EN BANC

G.R. No. 91649

May 14, 1991
ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, SOCRATES MARANAN AND LORENZO
SANCHEZ,petitioners,
vs.
PHILIPPINE AMUSEMENTS AND GAMING CORPORATION (PAGCOR), respondent.
PARAS, J.:
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. 2nd534, 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, jaialai 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
1wphi1

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.

EN BANC
G.R. No. 80391 February 28, 1989
SULTAN ALIMBUSAR P. LIMBONA, petitioner,
vs.
CONTE MANGELIN, SALIC ALI, SALINDATO ALI, PILIMPINAS CONDING, ACMAD TOMAWIS, GERRY TOMAWIS,
JESUS ORTIZ, ANTONIO DELA FUENTE, DIEGO PALOMARES, JR., RAUL DAGALANGIT, and BIMBO
SINSUAT, respondents.
Ambrosio Padilla, Mempin & Reyes Law Offices for petitioner petitioner.
Makabangkit B. Lanto for respondents.
SARMIENTO, J.:
The acts of the Sangguniang Pampook of Region XII are assailed in this petition. The antecedent facts are as follows:
1. On September 24, 1986, petitioner Sultan Alimbusar Limbona was appointed as a member of the
Sangguniang Pampook, Regional Autonomous Government, Region XII, representing Lanao del Sur.
2. On March 12, 1987 petitioner was elected Speaker of the Regional Legislative Assembly or Batasang
Pampook of Central Mindanao (Assembly for brevity).
3. Said Assembly is composed of eighteen (18) members. Two of said members, respondents Acmad
Tomawis and Pakil Dagalangit, filed on March 23, 1987 with the Commission on Elections their
respective certificates of candidacy in the May 11, 1987 congressional elections for the district of
Lanao del Sur but they later withdrew from the aforesaid election and thereafter resumed again their
positions as members of the Assembly.
4. On October 21, 1987 Congressman Datu Guimid Matalam, Chairman of the Committee on Muslim
Affairs of the House of Representatives, invited Mr. Xavier Razul, Pampook Speaker of Region XI,
Zamboanga City and the petitioner in his capacity as Speaker of the Assembly, Region XII, in a letter
which reads:
The Committee on Muslim Affairs well undertake consultations and dialogues with local
government officials, civic, religious organizations and traditional leaders on the recent
and present political developments and other issues affecting Regions IX and XII.
The result of the conference, consultations and dialogues would hopefully chart the
autonomous governments of the two regions as envisioned and may prod the President
to constitute immediately the Regional Consultative Commission as mandated by the
Commission.
You are requested to invite some members of the Pampook Assembly of your
respective assembly on November 1 to 15, 1987, with venue at the Congress of the
Philippines. Your presence, unstinted support and cooperation is (sic) indispensable.
5. Consistent with the said invitation, petitioner sent a telegram to Acting Secretary Johnny Alimbuyao
of the Assembly to wire all Assemblymen that there shall be no session in November as "our presence
in the house committee hearing of Congress take (sic) precedence over any pending business in
batasang pampook ... ."
6. In compliance with the aforesaid instruction of the petitioner, Acting Secretary Alimbuyao sent to the
members of the Assembly the following telegram:
TRANSMITTING FOR YOUR INFORMATION AND GUIDANCE TELEGRAM RECEIVED FROM
SPEAKER LIMBONA QUOTE CONGRESSMAN JIMMY MATALAM CHAIRMAN OF THE HOUSE
COMMITTEE ON MUSLIM AFFAIRS REQUESTED ME TO ASSIST SAID COMMITTEE IN THE
DISCUSSION OF THE PROPOSED AUTONOMY ORGANIC NOV. 1ST TO 15. HENCE WERE
ALL ASSEMBLYMEN THAT THERE SHALL BE NO SESSION IN NOVEMBER AS OUR
PRESENCE IN THE HOUSE COMMITTEE HEARING OF CONGRESS TAKE PRECEDENCE
OVER ANY PENDING BUSINESS IN BATASANG PAMPOOK OF MATALAM FOLLOWS
UNQUOTE REGARDS.
7. On November 2, 1987, the Assembly held session in defiance of petitioner's advice, with the
following assemblymen present:
1. Sali, Salic
2. Conding, Pilipinas (sic)
3. Dagalangit, Rakil
4. Dela Fuente, Antonio
5. Mangelen, Conte
6. Ortiz, Jesus
7. Palomares, Diego
8. Sinsuat, Bimbo
9. Tomawis, Acmad
10. Tomawis, Jerry

After declaring the presence of a quorum, the Speaker Pro-Tempore was authorized to preside in the
session. On Motion to declare the seat of the Speaker vacant, all Assemblymen in attendance voted in
the affirmative, hence, the chair declared said seat of the Speaker vacant. 8. On November 5, 1987,
the session of the Assembly resumed with the following Assemblymen present:
1. Mangelen Conte-Presiding Officer
2. Ali Salic
3. Ali Salindatu
4. Aratuc, Malik
5. Cajelo, Rene
6. Conding, Pilipinas (sic)
7. Dagalangit, Rakil
8. Dela Fuente, Antonio
9. Ortiz, Jesus
10 Palomares, Diego
11. Quijano, Jesus
12. Sinsuat, Bimbo
13. Tomawis, Acmad
14. Tomawis, Jerry
An excerpt from the debates and proceeding of said session reads:
HON. DAGALANGIT: Mr. Speaker, Honorable Members of the House, with the presence of our colleagues
who have come to attend the session today, I move to call the names of the new comers in order for
them to cast their votes on the previous motion to declare the position of the Speaker vacant. But
before doing so, I move also that the designation of the Speaker Pro Tempore as the Presiding Officer
and Mr. Johnny Evangelists as Acting Secretary in the session last November 2, 1987 be reconfirmed in
today's session.
HON. SALIC ALI: I second the motions.
PRESIDING OFFICER: Any comment or objections on the two motions presented? Me chair hears none
and the said motions are approved. ...
Twelve (12) members voted in favor of the motion to declare the seat of the Speaker vacant; one
abstained and none voted against. 1
Accordingly, the petitioner prays for judgment as follows:
WHEREFORE, petitioner respectfully prays that(a) This Petition be given due course;
(b) Pending hearing, a restraining order or writ of preliminary injunction be issued enjoining
respondents from proceeding with their session to be held on November 5, 1987, and on any day
thereafter;
(c) After hearing, judgment be rendered declaring the proceedings held by respondents of their session
on November 2, 1987 as null and void;
(d) Holding the election of petitioner as Speaker of said Legislative Assembly or Batasan Pampook,
Region XII held on March 12, 1987 valid and subsisting, and
(e) Making the injunction permanent.
Petitioner likewise prays for such other relief as may be just and equitable. 2
Pending further proceedings, this Court, on January 19, 1988, received a resolution filed by the Sangguniang Pampook,
"EXPECTING ALIMBUSAR P. LIMBONA FROM MEMBERSHIP OF THE SANGGUNIANG PAMPOOK AUTONOMOUS REGION
XII," 3 on the grounds, among other things, that the petitioner "had caused to be prepared and signed by him paying
[sic] the salaries and emoluments of Odin Abdula, who was considered resigned after filing his Certificate of Candidacy
for Congressmen for the First District of Maguindanao in the last May 11, elections. . . and nothing in the record of the
Assembly will show that any request for reinstatement by Abdula was ever made . . ." 4 and that "such action of Mr. Lim
bona in paying Abdula his salaries and emoluments without authority from the Assembly . . . constituted a usurpation
of the power of the Assembly," 5 that the petitioner "had recently caused withdrawal of so much amount of cash from
the Assembly resulting to the non-payment of the salaries and emoluments of some Assembly [sic]," 6 and that he had
"filed a case before the Supreme Court against some members of the Assembly on question which should have been
resolved within the confines of the Assembly," 7 for which the respondents now submit that the petition had become
"moot and academic". 8
The first question, evidently, is whether or not the expulsion of the petitioner (pending litigation) has made the case
moot and academic.
We do not agree that the case has been rendered moot and academic by reason simply of the expulsion resolution so
issued. For, if the petitioner's expulsion was done purposely to make this petition moot and academic, and to preempt
the Court, it will not make it academic.
On the ground of the immutable principle of due process alone, we hold that the expulsion in question is of no force
and effect. In the first place, there is no showing that the Sanggunian had conducted an investigation, and whether or
not the petitioner had been heard in his defense, assuming that there was an investigation, or otherwise given the
opportunity to do so. On the other hand, what appears in the records is an admission by the Assembly (at least, the

