61 and can exercise all the
powers of a corporation under the Corporation Code.62
To be sure, the ownership by the National Government of its entire capital stock
does not necessarily imply that petitioner is not engaged in business. Section 2 of
Pres. Decree No. 202963 classifies government-owned or controlled corporations
(GOCCs) into those performing governmental functions and those performing
proprietary functions, viz:
"A government-owned or controlled corporation is a stock or a non-stock
corporation, whether performing governmental or proprietary functions, which
is directly chartered by special law or if organized under the general
corporation law is owned or controlled by the government directly, or
indirectly through a parent corporation or subsidiary corporation, to the extent
of at least a majority of its outstanding voting capital stock x x x." (emphases
supplied)
Governmental functions are those pertaining to the administration of government,
and as such, are treated as absolute obligation on the part of the state to perform
while proprietary functions are those that are undertaken only by way of advancing
the general interest of society, and are merely optional on the
government.64 Included in the class of GOCCs performing proprietary functions are
"business-like" entities such as the National Steel Corporation (NSC), the National
Development Corporation (NDC), the Social Security System (SSS), the Government
Service Insurance System (GSIS), and the National Water Sewerage Authority
(NAWASA),65 among others.
Petitioner was created to "undertake the development of hydroelectric generation of
power and the production of electricity from nuclear, geothermal and other sources,
as well as the transmission of electric power on a nationwide basis."66 Pursuant to
this mandate, petitioner generates power and sells electricity in bulk. Certainly, these
activities do not partake of the sovereign functions of the government. They are
purely private and commercial undertakings, albeit imbued with public interest. The
public interest involved in its activities, however, does not distract from the true
nature of the petitioner as a commercial enterprise, in the same league with similar
public utilities like telephone and telegraph companies, railroad companies, water
supply and irrigation companies, gas, coal or light companies, power plants, ice plant
among others; all of which are declared by this Court as ministrant or proprietary
functions of government aimed at advancing the general interest of society.67
A closer reading of its charter reveals that even the legislature treats the character of
the petitioner's enterprise as a "business," although it limits petitioner's profits to
twelve percent (12%), viz:68
521
"(n) When essential to the proper administration of its corporate affairs or
necessary for the proper transaction of its business or to carry out the
purposes for which it was organized, to contract indebtedness and issue
bonds subject to approval of the President upon recommendation of the
Secretary of Finance;
(o) To exercise such powers and do such things as may be reasonably
necessary to carry out the business and purposes for which it was organized,
or which, from time to time, may be declared by the Board to be necessary,
useful, incidental or auxiliary to accomplish the said purpose xxx."(emphases
supplied)
It is worthy to note that all other private franchise holders receiving at least sixty
percent (60%) of its electricity requirement from the petitioner are likewise imposed
the cap of twelve percent (12%) on profits.69 The main difference is that the petitioner
is mandated to devote "all its returns from its capital investment, as well as excess
revenues from its operation, for expansion"70 while other franchise holders have the
option to distribute their profits to its stockholders by declaring dividends. We do not
see why this fact can be a source of difference in tax treatment. In both instances,
the taxable entity is the corporation, which exercises the franchise, and not the
individual stockholders.
We also do not find merit in the petitioner's contention that its tax exemptions under
its charter subsist despite the passage of the LGC.
As a rule, tax exemptions are construed strongly against the claimant. Exemptions
must be shown to exist clearly and categorically, and supported by clear legal
provisions.71 In the case at bar, the petitioner's sole refuge is section 13 of Rep. Act
No. 6395 exempting from, among others, "all income taxes, franchise taxes and
realty taxes to be paid to the National Government, its provinces, cities,
municipalities and other government agencies and instrumentalities." However,
section 193 of the LGC withdrew, subject to limited exceptions, the sweeping tax
privileges previously enjoyed by private and public corporations. Contrary to the
contention of petitioner, section 193 of the LGC is an express, albeit general, repeal
of all statutes granting tax exemptions from local taxes.72 It reads:
"Sec. 193. Withdrawal of Tax Exemption Privileges.- Unless otherwise
provided in this Code, tax exemptions or incentives granted to, or presently
enjoyed by all persons, whether natural or juridical, including government-
owned or controlled corporations, except local water districts, cooperatives
duly registered under R.A. No. 6938, non-stock and non-profit hospitals and
educational institutions, are hereby withdrawn upon the effectivity of this
Code." (emphases supplied)
It is a basic precept of statutory construction that the express mention of one person,
thing, act, or consequence excludes all others as expressed in the familiar
maxim expressio unius est exclusio alterius.73 Not being a local water district, a
cooperative registered under R.A. No. 6938, or a non-stock and non-profit hospital or
educational institution, petitioner clearly does not belong to the exception. It is
therefore incumbent upon the petitioner to point to some provisions of the LGC that
expressly grant it exemption from local taxes.
But this would be an exercise in futility. Section 137 of the LGC clearly states that the
LGUs can impose franchise tax "notwithstanding any exemption granted by any law
or other special law." This particular provision of the LGC does not admit any
exception. In City Government of San Pablo, Laguna v. Reyes,74 MERALCO's
exemption from the payment of franchise taxes was brought as an issue before this
Court. The same issue was involved in the subsequent case of Manila Electric
Company v. Province of Laguna.75 Ruling in favor of the local government in both
instances, we ruled that the franchise tax in question is imposable despite any
exemption enjoyed by MERALCO under special laws, viz:
"It is our view that petitioners correctly rely on provisions of Sections 137 and
193 of the LGC to support their position that MERALCO's tax exemption has
been withdrawn. The explicit language of section 137 which authorizes the
province to impose franchise tax 'notwithstanding any exemption granted by
any law or other special law' is all-encompassing and clear. The franchise tax
is imposable despite any exemption enjoyed under special laws.
Section 193 buttresses the withdrawal of extant tax exemption privileges. By
stating that unless otherwise provided in this Code, tax exemptions or
incentives granted to or presently enjoyed by all persons, whether natural or
522

