Law On Public Corpo - Set1

ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, SOCRATES MARANAN
AND LORENZO SANCHEZ vs. PHILIPPINE AMUSEMENTS AND GAMING

CORPORATION (PAGCOR)
G.R. No. 91649, May 14, 1991
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
CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

LAW ON PUBLIC CORPORATIONS
Page 1
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).

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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 timehonored principle, deeply ingrained in our jurisprudence, that a statute is
presumed to be valid. Every presumption must be indulged in favor of its
constitutionality. This is not to say that We approach Our task with diffidence or
timidity. Where it is clear that the legislature or the executive for that matter, has
over-stepped the limits of its authority under the constitution, We should not
hesitate to wield the axe and let it fall heavily, as fall it must, on the offending
statute (Lozano v. Martinez, supra).
In Victoriano v. Elizalde Rope Workers' Union, et al, 59 SCRA 54, the Court thru
Mr. Justice Zaldivar underscored the
. . . thoroughly established principle which must be followed in all cases
where questions of constitutionality as obtain in the instant cases are
involved. All presumptions are indulged in favor of constitutionality; one
who attacks a statute alleging unconstitutionality must prove its invalidity
beyond a reasonable doubt; that a law may work hardship does not render
it unconstitutional; that if any reasonable basis may be conceived which
supports the statute, it will be upheld and the challenger must negate all
possible basis; that the courts are not concerned with the wisdom, justice,
policy or expediency of a statute and that a liberal interpretation of the
constitution in favor of the constitutionality of legislation should be
adopted. (Danner v. Hass, 194 N.W. 2nd 534, 539; Spurbeck v. Statton,
106 N.W. 2nd 660, 663; 59 SCRA 66; see also e.g. Salas v. Jarencio, 46
SCRA 734, 739 [1970]; Peralta v. Commission on Elections, 82 SCRA 30,
55 [1978]; and Heirs of Ordona v. Reyes, 125 SCRA 220, 241-242 [1983]
cited in Citizens Alliance for Consumer Protection v. Energy Regulatory
Board, 162 SCRA 521, 540)
Of course, there is first, the procedural issue. The respondents are questioning
the legal personality of petitioners to file the instant petition.
Considering however the importance to the public of the case at bar, and in
keeping with the Court's duty, under the 1987 Constitution, to determine whether
or not the other branches of government have kept themselves within the limits
of the Constitution and the laws and that they have not abused the discretion
given to them, the Court has brushed aside technicalities of procedure and has
taken cognizance of this petition. (Kapatiran ng mga Naglilingkod sa Pamahalaan
ng Pilipinas Inc. v. Tan, 163 SCRA 371)
With particular regard to the requirement of proper party as applied in the

cases before us, We hold that the same is satisfied by the petitioners and
intervenors because each of them has sustained or is in danger of
sustaining an immediate injury as a result of the acts or measures
complained of. And even if, strictly speaking they are not covered by the
definition, it is still within the wide discretion of the Court to waive the
requirement and so remove the impediment to its addressing and
resolving the serious constitutional questions raised.
In the first Emergency Powers Cases, ordinary citizens and taxpayers were
allowed to question the constitutionality of several executive orders
issued by President Quirino although they were involving only an indirect
and general interest shared in common with the public. The Court
dismissed the objection that they were not proper parties and ruled that
"the transcendental importance to the public of these cases demands that
they be settled promptly and definitely, brushing aside, if we must
technicalities of procedure." We have since then applied the exception in
many other cases. (Association of Small Landowners in the Philippines,
Inc. v. Sec. of Agrarian Reform, 175 SCRA 343).
Having disposed of the procedural issue, We will now discuss the substantive
issues raised.
Gambling in all its forms, unless allowed by law, is generally prohibited. But the
prohibition of gambling does not mean that the Government cannot regulate it in
the exercise of its police power.
The concept of police power is well-established in this jurisdiction. It has been
defined as the "state authority to enact legislation that may interfere with
personal liberty or property in order to promote the general welfare." (Edu v.
Ericta, 35 SCRA 481, 487) As defined, it consists of (1) an imposition or restraint
upon liberty or property, (2) in order to foster the common good. It is not capable
of an exact definition but has been, purposely, veiled in general terms to
underscore its all-comprehensive embrace. (Philippine Association of Service
Exporters, Inc. v. Drilon, 163 SCRA 386).
Its scope, ever-expanding to meet the exigencies of the times, even to anticipate
the future where it could be done, provides enough room for an efficient and
flexible response to conditions and circumstances thus assuming the greatest
benefits. (Edu v. Ericta, supra)

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It finds no specific Constitutional grant for the plain reason that it does not owe
its origin to the charter. Along with the taxing power and eminent domain, it is
inborn in the very fact of statehood and sovereignty. It is a fundamental attribute
of government that has enabled it to perform the most vital functions of
governance. Marshall, to whom the expression has been credited, refers to it
succinctly as the plenary power of the state "to govern its citizens". (Tribe,
American Constitutional Law, 323, 1978). The police power of the State is a
power co-extensive with self-protection and is most aptly termed the "law of
overwhelming necessity." (Rubi v. Provincial Board of Mindoro, 39 Phil. 660, 708)
It is "the most essential, insistent, and illimitable of powers." (Smith Bell & Co. v.
National, 40 Phil. 136) It is a dynamic force that enables the state to meet the
agencies of the winds of change.
What was the reason behind the enactment of P.D. 1869?
P.D. 1869 was enacted pursuant to the policy of the government to "regulate and
centralize thru an appropriate institution all games of chance authorized by
existing franchise or permitted by law" (1st whereas clause, PD 1869). As was
subsequently proved, regulating and centralizing gambling operations in one
corporate entity the PAGCOR, was beneficial not just to the Government but to
society in general. It is a reliable source of much needed revenue for the cash
strapped Government. It provided funds for social impact projects and subjected
gambling to "close scrutiny, regulation, supervision and control of the
Government" (4th Whereas Clause, PD 1869). With the creation of PAGCOR and
the direct intervention of the Government, the evil practices and corruptions that
go with gambling will be minimized if not totally eradicated. Public welfare, then,
lies at the bottom of the enactment of PD 1896.
Petitioners contend that P.D. 1869 constitutes a waiver of the right of the City of
Manila to impose taxes and legal fees; that the exemption clause in P.D. 1869 is
violative of the principle of local autonomy. They must be referring to Section 13
par. (2) of P.D. 1869 which exempts PAGCOR, as the franchise holder from paying
any "tax of any kind or form, income or otherwise, as well as fees, charges or
levies of whatever nature, whether National or Local."
(2) Income and other taxes. a) Franchise Holder: No tax of any kind or
form, income or otherwise as well as fees, charges or levies of whatever
nature, whether National or Local, shall be assessed and collected under
this franchise from the Corporation; nor shall any form or tax or charge
attach in any way to the earnings of the Corporation, except a franchise
tax of five (5%) percent of the gross revenues or earnings derived by the
Corporation from its operations under this franchise. Such tax shall be due
and payable quarterly to the National Government and shall be in lieu of
all kinds of taxes, levies, fees or assessments of any kind, nature or
description, levied, established or collected by any municipal, provincial or
national government authority (Section 13 [2]).
Their contention stated hereinabove is without merit for the following reasons:
(a) The City of Manila, being a mere Municipal corporation has no inherent right
to impose taxes (Icard v. City of Baguio, 83 Phil. 870; City of Iloilo v. Villanueva,
105 Phil. 337; Santos v. Municipality of Caloocan, 7 SCRA 643). Thus, "the Charter
or statute must plainly show an intent to confer that power or the municipality
cannot assume it" (Medina v. City of Baguio, 12 SCRA 62). Its "power to tax"
therefore must always yield to a legislative act which is superior having been
passed upon by the state itself which has the "inherent power to tax" (Bernas,
the Revised [1973] Philippine Constitution, Vol. 1, 1983 ed. p. 445).
(b) The Charter of the City of Manila is subject to control by Congress. It should
be stressed that "municipal corporations are mere creatures of Congress" (Unson
v. Lacson, G.R. No. 7909, January 18, 1957) which has the power to "create and
abolish municipal corporations" due to its "general legislative powers" (Asuncion
v. Yriantes, 28 Phil. 67; Merdanillo v. Orandia, 5 SCRA 541). Congress, therefore,
has the power of control over Local governments (Hebron v. Reyes, G.R. No.
9124, July 2, 1950). And if Congress can grant the City of Manila the power to tax
certain matters, it can also provide for exemptions or even take back the power.
(c) The City of Manila's power to impose license fees on gambling, has long been
revoked. As early as 1975, the power of local governments to regulate gambling
thru the grant of "franchise, licenses or permits" was withdrawn by P.D. No. 771
and was vested exclusively on the National Government, thus:
Sec. 1. Any provision of law to the contrary notwithstanding, the authority
of chartered cities and other local governments to issue license, permit or
other form of franchise to operate, maintain and establish horse and dog
race tracks, jai-alai and other forms of gambling is hereby revoked.
Sec. 2. Hereafter, all permits or franchises to operate, maintain and
establish, horse and dog race tracks, jai-alai and other forms of gambling
shall be issued by the national government upon proper application and
verification of the qualification of the applicant . . .

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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

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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.1wphi1 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)

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It should be noted that, as the provision is worded, monopolies are not

necessarily prohibited by the Constitution. The state must still decide whether
public interest demands that monopolies be regulated or prohibited. Again, this is
a matter of policy for the Legislature to decide.
On petitioners' allegation that P.D. 1869 violates Sections 11 (Personality Dignity)
12 (Family) and 13 (Role of Youth) of Article II; Section 13 (Social Justice) of Article
XIII and Section 2 (Educational Values) of Article XIV of the 1987 Constitution,
suffice it to state also that these are merely statements of principles and,
policies. As such, they are basically not self-executing, meaning a law should be
passed by Congress to clearly define and effectuate such principles.
In general, therefore, the 1935 provisions were not intended to be selfexecuting principles ready for enforcement through the courts. They were
rather directives addressed to the executive and the legislature. If the
executive and the legislature failed to heed the directives of the articles
the available remedy was not judicial or political. The electorate could
express their displeasure with the failure of the executive and the
legislature through the language of the ballot. (Bernas, Vol. II, p. 2)
Every law has in its favor the presumption of constitutionality (Yu Cong Eng v.
Trinidad, 47 Phil. 387; Salas v. Jarencio, 48 SCRA 734; Peralta v. Comelec, 82
SCRA 30; Abbas v. Comelec, 179 SCRA 287). Therefore, for PD 1869 to be
nullified, it must be shown that there is a clear and unequivocal breach of the
Constitution, not merely a doubtful and equivocal one. In other words, the
grounds for nullity must be clear and beyond reasonable doubt. (Peralta v.
Comelec, supra) Those who petition this Court to declare a law, or parts thereof,
unconstitutional must clearly establish the basis for such a declaration.
Otherwise, their petition must fail. Based on the grounds raised by petitioners to
challenge the constitutionality of P.D. 1869, the Court finds that petitioners have
failed to overcome the presumption. The dismissal of this petition is therefore,
inevitable. But as to whether P.D. 1869 remains a wise legislation considering the
issues of "morality, monopoly, trend to free enterprise, privatization as well as
the state principles on social justice, role of youth and educational values" being
raised, is up for Congress to determine.
As this Court held in Citizens' Alliance for Consumer Protection v. Energy
Regulatory Board, 162 SCRA 521
Presidential Decree No. 1956, as amended by Executive Order No. 137

has, in any case, in its favor the presumption of validity and
constitutionality which petitioners Valmonte and the KMU have not
overturned. Petitioners have not undertaken to identify the provisions in
the Constitution which they claim to have been violated by that statute.
This Court, however, is not compelled to speculate and to imagine how
the assailed legislation may possibly offend some provision of the
Constitution. The Court notes, further, in this respect that petitioners have
in the main put in question the wisdom, justice and expediency of the
establishment of the OPSF, issues which are not properly addressed to
this Court and which this Court may not constitutionally pass upon. Those
issues should be addressed rather to the political departments of
government: the President and the Congress.
Parenthetically, We wish to state that gambling is generally immoral, and this is
precisely so when the gambling resorted to is excessive. This excessiveness
necessarily depends not only on the financial resources of the gambler and his
family but also on his mental, social, and spiritual outlook on life. However, the
mere fact that some persons may have lost their material fortunes, mental
control, physical health, or even their lives does not necessarily mean that the
same are directly attributable to gambling. Gambling may have been the
antecedent, but certainly not necessarily the cause. For the same consequences
could have been preceded by an overdose of food, drink, exercise, work, and
even sex.
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.
Fernan, C.J., Narvasa, Gutierrez, Jr., Cruz, Feliciano, Gancayco, Bidin, Sarmiento,
Grio-Aquino, Medialdea, Regalado and Davide, Jr., JJ., concur.
Separate Opinions
PADILLA, J., concurring:

