Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. 91649 May 14, 1991 ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, SOCRATES MARANAN AND LORENZO SANCHEZ,petitioner vs. PHILIPPINE AMUSEMENTS AND GAMING CORPORATION (PAGCOR), respondent. H.B. Basco & Associates for petitioners. Valmonte Law Offices collaborating counsel for petitioners. Aguirre, Laborte and Capule for respondent PAGCOR.

PARAS, J.:p A TV ad proudly announces: "The new PAGCOR responding through responsible gaming." But the petitioners think otherwise, that is why, they filed the instant petition seeking to annul the Philippine Amusement and Gaming Corporation (PAGCOR) Charter PD 1869, because it is allegedly contrary to morals, public policy and order, and because A. It constitutes a waiver of a right prejudicial to a third person with a right recognized by law. It waived the Manila City government's right to impose taxes and license fees, which is recognized by law; B. For the same reason stated in the immediately preceding paragraph, the law has intruded into the local government's right to impose local taxes and license fees. This, in contravention of the constitutionally enshrined principle of local autonomy; C. It violates the equal protection clause of the constitution in that it legalizes PAGCOR conducted gambling, while most other forms of gambling are outlawed, together with prostitution, drug trafficking and other vices; D. It violates the avowed trend of the Cory government away from monopolistic and crony economy, and toward free enterprise and privatization. (p. 2, Amended Petition; p. 7, Rollo) In their Second Amended Petition, petitioners also claim that PD 1869 is contrary to the declared national policy of the "new restored democracy" and the people's will as expressed in the 1987 Constitution. The decree is said to have a "gambling objective" and therefore is contrary to Sections 11, 12 and 13 of Article II, Sec. 1 of Article VIII and Section 3 (2) of Article XIV, of the present Constitution (p. 3, Second Amended Petition; p. 21, Rollo).

The procedural issue is whether petitioners, as taxpayers and practicing lawyers (petitioner Basco being also the Chairman of the Committee on Laws of the City Council of Manila), can question and seek the annulment of PD 1869 on the alleged grounds mentioned above. The Philippine Amusements and Gaming Corporation (PAGCOR) was created by virtue of P.D. 1067-A dated January 1, 1977 and was granted a franchise under P.D. 1067-B also dated January 1, 1977 "to establish, operate and maintain gambling casinos on land or water within the territorial jurisdiction of the Philippines." Its operation was originally conducted in the well known floating casino "Philippine Tourist." The operation was considered a success for it proved to be a potential source of revenue to fund infrastructure and socio-economic projects, thus, P.D. 1399 was passed on June 2, 1978 for PAGCOR to fully attain this objective. Subsequently, on July 11, 1983, PAGCOR was created under P.D. 1869 to enable the Government to regulate and centralize all games of chance authorized by existing franchise or permitted by law, under the following declared policy Sec. 1. Declaration of Policy. It is hereby declared to be the policy of the State to centralize and integrate all games of chance not heretofore authorized by existing franchises or permitted by law in order to attain the following objectives: (a) To centralize and integrate the right and authority to operate and conduct games of chance into one corporate entity to be controlled, administered and supervised by the Government. (b) To establish and operate clubs and casinos, for amusement and recreation, including sports gaming pools, (basketball, football, lotteries, etc.) and such other forms of amusement and recreation including games of chance, which may be allowed by law within the territorial jurisdiction of the Philippines and which will: (1) generate sources of additional revenue to fund infrastructure and socio-civic projects, such as flood control programs, beautification, sewerage and sewage projects, Tulungan ng Bayan Centers, Nutritional Programs, Population Control and such other essential public services; (2) create recreation and integrated facilities which will expand and improve the country's existing tourist attractions; and (3) minimize, if not totally eradicate, all the evils, malpractices and corruptions that are normally prevalent on the conduct and operation of gambling clubs and casinos without direct government involvement. (Section 1, P.D. 1869) To attain these objectives PAGCOR is given territorial jurisdiction all over the Philippines. Under its Charter's repealing clause, all laws, decrees, executive orders, rules and regulations, inconsistent therewith, are accordingly repealed, amended or modified. It is reported that PAGCOR is the third largest source of government revenue, next to the Bureau of Internal Revenue and the Bureau of Customs. In 1989 alone, PAGCOR earned P3.43 Billion, and directly remitted to the National Government a total of P2.5 Billion in form of franchise tax, government's income share, the President's Social Fund and Host Cities' share. In addition, PAGCOR sponsored other socio-cultural and charitable projects on its own or in cooperation with various governmental agencies, and other private associations and organizations. In its 3 1/2 years of operation under the present administration, PAGCOR remitted to the government a total of P6.2 Billion. As of December 31, 1989, PAGCOR was employing 4,494 employees in its nine (9) casinos nationwide, directly supporting the livelihood of Four Thousand Four Hundred Ninety-Four (4,494) families. But the petitioners, are questioning the validity of P.D. No. 1869. They allege that the same is "null and void" for being "contrary to morals, public policy and public order," monopolistic and tends toward "crony economy", and is violative of the equal protection clause and local autonomy as well as for running counter to the state policies enunciated in Sections 11 (Personal Dignity and Human

Rights), 12 (Family) and 13 (Role of Youth) of Article II, Section 1 (Social Justice) of Article XIII and Section 2 (Educational Values) of Article XIV of the 1987 Constitution. This challenge to P.D. No. 1869 deserves a searching and thorough scrutiny and the most deliberate consideration by the Court, involving as it does the exercise of what has been described as "the highest and most delicate function which belongs to the judicial department of the government." (State v. Manuel, 20 N.C. 144; Lozano v. Martinez, 146 SCRA 323). As We enter upon the task of passing on the validity of an act of a co-equal and coordinate branch of the government We need not be reminded of the time-honored principle, deeply ingrained in our jurisprudence, that a statute is presumed to be valid. Every presumption must be indulged in favor of its constitutionality. This is not to say that We approach Our task with diffidence or timidity. Where it is clear that the legislature or the executive for that matter, has over-stepped the limits of its authority under the constitution, We should not hesitate to wield the axe and let it fall heavily, as fall it must, on the offending statute (Lozano v. Martinez, supra). In Victoriano v. Elizalde Rope Workers' Union, et al, 59 SCRA 54, the Court thru Mr. Justice Zaldivar underscored the . . . thoroughly established principle which must be followed in all cases where questions of constitutionality as obtain in the instant cases are involved. All presumptions are indulged in favor of constitutionality; one who attacks a statute alleging unconstitutionality must prove its invalidity beyond a reasonable doubt; that a law may work hardship does not render it unconstitutional; that if any reasonable basis may be conceived which supports the statute, it will be upheld and the challenger must negate all possible basis; that the courts are not concerned with the wisdom, justice, policy or expediency of a statute and that a liberal interpretation of the constitution in favor of the constitutionality of legislation should be adopted. (Danner v. Hass, 194 N.W. 2nd 534, 539; Spurbeck v. Statton, 106 N.W. 2nd 660, 663; 59 SCRA 66; see also e.g. Salas v. Jarencio, 46 SCRA 734, 739 [1970]; Peralta v. Commission on Elections, 82 SCRA 30, 55 [1978]; and Heirs of Ordona v. Reyes, 125 SCRA 220, 241-242 [1983] cited in Citizens Alliance for Consumer Protection v. Energy Regulatory Board, 162 SCRA 521, 540) Of course, there is first, the procedural issue. The respondents are questioning the legal personality of petitioners to file the instant petition. Considering however the importance to the public of the case at bar, and in keeping with the Court's duty, under the 1987 Constitution, to determine whether or not the other branches of government have kept themselves within the limits of the Constitution and the laws and that they have not abused the discretion given to them, the Court has brushed aside technicalities of procedure and has taken cognizance of this petition. (Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas Inc. v. Tan, 163 SCRA 371) With particular regard to the requirement of proper party as applied in the cases before us, We hold that the same is satisfied by the petitioners and intervenors because each of them has sustained or is in danger of sustaining an immediate injury as a result of the acts or measures complained of. And even if, strictly speaking they are not covered by the definition, it is still within the wide discretion of the Court to waive the requirement and so remove the impediment to its addressing and resolving the serious constitutional questions raised. In the first Emergency Powers Cases, ordinary citizens and taxpayers were allowed to question the constitutionality of several executive orders issued by President Quirino although they were involving only an indirect and general interest shared in common with the public. The Court dismissed the objection that they were not proper

parties and ruled that "the transcendental importance to the public of these cases demands that they be settled promptly and definitely, brushing aside, if we must technicalities of procedure." We have since then applied the exception in many other cases. (Association of Small Landowners in the Philippines, Inc. v. Sec. of Agrarian Reform, 175 SCRA 343). Having disposed of the procedural issue, We will now discuss the substantive issues raised. Gambling in all its forms, unless allowed by law, is generally prohibited. But the prohibition of gambling does not mean that the Government cannot regulate it in the exercise of its police power. The concept of police power is well-established in this jurisdiction. It has been defined as the "state authority to enact legislation that may interfere with personal liberty or property in order to promote the general welfare." (Edu v. Ericta, 35 SCRA 481, 487) As defined, it consists of (1) an imposition or restraint upon liberty or property, (2) in order to foster the common good. It is not capable of an exact definition but has been, purposely, veiled in general terms to underscore its all-comprehensive embrace. (Philippine Association of Service Exporters, Inc. v. Drilon, 163 SCRA 386). Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future where it could be done, provides enough room for an efficient and flexible response to conditions and circumstances thus assuming the greatest benefits. (Edu v. Ericta, supra) It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the charter. Along with the taxing power and eminent domain, it is inborn in the very fact of statehood and sovereignty. It is a fundamental attribute of government that has enabled it to perform the most vital functions of governance. Marshall, to whom the expression has been credited, refers to it succinctly as the plenary power of the state "to govern its citizens". (Tribe, American Constitutional Law, 323, 1978). The police power of the State is a power co-extensive with self-protection and is most aptly termed the "law of overwhelming necessity." (Rubi v. Provincial Board of Mindoro, 39 Phil. 660, 708) It is "the most essential, insistent, and illimitable of powers." (Smith Bell & Co. v. National, 40 Phil. 136) It is a dynamic force that enables the state to meet the agencies of the winds of change. What was the reason behind the enactment of P.D. 1869? P.D. 1869 was enacted pursuant to the policy of the government to "regulate and centralize thru an appropriate institution all games of chance authorized by existing franchise or permitted by law" (1st whereas clause, PD 1869). As was subsequently proved, regulating and centralizing gambling operations in one corporate entity the PAGCOR, was beneficial not just to the Government but to society in general. It is a reliable source of much needed revenue for the cash strapped Government. It provided funds for social impact projects and subjected gambling to "close scrutiny, regulation, supervision and control of the Government" (4th Whereas Clause, PD 1869). With the creation of PAGCOR and the direct intervention of the Government, the evil practices and corruptions that go with gambling will be minimized if not totally eradicated. Public welfare, then, lies at the bottom of the enactment of PD 1896. Petitioners contend that P.D. 1869 constitutes a waiver of the right of the City of Manila to impose taxes and legal fees; that the exemption clause in P.D. 1869 is violative of the principle of local autonomy. They must be referring to Section 13 par. (2) of P.D. 1869 which exempts PAGCOR, as the franchise holder from paying any "tax of any kind or form, income or otherwise, as well as fees, charges or levies of whatever nature, whether National or Local." (2) Income and other taxes. a) Franchise Holder: No tax of any kind or form, income or otherwise as well as fees, charges or levies of whatever nature, whether National or Local, shall be assessed and collected under this franchise from the Corporation; nor shall any form or tax or charge attach in any way to the earnings of

the Corporation, except a franchise tax of five (5%) percent of the gross revenues or earnings derived by the Corporation from its operations under this franchise. Such tax shall be due and payable quarterly to the National Government and shall be in lieu of all kinds of taxes, levies, fees or assessments of any kind, nature or description, levied, established or collected by any municipal, provincial or national government authority (Section 13 [2]). Their contention stated hereinabove is without merit for the following reasons: (a) The City of Manila, being a mere Municipal corporation has no inherent right to impose taxes (Icard v. City of Baguio, 83 Phil. 870; City of Iloilo v. Villanueva, 105 Phil. 337; Santos v. Municipality of Caloocan, 7 SCRA 643). Thus, "the Charter or statute must plainly show an intent to confer that power or the municipality cannot assume it" (Medina v. City of Baguio, 12 SCRA 62). Its "power to tax" therefore must always yield to a legislative act which is superior having been passed upon by the state itself which has the "inherent power to tax" (Bernas, the Revised [1973] Philippine Constitution, Vol. 1, 1983 ed. p. 445). (b) The Charter of the City of Manila is subject to control by Congress. It should be stressed that "municipal corporations are mere creatures of Congress" (Unson v. Lacson, G.R. No. 7909, January 18, 1957) which has the power to "create and abolish municipal corporations" due to its "general legislative powers" (Asuncion v. Yriantes, 28 Phil. 67; Merdanillo v. Orandia, 5 SCRA 541). Congress, therefore, has the power of control over Local governments (Hebron v. Reyes, G.R. No. 9124, July 2, 1950). And if Congress can grant the City of Manila the power to tax certain matters, it can also provide for exemptions or even take back the power. (c) The City of Manila's power to impose license fees on gambling, has long been revoked. As early as 1975, the power of local governments to regulate gambling thru the grant of "franchise, licenses or permits" was withdrawn by P.D. No. 771 and was vested exclusively on the National Government, thus: Sec. 1. Any provision of law to the contrary notwithstanding, the authority of chartered cities and other local governments to issue license, permit or other form of franchise to operate, maintain and establish horse and dog race tracks, jai-alai and other forms of gambling is hereby revoked. Sec. 2. Hereafter, all permits or franchises to operate, maintain and establish, horse and dog race tracks, jai-alai and other forms of gambling shall be issued by the national government upon proper application and verification of the qualification of the applicant . . . Therefore, only the National Government has the power to issue "licenses or permits" for the operation of gambling. Necessarily, the power to demand or collect license fees which is a consequence of the issuance of "licenses or permits" is no longer vested in the City of Manila. (d) Local governments have no power to tax instrumentalities of the National Government. PAGCOR is a government owned or controlled corporation with an original charter, PD 1869. All of its shares of stocks are owned by the National Government. In addition to its corporate powers (Sec. 3, Title II, PD 1869) it also exercises regulatory powers thus: Sec. 9. Regulatory Power. The Corporation shall maintain a Registry of the affiliated entities, and shall exercise all the powers, authority and the responsibilities vested in the Securities and Exchange Commission over such affiliating entities mentioned under the preceding section, including, but not limited to amendments of Articles of Incorporation and By-Laws, changes in corporate term, structure, capitalization and other matters concerning the operation of the affiliated entities, the

provisions of the Corporation Code of the Philippines to the contrary notwithstanding, except only with respect to original incorporation. PAGCOR has a dual role, to operate and to regulate gambling casinos. The latter role is governmental, which places it in the category of an agency or instrumentality of the Government. Being an instrumentality of the Government, PAGCOR should be and actually is exempt from local taxes. Otherwise, its operation might be burdened, impeded or subjected to control by a mere Local government. The states have no power by taxation or otherwise, to retard, impede, burden or in any manner control the operation of constitutional laws enacted by Congress to carry into execution the powers vested in the federal government. (MC Culloch v. Marland, 4 Wheat 316, 4 L Ed. 579) This doctrine emanates from the "supremacy" of the National Government over local governments. Justice Holmes, speaking for the Supreme Court, made reference to the entire absence of power on the part of the States to touch, in that way (taxation) at least, the instrumentalities of the United States (Johnson v. Maryland, 254 US 51) and it can be agreed that no state or political subdivision can regulate a federal instrumentality in such a way as to prevent it from consummating its federal responsibilities, or even to seriously burden it in the accomplishment of them. (Antieau, Modern Constitutional Law, Vol. 2, p. 140, emphasis supplied) Otherwise, mere creatures of the State can defeat National policies thru extermination of what local authorities may perceive to be undesirable activities or enterprise using the power to tax as "a tool for regulation" (U.S. v. Sanchez, 340 US 42). The power to tax which was called by Justice Marshall as the "power to destroy" (Mc Culloch v. Maryland, supra) cannot be allowed to defeat an instrumentality or creation of the very entity which has the inherent power to wield it. (e) Petitioners also argue that the Local Autonomy Clause of the Constitution will be violated by P.D. 1869. This is a pointless argument. Article X of the 1987 Constitution (on Local Autonomy) provides: Sec. 5. Each local government unit shall have the power to create its own source of revenue and to levy taxes, fees, and other charges subject to such guidelines and limitation as the congress may provide, consistent with the basic policy on local autonomy. Such taxes, fees and charges shall accrue exclusively to the local government. (emphasis supplied) The power of local government to "impose taxes and fees" is always subject to "limitations" which Congress may provide by law. Since PD 1869 remains an "operative" law until "amended, repealed or revoked" (Sec. 3, Art. XVIII, 1987 Constitution), its "exemption clause" remains as an exception to the exercise of the power of local governments to impose taxes and fees. It cannot therefore be violative but rather is consistent with the principle of local autonomy. Besides, the principle of local autonomy under the 1987 Constitution simply means "decentralization" (III Records of the 1987 Constitutional Commission, pp. 435-436, as cited in Bernas, The Constitution of the Republic of the Philippines, Vol. II, First Ed., 1988, p. 374). It does not make local governments sovereign within the state or an "imperium in imperio." Local Government has been described as a political subdivision of a nation or state which is constituted by law and has substantial control of local affairs. In a unitary system of government, such as the government under the Philippine Constitution, local governments can only be an intra sovereign subdivision of one sovereign

nation, it cannot be an imperium in imperio. Local government in such a system can only mean a measure of decentralization of the function of government. (emphasis supplied) As to what state powers should be "decentralized" and what may be delegated to local government units remains a matter of policy, which concerns wisdom. It is therefore a political question. (Citizens Alliance for Consumer Protection v. Energy Regulatory Board, 162 SCRA 539). What is settled is that the matter of regulating, taxing or otherwise dealing with gambling is a State concern and hence, it is the sole prerogative of the State to retain it or delegate it to local governments. As gambling is usually an offense against the State, legislative grant or express charter power is generally necessary to empower the local corporation to deal with the subject. . . . In the absence of express grant of power to enact, ordinance provisions on this subject which are inconsistent with the state laws are void. (Ligan v. Gadsden, Ala App. 107 So. 733 Ex-Parte Solomon, 9, Cals. 440, 27 PAC 757 following in re Ah You, 88 Cal. 99, 25 PAC 974, 22 Am St. Rep. 280, 11 LRA 480, as cited in Mc Quinllan Vol. 3 Ibid, p. 548, emphasis supplied) Petitioners next contend that P.D. 1869 violates the equal protection clause of the Constitution, because "it legalized PAGCOR conducted gambling, while most gambling are outlawed together with prostitution, drug trafficking and other vices" (p. 82, Rollo). We, likewise, find no valid ground to sustain this contention. The petitioners' posture ignores the well-accepted meaning of the clause "equal protection of the laws." The clause does not preclude classification of individuals who may be accorded different treatment under the law as long as the classification is not unreasonable or arbitrary (Itchong v. Hernandez, 101 Phil. 1155). A law does not have to operate in equal force on all persons or things to be conformable to Article III, Section 1 of the Constitution (DECS v. San Diego, G.R. No. 89572, December 21, 1989). The "equal protection clause" does not prohibit the Legislature from establishing classes of individuals or objects upon which different rules shall operate (Laurel v. Misa, 43 O.G. 2847). The Constitution does not require situations which are different in fact or opinion to be treated in law as though they were the same (Gomez v. Palomar, 25 SCRA 827). Just how P.D. 1869 in legalizing gambling conducted by PAGCOR is violative of the equal protection is not clearly explained in the petition. The mere fact that some gambling activities like cockfighting (P.D 449) horse racing (R.A. 306 as amended by RA 983), sweepstakes, lotteries and races (RA 1169 as amended by B.P. 42) are legalized under certain conditions, while others are prohibited, does not render the applicable laws, P.D. 1869 for one, unconstitutional. If the law presumably hits the evil where it is most felt, it is not to be overthrown because there are other instances to which it might have been applied. (Gomez v. Palomar, 25 SCRA 827) The equal protection clause of the 14th Amendment does not mean that all occupations called by the same name must be treated the same way; the state may do what it can to prevent which is deemed as evil and stop short of those cases in which harm to the few concerned is not less than the harm to the public that would insure if the rule laid down were made mathematically exact. (Dominican Hotel v. Arizona, 249 US 2651). Anent petitioners' claim that PD 1869 is contrary to the "avowed trend of the Cory Government away from monopolies and crony economy and toward free enterprise and privatization" suffice it to state that this is not a ground for this Court to nullify P.D. 1869. If, indeed, PD 1869 runs counter to the

government's policies then it is for the Executive Department to recommend to Congress its repeal or amendment. The judiciary does not settle policy issues. The Court can only declare what the law is and not what the law should be. Under our system of government, policy issues are within the domain of the political branches of government and of the people themselves as the repository of all state power. (Valmonte v. Belmonte, Jr., 170 SCRA 256). On the issue of "monopoly," however, the Constitution provides that: Sec. 19. The State shall regulate or prohibit monopolies when public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed. (Art. XII, National Economy and Patrimony) It should be noted that, as the provision is worded, monopolies are not necessarily prohibited by the Constitution. The state must still decide whether public interest demands that monopolies be regulated or prohibited. Again, this is a matter of policy for the Legislature to decide. On petitioners' allegation that P.D. 1869 violates Sections 11 (Personality Dignity) 12 (Family) and 13 (Role of Youth) of Article II; Section 13 (Social Justice) of Article XIII and Section 2 (Educational Values) of Article XIV of the 1987 Constitution, suffice it to state also that these are merely statements of principles and, policies. As such, they are basically not self-executing, meaning a law should be passed by Congress to clearly define and effectuate such principles. In general, therefore, the 1935 provisions were not intended to be self-executing principles ready for enforcement through the courts. They were rather directives addressed to the executive and the legislature. If the executive and the legislature failed to heed the directives of the articles the available remedy was not judicial or political. The electorate could express their displeasure with the failure of the executive and the legislature through the language of the ballot. (Bernas, Vol. II, p. 2) Every law has in its favor the presumption of constitutionality (Yu Cong Eng v. Trinidad, 47 Phil. 387; Salas v. Jarencio, 48 SCRA 734; Peralta v. Comelec, 82 SCRA 30; Abbas v. Comelec, 179 SCRA 287). Therefore, for PD 1869 to be nullified, it must be shown that there is a clear and unequivocal breach of the Constitution, not merely a doubtful and equivocal one. In other words, the grounds for nullity must be clear and beyond reasonable doubt. (Peralta v. Comelec, supra) Those who petition this Court to declare a law, or parts thereof, unconstitutional must clearly establish the basis for such a declaration. Otherwise, their petition must fail. Based on the grounds raised by petitioners to challenge the constitutionality of P.D. 1869, the Court finds that petitioners have failed to overcome the presumption. The dismissal of this petition is therefore, inevitable. But as to whether P.D. 1869 remains a wise legislation considering the issues of "morality, monopoly, trend to free enterprise, privatization as well as the state principles on social justice, role of youth and educational values" being raised, is up for Congress to determine. As this Court held in Citizens' Alliance for Consumer Protection v. Energy Regulatory Board, 162 SCRA 521 Presidential Decree No. 1956, as amended by Executive Order No. 137 has, in any case, in its favor the presumption of validity and constitutionality which petitioners Valmonte and the KMU have not overturned. Petitioners have not undertaken to identify the provisions in the Constitution which they claim to have been violated by that statute. This Court, however, is not compelled to speculate and to imagine how the assailed legislation may possibly offend some provision of the Constitution. The Court notes, further, in this respect that petitioners have in the main put in question the wisdom, justice and expediency of the establishment of the OPSF, issues which

are not properly addressed to this Court and which this Court may not constitutionally pass upon. Those issues should be addressed rather to the political departments of government: the President and the Congress. Parenthetically, We wish to state that gambling is generally immoral, and this is precisely so when the gambling resorted to is excessive. This excessiveness necessarily depends not only on the financial resources of the gambler and his family but also on his mental, social, and spiritual outlook on life. However, the mere fact that some persons may have lost their material fortunes, mental control, physical health, or even their lives does not necessarily mean that the same are directly attributable to gambling. Gambling may have been the antecedent,but certainly not necessarily the cause. For the same consequences could have been preceded by an overdose of food, drink, exercise, work, and even sex. WHEREFORE, the petition is DISMISSED for lack of merit. SO ORDERED. Fernan, C.J., Narvasa, Gutierrez, Jr., Cruz, Feliciano, Gancayco, Bidin, Sarmiento, Grio-Aquino, Medialdea, Regalado and Davide, Jr., JJ., concur.

Separate Opinions

PADILLA, J., concurring: I concur in the result of the learned decision penned by my brother Mr. Justice Paras. This means that I agree with the decision insofar as it holds that the prohibition, control, and regulation of the entire activity known as gambling properly pertain to "state policy." It is, therefore, the political departments of government, namely, the legislative and the executive that should decide on what government should do in the entire area of gambling, and assume full responsibility to the people for such policy. The courts, as the decision states, cannot inquire into the wisdom, morality or expediency of policies adopted by the political departments of government in areas which fall within their authority, except only when such policies pose a clear and present danger to the life, liberty or property of the individual. This case does not involve such a factual situation. However, I hasten to make of record that I do not subscribe to gambling in any form. It demeans the human personality, destroys self-confidence and eviscerates one's self-respect, which in the long run will corrode whatever is left of the Filipino moral character. Gambling has wrecked and will continue to wreck families and homes; it is an antithesis to individual reliance and reliability as well as personal industry which are the touchstones of real economic progress and national development. Gambling is reprehensible whether maintained by government or privatized. The revenues realized by the government out of "legalized" gambling will, in the long run, be more than offset and negated by the irreparable damage to the people's moral values.

Also, the moral standing of the government in its repeated avowals against "illegal gambling" is fatally flawed and becomes untenable when it itself engages in the very activity it seeks to eradicate. One can go through the Court's decision today and mentally replace the activity referred to therein as gambling, which is legal only because it is authorized by law and run by the government, with the activity known asprostitution. Would prostitution be any less reprehensible were it to be authorized by law, franchised, and "regulated" by the government, in return for the substantial revenues it would yield the government to carry out its laudable projects, such as infrastructure and social amelioration? The question, I believe, answers itself. I submit that the sooner the legislative department outlaws all forms of gambling, as a fundamental state policy, and the sooner the executive implements such policy, the better it will be for the nation. Melencio-Herrera, J., concur.

Separate Opinions
PADILLA, J., concurring: I concur in the result of the learned decision penned by my brother Mr. Justice Paras. This means that I agree with the decision insofar as it holds that the prohibition, control, and regulation of the entire activity known as gambling properly pertain to "state policy." It is, therefore, the political departments of government, namely, the legislative and the executive that should decide on what government should do in the entire area of gambling, and assume full responsibility to the people for such policy. The courts, as the decision states, cannot inquire into the wisdom, morality or expediency of policies adopted by the political departments of government in areas which fall within their authority, except only when such policies pose a clear and present danger to the life, liberty or property of the individual. This case does not involve such a factual situation. However, I hasten to make of record that I do not subscribe to gambling in any form. It demeans the human personality, destroys self-confidence and eviscerates one's self-respect, which in the long run will corrode whatever is left of the Filipino moral character. Gambling has wrecked and will continue to wreck families and homes; it is an antithesis to individual reliance and reliability as well as personal industry which are the touchstones of real economic progress and national development. Gambling is reprehensible whether maintained by government or privatized. The revenues realized by the government out of "legalized" gambling will, in the long run, be more than offset and negated by the irreparable damage to the people's moral values. Also, the moral standing of the government in its repeated avowals against "illegal gambling" is fatally flawed and becomes untenable when it itself engages in the very activity it seeks to eradicate. One can go through the Court's decision today and mentally replace the activity referred to therein as gambling, which is legal only because it is authorized by law and run by the government, with the activity known asprostitution. Would prostitution be any less reprehensible were it to be authorized by law, franchised, and "regulated" by the government, in return for the substantial revenues it would yield the government to carry out its laudable projects, such as infrastructure and social amelioration? The question, I believe, answers itself. I submit that the sooner the legislative department outlaws all forms of gambling, as a fundamental state policy, and the sooner the executive implements such policy, the better it will be for the nation. Melencio-Herrera, J., concurs.The Lawphil Project - Arellano Law Foundation

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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 93252 August 5, 1991 RODOLFO T. GANZON, petitioner, vs. THE HONORABLE COURT OF APPEALS and LUIS T. SANTOS, respondents. G.R. No. 93746 August 5,1991 MARY ANN RIVERA ARTIEDA, petitioner, vs. HON. LUIS SANTOS, in his capacity as Secretary of the Department of Local Government, NICANOR M. PATRICIO, in his capacity as Chief, Legal Service of the Department of Local Government and SALVADOR CABALUNA JR., respondents. G.R. No. 95245 August 5,1991 RODOLFO T. GANZON, petitioner, vs. THE HONORABLE COURT OF APPEALS and LUIS T. SANTOS, in his capacity as the Secretary of the Department of Local Government, respondents. Nicolas P. Sonalan for petitioner in 93252. Romeo A. Gerochi for petitioner in 93746. Eugenio Original for petitioner in 95245.

SARMIENTO, J.:p The petitioners take common issue on the power of the President (acting through the Secretary of Local Government), to suspend and/or remove local officials. The petitioners are the Mayor of Iloilo City (G.R. Nos. 93252 and 95245) and a member of the Sangguniang Panglunsod thereof (G.R. No. 93746), respectively. The petitions of Mayor Ganzon originated from a series of administrative complaints, ten in number, filed against him by various city officials sometime in 1988, on various charges, among them, abuse of authority, oppression, grave misconduct, disgraceful and immoral conduct, intimidation, culpable violation of the Constitution, and arbitrary detention. 1 The personalities involved are Joceleehn
Cabaluna, a clerk at the city health office; Salvador Cabaluna, her husband; Dr. Felicidad Ortigoza, Assistant City Health Officer; Mansueto Malabor, Vice-Mayor; Rolando Dabao, Dan Dalido, German Gonzales, Larry Ong, and Eduardo Pefia Redondo members of the Sangguniang Panglunsod; and Pancho Erbite, a barangay tanod. The complaints against the Mayor are set forth in the opinion of the respondent Court of Appeals. 2 We quote:

xxx xxx xxx

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In her verified complaint (Annex A), Mrs. Cabaluna, a clerk assigned to the City Health, Office of Iloilo City charged that due to political reasons, having supported the rival candidate, Mrs. Rosa 0. Caram, the petitioner City Mayor, using as an excuse the exigency of the service and the interest of the public, pulled her out from rightful office where her qualifications are best suited and assigned her to a work that should be the function of a non-career service employee. To make matters worse, a utility worker in the office of the Public Services, whose duties are alien to the complainant's duties and functions, has been detailed to take her place. The petitioner's act are pure harassments aimed at luring her away from her permanent position or force her to resign. In the case of Dra. Felicidad Ortigoza, she claims that the petitioner handpicked her to perform task not befitting her position as Assistant City Health Officer of Iloilo City; that her office was padlocked without any explanation or justification; that her salary was withheld without cause since April 1, 1988; that when she filed her vacation leave, she was given the run-around treatment in the approval of her leave in connivance with Dr. Rodolfo Villegas and that she was the object of a wellengineered trumped-up charge in an administrative complaint filed by Dr. Rodolfo Villegas (Annex B). On the other hand, Mansuelo Malabor is the duly elected Vice-Mayor of Iloilo City and complainants Rolando Dabao, Dan Dalido, German Gonzales, Larry Ong and Eduardo Pefia Pedondo are members of the Sangguniang Panglunsod of the City of Iloilo. Their complaint arose out from the case where Councilor Larry Ong, whose key to his office was unceremoniously and without previous notice, taken by petitioner. Without an office, Councilor Ong had to hold office at Plaza Libertad, The Vice-Mayor and the other complainants sympathized with him and decided to do the same. However, the petitioner, together with its fully-armed security men, forcefully drove them away from Plaza Libertad. Councilor Ong denounced the petitioner's actuations the following day in the radio station and decided to hold office at the Freedom Grandstand at Iloilo City and there were so many people who gathered to witness the incident. However, before the group could reach the area, the petitioner, together with his security men, led the firemen using a firetruck in dozing water to the people and the bystanders. Another administrative case was filed by Pancho Erbite, a barangay tanod, appointed by former mayor Rosa O. Caram. On March 13, 1988, without the benefit of charges filed against him and no warrant of arrest was issued, Erbite was arrested and detained at the City Jail of Iloilo City upon orders of petitioner. In jail, he was allegedly mauled by other detainees thereby causing injuries He was released only the following day. 3 The Mayor thereafter answered 4 and the cases were shortly set for hearing. The opinion of the Court of
Appeals also set forth the succeeding events:

xxx xxx xxx The initial hearing in the Cabaluna and Ortigoza cases were set for hearing on June 20-21, 1988 at the Regional Office of the Department of Local Government in Iloilo City. Notices, through telegrams, were sent to the parties (Annex L) and the parties received them, including the petitioner. The petitioner asked for a postponement before the scheduled date of hearing and was represented by counsel, Atty. Samuel Castro. The hearing officers, Atty. Salvador Quebral and Atty. Marino Bermudez had to come all the way from Manila for the two-day hearings but was actually held only on June 20,1988 in view of the inability and unpreparedness of petitioner's counsel.

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The next hearings were re-set to July 25, 26, 27,1988 in the same venue-Iloilo City. Again, the petitioner attempted to delay the proceedings and moved for a postponement under the excuse that he had just hired his counsel. Nonetheless, the hearing officers denied the motion to postpone, in view of the fact that the parties were notified by telegrams of the scheduled hearings (Annex M). In the said hearings, petitioner's counsel cross-examined the complainants and their witnesses. Finding probable grounds and reasons, the respondent issued a preventive suspension order on August 11, 1988 to last until October 11,1988 for a period of sixty (60) days. Then the next investigation was set on September 21, 1988 and the petitioner again asked for a postponement to September 26,1988. On September 26, 1988, the complainants and petitioner were present, together with their respective counsel. The petitioner sought for a postponement which was denied. In these hearings which were held in Mala the petitioner testified in Adm. Case No. C-10298 and 10299. The investigation was continued regarding the Malabor case and the complainants testified including their witnesses. On October 10, 1988, petitioner's counsel, Atty. Original moved for a postponement of the October 24, 1988 hearing to November 7 to 11, 1988 which was granted. However, the motion for change of venue as denied due to lack of funds. At the hearing on November 7, 1988, the parties and counsel were present. Petitioner reiterated his motion to change venue and moved for postponement anew. The counsel discussed a proposal to take the deposition of witnesses in Iloilo City so the hearing was indefinitely postponed. However, the parties failed to come to terms and after the parties were notified of the hearing, the investigation was set to December 13 to 15, 1988. The petitioner sought for another postponement on the ground that his witnesses were sick or cannot attend the investigation due to lack of transportation. The motion was denied and the petitioner was given up to December 14, 1988 to present his evidence. On December 14,1988, petitioner's counsel insisted on his motion for postponement and the hearing officers gave petitioner up to December 15, 1988 to present his evidence. On December 15, 1988, the petitioner failed to present evidence and the cases were considered submitted for resolution. In the meantime, a prima facie evidence was found to exist in the arbitrary detention case filed by Pancho Erbite so the respondent ordered the petitioner's second preventive suspension dated October 11, 1988 for another sixty (60) days. The petitioner was able to obtain a restraining order and a writ of preliminary injunction in the Regional Trial Court, Branch 33 of Iloilo City. The second preventive suspension was not enforced. 5 Amidst the two successive suspensions, Mayor Ganzon instituted an action for prohibition against the respondent Secretary of Local Government (now, Interior) in the Regional Trial Court, Iloilo City, where he succeeded in obtaining a writ of preliminary injunction. Presently, he instituted CA-G.R. SP No. 16417, an action for prohibition, in the respondent Court of Appeals. Meanwhile, on May 3, 1990, the respondent Secretary issued another order, preventively suspending Mayor Ganzon for another sixty days, the third time in twenty months, and designating

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meantime Vice-Mayor Mansueto Malabor as acting mayor. Undaunted, Mayor Ganzon commenced CA-G.R. SP No. 20736 of the Court of Appeals, a petition for prohibition, 6 (Malabor it is to be noted,
is one of the complainants, and hence, he is interested in seeing Mayor Ganzon ousted.)

On September 7, 1989, the Court of Appeals rendered judgment, dismissing CA-G.R. SP No. 16417. On July 5, 1990, it likewise promulgated a decision, dismissing CA-G.R. SP No. 20736. In a Resolution dated January 24, 1990, it issued a Resolution certifying the petition of Mary Ann Artieda, who had been similary charged by the respondent Secretary, to this Court. On June 26,1990, we issued a Temporary Restraining Order, barring the respondent Secretary from implementing the suspension orders, and restraining the enforcement of the Court of Appeals' two decisions. In our Resolution of November 29, 1990, we consolidated all three cases. In our Resolutions of January 15, 1991, we gave due course thereto. Mayor Ganzon claims as a preliminary (GR No. 93252), that the Department of Local Government in hearing the ten cases against him, had denied him due process of law and that the respondent Secretary had been "biased, prejudicial and hostile" towards him 7 arising from his (Mayor Ganzon's)
alleged refusal to join the Laban ng Demokratikong Pilipino party 8 and the running political rivalry they maintained in the last congressional and local elections;9 and his alleged refusal to operate a lottery in Iloilo City. 10 He also alleges that he requested the Secretary to lift his suspension since it had come ninety days prior to an election (the barangay elections of November 14, 1988), 11notwithstanding which, the latter proceeded with the hearing and meted out two more suspension orders of the aforementioned cases. 12 He likewise contends that he sought to bring the cases to Iloilo City (they were held in Manila) in order to reduce the costs of proceeding, but the Secretary rejected his request. 13 He states that he asked for postponement on "valid and justifiable" 14 grounds, among them, that he was suffering from a heart ailment which required confinement; that his "vital" 15 witness was also hospitalized 16 but that the latter unduly denied his request. 17

Mayor Ganzon's primary argument (G.R. Nos. 93252 and 95245) is that the Secretary of Local Government is devoid, in any event, of any authority to suspend and remove local officials, an argument reiterated by the petitioner Mary Ann Rivera Artieda (G.R. No. 93746). As to Mayor Ganzon's charges of denial of due process, the records do not show very clearly in what manner the Mayor might have been deprived of his rights by the respondent Secretary. His claims that he and Secretary Luis-Santos were (are) political rivals and that his "persecution" was politically motivated are pure speculation and although the latter does not appear to have denied these contentions (as he, Mayor Ganzon, claims), we can not take his word for it the way we would have under less political circumstances, considering furthermore that "political feud" has often been a good excuse in contesting complaints. The Mayor has failed furthermore to substantiate his say-so's that Secretary Santos had attempted to seduce him to join the administration party and to operate a lottery in Iloilo City. Again, although the Secretary failed to rebut his allegations, we can not accept them, at face value, much more, as judicial admissions as he would have us accept them 18 for the same reasons above-stated and
furthermore, because his say so's were never corroborated by independent testimonies. As a responsible public official, Secretary Santos, in pursuing an official function, is presumed to be performing his duties regularly and in the absence of contrary evidence, no ill motive can be ascribed to him.

As to Mayor Ganzon's contention that he had requested the respondent Secretary to defer the hearing on account of the ninety-day ban prescribed by Section 62 of Batas Blg. 337, the Court finds the question to be moot and academic since we have in fact restrained the Secretary from further hearing the complaints against the petitioners. 19 As to his request, finally, for postponements, the Court is afraid that he has not given any compelling reason why we should overturn the Court of Appeals, which found no convincing reason to overrule 14

Secretary Santos in denying his requests. Besides, postponements are a matter of discretion on the part of the hearing officer, and based on Mayor Ganzon's above story, we are not convinced that the Secretary has been guilty of a grave abuse of discretion. The Court can not say, under these circumstances, that Secretary Santos' actuations deprived Mayor Ganzon of due process of law. We come to the core question: Whether or not the Secretary of Local Government, as the President's alter ego, can suspend and/or remove local officials. It is the petitioners' argument that the 1987 Constitution 20 no longer allows the President, as the 1935
and 1973 Constitutions did, to exercise the power of suspension and/or removal over local officials. According to both petitioners, the Constitution is meant, first, to strengthen self-rule by local government units and second, by deleting the phrase 21 as may be provided by law to strip the President of the power of control over local governments. It is a view, so they contend, that finds support in the debates of the Constitutional Commission. The provision in question reads as follows:

Sec. 4. The President of the Philippines shall exercise general supervision over local governments. Provinces with respect to component cities and municipalities, and cities and municipalities with respect to component barangays shall ensure that the acts of their component units are within the scope of their prescribed powers and functions. 22 It modifies a counterpart provision appearing in the 1935 Constitution, which we quote: Sec. 10. The President shall have control of all the executive departments, bureaus, or offices, exercise general supervision over all Local governments as may be provided by law, and take care that the laws be faithfully executed. 23 The petitioners submit that the deletion (of "as may be provided by law") is significant, as their argument goes, since: (1) the power of the President is "provided by law" and (2) hence, no law may provide for it any longer. It is to be noted that in meting out the suspensions under question, the Secretary of Local Government acted in consonance with the specific legal provisions of Batas Blg. 337, the Local Government Code, we quote: Sec. 62. Notice of Hearing. Within seven days after the complaint is filed, the Minister of local Government, or the sanggunian concerned, as the case may be, shall require the respondent to submit his verified answer within seven days from receipt of said complaint, and commence the hearing and investigation of the case within ten days after receipt of such answer of the respondent. No investigation shall be held within ninety days immediately prior to an election, and no preventive suspension shall be imposed with the said period. If preventive suspension has been imposed prior to the aforesaid period, the preventive suspension shall be lifted. 24 Sec. 63. Preventive Suspension. (1) Preventive suspension may be imposed by the Minister of Local Government if the respondent is a provincial or city official, by the provincial governor if the respondent is an elective municipal official, or by the city or municipal mayor if the respondent is an elective barangay official. (2) Preventive suspension may be imposed at any time after the issues are joined, when there is reasonable ground to believe that the respondent has committed the act or acts complained of, when the evidence of culpability is strong, when the gravity of the offense so warrants, or when the continuance in office of the respondent could influence the witnesses or pose a threat to the safety and integrity of the records and

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other evidence. In all cases, preventive suspension shall not extend beyond sixty days after the start of said suspension. (3) At the expiration of sixty days, the suspended official shall be deemed reinstated in office without prejudice to the continuation of the proceedings against him until its termination. However ' if the delay in the proceedings of the case is due to his fault, neglect or request, the time of the delay shall not be counted in computing the time of suspension. 25 The issue, as the Court understands it, consists of three questions: (1) Did the 1987 Constitution, in deleting the phrase "as may be provided by law" intend to divest the President of the power to investigate, suspend, discipline, and/or remove local officials? (2) Has the Constitution repealed Sections 62 and 63 of the Local Government Code? (3) What is the significance of the change in the constitutional language? It is the considered opinion of the Court that notwithstanding the change in the constitutional language, the charter did not intend to divest the legislature of its right or the President of her prerogative as conferred by existing legislation to provide administrative sanctions against local officials. It is our opinion that the omission (of "as may be provided by law") signifies nothing more than to underscore local governments' autonomy from congress and to break Congress' "control" over local government affairs. The Constitution did not, however, intend, for the sake of local autonomy, to deprive the legislature of all authority over municipal corporations, in particular, concerning discipline. Autonomy does not, after all, contemplate making mini-states out of local government units, as in the federal governments of the United States of America (or Brazil or Germany), although Jefferson is said to have compared municipal corporations euphemistically to "small republics." 26 Autonomy, in
the constitutional sense, is subject to the guiding star, though not control, of the legislature, albeit the legislative responsibility under the Constitution and as the "supervision clause" itself suggest-is to wean local government units from over-dependence on the central government.

It is noteworthy that under the Charter, "local autonomy" is not instantly self-executing, but subject to, among other things, the passage of a local government code, 27 a local tax law, 28 income
distribution legislation, 29 and a national representation law, 30 and measures 31 designed to realize autonomy at the local level. It is also noteworthy that in spite of autonomy, the Constitution places the local government under the general supervision of the Executive. It is noteworthy finally, that the Charter allows Congress to include in the local government code provisions for removal of local officials, which suggest that Congress may exercise removal powers, and as the existing Local Government Code has done, delegate its exercise to the President. Thus:

Sec. 3. The Congress shall enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanisms of recall, initiative, and referendum, allocate among the different local government units their powers, responsibilities and resources, and provide for the qualifications, election, appointment and removal, term, salaries, powers and functions and duties of local officials, and all other matters relating to the organization and operation of the local units. 32 As hereinabove indicated, the deletion of "as may be provided by law" was meant to stress, sub silencio, the objective of the framers to strengthen local autonomy by severing congressional control of its affairs, as observed by the Court of Appeals, like the power of local legislation. 33 The
Constitution did nothing more, however, and insofar as existing legislation authorizes the President (through the Secretary of Local Government) to proceed against local officials administratively, the Constitution contains no prohibition.

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The petitioners are under the impression that the Constitution has left the President mere supervisory powers, which supposedly excludes the power of investigation, and denied her control, which allegedly embraces disciplinary authority. It is a mistaken impression because legally, "supervision" is not incompatible with disciplinary authority as this Court has held, 34 thus: xxx xxx xxx It is true that in the case of Mondano vs. Silvosa, 51 Off. Gaz., No. 6 p. 2884, this Court had occasion to discuss the scope and extent of the power of supervision by the President over local government officials in contrast to the power of control given to him over executive officials of our government wherein it was emphasized that the two terms, control and supervision, are two different things which differ one from the other in meaning and extent. Thus in that case the Court has made the following digression: "In administration law supervision means overseeing or the power or authority of an officer to see that subordinate officers perform their duties. If the latter fail or neglect to fulfill them the former may take such action or step as prescribed by law to make them perform their duties. Control, on the other hand, means the power of an officer to alter or modify or nullify of set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for that of the latter." But from this pronouncement it cannot be reasonably inferred that the power of supervision of the President over local government officials does not include the power of investigation when in his opinion the good of the public service so requires, as postulated in Section 64(c) of the Revised Administrative Code. ... 35
xxx xxx xxx

"Control" has been defined as "the power of an officer to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for test of the latter."36 "Supervision" on the other hand means "overseeing or the power or
authority of an officer to see that subordinate officers perform their duties. 37 As we held, 38 however, "investigating" is not inconsistent with "overseeing", although it is a lesser power than "altering". The impression is apparently exacerbated by the Court's pronouncements in at least three cases,Lacson v. Roque, 39 Hebron v. Reyes, 40 and Mondano v. Silvosa, 41 and possibly, a fourth one, Pelaez v. Auditor General.42 In Lacson, this Court said that the President enjoyed no control powers but only supervision "as may be provided by law,"43 a rule we reiterated in Hebron, and Mondano. In Pelaez, we stated that the President "may not . . . suspend an elective official of a regular municipality or take any disciplinary action against him, except on appeal from a decision of the corresponding provincial board." 44 However, neither Lacson nor Hebron nor Mondano categorically banned the Chief Executive from exercising acts of disciplinary authority because she did not exercise control powers, but because no law allowed her to exercise disciplinary authority. Thus, according to Lacson:

The contention that the President has inherent power to remove or suspend municipal officers is without doubt not well taken. Removal and suspension of public officers are always controlled by the particular law applicable and its proper construction subject to constitutional limitations. 45 In Hebron we stated: Accordingly, when the procedure for the suspension of an officer is specified by law, the same must be deemed mandatory and adhered to strictly, in the absence of express or clear provision to the contrary-which does not et with respect to municipal officers ... 46 In Mondano, the Court held: ... The Congress has expressly and specifically lodged the provincial supervision over municipal officials in the provincial governor who is authorized to "receive and

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investigate complaints made under oath against municipal officers for neglect of duty, oppression, corruption or other form of maladministration of office, and conviction by final judgment of any crime involving moral turpitude." And if the charges are serious, "he shall submit written charges touching the matter to the provincial board, furnishing a copy of such charges to the accused either personally or by registered mail, and he may in such case suspend the officer (not being the municipal treasurer) pending action by the board, if in his opinion the charge by one affecting the official integrity of the officer in question." Section 86 of the Revised Administration Code adds nothing to the power of supervision to be exercised by the Department Head over the administration of ... municipalities ... . If it be construed that it does and such additional power is the same authority as that vested in the Department Head by section 79(c) of the Revised Administrative Code, then such additional power must be deemed to have been abrogated by Section 110(l), Article VII of the Constitution. 47 xxx xxx xxx In Pelaez, we stated that the President can not impose disciplinary measures on local officials except on appeal from the provincial board pursuant to the Administrative Code. 48 Thus, in those case that this Court denied the President the power (to suspend/remove) it was not because we did not think that the President can not exercise it on account of his limited power, but because the law lodged the power elsewhere. But in those cases ii which the law gave him the power, the Court, as in Ganzon v. Kayanan, found little difficulty in sustaining him. 49 The Court does not believe that the petitioners can rightfully point to the debates of the Constitutional Commission to defeat the President's powers. The Court believes that the deliberations are by themselves inconclusive, because although Commissioner Jose Nolledo would exclude the power of removal from the President, 50Commissioner Blas Ople would not. 51 The Court is consequently reluctant to say that the new Constitution has repealed the Local Government Code, Batas Blg. 37. As we said, "supervision" and "removal" are not incompatible terms and one may stand with the other notwithstanding the stronger expression of local autonomy under the new Charter. We have indeed held that in spite of the approval of the Charter, Batas Blg. 337 is still in force and effect. 52 As the Constitution itself declares, local autonomy means "a more responsive and accountable local government structure instituted through a system of decentralization." 53 The Constitution as we
observed, does nothing more than to break up the monopoly of the national government over the affairs of local governments and as put by political adherents, to "liberate the local governments from the imperialism of Manila." Autonomy, however, is not meant to end the relation of partnership and interdependence between the central administration and local government units, or otherwise, to user in a regime of federalism. The Charter has not taken such a radical step. Local governments, under the Constitution, are subject to regulation, however limited, and for no other purpose than precisely, albeit paradoxically, to enhance self- government.

As we observed in one case, 54 decentralization means devolution of national administration but not
power to the local levels. Thus:

Now, autonomy is either decentralization of administration or decentralization of power. There is decentralization of administration when the central government delegates administrative powers to political subdivisions in order to broaden the base of government power and in the process to make local governments "more responsive and accountable," and "ensure their fullest development as self-reliant communities and make them more effective partners in the pursuit of national development and social progress." At the same time, it relieves the central government of the burden of managing local affairs and enables it to concentrate on 18

national concerns. The President exercises "general supervision" over them, but only to "ensure that local affairs are administered according to law." He has no control over their acts in the sense that he can substitute their judgments with his own. Decentralization of power, on the other hand, involves an abdication of political power in the favor of local governments units declared to be autonomous, In that case, the autonomous government is free to chart its own destiny and shape its future with minimum intervention from central authorities. According to a constitutional author, decentralization of power amounts to "self-immolation," since in that event, the autonomous government becomes accountable not to the central authorities but to its constituency. 55 The successive sixty-day suspensions imposed on Mayor Rodolfo Ganzon is albeit another matter. What bothers the Court, and what indeed looms very large, is the fact that since the Mayor is facing ten administrative charges, the Mayor is in fact facing the possibility of 600 days of suspension, in the event that all ten cases yield prima faciefindings. The Court is not of course tolerating misfeasance in public office (assuming that Mayor Ganzon is guilty of misfeasance) but it is certainly another question to make him serve 600 days of suspension, which is effectively, to suspend him out of office. As we held: 56 2. Petitioner is a duly elected municipal mayor of Lianga, Surigao del Sur. His term of office does not expire until 1986. Were it not for this information and the suspension decreed by the Sandiganbayan according to the Anti-Graft and Corrupt Practices Act, he would have been all this while in the full discharge of his functions as such municipal mayor. He was elected precisely to do so. As of October 26, 1983, he has been unable to. it is a basic assumption of the electoral process implicit in the right of suffrage that the people are entitled to the services of elective officials of their choice. For misfeasance or malfeasance, any of them could, of course, be proceeded against administratively or, as in this instance, criminally. In either case, Ms culpability must be established. Moreover, if there be a criminal action, he is entitled to the constitutional presumption of innocence. A preventive suspension may be justified. Its continuance, however, for an unreasonable length of time raises a due process question. For even if thereafter he were acquitted, in the meanwhile his right to hold office had been nullified. Clearly, there would be in such a case an injustice suffered by him. Nor is he the only victim. There is injustice inflicted likewise on the people of Lianga They were deprived of the services of the man they had elected to serve as mayor. In that sense, to paraphrase Justice Cardozo, the protracted continuance of this preventive suspension had outrun the bounds of reason and resulted in sheer oppression. A denial of due process is thus quite manifest. It is to avoid such an unconstitutional application that the order of suspension should be lifted. 57 The plain truth is that this Court has been ill at ease with suspensions, for the above reasons, 58 and
so also, because it is out of the ordinary to have a vacancy in local government. The sole objective of a suspension, as we have held,59 is simply "to prevent the accused from hampering the normal cause of the investigation with his influence and authority over possible witnesses" 60 or to keep him off "the records and other evidence. 61

It is a means, and no more, to assist prosecutors in firming up a case, if any, against an erring local official. Under the Local Government Code, it can not exceed sixty days, 62 which is to say that it need
not be exactly sixty days long if a shorter period is otherwise sufficient, and which is also to say that it ought to be lifted if prosecutors have achieved their purpose in a shorter span.

Suspension is not a penalty and is not unlike preventive imprisonment in which the accused is held to insure his presence at the trial. In both cases, the accused (the respondent) enjoys a presumption of innocence unless and until found guilty.

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Suspension finally is temporary and as the Local Government Code provides, it may be imposed for no more than sixty days. As we held, 63 a longer suspension is unjust and unreasonable, and we might
add, nothing less than tyranny.

As we observed earlier, imposing 600 days of suspension which is not a remote possibility Mayor Ganzon is to all intents and purposes, to make him spend the rest of his term in inactivity. It is also to make, to all intents and purposes, his suspension permanent. It is also, in fact, to mete out punishment in spite of the fact that the Mayor's guilt has not been proven. Worse, any absolution will be for naught because needless to say, the length of his suspension would have, by the time he is reinstated, wiped out his tenure considerably. The Court is not to be mistaken for obstructing the efforts of the respondent Secretary to see that justice is done in Iloilo City, yet it is hardly any argument to inflict on Mayor Ganzon successive suspensions when apparently, the respondent Secretary has had sufficient time to gather the necessary evidence to build a case against the Mayor without suspending him a day longer. What is intriguing is that the respondent Secretary has been cracking down, so to speak, on the Mayor piecemeal apparently, to pin him down ten times the pain, when he, the respondent Secretary, could have pursued a consolidated effort. We reiterate that we are not precluding the President, through the Secretary of Interior from exercising a legal power, yet we are of the opinion that the Secretary of Interior is exercising that power oppressively, and needless to say, with a grave abuse of discretion. The Court is aware that only the third suspension is under questions, and that any talk of future suspensions is in fact premature. The fact remains, however, that Mayor Ganzon has been made to serve a total of 120 days of suspension and the possibility of sixty days more is arguably around the corner (which amounts to a violation of the Local Government Code which brings to light a pattern of suspensions intended to suspend the Mayor the rest of his natural tenure. The Court is simply foreclosing what appears to us as a concerted effort of the State to perpetuate an arbitrary act. As we said, we can not tolerate such a state of affairs. We are therefore allowing Mayor Rodolfo Ganzon to suffer the duration of his third suspension and lifting, for the purpose, the Temporary Restraining Order earlier issued. Insofar as the seven remaining charges are concerned, we are urging the Department of Local Government, upon the finality of this Decision, to undertake steps to expedite the same, subject to Mayor Ganzon's usual remedies of appeal, judicial or administrative, or certiorari, if warranted, and meanwhile, we are precluding the Secretary from meting out further suspensions based on those remaining complaints, notwithstanding findings of prima facie evidence. In resume the Court is laying down the following rules: 1. Local autonomy, under the Constitution, involves a mere decentralization of administration, not of power, in which local officials remain accountable to the central government in the manner the law may provide; 2. The new Constitution does not prescribe federalism; 3. The change in constitutional language (with respect to the supervision clause) was meant but to deny legislative control over local governments; it did not exempt the latter from legislative regulations provided regulation is consistent with the fundamental premise of autonomy; 4. Since local governments remain accountable to the national authority, the latter may, by law, and in the manner set forth therein, impose disciplinary action against local officials;

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5. "Supervision" and "investigation" are not inconsistent terms; "investigation" does not signify "control" (which the President does not have); 6. The petitioner, Mayor Rodolfo Ganzon. may serve the suspension so far ordered, but may no longer be suspended for the offenses he was charged originally; provided: a) that delays in the investigation of those charges "due to his fault, neglect or request, (the time of the delay) shall not be counted in computing the time of suspension. [Supra, sec. 63(3)] b) that if during, or after the expiration of, his preventive suspension, the petitioner commits another or other crimes and abuses for which proper charges are filed against him by the aggrieved party or parties, his previous suspension shall not be a bar to his being preventively suspended again, if warranted under subpar. (2), Section 63 of the Local Government Code. WHEREFORE, premises considered, the petitions are DISMISSED. The Temporary Restraining Order issued is LIFTED. The suspensions of the petitioners are AFFIRMED, provided that the petitioner, Mayor Rodolfo Ganzon, may not be made to serve future suspensions on account of any of the remaining administrative charges pending against him for acts committed prior to August 11, 1988. The Secretary of Interior is ORDERED to consolidate all such administrative cases pending against Mayor Ganzon. The sixty-day suspension against the petitioner, Mary Ann Rivera Artieda, is AFFIRMED. No costs. SO ORDERED. Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Grio-Aquino, Medialdea, Regalado and Davide, Jr., JJ concur.

Footnotes 1 Rollo, G.R. No. 93252, 76; 77. 2 Hon. Bonifacio Cacdac, Jr., J. 3 Rollo, Id., 76-77. 4 Id., 77. 5 Id., 77-78. 6 Id., 78. The first suspension was on the Cabaluna and Ortigoza complaints. CAG.R. No. 16417 was on the Erbite complaint. CA-G.R. No. 20736 was a challenge on the designation of Vice- Mayor Malabor. 7 Id., 21 8 Id. 9 Id., 27.

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10 Id., 28. 11 Id., 30. 12 Id 31-32. 13 Id., 34-35. 14 Id., 36. 15 Id. 16 Id 17 Id., 38. 18 Id . 19 By virtue of the Temporary Restraining Order the Court issued on June 26,1990. 20 CONST., art. X, sec. 4. 21 CONST. (1935), art, X, sec. 10(l). The 1973 Constitution contained no similar provision, but see art. VII, sec. 18. 22 CONST. (1987), supra. 23 CONST. (1935), supra. 24 Batas Blg. 337, sec. 62. 25 Supra, sec. 63. 26 CRUZ, PHILIPPINE POLITICAL LAW 64 (1987 ed.) 27 CONST., supra, art. X, sec. 3. 28 Supra, secs. 5, 6. 29 Supra, sec. 7. 30 Supra, sec. 9. 31 See supra, sec. 14, providing for regional development councils to be organized by the President. 32 Supra, sec. 3. 33 G.R. No. 95245, Id., 53; see Mendoza, J., Concurring. 34 Ganzon v. Kayanan, 104 Phil. 484 (1985). In this concurrence (Id., 48-61), Justice Mendoza cited this case. 35 Supra, 489-490.

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36 Mondano v. Silvosa, 97 Phil. 143,148 (1955). 37 Supra, 147. 38 Ganzon v. Kayanan, supra. 39 92 Phil. 456 (1953). 40 104 Phil. 175 (1958). 41 Supra. 42 No. L-23825, December 24,1965,15 SCRA 569. 43 Lacson v. Roque, supra, 463. 44 Pelaez v. Auditor General, supra, 583. 45 Lacson v. Roque, supra, 462. 46 Hebron v. Reyes, supra, 185. 47 Mondano v. Silvosa, supra, 148. 48 Pelaez v. Auditor General, supra, 583. 49 G.R. No. 95245, Id., 50-51; see Mendoza, J., Concurring. 50 Id., 23. 51 Id., 53. 52 Bagabuyo v. Davide, G.R. No. 87233, September 21,1989. 53 CONST., supra, art. X, see. 3. 54 Limbona v. Mangelin G.R. No. 80391, February 28,1989,170 SCRA 786. 55 Supra, 794-795. 56 Layno, Sr. v. Sandiganbayan, No. 65848, May 24, 1985, 136 SCRA 536, 57 Supra, 541. 58 See supra. 59 Lacson v. Roque, supra. 60 Supra, 469. 61 Batas Blg. 337, sec. 63. 62 Supra.

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63 Layno, Sr. v. Sandiganbayan, supra.

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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-12892 April 30, 1960

THE CITY OF CEBU, plaintiff-appellee, vs. THE NATIONAL WATERWORKS and SEWERAGE AUTHORITY, defendant-appellant. Ramon Duterte, Quirico del Mar, and Asst. City Fiscal Rafael Ybaez for appellee. Actg. Solicitor General Guillermo E. Torres and Govt. Corporate Counsel Juan C. Jimenez for appellant. BARRERA, J.: To prevent the National Waterworks and Sewerage Authority (NAWASA), created under Republic Act No. 1383, from taking over the ownership, control, supervision, and jurisdiction over the Osmea Waterworks System, pursuant to the provisions of Section 8 of the said Act, the City of Cebu filed an action for declaratory relief in the Court of First Instance of Cebu, naming the NAWASA as defendant, praying for a clear interpretation of the provisions of said R. A. No. 1383; a declaration of the rights and obligations of the parties thereunder; and a declaration that the statute or any part thereof, in so far as it deprives the plaintiff of its property rights in the Osmea Waterworks System without due process of law and just compensation, is unconstitutional. In its answer, NAWASA contended that as the System had always been under the control and operation of National Government, its transfer to the defendant NAWASA was within the competence of Congress to do; that even assuming that the said System belonged to plaintiff, it was public property and therefore, within the absolute control of Congress; and that granting that it was patrimonial property, there was proper and just compensation provided for in Republic Act No. 1383 for its transfer NAWASA. After due trial, the lower court rendered judgment which was later amended, declaring Republic Act No. 1383 unconstitutional "in so far as it vests in defendant authority (NAWASA) ownership over the Osmea Waterworks System without just compensation as required by the Constitution, without prejudice to granting positive coercive relief upon proper showing that defendant insists upon taking ownership of the Osmea Waterworks System," the same time upholding the defendant's right of control, jurisdiction and supervision over the said System. The question as to what acts of the NAWASA would constitute acts of ownership or dominion and what would be considered as an exercise of jurisdiction, supervision and control was left open for future determination. From this decision the present appeal has been interposed by the defendant NAWASA. The facts as found by the lower court and upon which its decision was based, are as follows: By an Act of 27 December 1910, the now defunct Philippine Legislature authorized the Municipality of Cebu, Province of Cebu, Philippines, to insurance indebtedness of $125,000.00 in money the United States, and to issue bonds covering the amount of said indebtedness in gold coin of the United States, for the purpose of providing funds for the construction of sewer and drainage facilities, to secure a sufficient supply of water and necessary buildings for primary schools, and for other purposes (Act No. 2009). The Act provided that the proceeds of the sale of the bond issue should be placed by the Treasurer of the Philippines to the credit of the municipality, to be drawn therefrom by appropriations by the Municipal Council of Cebu. It exclusively charged the municipality with the obligation of

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reimbursing the same from its current revenues. (Sections 4 and 7, Act No. 2009). The bonds which were to mature in 1941 were expressly declared exempt from taxes by the government of the United States or by the government of the Philippine Islands, and its political or municipal subdivisions, or by any state or territory of the United States. (Sec. 1, Act No. 2009). Pursuant to the statute, the Municipality of Cebu floated the bond issue and invested part of the proceeds of the sale thereof in the construction of a waterworks system to supply water to its inhabitants. The system came to be known as the Osmea Waterworks System in honor of the illustrious son of Cebu, former President Sergio Osmea, Sr., who was then the Speaker of the National Assembly that approved Act No. 2009. Since its establishment, the System has been supplying the inhabitants of the municipality of Cebu with water originally taken exclusively from the Buhisan basin, within an area of approximately five hundred hectares, and which is admittedly within a government reservation. The basin catches the rain water run-off from the surrounding hills and impounds it in a reinforced concrete dam. From the dam the water is conveyed in a 14 inch main pipe to the Tisa Filters where it is treated or purified by means of coagulants, rapid sand filtration and chlorination. After the purification process, the water is stored in a four million-gallon clear water reservoir. From the Tisa Filters the water is finally conveyed through a 16-inch conduit to the city for distribution to the paying customers of the system. By statute, the City of Cebu came into existence as a political body corporate on 20 October 1936. (Sec. 2. Commonwealth Act No. 58). The newly created city absorbed the former municipality of Cebu. (Sec. 3, Commonwealth Act No. 58). Among the general powers granted to, and duties imposed upon, the legislative body of the City, known as the Municipal Board, is that of providing for the maintenance of waterworks for the purpose of supplying water to the inhabitants of the city, and the purification of the source of supply and the places through which the same passes, and to regulate the consumption and use of the water; to fix and provide for the collection of rents therefor; and to regulate the construction, repair, and use of hydrants, pumps, cisterns, and reservoirs. Sec. 17-x. Commonwealth Act 58).Pursuant to the aforesaid charter provision, the Municipal Board the City of Cebu has been running and operating the Osmea Waterworks System. Its municipal Board provides for the budgetary expenses of the System and governs the disposition of the System's revenue. On 16 November 1948, the Public Service Commission granted plaintiff City a certificate of public convenience to operate and maintain the Osmea Waterworks System, subject to the terms and conditions imposed therein Exh. E). For the purpose of expanding the service to meet the water needs of its increased population, the City of Cebu, on 11 December 1950 filed with the Department of Agriculture and Natural Resources an application for the use of water emanating from a natural spring in a private land belonging to the late Dr. Pio Valencia, situated in Hagubiao, Consolacion, Cebu. The said application was in due time approved by the department head. Page 5, Exh C). On 17 June 1955, defendant Authority was created as a public corporation. (Sec. 1, Republic Act No. 1383). Pursuant to its charter, defendant shall own and/or have jurisdiction, supervision and control over all territory now embraced by the Metropolitan Water District as well as all areas now served by existing government-owned waterworks and sewerage and drainage systems within the boundaries of cities, municipalities, and municipal districts in the Philippines including those served by the Waterworks and Wells and Drills Sections of the Bureau of Public Works' (Sec. 1). Defendant was also given the power "to acquire, purchase, hold, transfer, sell, lease, rent, mortgage, encumber, and otherwise dispose of real and personal property including rights and franchises within the Philippines, as authorized by the purposes for which the Authority was created and reasonably and necessarily required for 26

the transaction of the lawful business of the same unless otherwise provided in this Act", and to exercise the right of eminent domain for the purpose for which the Authority was created, in the manner provided for by law for condemnation proceedings by the national, provincial, and municipal governments; (Sec. 2, paragraphs [h] and [i]). Lastly, the Act provides that "all existing government-owned waterworks and sewerage systems in cities, municipalities and municipal districts, including springs and other water sources, as well as the water-works and sewerage bonds, sinking funds, and all indebtedness in general of the said Metropolitan Water District, and government-owned waterworks and sewerage systems are transferred to the National Waterworks and Sewerage Authority, and the Board is hereby authorized and directed to receive and assume all such assets and liabilities or on behalf of the said Authority, and in turn to pledge such assets as security for the payment of waterworks and sewerage bonded debt" and that the net book value of the properties and assets of the Metropolitan Water District and of government owned waterworks and sewerage systems in cities, municipalities, or municipal districts, and other government-owned waterworks and sewerage systems shall be received by the Authority in payment for an equal value of the assets of the National Waterworks and Sewerage Authority. (Sec. 8). Appellant, in its appeal, claims that the lower court erred: 1. In declaring Republic Act Number 1383 unconstitutional in that it vests in defendant ownership and control of the Osmea Waterworks System without just compensation as required by the Constitution. 2. In not holding that under the legitimate exercise of the police power of the State, Congress has the authority to enact a law transferring the Osmea Waterworks System to another agency of the Government such as the defendant National Waterworks and Sewerage Authority in this case. 3. In declaring that Republic Act Number 1383 does not provide for just compensation and also in refusing to recognize the right of the National Government to acquire the Osmea Waterworks System by eminent domain. 4. In not dismissing the plaintiff's complaint. The issues presented above are basically the same as those raised and determined by this court in the recent case of the City of Baguio vs. The National Waterworks and Sewerage Authority, 106 Phil., 144; 57 Off. Gaz. [9] 1579. In the aforesaid case, passing upon the question of whether Republic Act No. 1383 provides for the automatic expropriation of the waterworks mentioned therein, we held, citing Section 6, Article XIII and Section 1-(2), Article III of our Constitution, this wise: It is clear that the State may, in the interest of national welfare, transfer to public ownership any private enterprise upon payment of just compensation. At the same time, one has to bear in mind that no person can be deprived of his property except for public use and upon payment of just compensation. There is an attempt to observe this requirement in Republic Act No. 1383 when in providing for the transfer of appellee's waterworks system to a national agency it was directed that the transfer be made upon payment of an equivalent value of the property. Has this been implemented? Has appellant actually transferred appellee any asset of the NAWASA that may be considered just compensation for the property expropriated? There is nothing in the record to show that such was done. Neither is there anything to this effect in Office Memorandum No. 7 issued by the NAWASA in implementation of the provision of Republic Act No. 1383. The law speaks of assets of the NAWASA but they are not specified. While the Act empowers the NAWASA to contract indebtedness and issue bonds subject to the approval of the Secretary of Finance when necessary for the transaction of its business (sec. 2, pa (1),sec. 5, Act No. 1383), no such action has been taken to comply

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with appellant's commitment in so far as payment of compensation of appellee is concerned. As to when such action should be taken no one knows. And unless this aspect of the law is clarified and appellee is given its due compensation, appellee cannot be deprived of its property even if appellant desires to take over its administration in line with the spirit of the law. We are therefore persuaded to conclude that the law, insofar as it expropriates the waterworks in question without providing for an effective payment of just compensation, violates our Constitution. Exactly the same situation obtains in the present case. Section 8 of Republic Act No. 1383 (supra.) provides that "the net book value of the properties and assets of the Metropolitan Water District and of government-owned waterworks and sewerage systems in cities, municipalities of municipal districts, and other government-owned waterworks and sewerage systems shall be received by the Authority in payment for an equal value of the assets of the National Waterworks and Sewerage Authority". In other words, all the properties and assets of the Osmea Waterworks System are transferred to the defendant NAWASA in exchange for an equal value of the latter's assets. But what these assets consist of, nothing concrete presently appears. All that is provided in Section 8 is that NAWASA acquires all the assets and liabilities of all government-owned waterworks and sewerage systems in the country. It is an equal value of these unliquidated assets and liabilities that is supposed to be given to plaintiff-appellee as payment of its System. Such, certainly, is not a compensation that satisfies the Constitutional provisions. Appellant, however, maintains that the waterworks involved herein is not a patrimonial property of the City of Cebu but one for public use and, therefore, falls within the control of the legislature. We find no merit in his contention. It must be remembered that the Osmea Waterworks System was established out of the $125,000.00 loan extended to the municipality of Cebu by the U.S. Government, payable within 30 years from the release thereof (Sec. 1, Act 2009), and which apparently was fully paid for by said municipality as certified to by the Insular Treasurer (Exh. D). For its operation and maintenance, the City of Cebu (Osmea Waterworks System) applied for and obtained a certificate of public convenience from the Public Service Commission (Exh. E) and was made subject to the rates fixed and regulations imposed by said body. The System owned properties which appellee estimated at P10,000,000.00, although appellant claims it to be worth only P1,000,000.00, and operates on a budget approved by its Board of Directors (not by Congress), the disbursement of which was placed under the supervision and custody of the City Treasurer (t.s.n., pp. 28-29). The mere fact that the Buhisan basin where the water is collected stands on a government reservation, and that the System was created to serve the needs of the residents of said City (upon payment of certain rates from which the System derives material gain), to our mind do not transform the proprietary nature of appellee's ownership over the same to governmental or public. The flaw in appellant's contention that the System is a public works for public service is due to an apparent misapprehension that because the System serves the public in a manner of speaking, it is, but that token alone, necessarily for public service. The contention overlooks the fact that only those of the general public who pay the required rental or charge authorized and collected by the System, do make use of water. In other words, the System serves all who pay the charges. It is open to the public (in the sense, it is public service), but upon the payment only of a certain rental (which makes it proprietary.) Article 424 of New Civil Code cited by appellant makes clear distinction. It reads: ART. 424. Property for public use, in the province, cities, municipalities, consist of the provincial roads, city streets, municipal streets, the squares, fountains, public waters, promenades, public works for public service paid for by said provinces, cities 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. Thus, the term "public works for public service" must be interpreted, following the principle of ejusdem generis, in the concept of the preceding words "provincial roads, city streets, municipal streets, the squares, fountains, public waters and promenades" which are used freely by all without 28

distinction. Hence, if the public works is not such freepublic service, it is not within the purview the first paragraph, but of the second paragraph of Article 424, and, consequently, patrimonial in character. And, as already held by this Court, a municipal water system designed to supply water to the inhabitants for profit is a corporate function of the municipality (Mendoza vs. Leon, 33 Phil., 508, citing Omaha Water Co. vs. Omaha, 12 L.R.A. [N.S.] 736; C.C.A. 267; 147 Fed. 1; Jodson vs. Borough of Winsted, 80 Conn. 384; 15 L.R.A. [N.S,.), 91. Cases differ as to the public and private character of water works in some respects, but the weight of authority, in so far as legislative control is concerned, classes them as private affairs (Shirk vs. City of Lancaster, 313 Pa. 158, 169 Alt. 557, 90 A.L.R. 688, cited in City of Baguio vs. National Waterworks and Sewerage Authority, supra.) The consequential effect of such declaration is foreseeable, thus: Although the state may regulate the service and rates of water plants owned and operated by municipalities, such property is not employed for governmental purposes and in the ownership operation thereof the municipality acts in its proprietary capacity, free from legislative interference (1 McQuillin, p. 683). The water system of a city not being a property held for governmental purposes is not subject to legislative control (Kenton Water Co. vs. City of Covington, 156 Ky. 569, 161 SW 988). In the ownership and control of a water system purchased by the city out of the proceeds of the loan contracted for that purpose, the city acts in its proprietary character as distinguished from its government capacity (Helena Consolidated Water Co. vs. Steele, 20 Mont. 1, 49 Pac., 382, 37 L.R.A. 412; Public Service Commission vs. City of Helena, 52 Mont. 527; 159 Pac. 24). Similarly, we cannot uphold appellant's theory that the transfer of ownership of the Osmea Waterworks System to another government agency is a valid exercise of the police power of the State, because while the power to enact laws intended to promote public order, safety, health, morals and general welfare of society is inherent in every sovereign state (Churchill vs. Rafferty, 32 Phil., 580), such power is not without limitations, notable among which is the constitutional prohibition against the taking of private property for public use without just compensation. (Art. III, Sec. 1, Philippine Constitution.). No exercise of the police power can disregard the constitutional guarantees in respect to the taking of private property, due process and equal protection of the laws and it should not override the demands of natural justice (People vs. Chicago, M & St. P.R. Co., 306 Ill. 486, 138 N.E. 155, 28 A.L.R. 610.) If a statute purporting to have been enacted to protect the public health, morals or safety, has no real or substantial reason to these objects, or is a palpable invasion of rights secured by fundamental law, it is the duty of courts to so adjudge, and thereby give effect to the Constitution, (Gaines & Co. vs. Holmes, 15, Ga. 344, 114 S.E. 327, 27 A.L.R. 98.) Action in the nature of police regulation is void if against the express provisions of the Constitution although otherwise within its general power to make police regulations. (State vs. Froechlich. 115 Wis. 32, 91 N.W. 115) Appellant also urges recognition of the right of the National Government (through the National Waterworks & Sewerage Authority) to acquire the Osmea Waterworks System by eminent domain. This, we find to be equally untenable, for one of the essential requisites to the lawful exercise of this right is the payment to the owner of condemned property of just compensation to be ascertained according to law (Western Union Tel. Co. vs.Louisville, etc. R. Co., 270 Ill. 399; 110 NE 583, Ann.

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Cas 1917B, 760; II Cooley's Constitutional Limitations, p. 1110). Needless to state in this respect, that it is precisely for this reason, that is, lack of provision regarding effective payment of just compensation, that Republic Act No. 1383 was declared violative of the Constitution, in the case of City of Baguio vs. National Waterworks & Sewerage Authority. Wherefore, and finding no reason to depart from the established jurisprudence on the matter, the decision appealed from is hereby affirmed, without costs. So ordered. Paras, C. J., Bengzon, Montemayor, Bautista Angelo, Labrador, Concepcion, Endencia and Gutierrez David, JJ.,concur.

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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-24440 March 28, 1968

THE PROVINCE OF ZAMBOANGA DEL NORTE, plaintiff-appellee, vs. CITY OF ZAMBOANGA, SECRETARY OF FINANCE and COMMISSIONER OF INTERNAL REVENUE,defendants-appellants. Fortugaleza, Lood, Sarmiento, M. T. Yap & Associates for plaintiff-appellee. Office of the Solicitor General for defendants-appellants. BENGZON, J.P., J.: Prior to its incorporation as a chartered city, the Municipality of Zamboanga used to be the provincial capital of the then Zamboanga Province. On October 12, 1936, Commonwealth Act 39 was approved converting the Municipality of Zamboanga into Zamboanga City. Sec. 50 of the Act also provided that Buildings and properties which the province shall abandon upon the transfer of the capital to another place will be acquired and paid for by the City of Zamboanga at a price to be fixed by the Auditor General. The properties and buildings referred to consisted of 50 lots and some buildings constructed thereon, located in the City of Zamboanga and covered individually by Torrens certificates of title in the name of Zamboanga Province. As far as can be gleaned from the records, 1 said properties were being utilized as follows No. of Lots Use 1 ................................................ Capitol Site 3 ................................................ School Site 3 ................................................ Hospital Site 3 ................................................ Leprosarium 1 ................................................ Curuan School 1 ................................................ Trade School 2 ................................................ Burleigh School 2 ................................................ High School Playground 9 ................................................ Burleighs 1 ................................................ Hydro-Electric Site (Magay) 1 ................................................ San Roque 23 ................................................ vacant It appears that in 1945, the capital of Zamboanga Province was transferred to Dipolog. 2 Subsequently, or on June 16, 1948, Republic Act 286 was approved creating the municipality of Molave and making it the capital of Zamboanga Province.