juridical, including government-owned or controlled corporations except (1)
local water districts, (2) cooperatives duly registered under R.A. 6938, (3)
non-stock and non-profit hospitals and educational institutions, are withdrawn
upon the effectivity of this code, the obvious import is to limit the exemptions
to the three enumerated entities. It is a basic precept of statutory construction
that the express mention of one person, thing, act, or consequence excludes
all others as expressed in the familiar maxim expressio unius est exclusio
alterius. In the absence of any provision of the Code to the contrary, and we
find no other provision in point, any existing tax exemption or incentive
enjoyed by MERALCO under existing law was clearly intended to be
withdrawn.
observed in the Mactan case, "the original reasons for the withdrawal of tax
exemption privileges granted to government-owned or controlled corporations and all
other units of government were that such privilege resulted in serious tax base
erosion and distortions in the tax treatment of similarly situated enterprises."78 With
the added burden of devolution, it is even more imperative for government entities to
share in the requirements of development, fiscal or otherwise, by paying taxes or
other charges due from them.
IN VIEW WHEREOF, the instant petition is DENIED and the assailed Decision and
l Resolution of the Court of Appeals dated March 12, 2001 and July 10, 2001,
respectively, are hereby AFFIRMED.

Reading together sections 137 and 193 of the LGC, we conclude that under SO ORDERED.
the LGC the local government unit may now impose a local tax at a rate not
exceeding 50% of 1% of the gross annual receipts for the preceding calendar
based on the incoming receipts realized within its territorial jurisdiction. The
legislative purpose to withdraw tax privileges enjoyed under existing law or
charter is clearly manifested by the language used on (sic) Sections 137 and
193 categorically withdrawing such exemption subject only to the exceptions
enumerated. Since it would be not only tedious and impractical to attempt to
enumerate all the existing statutes providing for special tax exemptions or
privileges, the LGC provided for an express, albeit general, withdrawal of
such exemptions or privileges. No more unequivocal language could have
been used."76 (emphases supplied).

It is worth mentioning that section 192 of the LGC empowers the LGUs, through
ordinances duly approved, to grant tax exemptions, initiatives or reliefs.77 But in
enacting section 37 of Ordinance No. 165-92 which imposes an annual franchise tax
"notwithstanding any exemption granted by law or other special law," the respondent
city government clearly did not intend to exempt the petitioner from the coverage
thereof.

Doubtless, the power to tax is the most effective instrument to raise needed
revenues to finance and support myriad activities of the local government units for
the delivery of basic services essential to the promotion of the general welfare and
the enhancement of peace, progress, and prosperity of the people. As this Court