1 PART III POWERS OF THE LOCAL GOVERNMENT UNITS Corporate Powers Section 22, RA 7160 a) Every local government

t unit, as a corporation, shall have the following powers: 1) To have continuous succession in its corporate name; 2) To sue and be sued; 3) To have and use a corporate seal; 4) To acquire and convey real or personal property; 5) To enter into contracts; and 6) To exercise such other powers as are granted to corporations, subject to the limitations provided in this Code and other laws. b) Local government units may continue using, modify, or change their existing corporate seals: Provided, That newly established local government units or those without corporate seals may create their own corporate seals which shall be registered with the Department of the Interior and Local Government: Provided, further, That any change of corporate seal shall also be registered as provided herein. c) Unless otherwise provided in this Code, contract may be entered into by the local chief executive in behalf of the local government unit without prior authorization by the sanggunian concerned. A legible copy of such contract shall be posted at a conspicuous place in the provincial capitol or the city, municipal or barangay hall. d) Local government units shall enjoy full autonomy in the exercise of their proprietary functions and in the management of their economic enterprises, subject to the limitations provided in this Code and other applicable laws. Authority to negotiate and secure grants and incurring indebtedness - Section 23, RA 7160 Local chief executives may, upon authority of the sanggunian, negotiate and secure financial grants or donations in kind, in support of the basic services or facilities enumerated under Section 17 hereof, from local and foreign assistance agencies without necessity of securing clearance or approval therefor from any department, agency, or office of the national government or from any higher local government unit: Provided, That projects financed by such grants or assistance with national security implications shall be approved by the national agency concerned: Provided, further, That when such national agency fails to act on the request for approval within thirty (30) days from receipt thereof, the same shall be deemed approved. The local chief executive shall, within thirty (30) days upon signing of such grant agreement or deed of donation, report the nature, amount, and terms of such assistance to both Houses of Congress and the President.

Build-Operate-Transfer- Section 302, RA 7160 Financing, Construction, Maintenance, Operation, and Management of Infrastructure Projects by the Private Sector. (a) Local government units may enter into contracts with any duly prequalified individual contractor, for the financing, construction, operation, and maintenance of any financially viable infrastructure facilities, under the build-operate-and-transfer agreement, subject to the applicable provisions of Republic Act Numbered Sixty-nine hundred fifty-seven (R.A. No. 6957) authorizing the financing, construction, operation and maintenance of infrastructure projects by the private sector and the rules and regulations issued thereunder and such terms and conditions provided in this Section. (b) Local government units shall include in their respective local development plans and public investment programs priority projects that may be financed, constructed, operated and maintained by the private sector under this Section. It shall be the duty of the local government unit concerned to disclose to the public all projects eligible for financing under this Section, including official notification of duly registered contractors and publication in newspapers of general or local circulation and in conspicuous and accessible public places. Local projects under the build-operate-andtransfer agreement shall be confirmed by the local development councils. (c) Projects implemented under this Section shall be subject to the following terms and conditions: (1) The provincial, city, or municipal engineer, as the case may be, upon formal request in writing by the local chief executive, shall prepare the plans and specifications for the proposed project, which shall be submitted to the sanggunian for approval. (2) Upon approval by the sanggunian of the project plans and specifications, the provincial, city, or municipal engineer shall, as the case may be, cause to be published once every week for two (2) consecutive weeks in at least one (1) local newspaper which is circulated in the region, province, city or municipality in which the project is to be implemented, a notice inviting all duly qualified contractors to participate in a public bidding for the projects so approved. The conduct of public bidding and award of contracts for local government projects under this Section shall be in accordance with this Code and other applicable laws, rules and regulations. In the case of a build-operate-and-transfer agreement, the contract shall be awarded to the lowest complying bidder whose offer is deemed most advantageous to the local government and based on the present value of its proposed tolls, fees, rentals, and charges over a fixed term for the facility to be constructed, operated, and maintained according to the prescribed minimum design and performance standards, plans, and specifications. For this purpose, the winning contractor shall be automatically granted by the

3 local government unit concerned the franchise to operate and maintain the facility, including the collection of tolls, fees, rentals, and charges in accordance with subsection (c-4) hereof. In the case of a build-operate-and-transfer agreement, the contract shall be awarded to the lowest complying bidder based on the present value of its proposed schedule of amortization payments for the facility to be constructed according to the prescribed minimum design and performance standards, plans, and specifications. (3) Any contractor who shall undertake the prosecution of any project under this Section shall post the required bonds to protect the interest of the province, city, or municipality, in such amounts as may be fixed by the sanggunian concerned and the provincial, city, or municipal engineer shall not, as the case may be, allow any contractor to initiate the prosecution of projects under this Section unless such contractor presents proof or evidence that he has posted the required bond. (4) The contractor shall be entitled to a reasonable return of its investment in accordance with its bid proposal as accepted by the local government unit concerned. In the case of a build-operate-and-transfer agreement, the repayment shall be made by authorizing the contractor to charge and collect reasonable tolls, fees, rentals, and charges for the use of the project facility not exceeding those proposed in the bid and incorporated in the contract: Provided, That the local government unit concerned shall, based on reasonableness and equity, approve the tolls, fees, rentals and charges: Provided, further, That the imposition and collection of tolls, fees, rentals and charges shall be for a fixed period as proposed in the bid and incorporated in the contract which shall in no case exceed fifty (50) years: Provided, finally, That during the lifetime of the contract, the contractor shall undertake the necessary maintenance and repair of the facility in accordance with standards prescribed in the bidding documents and in the contract. In the case of a build-operate-and-transfer agreement, the repayment shall be made through amortization payments in accordance with the schedule proposed in the bid and incorporated in the contract. In case of land reclamation or construction of industrial estates, the repayment plan may consist of the grant of a portion or percentage of the reclaimed land or the industrial estate constructed. (5) Every infrastructure project undertaken under this Section shall be constructed, operated, and maintained by the contractor under the technical supervision of the local government unit and in accordance with the plans, specifications, standards, and costs approved by it. (d) The provincial, city or municipal legal officer shall, as the case may be, review the contracts executed pursuant to this Section to determine their legality, validity, enforceability and correctness of form.

Land Reclassification

4 FORTICH vs. CORONA Facts: This pertains to the two (2) separate motions for reconsideration filed by herein respondent and the applicants for intervention, seeking a reversal of our April 24, 1998 Decision nullfying the so-called "win-win" Resolution dated November 7, 1997, issued by the Office of the President in O.P. Case No. 96-C-6424, and denying the applicants Motion For Leave To Intervene. The issue in this case stems from a proposed agro-economic development of the disputed land which the province of Bukidnon and the municipality of Sumilao, Bukidnon intend to undertake. Expressing full support for the proposed project, the Sangguniang Bayan of Sumilao, Bukidnon on March 4, 1193 enacted Ordinance No. 24 converting or reclassifying the subject 144-hectare land from agricultural to industrial/institutional use. It was intended to provide an opportunity to attract investors, who can inject new economic vitality, provide more jobs and raise the income of its people. Bukidnon Provincial Board also supported the said project. Issue: Whether or not the power of the local government units to reclassify lands is subject to the approval of the Department of Agrarian Reform (DAR) Held: Local Government Units need not obtain the approval of the DAR to convert or reclassify lands from agricultural to non-agricultural use. It should be stressed that when the March 29, 1996 OP Decision was declared final and executory, vested rights were acquired by the herein petitioners, namely, the province of Bukidnon, the municipality of Sumilao, Bukidnon, and the NQSR Management and Development Corporations, and all others who should be benefited by the said decision. The issue here is not a question of technicality but that of substance and merit. Whether the Sangguniang Bayan of Sumilao has the legal authority to reclassify the land into industrial/institutional use, the March 29, 1996 OP Decision has thoroughly and properly disposed the issue. Converting the land in question from agricultural to agro-industrial would open great opportunities for employment and bring about real development in the area towards a sustained economic growth of the municipality. Procedural lapses in the manner of identifying/reclassifying the subject property for agro-industrial purposes cannot be allowed to defeat the very purpose of the law granting autonomy to local government units in the management of their local affairs. Stated more

5 simply, the language of Section 20 of R.A. No. 7160 is clear and affords no room for any other interpretation. By unequivocal legal mandate, it grants local governments units autonomy in their local affairs including the power to convert portions of their agricultural lands and provide for the manner of their utilization and disposition to enable them to attain their fullest development as self-reliant communities. Roxas and Co., Inc. v. CA Puno, J. Facts: Petitioner Roxas and Co. Is a corporation that owns 3 haciendas in Batangas, which the government wishes to acquire under the Comprehensive Agrarian Law (CARL). Before the effectivity of the law, the petitioner filed with the Department of Agrarian Reform a voluntary offer to sell (VOS) Hacienda Caylaway pursuant to EO 229, which served as guidelines to the comprehensive agrarian program. The two other haciendasBanilad and Palicowere placed under compulsory acquisition by the DAR in accordance with the CARL. Hacienda Banilad and Palico DAR sent invitations to Roxas and Co in order to discuss the results of the DAR investigation, finding both Banilad and Palico qualified under the CARP. For Hacienda Palico, DAR sent a letter of acquisition to Roxas and Co at their offices in Manila, while for Hacienda Banilad, DAR addressed the notices to Jaime Pimintel, caretaker of the said hacienda. It was petitioner Pimintel who attended all the proceedings regarding the two haciendas. Hence, during trial, Roxas and Co claimed that they were not informed of the acquisition proceedings on their two haciendas. DAR then opened a trust account in favor of petitioner Roxas and Co. These trust accounts were replaced by DAR with cash and Land Bank of the Philippines (LBP) bonds. Meanwhile, petitioner Roxas applied for the conversion of the haciendas from agricultural to non-agricultural. Despite this, DAR proceeded with the acquisition of the two haciendas. It then issued and distributed certificate of land ownership awards (CLOA) to farmer beneficiaries. Hacianda Caylaway Although Hacienda Caylaway was initially offered for sale to the government, Roxas and Co sent a letter to DAR secretary withdrawing its offer. According to Roxas, the reclassification of Caylaway from agricultural to non agricultural was authorized by the Sangguniang Bayan of Nasugbu. Also, the municipality of Nasugbu where the haciendas are located had been declared a tourist zone. Roxas also argued that the land is not suitable for agricultural purposes.

6 DAR secretary denied Roxas withdrawal of his VOS. According to the secretary, the withdrawal can only be based on specific grounds such as unsuitability of soil for agriculture, slope of the lad is over 180 degrees and that the land is undeveloped. Despite the denial of the withdrawal of the VOS, petitioner still filed an application for conversion with the DAR Adjudication Board (DARAB), which submitted the case to the Secretary of DAR for resolution. The DAR secretary dismissed the case. Roxas and Co went to the CA on appeal. CA dismissed appeal claiming that petitioners failed to exhaust administrative remedies. Issues: 1. WON the court can take cognizance of petitioners petition despite failure to exhaust administrative remedies 2. WON acquisition proceedings against the petitioners were valid 3. WON the court can rule on whether the haciendas may be reclassified from agricultural to non agricultural Held: 1. Yes. Petitioners action falls under the exception to the doctrine of exhaustion of administrative remedies sine there is no other plain, speedy, and adequate remedy for the petitioners at this point. The CLOAs were already issued despite the fact that there was no just compensation. 2. Acquisition proceedings against petitioners violated their right to due process. First, there was an improper service of the Notice of Acquisition. Notices to corporations should be served through their president, manager, secretary, cashier, agent, or any of its directors or partners. Jaime Pimintel, to whom the notice was served, was neither of those. Second, there was no notice of coverage, meaning, the parcels of land were not properly identified before they were taken by the DAR. Under the law, the land owner has the right to choose 5 hectares of land he wishes to retain. Upon receiving the Notice of Acquisition, petitioner corporation had no idea which portions of its estate were subject to compulsory acquisiton. Third, The CLOAs were issued to farmer beneficiaries without just compensation. The law provides that the deposit must be made only in cash or LBP bonds. DARs opening of a trust account in petitioners name does not constitute payment. Even if later, DAR substituted the trust account with cash and LBP bonds, such does not cure the lack of notice, which still amounts to a violation of the petitioners right to due process. 3. Despite all this, the court has not jurisdiction to rule on the reclassification of land from agricultural to non agricultural. DARs

7 failure to observe due process does not give the court the power to adjudicate over petitioners application for land conversion. DAR is charged with the mandate of approving applications for land conversion. They have the tools and experience needed to evaluate such applications; hence, they are the proper agency with which applications for land use conversion are lodged. DAR should be given a chance to correct their defects with regard to petitioners right to due process. Petitioner dismissed. Note: Pertinent section although not mentioned in the case is Sec. 20 of the LGC on power of LGU to reclassify land. However, the code also provides that the CARL prevails over LGC provisions.

Zoning Ordinance
Patalinhug v. CA Facts: The Sangguniang Panlungsod of Davao City enacted Ordinance 363, series of 1982 otherwise known as the "Expanded Zoning Ordinance of Davao City," Section 8 of which states: Sec. 8. USE REGULATIONS IN C-2 DISTRICTS (Shaded light red in the Expanded Zoning Map) AC-2 District shall be dominantly for commercial and compatible industrial uses as provided hereunder: 3.1 Funeral Parlors/Memorial Homes with adequate off street parking space (see parking standards of P.D. 1096) and provided that they shall be established not less than 50 meters from any residential structures, churches and other institutional buildings. Upon prior approval and certification of zoning compliance by Zoning Administrator issued on February 10, 1987 Building Permit No. 870254 in favor of petitioner for the construction of a funeral parlor in the name and style of Metropolitan Funeral Parlor at Cabaguio Avenue, Agdao, Davao City. Thereafter, petitioner commenced the construction of his funeral parlor. Acting on the complaint of several residents of Barangay Agdao, Davao City that the construction of petitioner's funeral parlor violated Ordinance No. 363, since it was allegedly situated within a 50-meter radius from the Iglesia ni Kristo Chapel and several residential structures, the Sangguniang Panlungsod conducted an investigation and found that "the nearest residential structure, owned by Wilfred G. Tepoot is only 8 inches to the south. . . . ." Notwithstanding the findings of the Sangguniang Panlungsod, petitioner continued to construct his funeral parlor which was finished on November 3, 1987. Consequently, private respondents filed on September 6, 1988 a case for the declaration of nullity of a building permit with preliminary prohibitory and mandatory injunction and/or restraining order with the trial court. Issue:

8 1. WON the CA erred in concluding that the Tepoot building adjacent to petitioner's funeral parlor is residential simply because it was allegedly declared as such for taxation purposes, in complete disregard of Ordinance 363 declaring the subject area as dominantly for commercial and compatible industrial uses. YES. A tax declaration is not conclusive of the nature of the property for zoning purposes. A property may have been declared by its owner as residential for real estate taxation purposes but it may well be within a commercial zone. A discrepancy may thus exist in the determination of the nature of property for real estate taxation purposes vis-a-vis the determination of a property for zoning purposes. Even if we are to examine the evidentiary value of a tax declaration under the Real Property Tax Code, a tax declaration only enables the assessor to identify the same for assessment levels. In fact, a tax declaration does not bind a provincial/city assessor, for under Sec. 22 of the Real Estate Tax Code, appraisal and assessment are based on the actual use irrespective of "any previous assessment or taxpayer's valuation thereon," which is based on a taxpayer's declaration. In fact, a piece of land declared by a taxpayer as residential may be assessed by the provincial or city assessor as commercial because its actual use is commercial. The trial court's determination that Mr. Tepoot's building is commercial and, therefore, Sec. 8 is inapplicable, is strengthened by the fact that the Sangguniang Panlungsod has declared the questioned area as commercial or C-2. Consequently, even if Tepoot's building was declared for taxation purposes as residential, once a local government has reclassified an area as commercial, that determination for zoning purposes must prevail. While the commercial character of the questioned vicinity has been declared thru the ordinance, private respondents have failed to present convincing arguments to substantiate their claim that Cabaguio Avenue, where the funeral parlor was constructed, was still a residential zone. Unquestionably, the operation of a funeral parlor constitutes a "commercial purpose," as gleaned from Ordinance 363. The declaration of the said area as a commercial zone thru a municipal ordinance is an exercise of police power to promote the good order and general welfare of the people in the locality. Corollary thereto, 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 certain kinds of restraints and burdens in order to secure the general welfare of the state and to this fundamental aim of government, the rights of the individual may be subordinated. The ordinance which regulates the location of funeral homes has been adopted as part of comprehensive zoning plans for the orderly development of the area covered thereunder.

Ortigas & Co., Limited Partnership vs. Feati Bank and Trust Co. No. L-24670 December 14, 1979 Facts: Plaintiff is engaged in real estate business, developing and selling lots to the public, particularly the Highway Hills Subdivision along EDSA, Mandaluyong, Rizal. On March 4, 1952, plaintiff entered into separate agreements of sale with Augusto Padilla y Angeles and Natividad Angeles over 2 parcels of land (Lots Nos. 5 and 6, Block 31, of the Highway Hills Subdivision). On July 19, 1962 the vendees transferred their rights and interests over the said lots to Emma Chavez. The plaintiff executed the corresponding deeds of sale in favor of Emma Chavez upon payment of the purchase price. Both the agreements and the deeds of sale contained the stipulation that the parcels of land subject of the deeds of sale shall be used by the Buyer exclusively for residential purposes. The restrictions were later annotated in the TCTs covering the lots issued in Chavez' name. Eventually, Feati Bank and Trust Co., acquired Lots No. 5 and 6 with the building restrictions also annotated in their corresponding TCTs. Lot No.5 was bought directly from Chavez free from all liens and encumbrances while Lot No.6 was acquired through a Deed of Exchange from Republic Flour Mills. Plaintiff claims that the restrictions were imposed as part of its general building scheme designed for the beautification and development of the Highway Hills Subdivision which forms part of its big landed estate where commercial and industrial sites are also designated or established. Feati Bank and Trust Co., maintains that the area along the western part of EDSA from Shaw Boulevard to the Pasig River, has been declared a commercial and industrial zone, per Resolution No.27 of the Municipal Council of Mandaluyong. It alleges that plaintiff completely sold and transferred to third persons all lots in said subdivision facing EDSA" and the subject lots were acquired by it only on June 23, 1962 or more than 2 years after the area xxx had been declared a commercial and industrial zone. On or about May 5, 1963, Feati Bank and Trust Co., began construction of a building devoted to banking purposes but which it claims could also be used exclusively for residential purposes. The following day, the plaintiff demanded in writing that the construction of the commercial building be stopped but the defendant refused to comply contending that the construction was in accordance with the zoning regulations. Issues: 1. Whether Resolution No. 27 s-1960 is a valid exercise of police power.

10 2. Whether the said Resolution can nullify or supersede the contractual obligations assumed by defendant-appellee. Held: 1. Yes. The validity of Resolution No.27 was never questioned. In fact, it was impliedly admitted in the stipulation of facts, when plaintiff-appellant did not dispute the same. Having admitted the validity of the subject resolution, plaintiff-appellant cannot now change its position on appeal. However, assuming that it is not yet too late to question the validity of the said resolution, the posture is unsustainable. Municipalities are empowered by law through Sec.3 of RA 2264 (Local Autonomy Act) to to adopt zoning and subdivision ordinances or regulations for the municipality. 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 of the word regulation under the provision. An examination of Sec.12 of the same law reveals that the implied power of a municipality should be liberally construed in its favor and that any 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. An exception to the general welfare powers delegated to municipalities is when the exercise of its powers will conflict with vested rights arising from contracts. The exception does not apply to the case at bar. 1. While non-impairment of contacts is constitutionally guaranteed, the rule is not absolute since it has to be reconciled with the legitimate exercise of police power. Police Power = most essential, insistent and illimitable of powers; greatest and most powerful attribute of government The exercise of police 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. Resolution No.27, S-1960 was passed by the Municipal Council of Mandaluyong in the exercise of police power to safeguard/promote the health, safety, peace, good order and general welfare of the people in the locality. EDSA supports an endless stream of traffic and the resulting activity, noise and pollution which are hardly conducive to the health, safety or welfare of the residents in its route. The Municipality of Mandaluyong was reasonably justified in passing the subject resolution. Thus, the State, in order to promote the general welfare, may interfere with personal liberty, with property, and with business and occupations. Persons

11 may be subjected to all kinds of restraint and burdens , in order to secure the general comfort, health and prosperity of the state , and to this fundamental aim of the Government, the rights of the individual are subordinated.

Closure and Opening of Roads

Cabrera v. CA Facts: The Provincial Board of Catanduanes adopted Resolution No. 158 closing the old road leading to the new Capitol Building of this province to traffic and giving the owners of the properties traversed by the new road equal area as per survey by the Highway District Engineer's office from the old road adjacent to the respective remaining portion of their properties. Pursuant thereto, Deeds of Exchange were executed under which the Province of Catanduanes conveyed to Remedios R. Bagadiong, Fredeswindo F. Alcala, Elena S. Latorre, Baldomero Tolentino, Eulogia T. Alejandro, Angeles S. Vargas, and Juan S. Reyes portions of the closed road in exchange for their own respective properties, on which was subsequently laid a new concrete road leading to the Capitol Building. In 1978, part of the northern end of the old road fronting the petitioner's house was planted to vegetables in 1977 by Eulogia Alejandro. Anselmo Pea, who had bought Angeles Vargas's share, also in the same part of the road, converted it into a piggery farm. Learning about Resolution 158, the petitioner filed on December 29, 1978, a complaint with the Court of First Instance of Catanduanes for "Restoration of Public Road and/or Abatement of Nuisance, Annulment of Resolutions and Documents with Damages." He alleged that the land fronting his house was a public road owned by the Province of Catanduanes in its governmental capacity and therefore beyond the commerce of man. He contended that Resolution No. 158 and the deeds of exchange were invalid, as so too was the closure of the northern portion of the said road. In a decision dated November 21, 1980, Judge Graciano P. Gayapa, Jr., while holding that the land in question was not a declared public road but a mere "passageway" or "short-cut," nevertheless sustained the authority of the provincial board to enact Resolution No. 158 under existing law. 1 Appeal was taken to the respondent court, 2 which found that the road was a public road and not a trail but just the same also upheld Resolution 158. It declared: Pursuant to Republic Act No. 5185, municipal authorities can close, subject to the approval or direction of the Provincial Board, thoroughfares under Section 2246 of the Revised Administrative Code. Although in this case the road was not closed by the municipality of Catanduanes but by the provincial board of Catanduanes, the closure, nevertheless, is valid since it was ordered by the approving authority itself. However, while it could do so, the provincial government of Catanduanes could close the road only if the persons

12 prejudiced thereby were indemnified, Section 2246 of the Revised Administrative Code being very explicit on this. Before us now, the petitioner insists that Sec. 2246 is not applicable because Resolution No. 158 is not an order for the closure of the road in question but an authority to barter or exchange it with private properties. He maintains that the public road was owned by the province in its governmental capacity and, without a prior order of closure, could not be the subject of a barter. Control over public roads, he insists, is with Congress and not with the provincial board. The petitioner alleges that the closure of the road has especially injured him and his family as they can no longer use it in going to the national road leading to the old capitol building but must instead pass through a small passageway. For such inconvenience, he is entitled to damages in accordance with law. Issue: WON the provincial board can order the closure of a road and use/ convey it for other purposes. Held: YES. The authority of the provincial board to close that road and use or convey it for other purposes is derived from the following provisions of Republic Act No. 5185 in relation to Section 2246 of the Revised Administrative Code: R.A. No. 5185, Section 11 (II) (a): II. The following actions by municipal officials or municipal councils, as provided for in the pertinent sections of the Revised Administrative Code shall take effect without the need of approval or direction from any official of the national government: Provided, That such actions shall be subject to approval or direction by the Provincial Board: (a) Authority to close thoroughfare under Section 2246; Sec. 2246. Authority to close thoroughfare. With the prior authorization of the Department Head, a municipal council may close any municipal road, street, alley, park, or square; but no such way or place aforesaid or any part thereof, shall be closed without indemnifying any person prejudiced thereby. Property thus withdrawn from public servitude may be used or conveyed for any purpose for which other real property belonging to the municipality might be lawfully used or conveyed. Cebu Oxygen and Acetylene Co., Inc. v. Bercilles: closure of a city street is within the powers of the city council under the Revised Charter of Cebu City. It sustained the subsequent sale of the land as being in accordance not only with the charter but also with Article 422 of the Civil Code, which provides: "Property of public dominion, when no longer intended for public use or for public service, shall form part of the patrimonial property of the State." Favis vs. City of Baguio: appellant may not challenge the city council's act of withdrawing a strip of Lapu-Lapu Street at its dead end from public use and converting the remainder thereof into an alley. These