Page 7
I concur in the result of the learned decision penned by my brother Mr. Justice
Paras. This means that I agree with the decision insofar as it holds that the
prohibition, control, and regulation of the entire activity known as gambling
properly pertain to "state policy." It is, therefore, the political departments of
government, namely, the legislative and the executive that should decide on
what government should do in the entire area of gambling, and assume full
responsibility to the people for such policy.
The courts, as the decision states, cannot inquire into the wisdom, morality or
expediency of policies adopted by the political departments of government in
areas which fall within their authority, except only when such policies pose a
clear and present danger to the life, liberty or property of the individual. This
case does not involve such a factual situation.
However, I hasten to make of record that I do not subscribe to gambling in any
form. It demeans the human personality, destroys self-confidence and
eviscerates one's self-respect, which in the long run will corrode whatever is left
of the Filipino moral character. Gambling has wrecked and will continue to wreck
families and homes; it is an antithesis to individual reliance and reliability as well
as personal industry which are the touchstones of real economic progress and
national development.
Gambling is reprehensible whether maintained by government or privatized. The
revenues realized by the government out of "legalized" gambling will, in the long
run, be more than offset and negated by the irreparable damage to the people's
moral values.
Also, the moral standing of the government in its repeated avowals against
"illegal gambling" is fatally flawed and becomes untenable when it itself engages
in the very activity it seeks to eradicate.
One can go through the Court's decision today and mentally replace the activity
referred to therein as gambling, which is legal only because it is authorized by
law and run by the government, with the activity known asprostitution. Would
prostitution be any less reprehensible were it to be authorized by law, franchised,
and "regulated" by the government, in return for the substantial revenues it
would yield the government to carry out its laudable projects, such as
infrastructure and social amelioration? The question, I believe, answers itself. I
submit that the sooner the legislative department outlaws all forms of
gambling, as a fundamental state policy, and the sooner the executive

implements such policy, the better it will be for the nation.
G.R. No. 71159 November 15, 1989
CITY OF MANILA, and EVANGELINE SUVA, petitioners,
vs.
HON. INTERMEDIATE APPELLATE COURT, IRENE STO. DOMINGO and for
and in behalf of her minor children, VIVENCIO, JR., IRIS, VERGEL and
IMELDA, all surnamed STO. DOMINGO, respondents.
The City Legal Officer for petitioners.
Jose M. Castillo for respondents.
PARAS, J.:
This is a petition for review on certiorari seeking to reverse and set aside: (a) the
Decision of the Intermediate Appellate Court now Court of Appeals 1 promulgated
on May 31, 1984 in AC-G.R. CV No. 00613-R entitled Irene Sto. Domingo et al., v.
City Court of Manila et al., modifying the decision of the then Court of First
Instance of Manila, Branch VIII 2 in Civil Case No. 121921 ordering the defendants
(herein petitioners,) to give plaintiffs (herein private respondents) the right to use
a burial lot in the North Cemetery corresponding to the unexpired term of the
fully paid lease sued upon, to search the remains of the late Vivencio Sto.
Domingo, Sr. and to bury the same in a substitute lot to be chosen by the
plaintiffs; and (b) the Resolution of the Court of Appeals dated May 28, 1985
denying petitioner's motion for reconsideration.
As found by the Court of Appeals and the trial court, the undisputed facts of the
case are as follows:
Brought on February 22, 1979 by the widow and children of the
late Vivencio Sto. Domingo, Sr. was this action for damages against

Page 8
the City of Manila; Evangeline Suva of the City Health Office; Sergio
Mallari, officer-in-charge of the North Cemetery; and Joseph
Helmuth, the latter's predecessor as officer-in-charge of the said
burial grounds owned and operated by the City Government of
Manila.
Vivencio Sto. Domingo, Sr. deceased husband of plaintiff Irene Sto.
Domingo and father of the litigating minors, died on June 4,1971
and buried on June 6,1971 in Lot No. 159, Block No. 194 of the
North Cemetery which lot was leased by the city to Irene Sto.
Domingo for the period from June 6, 1971 to June 6, 2021 per
Official Receipt No. 61307 dated June 6, 1971 (see Exh. A) with an
expiry date of June 6, 2021 (see Exh. A-1). Full payment of the
rental therefor of P50.00 is evidenced by the said receipt which
appears to be regular on its face. Apart from the aforementioned
receipt, no other document was executed to embody such lease
over the burial lot in question. In fact, the burial record for Block
No. 194 of Manila North Cemetery (see Exh. 2) in which subject Lot
No. 159 is situated does not reflect the term of duration of the
lease thereover in favor of the Sto. Domingos.
Believing in good faith that, in accordance with Administrative
Order No. 5, Series of 1975, dated March 6, 1975, of the City Mayor
of Manila (See Exh. 1) prescribing uniform procedure and
guidelines in the processing of documents pertaining to and for the
use and disposition of burial lots and plots within the North
Cemetery, etc., subject Lot No. 159 of Block 194 in which the
mortal remains of the late Vivencio Sto. Domingo were laid to rest,
was leased to the bereaved family for five (5) years only, subject
lot was certified on January 25, 1978 as ready for exhumation.
On the basis of such certification, the authorities of the North
Cemetery then headed by defendant Joseph Helmuth authorized
the exhumation and removal from subject burial lot the remains of
the late Vivencio Sto. Domingo, Sr., placed the bones and skull in a
bag or sack and kept the same in the depository or bodega of the
cemetery y Subsequently, the same lot in question was rented out

to another lessee so that when the plaintiffs herein went to said lot
on All Souls Day in their shock, consternation and dismay, that the
resting place of their dear departed did not anymore bear the
stone marker which they lovingly placed on the tomb. Indignant
and disgusted over such a sorrowful finding, Irene Sto. Domingo
lost no time in inquiring from the officer-in-charge of the North
Cemetery, defendant Sergio Mallari, and was told that the remains
of her late husband had been taken from the burial lot in question
which was given to another lessee.
Irene Sto. Domingo was also informed that she can look for the
bones of her deceased husband in the warehouse of the cemetery
where the exhumed remains from the different burial lots of the
North Cemetery are being kept until they are retrieved by
interested parties. But to the bereaved widow, what she was
advised to do was simply unacceptable. According to her, it was
just impossible to locate the remains of her late husband in a
depository containing thousands upon thousands of sacks of
human bones. She did not want to run the risk of claiming for the
wrong set of bones. She was even offered another lot but was
never appeased. She was too aggrieved that she came to court for
relief even before she could formally present her claims and
demands to the city government and to the other defendants
named in the present complaint. (Decision, Court of Appeals, pp. 23; Rollo, pp. 34-55)
The trial court, on August 4, 1981, rendered its Decision, the dispositive portion
of which states:
WHEREFORE, judgment is hereby rendered, ordering the
defendants to give plaintiffs the right to make use of another single
lot within the North Cemetery for a period of forty-three (43) years
four (4) months and eleven (11) days, corresponding to the
unexpired term of the fully paid lease sued upon; and to search
without let up and with the use of all means humanly possible, for

Page 9
the remains of the late Vivencio Sto. Domingo, Sr. and thereafter,
to bury the same in the substitute lot to be chosen by the plaintiffs
pursuant to this decision.
For want of merit, defendant's counterclaim is DISMISSED.
No pronouncement as to costs.
SO ORDERED. (Rollo, p. 31)
The decision was appealed to the Court of Appeals which on May 31, 1984
rendered a decision (Rollo, pp. 33-40) modifying the decision appealed from, the
dispositive portion of which reads:
WHEREFORE, PREMISES CONSIDERED, the decision appealed from
is hereby REVERSED (is hereby modified) and another one is
hereby entered:
1. Requiring in full force the defendants to look in earnest for the
bones and skull of the late Vivencio Sto. Domingo, Sr., and to bury
the same in the substitute lot adjudged in favor of plaintiffs
hereunder;
2. Ordering defendants to pay plaintiffs-appellants jointly and
severally P10,000.00 for breach of contract;
3. Ordering defendants to pay plaintiffs-appellants, jointly and
severally, P20,000.00 for moral damages;
4. Ordering defendants to pay plaintiffs-appellants jointly and
severally, P20,000.00 for exemplary damages;
5. Ordering defendants to pay plaintiffs-appellants, jointly and
severally, P10,000.00 as and for attorney's fees;
6. Ordering defendants, to pay plaintiffs-appellants, jointly and

severally, on the foregoing amounts legal rate of interest
computed from filing hereof until fully paid; and
7. Ordering defendants, to pay plaintiffs-appellants, jointly and
severally, the cost of suit.
In the resolution dated November 13, 1985 (,Rollo, p. 84), the petition was given
due course.
The pivotal issue of this case is whether or not the operations and functions of a
public cemetery are a governmental, or a corporate or proprietary function of the
City of Manila. The resolution of this issue is essential to the determination of the
liability for damages of the petitioner city.
SO ORDERED. (Rollo, p. 40)

The petitioners' motion for reconsideration was likewise denied.
Hence, this instant petition (Rollo, pp. 7-27) filed on July 27, 1985.
The grounds relied upon for this petition are as follows:
I
THE HONORABLE INTERMEDIATE APPELLATE COURT ERRED IN
AWARDING DAMAGES AGAINST THE PETITIONERS HEREIN,
NOTWITHSTANDING THEIR GOOD FAITH AND THEIR LACK OF
KNOWLEDGE OR CONSENT TO THE REMOVAL OF THE SKELETAL
REMAINS OF THE LATE VIVENCIO STO. DOMINGO, SR. FROM THE
SUBJECT BURIAL LOT.
II
THE HON. INTERMEDIATE APPELLATE COURT ERRED IN HOLDING
PETITIONERS HEREIN RESPONSIBLE FOR THE ALLEGED TORTS OF
THEIR SUBORDINATE OFFICIALS AND EMPLOYEES, INSPITE OF THE
PROVISIONS OF SECTION 4 OF THE REPUBLIC ACT NO. 409
(REVISED CHARTER OF MANILA) AND OTHER APPLICABLE
JURISPRUDENCE ON THE SUBJECT EXEMPTING THE PETITIONERS
FROM DAMAGES FROM THE MALFEASANCE OR MISFEASANCE OF
THEIR OFFICIALS AND EMPLOYEES, IF THERE BE ANY IN THIS CASE.
(Brief for Petitioners, Rollo, pp. 93-94)

Page 10
Petitioners alleged in their petition that the North Cemetery is exclusively

devoted for public use or purpose as stated in Sec. 316 of the Compilation of the
Ordinances of the City of Manila. They conclude that since the City is a political
subdivision in the performance of its governmental function, it is immune from
tort liability which may be caused by its public officers and subordinate
employees. Further Section 4, Article I of the Revised Charter of Manila exempts
the city from liability for damages or injuries to persons or property arising from
the failure of the Mayor, the Municipal Board, or any other city officer, to enforce
the provision of its charter or any other laws, or ordinance, or from negligence of
said Mayor, Municipal Board or any other officers while enforcing or attempting to
enforce said provisions. They allege that the Revised Charter of Manila being a
special law cannot be defeated by the Human Relations provisions of the Civil
Code being a general law.
Private respondents on the other hand maintain that the City of Manila entered
into a contract of lease which involve the exercise of proprietary functions with
private respondent Irene Sto. Domingo. The city and its officers therefore can be
sued for any-violation of the contract of lease.
Private respondents' contention is well-taken.
Under Philippine laws, the City of Manila is a political body corporate and as such
endowed with the faculties of municipal corporations to be exercised by and
through its city government in conformity with law, and in its proper corporate
name. It may sue and be sued, and contract and be contracted with. Its powers
are twofold in character-public, governmental or political on the one hand, and
corporate, private and proprietary on the other. Governmental powers are those
exercised in administering the powers of the state and promoting the public
welfare and they include the legislative, judicial, public and political. Municipal
powers on the one hand are exercised for the special benefit and advantage of
the community and include those which are ministerial, private and corporate. In
McQuillin on Municipal Corporation, the rule is stated thus: "A municipal
corporation proper has ... a public character as regards the state at large insofar
as it is its agent in government, and private (so called) insofar as it is to promote
local necessities and conveniences for its own community (Torio v. Fontanilla, 85
SCRA 599 [1978]). In connection with the powers of a municipal corporation, it
may acquire property in its public or governmental capacity, and private or
proprietary capacity. The New Civil Code divides such properties into property for
public use and patrimonial properties (Article 423), and further enumerates the
properties for public use as provincial roads, city streets, municipal streets, the
squares, fountains, public waters, promenades, and public works for public
service paid for by said provisions, cities or municipalities, all other property is
patrimonial without prejudice to the provisions of special laws (Article 424;
Province of Zamboanga del Norte v. City of Zamboanga, et al., 22 SCRA 1334
[1968]).
Thus in Torio v. Fontanilla, supra, the Court declared that with respect to
proprietary functions the settled rule is that a municipal corporation can be held
liable to third persons ex contractu (Municipality of Moncada v. Cajuigan, et al.,
21 Phil. 184 (1912) or ex delicto (Mendoza v. de Leon, 33 Phil. 508 (1916).
The Court further stressed:
Municipal corporations are subject to be sued upon contracts and
in tort....
xxx xxx xxx
The rule of law is a general one, that the superior or employer
must answer civilly for the negligence or want of skill of its agent
or servant in the course or line of his employment, by which
another who is free from contributory fault, is injured. Municipal
corporations under the conditions herein stated, fall within tile
operation of this rule of law, and are liable accordingly, to civil