respondents) that "since November, 1987 up to this writing, the petitioner has not set foot at the Sangguniang
Pampook." 9 "To be sure, the private respondents aver that "[t]he Assemblymen, in a conciliatory gesture, wanted him
to come to Cotabato City," 10 but that was "so that their differences could be threshed out and settled." 11 Certainly,
that avowed wanting or desire to thresh out and settle, no matter how conciliatory it may be cannot be a substitute for
the notice and hearing contemplated by law.
While we have held that due process, as the term is known in administrative law, does not absolutely require notice
and that a party need only be given the opportunity to be heard, 12 it does not appear herein that the petitioner had, to
begin with, been made aware that he had in fact stood charged of graft and corruption before his collegues. It cannot
be said therefore that he was accorded any opportunity to rebut their accusations. As it stands, then, the charges now
levelled amount to mere accusations that cannot warrant expulsion.
In the second place, (the resolution) appears strongly to be a bare act of vendetta by the other Assemblymen against
the petitioner arising from what the former perceive to be abduracy on the part of the latter. Indeed, it (the resolution)
speaks of "a case [having been filed] [by the petitioner] before the Supreme Court . . . on question which should have
been resolved within the confines of the Assemblyman act which some members claimed unnecessarily and unduly
assails their integrity and character as representative of the people" 13 an act that cannot possibly justify expulsion.
Access to judicial remedies is guaranteed by the Constitution, 14 and, unless the recourse amounts to malicious
prosecution, no one may be punished for seeking redress in the courts.
We therefore order reinstatement, with the caution that should the past acts of the petitioner indeed warrant his
removal, the Assembly is enjoined, should it still be so minded, to commence proper proceedings therefor in line with
the most elementary requirements of due process. And while it is within the discretion of the members of the
Sanggunian to punish their erring colleagues, their acts are nonetheless subject to the moderating band of this Court
in the event that such discretion is exercised with grave abuse.
It is, to be sure, said that precisely because the Sangguniang Pampook(s) are "autonomous," the courts may not
rightfully intervene in their affairs, much less strike down their acts. We come, therefore, to the second issue: Are the
so-called autonomous governments of Mindanao, as they are now constituted, subject to the jurisdiction of the
national courts? In other words, what is the extent of self-government given to the two autonomous governments of
Region IX and XII?
The autonomous governments of Mindanao were organized in Regions IX and XII by Presidential Decree No.
161815 promulgated on July 25, 1979. Among other things, the Decree established "internal autonomy" 16 in the two
regions "[w]ithin the framework of the national sovereignty and territorial integrity of the Republic of the Philippines
and its Constitution," 17 with legislative and executive machinery to exercise the powers and responsibilities 18 specified
therein.
It requires the autonomous regional governments to "undertake all internal administrative matters for the respective
regions," 19 except to "act on matters which are within the jurisdiction and competence of the National
Government," 20"which include, but are not limited to, the following:
(1) National defense and security;
(2) Foreign relations;
(3) Foreign trade;
(4) Currency, monetary affairs, foreign exchange, banking and quasi-banking, and external borrowing,
(5) Disposition, exploration, development, exploitation or utilization of all natural resources;
(6) Air and sea transport
(7) Postal matters and telecommunications;
(8) Customs and quarantine;
(9) Immigration and deportation;
(10) Citizenship and naturalization;
(11) National economic, social and educational planning; and
(12) General auditing. 21
In relation to the central government, it provides that "[t]he President shall have the power of general supervision and
control over the Autonomous Regions ..." 22
Now, autonomy is either decentralization of administration or decentralization of power. There is decentralization of
administration when the central government delegates administrative powers to political subdivisions in order to
broaden the base of government power and in the process to make local governments "more responsive and
accountable," 23 "and ensure their fullest development as self-reliant communities and make them more effective
partners in the pursuit of national development and social progress." 24 At the same time, it relieves the central
government of the burden of managing local affairs and enables it to concentrate on national concerns. The President
exercises "general supervision" 25 over them, but only to "ensure that local affairs are administered according to
law." 26 He has no control over their acts in the sense that he can substitute their judgments with his own. 27
Decentralization of power, on the other hand, involves an abdication of political power in the favor of local
governments units declare to be autonomous . In that case, the autonomous government is free to chart its own
destiny and shape its future with minimum intervention from central authorities. According to a constitutional author,
decentralization of power amounts to "self-immolation," since in that event, the autonomous government becomes
accountable not to the central authorities but to its constituency. 28