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On May 26, 1949, the Appraisal Committee formed by the Auditor General, pursuant to Commonwealth Act 39, fixed the value of the properties and buildings in question left by Zamboanga Province in Zamboanga City at P1,294,244.00. 3 On June 6, 1952, Republic Act 711 was approved dividing the province of Zamboanga into two (2): Zamboanga del Norte and Zamboanga del Sur. As to how the assets and obligations of the old province were to be divided between the two new ones, Sec. 6 of that law provided: Upon the approval of this Act, the funds, assets and other properties and the obligations of the province of Zamboanga shall be divided equitably between the Province of Zamboanga del Norte and the Province of Zamboanga del Sur by the President of the Philippines, upon the recommendation of the Auditor General. Pursuant thereto, the Auditor General, on January 11, 1955, apportioned the assets and obligations of the defunct Province of Zamboanga as follows: 54.39% for Zamboanga del Norte and 45.61% for Zamboanga del Sur. Zamboanga del Norte therefore became entitled to 54.39% of P1,294,244.00, the total value of the lots and buildings in question, or P704,220.05 payable by Zamboanga City. On March 17, 1959, the Executive Secretary, by order of the President, issued a ruling 4 holding that Zamboanga del Norte had a vested right as owner (should be co-owner proindiviso) of the properties mentioned in Sec. 50 of Commonwealth Act 39, and is entitled to the price thereof, payable by Zamboanga City. This ruling revoked the previous Cabinet Resolution of July 13, 1951 conveying all the said 50 lots and buildings thereon to Zamboanga City for P1.00, effective as of 1945, when the provincial capital of the then Zamboanga Province was transferred to Dipolog. The Secretary of Finance then authorized the Commissioner of Internal Revenue to deduct an amount equal to 25% of the regular internal revenue allotment for the City of Zamboanga for the quarter ending March 31, 1960, then for the quarter ending June 30, 1960, and again for the first quarter of the fiscal year 1960-1961. The deductions, all aggregating P57,373.46, was credited to the province of Zamboanga del Norte, in partial payment of the P764,220.05 due it. However, on June 17, 1961, Republic Act 3039 was approved amending Sec. 50 of Commonwealth Act 39 by providing that All buildings, properties and assets belonging to the former province of Zamboanga and located within the City of Zamboanga are hereby transferred, free of charge, in favor of the said City of Zamboanga. (Stressed for emphasis). Consequently, the Secretary of Finance, on July 12, 1961, ordered the Commissioner of Internal Revenue to stop from effecting further payments to Zamboanga del Norte and to return to Zamboanga City the sum of P57,373.46 taken from it out of the internal revenue allotment of Zamboanga del Norte. Zamboanga City admits that since the enactment of Republic Act 3039, P43,030.11 of the P57,373.46 has already been returned to it. This constrained plaintiff-appellee Zamboanga del Norte to file on March 5, 1962, a complaint entitled "Declaratory Relief with Preliminary Mandatory Injunction" in the Court of First Instance of Zamboanga del Norte against defendants-appellants Zamboanga City, the Secretary of Finance and the Commissioner of Internal Revenue. It was prayed that: (a) Republic Act 3039 be declared unconstitutional for depriving plaintiff province of property without due process and just compensation; (b) Plaintiff's rights and obligations under said law be declared; (c) The Secretary of Finance and the Internal Revenue Commissioner be enjoined from reimbursing the sum of P57,373.46 to defendant City; and (d) The latter be ordered to continue paying the balance of P704,220.05 in quarterly installments of 25% of its internal revenue allotments.

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On June 4, 1962, the lower court ordered the issuance of preliminary injunction as prayed for. After defendants filed their respective answers, trial was held. On August 12, 1963, judgment was rendered, the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered declaring Republic Act No. 3039 unconstitutional insofar as it deprives plaintiff Zamboanga del Norte of its private properties, consisting of 50 parcels of land and the improvements thereon under certificates of title (Exhibits "A" to "A-49") in the name of the defunct province of Zamboanga; ordering defendant City of Zamboanga to pay to the plaintiff the sum of P704,220.05 payment thereof to be deducted from its regular quarterly internal revenue allotment equivalent to 25% thereof every quarter until said amount shall have been fully paid; ordering defendant Secretary of Finance to direct defendant Commissioner of Internal Revenue to deduct 25% from the regular quarterly internal revenue allotment for defendant City of Zamboanga and to remit the same to plaintiff Zamboanga del Norte until said sum of P704,220.05 shall have been fully paid; ordering plaintiff Zamboanga del Norte to execute through its proper officials the corresponding public instrument deeding to defendant City of Zamboanga the 50 parcels of land and the improvements thereon under the certificates of title (Exhibits "A" to "A-49") upon payment by the latter of the aforesaid sum of P704,220.05 in full; dismissing the counterclaim of defendant City of Zamboanga; and declaring permanent the preliminary mandatory injunction issued on June 8, 1962, pursuant to the order of the Court dated June 4, 1962. No costs are assessed against the defendants. It is SO ORDERED. Subsequently, but prior to the perfection of defendants' appeal, plaintiff province filed a motion to reconsider praying that Zamboanga City be ordered instead to pay the P704,220.05 in lump sum with 6% interest per annum. Over defendants' opposition, the lower court granted plaintiff province's motion. The defendants then brought the case before Us on appeal. Brushing aside the procedural point concerning the property of declaratory relief filed in the lower court on the assertion that the law had already been violated and that plaintiff sought to give it coercive effect, since assuming the same to be true, the Rules anyway authorize the conversion of the proceedings to an ordinary action, 5 We proceed to the more important and principal question of the validity of Republic Act 3039. The validity of the law ultimately depends on the nature of the 50 lots and buildings thereon in question. For, the matter involved here is the extent of legislative control over the properties of a municipal corporation, of which a province is one. The principle itself is simple: If the property is owned by the municipality (meaning municipal corporation) in its public and governmental capacity, the property is public and Congress has absolute control over it. But if the property is owned in its private or proprietary capacity, then it is patrimonial and Congress has no absolute control. The municipality cannot be deprived of it without due process and payment of just compensation. 6 The capacity in which the property is held is, however, dependent on the use to which it is intended and devoted. Now, which of two norms, i.e., that of the Civil Code or that obtaining under the law of Municipal Corporations, must be used in classifying the properties in question? The Civil Code classification is embodied in its Arts. 423 and 424 which provide:
1w ph1.t

ART. 423. The property of provinces, cities, and municipalities is divided into property for public use and patrimonial property. ART. 424. Property for public use, in the provinces, cities, and municipalities, consists of the provincial roads, city streets, municipal streets, the squares, fountains, public waters,

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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. (Stressed for emphasis). Applying the above cited norm, all the properties in question, except the two (2) lots used as High School playgrounds, could be considered as patrimonial properties of the former Zamboanga province. Even the capital site, the hospital and leprosarium sites, and the school sites will be considered patrimonial for they are not for public use. They would fall under the phrase "public works for public service" for it has been held that under theejusdem generis rule, such public works must be for free and indiscriminate use by anyone, just like the preceding enumerated properties in the first paragraph of Art 424. 7 The playgrounds, however, would fit into this category. This was the norm applied by the lower court. And it cannot be said that its actuation was without jurisprudential precedent for in Municipality of Catbalogan v. Director of Lands, 8 and in Municipality of Tacloban v. Director of Lands, 9 it was held that the capitol site and the school sites in municipalities constitute their patrimonial properties. This result is understandable because, unlike in the classification regarding State properties, properties for public service in the municipalities are not classified as public. Assuming then the Civil Code classification to be the chosen norm, the lower court must be affirmed except with regard to the two (2) lots used as playgrounds. On the other hand, applying the norm obtaining under the principles constituting the law of Municipal Corporations, all those of the 50 properties in question which are devoted to public service are deemed public; the rest remain patrimonial. Under this norm, to be considered public, it is enough that the property be held and, devoted for governmental purposes like local administration, public education, public health, etc. 10 Supporting jurisprudence are found in the following cases: (1) HINUNANGAN V. DIRECTOR OF LANDS, 11where it was stated that "... where the municipality has occupied lands distinctly for public purposes, such as for the municipal court house, the public school, the public market, or other necessary municipal building, we will, in the absence of proof to the contrary, presume a grant from the States in favor of the municipality; but, as indicated by the wording, that rule may be invoked only as to property which is used distinctly for public purposes...." (2) VIUDA DE TANTOCO V. MUNICIPAL COUNCIL OF ILOILO 12 held that municipal properties necessary for governmental purposes are public in nature. Thus, the auto trucks used by the municipality for street sprinkling, the police patrol automobile, police stations and concrete structures with the corresponding lots used as markets were declared exempt from execution and attachment since they were not patrimonial properties. (3) MUNICIPALITY OF BATANGAS VS. CANTOS 13 held squarely that a municipal lot which had always been devoted to school purposes is one dedicated to public use and is not patrimonial property of a municipality. Following this classification, Republic Act 3039 is valid insofar as it affects the lots used as capitol site, school sites and its grounds, hospital and leprosarium sites and the high school playground sites a total of 24 lots since these were held by the former Zamboanga province in its governmental capacity and therefore are subject to the absolute control of Congress. Said lots considered as public property are the following: TCT Number 2200 2816 3281 3282 3283 Lot Number ...................................... 4-B ...................................... 149 ...................................... 1224 ...................................... 1226 ...................................... 1225 Use ...................................... Capitol Site ...................................... School Site ...................................... Hospital Site ...................................... Hospital Site ...................................... Hospital Site

34

3748 5406 5564 5567 5583 6181 11942 11943 11944 5557 5562 5565 5570 5571 5572 5573 5585 5586 5587

...................................... 434-A-1 ...................................... 171 ...................................... 168 ...................................... 157 & 158

...................................... School Site ...................................... School Site High School Play...................................... ground ...................................... Trade School ......................................

High School Playground ...................................... (O.C.T.) ...................................... Curuan School ...................................... 926 ...................................... Leprosarium ...................................... 927 ...................................... Leprosarium ...................................... 925 ...................................... Leprosarium ...................................... 170 ...................................... Burleigh School ...................................... 180 ...................................... Burleigh School ...................................... 172-B ...................................... Burleigh ...................................... 171-A ...................................... Burleigh ...................................... 172-C ...................................... Burleigh ...................................... 174 ...................................... Burleigh ...................................... 178 ...................................... Burleigh ...................................... 171-B ...................................... Burleigh ...................................... 173 ...................................... Burleigh ...................................... 172-A ...................................... Burleigh ...................................... 167

We noticed that the eight Burleigh lots above described are adjoining each other and in turn are between the two lots wherein the Burleigh schools are built, as per records appearing herein and in the Bureau of Lands. Hence, there is sufficient basis for holding that said eight lots constitute the appurtenant grounds of the Burleigh schools, and partake of the nature of the same. Regarding the several buildings existing on the lots above-mentioned, the records do not disclose whether they were constructed at the expense of the former Province of Zamboanga. Considering however the fact that said buildings must have been erected even before 1936 when Commonwealth Act 39 was enacted and the further fact that provinces then had no power to authorize construction of buildings such as those in the case at bar at their own expense, 14 it can be assumed that said buildings were erected by the National Government, using national funds. Hence, Congress could very well dispose of said buildings in the same manner that it did with the lots in question. But even assuming that provincial funds were used, still the buildings constitute mere accessories to the lands, which are public in nature, and so, they follow the nature of said lands, i.e., public. Moreover, said buildings, though located in the city, will not be for the exclusive use and benefit of city residents for they could be availed of also by the provincial residents. The province then and its successors-in-interest are not really deprived of the benefits thereof. But Republic Act 3039 cannot be applied to deprive Zamboanga del Norte of its share in the value of the rest of the 26 remaining lots which are patrimonial properties since they are not being utilized for distinctly, governmental purposes. Said lots are: TCT Number Lot Number Use 5577 ...................................... 177 ...................................... Mydro, Magay 13198 ...................................... 127-0 ...................................... San Roque 5569 ...................................... 169 ...................................... Burleigh 15

35

5558 5559 5560 5561 5563 5566 5568 5574 5575 5576 5578 5579 5580 5581 5582 5584 5588 5589 5590 5591 5592 5593 7379

...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ......................................

175 ...................................... Vacant 188 ...................................... " 183 ...................................... " 186 ...................................... " 191 ...................................... " 176 ...................................... " 179 ...................................... " 196 ...................................... " 181-A ...................................... " 181-B ...................................... " 182 ...................................... " 197 ...................................... " 195 ...................................... " 159-B ...................................... " 194 ...................................... " 190 ...................................... " 184 ...................................... " 187 ...................................... " 189 ...................................... " 192 ...................................... " 193 ...................................... " 185 ...................................... " 4147 ...................................... "

Moreover, the fact that these 26 lots are registered strengthens the proposition that they are truly private in nature. On the other hand, that the 24 lots used for governmental purposes are also registered is of no significance since registration cannot convert public property to private. 16 We are more inclined to uphold this latter view. The controversy here is more along the domains of the Law of Municipal Corporations State vs. Province than along that of Civil Law. Moreover, this Court is not inclined to hold that municipal property held and devoted to public service is in the same category as ordinary private property. The consequences are dire. As ordinary private properties, they can be levied upon and attached. They can even be acquired thru adverse possession all these to the detriment of the local community. Lastly, the classification of properties other than those for public use in the municipalities as patrimonial under Art. 424 of the Civil Code is "... without prejudice to the provisions of special laws." For purpose of this article, the principles, obtaining under the Law of Municipal Corporations can be considered as "special laws". Hence, the classification of municipal property devoted for distinctly governmental purposes as public should prevail over the Civil Code classification in this particular case. Defendants' claim that plaintiff and its predecessor-in-interest are "guilty of laches is without merit. Under Commonwealth Act 39, Sec. 50, the cause of action in favor of the defunct Zamboanga Province arose only in 1949 after the Auditor General fixed the value of the properties in question. While in 1951, the Cabinet resolved transfer said properties practically for free to Zamboanga City, a reconsideration thereof was seasonably sought. In 1952, the old province was dissolved. As successor-in-interest to more than half of the properties involved, Zamboanga del Norte was able to get a reconsideration of the Cabinet Resolution in 1959. In fact, partial payments were effected subsequently and it was only after the passage of Republic Act 3039 in 1961 that the present controversy arose. Plaintiff brought suit in 1962. All the foregoing, negative laches.

36

It results then that Zamboanga del Norte is still entitled to collect from the City of Zamboanga the former's 54.39% share in the 26 properties which are patrimonial in nature, said share to computed on the basis of the valuation of said 26 properties as contained in Resolution No. 7, dated March 26, 1949, of the Appraisal Committee formed by the Auditor General. Plaintiff's share, however, cannot be paid in lump sum, except as to the P43,030.11 already returned to defendant City. The return of said amount to defendant was without legal basis. Republic Act 3039 took effect only on June 17, 1961 after a partial payment of P57,373.46 had already been made. Since the law did not provide for retroactivity, it could not have validly affected a completed act. Hence, the amount of P43,030.11 should be immediately returned by defendant City to plaintiff province. The remaining balance, if any, in the amount of plaintiff's 54.39% share in the 26 lots should then be paid by defendant City in the same manner originally adopted by the Secretary of Finance and the Commissioner of Internal Revenue, and not in lump sum. Plaintiff's prayer, particularly pars. 5 and 6, read together with pars. 10 and 11 of the first cause of action recited in the complaint 17 clearly shows that the relief sought was merely the continuance of the quarterly payments from the internal revenue allotments of defendant City. Art. 1169 of the Civil Code on reciprocal obligations invoked by plaintiff to justify lump sum payment is inapplicable since there has been so far in legal contemplation no complete delivery of the lots in question. The titles to the registered lots are not yet in the name of defendant Zamboanga City. WHEREFORE, the decision appealed from is hereby set aside and another judgment is hereby entered as follows:. (1) Defendant Zamboanga City is hereby ordered to return to plaintiff Zamboanga del Norte in lump sum the amount of P43,030.11 which the former took back from the latter out of the sum of P57,373.46 previously paid to the latter; and (2) Defendants are hereby ordered to effect payments in favor of plaintiff of whatever balance remains of plaintiff's 54.39% share in the 26 patrimonial properties, after deducting therefrom the sum of P57,373.46, on the basis of Resolution No. 7 dated March 26, 1949 of the Appraisal Committee formed by the Auditor General, by way of quarterly payments from the allotments of defendant City, in the manner originally adopted by the Secretary of Finance and the Commissioner of Internal Revenue. No costs. So ordered. Reyes, J.B.L., Actg. C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur. Concepcion, C.J., is on leave. Footnotes
1

See Record on Appeal, pp. 4-6. See Exhibit C. The Committee report itself was not submitted as evidence Exhibit C. Rule 64, Sec. 6, Rules of Court.

2 McQuillin, Municipal Corporations, 3rd ed., 191-196; Martin Public Corporation, 5th ed., 31-32; Gonzales, Law on Public Corporations, 1962 ed., 29-30; Municipality of Naguilian v. NWSA, L-18452, Nov. 29, 1963.
7

Cebu City v. NWSA, L-12892, Apr. 30, 1962.

37

17 Phil. 216. 17 Phil. 426. Martin, op. cit., supra.; Gonzales, op cit., supra.; 62 C.J. 8. 437-439. 24 Phil. 124. 49 Phil. 52. 91 Phil. 514.

10

11

12

13

14

It was only in Republic Act 2264, Sec. 3, last paragraph, that provinces, cities and municipalities were "... authorized to undertake and carry out any public works projects, financed by the provincial city and municipal funds or any other fund borrowed from or advanced by private third parties .. without the intervention of the Department of Public Works and Communications." (Stressed for emphasis) This law was approved and took effect on June 19, 1959.
15

This could not be considered as forming part of the appurtenant grounds of the Burleigh school sites since the records here and in the Bureau of Lands show that this lot is set apart from the other Burleigh lots.
16

Republic v. Sioson, L-13687, Nov. 29, 1963; Hodges V. City of Iloilo, L-17573, June 30, 1962.
17

Record on Appeal, pp. 8-9, 13.

The Lawphil Project - Arellano Law Foundation

38

Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. 111097 July 20, 1994 MAYOR PABLO P. MAGTAJAS & THE CITY OF CAGAYAN DE ORO, petitioners, vs. PRYCE PROPERTIES CORPORATION, INC. & PHILIPPINE AMUSEMENT AND GAMING CORPORATION,respondents. Aquilino G. Pimentel, Jr. and Associates for petitioners. R.R. Torralba & Associates for private respondent.

CRUZ, J.: There was instant opposition when PAGCOR announced the opening of a casino in Cagayan de Oro City. Civic organizations angrily denounced the project. The religious elements echoed the objection and so did the women's groups and the youth. Demonstrations were led by the mayor and the city legislators. The media trumpeted the protest, describing the casino as an affront to the welfare of the city. The trouble arose when in 1992, flush with its tremendous success in several cities, PAGCOR decided to expand its operations to Cagayan de Oro City. To this end, it leased a portion of a building belonging to Pryce Properties Corporation, Inc., one of the herein private respondents, renovated and equipped the same, and prepared to inaugurate its casino there during the Christmas season. The reaction of the Sangguniang Panlungsod of Cagayan de Oro City was swift and hostile. On December 7, 1992, it enacted Ordinance No. 3353 reading as follows: ORDINANCE NO. 3353 AN ORDINANCE PROHIBITING THE ISSUANCE OF BUSINESS PERMIT AND CANCELLING EXISTING BUSINESS PERMIT TO ANY ESTABLISHMENT FOR THE USING AND ALLOWING TO BE USED ITS PREMISES OR PORTION THEREOF FOR THE OPERATION OF CASINO. BE IT ORDAINED by the Sangguniang Panlungsod of the City of Cagayan de Oro, in session assembled that: Sec. 1. That pursuant to the policy of the city banning the operation of casino within its territorial jurisdiction, no business permit shall be issued to any person, partnership or corporation for the operation of casino within the city limits. Sec. 2. That it shall be a violation of existing business permit by any persons, partnership or corporation to use its business establishment or portion thereof, or allow the use thereof by others for casino operation and other gambling activities.

39

Sec. 3. PENALTIES. Any violation of such existing business permit as defined in the preceding section shall suffer the following penalties, to wit: a) Suspension of the business permit for sixty (60) days for the first offense and a fine of P1,000.00/day b) Suspension of the business permit for Six (6) months for the second offense, and a fine of P3,000.00/day c) Permanent revocation of the business permit and imprisonment of One (1) year, for the third and subsequent offenses. Sec. 4. This Ordinance shall take effect ten (10) days from publication thereof. Nor was this all. On January 4, 1993, it adopted a sterner Ordinance No. 3375-93 reading as follows: ORDINANCE NO. 3375-93 AN ORDINANCE PROHIBITING THE OPERATION OF CASINO AND PROVIDING PENALTY FOR VIOLATION THEREFOR. WHEREAS, the City Council established a policy as early as 1990 against CASINO under its Resolution No. 2295; WHEREAS, on October 14, 1992, the City Council passed another Resolution No. 2673, reiterating its policy against the establishment of CASINO; WHEREAS, subsequently, thereafter, it likewise passed Ordinance No. 3353, prohibiting the issuance of Business Permit and to cancel existing Business Permit to any establishment for the using and allowing to be used its premises or portion thereof for the operation of CASINO; WHEREAS, under Art. 3, section 458, No. (4), sub paragraph VI of the Local Government Code of 1991 (Rep. Act 7160) and under Art. 99, No. (4), Paragraph VI of the implementing rules of the Local Government Code, the City Council as the Legislative Body shall enact measure to suppress any activity inimical to public morals and general welfare of the people and/or regulate or prohibit such activity pertaining to amusement or entertainment in order to protect social and moral welfare of the community; NOW THEREFORE, BE IT ORDAINED by the City Council in session duly assembled that: Sec. 1. The operation of gambling CASINO in the City of Cagayan de Oro is hereby prohibited. Sec. 2. Any violation of this Ordinance shall be subject to the following penalties: a) Administrative fine of P5,000.00 shall be imposed against the proprietor, partnership or corporation undertaking the operation, conduct, maintenance of gambling CASINO in the City and closure thereof;

40

b) Imprisonment of not less than six (6) months nor more than one (1) year or a fine in the amount of P5,000.00 or both at the discretion of the court against the manager, supervisor, and/or any person responsible in the establishment, conduct and maintenance of gambling CASINO. Sec. 3. This Ordinance shall take effect ten (10) days after its publication in a local newspaper of general circulation. Pryce assailed the ordinances before the Court of Appeals, where it was joined by PAGCOR as intervenor and supplemental petitioner. Their challenge succeeded. On March 31, 1993, the Court of Appeals declared the ordinances invalid and issued the writ prayed for to prohibit their enforcement. 1 Reconsideration of this decision was denied on July 13, 1993. 2 Cagayan de Oro City and its mayor are now before us in this petition for review under Rule 45 of the Rules of Court. 3 They aver that the respondent Court of Appeals erred in holding that: 1. Under existing laws, the Sangguniang Panlungsod of the City of Cagayan de Oro does not have the power and authority to prohibit the establishment and operation of a PAGCOR gambling casino within the City's territorial limits. 2. The phrase "gambling and other prohibited games of chance" found in Sec. 458, par. (a), sub-par. (1) (v) of R.A. 7160 could only mean "illegal gambling." 3. The questioned Ordinances in effect annul P.D. 1869 and are therefore invalid on that point. 4. The questioned Ordinances are discriminatory to casino and partial to cockfighting and are therefore invalid on that point. 5. The questioned Ordinances are not reasonable, not consonant with the general powers and purposes of the instrumentality concerned and inconsistent with the laws or policy of the State. 6. It had no option but to follow the ruling in the case of Basco, et al. v. PAGCOR, G.R. No. 91649, May 14, 1991, 197 SCRA 53 in disposing of the issues presented in this present case. PAGCOR is a corporation created directly by P.D. 1869 to help centralize and regulate all games of chance, including casinos on land and sea within the territorial jurisdiction of the Philippines. In Basco v. Philippine Amusements and Gaming Corporation, 4 this Court sustained the
constitutionality of the decree and even cited the benefits of the entity to the national economy as the third highest revenue-earner in the government, next only to the BIR and the Bureau of Customs.

Cagayan de Oro City, like other local political subdivisions, is empowered to enact ordinances for the purposes indicated in the Local Government Code. It is expressly vested with the police power under what is known as the General Welfare Clause now embodied in Section 16 as follows: Sec. 16. General Welfare. Every local government unit shall exercise the powers expressly granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local government units shall ensure and support, among other things, the preservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced ecology, encourage and support the development of appropriate and self-reliant scientific and technological capabilities, improve public morals, enhance economic prosperity and social justice, 41

promote full employment among their residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants. In addition, Section 458 of the said Code specifically declares that: Sec. 458. Powers, Duties, Functions and Compensation. (a) The Sangguniang Panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the city as provided for under Section 22 of this Code, and shall: (1) Approve ordinances and pass resolutions necessary for an efficient and effective city government, and in this connection, shall: xxx xxx xxx (v) Enact ordinances intended to prevent, suppress and impose appropriate penalties for habitual drunkenness in public places, vagrancy, mendicancy, prostitution, establishment and maintenance of houses of ill repute,gambling and other prohibited games of chance, fraudulent devices and ways to obtain money or property, drug addiction, maintenance of drug dens, drug pushing, juvenile delinquency, the printing, distribution or exhibition of obscene or pornographic materials or publications, and such other activities inimical to the welfare and morals of the inhabitants of the city; This section also authorizes the local government units to regulate properties and businesses within their territorial limits in the interest of the general welfare. 5 The petitioners argue that by virtue of these provisions, the Sangguniang Panlungsod may prohibit the operation of casinos because they involve games of chance, which are detrimental to the people. Gambling is not allowed by general law and even by the Constitution itself. The legislative power conferred upon local government units may be exercised over all kinds of gambling and not only over "illegal gambling" as the respondents erroneously argue. Even if the operation of casinos may have been permitted under P.D. 1869, the government of Cagayan de Oro City has the authority to prohibit them within its territory pursuant to the authority entrusted to it by the Local Government Code. It is submitted that this interpretation is consonant with the policy of local autonomy as mandated in Article II, Section 25, and Article X of the Constitution, as well as various other provisions therein seeking to strengthen the character of the nation. In giving the local government units the power to prevent or suppress gambling and other social problems, the Local Government Code has recognized the competence of such communities to determine and adopt the measures best expected to promote the general welfare of their inhabitants in line with the policies of the State. The petitioners also stress that when the Code expressly authorized the local government units to prevent and suppress gambling and other prohibited games of chance, like craps, baccarat, blackjack and roulette, it meant allforms of gambling without distinction. Ubi lex non distinguit, nec nos distinguere debemos. 6 Otherwise, it would have expressly excluded from the scope of their power
casinos and other forms of gambling authorized by special law, as it could have easily done. The fact that it did not do so simply means that the local government units are permitted to prohibit all kinds of gambling within their territories, including the operation of casinos.

42

The adoption of the Local Government Code, it is pointed out, had the effect of modifying the charter of the PAGCOR. The Code is not only a later enactment than P.D. 1869 and so is deemed to prevail in case of inconsistencies between them. More than this, the powers of the PAGCOR under the decree are expressly discontinued by the Code insofar as they do not conform to its philosophy and provisions, pursuant to Par. (f) of its repealing clause reading as follows: (f) All general and special laws, acts, city charters, decrees, executive orders, proclamations and administrative regulations, or part or parts thereof which are inconsistent with any of the provisions of this Code are hereby repealed or modified accordingly. It is also maintained that assuming there is doubt regarding the effect of the Local Government Code on P.D. 1869, the doubt must be resolved in favor of the petitioners, in accordance with the direction in the Code calling for its liberal interpretation in favor of the local government units. Section 5 of the Code specifically provides: Sec. 5. Rules of Interpretation. In the interpretation of the provisions of this Code, the following rules shall apply: (a) Any provision on a power of a local government unit shall be liberally interpreted in its favor, and in case of doubt, any question thereon shall be resolved in favor of devolution of powers and of the lower local government unit. Any fair and reasonable doubt as to the existence of the power shall be interpreted in favor of the local government unit concerned; xxx xxx xxx (c) The general welfare provisions in this Code shall be liberally interpreted to give more powers to local government units in accelerating economic development and upgrading the quality of life for the people in the community; . . . (Emphasis supplied.) Finally, the petitioners also attack gambling as intrinsically harmful and cite various provisions of the Constitution and several decisions of this Court expressive of the general and official disapprobation of the vice. They invoke the State policies on the family and the proper upbringing of the youth and, as might be expected, call attention to the old case of U.S. v. Salaveria, 7 which sustained a municipal
ordinance prohibiting the playing of panguingue. The petitioners decry the immorality of gambling. They also impugn the wisdom of P.D. 1869 (which they describe as "a martial law instrument") in creating PAGCOR and authorizing it to operate casinos "on land and sea within the territorial jurisdiction of the Philippines."

This is the opportune time to stress an important point. The morality of gambling is not a justiciable issue. Gambling is not illegal per se. While it is generally considered inimical to the interests of the people, there is nothing in the Constitution categorically proscribing or penalizing gambling or, for that matter, even mentioning it at all. It is left to Congress to deal with the activity as it sees fit. In the exercise of its own discretion, the legislature may prohibit gambling altogether or allow it without limitation or it may prohibit some forms of gambling and allow others for whatever reasons it may consider sufficient. Thus, it has prohibited jueteng and monte but permits lotteries, cockfighting and horse-racing. In making such choices, Congress has consulted its own wisdom, which this Court has no authority to review, much less reverse. Well has it been said that courts do not sit to resolve the merits of conflicting theories. 8 That is the prerogative of the
political departments. It is settled that questions regarding the wisdom, morality, or practicibility of statutes are not addressed to the judiciary but may be resolved only by the legislative and executive departments, to which the function belongs in our scheme of government. That function is exclusive. Whichever way

43

these branches decide, they are answerable only to their own conscience and the constituents who will ultimately judge their acts, and not to the courts of justice.

The only question we can and shall resolve in this petition is the validity of Ordinance No. 3355 and Ordinance No. 3375-93 as enacted by the Sangguniang Panlungsod of Cagayan de Oro City. And we shall do so only by the criteria laid down by law and not by our own convictions on the propriety of gambling. The tests of a valid ordinance are well established. A long line of decisions 9 has held that to be valid,
an ordinance must conform to the following substantive requirements:

1) It must not contravene the constitution or any statute. 2) It must not be unfair or oppressive. 3) It must not be partial or discriminatory. 4) It must not prohibit but may regulate trade. 5) It must be general and consistent with public policy. 6) It must not be unreasonable. We begin by observing that under Sec. 458 of the Local Government Code, local government units are authorized to prevent or suppress, among others, "gambling and other prohibited games of chance." Obviously, this provision excludes games of chance which are not prohibited but are in fact permitted by law. The petitioners are less than accurate in claiming that the Code could have excluded such games of chance but did not. In fact it does. The language of the section is clear and unmistakable. Under the rule of noscitur a sociis, a word or phrase should be interpreted in relation to, or given the same meaning of, words with which it is associated. Accordingly, we conclude that since the word "gambling" is associated with "and other prohibited games of chance," the word should be read as referring to only illegal gambling which, like the other prohibited games of chance, must be prevented or suppressed. We could stop here as this interpretation should settle the problem quite conclusively. But we will not. The vigorous efforts of the petitioners on behalf of the inhabitants of Cagayan de Oro City, and the earnestness of their advocacy, deserve more than short shrift from this Court. The apparent flaw in the ordinances in question is that they contravene P.D. 1869 and the public policy embodied therein insofar as they prevent PAGCOR from exercising the power conferred on it to operate a casino in Cagayan de Oro City. The petitioners have an ingenious answer to this misgiving. They deny that it is the ordinances that have changed P.D. 1869 for an ordinance admittedly cannot prevail against a statute. Their theory is that the change has been made by the Local Government Code itself, which was also enacted by the national lawmaking authority. In their view, the decree has been, not really repealed by the Code, but merely "modified pro tanto" in the sense that PAGCOR cannot now operate a casino over the objection of the local government unit concerned. This modification of P.D. 1869 by the Local Government Code is permissible because one law can change or repeal another law. It seems to us that the petitioners are playing with words. While insisting that the decree has only been "modifiedpro tanto," they are actually arguing that it is already dead, repealed and useless for all intents and purposes because the Code has shorn PAGCOR of all power to centralize and regulate casinos. Strictly speaking, its operations may now be not only prohibited by the local government unit; in fact, the prohibition is not only discretionary but mandated by Section 458 of the Code if the word "shall" as used therein is to be given its accepted meaning. Local government units have now no choice but to prevent and suppress gambling, which in the petitioners' view includes 44

both legal and illegal gambling. Under this construction, PAGCOR will have no more games of chance to regulate or centralize as they must all be prohibited by the local government units pursuant to the mandatory duty imposed upon them by the Code. In this situation, PAGCOR cannot continue to exist except only as a toothless tiger or a white elephant and will no longer be able to exercise its powers as a prime source of government revenue through the operation of casinos. It is noteworthy that the petitioners have cited only Par. (f) of the repealing clause, conveniently discarding the rest of the provision which painstakingly mentions the specific laws or the parts thereof which are repealed (or modified) by the Code. Significantly, P.D. 1869 is not one of them. A reading of the entire repealing clause, which is reproduced below, will disclose the omission: Sec. 534. Repealing Clause. (a) Batas Pambansa Blg. 337, otherwise known as the "Local Government Code," Executive Order No. 112 (1987), and Executive Order No. 319 (1988) are hereby repealed. (b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees, orders, instructions, memoranda and issuances related to or concerning the barangay are hereby repealed. (c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding hospital fund; Section 3, a (3) and b (2) of Republic Act. No. 5447 regarding the Special Education Fund; Presidential Decree No. 144 as amended by Presidential Decree Nos. 559 and 1741; Presidential Decree No. 231 as amended; Presidential Decree No. 436 as amended by Presidential Decree No. 558; and Presidential Decree Nos. 381, 436, 464, 477, 526, 632, 752, and 1136 are hereby repealed and rendered of no force and effect. (d) Presidential Decree No. 1594 is hereby repealed insofar as it governs locallyfunded projects. (e) The following provisions are hereby repealed or amended insofar as they are inconsistent with the provisions of this Code: Sections 2, 16, and 29 of Presidential Decree No. 704; Sections 12 of Presidential Decree No. 87, as amended; Sections 52, 53, 66, 67, 68, 69, 70, 71, 72, 73, and 74 of Presidential Decree No. 463, as amended; and Section 16 of Presidential Decree No. 972, as amended, and (f) All general and special laws, acts, city charters, decrees, executive orders, proclamations and administrative regulations, or part or parts thereof which are inconsistent with any of the provisions of this Code are hereby repealed or modified accordingly. Furthermore, it is a familiar rule that implied repeals are not lightly presumed in the absence of a clear and unmistakable showing of such intention. In Lichauco & Co. v. Apostol, 10 this Court
explained:

The cases relating to the subject of repeal by implication all proceed on the assumption that if the act of later date clearly reveals an intention on the part of the lawmaking power to abrogate the prior law, this intention must be given effect; but there must always be a sufficient revelation of this intention, and it has become an unbending rule of statutory construction that the intention to repeal a former law will not be imputed to the Legislature when it appears that the two statutes, or provisions, with reference to which the question arises bear to each other the relation of general to special. There is no sufficient indication of an implied repeal of P.D. 1869. On the contrary, as the private respondent points out, PAGCOR is mentioned as the source of funding in two later enactments of

45

Congress, to wit, R.A. 7309, creating a Board of Claims under the Department of Justice for the benefit of victims of unjust punishment or detention or of violent crimes, and R.A. 7648, providing for measures for the solution of the power crisis. PAGCOR revenues are tapped by these two statutes. This would show that the PAGCOR charter has not been repealed by the Local Government Code but has in fact been improved as it were to make the entity more responsive to the fiscal problems of the government. It is a canon of legal hermeneutics that instead of pitting one statute against another in an inevitably destructive confrontation, courts must exert every effort to reconcile them, remembering that both laws deserve a becoming respect as the handiwork of a coordinate branch of the government. On the assumption of a conflict between P.D. 1869 and the Code, the proper action is not to uphold one and annul the other but to give effect to both by harmonizing them if possible. This is possible in the case before us. The proper resolution of the problem at hand is to hold that under the Local Government Code, local government units may (and indeed must) prevent and suppress all kinds of gambling within their territories except only those allowed by statutes like P.D. 1869. The exception reserved in such laws must be read into the Code, to make both the Code and such laws equally effective and mutually complementary. This approach would also affirm that there are indeed two kinds of gambling, to wit, the illegal and those authorized by law. Legalized gambling is not a modern concept; it is probably as old as illegal gambling, if not indeed more so. The petitioners' suggestion that the Code authorizes them to prohibit all kinds of gambling would erase the distinction between these two forms of gambling without a clear indication that this is the will of the legislature. Plausibly, following this theory, the City of Manila could, by mere ordinance, prohibit the Philippine Charity Sweepstakes Office from conducting a lottery as authorized by R.A. 1169 and B.P. 42 or stop the races at the San Lazaro Hippodrome as authorized by R.A. 309 and R.A. 983. In light of all the above considerations, we see no way of arriving at the conclusion urged on us by the petitioners that the ordinances in question are valid. On the contrary, we find that the ordinances violate P.D. 1869, which has the character and force of a statute, as well as the public policy expressed in the decree allowing the playing of certain games of chance despite the prohibition of gambling in general. The rationale of the requirement that the ordinances should not contravene a statute is obvious. Municipal governments are only agents of the national government. Local councils exercise only delegated legislative powers conferred on them by Congress as the national lawmaking body. The delegate cannot be superior to the principal or exercise powers higher than those of the latter. It is a heresy to suggest that the local government units can undo the acts of Congress, from which they have derived their power in the first place, and negate by mere ordinance the mandate of the statute. Municipal corporations owe their origin to, and derive their powers and rights wholly from the legislature. It breathes into them the breath of life, without which they cannot exist. As it creates, so it may destroy. As it may destroy, it may abridge and control. Unless there is some constitutional limitation on the right, the legislature might, by a single act, and if we can suppose it capable of so great a folly and so great a wrong, sweep from existence all of the municipal corporations in the State, and the corporation could not prevent it. We know of no limitation on the right so far as to the corporation themselves are concerned. They are, so to phrase it, the mere tenants at will of the legislature. 11 This basic relationship between the national legislature and the local government units has not been enfeebled by the new provisions in the Constitution strengthening the policy of local autonomy. Without meaning to detract from that policy, we here confirm that Congress retains control of the local government units although in significantly reduced degree now than under our previous Constitutions. The power to create still includes the power to destroy. The power to grant still includes the power to withhold or recall. True, there are certain notable innovations in the Constitution, like the direct conferment on the local government units of the power to tax, 12which 46

cannot now be withdrawn by mere statute. By and large, however, the national legislature is still the principal of the local government units, which cannot defy its will or modify or violate it.

The Court understands and admires the concern of the petitioners for the welfare of their constituents and their apprehensions that the welfare of Cagayan de Oro City will be endangered by the opening of the casino. We share the view that "the hope of large or easy gain, obtained without special effort, turns the head of the workman"13 and that "habitual gambling is a cause of laziness and
ruin." 14 In People v. Gorostiza, 15 we declared: "The social scourge of gambling must be stamped out. The laws against gambling must be enforced to the limit." George Washington called gambling "the child of avarice, the brother of iniquity and the father of mischief." Nevertheless, we must recognize the power of the legislature to decide, in its own wisdom, to legalize certain forms of gambling, as was done in P.D. 1869 and impliedly affirmed in the Local Government Code. That decision can be revoked by this Court only if it contravenes the Constitution as the touchstone of all official acts. We do not find such contravention here.

We hold that the power of PAGCOR to centralize and regulate all games of chance, including casinos on land and sea within the territorial jurisdiction of the Philippines, remains unimpaired. P.D. 1869 has not been modified by the Local Government Code, which empowers the local government units to prevent or suppress only those forms of gambling prohibited by law. Casino gambling is authorized by P.D. 1869. This decree has the status of a statute that cannot be amended or nullified by a mere ordinance. Hence, it was not competent for the Sangguniang Panlungsod of Cagayan de Oro City to enact Ordinance No. 3353 prohibiting the use of buildings for the operation of a casino and Ordinance No. 3375-93 prohibiting the operation of casinos. For all their praiseworthy motives, these ordinances are contrary to P.D. 1869 and the public policy announced therein and are therefore ultra vires and void. WHEREFORE, the petition is DENIED and the challenged decision of the respondent Court of Appeals is AFFIRMED, with costs against the petitioners. It is so ordered. Narvasa, C.J., Feliciano, Bidin, Regalado, Romero, Bellosillo, Melo, Quiason, Puno, Vitug, Kapunan and Mendoza, JJ., concur.

Separate Opinions

PADILLA, J., concurring: I concur with the majority holding that the city ordinances in question cannot modify much less repeal PAGCOR's general authority to establish and maintain gambling casinos anywhere in the Philippines under Presidential Decree No. 1869. In Basco v. Philippine Amusement and Gaming Corporation (PAGCOR), 197 SCRA 52, I stated in a separate opinion that: . . . I agree with the decision insofar as it holds that the prohibition, control, and regulation of the entire activity known as gambling properly pertain to "state policy". It is, therefore, the political departments of government, namely, the legislative and the executive that should decide on what government should do in the entire area of 47

gambling, and assume full responsibility to the people for such policy." (Emphasis supplied) However, despite the legality of the opening and operation of a casino in Cagayan de Oro City by respondent PAGCOR, I wish to reiterate my view that gambling in any form runs counter to the government's own efforts to re-establish and resurrect the Filipino moral character which is generally perceived to be in a state of continuing erosion. It is in the light of this alarming perspective that I call upon government to carefully weigh the advantages and disadvantages of setting up more gambling facilities in the country. That the PAGCOR contributes greatly to the coffers of the government is not enough reason for setting up more gambling casinos because, undoubtedly, this will not help improve, but will cause a further deterioration in the Filipino moral character. It is worth remembering in this regard that, 1) what is legal is not always moral and 2) the ends do not always justify the means. As in Basco, I can easily visualize prostitution at par with gambling. And yet, legalization of the former will not render it any less reprehensible even if substantial revenue for the government can be realized from it. The same is true of gambling. In the present case, it is my considered view that the national government (through PAGCOR) should re-examine and re-evaluate its decision of imposing the gambling casino on the residents of Cagayan de Oro City; for it is abundantly clear that public opinion in the city is very much against it, and again the question must be seriously deliberated: will the prospects of revenue to be realized from the casino outweigh the further destruction of the Filipino sense of values?

DAVIDE, JR., J., concurring: While I concur in part with the majority, I wish, however, to express my views on certain aspects of this case. I. It must at once be noted that private respondent Pryce Properties Corporation (PRYCE) directly filed with the Court of Appeals its so-called petition for prohibition, thereby invoking the said court's original jurisdiction to issue writs of prohibition under Section 9(1) of B.P. Blg. 129. As I see it, however, the principal cause of action therein is one for declaratory relief: to declare null and unconstitutional for, inter alia, having been enacted without or in excess of jurisdiction, for impairing the obligation of contracts, and for being inconsistent with public policy the challenged ordinances enacted by the Sangguniang Panglungsod of the City of Cagayan de Oro. The intervention therein of public respondent Philippine Amusement and Gaming Corporation (PAGCOR) further underscores the "declaratory relief" nature of the action. PAGCOR assails the ordinances for being contrary to the non-impairment and equal protection clauses of the Constitution, violative of the Local Government Code, and against the State's national policy declared in P.D. No. 1869. Accordingly, the Court of Appeals does not have jurisdiction over the nature of the action. Even assuming arguendo that the case is one for prohibition, then, under this Court's established policy relative to the hierarchy of courts, the petition should have been filed with the Regional Trial Court of Cagayan de Oro City. I find no special or compelling reason why it was not filed with the said court. I do not wish to entertain the thought that PRYCE doubted a favorable verdict therefrom, in which case the filing of the petition with the Court of Appeals may have been impelled by tactical considerations. A dismissal of the petition by the Court of Appeals would have been in order

48

pursuant to our decisions in People vs. Cuaresma (172 SCRA 415, [1989]) and Defensor-Santiago vs. Vasquez (217 SCRA 633 [1993]). In Cuaresma, this Court stated: A last word. This court's original jurisdiction to issue writs of certiorari (as well as prohibition,mandamus, quo warranto, habeas corpus and injunction) is not exclusive. It is shared by this Court with Regional Trial Courts (formerly Courts of First Instance), which may issue the writ, enforceable in any part of their respective regions. It is also shared by this court, and by the Regional Trial Court, with the Court of Appeals (formerly, Intermediate Appellate Court), although prior to the effectivity ofBatas Pambansa Bilang 129 on August 14, 1981, the latter's competence to issue the extraordinary writs was restricted by those "in aid of its appellate jurisdiction." This concurrence of jurisdiction is not, however, to be taken as according to parties seeking any of the writs an absolute, unrestrained freedom of choice of the court to which application therefor will be directed. There is after all a hierarchy of courts. That hierarchy is determinative of the revenue of appeals, and should also serve as a general determinant of the appropriate forum for petitions for the extraordinary writs. A becoming regard for that judicial hierarchy most certainly indicates that petitions for the issuance of extraordinary writs against first level ("inferior") courts should be filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct invocation of the Supreme Court's original jurisdiction to issue these writs should be allowed only when there are special and important reasons therefor, clearly and specifically set out in the petition. This is established policy. It is a policy that is necessary to prevent inordinate demands upon the Court's time and attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of the Court's docket. Indeed, the removal of the restriction of the jurisdiction of the Court of Appeals in this regard, supra resulting from the deletion of the qualifying phrase, "in aid of its appellate jurisdiction" was evidently intended precisely to relieve this Court pro tanto of the burden of dealing with applications for extraordinary writs which, but for the expansion of the Appellate Court's corresponding jurisdiction, would have had to be filed with it. (citations omitted) And in Vasquez, this Court said: One final observation. We discern in the proceedings in this case a propensity on the part of petitioner, and, for that matter, the same may be said of a number of litigants who initiate recourses before us, to disregard the hierarchy of courts in our judicial system by seeking relief directly from this Court despite the fact that the same is available in the lower courts in the exercise of their original or concurrent jurisdiction, or is even mandated by law to be sought therein. This practice must be stopped, not only because of the imposition upon the previous time of this Court but also because of the inevitable and resultant delay, intended or otherwise, in the adjudication of the case which often has to be remanded or referred to the lower court as the proper forum under the rules of procedure, or as better equipped to resolve the issues since this Court is not a trier of facts. We, therefore, reiterate the judicial policy that this Court will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify availment of a remedy within and calling for the exercise of our primary jurisdiction. II. The challenged ordinances are (a) Ordinance No. 3353 entitled, "An Ordinance Prohibiting the Issuance of Business Permit and Canceling Existing Business Permit To Any Establishment for the Using and Allowing to be Used Its Premises or Portion Thereof for the Operation of Casino," and (b) Ordinance No. 3375-93 entitled, "An Ordinance Prohibiting the Operation of Casino and Providing Penalty for Violation Therefor." They were enacted to implement Resolution No. 2295 entitled, 49

"Resolution Declaring As a Matter of Policy to Prohibit and/or Not to Allow the Establishment of the Gambling Casino in the City of Cagayan de Oro," which was promulgated on 19 November 1990 nearly two years before PRYCE and PAGCOR entered into a contract of lease under which the latter leased a portion of the former's Pryce Plaza Hotel for the operation of a gambling casino which resolution was vigorously reiterated in Resolution No. 2673 of 19 October 1992. The challenged ordinances were enacted pursuant to the Sangguniang Panglungsod's express powers conferred by Section 458, paragraph (a), subparagraphs (1)-(v), (3)-(ii), and (4)-(i), (iv), and (vii), Local Government Code, and pursuant to its implied power under Section 16 thereof (the general welfare clause) which reads: Sec. 16. General Welfare. Every local government unit shall exercise the powers expressly granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local government units shall ensure and support, among other things, the preservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced ecology, encourage and support the development of appropriate and self-reliant scientific and technological capabilities, improve public morals, enhance economic prosperity and social justice, promote full employment among their residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants. The issue that necessarily arises is whether in granting local governments (such as the City of Cagayan de Oro) the above powers and functions, the Local Government Code has, pro tanto, repealed P.D. No. 1869 insofar as PAGCOR's general authority to establish and maintain gambling casinos anywhere in the Philippines is concerned. I join the majority in holding that the ordinances cannot repeal P.D. No. 1869. III. The nullification by the Court of Appeals of the challenged ordinances as unconstitutional primarily because it is in contravention to P.D. No. 1869 is unwarranted. A contravention of a law is not necessarily a contravention of the constitution. In any case, the ordinances can still stand even if they be conceded as offending P.D. No. 1869. They can be reconciled, which is not impossible to do. So reconciled, the ordinances should be construed as not applying to PAGCOR. IV. From the pleadings, it is obvious that the government and the people of Cagayan de Oro City are, for obvious reasons, strongly against the opening of the gambling casino in their city. Gambling, even if legalized, would be inimical to the general welfare of the inhabitants of the City, or of any place for that matter. The PAGCOR, as a government-owned corporation, must consider the valid concerns of the people of the City of Cagayan de Oro and should not impose its will upon them in an arbitrary, if not despotic, manner.

# Separate Opinions

PADILLA, J., concurring:

50

I concur with the majority holding that the city ordinances in question cannot modify much less repeal PAGCOR's general authority to establish and maintain gambling casinos anywhere in the Philippines under Presidential Decree No. 1869. In Basco v. Philippine Amusement and Gaming Corporation (PAGCOR), 197 SCRA 52, I stated in a separate opinion that: . . . I agree with the decision insofar as it holds that the prohibition, control, and regulation of the entire activity known as gambling properly pertain to "state policy". It is, therefore, the political departments of government, namely, the legislative and the executive that should decide on what government should do in the entire area of gambling, and assume full responsibility to the people for such policy. (emphasis supplied) However, despite the legality of the opening and operation of a casino in Cagayan de Oro City by respondent PAGCOR, I wish to reiterate my view that gambling in any form runs counter to the government's own efforts to re-establish and resurrect the Filipino moral character which is generally perceived to be in a state of continuing erosion. It is in the light of this alarming perspective that I call upon government to carefully weigh the advantages and disadvantages of setting up more gambling facilities in the country. That the PAGCOR contributes greatly to the coffers of the government is not enough reason for setting up more gambling casinos because, undoubtedly, this will not help improve, but will cause a further deterioration in the Filipino moral character. It is worth remembering in this regard that, 1) what is legal is not always moral and 2) the ends do not always justify the means. As in Basco, I can easily visualize prostitution at par with gambling. And yet, legalization of the former will not render it any less reprehensible even if substantial revenue for the government can be realized from it. The same is true of gambling. In the present case, it is my considered view that the national government (through PAGCOR) should re-examine and re-evaluate its decision of imposing the gambling casino on the residents of Cagayan de Oro City; for it is abundantly clear that public opinion in the city is very much against it, and again the question must be seriously deliberated: will the prospects of revenue to be realized from the casino outweigh the further destruction of the Filipino sense of values? DAVIDE, JR., J., concurring: While I concur in part with the majority, I wish, however, to express my views on certain aspects of this case. I. It must at once be noted that private respondent Pryce Properties Corporation (PRYCE) directly filed with the Court of Appeals its so-called petition for prohibition, thereby invoking the said court's original jurisdiction to issue writs of prohibition under Section 9(1) of B.P. Blg. 129. As I see it, however, the principal cause of action therein is one for declaratory relief: to declare null and unconstitutional for, inter alia, having been enacted without or in excess of jurisdiction, for impairing the obligation of contracts, and for being inconsistent with public policy the challenged ordinances enacted by the Sangguniang Panglungsod of the City of Cagayan de Oro. The intervention therein of public respondent Philippine Amusement and Gaming Corporation (PAGCOR) further underscores the "declaratory relief" nature of the action. PAGCOR assails the ordinances for being contrary to the non-impairment and equal protection clauses of the Constitution, violative of 51

the Local Government Code, and against the State's national policy declared in P.D. No. 1869. Accordingly, the Court of Appeals does not have jurisdiction over the nature of the action. Even assuming arguendo that the case is one for prohibition, then, under this Court's established policy relative to the hierarchy of courts, the petition should have been filed with the Regional Trial Court of Cagayan de Oro City. I find no special or compelling reason why it was not filed with the said court. I do not wish to entertain the thought that PRYCE doubted a favorable verdict therefrom, in which case the filing of the petition with the Court of Appeals may have been impelled by tactical considerations. A dismissal of the petition by the Court of Appeals would have been in order pursuant to our decisions in People vs. Cuaresma (172 SCRA 415, [1989]) and Defensor-Santiago vs. Vasquez (217 SCRA 633 [1993]). In Cuaresma, this Court stated: A last word. This court's original jurisdiction to issue writs of certiorari (as well as prohibition,mandamus, quo warranto, habeas corpus and injunction) is not exclusive. It is shared by this Court with Regional Trial Courts (formerly Courts of First Instance), which may issue the writ, enforceable in any part of their respective regions. It is also shared by this court, and by the Regional Trial Court, with the Court of Appeals (formerly, Intermediate Appellate Court), although prior to the effectivity ofBatas Pambansa Bilang 129 on August 14, 1981, the latter's competence to issue the extraordinary writs was restricted by those "in aid of its appellate jurisdiction." This concurrence of jurisdiction is not, however, to be taken as according to parties seeking any of the writs an absolute, unrestrained freedom of choice of the court to which application therefor will be directed. There is after all a hierarchy of courts. That hierarchy is determinative of the revenue of appeals, and should also serve as a general determinant of the appropriate forum for petitions for the extraordinary writs. A becoming regard for that judicial hierarchy most certainly indicates that petitions for the issuance of extraordinary writs against first level ("inferior") courts should be filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct invocation of the Supreme Court's original jurisdiction to issue these writs should be allowed only when there are special and important reasons therefor, clearly and specifically set out in the petition. This is established policy. It is a policy that is necessary to prevent inordinate demands upon the Court's time and attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of the Court's docket. Indeed, the removal of the restriction of the jurisdiction of the Court of Appeals in this regard, supra resulting from the deletion of the qualifying phrase, "in aid of its appellate jurisdiction" was evidently intended precisely to relieve this Court pro tanto of the burden of dealing with applications for extraordinary writs which, but for the expansion of the Appellate Court's corresponding jurisdiction, would have had to be filed with it. (citations omitted) And in Vasquez, this Court said: One final observation. We discern in the proceedings in this case a propensity on the part of petitioner, and, for that matter, the same may be said of a number of litigants who initiate recourses before us, to disregard the hierarchy of courts in our judicial system by seeking relief directly from this Court despite the fact that the same is available in the lower courts in the exercise of their original or concurrent jurisdiction, or is even mandated by law to be sought therein. This practice must be stopped, not only because of the imposition upon the previous time of this Court but also because of the inevitable and resultant delay, intended or otherwise, in the adjudication of the case which often has to be remanded or referred to the lower court as the proper forum under the rules of procedure, or as better equipped to resolve the issues since this Court is not a trier of facts. We, therefore, reiterate the judicial policy that this Court will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify availment of a remedy within and calling for the exercise of our primary jurisdiction.

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II. The challenged ordinances are (a) Ordinance No. 3353 entitled, "An Ordinance Prohibiting the Issuance of Business Permit and Canceling Existing Business Permit To Any Establishment for the Using and Allowing to be Used Its Premises or Portion Thereof for the Operation of Casino," and (b) Ordinance No. 3375-93 entitled, "An Ordinance Prohibiting the Operation of Casino and Providing Penalty for Violation Therefor." They were enacted to implement Resolution No. 2295 entitled, "Resolution Declaring As a Matter of Policy to Prohibit and/or Not to Allow the Establishment of the Gambling Casino in the City of Cagayan de Oro," which was promulgated on 19 November 1990 nearly two years before PRYCE and PAGCOR entered into a contract of lease under which the latter leased a portion of the former's Pryce Plaza Hotel for the operation of a gambling casino which resolution was vigorously reiterated in Resolution No. 2673 of 19 October 1992. The challenged ordinances were enacted pursuant to the Sangguniang Panglungsod's express powers conferred by Section 458, paragraph (a), subparagraphs (1)-(v), (3)-(ii), and (4)-(i), (iv), and (vii), Local Government Code, and pursuant to its implied power under Section 16 thereof (the general welfare clause) which reads: Sec. 16. General Welfare. Every local government unit shall exercise the powers expressly granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local government units shall ensure and support, among other things, the preservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced ecology, encourage and support the development of appropriate and self-reliant scientific and technological capabilities, improve public morals, enhance economic prosperity and social justice, promote full employment among their residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants. The issue that necessarily arises is whether in granting local governments (such as the City of Cagayan de Oro) the above powers and functions, the Local Government Code has, pro tanto, repealed P.D. No. 1869 insofar as PAGCOR's general authority to establish and maintain gambling casinos anywhere in the Philippines is concerned. I join the majority in holding that the ordinances cannot repeal P.D. No. 1869. III. The nullification by the Court of Appeals of the challenged ordinances as unconstitutional primarily because it is in contravention to P.D. No. 1869 is unwarranted. A contravention of a law is not necessarily a contravention of the constitution. In any case, the ordinances can still stand even if they be conceded as offending P.D. No. 1869. They can be reconciled, which is not impossible to do. So reconciled, the ordinances should be construed as not applying to PAGCOR. IV. From the pleadings, it is obvious that the government and the people of Cagayan de Oro City are, for obvious reasons, strongly against the opening of the gambling casino in their city. Gambling, even if legalized, would be inimical to the general welfare of the inhabitants of the City, or of any place for that matter. The PAGCOR, as a government-owned corporation, must consider the valid concerns of the people of the City of Cagayan de Oro and should not impose its will upon them in an arbitrary, if not despotic, manner.
#Footnotes

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1 Rollo, pp. 64-94. 2 Ibid., pp. 53-62. 3 Pryce was dropped as private respondent in the resolution of the Court dated June 13, 1994. 4 197 SCRA 53. 5 Sec. 458, [2(vi-xv)]; [3(ii-vii)]; [4(i-ix)], Local Government Code, 1991. 6 Where the law does not distinguish, neither ought we to distinguish. 7 39 Phil. 102. 8 Garcia v. Executive Secretary, 204 SCRA 516, quoting Cooley, Constitutional Limitations, 8th ed., 379-380. 9 Tatel v. Municipality of Virac, 207 SCRA 157; Solicitor General v. Metropolitan Manila Authority, 204 SCRA 837; De la Cruz v. Paras, 123 SCRA 569; U.S. v. Abandan, 24 Phil. 165. 10 44 Phil. 138. 11 Clinton v. Ceder Rapids, etc. Railroad Co., 24 Iowa 455. 12 Art. X, Sec. 5, Constitution. 13 Planiol, Droit Civil, Vol. 2, No. 2210. 14 Ibid. 15 77 Phil. 88.

The Lawphil Project - Arellano Law Foundation

54

Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. 102782 December 11, 1991 THE SOLICITOR GENERAL, RODOLFO A. MALAPIRA, STEPHEN A. MONSANTO, DAN R. CALDERON, and GRANDY N. TRIESTE, petitioners vs. THE METROPOLITAN MANILA AUTHORITY and the MUNICIPALITY OF MANDALUYONG, respondents.

CRUZ, J.:p In Metropolitan Traffic Command, West Traffic District vs. Hon. Arsenio M. Gonong, G.R. No. 91023, promulgated on July 13, 1990, 1 the Court held that the confiscation of the license plates of motor vehicles for traffic violations
was not among the sanctions that could be imposed by the Metro Manila Commission under PD 1605 and was permitted only under the conditions laid dowm by LOI 43 in the case of stalled vehicles obstructing the public streets. It was there also observed that even the confiscation of driver's licenses for traffic violations was not directly prescribed by the decree nor was it allowed by the decree to be imposed by the Commission. No motion for reconsideration of that decision was submitted. The judgment became final and executory on August 6, 1990, and it was duly entered in the Book of Entries of Judgments on July 13, 1990.

Subsequently, the following developments transpired: In a letter dated October 17, 1990, Rodolfo A. Malapira complained to the Court that when he was stopped for an alleged traffic violation, his driver's license was confiscated by Traffic Enforcer Angel de los Reyes in Quezon City. On December 18,1990, the Caloocan-Manila Drivers and Operators Association sent a letter to the Court asking who should enforce the decision in the above-mentioned case, whether they could seek damages for confiscation of their driver's licenses, and where they should file their complaints. Another letter was received by the Court on February 14, 1991, from Stephen L. Monsanto, complaining against the confiscation of his driver's license by Traffic Enforcer A.D. Martinez for an alleged traffic violation in Mandaluyong. This was followed by a letter-complaint filed on March 7, 1991, from Dan R. Calderon, a lawyer, also for confiscation of his driver's license by Pat. R.J. Tano-an of the Makati Police Force. Still another complaint was received by the Court dated April 29, 1991, this time from Grandy N. Trieste, another lawyer, who also protested the removal of his front license plate by E. Ramos of the Metropolitan Manila Authority-Traffic Operations Center and the confiscation of his driver's license by Pat. A.V. Emmanuel of the Metropolitan Police Command-Western Police District. Required to submit a Comment on the complaint against him, Allan D. Martinez invoked Ordinance No. 7, Series of 1988, of Mandaluyong, authorizing the confiscation of driver's licenses and the removal of license plates of motor vehicles for traffic violations.

55

For his part, A.V. Emmanuel said he confiscated Trieste's driver's license pursuant to a memorandum dated February 27, 1991, from the District Commander of the Western Traffic District of the Philippine National Police, authorizing such sanction under certain conditions. Director General Cesar P. Nazareno of the Philippine National Police assured the Court in his own Comment that his office had never authorized the removal of the license plates of illegally parked vehicles and that he had in fact directed full compliance with the above-mentioned decision in a memorandum, copy of which he attached, entitled Removal of Motor Vehicle License Plates and dated February 28, 1991. Pat. R.J. Tano-an, on the other hand, argued that the Gonong decision prohibited only the removal of license plates and not the confiscation of driver's licenses. On May 24, 1990, the Metropolitan Manila Authority issued Ordinance No. 11, Series of 1991, authorizing itself "to detach the license plate/tow and impound attended/ unattended/ abandoned motor vehicles illegally parked or obstructing the flow of traffic in Metro Manila." On July 2, 1991, the Court issued the following resolution: The attention ofthe Court has been called to the enactment by the Metropolitan Manila Authority of Ordinance No. 11, Series of 1991, providing inter alia that: Section 2. Authority to Detach Plate/Tow and Impound. The Metropolitan Manila Authority, thru the Traffic Operatiom Center, is authorized to detach the license plate/tow and impound attended/unattended/abandoned motor vehicles illegally parked or obstructing the flow of traffic in Metro Manila. The provision appears to be in conflict with the decision of the Court in the case at bar (as reported in 187 SCRA 432), where it was held that the license plates of motor vehicles may not be detached except only under the conditions prescribed in LOI 43. Additionally, the Court has received several complaints against the confiscation by police authorities of driver's licenses for alleged traffic violations, which sanction is, according to the said decision, not among those that may be imposed under PD 1605. To clarify these matters for the proper guidance of law-enforcement officers and motorists, the Court resolved to require the Metropolitan Manila Authority and the Solicitor General to submit, within ten (10) days from notice hereof, separate COMMENTS on such sanctions in light of the said decision. In its Comment, the Metropolitan Manila Authority defended the said ordinance on the ground that it was adopted pursuant to the powers conferred upon it by EO 392. It particularly cited Section 2 thereof vesting in the Council (its governing body) the responsibility among others of: 1. Formulation of policies on the delivery of basic services requiring coordination or consolidation for the Authority; and 2. Promulgation of resolutions and other issuances of metropolitan wide application, approval of a code of basic services requiring coordination, andexercise of its rule-making powers. (Emphasis supplied) The Authority argued that there was no conflict between the decision and the ordinance because the latter was meant to supplement and not supplant the latter. It stressed that the decision itself said 56

that the confiscation of license plates was invalid in the absence of a valid law or ordinance, which was why Ordinance No. 11 was enacted. The Authority also pointed out that the ordinance could not be attacked collaterally but only in a direct action challenging its validity. For his part, the Solicitor General expressed the view that the ordinance was null and void because it represented an invalid exercise of a delegated legislative power. The flaw in the measure was that it violated existing law, specifically PD 1605, which does not permit, and so impliedly prohibits, the removal of license plates and the confiscation of driver's licenses for traffic violations in Metropolitan Manila. He made no mention, however, of the alleged impropriety of examining the said ordinance in the absence of a formal challenge to its validity. On October 24, 1991, the Office of the Solicitor General submitted a motion for the early resolution of the questioned sanctions, to remove once and for all the uncertainty of their vahdity. A similar motion was filed by the Metropolitan Manila Authority, which reiterated its contention that the incidents in question should be dismissed because there was no actual case or controversy before the Court. The Metropolitan Manila Authority is correct in invoking the doctrine that the validity of a law or act can be challenged only in a direct action and not collaterally. That is indeed the settled principle. However, that rule is not inflexible and may be relaxed by the Court under exceptional circumstances, such as those in the present controversy. The Solicitor General notes that the practices complained of have created a great deal of confusion among motorists about the state of the law on the questioned sanctions. More importantly, he maintains that these sanctions are illegal, being violative of law and the Gonong decision, and should therefore be stopped. We also note the disturbing report that one policeman who confiscated a driver's license dismissed the Gonong decision as "wrong" and said the police would not stop their "habit" unless they received orders "from the top." Regrettably, not one of the complainants has filed a formal challenge to the ordinances, including Monsanto and Trieste, who are lawyers and could have been more assertive of their rights. Given these considerations, the Court feels it must address the problem squarely presented to it and decide it as categorically rather than dismiss the complaints on the basis of the technical objection raised and thus, through its inaction, allow them to fester. The step we now take is not without legal authority or judicial precedent. Unquestionably, the Court has the power to suspend procedural rules in the exercise of its inherent power, as expressly recognized in the Constitution, to promulgate rules concerning "pleading, practice and procedure in all courts." 2 In proper cases, procedural rules may be relaxed or suspended in the interest of substantial justice, which otherwise may
be miscarried because of a rigid and formalistic adherence to such rules.

The Court has taken this step in a number of such cases, notably Araneta vs. Dinglasan, 3 where Justice
Tuason justified the deviation on the ground that "the transcendental importance to the public of these cases demands that they be settled promptly and definitely, brushing aside, if we must, technicalities of procedure."

We have made similar rulings in other cases, thus: Be it remembered that rules of procedure are but mere tools designed to facilitate the attainment ofjustice. Their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote substantial justice, must always be avoided. (Aznar III vs. Bernad, G.R. No. 81190, May 9, 1988, 161 SCRA 276.) Time and again, this Court has suspended its own rules and excepted a particular case from their operation whenever the higher interests of justice so require. In the instant petition, we forego a lengthy disquisition of the proper procedure that should have been taken by the parties involved and proceed directly to the merits of the case. (Piczon vs. Court of Appeals, 190 SCRA 31).

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Three of the cases were consolidated for argument and the other two were argued separately on other dates. Inasmuch as all of them present the same fundamental question which, in our view, is decisive, they will be disposed of jointly. For the same reason we will pass up the objection to the personality or sufficiency of interest of the petitioners in case G.R. No. L-3054 and case G.R. No. L-3056 and the question whether prohibition lies in cases G.R. Nos. L-2044 and L2756. No practical benefit can be gained from a discussion of these procedural matters, since the decision in the cases wherein the petitioners'cause of action or the propriety of the procedure followed is not in dispute, will be controlling authority on the others. Above all, the transcendental importance to the public of these cases demands that they be settled promptly and definitely, brushing aside, if we must, technicalities of procedure. (Avelino vs. Cuenco, G.R. No. L-2821 cited in Araneta vs. Dinglasan, 84 Phil. 368.) Accordingly, the Court will consider the motion to resolve filed by the Solicitor General a petition for prohibition against the enforcement of Ordinance No. 11, Series of 1991, of the Metropohtan Manila Authority, and Ordinance No. 7, Series of 1988, of the Municipality of Mandaluyong. Stephen A. Monsanto, Rodolfo A. Malapira, Dan R. Calderon, and Grandy N. Trieste are considered copetitioners and the Metropolitan Manila Authority and the Municipality of Mandaluyong are hereby impleaded as respondents. This petition is docketed as G.R. No. 102782. The comments already submitted are duly noted and shall be taken into account by the Court in the resolution of the substantive issues raised. It is stressed that this action is not intended to disparage procedural rules, which the Court has recognized often enough as necessary to the orderly administration of justice. If we are relaxing them in this particular case, it is because of the failure of the proper parties to file the appropriate proceeding against the acts complained of, and the necessity of resolving, in the interest of the public, the important substantive issues raised. Now to the merits. The Metro Manila Authority sustains Ordinance No. 11, Series of 1991, under the specific authority conferred upon it by EO 392, while Ordinance No. 7, Series of 1988, is justified on the basis of the General Welfare Clause embodied in the Local Government Code. 4 It is not disputed that both measures were
enacted to promote the comfort and convenience of the public and to alleviate the worsening traffic problems in Metropolitan Manila due in large part to violations of traffic rules.

The Court holds that there is a valid delegation of legislative power to promulgate such measures, it appearing that the requisites of such delegation are present. These requisites are. 1) the completeness of the statute making the delegation; and 2) the presence of a sufficient standard. 5 Under the first requirement, the statute must leave the legislature complete in all its terms and provisions such that all the delegate will have to do when the statute reaches it is to implement it. What only can be delegated is not the discretion to determine what the law shall be but the discretion to determine how the law shall be enforced. This has been done in the case at bar. As a second requirement, the enforcement may be effected only in accordance with a sufficient standard, the function of which is to map out the boundaries of the delegate's authority and thus "prevent the delegation from running riot." This requirement has also been met. It is settled that the "convenience and welfare" of the public, particularly the motorists and passengers in the case at bar, is an acceptable sufficient standard to delimit the delegate's authority. 6 But the problem before us is not the validity of the delegation of legislative power. The question we must resolve is the validity of the exercise of such delegated power. The measures in question are enactments of local governments acting only as agents of the national legislature. Necessarily, the acts of these agents must reflect and conform to the will of their principal. To test the validity of such acts in the specific case now before us, we apply the particular 58

requisites of a valid ordinance as laid down by the accepted principles governing municipal corporations. According to Elliot, a municipal ordinance, to be valid: 1) must not contravene the Constitution or any statute; 2) must not be unfair or oppressive; 3) must not be partial or discriminatory; 4) must not prohibit but may regulate trade; 5) must not be unreasonable; and 6) must be general and consistent with public policy. 7 A careful study of the Gonong decision will show that the measures under consideration do not pass the first criterion because they do not conform to existing law. The pertinent law is PD 1605. PD 1605 does not allow either the removal of license plates or the confiscation of driver's licenses for traffic violations committed in Metropolitan Manila. There is nothing in the following provisions of the decree authorizing the Metropolitan Manila Commission (and now the Metropolitan Manila Authority) to impose such sanctions: Section 1. The Metropolitan Manila Commission shall have the power to impose fines and otherwise discipline drivers and operators of motor vehicles for violations of traffic laws, ordinances, rules and regulations in Metropolitan Manila in such amounts and under such penalties as are herein prescribed. For this purpose, the powers of the Land Transportation Commission and the Board of Transportation under existing laws over such violations and punishment thereof are hereby transferred to the Metropolitan Manila Commission. When the proper penalty to be imposed issuspension or revocation of driver's license or certificate of public convenience, the Metropolitan Manila Commission or its representatives shall suspend or revoke such license or certificate. The suspended or revoked driver's license or the report of suspension or revocation of the certificate of public convenience shall be sent to the Land Transportation Commission or the Board of Transportation, as the case may be, for their records update. xxx xxx xxx Section 3.` Violations of traffic laws, ordinances, rules and regulations, committed within a twelve-month period, reckoned from the date of birth of the licensee, shall subject the violator to graduated fines as follows: P10.00 for the first offense, P20.00 for the and offense, P50.00 for the third offense, a one-year suspension of driver's license for the fourth offense, and a revocation of the driver'slicense for the fifth offense: Provided, That the Metropolitan Manila Commission may impose higher penalties as it may deem proper for violations of its ordinances prohibiting or regulating the use of certain public roads, streets and thoroughfares in Metropolitan Manila. xxx xxx xxx Section 5. In case of traffic violations, the driver's license shall not be confiscated but the erring driver shall be immediately issued a traffic citation ticket prescribed by the Metropolitan Manila Commission which shall state the violation committed, the amount of fine imposed for the violation and an advice that he can make payment to the city or municipal treasurer where the violation was committed or to the Philippine National Bank or Philippine Veterans Bank or their branches within seven days from the date of issuance of the citation ticket. If the offender fails to pay the fine imposed within the period herein prescribed, the Metropolitan Manila Commission or the law-enforcement agency concerned shall endorse the case to the proper fiscal for appropriate proceedings preparatory to the filing of the case with the competent traffic court, city or municipal court.

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If at the time a driver renews his driver's license and records show that he has an unpaid fine, his driver's license shall not be renewed until he has paid the fine and corresponding surcharges. xxx xxx xxx Section 8. Insofar as the Metropolitan Manila area is concerned, all laws, decrees, orders, ordinances, rules and regulations, or parts thereof inconsistent herewith are hereby repealed or modified accordingly. (Emphasis supplied). In fact, the above provisions prohibit the imposition of such sanctions in Metropolitan Manila. The Commission was allowed to "impose fines and otherwise discipline" traffic violators only "in such amounts and under such penalties as are herein prescribed," that is, by the decree itself. Nowhere is the removal of license plates directly imposed by the decree or at least allowed by it to be imposed by the Commission. Notably, Section 5 thereof expressly provides that "in case of traffic violations, the driver's license shall not be confiscated." These restrictions are applicable to the Metropolitan Manila Authority and all other local political subdivisions comprising Metropolitan Manila, including the Municipality of Mandaluyong. The requirement that the municipal enactment must not violate existing law explains itself. Local political subdivisions are able to legislate only by virtue of a valid delegation of legislative power from the national legislature (except only that the power to create their own sources of revenue and to levy taxes is conferred by the Constitution itself). 8 They are mere agents vested with what is called the power of
subordinate legislation. As delegates of the Congress, the local government unit cannot contravene but must obey at all times the will of their principal. In the case before us, the enactments in question, which are merely local in origin, cannot prevail against the decree, which has the force and effect of a statute.

The self-serving language of Section 2 of the challenged ordinance is worth noting. Curiously, it is the measure itself, which was enacted by the Metropolitan Manila Authority, that authorizes the Metropolitan Manila Authority to impose the questioned sanction. In Villacorta vs, Bemardo, 9 the Court nullified an ordinance enacted by the Municipal Board of Dagupan City for being violative of
the Land Registration Act. The decision held in part:

In declaring the said ordinance null and void, the court a quo declared: From the above-recited requirements, there is no showing that would justify the enactment of the questioned ordinance. Section 1 of said ordinance clearly conflicts with Section 44 of Act 496, because the latter law does not require subdivision plans to be submitted to the City Engineer before the same is submitted for approval to and verification by the General Land Registration Office or by the Director of Lands as provided for in Section 58 of said Act. Section 2 of the same ordinance also contravenes the provisions of Section 44 of Act 496, the latter being silent on a service fee of P0.03 per square meter of every lot subject of such subdivision application; Section 3 of the ordinance in question also conflicts with Section 44 of Act 496, because the latter law does not mention of a certification to be made by the City Engineer before the Register of Deeds allows registration of the subdivision plan; and the last section of said ordinance impose a penalty for its violation, which Section 44 of Act 496 does not impose. In other words, Ordinance 22 of the City of Dagupan imposes upon a subdivision owner additional conditions. xxx xxx xxx

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The Court takes note of the laudable purpose of the ordinance in bringing to a halt the surreptitious registration of lands belonging to the government. But as already intimated above, the powers of the board in enacting such a laudable ordinance cannot be held valid when it shall impede the exercise of rights granted in a general law and/or make a general law subordinated to a local ordinance. We affirm. To sustain the ordinance would be to open the floodgates to other ordinances amending and so violating national laws in the guise of implementing them. Thus, ordinances could be passed imposing additional requirements for the issuance of marriage licenses, to prevent bigamy; the registration of vehicles, to minimize carnapping; the execution of contracts, to forestall fraud; the validation of parts, to deter imposture; the exercise of freedom of speech, to reduce disorder; and so on. The list is endless, but the means, even if the end be valid, would be ultra vires. The measures in question do not merely add to the requirement of PD 1605 but, worse, impose sanctions the decree does not allow and in fact actually prohibits. In so doing, the ordinances disregard and violate and in effect partially repeal the law. We here emphasize the ruling in the Gonong case that PD 1605 applies only to the Metropolitan Manila area. It is an exception to the general authority conferred by R.A. No. 413 on the Commissioner of Land Transportation to punish violations of traffic rules elsewhere in the country with the sanction therein prescribed, including those here questioned. The Court agrees that the challenged ordinances were enacted with the best of motives and shares the concern of the rest of the public for the effective reduction of traffic problems in Metropolitan Manila through the imposition and enforcement of more deterrent penalties upon traffic violators. At the same time, it must also reiterate the public misgivings over the abuses that may attend the enforcement of such sanction in eluding the illicit practices described in detail in the Gonong decision. At any rate, the fact is that there is no statutory authority for and indeed there is a statutory prohibition against the imposition of such penalties in the Metropolitan Manila area. Hence, regardless of their merits, they cannot be impose by the challenged enactments by virtue only of the delegated legislative powers. It is for Congress to determine, in the exercise of its own discretion, whether or not to impose such sanctions, either directly through a statute or by simply delegating authority to this effect to the local governments in Metropolitan Manila. Without such action, PD 1605 remains effective and continues prohibit the confiscation of license plates of motor vehicles (except under the conditions prescribed in LOI 43) and of driver licenses as well for traffic violations in Metropolitan Manila. WHEREFORE, judgment is hereby rendered: (1) declaring Ordinance No.11, Seriesof l991,of theMetropolitan Manila Authority and Ordinance No. 7, Series of 1988 of the Municipality of Mandaluyong, NULL and VOID; and (2) enjoining all law enforcement authorities in Metropolitan Manila from removing the license plates of motor vehicles (except when authorized under LOI 43) and confiscating driver licenses for traffic violations within the said area. SO ORDERED. Narvasa, C.J., Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Padilla, Bidin, Grio-Aquino, Medialdea, Regalado, Davide, Jr. and Romero, JJ., concur.

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Nocon, J., took no part.

# Footnotes 1 En Banc 187 SCRA 432. 2 Constitution, Article VHI, Section 5(5). 3 84 Phil. 368. 4 R.A. 7160, Title One, Chapter 2, Section 16. 5 Pelaez v. Auditor General, 15 SCRA 569. 6 Calalang v. Williams, 70 Phil. 726. 7 U.S. v. Abendan, 24 Phil. 165. 8 Article X, Section 5. 9 143 SCR.A 480.
The Lawphil Project - Arellano Law Foundation

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FIRST DIVISION [G.R. No. 44028. March 31, 1938.] MANILA ELECTRIC COMPANY, Plaintiff-Appellant, v. JUAN POSADAS, JR., Collector of Internal Revenue, and THE CITY OF MANILA, Defendants-Appellees. Ross, Lawrence & Selph and Robert Janda for Appellant. City Fiscal Felix for appellee City of Manila. Solicitor-General Hilado for appellee Posadas, jr. SYLLABUS 1. PUBLIC SERVICES; MANILA ELECTRIC COMPANY; AUTOBUS SERVICE. Like any other company engaged in passenger transportation, the Manila Electric Company has the right to secure from the Public Service Commission a certificate of public convenience authorizing it to establish autobus lines for public transportation. This means of transportation being distinct and different from the one authorized under the franchise granted to it, the Manila Electric Company is not controlled by that franchise with respect to its autobus service, but by the law that regulates the operation of land transportation companies rendering service to the public. Neither can it be compelled to pay to the City of Manila the tax of 2 1/2 per cent of the fares collected and tickets sold within the city limits for using autobusses, which have no relation at all with its electric railways already existing or yet to be established. 2. ID.; ID.; ID.; TRANSFER TICKETS. The fact that the Manila Electric Company issues transfer tickets which permit purchasers of regular fares (not zone fares) coming from outside the City of Manila, to transfer from a street car to an autobus, and vice-versa, does not make plaintiffs autobus system a part of its railway system, since such issuance of transfer tickets is only accidental and not essential in the operation of its railway system established under the authority of its franchise.