Page 11
actions for damages when the requisite elements of liability coexist. ... (Emphasis supplied)
The Court added:
... while the following are corporate or proprietary in character, viz:
municipal waterworks, slaughter houses, markets, stables, bathing
establishments, wharves, ferries and fisheries. Maintenance of
parks, golf courses, cemeteries and airports among others, are
also recognized as municipal or city activities of a proprietary
character. (Dept. of Treasury v. City of Evansvulle, Sup. Ct. of
Indiana, 60 N.E. 2nd 952, 954 cited in Torio v. Fontanilla, supra)
(Emphasis supplied)
Under the foregoing considerations and in the absence of a special law, the North
Cemetery is a patrimonial property of the City of Manila which was created by
resolution of the Municipal Board of August 27, 1903 and January 7, 1904
(Petition, Rollo pp. 20-21 Compilation of the Ordinances of the City of Manila).
The administration and government of the cemetery are under the City Health
Officer (Ibid., Sec. 3189), the order and police of the cemetery (Ibid., See. 319),
the opening of graves, niches, or tombs, the exhuming of remains, and the
purification of the same (Ibid., Sec. 327) are under the charge and responsibility
of the superintendent of the cemetery. The City of Manila furthermore prescribes
the procedure and guidelines for the use and dispositions of burial lots and plots
within the North Cemetery through Administrative Order No. 5, s. 1975 (Rollo, p.
44). With the acts of dominion, there is, therefore no doubt that the North
Cemetery is within the class of property which the City of Manila owns in its
proprietary or private character. Furthermore, there is no dispute that the burial
lot was leased in favor of the private respondents. Hence, obligations arising from
contracts have the force of law between the contracting parties. Thus a lease
contract executed by the lessor and lessee remains as the law between them.
(Henson v. Intermediate Appellate Court, 148 SCRA 11 [1 987]). Therefore, a
breach of contractual provision entitles the other party to damages even if no
penalty for such breach is prescribed in the contract. (Boysaw v. Interphil
Promotions, Inc., 148 SCRA 635 [1987]).
Noteworthy are the findings of the Court of Appeals as to the harrowing

experience of private respondents and their wounded feelings upon discovery
that the remains of their loved one were exhumed without their knowledge and
consent, as said Court declared:
It has been fully established that the appellants, in spite or perhaps
because, of their lowly station in life have found great consolation
in their bereavement from the loss of their family head, by visiting
his grave on special or even ordinary occasions, but particularly on
All Saints Day, in keeping with the deep, beautiful and Catholic
Filipino tradition of revering the memory of their dead. It would
have been but fair and equitable that they were notified of the
intention of the city government to transfer the skeletal remains of
the late Vivencio Sto. Domingo to give them an opportunity to
demand the faithful fulfillment of their contract, or at least to
prepare and make provisions for said transfer in order that they
would not lose track of the remains of their beloved dead, as what
has actually happened on this case. We understand fully what the
family of the deceased must have felt when on All Saints Day of
1978, they found a new marker on the grave they were to visit,
only to be told to locate their beloved dead among thousands of
skeletal remains which to them was desecration and an impossible
task. Even the lower court recognized this when it stated in its
decision thus:
All things considered, even as the Court
commiserates with plaintiffs for the unfortunate
happening complained of and untimely desecration
of the resting place and remains of their deceased
dearly beloved, it finds the reliefs prayed for by
them lacking in legal and factual basis. Under the
aforementioned facts and circumstances, the most
that plaintiffs ran ask for is the replacement of
subject lot with another lot of equal size and similar
location in the North Cemetery which substitute lot
plaintiffs can make use of without paying any rental

Page 12
to the city government for a period of forty-three

(43) years, four (4) months and eleven (11) days
corresponding to the unexpired portion of the term
of the lease sued upon as of January 25, 1978 when
the remains of the late Vivencio Sto. Domingo, Sr.
were prematurely removed from the disputed lot;
and to require the defendants to look in earnest for
the bones and skull of the late Vivencio Sto.
Domingo Sr. and to bury the same in the substitute
lot adjudged in favor of plaintiffs hereunder.
(Decision, Intermediate Appellate Court, p. 7, Rollo,
p. 39)
As regards the issue of the validity of the contract of lease of grave lot No. 159,
Block No. 195 of the North Cemetery for 50 years beginning from June 6, 1971 to
June 6, 2021 as clearly stated in the receipt duly signed by the deputy treasurer
of the City of Manila and sealed by the city government, there is nothing in the
record that justifies the reversal of the conclusion of both the trial court and the
Intermediate Appellate Court to the effect that the receipt is in itself a contract of
lease. (Decision, Intermediate Appellate Court, p. 3, Rollo, pp. 5-6).
Under the doctrine of respondent superior, (Torio v. Fontanilla, supra), petitioner
City of Manila is liable for the tortious act committed by its agents who failed to
verify and check the duration of the contract of lease. The contention of the
petitioner-city that the lease is covered by Administrative Order No. 5, series of
1975 dated March 6, 1975 of the City of Manila for five (5) years only beginning
from June 6, 1971 is not meritorious for the said administrative order covers new
leases. When subject lot was certified on January 25, 1978 as ready for
exhumation, the lease contract for fifty (50) years was still in full force and effect.
PREMISES CONSIDERED, the Decision of the Intermediate Appellate Court is
hereby AFFIRMED.
SO ORDERED.
G.R. No. 93252 August 5, 1991
RODOLFO T. GANZON, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and LUIS T. SANTOS, respondents.
G.R. No. 93746 August 5,1991
MARY ANN RIVERA ARTIEDA, petitioner,
vs.
HON. LUIS SANTOS, in his capacity as Secretary of the Department of
Local Government, NICANOR M. PATRICIO, in his capacity as Chief, Legal
Service of the Department of Local Government and SALVADOR
CABALUNA JR., respondents.
The petitions of Mayor Ganzon originated from a series of administrative

complaints, ten in number, filed against him by various city officials sometime in
1988, on various charges, among them, abuse of authority, oppression, grave
misconduct, disgraceful and immoral conduct, intimidation, culpable violation of
the Constitution, and arbitrary detention. 1 The personalities involved are
Joceleehn Cabaluna, a clerk at the city health office; Salvador Cabaluna, her
husband; Dr. Felicidad Ortigoza, Assistant City Health Officer; Mansueto Malabor,
Vice-Mayor; Rolando Dabao, Dan Dalido, German Gonzales, Larry Ong, and
Eduardo Pefia Redondo members of the Sangguniang Panglunsod; and Pancho
Erbite, a barangay tanod. The complaints against the Mayor are set forth in the
opinion of the respondent Court of Appeals. 2 We quote:
xxx xxx xxx
G.R. No. 95245 August 5,1991

RODOLFO T. GANZON, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and LUIS T. SANTOS, in his
capacity as the Secretary of the Department of Local Government,
respondents.
Nicolas P. Sonalan for petitioner in 93252.
Romeo A. Gerochi for petitioner in 93746.
Eugenio Original for petitioner in 95245.
SARMIENTO, J.:p
The petitioners take common issue on the power of the President (acting through
the Secretary of Local Government), to suspend and/or remove local officials.
The petitioners are the Mayor of Iloilo City (G.R. Nos. 93252 and 95245) and a
member of the Sangguniang Panglunsod thereof (G.R. No. 93746), respectively.

Page 13
In her verified complaint (Annex A), Mrs. Cabaluna, a clerk

assigned to the City Health, Office of Iloilo City charged that due to
political reasons, having supported the rival candidate, Mrs. Rosa
0. Caram, the petitioner City Mayor, using as an excuse the
exigency of the service and the interest of the public, pulled her
out from rightful office where her qualifications are best suited and
assigned her to a work that should be the function of a non-career
service employee. To make matters worse, a utility worker in the
office of the Public Services, whose duties are alien to the
complainant's duties and functions, has been detailed to take her
place. The petitioner's act are pure harassments aimed at luring
her away from her permanent position or force her to resign.
In the case of Dra. Felicidad Ortigoza, she claims that the petitioner
handpicked her to perform task not befitting her position as
Assistant City Health Officer of Iloilo City; that her office was
padlocked without any explanation or justification; that her salary
was withheld without cause since April 1, 1988; that when she filed
her vacation leave, she was given the run-around treatment in the
approval of her leave in connivance with Dr. Rodolfo Villegas and
that she was the object of a well-engineered trumped-up charge in
an administrative complaint filed by Dr. Rodolfo Villegas (Annex B).
On the other hand, Mansuelo Malabor is the duly elected ViceMayor of Iloilo City and complainants Rolando Dabao, Dan Dalido,
German Gonzales, Larry Ong and Eduardo Pefia Pedondo are
members of the Sangguniang Panglunsod of the City of Iloilo. Their
complaint arose out from the case where Councilor Larry Ong,
whose key to his office was unceremoniously and without previous
notice, taken by petitioner. Without an office, Councilor Ong had to
hold office at Plaza Libertad, The Vice-Mayor and the other
complainants sympathized with him and decided to do the same.
However, the petitioner, together with its fully-armed security
men, forcefully drove them away from Plaza Libertad. Councilor
Ong denounced the petitioner's actuations the following day in the
radio station and decided to hold office at the Freedom Grandstand
at Iloilo City and there were so many people who gathered to
witness the incident. However, before the group could reach the
area, the petitioner, together with his security men, led the
firemen using a firetruck in dozing water to the people and the
bystanders.
Another administrative case was filed by Pancho Erbite, a barangay
tanod, appointed by former mayor Rosa O. Caram. On March 13,
1988, without the benefit of charges filed against him and no
warrant of arrest was issued, Erbite was arrested and detained at
the City Jail of Iloilo City upon orders of petitioner. In jail, he was
allegedly mauled by other detainees thereby causing injuries He
was released only the following day. 3
The Mayor thereafter answered 4 and the cases were shortly set for hearing. The
opinion of the Court of Appeals also set forth the succeeding events:
xxx xxx xxx
The next hearings were re-set to July 25, 26, 27,1988 in the same
venue-Iloilo City. Again, the petitioner attempted to delay the
proceedings and moved for a postponement under the excuse that
he had just hired his counsel. Nonetheless, the hearing officers
denied the motion to postpone, in view of the fact that the parties
were notified by telegrams of the scheduled hearings (Annex M).
In the said hearings, petitioner's counsel cross-examined the
complainants and their witnesses.
Finding probable grounds and reasons, the respondent issued a
preventive suspension order on August 11, 1988 to last until
October 11,1988 for a period of sixty (60) days.
Then the next investigation was set on September 21, 1988 and
the petitioner again asked for a postponement to September
26,1988. On September 26, 1988, the complainants and petitioner
were present, together with their respective counsel. The petitioner
sought for a postponement which was denied. In these hearings
which were held in Mala the petitioner testified in Adm. Case No. C10298 and 10299.
The investigation was continued regarding the Malabor case and
the complainants testified including their witnesses.
The initial hearing in the Cabaluna and Ortigoza cases were set for
hearing on June 20-21, 1988 at the Regional Office of the
Department of Local Government in Iloilo City. Notices, through
telegrams, were sent to the parties (Annex L) and the parties

received them, including the petitioner. The petitioner asked for a

postponement before the scheduled date of hearing and was
represented by counsel, Atty. Samuel Castro. The hearing officers,
Atty. Salvador Quebral and Atty. Marino Bermudez had to come all
the way from Manila for the two-day hearings but was actually held
only on June 20,1988 in view of the inability and unpreparedness of
petitioner's counsel.
Page 14
On October 10, 1988, petitioner's counsel, Atty. Original moved for

a postponement of the October 24, 1988 hearing to November 7 to
11, 1988 which was granted. However, the motion for change of
venue as denied due to lack of funds. At the hearing on November

7, 1988, the parties and counsel were present. Petitioner reiterated
his motion to change venue and moved for postponement anew.
The counsel discussed a proposal to take the deposition of
witnesses in Iloilo City so the hearing was indefinitely postponed.
However, the parties failed to come to terms and after the parties
were notified of the hearing, the investigation was set to December
13 to 15, 1988.
The petitioner sought for another postponement on the ground
that his witnesses were sick or cannot attend the investigation due
to lack of transportation. The motion was denied and the petitioner
was given up to December 14, 1988 to present his evidence.
On December 14,1988, petitioner's counsel insisted on his motion
for postponement and the hearing officers gave petitioner up to
December 15, 1988 to present his evidence. On December 15,
1988, the petitioner failed to present evidence and the cases were
considered submitted for resolution.
In the meantime, a prima facie evidence was found to exist in the
arbitrary detention case filed by Pancho Erbite so the respondent
ordered the petitioner's second preventive suspension dated
October 11, 1988 for another sixty (60) days. The petitioner was
able to obtain a restraining order and a writ of preliminary
injunction in the Regional Trial Court, Branch 33 of Iloilo City. The
second preventive suspension was not enforced. 5
Amidst the two successive suspensions, Mayor Ganzon instituted an action for
prohibition against the respondent Secretary of Local Government (now, Interior)
in the Regional Trial Court, Iloilo City, where he succeeded in obtaining a writ of
preliminary injunction. Presently, he instituted CA-G.R. SP No. 16417, an action
for prohibition, in the respondent Court of Appeals.
Meanwhile, on May 3, 1990, the respondent Secretary issued another order,
preventively suspending Mayor Ganzon for another sixty days, the third time in