13 are acts well within the ambit of the power to close a city street. The city council, it would seem to us, is the authority competent to determine whether or not a certain property is still necessary for public use. Such power to vacate a street or alley is discretionary. And the discretion will not ordinarily be controlled or interfered with by the courts, absent a plain case of abuse or fraud or collusion. Faithfulness to the public trust will be presumed. So the fact that some private interests may be served incidentally will not invalidate the vacation ordinance. While it is true that the above cases dealt with city councils and not the provincial board, there is no reason for not applying the doctrine announced therein to the provincial board in connection with the closure of provincial roads. The provincial board has, after all, the duty of maintaining such roads for the comfort and convenience of the inhabitants of the province. Moreover, this authority is inferable from the grant by the national legislature of the funds to the Province of Catanduanes for the construction of provincial roads. The lower court found the petitioner's allegation of injury and prejudice to be without basis because he had "easy access anyway to the national road, for in fact the vehicles used by the Court and the parties during the ocular inspection easily passed and used it, reaching beyond plaintiff's house." However, the CA ruled that the he "was prejudiced by the closure of the road which formerly fronted his house. He and his family were undoubtedly inconvenienced by the loss of access to their place of residence for which we believe they should be compensated." Favis: The general rule is that one whose property does not abut on the closed section of a street has no right to compensation for the closing or vacation of the street, if he still has reasonable access to the general system of streets. The circumstances in some cases may be such as to give a right to damages to a property owner, even though his property does not abut on the closed section. But to warrant recovery in any such case the property owner must show that the situation is such that he has sustained special damages differing in kind, and not merely in degree, from those sustained by the public generally. Richmond v. City of Hinton : The Constitution does not undertake to guarantee to a property owner the public maintenance of the most convenient route to his door. The law will not permit him to be cut off from the public thoroughfares, but he must content himself with such route for outlet as the regularly constituted public authority may deem most compatible with the public welfare. When he acquires city property, he does so in tacit recognition of these principles. If, subsequent to his acquisition, the city authorities abandon a portion of the street to which his property is not immediately adjacent, he may

14 suffer loss because of the inconvenience imposed, but the public treasury cannot be required to recompense him. Such case is damnum absque injuria. petitioner is not entitled to damages because the injury he has incurred, such as it is, is the price he and others like him must pay for the welfare of the entire community. This is not a case where his property has been expropriated and he is entitled to just compensation. The construction of the new road was undertaken under the general welfare clause. As the trial judge acutely observed, whatever inconvenience the petitioner has suffered "pales in significance compared to the greater convenience the new road, which is wide and concrete, straight to the veterans fountain and down to the pier, has been giving to the public, plus the fact that the new road adds beauty and color not only to the town of Virac but also to the whole province of Catanduanes." For the enjoyment of those benefits, every individual in the province, including the petitioner, must be prepared to give his share MMDA v. Bel-Air Facts: BAVA is the registered owner of Neptune Street, a road inside Bel-Air Village. Neptune runs parallel to Kalayaan Avenue, a national road open to the general public. Dividing the two (2) streets is a concrete perimeter wall approximately fifteen (15) feet high. The western end of Neptune Street intersects Nicanor Garcia, formerly Reposo Street, a subdivision road open to public vehicular traffic, while its eastern end intersects Makati Avenue, a national road. Both ends of Neptune Street are guarded by iron gates. On December 30, 1995, respondent received from petitioner, through its Chairman, a notice dated December 22, 1995 requesting respondent to open Neptune Street to public vehicular traffic starting January 2, 1996. On the same day, respondent was apprised that the perimeter wall separating the subdivision from the adjacent Kalayaan Avenue would be demolished. On January 2, 1996, respondent instituted against petitioner before the Regional Trial Court, Branch 136, Makati City, Civil Case No. 96-001 for injunction. Respondent prayed for the issuance of a temporary restraining order and preliminary injunction enjoining the opening of Neptune Street and prohibiting the demolition of the perimeter wall. RTC: issued TRO, after due hearing, the trial court denied issuance of a preliminary injunction. CA: MMDA has no authority to order the opening of Neptune Street, a private subdivision road and cause the demolition of its perimeter walls. It held that the authority is lodged in the City Council of Makati by ordinance. Issue: WON the MMDA has the mandate to open Neptune Street to public traffic pursuant to its regulator and police powers. MMDA: it has the authority to open Neptune Street to public traffic because it is an agent of the state endowed with police power in the

15 delivery of basic services in Metro Manila. One of these basic services is traffic management which involves the regulation of the use of thoroughfares to insure the safety, convenience and welfare of the general public. It is alleged that the police power of MMDA was affirmed by this Court in the consolidated cases of Sangalang v. Intermediate Appellate Court. From the premise that it has police power, it is now urged that there is no need for the City of Makati to enact an ordinance opening Neptune street to the public. 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 LGUs. Once delegated, the agents can exercise only such legislative powers as are conferred on them by the national lawmaking body. A local government is a "political subdivision of a nation or state which is constituted by law and has substantial control of local affairs." The LGC of 1991 defines a LGU as a "body politic and corporate", one endowed with powers as a political subdivision of the National Government and as a corporate entity representing the inhabitants of its territory. LGUs are the provinces, cities, municipalities and barangays. They are also the territorial and political subdivisions of the state. Our Congress delegated police power to the LGUs in the LGC of 1991. LGUs exercise police power through their respective legislative bodies. The legislative body of the provincial government is the sangguniang panlalawigan, that of the city government is the sangguniang panlungsod, that of the municipal government is the sangguniang bayan, and that of the barangay is the sangguniang barangay. The LGC of 1991 empowers the sangguniang panlalawigan, sangguniang panlungsod and sangguniang bayan to "enact ordinances, approve resolutions and appropriate funds for the general welfare of the [province, city or municipality, as the case may be], 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. The same Code gives the sangguniang barangay the power

16 to "enact ordinances as may be necessary to discharge the responsibilities conferred upon it by law or ordinance and to promote the general welfare of the inhabitants thereon." Metropolitan or Metro Manila is a body composed of several LGUs - i.e., twelve (12) cities and five (5) municipalities, namely, the cities of Caloocan, Manila, Mandaluyong, Makati, Pasay, Pasig, Quezon, Muntinlupa, Las Pinas, Marikina, Paranaque and Valenzuela, and the municipalities of Malabon, , Navotas, , Pateros, San Juan and Taguig. With the passage of Republic Act (R. A.) No. 7924 [24] in 1995, Metropolitan Manila was declared as a "special development and administrative region" and the Administration of "metro-wide" basic services affecting the region placed under "a development authority" referred to as the MMDA. "Metro-wide services" are those "services which have metro-wide impact and transcend local political boundaries or entail huge expenditures such that it would not be viable for said services to be provided by the individual LGUs comprising Metro Manila." There are seven (7) basic metro-wide services and the scope of these services cover the following: (1) development planning; (2) transport and traffic management; (3) solid waste disposal and management; (4) flood control and sewerage management; (5) urban renewal, zoning and land use planning, and shelter services; (6) health and sanitation, urban protection and pollution control; and (7) public safety. The basic service of transport and traffic management includes the following: "(b) Transport and traffic management which include the formulation, coordination, and monitoring of policies, standards, programs and projects to rationalize the existing transport operations, infrastructure requirements, the use of thoroughfares, and promotion of safe and convenient movement of persons and goods; provision for the mass transport system and the institution of a system to regulate road users; administration and implementation of all traffic enforcement operations, traffic engineering services and traffic education programs, including the institution of a single ticketing system in Metropolitan Manila;" The scope of the MMDAs function is limited to the delivery of the seven (7) basic services. One of these is transport and traffic management which includes the formulation and monitoring of policies, standards and projects to rationalize the existing transport operations, infrastructure requirements, the use of thoroughfares and promotion of the safe movement of persons and goods. It also covers the mass transport system and the institution of a system of road regulation, the administration of all traffic enforcement operations, traffic engineering services and traffic education programs, including the institution of a single ticketing system in Metro Manila for traffic violations. Under this service, the MMDA is expressly authorized "to set the policies concerning traffic" and "coordinate and regulate the

17 implementation of all traffic management programs." In addition, the MMDA may "install and administer a single ticketing system," fix, impose and collect fines and penalties for all traffic violations. It will be noted that the powers of the MMDA are limited to the following acts: formulation, coordination, regulation, implementation, preparation, management, monitoring, setting of policies, installation of a system and administration. There is no syllable in R. A. No. 7924 that grants the MMDA police power, let alone legislative power. Even the Metro Manila Council has not been delegated any legislative power. Unlike the legislative bodies of the LGUs, there is no provision in R. A. No. 7924 that empowers the MMDA or its Council to "enact ordinances, approve resolutions and appropriate funds for the general welfare" of the inhabitants of Metro Manila. 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, peoples organizations, nongovernmental 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. Contrary to petitioners claim, the two Sangalang cases do not apply to the case at bar. Firstly, both involved zoning ordinances passed by the municipal council of Makati and the MMC. In the instant case, the basis for the proposed opening of Neptune Street is contained in the notice of December 22, 1995 sent by petitioner to respondent BAVA, through its president. The notice does not cite any ordinance or law, either by the Sangguniang Panlungsod of Makati City or by the MMDA, as the legal basis for the proposed opening of Neptune Street. Petitioner MMDA simply relied on its authority under its charter "to rationalize the use of roads and/or thoroughfares for the safe and convenient movement of persons." Rationalizing the use of roads and thoroughfares is one of the acts that fall within the scope of transport and traffic management. By no stretch of the imagination, however, can this be interpreted as an express or implied grant of ordinancemaking power, much less police power. Secondly, the MMDA is not the same entity as the MMC in Sangalang. Although the MMC is the forerunner of the present MMDA, an examination of Presidential Decree (P. D.) No. 824, the charter of the MMC, shows that the latter possessed greater powers which were not bestowed on the present MMDA. The MMC was the "central government" of Metro Manila for the purpose of establishing and administering programs providing services common to the area. As a "central government" it had the power to levy and collect taxes and special assessments, the power to charge and collect fees; the power to appropriate money for its operation, and at the same time, review appropriations for the city and municipal units within its jurisdiction. It was bestowed the power to enact or

18 approve ordinances, resolutions and fix penalties for violation of such ordinances and resolutions. It also had the power to review, amend, revise or repeal all ordinances, resolutions and acts of any of the four (4) cities and thirteen (13) municipalities comprising Metro Manila. It was the MMC itself that possessed legislative powers. All ordinances, resolutions and measures recommended by the Sangguniang Bayan were subject to the MMCs approval. Moreover, the power to impose taxes and other levies, the power to appropriate money, and the power to pass ordinances or resolutions with penal sanctions were vested exclusively in the MMC. Thus, Metropolitan Manila had a "central government," i.e., the MMC which fully possessed legislative and police powers. Whatever legislative powers the component cities and municipalities had were all subject to review and approval by the MMC. Under the 1987 Constitution, the LGUs became primarily responsible for the governance of their respective political subdivisions. The MMAs jurisdiction was limited to addressing common problems involving basic services that transcended local boundaries. It did not have legislative power. Its power was merely to provide the LGUs technical assistance in the preparation of local development plans. Any semblance of legislative power it had was confined to a "review [of] legislation proposed by the local legislative assemblies to ensure consistency among local governments and with the comprehensive development plan of Metro Manila," and to "advise the local governments accordingly." When R.A. No. 7924 took effect, Metropolitan Manila became a "special development and administrative region" and the MMDA a "special development authority" whose functions were "without prejudice to the autonomy of the affected LGUs." The character of the MMDA was clearly defined in the legislative debates enacting its charter. Clearly, the MMDA is not a political unit of government. The power delegated to the MMDA is that given to the Metro Manila Council to promulgate administrative rules and regulations in the implementation of the MMDAs functions. There is no grant of authority to enact ordinances and regulations for the general welfare of the inhabitants of the metropolis. It is thus beyond doubt that the MMDA is not a LGU or a public corporation endowed with legislative power. It is not even a "special metropolitan political subdivision" as contemplated in Section 11, Article X of the Constitution. The creation of a "special metropolitan political subdivision" requires the approval by a majority of the votes cast in a plebiscite in the political units directly affected. R. A. No. 7924 was not submitted to the inhabitants of Metro Manila in a plebiscite. The Chairman of the MMDA is not an official elected by the people, but appointed by the President with the rank and privileges of a cabinet member. In fact, part of his function is to perform such other duties as may be assigned to him by the President, whereas in LGUs, the

19 President merely exercises supervisory authority. This emphasizes the administrative character of the MMDA. Clearly then, the MMC under P. D. No. 824 is not the same entity as the MMDA under R. A. No. 7924. Unlike the MMC, the MMDA has no power to enact ordinances for the welfare of the community. It is the LGUs, acting through their respective legislative councils, that possess legislative power and police power. In the case at bar, the Sangguniang Panlungsod of Makati City did not pass any ordinance or resolution ordering the opening of Neptune Street, hence, its proposed opening by petitioner MMDA is illegal and the respondent CA did not err in so ruling. SANGALANG V. INTERMEDIATE APPELLATE COURT *This case is about how Jupiter street was opened up to the public by a city ordinance contrary to the wishes of the Bel Air village residents who wanted to keep it closed for their private use. FACTS: 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. Plaintiffs are all either residents of Bel Air village or the Bel Air Village Association (BAVA). In the 1950's Bel Air Village property was sold by Makati Development Corporation which was later merged with Ayala Corporation. The lots were subject to certain restrictions namely: 1)All lot owners would automatically be a member of BAVA and 2) The lots may only be used for domestic purposes, which would last for a period of 50 years. At the time the area was open to all kinds of people and even animals. The residents decided to build a wall along the commercial side of jupiter street. Eventually Ayala Corporation decided to sell the lots on the commercial side of jupiter street to the public. In 1972, Bava and Ayala agreed that the lot owners would be members of BAVA and would be subject to the same deed of restriction of other residents in the subdivision. On April 4, 1975, the municipal council of Makati enacted its ordinance no 81, providing for the zonification of makati. Uner 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. The other side of the street in between buendia and until the center line of Jupiter street was made an Administrative Office Zone.

20 Jan 1977, The office of the Mayor wrote to BAVA that in order to ease traffic congestion Jupiter street would be opened up to the public. BAVA requested for the indefinite postponement of the plan because of the concern of the residents. Finally on August 1977 the officials of Makati removed the gates in order to open the entire length of Jupiter street to the public. Because of this there was a huge increase of traffic along Jupiter street. The commercial establishments on the southern side of jupiter street broke down the wall as it was no longer necessary and set up shop. Even the residential lots on the northern side of Jupiter street some chose to use as commercial due to the increase in traffic in the area. On March 1981, the 'comprehensive zoning ordinance' was passed by the MMC as ordinance 81-01. This ordinance made Bel Air village BOUND BY JUPITER STREET and no longer the center line. Significantly the other side of Jupiter street was classified as High Intensity Commercial zone. Several residents as well as BAVA filed suit claiming 1) Ayala corp for breach of contract in allowing the wall to be broken down ushering in a full commercialization of Jupiter street and 2)against some residents that had used their lots as commercial in violation of the restrictions..

LOWER COURTS: plaintiffs won, then lost on appeal, the CA upholding the ordinances as valid under police power and that they reclassified the area to allow commercial lots. ISSUE: 1) WON Ayala corp was liable for breach of contract for the wall and the limited use of Jupiter street? NO. Although Jupiter street was donated to BAVA in 1978 there was no intention to limit its use to bel air village residents, in fact the deed included the general public. Also as regards the wall there was no proof that there was any such agreement between the residents and Ayala corp that a wall be maintained. 2) WON the lot owners are liable? no. we likewise exculpate the private respondents not only because of the fact that jupiter street is not covered by the deed of restrictions but chiefly because the National Government itself through the MMC had reclassified Jupiter street into a high density commercial zone pursuant to its ordinance 81-01. It is not that we are saying that restrictive easements, especially the easements herein 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 the contract

21 and is aid 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... The non impairment clause is secondary to the more compelling interests of the general welfare. Macasiano vs. Diokno Levy D. Macasiano vs. Honorable Roberto C. Diokno G.R. No. 97764 August 10, 1992 Medialdea, J.: Doctrine: Properties of the local government which are devoted to public service are deemed public and are under the absolute control of Congress. Hence, local governments have no authority whatsoever to control or regulate the use of public properties unless specific authority is vested upon them by Congress. Facts: On June 13, 1990, the respondent municipality passed Ordinance No. 86, Series of 1990 which authorized the closure of J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena Streets located at Baclaran, Paraaque, Metro Manila and the establishment of a flea market thereon, pursuant to MMC Ordinance No. 2, Series of 1979, authorizing and regulating the use of certain city and/or municipal streets, roads and open spaces within Metropolitan Manila as sites for flea market and/or vending areas, under certain terms and conditions.. On June 20, 1990, the municipal council of Paraaque issued a resolution authorizing Paraaque Mayor Walfrido N. Ferrer to enter into contract with any service cooperative for the establishment, operation, maintenance and management of flea markets and/or vending areas. On August 8, 1990, respondent municipality and respondent Palanyag, a service cooperative, entered into an agreement whereby the latter shall operate, maintain and manage the flea market in the aforementioned streets with the obligation to remit dues to the treasury of the municipal government of Paraaque. Consequently, market stalls were put up by respondent Palanyag on the said streets. On September 13, 1990, petitioner Brig. Gen. Macasiano, PNP Superintendent of the Metropolitan Traffic Command, ordered the destruction and confiscation of stalls along G.G. Cruz and J. Gabriel St. in Baclaran. These stalls were later returned to respondent Palanyag.

22 Issue: Whether or not an ordinance or resolution issued by the municipal council of Paraaque authorizing the lease and use of public streets or thoroughfares as sites for flea markets is valid. Held: No. The ordinance or resolution authorizing the lease and use of public streets or thoroughfares as sites for a flea market is invalid. Property for public use, in the provinces, cities and municipalities, consists of the provincial roads, city streets, the squares, fountains, public waters, promenades, and public works for public service paid for by said provinces, cities or municipalities. All other property possessed by any of them is patrimonial and shall be governed by this Code, without prejudice to the provisions of special laws. Based on the foregoing, J. Gabriel G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena streets are local roads used for public service and are therefore considered public properties of respondent municipality. Properties of the local government which are devoted to public service are deemed public and are under the absolute control of Congress. Hence, local governments have no authority whatsoever to control or regulate the use of public properties unless specific authority is vested upon them by Congress. Even assuming, in gratia argumenti, that respondent municipality has the authority to pass the disputed ordinance, the same cannot be validly implemented because it cannot be considered approved by the Metropolitan Manila Authority due to non-compliance by respondent municipality of the conditions imposed by the former for the approval of the ordinance. Further, it is of public notice that the streets along Baclaran area are congested with people, houses and traffic brought about by the proliferation of vendors occupying the streets. To license and allow the establishment of a flea market along J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena streets in Baclaran would not help in solving the problem of congestion. Verily, the powers of a local government unit are not absolute. They are subject to limitations laid down by toe Constitution and the laws such as our Civil Code. Moreover, the exercise of such powers should be subservient to paramount considerations of health and well-being of the members of the community. Every local government unit has the sworn obligation to enact measures that will enhance the public health, safety and convenience, maintain peace and order, and promote the general prosperity of the inhabitants of the local units. Based on this objective, the local government should refrain from acting towards that which might prejudice or adversely affect the general welfare.

Regulating the use of weights and measures

-SEC. 148 of R.A. 7160 Fees for Sealing and Licensing of Weights and Measures.

23

a) The municipality may levy fees for the sealing and licensing of weights and measures at such reasonable rates as shall be prescribed by the sangguniang bayan. b) The sangguniang bayan shall prescribe the necessary regulations for the use of such weights and measures, subject to such guidelines as shall be prescribed by the Department of Science and Technology. The sanggunian concerned shall, by appropriate ordinance, penalize fraudulent practices and unlawful possession or use of instruments of weights and measures and prescribe the criminal penalty therefor in accordance with the provisions of this Code. Provided, however, That the sanggunian concerned may authorize the municipal treasurer to settle an offense not involving the commission of fraud before a case therefor is filed in court, upon payment of a compromise penalty of not less than Two hundred pesos (P=200.00).

Establishment of Waterworks System

Section 468. Powers, Duties, Functions and Compensation. (a) The sangguniang panlalawigan, as the legislative body of the province, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the province and its inhabitants pursuant to Section 16 of this Code in the proper exercise of the corporate powers of the province as provided for under Section 22 of this Code, and shall: (4) Approve ordinances which shall ensure the efficient and effective delivery of basic services and facilities as provided for under Section 17 of this Code, and, in addition to said services and facilities, shall: (ii) Subject to applicable laws, facilitate or provide for the establishment and maintenance of waterworks system or district waterworks for supplying water to inhabitants of component cities and municipalities;

Slaughter House Regulation

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. Such as Public markets, slaughterhouses and other municipal enterprises

24

Abatement of Nuisance
State of Gregoria Francisco vs. CA ESTATE OF GREGORIA FRANCISCO v. COURT OF APPEALS , G.R. No. 95279, 25 July 1991, 199 SCRA 595 Melencio-Herrera, J. FACTS: Basilan Municipal Mayor Benjamin Valencia summarily ordered the demolition of an antiquated and dilapidated quonset warehouse situated in Port Area, Strong Boulevard, Isabela, Basilan, outside the zone for warehouses. The legal possessor of the quonset sought the prohibition of the Order but was denied by the RTC. The CA originally overturned the RTC but subsequently reversed itself. In question in this case is the validity of such order by the Municipal Mayor, which was in effect an abatement of nuisance, without prior judicial authority. ISSUE: Whether or not Respondent Mayor could summarily and extrajudicially order the demolition of petitioner's quonset building. HELD: NO Ordinance No. 147 relied upon by Respondents should not be interpreted as authorizing the summary removal of a non-conforming building by the municipal government. For if it does, it must be struck down for being in contravention of the requirements of due process , as originally held by the Court of Appeals. Moreover, the enforcement and administration of the provisions of the Ordinance resides with the Zoning Administrator. It is said official who may call upon the City Fiscal to institute the necessary legal proceedings to enforce the provisions of the Ordinance. And any person aggrieved by the decision of the Zoning Administrator regarding the enforcement of the Ordinance may appeal to the Board of Zoning Appeals. Violation of a municipal ordinance neither empowers the Municipal Mayor to avail of extra-judicial remedies. On the contrary, the Local Government Code imposes upon him the duty "to cause to be instituted judicial proceedings in connection with the violation of ordinances" (Local Government Code, Sec. 141 [2] [t]). Respondents cannot seek cover under the general welfare clause authorizing the abatement of nuisances without judicial proceedings, which applies only 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

25 [1982]). The storage of copra in the quonset building is a legitimate business. By its nature, it cannot 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. The provincial governor, district engineer or district health officer is not authorized to destroy private property consisting of dams and fishponds summarily and without any judicial proceedings whatever under the pretense that such private property constitutes a nuisance. A dam or a fishery constructed in navigable rivers is not a nuisance per se. A dam or fishpond may be a nuisance per accidens where it endangers or impairs the health or depreciates property by causing water to become stagnant. (Monteverde v. Generoso, supra). While the Sangguniang Bayan may provide for the abatement of a nuisance (Local Government Code, Sec. 149 [ee]), it can not declare a particular thing as a nuisance per se and order its condemnation. The nuisance can only be so adjudged by judicial determination. [Municipal councils] do 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 they authorize the extra judicial condemnation and destruction of that as a nuisance which, in its nature, situation or use is not such. These things must be determined in the ordinary courts of law. In the present case, . . . the ice factory of the plaintiff is not a nuisance per se. It is a legitimate industry . . . . If it be in fact a nuisance due to the manner of its operation, that question cannot be determined by a mere resolution of the board. The petitioner is entitled to a fair and impartial heating before a judicial tribunal. (Iloilo Cold Storage v. Municipal Council, 24 Phil. 47 [1913]). Petitioner was in lawful possession of the lot and quonset building by virtue of a permit from the Philippine Ports Authority (Port of Zamboanga) when demolition was effected. It was not squatting on public land. Its property was not of trifling value. It was entitled to an impartial hearing before a tribunal authorized to decide whether the quonset building did constitute a nuisance in law. There was no compelling necessity for precipitate action. It follows then that respondent public officials of the Municipality of Isabela, Basilan, transcended their authority in abating summarily petitioner's quonset building. They had deprived petitioner of its property without due process of law. The fact that petitioner filed a suit for prohibition and was subsequently heard thereon will not cure the defect, as opined by the Court of Appeals, the demolition having been a fait accompli prior to hearing and the authority to demolish without a judicial order being a prejudicial issue.