DECISION

VILLA-REAL, J.:

The plaintiff Manila Electric Company appeals from a judgment of the Court of First Instance of Manila absolving the defendants from the complaint and dismissing it, with costs against the plaintiff. In support of its appeal, the appellant assigns ten alleged errors which will be discussed in the course of this decision. Before the case was heard, the parties submitted a stipulation of facts, which, together with the additional evidence presented at the trial, shows that:
chanrob1es vi rt ual 1aw li bra ry

On October 20, 1902, the Philippine Commission enacted Act No. 484, section 1 of which authorizes the City of Manila to grant to the "person or persons making the most favorable bid, as hereinafter provided, a franchise to construct and maintain in the streets of Manila and its suburbs an electric street railway and a franchise to construct, maintain, and operate an electric light, heat, and power system in the City of Manila and its suburbs."
cralaw virtua1aw l ibra ry

By virtue of said Act, the City of Manila passed on March 24, 1903, Ordinance No. 44 granting the franchise to one Charles M. Swift, as the highest bidder. Said Act No. 484 and Ordinance No. 44 were later amended by Act No. 1112 and Ordinances Nos. 70, 71, 144, 167, 192, 272, 490, 903, 988,1162, 1244 and 1476, which deal with the sale and transfer of the franchises of the Compaia de Tranvias de Filipinas to the plaintiff in April, 1904. On March 27, 1903, the plaintiff, then known as "Manila Railway and Light Company", acquired the said franchise from Charles M. Swift, together with all the rights, privileges and obligations appurtenant thereto. The plaintiff has since then established electric car lines along certain streets of the City of Manila and suburbs, which have now and then been altered with the express consent either of the City of Manila or of the Philippine Legislature. As grantee of the franchise, the plaintiff corporation agreed to pay, and has to date been paying, to the City of Manila, 2 1/2 per cent "of the fares collected and tickets sold within the

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limits of the City of Manila, and the same percentage of fares collected and tickets sold without the said limits to the proper municipality or municipalities of the Province of Rizal." (Par. 19, Act No. 484.) In 1927, the plaintiff applied for and obtained from the Public Service Commission certificates of public convenience to operate as it did in 1929, an autobus service along the streets, districts and suburbs of the City of Manila, not covered by its electric car lines (Exhibits D and E). Alleging that this autobus service was included in the franchise granted the plaintiff, under Ordinance No. 44, the defendant and appellee City of Manila collected from the plaintiff who had to pay under protest a tax of 2 1/2 per cent of the fares collected and tickets sold on its autobus lines within the City of Manila from April, 1929 to November, 1932, amounting to P43,868.06. The present action was instituted to recover this tax. The plaintiff sues transfer tickets which entitle the holder of a regular fare to transfer from a street car to an autobus and vice-versa without extra charge, although this privilege is not extended to zone fare passengers. The only major question to be decided in this appeal is whether or not the autobus business of the plaintiff is included in the franchise granted to it by Ordinance No. 44 of the City of Manila, and in case it is, if the defendant has any right to collect the tax of 2 1/2 per cent from the fares collected and tickets sold in said business, as prescribed in said ordinance. Section 2 of Act No. 1112, amending Ordinance No. 44 of the City of Manila, inserted between paragraphs 2 and 3 of the first part of said ordinance, the following paragraph 2(a):
jgc:chanroble s.com.p h

"Par. 2(a). The Manila Electric Railroad and Light Company shall be authorized to make excavations and constructions for the purposes prescribed in Part One of said Ordinance Numbered Forty-four, upon such further streets, thoroughfares, bridges, and public places within the City of Manila as may, from time to time, be approved by the Municipal Board."
cralaw virtu a1aw lib rary

The purpose of this legal provision authorizing the Manila Electric Company to make excavations and constructions upon further streets, thoroughfares, bridges, and public places within the City of Manila, is no other than the construction and maintenance of a net of electric car lines. This broadening of the authorization cannot be construed as permitting the plaintiff to establish autobus lines along the streets of Manila and suburbs, not specified in the original authorization, because, as we have already said, the purpose of the additional authorization was to enable the plaintiff to construct and maintain a net of electric car lines in other streets of Manila. Furthermore, to establish autobus lines, it is not necessary to make excavations upon the streets. This is only required when laying out rails for electric cars. Neither the letter nor the spirit of the law, therefore, authorizes that the franchise granted the plaintiff by the City of Manila be construed to include the establishment of autobus lines. It is true that in the case of the City of Manila v. Public Service Commission (52 Phil., 515), this court, interpreting paragraph 4 of Act No. 484, which authorizes the plaintiff, by virtue of its franchise, to modify, improve or change its system of electric railways such as the progress of science and the development of motive power may make reasonable and proper, said that the plaintiff might abandon the use of electric cars and substitute autobusses in their stead, which is a better means of transportation, and under the franchise, the grantee is authorized to make improvements in its system, with the approval of the City of Manila. That case dealt with the substitution of autobus lines along the same streets and public thoroughfares where electric car lines already existed. It was not the intention of this court, and it has not so declared, that the Manila Electric Company cannot establish autobus lines along streets and public thoroughfares where electric railways have not yet been established. When public convenience so requires, the Philippine Legislature can authorize other transportation companies to use the streets and public thoroughfares where the Manila Electric Company has not established electric railways, nor signified its intention to do so, since such authorization does not violate the terms and conditions of the plaintiffs franchise. Impliedly, this was done, when it created the office of the Public Service Commission charged with the task of looking after the comfort of the public as regards transportation, with power to grant a certificate of public convenience to a company desiring to operate a passenger transportation service, when, in its judgment, it will serve the interest o4 the public. Like any other company engaged in passenger transportation, the Manila Electric Company has the right to secure from the Public Service Commission a certificate of public convenience authorizing it to establish autobus lines for public transportation. This means of transportation being distinct and different from the one authorized under the franchise granted to it, the Manila Electric Company is not controlled by that franchise with respect to its autobus service, but by the law that regulates the operation of land transportation companies rendering service to the public. Neither can it be compelled to pay to the City of Manila the tax of 21 per cent of the fares collected and tickets sold within the city limits for using autobusses, which have no

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relation at all with its electric railways already existing or yet to be established. The fact that the Manila Electric Company issues transfer tickets which permit purchasers of regular fares (not zone fares coming from outside the City of Manila, to transfer from a street car to an autobus, and vice-versa, does not make plaintiffs autobus system a part of its railway system, since such issuance of transfer tickets is only accidental and not essential in the operation of its railway system established under the authority of its franchise. Having reached this conclusion, the other questions raised in this court being mere corollaries thereto, have impliedly been settled. Wherefore, the appealed judgment is reversed and the defendant-appellee City of Manila is hereby ordered to reimburse to the plaintiff-appellant Manila Electric Company the taxes erroneously collected under the purported authority of Ordinance No. 44, in the sum of P43,868.06, and to pay the costs in both instances. So ordered. Avancea, C.J., Abad Santos, Imperial, Diaz, Laurel and Concepcion, JJ., concur.

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Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. Nos. 120865-71 December 7, 1995 LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS; HON. JUDGE HERCULANO TECH, PRESIDING JUDGE, BRANCH 70, REGIONAL TRIAL COURT OF BINANGONAN RIZAL; FLEET DEVELOPMENT, INC. and CARLITO ARROYO; THE MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS, respondents. LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS; HON. JUDGE AURELIO C. TRAMPE, PRESIDING JUDGE, BRANCH 163, REGIONAL TRIAL COURT OF PASIG; MANILA MARINE LIFE BUSINESS RESOURCES, INC. represented by, MR. TOBIAS REYNALD M. TIANGCO; MUNICIPALITY OF TAGUIG, METRO MANILA and/or MAYOR RICARDO D. PAPA, JR., respondents. LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS; HON. JUDGE ALEJANDRO A. MARQUEZ, PRESIDING JUDGE, BRANCH 79, REGIONAL TRIAL COURT OF MORONG, RIZAL; GREENFIELD VENTURES INDUSTRIAL DEVELOPMENT CORPORATION and R. J. ORION DEVELOPMENT CORPORATION; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA VEGA, respondents. LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS; HON. JUDGE MANUEL S. PADOLINA, PRESIDING JUDGE, BRANCH 162, REGIONAL TRIAL COURT OF PASIG, METRO MANILA; IRMA FISHING & TRADING CORP.; ARTM FISHING CORP.; BDR CORPORATION, MIRT CORPORATION and TRIM CORPORATION; MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS, respondents. LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78, REGIONAL TRIAL COURT OF MORONG, RIZAL; BLUE LAGOON FISHING CORP. and ALCRIS CHICKEN GROWERS, INC.; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA VEGA, respondents. LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78, REGIONAL TRIAL COURT OF MORONG, RIZAL; AGP FISH VENTURES, INC., represented by its PRESIDENT ALFONSO PUYAT; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA VEGA, respondents. LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs.

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COURT OF APPEALS; HON. JUDGE EUGENIO S. LABITORIA, PRESIDING JUDGE, BRANCH 161, REGIONAL TRIAL COURT OF PASIG, METRO MANILA; SEA MAR TRADING CO. INC.; EASTERN LAGOON FISHING CORP.; MINAMAR FISHING CORP.; MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS,respondents.

HERMOSISIMA, JR., J.: It is difficult for a man, scavenging on the garbage dump created by affluence and profligate consumption and extravagance of the rich or fishing in the murky waters of the Pasig River and the Laguna Lake or making a clearing in the forest so that he can produce food for his family, to understand why protecting birds, fish, and trees is more important than protecting him and keeping his family alive. How do we strike a balance between environmental protection, on the one hand, and the individual personal interests of people, on the other? Towards environmental protection and ecology, navigational safety, and sustainable development, Republic Act No. 4850 created the "Laguna Lake Development Authority." This Government Agency is supposed to carry out and effectuate the aforesaid declared policy, so as to accelerate the development and balanced growth of the Laguna Lake area and the surrounding provinces, cities and towns, in the act clearly named, within the context of the national and regional plans and policies for social and economic development. Presidential Decree No. 813 of former President Ferdinand E. Marcos amended certain sections of Republic Act No. 4850 because of the concern for the rapid expansion of Metropolitan Manila, the suburbs and the lakeshore towns of Laguna de Bay, combined with current and prospective uses of the lake for municipal-industrial water supply, irrigation, fisheries, and the like. Concern on the part of the Government and the general public over: the environment impact of development on the water quality and ecology of the lake and its related river systems; the inflow of polluted water from the Pasig River, industrial, domestic and agricultural wastes from developed areas around the lake; the increasing urbanization which induced the deterioration of the lake, since water quality studies have shown that the lake will deteriorate further if steps are not taken to check the same; and the floods in Metropolitan Manila area and the lakeshore towns which will influence the hydraulic system of Laguna de Bay, since any scheme of controlling the floods will necessarily involve the lake and its river systems, likewise gave impetus to the creation of the Authority. Section 1 of Republic Act No. 4850 was amended to read as follows: Sec. 1. Declaration of Policy. It is hereby declared to be the national policy to promote, and accelerate the development and balanced growth of the Laguna Lake area and the surrounding provinces, cities and towns hereinafter referred to as the region, within the context of the national and regional plans and policies for social and economic development and to carry out the development of the Laguna Lake region with due regard and adequate provisions for environmental management and control, preservation of the quality of human life and ecological systems, and the prevention of undue ecological disturbances, deterioration and pollution. 1 Special powers of the Authority, pertinent to the issues in this case, include: Sec. 3. Section 4 of the same Act is hereby further amended by adding thereto seven new paragraphs to be known as paragraphs (j), (k), (l), (m), (n), (o), and (p) which shall read as follows: xxx xxx xxx

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(j) The provisions of existing laws to the contrary notwithstanding, to engage in fish production and other aqua-culture projects in Laguna de Bay and other bodies of water within its jurisdiction and in pursuance thereof to conduct studies and make experiments, whenever necessary, with the collaboration and assistance of the Bureau of Fisheries and Aquatic Resources, with the end in view of improving present techniques and practices. Provided, that until modified, altered or amended by the procedure provided in the following sub-paragraph, the present laws, rules and permits or authorizations remain in force; (k) For the purpose of effectively regulating and monitoring activities in Laguna de Bay,the Authority shall have exclusive jurisdiction to issue new permit for the use of the lake waters for any projects or activities in or affecting the said lake including navigation, construction, and operation of fishpens, fish enclosures, fish corrals and the like, and to impose necessary safeguards for lake quality control and management and to collect necessary fees for said activities and projects: Provided, That the fees collected for fisheries may be shared between the Authority and other government agencies and political sub-divisions in such proportion as may be determined by the President of the Philippines upon recommendation of the Authority's Board: Provided, further, That the Authority's Board may determine new areas of fishery development or activities which it may place under the supervision of the Bureau of Fisheries and Aquatic Resources taking into account the overall development plans and programs for Laguna de Bay and related bodies of water: Provided, finally, That the Authority shall subject to the approval of the President of the Philippines promulgate such rules and regulations which shall govern fisheries development activities in Laguna de Bay which shall take into consideration among others the following: socio-economic amelioration of bonafide resident fishermen whether individually or collectively in the form of cooperatives, lakeshore town development, a master plan for fishpen construction and operation, communal fishing ground for lake shore town residents, and preference to lake shore town residents in hiring laborer for fishery projects; (l) To require the cities and municipalities embraced within the region to pass appropriate zoning ordinances and other regulatory measures necessary to carry out the objectives of the Authority and enforce the same with the assistance of the Authority; (m) The provisions of existing laws to the contrary notwithstanding, to exercise water rights over public waters within the Laguna de Bay region whenever necessary to carry out the Authority's projects; (n) To act in coordination with existing governmental agencies in establishing water quality standards for industrial, agricultural and municipal waste discharges into the lake and to cooperate with said existing agencies of the government of the Philippines in enforcing such standards, or to separately pursue enforcement and penalty actions as provided for in Section 4 (d) and Section 39-A of this Act: Provided, That in case of conflict on the appropriate water quality standard to be enforced such conflict shall be resolved thru the NEDA Board. 2

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To more effectively perform the role of the Authority under Republic Act No. 4850, as though Presidential Decree No. 813 were not thought to be completely effective, the Chief Executive, feeling that the land and waters of the Laguna Lake Region are limited natural resources requiring judicious management to their optimal utilization to insure renewability and to preserve the ecological balance, the competing options for the use of such resources and conflicting jurisdictions over such uses having created undue constraints on the institutional capabilities of the Authority in the light of the limited powers vested in it by its charter, Executive Order No. 927 further defined and enlarged the functions and powers of the Authority and named and enumerated the towns, cities and provinces encompassed by the term "Laguna de Bay Region". Also, pertinent to the issues in this case are the following provisions of Executive Order No. 927 which include in particular the sharing of fees: Sec 2. Water Rights Over Laguna de Bay and Other Bodies of Water within the Lake Region: To effectively regulate and monitor activities in the Laguna de Bay region, the Authority shall have exclusive jurisdiction to issue permit for the use of all surface water for any projects or activities in or affecting the said region including navigation, construction, and operation of fishpens, fish enclosures, fish corrals and the like. For the purpose of this Executive Order, the term "Laguna de Bay Region" shall refer to the Provinces of Rizal and Laguna; the Cities of San Pablo, Pasay, Caloocan, Quezon, Manila and Tagaytay; the towns of Tanauan, Sto. Tomas and Malvar in Batangas Province; the towns of Silang and Carmona in Cavite Province; the town of Lucban in Quezon Province; and the towns of Marikina, Pasig, Taguig, Muntinlupa, and Pateros in Metro Manila. Sec 3. Collection of Fees. The Authority is hereby empowered to collect fees for the use of the lake water and its tributaries for all beneficial purposes including but not limited to fisheries, recreation, municipal, industrial, agricultural, navigation, irrigation, and waste disposal purpose; Provided, that the rates of the fees to be collected, and the sharing with other government agencies and political subdivisions, if necessary, shall be subject to the approval of the President of the Philippines upon recommendation of the Authority's Board, except fishpen fee, which will be shared in the following manner; 20 percent of the fee shall go to the lakeshore local governments, 5 percent shall go to the Project Development Fund which shall be administered by a Council and the remaining 75 percent shall constitute the share of LLDA. However, after the implementation within the three-year period of the Laguna Lake Fishery Zoning and Management Plan, the sharing will be modified as follows: 35 percent of the fishpen fee goes to the lakeshore local governments, 5 percent goes to the Project Development Fund and the remaining 60 percent shall be retained by LLDA; Provided, however, that the share of LLDA shall form part of its corporate funds and shall not be remitted to the National Treasury as an exception to the provisions of Presidential Decree No. 1234. (Emphasis supplied) It is important to note that Section 29 of Presidential Decree No. 813 defined the term "Laguna Lake" in this manner: Sec 41. Definition of Terms. (11) Laguna Lake or Lake. Whenever Laguna Lake or lake is used in this Act, the same shall refer to Laguna de Bay which is that area covered by the lake water when it is at the average annual maximum lake level of elevation 12.50 meters, as referred to a datum 10.00 meters below mean lower low water (M.L.L.W). Lands located at and below such elevation are public lands which form part of the bed of said lake.

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Then came Republic Act No. 7160, the Local Government Code of 1991. The municipalities in the Laguna Lake Region interpreted the provisions of this law to mean that the newly passed law gave municipal governments the exclusive jurisdiction to issue fishing privileges within their municipal waters because R.A. 7160 provides: Sec. 149. Fishery Rentals, Fees and Charges. (a) Municipalities shall have the exclusive authority to grant fishery privileges in the municipal waters and impose rental fees or charges therefor in accordance with the provisions of this Section. (b) The Sangguniang Bayan may: (1) Grant fishing privileges to erect fish corrals, oyster, mussel or other aquatic beds or bangus fry areas, within a definite zone of the municipal waters, as determined by it; . . . . (2) Grant privilege to gather, take or catch bangus fry, prawn fry or kawag-kawag or fry of other species and fish from the municipal waters by nets, traps or other fishing gears to marginal fishermen free from any rental fee, charges or any other imposition whatsoever. xxx xxx xxx Sec. 447. Power, Duties, Functions and Compensation. . . . . xxx xxx xxx (XI) Subject to the provisions of Book II of this Code, grant exclusive privileges of constructing fish corrals or fishpens, or the taking or catching of bangus fry, prawn fry orkawag-kawag or fry of any species or fish within the municipal waters. xxx xxx xxx Municipal governments thereupon assumed the authority to issue fishing privileges and fishpen permits. Big fishpen operators took advantage of the occasion to establish fishpens and fishcages to the consternation of the Authority. Unregulated fishpens and fishcages, as of July, 1995, occupied almost one-third of the entire lake water surface area, increasing the occupation drastically from 7,000 hectares in 1990 to almost 21,000 hectares in 1995. The Mayor's permit to construct fishpens and fishcages were all undertaken in violation of the policies adopted by the Authority on fishpen zoning and the Laguna Lake carrying capacity. To be sure, the implementation by the lakeshore municipalities of separate independent policies in the operation of fishpens and fishcages within their claimed territorial municipal waters in the lake and their indiscriminate grant of fishpen permits have already saturated the lake area with fishpens, thereby aggravating the current environmental problems and ecological stress of Laguna Lake. In view of the foregoing circumstances, the Authority served notice to the general public that: In compliance with the instructions of His Excellency PRESIDENT FIDEL V. RAMOS given on June 23, 1993 at Pila, Laguna pursuant to Republic Act 4850 as amended by Presidential Decree 813 and Executive Order 927 series of 1983 and in line with the policies and programs of the Presidential Task Force on Illegal Fishpens and Illegal Fishing, the general public is hereby notified that:

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1. All fishpens, fishcages and other aqua-culture structures in the Laguna de Bay Region, which were not registered or to which no application for registration and/or permit has been filed with Laguna Lake Development Authority as of March 31, 1993 are hereby declared outrightly as illegal. 2. All fishpens, fishcages and other aqua-culture structures so declared as illegal shall be subject to demolition which shall be undertaken by the Presidential Task Force for Illegal Fishpen and Illegal Fishing. 3. Owners of fishpens, fishcages and other aqua-culture structures declared as illegal shall, without prejudice to demolition of their structures be criminally charged in accordance with Section 39-A of Republic Act 4850 as amended by P.D. 813 for violation of the same laws. Violations of these laws carries a penalty of imprisonment of not exceeding 3 years or a fine not exceeding Five Thousand Pesos or both at the discretion of the court. All operators of fishpens, fishcages and other aqua-culture structures declared as illegal in accordance with the foregoing Notice shall have one (1) month on or before 27 October 1993 to show cause before the LLDA why their said fishpens, fishcages and other aqua-culture structures should not be demolished/dismantled. One month, thereafter, the Authority sent notices to the concerned owners of the illegally constructed fishpens, fishcages and other aqua-culture structures advising them to dismantle their respective structures within 10 days from receipt thereof, otherwise, demolition shall be effected. Reacting thereto, the affected fishpen owners filed injunction cases against the Authority before various regional trial courts, to wit: (a) Civil Case No. 759-B, for Prohibition, Injunction and Damages, Regional Trial Court, Branch 70, Binangonan, Rizal, filed by Fleet Development, Inc. and Carlito Arroyo; (b) Civil Case No. 64049, for Injunction, Regional Trial Court, Branch 162, Pasig, filed by IRMA Fishing and Trading Corp., ARTM Fishing Corp., BDR Corp., MIRT Corp. and TRIM Corp.; (c) Civil Case No. 566, for Declaratory Relief and Injunction, Regional Trial Court, Branch 163, Pasig, filed by Manila Marine Life Business Resources, Inc. and Tobias Reynaldo M. Tianco; (d) Civil Case No. 556-M, for Prohibition, Injunction and Damages, Regional Trial Court, Branch 78, Morong, Rizal, filed by AGP Fishing Ventures, Inc.; (e) Civil Case No. 522-M, for Prohibition, Injunction and Damages, Regional Trial Court, Branch 78, Morong, Rizal, filed by Blue Lagoon and Alcris Chicken Growers, Inc.; (f) Civil Case No. 554-, for Certiorari and Prohibition, Regional Trial Court, Branch 79, Morong, Rizal, filed by Greenfields Ventures Industrial Corp. and R.J. Orion Development Corp.; and (g) Civil Case No. 64124, for Injunction, Regional Trial Court, Branch 15, Pasig, filed by SEA-MAR Trading Co., Inc. and Eastern Lagoon Fishing Corp. and Minamar Fishing Corporation. The Authority filed motions to dismiss the cases against it on jurisdictional grounds. The motions to dismiss were invariably denied. Meanwhile, temporary restraining order/writs of preliminary mandatory injunction were issued in Civil Cases Nos. 64124, 759 and 566 enjoining the Authority from demolishing the fishpens and similar structures in question. Hence, the herein petition for certiorari, prohibition and injunction, G.R. Nos. 120865-71, were filed by the Authority with this court. Impleaded as parties-respondents are concerned regional trial courts and respective private parties, and the municipalities and/or respective Mayors of Binangonan, Taguig and Jala-jala, who issued permits for the construction and operation of fishpens in Laguna de Bay. The Authority sought the following reliefs,viz.: (A) Nullification of the temporary restraining order/writs of preliminary injunction issued in Civil Cases Nos. 64125, 759 and 566; (B) Permanent prohibition against the regional trial courts from exercising jurisdiction over cases involving the Authority which is a co-equal body;

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(C) Judicial pronouncement that R.A. 7610 (Local Government Code of 1991) did not repeal, alter or modify the provisions of R.A. 4850, as amended, empowering the Authority to issue permits for fishpens, fishcages and other aqua-culture structures in Laguna de Bay and that, the Authority the government agency vested with exclusive authority to issue said permits. By this Court's resolution of May 2, 1994, the Authority's consolidated petitions were referred to the Court of Appeals. In a Decision, dated June 29, 1995, the Court of Appeals dismissed the Authority's consolidated petitions, the Court of Appeals holding that: (A) LLDA is not among those quasi-judicial agencies of government whose decision or order are appealable only to the Court of Appeals; (B) the LLDA charter does vest LLDA with quasi-judicial functions insofar as fishpens are concerned; (C) the provisions of the LLDA charter insofar as fishing privileges in Laguna de Bay are concerned had been repealed by the Local Government Code of 1991; (D) in view of the aforesaid repeal, the power to grant permits devolved to and is now vested with their respective local government units concerned. Not satisfied with the Court of Appeals decision, the Authority has returned to this Court charging the following errors: 1. THE HONORABLE COURT OF APPEALS PROBABLY COMMITTED AN ERROR WHEN IT RULED THAT THE LAGUNA LAKE DEVELOPMENT AUTHORITY IS NOT A QUASI-JUDICIAL AGENCY. 2. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT RULED THAT R.A. 4850 AS AMENDED BY P.D. 813 AND E.O. 927 SERIES OF 1983 HAS BEEN REPEALED BY REPUBLIC ACT 7160. THE SAID RULING IS CONTRARY TO ESTABLISHED PRINCIPLES AND JURISPRUDENCE OF STATUTORY CONSTRUCTION. 3. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT RULED THAT THE POWER TO ISSUE FISHPEN PERMITS IN LAGUNA DE BAY HAS BEEN DEVOLVED TO CONCERNED (LAKESHORE) LOCAL GOVERNMENT UNITS. We take a simplistic view of the controversy. Actually, the main and only issue posed is: Which agency of the Government the Laguna Lake Development Authority or the towns and municipalities comprising the region should exercise jurisdiction over the Laguna Lake and its environs insofar as the issuance of permits for fishery privileges is concerned? Section 4 (k) of the charter of the Laguna Lake Development Authority, Republic Act No. 4850, the provisions of Presidential Decree No. 813, and Section 2 of Executive Order No. 927, cited above, specifically provide that the Laguna Lake Development Authority shall have exclusive jurisdiction to issue permits for the use of all surface water for any projects or activities in or affecting the said region, including navigation, construction, and operation of fishpens, fish enclosures, fish corrals and the like. On the other hand, Republic Act No. 7160, the Local Government Code of 1991, has granted to the municipalities the exclusive authority to grant fishery privileges in municipal waters. The Sangguniang Bayan may grant fishery privileges to erect fish corrals, oyster, mussels or other aquatic beds or bangus fry area within a definite zone of the municipal waters. We hold that the provisions of Republic Act No. 7160 do not necessarily repeal the aforementioned laws creating the Laguna Lake Development Authority and granting the latter water rights authority over Laguna de Bay and the lake region.

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The Local Government Code of 1991 does not contain any express provision which categorically expressly repeal the charter of the Authority. It has to be conceded that there was no intent on the part of the legislature to repeal Republic Act No. 4850 and its amendments. The repeal of laws should be made clear and expressed. It has to be conceded that the charter of the Laguna Lake Development Authority constitutes a special law. Republic Act No. 7160, the Local Government Code of 1991, is a general law. It is basic in statutory construction that the enactment of a later legislation which is a general law cannot be construed to have repealed a special law. It is a well-settled rule in this jurisdiction that "a special statute, provided for a particular case or class of cases, is not repealed by a subsequent statute, general in its terms, provisions and application, unless the intent to repeal or alter is manifest, although the terms of the general law are broad enough to include the cases embraced in the special law." 3 Where there is a conflict between a general law and a special statute, the special statute should prevail since it evinces the legislative intent more clearly than the general statute. The special law is to be taken as an exception to the general law in the absence of special circumstances forcing a contrary conclusion. This is because implied repeals are not favored and as much as possible, effect must be given to all enactments of the legislature. A special law cannot be repealed, amended or altered by a subsequent general law by mere implication. 4 Thus, it has to be concluded that the charter of the Authority should prevail over the Local Government Code of 1991. Considering the reasons behind the establishment of the Authority, which are environmental protection, navigational safety, and sustainable development, there is every indication that the legislative intent is for the Authority to proceed with its mission. We are on all fours with the manifestation of petitioner Laguna Lake Development Authority that "Laguna de Bay, like any other single body of water has its own unique natural ecosystem. The 900 km lake surface water, the eight (8) major river tributaries and several other smaller rivers that drain into the lake, the 2,920 km basin or watershed transcending the boundaries of Laguna and Rizal provinces, greater portion of Metro Manila, parts of Cavite, Batangas, and Quezon provinces, constitute one integrated delicate natural ecosystem that needs to be protected with uniform set of policies; if we are to be serious in our aims of attaining sustainable development. This is an exhaustible natural resource a very limited one which requires judicious management and optimal utilization to ensure renewability and preserve its ecological integrity and balance." "Managing the lake resources would mean the implementation of a national policy geared towards the protection, conservation, balanced growth and sustainable development of the region with due regard to the inter-generational use of its resources by the inhabitants in this part of the earth. The authors of Republic Act 4850 have foreseen this need when they passed this LLDA law the special law designed to govern the management of our Laguna de Bay lake resources." "Laguna de Bay therefore cannot be subjected to fragmented concepts of management policies where lakeshore local government units exercise exclusive dominion over specific portions of the lake water. The garbage thrown or sewage discharged into the lake, abstraction of water therefrom or construction of fishpens by enclosing its certain area, affect not only that specific portion but the entire 900 km of lake water. The implementation of a cohesive and integrated lake water resource management policy, therefore, is necessary to conserve, protect and sustainably develop Laguna de Bay." 5 The power of the local government units to issue fishing privileges was clearly granted for revenue purposes. This is evident from the fact that Section 149 of the New Local Government Code empowering local governments to issue fishing permits is embodied in Chapter 2, Book II, of

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Republic Act No. 7160 under the heading, "Specific Provisions On The Taxing And Other Revenue Raising Power Of Local Government Units." On the other hand, the power of the Authority to grant permits for fishpens, fishcages and other aqua-culture structures is for the purpose of effectively regulating and monitoring activities in the Laguna de Bay region (Section 2, Executive Order No. 927) and for lake quality control and management. 6 It does partake of the nature of police power which is the most pervasive, the least
limitable and the most demanding of all State powers including the power of taxation. Accordingly, the charter of the Authority which embodies a valid exercise of police power should prevail over the Local Government Code of 1991 on matters affecting Laguna de Bay.

There should be no quarrel over permit fees for fishpens, fishcages and other aqua-culture structures in the Laguna de Bay area. Section 3 of Executive Order No. 927 provides for the proper sharing of fees collected. In respect to the question as to whether the Authority is a quasi-judicial agency or not, it is our holding that, considering the provisions of Section 4 of Republic Act No. 4850 and Section 4 of Executive Order No. 927, series of 1983, and the ruling of this Court in Laguna Lake Development Authority vs. Court of Appeals, 231 SCRA 304, 306, which we quote: xxx xxx xxx As a general rule, the adjudication of pollution cases generally pertains to the Pollution Adjudication Board (PAB), except in cases where the special law provides for another forum. It must be recognized in this regard that the LLDA, as a specialized administrative agency, is specifically mandated under Republic Act No. 4850 and its amendatory laws to carry out and make effective the declared national policy of promoting and accelerating the development and balanced growth of the Laguna Lake area and the surrounding provinces of Rizal and Laguna and the cities of San Pablo, Manila, Pasay, Quezon and Caloocan with due regard and adequate provisions for environmental management and control, preservation of the quality of human life and ecological systems, and the prevention of undue ecological disturbances, deterioration and pollution. Under such a broad grant of power and authority, the LLDA, by virtue of its special charter, obviously has the responsibility to protect the inhabitants of the Laguna Lake region from the deleterious effects of pollutants emanating from the discharge of wastes from the surrounding areas. In carrying out the aforementioned declared policy, the LLDA is mandated, among others, to pass upon and approve or disapprove all plans, programs, and projects proposed by local government offices/agencies within the region, public corporations, and private persons or enterprises where such plans, programs and/or projects are related to those of the LLDA for the development of the region. xxx xxx xxx . . . . While it is a fundamental rule that an administrative agency has only such powers as are expressly granted to it by law, it is likewise a settled rule that an administrative agency has also such powers as are necessarily implied in the exercise of its express powers. In the exercise, therefore, of its express powers under its charter, as a regulatory and quasi-judicial body with respect to pollution cases in the Laguna Lake region, the authority of the LLDA to issue a "cease and desist order" is, perforce, implied. Otherwise, it may well be reduced to a "toothless" paper agency. there is no question that the Authority has express powers as a regulatory and quasi-judicial body in respect to pollution cases with authority to issue a "cease and desist order" and on matters affecting the construction of illegal fishpens, fishcages and other aqua-culture

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structures in Laguna de Bay. The Authority's pretense, however, that it is co-equal to the Regional Trial Courts such that all actions against it may only be instituted before the Court of Appeals cannot be sustained. On actions necessitating the resolution of legal questions affecting the powers of the Authority as provided for in its charter, the Regional Trial Courts have jurisdiction. In view of the foregoing, this Court holds that Section 149 of Republic Act No. 7160, otherwise known as the Local Government Code of 1991, has not repealed the provisions of the charter of the Laguna Lake Development Authority, Republic Act No. 4850, as amended. Thus, the Authority has the exclusive jurisdiction to issue permits for the enjoyment of fishery privileges in Laguna de Bay to the exclusion of municipalities situated therein and the authority to exercise such powers as are by its charter vested on it. Removal from the Authority of the aforesaid licensing authority will render nugatory its avowed purpose of protecting and developing the Laguna Lake Region. Otherwise stated, the abrogation of this power would render useless its reason for being and will in effect denigrate, if not abolish, the Laguna Lake Development Authority. This, the Local Government Code of 1991 had never intended to do. WHEREFORE, the petitions for prohibition, certiorari and injunction are hereby granted, insofar as they relate to the authority of the Laguna Lake Development Authority to grant fishing privileges within the Laguna Lake Region. The restraining orders and/or writs of injunction issued by Judge Arturo Marave, RTC, Branch 78, Morong, Rizal; Judge Herculano Tech, RTC, Branch 70, Binangonan, Rizal; and Judge Aurelio Trampe, RTC, Branch 163, Pasig, Metro Manila, are hereby declared null and void and ordered set aside for having been issued with grave abuse of discretion. The Municipal Mayors of the Laguna Lake Region are hereby prohibited from issuing permits to construct and operate fishpens, fishcages and other aqua-culture structures within the Laguna Lake Region, their previous issuances being declared null and void. Thus, the fishing permits issued by Mayors Isidro B. Pacis, Municipality of Binangonan; Ricardo D. Papa, Municipality of Taguig; and Walfredo M. de la Vega, Municipality of Jala-jala, specifically, are likewise declared null and void and ordered cancelled. The fishpens, fishcages and other aqua-culture structures put up by operators by virtue of permits issued by Municipal Mayors within the Laguna Lake Region, specifically, permits issued to Fleet Development, Inc. and Carlito Arroyo; Manila Marine Life Business Resources, Inc., represented by, Mr. Tobias Reynald M. Tiangco; Greenfield Ventures Industrial Development Corporation and R.J. Orion Development Corporation; IRMA Fishing And Trading Corporation, ARTM Fishing Corporation, BDR Corporation, Mirt Corporation and Trim Corporation; Blue Lagoon Fishing Corporation and ALCRIS Chicken Growers, Inc.; AGP Fish Ventures, Inc., represented by its President Alfonso Puyat; SEA MAR Trading Co., Inc., Eastern Lagoon Fishing Corporation, and MINAMAR Fishing Corporation, are hereby declared illegal structures subject to demolition by the Laguna Lake Development Authority. SO ORDERED. Davide, Jr., Bellosillo and Kapunan, JJ., concur.

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Separate Opinions

PADILLA, J., concurring: I fully concur with the decision written by Mr. Justice R. Hermosisima, Jr.. I would only like to stress what the decision already states, i.e., that the local government units in the Laguna Lake area are not precluded from imposing permits on fishery operations for revenue raising purposes of such local government units. In other words, while the exclusive jurisdiction to determine whether or not projects or activities in the lake area should be allowed, as well as their regulation, is with the Laguna Lake Development Authority, once the Authority grants a permit, the permittee may still be subjected to an additional local permit or license for revenue purposes of the local government units concerned. This approach would clearly harmonize the special law, Rep. Act No. 4850, as amended, with Rep. Act No. 7160, the Local Government Code. It will also enable small towns and municipalities in the lake area, like Jala-Jala, to rise to some level of economic viability. Separate Opinions PADILLA, J., concurring: I fully concur with the decision written by Mr. Justice R. Hermosisima, Jr.. I would only like to stress what the decision already states, i.e., that the local government units in the Laguna Lake area are not precluded from imposing permits on fishery operations for revenue raising purposes of such local government units. In other words, while the exclusive jurisdiction to determine whether or not projects or activities in the lake area should be allowed, as well as their regulation, is with the Laguna Lake Development Authority, once the Authority grants a permit, the permittee may still be subjected to an additional local permit or license for revenue purposes of the local government units concerned. This approach would clearly harmonize the special law, Rep. Act No. 4850, as amended, with Rep. Act No. 7160, the Local Government Code. It will also enable small towns and municipalities in the lake area, like Jala-Jala, to rise to some level of economic viability. Footnotes 1 Section 1, PD No. 813. 2 At pages 64-65. 3 Manila Railroad Company vs. Rafferty, 40 Phils. 225; National Power Corporation vs. Arca, 25 SCRA 935; Province of Misamis Oriental vs. Cagayan Electric Power and Light Company, Inc., 181 SCRA 43. 4 Fajardo vs. Villafuerte, G.R. No. 89135, December 21, 1989. 5 Petition, under caption, "Nature of Petition". 6 Section 3 (k), Presidential Decree No. 813.

The Lawphil Project - Arellano Law Foundation

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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-7708 May 30, 1955

JOSE MONDANO, petitioner, vs. FERNANDO SILVOSA, Provincial Governor of Surigao, JOSE ARREZA and OLIMPIO EPIS, Members of the Provincial Board, respondents. D. Avila and C. H. Lozada for petitioner. Olimpio R. Epis in his own behalf and for his co-respondents. PADILLA, J.: The petitioner is the duly elected and qualified mayor of the municipality of Mainit, province of Surigao. On 27 February 1954 Consolacion Vda. de Mosende filed a sworn complaint with the Presidential Complaints and Action Committee accusing him of (1) rape committed on her daughter Caridad Mosende; and (2) concubinage for cohabiting with her daughter in a place other than the conjugal dwelling. On 6 March the Assistant Executive Secretary indorsed the complaint to the respondent provincial governor for immediate investigation, appropriate action and report. On 10 April the petitioner appeared before the provincial governor in obedience to his summons and was served with a copy of the complaint filed by the provincial governor with provincial board. On the same day, the provincial governor issued Administrative Order No. 8 suspending the petitioner from office. Thereafter, the Provincial Board proceeded to hear the charges preferred against the petitioner over his objection. The petitioner prays for a writ of prohibition with preliminary injunction to enjoin the respondents from further proceeding with the hearing of the administrative case against him and for a declaration that the order of suspension issued by the respondent provincial governor is illegal and without legal effect. On 4 May 1954 the writ of preliminary injunction prayed for was issued after filing and approval of a bond for P500. The answer of the respondents admits the facts alleged in the petition except those that are inferences and conclusions of law and invokes the provisions of section 79 (c)of the Revised Administrative Code which clothes the department head with "direct control, direction, and supervision over all bureaus and offices under his jurisdiction . . ." and to that end "may order the investigation of any act or conduct of any person in the service of any bureau or office under his Department and in connection therewith may appoint a committee or designate an official or person who shall conduct such investigations; . . ."and the rule in the case of Villena vs. Secretary of Interior, 67 Phil. 452, which upheld "the power of the Secretary of Interior to conduct at its own initiative investigation of charges against local elective municipal officials and to suspend them preventively," on the board proposition "that under the presidential type of government which we have adopted and considering the departmental organization established and continued in force by paragraph 1, section 11, Article VII, of our Constitution, all executive and administrative organizations are adjuncts of the Executive Departments, the heads of the various executive departments are assistants and agents of the Chief Executive." The executive departments of the Government of the Philippines created and organized before the approval of the Constitution continued to exist as "authorized by law until the Congress shall provide otherwise."1 Section 10, paragraph 1, Article VII, of the Constitution provides: "The President shall

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have control of all the executive departments, bureaus, or offices, exercise general supervision over all local governments as may be provided by law, and take care that the laws be faithfully executed." Under this constitutional provision the President has been invested with the power of control of all the executive departments, bureaus, or offices, but not of all local governments over which he has been granted only the power of general supervision as may be provided by law. The Department head as agent of the President has direct control and supervision over all bureaus and offices under his jurisdiction as provided for in section 79 (c) of the Revised Administrative Code, but he does not have the same control of local governments as that exercised by him over bureaus and offices under his jurisdiction. Likewise, his authority to order the investigation of any act or conduct of any person in the service of any bureau or office under his department is confined to bureaus or offices under his jurisdiction and does not extend to local governments over which, as already stated, the President exercises only general supervision as may be provided by law. If the provisions of section 79 (c) of the Revised Administrative Code are to be construed as conferring upon the corresponding department head direct control, direction, and supervision over all local governments and that for the reason he may order the investigation of an official of a local government for malfeasance in office, such interpretation would be contrary to the provisions of paragraph 1, section 10, Article VII, of the Constitution. If "general supervision over all local governments" is to be construedas the same power granted to the Department Head in section 79 (c) of the Revised Administrative Code, then there would no longer be a distinction or difference between the power of control and that of supervision. In administrative law supervision means overseeing or the power or authority of an officer to see that subordinate officers perform their duties. If the latter fail or neglect to fulfill them the former may take such action or step as prescribed by law to make them perform their duties. Control, on the other hand, means the power of an officer to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for that of the latter. Such is the import of the provisions of section 79 (c) of the Revised Administrative Code and 37 of Act No. 4007. The Congress has expressly and specifically lodged the provincial supervision over municipal officials in the provincial governor who is authorized to "receive and investigate complaints made under oath against municipal officers for neglect of duty, oppression, corruption or other form of maladministration of office, and conviction by final judgment of any crime involving moral turpitude."2 And if the charges are serious, "he shall submit written charges touching the matter to the provincial board, furnishing a copy of such charges to the accused either personally or by registered mail, and he may in such case suspend the officer (not being the municipal treasurer) pending action by the board, if in his opinion the charge be one affecting the official integrity of the officer in question." 3 Section 86 of the Revised Administrative Code adds nothing to the power of supervision to be exercised by the Department Head over the administration of . . . municipalities . . .. If it be construed that it does and such additional power is the same authority as that vested in the Department Head by section 79 (c) of the Revised Administrative Code, then such additional power must be deemed to have been abrogated by section 10 (1), Article VII, of the Constitution. In Lacson vs. Roque, 49 Off. Gaz. 93, this Court held that the power of the President to remove officials from office as provided for in section 64 (b) of the Revised Administrative Code must be done "conformably to law;" and only for disloyalty to the Republic of the Philippines he "may at any time remove a person from any position of trust or authority under the Government of the (Philippine Islands) Philippines." Again, this power of removal must be exercised conformably to law. In the indorsement to the provincial governor the Assistant Executive Secretary requested immediate investigation, appropriate action and report on the complaint indorsed to him, and called his attention to section 2193 of the Revised Administrative Code which provides for the institution of judicial proceedings by the provincial fiscal upon direction of the provincial governor. If the indorsement of the Assistant Executive Secretary be taken as a designation of the provincial governor to investigate the petitioner, then he would only be acting as agent of the Executive, but the investigation to be conducted by him would not be that which is provided for in sections 2188, 2189 and 2190 of the Revised Administrative Code. The charges preferred against the respondent are not malfeasances or any of those enumerated or specified in section 2188 of the Revised Administrative Code, because rape and concubinage have nothing to do with the performance of his duties as mayor nor do they constitute or involve" neglect of duty, oppression, corruption or any other form of

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maladministration of office." True, they may involve moral turpitude, but before the provincial governor and board may act and proceed in accordance with the provisions of the Revised Administrative Code referred to, a conviction by final judgment must precede the filing by the provincial governor of charges and trial by the provincial board. Even the provincial fiscal cannot file an information for rape without a sworn complaint of the offended party who is 28 years of age and the crime of concubinage cannot be prosecuted but upon sworn complaint of the offended spouse.4 The charges preferred against the petitioner, municipal mayor of Mainit, province of Surigao, not being those or any of those specified in section 2188 of the Revised Administrative Code, the investigation of such charges by the provincial board is unauthorized and illegal. The suspension of the petitioner as mayor of the municipality of Mainit is, consequently, unlawful and without authority of law. The writ of prohibition prayed for is granted, without pronouncement as to costs. Pablo, Acting C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion and Reyes, J.B.L., JJ., concur.

The Lawphil Project - Arellano Law Foundation

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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-9124 July 28, 1958

BERNARDO HEBRON, petitioner, vs. EULALIO D. REYES, respondent. E. A. Beltran for petitioner. Roxas and Sarmiento for respondent. Office of the Solicitor General Ambrosio Padilla, Assistant Solicitor General Jose G. Bautista and Solicitor Troadio T. Quiazon, Jr. for respondent. Vicente G. Sinco and Enrique M. Fernando as amici curiae. CONCEPCION, J.: This is a quo warranto case involving the Office of Mayor of the Municipality of Carmona, Province of Cavite. In the general elections held in 1951, petitioner Bernardo Hebron, a member of the Liberal Party, and respondent Eulalio D. Reyes, of the Nacionalista Party, were elected mayor and vice-mayor, respectively, of said municipality, for a term of four (4) years, beginning from January 1, 1952, on which date they presumably assumed the aforementioned offices. Petitioner discharged the duties and functions of mayor continuously until May 22 or 24, 1954, when he received the following communication:

OFFICE OF THE PRESIDENT OF THE PHILIPPINES Manila, May 14, 1954 SIR: Please be advised that the President has decided for the good of the public service, to assume directly the investigation to the administrative charges against you for alleged oppression, grave abuse of authority and serious misconduct in office, and has designated the Provincial Fiscal of that province as Special Investigator of the said charges. Copy of his designation is enclosed for your information. In view of the serious nature of the aforementioned charges against you, and in order to promote a fair and impartial investigation thereof, you are hereby suspended from office, effective immediately, your suspension, to last until the final termination of the administrative proceedings against you aforementioned. In this connection, please be advised that the Vice-Mayor has been directed to assume the office of Acting Mayor during the period of your suspension, in accordance with the provisions of Section 2195 of the Revised Administrative Code. The Provincial Governor and the Special Investigator have been advised hereof.

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Respectfully, By authority of the President: (Sgd.) FRED RUIZ CASTRO Executive Secretary Mr. BERNARDO HEBRON Municipal Mayor Carmona, Cavite (Record, pp. 1-2). Thereupon, respondent Eulalio D. Reyes acted as mayor of Carmona and the Provincial Fiscal of Cavite investigated the charges referred to in the above-quoted letter. After holding hearings in connection with said charges, the provincial fiscal submitted his report thereon on July 15, 1954. Since then the matter has been pending in the Office of the President for decision. Inasmuch as the same did not appear to be forthcoming, and the term of petitioner, who remained suspended, was about to expire, on May 13, 1955, he instituted the present action for quo warranto, upon the ground that respondent was illegally holding the Office of Mayor of Carmona, and had unlawfully refused and still refused to surrender said office to petitioner, who claimed to be entitled thereto. Respondent and the Solicitor General, who was allowed to intervene, filed their respective answers admitting substantially the main allegations of fact in petitioner's complaint, but denying the alleged illegality of petitioner's suspension and alleging that respondent was holding the office of the mayor in compliance with a valid and lawful order of the President. Owing to the nature and importance of the issue thus raised, Dean Vicente G. Sinco of the College of Law, University of the Philippines, and Professor Enrique M. Fernando, were allowed to intervene asamici curiae. At the hearing of this case, the parties, as well as the Solicitor General and said amici curiae, appeared and argued extensively. Subsequently, they filed their respective memoranda, and, on September 2, 1955, the case became submitted for decision. The case could not be disposed of, however, before the close of said year, because the members of this Court could not, within the unexpired portion thereof, reach an agreement on the decision thereon. Although the term of office of petitioner herein expired on December 31, 1955, his claim to the Office of Mayor of Carmona, Cavite, has not thereby become entirely moot, as regards such rights as may have accrued to him prior thereto. For this reason, and, also, because the question of law posed in the pleadings, concerns a vital feature of the relations between the national government and the local governments, and the Court has been led to believe that the parties, specially the executive department, are earnestly interested in a clearcut settlement of said question, for the same will, otherwise, continue to be a constant source of friction, disputes and litigations to the detriment of the smooth operation of the Government and of the welfare of the people, the members of this Court deem it necessary to express their view thereon, after taking ample time to consider and discuss full every conceivable aspect thereof. The issue is whether a municipal mayor, not charged with disloyalty to the Republic of the Philippines, may be removed or suspended directly by the President of the Philippines, regardless of the procedure set forth in sections 2188 to 2191 of the Revised Administrative Code. 1. At the outset, it should be noted that, referring to local elective officers, we held, in Lacson vs. Roque (92 Phil., 456; 49 Off. Gaz., 93, 98), that the President has no "inherent power to remove or suspend" them. In said case, we declared, also: . . . Removal and suspension of public officers are always controlled by the particular law applicable and its proper construction subject to constitutional limitation. . . . . xxx xxx xxx

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There is neither statutory nor constitutional provision granting the President sweeping authority to remove municipal officials. By article VII, section 10, paragraph (1) of the Constitution the President "shall . . . exercise general supervision over all local governments", but supervision does not contemplate control. (People vs. Brophy, 120 P., 2nd., 946; 49 Cal. App., 2nd., 15.) Far from implying control or power to remove the President's supervisory authority over municipal affairs is qualified by the proviso "as may be provided by law", a clear indication of constitutional intention that the provisions was not to be self-executing but requires legislative implementation. And the limitation does not stop here. It is significant to note that section 64(b) of the Revised Administrative Code in conferring on the Chief Executive power to remove specifically enjoins that the said power should be exercised conformably to law, which we assume to mean that removals must be accomplished only for any of the causes and in the fashion prescribed by law and the procedure. What are "the causes and . . . the fashion . . . and the procedure" prescribed by law for the suspension of elective municipal officials? The aforementioned sections 2188 to 2191 of the Revised Administrative Code read: SEC. 2188. Supervisory authority of provincial governor over municipal officers. The provincial governor shall receive and investigate complaints made under oath against municipal officers for neglect of duty, oppression, corruption or other form of maladministration of office, and conviction by final judgment of any crime involving moral turpitude. For minor delinquency, he may reprimand the offender; and if a more severe punishment seems to be desirable, he shall submit written charges touching the matter to the provincial board, furnishing a copy of such charges to the accused either personally or by registered mail, and he may in such case suspend the officer (not being the municipal treasurer) pending action by the board, if in his opinion the charge be one affecting the official integrity of the officer in question. Where suspension is thus effected the written charges against the officer shall be filed with the board within five days. SEC. 2189. Trial of municipal officer by provincial board. When written charges are preferred by a provincial governor against a municipal officer, the provincial board shall, at its next meeting, regular or special, set a day, hour, and place for the trial of the same and notify the respondent thereof; and at the to and place appointed, the board shall proceed to hear and investigate the truth or falsity of said charges, giving the accused official full opportunity to be heard in his defense. The hearing shall occur as soon as may be practicable, and in case suspension has been effected, not later than ten days from the date the accused is furnished or has sent to him a copy of the charges, unless the suspended official shall, on sufficient grounds, request an extension of time to prepare his defense. The preventive suspension of a municipal officer shall not be for more than thirty days. At the expiration of the thirty days, the suspended officer shall be reinstated in office without prejudice to the continuation of the proceedings against him until their completion, unless the delay in the decision of the case is due to the fault, neglect, or request of the accused, in which case the time of the delay shall not be counted in computing the time of the suspension: Provided, That the suspension of the accused may continue after the expiration of the thirty days above mentioned in case of conviction until the Secretary of the Interior shall otherwise direct or the case shall finally be decided by said Secretary. SEC. 2190. Action by provincial board. If, upon due consideration, the provincial board shall adjudge that the charges are not sustained, the proceedings shall be dismissed; if it shall adjudge that the accused has been guilty of misconduct which would be sufficiently punished by reprimand or further reprimand, it shall direct the provincial governor to deliver such reprimand in pursuance of its judgment; and in either case the official, if suspended, shall be reinstated.

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If in the opinion of the board the case is one requiring more severe discipline, and in case of appeal, it shall without unnecessary delay forward to the Secretary of the Interior, within eight days after the date of the decision of the provincial board, certified copies of the record in the case, including the charges, the evidence, and the findings of the board, to which shall be added the recommendation of the board as to whether the official ought to be suspended, further suspended, or finally dismissed from office; and in such case the board may exercise its direction to reinstate the official, if suspended. The trial of a suspended municipal official and the proceedings incident thereto shall be given preference over the current and routine business of the board. SEC. 2191. Action by Secretary of the Interior. Upon receiving the papers in any such proceedings, the Secretary of the Interior shall review the case without unnecessary delay and shall make such order for the reinstatement, dismissal, suspension, or further suspension of the official, as the facts shall warrant and shall render his final decision upon the matter within thirty days after the date on which the case was received. Disciplinary suspension made upon order of the Secretary of the Interior shall be without pay. No final dismissal hereinunder shall take effect until recommended by the Department Head and approved by the President of the Philippines. As regards the effect of these provisions, suffice it for us to quote the opinion of Mr. Justice Tuason former Secretary of Justice in the case of Villena vs. Roque (93 Phil., 363, decided on June 19, 1953), referring, particularly, to said section 2190 of the Revised Administrative Code: By all canons of statutory construction and, I might say with apology, common sense, the preceding sections should control in the field of investigations of charges against, and suspension of, municipal officials. The minuteness and care, in three long paragraphs, with which the procedure in such investigations and suspensions is outlined, clearly manifests a purpose to exclude other modes of proceeding by other authorities under general statutes, and not to make the operation of said provisions depend upon the mercy and sufferance of higher authorities. To contend that these by their broad and unspecified power can also investigate such charges and order the temporary suspension of the erring officials indefinitely is to defy all concepts of the solemnity of legislative pronouncements and to set back the march of local self-government which it has been the constant policy of the legislative branch and of the Constitution to promote. Indeed, it is, likewise, well settled that laws governing the suspension or removal of public officers, especially those chosen by the direct vote of the people, must be strictly construed in their favor.1 Accordingly, when the procedure for the suspension of an officer is specified by law, the same must be deemed mandatory and adhered to strictly, in the absence of express or clear provision to the contrary which does not exist with respect to municipal officers. What is more, the language of sections 2188 to 2191 of the Revised Administrative Code leaves no room for doubt that the law in the words of Mr. Justice Tuason "frowns upon prolonged or indefinite suspension of local elective officials" (Lacson vs. Roque, 92 Phil., 456; 49 Off. Gaz., 93). Pursuant to said section 2188, . . . "the provincial governor shall receive and investigate complaints against municipal officers for neglect of duty, oppression, corruption or other form of maladministation of office." It provides that in case suspension has been effected, the hearing shall occur as soon as practicable, in no case later than ten days from the date the accused is furnished a copy of the charges, unless the suspended official on sufficient grounds asks from an extension of time to prepare his defense. The section further warns that "the preventive suspension shall not be for more than thirty days," and ordains that at the end of that period the officer should be reinstated in office without prejudice to the continuation of the proceedings against him until their completion, unless the delay in the decision of the case is

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due to the defendant's fault, neglect or request and unless in case of conviction the Secretary of the Interior shall otherwise direct. xxx xxx xxx

The policy manifested by section 2188 of the Revised Administrative Code, which is consecrated policy in other jurisdictions whose republican institutions this country has copied, requires speedy termination of a case in which suspension has been decreed, not only in the interest of the immediate party but of the public in general. The electorate is vitally interested, and the public good demands, that the man it has elevated to office be, within the shortest time possible, separated from the service if proven unfit and unfaithful to its trust, and restored if found innocent. Special proceedings alone, restored if found innocent. Special proceedings alone, unencumbered by nice technicalities of pleading, practice and procedure, and the right of appeal, are best calculated to guarantee quick result. (Lacson vs. Roque, 49 Off. Gaz., 93, 103-104, 105.) In the case at bar, petitioner was suspended in May 1954. The records of the investigation by the Provincial Fiscal of Cavite, with the report of the latter, were forwarded to the Executive Secretary since July 15, 1954. Yet, the administrative decision on the charges against petitioner was not rendered, either before the filing of the complaint herein, on May 13, 1955, or before the expiration of petitioner's term of office, on December 31, 1955. Manifestly, petitioner's continued, indefinite suspension cannot be reconciled with the letter and spirit of aforementioned provisions of the Revised Administrative Code. 2. Respondent and the amici curiae involve sections 79 (C) and 86 of the Revised Administrative Code, which are of the following tenor: Sec. 79 (C). Power of direction and supervision. The Department Head shall have direct control, direction, and supervision over all bureaus and offices under his jurisdiction and may, any provision of existing law to the contrary notwithstanding, repeal or modify the decisions of the chief of said bureaus or offices when advisable in the public interest. The Department Head may order the investigation of any act conduct of any person in the service of any bureau or office under his Department and in connection therewith may appoint a committee or designate an official or person who shall conduct such investigations, and such committee, official, or person may summon witnesses by subpoena and subpoena duces tecum, administer oath, and take testimony relevant to the investigation. Sec. 86. Bureaus and offices under the Department of Interior. The Department of the Interior shall have executive supervision over the administration of provinces, municipalities, chartered cities, and other local political subdivisions, except the financial affairs and financial agencies thereof, . . . . Referring to these provisions, we postulated in Mondano vs. Silvosa (97 Phil., 143; 51 Off. Gaz., 2884, 2887): The executive departments of the Government of the Philippines created and organized before the approval of the Constitution continued to exist as "authorized by law until the Congress shall provide otherwise." Section 10, paragraph 1, Article VII, of the Constitution provides: "The President shall have control of all the executive department, bureaus, or offices, exercise general supervision over all local governments as may be provided by law, and take care that the laws be faithfully executed." Under this constitutional provision the President has been invested with the power of control of all the executive departments, bureaus, or offices, but not of all local governments over which he has been granted only the power of general supervision as may be provided by the law. The Department head as agent of the President has directcontrol and supervision over all bureaus and offices under his

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jurisdiction as provided for in section 79(C) of the Revised Administrative Code, but he does not have the same control of local governments as that exercised by him over bureaus and offices under his jurisdiction. Likewise, his authority to order the investigation by any act or conduct of any person in the service of any bureau or office under his department is confined to bureaus or offices under his jurisdiction and does not extend to local governments over which, as already stated, the President exercises only general supervision as may be provided by law. If the provisions of Section 79(C) of the Revised Administrative Code are to be construed as conferring upon the corresponding department head direct control, direction, and supervision over all local governments and that for that reason he may order the investigation of an official of a local government for malfeasance in office, such interpretation would be contrary to the provisions of paragraph 1, section 10, Article VII, of the Constitution. If "general supervision over all local government's is to be construed as the same power granted to the Department Head in section 79 (C) of the Revised Administrative Code, thenthere would no longer be a distinction or difference between the power of control and that of supervision. In administrative law supervision means overseeing or the power or authority of an officer to see that subordinate officers perform their duties. If the latter fail or neglect to fulfill them the former may take such action or step as prescribed by law to make them perform their duties. Control, on the other hand, means the power of an officer to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for that of the latter. Such in the import of the provisions of section 79 (C) of the Revised Administrative Code and 37 of Act No. 4007. TheCongress has expressly and specifically lodge the provincial supervision over municipal officials in the provincial governor who is authorized to "receive and investigate complaints made under oath against municipal officer for neglect of duty, oppression, corruption or other form of maladministration of office, and conviction by final judgment of any crime involving moral turpitude." And if the charges are serious, "he shall submit written charges touching the matter to the provincial board, furnishing a copy of such charges to the accused either personally or by registered mail, and he may in such case suspend the officer (not being the municipal treasurer) pending action by the board, if in his opinion the charge be one affecting the official integrity of the officer in question." Section 86 of the Revised Administrative Code adds nothing to the power of supervision to be exercised by the Department Head over the administration of . . . municipalities . . . . If it be construed that it does and such additional power is the same authority as that vested in the Department Head by section 79(C) of the Revised Administrative Code, then such additional power must be deemed to have been abrogated by section 10(1), Article VII, of the Constitution. (51 Off. Gaz., pp. 2884, 28872888.) In fact, said section 79(C) was inserted in the Administrative Code by Act No. 3535, passed by the Philippine Legislature, during the American regime, in line with section 22 of the Jones Law, pursuant to which "all Executivefunctions of the Government must be directly under the Governor General or within one of the Executive Departments under the supervision and control of the Governor General." As already stated, however, this authority of the Executive has been constricted in our Constitution, which maintains the presidential "control of the executive departments, bureau and offices, "but limit the powers of the Executive over local governments to "supervision" of a "general," not particular, character, and this only "as may be provided by law. If said section 79 (C) were fully applicable to local governments, the President who now discharges the functions of the former Secretary of the Interior could "alter or modify or nullify or set aside" any duly enacted municipal ordinance or resolution of a provincial board, or "substitute" his judgment in lieu of that of municipal councils or provincial boards. Yet, it is well settled that he cannot even disapprove any said ordinance or resolution, except when the same is illegal (Gabriel vs. Gov't of Pampanga, 50 Phil., 686; Rodriguez vs. Montinola,* 50 Off. Gaz., 4820). Thus, despite the "direct control" and "supervision" of every Department Head over all bureaus and offices under his jurisdiction, and his specific power to "repeal or modify the decisions of the . . . bureaus and offices" under his department, pursuant to said section 79 (C), and the fact that "provinces, municipalities, chartered cities and other local political subdivisions" were among the "bureaus and offices under the Department of Interior", according to the above-quoted section 86, the

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word "offices", as used in section 79 (C), was not deemed to include local governments, even before the adoption of the Constitution. Greater adherence to this view is, obviously, demand by the provision of the fundamental law reducing the presidential authority over local governments, from "control" to mere "general supervision." 3. Section 64 (c) of the Revised Administrative Code, likewise, relied upon by respondent and the amici curiae, provides that the President shall have authority "to order, when in his opinion the good of the public service so requires, an investigation of any action or conduct of any person in the government services and in connection therewith, to designate the official committee or person by whom such investigation shall be conducted. Notwithstanding this, apparently, unqualified grant of said authority, it is obvious that the President may not apply it to members of Congress and those of the Supreme Court, in view of the principle of separation of powers, as to both, and of the constitutional provisions on impeachment (Article IX of the Constitution), as to members of this Court. In other words, said section 64 (c) cannot be construed literally without violating the Constitution. Indeed, the opening paragraphs of said section 64 read: In addition to his general supervisory authority, the (Governor-General)President of the Philippines shall have such specific powers and duties as are expressly conferred or imposed on him by law and also, in particular, the powers and duties set forth in this chapter. Among such special powers and duties shall be: (Emphasis ours.) Since the powers specified therein are given to the President, "in addition to his general supervisory authority", it follows that the application of those powers to municipal corporations insofar as they may appear to sanction the assumption by the Executive of the functions of provincial governors and provincial boards, under said sections 2188 to 2190 would contravene the constitutional provision restricting the authority of the President over local government to "general supervision." 4. The foregoing considerations are equally applicable to paragraph (b) of said section 64 similarly stressed by the respondent and the amici curiae empowering the Executive: To remove officials from office conformably to law and to declare vacant the offices held by such removed officials. For disloyalty to the (United States), the Republic of the Philippines, the (Governor-General) President of the Philippines may at any time remove a person from any position of trust or authority under the Government of the (Philippines Islands) Philippines. Besides, it is not claimed that petitioner falls under the second sentence of said provision, pursuant to which the President may "at any time remove a person from any position of trust or authority under the Government" for "disloyalty" to our Republic. There is no question of "disloyalty" in the present case. Upon the other hand, the power of removal of the President, under the first sentence of said paragraph 64 (b), must be exercised "conformably to law", which, as regards municipal officers, is found in sections 2188 to 2191 of the Revised Administrative Code. Accordingly, in Lacson vs. Roque, supra, we declared: The contention that the President has inherent power to remove or suspend municipal officers is without doubt not well taken. Removal and suspension of public officers are always controlled by the particular law applicable and its proper construction subject to constitutional limitations. (2 McQuillen's Municipal Corporations [Revised], section 574.) So it has been declared that the governor of a state, (who is to the state what the President is to the Republic of the Philippines) can only remove where the power is expresslygiven or arises by necessary implication under the Constitution or statutes.(43 Am. Jur. 34.)

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There is neither statutory nor constitutional provision granting the President sweeping authority to remove municipal officials. By Article VII, section 10, paragraph (1) of the Constitution the President "shall . . . exercise general supervision over all local governments", but supervision does not contemplate control. (People vs. Brophy, 120, P., 2nd., 946; 49 Cal. App., 2nd., 15.) Far from implying control or power to remove, the President's supervisory authority over municipal affairs is qualified by the proviso "as may be provided by law," a clear indication of constitutional intention that the provision was not to be self-executing but requires legislative implementation. And the limitation does not stop here. It is significant to note that section 64 (b) of the Revised Administrative Code in conferring on the Chief Executive power to remove specifically enjoins that the said power should be exercised conformably to law, which we assume to mean that removals must be accomplished only for any of the causes and in the fashion prescribed by law and the procedure. Again, petitioner herein was suspended for more than a year and seven (7) months (representing over three-eights [3/8], or almost one-half [1/2] of his full term) and, presumably, would have remained suspended up to the present, had his term not expired on December 31, 1955. In Alejandrino vs. Quezon (46 Phil., 83), it was held thatthe power of removal does not imply the authority to suspend for a substantial period of time, which, in said case, was only one (1) year.2 5. If there is any conflict between said sections 64 (b) and (c), 79 (c) and 86 of the Revised Administrative Code, on the other hand, and sections 2188 to 2191 of the same code, on the other, the latter being specificprovisions, setting forth the procedure for the disciplinary action that may be taken, particularly, against municipalofficials must prevail over the former, as general provisions, dealing with the powers of the President and the department heads over the officers of the Government.3 Such was the view adopted in Laxamana vs. Baltazar (92 Phil., 32; 48 Off. Gaz., 3869). The issue therein was whether, in case of suspension of a municipal mayor, his duties shall be discharged by the vice-mayor, as provided in section 2195 of the Revised Administrative Code,4 or by an appointee of the Provincial Governor, with the consent of the Provincial Board, pursuant to section 21(a) of Republic Act No. 180 (The Revised Election Code).5 It was held that, although subsequent in point of time, section 21 (a) of Republic Act No. 180, should yield to said section 2195.6 6. The alleged authority of the Executive to suspend a municipal mayor directly, without any opportunity on the part of the provincial governor and the provincial board to exercise the administrative powers of both under sections 2188 to 2190 of the Administrative Code, cannot be adopted without conceding that said powers are subject to repeal or suspension by the President. Obviously, this cannot, and should not, be done without a legislation of the most explicit and categorical nature, and there is none to such effect. Moreover, as stated inMondano vs. Silvosa (supra), said legislation would, in effect, place local governments under the control of the Executive and consequently conflict with the Constitution (Article VII, section 10[1]). That such would be the effect of respondent's pretense, is admitted in the very answer of the Solicitor General, on page 5 of which he avers: Truly impressive in the intention to make the Constitutional grant "real and effective" and not a mere splendid bauble is the significant fact that . . . the deliberations of the Constitutional Convention show that the grant of the supervisory authority to Chief Executive in this regard was in the nature of a compromise resulting from the conflict of views in that body, mainly between the historical view which recognizes the right of local self-government (People ex rel. Le Roy vs. Hurlbut [1871], 24 Mich., 44) and the legal theory which sanctions the possession by the state of absolute control over local governments (Booten vs. Pinson, L.R.A. [N.S., 1917-A], 1244; 77 W. Va., 412 [1915]). The

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result was the recognition of the power of supervision and all its implications and the rejectionof what otherwise would be an imperium in imperio to the detriment of a strong national government. (Planasvs. Gil. 67 Phil., 62, 78.) Such a compromise must have contemplated certain measure of control to be attached to the power of "general supervision", equivalent to the degree of local autonomy that may be determined by Congress, which under the aforestated constitutional provision, possesses final authority in applying it. In this connection, the case of Rodriguez vs. Montinola (94 Phil., 964; 50 Off. Gaz., 4820) is most illuminating. The issue therein was whether the Secretary of Finance could validly disapprove a resolution of the Provincial Board of Pangasinan abolishing the positions of three special counsel in the province. Counsel for the Secretary of Finance maintained the affirmative view invoking, among other things, Executive Order No. 167 (October 8, 1938), section 2 of which provides: The Department of Finance is the agency of the National Government for the supervision and control of the financial affairs of the provincial, city and municipal governments. (Emphasis ours.) and Executive order No. 383 (December 20, 1950) transferring the supervision and control of the personnel and finances of provincial governments from the Secretary of the Interior to the Secretary of Finance. In a unanimousdecision, this Court, however, resolved the question in the negative. Speaking for the Court, Mr. Justice Labrador a member of our constitutional convention lucidly stated: We must state frankly at the outset that the outset that the use of the word "control in Executive Order No. 167 finds no support or justification either in the Constitution (which grants the President only powers of general supervision over local governments), or in any provision of the law. Any effect or interpretation given to said executive order premised on the use of the word "control" therein would be of doubtful validity. xxx xxx xxx

Is the suppression of the position of three special counsel a financial matter falling under the supervisory power of the Secretary of Finance over provincial governments? Whether or not funds are available to pay for a newly created position is evidently a financial matter; but the suppression of positions is not a financial matter. The problem before the provincial board was, Should not the services of the three special counsel be stopped and the funds appropriated for them used for other services? This is not a financial matter. It is so only in the sense that the sum appropriated for the abolished positions reverts to the general funds to be thereafter appropriated again as the provincial board may provide. Were we to consider all changes in the purposes of appropriations as financial matters, because they may have relation to the annual appropriations, there would be no form of activity involving the expenditure of money that would not fall within the power of the Secretary of Finance to approve or disapprove. Such an interpretation can not be held to be within the intendment of the executive order on the approval of the budget of the provincial board. Having arrived at the conclusion that the suppression of the positions of three special counsel is not a financial matter, subject to the approval of the Secretary of Finance, we now proceed to examine the issue from another angle, i.e., whether the Secretary of Finance, as an alter ego of the President of the Philippines, may not have the authority to disapprove the resolution in question under the general supervisory authority given to the President of the Philippines in sub-paragraph (1), section 10, of the Constitution. The supervisory authority of the President is limited by the phrase "as provided by law" but there is no law in accordance with which said authority is to be exercised. The authority must be exercised, therefore, in accord with general principles (of law).

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xxx

xxx

xxx

The Secretary of Finance is an official of the central government, not of provincial government, which are distinct an separate. If any power of general supervision is given him over local governments certainly it can not be understood to mean or to include the right to direct action or even to control action, as in cases of school superintendents or supervisors within their respective districts. Such power (of general supervision) may include correction of violations of law, or of gross errors, abuses, offenses, or maladministration. Unless the acts of local officials or provincial governments constitute maladministration, or an abuse or violation of a law, the power of general supervision can not be exercised. In synthesis, we hold that the power of general supervision granted the President, in the absence of any express provision of law, may not generally be interpreted to mean that he, or his alterego, the Secretary of Finance, may direct the form and manner in which local officials shall perform or comply with their duties. The act of the provincial board in suppressing the positions of three special counsel not being contrary to law, or an act of maladministration, nor an act of abuse, the same may not be disapproved by the Secretary of Finance acting as a representative of the President by virtue of the latter's power of general supervisionover local governments (Rodriguez vs. Montinola, 94 Phil., 964 50 Off. Gaz., 4820, 4825-27; Emphasis ours.) If neither the Secretary of the Interior nor the President may disapprove a resolution of the Provincial Board of Pangasinan, passed within the jurisdiction thereof, because such disapproval would connote the assumption ofcontrol, which is denied by the Constitution, it is manifest that greater control would be wielded by said officers of the national government if they could either assume the powers vested in said provincial board or act in substitution thereof, such as by suspending municipal officials, without the administrative proceedings prescribed in sections 2188 to 2190 of the Administrative Code, before said board. As stated in People vs. Brophy (120 P. [2nd series], pp. 946, 953). As will be seen from an examination of the above section of the Constitution, the powers of the Attorney General are not without limitation. Manifestly, "direct supervision over every district attorney and sheriff and over such other law enforcement officers as may be designated by law" does not contemplate absolute control and direction of such officials. Especially is this true as to sheriffs and district attorneys, as the provision plainly indicates. These officials are public officers, as distinguished from mere employees, with public duties delegated and entrusted to them, as agents, the performance of which is an exercise of a part of the governmental functions of the particular political unit for which they, as agents, are active. Coulter vs. Pool, 187 Cal. 181, 201 p. 121. Moreover, sheriffs and district attorneys are officers created by the Constitution. In that connection it should be noted that there is nothing in section 21 of article V that indicates any intention to depart from the general scheme of state government by counties and cites and counties, as well as local authority in cities, as provided by sections 7 1/2, 7 1/2 a, 8 and 8 1/2, of Article XI. By interpreting section 21 of article V in the light of the above-mentioned provisions, it is at once evident that "supervision" does not contemplate control, and that sheriffs and district attorneys cannot avoid or evade the duties and responsibilities of their respective offices by permitting a substitution of judgment. The sole exception appears to be that whenever "in the opinion of the Attorney-General any law of the State is not being adequately enforced in any county, it shall be the duty of the Attorney-General to prosecute," in which cases "he shall have all the powers of a district attorney. But even this provision affords no excuse for a district attorney or a sheriff to yield the general control of his office and duties to the Attorney General. (Emphasis ours.) 7. The philosophy upon which our system of local governments is hinged rejects the theory of respondent herein.