Page 15
twenty months, and designating meantime Vice-Mayor Mansueto Malabor as

acting mayor. Undaunted, Mayor Ganzon commenced CA-G.R. SP No. 20736 of
the Court of Appeals, a petition for prohibition, 6 (Malabor it is to be noted, is one
of the complainants, and hence, he is interested in seeing Mayor Ganzon ousted.)
On September 7, 1989, the Court of Appeals rendered judgment, dismissing CAG.R. SP No. 16417. On July 5, 1990, it likewise promulgated a decision, dismissing
CA-G.R. SP No. 20736. In a Resolution dated January 24, 1990, it issued a
Resolution certifying the petition of Mary Ann Artieda, who had been similary
charged by the respondent Secretary, to this Court.
On June 26,1990, we issued a Temporary Restraining Order, barring the
respondent Secretary from implementing the suspension orders, and restraining
the enforcement of the Court of Appeals' two decisions.
In our Resolution of November 29, 1990, we consolidated all three cases. In our
Resolutions of January 15, 1991, we gave due course thereto.
Mayor Ganzon claims as a preliminary (GR No. 93252), that the Department of
Local Government in hearing the ten cases against him, had denied him due
process of law and that the respondent Secretary had been "biased, prejudicial
and hostile" towards him 7 arising from his (Mayor Ganzon's) alleged refusal to
join the Laban ng Demokratikong Pilipino party 8 and the running political rivalry
they maintained in the last congressional and local elections; 9 and his alleged
refusal to operate a lottery in Iloilo City. 10 He also alleges that he requested the
Secretary to lift his suspension since it had come ninety days prior to an election
(the barangay elections of November 14, 1988), 11notwithstanding which, the
latter proceeded with the hearing and meted out two more suspension orders of
the aforementioned cases. 12 He likewise contends that he sought to bring the
cases to Iloilo City (they were held in Manila) in order to reduce the costs of
proceeding, but the Secretary rejected his request. 13 He states that he asked for
postponement on "valid and justifiable" 14 grounds, among them, that he was
suffering from a heart ailment which required confinement; that his
"vital" 15 witness was also hospitalized 16 but that the latter unduly denied his
request. 17
Mayor Ganzon's primary argument (G.R. Nos. 93252 and 95245) is that the
Secretary of Local Government is devoid, in any event, of any authority to
suspend and remove local officials, an argument reiterated by the petitioner Mary
Ann Rivera Artieda (G.R. No. 93746).
As to Mayor Ganzon's charges of denial of due process, the records do not show
very clearly in what manner the Mayor might have been deprived of his rights by
the respondent Secretary. His claims that he and Secretary Luis-Santos were (are)
political rivals and that his "persecution" was politically motivated are pure
speculation and although the latter does not appear to have denied these
contentions (as he, Mayor Ganzon, claims), we can not take his word for it the
way we would have under less political circumstances, considering furthermore
that "political feud" has often been a good excuse in contesting complaints.
The Mayor has failed furthermore to substantiate his say-so's that Secretary
Santos had attempted to seduce him to join the administration party and to
operate a lottery in Iloilo City. Again, although the Secretary failed to rebut his
allegations, we can not accept them, at face value, much more, as judicial
admissions as he would have us accept them 18 for the same reasons abovestated and furthermore, because his say so's were never corroborated by
independent testimonies. As a responsible public official, Secretary Santos, in
pursuing an official function, is presumed to be performing his duties regularly
and in the absence of contrary evidence, no ill motive can be ascribed to him.
As to Mayor Ganzon's contention that he had requested the respondent Secretary
to defer the hearing on account of the ninety-day ban prescribed by Section 62 of
Batas Blg. 337, the Court finds the question to be moot and academic since we
have in fact restrained the Secretary from further hearing the complaints against
the petitioners. 19
As to his request, finally, for postponements, the Court is afraid that he has not
given any compelling reason why we should overturn the Court of Appeals, which
found no convincing reason to overrule Secretary Santos in denying his requests.
Besides, postponements are a matter of discretion on the part of the hearing
officer, and based on Mayor Ganzon's above story, we are not convinced that the
Secretary has been guilty of a grave abuse of discretion.

Page 16
The Court can not say, under these circumstances, that Secretary Santos'
actuations deprived Mayor Ganzon of due process of law.
We come to the core question: Whether or not the Secretary of Local
Government, as the President's alter ego, can suspend and/or remove local
officials.
It is the petitioners' argument that the 1987 Constitution 20 no longer allows the
President, as the 1935 and 1973 Constitutions did, to exercise the power of
suspension and/or removal over local officials. According to both petitioners, the
Constitution is meant, first, to strengthen self-rule by local government units and
second, by deleting the phrase 21 as may be provided by law to strip the
President of the power of control over local governments. It is a view, so they
contend, that finds support in the debates of the Constitutional Commission. The
provision in question reads as follows:
Sec. 4. The President of the Philippines shall exercise general
supervision over local governments. Provinces with respect to
component cities and municipalities, and cities and municipalities
with respect to component barangays shall ensure that the acts of
their component units are within the scope of their prescribed
powers and functions. 22
It modifies a counterpart provision appearing in the 1935 Constitution, which we
quote:
Sec. 10. The President shall have control of all the executive
departments, bureaus, or offices, exercise general supervision over
all Local governments as may be provided by law, and take care
that the laws be faithfully executed. 23
The petitioners submit that the deletion (of "as may be provided by law") is
significant, as their argument goes, since: (1) the power of the President is
"provided by law" and (2) hence, no law may provide for it any longer.
It is to be noted that in meting out the suspensions under question, the Secretary
of Local Government acted in consonance with the specific legal provisions of
Batas Blg. 337, the Local Government Code, we quote:
Sec. 62. Notice of Hearing. Within seven days after the
complaint is filed, the Minister of local Government, or the
sanggunian concerned, as the case may be, shall require the
respondent to submit his verified answer within seven days from
receipt of said complaint, and commence the hearing and
investigation of the case within ten days after receipt of such
answer of the respondent. No investigation shall be held within
ninety days immediately prior to an election, and no preventive
suspension shall be imposed with the said period. If preventive
suspension has been imposed prior to the aforesaid period, the
preventive suspension shall be lifted. 24
Sec. 63. Preventive Suspension. (1) Preventive suspension may
be imposed by the Minister of Local Government if the respondent
is a provincial or city official, by the provincial governor if the
respondent is an elective municipal official, or by the city or
municipal mayor if the respondent is an elective barangay official.
(2) Preventive suspension may be imposed at any time after the
issues are joined, when there is reasonable ground to believe that
the respondent has committed the act or acts complained of, when
the evidence of culpability is strong, when the gravity of the
offense so warrants, or when the continuance in office of the
respondent could influence the witnesses or pose a threat to the
safety and integrity of the records and other evidence. In all cases,
preventive suspension shall not extend beyond sixty days after the
start of said suspension.
(3) At the expiration of sixty days, the suspended official shall be
deemed reinstated in office without prejudice to the continuation of
the proceedings against him until its termination. However ' if the
delay in the proceedings of the case is due to his fault, neglect or

Page 17
request, the time of the delay shall not be counted in computing

the time of suspension. 25
The issue, as the Court understands it, consists of three questions: (1) Did the
1987 Constitution, in deleting the phrase "as may be provided by law" intend to
divest the President of the power to investigate, suspend, discipline, and/or
remove local officials? (2) Has the Constitution repealed Sections 62 and 63 of
the Local Government Code? (3) What is the significance of the change in the
constitutional language?
It is the considered opinion of the Court that notwithstanding the change in the
constitutional language, the charter did not intend to divest the legislature of its
right or the President of her prerogative as conferred by existing legislation to
provide administrative sanctions against local officials. It is our opinion that the
omission (of "as may be provided by law") signifies nothing more than to
underscore local governments' autonomy from congress and to break Congress'
"control" over local government affairs. The Constitution did not, however,
intend, for the sake of local autonomy, to deprive the legislature of all authority
over municipal corporations, in particular, concerning discipline.
Autonomy does not, after all, contemplate making mini-states out of local
government units, as in the federal governments of the United States of America
(or Brazil or Germany), although Jefferson is said to have compared municipal
corporations euphemistically to "small republics." 26 Autonomy, in the
constitutional sense, is subject to the guiding star, though not control, of the
legislature, albeit the legislative responsibility under the Constitution and as the
"supervision clause" itself suggest-is to wean local government units from overdependence on the central government.
It is noteworthy that under the Charter, "local autonomy" is not instantly selfexecuting, but subject to, among other things, the passage of a local government
code, 27 a local tax law, 28 income distribution legislation, 29 and a national
representation law, 30 and measures 31 designed to realize autonomy at the local
level. It is also noteworthy that in spite of autonomy, the Constitution places the
local government under the general supervision of the Executive. It is noteworthy
finally, that the Charter allows Congress to include in the local government code
provisions for removal of local officials, which suggest that Congress may
exercise removal powers, and as the existing Local Government Code has done,
delegate its exercise to the President. Thus:
Sec. 3. The Congress shall enact a local government code which
shall provide for a more responsive and accountable local
government structure instituted through a system of
decentralization with effective mechanisms of recall, initiative, and
referendum, allocate among the different local government units
their powers, responsibilities and resources, and provide for the
qualifications, election, appointment and removal, term, salaries,
powers and functions and duties of local officials, and all other
matters relating to the organization and operation of the local
units. 32
As hereinabove indicated, the deletion of "as may be provided by law" was
meant to stress, sub silencio, the objective of the framers to strengthen local
autonomy by severing congressional control of its affairs, as observed by the
Court of Appeals, like the power of local legislation. 33 The Constitution did
nothing more, however, and insofar as existing legislation authorizes the
President (through the Secretary of Local Government) to proceed against local
officials administratively, the Constitution contains no prohibition.
The petitioners are under the impression that the Constitution has left the
President mere supervisory powers, which supposedly excludes the power of
investigation, and denied her control, which allegedly embraces disciplinary
authority. It is a mistaken impression because legally, "supervision" is not
incompatible with disciplinary authority as this Court has held, 34 thus:
xxx xxx xxx
It is true that in the case of Mondano vs. Silvosa, 51 Off. Gaz., No. 6
p. 2884, this Court had occasion to discuss the scope and extent of
the power of supervision by the President over local government
officials in contrast to the power of control given to him over
executive officials of our government wherein it was emphasized

Page 18
that the two terms, control and supervision, are two different
things which differ one from the other in meaning and extent. Thus
in that case the Court has made the following digression: "In
administration law supervision means overseeing or the power or
authority of an officer to see that subordinate officers perform their
duties. If the latter fail or neglect to fulfill them the former may
take such action or step as prescribed by law to make them
perform their duties. Control, on the other hand, means the power
of an officer to alter or modify or nullify of set aside what a
subordinate officer had done in the performance of his duties and
to substitute the judgment of the former for that of the latter." But
from this pronouncement it cannot be reasonably inferred that the
power of supervision of the President over local government
officials does not include the power of investigation when in his
opinion the good of the public service so requires, as postulated in
Section 64(c) of the Revised Administrative Code. ... 35
xxx xxx xxx
"Control" has been defined as "the power of an officer to alter or modify or nullify
or set aside what a subordinate officer had done in the performance of his duties
and to substitute the judgment of the former for test of the
latter." 36 "Supervision" on the other hand means "overseeing or the power or
authority of an officer to see that subordinate officers perform their duties. 37 As
we held, 38 however, "investigating" is not inconsistent with "overseeing",
although it is a lesser power than "altering". The impression is apparently
exacerbated by the Court's pronouncements in at least three cases, Lacson v.
Roque, 39 Hebron v. Reyes, 40 and Mondano v. Silvosa, 41 and possibly, a fourth
one, Pelaez v. Auditor General. 42 In Lacson, this Court said that the President
enjoyed no control powers but only supervision "as may be provided by law," 43 a
rule we reiterated in Hebron, and Mondano. In Pelaez, we stated that the
President "may not . . . suspend an elective official of a regular municipality or
take any disciplinary action against him, except on appeal from a decision of the
corresponding provincial board." 44 However,
neither Lacson nor Hebron nor Mondano categorically banned the Chief Executive
from exercising acts of disciplinary authority because she did not exercise control
powers, but because no law allowed her to exercise disciplinary authority. Thus,
according to Lacson:
The contention that the President has inherent power to remove or
suspend municipal officers is without doubt not well taken.
Removal and suspension of public officers are always controlled by
the particular law applicable and its proper construction subject to
constitutional limitations. 45
of the Revised Administrative Code, then such additional power

must be deemed to have been abrogated by Section 110(l), Article
VII of the Constitution. 47
xxx xxx xxx
In Pelaez, we stated that the President can not impose disciplinary measures on
local officials except on appeal from the provincial board pursuant to the
Administrative Code. 48
In Hebron we stated:
Accordingly, when the procedure for the suspension of an officer is
specified by law, the same must be deemed mandatory and
adhered to strictly, in the absence of express or clear provision to
the contrary-which does not et with respect to municipal
officers ... 46
In Mondano, the Court held:
... The Congress has expressly and specifically lodged the
provincial supervision over municipal officials in the provincial
governor who is authorized to "receive and investigate complaints
made under oath against municipal officers for neglect of duty,
oppression, corruption or other form of maladministration of office,
and conviction by final judgment of any crime involving moral
turpitude." And if the charges are serious, "he shall submit written
charges touching the matter to the provincial board, furnishing a
copy of such charges to the accused either personally or by
registered mail, and he may in such case suspend the officer (not
being the municipal treasurer) pending action by the board, if in
his opinion the charge by one affecting the official integrity of the
officer in question." Section 86 of the Revised Administration Code
adds nothing to the power of supervision to be exercised by the
Department Head over the administration of ... municipalities ... . If
it be construed that it does and such additional power is the same
authority as that vested in the Department Head by section 79(c)