But the question of whether or not the grant of autonomy Muslim Mindanao under the 1987 Constitution involves,
truly, an effort to decentralize power rather than mere administration is a question foreign to this petition, since what
is involved herein is a local government unit constituted prior to the ratification of the present Constitution. Hence, the
Court will not resolve that controversy now, in this case, since no controversy in fact exists. We will resolve it at the
proper time and in the proper case.
Under the 1987 Constitution, local government units enjoy autonomy in these two senses, thus:
Section 1. The territorial and political subdivisions of the Republic of the Philippines are the provinces,
cities, municipalities, and barangays. Here shall be autonomous regions in Muslim Mindanao ,and the
Cordilleras as hereinafter provided. 29
Sec. 2. The territorial and political subdivisions shall enjoy local autonomy. 30
xxx xxx xxx
See. 15. Mere shall be created autonomous regions in Muslim Mindanao and in the Cordilleras
consisting of provinces, cities, municipalities, and geographical areas sharing common and distinctive
historical and cultural heritage, economic and social structures, and other relevant characteristics
within the framework of this Constitution and the national sovereignty as well as territorial integrity of
the Republic of the Philippines. 31
An autonomous government that enjoys autonomy of the latter category [CONST. (1987), art. X, sec. 15.] is subject
alone to the decree of the organic act creating it and accepted principles on the effects and limits of "autonomy." On
the other hand, an autonomous government of the former class is, as we noted, under the supervision of the national
government acting through the President (and the Department of Local Government). 32 If the Sangguniang Pampook
(of Region XII), then, is autonomous in the latter sense, its acts are, debatably beyond the domain of this Court in
perhaps the same way that the internal acts, say, of the Congress of the Philippines are beyond our jurisdiction. But if
it is autonomous in the former category only, it comes unarguably under our jurisdiction. An examination of the very
Presidential Decree creating the autonomous governments of Mindanao persuades us that they were never meant to
exercise autonomy in the second sense, that is, in which the central government commits an act of self-immolation.
Presidential Decree No. 1618, in the first place, mandates that "[t]he President shall have the power of general
supervision and control over Autonomous Regions." 33 In the second place, the Sangguniang Pampook, their legislative
arm, is made to discharge chiefly administrative services, thus:
SEC. 7. Powers of the Sangguniang Pampook. The Sangguniang Pampook shall exercise local legislative
powers over regional affairs within the framework of national development plans, policies and goals, in
the following areas:
(1) Organization of regional administrative system;
(2) Economic, social and cultural development of the Autonomous Region;
(3) Agricultural, commercial and industrial programs for the Autonomous Region;
(4) Infrastructure development for the Autonomous Region;
(5) Urban and rural planning for the Autonomous Region;
(6) Taxation and other revenue-raising measures as provided for in this Decree;
(7) Maintenance, operation and administration of schools established by the Autonomous Region;
(8) Establishment, operation and maintenance of health, welfare and other social services, programs
and facilities;
(9) Preservation and development of customs, traditions, languages and culture indigenous to the
Autonomous Region; and
(10) Such other matters as may be authorized by law,including the enactment of such measures as
may be necessary for the promotion of the general welfare of the people in the Autonomous Region.
The President shall exercise such powers as may be necessary to assure that enactment and acts of
the Sangguniang Pampook and the Lupong Tagapagpaganap ng Pook are in compliance with this
Decree, national legislation, policies, plans and programs.
The Sangguniang Pampook shall maintain liaison with the Batasang Pambansa. 34
Hence, we assume jurisdiction. And if we can make an inquiry in the validity of the expulsion in question, with more
reason can we review the petitioner's removal as Speaker.
Briefly, the petitioner assails the legality of his ouster as Speaker on the grounds that: (1) the Sanggunian, in
convening on November 2 and 5, 1987 (for the sole purpose of declaring the office of the Speaker vacant), did so in
violation of the Rules of the Sangguniang Pampook since the Assembly was then on recess; and (2) assuming that it
was valid, his ouster was ineffective nevertheless for lack of quorum.
Upon the facts presented, we hold that the November 2 and 5, 1987 sessions were invalid. It is true that under Section
31 of the Region XII Sanggunian Rules, "[s]essions shall not be suspended or adjourned except by direction of the
Sangguniang Pampook," 35 but it provides likewise that "the Speaker may, on [sic] his discretion, declare a recess of
"short intervals." 36 Of course, there is disagreement between the protagonists as to whether or not the recess called
by the petitioner effective November 1 through 15, 1987 is the "recess of short intervals" referred to; the petitioner
says that it is while the respondents insist that, to all intents and purposes, it was an adjournment and that "recess" as
used by their Rules only refers to "a recess when arguments get heated up so that protagonists in a debate can talk
things out informally and obviate dissenssion [sic] and disunity. 37 The Court agrees with the respondents on this

regard, since clearly, the Rules speak of "short intervals." Secondly, the Court likewise agrees that the Speaker could
not have validly called a recess since the Assembly had yet to convene on November 1, the date session opens under
the same Rules. 38 Hence, there can be no recess to speak of that could possibly interrupt any session. But while this
opinion is in accord with the respondents' own, we still invalidate the twin sessions in question, since at the time the
petitioner called the "recess," it was not a settled matter whether or not he could. do so. In the second place, the
invitation tendered by the Committee on Muslim Affairs of the House of Representatives provided a plausible reason
for the intermission sought. Thirdly, assuming that a valid recess could not be called, it does not appear that the
respondents called his attention to this mistake. What appears is that instead, they opened the sessions themselves
behind his back in an apparent act of mutiny. Under the circumstances, we find equity on his side. For this reason, we
uphold the "recess" called on the ground of good faith.
It does not appear to us, moreover, that the petitioner had resorted to the aforesaid "recess" in order to forestall the
Assembly from bringing about his ouster. This is not apparent from the pleadings before us. We are convinced that the
invitation was what precipitated it.
In holding that the "recess" in question is valid, we are not to be taken as establishing a precedent, since, as we said, a
recess can not be validly declared without a session having been first opened. In upholding the petitioner herein, we
are not giving him a carte blanche to order recesses in the future in violation of the Rules, or otherwise to prevent the
lawful meetings thereof.
Neither are we, by this disposition, discouraging the Sanggunian from reorganizing itself pursuant to its lawful
prerogatives. Certainly, it can do so at the proper time. In the event that be petitioner should initiate obstructive
moves, the Court is certain that it is armed with enough coercive remedies to thwart them. 39
In view hereof, we find no need in dwelling on the issue of quorum.
WHEREFORE, premises considered, the petition is GRANTED. The Sangguniang Pampook, Region XII, is ENJOINED to (1)
REINSTATE the petitioner as Member, Sangguniang Pampook, Region XII; and (2) REINSTATE him as Speaker thereof.
No costs.
SO ORDERED.