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The starting point from which the question may he considered is article VII, section 10, of the Constitution of the Philippines, subparagraph (1) of which provides as follows: "(1) The President shall have control of all the executive departments, bureaus, or offices, exercise general supervision over all local governments as may be provided by law, and take care that the laws be faithfully executed." It might be helpful to recall that under the Jones Law the Governor General had both control and supervision over all local governments, (Section 22, Jones Law) The evident aim of the members of the Constitutional Convention in introducing the change, therefore, must have been to free local governments from the control exercised by the central government, merely allowing the latter supervision over them. But this supervisory jurisdiction is not unlimited; it is to be exercised "as may be provided by law." At the time of the adoption of the Constitution, provincial governments had been in existence for over thirty years, and their relations with the central government had already been defined by law. Provincial governments were organized in the Philippines way back in the year 1901 upon the approval of Act No. 82 by the Philippines Commission on January 31, 1901. The policy enjoined by the President of the United States in his Instructions to the Philippines Commission was for the insular government to have "only supervision and control over local governments as may be necessary to secure and enforce faithful and efficient administration by local officers." (McKinley Instruction in Philippines Commission, April 7, 1900.) The aim of the policy was to enable the Filipinos to acquire experience in the art of self-government, with the end in view of later allowing them to assume complete management and control of the administration of their local affairs. This policy is the one now embodied in the above quoted provision of the Constitution. (Rodriguez vs. Montinola, 94 Phil., 964, 50 Off. Gaz., 4820, 4823, 4824.) (Emphasis ours.) As early as April 7, 1900, President McKinley, in his Instructions to the Second Philippine Commission, laid down the policy that our municipal governments should be "subject to the least degree of supervision and control" on the part of the national government; that said supervision and control should be "confined within the narrowest limits"; that in the distribution of powers among the governments to be organized in the Philippines, "the presumption is always to be in favor of the smaller subdivision"; that the organization of local governments should follow "the example of the distribution of powers between the states and the national government of the United States"; and that, accordingly, the national government "shall have no direct administration except of matters ofpurely general concern." If such were the basic principles underlying the organization of our local governments, at a time when the same were under the control of the Governor-General (the representative of the United States, which has delegated to us some governmental powers, to be exercised in the name of the United States), with more reason must those principles be observed under the Constitution of the Philippines, pursuant to which "sovereignty resides in the (Filipino) people and all government authority emanates from them" and the power of the President over local governments is limited to "general supervision . . . as may be provided by law." Thus, commenting on the executive power over municipalities, Dean Sinco, in his work on Philippine Political Law (10th ed., pp. 695-697), expressed himself as follows: Supervisory power, when contrasted with control, is the power of mere oversight over an inferior body; it does not include any restraining authority over the supervised party. Hence, the power of general supervision over local governments should exclude, in the strict sense, the authority to appoint and remove local officials. The Congress of the Philippines may pass laws which shall guide the President in the exercise of his power of supervision over provinces and municipalities; but it may not pass laws enlarging the extent of his supervisory authority to the power of control. To do so would

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be assuming the right to amend the Constitution which expressly limits the power of the President over local governments to general supervision. The question then arises: How should disciplinary action be taken against a local office who might be guilty of dereliction of duty? The legal procedure in such cases will have to be judicial, not administrative. An action will have to be presented in court charging the official with violation of law or neglect of his duties. The Constitution in this respect does not establish anything novel; it merely revives the rule of law in place of administrative discretion. Local autonomy may thus be established to a limited degree. In the deliberations of the committee on provincial and municipal governments of the Constitutional Convention held in Manila in 1934, there was practical unanimity of opinion among the delegates that provincial and municipal governments should enjoy a certain degree of autonomy. The first drafts prepared by the committee provincial and municipal governments included provisions intended to protect the local governments against the absolute control of the central government. Some difficulty was, however, encountered in expressing objectively the necessary provisions protective of local autonomy. This was due to the other desire of many of the delegates of establishing a strong central government. Concretely the problem was how to keep some degree of local autonomy without weakening the national government. The draft of the Committee on provincial and municipal governments was not considered satisfactory, and so it was not incorporated in the Constitution.But the idea of giving local governments a more of autonomy was not completely given up. It is, therefore, logical to conclude that the Constitution in limiting expressly the power of the President over local governments to mere general supervision expresses a concession to the general demand for some local autonomy. This idea of a compromise or concession should serve as a guide in construing the extent of the powers of the President over local governments. The Supreme Court of the Philippines, however, while admitting that the power of supervision over local governments given by the Constitution to the President is not coextensive with control, before the last war declared that the totality of executive powers constitutionally vested in the President and the adoption of the Presidential type of government for the Philippines gave the President a comprehensive authority over all local officials. This broad interpretation of Presidential powers would stultify the specific limitation expressly proved in the Constitution. Fortunately, newer decisions of the Courts are veering away from its early pronouncements. (Emphasis ours.) 8. It is urged that the authority of the President over our municipal corporations is not identical to that of State Governors in the United States, for the former is the Executive, with more comprehensive powers than those of the latter, who are merely chief executives, and in Severino vs. Governor General (16 Phil., 366, 386), it was held: . . . Governors of States in the Union are not the "executives" but are only the "chief executives". All State official associated with the governor, it may be said as a general rule, are, both in law and in fact, his colleagues, not his agents nor even his subordinates. . . . They are not given him as advisers; on the contrary they are coordinated with him. As a general rule he has no power to suspend or remove them. It is true that in a few of the States the governors have power to appoint certain high officials, but they can not be removed for administrative reasons. These are exceptions to the general rule. The duties of these officials are prescribed by Constitutional provisions or by statute, and not by the governor. The actual execution of a great many of the laws does not lie with the governors, but with the local officers who are chosen by the people in the towns and counties and "bound to the central authorities of the States by no real bonds of responsibility." In most of the States there is a significant distinction between the State and local officials, such as county and city officials over whom the governors have very little, if any, control; while in this country the Insular and provincial executive officials are bound to the Governor-General by strong bonds of responsibility. So we conclude that the powers, duties, and responsibilities conferred upon

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the Governor-General are far more comprehensive than those conferred upon State governors. (Emphasis ours.) Although accurate, this view is immaterial to the issue before us. The Severino case referred to the authority of the American Governor-General over local governments established in the Philippines, as an unincorporated territory or insular possession of the United States, which local governments had been placed by McKinley's Instructions ratified in the Philippine Bill (Act of Congress of the U. S. of July 1, 1902) and the Jones Law (Act of Congressof the U. S. of August 29, 1916), under the "control" of said officer. The case at bar deals with the authority of the President of the Philippines, as a full sovereign state, over local governments created by Philippine laws, enacted by representatives of the Filipino people, who elected said representatives and are the ultimate repository of our sovereignty (Sec. 1, Art. II, of the Constitution), in the exercise of which they adopted and promulgated a Constitution, and ordained therein, that, in lieu of the power of control of the former Governors-General, our Executive shall merely exercise "general supervision over all local governments as may be provided by law." (Article VII, Section 10 [1], of the Constitution.) Obviously, this provision vests in the President of the Republic less powers over municipal corporations than those possessed by our former Governors-General.7 9. It has, also, been pointed out that municipal corporations in the United States have the power of "local self-government", which is not given to our political subdivisions. This means simply that, whereas the former may not be deprived of their right to local "self-government", the latter have only such autonomy, if any, as the centralgovernment may deem fit to grant thereto, and that said autonomy shall be under the control of the national government, which may decree its increase, decrease, or, even, complete abolition. But, who shall exercise this power, on behalf of the State? Not the Executive, but the Legislative department, as an incident of its authority to create or abolish municipal corporations, and, consequently, to define its jurisdiction and functions. Hence, after noting the difference between the power of control of the Executive, under the former organic laws, and that of general supervision, under the Constitution, Dean Sinco stated in his above-cited work: . . . It is, therefore, obvious that local governments are subject to the control of Congress which has the authority to prescribe the procedure by which the President may perform his constitutional power of general supervision. (Sinco, Philippine Political Law, 10th ed., p. 294; (Emphasis ours.) 10. It is next said that, although the power of general supervision of the President imposes upon him the duty of non-interference in purely corporate affairs of the governments, such limitation does not apply to its politicalaffairs. To bolster up this proposition, the following has been cited: "A municipal corporation, being recognized as an appropriate instrumentality for the administration of general laws of the state within its boundaries and appointed and empowered for that purpose, thereby becomes an agent of the state for local administration and enforcement of its sovereign power. This is the governmental aspect of the municipal corporation. In their public and governmental aspects municipal corporations are referred to as arms of the state government, auxiliaries of the state, branches of the state government, subordinate divisions of the state government, delegates of the sovereign state, local divisions of the state, parts of the state government, parts of the civil governments of the state, parts of the governmental machinery of the state, parts of the machinery by which the state conducts its governmental affairs, political subdivisions of the state, political or governmental portion of the state in which they are situated, public agencies. They are not only representatives of the state, but portions of its governmental power. They represent no sovereignty distinct from the state itself. The government exercised by a municipal corporation is exercised as an agency of the whole public, and for all the people of the state. A municipal corporation is, within its prescribed sphere, a political power. In its governmental capacity it may command; it is a municipal government; a public corporation." (43 C. J., 6970)

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The Government of the Republic of the Philippines is a term which refers to the corporate governmental entity through which the functions of government are exercised throughout the Philippines, including, save as the contrary appears from the context, the various arms through which political authority is made effectivein the Philippines, whether pertaining to the central Government or to the provincial or municipal branches or other form of local government. (Art. I, Sec. 2, Rev. Adm. Code; (Emphasis ours.)" (See Answer of the Solicitor General, pp. 9-10) These authorities are good law, but its implications have seemingly been misconstrued, for they refer to the power of the State, exercised through its law-making body, not the Executive. In the Philippines, the constitutional provision limiting the authority of the President over local governments to General supervision is unqualified and, hence, it applies to all powers of municipal corporations, corporate and political alike. Thus, for instance, municipal ordinances, enacted under the police power delegated to municipal corporations, involve the exercise of not corporate, but political authority. Yet, admittedly, such ordinances are not subject to presidential control. The Executive may not repeal, modify or even disapprove said ordinances no matter how unwise the same being within the powers conferred by law upon local governments. In fact, there was no need of specifically qualifying the constitutional powers of the President as regards the corporate functions of local governments, inasmuch as the Executive never had any control over said functions.8What is more, the same are not, and never have been, under the control even of Congress, for, in the exercise of corporate, non-governmental or non-political functions, municipal corporations stand practically on the same level,vis-a-vis the National Government or the State as private corporations.9 Consequently, the aforesaid limitation of the powers of the President over local governments from "control" to "general supervision", could have had no other purpose than to affect his authority with regard precisely to political functions. In Villena vs. Secretary of the Interior (67 Phil., 451), the Solicitor General invoked the distinction between the governmental and the corporate powers of municipal corporations in support of the alleged direct authority of the Secretary of the Interior to suspend a municipal mayor. The argument was rejected by this Court in the following language: . . . if the power of suspension of the Secretary of the Interior is to be justified on the plea that the pretended power is governmental and not corporate, the result would be more disastrous. Then and thereunder, the Secretary of the Interior, in lieu of the mayor of the municipality, could directly veto municipal ordinances and resolutions under section 2229 of the revised Administrative Code; he could, without any formality,elbow aside the municipal mayor and himself make appointments to all non-elective positions in the municipal service, under section 2199 of the Revised Administrative Code; he could, instead of the provincial governor, fill a temporary vacancy in any municipal office under subsection (a), section 2188, as amended, of the said Code; he could even directly appoint lieutenants of barrios and wrest the authority given by section 2218 of the Revised Administrative Code to a municipal councilor. Instances may be multiplied but it is unnecessary to go any further. Prudence, then, dictates that we should hesitate to accept the suggestion urge upon us by the Solicitor-General, especially where we find the path indicated by him neither illumined by the light of our own experience nor cemented by the virtuality of legal principles but is, on the contrary, dimmed by the recognition however limited in our own Constitution of the right of local self-government and by the actual operation and enforcement of the laws governing provinces, chartered cities, municipalities and other political subdivisions. It is not any question of wisdom of legislation but the existence of any such destructive authority in the law invoked by the Government that we are called upon to pass and determine here. (Villena vs. Sec. of the Interior, 67 Phil., 451, 461-462.). 11. The case of Planas vs. Gil, supra, cited in favor of respondent herein, is not in point, for Planas was a councilor of the City of Manila, which for administrative purposes has, also, the status of a province (see section 2440, Revised Administrative Code; Republic Act No. 409, section 14). As such, it was under the direct supervision of the Department of Interior,10 unlike regular municipalities 93

such as that Carmona, Cavite, which are under the immediate supervision of the Provincial Governor (section 2082, Revised Administrative Code). In short, sections 2188 to 2191 of the Administrative Code have never been, and are not, applicable to the City of Manila, the charter of which contains no counterpart thereof. 12. The case of Villena vs. Roque (93 Phil., 363) likewise relied upon by respondent is substantially different from the one at bar. Administrative charges were filed, against Mayor Villena, with the office of the President, which referred the matter to the Provincial Governor of Rizal, but the Provincial Board thereof failed to act on said charges for an unreasonable length of time. Under such facts it is understandable that the power of supervision of the President was invoked, either to compel action, which the Provincial Board had the duty to take, or, in view of its obvious unwillingness to comply therewith, to cause the charges to be investigated by somebody else, in line with the responsibility of the Executive "to take care that the laws be faithfully executed." In the present case, however, the Provincial Board of Cavite never had a to chance to investigate the charges against petitioner herein. From the very beginning, the office of the Executive assumed authority to act on said charges. Worse still, such assumption of authority was made under such conditions as to give the impression that the Provincial Governor and the Provincial Board were banned from exercising said authority. Frankly, we are unable to see, how the aforementioned assumption of authority may be justified, either under the power of "general supervision," or under the duty to "take care that the laws be faithfully executed." As held in Mondano vs. Silvosa (51 Off. Gaz., 2888), in line with settled principles in administrative law, "supervision means overseeing or the power or authority of an officer to see that subordinate officers perform their duties. If the latter fails or neglects to fulfill them, the former may take such action or step as prescribed by law to make them perform their duties. Control, on the other hand, means the power of an official to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for that of the latter." When the office of the Executive Department acted, in the case at bar, in lieu, or in substitution, of the Provincial Board of Cavite, the former sought, therefore, to "control" the latter. What is more, instead of compelling the same to comply with its duties under sections 2188 to 2191 of the Administrative Code, the former, in effect, restrained, prevented or prohibited it from performing said duties. 13. Let us now examine the case of Villena vs. The Secretary of the Interior (67 Phil., 451). It involved the same Mayor of Makati, Rizal Jose D. Villena, whom the Secretary of the Interior suspended, allegedly with the authority of the President, who, it was claimed, had verbally expressed no objection thereto. Then Villena was advised of the charges against him and of the designation of a given official to investigate the same. Thereafter notified of the date set for the hearing of the aforementioned charges, before said official, Villena applied for a writ of prohibition to restrain the Secretary of the Interior and his agents from proceeding with said investigation. The issues raised were whether the Secretary of the Interior had authority (a) to order the investigation and (b) to suspend Villena. The first question was resolved in the affirmative, upon the ground that the power of supervision of department heads, under section 79(c) of the Revised Administrative Code, "implies authority to inquire into facts and conditions in order to render the power real and effective," as held in Planas vs. Gil (67 Phil., 62). The Court was divided on the second question. The majority opinion, subscribed by four (4) Justices, including its writer, used the following language: . . . the question, it may be admitted, is not free from difficulties. There is no clear and express grant of power to the secretary to suspend a mayor of a municipality who is under investigation. On the contrary, the power appears lodged in the provincial governor by section 2188 of the Administrative Code . . . .

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The fact, however, that the power of suspension is expressly granted by section 2188 of the Administrative Code to the provincial governor does not mean that the grant is necessarily exclusive and precludes the Secretary of the Interior from exercising a similar power . . . . After serious reflection, we have decided to sustain the contention of the government in this case on the broad proposition, albeit not suggested, that under the presidential type of government which we have adopted and considering the departmental organization established and continued in force by paragraph 1, section 12, Article VII, of our Constitution, all executive and administrative organizations are adjuncts of the Executive Department, the heads of the various executive departments are assistance and agents of the Chief Executive, and, except in cases where the Chief Executive is required by the Constitution or the law to act in person or in exigencies of the situation demand that he act personally, the multifarious executive and administrative functions of the Chief Executive are performed by and through the executive departments, and the acts of the secretaries of such departments, performed and promulgated in the regular course of business, are, unless disapproved or reprobated by the Chief Executive, presumptively the acts of the Chief Executive. (Villena vs. The Secretary of the Interior, 67 Phil., 451, 459-460, 463.) Concurring in the result, Associate Justice Villareal observed: . . . The Secretary of the Interior is nowhere given the power to suspend a municipal elective officer pending charges, and in the absence of such power be may not suspend him. The power to suspend cannot be implied even from an arbitrary power to remove, except where the power to remove is limited to cause; in such case, the power to suspend, made use of as a disciplinary power pending charges, is regarded as included within the power of removal (46 Corpus Juris, sec. 142, page 982). Provincial governors alone are expressly empowered to suspend municipal officers under certain conditions by section 2188 of the Revised Administrative Code, and the President of the Philippines by section 2191, as amended, of the same Code. Though the suspension of the petitioner by the Secretary of the Interior was unauthorized, the implied approval by the President of the Philippines validated such suspension. (Id., 67 Phil., 465-466.) Likewise, Associate Justice Imperial concurred in the result, upon the ground that: . . . (1) the President of the Philippines, under sections 64 (b), and 2191 of the Revised Administrative Code, as the later has been amended, and section 11 (1), Article VII, of the Constitution, is vested with the power to expel and suspend municipal officials for grave misconduct, and it appears that the suspension was ordered by virtue of that authority; and (2) the Secretary of the Interior acted within the powers conferred upon him by section 79 (c), in connection with section 86, of the Revised Administrative Code, as amended,in ordering an administrative investigation of the charges against the petitioner, in his capacity as mayor of the municipality of Makati, Province of Rizal. (Id., 67 Phil., 466.). He dissented, however, insofar as the majority held that the acts of department secretaries are "presumptively the case of the executive" and that the suspension directed by the Secretary of the Interior should be considered as one "decreed by the President" himself. Then Associate Justice, later Chief Justice, Moran, similarly, dissented from said view of the majority and concurred in the result. It is interesting to note that the authority of the President to suspend Mayor Villena was not even discussed. It was taken for granted. The reason may be gleaned from the following passage of the majority opinion: . . . counsel for the petitioner admitted in the oral argument that the President of the Philippines may himself suspend the petitioner from office in virtue of his greater power of

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removal (Section 2191, as amended, Administrative Code) to be exercised conformably to law. Indeed, if the President could, in the manner prescribed by law, remove a municipal official, it would be a legal incongruity if he were to be devoid of the lesser power of suspension. And the incongruity would be more patent if, possessed of the power both to suspend and to remove a provincial official (section 2078, Administrative Code), the President were to be without the power to suspend a municipal official. Here is, parenthetically, an instance where, as counsel for petitioner admitted, the power to suspend a municipal official is not exclusive. (Id., 67 Phil., 460; Emphasis supplied.) More important still, said majority opinion and the aforementioned separate opinions cited section 2191 of the Revised Administrative Code as the source of the power of the Executive to suspend and remove municipal officials. However, said provision deals with such power of suspension and removal on appeal from a decision of the Provincial Board in proceedings held under sections 2188 to 2190 of the said Code. Nowhere in said opinions was anything said on the question whether said appellate authority implies a grant of original power to suspend, either without an appeal from said decision of the Provincial Board, or without any proceedings before said Boardcalling for the exercise of its disciplinary functions under said provisions of the Revised Administrative Code. In other words, the Court passed this question sub silentio. Hence, the decision in Villena vs. Secretary of the Interior(supra) does not come within the purview of the rule of stare decisis, insofar as the aforesaid question is concerned, and, as regards the same, neither binds this Court nor bars it from passing thereon (McGirr vs.Hamilton and Abreu, 30 Phil., 563, 568-569; U.S. vs. More, 3 Cranch, 159, 172; U.S. vs. Sanges, 144 U.S., 310, 319; Cross vs. Burke, 146 U.S., 82; Louisville Trust Co. vs. Knott, 191 U.S., 22). 14. It is but fair to note that the action of the Executive Department of our Government against petitioner herein was evidently taken in the earnest belief that public interest demanded and justified it and had, in all probability, been premised upon the seeming implication of some of the former decisions of this Court. However, in the words of Mr. Justice Labrador, "the question before us is not one of necessity or usefulness, but exclusively one of authority or prerogative" (Rodriguez vs. Montinola, 50 Off. Gaz., 4820, 4828). Furthermore, paraphrasing Lacson vs. Roque (49 Off. Gaz., 93, 99), "it may be true, as suggested, that the public interest and the proper administration of official functions would be best served" by granting the Executive original authority to suspend a municipal mayor. However, . . . The answer to this observation is that the shortcoming is for legislative branch alone to correct byappropriate enactment. It is trite to say that we are not to pass upon the folly or wisdom of the law. As had been said in Cornejo vs. Naval, supra, anent identical criticisms, "if the law is too narrow in scope, it is for the Legislature rather than the courts to expand it." It is only when all other means of determining the legislative intention fail that a court may look into the effect of the law; otherwise the interpretation becomes judicial legislation. (Kansas ex rel, Little vs. Mitchell, 70 L.R.A., 306; Dudly vs. Reynolds, 1 Kan., 285.) (Lacson vs.Roque, supra.; Emphasis supplied.) Then again, the issue submitted for our determination has never been squarely presented and decided. Referring to a similar situation, the Supreme Court of Illinois said: . . . It may be frankly admitted that there are expressions in some of the decisions relied upon that lend support to counsel's position that the court has heretofore intimated that section 2 of the Vacation Act is unconstitutional, but in our judgment this is the first time that the constitutionality of this act has been squarely in the record and necessary for the consideration and decision of this court, and we are confronted with the proposition whether we should follow what is dicta in those cases in construing section 2 of the Vacation Act, and thus follow an erroneous construction of said Act. This court has said: "It is highly important that the decisions of the Court affecting the right to property should be uniform and stable; but cases will sometimes occur in the decision of the most enlightened judges where the settled rules and reasons of the law have been departed from, and in such 96

cases it becomes the duty of the court, before the error has been sanctioned by repeated decisions, to embrace the first opportunity to pronounce the law as it is." Frink vs. Darat 14 Ill. 304, 58 Am. Dec. 575. "The McNeer Case, supra, is a case particularly in point in support of the reasoning just given. In that case the court over-ruled the decision of Russell vs. Rumsey, 36 Ill. 362, which had been followed in Rose, vs. Sanderson, 38 Ill. 247, and Steele vs. Gellatly, 41 Ill. 39, notwithstanding the decision in the Russel Case had stood unchallenged for 28 years and notwithstanding the opinion in that case squarely decided the question involved that inchoate dower, although only an expectancy, was as completely beyond legislative control as an estate. In Chicago, Danvilla & Vincennes Railroad Co. vs. Smith, 62 Ill. 268, 14 Am. Rep. 99, the court discussed at some length the doctrine of stare decisis as authorities in other jurisdictions that bear on that subject where a constitutional question is involved, and from that discussion we think it may be fairly said that the conclusion of the court was that the rule of stare decisis will not prevent the courts from reviewing a constitutional question where the facts in the instant case are slightly different from those in former decisions. In Arnold vs. Knoxville, 115 Tenn. 195, 90 S. W. 469, 3 L.R.A. (N.S.) 837, 5 Ann. Cas. 881, the court considered the same doctrine as to the necessity of recognizing to the fullest extent and adhering to that doctrine in passing upon and construing the provisions of the organic law, but stated that when it is clear that the court has made a mistake it "will not decline to correct it, even though it may have been reasserted and acquiesced in for a long number of years." In Paul vs. Davis, 100 Ind. 422, the court said (page 427): "The law is a science of principles, and this cannot be true if a departure from principle can be perpetuated by a persistence in error." "In Propeller Genesee Chief vs. Fitsnugh, 53 U.S. (12 How.) 443, 456, 13 L. Ed. 1058, the court said: "It is the decision in the case of The Thomas Jefferson which mainly embarrasses the court in the present inquiry. We are sensible of the great weight to which it is entitled. But at the same time we are convinced that, if we follow it, we follow an erroneous decision into which the court fell, when the great importance of the question as it now presents itself could not be foreseen; and the subject did not therefore receive that deliberate consideration which at this time would have been given to it by the eminent men who presided here when that case was decided. (Prall vs. Burckhartt, 132 N.E. 280, 287-288; Emphasis ours.)10 In conclusion, we hold that, under the present law, the procedure prescribed in sections 2188 to 2191 of the Revised Administrative Code, for the suspension and removal of the municipal officials therein referred to, is mandatory; that, in the absence of a clear and explicit provision to the contrary, relative particularly to municipal corporations and none has been cited to us said procedure is exclusive; that the executive department of the national government, in the exercise of its general supervision over local governments, may conduct investigations with a view to determining whether municipal officials are guilty of acts or omissions warranting the administrative action referred to in said sections, as a means only to ascertain whether the provincial governor and the provincial board should take such action; that the Executive may take appropriate measures to compel the provincial governor and the provincial board to take said action, if the same is warranted, and they failed to do so; that the provincial governor and the provincial board may not be deprived by the Executive of the power to exercise the authority conferred upon them in sections 2188 to 2190 of the Revised Administrative Code; that such would be the effect of the assumption of those powers by the Executive; that said assumption of powers would further violate section 2191 of the same code, for the authority therein vested in the Executive is merely appellate in character; that, said assumption of powers, in the case at bar, even exceeded those of the Provincial Governor and Provincial Board, in whom original jurisdiction is vested by said sections 2188 to 2190, for, pursuant thereto, "the preventive suspension of a municipal officer shall not be for more than 30 days" at the expiration of which he shall be reinstated, unless the delay in the decision of the case is due to his fault, neglect or request, or unless he shall have meanwhile been convicted, whereas petitioner herein was 97

suspended "until the final determination of the proceedings" against him, regardless of the duration thereof and cause of the delay in its disposition;11 and that so much of the rule laid down in Villena vs. Secretary of the Interior (67 Phil., 451) Villena vs. Roque (93 Phil., 363), as may be inconsistent with the foregoing views, should be deemed, and, are hereby, reversed or modified accordingly. Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo, and Reyes, J. B. L., JJ., concur.

Separate Opinions PARAS, C. J., dissenting: In the allocation of governmental powers, our Constitution ordains that "the Executive power shall be vested in a President of the Philippines." (Sec. 1, Art. VII, Constitution). And the President is enjoined in the same Constitution to "take care that the laws be faithfully executed." (Sec. 10, par. 1, Art. VII, Constitution.) In the same breath, the Constitution provides that the President shall have control of all the executive departments, bureaus, or offices, and shall exercise general supervision over all local governments as may be provided by law (Sec. 10, par. 1, Art. VII, Constitution). In pursuance of the Constitution, the Revised Administrative Code declares that in addition to his general supervisory authority, the President shall have such specific powers and duties as are expressly conferred or imposed on him by law and among such special powers and duties shall be: (b) To remove officials from office conformably to law and to declare vacant the offices held by such removed officials. For disloyalty to the Republic of the Philippines the President may at any time remove a person from any position of trust or authority under the Government of the Philippine Islands. (c) To order, when in his opinion the good of the public service so requires, an investigation of any action or the conduct of any person in the Government service, and in connection therewith to designate the official, committee, or person by whom such investigation shall be conducted (Sec. 64, Rev. Adm. Code). In reference to the malfeasance of any person in the Government service, by virtue of Sec. 64(b) and (c) of the Revised Administrative Code, enacted in consonance with the totality of his executive power and, specifically, the power of supervision of all offices in the executive branch of the government, the President has concurrentsupervisory authority with the provincial governor to order an investigation of charges against an elective municipal official. While the provincial governor has to submit the charges to the Provincial Board for investigation, the President may designate the official, committee or person by whom such investigation shall be conducted (Sec. 64 [c], Rev. Adm. Code). The President can remove even elective municipal officials subject to the limitation that such removal must be conformable to law, which are that it must be for a cause provided by law, as those enumerated in Sec. 2188 of the Revised Administrative Code, and conducted in a manner in conformity with due process. Already in Planas vs. Gil, 67 Phil. 62, an attempt was made to have this Court distinguish the power of supervision and control of the President in relation to his power to order the investigation of an elective municipal official. This Court, through Justice Laurel, said: Our attention has been directed to the fact that with reference to local governments, the Constitution speaks of general supervision which is distinct from the control given to the President over executive departments, bureaus and offices. This is correct. But, aside from the fact that this distinction is not important insofar as the power of the President to order the investigation is concerned, as hereinabove indicated, the deliberations of the Constitutional 98

Convention show that the grant of the supervisory authority to the Chief Executive in this regard was in the nature of a compromise resulting from the conflict of views in that body, mainly between the historical view which recognizes the right of local self-government (People ex rel. Le Royvs. Hurlbut (1871) 24 Mich., 44), and the legal theory which sanction the possession by the state of absolute control over local governments (Booten vs. Pinson, LRA (NS 1917-A) 1244; 77 W. Va. 412 (1915). The result was the recognition of the power of supervision and all its implications and the rejection of what otherwise would be an imperium in imperio to the detriment of a strong national government. (p. 78.) Besides, if in administrative law supervision means overseeing or the power or authority of an officer to see that subordinate officers perform their duties, and control means the power of an officer to alter modify, nullify or set aside what a subordinate officer has done in the performance of his duties and to substitute the judgment of the former for that of the latter (Mondano vs. Silvosa, 51 Off. Gaz., 2884, 2887), how will the foregoing distinction affect the supervisory authority of the President to cause the investigation of the malfeasance of a municipal official relating to and affecting the administration of his office, and directly affecting the rights and interests of the public? If supervision and control meant by the Constitution relate to the power to oversee, or modify, set aside or annul acts done by a subordinate officer in the performance of his duties (Rodriguez vs. Montinola, 50 Off. Gaz., 4820), the supervisory authority to suspend and remove a subordinate official prescribed the administrative code refers to disciplinary action on account of his misconduct or malfeasance in office. The act complained of in the Mondano vs. Silvosa case, supra, has no reference to the performance of duty on the part of the Mayor and is therefore not included even under the power of supervision of the Chief Executive. I see no cogent reason for disturbing our ruling in Planas vs. Gil, 67 Phil. 62; Villena vs. Sec. of Interior, 67 Phil. 451; Lacson vs. Roque, 49 O. G. 93; and Villena vs. Roque, 93 Phil., 363, upholding the explicit supervisory authority of the President under Sec. 64 of the Revised Administrative Code to include that of ordering the investigation of elective municipal officials, and to remove or suspend them conformably to law. Endencia, J., concurs.

Footnotes
1

"Then, again, strict construction of law relating to suspension and removal, is the universal rule. The rule is expressed in different forms which convey the same idea: Removal is to be confined within the limits prescribed for it; the causes, manner and conditions fixed must be pursued with strictness; where the cause for removal is specified, the specification amounts to a prohibition to remove for different cause; etc., etc. (Mechem on the Law of Offices and Officers, p. 286; 2 McQuillen's Municipal Corporations [Revised], section 275; 43 Am. Jur., 39.) The last statement is a paraphrase of the well-known maxim Expressio unius est exclusion alterius. "The reason for the stringent rule is said to be that the remedy by removal is a drastic one (43 Am. Jur., 39) and, according to some courts, including ours (Cornejo vs. Naval, supra), penal in nature. When dealing with elective posts, the necessity for restricted construction is greater. Manifesting jealous regard for the integrity of position filled by popular election, some courts have refused to bring offices holding elective offices within constitutional provision which gives the state governor power to remove at pleasure. Not even in the face of such provision, it has been emphasized, may elective officers be dismissed except for cause. (62 C. J. S., 947.)

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xxx

xxx

xxx

". . . the abridgment of the power to remove or suspend an elective mayor is not without its own justification, and was, we think, deliberately intended by the law-makers. The evils resulting from a restricted authority to suspend or remove must have been weighed against the injustices and harms to the public interests which would be likely to emerge from an unrestrained discretionary power to suspend and remove." (Lacson vs.Roque, 49 Off. Gaz., 93, 99-100; emphasis ours.)
*

94 Phil., 964.

". . . The Organic Act authorizes the Governor-General of the Philippine Islands to appoint two senators and nine representatives to represent the non-Christian regions in the Philippine Legislature. These senators and representatives "hold office until removed by the Governor-General." (Organic Act, secs. 16, 17.) They may not be removed by the Philippine Legislature. However, to the Senate and the House of Representatives, respectively, is granted the power to "punish its members for disorderly behaviour, and, with the concurrence of two-thirds, expel an elective member." (Organic Act, sec. 18) Either House may thus punish an appointive member for disorderly behaviour. Neither House may expel an appointive member for any reason. As to whether the power to "suspend" is then included in the power to "punish", a power is granted in the House of Legislature by the Constitution, or in the power to "remove", a power granted to the Governor-General by the Constitution, it would appear that neither is the correct hypothesis. The Constitution has purposely withheld from the two Houses of the Legislature and the Governor-General alike the power to suspend an appointive member of the Legislature. "It is noteworthy that the Congress of the United States has not in all its long history suspended a member. And the reason is obvious. Punishment byway of reprimand or fine vindicates the outranged dignity of the House without depriving the constituency of representation; expulsion, when permissible, likewise vindicates the honor of the legislative body while giving to the constituency an opportunity to elect anew; butsuspension deprives the electoral district of representation without that district being afforded any means by which to fill the vacancy. By suspension, the seat remains filled but the occupant is silenced. . . ." (Alejandrino vs. Quezon, 46 Phil., 83, 95-96; Emphasis ours.)
3

Thus in Villena vs. Roque (supra) Mr. Justice Tuason had the following to say:

"Granting, but without conceding, that there is irreconcilable inconsistency between the powers of the provincial authorities and of the national authorities in the matter of investigations and suspensions of municipal officials, the universal rule, which admits of no exception, tells us that the latter being of general application must yield to the former which is special in character. xxx xxx xxx

"(d) General and Special Statues. Where there is one statute dealing with a subject in general and comprehensive terms, and another dealing with the part of the same subject in a more minute and definite way, the two should be read together and harmonized, if possible, with a view to giving effect to a consistent legislative policy; but to the extent of any necessary repugnancy between them, the special statute, or the one dealing with the common subject matter in a minute way, will prevail over the general statute, unless it appears that the legislature intended to make the general act controlling; and this is true a fortiori when the special act is later in point of time, although the rule is applicable without regards to the respective dates of passage. It is a fundamental rule that were the general statute, if standing alone, would include the same matter as a special act will be considered as an exception to the general statute, whether it was passed before or after such general

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enactment. Where the special statute is later, it will be regarded as an exception to, or qualification of, the prior general one; and where the general act is later, the special statute will be construed as remaining an exception to its terms, unless it is repealed in express words or by necessary implication. . . ." (59 C. J. 1056-1058.) "The Court justification of the action of which petitioner complains by citing the power of the Governor General (now the President) under Section 2078 to investigate, suspend or remove provincial officials is, it is submitted, not well considered. The conclusion does not so easily follow the premise. The power to suspend provincial officers does not necessarily imply power to suspend municipal officers. In the first place, Section 2078 is found in the chapter of the Code which deals with provinces whereas Sections 2188-90 fall under the chapter dedicated to municipalities. In the second place, both sets of provisions are clear and specific, each sufficient unto itself. In the third place, the power of suspension and removal is not acquired by inference, much less inference that would upset express statutory enactments. "Strict construction of law relating to suspension and removal is the universal rule . . . . "Further, the background of present legislation will disclose that there were reasons for imposing restrictions upon investigations and suspensions of municipal officials, and not upon those of provincial officials. With this background in mind, it becomes clear that the power of the President under Section 2078 was not intended to abrogate or modify the provisions of Sections 2188-90. "Municipal officers were, as they now are, subject to investigation and suspension by the provincial governoror the provincial board. These power were abused, and this circumstance led to the enactment of the laws that were to become Sections 2188-90 of the Revised Administrative Code. As stated in Lacson vs. Roque,supra, these provisions were "designed to protect elective municipal officials against abuses . . . of which past experience and observation had presented abundant example. "On the other hand, provincial officials were under the direct supervision and control of the insular government and, unlike municipal officials, were not harassed and embarrassed by investigations and suspensions for other than legitimate causes. There was then no compelling reason for limiting the period of preventive suspension of provincial officials and prescribing the manner in which investigations of charges against them should be conducted."(Emphasis ours.)
4

Reading:

"Upon the occasions of the absence, suspension, or other temporary disability of the mayor, his duties shall be discharge by the vice-mayor . . . ."
5

Which provides:

"Whenever a temporary vacancy in any elective local office occurs, the same shall be filed by appointment by the . . . provincial governor, with the consent of the provincial board, if it is a municipal office."
6

In the language of Mr. Justice Bengzon, who penned the opinion of this Court, which was unanimous: "Indeed, even disregarding their origin, the allegedly conflicting sections, could be interpreted in the light of the principle of statutory construction that when a general and a particular provision are inconsistent the latter is paramount to the former (Section 288, Act 190). In

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other words, section 2195 referring particularly to vacancy in the office of mayor, must prevail over the general terms of section 21(a) as to vacancies of municipal (local) offices. Otherwise stated, section 2195 may be deemed an exception to or qualification of the latter. (Sutherland, Statutory Construction, 3rd. ed., Vol. 1, p. 486.) "Where one statute deals with a subject in general terms, and another deals with a part of the same subject in a more detailed way, the two should be harmonized if possible; but if there is any conflict, the latter will prevail, regardless of whether it was passed prior to the general statute." (Sutherland Statutory Construction, section 5204). "In a recent decision (Phil. Railway Co. vs. Collector of Int. Rev. G. R. No. L-3859, March 25, 1952), we had occasion to pass on a similar situation repeal by subsequent general provision of a prior provision and we said: "It is well settled that a special and local statute, providing for a particular case or class of cases, is not repealed by a subsequent statute, general in its terms, provisions and application, unless the intent to repeal or alter is manifest, although the terms of the general act are broad enough to include the cases embraced in the special law. . . . It is a canon of statutory construction that a latter statute, general in its terms and not expressly repealing a prior special statute, will ordinarily not affect the special provisions of such earlier statute. (Steamboat Company vs. Collector 18 Wall. [U.S.], 478; Cass County vs. Gillett, 100 U.S. 585; Minnesota vs. Hitchcock, 185 U.S. 373, 396.) "Where there are two statutes, the earlier special and the latter general the terms of the general broad enough to include the matter provided for in the special the fact that one is special and the other is general creates a presumption that the special law is to be considered as remaining an exception to the general, one as general law of the land, the other as the law of a particular case. (State vs. Stoll, 17 Wall [U.S.] 425.)" (Laxamana vs. Baltazar, 92 Phil., 32 48 Off. Gaz., 3869, 3871; Emphasis ours.)
7

"The President under the Constitution has the right to "exercise general supervision over all local governments as may be provided by law." This constitutional provision carefully excludes the power of control over all local governments from the scope of the President's authority. General supervision is not the equivalent of control and denotes a less inclusive authority. The President has to exercise this general supervisory power over local governments not as he pleased but as Congress provides. It is, therefore, obvious that local governments are subject to the control of Congress which has the authority to prescribe the procedure by which the President may perform his constitutional power of general supervision. "The Constitution in this respect give the President a more limited power over local governments than what the Jones Law gave to the Governor General. The Governor General had supervision and control over them." (Sinco, Philippine Political Law, 10th ed., p. 294.) "With these considerations in the background, it is necessary to go back to the provision of the Constitution previously discussed which states that the President of the Philippines shall "exercise general supervision over all local governments as may be provided by law." It is evident that this authority over local government is of a lesser degree than what was provided in the Instructions of the President of the Commission which places municipalities under the supervision and control of the central government." (Ibid., p. 695.) "The power of the President over all local governments is that of general supervision. Moreover, the Constitution provides further that there must be statutory implementation before this power comes into playfor it may be exercised only as may be provided by law. The power is less than supervision because it is limited to general supervision. Nor is it a self-executing provision because there is the further requirement that it may only be

102

exercised as may be provided by law." (Taada and Fernando, Constitution of the Philippines, 4th ed., Vol. II, pp. 990-991.) (Emphasis ours.) "The Constitution provides that the President "shall have control of all the executive departments, bureaus, or offices, exercise general supervision over local governments as may be provided by law, and take care that the laws be faithfully executed. The use of the word "control" with respect to the executive departments, bureaus, or offices, and of the phrase "general supervision" as regards all local governments, is significant. "Control is synonymous to "regulate", though of broader sense, meaning to exercise restraining or directing influence, to dominate, regulate, to hold from action, curb, subject, overpower." "Supervision" signifies the act of overseeing, inspection; superintendence; oversight. While the power of supervision is embraced in the power of control, it can not be said that the power of supervision carries with it the power of control. It may be mentioned that in Villena vs. Secretary of the Interior (G. R. No. 46570, April 21, 1939), the Supreme Court held, thru Justice Laurel, that under the presidential type of government which we have established under our own Constitution, all executive and administrative organizations are adjuncts of the Chief Executive, and the heads of the various executive departments are assistants and agents of the Chief Executive. The President cannot be said to possess the same extensive power over local governments in view of the constitutional provision limiting his power over said governments to mere general supervision and all its implications." (Provincial and Municipal Law of the Philippines by Emiliano P. Cortez Acting Chief, Division of Local Governments, Office of the President 1952 ed., p. 25; Emphasis ours.)
8

Either during the American regime or under our Constitution (See Cooley's Mun. Corp., 72; 37 Am. Jur. 692, 694, 700-703; 19 R. C. L. 751-752, 758-760; State of Wisconsin vs. Haben, 22 Wis. 629; I McQuillin, Mun. Corp. [2nd ed.], 548, 679-680, 681, 689 I Dillon, Mun. Corp. [5th ed.], 181, 199-202).
9

Thus, "with respect to property acquired by a municipal corporation" in its private or proprietary capacity, the legislature is subject to the same constitutional limitations as regards its control over the property of private corporations" (19 R. C. L. 759-760; 37 Am. Jur. 702-703), and Congress has no power to require a city to transfer a cemetery thereof, without compensation, to a corporation created by law, said cemetery being a property of the city in its private or proprietary capacity (Proprietors of Mt. Hope Cemetery vs. City of Boston, 158 Mass. 509; see, also, Cooley's Mun. Corp., 78; 37 Am. Jur., 700-701; State of Wisconsin vs.Haben, 22 Wis. 629). In the words of Cooley, "in all that relates to public or governmental powers or rights, the corporation is merely the agent of the State, and therefore subject to its control; in all that relates to private powers or rights, it is the agent of the inhabitants, and maintains the character and relations of individuals, and is not subject to the absolute control of the legislature." (Cooley's Mun. Corp., 72; Emphasis ours.) (See, also, Coyle vs. McIntire, 40 Am. St. Rep., 109, 113.) Referring to the "dual character of municipal corporations," it was held in Vasquez Vilas vs. City of Manila (42 Phil., 953), that such corporations ". . . exercise powers which are governmental and powers which are of a private or business character. In the one character a municipal corporation is a governmental subdivision, and for that purpose exercises by delegation a part of the sovereignty of the state. In the other character it is a mere legal entity or juristic person. In the latter character it stands for the community in the administration of local affairs wholly beyond the sphere of the public purpose for which its governmental powers are conferred." (Id., p. 963; Emphasis ours.)
10

Now the President, who, upon the abolition of said department has assumed the functions of its head (Executive Order No. 383, dated December 20, 1950).

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11

Thus, in Tan Chong vs. Secretary of Labor and Lam Swee Sang vs. Commonwealth (45 Off. Gaz., 1269), decided on September 16, 1947, we reversed the rule laid down in Roa vs. Col. of Customs (23 Phil. 315), way back on October 30, 1912, despite the fact that the same had been adhered to in numerous cases, during the interregnum of 35 years.
12

The report of the special investigator in the present case had been submitted for decision since July 15, 1954.

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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-11336 August 30, 1958

RODOLFO GANZON, petitioner-appellant, vs. UNION C. KAYANAN, respondent-appellee. Divinagracia and Divinagracia, Villalobos and Villalobos and Ganzon and Ganzon for appellant. Office of the Solicitor General Ambrosio Padilla and Solicitor Troadio T. Quiazon, Jr. for appellee. BAUTISTA ANGELO, J.: On August 25, 1956, Ernesto V. Rosales lodged a verified complaint against petitioner with the President reading as follows: Complainant Ernesto V. Rosales most humbly and respectfully submits to the President of the Philippines, Ramon Magsaysay, for investigation and appropriate action, the following administrative charges against the respondent Rodolfo Ganzon incumbent Mayor of Iloilo City, which charges are: Count 1. That on August 22, 1956 the respondent taking advantage of his public position as Mayor of Iloilo City and accompanied by his armed body-guards and henchmen, stormed into the broadcasting station of DYRI of Iloilo City, and with violence and intimidation, unjustifiably and unlawfully stopped the radio-press interview program People's Forum' of said station, thus, suppressing and curtailing for about a quarter hour the complainant's right to free speech, the radio station's right to broadcast, and the people's right to listen to a radio-press interviews, which acts constitute oppression or unjust exercise of authority or power and/or grave misconduct in office. Count 2. That during the occurrence of the acts mentioned in Count 1, the respondent Mayor of Iloilo City arrogantly took the law in his own hands by personally pushing away the microphones and hitting on the back of the neck the complainant, who is a radio commentator and program director of Station DYRI of Iloilo City, and a member of the panel of interrogators of the 'People's Forum', a public service press interview program of said nature, constitutive of oppression and shameful misconduct in office. Count 3. That during the occurrence of the acts above-stated in Counts 1 and 2, the respondent Mayor of Iloilo City, in a fit of devouring fury, unrestrainedly hurled invectives at the complainant, calling the latter indecent bad-mannered, dammed-no-good-Cebuano who should evacuate to Cebu and other similar names, which verbal acts constituted oppression and oral defamation, highly unbecoming of Iloilo City's supposedly No. 1 public official and model citizen. In view of the foregoing, the complainant most respectfully prays: 1. That an investigation of the administrative charges above specified be ordered by the President of the Philippines, after which the corresponding and proper action be taken against the respondent who has demonstrated his unfitness to continue exercising governmental power; and,

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2. That in the interest of public welfare and safety, the respondent be immediately suspended from office, so as to prevent the further misuse of authority and power pending such investigation, particularly on witnesses to the above-specified charges. On September 13, 1956, the Executive Secretary, by authority of the President, designated respondent to conduct the investigation of said complaint pursuant to the provisions of Section 64(c) of the Revised Administrative Code granting said respondent all the powers given to an investigating officer by Sections 71 and 580 of the same Code. On September 18, 1956, respondent served a copy of the complaint on petitioner and set the investigation of the charges on September 20, 1956. Petitioner, having filed a motion for postponement, respondent definitely set the investigation for September 25 and 26, 1956. On September 24, 1956, petitioner instituted in the Court of First Instance of Iloilo an action for prohibition with preliminary injunction questioning the authority of the President to order his investigation and praying that respondent be enjoined to suspend and desist from proceeding with the investigation and that, pending decision of the case on the merits, a preliminary injunction be issued against respondent. On September 26, 1956, the lower court declined to issue the writ and instead set the case for hearing on the merits on September 28, 1956. At the hearing, both parties agreed to admit all the facts set forth in the pleadings and submitted the case for decision. And on October 2, 1956, the lower court rendered decision dismissing the petition. His motion for reconsideration having been denied, petitioner took the present appeal. The issues posed by petitioner are: 1. That the President of the Philippines has no authority under the Constitution or under any law to order the investigation of petitioner-appellant on the charges averred in the administrative complaint for the purpose of suspension and/or removal. 2. That the charges averred in the administrative complaint are penal in nature and the remedies sought for are punitive and/or disciplinary in character; 3. That the charges against petitioner-appellants do not allege acts constituting disloyalty to the Republic of the Philippines as provided for in Section 64 (b) of the Revised Administrative Code which is the only ground for the suspension and/or removal of an elective city mayor, and 4. That granting arguendo that the grounds enumerated in Sec. 2078 of the Revised Administrative Code for the removal of provincial officials are applicable by analogy and/or implication to an elective city mayor, the administrative complaint in question does not allege facts constituting oppression or misconduct in office and dishonesty, much less disloyalty. The present appeal involves the paramount issue of whether the President of the Philippines has the power and authority under our Constitution and the laws at present in force in this jurisdiction to investigate the mayor of a city and, if found guilty, to take disciplinary action against him as the evidence and law may warrant. At the outset, it should be stated that petitioner is the duly elected mayor of the City of Iloilo whose charter, speaking of his removal, merely provides that he "shall hold office for six years unless removed" (Section 8, Commonwealth Act No. 158, as amended). The charter does not contain any provision as regards the procedure by which he may be removed. Nevertheless, as this Court has once said, "the rights, duties, and privileges of municipal officers (including city officials) do not have to be embodied in the charter, but may be regulated by provisions of general application specially if these are incorporated in the same code of which the city organic law forms a part" (Lacson vs. Roque, 92 Phil., 456; 49 Off. Gaz., No. 1, pp. 93, 97). The code herein referred to is the Revised Administrative Code.

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Now, the charter of Iloilo City, as we have already stated, says that the mayor "shall hold office for six years unless removed." It does not say that he shall hold office at the pleasure of the President unlike similar provisions appearing in other city charters. The idea is to give the mayor a definite tenure of office not dependent upon the pleasure of the President. If this were the case, he could be separated from the service regardless of the cause or motive. But when he was given a definite tenure, the implication is that he can only be removed for cause. An inferential authority to remove at pleasure can not be deduced, since the existence of a defined term,ipso facto, negatives such an inference, and implies a contrary presumption, i.e. that the incumbent shall hold office to the end of his term subject to removal for cause.' (State ex rel Gallaghar vs. Brown, 57 Mo. Ap., 203, expressly adopted by the Supreme Court in States ex rel. vs. Maroney, 191 Mo. 548; 90 S. W., 141; States vs. Crandell, 269 Mo., 44; 190 S. W., 889; State vs. Salval, 450, 2d, 995; 62 C. J., S., 947.)" (Lacson vs. Roque, supra). The question that now arises is: Does the President have power and authority to investigate petitioner with a view to his removal under the above provision of the charter of Iloilo City? If so, for what causes may he authorize such investigation? The pertinent provisions governing the power of the President over local officials, be they provincial, city or municipal, are embodied in Section 64(b) and (c) of the Revised Administrative Code, in connection with the provisions of Section 10, paragraph 1, Article VII of the Constitution. For ready reference, we will hereunder quote said provisions: (b) To remove officials from office conformably to law and to declare vacant the offices held by such removed officials. For disloyalty to the (United States), the Republic of the Philippines, the (Governor-General) President of the Philippines may at any time remove a person from any position of trust or authority under the Government of the (Philippine Islands) Philippines. (c) To order, when in his opinion the good of the public services requires, an investigation of any action or the conduct of any person in the Government service, and in connection therewith to designate the official, committee, or person by whom such investigation shall be conducted. SEC. 10. (1) The President shall have control of an the executive departments, bureaus, or offices, exercise general supervision over all local governments as may be provided by law, and take care that the laws be faithfully executed. It may clearly be inferred from the above that the President may remove any official in the government service "conformably to law" and to declare vacant the office held by the removed official. And to this end, the President may order "an investigation of any action or the conduct of any person in the Government service, and in connection therewith to designate the official committee, or person by whom such investigation shall be conducted." Note that the provision refers to any official in the government service, which must necessarily include the mayor of a chartered city. It cannot therefore be disputed that in the particular case under consideration the President is vested with the authority to order the investigation of petitioner when in his opinion the good of the public service so requires, and such being the case, petitioner cannot now contend that the designation of respondent as the official to investigate him in connection with the charges lodged against him by Rosales has been done without the authority of law. This of course is upon the premise that the charges involved in the investigation refer to those for which petitioner may be suspended or removed under the law, a question which we will take up later in this decision. It is true that in the case of Mondano vs. Silvosa,* 51 Off. Gaz., No. 6, p. 2884, this Court had occasion to discuss the scope and extent of the power of supervision by the President over local government officials in contrast to the power of control given to him over executive officials of our government wherein it was, emphasized that the two terms, control and supervision, are two

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different things which differ one from the other in meaning and extent. Thus in that case the Court made the following digression: "In administration law supervision means overseeing or the power or authority of an officer to see that subordinate officers perform their duties. If the latter fail or neglect to fulfill them the former may take such action or step as prescribed by law to make them perform their duties. Control, on the other hand, means the power of an officer to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for that of the latter." But from this pronouncement it cannot be reasonably inferred that the power of supervision of the President over local government officials does not include the power of investigation when in his opinion the good of the public service so requires, as postulated in Section 64(c) of the Revised Administrative Code. In fact, this matter has been clarified when, in a subsequent case, this Court made the following pronouncement: In conclusion, we hold that, under the present law, the procedure prescribed in sections 2188 to 2191 of the Revised Administrative Code, for the suspension and removal of municipal officials therein referred to, is mandatory; that, in the absence of a clear and explicit provision to the contrary, relative particularly to municipal corporations and none has been cited to us said procedure is exclusive; that the executive department of the national government, in the exercise of its general supervision over local government, may conduct investigations with a view to determining whether municipal officials are guilty of acts or omissions warranting the administrative action referred to in said sections, as a means only to ascertain whether the provincial governor and the provincial board should take such action; that the Executive may take appropriate measures to compel the provincial governor and the provincial board to take said action, if the same is warranted, and they failed to do so; that the provincial governor and the provincial board may not be deprived by the Executive of the power to exercise the authority conferred upon them in sections 2188 to 2190 of the Revised Administrative Code; that such would be the effect of the assumption those powers by the Executive; that said assumption of powers would further violate section 2191 of the same Code, for the authority therein vested in the Executive is merely appellate in character; that, said assumption of powers, in the case at bar, even exceeded those of the Provincial Governor and Provincial Board, in whom original jurisdiction is vested by said sections 2188 to 2190, for, pursuant thereto, "the preventive suspension of a municipal officer shall not be for more than thirty (30) days," at the expiration of which he shall be reinstated, unless the delay in the decision of the case is due to his fault, neglect or request, or unless he shall have meanwhile been convicted, whereas petitioner herein was suspended "until the final determination of the proceedings" against him, regardless of the of the duration thereof and the cause of the delay in its disposition and that so much of the rule laid down in Villena vs. Secretary of the Interior (67 Phil., 451) andVillena vs. Roque (93 Phil., 363), as may be inconsistent with the foregoing views, should be deemed, and, are hereby reversed or modified accordingly. (Hebron vs. Reyes, supra, p. 175; emphasis supplied). The final question to be determined is: For what cause or causes may the President order the investigation of petitioner "conformably to law? For this, suffice it to quote hereunder what we have said in Lacson vs. Roque, supra: Four Justices who join in this decision do not share the view that the only ground upon which the Mayor may be expelled is disloyalty. The Chief Justice, Mr. Justice Padilla and Mr. Justice Jugo, three of the Justices referred to, reason that, as the office of provincial executive is at least as important as the office of mayor of the City of Manila, the latter officer, by analogy, ought to be amenable to removal and suspension for the same causes as provincial executives, who under Section 2078 of the Revised Administrative Code, may be discharged for dishonesty, oppression, or misconduct in office, besides disloyalty. And Chief Justice Paras, in concurring in the foregoing opinion, made the following interesting observation:

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It is hard and illogical to believe that, while there are express legal provisions for the suspension and removal of provincial governors and municipal mayors, it could have been intended that the mayor of Manila should enjoy an over-all immunity or sacrosanct position, considering that a provincial governor or municipal mayor may fairly be considered in parity with the city mayor insofar as they are all executive heads of political subdivisions. Counsel for petitioner calls attention to the fact that the peculiarly elevated standard of the City of Manila and its populace might have prompted the lawmakers to exempt the city mayor from removal or suspension. Much can be said about the desirability of making the executive head of Manila as strong and independent as possible but there should not be any doubt that awareness of the insistence of some sort of disciplinary measures has a neutralizing and deterring influence against any tendency toward officials' misfeasance, excesses or omission. Considering that the position of mayor of a chartered city may be fairly compared in category and stature with that of a provincial governor, we are of the opinion that the former, by analogy, may also be amenable to removal and suspension for the same causes as the latter, which causes, under Section 2078 of the Revised Administrative Code, are: disloyalty, dishonesty, oppression and misconduct in office. And considering the allegations in the complaint to the effect that petitioner took advantage of his public position as mayor of Iloilo City in committing the acts of violence and intimidation upon respondent in order to stop the radio program he was then conducting in his station thus suppressing and curtailing his right to free speech, we are of the opinion that said acts constitute misconduct in office for which he may be ordered investigated by the President within the meaning of the law. There is therefore no plausible reason to disturb the decision rendered by the lower court which we find to be in accordance with law. Wherefore, the decision appealed from is affirmed, with costs against appellant. Paras, C. J., Bengzon, Padilla, Montemayor, Reyes, A., Concepcion, Reyes, J.B.L., Endencia and Felix, JJ.,concur.

Footnotes
*

97 Phil., 143.

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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 93252 August 5, 1991 RODOLFO T. GANZON, petitioner, vs. THE HONORABLE COURT OF APPEALS and LUIS T. SANTOS, respondents. G.R. No. 93746 August 5,1991 MARY ANN RIVERA ARTIEDA, petitioner, vs. HON. LUIS SANTOS, in his capacity as Secretary of the Department of Local Government, NICANOR M. PATRICIO, in his capacity as Chief, Legal Service of the Department of Local Government and SALVADOR CABALUNA JR., respondents. G.R. No. 95245 August 5,1991 RODOLFO T. GANZON, petitioner, vs. THE HONORABLE COURT OF APPEALS and LUIS T. SANTOS, in his capacity as the Secretary of the Department of Local Government, respondents. Nicolas P. Sonalan for petitioner in 93252. Romeo A. Gerochi for petitioner in 93746. Eugenio Original for petitioner in 95245.

SARMIENTO, J.:p The petitioners take common issue on the power of the President (acting through the Secretary of Local Government), to suspend and/or remove local officials. The petitioners are the Mayor of Iloilo City (G.R. Nos. 93252 and 95245) and a member of the Sangguniang Panglunsod thereof (G.R. No. 93746), respectively. The petitions of Mayor Ganzon originated from a series of administrative complaints, ten in number, filed against him by various city officials sometime in 1988, on various charges, among them, abuse of authority, oppression, grave misconduct, disgraceful and immoral conduct, intimidation, culpable violation of the Constitution, and arbitrary detention. 1 The personalities involved are Joceleehn
Cabaluna, a clerk at the city health office; Salvador Cabaluna, her husband; Dr. Felicidad Ortigoza, Assistant City Health Officer; Mansueto Malabor, Vice-Mayor; Rolando Dabao, Dan Dalido, German Gonzales, Larry Ong, and Eduardo Pefia Redondo members of the Sangguniang Panglunsod; and Pancho Erbite, a barangay tanod. The complaints against the Mayor are set forth in the opinion of the respondent Court of Appeals. 2 We quote:

xxx xxx xxx

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In her verified complaint (Annex A), Mrs. Cabaluna, a clerk assigned to the City Health, Office of Iloilo City charged that due to political reasons, having supported the rival candidate, Mrs. Rosa 0. Caram, the petitioner City Mayor, using as an excuse the exigency of the service and the interest of the public, pulled her out from rightful office where her qualifications are best suited and assigned her to a work that should be the function of a non-career service employee. To make matters worse, a utility worker in the office of the Public Services, whose duties are alien to the complainant's duties and functions, has been detailed to take her place. The petitioner's act are pure harassments aimed at luring her away from her permanent position or force her to resign. In the case of Dra. Felicidad Ortigoza, she claims that the petitioner handpicked her to perform task not befitting her position as Assistant City Health Officer of Iloilo City; that her office was padlocked without any explanation or justification; that her salary was withheld without cause since April 1, 1988; that when she filed her vacation leave, she was given the run-around treatment in the approval of her leave in connivance with Dr. Rodolfo Villegas and that she was the object of a wellengineered trumped-up charge in an administrative complaint filed by Dr. Rodolfo Villegas (Annex B). On the other hand, Mansuelo Malabor is the duly elected Vice-Mayor of Iloilo City and complainants Rolando Dabao, Dan Dalido, German Gonzales, Larry Ong and Eduardo Pefia Pedondo are members of the Sangguniang Panglunsod of the City of Iloilo. Their complaint arose out from the case where Councilor Larry Ong, whose key to his office was unceremoniously and without previous notice, taken by petitioner. Without an office, Councilor Ong had to hold office at Plaza Libertad, The Vice-Mayor and the other complainants sympathized with him and decided to do the same. However, the petitioner, together with its fully-armed security men, forcefully drove them away from Plaza Libertad. Councilor Ong denounced the petitioner's actuations the following day in the radio station and decided to hold office at the Freedom Grandstand at Iloilo City and there were so many people who gathered to witness the incident. However, before the group could reach the area, the petitioner, together with his security men, led the firemen using a firetruck in dozing water to the people and the bystanders. Another administrative case was filed by Pancho Erbite, a barangay tanod, appointed by former mayor Rosa O. Caram. On March 13, 1988, without the benefit of charges filed against him and no warrant of arrest was issued, Erbite was arrested and detained at the City Jail of Iloilo City upon orders of petitioner. In jail, he was allegedly mauled by other detainees thereby causing injuries He was released only the following day. 3 The Mayor thereafter answered 4 and the cases were shortly set for hearing. The opinion of the Court of
Appeals also set forth the succeeding events:

xxx xxx xxx The initial hearing in the Cabaluna and Ortigoza cases were set for hearing on June 20-21, 1988 at the Regional Office of the Department of Local Government in Iloilo City. Notices, through telegrams, were sent to the parties (Annex L) and the parties received them, including the petitioner. The petitioner asked for a postponement before the scheduled date of hearing and was represented by counsel, Atty. Samuel Castro. The hearing officers, Atty. Salvador Quebral and Atty. Marino Bermudez had to come all the way from Manila for the two-day hearings but was actually held only on June 20,1988 in view of the inability and unpreparedness of petitioner's counsel.

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The next hearings were re-set to July 25, 26, 27,1988 in the same venue-Iloilo City. Again, the petitioner attempted to delay the proceedings and moved for a postponement under the excuse that he had just hired his counsel. Nonetheless, the hearing officers denied the motion to postpone, in view of the fact that the parties were notified by telegrams of the scheduled hearings (Annex M). In the said hearings, petitioner's counsel cross-examined the complainants and their witnesses. Finding probable grounds and reasons, the respondent issued a preventive suspension order on August 11, 1988 to last until October 11,1988 for a period of sixty (60) days. Then the next investigation was set on September 21, 1988 and the petitioner again asked for a postponement to September 26,1988. On September 26, 1988, the complainants and petitioner were present, together with their respective counsel. The petitioner sought for a postponement which was denied. In these hearings which were held in Mala the petitioner testified in Adm. Case No. C-10298 and 10299. The investigation was continued regarding the Malabor case and the complainants testified including their witnesses. On October 10, 1988, petitioner's counsel, Atty. Original moved for a postponement of the October 24, 1988 hearing to November 7 to 11, 1988 which was granted. However, the motion for change of venue as denied due to lack of funds. At the hearing on November 7, 1988, the parties and counsel were present. Petitioner reiterated his motion to change venue and moved for postponement anew. The counsel discussed a proposal to take the deposition of witnesses in Iloilo City so the hearing was indefinitely postponed. However, the parties failed to come to terms and after the parties were notified of the hearing, the investigation was set to December 13 to 15, 1988. The petitioner sought for another postponement on the ground that his witnesses were sick or cannot attend the investigation due to lack of transportation. The motion was denied and the petitioner was given up to December 14, 1988 to present his evidence. On December 14,1988, petitioner's counsel insisted on his motion for postponement and the hearing officers gave petitioner up to December 15, 1988 to present his evidence. On December 15, 1988, the petitioner failed to present evidence and the cases were considered submitted for resolution. In the meantime, a prima facie evidence was found to exist in the arbitrary detention case filed by Pancho Erbite so the respondent ordered the petitioner's second preventive suspension dated October 11, 1988 for another sixty (60) days. The petitioner was able to obtain a restraining order and a writ of preliminary injunction in the Regional Trial Court, Branch 33 of Iloilo City. The second preventive suspension was not enforced. 5 Amidst the two successive suspensions, Mayor Ganzon instituted an action for prohibition against the respondent Secretary of Local Government (now, Interior) in the Regional Trial Court, Iloilo City, where he succeeded in obtaining a writ of preliminary injunction. Presently, he instituted CA-G.R. SP No. 16417, an action for prohibition, in the respondent Court of Appeals. Meanwhile, on May 3, 1990, the respondent Secretary issued another order, preventively suspending Mayor Ganzon for another sixty days, the third time in twenty months, and designating

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meantime Vice-Mayor Mansueto Malabor as acting mayor. Undaunted, Mayor Ganzon commenced CA-G.R. SP No. 20736 of the Court of Appeals, a petition for prohibition, 6 (Malabor it is to be noted,
is one of the complainants, and hence, he is interested in seeing Mayor Ganzon ousted.)

On September 7, 1989, the Court of Appeals rendered judgment, dismissing CA-G.R. SP No. 16417. On July 5, 1990, it likewise promulgated a decision, dismissing CA-G.R. SP No. 20736. In a Resolution dated January 24, 1990, it issued a Resolution certifying the petition of Mary Ann Artieda, who had been similary charged by the respondent Secretary, to this Court. On June 26,1990, we issued a Temporary Restraining Order, barring the respondent Secretary from implementing the suspension orders, and restraining the enforcement of the Court of Appeals' two decisions. In our Resolution of November 29, 1990, we consolidated all three cases. In our Resolutions of January 15, 1991, we gave due course thereto. Mayor Ganzon claims as a preliminary (GR No. 93252), that the Department of Local Government in hearing the ten cases against him, had denied him due process of law and that the respondent Secretary had been "biased, prejudicial and hostile" towards him 7 arising from his (Mayor Ganzon's)
alleged refusal to join the Laban ng Demokratikong Pilipino party 8 and the running political rivalry they maintained in the last congressional and local elections;9 and his alleged refusal to operate a lottery in Iloilo City. 10 He also alleges that he requested the Secretary to lift his suspension since it had come ninety days prior to an election (the barangay elections of November 14, 1988), 11notwithstanding which, the latter proceeded with the hearing and meted out two more suspension orders of the aforementioned cases. 12 He likewise contends that he sought to bring the cases to Iloilo City (they were held in Manila) in order to reduce the costs of proceeding, but the Secretary rejected his request. 13 He states that he asked for postponement on "valid and justifiable" 14 grounds, among them, that he was suffering from a heart ailment which required confinement; that his "vital" 15 witness was also hospitalized 16 but that the latter unduly denied his request. 17

Mayor Ganzon's primary argument (G.R. Nos. 93252 and 95245) is that the Secretary of Local Government is devoid, in any event, of any authority to suspend and remove local officials, an argument reiterated by the petitioner Mary Ann Rivera Artieda (G.R. No. 93746). As to Mayor Ganzon's charges of denial of due process, the records do not show very clearly in what manner the Mayor might have been deprived of his rights by the respondent Secretary. His claims that he and Secretary Luis-Santos were (are) political rivals and that his "persecution" was politically motivated are pure speculation and although the latter does not appear to have denied these contentions (as he, Mayor Ganzon, claims), we can not take his word for it the way we would have under less political circumstances, considering furthermore that "political feud" has often been a good excuse in contesting complaints. The Mayor has failed furthermore to substantiate his say-so's that Secretary Santos had attempted to seduce him to join the administration party and to operate a lottery in Iloilo City. Again, although the Secretary failed to rebut his allegations, we can not accept them, at face value, much more, as judicial admissions as he would have us accept them 18 for the same reasons above-stated and
furthermore, because his say so's were never corroborated by independent testimonies. As a responsible public official, Secretary Santos, in pursuing an official function, is presumed to be performing his duties regularly and in the absence of contrary evidence, no ill motive can be ascribed to him.

As to Mayor Ganzon's contention that he had requested the respondent Secretary to defer the hearing on account of the ninety-day ban prescribed by Section 62 of Batas Blg. 337, the Court finds the question to be moot and academic since we have in fact restrained the Secretary from further hearing the complaints against the petitioners. 19 As to his request, finally, for postponements, the Court is afraid that he has not given any compelling reason why we should overturn the Court of Appeals, which found no convincing reason to overrule 113

Secretary Santos in denying his requests. Besides, postponements are a matter of discretion on the part of the hearing officer, and based on Mayor Ganzon's above story, we are not convinced that the Secretary has been guilty of a grave abuse of discretion. The Court can not say, under these circumstances, that Secretary Santos' actuations deprived Mayor Ganzon of due process of law. We come to the core question: Whether or not the Secretary of Local Government, as the President's alter ego, can suspend and/or remove local officials. It is the petitioners' argument that the 1987 Constitution 20 no longer allows the President, as the 1935
and 1973 Constitutions did, to exercise the power of suspension and/or removal over local officials. According to both petitioners, the Constitution is meant, first, to strengthen self-rule by local government units and second, by deleting the phrase 21 as may be provided by law to strip the President of the power of control over local governments. It is a view, so they contend, that finds support in the debates of the Constitutional Commission. The provision in question reads as follows:

Sec. 4. The President of the Philippines shall exercise general supervision over local governments. Provinces with respect to component cities and municipalities, and cities and municipalities with respect to component barangays shall ensure that the acts of their component units are within the scope of their prescribed powers and functions. 22 It modifies a counterpart provision appearing in the 1935 Constitution, which we quote: Sec. 10. The President shall have control of all the executive departments, bureaus, or offices, exercise general supervision over all Local governments as may be provided by law, and take care that the laws be faithfully executed. 23 The petitioners submit that the deletion (of "as may be provided by law") is significant, as their argument goes, since: (1) the power of the President is "provided by law" and (2) hence, no law may provide for it any longer. It is to be noted that in meting out the suspensions under question, the Secretary of Local Government acted in consonance with the specific legal provisions of Batas Blg. 337, the Local Government Code, we quote: Sec. 62. Notice of Hearing. Within seven days after the complaint is filed, the Minister of local Government, or the sanggunian concerned, as the case may be, shall require the respondent to submit his verified answer within seven days from receipt of said complaint, and commence the hearing and investigation of the case within ten days after receipt of such answer of the respondent. No investigation shall be held within ninety days immediately prior to an election, and no preventive suspension shall be imposed with the said period. If preventive suspension has been imposed prior to the aforesaid period, the preventive suspension shall be lifted. 24 Sec. 63. Preventive Suspension. (1) Preventive suspension may be imposed by the Minister of Local Government if the respondent is a provincial or city official, by the provincial governor if the respondent is an elective municipal official, or by the city or municipal mayor if the respondent is an elective barangay official. (2) Preventive suspension may be imposed at any time after the issues are joined, when there is reasonable ground to believe that the respondent has committed the act or acts complained of, when the evidence of culpability is strong, when the gravity of the offense so warrants, or when the continuance in office of the respondent could influence the witnesses or pose a threat to the safety and integrity of the records and

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other evidence. In all cases, preventive suspension shall not extend beyond sixty days after the start of said suspension. (3) At the expiration of sixty days, the suspended official shall be deemed reinstated in office without prejudice to the continuation of the proceedings against him until its termination. However ' if the delay in the proceedings of the case is due to his fault, neglect or request, the time of the delay shall not be counted in computing the time of suspension. 25 The issue, as the Court understands it, consists of three questions: (1) Did the 1987 Constitution, in deleting the phrase "as may be provided by law" intend to divest the President of the power to investigate, suspend, discipline, and/or remove local officials? (2) Has the Constitution repealed Sections 62 and 63 of the Local Government Code? (3) What is the significance of the change in the constitutional language? It is the considered opinion of the Court that notwithstanding the change in the constitutional language, the charter did not intend to divest the legislature of its right or the President of her prerogative as conferred by existing legislation to provide administrative sanctions against local officials. It is our opinion that the omission (of "as may be provided by law") signifies nothing more than to underscore local governments' autonomy from congress and to break Congress' "control" over local government affairs. The Constitution did not, however, intend, for the sake of local autonomy, to deprive the legislature of all authority over municipal corporations, in particular, concerning discipline. Autonomy does not, after all, contemplate making mini-states out of local government units, as in the federal governments of the United States of America (or Brazil or Germany), although Jefferson is said to have compared municipal corporations euphemistically to "small republics." 26 Autonomy, in
the constitutional sense, is subject to the guiding star, though not control, of the legislature, albeit the legislative responsibility under the Constitution and as the "supervision clause" itself suggest-is to wean local government units from over-dependence on the central government.

It is noteworthy that under the Charter, "local autonomy" is not instantly self-executing, but subject to, among other things, the passage of a local government code, 27 a local tax law, 28 income
distribution legislation, 29 and a national representation law, 30 and measures 31 designed to realize autonomy at the local level. It is also noteworthy that in spite of autonomy, the Constitution places the local government under the general supervision of the Executive. It is noteworthy finally, that the Charter allows Congress to include in the local government code provisions for removal of local officials, which suggest that Congress may exercise removal powers, and as the existing Local Government Code has done, delegate its exercise to the President. Thus:

Sec. 3. The Congress shall enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanisms of recall, initiative, and referendum, allocate among the different local government units their powers, responsibilities and resources, and provide for the qualifications, election, appointment and removal, term, salaries, powers and functions and duties of local officials, and all other matters relating to the organization and operation of the local units. 32 As hereinabove indicated, the deletion of "as may be provided by law" was meant to stress, sub silencio, the objective of the framers to strengthen local autonomy by severing congressional control of its affairs, as observed by the Court of Appeals, like the power of local legislation. 33 The
Constitution did nothing more, however, and insofar as existing legislation authorizes the President (through the Secretary of Local Government) to proceed against local officials administratively, the Constitution contains no prohibition.

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The petitioners are under the impression that the Constitution has left the President mere supervisory powers, which supposedly excludes the power of investigation, and denied her control, which allegedly embraces disciplinary authority. It is a mistaken impression because legally, "supervision" is not incompatible with disciplinary authority as this Court has held, 34 thus: xxx xxx xxx It is true that in the case of Mondano vs. Silvosa, 51 Off. Gaz., No. 6 p. 2884, this Court had occasion to discuss the scope and extent of the power of supervision by the President over local government officials in contrast to the power of control given to him over executive officials of our government wherein it was emphasized that the two terms, control and supervision, are two different things which differ one from the other in meaning and extent. Thus in that case the Court has made the following digression: "In administration law supervision means overseeing or the power or authority of an officer to see that subordinate officers perform their duties. If the latter fail or neglect to fulfill them the former may take such action or step as prescribed by law to make them perform their duties. Control, on the other hand, means the power of an officer to alter or modify or nullify of set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for that of the latter." But from this pronouncement it cannot be reasonably inferred that the power of supervision of the President over local government officials does not include the power of investigation when in his opinion the good of the public service so requires, as postulated in Section 64(c) of the Revised Administrative Code. ... 35
xxx xxx xxx

"Control" has been defined as "the power of an officer to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for test of the latter."36 "Supervision" on the other hand means "overseeing or the power or
authority of an officer to see that subordinate officers perform their duties. 37 As we held, 38 however, "investigating" is not inconsistent with "overseeing", although it is a lesser power than "altering". The impression is apparently exacerbated by the Court's pronouncements in at least three cases, Lacson v. Roque, 39 Hebron v. Reyes, 40 and Mondano v. Silvosa, 41 and possibly, a fourth one, Pelaez v. Auditor General.42 In Lacson, this Court said that the President enjoyed no control powers but only supervision "as may be provided by law,"43 a rule we reiterated in Hebron, and Mondano. In Pelaez, we stated that the President "may not . . . suspend an elective official of a regular municipality or take any disciplinary action against him, except on appeal from a decision of the corresponding provincial board." 44 However, neither Lacson nor Hebron nor Mondano categorically banned the Chief Executive from exercising acts of disciplinary authority because she did not exercise control powers, but because no law allowed her to exercise disciplinary authority. Thus, according to Lacson:

The contention that the President has inherent power to remove or suspend municipal officers is without doubt not well taken. Removal and suspension of public officers are always controlled by the particular law applicable and its proper construction subject to constitutional limitations. 45 In Hebron we stated: Accordingly, when the procedure for the suspension of an officer is specified by law, the same must be deemed mandatory and adhered to strictly, in the absence of express or clear provision to the contrary-which does not et with respect to municipal officers ... 46 In Mondano, the Court held: ... The Congress has expressly and specifically lodged the provincial supervision over municipal officials in the provincial governor who is authorized to "receive and 116

investigate complaints made under oath against municipal officers for neglect of duty, oppression, corruption or other form of maladministration of office, and conviction by final judgment of any crime involving moral turpitude." And if the charges are serious, "he shall submit written charges touching the matter to the provincial board, furnishing a copy of such charges to the accused either personally or by registered mail, and he may in such case suspend the officer (not being the municipal treasurer) pending action by the board, if in his opinion the charge by one affecting the official integrity of the officer in question." Section 86 of the Revised Administration Code adds nothing to the power of supervision to be exercised by the Department Head over the administration of ... municipalities ... . If it be construed that it does and such additional power is the same authority as that vested in the Department Head by section 79(c) of the Revised Administrative Code, then such additional power must be deemed to have been abrogated by Section 110(l), Article VII of the Constitution. 47 xxx xxx xxx In Pelaez, we stated that the President can not impose disciplinary measures on local officials except on appeal from the provincial board pursuant to the Administrative Code. 48 Thus, in those case that this Court denied the President the power (to suspend/remove) it was not because we did not think that the President can not exercise it on account of his limited power, but because the law lodged the power elsewhere. But in those cases ii which the law gave him the power, the Court, as in Ganzon v. Kayanan, found little difficulty in sustaining him. 49 The Court does not believe that the petitioners can rightfully point to the debates of the Constitutional Commission to defeat the President's powers. The Court believes that the deliberations are by themselves inconclusive, because although Commissioner Jose Nolledo would exclude the power of removal from the President, 50Commissioner Blas Ople would not. 51 The Court is consequently reluctant to say that the new Constitution has repealed the Local Government Code, Batas Blg. 37. As we said, "supervision" and "removal" are not incompatible terms and one may stand with the other notwithstanding the stronger expression of local autonomy under the new Charter. We have indeed held that in spite of the approval of the Charter, Batas Blg. 337 is still in force and effect. 52 As the Constitution itself declares, local autonomy means "a more responsive and accountable local government structure instituted through a system of decentralization." 53 The Constitution as we
observed, does nothing more than to break up the monopoly of the national government over the affairs of local governments and as put by political adherents, to "liberate the local governments from the imperialism of Manila." Autonomy, however, is not meant to end the relation of partnership and interdependence between the central administration and local government units, or otherwise, to user in a regime of federalism. The Charter has not taken such a radical step. Local governments, under the Constitution, are subject to regulation, however limited, and for no other purpose than precisely, albeit paradoxically, to enhance self- government.

As we observed in one case, 54 decentralization means devolution of national administration but not
power to the local levels. Thus:

Now, autonomy is either decentralization of administration or decentralization of power. There is decentralization of administration when the central government delegates administrative powers to political subdivisions in order to broaden the base of government power and in the process to make local governments "more responsive and accountable," and "ensure their fullest development as self-reliant communities and make them more effective partners in the pursuit of national development and social progress." At the same time, it relieves the central government of the burden of managing local affairs and enables it to concentrate on 117

national concerns. The President exercises "general supervision" over them, but only to "ensure that local affairs are administered according to law." He has no control over their acts in the sense that he can substitute their judgments with his own. Decentralization of power, on the other hand, involves an abdication of political power in the favor of local governments units declared to be autonomous, In that case, the autonomous government is free to chart its own destiny and shape its future with minimum intervention from central authorities. According to a constitutional author, decentralization of power amounts to "self-immolation," since in that event, the autonomous government becomes accountable not to the central authorities but to its constituency. 55 The successive sixty-day suspensions imposed on Mayor Rodolfo Ganzon is albeit another matter. What bothers the Court, and what indeed looms very large, is the fact that since the Mayor is facing ten administrative charges, the Mayor is in fact facing the possibility of 600 days of suspension, in the event that all ten cases yield prima faciefindings. The Court is not of course tolerating misfeasance in public office (assuming that Mayor Ganzon is guilty of misfeasance) but it is certainly another question to make him serve 600 days of suspension, which is effectively, to suspend him out of office. As we held: 56 2. Petitioner is a duly elected municipal mayor of Lianga, Surigao del Sur. His term of office does not expire until 1986. Were it not for this information and the suspension decreed by the Sandiganbayan according to the Anti-Graft and Corrupt Practices Act, he would have been all this while in the full discharge of his functions as such municipal mayor. He was elected precisely to do so. As of October 26, 1983, he has been unable to. it is a basic assumption of the electoral process implicit in the right of suffrage that the people are entitled to the services of elective officials of their choice. For misfeasance or malfeasance, any of them could, of course, be proceeded against administratively or, as in this instance, criminally. In either case, Ms culpability must be established. Moreover, if there be a criminal action, he is entitled to the constitutional presumption of innocence. A preventive suspension may be justified. Its continuance, however, for an unreasonable length of time raises a due process question. For even if thereafter he were acquitted, in the meanwhile his right to hold office had been nullified. Clearly, there would be in such a case an injustice suffered by him. Nor is he the only victim. There is injustice inflicted likewise on the people of Lianga They were deprived of the services of the man they had elected to serve as mayor. In that sense, to paraphrase Justice Cardozo, the protracted continuance of this preventive suspension had outrun the bounds of reason and resulted in sheer oppression. A denial of due process is thus quite manifest. It is to avoid such an unconstitutional application that the order of suspension should be lifted. 57 The plain truth is that this Court has been ill at ease with suspensions, for the above reasons, 58 and
so also, because it is out of the ordinary to have a vacancy in local government. The sole objective of a suspension, as we have held,59 is simply "to prevent the accused from hampering the normal cause of the investigation with his influence and authority over possible witnesses" 60 or to keep him off "the records and other evidence. 61

It is a means, and no more, to assist prosecutors in firming up a case, if any, against an erring local official. Under the Local Government Code, it can not exceed sixty days, 62 which is to say that it need
not be exactly sixty days long if a shorter period is otherwise sufficient, and which is also to say that it ought to be lifted if prosecutors have achieved their purpose in a shorter span.

Suspension is not a penalty and is not unlike preventive imprisonment in which the accused is held to insure his presence at the trial. In both cases, the accused (the respondent) enjoys a presumption of innocence unless and until found guilty.

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Suspension finally is temporary and as the Local Government Code provides, it may be imposed for no more than sixty days. As we held, 63 a longer suspension is unjust and unreasonable, and we might
add, nothing less than tyranny.