Page 19
Thus, in those case that this Court denied the President the power (to
suspend/remove) it was not because we did not think that the President can not
exercise it on account of his limited power, but because the law lodged the power
elsewhere. But in those cases ii which the law gave him the power, the Court, as
in Ganzon v. Kayanan, found little difficulty in sustaining him. 49
The Court does not believe that the petitioners can rightfully point to the debates
of the Constitutional Commission to defeat the President's powers. The Court
believes that the deliberations are by themselves inconclusive, because although
Commissioner Jose Nolledo would exclude the power of removal from the
President, 50Commissioner Blas Ople would not. 51
The Court is consequently reluctant to say that the new Constitution has repealed
the Local Government Code, Batas Blg. 37. As we said, "supervision" and
"removal" are not incompatible terms and one may stand with the other
notwithstanding the stronger expression of local autonomy under the new
Charter. We have indeed held that in spite of the approval of the Charter, Batas
Blg. 337 is still in force and effect. 52
As the Constitution itself declares, local autonomy means "a more responsive and
accountable local government structure instituted through a system of
decentralization." 53 The Constitution as we observed, does nothing more than to
break up the monopoly of the national government over the affairs of local
governments and as put by political adherents, to "liberate the local
governments from the imperialism of Manila." Autonomy, however, is not meant
to end the relation of partnership and inter-dependence between the central
administration and local government units, or otherwise, to user in a regime of

federalism. The Charter has not taken such a radical step. Local governments,
under the Constitution, are subject to regulation, however limited, and for no
other purpose than precisely, albeit paradoxically, to enhance self- government.
As we observed in one case, 54 decentralization means devolution of national
administration but not power to the local levels. Thus:
Now, autonomy is either decentralization of administration or
decentralization of power. There is decentralization of
administration when the central government delegates
administrative powers to political subdivisions in order to broaden
the base of government power and in the process to make local
governments "more responsive and accountable," and "ensure
their fullest development as self-reliant communities and make
them more effective partners in the pursuit of national
development and social progress." At the same time, it relieves the
central government of the burden of managing local affairs and
enables it to concentrate on national concerns. The President
exercises "general supervision" over them, but only to "ensure that
local affairs are administered according to law." He has no control
over their acts in the sense that he can substitute their judgments
with his own.
Decentralization of power, on the other hand, involves an
abdication of political power in the favor of local governments units
declared to be autonomous, In that case, the autonomous
government is free to chart its own destiny and shape its future
with minimum intervention from central authorities. According to a
constitutional author, decentralization of power amounts to "selfimmolation," since in that event, the autonomous government
becomes accountable not to the central authorities but to its
constituency. 55
The successive sixty-day suspensions imposed on Mayor Rodolfo Ganzon is albeit
another matter. What bothers the Court, and what indeed looms very large, is the

Page 20
fact that since the Mayor is facing ten administrative charges, the Mayor is in fact
facing the possibility of 600 days of suspension, in the event that all ten cases
yield prima facie findings. The Court is not of course tolerating misfeasance in
public office (assuming that Mayor Ganzon is guilty of misfeasance) but it is
certainly another question to make him serve 600 days of suspension, which is
effectively, to suspend him out of office. As we held: 56
2. Petitioner is a duly elected municipal mayor of Lianga, Surigao
del Sur. His term of office does not expire until 1986. Were it not for
this information and the suspension decreed by the Sandiganbayan
according to the Anti-Graft and Corrupt Practices Act, he would
have been all this while in the full discharge of his functions as
such municipal mayor. He was elected precisely to do so. As of
October 26, 1983, he has been unable to. it is a basic assumption
of the electoral process implicit in the right of suffrage that the
people are entitled to the services of elective officials of their
choice. For misfeasance or malfeasance, any of them could, of
course, be proceeded against administratively or, as in this
instance, criminally. In either case, Ms culpability must be
established. Moreover, if there be a criminal action, he is entitled
to the constitutional presumption of innocence. A preventive
suspension may be justified. Its continuance, however, for an
unreasonable length of time raises a due process question. For
even if thereafter he were acquitted, in the meanwhile his right to
hold office had been nullified. Clearly, there would be in such a
case an injustice suffered by him. Nor is he the only victim. There
is injustice inflicted likewise on the people of Lianga They were
deprived of the services of the man they had elected to serve as
mayor. In that sense, to paraphrase Justice Cardozo, the protracted
continuance of this preventive suspension had outrun the bounds
of reason and resulted in sheer oppression. A denial of due process
is thus quite manifest. It is to avoid such an unconstitutional
application that the order of suspension should be lifted. 57
The plain truth is that this Court has been ill at ease with suspensions, for the
above reasons, 58 and so also, because it is out of the ordinary to have a vacancy
in local government. The sole objective of a suspension, as we have held, 59 is

simply "to prevent the accused from hampering the normal cause of the
investigation with his influence and authority over possible witnesses" 60 or to
keep him off "the records and other evidence. 61
It is a means, and no more, to assist prosecutors in firming up a case, if any,
against an erring local official. Under the Local Government Code, it can not
exceed sixty days, 62 which is to say that it need not be exactly sixty days long if
a shorter period is otherwise sufficient, and which is also to say that it ought to
be lifted if prosecutors have achieved their purpose in a shorter span.
Suspension is not a penalty and is not unlike preventive imprisonment in which
the accused is held to insure his presence at the trial. In both cases, the accused
(the respondent) enjoys a presumption of innocence unless and until found guilty.
Suspension finally is temporary and as the Local Government Code provides, it
may be imposed for no more than sixty days. As we held, 63 a longer suspension
is unjust and unreasonable, and we might add, nothing less than tyranny.
As we observed earlier, imposing 600 days of suspension which is not a remote
possibility Mayor Ganzon is to all intents and purposes, to make him spend the
rest of his term in inactivity. It is also to make, to all intents and purposes, his
suspension permanent.
It is also, in fact, to mete out punishment in spite of the fact that the Mayor's
guilt has not been proven. Worse, any absolution will be for naught because
needless to say, the length of his suspension would have, by the time he is
reinstated, wiped out his tenure considerably.
Mayor piecemeal apparently, to pin him down ten times the pain, when he, the
respondent Secretary, could have pursued a consolidated effort.
We reiterate that we are not precluding the President, through the Secretary of
Interior from exercising a legal power, yet we are of the opinion that the
Secretary of Interior is exercising that power oppressively, and needless to say,
with a grave abuse of discretion.
The Court is aware that only the third suspension is under questions, and that
any talk of future suspensions is in fact premature. The fact remains, however,
that Mayor Ganzon has been made to serve a total of 120 days of suspension and
the possibility of sixty days more is arguably around the corner (which amounts
to a violation of the Local Government Code which brings to light a pattern of
suspensions intended to suspend the Mayor the rest of his natural tenure. The
Court is simply foreclosing what appears to us as a concerted effort of the State
to perpetuate an arbitrary act.
As we said, we can not tolerate such a state of affairs.
We are therefore allowing Mayor Rodolfo Ganzon to suffer the duration of his third
suspension and lifting, for the purpose, the Temporary Restraining Order earlier
issued. Insofar as the seven remaining charges are concerned, we are urging the
Department of Local Government, upon the finality of this Decision, to undertake
steps to expedite the same, subject to Mayor Ganzon's usual remedies of appeal,
judicial or administrative, or certiorari, if warranted, and meanwhile, we are
precluding the Secretary from meting out further suspensions based on those
remaining complaints, notwithstanding findings of prima facie evidence.
In resume the Court is laying down the following rules:
The Court is not to be mistaken for obstructing the efforts of the respondent
Secretary to see that justice is done in Iloilo City, yet it is hardly any argument to
inflict on Mayor Ganzon successive suspensions when apparently, the respondent
Secretary has had sufficient time to gather the necessary evidence to build a
case against the Mayor without suspending him a day longer. What is intriguing is
that the respondent Secretary has been cracking down, so to speak, on the

Page 21
1. Local autonomy, under the Constitution, involves a mere decentralization of

administration, not of power, in which local officials remain accountable to the
central government in the manner the law may provide;
2. The new Constitution does not prescribe federalism;
3. The change in constitutional language (with respect to the supervision clause)

was meant but to deny legislative control over local governments; it did not
exempt the latter from legislative regulations provided regulation is consistent
with the fundamental premise of autonomy;
4. Since local governments remain accountable to the national authority, the
latter may, by law, and in the manner set forth therein, impose disciplinary action
against local officials;
5. "Supervision" and "investigation" are not inconsistent terms; "investigation"
does not signify "control" (which the President does not have);
6. The petitioner, Mayor Rodolfo Ganzon. may serve the suspension so far
ordered, but may no longer be suspended for the offenses he was charged
originally; provided:
a) that delays in the investigation of those charges
"due to his fault, neglect or request, (the time of the
delay) shall not be counted in computing the time of
suspension. [Supra, sec. 63(3)]
b) that if during, or after the expiration of, his
preventive suspension, the petitioner commits
another or other crimes and abuses for which proper
charges are filed against him by the aggrieved party
or parties, his previous suspension shall not be a bar
to his being preventively suspended again, if
warranted under subpar. (2), Section 63 of the Local
Government Code.
WHEREFORE, premises considered, the petitions are DISMISSED. The Temporary
Restraining Order issued is LIFTED. The suspensions of the petitioners are
AFFIRMED, provided that the petitioner, Mayor Rodolfo Ganzon, may not be made
to serve future suspensions on account of any of the remaining administrative
charges pending against him for acts committed prior to August 11, 1988. The

Page 22
Secretary of Interior is ORDERED to consolidate all such administrative cases

pending against Mayor Ganzon.
The sixty-day suspension against the petitioner, Mary Ann Rivera Artieda, is
AFFIRMED. No costs.
SO ORDERED.
G.R. No. 83987 December 27, 1994
GREATER BALANGA DEVELOPMENT CORPORATION, petitioner,
vs.
MUNICIPALITY OF BALANGA, BATAAN; SANGGUNIANG BAYAN OF
BALANGA, BATAAN; HON. MELANIO S. BANZON, JR.; HON. DOMINGO D.
DIZON; HON. AGRIPINO C. BANZON; HON. EDUARDO P. TUAZON; HON.
GABRIEL J. NISAY; HON. LORENZO P. TAPAN; HON. FEDERICO S.
BUSTAMANTE; HON. ROLANDO H. DAVID; HON. EDILBERTO Q. DE
GUZMAN; HON. ALFREDO C. GUILA; and HON. GAVINO S.
SANTIAGO,respondents.
Ricardo C. Valmonte and Reynaldo L. Bagatsing for petitioner.
QUIASON, J.:
This a a petition for certiorari, prohibition and mandamus under Rule 65 of the
Revised Rules of Court to annul Executive Order No. 1, s-88 and Resolution No.
12, s-88 issued, respectively, by the Mayor and the Sangguniang Bayan of
Balanga, Bataan.
I
This case involves a parcel of land, Lot 261-B-6-A-3 of the subdivision plan Psd
03-007623, situated in Barrio San Jose, Municipality of Balanga, Province of
Bataan. The lot has an area of 8,467 square meters. It is registered under
Transfer Certificate of Title No. 120152 issued on January 11, 1988 by the
Register of Deeds of the Province of Bataan in the name of petitioner Greater
Balanga Development Corporation. Petitioner is a domestic corporation owned
and controlled by the Camacho family, which donated to the Municipality of
Balanga the present site of the Balanga Public Market. The lot in dispute lies
behind the Balanga Public Market.
In 1987, petitioner conducted a relocation survey of the area. It discovered that
certain portions of the property had been "unlawfully usurped and invaded" by
the Municipality of Balanga, which had "allowed/tolerated/abetted" the
construction of shanties and market stalls while charging market fees and market
entrance fees from the occupants and users of the area. A portion of the lot had
also been utilized as an unloading site ("bagsakan") of transient vegetable
vendors, who were charged market and entrance fees by the municipality.
On January 11, 1988, petitioner applied with the Office of the Mayor of Balanga
for a business permit to engage in business in the said area. On the same day,
Mayor Melanio S. Banzon, Jr. issued Mayor's Permit No. 2729, granting petitioner
the privilege of a "real estate dealer/privately-owned public market operator"
under the trade name of Balanga Public Market. The permit was to expire on
December 31, 1988. Petitioner likewise registered "Balanga Central Market" as a
trade name with the Bureau of Trade Regulations and Consumer Protection.
On February 19, 1988, however, the Sangguniang Bayan of Balanga passed
Resolution No. 12, s-88 annulling the Mayor's permit issued to petitioner and
advising the Mayor to revoke the permit "to operate a public market."
Pursuant to said Resolution, Mayor Banzon, on March 7, 1988, issued Executive
Order No. 1, s-88 revoking the permit insofar as it authorized the operation of a
public market.
On July 13, 1988, petitioner filed the instant petition with a prayer for the
issuance of a writ of preliminary mandatory and prohibitory injunction or
restraining order aimed at the reinstatement of the Mayor's permit and the