26

NOTES: Nuisances are of two classes: Nuisances per se and per accidens . As to the first, since they affect the immediate safety of persons and property, they may be summarily abated under the undefined law of necessity. But if the nuisance be of the second class, even the municipal authorities, under their power to declare and abate nuisances, would not have the right to compel the abatement of a particular thing or act as a nuisance without reasonable notice to the person alleged to be maintaining or doing the same of the time and place of hearing before a tribunal authorized to decide whether such a thing or act does in law constitute a nuisance. (Monteverde v. Generoso, 52 Phil. 123 (1982), citing Iloilo Ice and Cold Storage Co. vs. Municipal Council of Iloilo [{1913}, 24 Phil., 471]) Petitioner's business could not be considered a nuisance which respondent municipality could summarily abate in the guise of exercising its police powers. The abatement of a nuisance without judicial proceedings is possible only if it is a nuisance per se. A gas station is not a nuisance per se or one affecting the immediate safety of persons and property,17 hence, it cannot be closed down or transferred summarily to another location. (PARAYNO v. JOVELLANOS, G.R. No. 148408, 14 July 2006 citing Monteverde v. Generoso, 52 Phil. 123 (1982) Technology Developers v. CA Facts: TD received a letter from acting mayor Cruz, ordering the full cessation of the operation of its plant located at Guyong, Sta. Maria, Bulacan, until further order. The letter likewise requested its plant manager to bring with him to the office of the mayor the following: a) Building permit; b) Mayor's permit; c) Region III-Pollution of Environment and Natural Resources Anti-Pollution Permit. In compliance with said undertaking, petitioner commenced to secure "Region III-Department of Environmental and Natural Resources Anti-Pollution Permit," although among the permits previously secured prior to the operation of petitioner's plant was a "Temporary Permit to Operate Air Pollution Installation" issued by the then National Pollution Control Commission (now Environmental Management Bureau) and is now at a stage where the Environmental Management Bureau is trying to determine the correct kind of anti-pollution devise to be installed as part of petitioner's request for the renewal of its permit. TD's attention having been called to its lack of mayor's permit, it sent its representatives to the office of the mayor to secure the same but were not entertained. On April 6, 1989, without previous and reasonable notice upon petitioner, respondent acting mayor ordered the Municipality's station commander to padlock the premises of petitioner's plant, thus effectively causing the stoppage of its operation.

27 RTC: action for certiorari, prohibition, mandamus with preliminary injunction. Closure order was issued in grave abuse of discretion. Judge issued of the writ of preliminary mandatory injunction. MR: RTC issued an order (a) setting aside the order which granted a Writ of Preliminary Mandatory Injunction, and (b) dissolving the writ consequently issued. CA: certiorari and prohibition with preliminary injunction. In due course the petition was denied for lack of merit. MR: denied. Issue: WON the appellate court committed a grave abuse of discretion in rendering its question decision and resolution. NO. The authority of the local executive to protect the community from pollution is the center of this controversy. The following circumstances militate against the maintenance of the writ of preliminary injunction sought by petitioner: 1. No mayor's permit had been secured. While it is true that the matter of determining whether there is a pollution of the environment that requires control if not prohibition of the operation of a business is essentially addressed to the then National Pollution Control Commission of the Ministry of Human Settlements, now the Environmental Management Bureau of the Department of Environment and Natural Resources, it must be recognized that the mayor of a town has as much responsibility to protect its inhabitants from pollution, and by virture of his police power, he may deny the application for a permit to operate a business or otherwise close the same unless appropriate measures are taken to control and/or avoid injury to the health of the residents of the community from the emissions in the operation of the business. 2. The Acting Mayor, in a letter of February 16, 1989, called the attention of petitioner to the pollution emitted by the fumes of its plant whose offensive odor "not only pollute the air in the locality but also affect the health of the residents in the area," so that petitioner was ordered to stop its operation until further orders and it was required to bring its permits (see facts) 3. This action of the Acting Mayor was in response to the complaint of the residents of Barangay Guyong, Sta. Maria, Bulacan, directed to the Provincial Governor through channels. 4. The closure order of the Acting Mayor was issued only after an investigation was made by Marivic Guina who in her report of December 8, 1988 observed that the fumes emitted by the

28 plant of petitioner goes directly to the surrounding houses and that no proper air pollution device has been installed. 5. Petitioner failed to produce a building permit from the municipality of Sta. Maria, but instead presented a building permit issued by an official of Makati on March 6,1987. 6. While petitioner was able to present a temporary permit to operate by the then National Pollution Control Commission on December 15, 1987, the permit was good only up to May 25, 1988. Petitioner had not exerted any effort to extend or validate its permit much less to install any device to control the pollution and prevent any hazard to the health of the residents of the community. TD: huge investment. SC: such is concomitant with the need to promote investment and contribute to the growth of the economy is the equally essential imperative of protecting the health, nay the very lives of the people, from the deleterious effect of the pollution of the environment. Laguna Lake Development Authority vs. Court of Appeals Facts: The Laguna Lake Development Authority (LLDA) was created through RA No. 4850 in order to execute the policy towards environmental protection and sustainable development so as to accelerate the development and balanced growth of the Laguna Lake area and the surrounding provinces and towns. PD No. 813 amended certain sections of RA 4850 since water quality studies have shown that the lake will deteriorate further if steps are not taken to check the same. EO 927 further defined and enlarged the functions and powers of the LLDA and enumerated the towns, cities and provinces encompassed by the term Laguna de Bay Region. Upon implementation of RA 7160 (Local Government Code of 1991), the municipalities assumed exclusive jurisdiction & authority to issue fishing privileges within their municipal waters since Sec.149 thereof provides: Municipal corporations shall have the authority to grant fishery privileges in the municipal waters and impose rental fees or charges therefore Big fishpen operators took advantage of the occasion to establish fishpens & fish cages to the consternation of the LLDA. The implementation of separate independent policies in fish cages & fish pen operation and the indiscriminate grant of fishpen permits by the lakeshore municipalities have saturated the lake with fishpens, thereby aggravating the current environmental problems and ecological stress of Laguna Lake. The LLDA then served notice to the general public that (1) fishpens, cages & other aqua-culture structures unregistered with the LLDA as of March 31, 1993 are declared illegal; (2) those declared illegal shall be subject to demolition by the Presidential Task Force for Illegal Fishpen and Illegal

29 Fishing; and (3) owners of those declared illegal shall be criminally charged with violation of Sec.39-A of RA 4850 as amended by PD 813. A month later, the LLDA sent notices advising the owners of the illegally constructed fishpens, fishcages and other aqua-culture structures advising them to dismantle their respective structures otherwise demolition shall be effected. Issues: 1.Which agency of the government the LLDA 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? 2. Whether the LLDA is a quasi-judicial agency? Held: 1. Sec.4(k) of the charter of the LLDA, RA 4850, the provisions of PD 813,and Sec.2 of EO No.927, specifically provide that the LLDA 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. On the other hand, RA 7160 has granted to the municipalities the exclusive authority to grant fishery privileges on municipal waters. The provisions of RA 7160 do not necessarily repeal the laws creating the LLDA and granting the latter water rights authority over Laguna de Bay and the lake region. Where there is a conflict between a general law and a special statute, latter 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. 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 . The power of LGUs to issue fishing privileges was granted for revenue purposes. On the other hand, the power of the LLDA to grant permits for fishpens, fish cages, and other aqua-culture structures is for the purpose of effectively regulating & monitoring activities in the Laguna de Bay region and for lake control and management. It partakes of the nature of police power which is the most pervasive, least limitable and most demanding of all state powers including the power of taxation. Accordingly, the charter of the LLDA which embodies a valid exercise of police power should prevail over the LGC of 1991 on matters affecting Laguna de Bay. 2. The LLDA 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 fishpens, fish cages and other aqua-culture structures in Laguna de Bay.

30 Sec.149 of RA 7160 has not repealed the provisions of the charter of the LLDA, RA 4850, as amended. Thus, the LLDA has the exclusive jurisdiction to issue permits for enjoyment of fishery privileges in Laguna de Bay to the exclusion of municipalities situated thereinand the authority to exercise such powers as are by its charter vested on it.

Liability for Damages Section 24, RA 7160

Liability for Damages. - Local government units and their officials are not exempt from liability for death or injury to persons or damage to property. San Diego v. Municipality of Naujan, Oriental Mindoro Facts: The municipality of Naujan issued Resolution 46 awarding the concession of the Butas River and the Naujan Lake to San Diego. Contract: 5 years, from January 1, 1948 to December 31, 1952, lease of "the exclusive privilege of erecting fish corrals along the Butas River beginning from its junction with the San Agustin River up to the Naujan Lake itself," for annual rental of P26,300.00. Upon petition by the lessee, however, the said council reduced the annual rental by 20% by virtue of Resolution 59, series of 1949. On September 5, 1950, the lessee requested for a five-year extension of the original lease period. The request was, for some time, left pending before the municipal council, but on December 1, 1951, after the lessee had reiterated his petition for extension, for the reason that the typhoon "Wanda", which took place that month, destroyed most of his fish corrals, the council adopted Resolution 222, series of 1951 extending the lease for another five (5) years beginning January 1, 1952, with the express condition that the plaintiff would waive the privilege to seek for reduction of the amount of rent which was to be based on the original contract. After the resolution had been approved by the Provincial Board of Oriental Mindoro, the lessor and the lessee, on December 23, 1951, contracted for the extension of the period of the lease. The contract was approved and confirmed on December 29, 1951 by Resolution 229, series of 1951, of the municipal council of Naujan whose term was then about to expire. Pursuant to the said contract, the lessee filed a surety bond of P52,000.00 and then reconstructed his fish corrals and stocked the Naujan Lake with bagus fingerlings. On January 2, 1952, the municipal council of Naujan, this time composed of a new set of members, adopted Resolution 3, series of 1952, revoking Resolution 222, series of 1951. On the same date, the new council also passed Resolution 11, revoking Resolution 229 of the old council which confirmed the extension of the lease period. The lessee requested for reconsideration and recall of Resolution 3, on the ground, among others, that it violated the contract executed between him and the municipality on

31 December 23, 1951, and, therefore, contrary to Article III, section 1, clause 10 of the Constitution. The request, however, was not granted. On September 4, 1952, the lessee instituted this proceedings in the court below seeking to have Resolution 3, series of 1952, of the municipal council of Naujan, declared null and void, for being unconstitutional, and praying for an order enjoining the defendant municipality from conducting a public bidding for the leasing of the Naujan fisheries to any person other than the plaintiff during the period from January 1, 1953 to December 31, 1957. Answering the complaint, the defendant asserted the validity of Resolution 3, series of 1951, alleging by the way of special defense that the resolution authorizing the original lease contract, reducing the lease rentals and renewing the lease are null and void for not having been passed in accordance with law. Defendant further put up a counterclaim for the amount representing the illegal reduction of 20% of the original rentals, plus the sum of P2,191.60 per month beginning December 1, 1952 until the case shall have been terminated. After trial, the lower court rendered judgment upholding the validity of the lease contract, as well at is extension, and declaring Resolution 3, series of 1952, null and void. The municipality of Naujan has taken this appeal. Issue: WON Resolution No. 3, series of 1952, revoking Resolution 222, series of 1951, of the municipal council of Naujan is valid. The law (Sec. 2323 of the Revised Administrative Code) requires that when the exclusive privilege of fishery or the right to conduct a fishbreeding ground is granted to a private party, the same shall be let to the highest bidder in the same manner as is being done in exploiting a ferry, a market or a slaughterhouse belonging to the municipality. The requirement of competitive bidding is for the purpose of inviting competition and to guard against favoritism, fraud and corruption in the letting of fishery privileges There is no doubt that the original lease contract in this case was awarded to the highest bidder, but the reduction of the rental and the extension of the term of the lease appear to have been granted without previous public bidding. Caltex (Phil.), Inc., et al. vs. Delgado Bros., Inc.:the amendment to an arrastre contract was declared null and void on the ground that it was made without previous public bidding. In so declaring, this Court has adopted the following opinion:. . . it is the opinion of the Court that the said agreement .. executed and entered into without previous public bidding, is null and void, and cannot adversely affect the rights of third parties . . . and of the public in general. The Court agrees with the contention of counsel for the plaintiffs that the due execution of a contract after public bidding is a limitation upon the right of the contradicting parties to alter or amend it without another public bidding, for otherwise what would a public bidding be good for if after the execution of a contract after public bidding, the contracting parties may alter or amend the contract or even cancel it, at their will? Public

32 biddings are held for the protection of the public, and to give the public the best possible advantages by means of open competition between the bidders. He who bids or offers the best terms is awarded the contract subject of the bid, and it is obvious that such protection and best possible advantages to the public will disappear if the parties to a contract executed after public bidding may alter or amend it without another previous public bidding. While in that case we ruled that although the "arrastre contract" therein questioned authorized the parties to alter or amend any of the terms thereof, such authority must be considered as being subject to the requirement of previous public bidding, a formality observed before the original contract was awarded, with more reason should the rule requiring such public bidding be strickly applied in the instant case where no such authority to alter or amend the terms of the contract was reserved. Furthermore, it has been ruled that statutes requiring public bidding apply to amendments of any contract already executed in compliance with the law where such amendments alter the original contract in some vital and essential particular Inasmuch as the period in a lease is a vital and essential particular to the contract, we believe that the extension of the lease period in this case, which was granted without the essential requisite of public bidding, is not in accordance with law. And it follows the Resolution 222, series of 1951, and the contract authorized thereby, extending the original five-year lease to another five years are null and void as contrary to law and public policy. We agree with the defendant-appellant in that the question Resolution 3 is not an impairment of the obligation of contract, because the constitutional provision on impairment refers only to contract legally executed. While, apparently, Resolution 3 tended to abrogate the contract extending the lease, legally speaking, there was no contract abrogated because, as we have said, the extension contract is void and inexistent. The lower court, in holding that the defendant-appellant municipality has been estopped from assailing the validity of the contract into which it entered on December 23, 1951, seems to have overlooked the general rule that . . . the doctrine of estoppel cannot be applied as against a municipal corporation to validate a contract which it has no power to make or which it is authorized to make only under prescribed conditions, within prescribed limitations, or in a prescribed mode or manner, although the corporation has accepted the benefits thereof and the other party has fully performed his part of the agreement, or has expended large sums in preparation for performance. A reason frequently assigned for this rule is that to apply the doctrine of estoppel against a municipality in such case would be to enable it to do indirectly what it cannot do directly. Also, where a contract is violative

33 of public policy, the municipality executing it cannot be estopped to assert the invalidity of a contract which has ceded away, controlled, or embarrassed its legislative or government powers. As pointed out above, "public biddings are held for the best protection of the public and to give the public the best possible advantages by means of open competition between the bidders." Thus, contracts requiring public bidding affect public interest, and to change them without complying with that requirement would indeed be against public policy. There is, therefore, nothing to plaintiff-appellee's contention that the parties in this case being in pari delicto should be left in the situation where they are found, for "although the parties are in pari delicto, yet the court may interfere and grant relief at the suit of one of them, where public policy requires its intervention, even though the result may be that a benefit will be derived by a plaintiff who is in equal guilt with defendant. But here the guilt of the parties is not considered as equal to the higher right of the public, and the guilty party to whom the relief is granted is simply the instrument by which the public is served." In view of the foregoing, we hold that the municipal council of Naujan acted aright in adopting Resolution 3, series of 1952, now in question. In consonance with the principles enunciated above, Resolution 59, series of 1947, reducing the rentals by 20% of the original price, which was also passed without public bidding, should likewise be held void, since a reduction of the rental to be paid by the lessee is a substantial alternation in the contract, making it a distinct and different lease contract which requires the prescribed formality of public bidding. There seems to be no necessity of passing on the validity of Resolution 46, series of 1947, for defendant-appellant, apparently, did not mean to have it annulled, as may be seen from its prayer in the court below and also in this appeal. At any rate, the validity of said resolution does not alter our finding to the effect that Resolution 59, series of 1949, and Resolution 222, series of 1951, are illegal and void; and that Resolution 3, series of 1952, is valid. Rivera v. Municipality of Malolos Facts: Sometime in August 1949 the municipality of Malolos, Bulacan, called for bids for the supply of road construction materials to repair the roads of the municipality. At the public bidding held on 28 August 1949 for that purpose, the Rivera's bid was the lowest. On the same day, 28 August 1949, the acting municipal treasurer informed the petitioner that the contract had been awarded to him and requested him to call at his office for the execution of the contract. On 31 August 1949 the contract was signed by the municipal mayor in behalf of the municipality and the petitioner. It was stipulated that for and in consideration of the sum of P19,235 the petitioner was to furnish and deliver to the municipality of Malolos 2,700 cubic meters of crushed

34 adobe stone (cascajo) and 1,400 cubic meters of gravel. In compliance with the contract, the petitioner delivered crushed adobe stone and gravel to the municipality at the places designated by the municipal mayor. On 29 July 1950 the petitioner wrote to the municipal treasurer, through the provincial auditor, calling his attention to the fact that the sum of P19,339.56 due him as payment for the value of crushed adobe stone and gravel delivered to the municipality had not yet been paid and that as the fiscal year 1949-1950 had already expired, he requested that the sum be included in the appropriations for the incoming fiscal year 1950-1951 as an outstanding obligation. On 2 August 1950, the principal clerk, acting in behalf of the municipal treasurer, informed the petitioner that "The Municipal Council (had) agreed to put said amount as standing obligation of the municipality authorizing payment and authorizing the Municipal Treasurer to pay as soon as funds are available." On 16 October 1951 the municipal council passed Resolution No. 68 ratifying the public bidding called by the municipal treasurer for the supply of road construction materials, and the contract entered into by the municipal mayor in behalf of the municipality on 31 August 1949. On 30 October 1951 the petitioner filed a complaint against the municipality of Malolos in the Court of First Instance of Bulacan to collect the sum of P19,235 for the value of crushed adobe stone and gravel delivered by the petitioner under the contract. On 8 May 1952 the petitioner amended his complaint. On 8 January 1954 the Court dismissed the case without prejudice. On 11 January 1954 the petitioner sought the intervention of the Presidential Complaints and Action Committee, which forwarded the petitioner's claim through proper channels to the Office of the Auditor General. On 14 January 1955 the Deputy Auditor General denied the petitioner's claim on the ground that as there was no sum of money appropriated to meet the obligation incurred before the execution of the contract, as required by section 607 of the Revised Administrative Code, the said contract is void, as provided in section 608 of the same Code; and that even if there was such sum appropriated to meet such obligation, the alleged deliveries of crushed adobe stone and gravel could no longer be verified by the Provincial Auditor of Bulacan or his representative. On 1 March 1955, the petitioner requested the Deputy Auditor General to reconsider his decision. On 5 March 1955, before the said officer could take action on the request for reconsideration, the petitioner filed his notice of appeal with the Office of the Auditor General, and this petition for review in this Court. On 9 March 1955, on motion of the petitioner, this Court resolved to suspend the service of notice upon the Auditor General pursuant to section 4, Rule 45, and granted the petitioner five days from receipt of notice of the action taken by the Auditor General on his request for reconsideration, within which to file a supplement to his petition for review. On 2 June 1955 the Deputy Auditor General denied his request for reconsideration, reiterating the grounds previously relied upon in his decision on 14 January 1954. On 21 June 1955 the petitioner filed a supplement to his petition for review in this Court.

35 Issue: WON Rivera can properly claim from the municipality. The petitioner contends that the respondent should not be allowed to invoke legal technicalities to delay or refuse payment after its municipal council has acknowledged the indebtedness, because the respondent municipality had received an annual allotment or a certain percentage of the amount collected under the provisions of Act No. 3992, known as the Motor Vehicle Law, out of which it could pay said indebtedness, and that there is no issue as to the validity of the contract entered into by and between the petitioner and the respondent, nor is there any question as to the delivery by the petitioner and receipt by the respondent of the road construction materials. Before a contract may be entered into validly by a municipality, the law requires that there should be an appropriation of municipal funds to meet the obligation validly passed by the municipal council and approved by the municipal mayor. In answer to the statement of the Solicitor General that there is no provision of law which authorizes a municipal mayor to enter into a contract with a private contractor for furnishing the municipality with public works materials, the petitioner cites sections 2165 and 2196 of the Revised Administrative Code. Section 2165 provides that "Municipalities . . . are endowed with the faculties of municipal corporations to be exercised by and through their respective municipal governments in conformity with law." "It shall be competent for them, in their proper corporate name, . . . to contract and be contracted with, . . . ." The power or authority conferred upon municipal corporations must be exercised in conformity with law, and the law provides that such contracts must be entered into by the district engineer. The petitioner contends, however, that section 1920 of the Revised Administrative Code must be read in connection with sections 1912 and 1913 of the same Code and concludes that section 1920 does not abrogate the general rule that a municipal council may designate an officer of the municipal corporation to execute such a contract in behalf of the municipality. Section 1912 refers to investigations and survey by the district engineer for a proposed construction or repair of public works and submission by him to the mayor to reports and estimates of the cost of such construction or repair with his recommendations, and to the preparation of plans and specifications for such public works and supervision of the construction or repair of the same. The provisions of sections 1912 and 1913 of the Revised Administrative Code do not refer to contracts entered into by the municipality for the supply of road construction materials. If the law requires that before a contract involving the expenditure of P2,000 or more may be entered into or authorized, the municipal treasurer must certify to the officer entering into such contract that

36 funds have been duly appropriated for such purpose and that the amount necessary to cover the proposed contract is available for expenditure on account thereof; 2 and that a purported contract entered into contrary to the requirements just stated is wholly void, the petitioner's claim that there is no longer any question as to the validity of the contract entered into by and between the petitioner and the municipal mayor of Malolos is not correct. Likewise, if the law provides that the provincial auditor or his representative must check up the deliveries made by a contractor pursuant to a contract lawfully and validly entered into, 3 and there was no such check up, the petitioner's claim that there is no longer an issue as to whether the road construction materials have been actually delivered by the petitioner and received by the respondent is groundless. The Auditor General is not in duty bound to pass and allow in audit the sum claimed by the petitioner if he or his authorized representative did not check up the delivery of the crushed adobe stone and gravel. To say that the purpose and aim of this checking requirement is to forestall fraud and collusion is to state what is obvious. The petitioner enlisted the aid of the Presidential Complaints and Action Committee to request the Auditor General to pass in audit and authorize the payment or the petitioner's claim. The Auditor General had no alternative but to comply with the provisions of the law and as the contract entered into by the municipal mayor of Malolos, Bulacan, was not in accordance with law, the Auditor General was correct in denying the petitioner's claim. Section 73, Act No. 3992, otherwise known as the Motor Vehicle Law, as amended by section 2, Republic Act No. 314, invoked by the petitioner, merely allocates 10 per cent of the money collected under its provisions to the road and bridge funds of the different municipalities in proportion to population, as shown in the latest available census, for the repair, maintenance, and construction of municipal roads. This alone is not sufficient appropriation and authority to disburse part of the 10 per cent collected under the Motor Vehicle Law for the purpose of paying the claim of the petitioner. And the section cited, as amended by section 5 of Republic Act No. 917, approved on 20 June 1953, provides: Moneys collected under the provisions of this Act shall be deposited in a special trust account in the National Treasury to constitute the Highway Special Fund, which shall be apportioned and expended in accordance with the provisions of the Philippine Highway Act of nineteen hundred and fifty-three. Section 608 of the Revised Administrative Code affords the petitioner a remedy.