As we observed earlier, imposing 600 days of suspension which is not a remote possibility Mayor Ganzon is to all intents and purposes, to make him spend the rest of his term in inactivity. It is also to make, to all intents and purposes, his suspension permanent. It is also, in fact, to mete out punishment in spite of the fact that the Mayor's guilt has not been proven. Worse, any absolution will be for naught because needless to say, the length of his suspension would have, by the time he is reinstated, wiped out his tenure considerably. The Court is not to be mistaken for obstructing the efforts of the respondent Secretary to see that justice is done in Iloilo City, yet it is hardly any argument to inflict on Mayor Ganzon successive suspensions when apparently, the respondent Secretary has had sufficient time to gather the necessary evidence to build a case against the Mayor without suspending him a day longer. What is intriguing is that the respondent Secretary has been cracking down, so to speak, on the Mayor piecemeal apparently, to pin him down ten times the pain, when he, the respondent Secretary, could have pursued a consolidated effort. We reiterate that we are not precluding the President, through the Secretary of Interior from exercising a legal power, yet we are of the opinion that the Secretary of Interior is exercising that power oppressively, and needless to say, with a grave abuse of discretion. The Court is aware that only the third suspension is under questions, and that any talk of future suspensions is in fact premature. The fact remains, however, that Mayor Ganzon has been made to serve a total of 120 days of suspension and the possibility of sixty days more is arguably around the corner (which amounts to a violation of the Local Government Code which brings to light a pattern of suspensions intended to suspend the Mayor the rest of his natural tenure. The Court is simply foreclosing what appears to us as a concerted effort of the State to perpetuate an arbitrary act. As we said, we can not tolerate such a state of affairs. We are therefore allowing Mayor Rodolfo Ganzon to suffer the duration of his third suspension and lifting, for the purpose, the Temporary Restraining Order earlier issued. Insofar as the seven remaining charges are concerned, we are urging the Department of Local Government, upon the finality of this Decision, to undertake steps to expedite the same, subject to Mayor Ganzon's usual remedies of appeal, judicial or administrative, or certiorari, if warranted, and meanwhile, we are precluding the Secretary from meting out further suspensions based on those remaining complaints, notwithstanding findings of prima facie evidence. In resume the Court is laying down the following rules: 1. Local autonomy, under the Constitution, involves a mere decentralization of administration, not of power, in which local officials remain accountable to the central government in the manner the law may provide; 2. The new Constitution does not prescribe federalism; 3. The change in constitutional language (with respect to the supervision clause) was meant but to deny legislative control over local governments; it did not exempt the latter from legislative regulations provided regulation is consistent with the fundamental premise of autonomy; 4. Since local governments remain accountable to the national authority, the latter may, by law, and in the manner set forth therein, impose disciplinary action against local officials;

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5. "Supervision" and "investigation" are not inconsistent terms; "investigation" does not signify "control" (which the President does not have); 6. The petitioner, Mayor Rodolfo Ganzon. may serve the suspension so far ordered, but may no longer be suspended for the offenses he was charged originally; provided: a) that delays in the investigation of those charges "due to his fault, neglect or request, (the time of the delay) shall not be counted in computing the time of suspension. [Supra, sec. 63(3)] b) that if during, or after the expiration of, his preventive suspension, the petitioner commits another or other crimes and abuses for which proper charges are filed against him by the aggrieved party or parties, his previous suspension shall not be a bar to his being preventively suspended again, if warranted under subpar. (2), Section 63 of the Local Government Code. WHEREFORE, premises considered, the petitions are DISMISSED. The Temporary Restraining Order issued is LIFTED. The suspensions of the petitioners are AFFIRMED, provided that the petitioner, Mayor Rodolfo Ganzon, may not be made to serve future suspensions on account of any of the remaining administrative charges pending against him for acts committed prior to August 11, 1988. The Secretary of Interior is ORDERED to consolidate all such administrative cases pending against Mayor Ganzon. The sixty-day suspension against the petitioner, Mary Ann Rivera Artieda, is AFFIRMED. No costs. SO ORDERED. Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Grio-Aquino, Medialdea, Regalado and Davide, Jr., JJ concur.

Footnotes 1 Rollo, G.R. No. 93252, 76; 77. 2 Hon. Bonifacio Cacdac, Jr., J. 3 Rollo, Id., 76-77. 4 Id., 77. 5 Id., 77-78. 6 Id., 78. The first suspension was on the Cabaluna and Ortigoza complaints. CAG.R. No. 16417 was on the Erbite complaint. CA-G.R. No. 20736 was a challenge on the designation of Vice- Mayor Malabor. 7 Id., 21 8 Id. 9 Id., 27.

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10 Id., 28. 11 Id., 30. 12 Id 31-32. 13 Id., 34-35. 14 Id., 36. 15 Id. 16 Id 17 Id., 38. 18 Id . 19 By virtue of the Temporary Restraining Order the Court issued on June 26,1990. 20 CONST., art. X, sec. 4. 21 CONST. (1935), art, X, sec. 10(l). The 1973 Constitution contained no similar provision, but see art. VII, sec. 18. 22 CONST. (1987), supra. 23 CONST. (1935), supra. 24 Batas Blg. 337, sec. 62. 25 Supra, sec. 63. 26 CRUZ, PHILIPPINE POLITICAL LAW 64 (1987 ed.) 27 CONST., supra, art. X, sec. 3. 28 Supra, secs. 5, 6. 29 Supra, sec. 7. 30 Supra, sec. 9. 31 See supra, sec. 14, providing for regional development councils to be organized by the President. 32 Supra, sec. 3. 33 G.R. No. 95245, Id., 53; see Mendoza, J., Concurring. 34 Ganzon v. Kayanan, 104 Phil. 484 (1985). In this concurrence (Id., 48-61), Justice Mendoza cited this case. 35 Supra, 489-490.

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36 Mondano v. Silvosa, 97 Phil. 143,148 (1955). 37 Supra, 147. 38 Ganzon v. Kayanan, supra. 39 92 Phil. 456 (1953). 40 104 Phil. 175 (1958). 41 Supra. 42 No. L-23825, December 24,1965,15 SCRA 569. 43 Lacson v. Roque, supra, 463. 44 Pelaez v. Auditor General, supra, 583. 45 Lacson v. Roque, supra, 462. 46 Hebron v. Reyes, supra, 185. 47 Mondano v. Silvosa, supra, 148. 48 Pelaez v. Auditor General, supra, 583. 49 G.R. No. 95245, Id., 50-51; see Mendoza, J., Concurring. 50 Id., 23. 51 Id., 53. 52 Bagabuyo v. Davide, G.R. No. 87233, September 21,1989. 53 CONST., supra, art. X, see. 3. 54 Limbona v. Mangelin G.R. No. 80391, February 28,1989,170 SCRA 786. 55 Supra, 794-795. 56 Layno, Sr. v. Sandiganbayan, No. 65848, May 24, 1985, 136 SCRA 536, 57 Supra, 541. 58 See supra. 59 Lacson v. Roque, supra. 60 Supra, 469. 61 Batas Blg. 337, sec. 63. 62 Supra.

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63 Layno, Sr. v. Sandiganbayan, supra.

The Lawphil Project - Arellano Law Foundation

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Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. 90336 August 12, 1991 RUPERTO TAULE, petitioner, vs. SECRETARY LUIS T. SANTOS and GOVERNOR LEANDRO VERCELES, respondents. Balgos & Perez and Bugaring, Tugonon & Associates Law Offices for petitioner. Juan G. Atencia for private respondent.

GANCAYCO, J.:p The extent of authority of the Secretary of Local Government over the katipunan ng mga barangay or the barangay councils is brought to the fore in this case. On June 18,1989, the Federation of Associations of Barangay Councils (FABC) of Catanduanes, composed of eleven (11) members, in their capacities as Presidents of the Association of Barangay Councils in their respective municipalities, convened in Virac, Catanduanes with six members in attendance for the purpose of holding the election of its officers. Present were petitioner Ruperto Taule of San Miguel, Allan Aquino of Viga, Vicente Avila of Virac, Fidel Jacob of Panganiban, Leo Sales of Caramoran and Manuel Torres of Baras. The Board of Election Supervisors/Consultants was composed of Provincial Government Operation Officer (PGOO) Alberto P. Molina, Jr. as Chairman with Provincial Treasurer Luis A. Manlapaz, Jr. and Provincial Election Supervisor Arnold Soquerata as members. When the group decided to hold the election despite the absence of five (5) of its members, the Provincial Treasurer and the Provincial Election Supervisor walked out. The election nevertheless proceeded with PGOO Alberto P. Molina, Jr. as presiding officer. Chosen as members of the Board of Directors were Taule, Aquino, Avila, Jacob and Sales. Thereafter, the following were elected officers of the FABC: President Ruperto Taule Vice-President Allan Aquino Secretary Vicente Avila Treasurer Fidel Jacob Auditor Leo Sales 1

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On June 19, 1989, respondent Leandro I. Verceles, Governor of Catanduanes, sent a letter to respondent Luis T. Santos, the Secretary of Local Government,* protesting the election of the officers of the FABC
and seeking its nullification in view of several flagrant irregularities in the manner it was conducted.
2

In compliance with the order of respondent Secretary, petitioner Ruperto Taule as President of the FABC, filed his comment on the letter-protest of respondent Governor denying the alleged irregularities and denouncing said respondent Governor for meddling or intervening in the election of FABC officers which is a purely non-partisan affair and at the same time requesting for his appointment as a member of the Sangguniang Panlalawigan of the province being the duly elected President of the FABC in Catanduanes. 3 On August 4, 1989, respondent Secretary issued a resolution nullifying the election of the officers of the FABC in Catanduanes held on June 18, 1989 and ordering a new one to be conducted as early as possible to be presided by the Regional Director of Region V of the Department of Local Government. 4 Petitioner filed a motion for reconsideration of the resolution of August 4, 1989 but it was denied by respondent Secretary in his resolution of September 5, 1989. 5 In the petition for certiorari before Us, petitioner seeks the reversal of the resolutions of respondent Secretary dated August 4, 1989 and September 5, 1989 for being null and void. Petitioner raises the following issues: 1) Whether or not the respondent Secretary has jurisdiction to entertain an election protest involving the election of the officers of the Federation of Association of Barangay Councils; 2) Whether or not the respondent Governor has the legal personality to file an election protest; 3) Assuming that the respondent Secretary has jurisdiction over the election protest, whether or not he committed grave abuse of discretion amounting to lack of jurisdiction in nullifying the election; The Katipunan ng mga Barangay is the organization of all sangguniang barangays in the following levels: in municipalities to be known as katipunang bayan; in cities, katipunang panlungsod; in provinces, katipunang panlalawigan; in regions, katipunang pampook; and on the national level, katipunan ng mga barangay. 6 The Local Government Code provides for the manner in which the katipunan ng mga barangay at all levels shall be organized: Sec. 110. Organization. (1) The katipunan at all levels shall be organized in the following manner: (a) The katipunan in each level shall elect a board of directors and a set of officers. The president of each level shall represent the katipunan concerned in the next higher level of organization. (b) The katipunan ng mga barangay shall be composed of the katipunang pampook, which shall in turn be composed of the presidents of the katipunang panlalawigan and the katipunang panlungsod. The presidents of the katipunang bayan in each province shall constitute the katipunang panlalawigan. The katipunang panlungsod and the katipunang bayan shall be composed of the punong barangays of cities and municipalities, respectively. 125

xxx xxx xxx The respondent Secretary, acting in accordance with the provision of the Local Government Code empowering him to "promulgate in detail the implementing circulars and the rules and regulations to carry out the various administrative actions required for the initial implementation of this Code in such a manner as will ensure the least disruption of on-going programs and projects 7 issued
Department of Local Government Circular No. 89-09 on April 7, 1989, 8 to provide the guidelines for the conduct of the elections of officers of the Katipunan ng mga Barangay at the municipal, city, provincial, regional and national levels.

It is now the contention of petitioner that neither the constitution nor the law grants jurisdiction upon the respondent Secretary over election contests involving the election of officers of the FABC, the katipunan ng mga barangay at the provincial level. It is petitioner's theory that under Article IX, C, Section 2 of the 1987 Constitution, it is the Commission on Elections which has jurisdiction over all contests involving elective barangay officials. On the other hand, it is the opinion of the respondent Secretary that any violation of the guidelines as set forth in said circular would be a ground for filing a protest and would vest upon the Department jurisdiction to resolve any protest that may be filed in relation thereto. Under Article IX, C, Section 2(2) of the 1987 Constitution, the Commission on Elections shall exercise "exclusive original jurisdiction over all contests relating to the elections, returns, and qualifications of all elective regional, provincial, and city officials, and appellate jurisdiction over all contests involving elective municipal officials decided by trial courts of general jurisdiction, or involving elective barangay officials decided by trial courts of limited jurisdiction." The 1987 Constitution expanded the jurisdiction of the COMELEC by granting it appellate jurisdiction over all contests involving elective municipal officials decided by trial courts of general jurisdiction or elective barangay officials decided by trial courts of limited jurisdiction. 9 The jurisdiction of the COMELEC over contests involving elective barangay officials is limited to appellate jurisdiction from decisions of the trial courts. Under the law, 10 the sworn petition contesting
the election of a barangay officer shall be filed with the proper Municipal or Metropolitan Trial Court by any candidate who has duly filed a certificate of candidacy and has been voted for the same office within 10 days after the proclamation of the results. A voter may also contest the election of any barangay officer on the ground of ineligibility or of disloyalty to the Republic of the Philippines by filing a sworn petition for quo warranto with the Metropolitan or Municipal Trial Court within 10 days after the proclamation of the results of the election. 11 Only appeals from decisions of inferior courts on election matters as aforestated may be decided by the COMELEC.

The Court agrees with the Solicitor General that the jurisdiction of the COMELEC is over popular elections, the elected officials of which are determined through the will of the electorate. An election is the embodiment of the popular will, the expression of the sovereign power of the people. 12 It
involves the choice or selection of candidates to public office by popular vote. 13 Specifically, the term "election," in the context of the Constitution, may refer to the conduct of the polls, including the listing of voters, the holding of the electoral campaign, and the casting and counting of the votes 14which do not characterize the election of officers in the Katipunan ng mga barangay. "Election contests" would refer to adversary proceedings by which matters involving the title or claim of title to an elective office, made before or after proclamation of the winner, is settled whether or not the contestant is claiming the office in dispute 15 and in the case of elections of barangay officials, it is restricted to proceedings after the proclamation of the winners as no pre-proclamation controversies are allowed. 16

The jurisdiction of the COMELEC does not cover protests over the organizational set-up of the katipunan ng mga barangay composed of popularly elected punong barangays as prescribed by law whose officers are voted upon by their respective members. The COMELEC exercises only appellate jurisdiction over election contests involving elective barangay officials decided by the Metropolitan or Municipal Trial Courts which likewise have limited jurisdiction. The authority of the COMELEC over the katipunan ng mga barangay is limited by law to supervision of the election of the

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representative of the katipunan concerned to the sanggunian in a particular level conducted by their own respective organization. 17 However, the Secretary of Local Government is not vested with jurisdiction to entertain any protest involving the election of officers of the FABC. There is no question that he is vested with the power to promulgate rules and regulations as set forth in Section 222 of the Local Government Code. Likewise, under Book IV, Title XII, Chapter 1, See. 3(2) of the Administrative Code of 1987, ** the
respondent Secretary has the power to "establish and prescribe rules, regulations and other issuances and implementing laws on the general supervision of local government units and on the promotion of local autonomy and monitor compliance thereof by said units."

Also, the respondent Secretary's rule making power is provided in See. 7, Chapter II, Book IV of the Administrative Code, to wit: (3) Promulgate rules and regulations necessary to carry out department objectives, policies, functions, plans, programs and projects; Thus, DLG Circular No. 89-09 was issued by respondent Secretary in pursuance of his rule-making power conferred by law and which now has the force and effect of law. 18 Now the question that arises is whether or not a violation of said circular vests jurisdiction upon the respondent Secretary, as claimed by him, to hear a protest filed in relation thereto and consequently declare an election null and void. It is a well-settled principle of administrative law that unless expressly empowered, administrative agencies are bereft of quasi- judicial powers. 19 The jurisdiction of administrative authorities is
dependent entirely upon the provisions of the statutes reposing power in them; they cannot confer it upon themselves. 20 Such jurisdiction is essential to give validity to their determinations. 21

There is neither a statutory nor constitutional provision expressly or even by necessary implication conferring upon the Secretary of Local Government the power to assume jurisdiction over an election protect involving officers of the katipunan ng mga barangay. An understanding of the extent of authority of the Secretary over local governments is therefore necessary if We are to resolve the issue at hand. Presidential power over local governments is limited by the Constitution to the exercise of general supervision 22"to ensure that local affairs are administered according to law." 23 The general supervision
is exercised by the President through the Secretary of Local Government.
24

In administrative law, supervision means overseeing or the power or authority of an officer to see that the subordinate officers perform their duties. If the latter fails or neglects to fulfill them the former may take such action or step as prescribed by law to make them perform their duties. Control, on the other hand, means the power of an officer to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for that of the latter. The fundamental law permits the Chief Executive to wield no more authority than that of checking whether said local government or the officers thereof perform their duties as provided by statutory enactments. Hence, the President cannot interfere with local governments so long as the same or its officers act within the scope of their authority. 25 Supervisory power, when contrasted with
control, is the power of mere oversight over an inferior body; it does not include any restraining authority over such body. 26

Construing the constitutional limitation on the power of general supervision of the President over local governments, We hold that respondent Secretary has no authority to pass upon the validity or regularity of the election of the officers of the katipunan. To allow respondent Secretary to do so will

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give him more power than the law or the Constitution grants. It will in effect give him control over local government officials for it will permit him to interfere in a purely democratic and non-partisan activity aimed at strengthening the barangay as the basic component of local governments so that the ultimate goal of fullest autonomy may be achieved. In fact, his order that the new elections to be conducted be presided by the Regional Director is a clear and direct interference by the Department with the political affairs of the barangays which is not permitted by the limitation of presidential power to general supervision over local governments. 27 Indeed, it is the policy of the state to ensure the autonomy of local governments. 28 This state policy is
echoed in the Local Government Code wherein it is declared that "the State shall guarantee and promote the autonomy of local government units to ensure their fullest development as self-reliant communities and make them more effective partners in the pursuit of national development and social progress." 29 To deny the Secretary of Local Government the power to review the regularity of the elections of officers of the katipunan would be to enhance the avowed state policy of promoting the autonomy of local governments.

Moreover, although the Department is given the power to prescribe rules, regulations and other issuances, the Administrative Code limits its authority to merely "monitoring compliance" by local government units of such issuances. 30 To monitor means "to watch, observe or check. 31 This is
compatible with the power of supervision of the Secretary over local governments which as earlier discussed is limited to checking whether the local government unit concerned or the officers thereof perform their duties as provided by statutory enactments. Even the Local Government Code which grants the Secretary power to issue implementing circulars, rules and regulations is silent as to how these issuances should be enforced. Since the respondent Secretary exercises only supervision and not control over local governments, it is truly doubtful if he could enforce compliance with the DLG Circular. 32 Any doubt therefore as to the power of the Secretary to interfere with local affairs should be resolved in favor of the greater autonomy of the local government.

Thus, the Court holds that in assuming jurisdiction over the election protest filed by respondent Governor and declaring the election of the officers of the FABC on June 18, 1989 as null and void, the respondent Secretary acted in excess of his jurisdiction. The respondent Secretary not having the jurisdiction to hear an election protest involving officers of the FABC, the recourse of the parties is to the ordinary courts. The Regional Trial Courts have the exclusive original jurisdiction to hear the protest. 33 The provision in DLG Circular No. 89-15 amending DLG Circular No. 89-09 which states that "whenever the guidelines are not substantially complied with, the election shall be declared null and void by the Department of Local Government and an election shall conduct and being invoked by the Solicitor General cannot be applied. DLG Circular No. 89-15 was issued on July 3, 1989 after the June 18, 1989 elections of the FABC officers and it is the rule in statutory construction that laws, including circulars and regulations 34 cannot be applied retrospectively. 35Moreover, such provision is
null and void for having been issued in excess of the respondent Secretary's jurisdiction, inasmuch as an administrative authority cannot confer jurisdiction upon itself.

As regards the second issue raised by petitioner, the Court finds that respondent Governor has the personality to file the protest. Under Section 205 of the Local Government Code, the membership of the sangguniang panlalawigan consists of the governor, the vice-governor, elective members of the said sanggunian and the presidents of the katipunang panlalawigan and the kabataang barangay provincial federation. The governor acts as the presiding officer of the sangguniang panlalawigan. 36 As presiding officer of the sagguniang panlalawigan, the respondent governor has an interest in the election of the officers of the FABC since its elected president becomes a member of the assembly. If the president of the FABC assumes his presidency under questionable circumstances and is allowed to sit in the sangguniang panlalawiganthe official actions of the sanggunian may be vulnerable to attacks as to their validity or legality. Hence, respondent governor is a proper party to question the regularity of the elections of the officers of the FABC.

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As to the third issue raised by petitioner, the Court has already ruled that the respondent Secretary has no jurisdiction to hear the protest and nullify the elections. Nevertheless, the Court holds that the issue of the validity of the elections should now be resolved in order to prevent any unnecessary delay that may result from the commencement of an appropriate action by the parties. The elections were declared null and void primarily for failure to comply with Section 2.4 of DLG Circular No. 89-09 which provides that "the incumbent FABC President or the VicePresident shall preside over the reorganizational meeting, there being a quorum." The rule specifically provides that it is the incumbent FABC President or Vice-President who shall preside over the meeting. The word "shall" should be taken in its ordinary signification, i.e., it must be imperative or mandatory and not merely permissive, 37 as the rule is explicit and requires no other interpretation. If it had been intended that any
other official should preside, the rules would have provided so, as it did in the elections at the town and city levels 38 as well as the regional level.. 39

It is admitted that neither the incumbent FABC President nor the Vice-President presided over the meeting and elections but Alberto P. Molina, Jr., the Chairman of the Board of Election Supervisors/Consultants. Thus, there was a clear violation of the aforesaid mandatory provision. On this ground, the elections should be nullified. Under Sec. 2.3.2.7 of the same circular it is provided that a Board of Election Supervisors/Consultants shall be constituted to oversee and/or witness the canvassing of votes and proclamation of winners. The rules confine the role of the Board of Election Supervisors/Consultants to merely overseeing and witnessing the conduct of elections. This is consistent with the provision in the Local Government Code limiting the authority of the COMELEC to the supervision of the election. 40 In case at bar, PGOO Molina, the Chairman of the Board, presided over the elections. There was direct participation by the Chairman of the Board in the elections contrary to what is dictated by the rules. Worse, there was no Board of Election Supervisors to oversee the elections in view of the walk out staged by its two other members, the Provincial COMELEC Supervisor and the Provincial Treasurer. The objective of keeping the election free and honest was therefore compromised. The Court therefore finds that the election of officers of the FABC held on June 18, 1989 is null and void for failure to comply with the provisions of DLG Circular No. 89-09. Meanwhile, pending resolution of this petition, petitioner filed a supplemental petition alleging that public respondent Local Government Secretary, in his memorandum dated June 7, 1990, designated Augusto Antonio as temporary representative of the Federation to the sangguniang panlalawigan of Catanduanes. 41 By virtue of this memorandum, respondent governor swore into said office Augusto
Antonio on June 14, 1990. 42

The Solicitor General filed his comment on the supplemental petition 43 as required by the resolution of
the Court dated September 13,1990.

In his comment, the Solicitor General dismissed the supervening event alleged by petitioner as something immaterial to the petition. He argues that Antonio's appointment was merely temporary "until such time that the provincial FABC president in that province has been elected, appointed and qualified." 44 He stresses that Antonio's appointment was only a remedial measure designed to cope with
the problems brought about by the absence of a representative of the FABC to the "sanggunian ang panlalawigan."

Sec. 205 (2) of the Local Government Code (B.P. Blg. 337) provides-

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(2) The sangguniang panlalawigan shall be composed of the governor, the vicegovernor, elective members of the said sanggunian and the presidents of the katipunang panlalawigan and the kabataang barangay provincial federation who shall be appointed by the President of the Philippines. (Emphasis supplied.) Batas Pambansa Blg. 51, under Sec. 2 likewise states: xxx xxx xxx The sangguniang panlalawigan of each province shall be composed of the governor as chairman and presiding officer, the vice-governor as presiding officer pro tempore, the elective sangguniang panlalawigan members, and the appointive members consisting of the president of the provincial association of barangay councils, and the president of the provincial federation of the kabataang barangay. (Emphasis supplied.) In Ignacio vs. Banate Jr. 45 the Court, interpreting similarly worded provisions of Batas Pambansa Blg.
337 and Batas Pambansa Blg. 51 on the composition of the sangguniang panlungsod, 46 declared as null and void the appointment of private respondent Leoncio Banate Jr. as member of the Sangguniang Panlungsod of the City of Roxas representing thekatipunang panlungsod ng mga barangay for he lacked the elegibility and qualification required by law, not being a barangay captain and for not having been elected president of the association of barangay councils. The Court held that an unqualified person cannot be appointed a member of the sanggunian, even in an acting capacity. In Reyes vs. Ferrer, 47 the appointment of Nemesio L. Rasgo Jr. as representative of the youth sector to the sangguniang panlungsod of Davao City was declared invalid since he was never the president of the kabataang barangay city federation as required by Sec. 173, Batas Pambansa Blg. 337.

In the present controversy involving the sangguniang panlalawigan, the law is likewise explicit. To be appointed by the President of the Philippines to sit in the sangguniang panlalawigan is the president of the katipunang panlalawigan. The appointee must meet the qualifications set by law. 48 The
appointing power is bound by law to comply with the requirements as to the basic qualifications of the appointee to the sangguniang panlalawigan. The President of the Philippines or his alter ego, the Secretary of Local Government, has no authority to appoint anyone who does not meet the minimum qualification to be the president of the federation of barangay councils.

Augusto Antonio is not the president of the federation. He is a member of the federation but he was not even present during the elections despite notice. The argument that Antonio was appointed as a remedial measure in the exigency of the service cannot be sustained. Since Antonio does not meet the basic qualification of being president of the federation, his appointment to the sangguniang panlalawigan is not justified notwithstanding that such appointment is merely in a temporary capacity. If the intention of the respondent Secretary was to protect the interest of the federation in the sanggunian, he should have appointed the incumbent FABC President in a hold-over capacity. For even under the guidelines, the term of office of officers of the katipunan at all levels shall be from the date of their election until their successors shall have been duly elected and qualified, without prejudice to the terms of their appointments as members of the sanggunian to which they may be correspondingly appointed. 49 Since the election is still under protest such that no successor of the
incumbent has as yet qualified, the respondent Secretary has no choice but to have the incumbent FABC President sit as member of the sanggunian. He could even have appointed petitioner since he was elected the president of the federation but not Antonio. The appointment of Antonio, allegedly the protege of respondent Governor, gives credence to petitioner's charge of political interference by respondent Governor in the organization. This should not be allowed. The barangays should be insulated from any partisan activity or political intervention if only to give true meaning to local autonomy.

WHEREFORE, the petition is GRANTED in that the resolution of respondent Secretary dated August 4, 1989 is hereby SET ASIDE for having been issued in excess of jurisdiction.

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The election of the officials of the ABC Federation held on June 18, 1989 is hereby annulled. A new election of officers of the federation is hereby ordered to be conducted immediately in accordance with the governing rules and regulations. The Supplemental petition is hereby GRANTED. The appointment of Augusto Antonio as representative to theSangguniang Panlalawigan in a temporary capacity is declared null and void. No costs. SO ORDERED. Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Padilla, Bidin, Sarmiento, Grio-Aquino, Medialdea, Regalado and Davide, Jr., JJ., concur.

Footnotes 1 Page 18, Rollo. * Now Secretary of Interior and Local Government by virtue of R.A. No. 6975. 2 Page 21, Rollo. 3 Page 23, Rollo. 4 Page 14, Rollo. 5 Page 16, Rollo. 6 Sec. 108, Batas Pambansa Blg. 337. 7 Sec. 222, ibid. 8 Amended by Department of Local Government Circular No. 8915 issued on July 3,1989. 9 Sec. 2 (2), Art. XII-C, 1973 Constitution provides as follows- 'The Commission on Elections shall have the following powers and functions: ... (2) Be the sole judge of all contests relating to the elections, returns, and qualifications of all members of the Batasang Pambansa and elective provincial and city officials. ... 10 Sec. 9, Republic Act No. 6679; Sec. 252, Batas Pambansa Blg. 881. 11 Sec. 9, Republic Act No. 6679; Sec. 253, Batas Pambansa Blg. 881. 12 Hontiveros vs. Altavos 24 Phil. 636 (1913). 13 Gonzales vs. Commission on Elections, 21 SCRA 796 (1967). 14 Javier vs. Commission on Elections, 144 SCRA 194 (1986). 15 Ibid.

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16 Sec. 9, Republic Act No. 6679. 17 Sec 43, Batas Pambansa Blg, 337. ** Executive Order No. 292. 18 Cebu Institute of Technology vs. Ople, 156 SCRA 632 (1987); People vs. Maceren, 79 SCRA 450 (1977); Philippine Blooming Mills Co., Inc. vs. Social Security Commission, 17 SCRA 1077 (1966). 19 Pilipinas Shell Petroleum Corporation vs. Oil Industry Commission, 145 SCRA 433 (1986). 20 42 Am. Jur. 109. 21 Ibid. 22 Section 4, Article X, 1987 Constitution. 23 Section 14, Batas Pambansa Blg, 337. 24 Ibid. 25 Pelaez vs. Auditor General, 15 SCRA 569 (1965); Hebron vs. Reyes, 104 Phil. 175 (1958); Mondano vs. Silvosa, et al., 97 Phil. 143 (1955). 26 Hebron vs. Reyes, supra. 27 Ibid. 28 Section 25, Article II, 1987 Constitution. 29 Section 2, Batas Pambansa Blg. 337. 30 Sec. 3 (2), Chapter 1, Title XII, Book IV, Administrative Code of 1987. 31 Webster's Third New International Dictionary, 1971 ed., page 1460. 32 See Serafica vs. Treasurer of Ormoc City, 27 SCRA 1108 (1969). 33 B.P. Blg. 129, Sec. 19. provides as follows "Jurisdiction in civil cases.Regional Trial Courts shall exercise original jurisdiction: ... (6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or body exercising judicial or quasi-judicial functions.' 34 People vs. Que Po Lay, 94 Phil. 640 (1954). 35 Rumualdez III vs. Civil Service Commission and Philippine Ports Authority, G.R Nos. 94878-94881, May 15, 1991, Baltazar vs. Court of Appeals, 104 SCRA 619 (1981).

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36 Section 206 (3), Batas Pambansa Blg. 337. 37 Diokno vs. Rehabilitation Finance Corp., 91 Phil. 608 (1952). 38 Sec. 2.3.2, DLG Circular No. 89-09, where only incumbent president initially presides over the reorganizational meeting. 39 Sec. 2.5, DLG Circular No. 89-09 which provides that the incumbent Regional FABC President or the vice-president or the member of the Board in succession shall temporarily preside in the reorganizational meeting. 40 Sec. 43, Batas Pambansa Blg. 337. 41 Annex A to supplemental petition, p. 60, Rollo. 42 Annex B to supplemental Petition, p. 61, Rollo. 43 P. 67, Rollo. 44 P. 68, Rollo. 45 153 SCRA 546 (1987). 46 Sec. 173 of B.P. Blg. 337 provides as follows --, "Composition and Compensation.-- (1) The sangguniang panlungsod, as the legislative body of the city, shall be composed of the vice-mayor, as presiding officer, the elected sangguniang panlungsod members, and the members who may be appointed by the President of the Philippines consisting of the presidents of the katipunang panglungsod ng mga barangay and the kabataang barangay city federation. xxx xxx xxx See. 3 of B.P. Blg. 51, "Cities.-- There shall be in each city such elective local officials as provided in their respective charters, including the city mayor, the city vice-mayor, and the elective members of the sangguniang panglungsod, all of whom shall be elected by the qualified voters in the city. In addition thereto, there shall be appointive sangguniang panglungsod members consisting of the president of the city organization of barangay councils, the president of the city federation of the kabataang barangay, and one representative each from the agricultural and industrial labor sectors who shall be appointed by the President ... . 47 156 SCRA 317 (1987). 48 Ibid. 49 Section 2.2., DLG Circular No. 89-09.
The Lawphil Project - Arellano Law Foundation

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Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. 96409 February 14, 1992 CITIZEN J. ANTONIO M. CARPIO, petitioner, vs. THE EXECUTIVE SECRETARY, THE SECRETARY OF LOCAL GOVERNMENTS, THE SECRETARY OF NATIONAL DEFENSE and THE NATIONAL TREASURER, respondents.

PARAS, J.: At the very outset, it should be well to set forth the constitutional provision that is at the core of the controversy now confronting us, thus: Article XVI, Section 6: The State shall establish and maintain one police force, which stall be national in scope and civilian in character, to be administered and controlled by a national police commission. The authority of local executives over the police units in their jurisdiction shall be provided by law. 1 With the aforequoted provision in mind, Congress passed Republic Act No. 6975 entitled "AN ACT ESTABLISHING THE PHILIPPINE NATIONAL POLICE UNDER A REORGANIZED DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT, AND FOR OTHER PURPOSES" as the consolidated version of House Bill No. 23614 and Senate Bill No. 463. Following the said Act's approval by President Corazon C. Aquino on December 13, 1990, it was published on December 17, 1990. 2 Presently, however, petitioner as citizen, taxpayer and member of the Philippine Bar sworn to defend the Constitution, filed the petition now at bar on December 20, 1990, seeking this Court's declaration of unconstitutionality of RA 6975 with prayer for temporary restraining order. But in an en banc resolution dated December 27, 1990, We simply required the public respondents to file their Comment, without however giving due course to the petition and the prayer therein. Hence, the Act took effect after fifteen days following its publication, or on January 1, 1991. 3 Before we settle down on the merits of the petition, it would likewise be well to discuss albeit briefly the history of our police force and the reasons for the ordination of Section 6, Article XVI in our present Constitution. During the Commonwealth period, we had the Philippine Constabulary as the nucleus of the Philippine Ground Force (PGF), now the Armed Forces of the Philippines (AFP). The PC was made part of the PGF but its administrative, supervisory and directional control was handled by the then Department of the Interior. After the war, it remained as the "National Police" under the Department of National Defense, as a major service component of the AFP. 4

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Later, the Integration Act of 1975 5 created the Integrated National Police (INP) under the Office of the
President, with the PC as the nucleus, and the local police forces as the civilian components. The PC-INP was headed by the PC Chief who, as concurrent Director-General of the INP, exercised command functions over the INP. 6

The National Police Commission (NAPOLCOM) 7 exercised administrative control and supervision
while the local executives exercised operational supervision and direction over the INP units assigned within their respective localities. 8

The set-up whereby the INP was placed under the command of the military component, which is the PC, severely eroded the INP's civilian character and the multiplicity in the governance of the PC-INP resulted in inefficient police service. 9 Moreover, the integration of the national police forces with the PC
also resulted in inequities since the military component had superior benefits and privileges. 10

The Constitutional Commission of 1986 was fully aware of the structural errors that beset the system. Thus, Com. Teodulo C. Natividad explained that: xxx xxx xxx MR. NATIVIDAD. . . . The basic tenet of a modern police organization is to remove it from the military. 11
xxx xxx xxx

Here in our draft Constitution, we have already made a constitutional postulate that the military cannot occupy any civil service position [in Section 6 of the Article on the Civil Service 12] Therefore, in keeping with this and because of the universal acceptance
that a police force is a civilian function, a public service, and should not be performed by military force, one of the basic reforms we are presenting here is that it should be separated from the military force which is the PC. 13 xxx xxx xxx

Furthermore: xxx xxx xxx . . . the civilian police cannot blossom into full profession because most of the key positions are being occupied by the military So, it is up to this Commission to remove the police from such a situation so that it can develop into a truly professional civilian police. . . . 14 Hence, the "one police force, national in scope, and civilian in character" provision that is now Article XVI, Section 6 of the 1987 Constitution. And so we now come to the merits of the petition at hand. In the main, petitioner herein respectfully advances the view that RA 6975 emasculated the National Police Commission by limiting its power "to administrative control" over the Philippine National Police (PNP), thus, "control" remained with the Department Secretary under whom both the National Police Commission and the PNP were placed. 15 We do not share this view.

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To begin with, one need only refer to the fundamentally accepted principle in Constitutional Law that the President has control of all executive departments, bureaus, and offices to lay at rest petitioner's contention on the matter. This presidential power of control over the executive branch of government extends over all executive officers from Cabinet Secretary to the lowliest clerk 17 and has been held by us, in the
landmark case of Mondano vs. Silvosa, 18 to mean "the power of [the President] to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former with that of the latter." It is said to be at the very "heart of the meaning of Chief Executive." 19

Equally well accepted, as a corollary rule to the control powers of the President, is the "Doctrine of Qualified Political Agency". As the President cannot be expected to exercise his control powers all at the same time and in person, 20 he will have to delegate some of them to his Cabinet members. Under this doctrine, which recognizes the establishment of a single executive, 21 "all executive and
administrative organizations are adjuncts of the Executive Department, the heads of the various executive departments are assistants and agents of the Chief Executive, and, except in cases where the Chief Executive is required by the Constitution or law to act in person on the exigencies of the situation demand that he act personally, the multifarious executive and administrative functions of the Chief Executive are performed by and through the executive departments, and the acts of the Secretaries of such departments, performed and promulgated in the regular course of business, unless disapproved or reprobated by the Chief Executive presumptively the acts of the Chief Executive ." 22 (emphasis ours)

Thus, and in short, "the President's power of control is directly exercised by him over the members of the Cabinet who, in turn, and by his authority, control the bureaus and other offices under their respective jurisdictions in the executive department." 23 Additionally, the circumstance that the NAPOLCOM and the PNP are placed under the reorganized Department of Interior and Local Government is merely an administrative realignment that would bolster a system of coordination and cooperation among the citizenry, local executives and the integrated law enforcement agencies and public safety agencies created under the assailed Act, 24 the funding of the PNP being in large part subsidized by the national government. Such organizational set-up does not detract from the mandate of the Constitution that the national police force shall be administered and controlled by a national police commission as at any rate, and in fact, the Act in question adequately provides for administration and control at the commission level, as shown in the following provisions, to wit: Sec. 14. Powers and Functions of the Commission. The Commission shall exercise the following powers and functions: xxx xxx xxx (i) Approve or modify plans and programs on education and training, logistical requirements, communications, records, information systems, crime laboratory, crime prevention and crime reporting; (j) Affirm, reverse or modify, through the National Appellate Board, personnel disciplinary actions involving demotion or dismissal from the service imposed upon members of the Philippine National Police by the Chief of the PNP; (k) Exercise appellate jurisdiction through .the regional. appellate boards over administrative cases against policemen and over decisions on claims for police benefits;

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xxx xxx xxx Sec. 26. The Command and direction of the PNP shall be vested in the Chief of the PNP . . . Such command and direction of the Chief of the PNP may be delegated to subordinate officials with respect to the units under their respective commands, in accordance with the rules and regulations prescribed by the Commission. . . . xxx xxx xxx Sec. 35. . . . To enhance police operational efficiency and effectiveness, the Chief of the PNP may constitute such other support units as may be necessary subject to the approval of the Commission. . . . xxx xxx xxx Sec. 37. . . . There shall be established a performance evaluation system which shall be administered in accordance with the rules, regulations and standards; and a code of conduct promulgated by the Commission for members of the PNP. . . . xxx xxx xxx Petitioner further asserts that in manifest derogation of the power of control of the NAPOLCOM over the PNP, RA 6975 vested the power to choose the PNP Provincial Director and the Chiefs of Police in the Governors and Mayors, respectively; the power of "operational supervision and control" over police units in city and municipal mayors; in the Civil Service Commission, participation in appointments to the positions of Senior Superintendent to Deputy Director-General as well as the administration of qualifying entrance examinations; disciplinary powers over PNP members in the "People's Law Enforcement Boards" and in city and municipal mayors. 25 Once more, we find no real controversy upon the foregoing assertions. It is true that when the Constitutional Commissioners of 1986 provided that the authority of local executives over the police units in their jurisdiction shall be provided by law, they intended that the day-to-day functions of police work like crime, investigation, crime prevention activities, traffic control, etc., would be under the operational control of the local executives as it would not be advisable to give full control of the police to the local executives.26 They reasoned that in the past, this gave rise to warlordism, bossism, and sanctuaries for vices and abuses. 27 It would appear then that by vesting in the local executives the power to choose the officers in question, the Act went beyond the bounds of the Constitution's intent. Not so. We find light in the principle of constitutional construction that every presumption should be indulged in favor of constitutionality and the court in considering the validity of the statute in question should give it such reasonable construction as can be reached to bring it within the fundamental law. 28 Under the questioned provisions, which read as follows: D. PARTICIPATION OF LOCAL EXECUTIVES IN THE ADMINISTRATION OF THE PNP. Sec. 51. Powers of Local Government Officials over the PNP Units or Forces.

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Governors and mayors shall be deputized as representatives of the Commission in their respective territorial jurisdictions. As such, the local executives shall discharge the following functions: a.) Provincial Governor (1) . . . The provincial governor shall choose the provincial director from a list of three (3) eligibles recommended by the PNP Regional Director. 4) . . . City and municipal mayors shall have the following authority over the PNP units in their respective jurisdictions: i.) Authority to choose the chief of police from a list of five (5) eligibles recommended by the Provincial Police Director. . . . (Emphasis ours) full control remains with the National Police Commission. We agree, and so hold, with the view of the Solicitor General that "there is no usurpation of the power of control of the NAPOLCOM under Section 51 because under this very same provision, it is clear that the local executives are only acting as representatives of the NAPOLCOM. . . . As such deputies, they are answerable to the NAPOLCOM for their actions in the exercise of their functions under that section. Thus, unless countermanded by the NAPOLCOM, their acts are valid and binding as acts of the NAPOLCOM." 29 It is significant to note that the local officials, as NAPOLCOM
representatives, will choose the officers concerned from a list of eligibles (those who meet the general qualifications for appointment to the PNP) 30 to be recommended by PNP officials.

The same holding is true with respect to the contention on the operational supervision and control exercised by the local officials. Those officials would simply be acting as representatives of the Commission. As regards the assertion involving the Civil Service Commission, suffice it to say that the questioned provisions, which read: Sec. 31. Appointment of PNP Officers and Members. The Appointment of the officers and members of the PNP shall be effected in the following manner: a.) Police Officer I to Senior Police Officer IV. Appointed by the PNP regional director for regional personnel or by the Chief of the PNP for national headquarters personnel and attested by the Civil Service Commission; b.) Inspector to Superintendent. Appointed by the Chief of the PNP, as recommended by their immediate superiors, and attested by the Civil Service Commission; c.) Senior Superintendent to Deputy Director-General. Appointed by the President upon recommendation of the Chief of the PNP, with proper endorsement by the Chairman of the Civil Service Commission . . . Sec. 32. Examinations for Policemen. The Civil Service Commission shall administer the qualifying entrance examinations for policemen on the basis of the standards set by the NAPOLCOM. precisely underscore the civilian character of the national police force, and will undoubtedly professionalize the same.

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The grant of disciplinary powers over PNP members to the "People's Law Enforcement Boards" (or the PLEB) and city and municipal mayors is also not in derogation of the commission's power of control over the PNP. Pursuant to the Act, the Commission exercises appellate jurisdiction, thru the regional appellate boards, over decisions of both the PLEB and the said mayors. This is so under Section 20(c). Furthermore, it is the Commission which shall issue the implementing guidelines and procedures to be adopted by the PLEB for in the conduct of its hearings, and it may assign NAPOLCOM hearing officers to act as legal consultants of the PLEBs (Section 43-d4, d5). As a disciplinary board primarily created to hear and decide citizen's complaints against erring officers and members of the PNP, the establishment of PLEBs in every city, and municipality would all the more help professionalize the police force. Petitioner would likewise have this Court imagine that Section 12 of the questioned Act, the pertinent portion of which reads: Sec. 12. Relationship of the Department with the Department of National Defense. During a period of twenty- four (24) months from the effectivity of this Act, the Armed Forces of the Philippines (AFP) shall continue its present role of preserving the internal and external security of the State: Provided, that said period may be extended by the President, if he finds it justifiable, for another period not exceeding twenty-four (24) months, after which, the Department shall automatically take over from the AFP the primary role of preserving internal security, leaving to the AFP its primary role of preserving external security. xxx xxx xxx constitutes an "encroachment upon, interference with, and an abdication by the President of, executive control and commander-in-chief powers." That We are not disposed to do for such is not the case at all here. A rejection thus of petitioner's submission anent Section 12 of the Act should be in order in the light of the following exchanges during the CONCOM deliberations of Wednesday, October 1, 1986: xxx xxx xxx MR. RODRIGO. Just a few questions. The President of the Philippines is the Commander-in-Chief of all the armed forces. MR. NATIVIDAD. Yes, Madam President. MR. RODRIGO. Since the national police is not integrated with the armed forces, I do not suppose they come under the Commander-in-Chief powers of the President of the Philippines. MR. NATIVIDAD. They do, Madam President. By law they are under the supervision and control of the President of the Philippines. MR. RODRIGO. Yes, but the President is not the Commander-in-Chief of the national police. MR. NATIVIDAD. He is the President.

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MR. RODRIGO. Yes, the Executive. But they do not come under that specific provision that the President is Commander-in-Chief of all the armed forces. MR. NATIVIDAD. No, not under the Commander-in-Chief provision. MR. RODRIGO. There are two other powers of the President. The President has control over departments, bureaus and offices, and supervision over local governments. Under which does the police fall, under control or under supervision? MR. NATIVIDAD. Both, Madam President. MR. RODRIGO. Control and Supervision. MR. NATIVIDAD. Yes, in fact, the National Police Commission is under the Office of the President. (CONCOM RECORDS, Vol. 5, p. 296) It thus becomes all too apparent then that the provision herein assailed precisely gives muscle to and enforces the proposition that the national police force does not fall under the Commander-inChief powers of the President. This is necessarily so since the police force, not being integrated with the military, is not a part of the Armed Forces of the Philippines. As a civilian agency of the government, it properly comes within, and is subject to, the exercise by the President of the power of executive control. Consequently, Section 12 does not constitute abdication of commander-in-chief powers. It simply provides for the transition period or process during which the national police would gradually assume the civilian function of safeguarding the internal security of the State. Under this instance, the President, to repeat, abdicates nothing of his war powers. It would bear to here state, in reiteration of the preponderant view, that the President, as Commander-in-Chief, is not a member of the Armed Forces. He remains a civilian whose duties under the Commander-in-Chief provision "represent only a part of the organic duties imposed upon him. All his other functions are clearly civil in nature." 31 His
position as a civilian Commander-in-Chief is consistent with, and a testament to, the constitutional principle that "civilian authority is, at all times, supreme over the military." (Article II, Section 3, 1987 Constitution)

Finally, petitioner submits that the creation of a "Special Oversight Committee" under Section 84 of the Act, especially the inclusion therein of some legislators as members (namely: the respective Chairmen of the Committee on Local Government and the Committee on National Defense and Security in the Senate, and the respective Chairmen of the Committee on Public Order and Security and the Committee on National Defense in the House of Representatives) is an "unconstitutional encroachment upon and a diminution of, the President's power of control over all executive departments, bureaus and offices." But there is not the least interference with the President's power of control under Section 84. The Special Oversight Committee is simply an ad hoc or transitory body, established and tasked solely with planning and overseeing the immediate "transfer, merger and/or absorption" into the Department of the Interior and Local Governments of the "involved agencies." This it will undertake in accordance with the phases of implementation already laid down in Section 85 of the Act and once this is carried out, its functions as well as the committee itself would cease altogether. 32 As
an ad hoc body, its creation and the functions it exercises, decidedly do not constitute an encroachment and in diminution of the power of control which properly belongs to the President. What is more, no executive department, bureau or office is placed under the control or authority, of the committee. 33

As a last word, it would not be amiss to point out here that under the Constitution, there are the socalledindependent Constitutional Commissions, namely: The Civil Service Commission, Commission on Audit, and the Commission on Elections. (Article IX-A, Section 1)

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As these Commissions perform vital governmental functions, they have to be protected from external influences and political pressures. Hence, they were made constitutional bodies, independent of and not under any department of the government. 34 Certainly, they are not under the control of the
President.

The Constitution also created an independent office called the "Commission on Human Rights." (Article XIII, Section 17[1]).However, this Commission is not on the same level as the Constitutional Commissions under Article IX, although it is independent like the latter Commissions. 35 It still had to
be constituted thru Executive Order No. 163 (dated May 5, 1987).

In contrast, Article XVI, Section 6 thereof, merely mandates the statutory creation of a national police commission that will administer and control the national police force to be established thereunder. This commission is, for obvious reasons, not in the same category as the independent Constitutional Commissions of Article IX and the other constitutionally created independent Office, namely, the Commission on Human Rights. By way of resume, the three Constitutional Commissions (Civil Service, Audit, Elections) and the additional commission created by the Constitution (Human Rights) are all independent of the Executive; but the National Police Commission is not. 36 In fact, it was stressed during the CONCOM
deliberations that this commission would be under the President, and hence may be controlled by the President, thru his or her alter ego, the Secretary of the Interior and Local Government.

WHEREFORE, having in view all of the foregoing holdings, the instant petition is hereby DISMISSED for lack of merit. SO ORDERED. Narvasa, C.J., Melencio-Herrera, Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin, Grio-Aquino, Medialdea, Regalado, Davide, Jr., Romero and Nocon, JJ., concur.

Footnotes 1 1987 Constitution. 2 Dec. 17, 1990 issue of Philippine Star. 3 Section 96, RA 6975. 4 Textbook on 1987 Constitution by Hector S. De Leon. 1989 Ed., p. 598, Footnote 21a. 5 PD No. 765 (Aug. 8, 1979). 6 The Constitution by De Leon, Supra, at p. 598. 7 First created by RA 4864 under the Office of the President. Under RA 6975, the National Police Commission created thereunder is a collegial body within the Department of the Interior and Local Government (DILG) with the DILG Secretary as Ex Officio Chairman of the Commission. 8 The Constitution by De Leon, Supra, at p. 599. See also Exec. Order No. 1012, as amended by EO Nos. 1027 and 1040, dated July 10, 1985.

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9 Id., at p. 599, citing "The Police Under the New Constitution", by Com. Teodulo C. Natividad, Manila Bulletin, October 1986. 10 Ibid., at p. 599-600. 11 CONCOM RECORDS, Vol. 5, p. 294. 12 Now Article XVI, Section 5, par. 4. 13 CONCOM Records, Supra, at p. 293. 14 Ibid at page 294. 15 Rollo, pp. 4 and 47. 16 Article VII, Section 17. 17 The Constitution, A Commentary. By Fr. Joaquin Bernas, S.J., Vol. II, 2nd Ed. (1988), p. 203-204. 18 97 Phil. 143 (1955). 19 The Constitution by Bernas, Supra, at p. 204. 20 Ibid. 21 Ibid. 22 Ibid., at p. 204, citing Villena vs. Secretary of Interior, 67 Phil. 451, 464 (1939). Also Lacson-Magallanes Co., Inc. vs. Pano, 21 SCRA 895 (1967). 23 De Leon vs. Carpio, 178 SCRA 457 (1989), thru Justice Isagani A. Cruz. 24 Declaration of Policy, Section 2, R.A. 6975. 25 Rollo, p. 4. 26 CONCOM Records, Vol. 5, p. 293. 27 Ibid., at p. 293. 28 In re Guarina, 24 Phil. 37. 29 Rollo, p. 26. 30 Sec. 30, RA 6975. General Qualifications for Appointment. No person shall be appointed as officer or member of the PNP unless he possesses the following minimum qualifications: (a) A citizen of the Philippines; (b) A person of good moral conduct; (c) Of sound, mind and body;

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(d) Must possess a formal baccalaureate degree for appointment as officer and must have finished at least second year college or the equivalent of seventy-two (72) collegiate units for appointment as non-officer or an equivalent training or experience for those already in the service upon the effectivity of this Act: (e) Must be eligible in accordance with the standards set by the Commission; (f) Must not have been dishonorably discharged from military employment or dismissed for cause from any civilian position in the Government; (g) Must not have been convicted by final judgment of an offense or crime involving moral turpitude; (h) Must be at least one meter and sixty-two centimeters (1.62 m.) in height for male and one meter and fifty-seven centimeters (1.57m.) for female; (i) Must weigh not more or less than five kilograms (5 kg.) of the standard weight corresponding to his or her height, age, and sex; and (j) For a new applicant, must not be less than twenty-one (21) nor more than thirty (30)years of age. 31 The Constitution, A Commentary, by Fr. Joaquin Bernas, S.J., Vol. II, p. 212. 32 COMMENT of the Solicitor General, Rollo, p. 32. 33 Ibid. 34 The Constitution by Bernas. Supra at p. 325. 35 Ibid., at p. 501; CONCOM RECORDS, Vol. IV, p. 30. 36 Under the Administrative Code of 1987 (specifically Section 70; Subtitle III of Title VIII), the old NAPOLCOM was placed under the Office of the President. Prior to that, it was, for a time, placed under the Ministry of Justice. EO 1040 (1985) then transferred it back to the Office of the President.

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Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. 112497 August 4, 1994 HON. FRANKLIN M. DRILON, in his capacity as SECRETARY OF JUSTICE, petitioner, vs. MAYOR ALFREDO S. LIM, VICE-MAYOR JOSE L. ATIENZA, CITY TREASURER ANTHONY ACEVEDO, SANGGUNIANG PANGLUNSOD AND THE CITY OF MANILA, respondents. The City Legal Officer for petitioner. Angara, Abello, Concepcion, Regala & Cruz for Caltex (Phils.). Joseph Lopez for Sangguniang Panglunsod of Manila. L.A. Maglaya for Petron Corporation.

CRUZ, J.: The principal issue in this case is the constitutionality of Section 187 of the Local Government Code reading as follows: Procedure For Approval And Effectivity Of Tax Ordinances And Revenue Measures; Mandatory Public Hearings. The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof; Provided, further, That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction. Pursuant thereto, the Secretary of Justice had, on appeal to him of four oil companies and a taxpayer, declared Ordinance No. 7794, otherwise known as the Manila Revenue Code, null and void for non-compliance with the prescribed procedure in the enactment of tax ordinances and for containing certain provisions contrary to law and public policy. 1 In a petition for certiorari filed by the City of Manila, the Regional Trial Court of Manila revoked the Secretary's resolution and sustained the ordinance, holding inter alia that the procedural requirements had been observed. More importantly, it declared Section 187 of the Local Government Code as unconstitutional because of its vesture in the Secretary of Justice of the power of control over local governments in violation of the policy of local autonomy mandated in the

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Constitution and of the specific provision therein conferring on the President of the Philippines only the power of supervision over local governments. 2 The present petition would have us reverse that decision. The Secretary argues that the annulled Section 187 is constitutional and that the procedural requirements for the enactment of tax ordinances as specified in the Local Government Code had indeed not been observed. Parenthetically, this petition was originally dismissed by the Court for non-compliance with Circular 1-88, the Solicitor General having failed to submit a certified true copy of the challenged decision. 3 However, on motion for reconsideration with the required certified true copy of the decision
attached, the petition was reinstated in view of the importance of the issues raised therein.

We stress at the outset that the lower court had jurisdiction to consider the constitutionality of Section 187, this authority being embraced in the general definition of the judicial power to determine what are the valid and binding laws by the criterion of their conformity to the fundamental law. Specifically, BP 129 vests in the regional trial courts jurisdiction over all civil cases in which the subject of the litigation is incapable of pecuniary estimation, 4even as the accused in a criminal action
has the right to question in his defense the constitutionality of a law he is charged with violating and of the proceedings taken against him, particularly as they contravene the Bill of Rights. Moreover, Article X, Section 5(2), of the Constitution vests in the Supreme Court appellate jurisdiction over final judgments and orders of lower courts in all cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question.

In the exercise of this jurisdiction, lower courts are advised to act with the utmost circumspection, bearing in mind the consequences of a declaration of unconstitutionality upon the stability of laws, no less than on the doctrine of separation of powers. As the questioned act is usually the handiwork of the legislative or the executive departments, or both, it will be prudent for such courts, if only out of a becoming modesty, to defer to the higher judgment of this Court in the consideration of its validity, which is better determined after a thorough deliberation by a collegiate body and with the concurrence of the majority of those who participated in its discussion. 5 It is also emphasized that every court, including this Court, is charged with the duty of a purposeful hesitation before declaring a law unconstitutional, on the theory that the measure was first carefully studied by the executive and the legislative departments and determined by them to be in accordance with the fundamental law before it was finally approved. To doubt is to sustain. The presumption of constitutionality can be overcome only by the clearest showing that there was indeed an infraction of the Constitution, and only when such a conclusion is reached by the required majority may the Court pronounce, in the discharge of the duty it cannot escape, that the challenged act must be struck down. In the case before us, Judge Rodolfo C. Palattao declared Section 187 of the Local Government Code unconstitutional insofar as it empowered the Secretary of Justice to review tax ordinances and, inferentially, to annul them. He cited the familiar distinction between control and supervision, the first being "the power of an officer to alter or modify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for the latter," while the second is "the power of a superior officer to see to it that lower officers perform their functions in accordance with law." 6 His conclusion was that the challenged section gave to the Secretary the power
of control and not of supervision only as vested by the Constitution in the President of the Philippines. This was, in his view, a violation not only of Article X, specifically Section 4 thereof, 7 and of Section 5 on the taxing powers of local governments, 8 and the policy of local autonomy in general.

We do not share that view. The lower court was rather hasty in invalidating the provision. Section 187 authorizes the Secretary of Justice to review only the constitutionality or legality of the tax ordinance and, if warranted, to revoke it on either or both of these grounds. When he alters or modifies or sets aside a tax ordinance, he is not also permitted to substitute his own judgment for the 145

judgment of the local government that enacted the measure. Secretary Drilon did set aside the Manila Revenue Code, but he did not replace it with his own version of what the Code should be. He did not pronounce the ordinance unwise or unreasonable as a basis for its annulment. He did not say that in his judgment it was a bad law. What he found only was that it was illegal. All he did in reviewing the said measure was determine if the petitioners were performing their functions in accordance with law, that is, with the prescribed procedure for the enactment of tax ordinances and the grant of powers to the city government under the Local Government Code. As we see it, that was an act not of control but of mere supervision. An officer in control lays down the rules in the doing of an act. If they are not followed, he may, in his discretion, order the act undone or re-done by his subordinate or he may even decide to do it himself. Supervision does not cover such authority. The supervisor or superintendent merely sees to it that the rules are followed, but he himself does not lay down such rules, nor does he have the discretion to modify or replace them. If the rules are not observed, he may order the work done or redone but only to conform to the prescribed rules. He may not prescribe his own manner for the doing of the act. He has no judgment on this matter except to see to it that the rules are followed. In the opinion of the Court, Secretary Drilon did precisely this, and no more nor less than this, and so performed an act not of control but of mere supervision. The case of Taule v. Santos 9 cited in the decision has no application here because the jurisdiction
claimed by the Secretary of Local Governments over election contests in the Katipunan ng Mga Barangay was held to belong to the Commission on Elections by constitutional provision. The conflict was over jurisdiction, not supervision or control.

Significantly, a rule similar to Section 187 appeared in the Local Autonomy Act, which provided in its Section 2 as follows: A tax ordinance shall go into effect on the fifteenth day after its passage, unless the ordinance shall provide otherwise: Provided, however, That the Secretary of Finance shall have authority to suspend the effectivity of any ordinance within one hundred and twenty days after receipt by him of a copy thereof, if, in his opinion, the tax or fee therein levied or imposed is unjust, excessive, oppressive, or confiscatory, or when it is contrary to declared national economy policy, and when the said Secretary exercises this authority the effectivity of such ordinance shall be suspended, either in part or as a whole, for a period of thirty days within which period the local legislative body may either modify the tax ordinance to meet the objections thereto, or file an appeal with a court of competent jurisdiction; otherwise, the tax ordinance or the part or parts thereof declared suspended, shall be considered as revoked. Thereafter, the local legislative body may not reimpose the same tax or fee until such time as the grounds for the suspension thereof shall have ceased to exist. That section allowed the Secretary of Finance to suspend the effectivity of a tax ordinance if, in his opinion, the tax or fee levied was unjust, excessive, oppressive or confiscatory. Determination of these flaws would involve the exercise of judgment or discretion and not merely an examination of whether or not the requirements or limitations of the law had been observed; hence, it would smack of control rather than mere supervision. That power was never questioned before this Court but, at any rate, the Secretary of Justice is not given the same latitude under Section 187. All he is permitted to do is ascertain the constitutionality or legality of the tax measure, without the right to declare that, in his opinion, it is unjust, excessive, oppressive or confiscatory. He has no discretion on this matter. In fact, Secretary Drilon set aside the Manila Revenue Code only on two grounds, to with, the inclusion therein of certain ultra vires provisions and non-compliance with the prescribed procedure in its enactment. These grounds affected the legality, not the wisdom or reasonableness, of the tax measure. The issue of non-compliance with the prescribed procedure in the enactment of the Manila Revenue Code is another matter.

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In his resolution, Secretary Drilon declared that there were no written notices of public hearings on the proposed Manila Revenue Code that were sent to interested parties as required by Art. 276(b) of the Implementing Rules of the Local Government Code nor were copies of the proposed ordinance published in three successive issues of a newspaper of general circulation pursuant to Art. 276(a). No minutes were submitted to show that the obligatory public hearings had been held. Neither were copies of the measure as approved posted in prominent places in the city in accordance with Sec. 511(a) of the Local Government Code. Finally, the Manila Revenue Code was not translated into Pilipino or Tagalog and disseminated among the people for their information and guidance, conformably to Sec. 59(b) of the Code. Judge Palattao found otherwise. He declared that all the procedural requirements had been observed in the enactment of the Manila Revenue Code and that the City of Manila had not been able to prove such compliance before the Secretary only because he had given it only five days within which to gather and present to him all the evidence (consisting of 25 exhibits) later submitted to the trial court. To get to the bottom of this question, the Court acceded to the motion of the respondents and called for the elevation to it of the said exhibits. We have carefully examined every one of these exhibits and agree with the trial court that the procedural requirements have indeed been observed. Notices of the public hearings were sent to interested parties as evidenced by Exhibits G-1 to 17. The minutes of the hearings are found in Exhibits M, M-1, M-2, and M-3. Exhibits B and C show that the proposed ordinances were published in the Balita and the Manila Standard on April 21 and 25, 1993, respectively, and the approved ordinance was published in the July 3, 4, 5, 1993 issues of the Manila Standard and in the July 6, 1993 issue of Balita, as shown by Exhibits Q, Q-1, Q-2, and Q-3. The only exceptions are the posting of the ordinance as approved but this omission does not affect its validity, considering that its publication in three successive issues of a newspaper of general circulation will satisfy due process. It has also not been shown that the text of the ordinance has been translated and disseminated, but this requirement applies to the approval of local development plans and public investment programs of the local government unit and not to tax ordinances. We make no ruling on the substantive provisions of the Manila Revenue Code as their validity has not been raised in issue in the present petition. WHEREFORE, the judgment is hereby rendered REVERSING the challenged decision of the Regional Trial Court insofar as it declared Section 187 of the Local Government Code unconstitutional but AFFIRMING its finding that the procedural requirements in the enactment of the Manila Revenue Code have been observed. No pronouncement as to costs. SO ORDERED. Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Quiason, Puno, Vitug, Kapunan and Mendoza, JJ., concur.

#Footnotes

1 Annex "E," rollo, pp. 37-55. 2 Annex "A," rollo, pp. 27-36. 3 Rollo, p. 256. 4 Sec. 19(1).

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5 Art. VIII, Sec. 4(2), Constitution. 6 Mondano v. Silvosa, 97 Phil. 143; Hebron v. Reyes, 104 Phil. 175; Tecson v. Salas, 34 SCRA 282. 7 Sec. 4. The President of the Philippines shall exercise general supervision over local governments. Provinces with respect to component cities and municipalities, and cities and municipalities with respect to component barangays shall ensure that the acts of their component units are within the scope of their prescribed powers and functions. 8 Sec. 5. Each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees, and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local governments. 9 200 SCRA 512.

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Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 139813 January 31, 2001

JOEL BITO-ONON, petitioner, vs. HON. JUDGE NELIA YAP FERNANDEZ, R.T.C. Br. 50 Puerto Princesa City and Palawan, and ELEGIO QUEJANO, JR., respondents. GONZAGA-REYES, J.: This Petition for Certiorari and Prohibition with prayer for the issuance of a temporary restraining order and writ of injunction seeks the reversal of the Order of the Regional Trial Court of Palawan and Puerto Princesa City,1Branch 50 in SPL. PROC. NO. 1056 entitled "Elegio F. Quejano, Jr., petitioner vs. Joel Bito-Onon, et. al., respondents" which denied herein petitioner's motion to dismiss the Petition for Review of the Resolution of the Board of Election Supervisors dated August 25, 1997 in case number L-10-97 filed by herein private respondent with said court.
1w phi 1.nt

It appears from the records that the petitioner, Joel Bito-Onon is the duly elected Barangay Chairman of Barangay Tacras, Narra, Palawan and is the Municipal Liga Chapter President for the Municipality of Narra, Palawan. The private respondent, Elegio Quejano, Jr. on the other hand, is the duly elected Barangay Chairman of Barangay Rizal, Magsaysay, Palawan and is the Municipal Liga Chapter President for the Municipality of Magsaysay, Palawan. Both Onon and Quejano were candidates for the position of Executive Vice-President in the August 23, 1997 election for the Liga ng Barangay Provincial Chapter of the province of Palawan. Onon was proclaimed the winning candidate in the said election prompting Quejano to file a post proclamation protest with the Board of Election Supervisors (BES), which was decided against him on August 25, 1997. Not satisfied with the decision of the BES, Quejano filed a Petition for Review of the decision of the BES with the Regional Trial Court of Palawan and Puerto Princesa City (RTC). On April 26, 1999, Onon filed a motion to dismiss the Petition for Review raising the issue of jurisdiction. Onon claimed that the RTC had no jurisdiction to review the decisions rendered by the BES in any post proclamation electoral protest in connection with the 1997 Liga ng mga Barangay election of officers and directors. In his motion to dismiss, Onon claimed that the Supplemental Guidelines for the 1997 Liga ng mga Barangay election issued by the DILG on August 11, 1997 in its Memorandum Circular No. 97-193, providing for review of decisions or resolutions of the BES by the regular courts of law is an ultra vires act and is void for being issued without or in excess of jurisdiction, as its issuance is not a mere act of supervision but rather an exercise of control over the Liga's internal organization. On June 22, 1999, the RTC denied Onon's motion to dismiss. In its order, the RTC ratiocinated that the Secretary of the Department of Interior and Local Government2 is vested with the power "to establish and prescribe rules, regulations and other issuances and implementing laws on the general supervision of local government units and the promotion of local autonomy and monitor compliance thereof by said units."3 The RTC added that DILG Circular No. 97-193 was issued by the DILG Secretary pursuant to his rule-making power as provided for under Section 7, Chapter II, Book IV of the Administrative Code.4 Consequently, the RTC ruled that it had jurisdiction over the petition for review filed by Quejada.5 Motion for reconsideration of the aforesaid Order was denied6 prompting the petitioner to file the present petition wherein the following issues are raised:

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A. WHETHER OR NOT THE QUESTIONED PROVISION IN MEMORANDUM CIRCULAR 97-193 WAS ISSUED BY THE DILG SECRETARY IN EXCESS OF HIS AUTHORITY. B. WHETHER OR NOT THE RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION IN ISSUING THE QUESTIONED ORDERS.7 In support of his petition, Onon argues that the "Supplemental Guidelines for the 1997 Synchronized Election of the Provincial and Metropolitan Chapters and for the Election of the National Chapter of the Liga ng mga Barangay" contradicts the "Implementing Rules and Guidelines for the 1997 General Elections of the Liga ng mga Barangay Officers and Directors" and is therefore invalid. Onon alleges that the Liga ng mga Barangay (LIGA) is not a local government unit considering that a local government unit must have its own source of income, a certain number of population, and a specific land area in order to exist or be created as such. Consequently, the DILG only has a limited supervisory authority over the LIGA. Moreover, Onon Argues that even if the DILG has supervisory authority over the LIGA, the act of the DILG in issuing Memorandum Circular No. 97-193 or the supplemental rules and guidelines for the conduct of the 1997 LIGA elections had the effect of modifying, altering and nullifying the rules prescribed by the National Liga Board. Onon posits that the issuance of said guidelines allowing an appeal of the decision of the BES to the regular courts rather than to the National Liga Board is no longer an exercise of supervision but an exercise of control.8 In his comment to the petition, private respondent Quejano argues that the Secretary of the DILG has competent authority to issue rules and regulations like Memorandum Circular No. 97-893. The Secretary of DILG's rule-making power is conferred by the Administrative Code. Considering that the Memorandum Circular was issued pursuant to his rule making power, Quejano insists that the lower court did not commit any reversible error when it denied Onon's motion to dismiss.9 On the other hand, the public respondent represented herein by the Solicitor General, filed a separate Manifestation and Motion in Lieu of Comment agreeing with the position of petitioner Onon. The Solicitor General affirms Onon's claim that in issuing the questioned Memorandum Circular, the Secretary of the DILG effectively amended the rules and guidelines promulgated by National Liga Board. This act was no longer a mere act of supervision but one of control. The Solicitor General submits that the RTC committed grave abuse of discretion in not dismissing the petition for review of the BES decision filed before it for failure of the petitioner to exhaust the rightful remedy which was to appeal to the National Liga Board.10 On October 27, 1999, this Court denied petitioner Onon's motion for the issuance of restraining order for lack of merit. After a careful review of the case, we sustain the position of the petitioner. The resolution of the present controversy requires an examination of the questioned provision of Memorandum Circular No. 97-193 and the Implementing Rules and Guidelines for the 1997 General Elections of the Liga ng mga Barangay Officers and Directors (Guidelines). The memorandum circular reads, insofar as pertinent, as follows: "Any post-proclamation protest must be filed with the BES within twenty-four (24) hours from the closing of the election. The BES shall decide the same within forty-eight (48) hours from receipt thereof. The decision of the BES shall be final and immediately executory without prejudice to the filing of a Petition for Review with the regular courts of law."11 (emphasis supplied) On the other hand, the GUIDELINES provides that the BES shall have the following among its duties:

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"To resolve any post-proclamation electoral protest which must be submitted in writing to this Board within twenty-four (24) hours from the close of election; provided said Board shall render its decision within forty-eight (48) hours from receipt hereof; and provided further that the decision must be submitted to the National Liga Headquarters within twenty-four (24) hours from the said decision. The decision of the Board of Election Supervisors in this respect shall be subject to review by the National Liga Board the decision of which shall be final and executory."12 (emphasis supplied) Memorandum Circular No. 97-193 was issued by the DILG Secretary pursuant to the power of general supervision of the President over all local government units which was delegated to the DILG Secretary by virtue of Administrative Order No. 267 dated February 18, 1992.13 The President's power of general supervision over local government units is conferred upon him by the Constitution.14 The power of supervision is defined as "the power of a superior officer to see to it that lower officers perform their functions in accordance with law."15 This is distinguished from the power of control or "the power of an officer to alter or modify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for the latter."16 On many occasions in the past, this court has had the opportunity to distinguish the power of supervision from the power of control. In Taule vs. Santos,17 we held that the Chief Executive wielded no more authority than that of checking whether a local government or the officers thereof perform their duties as provided by statutory enactments. He cannot interfere with local governments provided that the same or its officers act within the scope of their authority. Supervisory power, when contrasted with control, is the power of mere oversight over an inferior body; it does not include any restraining authority over such body.18 Officers in control lay down the rules in the doing of an act. If they are not followed, it is discretionary on his part to order the act undone or re-done by his subordinate or he may even decide to do it himself. Supervision does not cover such authority. Supervising officers merely sees to it that the rules are followed, but he himself does not lay down such rules, nor does he have the discretion to modify or replace them. If the rules are not observed, he may order the work done or re-done to conform to the prescribed rules. He cannot prescribe his own manner for the doing of the act.19 Does the President's power of general supervision extend to the liga ng mga barangay, which is not a local government unit?20 We rule in the affirmative. In Opinion No. 41, Series of 1995, the Department of Justice ruled that the liga ng mga barangay is a government organization, being an association, federation, league or union created by law or by authority of law, whose members are either appointed or elected government officials. The Local Government Code21 defines the liga ng mga barangay as an organization of all barangays for the primary purpose of determining the representation of the liga in the sanggunians, and for ventilating, articulating and crystallizing issues affecting barangay government administration and securing, through proper and legal means, solutions thereto.22 The liga shall have chapters at the municipal, city, provincial and metropolitan political subdivision levels. The municipal and city chapters of the liga shall be composed of the barangay representatives of the municipal and city barangays respectively. The duly elected presidents of the component municipal and city chapters shall constitute the provincial chapter or the metropolitan political subdivision chapter. The duly elected presidents of highly urbanized cities, provincial chapters, the Metropolitan Manila chapter and metropolitan political subdivision chapters shall constitute the National Liga ng mga Barangay.23 The liga at the municipal, city, provincial, metropolitan political subdivision, and national levels directly elect a president, a vice-president and five (5) members of the board of directors. The board shall appoint its secretary and treasurer and create such other positions as it may deem necessary for the management of the chapter.24 The ligas are primarily governed by the provisions of the Local Government Code.25 However, their respective constitution and by-laws shall govern all other matters affecting the internal organization of the liga not otherwise provided for in the Local Government Code provided that the constitution 151

and by-laws shall be suppletory to the provisions of Book III, Title VI of the Local Government Code and shall always conform to the provisions of the Constitution and existing laws.26 Having in mind the foregoing principles, we rule that Memorandum Circular No. 97-193 of the DILG insofar as it authorizes the filing a Petition for Review of the decision of the BES with the regular courts in a post proclamation electoral protest is of doubtful constitutionality. We agree with both the petitioner and the Solicitor General that in authorizing the filing of the petition for review of the decision of the BES with the regular courts, the DILG Secretary in effect amended and modified the GUIDELINES promulgated by the National Liga Board and adopted by the LIGA which provides that the decision of the BES shall be subject to review by the National Liga Board. The amendment of the GUIDELINES is more than an exercise of the power of supervision but is an exercise of the power of control, which the President does not have over the LIGA. Although the DILG is given the power to prescribe rules, regulations and other issuances, the Administrative Code limits its authority to merely "monitoring compliance" by local government units of such issuances.27 To monitor means "to watch, observe or check" and is compatible with the power of supervision of the DILG Secretary over local governments, which is limited to checking whether the local government unit concerned or the officers thereof perform their duties as per statutory enactments.28 Besides, any doubt as to the power of the DILG Secretary to interfere with local affairs should be resolved in favor of the greater autonomy of the local government.29 The public respondent judge therefore committed grave abuse of discretion amounting to lack or excess of jurisdiction in not dismissing the respondent's Petition for Review for failure to exhaust all administrative remedies and for lack of jurisdiction. WHEREFORE, the instant petition is hereby GRANTED. The Order of the Regional Trial Court dated June 22, 1999 is REVERSED and SET ASIDE. The Petition for Review filed by the private respondent docketed as SPL. PROC. NO. 1056 is DISMISSED. SO ORDERED. Melo, Vitug, Panganiban, and Sandoval-Gutierrez, JJ., concur.

Footnotes:
1 Penned by Judge Nelia Yap Fernandez.

2 Secretary Robert Z. Barbers.

3 RTC Order quoting Book IV, Title XII, Chapter 1, Sec. 3 (2) of the Administrative Code; Rollo, 84.

4 "(3) Promulgate rules and regulations necessary to carry out department objectives, policies, functions, plans, programs and projects;"

5 Rollo, 84-85.

6 Order dated July 26, 1999; Rollo, 89.

7 Memorandum for the Petitioner, 3; Rollo, 155.

8 Petition, 7-12; Rollo, 10-15.

9 Comment, 4-7; Rollo, 119-121.

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10 Manifestation and Motion in Lieu of Comment, 3-5; Rollo, 126-128.

11 Article II, par. 3.

12 1, Article VIII, par. 1.2.2.

13 See Whereas clauses, Memorandum Circular No. 97-193, August 11, 1997.

14 4, Article X.

15 Drilon vs. Lim 335 SCRA 135, 141 [1994].

16 Ibid, 140-141.

17 200 SCRA 512.

18 Ibid.

19 Drilon vs. Lim Supra, 142.

20 As a general rule, the creation of a local government unit or its conversion from one level to another level shall be based on verifiable indicators or viability and projected capacity to provide service. These are income, population and land area. See 7, Local Government Code, Republic Act No. 7160.

21 Republic Act No. 7160.

22 491, Local Government Code.

23 492, Local Government Code.

24 493, Local Government Code.

25 Book III, Title VI, Local Government Code.

26 507, Local Government Code.