Page 23
curtailment of the municipality's collection of market fees and market entrance

fees. The Court did not issue the preliminary reliefs prayed for.
Respondent asserted that as the local chief executive, the Mayor may issue, deny
or revoke municipal licenses and permits. They contended that Resolution No. 12,
s-88 of the Sangguniang Bayan, the basis of Executive Order No. 1, s-88, was a
legitimate exercise of local legislative authority and, as such, the revocation of
petitioner's permit was not tainted with any grave abuse of discretion.
Petitioner replied that since it had not violated any law or ordinance, there was
no reason for respondents to revoke the Mayor's permit issued to it. On the
contrary, petitioner asserted that the executive order and the resolution in
question were quasi-judicial acts and not mere exercises of police power. It
questioned respondents' failure to observe due process in revoking the permit
and challenged the legality of the collection of the market and entrance fees by
the municipality.
In their Rejoinder, respondents pointed out that petitioner had violated an
existing municipal ordinance when it failed to disclose the true status of the area
involved in the permit and when it did not secure separate permits for its two
businesses, i.e., one as "real estate dealer" and another as "privately-owned
public market operator." Respondents referred to Section 3A-06(b) of the Balanga
Revenue Code which, inter alia, enjoins an applicant for a Mayor's permit from
making a false statement in his application and provides for the penalties for
violation of any existing ordinance regulating business establishments.
II
Mayor's Permit No. 2729 was revoked by Executive Order No. 1, s-88, which reads
as follows:
By virtue of the authority vested upon me by law as Mayor of the
Municipality of Balanga, and as per Resolution No. 12, s-88 of the
Sangguniang Bayan of Balanga, the Mayor's Permit in the latter
portion of its purpose, i.e., "to operate a public market," issued to
the Greater Balanga Development Corporation, is hereby

REVOKED, effective immediately.
conducted, and such other pertinent information and date (sic) as

any (sic) be required. If the applicant deliberately makes a false
statement in the application form, the Municipal Mayor may revoke
the permit and the applicant may be prosecuted and penalized in
accordance with the pertinent provisions of penal laws.
IN WITNESS WHEREOF, I hereunto have set my hand this 7th day

of March 1988, at Balanga, Bataan.
(SG
D.)
MEL
ANI
O S.
BAN
ZON
, JR.
Mun
icip
al
May
or
(Rollo, p. 36)
The authority of the Mayor to revoke a permit he issued is premised on a
violation by the grantee of any of the conditions for which the permit had been
granted. Respondents claimed that petitioner had violated the provisions of
Section 3A-06(b) of the Balanga Revenue Code when it failed to inform the Mayor
that the lot in controversy was the subject of adverse claims for which a civil case
was filed.
Section 3A-06(b) of the Balanga Revenue Code reads:
xxx xxx xxx
(b) The application for a Mayor's permit shall state the name,
residence and citizenship of (sic) the applicant's full description of
the business, the particular place where (sic) the same shall be

Page 24
In case a person desires to conduct the same kind or line of

business in another place within the Municipality, in addition to or
aside from the establishment specified in his permit, he shall
secure a separate permit for each business and pay the
corresponding fee imposed in this article. If a person desires to
engage in more than one kind or line of business, he shall pay the
fee imposed on each separate business, notwithstanding the fact
that he may conduct or operate all distinct business (sic), trades or
occupation in one place only.
xxx xxx xxx
(h) Revocation of Permit. The Municipal Mayor may revoke a
permit, in effect close the establishment, upon a violation of
existing ordinance regulating business establishments or any
provisions of this article, in addition to the fine and imprisonment
that they (sic) may be imposed by the court for violation of this
article (Memorandum of the Solicitor General, pp. 16-17; Rollo, p.
322).
Respondents claim that petitioner (1) deliberately made a false statement in the
application form when it failed to provide the information that their place of
business is the subject of adverse claims; and (2) failed to apply for two separate
permits for the two lines of business it proposed to engage in.
The application for Mayor's permit in the case at bench requires the applicant to
state what type of "business", profession, occupation and/or calling privileges" is
being applied for. Petitioner left this entry bank in its application form (Rollo, p.
324). It is only in the Mayor's permit itself that petitioner's lines of business
appear, which in this case are two separate types, one as real estate dealer and
another as public market operator.
The permit should not have been issued without the required information given in
the application form itself. Revoking the permit, however, because of a false
statement in the application form cannot be justified under the aforementioned
provision. There must be proof of willful misrepresentation and deliberate intent
to make a false statement. Good faith is always presumed, and as it happened,
petitioner did not make any false statement in the pertinent entry.
Neither was petitioner's applying for two businesses in one permit a ground for
revocation. The second paragraph of Section 3A-06(b) does not expressly require
two permits for their conduct of two or more businesses in one place, but only
that separate fees be paid for each business. The powers of municipal
corporations are to be construed in strictissimi juris and any doubt or ambiguity
must be construed against the municipality (City of Ozamiz v. Lumapas, 65 SCRA
33 [1975]). Granting, however, that separate permits are actually required, the
application form does not contain any entry as regards the number of businesses
the applicant wishes to engage in.
Respondents insinuated bad faith on the part of petitioner in failing to supply the
pertinent information in the application form and for taking advantage of the fact
that Mayor Banzon was then newly installed as Mayor of Balanga. The absence of
the material information in the application form was nonetheless supplied in the
face of the permit signed and issued by Mayor Banzon himself (Rollo, p. 17).
Under the law, the Sangguniang Bayan has the power to provide for the
establishment and maintenance of public markets in the municipality and "to
regulate any business subject to municipal license tax or fees and prescribe the
conditions under which a municipal license may be revoked" (B.P. Blg. 337, Sec.
149 [1] [f & r]). It was this authority which respondent Sangguniang Bayan
invoked when it issued Resolution No. 12, s-88.
The said Resolution stated that the land subject of this case was earmarked for
the expansion of the Balanga Public Market; that this land was owned not by
petitioner but by the plaintiffs in Civil Case No. 3803 entitled "Leoncia Dizon, et.

Page 25
al. v. Aurora B. Camacho"; that the Municipality of Balanga was not apprised of
the existence of the civil case; that the decision awarding the lot to the plaintiffs
and the issuance of the Mayor's permit to petitioner who was not the rightful
owner had caused "anxiety, uncertainty and restiveness" among the stallholders
and traders in the subject lot; and that the Sangguniang Bayan therefore
resolved to annul the said Mayor's permit insofar as it concerns the operation of a
public market.
As may be gleaned from said Resolution, the main reason for the revocation of
the Mayor's permit was the controversy engendered by the filing of Civil Case No.
3803 before the Regional Trial Court, Balanga, Bataan involving the ownership of
certain portions of Lot 261-B, the land from which Lot 261-B-6-A-3 was derived.
Lot 261-B was originally owned and registered in the name of Aurora T. Banzon
Camacho, who subdivided the land into nine lots under LRC
Psd-277050 and designated them as Lots 261-B-1 to 261-B-9. She denoted some
of the lots to the Municipality of Balanga which now comprise the Balanga Public
Market, and sold others to third persons.
On January 30, 1974, five buyers of certain portions of Lot 261-B filed Civil Case
No. 3803 against Camacho for partition and delivery of titles. Camacho was
declared in default and the plaintiffs forthwith presented their evidence. On
December 20, 1974, the trial court rendered a decision ordering the defendant to
segregate the definite portions sold to the plaintiffs and deliver to them the
corresponding titles thereto. This decision was affirmed by the Court of Appeals
on January 30, 1981 in CA-G.R. No. 59148-R (G.R. No. 62223, Rollo, pp. 50-58).
The defendant elevated the matter to this Court. In a Resolution dated March 21,
1983, we denied the petition for lack of merit (G.R. No. 62223, Rollo, p. 100).
The question now is whether Lot 261-B-6-A-3 is a part of the land adjudged by
the trial court in Civil Case No. 3803 to the plaintiffs, or any one of them.
Lot 261-B-6-A-3 was originally registered in the name of Camacho under TCT No.
T-104438. She denoted the land to her daughter, Aurora Fe (Rollo,
p. 329). TCT No. 104438 was then cancelled and TCT No. T-104461 issued in the
donee's name, who in turn, transferred the land to herein petitioner. TCT
No. 104461 of Aurora Fe was cancelled and TCT No. 120152 was issued in
petitioner's name on January 11, 1988. On the same day, the Mayor's permit to
operate the lot as a public market was also granted.
It is the position of respondents that the series of transfers of the subject lot
reveals a scheme to avoid the application of the decision in Civil Case
No. 3803.
There is no question that Lot 261-B-6-A-3 is a portion of Lot 261-B-6, and the
claims of the plaintiffs in the civil case were on Lots 261-B-6 and
261-B-7 (Rollo, p. 327). As to whether plaintiffs' claims embraced specifically Lot
261-B-6-A-3 could not be determined from the face of the decision in the civil
case. There is no showing that Lot 261-B-6-A-3 was awarded by the court to one
of the plaintiffs therein. There is no proof either that the judgment in said case
had already been executed and the titles delivered to the plaintiffs.
The question of ownership over Lot 261-B had already been settled with finality
by the Supreme Court in 1983 in G.R. No. 62223. Entry of judgment was likewise,
made in the same year. When the Mayor's permit was revoked on February 19,
1988, five years had already elapsed since the case was decided. Petitioner was
able to survey the land and have the survey approved on March 21, 1984 (Rollo,
pp. 15-16), and on January 11, 1988, petitioner obtained in its name TCT No.
120152 "without any memorandum of encumbrance or encumbrances pertaining
to any decision rendered in any civil case" (Rollo,
p. 199). Clearly, for all intents and purposes, petitioner appeared to be the true
owner of Lot 261-B-6-A-3 when respondents revoked its permit to engaged in
business on its own land.
Assuming arguendo that Lot 261-B-6-A-3 was actually one of those awarded to
the plaintiffs in Civil Case No. 3803 and the Transfer Certificate of Title of
petitioner is spurious, this still does not justify the revocation of the Mayor's
permit.
A close scrutiny of the records reveals that the Sangguniang Bayan did not
establish or maintain any public market on the subject lot. The resolution merely