Rivera v. Maclang

37

Facts: On August 19, 1949 the municipality of Malolos called for bids for furnishing and delivering materials to be used in the maintenance and repair of barrio roads. Rivera won in the bidding and was asked by the Municipal Treasurer to come to his office for execution of the corresponding contract. On August 31, 1949 the contract was signed by appellant and by Maclang in his capacity as Municipal Mayor of Malolos. Pursuant thereto appellant subsequently delivered to the municipality gravel and adobe stones valued at P19,235.00. On October 16, 1951 the Municipal council of Malolos passed a resolution approving the contract, but in spite of repeated demands by appellant the price of the materials was not paid. In 1954 appellant sought the intervention of the Presidential Complaint and Action Commission, which referred the matter to the General Auditing Office. That office turned down the claim for payment, whereupon appellant filed in this Court a petition for review, docketed as SC-G.R. No. L-8847. In its decision of October 31, 1957 this Court sustained the action of the General Auditing Office and held that the contract in question was void as far as the municipal government of Malolos was concerned on the ground that no money had been appropriated to meet the obligation prior to the execution of the contract, as required by section 607 Revised Administrative Code. However, in the same decision this Court indicated that section 608 of the same Code afforded appellant a remedy. Consequently, he filed the present action against defendant- appellee in his personal capacity pursuant to the said provision. The trial court dismissed the complaint, stating that inasmuch as in the previous case the contract entered into between appellant and the Municipality of Malolos had been declared null and void by this Court, "it cannot produce any legal effect for which thereafter no recovery can be made." Issue: WON the dismissal is erroneous. Our ruling in the previous case is that the contract was null and void vis-a-vis the Municipality of Malolos, by reason of noncompliance with the requirement of section 607 of the Revised Administrative Code, which states that "except in the case of a contract for supplies to be carried in stock, no contract involving the expenditure by any province, municipality, chartered city, or municipal district of two thousand pesos or more shall be entered into or authorized until the treasurer of the political division concerned shall have certified to the officer entering into such contract that funds have been duly appropriated for such purpose and that the amount necessary to cover the proposed contract is available for expenditure on account thereof." It should be noted that the present action is against defendantappellee in his personal capacity on the strength of section 608 of the same code, which provides as follows: SEC. 608.Void contract Liability of officer. A purported contract entered into contrary to the requirements of the next preceding section hereof shall be wholly void,

38 and the officer assuming to make such contract shall be liable to the Government or other contracting party for any consequent damage to the same extent as if the transaction had been wholly between private parties." The position of defendant-appellee, as the officer who signed the contract with appellant in violation of section 607, comes squarely under the provision just quoted. His liability is personal, as if the transaction had been entered into by him as a private party. We take it that the intention of the law in this respect is to ensure that public officers entering into transactions with private individuals calling for the expenditure of public funds observe a high degree of caution so that the government may not be the victim of ill-advised or improvident action by those assuming to represent it. Mendoza v. De Leon Facts: This is an action for damages against the individual members of the municipal council of the municipality of Villasis, Pangasinan, for the revocation of the lease of an exclusive ferry privilege awarded to the plaintiff under the provisions of Act. No. 1634 of the Philippine Commission. After user of a little more than one year, the plaintiff was forcibly ejected under and in pursuance of a resolution adopted by the herein defendants, awarding a franchise for the same ferry to another person. Issue: WON the municipality may be sued for acts done in the exercise of its corporate functions. Municipalities of the Philippine Islands organized under the Municipal Code have both governmental and corporate or business functions. Of the first class are the adoption of regulations against fire and disease, preservation of the public peace maintenance of municipal prisons, establishment of primary schools and post-offices, etc. Of the latter class are the establishment of municipal waterworks for the use of the inhabitants, the construction and maintenance of municipal slaughterhouses, markets, stables, bathing establishments, wharves, ferries, and fisheries. Act No. 1634 provides that the use of each fishery, fish-breeding ground, ferry, stable, market, slaughterhouse belonging to any municipality or township shall be let to the highest bidder annually or for such longer period not exceeding five years as may have been previously approved by the provincial board of the province in which the municipality or township is located. The twofold character of the powers of a municipality, under our Municipal Code (Act No. 82) is so apparent and its private or corporate powers so numerous and important that we find no difficulty in reaching the conclusion that the general principles governing the liability of such entities to private individuals as enunciated in the United States are applicable to it. The distinction between

39 governmental powers on the one hand, and corporate or proprietary or business powers on the other, as the latter class is variously described in the reported cases, has long been recognized in the United States and there is no dissent from the doctrine. The municipality is not liable for the acts of its officers or agents in the performance in the performance of its governmental functions. Governmental affairs do not lose their governmental character by being delegated to the municipal government. Nor does the fact that such duties are performed by such officers of the municipality which, for convenience, the state allows the municipality to select, change their character. To preserve the peace, protect the morals and health of the community and so on is to administer government, whether it be done by the central government itself or is shifted to a local organization. And the state being immune for injuries suffered by private individuals in the administration of strictly governmental functions, like immunity is enjoyed by the municipality in the performance of the same duties, unless it is expressly made liable by statute. "The state cannot, without its consent expressed through legislation, be sued for injuries resulting from an act done in the exercise of its lawful governmental powers and pertaining to the administration of government. . . . Municipal corporations are agents of the state in the exercise of certain governmental powers. The preservation of the health and peace of its inhabitants and fire protections afforded the property owner, are governmental functions." A municipality is not exempt from liability for the negligent performance of its corporate or proprietary or business functions. In the administration of its patrimonial property, it is to be regarded as a private corporation or individual 153113-13 so far as its liability to third persons on contract or in tort is concerned. Its contracts, valid entered into, may be enforced and damages may be collected from it for the torts of its officers or agents within the scope of their employment in precisely the same manner and to the same extent as those of private corporations or individuals. As to such matters the principles respondeat superior applies. It is for these purposes that the municipality is made liable to suits in the courts. "Municipal corporations are subject to be sued upon contracts and in tort. In a previous chapter we have considered at length the authority of such corporations to make contracts, the mode of exercising, and the effect of transcending the power. This leaves but little to add in this place respecting their liability in actions ex contractu. Upon an authorized contract ---- that is, upon a contract within the scope of the charter or legislative powers of the corporation and duly made by the proper officers or agents ---- they are liable in the same manner and to the same extent as private corporations or natural persons."

40 The same author says in section 1647:"The rule of law is a general one, that the superior or employer must answer civilly for the negligence or want of skill of his agent or servant in the course or line of his employment, by which another, who is free from contributory fault, is injured. Municipal corporations, under the conditions herein stated, fall within the operation of this rule of law, and are liable, accordingly, to civil actions for damages when the requisite elements of liability coexist. To create such liability, it is fundamentally necessary that the act done which is injurious to others must be within the scope of the corporate powers as prescribed by charter or positive enactment (the extent of which powers all persons are bound, at their peril, to know); in other words, it must not be ultra vires in the sense that it is not within the power or authority of the corporation to act in reference to it under any circumstances. If the act complained of necessarily lies wholly outside of the general or special powers of the corporation as conferred in its charter or by statute, the corporation can in no event be liable to an action for damages, whether it directly commanded the performance of the act or whether it be done by its officers without its express command; for a corporation cannot of course, be impliedly liable to a greater extent than it could make itself by express corporate vote or action." It often happens that the same agent or agency has both a governmental and a corporate character. Such, for instance, are a municipal water system designed both for protection against fire (a governmental function) and to supply water to the inhabitants for profit (a corporate function) a municipal light plant both for lighting the streets (a governmental function) and for furnishing light to the inhabitants at a profit (a corporate function); an agent who is at the same time a police officer and a caretaker of a municipal toll bridge. It is, also, sometimes the case that considerable difficulty is experienced in determining whether a particular municipal duty is governmental or corporate. But questions such as these do not arise in the case at bar. Here it is clear that the leasing of a municipal ferry to the highest bidder for a specified period of time is not a governmental but corporate function. Such a lease, when validly entered into, constitutes a contract with the lessee which the municipality is bound to respect. The matter is thus summed up by Dillon on Municipal Corporations:"Ordinances made by municipalities under charter or legislative authority, containing grants to water and light companies and other public service corporations of the right to use the street pipes, mains, etc., upon the condition of the performance of service by the grantee, are, after acceptance and performance by the grantee, contracts protected by the prohibition of the Federal Constitution against the enactment of any State Law impairing the obligation of contracts."

41 It seems clear, therefore, that under the provisions of the Municipal Code and Act No. 1634, above referred to, the plaintiff had a vested right to the exclusive operation of the ferry in question for the period of his lease. Were the municipality a party to this action, it would be patent that a judgment for damages against it for the rescission of the contract would be proper. This, be it said, is the usual method of exacting damages, either ex contractu or ex delicto arising from the exercise of corporate powers of municipalities. But the present action is against the members of the municipal council personally, and the question arise: Are they liable? In administering the patrimonial property of municipalities, the municipal council occupies, for most purposes, the position of a board of directors of a private corporation. In disposing of the local public utilities, if the term may be used, such as the fishing and ferry rights, etc., they must exercise considerable judgment. It requires some considerable amount of business acumen to compel performance on the part of lessees of these privileges in accordance with the terms of their leases and in a manner in which will not cause the property to deteriorate. Questions must continually arise which are not expressly provided for in the contracts and which must be settled, if possible, in a manner that will preserve the just claims of the municipality. Indeed, it is not at all improbable that on occasion the councilors may have reason to believe that a particular contract has been rescinded by the other party or has never been legally entered into, in both of which cases, decisive steps must be taken to safeguard the interest of the municipality. Thus, in Municipality of Moncada vs. Cajuigan (21 Phil. Rep., 184), the lessee of a municipal fishery was evicted for failing to pay his quarterly rents. The municipal authorities rightly held that the contract was rescinded but forcibly evicted the lessee instead of resorting to the courts. Hence, in an action by the municipality against the lessee and his bondsmen to recover rent arrears, damages were allowed the lessee on his counterclaim for the loss caused by the forcible eviction. Nevertheless, we do not think the councilors could have been personally held liable for their error in resorting to forcible eviction of the lessee. Theirs was an error of judgment, and honest mistake on their part as to the rights of the municipality in the premises. We think the rule of personal liability should be with municipal councilors in such matters as it is with the directors or managers of an ordinary private corporation. "Under the rule that directors are not liable for mistakes of judgment, it follows naturally that they are not liable for the mismanagement of the corporate affairs where such mismanagement is a mistake of judgment. The wisdom of this rule is not only approved by common experience but by law writers and all courts. A rule so rigid as to hold directors personally liable for honest mistakes in corporate management would deter all prudent business men from accepting such positions. The remedy of stockholders in all such cases is by a

42 change in the directory. . . . The rule is that the courts will not interfere even in doubtful cases. But directors and managing directors may be liable for mismanagement to warrant the interposition of a court either as against the contemplated action of the directors, or a majority of the stockholders, or to give relief by way of damages after the action has been taken; a case must be made out which plainly shows that such action is so far opposed to the true interests of the corporation itself as to lead to the clear inference that no thus acting could have been influenced by any honest desire to secure such interests, but that he must have acted with an intent to subserve some outside purpose, regardless of the consequences to the corporation, and in a manner inconsistent with its interests." In the case at bar, there is not a scintilla of evidence that there was any justifiable reason for forcibly evicting the plaintiff from the ferry which he had leased. On the contrary, the defendant councilors attempted to justify their action on the ground that the ferry which he was operating was not the one leased to him; this in spite of the fact the vice-president had personally placed him in possession of it more than a year before, and the fact that he had operated this ferry for over a year, evidently with the knowledge of the defendants. The evidence is so clear that the ferry of which the plaintiff was dispossessed was the one which he had leased that no reasonable man would entertain any doubt whatever upon the question. Hence, we cannot say that in rescinding the contract with the plaintiff, thereby making the municipality liable to an action for damages for no valid reason at all, the defendant councilors were honestly acting for the interests of the municipality. We are, therefore, of the opinion that the defendants are liable jointly and severally for the damages sustained by the plaintiff from the rescission of his contract of lease of the ferry privilege in question. In reaching this conclusion, we have not failed to take into consideration the rule enunciated in Dennison vs. The Moro Province nor the distinction made by the courts in the United States between the liability of a municipal corporation, made such by acceptance of a village or city charter, and the involuntary quasi corporations known as counties, towns, schools districts, and especially the townships of New England. Upon the question of the amount of damages sustained, we accept the findings of the lower court. Municipality of San Fernando, La Union v. Firme Facts: At about 7 o'clock in the morning of December 16, 1965, a collision occurred involving a passenger jeepney driven by Bernardo Balagot and owned by the Estate of Macario Nieveras, a gravel and sand truck driven by Jose Manandeg and owned by Tanquilino Velasquez and a dump truck of the Municipality of San Fernando, La Union and driven by Alfredo Bislig. Due to the impact, several passengers of the jeepney including Laureano Bania Sr.

43 died as a result of the injuries they sustained and four (4) others suffered varying degrees of physical injuries. On December 11, 1966, the private respondents instituted a complaint for damages against the Estate of Macario Nieveras and Bernardo Balagot, owner and driver, respectively, of the passenger jeepney, which was docketed Civil Case No. 2183 in the Court of First Instance of La Union, Branch I, San Fernando, La Union. However, the aforesaid defendants filed a Third Party Complaint against the petitioner and the driver of a dump truck of petitioner. Thereafter, the case was subsequently transferred to Branch IV, presided over by respondent judge and was subsequently docketed as Civil Case No. 107-Bg. By virtue of a court order dated May 7, 1975, the private respondents amended the complaint wherein the petitioner and its regular employee, Alfredo Bislig were impleaded for the first time as defendants. Petitioner filed its answer and raised affirmative defenses such as lack of cause of action, non-suability of the State, prescription of cause of action and the negligence of the owner and driver of the passenger jeepney as the proximate cause of the collision. In the course of the proceedings, the respondent judge issued the following questioned orders: (1) Order dated November 4, 1975 dismissing the crossclaim against Bernardo Balagot; (2) Order dated July 13, 1976 admitting the Amended Answer of the Municipality of San Fernando, La Union and Bislig and setting the hearing on the affirmative defenses only with respect to the supposed lack of jurisdiction; (3) Order dated August 23, 1976 deferring the resolution of the grounds for the Motion to Dismiss until the trial; (4) Order dated February 23, 1977 denying the motion for reconsideration of the order of July 13, 1976 filed by the Municipality and Bislig for having been filed out of time; (5) Order dated March 16, 1977 reiterating the denial of the motion for reconsideration of the order of July 13, 1976; (6) Order dated July 26, 1979 declaring the case deemed submitted for decision it appearing that parties have not yet submitted their respective memoranda despite the court's direction; and (7) Order dated September 7, 1979 denying the petitioner's motion for reconsideration and or order to recall prosecution witnesses for cross examination. TC: defendants Municipality of San Fernando, La Union and Alfredo Bislig are ordered to pay jointly and severally, plaintiffs Juana Rimando-Bania, Mrs. Priscilla B. Surell, Laureano Bania, Jr., Sor Marietta Bania, Mrs. Fe B. Soriano, Montano Bania, Orja Bania and Lydia B. Bania the sums of P1,500.00 as funeral expenses and P24,744.24 as the lost expected earnings of the late Laureano Bania Sr., P30,000.00 as moral damages, and P2,500.00 as attorney's fees. Costs against said defendants.The Complaint is dismissed as to defendants Estate of Macario Nieveras and Bernardo Balagot. MR, MNT. MR denied. Finally, the respondent judge issued an order dated December 3, 1979 providing that if defendants municipality and Bislig further wish to pursue the matter disposed of in the order of July 26, 1979, such should be elevated to a higher court in accordance with the Rules of Court. Hence, this petition.

44 Issue: 1. WON the respondent court committed grave abuse of discretion when it deferred and failed to resolve the defense of non-suability of the State amounting to lack of jurisdiction in a motion to dismiss. In the case at bar, the respondent judge deferred the resolution of the defense of non-suability of the State amounting to lack of jurisdiction until trial. However, said respondent judge failed to resolve such defense, proceeded with the trial and thereafter rendered a decision against the municipality and its driver. The respondent judge did not commit grave abuse of discretion when in the exercise of its judgment it arbitrarily failed to resolve the vital issue of non-suability of the State in the guise of the municipality. However, said judge acted in excess of his jurisdiction when in his decision dated October 10, 1979 he held the municipality liable for the quasi-delict committed by its regular employee. The doctrine of non-suability of the State is expressly provided for in Article XVI, Section 3 of the Constitution, to wit: "the State may not be sued without its consent." Stated in simple parlance, the general rule is that the State may not be sued except when it gives consent to be sued. Consent takes the form of express or implied consent. Express consent may be embodied in a general law or a special law. The standing consent of the State to be sued in case of money claims involving liability arising from contracts is found in Act No. 3083. A special law may be passed to enable a person to sue the government for an alleged quasi-delict, as in Merritt v. Government of the Philippine Islands. Consent is implied when the government enters into business contracts, thereby descending to the level of the other contracting party, and also when the State files a complaint, thus opening itself to a counterclaim. Municipal corporations, for example, like provinces and cities, are agencies of the State when they are engaged in governmental functions and therefore should enjoy the sovereign immunity from suit. Nevertheless, they are subject to suit even in the performance of such functions because their charter provided that they can sue and be sued. A distinction should first be made between suability and liability. "Suability depends on the consent of the state to be sued, liability on the applicable law and the established facts. The circumstance that a state is suable does not necessarily mean that it is liable; on the other hand, it can never be held liable if it does not first consent to be sued. Liability is not conceded by the mere fact that the state has allowed itself to be sued. When the state does waive its sovereign immunity, it is only giving the plaintiff the chance to prove, if it can, that the defendant is liable." 2. WON the municipality is liable for the torts committed by its employee, the test of liability of the municipality depends on whether or not the

45 driver, acting in behalf of the municipality, is performing governmental or proprietary functions. Torio v. Fontanilla: the distinction of powers becomes important for purposes of determining the liability of the municipality for the acts of its agents which result in an injury to third persons. City of Kokomo v. Loy: "Municipal corporations exist in a dual capacity, and their functions are twofold. In one they exercise the right springing from sovereignty, and while in the performance of the duties pertaining thereto, their acts are political and governmental. Their officers and agents in such capacity, though elected or appointed by them, are nevertheless public functionaries performing a public service, and as such they are officers, agents, and servants of the state. In the other capacity the municipalities exercise a private, proprietary or corporate right, arising from their existence as legal persons and not as public agencies. Their officers and agents in the performance of such functions act in behalf of the municipalities in their corporate or individual capacity, and not for the state or sovereign power. It has already been remarked that municipal corporations are suable because their charters grant them the competence to sue and be sued. Nevertheless, they are generally not liable for torts committed by them in the discharge of governmental functions and can be held answerable only if it can be shown that they were acting in a proprietary capacity. In permitting such entities to be sued, the State merely gives the claimant the right to show that the defendant was not acting in its governmental capacity when the injury was committed or that the case comes under the exceptions recognized by law. Failing this, the claimant cannot recover. In the case at bar, the driver of the dump truck of the municipality insists that "he was on his way to the Naguilian river to get a load of sand and gravel for the repair of San Fernando's municipal streets." In the absence of any evidence to the contrary, the regularity of the performance of official duty is presumed pursuant to Section 3(m) of Rule 131 of the Revised Rules of Court. Hence, We rule that the driver of the dump truck was performing duties or tasks pertaining to his office. Palafox, et. al. v. Province of Ilocos Norte, the District Engineer, and the Provincial Treasurer: that "the construction or maintenance of roads in which the truck and the driver worked at the time of the accident are admittedly governmental activities." After a careful examination of existing laws and jurisprudence, We arrive at the conclusion that the municipality cannot be held liable for the torts committed by its regular employee, who was then engaged in the discharge of governmental functions. Hence, the death of the passenger tragic and deplorable

46 though it may be imposed on the municipality no duty to pay monetary compensation. Fernando et al v. CA and City of Davao Facts: On November 7, 1975, Bibiano Morta, market master of the Agdao Public Market filed a requisition request with the Chief of Property of the City Treasurer's Office for the re-emptying of the septic tank in Agdao. An invitation to bid was issued to Aurelio Bertulano, Lito Catarsa, Feliciano Bascon, Federico Bolo and Antonio Suer, Jr. Bascon won the bid. On November 26, 1975 Bascon was notified and he signed the purchase order. However, before such date, specifically on November 22, 1975, bidder Bertulano with four other companions namely Joselito Garcia, William Liagoso, Alberto Fernando and Jose Fajardo, Jr. were found dead inside the septic tank. The bodies were removed by a fireman. One body, that of Joselito Garcia, was taken out by his uncle, Danilo Garcia and taken to the Regional Hospital but he expired there. The City Engineer's office investigated the case and learned that the five victims entered the septic tank without clearance from it nor with the knowledge and consent of the market master. In fact, the septic tank was found to be almost empty and the victims were presumed to be the ones who did the re-emptying. Dr. Juan Abear of the City Health Office autopsied the bodies and in his reports, put the cause of death of all five victims as `asphyxia' caused by the diminution of oxygen supply in the body working below normal conditions. The lungs of the five victims burst, swelled in hemmorrhagic areas and this was due to their intake of toxic gas, which, in this case, was sulfide gas produced from the waste matter inside the septic tank." TC: dismissed. IAC/CA: reversed. MR:reversed. Issue: 1. WON Davao City guilty of negligence in the case at bar. 2. WON such negligence the immediate and proximate cause of deaths of the victims hereof. Negligence has been defined as the failure to observe for the protection of the interests of another person that degree of care, precaution, and vigilance which the circumstances justly demand, whereby such other person suffers injury. Under the law, a person who by his omission causes damage to another, there being negligence, is obliged to pay for the damage done (Article 2176, New Civil Code). To be entitled to damages for an injury resulting from the negligence of another, a claimant must establish the relation between the omission and the damage. He must drove under Article 2179 of the New Civil Code that the defendant's negligence was the immediate and proximate cause of his injury. Proximate cause has been defined as that cause, which, in natural and continuous sequence unbroken by any efficient intervening cause, produces the injury, and without which the result would not have