SECOND DIVISION
G.R. No. 129093
August 30, 2001
HON. JOSE D. LINA, JR., SANGGUNIANG PANLALAWIGAN OF LAGUNA, and HON. CALIXTO
CATAQUIZ,petitioners,
vs.
HON. FRANCISCO DIZON PAO and TONY CALVENTO, respondents.
QUISUMBING, J.:
For our resolution is a petition for review on certiorari seeking the reversal of the decision 1 dated February 10, 1997 of
the Regional Trial Court of San Pedro, Laguna, Branch 93, enjoining petitioners from implementing or
enforcingKapasiyahan Bilang 508, Taon 1995, of the Sangguniang Panlalawigan of Laguna and its subsequent Order 2
dated April 21, 1997 denying petitioners' motion for reconsideration.
On December 29, 1995, respondent Tony Calvento was appointed agent by the Philippine Charity Sweepstakes Office
(PCSO) to install Terminal OM 20 for the operation of lotto. He asked Mayor Calixto Cataquiz, Mayor of San Pedro,
Laguna, for a mayor's permit to open the lotto outlet. This was denied by Mayor Cataquiz in a letter dated February 19,
1996. The ground for said denial was an ordinance passed by the Sangguniang Panlalawigan of Laguna
entitled Kapasiyahan Blg. 508, T. 1995 which was issued on September 18, 1995. The ordinance reads:
ISANG KAPASIYAHAN TINUTUTULAN ANG MGA "ILLEGAL GAMBLING" LALO NA ANG LOTTO SA LALAWIGAN NG
LAGUNA
SAPAGKA'T, ang sugal dito sa lalawigan ng Laguna ay talamak na;
SAPAGKA'T, ang sugal ay nagdudulot ng masasamang impluwensiya lalo't higit sa mga kabataan;
KUNG KAYA'T DAHIL DITO, at sa mungkahi nina Kgg. Kgd. Juan M. Unico at Kgg. Kgd. Gat-Ala A. Alatiit,
pinangalawahan ni Kgg. Kgd. Meliton C. Larano at buong pagkakaisang sinangayunan ng lahat ng dumalo sa
pulong;
IPINASIYA, na tutulan gaya ng dito ay mahigpit na TINUTUTULAN ang ano mang uri ng sugal dito sa lalawigan
ng Laguna lalo't higit ang Lotto;
IPINASIYA PA RIN na hilingin tulad ng dito ay hinihiling sa Panlalawigang pinuno ng Philippine National Police
(PNP) Col. [illegible] na mahigpit na pag-ibayuhin ang pagsugpo sa lahat ng uri ng illegal na sugal sa buong
lalawigan ng Laguna lalo na ang "Jueteng".3
As a result of this resolution of denial, respondent Calvento filed a complaint for declaratory relief with prayer for
preliminary injunction and temporary restraining order. In the said complaint, respondent Calvento asked the Regional
Trial Court of San Pedro Laguna, Branch 93, for the following reliefs: (1) a preliminary injunction or temporary
restraining order, ordering the defendants to refrain from implementing or enforcing Kapasiyahan Blg. 508, T. 1995; (2)
an order requiring Hon. Municipal Mayor Calixto R Cataquiz to issue a business permit for the operation of a lotto
outlet; and (3) an order annulling or declaring as invalid Kapasiyahan Blg. 508, T. 1995.
On February 10, 1997, the respondent judge, Francisco Dizon Pao, promulgated his decision enjoining the petitioners
from implementing or enforcing resolution or Kapasiyahan Blg. 508, T. 1995. The dispositive portion of said decision
reads:
WHEREFORE, premises considered, defendants, their agents and representatives are hereby enjoined from
implementing or enforcing resolution or kapasiyahan blg. 508, T. 1995 of the Sangguniang Panlalawigan ng
Laguna prohibiting the operation of the lotto in the province of Laguna.
SO ORDERED.4
Petitioners filed a motion for reconsideration which was subsequently denied in an Order dated April 21, 1997, which
reads:
Acting on the Motion for Reconsideration filed by defendants Jose D. Lina, Jr. and the Sangguniang
Panlalawigan of Laguna, thru counsel, with the opposition filed by plaintiff's counsel and the comment thereto
filed by counsel for the defendants which were duly noted, the Court hereby denies the motion for lack of
merit.
SO ORDERED.5
On May 23, 1997, petitioners filed this petition alleging that the following errors were committed by the respondent
trial court:
I
THE TRIAL COURT ERRED IN ENJOINING THE PETITIONERS FROM IMPLEMENTING KAPASIYAHAN BLG. 508, T.
1995 OF THE SANGGUNIANG PANLALAWIGAN OF LAGUNA PROHIBITING THE OPERATION OF THE LOTTO IN THE
PROVINCE OF LAGUNA.
II
THE TRIAL COURT FAILED TO APPRECIATE THE ARGUMENT POSITED BY THE PETITIONERS THAT BEFORE ANY
GOVERNMENT PROJECT OR PROGRAM MAY BE IMPLEMENTED BY THE NATIONAL AGENCIES OR OFFICES, PRIOR
CONSULTATION AND APPROVAL BY THE LOCAL GOVERNMENT UNITS CONCERNED AND OTHER CONCERNED
SECTORS IS REQUIRED.
Petitioners contend that the assailed resolution is a valid policy declaration of the Provincial Government of Laguna of
its vehement objection to the operation of lotto and all forms of gambling. It is likewise a valid exercise of the