Page 26
mentioned the plan to acquire the lot for expansion of the public market adjacent
thereto. Until expropriation proceedings are instituted in court, the
landowner cannot be deprived of its right over the land (Province of Rizal v. San
Diego, 105 Phil. 33 [1959];Republic v. Baylosis, 96 Phil. 461 [1955]). Of course,
the Sangguniang Bayan has the duty in the exercise of its police powers to
regulate any business subject to municipal license fees and prescribe the
conditions under which a municipal license already issued may be revoked (B.P.
Blg. 337, Sec. 149 [1] [r]). But the "anxiety, uncertainty, restiveness" among the
stallholders and traders cannot be a valid ground for revoking the permit of
petitioner. After all, the stallholders and traders were doing business on property
not belonging to the Municipal government. Indeed, the claim that the executive
order and resolution were measures "designed to promote peace and order and
protect the general welfare of the people of Balanga" is too amorphous and
convenient an excuse to justify respondents' acts (Villacorta v. Bernardo, 143
SCRA 480 [1986]).
Moreover, we find that the manner by which the Mayor revoked the permit
transgressed petitioner's right to due process (Gordon v. Veridiano II, 167 SCRA
51 [1988]). The alleged violation of Section 3A-06(b) of the Balanga Revenue
Code was not stated in the order of revocation, and neither was petitioner
informed of this specific violation until the Rejoinder was filed in the instant case.
In fact, with all the more reason should due process have been observed in view
of the questioned Resolution of the Sangguniang Bayan.
The knowledge of the pendency of Civil Case No. 3803 could not ipso facto nullify
any claim petitioner had on the lot. This necessitated first and foremost a
determination of the exact parameters of the lot and a finding that petitioner is
not the true owner thereof. The finding that Civil Case No. 3803 was already
settled by the Supreme Court should have apprised respondents of the possibility
that the decision therein may have already been executed.
Indeed, the cases of Austin Hardware Co., Inc. v. Court of Appeals, 69 SCRA 564
(1976) and Enriquez v. Bidin, 47 SCRA 183 (1972) are in point. In these cases, the
revocation of the Mayor's permit was upheld by this Court because the grounds
for revocation were admitted and not disputed.
If only for the violation of due process which is manifest from Executive Order No.
1, s-88 and Resolution No. 12, s-88, the Mayor's arbitrary action can be annulled.
In view of the undisputed fact that the respondent Municipality is not the owner
of Lot 261-B-6-A-3, then there is no legal basis for it to impose and collect market
fees and market entrance fees. Only the owner has the right to do so.
Be that as it may, the Mayor's permit issued on January 11, 1988 cannot now be
reinstated despite the nullity of its revocation. The permit expired on December
31, 1988.
WHEREFORE, (1) the petition for certiorari and prohibition is GRANTED and
Executive Order No. 1, s-88 and Resolution No. 12, s-88 issued, respectively, by
respondents Mayor and Sangguniang Bayan of Balanga, Bataan are NULLIFIED for
having been issued in grave abuse of discretion; and (2) the petition
for mandamus is DISMISSED.
SO ORDERED
[G.R. No. 143596. December 11, 2003]
JUDGE TOMAS C. LEYNES, petitioner, vs. THE COMMISSION ON AUDIT

(COA), HON. GREGORIA S. ONG, DIRECTOR, COMMISSION ON
AUDIT
and
HON.
SALVACION
DALISAY,
PROVINCIAL
AUDITOR, respondents.
DECISION
CORONA, J.:
Before us is a petition for certiorari under Rule 65 in relation to Section 2,
Rule 64 of the Rules of Court, seeking to reverse and set aside the
decision[1] dated September 14, 1999 of the Commission on Audit (COA),
affirming the resolution of COA Regional Director Gregoria S. Ong dated March

Page 27
29, 1994 which in turn affirmed the opinion dated October 19, 1993 of the
Provincial Auditor of Oriental Mindoro, Salvacion M. Dalisay. All three denied the
grant of P1,600 monthly allowance to petitioner Judge Tomas C. Leynes by
the Municipality of Naujan, Oriental Mindoro.
FACTUAL ANTECEDENTS
Petitioner Judge Tomas C. Leynes who, at present, is the presiding judge of
the Regional Trial Court of Calapan City, Oriental Mindoro, Branch 40 was
formerly assigned to theMunicipality of Naujan, Oriental Mindoro as the sole
presiding judge of the Municipal Trial Court thereof. As such, his salary and
representation and transportation allowance (RATA) were drawn from the budget
of the Supreme Court. In addition, petitioner received a monthly allowance
of P944 from the local funds[2] of the Municipality of Naujan starting 1984.[3]
On March 15, 1993, the Sangguniang Bayan of Naujan, through Resolution
No. 057, sought the opinion of the Provincial Auditor and the Provincial Budget
Officer regarding any budgetary limitation on the grant of a monthly allowance
by
the
municipality
to
petitioner
judge.
On May
7,
1993,
the Sangguniang Bayan unanimously approved Resolution No. 101 increasing
petitioner judges monthly allowance from P944 to P1,600 (an increase of P656)
starting May 1993.[4] By virtue of said resolution, the municipal government (the
Municipal Mayor and the Sangguniang Bayan) approved a supplemental budget
which was likewise approved by the Sangguniang Panlalawigan and the Office of
Provincial Budget and Management of Oriental Mindoro. In 1994, the Municipal
Government of Naujan again provided for petitioner judges P1,600 monthly
allowance in its annual
budget which was again
approved by
theSangguniang Panlalawigan and the Office of Provincial Budget and
Management of Oriental Mindoro.[5]
On February 17, 1994, Provincial Auditor Salvacion M. Dalisay sent a letter to
the Municipal Mayor and the Sangguniang Bayan of Naujan directing them to
stop the payment of theP1,600 monthly allowance or RATA to petitioner judge
and to require the immediate refund of the amounts previously paid to the latter.
She opined that the Municipality of Naujan could not grant RATA to petitioner
judge in addition to the RATA the latter was already receiving from the Supreme
Court. Her directive was based on the following:
Section 36, RA No. 7645, General Appropriations Act of 1993
Representation and Transportation Allowances. The following officials and those

of equivalent rank as may be determined by the Department of Budget and
Management (DBM) while in the actual performance of their respective
functions are hereby granted monthly commutable representation and
transportation allowances payable from the programmed appropriations
provided for their respective offices, not exceeding the rates indicated below . . .
National Compensation Circular No. 67 dated January 1, 1992, of the Department
of Budget and Management
Subject: Representation and Transportation Allowances of National Government
Officials and Employees
xxxxxxxxx
4. Funding Source: In all cases, commutable and reimbursable RATA shall be paid
from the amount appropriated for the purpose and other personal services
savings of the agency or project from where the officials and employees covered
under this Circular draw their salaries. No one shall be allowed to collect RATA
from more than one source.[6] (emphasis supplied)
Petitioner judge appealed to COA Regional Director Gregoria S. Ong who,
however, upheld the opinion of Provincial Auditor Dalisay and who added that
Resolution No. 101, Series of 1993 of the Sangguniang Bayan of Naujan failed to
comply with Section 3 of Local Budget Circular No. 53 dated September 1, 1993
outlining the conditions for the grant of allowances to judges and other national
officials or employees by the local government units (LGUs). Section 3 of the said
budget circular provides that:
Sec. 3 Allowances. LGUs may grant allowances/additional compensation to the
national government officials/employees assigned to their locality at rates
authorized by law, rules and regulations and subject to the following
preconditions:
a. That the annual income or finances of the municipality, city or
province as certified by the Accountant concerned will allow the
grant of the allowances/additional compensation without
exceeding the general limitations for personal services under
Section 325 of RA 7160;

Page 28
b. That the budgetary requirements under Section 324 of RA 7160

including the full requirement of RA 6758 have been satisfied and
provided fully in the budget as certified by the Budget Officer and
COA representative in the LGU concerned;
c. That the LGU has fully implemented the devolution of
personnel/functions in accordance with the provisions of RA 7160;
d. That the LGU has already created mandatory positions prescribed in
RA 7160; and
e. That similar allowances/additional compensation are not granted by
the national government to the officials/employees assigned to the
LGU.[7]
Petitioner judge appealed the unfavorable resolution of the Regional Director
to the Commission on Audit. In the meantime, a disallowance of the payment of
the P1,600 monthly allowance to petitioner was issued. Thus he received
his P1,600 monthly allowance from the Municipality of Naujan only for the period
May 1993 to January 1994.
On September 14, 1999, the COA issued its decision affirming the resolution
of Regional Director Gregoria S. Ong:
The main issue . . . is whether or not the Municipality of Naujan,
Oriental Mindoro can validly provide RATA to its Municipal Judge, in addition to
that provided by the Supreme Court.
Generally, the grant of (RATA) [sic] to qualified national government officials and
employees pursuant to Section 36 of R.A. 7645 [General Appropriations Act of
1993] and NCC No. 67 dated 01 January 1992 is subject to the following
conditions to wit:
1. Payable from the programmed /appropriated amount and others from
personal services savings of the respective offices where the
officials or employees draw their salaries;
2. Not exceeding the rates prescribed by the Annual General
Appropriations Act;
3. Officials /employees on detail with other offices or assigned to serve

other offices or agencies shall be paid from their parent agencies;
4. No one shall be allowed to collect RATA from more than one source.
On the other hand, the municipal government may provide additional allowances
and other benefits to judges and other national government officials or
employees assigned or stationed in the municipality, provided, that the finances
of the municipality allow the grant thereof pursuant to Section 447, Par. 1 (xi),
R.A. 7160, and provided further, that similar allowance/additional compensation
are not granted by the national government to the official/employee assigned to
the local government unit as provided under Section 3(e) of Local Budget Circular
No. 53, dated 01 September 1993.
The conflicting provisions of Section 447, Par. (1) (xi) of the Local Government
Code of 1991 and Section 36 of the General Appropriations Act of 1993 [RA
7645] have been harmonized by the Local Budget Circular No. 53 dated 01
September 1993, issued by the Department of Budget and Management
pursuant to its powers under Section 25 and Section 327 of the Local
Government Code. The said circular must be adhered to by the local government
units particularly Section 3 thereof which provides the implementing guidelines of
Section 447, Par. (1) (xi) of the Local Government Code of 1991 in the grant of
allowances to national government officials/employees assigned or stationed in
their respective local government units.
Consequently, the subject SB Resolution No. 101 dated 11 May 1993 of
the Sangguniang Bayan of Naujan, Oriental Mindoro, having failed to comply with
the inherent precondition as defined in Section 3 (e). . . is null and
void. Furthermore, the Honorable Judge Tomas C. Leynes, being a national
government official is prohibited to receive additional RATA from the local
government fund pursuant to Section 36 of the General Appropriations Act (R.A.
7645 for 1993) and National Compensation Circular No. 67 dated 1 January 1992.
[8]
(emphasis ours)
petitioner filed the instant petition, raising the following assignments of error for
our consideration:
I
WHETHER OR NOT RESOLUTION NO. 1O1, SERIES OF 1993 OF NAUJAN, ORIENTAL
MINDORO, WHICH GRANTED ADDITIONAL ALLOWANCE TO THE MUNICIPAL TRIAL
JUDGE OF NAUJAN, ORIENTAL MINDORO AND INCREASING HIS CURRENT
REPRESENTATION AND TRAVELLING ALLOWANCE (RATA) TO AN AMOUNT
EQUIVALENT TO THAT RECEIVED MONTHLY BY SANGGUNIANG MEMBERS IN
PESOS: ONE THOUSAND SIX HUNDRED (P1,600.00) EFFECTIVE 1993, IS VALID.
II
WHETHER OR NOT THE POWER OF MUNICIPAL GOVERNMENTS TO GRANT
ADDITIONAL ALLOWANCES AND OTHER BENEFITS TO NATIONAL GOVERNMENT
EMPLOYEES STATIONED IN THEIR MUNICIPALITY IS VERY EXPLICIT AND
UNEQUIVOCAL UNDER THE LOCAL GOVERNMENT CODE OF 1991 PARTICULARLY
SECTION 447 IN RELATION TO SECTIONS 17 AND 22 THEREOF.
III
WHETHER OR NOT THE DEPARTMENT OF BUDGET AND MANAGEMENT (DBM) CAN,
BY THE ISSUANCE OF BUDGET CIRCULARS, RESTRICT A MUNICIPAL GOVERNMENT
FROM EXERCISING ITS GIVEN LEGISLATIVE POWERS OF PROVIDING ADDITIONAL
ALLOWANCES AND OTHER BENEFITS TO NATIONAL EMPLOYEES STATIONED OR
ASSIGNED TO THEIR MUNICIPALITY FOR AS LONG AS THEIR FINANCES SO ALLOW.
IV
WHETHER OR NOT THE LOCAL GOVERNMENT CODE OF 1991 PARTICULARLY
SECTION 447 (a) (1) (xi) WAS EXPRESSLY OR IMPLIEDLY REPEALED OR MODIFIED
BY REPUBLIC ACT 7645 AND THE GENERAL APPROPRIATIONS ACT OF 1993.
V
ASSIGNMENTS OF ERROR
Petitioner judge filed a motion for reconsideration of the above decision but it
was denied by the Commission in a resolution dated May 30, 2000. Aggrieved,

Page 29
WHETHER OR NOT PETITIONER WAS ENTITLED TO RECEIVE THE ADDITIONAL

ALLOWANCES GRANTED TO HIM BY THE MUNICIPALITY OF NAUJAN, ORIENTAL
MINDORO BY VIRTUE OF ITS RESOLUTION NO. 101, SERIES OF 1993.
POSITION OF COA
circulars must conform to, not modify or amend, the provisions of the law it seeks
to implement.[11]
Respondent
Commission
on
Audit
opposes
the
grant
by
the Municipality of Naujan of the P1,600 monthly allowance to petitioner
Judge Leynes for the reason that the municipality could not grant RATA to
judges in addition to the RATA already received from the Supreme Court.
[9]
Respondent bases its contention on the following:
HISTORY OF GRANT OF
ALLOWANCES TO JUDGES
1. National Compensation Circular No. 67 (hereafter NCC No. 67) dated