47 occurred. Proof of such relation of cause and effect is not an arduous one if the claimant did not in any way contribute to the negligence of the defendant. However, where the resulting injury was the product of the negligence of both parties, there exists a difficulty to discern which acts shall be considered the proximate cause of the accident. Petitioners fault the city government of Davao for failing to clean a septic tank for the period of 19 years resulting in an accumulation of hydrogen sulfide gas which killed the laborers. They contend that such failure was compounded by the fact that there was no warning sign of the existing danger and no efforts exerted by the public respondent to neutralize or render harmless the effects of the toxic gas. They submit that the public respondent's gross negligence was the proximate cause of the fatal incident. We do not subscribe to this view. While it may be true that the public respondent has been remiss in its duty to re-empty the septic tank annually, such negligence was not a continuing one. Upon learning from the report of the market master about the need to clean the septic tank of the public toilet in Agdao Public Market, the public respondent immediately responded by issuing invitations to bid for such service. Thereafter, it awarded the bid to the lowest bidder, Mr. Feliciano Bascon. The public respondent, therefore, lost no time in taking up remedial measures to meet the situation. It is likewise an undisputed fact that despite the public respondent's failure to reempty the septic tank since 1956, people in the market have been using the public toilet for their personal necessities but have remained unscathed. The absence of any accident was due to the public respondent's compliance with the sanitary and plumbing specifications in constructing the toilet and the septic tank. Hence, the toxic gas from the waste matter could not have leaked out because the septic tank was air-tight. The only indication that the septic tank in the case at bar was full and needed emptying was when water came out from it. Yet, even when the septic tank was full, there was no report of any casualty of gas poisoning despite the presence of people living near it or passing on top of it or using the public toilet for their personal necessities. Petitioners made a lot of fuss over the lack of any ventilation pipe in the toilet to emphasize the negligence of the city government and presented witnesses to attest on this lack. However, this strategy backfired on their faces. Their witnesses were not expert witnesses. On the other hand, Engineer Demetrio Alindada of the city government testified and demonstrated by drawings how the safety requirements like emission of gases in the construction of both toilet and septic tank have been complied with. He stated that the ventilation pipe need not be constructed outside the building as it could also be embodied in the hollow blocks as is usually done in residential buildings. The petitioners submitted no competent evidence to corroborate their oral testimonies or rebut the testimony given by

48 Engr. Alindada. We also do not agree with the petitioner's submission that warning signs of noxious gas should have been put up in the toilet in addition to the signs of "MEN" and "WOMEN" already in place in that area. Toilets and septic tanks are not nuisances per se as defined in Article 694 of the New Civil Code which would necessitate warning signs for the protection of the public. While the construction of these public facilities demands utmost compliance with safety and sanitary requirements, the putting up of warning signs is not one of those requirements. In view of this factual milieu, it would appear that an accident such as toxic gas leakage from the septic tank is unlikely to happen unless one removes its covers. The accident in the case at bar occurred because the victims on their own and without authority from the public respondent opened the septic tank. Considering the nature of the task of emptying a septic tank especially one which has not been cleaned for years, an ordinarily prudent person should undoubtedly be aware of the attendant risks. The victims are no exception; more so with Mr. Bertulano, an old hand in this kind of service, who is presumed to know the hazards of the job. His failure, therefore, and that of his men to take precautionary measures for their safety was the proximate cause of the accident. The fatal accident in this case would not have happened but for the victims' negligence. Thus, the appellate court was correct to observe that: ". . . Could the victims have died if they did not open the septic tank which they were not in the first place authorized to open? Who between the passive object (septic tank) and the active subject (the victims herein) who, having no authority therefore, arrogated unto themselves, the task of opening the septic tank which caused their own deaths should be responsible for such deaths. How could the septic tank which has been in existence since the 1950's be the proximate cause of an accident that occurred only on November 22, 1975? The stubborn fact remains that since 1956 up to occurrence of the accident in 1975 no injury nor death was caused by the septic tank. The only reasonable conclusion that could be drawn from the above is that the victims death was caused by their own negligence in opening the septic tank . . ." Petitioners further contend that the failure of the market master to supervise the area where the septic tank is located is a reflection of the negligence of the public respondent. We do not think so. The market master knew that work on the septic tank was still forthcoming. It must be remembered that the bidding had just been conducted. Although the winning bidder was already known, the award to him was still to be made by the Committee on Awards. Upon the other hand, the accident which befell the victims who are not in any way connected with the winning bidder happened before the award could be given. Considering that there was yet no award and order to commence work on the septic tank, the duty of the market master or his security

49 guards to supervise the work could not have started. Also, the victims could not have been seen working in the area because the septic tank was hidden by a garbage storage which is more or less ten (10) meters away from the comfort room itself. The surreptitious way in which the victims did their job without clearance from the market master or any of the security guards goes against their good faith. Even their relatives or family members did not know of their plan to clean the septic tank. Finally, petitioners insistence on the applicability of Article 24 of the New Civil Code cannot be sustained. Said law states: "Art. 24. In all contractual, property or other relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance, indigence, mental weakness, tender age or other handicap, the courts must be vigilant for his protection." We approve of the appellate court's ruling that "(w)hile one of the victims was invited to bid for said project, he did not win the bid, therefore, there is a total absence of contractual relations between the victims and the City Government of Davao City that could give rise to any contractual obligation, much less, any liability on the part of Davao City." The accident was indeed tragic and We empathize with the petitioners. However, the herein circumstances lead Us to no other conclusion than that the proximate and immediate cause of the death of the victims was due to their own negligence. Consequently, the petitioners cannot demand damages from the public respondent. Tuzon and Mapagu v. CA Facts: The Sangguniang Bayan of Camalaniugan, Cagayan adopted Resolution No. 9 which solicits a 1% donation from thresher operators who apply for a permit to thresh within the municipalitys jurisdiction to help finance the construction of the municipalitys Sports and Nutrition Center. Such 1% shall come from the value of the palay threshed by them in the area. To implement the resolution, Municipal Treasurer Mapagu prepared an agreement to donate for signature of all thresher/owner/ operators applying for a mayors permit. Jurado sent his agent to the Treasurers office to pay the license fee for thresher operators. Mapagu refused to accept payment and required Jurado to first secure a mayors permit. Mayor Tuzon said that Jurado should first comply with Res 9 and sign the agreement before the permit could be issued. Jurado ignored the requirement and sent his license fee payment through postal money order. His payment was returned on the ground that he failed to comply with Res 9. Jurado filed a special civil action for mandamus w/ damages to compel the issuance of the mayors permit and license and a petition for declaratory judgment against Res 9 and the implementing agreement for being illegal either as a donation/tax measure RTC: Upheld Res 9 and implementing agreement, and dismissed claims for damages

50 CA: Affirmed validity of Res 9 and implementing agreement, but found Mayor Tuzon and Treasurer Mapagu to have acted maliciously and in bad faith when they denied Jurados application. Issue: WON the tax measure contravenes the limitations on the taxing powers of LGUs under Sec 5 of the LGC. SC will not rule on validity of Res 9 and the implementing agreement because the issue has not been raised as an assigned error. However, it observes that that CA said no more than Res 9 was passed by the Sangguniang Bayan in the lawful exercise of its legislative powers in pursuance to (1) Art. XI, Sec. 5 1973 Consti subject to such limitation as may be provided by law and (2) Art. 4, Sec. 29 of PD 231 the barrio council may solicit monies, materials, and other contributions from private agencies and individuals. The SC said that this was an oversimplification. The CA failed to offer any explanation for its conclusion nor does it discuss its own concept of the nature of the resolution. If Res. 9 is claimed to be a solicitation: Implementing agreement makes the donationobligatory and a condition precedent to the issuance of a mayors permit. Therefore, it goes against the nature of a donation. If it is to be considered as a tax ordinance, it must be shown to have been enacted in accordance with the requirements of the Local Tax Code. It would include the holding of a public hearing on the measure, its subsequent approval by the Secretary of Finance, in addition to the requisites for publication of ordinances in general Torio v. Fontanilla Facts: On October 21, 1958, the Municipal Council of Malasiqui, Pangasinan, passed Resolution No. 159 whereby "it resolved to manage the 1959 Malasiqui town fiesta celebration on January 21, 22, and 23, 1959." Resolution No. 182 was also passed creating the "1959 Malasiqui Town Fiesta Executive Committee" which in turn organized a subcommittee on entertainment and stage, with Jose Macaraeg as Chairman. The council appropriated the amount of P100.00 for the construction of 2 stages, one for the "zarzuela" and another for the "cancionan". The "zarzuela" entitled "Midas Extravanganza" was donated by an association of Malasiqui employees of the Manila Railroad Company in Caloocan, Rizal. The troupe arrived in the evening of January 22 for the performance and one of the members of the group was Vicente Fontanilla. The program started at about 10:15 o'clock that evening with some speeches, and many persons went up

51 the stage. The "zarzuela" then began but before the dramatic part of the play was reached, the stage collapsed and Vicente Fontanilla who was at the rear of the stage was pinned underneath. Fontanilla was taken to the San Carlos General Hospital where he died in the afternoon of the following day. The heirs of Vicente Fontanilla filed a complaint with the Court of First Instance of Manila on September 11, 1959 to recover damages. TC: Executive Committee appointed by the municipal council had exercised due diligence and care like a good father of the family in selecting a competent man to construct a stage strong enough for the occasion and that if it collapsed that was due to forces beyond the control of the committee on entertainment, consequently, the defendants were not liable for damages for the death of Vicente Fontanilla. The complaint was accordingly dismissed in a decision dated July 10, 1962. CA reversed. Issue: Is the celebration of a town fiesta an undertaking in the exercise of a municipality's governmental or public function or is it of a private or proprietary character? Holding of the town fiesta in 1959 by the municipality of Malasiqui Pangasinan, was an exercise of a private or proprietary function of the municipality. Chapter on Municipal Law of the Revised Administrative Code provides: Section 2282. Celebration of fiesta. A fiesta may be held in each municipality not oftener than once a year upon a date fixed by the municipal council. A fiesta shall not be held upon any other date than that lawfully fixed therefor, except when, for weighty reasons, such as typhoons, inundations, earthquakes, epidemics, or other public calamities, the fiesta cannot be held in the date fixed, in which case it may be held at a later date in the same year, by resolution of the council." This provision simply gives authority to the municipality to accelebrate a yearly fiesta but it does not impose upon it a duty to observe one. Holding a fiesta even if the purpose is to commemorate a religious or historical event of the town is in essence an act for the special benefit of the community and not for the general welfare of the public performed in pursuance of a policy of the state. The mere fact that the celebration, as claimed, was not to secure profit or gain but merely to provide entertainment to the town inhabitants is not a conclusive test. For instance, the maintenance of parks is not a source of income for the town, nonetheless it is private undertaking as distinguished from the maintenance of public schools, jails, and the like which are for public service. There can be no hard and fast rule for purposes of determining the true nature of an undertaking or function of a municipality; the surrounding circumstances of a particular case are to be considered and will be decisive. The basic element, however beneficial to the public the undertaking may be, is that it is governmental in essence, otherwise, the function becomes private or

52 proprietary in character. Easily, no governmental or public policy of the state is involved in the celebration of a town fiesta. WON under the doctrine of respondent superior, petitioner-municipality is to be held liable for damages for the death of Vicente Fontanilla if that was attributable to the negligence of the municipality's officers, employees, or agents. YES. "Art. 2176, Civil Code: Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. . . ." "Art. 2180. Civil Code: The obligation imposed by article 2176 is demandable not only for one's own acts or omission, but also for those of persons for whom one is responsible . . ." On this point, the Court of Appeals found and held that there was negligence. The trial court gave credence to the testimony of Angel Novado, a witness of the defendants (now petitioners), that a member of the "extravaganza troupe" removed two principal braces located on the front portion of the stage and used them to hang the screen or "telon", and that when many people went up the stage the latter collapsed. This testimony was not believed however by respondent appellate court, and rightly so. According to said defendants, those two braces were "mother" or "principal" braces located semi-diagonally from the front ends of the stage to the front posts of the ticket booth located at the rear of the stage and were fastened with a bamboo twine. That being the case, it becomes incredible that any person in his right mind would remove those principal braces and leave the front portion of the stage practically unsupported. Moreover, if that did happen, there was indeed negligence as there was lack of supervision over the use of the stage to prevent such an occurrence. At any rate, the guitarist who was pointed to by Novado as the person who removed the two bamboo braces denied having done so. The Court of Appeals said. "Amor by himself alone could not have removed the two braces which must be about ten meters long and fastened them on top of the stage for the curtain. The stage was only five and a half meters wide Surely, it would be impractical and unwieldy to use a ten meter bamboo pole, much more two poles, for the stage curtain." The appellate court also found that the stage was not strong enough considering that only P100.00 was appropriate for the construction of two stages and while the floor of the "zarzuela" stage was of wooden planks, the posts and braces used were of bamboo material. We likewise observe that although the stage was described by the petitioners as being supported by "24" posts, nevertheless there were only 4 in front, 4 at the rear, and 5 on each side. Where were the rest? The Court of Appeals thus concluded: "The court a quo itself attributed the collapse of the stage to the great number of onlookers who mounted the stage. The municipality and/or its agents had the necessary means within its command to prevent such an occurrence. Having failed to take the necessary steps to maintain the safety of the

2.

53 stage for the use of the participants in the stage presentation prepared in connection with the celebration of the town fiesta, particularly, in preventing nonparticipants or spectators from mounting and accumulating on the stage which was not constructed to meet the additional weight, the defendants-appellees were negligent and are liable for the death of Vicente Fontanilla." The findings of the respondent appellate court that the facts as presented to it establish negligence as a matter of law and that the Municipality failed to exercise the due diligence of a good father of the family, will not disturbed by Us in the absence of a clear showing of an abuse of discretion or a gross misapprehension of facts. Liability rests on negligence which is "the want of such care as a person of ordinary prudence would exercise under the circumstances of the case." Thus, private respondents argue that the "Midas Extravaganza" which was to be performed during the town fiesta was a "donation" offered by an association of Malasiqui employees of the Manila Railroad Co. in Caloocan, and that when the Municipality of Malasiqui accepted the donation of services and constructed precisely a "zarzuela stage" for the purpose, the participants in the stage show had the right to expect that the Municipality through its "Committee on entertainment and stage" would build or put up a stage or platform strong enough to sustain the weight or burden of the performance and take the necessary measures to insure the personal safety of the participants. We agree. Sanders v. City of Long Beach, 1942, which was an action against the city for injuries sustained from a fall when plaintiff was descending the steps of the city auditorium. The city was conducting a "Know your City Week" and one of the features was the showing of a motion picture in the city auditorium to which the general public was invited and plaintiff Sanders was one of those who attended. In sustaining the award for damages in favor of plaintiff, the District Court of Appeal, Second district, California, held inter alia that the "Know your City Week" was a "proprietary activity" and not a "governmental one" of the city, that defendant owed to plaintiff, an "invitee", the duty of exercising ordinary care for her safety, and plaintiff was entitled to assume that she would not be exposed to a danger (which in this case consisted of lack of sufficient illumination of the premises) that would come to her through a violation of defendant's duty. We can say that the deceased Vicente Fontanilla was similarly situated as Sanders. The Municipality of Malasiqui resolved to celebrate the town fiesta in January of 1959; it created a committee in charge of the entertainment and stage; an association of Malasiqui residents responded to the call for the festivities and volunteered to present a stage show; Vicente Fontanilla was one of the participants who like

54 Sanders had the right to expect that he would be exposed to danger on that occasion. Lastly, petitioner or appellant Municipality cannot evade responsibility and/or liability under the claim that it was Jose Macaraeg who constructed the stage. The municipality acting through its municipal council appointed Macaraeg as chairman of the sub-committee on entertainment and in charge of the construction of the "zarzuela" stage. Macaraeg acted merely as an agent of the Municipality. Under the doctrine of respondent superior mentioned earlier, petitioner is responsible or liable for the negligence of its agent acting within his assigned tasks. ". . . when it is sought to render a municipal corporation liable for the act of servants or agents, a cardinal inquiry is, whether they are the servants or agents of the corporation. If the corporation appoints or elects them, can control them in the discharge of their duties, can continue or remove them, can hold them responsible f or the manner in which they discharge their trust, and if those duties relate to the exercise of corporate powers, and are for the peculiar benefit of the corporation in its local or special interest, they may justly be regarded as its agents or servants, and the maxim of respondent superior applies." WON municipality councilors who enacted the ordinance and created the fiesta committee are liable. The Court of Appeals held the councilors jointly and solidarily liable with the municipality for damages under Article 27 of the Civil Code which provides that "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." In their Petition for review the municipal councilors allege that the Court of Appeals erred in ruling that the holding of a town fiesta is not a governmental function and that there was negligence on their part for not maintaining and supervising the safe use of the stage, in applying Article 27 of the Civil Code against them, and in not holding Jose Macaraeg liable for the collapse of the stage and the consequent death of Vicente Fontanilla. We agree with petitioners that the Court of Appeals erred in applying Article 27 of the Civil Code against them, for this particular article covers a case of non-feasance or non-performance by a public officer of his official duty; it does not apply to a case of negligence or misfeasance in carrying out an official duty. If We are led to set aside the decision of the Court of Appeals insofar as these petitioners are concerned, it is because of plain error committed by respondent court which however is not invoked in petitioners' brief.

3.

55 Miguel v. CA: the Supreme Court is vested with ample authority to review matters not assigned as errors in an appeal if it finds that their consideration and resolution are indispensable or necessary in arriving at a just decision in a given case, and that this is authorized under Sec. 7, Rule 51 of the Rules of Court. We believe that this pronouncement can well be applied in the instant case. The Court of Appeals in its decision now under review held that the celebration of a town fiesta by the Municipality of Malasiqui was not a governmental function. We upheld that ruling. The legal consequence thereof is that the Municipality stands on the same footing as an ordinary private corporation with the municipal council acting as its board of directors. It is an elementary principle that a corporation has a personality, separate and distinct from its officers, directors, or persons composing it and the latter are not as a rule co-responsible in an action for damages for tort or negligence (culpa aquiliana) committed by the corporation's employees or agents unless there is a showing of bad faith or gross or wanton negligence on their part. "The ordinary doctrine is that a Director, merely by reason of his office, is not personally liable for the torts of his corporation; he must be shown to have personally voted for or otherwise participated in them." "Officers of a corporation 'are not held liable for the negligence of the corporation merely because of their official relation to it, but because of some wrongful or negligent act by such officer amounting to a breach of duty which resulted in an injury . . . To make an officer of a corporation liable for the negligence of the corporation there must have been upon his part such a breach of duty as contributed to, or helped to bring about, the injury; that is to say, he must be a participant in the wrongful act." "Directors who merely employ one to give n fireworks exhibition on the corporate grounds are not personally liable for the negligent acts of the exhibitor." On these principles We absolve the municipal councilors from any liability for the death of Vicente Fontanilla. The records do not show that said petitioners directly participated in the defective construction of the "zarzuela" stage or that they personally permitted spectators to go up the platform. City of Manila vs Teotico FACTS: In January 1958, at about 8pm, Teotico was about to board a jeepney in P. Burgos, Manila when he fell into an uncovered manhole. This caused injuries upon him. Thereafter he sued for damages under Article 2189 of the Civil Code the City of Manila, the mayor, the city engineer, the city health officer, the city treasurer, and the chief of police. CFI Manila ruled against Teotico. The CA, on appeal, ruled that the City of Manila should pay damages

56 to Teotico. The City of Manila assailed the decision of the CA on the ground that the charter of Manila states that it shall not be liable for damages caused by the negligence of the city officers in enforcing the charter; that the charter is a special law and shall prevail over the Civil Code which is a general law; and that the accident happened in national highway. ISSUE: Whether or not the City of Manila is liable in the case at bar. HELD: Yes. It is true that in case of conflict, a special law prevails over a general law; that the charter of Manila is a special law and that the Civil Code is a general law. However, looking at the particular provisions of each law concerned, the provision of the Manila Charter exempting it from liability caused by the negligence of its officers is a general law in the sense that it exempts the city from negligence of its officers in general. There is no particular exemption but merely a general exemption. On the other hand, Article 2189 of the Civil Code provides a particular prescription to the effect that it makes provinces, cities, and municipalities liable for the damages caused to a certain person by reason of the defective condition of roads, streets, bridges, public buildings, and other-public works under their control or supervision. The allegation that the incident happened in a national highway was only raised for the first time in the Citys motion for reconsideration in the Court of Appeals, hence it cannot be given due weight. At any rate, even though it is a national highway, the law contemplates that regardless if whether or not the road is national, provincial, city, or municipal, so long as it is under the Citys control and supervision, it shall be responsible for damages by reason of the defective conditions thereof. In the case at bar, the City admitted they have control and supervision over the road where Teotico fell when the City alleged that it has been doing constant and regular inspection of the citys roads, P. Burgos included. Abella v. City of Naga Facts: The municipality of Naga by resolution ordered the closing of that part of a municipal street which ran between the public market and the plaintiff's property, and used the closed thoroughfare to expand the market. As a consequence of this resolution, and immediately after the passage of the same, - says the agreement - permanent, semi-permanent, as well as temporary constructions were allowed by the defendant municipality of Naga along the sidewalk of Plaintiff's property and abutting to said property, facing P. Prieto Street, and extending out in the middle of the same street, hence depriving the plaintiff's property of access to said street, and consequently retarding her reconstructions. "It was further stipulated "that if all the damages is to be awarded the plaintiff, the same should not exceed the sum of Three hundred pesos (P300)." Naga: "it acted and exercised its police

57 power" "prompted to preserve the peace and good order of the community and promote the general welfare;" and this being the case, it believes that it is not liable for damages. Issue: WON Naga is liable. The municipality or city of Naga was not charged with any unlawful act, or with acting without authority, or with invasion of plaintiff's property rights; the basis of the lower court's decision in Section 2246 of the Revised Administrative Code copied in appellant's brief, which provides that no municipal road, street, etc. or any part thereof "shall be closed without indemnifying any person prejudiced thereby." The question then for determination by the court below was reduced to whether the plaintiff was prejudiced by defendant municipality's action. That she was economically damaged, the stipulation of facts admits; and that the indemnity assessed is within the bounds of the damages suffered, there is no dispute. As a matter of fact, the damages awarded seem to be nominal judged by the description of the plaintiff's interests adversely affected by the conversion of P. Prieto Street into a market. The appeal is absolutely without merit, and the appealed decision will be affirmed, with costs against the appellant.

Satisfying/Executing Judgment Against Municipal Corporations

Tan Toco v. Municipal Council of Iloilo Facts: The widow of Tan Toco sued the municipal council of Iloilo for the amount of P42,966.40, being the purchase price of two strips of land, one on Calle J. M. Basa consisting of 592 square meters, and the other on Calle Aldiguer consisting of 59 square meters, which the municipality of Iloilo had appropriated for widening said street. The Court of First Instance of Iloilo sentenced the said municipality to pay the plaintiff the amount so claimed, plus the interest, and the said judgment was on appeal affirmed by this court. On account of lack of funds the municipality of Iloilo was unable to pay the said judgment, wherefore plaintiff had a writ of execution issue against the property of the said municipality, by virtue of which the sheriff attached two auto trucks used for street sprinkling, one police patrol automobile, the police stations on Mabini street, and in Molo and Mandurriao and the concrete structures, with the corresponding lots, used as markets by Iloilo, Molo, and Mandurriao. After notice of the sale of said property had been made, and a few days before the sale, the provincial fiscal of Iloilo filed a motion which the Court of First Instance praying that the attachment on the said property be dissolved, that the said attachment be declared null and void as being illegal and violative of the rights of the defendant municipality.