provincial government's police power under the General Welfare Clause of Republic Act 7160, otherwise known as the
Local Government Code of 1991.6 They also maintain that respondent's lotto operation is illegal because no prior
consultations and approval by the local government were sought before it was implemented contrary to the express
provisions of Sections 2 (c) and 27 of R.A. 7160.7
For his part, respondent Calvento argues that the questioned resolution is, in effect, a curtailment of the power of the
state since in this case the national legislature itself had already declared lotto as legal and permitted its operations
around the country.8 As for the allegation that no prior consultations and approval were sought from thesangguniang
panlalawigan of Laguna, respondent Calvento contends this is not mandatory since such a requirement is merely
stated as a declaration of policy and not a self-executing provision of the Local Government Code of 1991. 9 He also
states that his operation of the lotto system is legal because of the authority given to him by the PCSO, which in turn
had been granted a franchise to operate the lotto by Congress. 10
The Office of the Solicitor General (OSG), for the State, contends that the Provincial Government of Laguna has no
power to prohibit a form of gambling which has been authorized by the national government. 11 He argues that this is
based on the principle that ordinances should not contravene statutes as municipal governments are merely agents of
the national government. The local councils exercise only delegated legislative powers which have been conferred on
them by Congress. This being the case, these councils, as delegates, cannot be superior to the principal or exercise
powers higher than those of the latter. The OSG also adds that the question of whether gambling should be permitted
is for Congress to determine, taking into account national and local interests. Since Congress has allowed the PCSO to
operate lotteries which PCSO seeks to conduct in Laguna, pursuant to its legislative grant of authority, the
province's Sangguniang Panlalawigan cannot nullify the exercise of said authority by preventing something already
allowed by Congress.
The issues to be resolved now are the following: (1) whether Kapasiyahan Blg. 508, T. 1995 of the Sangguniang
Panlalawigan of Laguna and the denial of a mayor's permit based thereon are valid; and (2) whether prior
consultations and approval by the concerned Sanggunian are needed before a lotto system can be operated in a given
local government unit.
The entire controversy stemmed from the refusal of Mayor Cataquiz to issue a mayor's permit for the operation of a
lotto outlet in favor of private respondent. According to the mayor, he based his decision on an existing ordinance
prohibiting the operation of lotto in the province of Laguna. The ordinance, however, merely states the "objection" of
the council to the said game. It is but a mere policy statement on the part of the local council, which is not selfexecuting. Nor could it serve as a valid ground to prohibit the operation of the lotto system in the province of Laguna.
Even petitioners admit as much when they stated in their petition that:
5.7. The terms of the Resolution and the validity thereof are express and clear. The Resolution is a policy
declaration of the Provincial Government of Laguna of its vehement opposition and/or objection to the
operation of and/or all forms of gambling including the Lotto operation in the Province of Laguna. 12
As a policy statement expressing the local government's objection to the lotto, such resolution is valid. This is part of
the local government's autonomy to air its views which may be contrary to that of the national government's.
However, this freedom to exercise contrary views does not mean that local governments may actually enact
ordinances that go against laws duly enacted by Congress. Given this premise, the assailed resolution in this case
could not and should not be interpreted as a measure or ordinance prohibiting the operation of lotto.
The game of lotto is a game of chance duly authorized by the national government through an Act of Congress.
Republic Act 1169, as amended by Batas Pambansa Blg. 42, is the law which grants a franchise to the PCSO and allows
it to operate the lotteries. The pertinent provision reads:
SECTION 1. The Philippine Charity Sweepstakes Office. The Philippine Charity Sweepstakes Office,
hereinafter designated the Office, shall be the principal government agency for raising and providing for funds
for health programs, medical assistance and services and charities of national character, and as such shall
have the general powers conferred in section thirteen of Act Numbered One thousand four hundred fifty-nine,
as amended, and shall have the authority:
A. To hold and conduct charity sweepstakes races, lotteries, and other similar activities, in such frequency and
manner, as shall be determined, and subject to such rules and regulations as shall be promulgated by the
Board of Directors.
This statute remains valid today. While lotto is clearly a game of chance, the national government deems it wise and
proper to permit it. Hence, the Sangguniang Panlalawigan of Laguna, a local government unit, cannot issue a
resolution or an ordinance that would seek to prohibit permits. Stated otherwise, what the national legislature
expressly allows by law, such as lotto, a provincial board may not disallow by ordinance or resolution.
In our system of government, the power of local government units to legislate and enact ordinances and resolutions is
merely a delegated power coming from Congress. As held in Tatel vs. Virac,13 ordinances should not contravene an
existing statute enacted by Congress. The reasons for this is obvious, as elucidated in Magtajas v. Pryce Properties
Corp.14
Municipal governments are only agents of the national government. Local councils exercise only delegated
legislative powers conferred upon 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 the corporation themselves are concerned. They are, so to
phrase it, the mere tenants at will of the legislature (citing Clinton vs. Ceder Rapids, etc. Railroad Co., 24 Iowa
455).
Nothing in the present constitutional provision enhancing local autonomy dictates a different conclusion.
The basic relationship between the national legislature and the local government units has not been enfeebled
by the new provisions in the Constitution strengthening the policy of 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 (citing Art. X, Sec. 5, Constitution), which cannot now be withdrawn by mere statute. By and large,
however, the national legislature is still the principal of the local government units, which cannot defy its will or
modify or violate it.15
Ours is still a unitary form of government, not a federal state. Being so, any form of autonomy granted to local
governments will necessarily be limited and confined within the extent allowed by the central authority. Besides, the
principle of local autonomy under the 1987 Constitution simply means "decentralization". It does not make local
governments sovereign within the state or an "imperium in imperio".16
To conclude our resolution of the first issue, respondent mayor of San Pedro, cannot avail of Kapasiyahan Bilang 508,
Taon 1995, of the Provincial Board of Laguna as justification to prohibit lotto in his municipality. For said resolution is
nothing but an expression of the local legislative unit concerned. The Board's enactment, like spring water, could not
rise above its source of power, the national legislature.
As for the second issue, we hold that petitioners erred in declaring that Sections 2 (c) and 27 of Republic Act 7160,
otherwise known as the Local Government Code of 1991, apply mandatorily in the setting up of lotto outlets around
the country. These provisions state:
SECTION 2. Declaration of Policy. . . .
(c) It is likewise the policy of the State to require all national agencies and offices to conduct periodic
consultations with appropriate local government units, non-governmental and people's organizations, and
other concerned sectors of the community before any project or program is implemented in their respective
jurisdictions.
SECTION 27. Prior Consultations Required. No project or program shall be implemented by government
authorities unless the consultations mentioned in Section 2 (c) and 26 hereof are complied with, and prior
approval of the sanggunian concerned is obtained; Provided, that occupants in areas where such projects are
to be implemented shall not be evicted unless, appropriate relocation sites have been provided, in accordance
with the provisions of the Constitution.
From a careful reading of said provisions, we find that these apply only to national programs and/or projects which are
to be implemented in a particular local community. Lotto is neither a program nor a project of the national
government, but of a charitable institution, the PCSO. Though sanctioned by the national government, it is far fetched
to say that lotto falls within the contemplation of Sections 2 (c) and 27 of the Local Government Code.
Section 27 of the Code should be read in conjunction with Section 26 thereof. 17 Section 26 reads:
SECTION 26. Duty of National Government Agencies in the Maintenance of Ecological Balance. - It shall be the
duty of every national agency or government-owned or controlled corporation authorizing or involved in the
planning and implementation of any project or program that may cause pollution, climatic change, depletion of
non-renewable resources, loss of crop land, range-land, or forest cover, and extinction of animal or plant
species, to consult with the local government units, nongovernmental organizations, and other sectors
concerned and explain the goals and objectives of the project or program, its impact upon the people and the
community in terms of environmental or ecological balance, and the measures that will be undertaken to
prevent or minimize the adverse effects thereof.
Thus, the projects and programs mentioned in Section 27 should be interpreted to mean projects and programs whose
effects are among those enumerated in Section 26 and 27, to wit, those that: (1) may cause pollution; (2) may bring
about climatic change; (3) may cause the depletion of non-renewable resources; (4) may result in loss of crop land,
range-land, or forest cover; (5) may eradicate certain animal or plant species from the face of the planet; and (6) other
projects or programs that may call for the eviction of a particular group of people residing in the locality where these
will be implemented. Obviously, none of these effects will be produced by the introduction of lotto in the province of
Laguna.

Moreover, the argument regarding lack of consultation raised by petitioners is clearly an afterthought on their part.
There is no indication in the letter of Mayor Cataquiz that this was one of the reasons for his refusal to issue a permit.
That refusal was predicated solely but erroneously on the provisions of Kapasiyahan Blg. 508, Taon 1995, of
the Sangguniang Panlalawigan of Laguna.
In sum, we find no reversible error in the RTC decision enjoining Mayor Cataquiz from enforcing or implementing
theKapasiyahan Blg. 508, T. 1995, of the Sangguniang Panlalawigan of Laguna. That resolution expresses merely a
policy statement of the Laguna provincial board. It possesses no binding legal force nor requires any act of
implementation. It provides no sufficient legal basis for respondent mayor's refusal to issue the permit sought by
private respondent in connection with a legitimate business activity authorized by a law passed by Congress.
WHEREFORE, the petition is DENIED for lack of merit. The Order of the Regional Trial Court of San Pedro, Laguna
enjoining the petitioners from implementing or enforcing Resolution or Kapasiyahan Blg. 508, T. 1995, of the Provincial
Board of Laguna is hereby AFFIRMED. No costs.
SO ORDERED.

EN BANC
[G.R. No. 125350. December 3, 2002]
HON. RTC JUDGES MERCEDES G. DADOLE (Executive Judge, Branch 28), ULRIC R. CAETE (Presiding Judge,
Branch 25), AGUSTINE R. VESTIL (Presiding Judge, Branch 56), HON. MTC JUDGES TEMISTOCLES M.
BOHOLST (Presiding Judge, Branch 1), VICENTE C. FANILAG (Judge Designate, Branch 2), and
WILFREDO A. DAGATAN (Presiding Judge, Branch 3), all of Mandaue City, petitioners,
vs.COMMISSION ON AUDIT, respondent.
DECISION
CORONA, J.:

Before us is a petition for certiorari under Rule 64 to annul the decision and resolution , dated September 21,
1995 and May 28, 1996, respectively, of the respondent Commission on Audit (COA) affirming the notices of the
Mandaue City Auditor which diminished the monthly additional allowances received by the petitioner judges of the
Regional Trial Court (RTC) and Municipal Trial Court (MTC) stationed in Mandaue City.
The undisputed facts are as follows:
In 1986, the RTC and MTC judges of Mandaue City started receiving monthly allowances of P1,260 each through
the yearly appropriation ordinance enacted by the Sangguniang Panlungsod of the said city. In 1991, Mandaue City
increased the amount to P1,500 for each judge.
On March 15, 1994, the Department of Budget and Management (DBM) issued the disputed Local Budget Circular
No. 55 (LBC 55) which provided that:
[1]