27 Taule vs. Santos, 200 SCRA 512, 523 [1991].

28 Ibid.

29 Ibid.

The Lawphil Project - Arellano Law Foundation

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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 130775 September 27, 2004

THE NATIONAL LIGA NG MGA BARANGAY, represented by ALEX L. DAVID in his capacity as National President and for his own Person, President ALEX L. DAVID, petitioners, vs. HON. VICTORIA ISABEL A. PAREDES, Presiding Judge, Regional Trial Court, Branch 124, Caloocan City, and THE DEPARTMENT OF INTERIOR and LOCAL GOVERNMENT, represented the HON. SECRETARY ROBERT Z. BARBERS and MANUEL A. RAYOS, respondents. x--------------------------------------------------------------------------x G.R. No. 131939 September 27, 2004

LEANDRO YANGOT, BONIFACIO LACWASAN and BONY TACIO, petitioners, vs. DILG Secretary ROBERT Z. BARBERS and DILG Undersecretary MANUEL SANCHEZ, respondents. DECISION TINGA, J.: At bottom, the present petition inquires into the essential nature of the Liga ng mga Barangay and questions the extent of the power of Secretary of the Department of Interior and Local Government (DILG), as alter ego of the President. More immediately, the petition disputes the validity of the appointment of the DILG as the interim caretaker of the Liga ng mga Barangay. On 11 June 1997, private respondent Manuel A. Rayos [as petitioner therein], Punong Barangay of Barangay 52, District II, Zone 5, District II, Caloocan City, filed a petition for prohibition and mandamus, with prayer for a writ of preliminary injunction and/or temporary restraining order and damages before the Regional Trial Court (RTC) of Caloocan,1 alleging that respondent therein Alex L. David [now petitioner], Punong Barangay of Barangay 77, Zone 7, Caloocan City and then president of the Liga Chapter of Caloocan City and of the Liga ng mga BarangayNational Chapter, committed certain irregularities in the notice, venue and conduct of the proposed synchronizedLiga ng mga Barangay elections in 1997. According to the petition, the irregularities consisted of the following: (1) the publication of the notice in the Manila Bulletin but without notifying in writing the individual punong barangaysof Caloocan City;2 (2) the Notice of Meeting dated 08 June 1997 for the Liga Chapter of Caloocan City did not specify whether the meeting scheduled on 14 June 1997 was to be held at 8:00 a.m. or 8:00 p.m., and worse, the meeting was to be held in Lingayen, Pangasinan;3 and (3) the deadline for the filing of the Certificates of Candidacy having been set at 5:00 p.m. of the third "day prior to the above election day", or on 11 June 1997,4Rayos failed to meet said deadline since he was not able to obtain a certified true copy of the COMELEC Certificate of Canvas and Proclamation of Winning Candidate, which were needed to be a delegate, to vote and be voted for in the Liga election. On 13 June 1997, the Executive Judge issued a temporary restraining order (TRO), effective for seventy-two (72) hours, enjoining the holding of the general membership and election meeting of Liga Chapter of Caloocan City on 14 June 1975.5 However, the TRO was allegedly not properly served on herein petitioner David, and so the election for the officers of the Liga-Caloocan was held as scheduled.6 Petitioner David was proclaimed

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President of the Liga-Caloocan, and thereafter took his oath and assumed the position of exofficio member of the Sangguniang Panlungsod of Caloocan. On 17 July 1997, respondent Rayos filed a second petition, this time for quo warranto, mandamus and prohibition, with prayer for a writ of preliminary injunction and/or temporary restraining order and damages, against David, Nancy Quimpo, Presiding Officer of the Sangguniang Panlungsod of Caloocan City, and Secretary Barbers.7Rayos alleged that he was elected President of the Liga Caloocan Chapter in the elections held on 14 June 1997 by the members of the Caloocan Chapter pursuant to their Resolution/Petition No. 001-97.8 On 18 July 1997, the presiding judge granted the TRO, enjoining therein respondents David, Quimpo and Secretary Barbers from proceeding with the synchronized elections for the Provincial and Metropolitan Chapters of the Liga scheduled on 19 July 1997, but only for the purpose of maintaining the status quo and effective for a period not exceeding seventy-two (72) hours.9 Eventually, on 18 July 1997, at petitioner Davids instance, Special Civil Action (SCA) No. C -512 pending before Branch 126 was consolidated with SCA No. C-508 pending before Branch 124.10 Before the consolidation of the cases, on 25 July 1997, the DILG through respondent Secretary Barbers, filed in SCA No. C-512 an Urgent Motion,11 invoking the Presidents power of general supervision over all local government units and seeking the following reliefs: WHEREFORE, in the interest of the much-needed delivery of basic services to the people, the maintenance of public order and to further protect the interests of the forty-one thousand barangays all over the country, herein respondent respectfully prays: a) That the Department of the Interior and Local Government (DILG), pursuant to its delegated power of general supervision, be appointed as the Interim Caretaker to manage and administer the affairs of the Liga, until such time that the new set of National Liga Officers shall have been duly elected and assumed office; ...12 The prayer for injunctive reliefs was anchored on the following grounds: (1) the DILG Secretary exercises the power of general supervision over all government units by virtue of Administrative Order No. 267 dated 18 February 1992; (2) the Liga ng mga Barangay is a government organization; (3) undue interference by some local elective officials during the Municipal and City Chapter elections of the Liga ng mga Barangay; (4) improper issuance of confirmations of the elected Liga Chapter officers by petitioner David and the National Liga Board; (5) the need for the DILG to provide remedies measured in view of the confusion and chaos sweeping the Liga ng mga Barangay and the incapacity of the National Liga Board to address the problems properly. On 31 July 1997, petitioner David opposed the DILGs Urgent Motion, claiming that the DILG, being a respondent in the case, is not allowed to seek any sanction against a co-respondent like David, such as by filing a cross-claim, without first seeking leave of court.13 He also alleged that the DILGs request to be appointed interim caretaker constitutes undue interference in the internal affairs of the Liga, since the Liga is not subject to DILG control and supervision.14 Three (3) days after filing its Urgent Motion, on 28 July 1997, and before it was acted upon by the lower court, the DILG through then Undersecretary Manuel Sanchez, issued Memorandum Circular No. 97-176.15 It cited the reported violations of the Liga ng mga Barangay Constitution and By-Laws by David and "widespread chaos and confusion" among local government officials as to who were the qualified ex-officio Liga members in their respective sangunians.16 Pending the appointment of the DILG "as the Interim Caretaker of the Liga ng mga Barangay by the court and until the officers and board members of the national Liga Chapter have been elected and have assumed office," the Memorandum Circular directed all provincial governors, vice governors, city mayors, city vice mayors, members of the sangguniang panlalawigan and panlungsod, DILG regional directors and other concerned officers, as follows:

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1. All concerned are directed not to recognize and/or honor any Liga Presidents of the Provincial and Metropolitan Chapters as ex-officio members of the sanggunian concerned until further notice from the Courts or this Department; 2. All concerned are directed to disregard any pronouncement and/or directive issued by Mr. Alex David on any issue or matter relating to the affairs of the Liga ng mga Barangay until further notice from the Courts or this Department.17 On 04 August 1997, public respondent Judge Victoria Isabel A. Paredes issued the assailed order,18 the pertinent portions of which read, thus: The authority of the DILG to exercise general supervisory jurisdiction over local government units, including the different leagues created under the Local Government Code of 1991 (RA 7160) finds basis in Administrative Order No. 267 dated February 18, 1992. Specifically, Section 1 (a) of the said Administrative Order provides a broad premise for the supervisory power of the DILG. Administratively, the DILGs supervision has been tacitly recognized by the local barangays, municipalities, cities and provinces as shown by the evidences presented by respondent David himself (See Annexes "A" to "C"). The fact that the DILG has sought to refer the matters therein to the National Liga Board/Directorate does not ipso factomean that it has lost jurisdiction to act directly therein. Jurisdiction is conferred by law and cannot be claimed or lost through agreements or inaction by individuals. What respondent David may term as "interference" should caretakership be allowed, this Court would rather view as a necessary and desirable corollary to the exercise of supervision.19 Political motivations must not preclude, hamper, or obstruct the delivery of basic services and the perquisites of public service. In this case, the fact of confusion arising from conflicting appointments, non-action, and uninformed or wavering decisions of the incumbent National Liga Board/Directorate, having been satisfactorily established, cannot simply be brushed aside as being politically motivated or arising therefrom. It is incumbent, therefore, that the DILG exercise a more active role in the supervision of the affairs and operations of the National Liga Board/ Directorate at least until such time that the regular National Liga Board/Directorate may have been elected, qualified and assumed office.20 xxx WHEREFORE, premises considered, the Urgent Motion of the DILG for appointment as interim caretaker, until such time that the regularly elected National Liga Board of Directors shall have qualified and assumed office, to manage and administer the affairs of the National Liga Board, is hereby GRANTED.21 On 11 August 1997, petitioner David filed an urgent motion for the reconsideration of the assailed order and to declare respondent Secretary Barbers in contempt of Court.22 David claimed that the 04 August 1997 order divested the duly elected members of the Board of Directors of the Liga National Directorate of their positions without due process of law. He also wanted Secretary Barbers declared in contempt for having issued, through his Undersecretary, Memorandum Circular No. 97-176, even before respondent judge issued the questioned order, in mockery of the justice system. He implied that Secretary Barbers knew about respondent judges questioned order even before it was promulgated.23 On 11 August 1997, the DILG issued Memorandum Circular No. 97-193,24 providing supplemental guidelines for the 1997 synchronized elections of the provincial and metropolitan chapters and for the election of the national chapter of the Liga ng mga Barangay. The Memorandum Circular set the synchronized elections for the provincial and metropolitan chapters on 23 August 1997 and for the national chapter on 06 September 1997.

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On 12 August 1997, the DILG issued a Certificate of Appointment25 in favor of respondent Rayos as president of the Liga ng mga Barangay of Caloocan City. The appointment purportedly served as Rayoss "legal basis for ex-officio membership in the Sangguniang Panlungsod of Caloocan City" and "to qualify and participate in the forthcoming National Chapter Election of the Liga ng mga Barangay."26 On 23 August 1997, the DILG conducted the synchronized elections of Provincial and Metropolitan Liga Chapters. Thereafter, on 06 September 1997, the National Liga Chapter held its election of officers and board of directors, wherein James Marty L. Lim was elected as President of the National Liga.27 On 01 October 1997, public respondent judge denied Davids motion for reconsideration,28 ruling that there was no factual or legal basis to reconsider the appointment of the DILG as interim caretaker of the National Liga Board and to cite Secretary Barbers in contempt of court.29 On 10 October 1997, petitioners filed the instant Petition for Certiorari30 under Rule 65 of the Rules of Court, seeking to annul public respondent judges orders of 04 August 1997 and 01 October 1997. They dispute the latters opinion on the power of supervision of the President under the Constitution, through the DILG over local governments, which is the same as that of the DILGs as shown by its application of the power on the Liga ng mga Barangay. Specifically, they claim that the public respondent judges designation of the DILG as interim caretaker and the acts which the DILG sought to implement pursuant to its designation as such are beyond the scope of the Chief Executives power of supervision. To support the petition, petitioners argue that under Administrative Order No. 267, Series of 1992, the power of general supervision of the President over local government units does not apply to the Liga and its various chapters precisely because the Liga is not a local government unit, contrary to the stance of the respondents.31 Section 507 of the Local Government Code (Republic Act No. 7160)32 provides that the Liga shall be governed by its own Constitution and By-laws. Petitioners posit that the duly elected officers and directors of the National Ligaelected in 1994 had a vested right to their positions and could only be removed therefrom for cause by affirmative vote of two-thirds (2/3) of the entire membership pursuant to the Liga Constitution and By-Laws, and not by mere issuances of the DILG, even if bolstered by the dubious authorization of respondent judge.33 Thus, petitioners claim that the questioned order divested the then incumbent officers and directors of the Liga of their right to their respective offices without due process of law. Assuming the Liga could be subsumed under the term "local governments," over which the President, through the DILG Secretary, has the power of supervision,34 petitioners point out that still there is no legal or constitutional basis for the appointment of the DILG as interim caretaker.35 They stress that the actions contemplated by the DILG as interim caretaker go beyond supervision, as what it had sought and obtained was authority to alter, modify, nullify or set aside the actions of the Liga Board of Directors and even to substitute its judgment over that of the latter which are all clearly one of control.36 Petitioners question the appointment of Rayos as Liga-Caloocan President since at that time petitioner David was occupying that position which was still the subject of the quo warranto proceedings Rayos himself had instituted.37 Petitioners likewise claim that DILG Memorandum Circular No. 97-193, providing supplemental guidelines for the synchronized elections of the Liga, replaced the implementing rules adopted by the Liga pursuant to its Constitution and Bylaws.38 In fact, even before its appointment as interim caretaker, DILG specifically enjoined all heads of government units from recognizing petitioner David and/or honoring any of his pronouncements relating to the Liga.39 Petitioners rely on decision in Taule v. Santos,40 which, they claim, already passed upon the "extent of authority of the then Secretary of Local Government over the katipunan ng mga barangay or the

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barangay councils," as it specifically ruled that the "Secretary [of Local Government] has no authority to pass upon the validity or regularity of the election of officers of the katipunan."41 For his part, respondent Rayos avers that since the Secretary of the DILG supervises the acts of local officials by ensuring that they act within the scope of their prescribed powers and functions and since members of the various leagues, such as the Liga in this case, are themselves officials of local government units, it follows that the Ligamembers are subject to the power of supervision of the DILG.42 He adds that as the DILGs management and administration of the Liga affairs was limited only to the conduct of the elections, its actions were consistent with its rule-making power and power of supervision under existing laws.43 He asserts that in assailing the appointment of the DILG as interim caretaker, petitioners failed to cite any provision of positive law in support of their stance. Thus, he adds, "if a law is silent, obscure or insufficient, a judge may apply a rule he sees fit to resolve the issue, as long as the rule chosen is in harmony with general interest, order, morals and public policy,"44 in consonance with Article 9 of the Civil Code.45 On the other hand, it is quite significant that the Solicitor General has shared petitioners position. He states that the DILGs act of managing and administering the affairs of the National Liga Board are not merely acts of supervision but plain manifestations of control and direct takeover of the functions of the National Liga Board,46going beyond the limits of the power of general supervision of the President over local governments.47 Moreover, while the Liga may be deemed a government organization, it is not strictly a local government unit over which the DILG has supervisory power.48 Meanwhile, on 24 September 1998, James Marty L. Lim, the newly elected President of the National Liga, filed aMotion for Leave to File Comment in Intervention,49 with his Comment in Intervention attached,50 invoking the validity of the DILGs actions relative to the conduct of the Liga elections.51 In addition, he sought the dismissal of the instant petition on the following grounds: (1) the issue of validity or invalidity of the questioned order has been rendered moot and academic by the election of Liga officers; (2) the turn-over of the administration and management of Liga affairs to the Liga officers; and (3) the recognition and acceptance by the members of theLiga nationwide.52 In the interim, another petition, this time for Prohibition with Prayer for a Temporary Restraining Order,53 was filed by several presidents of Liga Chapters, praying that this Court declare the DILG Secretary and Undersecretary are not vested with any constitutional or legal power to exercise control or even supervision over the National Liga ng mga Barangay, nor to take over the functions of its officers or suspend its constitution; and declare void any and all acts committed by respondents therein in connection with their caretakership of the Liga.54 The petition was consolidated with G.R. No. 130775, but it was eventually dismissed because the petitioners failed to submit an affidavit of service and proof of service of the petition.55 Meanwhile, on 01 December 1998, petitioner David died and was substituted by his legal representatives.56 Petitioners have raised a number of issues.57 Integrated and simplified, these issues boil down to the question of whether or not respondent Judge acted with grave abuse of discretion in appointing the DILG as interim caretaker to administer and manage the affairs of the National Liga Board, per its order dated 04 August 1997.58 In turn, the resolution of the question of grave abuse of discretion entails a couple of definitive issues, namely: (1) whether theLiga ng mga Barangay is a government organization that is subject to the DILG Secretarys power of supervision over local governments as the alter ego of the President, and (2) whether the respondent Judges designation of the DILG as interim caretaker of the Liga has invested the DILG with control over the Liga and whether DILG Memorandum Circular No. 97-176, issued before it was designated as such interim caretaker, and DILG Memorandum Circular No. 97-193 and other acts which the DILG made in its capacity as interim caretaker of theLiga, involve supervision or control of the Liga.

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However, the Court should first address the question of mootness which intervenor Lim raised because, according to him, during the pendency of the present petition a general election was held; the new set of officers and directors had assumed their positions; and that supervening events the DILG had turned-over the management and administration of the Liga to new Liga officers and directors.59 Respondent Rayos has joined him in this regard.60 Forthwith, the Court declares that these supervening events have not rendered the instant petition moot, nor removed it from the jurisdiction of this Court. This case transcends the elections ordered and conducted by the DILG as interim caretaker of the Liga and theLiga officers and directors who were elected to replace petitioner David and the former officers. At the core of the petition is the validity of the DILGs "caretakership" of the Liga and the official acts of the DILG as such caretaker which exceeded the bounds of supervision and were exercise of control. At stake in this case is the realization of the constitutionally ensconced principle of local government autonomy;61 the statutory objective to enhance the capabilities of barangays and municipalities "by providing them opportunities to participate actively in the implementation of national programs and projects;"62 and the promotion of the avowed aim to ensure the independence and non-partisanship of the Liga ng mga Barangay. The mantle of local autonomy would be eviscerated and remain an empty buzzword if unconstitutional, illegal and unwarranted intrusions in the affairs of the local governments are tolerated and left unchecked. Indeed, it is the declared policy of the State that its territorial and political subdivisions should enjoy genuine meaningful local autonomy to enable them to attain their fullest development as self-reliant communities and make them more effective partners in the attainment of national goals.63 In the case of De Leon v. Esguerra,64 the Court ruled that even barangays are meant to possess genuine and meaningful local autonomy so that they may develop fully as self-reliant communities.65 Furthermore, well-entrenched is the rule that courts will decide a question otherwise moot and academic if it is "capable of repetition, yet evading review."66 For the question of whether the DILG may validly be appointed as interim caretaker, or assume a similar position and perform acts pursuant thereto, is likely to resurrect again, and yet the question may not be decided before the actual assumption, or the termination of said assumption even. So too, dismissing the petition on the ground of mootness could lead to the wrong impression that the challenged order and issuances are valid. Verily, that does not appear to be the correct conclusion to make since by applying opposite precedents to the issues the outcome points to invalidating the assailed order and memorandum circulars. The resolution of the issues of whether the Liga ng mga Barangay is subject to DILG supervision, and whether the questioned "caretakership" order of the respondent judge and the challenged issuances and acts of the DILG constitute control in derogation of the Constitution, necessitates a brief overview of the barangay, as the lowest LGU, and the Liga, as a vehicle of governance and coordination. As the basic political unit, the barangay serves as the primary planning and implementing unit of government policies, plans, programs, projects and activities in the community, and as a forum wherein the collective views of the people may be expressed, crystallized and considered, and where disputes may be amicably settled.67 On the other hand, the Liga ng mga Barangay68 is the organization of all barangays, the primary purpose of which is the determination of the representation of the Liga in the sanggunians, and the ventilation, articulation, and crystallization of issues affecting barangay government administration and securing solutions thereto, through proper and legal means.69 The Liga ng mga Barangay shall have chapters at the municipal, city and provincial and metropolitan political subdivision levels.70 The municipal and city chapters of the Liga are composed of thebarangay representatives from the municipality or city concerned. The presidents of the municipal and city chapters of the Liga form the provincial or metropolitan political subdivision chapters of the Liga. The presidents of the chapters of

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the Liga in highly urbanized cities, provinces and the Metro Manila area and other metropolitan political subdivisions constitute the National Liga ng mga Barangay.71 As conceptualized in the Local Government Code, the barangay is positioned to influence and direct the development of the entire country. This was heralded by the adoption of the bottom-to-top approach process of development which requires the development plans of the barangay to be considered in the development plans of the municipality, city or province,72 whose plans in turn are to be taken into account by the central government73in its plans for the development of the entire country.74 The Liga is the vehicle assigned to make this new development approach materialize and produce results. The presidents of the Liga at the municipal, city and provincial levels, automatically become exofficio members of the Sangguniang Bayan, Sangguniang Panlungsod and Sangguniang Panlalawigan, respectively. They shall serve as such only during their term of office as presidents of the Liga chapters, which in no case shall be beyond the term of office of the sanggunian concerned.75 The Liga ng mga Barangay has one principal aim, namely: to promote the development of barangays and secure the general welfare of their inhabitants.76 In line with this, the Liga is granted the following functions and duties: a) Give priority to programs designed for the total development of the barangays and in consonance with the policies, programs and projects of the national government; b) Assist in the education of barangay residents for peoples participation in local government administration in order to promote untied and concerted action to achieve country-wide development goals; c) Supplement the efforts of government in creating gainful employment within the barangay; d) Adopt measures to promote the welfare of barangay officials; e) Serve as forum of the barangays in order to forge linkages with government and nongovernmental organizations and thereby promote the social, economic and political wellbeing of the barangays; and f) Exercise such other powers and perform such other duties and functions which will bring about stronger ties between barangays and promote the welfare of the barangay inhabitants.77 The Ligas are primarily governed by the provisions of the Local Government Code. However, they are empowered to make their own constitution and by-laws to govern their operations. Sec. 507 of the Code provides: Sec. 507. Constitution and By-Laws of the Liga and the Leagues. - All other matters not herein otherwise provided for affecting the internal organization of the leagues of local government units shall be governed by their respective constitution and by-laws which are hereby made suppletory to the provision of this Chapter: Provided, That said Constitution and By-laws shall always conform to the provision of the Constitution and existing laws. Pursuant to the Local Government Code, the Liga ng mga Barangay adopted its own Constitution and By-Laws. It provides that the corporate powers of the Liga, expressed or implied, shall be vested in the board of directors of each level of the Liga which shall:

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a) Have jurisdiction over all officers, directors and committees of the said Liga; including the power of appointment, assignment and delegation; b) Have general management of the business, property, and funds of said Liga; c) Prepare and approve a budget showing anticipated receipts and expenditures for the year, including the plans or schemes for funding purposes; and d) Have the power to suspend or remove from office any officer or member of the said board on grounds cited and in the manner provided in hereinunder provisions.78 The National Liga Board of Directors promulgated the rules for the conduct of its Ligas general elections.79 And, as early as 28 April 1997, the Liga National Chapter had already scheduled its general elections on 14 June 1997.80 The controlling provision on the issues at hand is Section 4, Article X of the Constitution, which reads in part: Sec. The President of the Philippines shall exercise general supervision over local governments. The 1935, 1973 and 1987 Constitutions uniformly differentiate the Presidents power of supervision over local governments and his power of control of the executive departments bureaus and offices.81 Similar to the counterpart provisions in the earlier Constitutions, the provision in the 1987 Constitution provision has been interpreted to exclude the power of control.82 In the early case of Mondano v. Silvosa, et al.,83 this Court defined supervision as "overseeing, or the power or authority of an officer to see that subordinate officers perform their duties, and to take such action as prescribed by law to compel his subordinates to perform their duties. Control, on the other hand, means the power of an officer to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for that of the latter.84 In Taule v. Santos,85 the Court held that the Constitution permits the President to wield no more authority than that of checking whether a local government or its officers perform their duties as provided by statutory enactments.86 Supervisory power, when contrasted with control, is the power of mere oversight over an inferior body; it does not include any restraining authority over such body.87 The case of Drilon v. Lim88 clearly defined the extent of supervisory power, thus: The supervisor or superintendent merely sees to it that the rules are followed, but he himself does not lay down such rules, nor does he have the discretion to modify or replace them. If the rules are not observed, he may order the work done or re-done but only to conform to the prescribed rules. He may not prescribe his own manner for the doing of the act. He has no judgment on this matter except to see that the rules are followed89 In Section 4, Article X of the Constitution applicable to the Liga ng mga Barangay? Otherwise put, is the Ligalegally susceptible to DILG suspension? This question was resolved in Bito-Onon v. Fernandez,90 where the Court ruled that the Presidents power of the general supervision, as exercised therein by the DILG Secretary as his alter ego, extends to the Liga ng mga Barangay. Does the Presidents power of general supervision extend to the liga ng mga barangay, which is not a local government unit?

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We rule in the affirmative. In Opinion No. 41, Series of 1995, the Department of Justice ruled that the liga ng mga barangay is a government organization, being an association, federation, league or union created by law or by authority of law, whose members are either appointed or elected government officials. The Local Government Code defines the liga ng mga barangay as an organization of all barangays for the primary purpose of determining the representation of the liga in the sanggunians, and for ventilating, articulating and crystallizing issues affecting barangay government administration and securing, through proper and legal means, solutions thereto.91 The rationale for making the Liga subject to DILG supervision is quite evident, whether from the perspectives of logic or of practicality. The Liga is an aggroupment of barangays which are in turn represented therein by their respective punong barangays. The representatives of the Liga sit in an ex officio capacity at the municipal, city and provincial sanggunians. As such, they enjoy all the powers and discharge all the functions of regular municipal councilors, city councilors or provincial board members, as the case may be. Thus, the Liga is the vehicle through which the barangay participates in the enactment of ordinances and formulation of policies at all the legislative local levels higher than the sangguniang barangay, at the same time serving as the mechanism for the bottom-to-top approach of development. In the case at bar, even before the respondent Judge designated the DILG as interim caretaker of the Liga, on 28 July 1997, it issued Memorandum Circular No. 97-176, directing local government officials not to recognize David as the National Liga President and his pronouncements relating to the affairs of the Liga. Not only was the action premature, it even smacked of superciliousness and injudiciousness. The DILG is the topmost government agency which maintains coordination with, and exercises supervision over local government units and its multi-level leagues. As such, it should be forthright, circumspect and supportive in its dealings with the Ligas especially theLiga ng mga Barangay. The indispensable role played by the latter in the development of the barangays and the promotion of the welfare of the inhabitants thereof deserve no less than the full support and respect of the other agencies of government. As the Court held in the case of San Juan v. Civil Service Commission,92 our national officials should not only comply with the constitutional provisions on local autonomy but should also appreciate the spirit of liberty upon which these provisions are based.93 When the respondent judge eventually appointed the DILG as interim caretaker to manage and administer the affairs of the Liga, she effectively removed the management from the National Liga Board and vested control of the Liga on the DILG. Even a cursory glance at the DILGs prayer for appointment as interim caretaker of the Liga"to manage and administer the affairs of the Liga, until such time that the new set of National Liga officers shall have been duly elected and assumed office" reveals that what the DILG wanted was to take control over theLiga. Even if said "caretakership" was contemplated to last for a limited time, or only until a new set of officers assume office, the fact remains that it was a conferment of control in derogation of the Constitution. With his Department already appointed as interim caretaker of the Liga, Secretary Barbers nullified the results of the Liga elections and promulgated DILG Memorandum Circular No. 97-193 dated 11 August 1997, where he laid down the supplemental guidelines for the 1997 synchronized elections of the provincial and metropolitan chapters and for the election of the national chapter of the Liga ng mga Barangay; scheduled dates for the new provincial, metropolitan and national chapter elections; and appointed respondent Rayos as president of Liga-Caloocan Chapter. These acts of the DILG went beyond the sphere of general supervision and constituted direct interference with the political affairs, not only of the Liga, but more importantly, of the barangay as an institution. The election of Ligaofficers is part of the Ligas internal organization, for which the latter has already provided guidelines. In succession, the DILG assumed stewardship and jurisdiction over the Liga affairs, issued supplemental guidelines for the election, and nullified the effects of the Ligaconducted elections. Clearly, what the DILG wielded was the power of control which even the President does not have. Furthermore, the DILG assumed control when it appointed respondent Rayos as president of the Liga-Caloocan Chapter prior to the newly scheduled general Liga elections, although petitioner 162

Davids term had not yet expired. The DILG substituted its choice, who was Rayos, over the choice of majority of the punong barangay of Caloocan, who was the incumbent President, petitioner David. The latter was elected and had in fact been sitting as an ex-officio member of the sangguniang panlungsod in accordance with the Liga Constitution and By-Laws. Yet, the DILG extended the appointment to respondent Rayos although it was aware that the position was the subject of aquo warranto proceeding instituted by Rayos himself, thereby preempting the outcome of that case. It was bad enough that the DILG assumed the power of control, it was worse when it made use of the power with evident bias and partiality. As the entity exercising supervision over the Liga ng mga Barangay, the DILGs authority over the Liga is limited to seeing to it that the rules are followed, but it cannot lay down such rules itself, nor does it have the discretion to modify or replace them. In this particular case, the most that the DILG could do was review the acts of the incumbent officers of the Liga in the conduct of the elections to determine if they committed any violation of theLigas Constitution and By-laws and its implementing rules. If the National Liga Board and its officers had violatedLiga rules, the DILG should have ordered the Liga to conduct another election in accordance with the Ligas own rules, but not in obeisance to DILG-dictated guidelines. Neither had the DILG the authority to remove the incumbent officers of the Liga and replace them, even temporarily, with unelected Liga officers. Like the local government units, the Liga ng mga Barangay is not subject to control by the Chief Executive or hisalter ego. In the Bito-Onon94 case, this Court held that DILG Memorandum Circular No. 97-193, insofar as it authorized the filing of a petition for review of the decision of the Board of Election Supervisors (BES) with the regular courts in a post-proclamation electoral protest, involved the exercise of control as it in effect amended the guidelines already promulgated by the Liga. The decision reads in part: xxx. Officers in control, lay down the rules in the doing of an act. If they are not followed, it is discretionary on his part to order the act undone or redone by his subordinate or he may even decide to do it himself. Supervision does not cover such authority. Supervising officers merely see to it that the rules are followed, but he himself does not lay down such rules, nor does he have the discretion to modify or replace them. If the rules are not observed, he may order the work done or re-done to conform for to the prescribed rules. He cannot prescribe his own manner the doing of the act. xxx xxx. The amendment of the GUIDELINES is more than an exercise of the power of supervision but is an exercise of the power of control, which the President does not have over the LIGA. Although the DILG is given the power to prescribe rules, regulations and other issuances, the Administrative Code limits its authority to merely "monitoring compliance by local government units of such issuances. To monitor means to "watch, observe or check" and is compatible with the power of supervision of the DILG Secretary over local governments, which is limited to checking whether the local government unit concerned or the officers thereof perform their duties as per statutory enactments. Besides, any doubt as to the power of the DILG Secretary to interfere with local affairs should be resolved in favor of the greater autonomy of the local government.95 In Taule,96 the Court ruled that the Secretary of Local Government had no authority to pass upon the validity or regularity of the election of officers of katipunan ng mga barangay or barangay councils. In that case, a protest was lodged before the Secretary of Local Government regarding several irregularities in, and seeking the nullification of, the election of officers of the Federation of Associations of Barangay Councils (FABC) of Catanduanes. Then Local Government Secretary Luis Santos issued a resolution nullifying the election of officers and ordered a new one to be conducted. The Court ruled:

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Construing the constitutional limitation on the power of general supervision of the President over local governments, We hold that respondent Secretary has no authority to pass upon the validity or regularity of the officers of the katipunan. To allow respondent Secretary to do so will give him more power than the law or the Constitution grants. It will in effect give him control over local government officials for it will permit him to interfere in a purely democratic and non-partisan activity aimed at strengthening the barangay as the basic component of local governments so that the ultimate goal of fullest autonomy may be achieved. In fact, his order that the new elections to be conducted be presided by the Regional Director is a clear and direct interference by the Department with the political affairs of the barangays which is not permitted by the limitation of presidential power to general supervision over local governments.97 All given, the Court is convinced that the assailed order was issued with grave abuse of discretion while the acts of the respondent Secretary, including DILG Memorandum Circulars No. 97-176 and No. 97-193, are unconstitutional and ultra vires, as they all entailed the conferment or exercise of control a power which is denied by the Constitution even to the President. WHEREFORE, the Petition is GRANTED. The Order of the Regional Trial Court dated 04 August 1997 is SET ASIDE for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction. DILG Memorandum Circulars No. 97-176 and No. 97-193, are declared VOID for being unconstitutional and ultra vires. No pronouncements as to costs. SO ORDERED. Davide, Jr., Puno, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, AustriaMartinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna, and Chico-Nazario*, JJ., concur. Footnotes
*

On leave.

Rollo, p. 43. The petition was docketed as Special Civil Action No. C-508, raffled to Branch 124 of the RTC of Caloocan.
2

Id. at 44. Id. at 45. Ibid.

Id. at 50. Both the presiding judge of Branch 124, and pairing judge were on official leave, thus the Petition was referred to the Executive Judge, Bayani S. Rivera.
6

Id. at 58.

Id. at 52-61, the petition was docketed as Special Civil Action No. C-512 and raffled to Branch 126 of the RTC-Caloocan presided by Judge Luisito C. Sardillo.
8

Id. at 71-74. Id. at 106.

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10

Id. at 10. Id. at 116-119. Id. at 118. Id. at 123-124. Id. at 125. Id. at 140-140-A. Id. at 140-A. Ibid. Id. at 35-38. Id. at 37. Id. at 37-38. Id. at 38. Id. at 13; RTC Records, pp. 285-297. Id. at 294. Rollo, pp. 134-139. Id. at 133. Ibid. at 133. Id. at 346-347. Id. at 39-42. Id. at 40-A. Id. at 2-33. Id. at 17-18.

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Sec. 507. Constitution and By-Laws of the Liga and the Leagues. - All other matters not herein otherwise provided for affecting the internal organization of the leagues of local government units shall be governed by their respective constitution and by-laws which are hereby made suppletory to the provision of this Chapter: Provided, that said Constitution and By-laws shall always conform to the provisions of the Constitution and existing laws.
33

Rollo, p. 19.

34

Constitution, Art. X, Sec. 4. "The President of the Philippines shall exercise general supervision over local governments."

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35

Rollo, p. 20. Id. at 24. Ibid. at 24. Id. at 25. Ibid. G.R. No. 90336, 12 August 1991, 200 SCRA 512. Rollo, pp. 2-3, citing Taule v. Santos, at pp. 515, 522. Id. at 484-485. Id. at 487. Id. at 488.

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Art. 9. No judge or court shall decline to render judgment by reason of the silence, obscurity or insufficiency of the laws.
46

Rollo, p. 253. Id. at 254. Id. at 254. Id. at 336-340. Id. at 341-399. Id. at 359. Id. at 360.

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48

49

50

51

52

53

Entitled "Leandro Yangot, Bonifacio Lacwasan and Bony Tacio v. DILG Secretary Robert Barbers and DILG Undersecretary Manuel Sanchez" docketed as G.R. No. 131939.
54

G.R. No. 131939, Rollo, p. 9. Id. at 315, G.R. No. 130775. Id. at 410. Rollo, pp. 13-14; pp. 513-514. See Rollo, p. 433. Rollo, p. 360. Id. at 496-497.

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Const., Art. II, Sec. 25. Local Government Code, Sec.3 (9). Also Secs. 3(h)(k) & (l): (h) There shall be a continuing mechanism to enhance local autonomy not only by legislative enabling acts but also by administrative and organizational reforms; (k) The realization of local autonomy shall be facilitated through improved coordination of national government policies and programs and extension of adequate technical and material assistance to less developed and deserving local government units; (l) The participation of the private sector in local governance, particularly in the delivery of basic services, shall be encouraged to ensure the viability of local autonomy as an alternative strategy for sustainable development;

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Section 2, Local Government Code. No. L-78059, 31 August 1987, 153 SCRA 602. Supra note 59 at 606.

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65

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Alunan III v. Mirasol, G.R. No. 108399, 31 July 1997, 276 SCRA 501, 509-510, cited in SANLAKAS v. Executive Secretary, et al. G.R. Nos. 159085, 159103, 159185, 159196, 3 February 2004; Viola v. Alunan III, G.R. No. 115844, 15 August 1997, 277 SCRA 409,416.
67

Section 384, Local Government Code.

68

The forerunner of the liga ng mga barangay is the katipunan ng mga barangay under Section 108 of B.P. Blg. 337, which was known as the katipunan bayan in municipalities, katipunang panglungsod in cities,katipunang panlalawigan in provinces, and katipunang ng mga barangay on the national level. Each barangay therein was represented by the punong barangay. The katipunang bayan was also referred to as the Association of Barangay councils or ABC for short. Pursuant to the first paragraph of Section 146 of B.P. 337, the president of the said organization was among the members of the sangguniang bayan -- the legislative body of the municipality--subject, however, to appointment by the President of the Philippines, p. 739, 227 SCRA, as indicated Galarosa v. Valencia, G.R. No. 109455, November 11, 1993, 227 SCRA 728, 729.
69

Section 491, Local Government Code. Section 492, Local Government Code. Ibid. See Sec. 106, Local Government Code. See Sec. 114, Local Government Code. Pimentel, Jr., A.Q., The Barangay and the Local Government Code, p. vi. Section 494 of the Local Government Code.

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72

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75

76

Galarosa v. Valencia, supra note 68; citing Pimentel, Jr., A.Q., The Local Government Code of 1991, The Key to National Development, p. 552 (1993).

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Section 495 of the Local Government Code. Rollo, p. 387.

78

79

Implementing Rules and Guidelines for the 1997 General Elections of the Liga ng mga Barangay Officers and Directors, Rollo, pp. 101-194.
80

Rollo, p. 101.

81

See 1935 Const., Art. IV, Sec. 10; 1973 Const., Art. VIII, Sec. 10; 1987 Const., Art. VII, Sec. 17 and Art. X, Sec. 4.
82

Pimentel, Jr. v. Aguirre, G.R. No. 132988, 19 July 2000, 336 SCRA 201. No. L-7708, 97 Phil. 143, (1995). Id. at 148. G.R. No. 90336, 12 August 1991, 200 SCRA 512. Id. at 522. Id. at 522, citing Hebron v. Reyes, 104 Phil. 175 (1958). G.R. No. 112497, 4 August 1994, 235 SCRA 135, 137. Id. at 142. G.R. No. 139813, 31 January 2001; 350 SCRA 732. Id. at 738. G.R. No. 92299, 19 April 1991, 196 SCRA 69, 80. Ibid. Supra note 86. Id. at 740. Supra note 81. Taule v. Santos, p. 522.

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The Lawphil Project - Arellano Law Foundation

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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 152774 May 27, 2004

THE PROVINCE OF BATANGAS, represented by its Governor, HERMILANDO I. MANDANAS, petitioner, vs. HON. ALBERTO G. ROMULO, Executive Secretary and Chairman of the Oversight Committee on Devolution; HON. EMILIA BONCODIN, Secretary, Department of Budget and Management; HON. JOSE D. LINA, JR., Secretary, Department of Interior and Local Government, respondents. DECISION CALLEJO, SR., J.: The Province of Batangas, represented by its Governor, Hermilando I. Mandanas, filed the present petition for certiorari, prohibition and mandamus under Rule 65 of the Rules of Court, as amended, to declare as unconstitutional and void certain provisos contained in the General Appropriations Acts (GAA) of 1999, 2000 and 2001, insofar as they uniformly earmarked for each corresponding year the amount of five billion pesos (P5,000,000,000.00) of the Internal Revenue Allotment (IRA) for the Local Government Service Equalization Fund (LGSEF) and imposed conditions for the release thereof. Named as respondents are Executive Secretary Alberto G. Romulo, in his capacity as Chairman of the Oversight Committee on Devolution, Secretary Emilia Boncodin of the Department of Budget and Management (DBM) and Secretary Jose Lina of the Department of Interior and Local Government (DILG). Background On December 7, 1998, then President Joseph Ejercito Estrada issued Executive Order (E.O.) No. 48 entitled "ESTABLISHING A PROGRAM FOR DEVOLUTION ADJUSTMENT AND EQUALIZATION." The program was established to "facilitate the process of enhancing the capacities of local government units (LGUs) in the discharge of the functions and services devolved to them by the National Government Agencies concerned pursuant to the Local Government Code."1 The Oversight Committee (referred to as the Devolution Committee in E.O. No. 48) constituted under Section 533(b) of Republic Act No. 7160 (The Local Government Code of 1991) has been tasked to formulate and issue the appropriate rules and regulations necessary for its effective implementation.2Further, to address the funding shortfalls of functions and services devolved to the LGUs and other funding requirements of the program, the "Devolution Adjustment and Equalization Fund" was created.3 For 1998, the DBM was directed to set aside an amount to be determined by the Oversight Committee based on the devolution status appraisal surveys undertaken by the DILG.4 The initial fund was to be sourced from the available savings of the national government for CY 1998.5 For 1999 and the succeeding years, the corresponding amount required to sustain the program was to be incorporated in the annual GAA.6 The Oversight Committee has been authorized to issue the implementing rules and regulations governing the equitable allocation and distribution of said fund to the LGUs.7 The LGSEF in the GAA of 1999

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In Republic Act No. 8745, otherwise known as the GAA of 1999, the program was renamed as the LOCAL GOVERNMENT SERVICE EQUALIZATION FUND (LGSEF). Under said appropriations law, the amount ofP96,780,000,000 was allotted as the share of the LGUs in the internal revenue taxes. Item No. 1, Special Provisions, Title XXXVI A. Internal Revenue Allotment of Rep. Act No. 8745 contained the following proviso: ... PROVIDED, That the amount of FIVE BILLION PESOS (P5,000,000,000) shall be earmarked for the Local Government Service Equalization Fund for the funding requirements of projects and activities arising from the full and efficient implementation of devolved functions and services of local government units pursuant to R.A. No. 7160, otherwise known as the Local Government Code of 1991: PROVIDED, FURTHER, That such amount shall be released to the local government units subject to the implementing rules and regulations, including such mechanisms and guidelines for the equitable allocations and distribution of said fund among local government units subject to the guidelines that may be prescribed by the Oversight Committee on Devolution as constituted pursuant to Book IV, Title III, Section 533(b) of R.A. No. 7160. The Internal Revenue Allotment shall be released directly by the Department of Budget and Management to the Local Government Units concerned. On July 28, 1999, the Oversight Committee (with then Executive Secretary Ronaldo B. Zamora as Chairman) passed Resolution Nos. OCD-99-003, OCD-99-005 and OCD-99-006 entitled as follows: OCD-99-005 RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR THE PhP5 BILLION CY 1999 LOCAL GOVERNMENT SERVICE EQUALIZATION FUND (LGSEF) AND REQUESTING HIS EXCELLENCY PRESIDENT JOSEPH EJERCITO ESTRADA TO APPROVE SAID ALLOCATION SCHEME. OCD-99-006 RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR THE PhP4.0 BILLION OF THE 1999 LOCAL GOVERNMENT SERVICE EQUALIZATION FUND AND ITS CONCOMITANT GENERAL FRAMEWORK, IMPLEMENTING GUIDELINES AND MECHANICS FOR ITS IMPLEMENTATION AND RELEASE, AS PROMULGATED BY THE OVERSIGHT COMMITTEE ON DEVOLUTION. OCD-99-003 RESOLUTION REQUESTING HIS EXCELLENCY PRESIDENT JOSEPH EJERCITO ESTRADA TO APPROVE THE REQUEST OF THE OVERSIGHT COMMITTEE ON DEVOLUTION TO SET ASIDE TWENTY PERCENT (20%) OF THE LOCAL GOVERNMENT SERVICE EQUALIZATION FUND (LGSEF) FOR LOCAL AFFIRMATIVE ACTION PROJECTS AND OTHER PRIORITY INITIATIVES FOR LGUs INSTITUTIONAL AND CAPABILITY BUILDING IN ACCORDANCE WITH THE IMPLEMENTING GUIDELINES AND MECHANICS AS PROMULGATED BY THE COMMITTEE. These OCD resolutions were approved by then President Estrada on October 6, 1999. Under the allocation scheme adopted pursuant to Resolution No. OCD-99-005, the five billion pesos LGSEF was to be allocated as follows: 1. The PhP4 Billion of the LGSEF shall be allocated in accordance with the allocation scheme and implementing guidelines and mechanics promulgated and adopted by the OCD. To wit:

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a. The first PhP2 Billion of the LGSEF shall be allocated in accordance with the codal formula sharing scheme as prescribed under the 1991 Local Government Code; b. The second PhP2 Billion of the LGSEF shall be allocated in accordance with a modified 1992 cost of devolution fund (CODEF) sharing scheme, as recommended by the respective leagues of provinces, cities and municipalities to the OCD. The modified CODEF sharing formula is as follows: Province : 40% Cities : 20% Municipalities : 40% This is applied to the P2 Billion after the approved amounts granted to individual provinces, cities and municipalities as assistance to cover decrease in 1999 IRA share due to reduction in land area have been taken out. 2. The remaining PhP1 Billion of the LGSEF shall be earmarked to support local affirmative action projects and other priority initiatives submitted by LGUs to the Oversight Committee on Devolution for approval in accordance with its prescribed guidelines as promulgated and adopted by the OCD. In Resolution No. OCD-99-003, the Oversight Committee set aside the one billion pesos or 20% of the LGSEF to support Local Affirmative Action Projects (LAAPs) of LGUs. This remaining amount was intended to "respond to the urgent need for additional funds assistance, otherwise not available within the parameters of other existing fund sources." For LGUs to be eligible for funding under the one-billion-peso portion of the LGSEF, the OCD promulgated the following: III. CRITERIA FOR ELIGIBILITY: 1. LGUs (province, city, municipality, or barangay), individually or by group or multi-LGUs or leagues of LGUs, especially those belonging to the 5th and 6th class, may access the fund to support any projects or activities that satisfy any of the aforecited purposes. A barangay may also access this fund directly or through their respective municipality or city. 2. The proposed project/activity should be need-based, a local priority, with high development impact and are congruent with the socio-cultural, economic and development agenda of the Estrada Administration, such as food security, poverty alleviation, electrification, and peace and order, among others. 3. Eligible for funding under this fund are projects arising from, but not limited to, the following areas of concern: a. delivery of local health and sanitation services, hospital services and other tertiary services; b. delivery of social welfare services; c. provision of socio-cultural services and facilities for youth and community development; d. provision of agricultural and on-site related research;

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e. improvement of community-based forestry projects and other local projects on environment and natural resources protection and conservation; f. improvement of tourism facilities and promotion of tourism; g. peace and order and public safety; h. construction, repair and maintenance of public works and infrastructure, including public buildings and facilities for public use, especially those destroyed or damaged by man-made or natural calamities and disaster as well as facilities for water supply, flood control and river dikes; i. provision of local electrification facilities; j. livelihood and food production services, facilities and equipment; k. other projects that may be authorized by the OCD consistent with the aforementioned objectives and guidelines; 4. Except on extremely meritorious cases, as may be determined by the Oversight Committee on Devolution, this portion of the LGSEF shall not be used in expenditures for personal costs or benefits under existing laws applicable to governments. Generally, this fund shall cover the following objects of expenditures for programs, projects and activities arising from the implementation of devolved and regular functions and services: a. acquisition/procurement of supplies and materials critical to the full and effective implementation of devolved programs, projects and activities; b. repair and/or improvement of facilities; c. repair and/or upgrading of equipment; d. acquisition of basic equipment; e. construction of additional or new facilities; f. counterpart contribution to joint arrangements or collective projects among groups of municipalities, cities and/or provinces related to devolution and delivery of basic services. 5. To be eligible for funding, an LGU or group of LGU shall submit to the Oversight Committee on Devolution through the Department of Interior and Local Governments, within the prescribed schedule and timeframe, a Letter Request for Funding Support from the Affirmative Action Program under the LGSEF, duly signed by the concerned LGU(s) and endorsed by cooperators and/or beneficiaries, as well as the duly signed Resolution of Endorsement by the respective Sanggunian(s) of the LGUs concerned. The LGU-proponent shall also be required to submit the Project Request (PR), using OCD Project Request Form No. 99-02, that details the following: (a) general description or brief of the project; (b) objectives and justifications for undertaking the project, which should highlight the benefits to the locality and the expected impact to the local program/project arising from the full and efficient implementation of social services and facilities, at the local levels;

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(c) target outputs or key result areas; (d) schedule of activities and details of requirements; (e) total cost requirement of the project; (f) proponent's counterpart funding share, if any, and identified source(s) of counterpart funds for the full implementation of the project; (g) requested amount of project cost to be covered by the LGSEF. Further, under the guidelines formulated by the Oversight Committee as contained in Attachment Resolution No. OCD-99-003, the LGUs were required to identify the projects eligible for funding under the one-billion-peso portion of the LGSEF and submit the project proposals thereof and other documentary requirements to the DILG for appraisal. The project proposals that passed the DILG's appraisal would then be submitted to the Oversight Committee for review, evaluation and approval. Upon its approval, the Oversight Committee would then serve notice to the DBM for the preparation of the Special Allotment Release Order (SARO) and Notice of Cash Allocation (NCA) to effect the release of funds to the said LGUs. The LGSEF in the GAA of 2000 Under Rep. Act No. 8760, otherwise known as the GAA of 2000, the amount of P111,778,000,000 was allotted as the share of the LGUs in the internal revenue taxes. As in the GAA of 1999, the GAA of 2000 contained a proviso earmarking five billion pesos of the IRA for the LGSEF. This proviso, found in Item No. 1, Special Provisions, Title XXXVII A. Internal Revenue Allotment, was similarly worded as that contained in the GAA of 1999. The Oversight Committee, in its Resolution No. OCD-2000-023 dated June 22, 2000, adopted the following allocation scheme governing the five billion pesos LGSEF for 2000: 1. The PhP3.5 Billion of the CY 2000 LGSEF shall be allocated to and shared by the four levels of LGUs, i.e., provinces, cities, municipalities, and barangays, using the following percentage-sharing formula agreed upon and jointly endorsed by the various Leagues of LGUs: For Provinces 26% or P 910,000,000 For Cities 23% or 805,000,000 For Municipalities 35% or 1,225,000,000 For Barangays 16% or 560,000,000 Provided that the respective Leagues representing the provinces, cities, municipalities and barangays shall draw up and adopt the horizontal distribution/sharing schemes among the member LGUs whereby the Leagues concerned may opt to adopt direct financial assistance or project-based arrangement, such that the LGSEF allocation for individual LGU shall be released directly to the LGU concerned; Provided further that the individual LGSEF shares to LGUs are used in accordance with the general purposes and guidelines promulgated by the OCD for the implementation of the LGSEF at the local levels pursuant to Res. No. OCD-99-006 dated October 7, 1999 and pursuant to the Leagues' guidelines and mechanism as approved by the OCD;

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Provided further that each of the Leagues shall submit to the OCD for its approval their respective allocation scheme, the list of LGUs with the corresponding LGSEF shares and the corresponding project categories if project-based; Provided further that upon approval by the OCD, the lists of LGUs shall be endorsed to the DBM as the basis for the preparation of the corresponding NCAs, SAROs, and related budget/release documents. 2. The remaining P1,500,000,000 of the CY 2000 LGSEF shall be earmarked to support the following initiatives and local affirmative action projects, to be endorsed to and approved by the Oversight Committee on Devolution in accordance with the OCD agreements, guidelines, procedures and documentary requirements: On July 5, 2000, then President Estrada issued a Memorandum authorizing then Executive Secretary Zamora and the DBM to implement and release the 2.5 billion pesos LGSEF for 2000 in accordance with Resolution No. OCD-2000-023. Thereafter, the Oversight Committee, now under the administration of President Gloria Macapagal-Arroyo, promulgated Resolution No. OCD-2001-29 entitled "ADOPTING RESOLUTION NO. OCD-2000-023 IN THE ALLOCATION, IMPLEMENTATION AND RELEASE OF THE REMAINING P2.5 BILLION LGSEF FOR CY 2000." Under this resolution, the amount of one billion pesos of the LGSEF was to be released in accordance with paragraph 1 of Resolution No. OCD-2000-23, to complete the 3.5 billion pesos allocated to the LGUs, while the amount of 1.5 billion pesos was allocated for the LAAP. However, out of the latter amount, P400,000,000 was to be allocated and released as follows: P50,000,000 as financial assistance to the LAAPs of LGUs; P275,360,227 as financial assistance to cover the decrease in the IRA of LGUs concerned due to reduction in land area; and P74,639,773 for the LGSEF Capability-Building Fund. The LGSEF in the GAA of 2001 In view of the failure of Congress to enact the general appropriations law for 2001, the GAA of 2000 was deemed re-enacted, together with the IRA of the LGUs therein and the proviso earmarking five billion pesos thereof for the LGSEF. On January 9, 2002, the Oversight Committee adopted Resolution No. OCD-2002-001 allocating the five billion pesos LGSEF for 2001 as follows: Modified Codal Formula Priority Projects P 3.000 billion 1.900 billion

Capability Building Fund .100 billion P 5.000 billion RESOLVED FURTHER, that the P3.0 B of the CY 2001 LGSEF which is to be allocated according to the modified codal formula shall be released to the four levels of LGUs, i.e., provinces, cities, municipalities and barangays, as follows: LGUs Provinces Cities Percentage 25 25 Amount P 0.750 billion 0.750

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Municipalities 35 Barangays 15 100

1.050 0.450 P 3.000 billion

RESOLVED FURTHER, that the P1.9 B earmarked for priority projects shall be distributed according to the following criteria: 1.0 For projects of the 4th, 5th and 6th class LGUs; or 2.0 Projects in consonance with the President's State of the Nation Address (SONA)/summit commitments. RESOLVED FURTHER, that the remaining P100 million LGSEF capability building fund shall be distributed in accordance with the recommendation of the Leagues of Provinces, Cities, Municipalities and Barangays, and approved by the OCD. Upon receipt of a copy of the above resolution, Gov. Mandanas wrote to the individual members of the Oversight Committee seeking the reconsideration of Resolution No. OCD-2002-001. He also wrote to Pres. Macapagal-Arroyo urging her to disapprove said resolution as it violates the Constitution and the Local Government Code of 1991. On January 25, 2002, Pres. Macapagal-Arroyo approved Resolution No. OCD-2002-001. The Petitioner's Case The petitioner now comes to this Court assailing as unconstitutional and void the provisos in the GAAs of 1999, 2000 and 2001, relating to the LGSEF. Similarly assailed are the Oversight Committee's Resolutions Nos. OCD-99-003, OCD-99-005, OCD-99-006, OCD-2000-023, OCD2001-029 and OCD-2002-001 issued pursuant thereto. The petitioner submits that the assailed provisos in the GAAs and the OCD resolutions, insofar as they earmarked the amount of five billion pesos of the IRA of the LGUs for 1999, 2000 and 2001 for the LGSEF and imposed conditions for the release thereof, violate the Constitution and the Local Government Code of 1991. Section 6, Article X of the Constitution is invoked as it mandates that the "just share" of the LGUs shall be automatically released to them. Sections 18 and 286 of the Local Government Code of 1991, which enjoin that the "just share" of the LGUs shall be "automatically and directly" released to them "without need of further action" are, likewise, cited. The petitioner posits that to subject the distribution and release of the five-billion-peso portion of the IRA, classified as the LGSEF, to compliance by the LGUs with the implementing rules and regulations, including the mechanisms and guidelines prescribed by the Oversight Committee, contravenes the explicit directive of the Constitution that the LGUs' share in the national taxes "shall be automatically released to them." The petitioner maintains that the use of the word "shall" must be given a compulsory meaning. To further buttress this argument, the petitioner contends that to vest the Oversight Committee with the authority to determine the distribution and release of the LGSEF, which is a part of the IRA of the LGUs, is an anathema to the principle of local autonomy as embodied in the Constitution and the Local Government Code of 1991. The petitioner cites as an example the experience in 2001 when the release of the LGSEF was long delayed because the Oversight Committee was not able to convene that year and no guidelines were issued therefor. Further, the possible disapproval by the Oversight Committee of the project proposals of the LGUs would result in the diminution of the latter's share in the IRA.

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Another infringement alleged to be occasioned by the assailed OCD resolutions is the improper amendment to Section 285 of the Local Government Code of 1991 on the percentage sharing of the IRA among the LGUs. Said provision allocates the IRA as follows: Provinces 23%; Cities 23%; Municipalities 34%; and Barangays 20%.8 This formula has been improperly amended or modified, with respect to the five-billion-peso portion of the IRA allotted for the LGSEF, by the assailed OCD resolutions as they invariably provided for a different sharing scheme. The modifications allegedly constitute an illegal amendment by the executive branch of a substantive law. Moreover, the petitioner mentions that in the Letter dated December 5, 2001 of respondent Executive Secretary Romulo addressed to respondent Secretary Boncodin, the former endorsed to the latter the release of funds to certain LGUs from the LGSEF in accordance with the handwritten instructions of President Arroyo. Thus, the LGUs are at a loss as to how a portion of the LGSEF is actually allocated. Further, there are still portions of the LGSEF that, to date, have not been received by the petitioner; hence, resulting in damage and injury to the petitioner. The petitioner prays that the Court declare as unconstitutional and void the assailed provisos relating to the LGSEF in the GAAs of 1999, 2000 and 2001 and the assailed OCD resolutions (Resolutions Nos. OCD-99-003, OCD-99-005, OCD-99-006, OCD-2000-023, OCD-2001-029 and OCD-2002-001) issued by the Oversight Committee pursuant thereto. The petitioner, likewise, prays that the Court direct the respondents to rectify the unlawful and illegal distribution and releases of the LGSEF for the aforementioned years and release the same in accordance with the sharing formula under Section 285 of the Local Government Code of 1991. Finally, the petitioner urges the Court to declare that the entire IRA should be released automatically without further action by the LGUs as required by the Constitution and the Local Government Code of 1991. The Respondents' Arguments The respondents, through the Office of the Solicitor General, urge the Court to dismiss the petition on procedural and substantive grounds. On the latter, the respondents contend that the assailed provisos in the GAAs of 1999, 2000 and 2001 and the assailed resolutions issued by the Oversight Committee are not constitutionally infirm. The respondents advance the view that Section 6, Article X of the Constitution does not specify that the "just share" of the LGUs shall be determined solely by the Local Government Code of 1991. Moreover, the phrase "as determined by law" in the same constitutional provision means that there exists no limitation on the power of Congress to determine what is the "just share" of the LGUs in the national taxes. In other words, Congress is the arbiter of what should be the "just share" of the LGUs in the national taxes. The respondents further theorize that Section 285 of the Local Government Code of 1991, which provides for the percentage sharing of the IRA among the LGUs, was not intended to be a fixed determination of their "just share" in the national taxes. Congress may enact other laws, including appropriations laws such as the GAAs of 1999, 2000 and 2001, providing for a different sharing formula. Section 285 of the Local Government Code of 1991 was merely intended to be the "default share" of the LGUs to do away with the need to determine annually by law their "just share." However, the LGUs have no vested right in a permanent or fixed percentage as Congress may increase or decrease the "just share" of the LGUs in accordance with what it believes is appropriate for their operation. There is nothing in the Constitution which prohibits Congress from making such determination through the appropriations laws. If the provisions of a particular statute, the GAA in this case, are within the constitutional power of the legislature to enact, they should be sustained whether the courts agree or not in the wisdom of their enactment. On procedural grounds, the respondents urge the Court to dismiss the petition outright as the same is defective. The petition allegedly raises factual issues which should be properly threshed out in the lower courts, not this Court, not being a trier of facts. Specifically, the petitioner's allegation that there are portions of the LGSEF that it has not, to date, received, thereby causing it (the petitioner) injury and damage, is subject to proof and must be substantiated in the proper venue, i.e., the lower courts.

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Further, according to the respondents, the petition has already been rendered moot and academic as it no longer presents a justiciable controversy. The IRAs for the years 1999, 2000 and 2001, have already been released and the government is now operating under the 2003 budget. In support of this, the respondents submitted certifications issued by officers of the DBM attesting to the release of the allocation or shares of the petitioner in the LGSEF for 1999, 2000 and 2001. There is, therefore, nothing more to prohibit. Finally, the petitioner allegedly has no legal standing to bring the suit because it has not suffered any injury. In fact, the petitioner's "just share" has even increased. Pursuant to Section 285 of the Local Government Code of 1991, the share of the provinces is 23%. OCD Nos. 99-005, 99-006 and 99003 gave the provinces 40% of P2 billion of the LGSEF. OCD Nos. 2000-023 and 2001-029 apportioned 26% of P3.5 billion to the provinces. On the other hand, OCD No. 2001-001 allocated 25% of P3 billion to the provinces. Thus, the petitioner has not suffered any injury in the implementation of the assailed provisos in the GAAs of 1999, 2000 and 2001 and the OCD resolutions. The Ruling of the Court Procedural Issues Before resolving the petition on its merits, the Court shall first rule on the following procedural issues raised by the respondents: (1) whether the petitioner has legal standing or locus standi to file the present suit; (2) whether the petition involves factual questions that are properly cognizable by the lower courts; and (3) whether the issue had been rendered moot and academic. The petitioner has locus standi to maintain the present suit The gist of the question of standing is whether a party has "alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions."9 Accordingly, it has been held that the interest of a party assailing the constitutionality of a statute must be direct and personal. Such party must be able to show, not only that the law or any government act is invalid, but also that he has sustained or is in imminent danger of sustaining some direct injury as a result of its enforcement, and not merely that he suffers thereby in some indefinite way. It must appear that the person complaining has been or is about to be denied some right or privilege to which he is lawfully entitled or that he is about to be subjected to some burdens or penalties by reason of the statute or act complained of.10 The Court holds that the petitioner possesses the requisite standing to maintain the present suit. The petitioner, a local government unit, seeks relief in order to protect or vindicate an interest of its own, and of the other LGUs. This interest pertains to the LGUs' share in the national taxes or the IRA. The petitioner's constitutional claim is, in substance, that the assailed provisos in the GAAs of 1999, 2000 and 2001, and the OCD resolutions contravene Section 6, Article X of the Constitution, mandating the "automatic release" to the LGUs of their share in the national taxes. Further, the injury that the petitioner claims to suffer is the diminution of its share in the IRA, as provided under Section 285 of the Local Government Code of 1991, occasioned by the implementation of the assailed measures. These allegations are sufficient to grant the petitioner standing to question the validity of the assailed provisos in the GAAs of 1999, 2000 and 2001, and the OCD resolutions as the petitioner clearly has "a plain, direct and adequate interest" in the manner and distribution of the IRA among the LGUs. The petition involves a significant legal issue The crux of the instant controversy is whether the assailed provisos contained in the GAAs of 1999, 2000 and 2001, and the OCD resolutions infringe the Constitution and the Local Government Code of 1991. This is undoubtedly a legal question. On the other hand, the following facts are not disputed:

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1. The earmarking of five billion pesos of the IRA for the LGSEF in the assailed provisos in the GAAs of 1999, 2000 and re-enacted budget for 2001; 2. The promulgation of the assailed OCD resolutions providing for the allocation schemes covering the said five billion pesos and the implementing rules and regulations therefor; and 3. The release of the LGSEF to the LGUs only upon their compliance with the implementing rules and regulations, including the guidelines and mechanisms, prescribed by the Oversight Committee. Considering that these facts, which are necessary to resolve the legal question now before this Court, are no longer in issue, the same need not be determined by a trial court.11 In any case, the rule on hierarchy of courts will not prevent this Court from assuming jurisdiction over the petition. The said rule may be relaxed when the redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify availment of a remedy within and calling for the exercise of this Court's primary jurisdiction.12 The crucial legal issue submitted for resolution of this Court entails the proper legal interpretation of constitutional and statutory provisions. Moreover, the "transcendental importance" of the case, as it necessarily involves the application of the constitutional principle on local autonomy, cannot be gainsaid. The nature of the present controversy, therefore, warrants the relaxation by this Court of procedural rules in order to resolve the case forthwith. The substantive issue needs to be resolved notwithstanding the supervening events Granting arguendo that, as contended by the respondents, the resolution of the case had already been overtaken by supervening events as the IRA, including the LGSEF, for 1999, 2000 and 2001, had already been released and the government is now operating under a new appropriations law, still, there is compelling reason for this Court to resolve the substantive issue raised by the instant petition. Supervening events, whether intended or accidental, cannot prevent the Court from rendering a decision if there is a grave violation of the Constitution.13Even in cases where supervening events had made the cases moot, the Court did not hesitate to resolve the legal or constitutional issues raised to formulate controlling principles to guide the bench, bar and public.14 Another reason justifying the resolution by this Court of the substantive issue now before it is the rule that courts will decide a question otherwise moot and academic if it is "capable of repetition, yet evading review."15 For the GAAs in the coming years may contain provisos similar to those now being sought to be invalidated, and yet, the question may not be decided before another GAA is enacted. It, thus, behooves this Court to make a categorical ruling on the substantive issue now. Substantive Issue As earlier intimated, the resolution of the substantive legal issue in this case calls for the application of a most important constitutional policy and principle, that of local autonomy.16 In Article II of the Constitution, the State has expressly adopted as a policy that: Section 25. The State shall ensure the autonomy of local governments. An entire article (Article X) of the Constitution has been devoted to guaranteeing and promoting the autonomy of LGUs. Section 2 thereof reiterates the State policy in this wise: Section 2. The territorial and political subdivisions shall enjoy local autonomy.

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Consistent with the principle of local autonomy, the Constitution confines the President's power over the LGUs to one of general supervision.17 This provision has been interpreted to exclude the power of control. The distinction between the two powers was enunciated in Drilon v. Lim:18 An officer in control lays down the rules in the doing of an act. If they are not followed, he may, in his discretion, order the act undone or re-done by his subordinate or he may even decide to do it himself. Supervision does not cover such authority. The supervisor or superintendent merely sees to it that the rules are followed, but he himself does not lay down such rules, nor does he have the discretion to modify or replace them. If the rules are not observed, he may order the work done or redone but only to conform to the prescribed rules. He may not prescribe his own manner for doing the act. He has no judgment on this matter except to see to it that the rules are followed.19 The Local Government Code of 199120 was enacted to flesh out the mandate of the Constitution.21 The State policy on local autonomy is amplified in Section 2 thereof: Sec. 2. Declaration of Policy. (a) It is hereby declared the policy of the State that the territorial and political subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable them to attain their fullest development as self-reliant communities and make them more effective partners in the attainment of national goals. Toward this end, the State shall provide for a more responsive and accountable local government structure instituted through a system of decentralization whereby local government units shall be given more powers, authority, responsibilities, and resources. The process of decentralization shall proceed from the National Government to the local government units. Guided by these precepts, the Court shall now determine whether the assailed provisos in the GAAs of 1999, 2000 and 2001, earmarking for each corresponding year the amount of five billion pesos of the IRA for the LGSEF and the OCD resolutions promulgated pursuant thereto, transgress the Constitution and the Local Government Code of 1991. The assailed provisos in the GAAs of 1999, 2000 and 2001 and the OCD resolutions violate the constitutional precept on local autonomy Section 6, Article X of the Constitution reads: Sec. 6. Local government units shall have a just share, as determined by law, in the national taxes which shall be automatically released to them. When parsed, it would be readily seen that this provision mandates that (1) the LGUs shall have a "just share" in the national taxes; (2) the "just share" shall be determined by law; and (3) the "just share" shall be automatically released to the LGUs. The Local Government Code of 1991, among its salient provisions, underscores the automatic release of the LGUs' "just share" in this wise: Sec. 18. Power to Generate and Apply Resources. Local government units shall have the power and authority to establish an organization that shall be responsible for the efficient and effective implementation of their development plans, program objectives and priorities; to create their own sources of revenue and to levy taxes, fees, and charges which shall accrue exclusively for their use and disposition and which shall be retained by them;to have a just share in national taxes which shall be automatically and directly released to them without need of further action; ... Sec. 286. Automatic Release of Shares. (a) The share of each local government unit shall be released, without need of any further action, directly to the provincial, city, municipal or barangay treasurer, as the case may be, on a quarterly basis within five (5) days after the end of each

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quarter, and which shall not be subject to any lien or holdback that may be imposed by the national government for whatever purpose. (b) Nothing in this Chapter shall be understood to diminish the share of local government units under existing laws. Webster's Third New International Dictionary defines "automatic" as "involuntary either wholly or to a major extent so that any activity of the will is largely negligible; of a reflex nature; without volition; mechanical; like or suggestive of an automaton." Further, the word "automatically" is defined as "in an automatic manner: without thought or conscious intention." Being "automatic," thus, connotes something mechanical, spontaneous and perfunctory. As such, the LGUs are not required to perform any act to receive the "just share" accruing to them from the national coffers. As emphasized by the Local Government Code of 1991, the "just share" of the LGUs shall be released to them "without need of further action." Construing Section 286 of the LGC, we held in Pimentel, Jr. v. Aguirre,22 viz: Section 4 of AO 372 cannot, however, be upheld. A basic feature of local fiscal autonomy is the automatic release of the shares of LGUs in the National internal revenue. This is mandated by no less than the Constitution. The Local Government Code specifies further that the release shall be made directly to the LGU concerned within five (5) days after every quarter of the year and "shall not be subject to any lien or holdback that may be imposed by the national government for whatever purpose." As a rule, the term "SHALL" is a word of command that must be given a compulsory meaning. The provision is, therefore, IMPERATIVE. Section 4 of AO 372, however, orders the withholding, effective January 1, 1998, of 10 percent of the LGUs' IRA "pending the assessment and evaluation by the Development Budget Coordinating Committee of the emerging fiscal situation" in the country. Such withholding clearly contravenes the Constitution and the law. Although temporary, it is equivalent to a holdback, which means "something held back or withheld, often temporarily." Hence, the "temporary" nature of the retention by the national government does not matter. Any retention is prohibited. In sum, while Section 1 of AO 372 may be upheld as an advisory effected in times of national crisis, Section 4 thereof has no color of validity at all. The latter provision effectively encroaches on the fiscal autonomy of local governments. Concededly, the President was well-intentioned in issuing his Order to withhold the LGUs' IRA, but the rule of law requires that even the best intentions must be carried out within the parameters of the Constitution and the law. Verily, laudable purposes must be carried out by legal methods.23 The "just share" of the LGUs is incorporated as the IRA in the appropriations law or GAA enacted by Congress annually. Under the assailed provisos in the GAAs of 1999, 2000 and 2001, a portion of the IRA in the amount of five billion pesos was earmarked for the LGSEF, and these provisos imposed the condition that "such amount shall be released to the local government units subject to the implementing rules and regulations, including such mechanisms and guidelines for the equitable allocations and distribution of said fund among local government units subject to the guidelines that may be prescribed by the Oversight Committee on Devolution." Pursuant thereto, the Oversight Committee, through the assailed OCD resolutions, apportioned the five billion pesos LGSEF such that: For 1999 P2 billion - allocated according to Sec. 285 LGC P2 billion - Modified Sharing Formula (Provinces 40%; Cities 20%; Municipalities 40%) P1 billion projects (LAAP) approved by OCD.24

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For 2000 P3.5 billion Modified Sharing Formula (Provinces 26%; Cities 23%; Municipalities 35%; Barangays 16%); P1.5 billion projects (LAAP) approved by the OCD.25 For 2001 P3 billion Modified Sharing Formula (Provinces 25%; Cities 25%; Municipalities 35%; Barangays 15%) P1.9 billion priority projects P100 million capability building fund.26 Significantly, the LGSEF could not be released to the LGUs without the Oversight Committee's prior approval. Further, with respect to the portion of the LGSEF allocated for various projects of the LGUs (P1 billion for 1999;P1.5 billion for 2000 and P2 billion for 2001), the Oversight Committee, through the assailed OCD resolutions, laid down guidelines and mechanisms that the LGUs had to comply with before they could avail of funds from this portion of the LGSEF. The guidelines required (a) the LGUs to identify the projects eligible for funding based on the criteria laid down by the Oversight Committee; (b) the LGUs to submit their project proposals to the DILG for appraisal; (c) the project proposals that passed the appraisal of the DILG to be submitted to the Oversight Committee for review, evaluation and approval. It was only upon approval thereof that the Oversight Committee would direct the DBM to release the funds for the projects. To the Court's mind, the entire process involving the distribution and release of the LGSEF is constitutionally impermissible. The LGSEF is part of the IRA or "just share" of the LGUs in the national taxes. To subject its distribution and release to the vagaries of the implementing rules and regulations, including the guidelines and mechanisms unilaterally prescribed by the Oversight Committee from time to time, as sanctioned by the assailed provisos in the GAAs of 1999, 2000 and 2001 and the OCD resolutions, makes the release not automatic, a flagrant violation of the constitutional and statutory mandate that the "just share" of the LGUs "shall be automatically released to them." The LGUs are, thus, placed at the mercy of the Oversight Committee. Where the law, the Constitution in this case, is clear and unambiguous, it must be taken to mean exactly what it says, and courts have no choice but to see to it that the mandate is obeyed.27 Moreover, as correctly posited by the petitioner, the use of the word "shall" connotes a mandatory order. Its use in a statute denotes an imperative obligation and is inconsistent with the idea of discretion.28 Indeed, the Oversight Committee exercising discretion, even control, over the distribution and release of a portion of the IRA, the LGSEF, is an anathema to and subversive of the principle of local autonomy as embodied in the Constitution. Moreover, it finds no statutory basis at all as the Oversight Committee was created merely to formulate the rules and regulations for the efficient and effective implementation of the Local Government Code of 1991 to ensure "compliance with the principles of local autonomy as defined under the Constitution."29 In fact, its creation was placed under the title of "Transitory Provisions," signifying its ad hoc character. According to Senator Aquilino Q. Pimentel, the principal author and sponsor of the bill that eventually became Rep. Act No. 7160, the Committee's work was supposed to be done a year from the approval of the Code, or on October 10, 1992.30 The Oversight Committee's authority is undoubtedly limited to the implementation of the Local Government Code of 1991, not to supplant or subvert the same. Neither can it exercise control over the IRA, or even a portion thereof, of the LGUs. 181

That the automatic release of the IRA was precisely intended to guarantee and promote local autonomy can be gleaned from the discussion below between Messrs. Jose N. Nolledo and Regalado M. Maambong, then members of the 1986 Constitutional Commission, to wit: MR. MAAMBONG. Unfortunately, under Section 198 of the Local Government Code, the existence of subprovinces is still acknowledged by the law, but the statement of the Gentleman on this point will have to be taken up probably by the Committee on Legislation. A second point, Mr. Presiding Officer, is that under Article 2, Section 10 of the 1973 Constitution, we have a provision which states: The State shall guarantee and promote the autonomy of local government units, especially the barrio, to insure their fullest development as self-reliant communities. This provision no longer appears in the present configuration; does this mean that the concept of giving local autonomy to local governments is no longer adopted as far as this Article is concerned? MR. NOLLEDO. No. In the report of the Committee on Preamble, National Territory, and Declaration of Principles, that concept is included and widened upon the initiative of Commissioner Bennagen. MR. MAAMBONG. Thank you for that. With regard to Section 6, sources of revenue, the creation of sources as provided by previous law was "subject to limitations as may be provided by law," but now, we are using the term "subject to such guidelines as may be fixed by law." In Section 7, mention is made about the "unique, distinct and exclusive charges and contributions," and in Section 8, we talk about "exclusivity of local taxes and the share in the national wealth." Incidentally, I was one of the authors of this provision, and I am very thankful. Does this indicate local autonomy, or was the wording of the law changed to give more autonomy to the local government units?31 MR. NOLLEDO. Yes. In effect, those words indicate also "decentralization" because local political units can collect taxes, fees and charges subject merely to guidelines, as recommended by the league of governors and city mayors, with whom I had a dialogue for almost two hours. They told me that limitations may be questionable in the sense that Congress may limit and in effect deny the right later on. MR. MAAMBONG. Also, this provision on "automatic release of national tax share" points to more local autonomy. Is this the intention? MR. NOLLEDO. Yes, the Commissioner is perfectly right.32 The concept of local autonomy was explained in Ganzon v. Court of Appeals33 in this wise: As the Constitution itself declares, local autonomy 'means a more responsive and accountable local government structure instituted through a system of decentralization.' The Constitution, as we observed, does nothing more than to break up the monopoly of the national government over the affairs of local governments and as put by political adherents, to "liberate the local governments from the imperialism of Manila." Autonomy, however, is not meant to end the relation of partnership and interdependence between the central administration and local government units, or otherwise, to usher in a regime of federalism. The Charter has not taken such a radical step. Local governments, under the Constitution, are subject to regulation, however limited, and for no other purpose than precisely, albeit paradoxically, to enhance self-government. As we observed in one case, decentralization means devolution of national administration but not power to the local levels. Thus:

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Now, autonomy is either decentralization of administration or decentralization of power. There is decentralization of administration when the central government delegates administrative powers to political subdivisions in order to broaden the base of government power and in the process to make local governments 'more responsive and accountable' and 'ensure their fullest development as selfreliant communities and make them more effective partners in the pursuit of national development and social progress.' At the same time, it relieves the central government of the burden of managing local affairs and enables it to concentrate on national concerns. The President exercises 'general supervision' over them, but only to 'ensure that local affairs are administered according to law.' He has no control over their acts in the sense that he can substitute their judgments with his own. Decentralization of power, on the other hand, involves an abdication of political power in the [sic] favor of local governments [sic] units declared to be autonomous. In that case, the autonomous government is free to chart its own destiny and shape its future with minimum intervention from central authorities. According to a constitutional author, decentralization of power amounts to 'selfimmolation,' since in that event, the autonomous government becomes accountable not to the central authorities but to its constituency.34 Local autonomy includes both administrative and fiscal autonomy. The fairly recent case of Pimentel v. Aguirre35is particularly instructive. The Court declared therein that local fiscal autonomy includes the power of the LGUs to, inter alia, allocate their resources in accordance with their own priorities: Under existing law, local government units, in addition to having administrative autonomy in the exercise of their functions, enjoy fiscal autonomy as well. Fiscal autonomy means that local governments have the power to create their own sources of revenue in addition to their equitable share in the national taxes released by the national government, as well as the power to allocate their resources in accordance with their own priorities. It extends to the preparation of their budgets, and local officials in turn have to work within the constraints thereof. They are not formulated at the national level and imposed on local governments, whether they are relevant to local needs and resources or not ...36 Further, a basic feature of local fiscal autonomy is the constitutionally mandated automatic release of the shares of LGUs in the national internal revenue.37 Following this ratiocination, the Court in Pimentel struck down as unconstitutional Section 4 of Administrative Order (A.O.) No. 372 which ordered the withholding, effective January 1, 1998, of ten percent of the LGUs' IRA "pending the assessment and evaluation by the Development Budget Coordinating Committee of the emerging fiscal situation." In like manner, the assailed provisos in the GAAs of 1999, 2000 and 2001, and the OCD resolutions constitute a "withholding" of a portion of the IRA. They put on hold the distribution and release of the five billion pesos LGSEF and subject the same to the implementing rules and regulations, including the guidelines and mechanisms prescribed by the Oversight Committee from time to time. Like Section 4 of A.O. 372, the assailed provisos in the GAAs of 1999, 2000 and 2001 and the OCD resolutions effectively encroach on the fiscal autonomy enjoyed by the LGUs and must be struck down. They cannot, therefore, be upheld. The assailed provisos in the GAAs of 1999, 2000 and 2001 and the OCD resolutions cannot amend Section 285 of the Local Government Code of 1991 Section 28438 of the Local Government Code provides that, beginning the third year of its effectivity, the LGUs' share in the national internal revenue taxes shall be 40%. This percentage is fixed and may not be reduced except "in the event the national government incurs an unmanageable public sector deficit" and only upon compliance with stringent requirements set forth in the same section:

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Sec. 284. ... Provided, That in the event that the national government incurs an unmanageable public sector deficit, the President of the Philippines is hereby authorized, upon recommendation of Secretary of Finance, Secretary of Interior and Local Government and Secretary of Budget and Management, and subject to consultation with the presiding officers of both Houses of Congress and the presidents of the liga, to make the necessary adjustments in the internal revenue allotment of local government units but in no case shall the allotment be less than thirty percent (30%) of the collection of the national internal revenue taxes of the third fiscal year preceding the current fiscal year; Provided, further That in the first year of the effectivity of this Code, the local government units shall, in addition to the thirty percent (30%) internal revenue allotment which shall include the cost of devolved functions for essential public services, be entitled to receive the amount equivalent to the cost of devolved personnel services. Thus, from the above provision, the only possible exception to the mandatory automatic release of the LGUs' IRA is if the national internal revenue collections for the current fiscal year is less than 40 percent of the collections of the preceding third fiscal year, in which case what should be automatically released shall be a proportionate amount of the collections for the current fiscal year. The adjustment may even be made on a quarterly basis depending on the actual collections of national internal revenue taxes for the quarter of the current fiscal year. In the instant case, however, there is no allegation that the national internal revenue tax collections for the fiscal years 1999, 2000 and 2001 have fallen compared to the preceding three fiscal years. Section 285 then specifies how the IRA shall be allocated among the LGUs: Sec. 285. Allocation to Local Government Units. The share of local government units in the internal revenue allotment shall be allocated in the following manner: (a) Provinces Twenty-three (23%) (b) Cities Twenty-three percent (23%); (c) Municipalities Thirty-four (34%); and (d) Barangays Twenty percent (20%). However, this percentage sharing is not followed with respect to the five billion pesos LGSEF as the assailed OCD resolutions, implementing the assailed provisos in the GAAs of 1999, 2000 and 2001, provided for a different sharing scheme. For example, for 1999, P2 billion of the LGSEF was allocated as follows: Provinces 40%; Cities 20%; Municipalities 40%.39 For 2000, P3.5 billion of the LGSEF was allocated in this manner: Provinces 26%; Cities 23%; Municipalities 35%; Barangays 26%.40 For 2001, P3 billion of the LGSEF was allocated, thus: Provinces 25%; Cities 25%; Municipalities 35%; Barangays 15%.41 The respondents argue that this modification is allowed since the Constitution does not specify that the "just share" of the LGUs shall only be determined by the Local Government Code of 1991. That it is within the power of Congress to enact other laws, including the GAAs, to increase or decrease the "just share" of the LGUs. This contention is untenable. The Local Government Code of 1991 is a substantive law. And while it is conceded that Congress may amend any of the provisions therein, it may not do so through appropriations laws or GAAs. Any amendment to the Local Government Code of 1991 should be done in a separate law, not in the appropriations law, because Congress cannot include in a general appropriation bill matters that should be more properly enacted in a separate legislation.42 A general appropriations bill is a special type of legislation, whose content is limited to specified sums of money dedicated to a specific purpose or a separate fiscal unit.43 Any provision therein

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which is intended to amend another law is considered an "inappropriate provision." The category of "inappropriate provisions" includes unconstitutional provisions and provisions which are intended to amend other laws, because clearly these kinds of laws have no place in an appropriations bill.44 Increasing or decreasing the IRA of the LGUs or modifying their percentage sharing therein, which are fixed in the Local Government Code of 1991, are matters of general and substantive law. To permit Congress to undertake these amendments through the GAAs, as the respondents contend, would be to give Congress the unbridled authority to unduly infringe the fiscal autonomy of the LGUs, and thus put the same in jeopardy every year. This, the Court cannot sanction. It is relevant to point out at this juncture that, unlike those of 1999, 2000 and 2001, the GAAs of 2002 and 2003 do not contain provisos similar to the herein assailed provisos. In other words, the GAAs of 2002 and 2003 have not earmarked any amount of the IRA for the LGSEF. Congress had perhaps seen fit to discontinue the practice as it recognizes its infirmity. Nonetheless, as earlier mentioned, this Court has deemed it necessary to make a definitive ruling on the matter in order to prevent its recurrence in future appropriations laws and that the principles enunciated herein would serve to guide the bench, bar and public. Conclusion In closing, it is well to note that the principle of local autonomy, while concededly expounded in greater detail in the present Constitution, dates back to the turn of the century when President William McKinley, in his Instructions to the Second Philippine Commission dated April 7, 1900, ordered the new Government "to devote their attention in the first instance to the establishment of municipal governments in which the natives of the Islands, both in the cities and in the rural communities, shall be afforded the opportunity to manage their own affairs to the fullest extent of which they are capable, and subject to the least degree of supervision and control in which a careful study of their capacities and observation of the workings of native control show to be consistent with the maintenance of law, order and loyalty."45 While the 1935 Constitution had no specific article on local autonomy, nonetheless, it limited the executive power over local governments to "general supervision ... as may be provided by law."46 Subsequently, the 1973 Constitution explicitly stated that "[t]he State shall guarantee and promote the autonomy of local government units, especially the barangay to ensure their fullest development as self-reliant communities."47 An entire article on Local Government was incorporated therein. The present Constitution, as earlier opined, has broadened the principle of local autonomy. The 14 sections in Article X thereof markedly increased the powers of the local governments in order to accomplish the goal of a more meaningful local autonomy. Indeed, the value of local governments as institutions of democracy is measured by the degree of autonomy that they enjoy.48 As eloquently put by M. De Tocqueville, a distinguished French political writer, "[l]ocal assemblies of citizens constitute the strength of free nations. Township meetings are to liberty what primary schools are to science; they bring it within the people's reach; they teach men how to use and enjoy it. A nation may establish a system of free governments but without the spirit of municipal institutions, it cannot have the spirit of liberty."49 Our national officials should not only comply with the constitutional provisions on local autonomy but should also appreciate the spirit and liberty upon which these provisions are based.50 WHEREFORE, the petition is GRANTED. The assailed provisos in the General Appropriations Acts of 1999, 2000 and 2001, and the assailed OCD Resolutions, are declared UNCONSTITUTIONAL. SO ORDERED. ROMEO J. CALLEJO, SR. Associate Justice

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WE CONCUR: On official leave HILARIO G. DAVIDE, JR. Chief Justice On official leave REYNATO S. PUNO JOSE C. VITUG Associate Justice Associate Justice ARTEMIO V. PANGANIBAN LEONARDO A. QUISUMBING Associate Justice Associate Justice CONSUELO YNARES-SANTIAGO ANGELINA SANDOVAL-GUTIERREZ Associate Justice Associate Justice ANTONIO T. CARPIO MA. ALICIA AUSTRIA-MARTINEZ Associate Justice Associate Justice RENATO C. CORONA CONCHITA CARPIO MORALES Associate Justice Associate Justice ADOLFO S. AZCUNA DANTE O. TINGA Associate Justice Associate Justice CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. JOSE C. VITUG Acting Chief Justice

Footnotes
1

Section 1, E.O. No. 48. Section 2, id. Section 4, id. Ibid. Id. Id. Id.