58 Plaintiffs counsel objected o the fiscal's motion but the court, by order of August 12, 1925, declared the attachment levied upon the aforementioned property of the defendant municipality null and void, thereby dissolving the said attachment. Issue: WON the property levied upon is exempt from execution. The municipal law, section 2165 of the Administrative Code, provides that: Municipalities are political bodies corporate, and as such are endowed with the faculties of municipal corporations, to be exercised by and through their respective municipal government in conformity with law.It shall be competent for them, in their proper corporate name, to sue and be sued, to contract and be contracted with, to acquire and hold real and personal property for municipal purposes, and generally to exercise the powers hereinafter specified or otherwise conferred upon them by law. For the purposes of the matter here in question, the Administrative Code does not specify the kind of property that a municipality may acquire. However, article 343 of the Civil Code divides the property of provinces and towns (municipalities) into property for public use and patrimonial property. According to article 344 of the same Code, provincial roads and foot-path, squares, streets, fountains and public waters, drives and public improvements of general benefit built at the expense of the said towns or provinces, are property for public use. All other property possessed by the said towns and provinces is patrimonial and shall be subject to the provisions of the Civil Code except as provided by special laws. It is generally held that property owned by a municipality, where not used for a public purpose but for quasi private purposes, is subject to execution on a judgment against the municipality, and may be sold. This rule applies to shares of stock owned by a municipal corporation, and the like. But the mere fact that corporate property held for public uses is being temporarily used for private purposes does not make it subject execution. If municipal property exempt from execution is destroyed, the insurance money stands in lieu thereof and is also exempt. The members or inhabitants of a municipal corporation proper are not personally liable for the debts of the municipality, except that in the New England States the individual liability of the inhabitant is generally maintained. The special concession of the right of usufruct in a public market cannot be attached like any ordinary right, because that would be to permit a person who has contracted with the state or with the administrative officials thereof to conduct and manage a service of a public character, to be substituted, without the knowledge and consent of the administrative authorities, by one who took no part in the

59 contract, thus giving rise to the possibility of the regular course of a public service being disturbed by the more or less legal action of a grantee, to the prejudice of the state and the public interests. The privilege or franchise granted to a private person to enjoy the usufruct of a public market cannot lawfully be attached and sold, and a creditor of such person can recover his debt only out of the income or revenue obtained by the debtor from the enjoyment or usufruct of the said privilege, in the same manner that the rights of such creditors of a railroad company can be exercised and their credit collected only out of the gross receipts remaining after deduction has been made therefrom of the operating expenses of the road. For the reasons contained in the authorities above quoted we believe that this court would have reached the same conclusion if the debtor had been municipality of Guinobatan and the public market had been levied upon by virtue of the execution. It is evident that the movable and immovable property of a municipality, necessary for governmental purpose, may not be attached and sold for the payment of a judgment against the municipality. The supreme reason for this rule is the character of the public use to which such kind of property is devoted. The necessity for government service justifies that the property of public of the municipality be exempt from execution just as it is necessary to exempt certain property of private individuals in accordance with section 452 of the Code of Civil Procedure. Even the municipal income, according to the above quoted authorities, is exempt from levy and execution. In volume 1, page 467, Municipal Corporations by Dillon we find that: Municipal corporations are instituted by the supreme authority of a state for the public good. They exercise, by delegation from the legislature, a portion of the sovereign power. The main object of their creation is to act as administrative agencies for the state, and to provide for the police and local government of certain designated civil divisions of its territory. To this end they are invested with certain governmental powers and charged with civil, political, and municipal duties. To enable them beneficially to exercise these powers and discharge these duties, they are clothed with the authority to raise revenues, chiefly by taxation, and subordinately by other modes as by licenses, fines, and penalties. The revenue of the public corporation is the essential means by which it is enabled to perform its appointed work. Deprived of its regular and adequate supply of revenue, such a corporation is practically destroyed and the ends of its erection thwarted. Based upon considerations of this character, it is the settled doctrine of the law that only the public property but also the taxes and public revenues of such corporations cannot be seized under execution against them, either in the treasury or when in transit to it. Judgments rendered for taxes, and the proceeds of such judgments in the hands of officers of

60 the law, are not subject to execution unless so declared by statute. The doctrine of the inviolability of the public revenues by the creditor is maintained, although the corporation is in debt, and has no means of payment but the taxes which it is authorized to collect. Another error assigned by counsel for appellant is the holding of the court a quo that the proper remedy for collecting the judgment in favor of the plaintiff was by way or mandamus. While this question is not necessarily included in the one which is the subject of this appeal, yet we believe that the holding of the court, assigned as error by appellant's counsel, is true when, after a judgment is rendered against a municipality, it has no property subject to execution. This doctrine is maintained by Dillon (Municipal Corporations, vol. 4, par. 1507, 5th ed.) based upon the decisions of several States of the Union upholding the same principle and which are cited on page 2679 of the aforesaid work. In this sense this assignment of error, we believe, is groundless. Municipality of Makati In the case at bar, the validity of the RTC decision dated June 4, 1987 is not disputed by petitioner. No appeal was taken therefrom. For three years now, petitioner has enjoyed possession and use of the subject property notwithstanding its inexcusable failure to comply with its legal obligation to pay just compensation. Petitioner has benefited from its possession of the property since the same has been the site of Makati West High School since the school year 1986-1987. This Court will not condone petitioner's blatant refusal to settle its legal obligation arising from expropriation proceedings it had in fact initiated. It cannot be over-emphasized that, within the context of the State's inherent power of eminent domain, . . . [j]ust compensation means not only the correct determination of the amount to be paid to the owner of the land but also the payment of the land within a reasonable time from its taking. Without prompt payment, compensation cannot be considered "just" for the property owner is made to suffer the consequence of being immediately deprived of his land while being made to wait for a decade or more before actually receiving the amount necessary to cope with his loss [Cosculluela v. The Honorable Court of Appeals, G.R. No. 77765, August 15, 1988, 164 SCRA 393, 400. See also Provincial Government of Sorsogon v. Vda. de Villaroya, G.R. No. 64037, August 27, 1987, 153 SCRA 291]. The State's power of eminent domain should be exercised within the bounds of fair play and justice. In the case at bar, considering that valuable property has been taken, the compensation to be paid fixed and the municipality is in full possession and utilizing the property for public purpose, for three (3) years, the Court finds that the municipality has had more than reasonable time to pay full compensation.

61 Pasay City Government v. CFI of Manila Facts: V.D. Isip, Sons & Associates represented by Vicente David Isip entered into a contract with the City of Pasay represented by the then Mayor Pablo Cuneta. Pursuant to the aforesaid contract, the respondent-appellee proceeded with the construction of the new Pasay City Hall building as per duly approved plans and specifications. The respondent-appellee accomplished under various stages of construction the amount of work (including supplies and materials) equivalent to an estimated value of P1,713,096.00 of the total contract price of P4,914,500.80. The appellants paid only the total amount of P1,100,000.00 to the respondent-appellee leaving an amount of P613,096.00 immediately due from the petitionerappellants to the respondent-appellee. Pasay failed to pay. Action for specific performance with damages against herein petitioners-appellants before the respondent Court. The parties arrived at a draft of amicable agreement which was submitted to the Municipal Board of Pasay City for its consideration. Protracted pre-trial hearings and conferences were held where the respondent Court suggested and advised that "under the principle of quantum meruit, the plaintiff is forthwith entitled to at least that which is due to him for defendants under the contract and that public interest must perforce require the continuity of construction of a public work project, instead of delaying its immediate completion by litigating upon technical grounds which would undoubtedly redound to public detriment". The Municipal Board of Pasay then enacted Ordinance No. 1012 which approved the Compromise Agreement and also authorized and empowered the incumbent City Mayor Claudio to represent the appellant Pasay City Government, subject to the final approval of the respondent Court herein. Court approved the said Compromise Agreement including a Manifestation and Addendum thereto. On April 10, 1969, the appellants filed an urgent motion seeking a declaration of legality of the original contract and agreement dated August 4, 1964 from the respondent Court. Court issued an order declaring that the original contract is legal and valid. Court granted an order of execution pursuant to which a writ of execution was issued. Application for and notice of garnishment were made and effected upon the funds of appellant Pasay City Government with the PNB. Pasay: premature, the 90-day stipulation has not expired; the obligations were reciprocal, the contractor has not set up a new performance bond; and Sheriff cannot garnish trust funds of the city. TC: Contractor complied substantially, garnishment must proceed. Issue: WON the CFI erred in refusing to quash the writ of execution it issued. YES. The two purposes of a compromise agreement are enunciated in Article 2028 of the New Civil Code, to wit: "A. 2028. A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced." The first

62 purpose - "to avoid a litigation" - occurs when there is a threat of an impending litigation. At this point, no case has yet reached the courts. The moment a case has been filed in court then the second purpose "to put an end to one already commenced" - applies. In the herein case, We are concerned with the second purpose. The latter purpose is given effect in Article 2037 of the New Civil Code which reads: "Article 2037. A compromise has upon the parties the effect and authority of res judicata; but there shall be no execution except in compliance with a judicial compromise." A compromise agreement not contrary to law, public order, public policy, morals or good customs is a valid contract which is the law between the parties themselves. A judgment on a compromise is a final and executor. It is immediately executor in the absence of a motion to set the same aside on the ground of fraud, mistake or duress. In fact in the herein case before Us, execution has already been issued. Considering this in the light of Article 2041 of the New Civil Code, to wit: "Art. 2041. If one of the parties fails or refuses to abide by the compromise, the other party may either enforce the compromise or regard it as rescinded and insist upon his original demand." it is obvious that the respondent-appellee did not only succeed in enforcing the compromise but said plaintiff-appellee likewise wants to rescind the said compromise. It is clear from the language of the law, specifically Article 2041 of the New Civil Code that one of the parties to a compromise has two options: 1) to enforce the compromise; or 2) to rescind the same and insist upon his original demand. The respondentappellee in the case herein before Us wants to avail of both of these options. This can not be done. The respondent-appellee cannot ask for rescission of the compromise agreement after it has already enjoyed the first option of enforcing the compromise by asking for a writ of execution resulting thereby in the garnishment of the Pasay City funds deposited with the Philippine National Bank which eventually was delivered to the respondent-appellee. Upon the issuance of the writ of execution, the petitioner-appellants moved for its quashal alleging among other things the exemption of the government from execution. This move on the part of the petitioner-appellant is at first glance laudable for "all government funds deposited with the Philippine National Bank by any agency or instrumentality of the government, whether by way of general or special deposit, remain government funds and may not be subject to garnishment or levy (Commissioner of Public Highways vs. San Diego, L-30098, 31 SCRA 616 [Feb. 18, 1970]). But, inasmuch as an ordinance has already been enacted expressly appropriating the amount of P613,096.00 of payment to the respondent-appellee, then the herein case is covered by the exception to the general rule stated in the case

63 of Republic vs. Palacio: "Judgments against a State in cases where it has consented to be sued, generally operate merely to liquidate and establish plaintiff's claim in the absence of express provision; otherwise they cannot be enforced by processes of the law; and it is for the legislature to provide for the payment in such manner as sees fit." Having established that the compromise agreement was final and immediately executory, and in fact as already enforced, the respondent court was in error where it still entertained the supplemental complaint filed by the respondent-appellee for by then the respondent Court had no more jurisdiction over the subject matter. When a decision has become final and executory, the court no longer has the power and jurisdiction to alter, amend or revoke, and its only power thereof is to order its execution. After the perfection of an appeal, the trial court loses jurisdiction over its judgment and cannot vacate the same. WE find no error in the order of the respondent Court dated July 23, 1969. From the reading of the premises and provisions of the contract and agreement which was "formally confirmed and officially approved by the parties" in the compromise agreement later entered into by the same parties, subject only to the enumerated changes and/or modifications, it is obvious that the contracting parties envisioned a stage by stage construction (on the part of the respondent-appellee) and payment (on the part of the defendant-appellant). Sub-paragraph B of paragraph 1 of the Compromise Agreement, to wit: "B. That immediately upon final approval hereof by this Honorable Court, the plaintiff contractor will submit and file in favor of Pasay City Government a new performance bond in the amount required by pertinent law, rules and regulations, in proportion to the remaining value or cost of the unfinished work of the construction as per approved plans and specifications . . ." Read together with the stage-by-stage construction and payment approach, would inevitably lead to the conclusion that the parties to the compromise contemplated a divisible obligation necessitating therefore a performance bond "in proportion to" the uncompleted work. What is crucial in sub-paragraph B of paragraph 1 of the compromise agreement are the words "in proportion." If the parties really intended the legal rate of 20% performance bond to refer to the whole unfinished work, then the provision should have required the plaintiff contractor to submit and file a new performance bond to cover the remaining value/cost of the unfinished work of the construction. Using the words in proportion then significantly changed the meaning of the paragraph to ultimately mean a performance bond equal to 20% of the next stage of work to be done.

64 And, We note that in the Contract and Agreement, the respondentappellee was allowed to file a performance bond of P222,250.00 which is but 5% of the total bid of P4,914,500.80. A security bond was likewise filed with an amount of P97,290.00. The sum total of bond then filed was P320,540.00 which is just 6.5% of the total bid. It is rather curious why all of a sudden the petitioners-appellants are insisting on a 20% performance bond of the entire unfinished work when they were quite content with a bond just 5% of the entire work. For Us to allow the petitioners-appellants to adamantly stick to the 20% performance bond would be tantamount to allowing them to evade their obligation in the compromise agreement. This cannot be allowed. The bond of a contractor for a public work should not be extended beyond the reasonable intent as gathered from the purpose and language of the instrument construed in connection with the proposals, plans and specifications, and contract. The premium of the bond will be sizeable and will eat up the profit of the contractor, who is faced with the fluctuation of prices of materials due to inflation and devaluation. Right now, many contractors cannot proceed with the implementation of their contracts because of the extraordinary rise in cost of materials and labor. No contractor would be willing to bid for public works contracts under the oppressive interpretation by petitioners-appellants. Again, the respondent Court was correct in ruling that the submission of the bond was not a condition precedent to the payment of P613,096.00 to the plaintiff. Nowhere in the Contact and Agreement nor in the Compromise Agreement could be found the fact that payment by the petitioner-appellants of the amount of P613,096.00 was dependent upon the submission by the respondent-appellee of the performance bond. It cannot be argued that reciprocal obligation was created in the Compromise Agreement, for the obligation to pay on the part of the petitioners-appellants was established several years ago when the respondents-appellee finished some of the stages of construction. And, this argument is already moot and academic, for the amount of P613,096.00 has already been collected through execution and garnishment upon the funds of Pasay City with the Philippine National Bank. Inasmuch as the parties in the herein case have agreed in the Compromise Agreement, to wit: "3. That within a similar period the defendant Pasay City Government shall pay and remit to plaintiff contractor an amount equivalent to three (3%) percent of the above mentioned amount of SIX HUNDRED THIRTEEN NINETY-SIX PESOS (P613,096.00), for and as adverse attorney's fees in this case; . . . " Municipality of Paoay, Ilocos Norte v. Manaois Facts: Teodoro Manaois having obtained a judgment against the municipality of Paoay, Ilocos Norte in civil case No. 8026 of the Court of First Instance of

65 Pangasinan, Judge De Guzman of said province issued a writ of execution against the defendant municipality. In compliance with said writ the Provincial Sheriff of Ilocos Norte levied upon and attached certain properties. On July 26, 1949, the Provincial Fiscal of Ilocos Norte in representation of the municipality of Paoay, filed a petition in the Court of First Instance of Pangasinan asking for the dissolution of that attachment of levy. Judge De Guzman in his order of October 6, 1949, denied the petition for the dissolution of the attachment; a MR also denied. Instead of appealing from that order the municipality of Paoay has filed the present petition for certiorari with the writ of preliminary injunction, asking that the order of respondent Judge dated October 6, 1946, be reversed and that the attachment of the properties of the municipality be dissolved. Issue: WON properties may be levied. There can be no question that properties for public use held by municipal corporation are not subject to levy and execution. The authorities are unanimous on this point. This Court in the case of Viuda de Tantoco vs. Municipal Council of Iloilo (49 Phil., 52) after citing Manresa, the works of McQuillin and Dillon on Municipal Corporations, and Corpus Juris, held that properties for public use like trucks used for sprinkling the streets, police patrol wagons, police stations, public markets, together with the land on which they stand are exempt from execution. Even public revenues of municipal corporations destined for the expenses of the municipality are also exempt from the execution. The reason behind this exemption extended to properties for public use, and public municipal revenues is that they are held in trust for the people, intended and used for the accomplishment of the purposes for which municipal corporations are created, and that to subject said properties and public funds to execution would materially impede, even defeat and in some instances destroy said purpose. Property however, which is patrimonial and which is held by municipality in its proprietary capacity is treated by great weight of authority as the private asset of the town and may be levied upon and sold under an ordinary execution. The same rule applies to municipal funds derived from patrimonial properties, for instance, it has been held that shares of stocks held by municipal corporations are subject to execution. If this is true, with more reason should income or revenue coming from these shares of stock, in the form of interest or dividends, be subject to execution? The fishery or municipal waters of the town of Paoay, Ilocos Norte, which had been parceled out or divided into lots and later let out to private persons for fishing purposes at an annual rental are clearly not subject to execution. In the first place, they do not belong to the municipality. They may well be regarded as property of State. What the municipality of Paoay hold is merely what may be considered the usufruct or the right to use said municipal waters, granted to it by

66 section 2321 of the Revised Administrative Code. Grant of fishery. A municipal council shall have authority, for purposes of profit, to grant the exclusive privileges of fishery or right to conduct a fish-breeding ground within any definite portion, or area, of the municipal waters. "Municipal waters", as herein used, include not only streams, lakes, and tidal waters, include within the municipality, not being the subject of private ownership, but also marine waters include between two lines drawn perpendicular to the general coast line from points where the boundary lines of the municipality touch the sea at high tide, and third line parallel with the general coast line and distant from it three marine leagues. Where two municipalities are so situated on opposite shores that there is less than six marine leagues of marine waters between them the third line shall be a line equally distant from the opposite shores of the respective municipalities. Now, is this particular usufruct of the municipality of Paoay over its municipal waters, subject to execution to enforce a judgment against the town? We are not prepared to answer this question in the affirmative because there are powerful reasons against its propriety and legality. In the first place, it is not a usufruct based on or derived from an inherent right of the town. It is based merely on a grant, more or less temporary, made by the Legislature. Take the right of fishery over the sea or marine waters bordering a certain municipality. These marine waters are ordinarily for public use, open to navigation and fishing by the people. The Legislature thru section 2321 of the Administrative Code, as already stated, saw fit to grant the usufruct of said marine waters for fishery purpose, to the towns bordering said waters. Said towns have no visited right over said marine waters. The Legislature, for reasons it may deem valid or as a matter of public policy, may at any time, repeal or modify said section 2321 and revoke this grant to coastal towns and open these marine waters to the public. Or the Legislature may grant the usufruct or right of fishery to the provinces concerned so that said provinces may operate or administer them by leasing them to private parties. All this only goes to prove that the municipality of Paoay is not holding this usufruct or right of fishery in a permanent or absolute manner so as to enable it to dispose of it or to allow it to be taken away from it as its property through execution. Another reason against subjecting this usufruct or right of fishery over municipal waters, to execution, is that, if this were to be allowed and this right sold on execution, the buyer would immediately step into the shoes of the judgment-debtor municipality. Such buyer presumably buys only the right of the municipality. He does not buy the fishery itself nor the municipal waters because that belongs to the State. All that the buyer might do would be to let out or rent to private individuals the fishery rights over the lots into which the municipal waters had been parceled out or divided, and that is, after public

67 bidding. This, he must do because that is the only right granted to the municipality by the Legislature, a right to be exercised in the manner provided by law, namely, to rent said fishery lots after public bidding. (See sec. 2323 of the Administrative Code in connection with sec. 2319 of the same Code.) Then, we shall have a situation rather anomalous to be sure, of a private individual conducting public bidding, renting to the highest bidders fishery lots over municipal waters which are property of the State, and appropriating the results to his own private use. The impropriety, if not illegality, of such a contingency is readily apparent. But that is not all. The situation imagined implies the deprivation of the municipal corporation of a source of a substantial income, expressly provide by law. Because of all this, we hold that the right or usufruct of the town of Paoay over its municipal waters, particularly, the forty odd fishery lots included in the attachment by the Sheriff, is not subject to execution. But we hold that the revenue or income coming from the renting of these fishery lots is certainly subject to execution. It may be profitable, if not necessary, to distinguish this kind of revenue from that derived from taxes, municipal licenses and market fees are provided for and imposed by the law, they are intended primarily and exclusively for the purpose of financing the governmental activities and functions of municipal corporations. In fact, the real estate taxes collected by a municipality do not all go to it. A portion thereof goes to the province, in the proportion provided for by law. For the same reason, municipal markets are established not only to provide a place where the people may sell and buy commodities but also to provide public revenues for the municipality. To many towns, market fees constitute the bulk of their assets and incomes. These revenues are fixed and definite, so much so that the annual appropriations for the expenses of the municipalities are based on these revenues. Not so with the income derived form fisheries. In the first place, the usufruct over municipal waters was granted by the Legislature merely to help or bolster up the economy of municipal government. There are many towns in the Philippines, specially in the interior, which do not have municipal waters for fishery purpose and yet without much source of revenue, they can function, which goes to prove that this kind of revenue is not indispensable for the performance of governmental functions. In the second place, the amount of this income is far from definite or fixed. It depends upon the amounts which prospective bidders or lessees are willing to pay. If fishing on these marine water, lakes and rivers in the municipality is good, the bids would be high and the income would be substantial. If the fish in these waters is depleted or, if for some reasons or another, fishing is not profitable, then the income would be greatly reduced. In other words, to many municipalities engaged in this business of letting out municipal waters for fishing purposes, it is a sort of sideline, so that even for fishing purposes, it is sort of sideline, so

68 that even without it the municipality may still continue functioning and perform its essential duties as such municipal corporations. We call this activity of municipalities in renting municipal waters for fishing purposes as a business for the reasons that the law itself (Sec. 2321, Administrative Code already mentioned and quoted) allowed said municipalities to engage in it for profit. And it is but just that a town so engaged should pay and liquidate obligations contracted in connection with said fishing business, with the income derived therefrom.