[2]

xxx xxx xxx

2.3.2. In the light of the authority granted to the local government units under the Local Government Code to provide
for additional allowances and other benefits to national government officials and employees assigned in their
locality, such additional allowances in the form of honorarium at rates not exceeding P1,000.00 in provinces and cities
and P700.00 in municipalities may be granted subject to the following conditions:
a) That the grant is not mandatory on the part of the LGUs;
b) That all contractual and statutory obligations of the LGU including the implementation of R.A. 6758 shall have been
fully provided in the budget;
c) That the budgetary requirements/limitations under Section 324 and 325 of R.A. 7160 should be satisfied and/or
complied with; and
d) That the LGU has fully implemented the devolution of functions/personnel in accordance with R.A. 7160. (italics
supplied)
xxx xxx xxx
[3]

The said circular likewise provided for its immediate effectivity without need of publication:
5.0 EFFECTIVITY
This Circular shall take effect immediately.
Acting on the DBM directive, the Mandaue City Auditor issued notices of disallowance to herein petitioners,
namely, Honorable RTC Judges Mercedes G. Dadole, Ulric R. Caete, Agustin R. Vestil, Honorable MTC Judges Temistocles
M. Boholst, Vicente C. Fanilag and Wilfredo A. Dagatan, in excess of the amount authorized by LBC 55. Beginning
October, 1994, the additional monthly allowances of the petitioner judges were reduced to P1,000 each. They were
also asked to reimburse the amount they received in excess of P1,000 from April to September, 1994.
The petitioner judges filed with the Office of the City Auditor a protest against the notices of disallowance. But the
City Auditor treated the protest as a motion for reconsideration and indorsed the same to the COA Regional Office No.
7. In turn, the COA Regional Office referred the motion to the head office with a recommendation that the same be
denied.
On September 21, 1995, respondent COA rendered a decision denying petitioners motion for reconsideration. The
COA held that:

The issue to be resolved in the instant appeal is whether or not the City Ordinance of Mandaue which provides a higher
rate of allowances to the appellant judges may prevail over that fixed by the DBM under Local Budget Circular No. 55
dated March 15, 1994.
xxx xxx xxx
Applying the foregoing doctrine, appropriation ordinance of local government units is subject to the organizational,
budgetary and compensation policies of budgetary authorities (COA 5th Ind., dated March 17, 1994 re: Province of
Antique; COA letter dated May 17, 1994 re: Request of Hon. Renato Leviste, Cong. 1 st Dist. Oriental Mindoro). In this
regard, attention is invited to Administrative Order No. 42 issued on March 3, 1993 by the President of the Philippines
clarifying the role of DBM in the compensation and classification of local government positions under RA No. 7160 visavis the provisions of RA No. 6758 in view of the abolition of the JCLGPA. Section 1 of said Administrative Order
provides that:
Section 1. The Department of Budget and Management as the lead administrator of RA No. 6758 shall, through its
Compensation and Position Classification Bureau, continue to have the following responsibilities in connection with the
implementation of the Local Government Code of 1991:
a) Provide guidelines on the classification of local government positions and on the specific rates of
pay therefore;
b) Provide criteria and guidelines for the grant of all allowances and additional forms of
compensation to local government employees; xxx. (underscoring supplied)
To operationalize the aforecited presidential directive, DBM issued LBC No. 55, dated March 15, 1994, whose effectivity
clause provides that:
xxx xxx xxx
5.0 EFFECTIVITY
This Circular shall take effect immediately.
It is a well-settled rule that implementing rules and regulations promulgated by administrative or executive officer in
accordance with, and as authorized by law, has the force and effect of law or partake the nature of a statute (Victorias
Milling Co., Inc., vs. Social Security Commission, 114 Phil. 555, cited in Agpalos Statutory Construction, 2 nd Ed. P. 16;
Justice Cruzs Phil. Political Law, 1984 Ed., p. 103; Espanol vs. Phil Veterans Administration, 137 SCRA 314; Antique
Sawmills Inc. vs. Tayco, 17 SCRA 316).
xxx xxx xxx
There being no statutory basis to grant additional allowance to judges in excess of P1,000.00 chargeable against the
local government units where they are stationed, this Commission finds no substantial grounds or cogent reason to
disturb the decision of the City Auditor, Mandaue City, disallowing in audit the allowances in question. Accordingly, the
above-captioned appeal of the MTC and RTC Judges of Mandaue City, insofar as the same is not covered by Circular
Letter No. 91-7, is hereby dismissed for lack of merit.
xxx xxx xxx
[4]

On November 27, 1995, Executive Judge Mercedes Gozo-Dadole, for and in behalf of the petitioner judges, filed a
motion for reconsideration of the decision of the COA. In a resolution dated May 28, 1996, the COA denied the motion.
Hence, this petition for certiorari by the petitioner judges, submitting the following questions for resolution:
I

HAS THE CITY OF MANDAUE STATUTORY AND CONSTITUTIONAL BASIS TO PROVIDE ADDITIONAL ALLOWANCES AND
OTHER BENEFITS TO JUDGES STATIONED IN AND ASSIGNED TO THE CITY?
II

CAN AN ADMINISTRATIVE CIRCULAR OR GUIDELINE SUCH AS LOCAL BUDGET CIRCULAR NO. 55 RENDER INOPERATIVE
THE POWER OF THE LEGISLATIVE BODY OF A CITY BY SETTING A LIMIT TO THE EXTENT OF THE EXERCISE OF SUCH
POWER?
III

HAS THE COMMISSION ON AUDIT CORRECTLY INTERPRETED LOCAL BUDGET CIRCULAR NO. 55 TO INCLUDE MEMBERS
OF THE JUDICIARY IN FIXING THE CEILING OF ADDITIONAL ALLOWANCES AND BENEFITS TO BE PROVIDED TO JUDGES
STATIONED IN AND ASSIGNED TO MANDAUE CITY BY THE CITY GOVERNMENT AT P1,000.00 PER MONTH
NOTWITHSTANDING THAT THEY HAVE BEEN RECEIVING ALLOWANCES OF P1,500.00 MONTHLY FOR THE PAST FIVE
YEARS?
IV

IS LOCAL BUDGET CIRCULAR NO. 55 DATED MARCH 15, 1994 ISSUED BY THE DEPARTMENT OF BUDGET AND
MANAGEMENT VALID AND ENFORCEABLE CONSIDERING THAT IT WAS NOT DULY PUBLISHED IN ACCODANCE WITH
LAW?
[5]