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Infra.

Baker v. Carr, 369 U.S. 186, 7 L.Ed. 2d 633 cited in, among others, Agan, Jr. v. PIATCO, G.R. Nos. 155001, 155547 and 155661, May 5, 2003 and Farias v. Executive Secretary, G.R. Nos. 147387 and 152161, December 10, 2003.
10

Agan, Jr. v. PIATCO, supra. Ibid. Id. 13 Chavez v. Public Estates Authority, 384 SCRA 152 (2002). Ibid, citing, among others, Salonga v. Pao, 134 SCRA 438 (1995).

11

12

14

15

Southern Pac. Terminal Co. v. ICC, 219 U.S. 498, 55 L.Ed. 310 (1911) cited in, among others, Viola v. Alunan III, 277 SCRA 409 (1997); Acop v. Guingona, Jr., 383 SCRA 577 (2002).
16

San Juan v. Civil Service Commission, 196 SCRA 69 (1991). Section 4, Article X. 235 SCRA 135 (1994). Id. at 142.

17

18

19

20

Rep. Act No. 7160 was signed into law by then President Corazon C. Aquino on October 10, 1991. It took effect on January 1, 1992.
21

Section 3, Article X reads: Sec. 3. The Congress shall enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanisms of recall, initiative, and referendum, allocate among the different local government units their powers, responsibilities, and resources, and provide for the qualifications, election, appointment and removal, terms, salaries, powers and functions and duties of local officials, and all other matters relating to the organization and operation of local government units.

22

336 SCRA 201 (2000). Id. at 220-221. (Emphasis supplied.) Per OCD-99-005, 99-006, 99-003. Per OCD-2000-023 and 2001-029. Per OCD-2002-001. Quisumbing v. Manila Electric Co., 380 SCRA 195 (2002). Codoy v. Calugay, 312 SCRA 333 (1999).

23

24

25

26

27

28

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29

Section 533 of Rep. Act 7160 reads in part: Sec. 533. Formulation of Implementing Rules and Regulations. (a) Within one (1) month after the approval of this Code, the President shall convene the Oversight Committee as herein provided for. The said Committee shall formulate and issue the appropriate rules and regulations necessary for the efficient and effective implementation of any and all provisions of this Code, thereby ensuring compliance with the principles of local autonomy as defined under the Constitution. ... (c) The Committee shall submit its report and recommendation to the President within two (2) months after its organization. If the President fails to act within thirty (30) days from receipt thereof, the recommendation of the Oversight Committee shall be deemed approved. Thereafter, the Committee shall supervise the transfer of such powers and functions mandated under this Code to the local government units, together with the corresponding personnel, properties, assets and liabilities of the offices or agencies concerned, with the least possible disruptions to existing programs and projects. The Committee shall, likewise, recommend the corresponding appropriations necessary to effect the said transfer.

30

Pimentel, The Local Government Code of 1991: The Key to National Development, p. 576.

31

The Committee Report No. 21 submitted by the Committee on Local Governments of the Constitutional Commission, headed by Commissioner Jose N. Nolledo, proposed to incorporate the following provisions: SEC. 6. Each government unit shall have the power to create its own sources of revenue and to levy taxes, fees and charges subject to such guidelines as may be fixed by law. SEC. 7. Local governments shall have the power to levy and collect charges or contributions unique, distinct and exclusive to them. SEC. 8. Local taxes shall belong exclusively to local governments and they shall, likewise, be entitled to share in the proceeds of the exploitation and development of the national wealth within their respective areas. The share of local governments in the national taxes shall be released to them automatically.
32

3 RECORD OF THE CONSTITUTIONAL COMMISSION 231. 200 SCRA 271 (1991). Id. at 286-287. (Citations omitted.) Supra at note 22. Id. at 218. Id. at 220. The provision reads in part:

33

34

35

36

37

38

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Sec. 284. Allotment of Internal Revenue Taxes. Local government units shall have a share in the national internal revenue taxes based on the collection of the third fiscal year preceding the current fiscal year as follows: (a) On the first year of the effectivity of this Code, thirty percent (30%); (b) On the second year, thirty-five percent (35%); and (c) On the third year and, thereafter, forty percent (40%).
39

Per OCD Res.-99-005, 99-006, 99-003. Per OCD-2000-023 and 2001-029. Per OCD-2002-001. Philippine Constitutional Association v. Enriquez, 235 SCRA 506 (1994).

40

41

42

43

Ibid, citing Beckman, The Item Veto Power of the Executive, 31 Temple Law Quarterly 27 (1957).
44

Id.

45

Mendoza, From McKinley's Instructions to the New Constitution: Documents on the Philippine Constitutional System, pp. 67-68.
46

Paragraph (1), Section 11, Article VII of the 1935 Constitution reads: Sec. 11(1). The President shall have control of all the executive departments, bureaus or offices, exercise general supervision over all local governments as may be provided by law, and take care that the laws be faithfully executed.

47

Section 10, Article II thereof. Sinco, Philippine Political Law, 10th ed., pp. 681-682. Ibid. San Juan v. Civil Service Commission, supra.

48

49

50

The Lawphil Project - Arellano Law Foundation

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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 147402 January 14, 2004

ENGR. RANULFO C. FELICIANO, in his capacity as General Manager of the Leyte Metropolitan Water District (LMWD), Tacloban City, petitioner, vs. COMMISSION ON AUDIT, Chairman CELSO D. GANGAN, Commissioners RAUL C. FLORES and EMMANUEL M. DALMAN, and Regional Director of COA Region VIII, respondents.

DECISION

CARPIO, J.: The Case This is a petition for certiorari1 to annul the Commission on Audits ("COA") Resolution dated 3 January 2000 and the Decision dated 30 January 2001 denying the Motion for Reconsideration. The COA denied petitioner Ranulfo C. Felicianos request for COA to cease all audit services, and to stop charging auditing fees, to Leyte Metropolitan Water District ("LMWD"). The COA also denied petitioners request for COA to refund all auditing fees previously paid by LMWD. Antecedent Facts A Special Audit Team from COA Regional Office No. VIII audited the accounts of LMWD. Subsequently, LMWD received a letter from COA dated 19 July 1999 requesting payment of auditing fees. As General Manager of LMWD, petitioner sent a reply dated 12 October 1999 informing COAs Regional Director that the water district could not pay the auditing fees. Petitioner cited as basis for his action Sections 6 and 20 of Presidential Decree 198 ("PD 198")2, as well as Section 18 of Republic Act No. 6758 ("RA 6758"). The Regional Director referred petitioners reply to the COA Chairman on 18 October 1999. On 19 October 1999, petitioner wrote COA through the Regional Director asking for refund of all auditing fees LMWD previously paid to COA. On 16 March 2000, petitioner received COA Chairman Celso D. Gangans Resolution dated 3 January 2000 denying his requests. Petitioner filed a motion for reconsideration on 31 March 2000, which COA denied on 30 January 2001. On 13 March 2001, petitioner filed this instant petition. Attached to the petition were resolutions of the Visayas Association of Water Districts (VAWD) and the Philippine Association of Water Districts (PAWD) supporting the petition. The Ruling of the Commission on Audit

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The COA ruled that this Court has already settled COAs audit jurisdiction over local water districts in Davao City Water District v. Civil Service Commission and Commission on Audit,3 as follows: The above-quoted provision [referring to Section 3(b) PD 198] definitely sets to naught petitioners contention that they are private corporations. It is clear therefrom that the power to appoint the members who will comprise the members of the Board of Directors belong to the local executives of the local subdivision unit where such districts are located. In contrast, the members of the Board of Directors or the trustees of a private corporation are elected from among members or stockholders thereof. It would not be amiss at this point to emphasize that a private corporation is created for the private purpose, benefit, aim and end of its members or stockholders. Necessarily, said members or stockholders should be given a free hand to choose who will compose the governing body of their corporation. But this is not the case here and this clearly indicates that petitioners are not private corporations. The COA also denied petitioners request for COA to stop charging auditing fees as well as petitioners request for COA to refund all auditing fees already paid. The Issues Petitioner contends that COA committed grave abuse of discretion amounting to lack or excess of jurisdiction by auditing LMWD and requiring it to pay auditing fees. Petitioner raises the following issues for resolution: 1. Whether a Local Water District ("LWD") created under PD 198, as amended, is a government-owned or controlled corporation subject to the audit jurisdiction of COA; 2. Whether Section 20 of PD 198, as amended, prohibits COAs certified public accountants from auditing local water districts; and 3. Whether Section 18 of RA 6758 prohibits the COA from charging government-owned and controlled corporations auditing fees. The Ruling of the Court The petition lacks merit. The Constitution and existing laws4 mandate COA to audit all government agencies, including government-owned and controlled corporations ("GOCCs") with original charters. An LWD is a GOCC with an original charter. Section 2(1), Article IX-D of the Constitution provides for COAs audit jurisdiction, as follows: SECTION 2. (1) The Commission on Audit shall have the power, authority and duty to examine, audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or instrumentalities, including government-owned and controlled corporations with original charters, and on a postaudit basis: (a) constitutional bodies, commissions and offices that have been granted fiscal autonomy under this Constitution; (b) autonomous state colleges and universities; (c) other government-owned or controlled corporations and their subsidiaries; and (d) such nongovernmental entities receiving subsidy or equity, directly or indirectly, from or through the government, which are required by law or the granting institution to submit to such audit as a condition of subsidy or equity. However, where the internal control system of the audited agencies is inadequate, the Commission may adopt such measures, including temporary or special pre-audit, as are necessary and appropriate to correct the deficiencies. It shall keep

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the general accounts of the Government and, for such period as may be provided by law, preserve the vouchers and other supporting papers pertaining thereto. (Emphasis supplied) The COAs audit jurisdiction extends not only to government "agencies or instrumentalities," but also to "government-owned and controlled corporations with original charters" as well as "other government-owned or controlled corporations" without original charters. Whether LWDs are Private or Government-Owned and Controlled Corporations with Original Charters Petitioner seeks to revive a well-settled issue. Petitioner asks for a re-examination of a doctrine backed by a long line of cases culminating in Davao City Water District v. Civil Service Commission5 and just recently reiterated in De Jesus v. Commission on Audit.6 Petitioner maintains that LWDs are not government-owned and controlled corporations with original charters. Petitioner even argues that LWDs are private corporations. Petitioner asks the Court to consider certain interpretations of the applicable laws, which would give a "new perspective to the issue of the true character of water districts."7 Petitioner theorizes that what PD 198 created was the Local Waters Utilities Administration ("LWUA") and not the LWDs. Petitioner claims that LWDs are created "pursuant to" and not created directly by PD 198. Thus, petitioner concludes that PD 198 is not an "original charter" that would place LWDs within the audit jurisdiction of COA as defined in Section 2(1), Article IX-D of the Constitution. Petitioner elaborates that PD 198 does not create LWDs since it does not expressly direct the creation of such entities, but only provides for their formation on an optional or voluntary basis.8 Petitioner adds that the operative act that creates an LWD is the approval of the Sanggunian Resolution as specified in PD 198. Petitioners contention deserves scant consideration. We begin by explaining the general framework under the fundamental law. The Constitution recognizes two classes of corporations. The first refers to private corporations created under a general law. The second refers to government-owned or controlled corporations created by special charters. Section 16, Article XII of the Constitution provides: Sec. 16. The Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations. Government-owned or controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of economic viability. The Constitution emphatically prohibits the creation of private corporations except by a general law applicable to all citizens.9 The purpose of this constitutional provision is to ban private corporations created by special charters, which historically gave certain individuals, families or groups special privileges denied to other citizens.10 In short, Congress cannot enact a law creating a private corporation with a special charter. Such legislation would be unconstitutional. Private corporations may exist only under a general law. If the corporation is private, it must necessarily exist under a general law. Stated differently, only corporations created under a general law can qualify as private corporations. Under existing laws, that general law is the Corporation Code,11 except that the Cooperative Code governs the incorporation of cooperatives.12 The Constitution authorizes Congress to create government-owned or controlled corporations through special charters. Since private corporations cannot have special charters, it follows that Congress can create corporations with special charters only if such corporations are governmentowned or controlled.

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Obviously, LWDs are not private corporations because they are not created under the Corporation Code. LWDs are not registered with the Securities and Exchange Commission. Section 14 of the Corporation Code states that "[A]ll corporations organized under this code shall file with the Securities and Exchange Commission articles of incorporation x x x." LWDs have no articles of incorporation, no incorporators and no stockholders or members. There are no stockholders or members to elect the board directors of LWDs as in the case of all corporations registered with the Securities and Exchange Commission. The local mayor or the provincial governor appoints the directors of LWDs for a fixed term of office. This Court has ruled that LWDs are not created under the Corporation Code, thus: From the foregoing pronouncement, it is clear that what has been excluded from the coverage of the CSC are those corporations created pursuant to the Corporation Code. Significantly, petitioners are not created under the said code, but on the contrary, they were created pursuant to a special law and are governed primarily by its provision.13 (Emphasis supplied) LWDs exist by virtue of PD 198, which constitutes their special charter. Since under the Constitution only government-owned or controlled corporations may have special charters, LWDs can validly exist only if they are government-owned or controlled. To claim that LWDs are private corporations with a special charter is to admit that their existence is constitutionally infirm. Unlike private corporations, which derive their legal existence and power from the Corporation Code, LWDs derive their legal existence and power from PD 198. Sections 6 and 25 of PD 19814 provide: Section 6. Formation of District. This Act is the source of authorization and power to form and maintain a district. For purposes of this Act, a district shall be considered as a quasi-public corporation performing public service and supplying public wants. As such, a district shall exercise the powers, rights and privileges given to private corporations under existing laws, in addition to the powers granted in, and subject to such restrictions imposed, under this Act. (a) The name of the local water district, which shall include the name of the city, municipality, or province, or region thereof, served by said system, followed by the words "Water District". (b) A description of the boundary of the district. In the case of a city or municipality, such boundary may include all lands within the city or municipality. A district may include one or more municipalities, cities or provinces, or portions thereof. (c) A statement completely transferring any and all waterworks and/or sewerage facilities managed, operated by or under the control of such city, municipality or province to such district upon the filing of resolution forming the district. (d) A statement identifying the purpose for which the district is formed, which shall include those purposes outlined in Section 5 above. (e) The names of the initial directors of the district with the date of expiration of term of office for each. (f) A statement that the district may only be dissolved on the grounds and under the conditions set forth in Section 44 of this Title. (g) A statement acknowledging the powers, rights and obligations as set forth in Section 36 of this Title. Nothing in the resolution of formation shall state or infer that the local legislative body has the power to dissolve, alter or affect the district beyond that specifically provided for in this Act. 193

If two or more cities, municipalities or provinces, or any combination thereof, desire to form a single district, a similar resolution shall be adopted in each city, municipality and province. xxx Sec. 25. Authorization. The district may exercise all the powers which are expressly granted by this Title or which are necessarily implied from or incidental to the powers and purposes herein stated. For the purpose of carrying out the objectives of this Act, a district is hereby granted the power of eminent domain, the exercise thereof shall, however, be subject to review by the Administration. (Emphasis supplied) Clearly, LWDs exist as corporations only by virtue of PD 198, which expressly confers on LWDs corporate powers. Section 6 of PD 198 provides that LWDs "shall exercise the powers, rights and privileges given to private corporations under existing laws." Without PD 198, LWDs would have no corporate powers. Thus, PD 198 constitutes the special enabling charter of LWDs. The ineluctable conclusion is that LWDs are government-owned and controlled corporations with a special charter. The phrase "government-owned and controlled corporations with original charters" means GOCCs created under special laws and not under the general incorporation law. There is no difference between the term "original charters" and "special charters." The Court clarified this in National Service Corporation v. NLRC15 by citing the deliberations in the Constitutional Commission, as follows: THE PRESIDING OFFICER (Mr. Trenas). The session is resumed. Commissioner Romulo is recognized. MR. ROMULO. Mr. Presiding Officer, I am amending my original proposed amendment to now read as follows: "including government-owned or controlled corporations WITH ORIGINAL CHARTERS." The purpose of this amendment is to indicate that government corporations such as the GSIS and SSS, which have original charters, fall within the ambit of the civil service. However, corporations which are subsidiaries of these chartered agencies such as the Philippine Airlines, Manila Hotel and Hyatt are excluded from the coverage of the civil service. THE PRESIDING OFFICER (Mr. Trenas). What does the Committee say? MR. FOZ. Just one question, Mr. Presiding Officer. By the term "original charters," what exactly do we mean? MR. ROMULO. We mean that they were created by law, by an act of Congress, or by special law. MR. FOZ. And not under the general corporation law. MR. ROMULO. That is correct. Mr. Presiding Officer. MR. FOZ. With that understanding and clarification, the Committee accepts the amendment. MR. NATIVIDAD. Mr. Presiding Officer, so those created by the general corporation law are out. MR. ROMULO. That is correct. (Emphasis supplied)

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Again, in Davao City Water District v. Civil Service Commission,16 the Court reiterated the meaning of the phrase "government-owned and controlled corporations with original charters" in this wise: By "government-owned or controlled corporation with original charter," We mean government owned or controlled corporation created by a special law and not under the Corporation Code of the Philippines. Thus, in the case of Lumanta v. NLRC (G.R. No. 82819, February 8, 1989, 170 SCRA 79, 82), We held: "The Court, in National Service Corporation (NASECO) v. National Labor Relations Commission, G.R. No. 69870, promulgated on 29 November 1988, quoting extensively from the deliberations of the 1986 Constitutional Commission in respect of the intent and meaning of the new phrase with original charter, in effect held that government-owned and controlled corporations with original charter refer to corporations chartered by special law as distinguished from corporations organized under our general incorporation statute the Corporation Code. In NASECO, the company involved had been organized under the general incorporation statute and was a subsidiary of the National Investment Development Corporation (NIDC) which in turn was a subsidiary of the Philippine National Bank, a bank chartered by a special statute. Thus, government-owned or controlled corporations like NASECO are effectively, excluded from the scope of the Civil Service." (Emphasis supplied) Petitioners contention that the Sangguniang Bayan resolution creates the LWDs assumes that the Sangguniang Bayan has the power to create corporations. This is a patently baseless assumption. The Local Government Code17 does not vest in the Sangguniang Bayan the power to create corporations.18 What the Local Government Code empowers the Sangguniang Bayan to do is to provide for the establishment of a waterworks system "subject to existing laws." Thus, Section 447(5)(vii) of the Local Government Code provides: SECTION 447. Powers, Duties, Functions and Compensation. (a) The sangguniang bayan, as the legislative body of the municipality, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the municipality and its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the municipality as provided for under Section 22 of this Code, and shall: xxx (vii) Subject to existing laws, provide for the establishment, operation, maintenance, and repair of an efficient waterworks system to supply water for the inhabitants; regulate the construction, maintenance, repair and use of hydrants, pumps, cisterns and reservoirs; protect the purity and quantity of the water supply of the municipality and, for this purpose, extend the coverage of appropriate ordinances over all territory within the drainage area of said water supply and within one hundred (100) meters of the reservoir, conduit, canal, aqueduct, pumping station, or watershed used in connection with the water service; and regulate the consumption, use or wastage of water; x x x. (Emphasis supplied) The Sangguniang Bayan may establish a waterworks system only in accordance with the provisions of PD 198. The Sangguniang Bayan has no power to create a corporate entity that will operate its waterworks system. However, the Sangguniang Bayan may avail of existing enabling laws, like PD 198, to form and incorporate a water district. Besides, even assuming for the sake of argument that the Sangguniang Bayan has the power to create corporations, the LWDs would remain governmentowned or controlled corporations subject to COAs audit jurisdiction. The resolution of the

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Sangguniang Bayan would constitute an LWDs special charter, making the LWD a governmentowned and controlled corporation with an original charter. In any event, the Court has already ruled in Baguio Water District v. Trajano19 that the Sangguniang Bayan resolution is not the special charter of LWDs, thus: While it is true that a resolution of a local sanggunian is still necessary for the final creation of a district, this Court is of the opinion that said resolution cannot be considered as its charter, the same being intended only to implement the provisions of said decree. Petitioner further contends that a law must create directly and explicitly a GOCC in order that it may have an original charter. In short, petitioner argues that one special law cannot serve as enabling law for several GOCCs but only for one GOCC. Section 16, Article XII of the Constitution mandates that "Congress shall not, except by general law,"20 provide for the creation of private corporations. Thus, the Constitution prohibits one special law to create one private corporation, requiring instead a "general law" to create private corporations. In contrast, the same Section 16 states that "Government-owned or controlled corporations may be created or established by special charters." Thus, the Constitution permits Congress to create a GOCC with a special charter. There is, however, no prohibition on Congress to create several GOCCs of the same class under one special enabling charter. The rationale behind the prohibition on private corporations having special charters does not apply to GOCCs. There is no danger of creating special privileges to certain individuals, families or groups if there is one special law creating each GOCC. Certainly, such danger will not exist whether one special law creates one GOCC, or one special enabling law creates several GOCCs. Thus, Congress may create GOCCs either by special charters specific to each GOCC, or by one special enabling charter applicable to a class of GOCCs, like PD 198 which applies only to LWDs. Petitioner also contends that LWDs are private corporations because Section 6 of PD 19821 declares that LWDs "shall be considered quasi-public" in nature. Petitioners rationale is that only private corporations may be deemed "quasi-public" and not public corporations. Put differently, petitioner rationalizes that a public corporation cannot be deemed "quasi-public" because such corporation is already public. Petitioner concludes that the term "quasi-public" can only apply to private corporations. Petitioners argument is inconsequential. Petitioner forgets that the constitutional criterion on the exercise of COAs audit jurisdiction depends on the governments ownership or control of a corporation. The nature of the corporation, whether it is private, quasi-public, or public is immaterial. The Constitution vests in the COA audit jurisdiction over "government-owned and controlled corporations with original charters," as well as "government-owned or controlled corporations" without original charters. GOCCs with original charters are subject to COA pre-audit, while GOCCs without original charters are subject to COA post-audit. GOCCs without original charters refer to corporations created under the Corporation Code but are owned or controlled by the government. The nature or purpose of the corporation is not material in determining COAs audit jurisdiction. Neither is the manner of creation of a corporation, whether under a general or special law. The determining factor of COAs audit jurisdiction is government ownership or control of the corporation. InPhilippine Veterans Bank Employees Union-NUBE v. Philippine Veterans Bank,22 the Court even ruled that the criterion of ownership and control is more important than the issue of original charter, thus: This point is important because the Constitution provides in its Article IX-B, Section 2(1) that "the Civil Service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters." As the Bank is not owned or controlled by the Government although it does have an original charter in the form of R.A. No. 3518,23 it clearly does not fall under the

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Civil Service and should be regarded as an ordinary commercial corporation. Section 28 of the said law so provides. The consequence is that the relations of the Bank with its employees should be governed by the labor laws, under which in fact they have already been paid some of their claims. (Emphasis supplied) Certainly, the government owns and controls LWDs. The government organizes LWDs in accordance with a specific law, PD 198. There is no private party involved as co-owner in the creation of an LWD. Just prior to the creation of LWDs, the national or local government owns and controls all their assets. The government controls LWDs because under PD 198 the municipal or city mayor, or the provincial governor, appoints all the board directors of an LWD for a fixed term of six years.24 The board directors of LWDs are not co-owners of the LWDs. LWDs have no private stockholders or members. The board directors and other personnel of LWDs are government employees subject to civil service laws25 and anti-graft laws.26 While Section 8 of PD 198 states that "[N]o public official shall serve as director" of an LWD, it only means that the appointees to the board of directors of LWDs shall come from the private sector. Once such private sector representatives assume office as directors, they become public officials governed by the civil service law and anti-graft laws. Otherwise, Section 8 of PD 198 would contravene Section 2(1), Article IX-B of the Constitution declaring that the civil service includes "government-owned or controlled corporations with original charters." If LWDs are neither GOCCs with original charters nor GOCCs without original charters, then they would fall under the term "agencies or instrumentalities" of the government and thus still subject to COAs audit jurisdiction. However, the stark and undeniable fact is that the government owns LWDs. Section 4527 of PD 198 recognizes government ownership of LWDs when Section 45 states that the board of directors may dissolve an LWD only on the condition that "another public entity has acquired the assets of the district and has assumed all obligations and liabilities attached thereto." The implication is clear that an LWD is a public and not a private entity. Petitioner does not allege that some entity other than the government owns or controls LWDs. Instead, petitioner advances the theory that the "Water Districts owner is the District itself."28 Assuming for the sake of argument that an LWD is "self-owned,"29 as petitioner describes an LWD, the government in any event controls all LWDs. First, government officials appoint all LWD directors to a fixed term of office. Second, any per diem of LWD directors in excess of P50 is subject to the approval of the Local Water Utilities Administration, and directors can receive no other compensation for their services to the LWD.30 Third, the Local Water Utilities Administration can require LWDs to merge or consolidate their facilities or operations.31 This element of government control subjects LWDs to COAs audit jurisdiction. Petitioner argues that upon the enactment of PD 198, LWDs became private entities through the transfer of ownership of water facilities from local government units to their respective water districts as mandated by PD 198. Petitioner is grasping at straws. Privatization involves the transfer of government assets to a private entity. Petitioner concedes that the owner of the assets transferred under Section 6 (c) of PD 198 is no other than the LWD itself.32 The transfer of assets mandated by PD 198 is a transfer of the water systems facilities "managed, operated by or under the control of such city, municipality or province to such (water) district."33 In short, the transfer is from one government entity to another government entity. PD 198 is bereft of any indication that the transfer is to privatize the operation and control of water systems. Finally, petitioner claims that even on the assumption that the government owns and controls LWDs, Section 20 of PD 198 prevents COA from auditing LWDs. 34 Section 20 of PD 198 provides: Sec. 20. System of Business Administration. The Board shall, as soon as practicable, prescribe and define by resolution a system of business administration and accounting for the district, which shall be patterned upon and conform to the standards established by the Administration. Auditing shall be performed by a certified public accountant not in the

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government service. The Administration may, however, conduct annual audits of the fiscal operations of the district to be performed by an auditor retained by the Administration. Expenses incurred in connection therewith shall be borne equally by the water district concerned and the Administration.35 (Emphasis supplied) Petitioner argues that PD 198 expressly prohibits COA auditors, or any government auditor for that matter, from auditing LWDs. Petitioner asserts that this is the import of the second sentence of Section 20 of PD 198 when it states that "[A]uditing shall be performed by a certified public accountant not in the government service."36 PD 198 cannot prevail over the Constitution. No amount of clever legislation can exclude GOCCs like LWDs from COAs audit jurisdiction. Section 3, Article IX-C of the Constitution outlaws any scheme or devise to escape COAs audit jurisdiction, thus: Sec. 3. No law shall be passed exempting any entity of the Government or its subsidiary in any guise whatever, or any investment of public funds, from the jurisdiction of the Commission on Audit. (Emphasis supplied) The framers of the Constitution added Section 3, Article IX-D of the Constitution precisely to annul provisions of Presidential Decrees, like that of Section 20 of PD 198, that exempt GOCCs from COA audit. The following exchange in the deliberations of the Constitutional Commission elucidates this intent of the framers: MR. OPLE: I propose to add a new section on line 9, page 2 of the amended committee report which reads: NO LAW SHALL BE PASSED EXEMPTING ANY ENTITY OF THE GOVERNMENT OR ITS SUBSIDIARY IN ANY GUISE WHATEVER, OR ANY INVESTMENTS OF PUBLIC FUNDS, FROM THE JURISDICTION OF THE COMMISSION ON AUDIT. May I explain my reasons on record. We know that a number of entities of the government took advantage of the absence of a legislature in the past to obtain presidential decrees exempting themselves from the jurisdiction of the Commission on Audit, one notable example of which is the Philippine National Oil Company which is really an empty shell. It is a holding corporation by itself, and strictly on its own account. Its funds were not very impressive in quantity but underneath that shell there were billions of pesos in a multiplicity of companies. The PNOC the empty shell under a presidential decree was covered by the jurisdiction of the Commission on Audit, but the billions of pesos invested in different corporations underneath it were exempted from the coverage of the Commission on Audit. Another example is the United Coconut Planters Bank. The Commission on Audit has determined that the coconut levy is a form of taxation; and that, therefore, these funds attributed to the shares of 1,400,000 coconut farmers are, in effect, public funds. And that was, I think, the basis of the PCGG in undertaking that last major sequestration of up to 94 percent of all the shares in the United Coconut Planters Bank. The charter of the UCPB, through a presidential decree, exempted it from the jurisdiction of the Commission on Audit, it being a private organization. So these are the fetuses of future abuse that we are slaying right here with this additional section. May I repeat the amendment, Madam President: NO LAW SHALL BE PASSED EXEMPTING ANY ENTITY OF THE GOVERNMENT OR ITS SUBSIDIARY IN ANY GUISE WHATEVER, OR ANY INVESTMENTS OF PUBLIC FUNDS, FROM THE JURISDICTION OF THE COMMISSION ON AUDIT.

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THE PRESIDENT: May we know the position of the Committee on the proposed amendment of Commissioner Ople? MR. JAMIR: If the honorable Commissioner will change the number of the section to 4, we will accept the amendment. MR. OPLE: Gladly, Madam President. Thank you. MR. DE CASTRO: Madam President, point of inquiry on the new amendment. THE PRESIDENT: Commissioner de Castro is recognized. MR. DE CASTRO: Thank you. May I just ask a few questions of Commissioner Ople. Is that not included in Section 2 (1) where it states: "(c) government-owned or controlled corporations and their subsidiaries"? So that if these government-owned and controlled corporations and their subsidiaries are subjected to the audit of the COA, any law exempting certain government corporations or subsidiaries will be already unconstitutional. So I believe, Madam President, that the proposed amendment is unnecessary. MR. MONSOD: Madam President, since this has been accepted, we would like to reply to the point raised by Commissioner de Castro. THE PRESIDENT: Commissioner Monsod will please proceed. MR. MONSOD: I think the Commissioner is trying to avoid the situation that happened in the past, because the same provision was in the 1973 Constitution and yet somehow a law or a decree was passed where certain institutions were exempted from audit. We are just reaffirming, emphasizing, the role of the Commission on Audit so that this problem will never arise in the future.37 There is an irreconcilable conflict between the second sentence of Section 20 of PD 198 prohibiting COA auditors from auditing LWDs and Sections 2(1) and 3, Article IX-D of the Constitution vesting in COA the power to audit all GOCCs. We rule that the second sentence of Section 20 of PD 198 is unconstitutional since it violates Sections 2(1) and 3, Article IX-D of the Constitution. On the Legality of COAs Practice of Charging Auditing Fees Petitioner claims that the auditing fees COA charges LWDs for audit services violate the prohibition in Section 18 of RA 6758,38 which states: Sec. 18. Additional Compensation of Commission on Audit Personnel and of other Agencies. In order to preserve the independence and integrity of the Commission on Audit (COA), its officials and employees are prohibited from receiving salaries, honoraria, bonuses, allowances or other emoluments from any government entity, local government unit, government-owned or controlled corporations, and government financial institutions, except those compensation paid directly by COA out of its appropriations andcontributions. Government entities, including government-owned or controlled corporations including financial institutions and local government units are hereby prohibited from assessing or billing other government entities, including government-owned or controlled corporations including financial institutions or local government units for services rendered by its officials

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and employees as part of their regular functions for purposes of paying additional compensation to said officials and employees. (Emphasis supplied) Claiming that Section 18 is "absolute and leaves no doubt,"39 petitioner asks COA to discontinue its practice of charging auditing fees to LWDs since such practice allegedly violates the law. Petitioners claim has no basis. Section 18 of RA 6758 prohibits COA personnel from receiving any kind of compensation from any government entity except "compensation paid directly by COA out of its appropriations and contributions." Thus, RA 6758 itself recognizes an exception to the statutory ban on COA personnel receiving compensation from GOCCs. In Tejada v. Domingo,40 the Court declared: There can be no question that Section 18 of Republic Act No. 6758 is designed to strengthen further the policy x x x to preserve the independence and integrity of the COA, by explicitly PROHIBITING: (1) COA officials and employees from receiving salaries, honoraria, bonuses, allowances or other emoluments from any government entity, local government unit, GOCCs and government financial institutions, except such compensation paid directly by the COA out of its appropriations and contributions, and (2) government entities, including GOCCs, government financial institutions and local government units from assessing or billing other government entities, GOCCs, government financial institutions or local government units for services rendered by the latters officials and employees as part of their regular functions for purposes of paying additional compensation to said officials and employees. xxx The first aspect of the strategy is directed to the COA itself, while the second aspect is addressed directly against the GOCCs and government financial institutions. Under the first, COA personnel assigned to auditing units of GOCCs or government financial institutions can receive only such salaries, allowances or fringe benefits paid directly by the COA out of its appropriations and contributions. The contributions referred to are the cost of audit services earlier mentioned which cannot include the extra emoluments or benefits now claimed by petitioners. The COA is further barred from assessing or billing GOCCs and government financial institutions for services rendered by its personnel as part of their regular audit functions for purposes of paying additional compensation to such personnel. x x x. (Emphasis supplied) In Tejada, the Court explained the meaning of the word "contributions" in Section 18 of RA 6758, which allows COA to charge GOCCs the cost of its audit services: x x x the contributions from the GOCCs are limited to the cost of audit services which are based on the actual cost of the audit function in the corporation concerned plus a reasonable rate to cover overhead expenses. The actual audit cost shall include personnel services, maintenance and other operating expenses, depreciation on capital and equipment and outof-pocket expenses. In respect to the allowances and fringe benefits granted by the GOCCs to the COA personnel assigned to the formers auditing units, the same shall be directly defrayed by COA from its own appropriations x x x. 41 COA may charge GOCCs "actual audit cost" but GOCCs must pay the same directly to COA and not to COA auditors. Petitioner has not alleged that COA charges LWDs auditing fees in excess of COAs "actual audit cost." Neither has petitioner alleged that the auditing fees are paid by LWDs directly to individual COA auditors. Thus, petitioners contention must fail. WHEREFORE, the Resolution of the Commission on Audit dated 3 January 2000 and the Decision dated 30 January 2001 denying petitioners Motion for Reconsideration are AFFIRMED. The second

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sentence of Section 20 of Presidential Decree No. 198 is declared VOID for being inconsistent with Sections 2 (1) and 3, Article IX-D of the Constitution. No costs. SO ORDERED. Davide, Jr., C.J., Puno, Vitug, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., and Azcuna, and Tinga, JJ., concur.

Footnotes
1

Under Rule 64 of the 1997 Revised Rules of Court. As amended by Presidential Decrees Nos. 768 and 1479. G.R. No. 95237-38, 13 September 1991, 201 SCRA 593. Section 26, Government Auditing Code of the Philippines. Supra note 3. G.R. No. 149154, 10 June 2003. Rollo, p. 7. Ibid., p. 29.

See National Development Company v. Philippine Veterans Bank, G.R. Nos. 84132-33, 10 December 1990, 192 SCRA 257.
10

BERNAS, THE 1987 CONSTITUTION OF THE REPUBLIC OF THE PHILIPPINES: A COMMENTARY 1181 (2003).
11

Batas Pambansa Blg. 68.

12

Republic Act. No. 6938. See also Republic Act No. 6939 or the Cooperative Development Authority Law.
13

Supra note 3. As amended by PD 1479. G.R. No. L-69870, 29 November 1988, 168 SCRA 122. Supra note 3. Republic Act No. 7160. See Section 447 of the Local Government Code on the powers of the Sangguniang Bayan. 212 Phil. 674 (1984).

14

15

16

17

18

19

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20

Emphasis supplied. As amended by PD 1479. G.R. No. 67125, 24 August 1990, 189 SCRA 14.

21

22

23

Under Section 3 of Republic Act No. 7169 which took effect on 2 January 1992, the "operations and changes in the capital structure of the Veterans Bank, as well as other amendments to its articles of incorporation and by-laws as prescribed under Republic Act No. 3518, shall be in accordance with the Corporation Code, the General Banking Act, and other related laws."
24

Section 3 (b) of PD 198 provides: "(b) Appointing Authority. The person empowered to appoint the members of the Board of Directors of a local water district depending upon the geographic coverage and population make-up of the particular district. In the event that more than seventyfive percent of the total active water service connections of local water districts are within the boundary of any city or municipality, the appointing authority shall be the mayor of the city or municipality, as the case may be; otherwise, the appointing authority shall be the governor of the province within which the district is located: Provided, That if the existing waterworks system in the city or municipality established as a water district under this Decree is operated and managed by the province, initial appointment shall be extended by the governor of the province. Subsequent appointments shall be as specified as herein. If portions of more than one province are included within the boundary of the district, and the appointing authority is to be the governor, then the power to appoint shall rotate between the governors involved with the initial appointments made by the governor in whose province the greatest number of service connections exists."

25

Baguio Water District v. Trajano, supra note 20; Davao City Water District v. Civil Service Commission, supra note 3.
26

Morales v. People, G.R. No. 144047, 26 July 2002, 385 SCRA 259. As amended by PD 768. Rollo, p. 16. Ibid. Section 13, PD 198. Section 43, PD 198. Rollo, p. 644. Section 6(c) of PD 198, as amended by PD 768. Supra note 2. Section 20 of PD 198, as amended by PD 768. Rollo, p. 9.

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28

29

30

31

32

33

34

35

36

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Record of the Constitutional Commission, Vol. I, pp. 606-607. Compensation and Position Classification Act of 1989. Rollo, p. 11. G.R. No. 91860, 13 January 1992, 205 SCRA 138. Ibid.

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39

40

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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-9920 February 29, 1960

BARTOLOME E. SAN DIEGO, plaintiff-appellee, vs. THE MUNICIPALITY OF NAUJAN, PROVINCE OF ORIENTAL MINDORO, defendant-appellant. Rodegelio M. Jalandoni and Jose P. Laurel for appellee. Delgado, Flores, Macapagal and Dizon and the Provincial Fiscal of Oriental Mindoro for appellant. GUTIERREZ DAVID, J.: Following a public bidding conducted by the municipality of Naujan, Oriental Mindoro for the lease of its municipal waters, Resolution 46, series of 1947 was passed by the municipal council thereof awarding the concession of the Butas River and the Naujan Lake to the highest bidder Bartolome San Diego. Consequently, a contract was entered into between the said San Diego and the municipality, stipulating that for a period of five (5) years, from January 1, 1948 to December 31, 1952, the former was to be the lessee 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, or a total of P131,500.00 for five years. 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 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.

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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. The main question to be decided is whether or not Resolution No. 3, series of 1952, revoking Resolution 222, series of 1951, of the municipal council of Naujan is valid. For clarity, we have to reiterate that Resolution 222, series of 1951, is an approval of plaintiffappellee's petition for extension for another five years, effective January 1, 1953, of his five-year lease concession granted under Resolution 46, series of 1947. Said Resolution 222, however, was revoked by the municipal council under a new set of members in its Resolution 3, series of 1952, for the reason, among others, that the extension was illegal, it having been granted without competitive public bidding. It is this last mentioned resolution that has been declared null and void by the trial court. The law (Sec. 2323 of the Revised Administrative Code) requires that when the exclusive privilege of fishery or the right to conduct a fish-breeding 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 (See Municipality of San Luis vs. Ventura, et al., 56 Phil., 329). 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 (See 3 McQuillin, Municipal Corporations, 2nd Ed., p. 1170; Harles Gaslight Co. vs. New York, 33 N.Y. 309; and 2 Dillon, Municipal Corporation, p. 1219). 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. In the case of Caltex (Phil.), Inc., et al. vs. Delgado Bros., Inc., et al., 96 Phil., 368, 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 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

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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 (See Morse vs. Boston, 148 N.E. 813253 Mass. 247.) 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 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. (38 Am. Jur. pp. 202-204). 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 plaintiffappellee'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." (13 C.J. p. 497) 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

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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. Wherefore, the appealed judgment is reversed; plaintiff-appellee is hereby ordered to pay the defendant-appellant under the latter's counterclaim the sum of P17,971.60 representing the unapproved and ineffective reduction by 20% of the original stipulated rental, for the period from July 1, 1949 to December 1, 1952 plus the further sum of P2,191.60 per month beginning December 1, 1952, to December 31, 1957, as reasonable compensation for the illegal retention of the Naujan fisheries. Without special pronouncement as to costs. Bengzon, Montemayor, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Endencia, and Barrera, JJ.,concur.

RESOLUTION April 18, 1960 GUTIERREZ DAVID, J.: In the above entitled case, which was decided on February 29, 1960, the plaintiff-appellee moves for reconsideration of the decision on the grounds (1) that in virtue of the dispositive portion thereof the plaintiff-appellee is ordered to pay the sum of P2,191.60 per month beginning December 1, 1952 to December 31, 1957 as reasonable compensation for the illegal retention of the Naujan fisheries, while the contract, which was declared illegal and void covered the period January 1, 1953 to December 31, 1957, so the period of payment of the sum of P2,191.60 should begin not from December 1, 1952 but from January 1, 1953; (2) that plaintiff-appellee has already paid to the defendant-appellant the said sum of P2,191.60 every month, from January 1, 1953 to December 31, 1957; (3) that by clerical error in the statement of facts of the decision (second paragraph) it appears that the extension of the lease contract commenced January 1, 1952, instead of January 1, 1953; and (4)that this Court ordered the plaintiff-appellee to pay defendant-appellant the sum of P17,971.60 representing the unapproved and ineffective reduction by 20% of the originally stipulated rental, which order, from the strictly legal point of view, cannot be assailed, yet on equitable grounds relief from such payment of the sum could be given for the reasons alleged in the motion. The defendant-appellant, on other hand, filed an "Answer to the Motion for Reconsideration and Application for Damages". The answer states: According to the evidence in this case, after the approval, in June, 1949, of Resolution 59, series of 1949, reducing the rental by 20%, the plaintiff-appellee paid defendant-appellant the reduced rentals from July 1, 1949 to December 31, 1952. The original lease contract "Exhibit "A", stipulates an annual rental of P26,300.00 payable every trimester, and 20% thereof is P5,260.00 or P1,315.00 per trimester, which amount plaintiff consequently failed to pay from July 1, 1949 to December 31, 1952. Since the period from July 1, 1949 to December 31, 1952 consists of 14 trimesters, the plaintiff-appellee failed to pay accordingly, the amount of P18,410.00 during the said period (session of April 12, 1955, t.s.n., pp. 10-11). However, this Honorable Court, in ordering the plaintiff to pay the sum of P17,971.60 computed and based the said amount from July 1, 1949 to December 1, 1952, such that the rental corresponding to the month of December, 1952 was not included in the decision (P18,410 -- P438.34 [representing 20% monthly reduction] P17,971.60 (which should be P17,971.66 to be exact). And since the total unpaid reduction amounting to P17,971.60 as found by the court in its decisions, does not include the rental for the month of December, 1952, this Court consequently had to order the plaintiff to pay defendant the full amount of

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the rental of P2,191.60 (P2,191.66 to be exact), which is one-twelfth (1/2) of P26,300.00, commencing from December 1, 1952 to December 31, 1967, otherwise, there would be a gap of one month, that is, there would be no rental for the entire month of December 1952. . . . After a careful consideration of grounds 1, 2 and 3 of the motion and the answer thereto, which involve clerical errors, this Court deems it necessary to amend the decision as follows: Part of the second paragraph to read: . . . the council adopted Resolution 222, series of 1951 extending the lease for another five (5) years beginning January 1, 1953, 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. The dispositive portion to read: Wherefore, the appealed judgment is reversed; plaintiff-appellee is hereby ordered to pay defendant-appellant under the latter's counterclaim the sum of P18,410.00 representing the unapproved and ineffective reduction by 20% of the originally stipulated rental, for the period from July 1, 1949 to December 31, 1952, plus the further sum of P2,191.60 per month beginning January 1, 1953 to December 31, 1957, as reasonable compensation for the illegal retention of the Naujan fisheries, unless the said sum of P2,191.60 per month has already been paid by the plaintiff-appellee to the defendant-appellant during the said period. Ground 4 of the Motion for Reconsideration is denied for lack of merit. And defendant-appellant's application for damages is likewise denied, but without prejudice to the filing of the same in the proper court. Paras, C.J., Bengzon, Montemayor, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., and Barrera, JJ.,concur.

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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-8847 October 31, 1957

PEDRO P. RIVERA, petitioner, vs. MUNICIPALITY OF MALOLOS, respondent. Diokno and Sison for petitioner. Office of the Solicitor General Ambrosio Padilla and Solicitor Pacifico V. Sian for respondent. PADILLA, J.: This is a petition under Rule 45 to review the decision of the Auditor General dated 14 January 1955, denying the claim of Pedro P. Rivera against the Municipality of Malolos, Bulacan, for payment of 2,700 cubic meters of crushed adobe stone (cascajo) and 1,400 cubic meters of gravel delivered in 1949 to the municipality in the total sum of P19,235, and the denial of the motion for reconsideration of the decision. Sometime in August 1949 the municipality of Malolos, Bulacan, called for bids for the supply of road construction materials to repair the road of the municipality. At the public bidding held on 28 August 1949 for the purpose, the petitioners bid was the lowest (Annex B, p. 52, record of the case). 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 (Annex C, p. 53, record of the case). 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 adobe stone (cascajo) and 1,400 cubic meters of gravel (Annex D, p. 54, record of the case). 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 (Annex G, p. 73, record of the case). 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." (Annex G-1, p. 74, record of the case). 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 municipality on 31 August 1949 (Annex H, p. 75, record of the case). 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 (Annex I, p. 76, record of the case). On 8 May 1952 the petitioner amended his complaint (Annex J, p. 77, record of the case). On 8 January 1954 the Court dismissed the case without prejudice (Annex K, p. 79, record of the case). On 11 January 1954 the petitioner sought the intervention of the Presidential Complaints and Committee, which forwarded 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

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the Provincial Auditor of Bulacan or his representative (p. 7, record of the case). On 1 March 1955, the petitioner requested the Deputy Auditor General to reconsider his decision (p. 40, record of the case). 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 (p. 3, record of the case), and this petition for review in this Court. On 9 March 1955, the 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. 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 and by and between the petitioner and the respondent, nor is there any question as to 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.1 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 contraction behalf of the municipality. Section 1912 refers to investigation 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 contracts 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;2 and that 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.

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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 of 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. The decision under review is affirmed, without pronouncement as to costs. Paras, C. J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., Endencia and Felix, J.J., concur.

Footnotes

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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-15948 January 31, 1963

PEDRO P. RIVERA, plaintiff-appellant, vs. CARLOS P. MACLANG, defendant-appellee. Job B. Madayag and Jose W. Diokno for plaintiff-appellant. Alfredo Granados for defendant-appellee. MAKALINTAL, J.: This case is before us on appeal by plaintiff from the decision of the Court of First Instance of Malolos, Bulacan, dismissing the complaint, without costs. The facts are stipulated by the parties and the case has been submitted for decision upon appellant's brief alone, appellee having failed to file a brief in reply. 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. Appellant 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 defendant-appellee Carlo P. 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. L8847. 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." The dismissal is erroneous. Our ruling in the previous case is that the contract was null and void visa-vis the Municipality of Malolos, by reason of non-compliance 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 defendant-appellee in his personal capacity on the strength of section 608 of the same code, which provides as follows:

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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, 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 it 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. The judgment appealed from is reversed and defendant-appellee is ordered to pay plaintiff-appellant the sum P19,235.00, with legal interest from the date the complaint was filed, and costs. Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this Honorable Court, without prejudice to the parties adducing other evidence to prove their case not covered by this stipulation of facts.
1wph1.t

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon and Regala, JJ., concur.

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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-9596 February 11, 1916

MARCOS MENDOZA, plaintiff-appellee, vs. FRANCISCO DE LEON, ET AL., defendants-appellants. Luis Morales for appellant. Hugo Sansano for appellee. TRENT, J.: 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 duly awarded to the plaintiff under the provisions of Act No. 1643 of the Philippine Commission. After use of a little more than one year, the plaintiff was forcibly ejected under and pursuance of a resolution adopted by the herein defendants, awarding a franchise for the same ferry to another person. 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 regulation 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. 1643 provides that the use of each fishery, fish-breeding ground, ferry, stable, market, and 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 two fold 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 applicable to it. The distinction between 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 been long recognized in the United States and there is no dissent from the doctrine. In Wilcox vs. City of Rochester (190 N. Y., 137), it was said: The broad general doctrine of the Maxmilian case (Maxmilian vs. Mayor, etc., New York, 62 N. Y. 160), which is certainly not now open to question in the courts of this State, is that "two kinds of duties are imposed on municipal corporations, the one governmental and a branch of the general administration of the state, the other quasi private or corporate;" and "that in the exercise of the latter duties the municipality is liable for the acts of its officers and agents, while in the former it is not." (Cullen, J., in Lefrois vs. Co. of Monroe, 162 N. Y., 563, 567.) The Maxmilian case is quoted with approval in Bond vs. Royston (130 Ga., 646). In Co. Comm's of Anne Arundel Co. vs. Duckett (20 Md., 468, 476; 83 Am. Dec., 557), it was said:

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With regard to the liability of a public municipal corporation for the acts of its officers, the distinction is between an exercise of those legislative powers which it holds for public purposes, and as part of the government of the country, and those private franchise which belong to it, as a creation of the law; within the sphere of the former, it enjoys, the exemption of the government, from responsibility for its own acts, and for the acts of those who are independent corporate officers, deriving their rights and duties from the sovereign power. But in regard to the latter, it is responsible for the acts of those who are in law its agents, though they may not be appointed by itself. This case was quoted with approval in Trammell vs. Russellville (34 Ark., 105; 36 Am. Rep., 1); and in McIlhenneyvs. Wilmington (127 N. C., 146; 50 L. R. A. 470). In Cummings vs. Lobsitz (42 Okla., 704; L. R. A., N. S., 1915 B, p. 415), it was said: A distinction is made between the liability of a municipal corporation for the acts of its officers in the exercise of powers which it possesses for public purpose and which it holds as agent of the state, and those powers which embrace private or corporate duties and are exercised for the advantage of the municipality and its inhabitants. When the acts of its officers come within the powers which it has as agent of the state, it is exempt from liability for its own acts and the acts of its officers; if the acts of the officer or agent of the city are for the special benefits of the corporation in its private or corporate interest, such officer is deemed the agent or servant of the city, but where the act is not in relation to a private or corporate interest of the municipality, but for the benefit of the public at large, such acts by the agents and servants are deemed to be acts by public or state officers, and for the public benefit. The distinction is also recognized by Dillon in his work on Municipal Corporations (5th ed.) section 38 and 39. As is indicated in some of the above quoted cases, the municipality is not liable for the acts of its officers or agents in the performance of its governmental functions. Governmental affairs do not lose their governmental character by being delegated to the municipal governments. Nor 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 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 protection afforded the property owner, are governmental functions. (Burke vs. City of South Omaha, 79 Neb., 793.) In Nicholson vs. Detroit (129 Mich., 246; 56 L. R. A., 601), it was said: It is the well-settled rule that the state is not liable to private persons who suffer injuries through the negligence of its officers and the rule extends to township and cities while in the performance of state functions, imposed upon them by law. This subject is fully discussed in Detroit vs. Blackeby (21 Mich., 84; 4 Am. Rep., 450). It was there held that cities are governmental agencies, and that their "officers are in no such sense municipal agents; that their negligence is the neglect of the municipality; nor will their misconduct be chargeable against them, unless act complained of the either authorized or ratified." And in a large number of cases it has been held that there is no such liability on the part of such

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governmental agency unless it has been imposed by statute, and in such case it is necessarily limited by the statute. In Claussen vs. City of Luverne (103 Minn., 491; 15 L. R. A., N. S., 698), it was said: It is elementary that neither the state nor any of the subdivisions, like a municipality, through which it operates, is liable for torts committed by public officers, save in definitely excepted classes of cases. The exemption is based upon the sovereign character of the state and its agencies, and upon the absence of obligation, and not on the ground that no means for remedy have been provided. "The government," said Mr. Justice Story, "does not undertake to guarantee to any person the fidelity of the officers or agents whom it employs, since that would involve in all its operations in endless embarrassments, difficulties and losses, which would be subversive of the public interest." (U.S. vs. Kirkpatrick, 9 Wheat., 720; 6 L. ed., 199; Beersvs. Arkansas, 20 How., 527; 15 L. ed., 991.) This general exemption has been applied to municipal corporations in so far as the acts complained of were, in the language of the memorandum of the trial court, "done in exercising powers for the public at large as a governing agency." While so acting, the city cannot be held liable for misfeasance; and ... the rule of respondeat superior has no application. Nor are officers or agents of the Government charged with the performance of governmental duties which are in their nature legislative, or quasi judicial, liable for the consequences of their official acts, unless it be shown that they act willfully and maliciously, and with the express purpose of inflicting injury upon the plaintiff. If they exercise their honest judgment in the performance of their duties, their errors cannot be charged against them. (People vs. May, 251 Ill., 54; Salt Lake County vs. Clinton [Utah, 1911], 117 Pac., 1075; Comanche County vs. Burks (Tex. Civ. App., 1914), 166 S. W., 470; Monnier vs. Godbold, 116 La., 165; 5 L. R. A., N. S., 463; Ray vs. Dodd, 132 Mo. App., 444; Johnson vs. Marsh, 82 N. J. L.M, 4; Gregory vs. Brooks, 37 Conn., 3645; Lecourt vs. Gaster, 50 La. Ann., 521.) So it may be said that in so far as its governmental functions are concerned, a municipality is not liable at all, unless expressly made so by statute; nor are its officers, so long as they perform their duties honestly and in good faith. The most common illustration of both phrases of this rule is the action for false imprisonment so often brought either against a municipality or a municipal police officer. (Bartlett vs. City of Columbus, 101 Ga., 300; 44 L. R. A., 795; Peter vs. City of Lindborg, 40 Kan., 654.) So, in Field vs. City of Des Moines (39 Iowa, 575), it was held that a municipality, acting under authority given it by the central government to destroy houses in the path of a conflagration, was not liable in damages in the absence of a statute expressly making it so. From what has already been said, it should be clear that 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 so far as its liability to third persons on contract or in tort is concerned. Its contracts, validly 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 of respondeat superiorapplies. 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 actionsex 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. (Dillon on Municipal Corporations, 5th ed., sec. 1610.) The same author says in section 1647:

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The rule of law is a general one, that the superior or employer must answer civilly of 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, 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 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) (Omaha Water Co. vs. Omaha, 12 L.R.A., N. S., 736l 77 C.C.A., 267; 147 Fed., 1; Judson vs. Borough of Winsted, 80 Conn., 3841 15 L. R. A., N. S., 91); 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) (Fisher vs. NewBern, 140 N. C., 506; 111 Am. St. Rep., 857); an agent who is at the same time a police officer and a caretaker of a municipal toll bridge (Woodhull vs. Mayor, etc., of New York, 150 N. Y., 450). 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 is it clear that the leasing of a municipal ferry to the highest bidder for a specified period of time is not a governmental but a 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 (5th ed., sec. 1306): 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 streets for 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. Again, this author, adopting the language of the court in In re Fay (15 Pick. [Mass.], 243), says, in section 277: If a municipal corporation, seized of a ferry, lease the same, through the agency of the mayor and aldermen, with a covenant of quiet enjoyment, this covenant will not restrain in them by statute, to license another ferry over the same waters, if in their judgment (which cannot be reviewed by the courts) the public necessity and convenience require it. On such a covenant the city may be liable to the covenantees; but the powers vested in the city officers as trustees for the public cannot be thus abrogated. If, however, city in its corporate capacity is the legal owner of an exclusive franchise, its grantees or lessees would hold it, notwithstanding any license to others, whether granted by the mayor and aldermen or any other tribunal. It seems clear, therefore, that under the provisions of 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 217

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 arises: 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 required 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 which will not cause the property to deteriorate. Questions must continually arise which are not expressly provided for in 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 held personally 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 change in the directory. ... The rule is that courts will not interfere even in the doubtful cases. But directors and managing officers 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 as 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 clear inference that no one 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. (Thompson on Corporations, sec. 1298.) 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 that 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 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 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 (R.G. No. 8173, March 28, 1914; not reported), nor the distinction made by the courts in the United States between the liability of a municipal corporation, made such acceptance of a village or city charter, and the involuntary quasi corporations known as counties, towns, school

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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. For the foregoing reasons, the judgment appealed from is affirmed, with cost. So ordered. Arellano, C.J., Torres, Johnson and Araullo, JJ., concur. Moreland, J., concurs in the result.

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Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. L-52179 April 8, 1991 MUNICIPALITY OF SAN FERNANDO, LA UNION, petitioner vs. HON. JUDGE ROMEO N. FIRME, JUANA RIMANDO-BANIA, IAUREANO BANIA, JR., SOR MARIETA BANIA, MONTANO BANIA, ORJA BANIA, AND LYDIA R. BANIA, respondents. Mauro C. Cabading, Jr. for petitioner. Simeon G. Hipol for private respondent.

MEDIALDEA, J.:p This is a petition for certiorari with prayer for the issuance of a writ of preliminary mandatory injunction seeking the nullification or modification of the proceedings and the orders issued by the respondent Judge Romeo N. Firme, in his capacity as the presiding judge of the Court of First Instance of La Union, Second Judicial District, Branch IV, Bauang, La Union in Civil Case No. 107BG, entitled "Juana Rimando Bania, et al. vs. Macario Nieveras, et al." dated November 4, 1975; July 13, 1976; August 23,1976; February 23, 1977; March 16, 1977; July 26, 1979; September 7, 1979; November 7, 1979 and December 3, 1979 and the decision dated October 10, 1979 ordering defendants Municipality of San Fernando, La Union and Alfredo Bislig to pay, jointly and severally, the plaintiffs for funeral expenses, actual damages consisting of the loss of earning capacity of the deceased, attorney's fees and costs of suit and dismissing the complaint against the Estate of Macario Nieveras and Bernardo Balagot. The antecedent facts are as follows: Petitioner Municipality of San Fernando, La Union is a municipal corporation existing under and in accordance with the laws of the Republic of the Philippines. Respondent Honorable Judge Romeo N. Firme is impleaded in his official capacity as the presiding judge of the Court of First Instance of La Union, Branch IV, Bauang, La Union. While private respondents Juana Rimando-Bania, Laureano Bania, Jr., Sor Marietta Bania, Montano Bania, Orja Bania and Lydia R. Bania are heirs of the deceased Laureano Bania Sr. and plaintiffs in Civil Case No. 107-Bg before the aforesaid court. 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. 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 compliant 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

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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, to wit: (1) Order dated November 4, 1975 dismissing the cross-claim 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 there 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. On October 10, 1979 the trial court rendered a decision, the dispositive portion is hereunder quoted as follows: IN VIEW OF ALL OF (sic) THE FOREGOING, judgment is hereby rendered for the plaintiffs, and 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. SO ORDERED. (Rollo, p. 30)

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Petitioner filed a motion for reconsideration and for a new trial without prejudice to another motion which was then pending. However, respondent judge issued another order dated November 7, 1979 denying the motion for reconsideration of the order of September 7, 1979 for having been filed out of time. 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. Petitioner maintains that the respondent judge committed grave abuse of discretion amounting to excess of jurisdiction in issuing the aforesaid orders and in rendering a decision. Furthermore, petitioner asserts that while appeal of the decision maybe available, the same is not the speedy and adequate remedy in the ordinary course of law. On the other hand, private respondents controvert the position of the petitioner and allege that the petition is devoid of merit, utterly lacking the good faith which is indispensable in a petition for certiorari and prohibition. (Rollo, p. 42.) In addition, the private respondents stress that petitioner has not considered that every court, including respondent court, has the inherent power to amend and control its process and orders so as to make them conformable to law and justice. (Rollo, p. 43.) The controversy boils down to the main issue of whether or not 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 quasidelict, as in Merritt v. Government of the Philippine Islands (34 Phil 311). (see United States of America v. Guinto, G.R. No. 76607, February 26, 1990, 182 SCRA 644, 654.) 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. (Ibid) 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. (Cruz, Philippine Political Law, 1987 Edition, p. 39)

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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." (United States of America vs. Guinto, supra, p. 659-660) Anent the issue of whether or not the municipality is liable for the torts committed by its employee, the test of liability of the municipality depends on whether or not the driver, acting in behalf of the municipality, is performing governmental or proprietary functions. As emphasized in the case of Torio vs. Fontanilla (G. R. No. L-29993, October 23, 1978. 85 SCRA 599, 606), 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. Another statement of the test is given in City of Kokomo vs. Loy, decided by the Supreme Court of Indiana in 1916, thus: 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." (112 N.E., 994-995) (Ibid, pp. 605-606.) 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. (Cruz, supra, p. 44.) 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." (Rollo, p. 29.) 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. We already stressed in the case of Palafox, et. al. vs. Province of Ilocos Norte, the District Engineer, and the Provincial Treasurer (102 Phil 1186) 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 though it may be imposed on the municipality no duty to pay monetary compensation.

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All premises considered, the Court is convinced that the respondent judge's dereliction in failing to resolve the issue of non-suability did not amount to grave abuse of discretion. But said judge exceeded his jurisdiction when it ruled on the issue of liability. ACCORDINGLY, the petition is GRANTED and the decision of the respondent court is hereby modified, absolving the petitioner municipality of any liability in favor of private respondents. SO ORDERED. Narvasa, Cruz, Gancayco and Grio-Aquino, JJ., concur.
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Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. 92087 May 8, 1992 SOFIA FERNANDO, in her behalf and as the legal guardian of her minor children, namely: ALBERTO & ROBERTO, all surnamed FERNANDO, ANITA GARCIA, NICOLAS LIAGOSO, ROSALIA BERTULANO, in her behalf and as the legal guardian of her minor children, namely: EDUARDO, ROLANDO, DANIEL, AND JOCELYN, all surnamed BERTULANO, PRIMITIVA FAJARDO in her behalf and as legal guardian of her minor children, namely: GILBERT, GLEN, JOCELYN AND JOSELITO, all surnamed FAJARDO, and EMETERIA LIAGOSO, in her behalf and as guardian ad litem, of her minor grandchildren, namely: NOEL, WILLIAM, GENEVIEVE and GERRY, all surnamed LIAGOSO, petitioners, vs. THE HONORABLE COURT OF APPEALS AND CITY OF DAVAO, respondents.

MEDIALDEA, J.: This is a petition for review on certiorari praying that the amended decision of the Court of Appeals dated January 11, 1990 in CA-G.R. No. C.V. 04846, entitled "Sofia Fernando, etc., et al. v. The City of Davao," be reversed and that its original decision dated January 31, 1986 be reinstated subject to the modification sought by the petitioners in their motion for partial reconsideration dated March 6, 1986. The antecedent facts are briefly narrated by the trial court, as follows: From the evidence presented we see the following 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. (p. 177, Records) On August 28, 1984, the trial court rendered a decision, the dispositive portion of which reads:

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IN VIEW OF THE FOREGOING, this case is hereby DISMISSED without pronouncement as to costs. SO ORDERED. (Records, p. 181) From the said decision, the petitioners appealed to the then Intermediate Appellate Court (now Court of Appeals). On January 3, 1986, the appellate court issued a decision, the dispositive portion of which reads: WHEREFORE, in view of the facts fully established and in the liberal interpretation of what the Constitution and the law intended to protect the plight of the poor and the needy, the ignorant and the indigent more entitled to social justice for having, in the unforgettable words of Magsaysay, "less in life," We hereby reverse and set aside the appealed judgment and render another one: 1. Ordering the defendant to pay to the plaintiffs Dionisio Fernando, Sofia Fernando and her minor children the following sums of money: a) Compensatory damages for his death P30,000.00 b) Moral damages P20,000.00 2. Ordering the defendant to pay to the plaintiffs David Garcia and Anita Garcia the following sums of money: a) Compensatory damages for his death P30,000.00 b) Moral damages P20,000.00 3. Ordering the defendant to pay to the plaintiff Rosalia Bertulano (sic) and her minor children the following sums of money a) Compensatory damages for his death P30,000.00 b) Moral damages P20,000.00 4. Ordering the defendant to pay to the plaintiff Primitiva Fajardo and her minor children the following sums of money: a) Compensatory damages for his death P30,000.00 b) Moral damages P20,000.00 5. Ordering the defendant to pay to the plaintiffs Norma Liagoso, Nicolas Liagoso and Emeteria Liagoso and her minor grandchildren the following sums of money: a) Compensatory damages for his death P30,000.00 b) Moral damages P20,000.00 The death compensation is fixed at P30,000.00 in accordance with the rulings of the Supreme Court starting with People vs. De la Fuente, Nos. L-63251-52, December 29, 1983, 126 SCRA 518 reiterated in the recent case of People vs. Nepomuceno,

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No. L-41412, May 27, 1985. Attorney's fees in the amount of P10,000.00 for the handling of the case for the 5 victims is also awarded. No pronouncement as to costs. SO ORDERED. (Rollo, pp. 33-34) Both parties filed their separate motions for reconsideration. On January 11, 1990, the Court of Appeals rendered an Amended Decision, the dispositive portion of which reads: WHEREFORE, finding merit in the motion for reconsideration of the defendantappellee Davao City, the same is hereby GRANTED. The decision of this Court dated January 31, 1986 is reversed and set aside and another one is hereby rendered dismissing the case. No pronouncement as to costs. SO ORDERED. (Rollo, p. 25) Hence, this petition raising the following issues for resolution: 1. Is the respondent Davao City guilty of negligence in the case at bar? 2. If so, is such negligence the immediate and proximate cause of deaths of the victims hereof? (p. 72, Rollo) 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 (Corliss v. Manila Railroad Company, L-21291, March 28, 1969, 27 SCRA 674, 680). 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). As to what would constitute a negligent act in a given situation, the case of Picart v. Smith (37 Phil. 809, 813) provides Us the answer, to wit: The test by which to determine the existence of negligence in a particular case may be stated as follows: Did the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, then he is guilty of negligence. The law here in effect adopts the standard supposed to be supplied by the imaginary conduct of the discreet pater familias of the Roman law. The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before him. The law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence and determines liability by that. The question as to what would constitute the conduct of a prudent man in a given situation must of course be always determined in the light of human experience and in view of the facts involved in the particular case. Abstract speculation cannot here be of much value but this much can be profitably said: Reasonable men govern their conduct by the circumstances which are before them or known to them. They are not, and are not supposed to be, omniscient of the future. Hence they can be expected to take care only when there is something before them to suggest or warn of danger. Could a prudent man, in the case under consideration, foresee harm as a result of the course actually pursued? If so, it was the duty of the actor to take precautions to guard against that harm.Reasonable foresight of harm, followed by the ignoring of the suggestion born of this provision, is always necessary before negligence can be held to exist. Stated in these terms, the proper criterion for determining the existence of negligence in a given case is this: Conduct is said to be

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negligent when a prudent man in the position of the tortfeasor would have foreseen that an effect harmful to another was sufficiently probable warrant his foregoing the conduct or guarding against its consequences. (emphasis supplied) 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 prove 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 occurred (Vda. de Bataclan, et al. v. Medina, 102 Phil. 181, 186). 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. InTaylor v. Manila Electric Railroad and Light Co. (16 Phil. 8, 29-30), this Court set a guideline for a judicious assessment of the situation: Difficulty seems to be apprehended in deciding which acts of the injured party shall be considered immediate causes of the accident. The test is simple. Distinction must be made between the accident and the injury, between the event itself, without which there could have been no accident, and those acts of the victim not entering into it, independent of it, but contributing to his own proper hurt. For instance, the cause of the accident under review was the displacement of the crosspiece or the failure to replace it. This produced the event giving occasion for damages that is, the sinking of the track and the sliding of the iron rails. To this event, the act of the plaintiff in walking by the side of the car did not contribute, although it was an element of the damage which came to himself. Had the crosspiece been out of place wholly or partly through his act or omission of duty, that would have been one of the determining causes of the event or accident, for which he would have been responsible. Where he contributes to the principal occurrence, as one of its determining factors, he can not recover. Where, in conjunction with the occurrence, he contributes only to his own injury, he may recover the amount that the defendant responsible for the event should pay for such injury, less a sum deemed a suitable equivalent for his own imprudence. (emphasis Ours) Applying all these established doctrines in the case at bar and after a careful scrutiny of the records, We find no compelling reason to grant the petition. We affirm. 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 (TSN, May 24, 1983, pp. 22-25). 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 re-empty the septic tank since 1956, people in the market have been using the public toilet for their personal necessities but have remained unscathed. The testimonies of Messrs. Danilo Garcia and David Secoja (plaintiffs'-petitioners' witnesses) on this point are relevant, to wit: Atty. Mojica, counsel for defendant Davao City:

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xxx xxx xxx The place where you live is right along the Agdao creek, is that correct? DANILO GARCIA: A Yes, sir. Q And to be able to go to the market place, where you claim you have a stall,, you have to pass on the septic tank? A Yes, sir. Q Day in and day out, you pass on top of the septic tank? A Yes, sir. Q Is it not a fact that everybody living along the creek passes on top of this septic tank as they go out from the place and return to their place of residence, is that correct? And this septic tank, rather the whole of the septic tank, is covered by lead . . .? A Yes, sir. there is cover. Q And there were three (3) of these lead covering the septic tank? A Yes, sir. Q And this has always been closed? A Yes, sir. (TSN, November 26, 1979, pp. 21-23, emphasis supplied) ATTY. JOVER, counsel for the plaintiffs: Q You said you are residing at Davao City, is it not? DAVID SEJOYA: A Yes, sir. Q How long have you been a resident of Agdao? A Since 1953. Q Where specifically in Agdao are you residing? A At the Public Market. Q Which part of the Agdao Public Market is your house located? A Inside the market in front of the fish section.

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Q Do you know where the Agdao septic tank is located? A Yes, sir. Q How far is that septic tank located from your house? A Around thirty (30) meters. Q Have you ever had a chance to use that septic tank (public toilet)? A Yes, sir. Q How many times, if you could remember? A Many times, maybe more than 1,000 times. Q Prior to November 22, 1975, have you ever used that septic tank (public toilet)? A Yes, sir. Q How many times have you gone to that septic tank (public toilet) prior to that date, November 22, 1975? A Almost 1,000 times. (TSN, February 9, 1983, pp. 1-2) 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 (TSN, November 4, 1983, p. 51). Hence, the toxic gas from the waste matter could not have leaked out because the septic tank was air-tight (TSN, ibid, p. 49). The only indication that the septic tank in the case at bar was full and needed emptying was when water came out from it (TSN, September 13, 1983, p. 41). 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 (TSN, November 4, 1983, pp. 50-51). The petitioners submitted no competent evidence to corroborate their oral testimonies or rebut the testimony given by 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. The testimony of Engr. Alindada on this matter is elucidative: ATTY. ALBAY:

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Q Mr. Witness, you mentioned the several aspects of the approval of the building permit which include the plans of an architect, senitary engineer and electrical plans. All of these still pass your approval as building official, is that correct? DEMETRIO ALINDADA: A Yes. Q So there is the sanitary plan submitted to and will not be approved by you unless the same is in conformance with the provisions of the building code or sanitary requirements? A Yes, for private building constructions. Q How about public buildings? A For public buildings, they are exempted for payment of building permits but still they have to have a building permit. Q But just the same, including the sanitary plans, it require your approval? A Yes, it requires also. Q Therefore, under the National Building Code, you are empowered not to approve sanitary plans if they are not in conformity with the sanitary requirements? A Yes. Q Now, in private or public buildings, do you see any warning signs in the vicinity of septic tanks? A There is no warning sign. Q In residential buildings do you see any warning sign? A There is none. ATTY. AMPIG: We submit that the matter is irrelevant and immaterial, Your Honor. ATTY. ALBAY: But that is in consonance with their cross-examination, your Honor. COURT: Anyway it is already answered. ATTY. ALBAY:

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Q These warning signs, are these required under the preparation of the plans? A It is not required. Q I will just reiterate, Mr. Witness. In residences, for example like the residence of Atty. Ampig or the residence of the honorable Judge, would you say that the same principle of the septic tank, from the water closet to the vault, is being followed? A Yes. ATTY. ALBAY: That will be all, Your Honor. (TSN, December 6, 1983, pp. 62-63) 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. In Culion Ice, Fish and Elect. Co., v. Phil. Motors Corporation (55 Phil. 129, 133), We held that when a person holds himself out as being competent to do things requiring professional skill, he will be held liable for negligence if he fails to exhibit the care and skill of one ordinarily skilled in the particular work which he attempts to do (emphasis Ours). 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. . . . (Rollo, p. 23) 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 the case was yet no award to commence work on the septic tank, the duty of the market master or his security guards to supervise the work could not have started (TSN, September 13, 1983, p. 40). 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 (TSN, ibid, pp. 38-39). The surreptitious way in which the victims did their job without clearance from the market master or any

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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." (Rollo, p. 24) 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. ACCORDINGLY, the amended decision of the Court of Appeals dated January 11, 1990 is AFFIRMED. No costs. SO ORDERED. Narvasa, C.J., Cruz, Grio-Aquino and Bellosillo, JJ., concur.
The Lawphil Project - Arellano Law Foundation

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FIRST DIVISION [G.R. No. 90107. August 21, 1992.] DOMINGO A. TUZON and LOPE C. MAPAGU, Petitioners, v. HONORABLE COURT OF APPEALS and SATURNINO T. JURADO, Respondents. Alfredo J . Donato and Orlando B. Consigna, for Petitioners. Hermenegildo G. Rapanan for Private Respondent.

SYLLABUS

1. CIVIL LAW; DONATION; ACT OF LIBERALITY AND NEVER OBLIGATORY; CASE AT BAR. While it would appear from the wording of the resolution that the municipal government merely intends to "solicit" the 1% contribution from the threshers, the implementing agreement seems to make the donation obligatory and a condition precedent to the issuance of the mayors permit. This goes against the nature of a donation, which is an act of liberality and is never obligatory. 2. ID.; HUMAN RELATIONS; ARTICLE 27 OF THE NEW CIVIL CODE; PURPOSE; CASE AT BAR. The private respondent anchors his claim for damages on Article 27 of the New Civil Code, which reads: Art. 27. Any person suffering material or moral loss because a public servant or employee refuses or neglects, without just cause, to perform his official duty may file an action for damages and other relief against the latter, without prejudice to any disciplinary administrative action that may be taken. It has been remarked that one purpose of this article is to end the "bribery system, where the public official, for some flimsy excuse, delays or refuses the performance of his duty until he gets some kind of pabagsak." Official inaction may also be due to plain indolence or a cynical indifference to the responsibilities of public service. According to Phil. Match Co. Ltd. v. City of Cebu, (81 SCRA 99) the provision presupposes that the refusal or omission of a public official to perform his official duty is attributable to malice or inexcusable negligence. In any event, the erring public functionary is justly punishable under this article for whatever loss or damage the complainant has sustained. In the present case, it has not even been alleged that the Mayor Tuzons refusal to act on the private respondents application was an attempt to compel him to resort to bribery to obtain approval of his application. It cannot be said either that the mayor and the municipal treasurer were motivated by personal spite or were grossly negligent in refusing to issue the permit and license to Jurado. It is no less significant that no evidence has been offered to show that the petitioners singled out the private respondent for persecution. Neither does it appear that the petitioners stood to gain personally from refusing to issue to Jurado the mayors permit and license he needed. The petitioners were not Jurados business competitors nor has it been established that they intended to favor his competitors. On the contrary, the record discloses that the resolution was uniformly applied to all the threshers in the municipality without discrimination or preference. 3. TAXATION; ENACTMENT OF TAX ORDINANCE WHERE TAX BASE OR SUBJECT NOT SIMILAR OR COMPARABLE TO ANY OF THOSE ENUMERATED IN LOCAL TAX CODE; REQUIREMENTS. If, on the other hand, it is to be considered a tax ordinance, then it must be shown in view of the challenge raised by the private respondents to have been enacted in accordance with the requirements of the Local Tax Code. These would include the holding of a public hearing on the measure and its subsequent approval by the Secretary of Finance, in addition to the usual requisites for publication of ordinances in general. 4. ADMINISTRATIVE LAW; PUBLIC OFFICERS; NOT PERSONALLY LIABLE FOR INJURIES OCCASIONED BY PERFORMANCE OF OFFICIAL DUTY WITHIN SCOPE OF OFFICIAL AUTHORITY; ERRONEOUS INTERPRETATION OF ORDINANCE DOES NOT CONSTITUTE BAD FAITH; CASE AT BAR. The Court is convinced that the petitioners acted within the scope of their authority and in consonance with their honest interpretation of the resolution in question. We agree that it was not for them to rule on its validity. In the absence of a judicial decision declaring it invalid, its legality would have to be presumed (in fact, both the trial court and the appellate court said there was nothing wrong with it). As executive officials of the municipality, they had the duty to enforce it as long as it had not been repealed by the Sangguniang Bayan or annulled by the courts. . . . As a rule, a public officer, whether judicial, quasi-judicial or executive, is not personally liable to one injured in consequence of an act performed within the scope of his official authority, and in line of his official duty. . . . It has been held that an erroneous interpretation of an ordinance does not constitute nor does it amount to bad faith that would entitle an aggrieved party to an award for damages. (Philippine Match Co. Ltd. v. City of Cebu, 81 SCRA 99).