Power of Eminent Domain

a. Moday v. CA Facts: The Sangguniang Bayan of the Municipality of Bunawan in Agusan del Sur passed R 43-89, "Authorizing the Municipal Mayor to Initiate the Petition for Expropriation of a One (1) Hectare Portion of Lot No. 6138-Pls-4 Along the National Highway Owned by Percival Moday for the Site of Bunawan Farmers Center and Other Government Sports Facilities." R 43-89 was approved by then Municipal Mayor Anuncio C. Bustillo and transmitted to the Sangguniang Panlalawigan for its approval. The Sangguniang Panlalawigan disapproved said Resolution and returned it with the comment that "expropriation is unnecessary considering that there are still available lots in Bunawan for the establishment of the government center." Bunawan filed a petition for Eminent Domain against petitioner Percival Moday, as well as his parents before the RTC at Prosperidad, Agusan del Sur. The municipality filed a Motion to Take or Enter Upon the Possession of Subject Matter of This Case stating that it had already deposited with the municipal treasurer the necessary amount in accordance with Section 2, Rule 67 of the Revised Rules of Court and that it would be in the government's best interest for public respondent to be allowed to take possession of the property. RTC: granted respondent municipality's motion to take possession of the land, held that the Sangguniang Panlalawigan's failure to declare the resolution invalid leaves it effective. It added that the duty of the Sangguniang Panlalawigan is merely to review the ordinances and resolutions passed by the Sangguniang Bayan under Section 208 (1) of B.P. Blg. 337, old LGC and that the exercise of eminent domain is not one of the two acts enumerated in Section 19 thereof requiring the approval of the Sangguniang Panlalawigan. MR: denied. CA: the public purpose for the expropriation is clear from R 43-89 and that since the Sangguniang Panlalawigan of Agusan del Sur did not declare R 4389 invalid, expropriation of petitioners' property could proceed. MR: denied. Meanwhile, the Municipality of Bunawan had erected three buildings on the subject property: the Association of Barangay Councils (ABC) Hall, the

69 Municipal Motorpool, both wooden structures, and the Bunawan Municipal Gymnasium, which is made of concrete. Pet: seeks the reversal of the decision and resolution of the CA and a declaration that R 43-89 of the Municipality of Bunawan is null and void. Court issued TRO enjoining and restraining public respondent Judge from enforcing her order and respondent municipality from using and occupying all the buildings constructed and from further constructing any building on the land subject of this petition. Acting on petitioners' Omnibus Motion for Enforcement of Restraining Order and for Contempt, the Court issued a Resolution citing incumbent municipal mayor Anuncio C. Bustillo for contempt, ordering him to pay the fine and to demolish the "blocktiendas" which were built in violation of the restraining order. Bustillo paid the fine and manifested that he lost in the election. The incumbent Mayor Leonardo Barrios, filed a Manifestation, Motion to Resolve "Urgent Motion for Immediate Dissolution of the Temporary Restraining Order" and Memorandum on June 11, 1996 for the Municipality of Bunawan. Pet: contend that the CA erred in upholding the legality of the condemnation proceedings initiated by the municipality. According to petitioners, the expropriation was politically motivated and R 43-89 was correctly disapproved by the Sangguniang Panlalawigan, there being other municipal properties available for the purpose. Petitioners also pray that the former Mayor Bustillo be ordered to pay damages for insisting on the enforcement of a void municipal resolution. CA: declared that the Sangguniang Panlalawigan's reason for disapproving the resolution "could be baseless, because it failed to point out which and where are those available lots.'" Respondent court also concluded that since the Sangguniang Panlalawigan did not declare the municipal board's resolution as invalid, expropriation of petitioners' property could proceed. Issue: WON a municipality may expropriate private property by virtue of a municipal resolution which was disapproved by the Sangguniang Panlalawigan. NO. Eminent domain, the power which the Municipality of Bunawan exercised in the instant case, is a fundamental State power that is inseparable from sovereignty. It is government's right to appropriate, in the nature of a compulsory sale to the State, private property for public use or purpose. Inherently possessed by the national legislature, the power of eminent domain may be validly delegated to local governments, other public entities and public utilities. For the taking of private property by the government to be valid, the taking must be for public use and there must be just compensation. The Municipality of Bunawan's power to exercise the right of eminent domain is not disputed as it is expressly provided for in Batas Pambansa Blg. 337, the LGC 18 in force at the time expropriation proceedings were initiated. Section 9 of said law states: A LGU may, through its head and acting pursuant to a

70 resolution of its sanggunian, exercise the right of eminent domain and institute condemnation proceedings for public use or purpose. What petitioners question is the lack of authority of the municipality to exercise this right since the Sangguniang Panlalawigan disapproved R 43-89. Section 153 of B.P. Blg. 337: Sangguniang Panlalawigan Review. (1) Within thirty days after receiving copies of approved ordinances, resolutions and executive orders promulgated by the municipal mayor, the sangguniang panlalawigan shall examine the documents or transmit them to the provincial attorney, or if there be none, to the provincial fiscal, who shall examine them promptly and inform the sangguniang panlalawigan in writing of any defect or impropriety which he may discover therein and make such comments or recommendations as shall appear to him proper. (2) If the sangguniang panlalawigan shall find that any municipal ordinance, resolution or executive order is beyond the power conferred upon the sangguniang bayan or the mayor, it shall declare such ordinance, resolution or executive order invalid in whole or in part, entering its actions upon the minutes and advising the proper municipal authorities thereof. The effect of such an action shall be to annul the ordinance, resolution or executive order in question in whole or in part. The action of the sangguniang panlalawigan shall be final. The Sangguniang Panlalawigan's disapproval of Municipal R 43-89 is an infirm action which does not render said resolution null and void. The law, as expressed in Section 153 of B.P. Blg. 337, grants the Sangguniang Panlalawigan the power to declare a municipal resolution invalid on the sole ground that it is beyond the power of the Sangguniang Bayan or the Mayor to issue. Although pertaining to a similar provision of law but different factual milieu then obtaining, the Court's pronouncements in Velazco v. Blas, where we cited significant early jurisprudence, are applicable to the case at bar. The only ground upon which a provincial board may declare any municipal resolution, ordinance, or order invalid is when such resolution, ordinance, or order is "beyond the powers conferred upon the council or president making the same." Absolutely no other ground is recognized by the law. A strictly legal question is before the provincial board in its consideration of a municipal resolution, ordinance, or order. The provincial (board's) disapproval of any resolution, ordinance, or order must be premised specifically upon the fact that such resolution, ordinance, or order is outside the scope of the legal powers conferred by law. If a provincial board passes these limits, it usurps the legislative function of the municipal council or president. Such has been the consistent course of executive authority. Sangguniang Panlalawigan was without the authority to disapprove Municipal R 43-89 for the Municipality of Bunawan clearly has the

71 power to exercise the right of eminent domain and its Sangguniang Bayan the capacity to promulgate said resolution, pursuant to the earlier-quoted Section 9 of B.P. Blg. 337. Perforce, it follows that Resolution No. 43-89 is valid and binding and could be used as lawful authority to petition for the condemnation of petitioners' property. Accusation of political oppression: it is alleged that Percival Moday incurred the ire of then Mayor Bustillo when he refused to support the latter's candidacy for mayor in previous elections. Petitioners claim that then incumbent Mayor C. Bustillo used the expropriation to retaliate by expropriating their land even if there were other properties belonging to the municipality and available for the purpose. Specifically, they allege that the municipality owns a vacant sevenhectare property adjacent to petitioners' land, evidenced by a sketch plan. The limitations on the power of eminent domain are that the use must be public, compensation must be made and due process of law must be observed. The Supreme Court, taking cognizance of such issues as the adequacy of compensation, necessity of the taking and the public use character or the purpose of the taking, 23 has ruled that the necessity of exercising eminent domain must be genuine and of a public character. Government may not capriciously choose what private property should be taken. After a careful study of the records of the case, however, we find no evidentiary support for petitioners' allegations. The uncertified photocopy of the sketch plan does not conclusively prove that the municipality does own vacant land adjacent to petitioners' property suited to the purpose of the expropriation. In the questioned decision, respondent appellate court similarly held that the pleadings and documents on record have not pointed out any of respondent municipality's "other available properties available for the same purpose." The accusations of political reprisal are likewise unsupported by competent evidence. Consequently, the Court holds that petitioners' demand that the former municipal mayor be personally liable for damages is without basis. Camarines Sur v. CA Facts: The Sangguniang Panlalawigan of the Province of Camsur passed Resolution No. 129, Series of 1988, authorizing the Provincial Governor to purchase or expropriate property contiguous to the provincial capitol site, in order to establish a pilot farm for non-food and non-traditional agricultural crops and a housing project for provincial government employees. Camsur filed expropriation cases against the San Joaquins as well as a motion for the issuance of writ of possession. The SJs failed to appear at the hearing of the motion. They moved to dismiss the complaints on the ground of inadequacy of the price offered for their property.

72 RTC: denied the motion to dismiss and authorized the Camsur to take possession of the property upon the deposit with the Clerk of Court of the amount of P5,714.00, the amount provisionally fixed by the trial court to answer for damages that private respondents may suffer in the event that the expropriation cases do not prosper. Issued a writ of possession. The San Joaquins filed a motion for relief from the order and a motion to admit an amended motion to dismiss. Both motions were denied. CA: SJs asked: (a) that the Res. be declared null and void; (b) that the complaints for expropriation be dismissed; and (c) that the order denying the motion to dismiss and allowing Camsur to take possession of the property subject of the expropriation and the order denying the motion to admit the amended motion to dismiss, be set aside. They also asked that an order be issued to restrain the trial court from enforcing the writ of possession, and thereafter to issue a writ of injunction. Camsur: claimed that it has the authority to initiate the expropriation proceedings under Sections 4 and 7 of LGC (B.P. Blg. 337) and that the expropriations are for a public purpose. SG: under Section 9 of the LGC (B.P. Blg. 337), there was no need for the approval by the Office of the President of the exercise by the Sangguniang Panlalawigan of the right of eminent domain. Expressed the view that the Province of Camsur must first secure the approval of the Department of Agrarian Reform of the plan to expropriate the lands of petitioners for use as a housing project. CA: set aside the order of the trial court, allowing the Province of Camsur to take possession of private respondents' lands and the order denying the admission of the amended motion to dismiss. It also ordered the trial court to suspend the expropriation proceedings until after Camsur shall have submitted the requisite approval of the Department of Agrarian Reform to convert the classification of the property of the private respondents from agricultural to non-agricultural land. Camsur: its exercise of the power of eminent domain cannot be restricted by the provisions of the Comprehensive Agrarian Reform Law (R.A. No. 6657), particularly Section 65 thereof, which requires the approval of the Department of Agrarian Reform before a parcel of land can be reclassified from an agricultural to a non-agricultural land. CA, following the recommendation of the Solicitor General, held that the Province of Camsur must comply with the provision of Section 65 of the Comprehensive Agrarian Reform Law and must first secure the approval of the Department of Agrarian Reform of the plan to expropriate the lands of the SJs Issue: WON the expropriation of agricultural lands by LGUs is subject, to the prior approval of the Secretary of the Agrarian Reform, as the implementator of the agrarian reform program. When the CA ordered the suspension of the proceedings until the Province of Camsur shall have obtained the authority of the Department of Agrarian Reform to change the classification of the

73 lands sought to be expropriated from agricultural to non-agricultural use, it assumed that the resolution is valid and that the expropriation is for a public purpose or public use. Modernly, there has been a shift from the literal to a broader interpretation of "public purpose" or "public use" for which the power of eminent domain may be exercised. The old concept was that the condemned property must actually be used by the general public (e.g. roads, bridges, public plazas, etc.) before the taking thereof could satisfy the constitutional requirement of "public use". Under the new concept, "public use" means public advantage, convenience or benefit, which tends to contribute to the general welfare and the prosperity of the whole community, like a resort complex for tourists or housing project (Heirs of Juancho Ardano v. Reyes, 125 SCRA 220 [1983]; Sumulong v. Guerrero, 154 SC.RA 461 [1987]). The expropriation of the property authorized by the questioned resolution is for a public purpose. The establishment of a pilot development center would inure to the direct benefit and advantage of the people of the Province of Camsur. Once operational, the center would make available to the community invaluable information and technology on agriculture, fishery and the cottage industry. Ultimately, the livelihood of the farmers, fishermen and craftsmen would be enhanced.. The housing project also satisfies the public purpose requirement of the Constitution. As held in Sumulong v. Guerrero, 154 SCRA 461, "Housing is a basic human need. Shortage in housing is a matter of state concern since it directly and significantly affects public health, safety, the environment and in sum the general welfare." The Solicitor General denigrated the power to expropriate by the Province of Camsur by stressing the fact that LGUs exercise such power only by delegation. (Comment, pp. 14-15; Rollo, pp. 128-129) Heirs of Juancho Ardana v. Reyes: Court said that there was "no need under the facts of this petition to rule on whether the public purpose is superior or inferior to another purpose or engage in a balancing of competing public interest," it upheld the expropriation after noting that petitioners had failed to overcome the showing that the taking of 8,970 square meters formed part of the resort complex. A fair and reasonable reading of the decision is that this Court viewed the power of expropriation as superior to the power to distribute lands under the land reform program. It is true that LGUs have no inherent power of eminent domain and can exercise it only when expressly authorized by the legislature. It is also true that in delegating the power to expropriate, the legislature may retain certain control or impose certain restraints on the exercise thereof by the local governments. While such delegated power may be a limited authority, it is complete within its limits. Moreover, the limitations on the exercise of the delegated power must be clearly

74 expressed, either in the law conferring the power or in other legislations. Resolution No. 129, Series of 1988, was promulgated pursuant to Section 9 of B.P. Blg. 337, the LGC, which provides: A LGU may, through its head and acting pursuant to a resolution of its sanggunian exercise the right of eminent domain and institute condemnation proceedings for public use or purpose. Section 9 of B.P. Blg. 337 does not intimate in the least that local government, units must first secure the approval of the Department of Land Reform for the conversion of lands from agricultural to non-agricultural use, before they can institute the necessary expropriation proceedings. Likewise, there is no provision in the Comprehensive Agrarian Reform Law which expressly subjects the expropriation of agricultural lands by LGUs to the control of the Department of Agrarian Reform. The closest provision of law that the CA could cite to justify the intervention of the Department of Agrarian Reform in expropriation matters is Section 65 of the Comprehensive Agrarian Reform Law, which reads: Sec. 65. Conversion of Lands. After the lapse of five (5) years from its award, when the land ceases to be economically feasible and sound for, agricultural purposes, or the locality has become urbanized and the land will have a greater economic value for residential, commercial or industrial purposes, the DAR, upon application of the beneficiary or the landowner, with due notice to the affected parties, and subject to existing laws, may authorize the reclassification or conversion of the land and its disposition: Provided, That the beneficiary shall have fully paid his obligation. The opening, adverbial phrase of the provision sends signals that it applies to lands previously placed under the agrarian reform program as it speaks of "the lapse of five (5) years from its award." The rules on conversion of agricultural lands found in Section 4 (k) and 5 (1) of Executive Order No. 129-A, Series of 1987, cannot be the source of the authority of the Department of Agrarian Reform to determine the suitability of a parcel of agricultural land for the purpose to which it would be devoted by the expropriating authority. While those rules vest on the Department of Agrarian Reform the exclusive authority to approve or disapprove conversions of agricultural lands for residential, commercial or industrial uses, such authority is limited to the applications for reclassification submitted by the land owners or tenant beneficiaries. Statutes conferring the power of eminent domain to political subdivisions cannot be broadened or constricted by implication. To sustain the CA would mean that the LGUs can no longer expropriate agricultural lands needed for the construction of roads, bridges, schools, hospitals, etc, without first applying for conversion of the use of the lands with the Department of Agrarian Reform, because all of

75 these projects would naturally involve a change in the land use. In effect, it would then be the Department of Agrarian Reform to scrutinize whether the expropriation is for a public purpose or public use. Ordinarily, it is the legislative branch of the LGU that shall determine whether the use of the property sought to be expropriated shall be public, the same being an expression of legislative policy. The courts defer to such legislative determination and will intervene only when a particular undertaking has no real or substantial relation to the public use. There is also an ancient rule that restrictive statutes, no matter how broad their terms are, do not embrace the sovereign unless the sovereign is specially mentioned as subject thereto. The Republic of the Philippines, as sovereign, or its political subdivisions, as holders of delegated sovereign powers, cannot be bound by provisions of law couched in general term.

Brgy. San Roque, Talisay, Cebu vs Heirs of Franco Pastor Facts: In 1997, Brgy. San Roque filed for an expropriation suit before the MTC of Talisay. The MTC denied the suit because apparently under BP 129, MTCs do not have jurisdiction over expropriation cases as it is the RTCs that are lodged with the power to try such cases. So Brgy. San Roque filed it before RTC Talisay but then Judge Pastor denied the suit arguing that the action for eminent domain affected title to real property; hence, the value of the property to be expropriated would determine whether the case should be filed before the MTC or the RTC. Concluding that the action should have been filed before the MTC since the value of the subject property was less than P20,000. ISSUE: Whether or not the RTC should take cognizance of the expropriation case. HELD: Yes. Under Section 19 (1) of BP 129, which provides that RTCs shall exercise exclusive original jurisdiction over all civil actions in which the subject of the litigation is incapable of pecuniary estimation; . . . . . The present action involves the exercise of the right to eminent domain, and that such right is incapable of pecuniary estimation. What are the two phases of expropriation cases? The first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its exercise in the context of the facts involved in the suit. It ends with an order, if not of

76 dismissal of the action, of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, for the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the filing of the complaint. An order of dismissal, if this be ordained, would be a final one, of course, since it finally disposes of the action and leaves nothing more to be done by the Court on the merits. So, too, would an order of condemnation be a final one, for thereafter as the Rules expressly state, in the proceedings before the Trial Court, no objection to the exercise of the right of condemnation (or the propriety thereof) shall be filed or heard. The second phase of the eminent domain action is concerned with the determination by the court of the just compensation for the property sought to be taken. This is done by the Court with the assistance of not more than three (3) commissioners. The order fixing the just compensation on the basis of the evidence before, and findings of, the commissioners would be final, too. It would finally dispose of the second stage of the suit, and leave nothing more to be done by the Court regarding the issue. . . . It should be stressed that the primary consideration in an expropriation suit is whether the government or any of its instrumentalities has complied with the requisites for the taking of private property. Hence, the courts determine the authority of the government entity, the necessity of the expropriation, and the observance of due process. In the main, the subject of an expropriation suit is the governments exercise of eminent domain, a matter that is incapable of pecuniary estimation. Filstream International Inc. [GR 125218 and GR 128077. 23 January 1998] Facts: Filstream International, Inc., is the registered owner of the properties consisting of adjacent parcels of land situated in Antonio Rivera Street, Tondo II, Manila, with a total area of 3,571.10 square meters (TCT 203937, 203936, 169198, 169199, 169200 and 169202 of the Register of Deeds of Manila). On 7 January 1993, Filstream filed an ejectment suit before the Metropolitan Trial Court (MTC) of Manila (Branch 15, Civil Case 140817-CV) against the occupants of the parcels of land (Orlando Malit, Antonio Caguiat, Alicia Cabrera, Armando Lachica, Jacinto Caguiat, Gloria Antonio, Elizalde Navarra, Dolores Fuentes, Susana Roy, Antonio Ibaez, Benigno Basilio, Luceria Dematulac, Florencia Gomez, Lazaro Gomez, Jose Gomez, Venancio Manaloto, Cristino Umali, Demetria Gatus, Priscilla Malong, Domingo Aguila, Ramon San Agustin, Julian Ferrer, Jr., Francisco Galang, Florentino Maliwat, Severina Villar, Trinidad Naguit, Jose Naguit, Fortunato Agustin Cabrera, Gaudencio Intal, Danilo David, Enrique David, Vicente De Guzman, Policarpio Lumba, Belen Palma, Elen Somvillo, Leonardo Manicad, Opreng Miclat, Benita Mata, Gregorio Lopez, Marcelina

77 Sapno, Jesus Mercado, and Calixto Gomez) on the grounds of termination of the lease contract and non-payment of rentals. Judgment was rendered by the MTC on September 14, 1993 ordering private respondents to vacate the premises and pay back rentals to Filstream. Not satisfied, malit, et. al. appealed the decision to the Regional Trial Court (RTC) of Manila (Branch 4, Civil Case 93-68130) which in turn affirmed the decision of the MTC. Still not content, Malit, et. al. proceeded to the Court of Appeals via a petition for review (CA-GR SP 33714). The result however remained the same as the appellate court affirmed the decision of the RTC in its decision dated 25 August 1994. Thereafter, no further action was taken by Malit, et. al., as a result of which the decision in the ejectment suit became final and executory. However, during the pendency of the ejectment proceedings Malit, et. al. filed on 25 May 1993, a complaint for Annulment of Deed of Exchange against Filstream before the RTC of Manila (Branch 43, Civil Case 93-66059). It was at this stage that City of Manila came into the picture when the city government approved Ordinance 7813 on 5 November 1993, authorizing Mayor Alfredo S. Lim to initiate the acquisition by negotiation, expropriation, purchase, or other legal means certain parcels of land which formed part of Filstream's properties then occupied by Malit, et. al. Subsequently, the City of Manila approved Ordinance 7855 declaring the expropriation of certain parcels of land situated along Antonio Rivera and Fernando Ma. Guerrero streets in Tondo, Manila which were owned by Mr. Enrique Quijano Gutierrez, Filstream's predecessor-in-interest. The said properties were to be sold and distributed to qualified tenants of the area pursuant to the Land Use Development Program of the City of Manila. On 23 May 1994, the City of Manila filed a complaint for eminent domain before the RTC of Manila (Branch 42, Civil Case 94-70560), seeking to expropriate the parcels of land owned by Filstream which are situated at Antonio Rivera Street, Tondo II, Manila. Pursuant to the complaint filed by the City of Manila, the trial court issued a Writ of Possession in favor of the former which ordered the transfer of possession over the disputed premises to the City of Manila. Filstream filed a motion to dismiss the complaint for eminent domain as well as a motion to quash the writ of possession. On 30 September 1994, the RTC of Manila issued an order denying Filstream's motion to dismiss and the motion to quash the Writ of Possession. Filstream filed a motion for reconsideration as well as a supplemental motion for reconsideration seeking the reversal of the order but the same were denied. Still, Filstream filed a subsequent motion to be allowed to file a second motion for reconsideration but it was also denied. Aggrieved, Filstream filed on 31 March 1996, a Petition for Certiorari with the Court of Appeals (CAGR SP 36904) seeking to set aside the RTC order. On 18 March 1996, the appellate court dismissed the petition. Filsteream filed a motion for reconsideration and attached clearer copies of the pertinent documents and papers pursuant to Section 2(a), Rule 6 of the Revised Internal Rules of the Court of Appeals. But on 20 May 1996, the appellate court issued a resolution denying the motion as petitioner failed to submit

78 clearer and readable copies of the pleadings. This prompted Filstream to proceed to the Supreme Court by filing a petition for review on certiorari. Meanwhile, owing to the finality of the decision in the ejectment suit (Civil Case 140817-CV), the MTC of Manila, Branch 15, upon motion of Filstream, issued a Writ of Execution as well as a Notice to Vacate the disputed premises. Malit, et. al. filed a Motion to Recall/Quash the Writ of Execution and Notice to Vacate alleging the existence of a supervening event in that the properties subject of the dispute have already been ordered condemned in an expropriation proceeding in favor of the City of Manila for the benefit of the qualified occupants thereof, thus execution shall be stayed. For its part, the City of Manila filed on 13 March 1996, a motion for intervention with prayer to stay/quash the writ of execution on the ground that it is the present possessor of the property subject of execution. In its order dated 14 March 1996, the MTC of Manila denied Malit, et. al.'s motion as it found the allegations therein bereft of merit and upheld the issuance of the Writ of Execution and Notice to Vacate in Filstream's favor. Subsequently, the trial court also denied the motion filed by the City of Manila. On 22 April 1996, the trial court issued an order commanding the demolition of the structure erected on the disputed premises. To avert the demolition, Malit, et. al. filed before the RTC of Manila, (Branch 14, Civil Case 96-78098) a Petition for Certiorari and Prohibition with prayer for the issuance of a temporary restraining order and preliminary injunction . On 15 May 1996, the City of Manila filed its Petition for Certiorari and Prohibition with prayer for the issuance of a temporary restraining order and preliminary injunction which was raffled to Branch 23 of the RTC of Manila (Civil Case 96-78382), seeking the reversal of the orders issued by the MTC of Manila, Branch 14. Thereafter, upon motion filed by the City of Manila, an order was issued by the RTC of Manila, Branch 10, ordering the consolidation of Civil Case 9678382 with Civil Case 96-78098 pending before Branch 14 of the RTC of Manila. Injunctions were issued. Filstream then filed a motion for reconsideration from the order of denial but pending resolution of this motion, it filed a motion for voluntary inhibition of the presiding judge of the RTC of Manila, Branch 14. The motion for inhibition was granted 25 and as a result, the consolidated cases (Civil Cases 96-78382 and 96-78098) were re-raffled to the RTC of Manila, Branch 33. During the proceedings before the RTC of Manila, Branch 33, Filstream moved for the dismissal of the consolidated cases (Civil Cases 96-78382 and 96-78098) for violation of Supreme Court Circular 04-94 (forum shopping) because the same parties, causes of action and subject matter involved therein have already been disposed of in the decision in the ejectment case (Civil Case 140817) which has already become final and executory prior to the filing of these consolidated cases. On 9 December 1996, the RTC of Manila, Branch 33 ordered the dismissal of Civil Cases 9678382 and 96-78098 due to forum shopping. Immediately thereafter,

79 Filstream filed an Ex-parte Motion for Issuance of an Alias Writ of Demolition and Ejectment and a supplemental motion to the same dated January 10 and 13, 1997, respectively, before the MTC of Manila, Branch 15, which promulgated the decision in the ejectment suit (Civil Case No. 140817-CV). 23 On January 1997, the court granted the motion and issued the corresponding writ of demolition. As a consequence of the dismissal of the consolidated cases, Malit, et. al. filed a Petition for Certiorari and Prohibition with prayer for the issuance of a temporary restraining order and preliminary injunction before the Court of Appeals (CA-GR SP 43101). At the conclusion of the hearing for the issuance of a writ of preliminary injunction, the Court of Appeals, in its resolution dated 18 February 1997, found merit in Malit, et. al.'s allegations in support of their application of the issuance of the writ and granted the same. Filstream filed a Petition for Certiorari under Rule 65. Issue: Whether there is violation of due process against Filstream in the manner its properties were expropriated and condemned in favor of the City of Manila. Held: That only a few could actually benefit from the expropriation of the property does not diminish its public use character. It is simply not possible to provide all at once land and shelter for all who need them. Corollary to the expanded notion of public use, expropriation is not anymore confined to vast tracts of land and landed estates. It is therefore of no moment that the land sought to be expropriated in this case is less than half a hectare only. Through the years, the public use requirement in eminent domain has evolved into a flexible concept, influenced by changing conditions. Public use now includes the broader notion of indirect public benefit or advantage, including in particular, urban land reform and housing. The Court takes judicial notice of the fact that urban land reform has become a paramount task in view of the acute shortage of decent housing in urban areas particularly in Metro Manila. Nevertheless, despite the existence of a serious dilemma, local government units are not given an unbridled authority when exercising their power of eminent domain in pursuit of solutions to these problems. The basic rules still have to be followed, which are as follows: "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 the laws; private property shall not be taken for public use without just compensation". Thus, the exercise by local government units of the power of eminent domain is not without limitations. Even Section 19 of the 1991 Local Government Code is very explicit that it must comply with the provisions of the Constitution and pertinent laws. Very clear from Sections 9 and 10 of Republic Act 7279 (Urban Development and Housing Act of 1992) are the