Petitioner judges argue that LBC 55 is void for infringing on the local autonomy of Mandaue City by dictating a
uniform amount that a local government unit can disburse as additional allowances to judges stationed therein. They
maintain that said circular is not supported by any law and therefore goes beyond the supervisory powers of the
President. They further allege that said circular is void for lack of publication.
On the other hand, the yearly appropriation ordinance providing for additional allowances to judges is allowed by
Section 458, par. (a)(1)[xi], of RA 7160, otherwise known as the Local Government Code of 1991, which provides that:
Sec. 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the legislative body of the
city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the city and its
inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the city as
provided for under Section 22 of this Code, and shall:
(1) Approve ordinances and pass resolutions necessary for an efficient and effective city government, and in this
connection, shall:
xxx xxx xxx
(xi) When the finances of the city government allow, provide for additional allowances and other benefits to judges,
prosecutors, public elementary and high school teachers, and other national government officials stationed in or
assigned to the city; (italics supplied)
Instead of filing a comment on behalf of respondent COA, the Solicitor General filed a manifestation supporting
the position of the petitioner judges. The Solicitor General argues that (1) DBM only enjoys the power to review and
determine whether the disbursements of funds were made in accordance with the ordinance passed by a local
government unit while (2) the COA has no more than auditorial visitation powers over local government units pursuant
to Section 348 of RA 7160 which provides for the power to inspect at any time the financial accounts of local
government units.
Moreover, the Solicitor General opines that the DBM and the respondent are only authorized under RA 7160 to
promulgate a Budget Operations Manual for local government units, to improve and systematize methods, techniques
and procedures employed in budget preparation, authorization, execution and accountability pursuant to Section 354
of RA 7160. The Solicitor General points out that LBC 55 was not exercised under any of the aforementioned
provisions.
Respondent COA, on the other hand, insists that the constitutional and statutory authority of a city government to
provide allowances to judges stationed therein is not absolute. Congress may set limitations on the exercise of
autonomy. It is for the President, through the DBM, to check whether these legislative limitations are being followed by
the local government units.
One such law imposing a limitation on a local government units autonomy is Section 458, par. (a) (1) [xi], of RA
7160, which authorizes the disbursement of additional allowances and other benefits to judges subject to the condition
that the finances of the city government should allow the same. Thus, DBM is merely enforcing the condition of the law
when it sets a uniform maximum amount for the additional allowances that a city government can release to judges
stationed therein.
Assuming arguendo that LBC 55 is void, respondent COA maintains that the provisions of the yearly approved
ordinance granting additional allowances to judges are still prohibited by the appropriation laws passed by Congress
every year. COA argues that Mandaue City gets the funds for the said additional allowances of judges from the Internal
Revenue Allotment (IRA). But the General Appropriations Acts of 1994 and 1995 do not mention the disbursement of
additional allowances to judges as one of the allowable uses of the IRA. Hence, the provisions of said ordinance
granting additional allowances, taken from the IRA, to herein petitioner judges are void for being contrary to law.

To resolve the instant petition, there are two issues that we must address: (1) whether LBC 55 of the DBM is void
for going beyond the supervisory powers of the President and for not having been published and (2) whether the
yearly appropriation ordinance enacted by the City of Mandaue that provides for additional allowances to judges
contravenes the annual appropriation laws enacted by Congress.
We rule in favor of the petitioner judges.
On the first issue, we declare LBC 55 to be null and void.
We recognize that, although our Constitution guarantees autonomy to local government units, the exercise of
local autonomy remains subject to the power of control by Congress and the power of supervision by the
President. Section 4 of Article X of the 1987 Philippine Constitution provides that:
[6]

Sec. 4. The President of the Philippines shall exercise general supervision over local governments. x x x
In Pimentel vs. Aguirre , we defined the supervisory power of the President and distinguished it from the power of
control exercised by Congress. Thus:
[7]

This provision (Section 4 of Article X of the 1987 Philippine Constitution) has been interpreted to exclude the power of
control. In Mondano v. Silvosa,[i][5] the Court contrasted the President's power of supervision over local government
officials with that of his power of control over executive officials of the national government. It was emphasized that
the two terms -- supervision and control -- differed in meaning and extent. The Court distinguished them as follows:
"x x x In administrative law, supervision means overseeing or the power or authority of an officer to see that
subordinate officers perform their duties. If the latter fail or neglect to fulfill them, the former may take such action or
step as prescribed by law to make them perform their duties. Control, on the other hand, means the power of an
officer to alter or modify or nullify or set aside what a subordinate officer ha[s] done in the performance of his duties
and to substitute the judgment of the former for that of the latter." [ii][6]
In Taule v. Santos,[iii][7] we further stated that the Chief Executive wielded no more authority than that of checking
whether local governments or their officials were performing their duties as provided by the fundamental law and by
statutes. He cannot interfere with local governments, so long as they act within the scope of their
authority. "Supervisory power, when contrasted with control, is the power of mere oversight over an inferior body; it
does not include any restraining authority over such body," [iv][8] we said.
In a more recent case, Drilon v. Lim,[v][9] the difference between control and supervision was further delineated. Officers
in control lay down the rules in the performance or accomplishment of an act. If these rules are not followed, they
may, in their discretion, order the act undone or redone by their subordinates or even decide to do it themselves. On
the other hand, supervision does not cover such authority. Supervising officials merely see to it that the rules are
followed, but they themselves do not lay down such rules, nor do they have the discretion to modify or replace them. If
the rules are not observed, they may order the work done or redone, but only to conform to such rules. They may not
prescribe their own manner of execution of the act. They have no discretion on this matter except to see to it that the
rules are followed.
Under our present system of government, executive power is vested in the President. [vi][10] The members of the Cabinet
and other executive officials are merely alter egos. As such, they are subject to the power of control of the President,
at whose will and behest they can be removed from office; or their actions and decisions changed, suspended or
reversed.[vii][11] In contrast, the heads of political subdivisions are elected by the people. Their sovereign powers
emanate from the electorate, to whom they are directly accountable. By constitutional fiat, they are subject to the
Presidents supervision only, not control, so long as their acts are exercised within the sphere of their legitimate
powers. By the same token, the President may not withhold or alter any authority or power given them by the
Constitution and the law.
Clearly then, the President can only interfere in the affairs and activities of a local government unit if he or she
finds that the latter has acted contrary to law. This is the scope of the Presidents supervisory powers over local
government units. Hence, the President or any of his or her alter egos cannot interfere in local affairs as long as the
concerned local government unit acts within the parameters of the law and the Constitution. Any directive therefore by
the President or any of his or her alter egos seeking to alter the wisdom of a law-conforming judgment on local affairs
of a local government unit is a patent nullity because it violates the principle of local autonomy and separation of
powers of the executive and legislative departments in governing municipal corporations.
Does LBC 55 go beyond the law it seeks to implement? Yes.
LBC 55 provides that the additional monthly allowances to be given by a local government unit should not
exceed P1,000 in provinces and cities and P700 in municipalities. Section 458, par. (a)(1)(xi), of RA 7160, the law that
supposedly serves as the legal basis of LBC 55, allows the grant of additional allowances to judges when the finances
of the city government allow. The said provision does not authorize setting a definite maximum limit to the additional
allowances granted to judges. Thus, we need not belabor the point that the finances of a city government may allow
the grant of additional allowances higher than P1,000 if the revenues of the said city government exceed its annual