DECISION

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CRUZ, J.:

The petitioners are questioning the decision of the respondent court holding them liable in damages to the private respondent for refusing to issue to him a mayors permit and license to operate his palay-threshing business. The case goes back to March 14, 1977, when the Sangguniang Bayan of Camalaniugan, Cagayan, unanimously adopted Resolution No. 9, reading pertinently as follows:
jgc:chan roble s.com.p h

"WHEREAS, the municipality of Camalaniugan, Cagayan has embarked in the construction of Sports and Nutrition Center, to provide the proper center wherein the government program of Nutrition and physical development of the people, especially the youth could be well administered:
jg c:chan roble s.com.p h

"WHEREAS, the available funds for the construction of the said project is far (sic) being adequate to finance its completion; "WHEREAS, the Sangguniang Bayan have (sic) thought of fund-raising scheme, to help finance the construction of the project, by soliciting 1% donation from the thresher operators who will apply for a permit to thresh within the jurisdiction of this municipality, of all the palay threshed by them to help finance the continuation of the construction of the Sports and Nutrition Center Building.
chan roble s law li bra ry : red

RESOLVED, therefore, as it is hereby resolved, that the municipal treasurer is hereby authorized to enter into an agreement to all thresher operators, that will come to apply for a permit to thresh palay within the jurisdiction of this municipality to donate 1% of all the palay threshed by them.
chanrobles v irt ual lawl ibra ry

To implement the above resolution, petitioner Lope C. Mapagu, then incumbent municipal treasurer, prepared the following document for signature of all thresher/owner/operators applying for a mayors permit:
c hanro b1es vi rt ual 1aw li bra ry

AGREEMENT That I, _____________ thresher-owner-operator hereby voluntarily agree to donate to the municipality of Camalaniugan, Cagayan, one percent (1%) of all palay threshed by me within the jurisdiction of Camalaniugan, Cagayan, to help finance the completion of the construction of the sports and nutrition center building of Camalaniugan per Resolution No. 9 dated March 14, 1977 of the Sanggunian Bayan; That I also agree to report weekly the total number of palay threshed by me to the municipal treasurer and turn over the corresponding 1% share of the municipality for the said project mentioned above. Signed this day of __________, 1977. ____________________ Thresher/Owner/Operator Soon thereafter, private respondent Saturnino T. Jurado sent his agent to the municipal treasurers office to pay the license fee of P285.00 for thresher operators. Mapagu refused to accept the payment and required him to first secure a mayors permit. For his part, Mayor Domingo Tuzon, the herein other petitioner, said that Jurado should first comply with Resolution No. 9 and sign the agreement before the permit could be issued. Jurado ignored the requirement. Instead, he sent the P285.00 license fee by postal money order to the office of the municipal treasurer who, however, returned the said amount. The reason given was the failure of the respondent to comply with Resolution No. 9. On April 4, 1977, Jurado filed with the Court of First Instance of Cagayan a special civil action for mandamus with actual and moral damages to compel the issuance of the mayors permit and license. On May 31, 1977, he filed another petition with the same court. this time for declaratory judgment against the said resolution (and the implementing agreement) for being illegal either as a donation or as a tax measure. Named defendants were the same respondents and all the members of the Sangguniang Bayan of Camalaniugan. In a joint decision dated March 31, 1982, the trial court 1 upheld the challenged measure. However, it dismissed the claims for damages of both parties for lack of evidence.
chan roblesv irt uallawl ibra ry

Jurado appealed to the Court of Appeals, which in it decision dated August 31, 1989, 2 affirmed the validity of Resolution No. 9 and the implementing agreement. Nevertheless, it found Tuzon and Mapagu to have

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acted maliciously and in bad faith when they denied Jurados application for the mayors permit and license. Consequently, they were held liable thus:
cha nrob 1es vi rtua l 1aw lib ra ry

WHEREFORE, in view of all the foregoing, the decision appealed from is hereby MODIFIED in that appellees Mayor and Municipal Treasurer are hereby ordered to pay jointly and severally the appellant the following amounts: P20,000.00 as actual damages; P5,000.00 as moral damages; and P3,000.00 as attorneys fees. The petitioners now seek relief from this Court on the grounds that:
chanrob1es vi rt ual 1aw li bra ry

1. Respondent Court gravely abused its discretion when it concluded that the refusal on the part of the petitioners to issue a Mayors permit and license to operate a thresher to the private respondent is "unjustified and constitutes bad faith" on their part.
chanrob les law li bra ry : red

2. Respondent Court gravely abused its discretion when it concluded that compliance with Resolution No. 9 and its implementing agreement is not mandatory despite its own ruling and finding that Resolution No. 9 is valid because the same was passed in accordance with the provisions of the 1973 Constitution and the Local Tax Code. 3. Respondent court likewise gravely abused its discretion when it awarded damages to the private respondent, contrary to the findings of facts of the trial court to the effect that petitioners were not guilty of bad faith and malice and because from the records, there is no proof or evidence to support such award. The petitioners stress that they were acting in their official capacity when they enforced the resolution, which was duly adopted by the Sangguniang Bayan and later declared to be valid by both the trial and the appellate courts. For so acting, they cannot be held personally liable in damages, more so because their act was not tainted with bad faith or malice. This was the factual finding of the trial court and the respondent court was not justified in reversing it. Commenting on the petition, the private respondent avers that the signing of the implementing agreement was not a condition sine qua non to the issuance of a permit and license. Hence the petitioners unwarranted refusal to issue the permit and license despite his offer to pay the required fee constituted bad faith on their part. Jurado further assails Resolution No. 9 and the implementing agreement for compelling the thresher to donate something which he does not yet own. He also claims that the measure contravenes the limitations on the taxing powers of local government units under Section 5, of the Local Tax Code. His conclusion is that he is entitled to actual and moral damages from the petitioners under Article 27 of the Civil Code, and to the payment of attorneys fees as well, for their refusal or neglect, without just cause, to perform their official duties. We need not concern ourselves at this time with the validity of Resolution No. 9 and the implementing agreement because the issue has not been raised in this petition as an assigned error of the respondent court. The measures have been sustained in the challenged decision, from which the respondent has not appealed. The decision is final and binding as to him. It is true that he did question the measures in his Comment, but only half-heartedly and obliquely, to support his claim for damages. We may therefore defer examination of these measures to a more appropriate case, where it may be discussed more fully by the proper parties.
c hanro blesvi rt ual|awlib rary

We may merely observe at this time that in sustaining Resolution No. 9, the respondent court said no more than that:
chanrob1e s virtual 1aw lib rary

It was passed by the Sangguniang Bayan of Camalaniugan in the lawful exercise of its legislative powers in pursuance to Article XI, Section 5 of the 1973 Constitution which provided that: "Each local government unit shall have the power to create (sic) its own source of revenue and to levy taxes, subject to such limitation as may be provided by law." And under Article 4, Section 29 of Presidential Decree No. 231 (Enacting a Local Tax Code for Provinces, Cities, Municipalities and Barrios), it is provided that:
jgc:c h anroble s.com.p h

"Section 29. Contributions. In addition to the above specified taxing and other revenue-raising powers, the barrio council may solicit monies, materials, and other contributions from the following sources:
cha nro b1es vi rtua l 1aw lib ra ry

x "(c) Monies from private agencies and individuals."

cralaw vi rtua 1aw lib rary

That is an over simplification. The respondent court has not offered any explanation for its conclusion that

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the challenged measures are valid nor does it discuss its own concept of the nature of the resolution.

cralawna d

While it would appear from the wording of the resolution that the municipal government merely intends to "solicit" the 1% contribution from the threshers, the implementing agreement seems to make the donation obligatory and a condition precedent to the issuance of the mayors permit. This goes against the nature of a donation, which is an act of liberality and is never obligatory. 3 If, on the other hand, it is to be considered a tax ordinance, then it must be shown in view of the challenge raised by the private respondents to have been enacted in accordance with the requirements of the Local Tax Code. These would include the holding of a public hearing on the measure 4 and its subsequent approval by the Secretary of Finance, 5 in addition to the usual requisites for publication of ordinances in general. 6 The only issue that has to be resolved in this case is whether or not the petitioners are liable in damages to the private respondent for having withheld from him the mayors permit and license because of his refusal to comply with Resolution No. 9.
cralawnad

The private respondent anchors his claim for damages on Article 27 of the New Civil Code, which reads: Art. 27. Any person suffering material or moral loss because a public servant or employee refuses or neglects, without just cause, to perform his official duty may file an action for damages and other relief against the latter, without prejudice to any disciplinary administrative action that may be taken.

chanrob 1es vi rtual 1aw lib rary

It has been remarked that one purpose of this article is to end the "bribery system, where the public official, for some flimsy excuse, delays or refuses the performance of his duty until he gets some kind of pabagsak." 7 Official inaction may also be due to plain indolence or a cynical indifference to the responsibilities of public service. According to Phil. Match Co. Ltd. v. City of Cebu, 8 the provision presupposes that the refusal or omission of a public official to perform his official duty is attributable to malice or inexcusable negligence. In any event, the erring public functionary is justly punishable under this article for whatever loss or damage the complainant has sustained. In the present case, it has not even been alleged that the Mayor Tuzons refusal to act on the private respondents application was an attempt to compel him to resort to bribery to obtain approval of his application. It cannot be said either that the mayor and the municipal treasurer were motivated by personal spite or were grossly negligent in refusing to issue the permit and license to Jurado. It is no less significant that no evidence has been offered to show that the petitioners singled out the private respondent for persecution. Neither does it appear that the petitioners stood to gain personally from refusing to issue to Jurado the mayors permit and license he needed. The petitioners were not Jurados business competitors nor has it been established that they intended to favor his competitors. On the contrary, the record discloses that the resolution was uniformly applied to all the threshers in the municipality without discrimination or preference.
chan roble s.com:c ralaw:re d

The Court is convinced that the petitioners acted within the scope of their authority and in consonance with their honest interpretation of the resolution in question. We agree that it was not for them to rule on its validity. In the absence of a judicial decision declaring it invalid, its legality would have to be presumed (in fact, both the trial court and the appellate court said there was nothing wrong with it). As executive officials of the municipality, they had the duty to enforce it as long as it had not been repealed by the Sangguniang Bayan or annulled by the courts. 9 . . . As a rule, a public officer, whether judicial, quasi-judicial or executive, is not personally liable to one injured in consequence of an act performed within the scope of his official authority, and in line of his official duty.
chanrob les vi rtual lawlib rary

. . . It has been held that an erroneous interpretation of an ordinance does not constitute nor does it amount to bad faith that would entitle an aggrieved party to an award for damages. (Philippine Match Co. Ltd. v. City of Cebu, 81 SCRA 99). The private respondent complains that as a result of the petitioners acts, he was prevented from operating his business all this time and earning substantial profit therefrom, as he had in previous years. But as the petitioners correctly observed, he could have taken the prudent course of signing the agreement under protest and later challenging it in court to relieve him of the obligation to "donate." Pendente lite, he could have continued to operate his threshing business and thus avoided the lucro cesante that he now says was the consequence of the petitioners wrongful act. He could have opted for the less obstinate but still dissentient action, without loss of face, or principle, or profit. In view of the foregoing, We find that the petitioners, having acted in good faith in the discharge of their

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official functions, should be absolved from liability. ACCORDINGLY, the appealed decision is reversed insofar as it holds the petitioners liable in damages and attorneys fees to the private Respondent. No costs. SO ORDERED. Grio-Aquino and Bellosillo, JJ., concur. Medialdea, J., No part. Endnotes:

1. Decision penned by Judge Napoleon R. Flojo of the Court of First Instance, First Judicial District, Second Branch, Aparri, Cagayan, Rollo, p. 71. 2. Kapunan Santiago M., J, Ponente; Francisco, Ricardo J. and Gonzaga-Reyes, Minerva, JJ., concurring; Rollo, p. 13. 3. Article 725, Civil Code. 4. Sections 49 and 50, Local Tax Code. 5. Ibid. 6. Section 11, Local Government Code (now in Section 59 of the Local Government Code (LGC) and Section 43, Local Tax Code (now in Section 188, LGC of 1991). 7. Paras, E., Civil Code of the Philippines, 1989, pp. 145-146. 8. 81 SCRA 99. 9. Section 44, Local Tax Code.

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Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-29993 October 23, 1978 LAUDENCIO TORIO, GUILLERMO EVANGELISTA, MANUEL DE GUZMAN, ALFONSO R. MAGSANOC, JESUS MACARANAS, MAXIMO MANANGAN, FIDEL MONTEMAYOR, MELCHOR VIRAY, RAMON TULAGAN, all Members of the Municipal Council of Malasiqui in 1959, Malasiqui, Pangasinan, petitioners, vs. ROSALINA, ANGELINA, LEONARDO, EDUARDO, ARTEMIO, ANGELITA, ANITA, ERNESTO, NORMA, VIRGINIA, REMEDIOS and ROBERTO, all surnamed FONTANILLA, and THE HONORABLE COURT OF APPEALS,respondents. G.R. No. L-30183 October 23, 1978 MUNICIPALITY OF MALASIQUI, petitioner, vs. ROSALINA, ANGELINA, LEONARDO, EDUARDO, ARTEMIO, ANGELITA, ANITA, ERNESTO, NORMA, VIRGINIA, REMEDIOS and ROBERTO, all surnamed FONTANILLA, and the Honorable COURT OF APPEALS,respondents. Julian M. Armas, Assistant Provincial Fiscal for petitioners. Isidro L. Padilla for respondents.

MUOZ PALMA, J.: These Petitions for review present the issue of whether or not the celebration of a town fiesta authorized by a municipal council under Sec. 2282 of the Municipal Law as embodied in the Revised Administrative Code is a governmental or a corporate or proprietary function of the municipality. A resolution of that issue will lead to another, viz the civil liability for damages of the Municipality of Malasiqui, and the members of the Municipal Council of Malasiqui, province of Pangasinan, for a death which occurred during the celebration of the town fiesta on January 22, 1959, and which was attributed to the negligence of the municipality and its council members. The following facts are not in dispute: 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 sub-committee 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 Jose Macaraeg supervised the construction of the stage and as constructed the stage for the "zarzuela" was "5- meters by 8 meters in size, had a wooden floor high at the rear and was supported by 24 bamboo posts 4 in a row in front, 4 in the rear and 5 on each side with bamboo braces." 1

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The "zarzuela" entitled "Midas Extravaganza" 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 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. Fontanilia was taken to tile San Carlos General Hospital where he died in the afternoon of the following day. The heirs of Vicente Fontanilia filed a complaint with the Court of First Instance of Manila on September 11, 1959 to recover damages. Named party-defendants were the Municipality of Malasiqui, the Municipal Council of Malasiqui and all the individual members of the Municipal Council in 1959. Answering the complaint defendant municipality invoked inter alia the principal defense that as a legally and duly organized public corporation it performs sovereign functions and the holding of a town fiesta was an exercise of its governmental functions from which no liability can arise to answer for the negligence of any of its agents. The defendant councilors inturn maintained that they merely acted as agents of the municipality in carrying out the municipal ordinance providing for the management of the town fiesta celebration and as such they are likewise not liable for damages as the undertaking was not one for profit; furthermore, they had exercised due care and diligence in implementing the municipal ordinance. 2 After trial, the Presiding Judge, Hon. Gregorio T. Lantin narrowed the issue to whether or not the defendants exercised due diligence 'm the construction of the stage. From his findings he arrived at the conclusion that the 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. 3 The Fontanillas appealed to the Court of Appeals. In a decision Promulgated on October 31, 1968, the Court of Appeals through its Fourth Division composed at the time of Justices Salvador V. Esguerra, Nicasio A. Yatco and Eulogio S. Serrano reversed the trial court's decision and ordered all the defendants-appellees to pay jointly and severally the heirs of Vicente Fontanilla the sums of P12,000.00 by way of moral and actual damages: P1200.00 its attorney's fees; and the costs. 4 The case is now before Us on various assignments of errors all of which center on the proposition stated at the sentence of this Opinion and which We repeat: Is the celebration of a town fiesta an undertaking in the excercise of a municipality's governmental or public function or is it or a private or proprietary character? 1. Under Philippine laws municipalities are political bodies corporate and as such ag endowed with the faculties of municipal corporations to be exercised by and through their respective municipal governments in conformity with law, and in their proper corporate name, they may inter alia sue and be sued, and contract and be contracted with.5 The powers of a municipality are twofold in character public, governmental or political on the one hand, and corporate, private, or proprietary on the other. Governmental powers are those exercised by the corporation in administering the powers of the state and promoting the public welfare and they include the legislative, judicial public, and political Municipal powers on the other hand are exercised for the special benefit and advantage of the community and include those which are ministerial private and corporate. 6

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As to when a certain activity is governmental and when proprietary or private, that is generally a difficult matter to determine. The evolution of the municipal law in American Jurisprudence, for instance, has shown that; none of the tests which have evolved and are stated in textbooks have set down a conclusive principle or rule, so that each case will have to be determined on the basis of attending circumstances. In McQuillin on Municipal Corporations, the rule is stated thus: "A municipal corporation proper has ... a public character as regards the state at large insofar as it is its agent in government, and private (so-called) insofar as it is to promote local necessities and conveniences for its own community. 7 Another statement of the test is given in City of Kokomo v. Loy, decided by the Supreme Court of Indiana in 1916, thus: Municipal corporations exist in a dual capacity, and their functions are two fold. 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 the 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 in. individual capacity, and not for the state or sovereign power. (112 N. E 994-995) In the early Philippine case of Mendoza v. de Leon 1916, the Supreme Court, through Justice Grant T. Trent, relying mainly on American Jurisprudence classified certain activities of the municipality as governmental, e.g.: regulations against fire, disease, preservation of public peace, maintenance of municipal prisons, establishment of schools, post-offices, etc. while the following are corporate or proprietary in character, viz: municipal waterwork, slaughter houses, markets, stables, bathing establishments, wharves, ferries, and fisheries. 8 Maintenance of parks, golf courses, cemeteries and
airports among others, are also recognized as municipal or city activities of a proprietary character.
9

2. This 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. If the injury is caused in the course of the performance of a governmental function or duty no recovery, as a rule, can be. had from the municipality unless there is an existing statute on the matter, 10 nor from its officers, so long as they performed their duties honestly and in good faith or that
they did not act wantonly and maliciously. 11 In Palafox, et al., v. Province of Ilocos Norte, et al., 1958, a truck driver employed by the provincial government of Ilocos Norte ran over Proceto Palafox in the course of his work at the construction of a road. The Supreme Court in affirming the trial court's dismissal of the complaint for damages held that the province could not be made liable because its employee was in the performance of a governmental function the construction and maintenance of roads and however tragic and deplorable it may be, the death of Palafox imposed on the province no duty to pay monetary consideration. 12

With respect to proprietary functions, the settled rule is that a municipal corporation can be held liable to third persons ex contract 13 or ex delicto. 14 Municipal corporations are subject to be sued upon contracts and in tort. ... xxx xxx xxx The rule of law is a general one, that the superior or employer must answer civilly for the negligence or want of skill of its agent or servant in the course or fine of his employment, by which another, who is free from contributory fault, is injured.

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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 co-exist. ... (Dillon on Municipal Corporations, 5th ed. Sec. 1610,1647, cited in Mendoza v. de Leon, supra. 514) 3. Coming to the cam before Us, and applying the general tests given above, We hold that the ho of the town fiesta in 1959 by the municipality of Malsiqui Pangasinan was an exercise of a private or proprietary function of the municipality. Section 2282 of the Chatter on Municipal Law of the Revised Administrative Code provides: Section 2282. Celebration of fiesta. fiesta may be held in each municipality not oftener than once a year upon a date fixed by the municipal council A fiesta s not be held upon any other date than that lawfully fixed therefor, except when, for weighty reasons, such as typhoons, foundations, earthquakes, epidemics, or other public ties, the fiesta cannot be hold 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 nonetheless it is private undertaking as distinguished from the maintenance of public schools, jails, and the like which are for public service. As stated earlier, 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 proprietary in character. Easily, no overnmental or public policy of the state is involved in the celebration of a town fiesta. 15 4. It follows that under the doctrine of respondent superior, petitioner-municipality is to be held liable for damages for the death of Vicente Fontanilia if that was at- tributable to the negligence of the municipality's officers, employees, or agents. 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 u 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. 16 That being the case, it
becomes incredible that any person in his right mind would remove those principal braces and leave the

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front portion of the stage practically unsuported Moreover, if that did happen, there was indeed negligence as there was lack of suspension 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 go. 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 stags 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. 17 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 Post 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 filed to take the necessary steps to maintain the safety of the stage for the use of the participants in the stage presentation prepared in connection with the celebration of the town fiesta, particularly, in preventing non participants or spectators from mounting and accumulating on the stage which was not constructed to meet the additional weight- the defendant-appellees were negligent and are liable for the death of Vicente Fontanilla . (pp. 30-31, rollo, L-29993) 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." 18 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." 19 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. 20 We agree. Quite relevant to that argument is the American case of 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, heldinter 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 duty. 21

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We can say that the deceased Vicente Fontanilla was similarly situated as Sander 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 Sanders had the right to expect that he would be exposed to danger on that occasion. Lastly, petitioner or appellant Municipality cannot evade ability and/or liability under the c 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. 22 ... 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 the can hold them responsible for the manner in which they discharge their trust, and if those duties relate to the exercise of corporate powers, and are for the 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." ... (Dillon on Municipal Corporations, 5th Ed., Vol IV, p. 2879) 5. The remaining question to be resolved centers on the liability of the municipal councilors who enacted the ordinance and created the fiesta committee. The Court of Appeals held the councilors jointly and solidarity liable with the municipality for damages under Article 27 of the Civil Code which provides that d any person suffering ing 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 at the latter. 23 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. 24 We agree with petitioners that the Court of Appeals erred in applying Article 27 of the Civil Code against the for this particular article covers a case of nonfeasance 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 a plain error committed by respondent court which however is not invoked in petitioners' brief. In Miguel v. The Court of appeal. et al., the Court, through Justice, now Chief Justice, Fred Ruiz Castro, held that 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 tills is author under Sec. 7, Rule 51 of the Rules of Court. 25 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

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composing it 26 and the latter are not as a rule co-responsible in an action for damages for tort or
negligence culpa aquilla committed by the corporation's employees or agents unless there is a showing of bad faith or gross or wanton negligence on their part. 27

xxx xxx xxx The ordinary doctrine is that a director, merely by reason of his office, is not personally Stable for the torts of his corporation; he Must be shown to have personally voted for or otherwise participated in them ... Fletcher Encyclopedia Corporations, Vol 3A Chapt 11, p. 207) 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. ... (pp. 207-208, Ibid.) xxx xxx xxx Directors who merely employ one to give a fireworks Ambition on the corporate are not personally liable for the negligent acts of the exhibitor. (p. 211, Ibid.) On these people We absolve Use 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. 6. One last point We have to resolve is on the award of attorney's fees by respondent court. Petitioner-municipality assails the award. Under paragraph 11, Art. 2208 of the Civil Code attorney's fees and expenses of litigation may be granted when the court deems it just and equitable. In this case of Vicente Fontanilla, although respondent appellate court failed to state the grounds for awarding attorney's fees, the records show however that attempts were made by plaintiffs, now private respondents, to secure an extrajudicial compensation from the municipality: that the latter gave prorases and assurances of assistance but failed to comply; and it was only eight month after the incident that the bereaved family of Vicente Fontanilla was compelled to seek relief from the courts to ventilate what was believed to be a just cause. 28 We hold, therefore, that there is no error committed in the grant of attorney's fees which after all is a matter of judicial discretion. The amount of P1,200.00 is fair and reasonable. PREMISES CONSIDERED, We AFFIRM in toto the decision of the Court of Appeals insofar as the Municipality of Malasiqui is concerned (L-30183), and We absolve the municipal councilors from liability and SET ASIDE the judgment against them (L-9993). Without pronouncement as to costs. SO ORDERED, Teehankee (Chairman), Makasiar, Fernandez, and Guerrero, JJ., concur.

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Footnotes 1 pp- 3-4 of Petitioner's brief 2 pp. 35-37, rollo L-29993 3 pp- 42-44, Ibid 4 pp. 21-31, Ibid. 5 Sec. 2125, Art. 1, Municipal Law as embodied in the Revised Administrative Code. 6 Mendoza v. de In 33 Phil 508; 56 Am Jur 2d 254, sec 199; Martin on the Revised Administrative Code, 1963 ed., pp. 482-483, citing Cooley's Municipal Corporation, pp. 136-137. 7 2nd Ed. Vol 1, Sec. 12&, p. 381, cited in Dept. of Treasury v. City of Evansville, Sup. Ct. of Indiana, 60 N.E. 2nd 952,954. 8 supra, p. 509 9 Dept. of Treasury v. City of Evansville. supra, p. 956 10 For instance, Art. 2189, Civil Code provides "Art. 2189. Provinces, cities and municipalities shall be liable for damages for the death of, or injuries, suffered by, any person by reason of the defective condition of roads, streets, bridges, public buildings, and other public works under their control or supervision. " 11 Mendoza v. de Leon, supra, p 513. In Palma v. Graciano, the City of Cebu, et al., 99 Phil. 72, the Court held that although the prosecution of crimes is a governmental function and as a rule the province and City of Cebu are not civilly liable by reason thereof, nonetheless when public official goes beyond the scope of this duty, particularly when acting tortiously, he is not entitled to protection on account of his office but is liable for his acts like any private individual. 12 L-10659, January 31, 1958, Unrep 102 Phil. 1186 13 Municipality of Paoay Ilocos Norte v. Manaois, et al., 86 Phil. 629; Municipality of Moncada v. Cajuigan et al., 21 Phil. 184 14 Mendoza v. de Leon, supra, p. 513 15 We came across an interesting case which shows that surrounding circumstances plus the political, social, and cultural backgrounds may have a decisive bearing on this question. The case of Pope v. City of New Haven et al, was an action to recover damages for personal injuries caused during a Fourth of July fireworks display resulting in the death of a bystander alleged to have been caused by defendants' negligence. The defendants demurred to the complaint invoking the defense that the city was engaged in the performance of a public governmental duty from which it received no pecuniary benefit and for negligence, in i lie performance 4t which no statutory liability is imposed. This demurrer was sustained by the Superior Court of New Haven Country. Plaintiff sought to amend his complaint to allege that the celebration was for the corporate advantage of the city. This was denied. In affirming the order, the Supreme Court of Errors of Connection held inter alia.

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Municipal corporations are exempt from liability for the negligent performance of purely public governmental' duties, Illness made liable by statute ... "A municipal corporation, which under permissive authority of its charter or of statue, concluded a public Court of July celebration, including a display, of fireworks, and sent up a bomb intended to explode in the air, but which Jailed to explode until it reached the ground and then killed a spectator, was engaged in the performance of a governmental duty. (99 A.R. 51) This decision was concurred in by three Judges while two dissented. At any rate the rationale of the Majority Opinion is evident from ttis excerpt: July 4th. or, when that date tails upon Sunday, July 5th. is made a public holiday, called Independence Day, by our statutes. All or nearly all of the other states have similar statutes. While there is no United States statute making a similar provision, the different departments of the government recognize, and have recognized since the government was established, July 4th as a national holiday. 'Throughout the country it has been recognized and celebrated as such. These celebrations, calculated to entertain and instruct the people generally and to arouse and stimulate patriotic sentiments and love of country, frequently take the form of literary exercises consisting of patriotic speeches and the reading of the Constitution, accompartied by a musical program including patriotic airs sometimes preceded by the firing of cannon and followed by fireworks. That such celebrations are of advantage to the. general public and their promotion a proper subject of legislation can hardly be questioned. ... Ibid p. 52) 16 See page 8 of Court of Appeals decision, p. 28 rollo L-29993 17 p. 29, Ibid. Page 612 18 De Gala-Sison v. Manalo, 8 SCRA 595-, Ramos v. Pepsi-Cola Bottling Co 19 SCRA 289; Tan v. Court of Appeals, et al., 20 SCRA 54; Chan v. Court of Appeals, et al., 33 SCRA 737, among others. 19 19 Cal Jur., P. 543; Corliss v. Manila Railroad Co., 27 SCRA 674 " 20 Respondents brief p. 70, rollo L-29993 21 129 P. 2d 511, 514 22 See page 8 of this Decision for quotation from Dillon on Municipal Corporations. 23 p. 31, rollo L-29993 24 pp. 1-3, petitioners brief 25 29 SCRA 760 26 Banque General Belge et al., v. Walter Bull & Co Inc. and Walter Bull, 47 Off. Gaz., No. 1, 140 27 See Mindanao Motor Line, Inc. et al., v. Court of Industrial Relations, et al., L- 6 SCRA 710

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28 pp. 34, 72-73, rollo L-29993

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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-23052 January 29, 1968

CITY OF MANILA, petitioner, vs. GENARO N. TEOTICO and COURT OF APPEALS, respondents. City Fiscal Manuel T. Reyes for petitioner. Sevilla, Daza and Associates for respondents. CONCEPCION, C.J.: Appeal by certiorari from a decision of the Court of Appeals. On January 27, 1958, at about 8:00 p.m., Genaro N. Teotico was at the corner of the Old Luneta and P. Burgos Avenue, Manila, within a "loading and unloading" zone, waiting for a jeepney to take him down town. After waiting for about five minutes, he managed to hail a jeepney that came along to a stop. As he stepped down from the curb to board the jeepney, and took a few steps, he fell inside an uncovered and unlighted catch basin or manhole on P. Burgos Avenue. Due to the fall, his head hit the rim of the manhole breaking his eyeglasses and causing broken pieces thereof to pierce his left eyelid. As blood flowed therefrom, impairing his vision, several persons came to his assistance and pulled him out of the manhole. One of them brought Teotico to the Philippine General Hospital, where his injuries were treated, after which he was taken home. In addition to the lacerated wound in his left upper eyelid, Teotico suffered contusions on the left thigh, the left upper arm, the right leg and the upper lip apart from an abrasion on the right infra-patella region. These injuries and the allergic eruption caused by anti-tetanus injections administered to him in the hospital, required further medical treatment by a private practitioner who charged therefor P1,400.00. As a consequence of the foregoing occurrence, Teotico filed, with the Court of First Instance of Manila, a complaint which was, subsequently, amended for damages against the City of Manila, its mayor, city engineer, city health officer, city treasurer and chief of police. As stated in the decision of the trial court, and quoted with approval by the Court of Appeals, At the time of the incident, plaintiff was a practicing public accountant, a businessman and a professor at the University of the East. He held responsible positions in various business firms like the Philippine Merchandising Co., the A.U. Valencia and Co., the Silver Swan Manufacturing Company and the Sincere Packing Corporation. He was also associated with several civic organizations such as the Wack Wack Golf Club, the Chamber of Commerce of the Philippines, Y's Men Club of Manila and the Knights of Rizal. As a result of the incident, plaintiff was prevented from engaging in his customary occupation for twenty days. Plaintiff has lost a daily income of about P50.00 during his incapacity to work. Because of the incident, he was subjected to humiliation and ridicule by his business associates and friends. During the period of his treatment, plaintiff was under constant fear and anxiety for the welfare of his minor children since he was their only support. Due to the filing of this case, plaintiff has obligated himself to pay his counsel the sum of P2,000.00. On the other hand, the defense presented evidence, oral and documentary, to prove that the Storm Drain Section, Office of the City Engineer of Manila, received a report of the uncovered condition of a catchbasin at the corner of P. Burgos and Old Luneta Streets, Manila, on January 24, 1958, but the same was covered on the same day (Exhibit 4); that again the iron cover of the same catch basin was reported missing on January 30, 1958, but

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the said cover was replaced the next day (Exhibit 5); that the Office of the City Engineer never received any report to the effect that the catchbasin in question was not covered between January 25 and 29, 1968; that it has always been a policy of the said office, which is charged with the duty of installation, repair and care of storm drains in the City of Manila, that whenever a report is received from whatever source of the loss of a catchbasin cover, the matter is immediately attended to, either by immediately replacing the missing cover or covering the catchbasin with steel matting that because of the lucrative scrap iron business then prevailing, stealing of iron catchbasin covers was rampant; that the Office of the City Engineer has filed complaints in court resulting from theft of said iron covers; that in order to prevent such thefts, the city government has changed the position and layout of catchbasins in the City by constructing them under the sidewalks with concrete cement covers and openings on the side of the gutter; and that these changes had been undertaken by the city from time to time whenever funds were available. After appropriate proceedings the Court of First Instance of Manila rendered the aforementioned decision sustaining the theory of the defendants and dismissing the amended complaint, without costs. On appeal taken by plaintiff, this decision was affirmed by the Court of Appeals, except insofar as the City of Manila is concerned, which was sentenced to pay damages in the aggregate sum of P6,750.00. 1 Hence, this appeal by the City of Manila. The first issue raised by the latter is whether the present case is governed by Section 4 of Republic Act No. 409 (Charter of the City of Manila) reading: The city shall not be liable or held for damages or injuries to persons or property arising from the failure of the Mayor, the Municipal Board, or any other city officer, to enforce the provisions of this chapter, or any other law or ordinance, or from negligence of said Mayor, Municipal Board, or other officers while enforcing or attempting to enforce said provisions. or by Article 2189 of the Civil Code of the Philippines which provides: Provinces, cities and municipalities shall be liable for damages for the death of, or injuries suffered by, any person by reason of defective conditions of road, streets, bridges, public buildings, and other public works under their control or supervision. Manila maintains that the former provision should prevail over the latter, because Republic Act 409, is a special law, intended exclusively for the City of Manila, whereas the Civil Code is a general law, applicable to the entire Philippines. The Court of Appeals, however, applied the Civil Code, and, we think, correctly. It is true that, insofar as its territorial application is concerned, Republic Act No. 409 is a special law and the Civil Code a general legislation; but, as regards the subject-matter of the provisions above quoted, Section 4 of Republic Act 409 establishes a general rule regulating the liability of the City of Manila for: "damages or injury to persons or property arising from the failure of" city officers "to enforce the provisions of" said Act "or any other law or ordinance, or from negligence" of the city "Mayor, Municipal Board, or other officers while enforcing or attempting to enforce said provisions." Upon the other hand, Article 2189 of the Civil Code constitutes a particular prescription making "provinces, cities and municipalities . . . liable for damages for the death of, or injury suffered by any person by reason" specifically "of the defective condition of roads, streets, bridges, public buildings, and other-public works under their control or supervision." In other words, said section 4 refers to liability arising from negligence, in general, regardless of the object thereof, whereas Article 2189 governs liability due to "defective streets," in particular. Since the present action is based upon the alleged defective condition of a road, said Article 2189 is decisive thereon.

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It is urged that the City of Manila cannot be held liable to Teotico for damages: 1) because the accident involving him took place in a national highway; and 2) because the City of Manila has not been negligent in connection therewith. As regards the first issue, we note that it is based upon an allegation of fact not made in the answer of the City. Moreover, Teotico alleged in his complaint, as well as in his amended complaint, that his injuries were due to the defective condition of a street which is "under the supervision and control" of the City. In its answer to the amended complaint, the City, in turn, alleged that "the streets aforementioned were and have been constantly kept in good condition and regularly inspected and the storm drains and manholes thereof covered by the defendant City and the officers concerned" who "have been ever vigilant and zealous in the performance of their respective functions and duties as imposed upon them by law." Thus, the City had, in effect, admitted that P. Burgos Avenue was and is under its control and supervision. Moreover, the assertion to the effect that said Avenue is a national highway was made, for the first time, in its motion for reconsideration of the decision of the Court of Appeals. Such assertion raised, therefore, a question of fact, which had not been put in issue in the trial court, and cannot be set up, for the first time, on appeal, much less after the rendition of the decision of the appellate court, in a motion for the reconsideration thereof. At any rate, under Article 2189 of the Civil Code, it is not necessary for the liability therein established to attach that the defective roads or streets belong to the province, city or municipality from which responsibility is exacted. What said article requires is that the province, city or municipality have either "control or supervision" over said street or road. Even if P. Burgos Avenue were, therefore, a national highway, this circumstance would not necessarily detract from its "control or supervision" by the City of Manila, under Republic Act 409. In fact Section 18(x) thereof provides: Sec. 18. Legislative powers. The Municipal Board shall have the following legislative powers: xxx xxx xxx

(x) Subject to the provisions of existing law to provide for the laying out, construction and improvement, and to regulate the use of streets, avenues, alleys, sidewalks, wharves, piers, parks, cemeteries, and other public places; to provide for lighting, cleaning, and sprinkling of streets and public places; . . . to provide for the inspection of, fix the license fees for and regulate the openings in the same for the laying of gas, water, sewer and other pipes, the building and repair of tunnels, sewers, and drains, and all structures in and under the same and the erecting of poles and the stringing of wires therein; to provide for and regulate cross-works, curbs, and gutters therein, . . . to regulate traffic and sales upon the streets and other public places; to provide for the abatement of nuisances in the same and punish the authors or owners thereof; to provide for the construction and maintenance, and regulate the use, of bridges, viaducts and culverts; to prohibit and regulate ball playing, kite-flying, hoop rolling, and other amusements which may annoy persons using the streets and public places, or frighten horses or other animals; to regulate the speed of horses and other animals, motor and other vehicles, cars, and locomotives within the limits of the city; to regulate the lights used on all vehicles, cars, and locomotives; . . . to provide for and change the location, grade, and crossing of railroads, and compel any such railroad to raise or lower its tracks to conform to such provisions or changes; and to require railroad companies to fence their property, or any part thereof, to provide suitable protection against injury to persons or property, and to construct and repair ditches, drains, sewers, and culverts along and under their tracks, so that the natural drainage of the streets and adjacent property shall not be obstructed. This authority has been neither withdrawn nor restricted by Republic Act No. 917 and Executive Order No. 113, dated May 2, 1955, upon which the City relies. Said Act governs the disposition or

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appropriation of the highway funds and the giving of aid to provinces, chartered cities and municipalities in the construction of roads and streets within their respective boundaries, and Executive Order No. 113 merely implements the provisions of said Republic Act No. 917, concerning the disposition and appropriation of the highway funds. Moreover, it provides that "the construction, maintenance and improvement of national primary, national secondary and national aid provincial and city roads shall be accomplished by the Highway District Engineers and Highway City Engineers under the supervision of the Commissioner of Public Highways and shall be financed from such appropriations as may be authorized by the Republic of the Philippines in annual or special appropriation Acts." Then, again, the determination of whether or not P. Burgos Avenue is under the control or supervision of the City of Manila and whether the latter is guilty of negligence, in connection with the maintenance of said road, which were decided by the Court of Appeals in the affirmative, is one of fact, and the findings of said Court thereon are not subject to our review. WHEREFORE, the decision appealed from should be as it is hereby affirmed, with costs against the City of Manila. It is so ordered.
1wph1.t

Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur. Footnotes Medical fees P1,400.00; Lost income P350.00; Moral damages P3,000.00; and Attorney's fees P2,000.00.
1

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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-3738 November 20, 1951

CONCEPCION ABELLA, plaintiff-appellee, vs. MUNICIPALITY OF NAGA, ET AL., defendants. MUNICIPALITY OF NAGA, defendant-appellant. Ramon Imperial for plaintiff-appellee. Luis B. Uvero for defendant-appellant. TUASON, J.: This is an appeal from a judgment of the Court of First Instance of Camarines Sur sentencing the municipality of Naga, now Naga City, to pay the plaintiff, now appellee, P300 damages resulting from the closing of a municipal street. The complaint alleged two causes of action and the parties submitted in the court below an agreed statement of facts on both. As the second cause of action was dismissed and the plaintiff did not appeal, and as the stipulated facts are long and somewhat involved in many or most of them have become irrelevant to the issues formulated in this appeal, it will suffice to state for the purpose of these issues, that the defendant municipality 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)." The appellant is the municipality of or city of Naga and the burden of its contention is that "it acted and exercised its police 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. The appellant misses the point. 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.

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Paras, C.J., Feria, Pablo, Padilla, Reyes, Jugo and Bautista Angelo, JJ., concur.

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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-24950 March 25, 1926

VIUDA DE TAN TOCO, plaintiff-appellant, vs. THE MUNICIPAL COUNCIL OF ILOILO, defendant-appellee. Arroyo & Evangelista for appellant. Provincial Fiscal Borromeo Veloso for appelle. VILLAMOR, J.: It appears from the record that the widow of Tan Toco had 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.1 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. 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. From this order the plaintiff has appealed by bill of exceptions. The fundamental question raised by appellant in her four assignments of error is whether or not 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.

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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. Commenting upon article 344, Mr. Manresa says that "In accordance with administrative legislation" (Spanish) we must distinguish, as to the patrimonial property of the towns, "between that a common benefit and that which is private property of the town. The first differs from property for public use in that generally its enjoyment is less, as it is limited to neighbors or to a group or class thereof; and, furthermore, such use, more or less general, is not intrinsic with this kind of property, for by its very nature it may be enjoyed as though it were private property. The third group, that is, private property, is used in the name of the town or province by the entities representing it and, like and private property, giving a source of revenue." Such distinction, however, is of little practical importance in this jurisdiction in view of the different principles underlying the functions of a municipality under the American rule. Notwithstanding this, we believe that the principle governing property of the public domain of the State is applicable to property for public use of the municipalities as said municipal is similar in character. The principle is that the property for public use of the State is not within the commerce of man and, consequently, is inalienable and not subject to prescription. Likewise, property for public of the municipality is not within the commerce of man so long as it is used by the public and, consequently, said property is also inalienable. The American Law is more explicit about this matter as expounded by Mcquilin in Municipal Corporations, volume 3, paragraph 1160, where he says that: States statutes often provide the court houses, jails and other buildings owned by municipalities and the lots on which they stand shall be exempt from attachment and execution. But independent of express statutory exemption, as a general proposition, property, real and personal, held by municipal corporations, in trust for the benefit of their inhabitants, and used for public purposes, is exempt. For example, public buildings, school houses, streets, squares, parks, wharves, engines and engine houses, and the like, are not subject to execution. So city waterworks, and a stock of liquors carried in a town dispensary, are exempt. The reason for the exemption is obvious. Municipal corporations are created for public purposes and for the good of the citizens in their aggregate or public capacity. That they may properly discharge such public functions corporate property and revenues are essential, and to deny them these means the very purpose of their creation would be materially impeded, and in some instances practically destroy it. Respecting this subject the Supreme Court of Louisiana remarked: "On the first view of this question there is something very repugnant to the moral sense in the idea that a municipal corporation should contract debts, and that, having no resources but the taxes which are due to it, these should not be subjected by legal process to the satisfaction of its creditors. This consideration, deduced from the principles of moral equity has only given way to the more enlarged contemplation of the great and paramount interests of public order and the principles of government." 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

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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. In Corpus Juris, vol 23, page 355, the following is found: Where property of a municipal or other public corporation is sough to be subjected to execution to satisfy judgments recovered against such corporation, the question as to whether such property is leviable or not is to be determined by the usage and purposes for which it is held. The rule is that property held for public uses, such as public buildings, streets, squares parks, promenades, wharves, landing places fire engines, hose and hose carriages, engine houses, public markets, hospitals, cemeteries, and generally everything held for governmental purposes, is not subject to levy and sale under execution against such corporation. The rule also applies to funds in the hands of a public officer. Likewise it has been held that taxes due to a municipal corporation or country cannot be seized under execution by a creditor of such corporation. But where a municipal corporation or country owns in its proprietary, as distinguished from its public or governmental capacity, property not useful or used for a public purpose but for quasi private purposes, the general rule is that such property may be seized and sold under execution against the corporation, precisely as similar property of individuals is seized and sold. But property held for public purposes is not subject to execution merely because it is temporarily used for private purposes, although if the public use is wholly abandoned it becomes subject to execution. Whether or not property held as public property is necessary for the public use is a political, rather than a judicial question. In the case of City of New Orleans vs. Louisiana Construction Co., Ltd. (140 U. S., 654; 35 Law. ed., 556), it was held that a wharf for unloading sugar and molasses, open to the public, was property for the public use of the City of New Orleans and was not subject to attachment for the payment of the debts of the said city. In that case it was proven that the said wharf was a parcel of land adjacent to the Mississippi River where all shipments of sugar and molasses taken to New Orleans were unloaded. That city leased the said wharf to the Louisiana Construction Company, Ltd., in order that it might erect warehouses so that the merchandise upon discharge might not be spoiled by the elements. The said company was given the privilege of charging certain fees for storing merchandise in the said warehouses and the public in general had the right to unload sugar and molasses there by paying the required fees, 10 per cent of which was turned over to the city treasury. The United States Supreme Court on an appeal held that the wharf was public property, that it never ceased to be such in order to become private property of the city; wherefore the company could not levy execution upon the wharf in order to collect the amount of the judgment rendered in favor thereof. In the case of Klein vs. City of New Orleans (98 U. S., 149; 25 Law. ed., 430), the Supreme Court of the United States that a public wharf on the banks of the Mississippi River was public property and not subject to execution for the payment of a debt of the City of New Orleans where said wharf was located.

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In this case a parcel of land adjacent to the Mississippi River, which formerly was the shore of the river and which later enlarged itself by accession, was converted into a wharf by the city for public use, who charged a certain fee for its use. It was held that the land was public property as necessary as a public street and was not subject to execution on account of the debts of the city. It was further held that the fees collected where also exempt from execution because they were a part of the income of the city. In the case of Tufexis vs. Olaguera and Municipal Council of Guinobatan (32 Phil., 654), the question raised was whether for the payment of a debt to a third person by the concessionaire of a public market, the said public market could be attached and sold at public auction. The Supreme Court held that: Even though a creditor is unquestionably entitled to recover out of his debtor's property, yet when among such property there is included the special right granted by the Government of usufruct in a building intended for a public service, and when this privilege is closely related to a service of a public character, such right of the creditor to the collection of a debt owed him by the debtor who enjoys the said special privilege of usufruct in a public market is not absolute and may be exercised only through the action of court of justice with respect to the profits or revenue obtained under the special right of usufruct enjoyed by debtor. 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 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. (Law of November 12, 1896, extended to the overseas provinces by the royal order of August 3, 1886.) 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

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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 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. By virtue of all the foregoing, the judgment appealed from should be and is hereby affirmed with costs against the appellant. So ordered. Avancea, C. J., Street, Malcolm, Ostrand, Johns, Romualdez and Villa-Real., JJ., concur.

Footnotes
1

R. G. No. L-22617, promulgated November 28, 1924, not reported.

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Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

G.R. Nos. 89898-99 October 1, 1990 MUNICIPALITY OF MAKATI, petitioner, vs. THE HONORABLE COURT OF APPEALS, HON. SALVADOR P. DE GUZMAN, JR., as Judge RTC of Makati, Branch CXLII ADMIRAL FINANCE CREDITORS CONSORTIUM, INC., and SHERIFF SILVINO R. PASTRANA,respondents. Defante & Elegado for petitioner. Roberto B. Lugue for private respondent Admiral Finance Creditors' Consortium, Inc. RESOLUTION

CORTS, J.: The present petition for review is an off-shoot of expropriation proceedings initiated by petitioner Municipality of Makati against private respondent Admiral Finance Creditors Consortium, Inc., Home Building System & Realty Corporation and one Arceli P. Jo, involving a parcel of land and improvements thereon located at Mayapis St., San Antonio Village, Makati and registered in the name of Arceli P. Jo under TCT No. S-5499. It appears that the action for eminent domain was filed on May 20, 1986, docketed as Civil Case No. 13699. Attached to petitioner's complaint was a certification that a bank account (Account No. S/A 265-537154-3) had been opened with the PNB Buendia Branch under petitioner's name containing the sum of P417,510.00, made pursuant to the provisions of Pres. Decree No. 42. After due hearing where the parties presented their respective appraisal reports regarding the value of the property, respondent RTC judge rendered a decision on June 4, 1987, fixing the appraised value of the property at P5,291,666.00, and ordering petitioner to pay this amount minus the advanced payment of P338,160.00 which was earlier released to private respondent. After this decision became final and executory, private respondent moved for the issuance of a writ of execution. This motion was granted by respondent RTC judge. After issuance of the writ of execution, a Notice of Garnishment dated January 14, 1988 was served by respondent sheriff Silvino R. Pastrana upon the manager of the PNB Buendia Branch. However, respondent sheriff was informed that a "hold code" was placed on the account of petitioner. As a result of this, private respondent filed a motion dated January 27, 1988 praying that an order be issued directing the bank to deliver to respondent sheriff the amount equivalent to the unpaid balance due under the RTC decision dated June 4, 1987. Petitioner filed a motion to lift the garnishment, on the ground that the manner of payment of the expropriation amount should be done in installments which the respondent RTC judge failed to state in his decision. Private respondent filed its opposition to the motion.

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Pending resolution of the above motions, petitioner filed on July 20, 1988 a "Manifestation" informing the court that private respondent was no longer the true and lawful owner of the subject property because a new title over the property had been registered in the name of Philippine Savings Bank, Inc. (PSB) Respondent RTC judge issued an order requiring PSB to make available the documents pertaining to its transactions over the subject property, and the PNB Buendia Branch to reveal the amount in petitioner's account which was garnished by respondent sheriff. In compliance with this order, PSB filed a manifestation informing the court that it had consolidated its ownership over the property as mortgagee/purchaser at an extrajudicial foreclosure sale held on April 20, 1987. After several conferences, PSB and private respondent entered into a compromise agreement whereby they agreed to divide between themselves the compensation due from the expropriation proceedings. Respondent trial judge subsequently issued an order dated September 8, 1988 which: (1) approved the compromise agreement; (2) ordered PNB Buendia Branch to immediately release to PSB the sum of P4,953,506.45 which corresponds to the balance of the appraised value of the subject property under the RTC decision dated June 4, 1987, from the garnished account of petitioner; and, (3) ordered PSB and private respondent to execute the necessary deed of conveyance over the subject property in favor of petitioner. Petitioner's motion to lift the garnishment was denied. Petitioner filed a motion for reconsideration, which was duly opposed by private respondent. On the other hand, for failure of the manager of the PNB Buendia Branch to comply with the order dated September 8, 1988, private respondent filed two succeeding motions to require the bank manager to show cause why he should not be held in contempt of court. During the hearings conducted for the above motions, the general manager of the PNB Buendia Branch, a Mr. Antonio Bautista, informed the court that he was still waiting for proper authorization from the PNB head office enabling him to make a disbursement for the amount so ordered. For its part, petitioner contended that its funds at the PNB Buendia Branch could neither be garnished nor levied upon execution, for to do so would result in the disbursement of public funds without the proper appropriation required under the law, citing the case of Republic of the Philippines v. Palacio [G.R. No. L-20322, May 29, 1968, 23 SCRA 899]. Respondent trial judge issued an order dated December 21, 1988 denying petitioner's motion for reconsideration on the ground that the doctrine enunciated in Republic v. Palacio did not apply to the case because petitioner's PNB Account No. S/A 265-537154-3 was an account specifically opened for the expropriation proceedings of the subject property pursuant to Pres. Decree No. 42. Respondent RTC judge likewise declared Mr. Antonio Bautista guilty of contempt of court for his inexcusable refusal to obey the order dated September 8, 1988, and thus ordered his arrest and detention until his compliance with the said order. Petitioner and the bank manager of PNB Buendia Branch then filed separate petitions for certiorari with the Court of Appeals, which were eventually consolidated. In a decision promulgated on June 28, 1989, the Court of Appeals dismissed both petitions for lack of merit, sustained the jurisdiction of respondent RTC judge over the funds contained in petitioner's PNB Account No. 265-537154-3, and affirmed his authority to levy on such funds. Its motion for reconsideration having been denied by the Court of Appeals, petitioner now files the present petition for review with prayer for preliminary injunction. On November 20, 1989, the Court resolved to issue a temporary restraining order enjoining respondent RTC judge, respondent sheriff, and their representatives, from enforcing and/or carrying out the RTC order dated December 21, 1988 and the writ of garnishment issued pursuant thereto. Private respondent then filed its comment to the petition, while petitioner filed its reply. Petitioner not only reiterates the arguments adduced in its petition before the Court of Appeals, but also alleges for the first time that it has actually two accounts with the PNB Buendia Branch, to wit:

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xxx xxx xxx (1) Account No. S/A 265-537154-3 exclusively for the expropriation of the subject property, with an outstanding balance of P99,743.94. (2) Account No. S/A 263-530850-7 for statutory obligations and other purposes of the municipal government, with a balance of P170,098,421.72, as of July 12, 1989. xxx xxx xxx [Petition, pp. 6-7; Rollo, pp. 11-12.] Because the petitioner has belatedly alleged only in this Court the existence of two bank accounts, it may fairly be asked whether the second account was opened only for the purpose of undermining the legal basis of the assailed orders of respondent RTC judge and the decision of the Court of Appeals, and strengthening its reliance on the doctrine that public funds are exempted from garnishment or execution as enunciated in Republic v. Palacio[supra.] At any rate, the Court will give petitioner the benefit of the doubt, and proceed to resolve the principal issues presented based on the factual circumstances thus alleged by petitioner. Admitting that its PNB Account No. S/A 265-537154-3 was specifically opened for expropriation proceedings it had initiated over the subject property, petitioner poses no objection to the garnishment or the levy under execution of the funds deposited therein amounting to P99,743.94. However, it is petitioner's main contention that inasmuch as the assailed orders of respondent RTC judge involved the net amount of P4,965,506.45, the funds garnished by respondent sheriff in excess of P99,743.94, which are public funds earmarked for the municipal government's other statutory obligations, are exempted from execution without the proper appropriation required under the law. There is merit in this contention. The funds deposited in the second PNB Account No. S/A 263530850-7 are public funds of the municipal government. In this jurisdiction, well-settled is the rule that public funds are not subject to levy and execution, unless otherwise provided for by statute [Republic v. Palacio, supra.; The Commissioner of Public Highways v. San Diego, G.R. No. L-30098, February 18, 1970, 31 SCRA 616]. More particularly, the properties of a municipality, whether real or personal, which are necessary for public use cannot be attached and sold at execution sale to satisfy a money judgment against the municipality. Municipal revenues derived from taxes, licenses and market fees, and which are intended primarily and exclusively for the purpose of financing the governmental activities and functions of the municipality, are exempt from execution [See Viuda De Tan Toco v. The Municipal Council of Iloilo, 49 Phil. 52 (1926): The Municipality of Paoay, Ilocos Norte v. Manaois, 86 Phil. 629 (1950); Municipality of San Miguel, Bulacan v. Fernandez, G.R. No. 61744, June 25, 1984, 130 SCRA 56]. The foregoing rule finds application in the case at bar. Absent a showing that the municipal council of Makati has passed an ordinance appropriating from its public funds an amount corresponding to the balance due under the RTC decision dated June 4, 1987, less the sum of P99,743.94 deposited in Account No. S/A 265-537154-3, no levy under execution may be validly effected on the public funds of petitioner deposited in Account No. S/A 263-530850-7. Nevertheless, this is not to say that private respondent and PSB are left with no legal recourse. Where a municipality fails or refuses, without justifiable reason, to effect payment of a final money judgment rendered against it, the claimant may avail of the remedy of mandamus in order to compel the enactment and approval of the necessary appropriation ordinance, and the corresponding disbursement of municipal funds therefor [SeeViuda De Tan Toco v. The Municipal Council of Iloilo, supra; Baldivia v. Lota, 107 Phil. 1099 (1960); Yuviengco v. Gonzales, 108 Phil. 247 (1960)]. 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

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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. WHEREFORE, the Court Resolved to ORDER petitioner Municipality of Makati to immediately pay Philippine Savings Bank, Inc. and private respondent the amount of P4,953,506.45. Petitioner is hereby required to submit to this Court a report of its compliance with the foregoing order within a non-extendible period of SIXTY (60) DAYS from the date of receipt of this resolution. The order of respondent RTC judge dated December 21, 1988, which was rendered in Civil Case No. 13699, is SET ASIDE and the temporary restraining order issued by the Court on November 20, 1989 is MADE PERMANENT. SO ORDERED. Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.
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Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-32162 September 28, 1984 THE PASAY CITY GOVERNMENT, THE CITY MAYOR OF DEFENDANT PASAY CITY GOVERNMENT, THE MEMBERS OF THE MUNICIPAL BOARD OF PASAY ClTY and THE CITY TREASURER OF PASAY CITY GOVERNMENT, petitioners-appellants, vs. THE HONORABLE COURT OF FIRST INSTANCE OF MANILA, BRANCH X and VICENTE DAVID ISIP (doing business under the firm name V.D. ISIP SONS & ASSOCIATES), respondentsappellees. Enrico R Castro for petitioners-appellants. Lorenzo D. Fuggan and F. V. Castillo for respondents-appellees.

MAKASIAR, J., Chairman: This is a petition for review on certiorari of the order rendered by the Court of First Instance of Manila, Branch X, presided by Honorable Judge Jose L. Moya on July 23, 1969, the dispositive portion of which is as follows: WHEREFORE, the motions for reconsideration, dated July 21 and July 22, 1969, are denied and it is ordered once more that the writ of execution as well as of garnishment already issued be enforced by taking possession of the amount of P613,096.00 from the deposits of the Pasay City government in the branch of the Philippine National Bank in Pasay City and delivering them to the plaintiff. SO ORDERED (p. 78, rec.). on the ground, among others, that: xxx xxx xxx It is further argued that under the compromise, the plaintiff is required to submit a performance bond upon the approval thereof and that he has not yet done so. At the hearing of the motion of June 21, it was in the amount of P60,000.00 which was thereafter increased to P100,000.00 to make it equal to 20% of the cost of the next stage of the construction to be undertaken by the plaintiff. This is a sufficient compliance. Since the work is to be undertaken by stages, it would be unreasonable to compel the plaintiff to submit a performance bond equal to the cost of the entire project, it not being known when the City of Pasay shall have the funds for the completion thereof and it claim it does not even have money to pay for the phase of the work finished years ago. Besides, there is nothing in the compromise which makes the submission of the bond a condition precedent to the payment of P613,096.00 to the plaintiff (p. 76, rec.). On August 12, 1964, respondent-appellee 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

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Cuneta. The contract entitled "Contract and Agreement" was for the construction of a new Pasay City Hall at F.B. Harrison St., Pasay City. Pertinent provision of the said contract is as follows: xxx xxx xxx Whereas one of the conditions set forth in the proposal is that the Contractor shag start the construction of the Pasay City Hall Building as per plans and specifications by stages advancing the necessary amount needed for each stage of work and the Party of the First Part (Pasay City) to reimburse the amount spent on the work accomplished by the Contractor before proceeding on the next stage ... ... xxx xxx xxx 2. That the work shall be done in stages to be determined by the City Engineer considering structural and functional criteria and consistent with funds immediately available for the purpose; 3. That the Contractor shall advance the necessary amount needed for each stage of work; Provided that the Contractor, shall before starting each stage of work, inform the First Party in writing as to the amount necessary to be advanced by the former; ... ... 4. That the Party of the First Part shall reimburse the Contractor the cost of the work completed as estimated by the City Engineer for back stage of work before the Contractor proceed to the next stage; ... ... (pp. 33-34, rec.). 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 respondentappellee accomplished under various stages of construction the amount of work (including supplies and materials) equivalent to an estimated value of ONE MILLION SEVEN HUNDRED THIRTEEN THOUSAND NINETY-SIX PESOS (P1,713,096.00) of the total contract price of FOUR MILLION NINE HUNDRED FOURTEEN THOUSAND FIVE HUNDRED 80/100 PESOS (P4,914,500.80). The appellants paid only the total amount of ONE MILLION ONE HUNDRED THOUSAND PESOS (P1,100,000.00) to the respondent-appellee leaving an amount of SIX HUNDRED THIRTEEN THOUSAND NINETY SIX PESOS (P613,096.00) immediately due from the petitioner-appellants to the respondent-appellee. Notwithstanding demands for payment thereof, the petitioner-appellants failed to remit the aforesaid amount of P613,096.00 to the respondent-appellee. On May 16, 1968, respondent appellee filed an action for specific performance with damages against herein petitioners-appellants before the respondent Court. On May 23, 1968, the appellants filed a motion for the amendment of the complaint and for bin of particulars (p. 9, Appellant's Brief; p. 159, rec.). This was denied by the respondent Court. The appellants later filed a motion for reconsideration. This was likewise denied. On August 10, 1968, the appellants filed their answer. 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 (p. 40, rec.). 265

On February 25, 1969, the Municipal Board of Pasay enacted Ordinance No. 1012 which approved the Compromise Agreement and also authorized and empowered the incumbent City Mayor Jovito Claudio to represent the appellant Pasay City Government, subject to the final approval of the respondent Court herein. On March 12, 1969, the respondent Court approved the said Compromise Agreement including a Manifestation and Addendum thereto. Relevant provisions of the said compromise agreement are as follows: 1. That the contract and agreement, Annex "A" here of dated August 12, 1964 ... is hereby formally confirmed and officially approved by the parties hereto, subject to the following changes and/or modification only: xxx xxx xxx 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 specification xxx xxx xxx D. That if and when warranted by the finances and income of the Pasay City Government and subject to the pertinent and applicable government auditing and accounting rules and procedure, the plaintiff contractor shall without delay finish and complete the construction as per attached plans and specifications ... within a period of one (1) year from the date of final approval of this compromise agreement by this Honorable Court, provided, however that in any case or event the construction herein contemplated shall not extend beyond one and a half (1 1/2) years from the date of the final approval hereof by this Honorable Court; xxx xxx xxx 2. That within a reasonable period of time, at least ninety (90) days from the final approval of this Compromise Agreement by this Honorable Court, the defendant Pasay City Government shall pay and remit the amount of SIX HUNDRED THIRTEEN THOUSAND NINETY-SIX PESOS (P613,096.00) ... to the plaintiff contractor, who, in turn, immediately upon receipt thereof, shall be bound and obliged to commence and start the construction work corresponding to the next stage thereof; 3. That within a similar period, the defendant Pasay City Government shall pay and remit to plaintiff contractor an amount equivalent to three (3%) per cent of the above mentioned amount of SIX HUNDRED THIRTEEN THOUSAND NINETY-SIX PESOS (P613,096.00), for and as adverse attorney's fees in this case; 4. That any and all other of plaintiff contractor in its complaint relative to and arising out of the contract, Annex "A" hereof, are hereby waived and relinquished and the case against the defendants City Mayor, Jovito 0. Claudio, City Treasurer and Members of the Municipal Board of Pasay City, either in their official or personal capacities, are hereby likewise waived, relinquished and dismissed with prejudice;

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5. That any willful, gross, deliberate and wanton violation and/or avoidance of the terms and conditions of this Compromise Agreement by either of the parties herein shall, with due notice, forthwith entitle the aggrieved party to an immediate execution hereof and to the necessary and corresponding reliefs and remedies therefor (pp. 4346, rec.). 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. On May 10, 1969, the respondent Court issued an order declaring that the original contract is legal and valid (p. 59, rec.). On June 21, 1969, at the instance of the appellee, the respondent Court granted an order of execution pursuant to which a writ of execution dated June 25, 1969 was issued. On July 9, 1969, an application for and notice of garnishment were made and effected upon the funds of appellant Pasay City Government with the Philippine National Bank (p. 61, rec.). On July 11, 1969, the appellant filed an urgent motion to set aside the respondent Court's order of June 21, 1969 and to quash the writ of execution issued pursuant thereto upon the following grounds: 1) that the execution sought was then still premature, the period of 90 days stipulated not having elapsed as yet; 2) that the obligations of the parties under the Compromise Agreement were reciprocal and the appellee not having put up a new performance bond in the sufficient amount equivalent to 20% of the remaining cost of construction as per agreement, the appellants cannot be obliged to pay the sum due appellee as yet; 3) that the Sheriff has no power or authority to levy or garnish on execution the general funds, especially more so, the trust funds of the defendant Pasay City (pp. 6366, rec.). On July 19, 1969, the respondent Court issued an order stating that inasmuch as the defendant has not yet paid the plaintiff as of this date then "the writ of execution and of garnishment are declared to be again in full force and effect ..." (p. 67, rec.). On July 22, 1969, the appellants filed a motion for reconsideration on three grounds, to wit: 1. That the same is not supported by the facts and pertinent law, rule and regulation on the matter; 2. That the funds of the defendant Pasay City Government which were garnished by the City Sheriff are by law exempt from execution and/or garnishment; and 3. That plaintiff's claim may not as yet be enforceable by ex- execution" (pp. 68-71, rec.). On July 22, 1969, the respondent Court denied and rejected the appellants' motion for reconsideration. The respondent Court ordered the enforcement of the garnishment already issued to the City Sheriff for Pasay by taking possession of the amount of P613,096.00 from the deposits of appellant Pasay City Government with the Philippine National Bank, Pasay City Branch and delivering the same to the plaintiff. On July 23, 1969, the respondent Court issued an order, the pertinent provision of which is now being questioned by the appellants in this petition for review on certiorari, to wit: It is further argued that under the compromise, the plaintiff is required to submit a performance bond upon the approval thereof and that he has not yet done so. At the hearing of the motion of June 21, it was shown that the plaintiff has submitted a performance bond in the amount of P60,000.00 which was thereafter increased to P100,000.00 to make it equal to 20% of the cost of the next stage of the construction 267

to be undertaken by the plaintiff. This is a sufficient compliance. Since the work is to be undertaken by stages, it would be unreasonable to compel the plaintiff to submit a performance bond equal to the cost of the entire project, it not being known when the City of Pasay shall have the funds for the completion thereof and it claims it does not even have money to pay for the phase of the work finished years ago. Besides, there is nothing in the compromise which makes the submission of the bond a condition precedent to the payment of P613,096.00 to the plaintiff (p. 76, rec.). On July 23, 1969, the appellants Med their notice of appeal from the orders of the respondent Court dated June 21, July 19 and July 23, 1969 (p. 2, rec.). On July 24, 1969, the appellants filed their manifestation and petition to suspend the writ of execution and garnishment (pp. 80-82, rec.). On July 25, 1969, the appellants filed their manifestation and withdrawal of notice of appeal On July 28, 1969, the respondent Court approved said withdrawal (p. 85, rec.). On August 22, 1969, the appellants filed an amended notice of appeal (pp. 86-87, rec.) and a record on appeal which were duly approved as per order of the respondent Court dated January 7, 1970 and a notice of transmittal dated May 29, 1970 (p. 89, rec.). On October 23, 1969, the plaintiff, Vicente David Isip, in the original complaint for specific performance filed an urgent motion for permit to serve a supplemental complaint seeking rescission of the original contract titled Contract and Agreement and of the Compromise Agreement and claiming damages in the sum of P672,653.91 alleging the violations of the defendants specially the Pasay City Government in complying with its obligations incumbent upon it in the compromise agreement and in view of the rights granted to the plaintiff in paragraph 5 of the resolutory clause of the compromise agreement. On June 5, 1970, the Supreme Court resolved to require the petitioner-appellants to file a petition for review on certiorari (p. 6, rec.). On June 29, 1970, the defendants filed their cautionary answer to the supplemental complaint alleging that the Court has no jurisdiction over the subject of the present supplemental complaint; that the cause of action is already barred by prior judgment; that the principle of res judicata applies; that plaintiff's supplemental complaint states no cause of action and that the present claim of plaintiff has been paid, waived, abandoned and extinguished. On July 14, 1970, the appellants filed their petition for review on certiorari (pp. 11-24, rec.). This was denied for lack of merit by the Supreme Court. On August 14, 1970, the respondent Court set for pre-trial the supplemental complaint. On October 16, 1970, the Supreme Court granted the petitioner's motion for reconsideration and their petition for review on certiorari was given due course (p. 102, rec.). On July 21, 1971, the appellees filed their brief praying that the petition for review on certiorari be dismissed since the issues involved in the supplemental complaint are prejudicial to the present petition for review (p. 179, rec.). On December 6, 1971, the appellants filed their manifestation and petition alleging that the supplemental complaint is not prejudicial to the present petition for review (p. 199-201, rec.). The two purposes of a compromise agreement are enunciated in Article 2028 of the New Civil Code, to wit:

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A. 2028. A compromise is a contract where by the parties,by making reciprocal concessions, avoid a litigation or put an end to one already commenced. The first 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 (Municipal Board of Cabanatuan City vs. Samahang Magsasaka, Inc., 62 SCRA 435). A judgment on a compromise is a final and executory (Samonte vs. Samonte, 64 SCRA 524). It is immediately executory (Pamintuan vs. Muos et al., L-26331, 22 SCRA 1109 [March 15, 1968]) in the absence of a motion to set the same aside on the ground of fraud, mistake or duress (Cadano vs. Cadano L-34998, 49 SCRA 33 [January 11, 1973]). 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 respondent-appellee 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 nile stated in the case of Republic vs. Palacio (L-20322, 23 SCRA 899 [May 29,1968]), to wit: 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 it sees fit. Hence, the respondent Court was correct in refusing to quash the writ of execution it has issued.

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Having established that the compromise agreement was final and immediately executory, and in fact was already enforced, the respondent Court was in error when 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 (Ocampo vs. Caluag, L-21113, 19 SCRA 791 [April 27, 1967]). After the perfection of an appeal, the trial court loses jurisdiction over its judgment and cannot vacate the same Alama vs. Abbas, L-19616, 18 SCRA 679 [Nov. 29, 1966]; Commissioner of Immigration vs. Romero, L-19782, 10 SCRA 216 [Jan. 31, 1964]; Valdez vs. CFI, etc., L-3366 [April 27, 1951] cited in Cabungcal vs. Fernandez, L-16520, 10 SCRA 731 [April 30, 1964]; Government vs. Mendoza, 51 Phil. 403; Ayllon vs. Siojo, 26 Phil. 195). Moreover, supplemental pleadings are meant to supply deficiencies in aid of original pleading, not to entirely substitute the latter (British Traders' Insurance Co., Ltd. vs. Commissioner of Internal Revenue, L-20501, 13 SCRA 719, 728 [April 30, 1965]). Here, the respondent-appellee originally asked for specific performance which was later settled through a compromise agreement. After this, the respondent-appellee asked for rescission of both the contract and agreement and the compromise agreement using a supplemental complaint. It is clear that the supplemental complaint We have before Us is not only to "supply deficiencies in aid of original pleading but is also meant as an entirely new "substitute" to the latter. A supplemental complaint must be consistent with and in aid of, the cause of action set forth in the original complaint and a new and independent cause of action cannot be set up by such complaint (Bishop vs. Taylor, 210 App. Div. 1, 205 NVS 653), especially where judgment has already been obtained by him in the original action (Anadarko First National Bank vs. Anadarko First National Bank, 39 0kl. 225, 134 Phil. 866). 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). This is manifested in the contract and agreement, to quote: xxx xxx xxx WHEREAS, one of the conditions set forth in the proposal is that the Contractor shag start the construction of the Pasay City Hall building as per plans and specifications by stages advancing the necessary amount needed for each stage of work and the Party of the First Part to reimburse the amount spent on the work accomplished by the Contractor before proceeding on the next stage; Provided, the First Party shall supply the cement needed; xxx xxx xxx 2. That the work shall be done in stages to be determined by the City Engineer considering structural and functional criteria and consistent with funds immediately available for the purpose; 3. That the Contractor shall advance the necessary amount needed for each stage of work; Provided that the Contractor shalt before starting each stage of work, inform the First Party in writing as to the amount necessary to be advanced by the former; ... 4. That the Party of the First Part shall reimburse the Contractor the cost of the work completed as estimated by the City Engineer for each stage of work before the Contractor proceed to the next stage; (pp. 33-34, rec.).

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And sub-paragraph H of paragraph 1 and paragraph 2 of the compromise agreement also reiterated the stage by stage construction and payment as follows: H. That detailed, separate reports on the progress of the construction work during each stage shall regularly be submitted to the City Enginer and the City Mayor; xxx xxx xxx 2. That within a reasonable period ,at least ninety(90) days from the final approval of this Compromise Agreement by this Honorable Court, the defendant Pasay City Government shall pay and remit the amount of SIX HUNDRED THIRTEEN THOUSAND NINETY-SIX PESOS (P 613,096.00) ... ... to the plaintiff contractor, who, in turn, immediately upon receipt thereof, shall be bound and obliged to commence and start the construction work corresponding to the next stage thereof; ... ... (p. 45, rec.). 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 regular value or cost of the unfinished work of the construction as per approved plans and specifications ... (p. 4, rec.), 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. And, We note that in the Contract and Agreement, the respondent-appellee 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 Ibid. 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 (John L. Roper Lumber Co. vs. Lawson, 195 NC 840, 143 SE 847,67 ALR 984). 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 Contract and Agreement nor in the Compromise Agreement could be found the fact that payment by the

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petitioners- 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 petitionersappellants was established several years ago when the respondent-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; ... (p. 45, rec.). WE hereby grant the amount of P 18,392.78 which is 3% of P613,096.00 as attorney's fees in favor of the respondent-appellee. WHEREFORE, THE ORDER OF THE RESPONDENT COURT DATED JULY 23, 1969 IS HEREBY AFFIRMED AND THE PETITIONERS-APPELLANTS ARE HEREBY DIRECTED TO PAY ATTORNEY'S FEES IN THE AMOUNT OF EIGHTEEN THOUSAND THREE HUNDRED NINETYTWO AND 78/100 (P18,392.78) PESOS. COSTS AGAINST PETITIONERS-APPELLANTS. SO ORDERED. Abad Santos, Escolin and Cuevas, JJ., concur. Aquino, J., concurs in the result. Concepcion, Jr. and Guerrero, JJ., are on leave.

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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-3485 June 30, 1950

THE MUNICIPALITY OF PAOAY, ILOCOS NORTE, petitioner, vs. TEODORO MANAOIS and EULOGIO F. DE GUZMAN, Judge of the Court of First Instance of Pangasinan,respondents. First Assistant Solicitor General Roberto A. Gianzon and Solicitor Pacifico P. de Castro for petitioner. Primicias, Abad, Mencias and Castillo for respondents. MONTEMAYOR, J.: 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 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 the following properties: (1) The amount of One thousand seven hundred twelve pesos and one centavo (P1,712.01) in the Municipal Treasury of Paoay, Ilocos Norte, representing the rental paid by Mr. Demetrio Tabije of a fishery lot belonging to the defendant municipality; (2) About forty fishery lots leased to thirty-five different persons by the Municipality. 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 of the properties above-mentioned. Judge De Guzman in his order of October 6, 1949, denied the petition for the dissolution of the attachment; a motion for reconsideration was 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 already mentioned be dissolved. The petitioner goes on the theory that the properties attached by the sheriff for purposes of execution are not subject to levy because they are properties for public use. It is therefore necessary to ascertain the nature and status back a few years, specifically, to the year 1937. It seems that the municipality of Paoay is and for many years has been operating or rather leasing fishery lots on municipal waters. These waters have been parceled out in lots, either singly or in groups and let out or rented after public bidding to the highest bidders, ordinarily, for a year, but sometimes, for a longer period of time. On April 4, 1937, the municipality of Paoay entered into a contract with one Francisco V. Duque for the lease of fishery lots 3, 4, 5, 6, 7, and 8 at a rental of P1,218.79 per annum, for a period of four years from January 1, 1937 to December 31, 1940. In 1938, the municipal council of Paoay approved a resolution confiscating said fishery lots on the ground that Duque had failed to comply with the terms of the lease contract. Thereafter, the municipality advertised the lease of its fishery lots for public bidding, including the lots above mentioned. Teodoro Manaois being the highest bidder for said lots 3 to 8, was awarded the lease thereof as per resolution of the municipality council of Paoay of December 1, 1938. On January 1, 1939, Manaois paid P2,025 as rental for the said lots for the year 1939. However, when Manaois and his men tried to enter the property in order to exercise his rights as lessee and to catch fish, particularly bagos fry, he found therein Duque and his men who claimed that he (Duque) was still

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the lessee, and despite the appeal of Manaois to the Municipality of Paoay to put him in possession and the efforts of the municipality to oust Duque, the latter succeeded in continuing in his possession and keeping Manaois and his men out. Manaois brought an action against the Municipality of Paoay to recover not only the sum paid by him for the lease of the fishery lots but also damages. He obtained judgment in his favor in June, 1940 in the Court of First Instance of Pangasinan, civil case No. 8026, which decision has long become final. The writ of execution and the attachment and levy mentioned at the beginning of this decision were issued and effected to enforce the judgment just mentioned. 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? (McQuillin on Municipal Corporations, Vol. 3, par. 1160.) 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 section 2321 of the Revised Administrative Code which reads as follows: 1. SEC. 2321. 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,

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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 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 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

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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. In conclusion, we hold that the fishery lots numbering about forty in the municipality of Paoay, mentioned at the beginning of this decision are not subject to execution. For this reason, the levy and attachment made by the Provincial Sheriff of Ilocos Norte of theses fishery lots is void and the order of the Court of First Instance of Pangasinan insofar as it failed to dissolve the attachment made on these lots is reversed. However, the amount of P1,712.01 in the municipal treasury of Paoay representing the rental paid by Demetrio Tabije on fishery lots let out by the municipality of Paoay is a proper subject of levy, and the attachment made thereon by the Sheriff is valid. We may add that other amounts coming or due from lessees of the forty odd fishery lots leased by the municipality to different persons may also be attached or garnished to satisfy the judgement against the municipality of Paoay. In this connection, we wish to say that had the municipality of Paoay paid the judgment rendered against it, all this controversy and court action with all its vexation, troubles and expense would have been avoided. It will be remembered that the decision against the municipality was rendered as far back as 1940. Evidently, the municipality did not appeal from that decision. It has long become final. The Court of Pangasinan that rendered the decision saw no valid defense of the municipality to the legitimate claim of Teodoro Manaois. After the municipality had failed to place Manaois in possession of the lots leased to him, the municipality did not even offer to return or reimburse the rental paid by him. It is hard to understand the position taken by the municipality of Paoay. The courts, including this tribunal cannot condone, much less encourage, the repudiation of just obligations contracted by municipal corporations. On the contrary, the courts and compel payments of their valid claims against municipalities with which they entered into valid contracts. Municipal corporations are authorized by law to sue and be sued. (Sec. 2165, Rev. Adm. Code). This authority naturally carries with it all the remedies and court processes, including writs of execution and attachment against municipal corporations. While we are willing and ready to protect properties of municipalities held for public use, as well as public revenues such as taxes, from execution, we believe that other properties of such municipalities not held for public use, including funds which are not essential to the performance of their public functions, may be levied upon and sold to satisfy valid claims against said municipalities. And this Tribunal will help any citizen and give him every judicial facility to enforce his valid claim, especially a court award, against municipal corporations, even to the extent of attaching and selling on execution, municipal revenues and properties not exempt from execution. In view of the foregoing, the order of the respondent Judge of October 6, 1949, is reversed insofar as it failed to dissolved the attachment of the forty odd fishery lots. In all other respect, said order is hereby affirmed. Ozaeta, Pablo, Bengzon, Tuason, and Reyes, JJ., concur.

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