80 limitations with respect to the order of priority in acquiring private lands and in resorting to expropriation proceedings as a means to acquire the same. Private lands rank last in the order of priority for purposes of socialized housing. In the same vein, expropriation proceedings are to be resorted to only when the other modes of acquisition have been exhausted. Compliance with these conditions must be deemed mandatory because these are the only safeguards in securing the right of owners of private property to due process when their property is expropriated for public use. There is nothing in the records that would indicate that City of Manila complied with Section 9 and Section 10 of RA 7279. Filstream's properties were expropriated and ordered condemned in favor of the City of Manila sans any showing that resort to the acquisition of other lands listed under Section 9 of RA 7279 have proved futile. Evidently, there was a violation of Filstream's right to due process which must accordingly be rectified. Municipality of Paraaque v. V.M. Realty Corp Petitioner contends that a resolution approved by the municipal council for the purpose of initiating an expropriation case "substantially complies with the requirements of the law" 22 because the terms "ordinance" and "resolution" are synonymous for "the purpose of bestowing authority [on] the local government unit through its chief executive to initiate the expropriation proceedings in court in the exercise of the power of eminent domain The Court disagrees. The power of eminent domain is lodged in the legislative branch of government, which may delegate the exercise thereof to LGUs, other public entities and public utilities. 25 An LGU may therefore exercise the power to expropriate private property only when authorized by Congress and subject to the latter's control and restraints, imposed "through the law conferring the power or in other legislations." 26 In this case, Section 19 of RA 7160, which delegates to LGUs the power of eminent domain, also lays down the parameters for its exercise. It provides as follows: Sec. 19. Eminent Domain. A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided, however, That the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner, and such offer was not accepted: Provided, further, That the local government unit may immediately take possession of the property upon the filing of the expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated: Provided, finally, That, the amount to be paid for the expropriated property shall be determined by the proper court,

81 based on the fair market value at the time of the taking of the property. (Emphasis supplied) Thus, the following essential requisites must concur before an LGU can exercise the power of eminent domain: 1. An ordinance is enacted by the local legislative council authorizing the local chief executive, in behalf of the LGU, to exercise the power of eminent domain or pursue expropriation proceedings over a particular private property. 2. The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit of the poor and the landless. 3. There is payment of just compensation, as required under Section 9, Article III of the Constitution, and other pertinent laws. 4. A valid and definite offer has been previously made to the owner of the property sought to be expropriated, but said offer was not accepted. 27 In the case at bar, the local chief executive sought to exercise the power of eminent domain pursuant to a resolution of the municipal council. Thus, there was no compliance with the first requisite that the mayor be authorized through an ordinance. Petitioner cites Camarines Sur vs. Court of Appeals 28 to show that a resolution may suffice to support the exercise of eminent domain by an LGU. 29 This case, however, is not in point because the applicable law at that time was BP 337, 30 the previous Local Government Code, which had provided that a mere resolution would enable an LGU to exercise eminent domain. In contrast, RA 7160, 31 the present Local Government Code which was already in force when the Complaint for expropriation was filed, explicitly required an ordinance for this purpose. City of Cebu v. CA (1996) Facts: Merlita Cardeno owns a parcel of land at Sto. Nino, Alaska-Mambaling. The City of Cebu filed a complaint for eminent domain against her. The complaint was initiated through Res. # 404 and Ordinance No. 1418 of the SP Cebu authorizing the City Mayor to expropriate the said parcel of land for the purpose of providing a socialized housing project for the landless and low-income city residents. Private respondent filed MD the said complaint on the ground of lack of causes of action (COA). According to her, the allegations contained in pa.VII of the complaint, i.e., That repeated negotiations had been made with the defendant to have the aforementioned property purchased by the plaintiff through negotiated sale without resorting to expropriation, but said negotiation failed do not show compliance with one of the conditions precedent to the exercise of eminent domain as enunciated in RA 7160- x x x that the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner, and such offer was not accepted. According to the petitioner, in its Comment and Opposition, offer was made through her lawyer.

82 RTC: dismissed the complaint City has not complied with condition precedent; and where the ground for dismissal is that the complaint states no COA, its sufficiency can only be determined from the facts alleged in the complaint and no other CA: affirmed . The term negotiation may not be perceived to mean the valid and definite offer contemplated by law. SC Held: It states COA. 1) a complaint should not be dismissed upon a mere ambiguity for this is not ground for MD but rather for a bill of particulars; 2) the CA and the RTC made an inflexible application of the rule when the an examination of the Comment and Opposition leaves no doubt on the petitioners valid offer; 3) even on the face of the complaint, there is COA; d) a perusal of the copy of said ordinance shows that the fact of offer is categorically stated in therein. Petition is granted. AMOS P. FRANCIA JR., et. al. v. MUNICIPALITY OF MERCAUAYAN Facts: Before a local government unit may enter into the possession of the property sought to be expropriated, it must (1) file a complaint for expropriation sufficient in form and substance in the proper court and (2) deposit with the said court at least 15% of the property's fair market value based on its current tax declaration. The law does not make the determination of a public purpose a condition precedent to the issuance of a writ of possession. A Complaint for expropriation was filed by respondent Municipality of Meycauayan, Bulacan against the property of petitioners Amos Francia, Cecilia Francia and Benjamin Francia. The Municipality of Meycauayan seeks to use the said property in order to establish a common public terminal for all public utility vehicles. The Regional Trial Court (RTC) ruled that the expropriation was for public purpose and issued an Order of Expropriation. On appeal, the Court of Appeals partially granted the petition. It nullified the Order of Expropriation except with regard to the writ of possession. It upheld the decision of the RTC that in issuance of writ of possession, prior determination of the existence of public purpose is necessary. ISSUE: Whether or not prior determination of existence of public purpose is necessary before the issuance of writ of possession HELD: Petition denied.

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Section 19 of Republic Act 7160 provides: Section 19. Eminent Domain. A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws; Provided, however, That the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner, and that such offer was not accepted; Provided, further, That the local government unit may immediately take possession of the property upon the filing of the expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated; Provided, finally, That, the amount to be paid for the expropriated property shall be determined by the proper court, based on the fair market value at the time of the taking of the property. Before a local government unit may enter into the possession of the property sought to be expropriated, it must (1) file a complaint for expropriation sufficient in form and substance in the proper court and (2) deposit with the said court at least 15% of the property's fair market value based on its current tax declaration. The law does not make the determination of a public purpose a condition precedent to the issuance of a writ of possession. HEIRS OF JUANCHO ARDONA VS. REYES Facts: The Philippine Tourism Authority filed 4 complaints with the Court of First Instance of Cebu City for the expropriation of some 282 hectares of rolling land situated in barangay Alubog and Babag, Cebu City, under PTAs express authority to acquire by purchase, by negotiation or by condemnation proceedings any private land within and without the tourist zones for the purposes indicated in Section 5, paragraph B(2), of its Revised Charter (PD 564). The heirs of Juancho Ardona et. Al, ) filed their oppositions, and had a common allegation in that the taking is allegedly not impressed with public use under the Constitution; alleging that there is no specific constitutional provision authorizing the taking of private property for tourism purposes; that assuming that PTA has such power, the intended use cannot be paramount to the determination of the land as a land reform area; that limiting the amount of compensation by legislative fiat is constitutionally repugnant; and that since the land is under the land reform program, it is the Court of Agrarian Relations and not the Court of First Instance (CFI), that has jurisdiction over the expropriation cases. The Philippine Tourism Authority having deposited with the Philippine National Bank, Cebu City Branch, an amount equivalent to 10% of the value of the properties pursuant to Presidential Decree No. 1533, the lower court issued separate orders

84 authorizing PTA to take immediate possession of the premises and directing the issuance of writs of possession. The Heirs of Ardona, et. al. then filed a petition for certiorari with preliminary injunction before the Supreme Court. Issue: Whether the expropriation of parcels of land for the purpose of constructing a sports complex by the Philippine Tourism Authority be considered taking for public use. Held: The states power of eminent domain extends to the expropriation of land for tourism purposes although this specific objective is not expressed in the constitution. The policy objectives of the framers can be expressed only in general terms such as social justice, local autonomy, conservation and development of the national patrimony public interest, and general welfare, among others. The programs to achieve these objectives vary from time to time and according to place. To freeze specific programs like tourism into express provisions would make the constitution more prolix than bulky code and require of the framers a prescience beyond Delphic proportions. The particular mention in the constitution of agrarian reform and transfer of utilities and other private enterprises to public ownership merely underscores the magnitude of the problems sought to be remedied by this programs. They do not preclude nor limit the exercise of the power of eminent domain for the purposes like tourism and other development program Hagonoy Market Vendors Assn v. Municipality of Hagonoy Facts: On October 1, 1996, the Sangguniang Bayan of Hagonoy, Bulacan, enacted an ordinance, Kautusan Blg. 28, which increased the stall rentals of the market vendors in Hagonoy. Article 3 provided that it shall take effect upon approval. The subject ordinance was posted from November 4-25, 1996. In the last week of November, 1997, the petitioners members were personally given copies of the approved Ordinance and were informed that it shall be enforced in January, 1998. On December 8, 1997, the petitioners President filed an appeal with the Secretary of Justice assailing the constitutionality of the tax ordinance. Petitioner claimed it was unaware of the posting of the ordinance. Respondent opposed the appeal. It contended that the ordinance took effect on October 6, 1996 and that the ordinance, as approved, was posted as required by law. Hence, it was pointed out that petitioners appeal, made over a year later, was already time-barred. The Secretary of Justice dismissed the appeal on the ground that it was filed out of time, i.e., beyond 30 days from the effectivity of the Ordinance on October 1, 1996, as prescribed under Section 187 of the 1991 LGC. Citing the case of Taada vs. Tuvera, the Secretary of Justice held that the date of effectivity of the subject ordinance retroacted to the date of its approval in October 1996, after the required publication or posting has been complied with, pursuant to Section 3 of said ordinance. After its motion for reconsideration was denied, petitioner appealed to the Court of Appeals. Petitioner did not assail the finding of the Secretary of Justice that their

85 appeal was filed beyond the reglementary period. Instead, it urged that the Secretary of Justice should have overlooked this mere technicality and ruled on its petition on the merits. Unfortunately, its petition for review was dismissed by the Court of Appeals for being formally deficient as it was not accompanied by certified true copies of the assailed Resolutions of the Secretary of Justice. Undaunted, the petitioner moved for reconsideration but it was denied. Issues: 1. WON the CA was correct in dismissing the petition for review for petitioners failure to attach certified true copies of the assailed Resolutions of the Secretary of Justice. YES. In its Motion for Reconsideration before the Court of Appeals, the petitioner satisfactorily explained the circumstances relative to its failure to attach to its appeal certified true copies of the assailed Resolutions of the Secretary of Justice, thus: during the preparation of the petition on October 21, 1998, it was raining very hard due to (t)yphoon Loleng. When the petition was completed, copy was served on the Department of Justice at about (sic) past 4:00 p.m. of October 21, 1998, with (the) instruction to have the Resolutions of the Department of Justice be stamped as certified true copies. However, due to bad weather, the person in charge (at the Department of Justice) was no longer available to certify to (sic) the Resolutions. The following day, October 22, 1998, was declared a non-working holiday because of (t)yphoon Loleng. Thus, petitioner was again unable to have the Resolutions of the Department of Justice stamped certified true copies. In the morning of October 23, 1998, due to time constraint(s) , herein counsel served a copy by personal service on (r)espondents lawyer at (sic) Malolos, Bulacan, despite the flooded roads and heavy rains. However, as the herein counsel went back to Manila, (official business in) government offices were suspended in the afternoon and the personnel of the Department of Justice tasked with issuing or stamping certified true copies of their Resolutions were no longer available. To avoid being time-barred in the filing of the (p)etition, the same was filed with the Court of Appeals as is. CA erred in dismissing petitioners appeal on the ground that it was formally deficient. It is clear from the records that the petitioner exerted due diligence to get the copies of its appealed Resolutions certified by the Department of Justice, but failed to do so on account of typhoon Loleng. Under the circumstances, respondent appellate court should have tempered its strict application of procedural rules in view of the fortuitous event considering that litigation is not a game of technicalities 2. WON the appeal was time-barred. YES. The applicable law is Section 187 of the 1991 LGC which provides: SEC. 187. Procedure for Approval and Effectivity of Tax Ordinances and Revenue Measures; Mandatory Public

86 Hearings. - The procedure for the 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 receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and 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 sixtyday period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings. The aforecited law requires that an appeal of a tax ordinance or revenue measure should be made to the Secretary of Justice within thirty (30) days from effectivity of the ordinance and even during its pendency, the effectivity of the assailed ordinance shall not be suspended. In the case at bar, Municipal Ordinance No. 28 took effect in October 1996. Petitioner filed its appeal only in December 1997, more than a year after the effectivity of the ordinance in 1996. Clearly, the Secretary of Justice correctly dismissed it for being time-barred. At this point, it is apropos to state that the timeframe fixed by law for 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 LGC are mandatory. Ordinance No. 28 is a revenue measure adopted by the municipality of Hagonoy to fix and collect public market stall rentals. 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. 2. WON the period to appeal should be counted not from the time the ordinance took effect in 1996 but from the time its members were personally given copies of the approved ordinance in November 1997. NO Petitioner insists that it was unaware of the approval and effectivity of the subject ordinance in 1996 on two (2) grounds: first, no public hearing was conducted prior to the passage of

87 the ordinance and, second, the approved ordinance was not posted. Petitioners bold assertion that there was no public hearing conducted prior to the passage of Kautusan Blg. 28 is belied by its own evidence. In petitioners two (2) communications with the Secretary of Justice, it enumerated the various objections raised by its members before the passage of the ordinance in several meetings called by the Sanggunian for the purpose. These show beyond doubt that petitioner was aware of the proposed increase and in fact participated in the public hearings therefor. The respondent municipality likewise submitted the Minutes and Report of the public hearings conducted by the Sangguniang Bayans Committee on Appropriations and Market on February 6, July 15 and August 19, all in 1996, for the proposed increase in the stall rentals. Petitioner cannot gripe that there was practically no public hearing conducted as its objections to the proposed measure were not considered by the Sangguniang Bayan. To be sure, public hearings are conducted by legislative bodies to allow interested parties to ventilate their views on a proposed law or ordinance. These views, however, are not binding on the legislative body and it is not compelled by law to adopt the same. Sanggunian members are elected by the people to make laws that will promote the general interest of their constituents. They are mandated to use their discretion and best judgment in serving the people. Parties who participate in public hearings to give their opinions on a proposed ordinance should not expect that their views would be patronized by their lawmakers. On the issue of publication or posting, Section 188 of the LGC provides: Section 188. Publication of Tax Ordinance 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. Sangguniang Bayan of the Municipality of Hagonoy, Bulacan, presented evidence which clearly shows that the procedure for the enactment of the assailed ordinance was complied with. Municipal Ordinance No. 28 was enacted by the Sangguniang Bayan of Hagonoy on October 1, 1996. Then Acting Municipal Mayor Maria Garcia Santos approved the Ordinance on October 7, 1996. After its approval, copies of the Ordinance were given

88 to the Municipal Treasurer on the same day. On November 9, 1996, the Ordinance was approved by the Sangguniang Panlalawigan. The Ordinance was posted during the period from November 4 - 25, 1996 in three (3) public places, viz: in front of the municipal building, at the bulletin board of the Sta. Ana Parish Church and on the front door of the Office of the Market Master in the public market. Posting was validly made in lieu of publication as there was no newspaper of local circulation in the municipality of Hagonoy. This fact was known to and admitted by petitioner. Thus, petitioners ambiguous and unsupported claim that it was only sometime in November 1997 that the Provincial Board approved Municipal Ordinance No. 28 and so the posting could not have been made in November 1996 was sufficiently disproved by the positive evidence of respondent municipality. Given the foregoing circumstances, petitioner cannot validly claim lack of knowledge of the approved ordinance. The filing of its appeal a year after the effectivity of the subject ordinance is fatal to its cause. **Even on the substantive points raised, the petition must fail. Section 6c.04 of the 1993 Municipal Revenue Code and Section 191 of the LGC limiting the percentage of increase that can be imposed apply to tax rates, not rentals. Neither can it be said that the rates were not uniformly imposed or that the public markets included in the Ordinance were unreasonably determined or classified. To be sure, the Ordinance covered the three (3) concrete public markets: the two-storey Bagong Palengke, the burnt but reconstructed Lumang Palengke and the more recent Lumang Palengke with wet market. However, the Palengkeng Bagong Munisipyo or Gabaldon was excluded from the increase in rentals as it is only a makeshift, dilapidated place, with no doors or protection for security, intended for transient peddlers who used to sell their goods along the sidewalk. Republic v. CA Facts: Petitioner instituted expropriation proceedings covering contiguous land situated along MacArthur Highway, Malolos, Bulacan, to be utilized for the continued broadcast operation and use of radio transmitter facilities for the Voice of the Philippines project. Petitioner, through the Philippine Information Agency, took over the premises after the previous lessee, the Voice of America, had ceased its operations thereat. The national government failed to pay to herein respondents the compensation pursuant to the foregoing decision, such that a little over five years later, respondents filed a manifestation with a motion seeking payment for the expropriated property. In the meantime, President Estrada issued Proclamation No. 22, transferring 20 hectares of the expropriated property to the Bulacan State University for the expansion of its facilities and another 5 hectares to be used exclusively for the propagation of the Philippine carabao. The remaining

89 portion was retained by the PIA. The Santos heirs remained unpaid, and no action was taken on their case until petitioner filed its manifestation and motion to permit the deposit in court of the amount of P4,664,000.00 by way of just compensation for the expropriated property of the late Luis Santos subject to such final computation as might be approved by the court. This time, the Santos heirs, opposing the manifestation and motion, submitted a counter-motion to adjust the compensation from P6.00 per square meter previously fixed in the 1979 decision to its current zonal valuation pegged at P5,000.00 per square meter or, in the alternative, to cause the return to them of the expropriated property. Assailing the finding of prescription by the trial court, petitioner here posited that a motion which respondents had filed on 17 February 1984, followed up by other motions subsequent thereto, was made within the reglementary period that thereby interrupted the 5-year prescriptive period within which to enforce the 1979 judgment. Furthermore, petitioner claimed, the receipt by respondents of partial compensation in the sum of P72,683.55 on 23 July 1984 constituted partial compliance on the part of petitioners and effectively estopped respondents from invoking prescription expressed in Section 6, Rule 39, of the Rules of Court. In opposing the petition, respondents advanced the view that pursuant to Section 6, Rule 39, of the Rules of Court, the failure of petitioner to execute the judgment, dated 26 February 1979, within five years after it had become final and executory, rendered it unenforceable by mere motion. The motion for payment, dated 09 May 1984, as well as the subsequent disbursement to them of the sum of P72,683.55 by the provincial treasurer of Bulacan, could not be considered as having interrupted the five-year period, since a motion, to be considered otherwise, should instead be made by the prevailing party, in this case by petitioner. Respondents maintained that the P72,683.55 paid to them by the provincial treasurer of Bulacan pursuant to the 1984 order of the trial court was part of the initial deposit made by petitioner when it first entered possession of the property in 1969 and should not be so regarded as a partial payment. Respondents further questioned the right of PIA to transfer ownership of a portion of the property to the Bulacan State University even while the just compensation due the heirs had yet to be finally settled. Issue: WON the expropriated property may be returned. NO. The right of eminent domain is usually understood to be an ultimate right of the sovereign power to appropriate any property within its territorial sovereignty for a public purpose. Fundamental to the independent existence of a State, it requires no recognition by the Constitution, whose provisions are taken as being merely confirmatory of its presence and as being regulatory, at most, in the due exercise of the power. In the hands of the legislature, the power is inherent, its scope matching that of taxation, even that of police power itself, in

90 many respects. It reaches to every form of property the State needs for public use and, as an old case so puts it, all separate interests of individuals in property are held under a tacit agreement or implied reservation vesting upon the sovereign the right to resume the possession of the property whenever the public interest so requires it. The ubiquitous character of eminent domain is manifest in the nature of the expropriation proceedings. Expropriation proceedings are not adversarial in the conventional sense, for the condemning authority is not required to assert any conflicting interest in the property. Thus, by filing the action, the condemnor in effect merely serves notice that it is taking title and possession of the property, and the defendant asserts title or interest in the property, not to prove a right to possession, but to prove a right to compensation for the taking. Obviously, however, the power is not without its limits: first, the taking must be for public use, and second, that just compensation must be given to the private owner of the property. These twin proscriptions have their origin in the recognition of the necessity for achieving balance between the State interests, on the one hand, and private rights, upon the other hand, by effectively restraining the former and affording protection to the latter. In determining public use, two approaches are utilized - the first is public employment or the actual use by the public, and the second is public advantage or benefit. It is also useful to view the matter as being subject to constant growth, which is to say that as society advances, its demands upon the individual so increases, and each demand is a new use to which the resources of the individual may be devoted. The expropriated property has been shown to be for the continued utilization by the PIA, a significant portion thereof being ceded for the expansion of the facilities of the Bulacan State University and for the propagation of the Philippine carabao, themselves in line with the requirements of public purpose. Respondents question the public nature of the utilization by petitioner of the condemned property, pointing out that its present use differs from the purpose originally contemplated in the 1969 expropriation proceedings. The argument is of no moment. The property has assumed a public character upon its expropriation. Surely, petitioner, as the condemnor and as the owner of the property, is well within its rights to alter and decide the use of that property, the only limitation being that it be for public use, which, decidedly, it is.

91 In insisting on the return of the expropriated property, respondents would exhort on the pronouncement in Provincial Government of Sorsogon vs. Vda. de Villaroya where the unpaid landowners were allowed the alternative remedy of recovery of the property there in question. It might be borne in mind that the case involved the municipal government of Sorsogon, to which the power of eminent domain is not inherent, but merely delegated and of limited application. The grant of the power of eminent domain to local governments under Republic Act No. 7160 cannot be understood as being the pervasive and allencompassing power vested in the legislative branch of government. For local governments to be able to wield the power, it must, by enabling law, be delegated to it by the national legislature, but even then, this delegated power of eminent domain is not, strictly speaking, a power of eminent, but only of inferior, domain or only as broad or confined as the real authority would want it to be. The exercise of such rights vested to it as the condemnee indeed has amounted to at least a partial compliance or satisfaction of the 1979 judgment, thereby preempting any claim of bar by prescription on grounds of non-execution. In arguing for the return of their property on the basis of nonpayment, respondents ignore the fact that the right of the expropriatory authority is far from that of an unpaid seller in ordinary sales, to which the remedy of rescission might perhaps apply. An in rem proceeding, condemnation acts upon the property. After condemnation, the paramount title is in the public under a new and independent title; thus, by giving notice to all claimants to a disputed title, condemnation proceedings provide a judicial process for securing better title against all the world than may be obtained by voluntary conveyance. Private respondents, although not entitled to the return of the expropriated property, deserve to be paid promptly on the yet unpaid award of just compensation already fixed by final judgment of the Bulacan RTC on 26 February 1979 at P6.00 per square meter, with legal interest thereon at 12% per annum computed from the date of "taking" of the property, i.e., 19 September 1969 (institution of condemnation proceedings) , until the due amount shall have been fully paid.

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