expenditures. Thus, to illustrate, a city government with locally generated annual revenues of P40 million and
expenditures of P35 million can afford to grant additional allowances of more than P1,000 each to, say, ten judges
inasmuch as the finances of the city can afford it.
Setting a uniform amount for the grant of additional allowances is an inappropriate way of enforcing the criterion
found in Section 458, par. (a)(1)(xi), of RA 7160. The DBM over-stepped its power of supervision over local government
units by imposing a prohibition that did not correspond with the law it sought to implement. In other words, the
prohibitory nature of the circular had no legal basis.
Furthermore, LBC 55 is void on account of its lack of publication, in violation of our ruling in Taada vs.
Tuvera where we held that:
[8]

xxx. Administrative rules and regulations must also be published if their purpose is to enforce or implement existing
law pursuant to a valid delegation.
Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of an
administrative agency and the public, need not be published. Neither is publication required of the so-called letters of
instruction issued by administrative superiors concerning the rules or guidelines to be followed by their subordinates in
the performance of their duties.
Respondent COA claims that publication is not required for LBC 55 inasmuch as it is merely an interpretative
regulation applicable to the personnel of an LGU. We disagree. In De Jesus vs. Commission on Audit where we dealt
with the same issue, this Court declared void, for lack of publication, a DBM circular that disallowed payment of
allowances and other additional compensation to government officials and employees. In refuting respondent COAs
argument that said circular was merely an internal regulation, we ruled that:
[9]

On the need for publication of subject DBM-CCC No. 10, we rule in the affirmative. Following the doctrine enunciated
in Taada v. Tuvera, publication in the Official Gazette or in a newspaper of general circulation in the Philippines is
required since DBM-CCC No. 10 is in the nature of an administrative circular the purpose of which is to
enforce or implement an existing law.Stated differently, to be effective and enforceable, DBM-CCC No. 10 must go
through the requisite publication in the Official Gazette or in a newspaper of general circulation in the Philippines.
In the present case under scrutiny, it is decisively clear that DBM-CCC No. 10, which completely disallows payment of
allowances and other additional compensation to government officials and employees, starting November 1, 1989, is
not a mere interpretative or internal regulation. It is something more than that. And why not, when it tends to deprive
government workers of their allowance and additional compensation sorely needed to keep body and soul together. At
the very least, before the said circular under attack may be permitted to substantially reduce their
income, the government officials and employees concerned should be apprised and alerted by the
publication of subject circular in the Official Gazette or in a newspaper of general circulation in the
Philippines to the end that they be given amplest opportunity to voice out whatever opposition they may
have, and to ventilate their stance on the matter. This approach is more in keeping with democratic
precepts and rudiments of fairness and transparency. (emphasis supplied)
In Philippine International Trading Corporation vs. Commission on Audit , we again declared the same circular as
void, for lack of publication, despite the fact that it was re-issued and then submitted for publication. Emphasizing the
importance of publication to the effectivity of a regulation, we therein held that:
[10]

It has come to our knowledge that DBM-CCC No. 10 has been re-issued in its entirety and submitted for publication in
the Official Gazette per letter to the National Printing Office dated March 9, 1999. Would the subsequent publication
thereof cure the defect and retroact to the time that the above-mentioned items were disallowed in audit?
The answer is in the negative, precisely for the reason that publication is required as a condition precedent to the
effectivity of a law to inform the public of the contents of the law or rules and regulations before their rights and
interests are affected by the same. From the time the COA disallowed the expenses in audit up to the filing of herein
petition the subject circular remained in legal limbo due to its non-publication. As was stated in Taada v. Tuvera, prior
publication of laws before they become effective cannot be dispensed with, for the reason that it would deny the public
knowledge of the laws that are supposed to govern it.
[11]

We now resolve the second issue of whether the yearly appropriation ordinance enacted by Mandaue City
providing for fixed allowances for judges contravenes any law and should therefore be struck down as null and void.
According to respondent COA, even if LBC 55 were void, the ordinances enacted by Mandaue City granting
additional allowances to the petitioner judges would still (be) bereft of legal basis for want of a lawful source of funds
considering that the IRA cannot be used for such purposes. Respondent COA showed that Mandaue Citys funds
consisted of locally generated revenues and the IRA. From 1989 to 1995, Mandaue Citys yearly expenditures exceeded

its locally generated revenues, thus resulting in a deficit. During all those years, it was the IRA that enabled Mandaue
City to incur a surplus. Respondent avers that Mandaue City used its IRA to pay for said additional allowances and this
violated paragraph 2 of the Special Provisions, page 1060, of RA 7845 (The General Appropriations Act of 1995) and
paragraph 3 of the Special Provision, page 1225, of RA 7663 (The General Appropriations Act of 1994) which
specifically identified the objects of expenditure of the IRA. Nowhere in said provisions of the two budgetary laws does
it say that the IRA can be used for additional allowances of judges. Respondent COA thus argues that the provisions in
the ordinance providing for such disbursement are against the law, considering that the grant of the subject
allowances is not within the specified use allowed by the aforesaid yearly appropriations acts.
We disagree.
Respondent COA failed to prove that Mandaue City used the IRA to spend for the additional allowances of the
judges. There was no evidence submitted by COA showing the breakdown of the expenses of the city government and
the funds used for said expenses. All the COA presented were the amounts expended, the locally generated revenues,
the deficit, the surplus and the IRA received each year. Aside from these items, no data or figures were presented to
show that Mandaue City deducted the subject allowances from the IRA. In other words, just because Mandaue Citys
locally generated revenues were not enough to cover its expenditures, this did not mean that the additional
allowances of petitioner judges were taken from the IRA and not from the citys own revenues.
Moreover, the DBM neither conducted a formal review nor ordered a disapproval of Mandaue Citys appropriation
ordinances, in accordance with the procedure outlined by Sections 326 and 327 of RA 7160 which provide that:
[12]

[13]

Section 326. Review of Appropriation Ordinances of Provinces, Highly Urbanized Cities, Independent Component Cities,
and Municipalities within the Metropolitan Manila Area. The Department of Budget and Management shall review
ordinances authorizing the annual or supplemental appropriations of provinces, highly-urbanized cities, independent
component cities, and municipalities within the Metropolitan Manila Area in accordance with the immediately
succeeding Section.
Section 327. Review of Appropriation Ordinances of Component Cities and Municipalities.- The sangguninang
panlalawigan shall review the ordinance authorizing annual or supplemental appropriations of component cities and
municipalities in the same manner and within the same period prescribed for the review of other ordinances.
If within ninety (90) days from receipt of copies of such ordinance, the sangguniang panlalawigan takes
no action thereon, the same shall be deemed to have been reviewed in accordance with law and shall
continue to be in full force and effect. (emphasis supplied)
Within 90 days from receipt of the copies of the appropriation ordinance, the DBM should have taken positive
action. Otherwise, such ordinance was deemed to have been properly reviewed and deemed to have taken effect.
Inasmuch as, in the instant case, the DBM did not follow the appropriate procedure for reviewing the subject ordinance
of Mandaue City and allowed the 90-day period to lapse, it can no longer question the legality of the provisions in the
said ordinance granting additional allowances to judges stationed in the said city.
WHEREFORE, the petition is hereby GRANTED, and the assailed decision and resolution, dated September 21,
1995 and May 28, 1996, respectively, of the Commission on Audit are hereby set aside.
No costs.
SO ORDERED.