January 1, 1992 of the Department of Budget and Management (DBM)
which provides that (a) the RATA of national officials and employees
shall be payable from the programmed appropriations or personal
services savings of the agency where such officials or employees draw
their salary and (b) no one shall be allowed to collect RATA from more
than one source;
The power of local government units (LGUs) to grant allowances to judges

stationed in their respective territories was originally provided by Letter of
Instruction No. 1418 dated July 18, 1984 (hereafter LOI No. 1418):
2. the General Appropriations Act of 1993 (RA 7645) which provided that the
RATA of national officials shall be payable from the programmed
appropriations of their respective offices and
WHEREAS, the budgetary allotment of the Judiciary constitutes only a small

percentage of the national budget;
3. Local Budget Circular No. 53 (hereafter LBC No. 53) dated September 1,
1993 of the DBM which prohibits local government units from granting
allowances to national government officials or employees stationed in
their localities when such allowances are also granted by the national
government or are similar to the allowances granted by the national
government to such officials or employees.[10]
WHEREAS, present economic conditions adversely affected the livelihood of the

members of the Judiciary;
WHEREAS, some local government units are ready, willing and able to
pay additional allowances to Judges of various courts within their respective
territorial jurisdiction;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of
the Philippines, do hereby direct:
POSITION OF PETITIONER
Petitioner judge, on the other hand, asserts that the municipality is expressly
and unequivocally empowered by RA 7160 (the Local Government Code of 1991)
to enact appropriation ordinances granting allowances and other benefits to
judges stationed in its territory. Section 447(a)(1)(xi) of the Local Government
Code of 1991 imposes only one condition, that is, when the finances of the
municipal government allow. The Code does not impose any other restrictions in
the exercise of such power by the municipality. Petitioner also asserts that the
DBM cannot amend or modify a substantive law like the Local Government Code
of 1991 through mere budget circulars. Petitioner emphasizes that budget

WHEREAS, the State is cognizant of the need to maintain the independence of

the Judiciary;
Page 30
1. Section 3 of Letter of Implementation No. 96 is hereby amended

to read as follows:
3. The allowances provided in this letter shall be borne
exclusively by the National Government. However,
provincial, city and municipal governments may pay
additional allowances to the members and personnel of
the Judiciary assigned in their respective areas out of
available local funds but not to exceed P1,500.00;
Provided, that in Metropolitan Manila, the city and
municipal governments therein may pay additional
allowances not exceeding P3,000.00. (emphasis ours)[12]
On June 25, 1991, the DBM issued Circular No. 91-7 outlining the guidelines
for the continued receipt of allowances by judges from LGUs:
Consistent with the constitutional provision on the fiscal autonomy of the
judiciary and the policy of the National Government of allowing greater autonomy
to local government units, judges of the Judiciary are hereby allowed to continue
to receive allowances at the same rates which they have been receiving from the
Local Government Units as of June 30, 1989, subject to the following guidelines:
1. That the continuance of payment of subject allowance to the recipient
judge shall be entirely voluntary and non-compulsory on the part of
the Local Government Units;
2. That payment of the above shall always be subject to the availability
of local funds;
3. That it shall be made only in compliance with the policy of nondiminution of compensation received by the recipient judge before
the implementation of the salary standardization;
4. That the subject allowance shall be given only to judges who were
receiving the same as of June 30, 1989 and shall be coterminous with the incumbent judges; and
5. That the subject allowance shall automatically terminate upon
transfer of a judge from one local government unit to another local
government unit. (emphasis ours)
On October 10, 1991, Congress enacted RA 7160, otherwise known as the
Local Government Code of 1991. [13] The power of the LGUs to grant allowances
and other benefits to judges and other national officials stationed in their
respective territories was expressly provided in Sections 447(a)(1)(xi), 458(a)(1)
(xi) and 468(a)(1)(xi) of the Code.
On March 15, 1994, the DBM issued Local Budget Circular No. 55 (hereafter
LBC No. 55) setting out the maximum amount of allowances that LGUs may grant
to judges. For provinces and cities, the amount should not exceed P1,000 and for
municipalities, P700.
On December 3, 2002, we struck down the above circular in Dadole, et al.
vs. COA.[14] We ruled there that the Local Government Code of 1991 clearly

Page 31
provided that LGUs could grant allowances to judges, subject only to the
condition that the finances of the LGUs allowed it. We held that setting a uniform
amount for the grant of allowances (was) an inappropriate way of enforcing said
criterion. Accordingly, we declared that the DBM exceeded its power of
supervision over LGUs by imposing a prohibition that did not jibe with the Local
Government Code of 1991.[15]
ESTABLISHED PRINCIPLES INVOLVED

From the foregoing history of the power of LGUs to grant allowances to
judges, the following principles should be noted:
1. the power of LGUs to grant allowances to judges has long been recognized
(since 1984 by virtue of LOI No. 1418) and, at present, it is expressly
and unequivocally provided in Sections 447, 458 and 468 of the Local
Government Code of 1991;
2. the issuance of DBM Circular No. 91-7 dated June 25, 1991 and LBC No. 55
dated March 15, 1994 indicates that the national government
recognizes the power of LGUs to grant such allowances to judges;
3. in
Circular
No.
91-7,
the
national
government
merely provides the guidelines for the continued receipt of allowances
by judges from LGUs while in LBC No. 55, the national government
merely tries to limit the amount of allowances LGUs may grant to
judges and
4. in the recent case of Dadole, et al. vs. COA, the Court upheld the
constitutionally enshrined autonomy of LGUs to grant allowances to
judges in any amount deemed appropriate, depending on availability of
funds, in accordance with the Local Government Code of 1991.
OUR RULING
We rule in favor of petitioner judge. Respondent COA erred in opposing the
grant of the P1,600 monthly allowance by the Municipality of Naujan to petitioner
Judge Leynes.
DISCUSSION OF OUR RULING

Section 447(a)(1)(xi) of RA 7160, the Local Government Code of 1991,
provides:
(a) The sangguniang bayan, as the legislative body of the municipality, shall
enact ordinances, approve resolutions and appropriate funds for the general
welfare of the municipality and its inhabitants . . ., and shall:
(1) Approve ordinances and pass resolutions necessary for an efficient and
effective municipal government, and in this connection shall:
xxxxxxxxx
(xi) When the finances of the municipal 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 municipality; (emphasis ours)
Respondent COA, however, contends that the above section has been
repealed, modified or amended by NCC No. 67 dated January 1, 1992, RA 7645
(the General Appropriations Act of 1993) and LBC No. 53 dated September 1,
1993.[16]
It is elementary in statutory construction that an administrative circular
cannot supersede, abrogate, modify or nullify a statute. A statute is superior to
an administrative circular, thus the latter cannot repeal or amend it. [17] In the
present case, NCC No. 67, being a mere administrative circular, cannot repeal a
substantive law like RA 7160.
It is also an elementary principle in statutory construction that repeal of
statutes by implication is not favored, unless it is manifest that the legislature so
intended. The legislature is assumed to know the existing laws on the subject and
cannot be presumed to have enacted inconsistent or conflicting statutes.
[18]
Respondent COA alleges that Section 36 of RA 7645 (the GAA of 1993)
repealed Section 447(a)(l)(xi) of RA 7160 (the LGC of 1991). A review of the two
laws, however, shows that this was not so. Section 36 of RA 7645 merely
provided for the different rates of RATA payable to national government officials
or employees, depending on their position, and stated that these amounts were
payable from the programmed appropriations of the parent agencies to which the

Page 32
concerned national officials or employees belonged. Furthermore, there was no

other provision in RA 7645 from which a repeal of Section 447(a) (l)(xi) of RA
7160 could be implied. In the absence, therefore, of any clear repeal of Section
447(a)(l)(xi) of RA 7160, we cannot presume such intention on the part of the
legislature.
Moreover, the presumption against implied repeal becomes stronger when,
as in this case, one law is special and the other is general. [19] The principle is
expressed in the maximgeneralia specialibus non derogant, a general law does
not nullify a specific or special law. The reason for this is that the legislature, in
passing a law of special character, considers and makes special provisions for the
particular circumstances dealt with by the special law. This being so, the
legislature, by adopting a general law containing provisions repugnant to those of
the special law and without making any mention of its intention to amend or
modify such special law, cannot be deemed to have intended an amendment,
repeal or modification of the latter.[20]
In this case, RA 7160 (the LGC of 1991) is a special law [21] which exclusively
deals with local government units (LGUs), outlining their powers and functions in
consonance with the constitutionally mandated policy of local autonomy. RA 7645
(the GAA of 1993), on the other hand, was a general law [22] which outlined the
share in the national fund of all branches of the national government. RA 7645
therefore, being a general law, could not have, by mere implication, repealed RA
7160. Rather, RA 7160 should be taken as the exception to RA 7645 in the
absence of circumstances warranting a contrary conclusion.[23]
The controversy actually centers on the seemingly sweeping provision in
NCC No. 67 which states that no one shall be allowed to collect RATA from more
than one source. Does this mean that judges cannot receive allowances
from LGUs in addition to the RATA from the Supreme Court? For reasons that will
hereinafter be discussed, we answer in the negative.
The pertinent provisions of NCC No. 67 read:
3. Rules and Regulations:
3.1.1 Payment of RATA, whether commutable or reimbursable, shall
be in accordance with the rates prescribed for each of the
following officials and employees and those of equivalent
ranks, and the conditions enumerated under the pertinent
sections of the General Provisions of the annual General
Appropriations Act (GAA):
xxxxxxxxx
4. Funding Source:
respective offices, not exceeding the rates indicated below, which shall apply to
each type of allowance:
xxxxxxxxx
In all cases, commutable and reimbursable RATA shall be paid from the amount
appropriated for the purpose and other personal services savings of the agency
or project from where the officials and employees covered under this Circular
draw their salaries. No one shall be allowed to collect RATA from more than one
source. (emphasis ours)
In construing NCC No. 67, we apply the principle in statutory construction
that force and effect should not be narrowly given to isolated and disjoined
clauses of the law but to its spirit, broadly taking all its provisions together in one
rational view.[24] Because a statute is enacted as a whole and not in parts or
sections, that is, one part is as important as the others, the statute should be
construed and given effect as a whole. A provision or section which is unclear by
itself may be clarified by reading and construing it in relation to the whole
statute.[25]
Taking NCC No. 67 as a whole then, what it seeks to prevent is the dual
collection of RATA by a national official from the budgets of more than one
national agency. We emphasize that the other source referred to in the
prohibition is another national agency. This can be gleaned from the fact that the
sentence no one shall be allowed to collect RATA from more than one source (the
controversial prohibition) immediately follows the sentence that RATA shall be
paid from the budget of the national agency where the concerned national
officials and employees draw their salaries. The fact that the other source is
another national agency is supported by RA 7645 (the GAA of 1993) invoked by
respondent COA itself and, in fact, by all subsequentGAAs for that matter,
because the GAAs all essentially provide that (1) the RATA of national officials
shall be payable from the budgets of their respective national agencies and (2)
those officials on detail with other national agencies shall be paid their RATA only
from the budget of their parent national agency:
Officials on detail with other offices, including officials of the Commission of Audit
assigned to serve other offices or agencies, shall be paid the allowance herein
authorized from the appropriations of their parent agencies. (emphasis ours)
Clearly therefore, the prohibition in NCC No. 67 is only against the dual or
multiple collection of RATA by a national official from the budgets of two or more
national agencies. Stated otherwise, when a national official is on detail with
another national agency, he should get his RATA only from his parent national
agency and not from the other national agency he is detailed to.
Since the other source referred in the controversial prohibition is another
national agency, said prohibition clearly does not apply to LGUs like
the Municipality of Naujan. National agency of course refers to the different
offices, bureaus and departments comprising the national government. The
budgets of these departments or offices are fixed annually by Congressin the
General Appropriations Act.[26] An LGU is obviously not a national agency. Its
annual
budget
is
fixed
by
its
own
legislative
council
(Sangguniang Bayan, Panlungsod or Panlalawigan), not by Congress. Without
doubt, NCC No. 67 does not apply to LGUs.
The prohibition in NCC No. 67 is in fact an administrative tool of the DBM to
prevent the much-abused practice of multiple allowances, thus standardizing the
grant of RATA by national agencies. Thus, the purpose clause of NCC No. 67
reads:
Section 36, RA 7645, General Appropriations Act of 1993:
This Circular is being issued to ensure uniformity and consistency of actions on

claims for representation and transportation allowance (RATA) which is primarily
granted by law to national government officials and employees to cover
expenses incurred in the discharge or performance of their duties and
responsibilities.
Representation and Transportation Allowances. The following officials and those

of equivalent rank as may be determined by the Department of Budget and
Management (DBM) while in the actual performance of their respective functions
are hereby granted monthly commutable representation and transportation
allowances payable from the programmed appropriations provided for their
By no stretch of the imagination can NCC No. 67 be construed as nullifying

the power of LGUs to grant allowances to judges under the Local Government
Code of 1991. It was issued primarily to make the grant of RATA to national
officials under the national budget uniform. In other words, it applies only to the
national funds administered by the DBM, not the local funds of LGUs.

Page 33
To rule against the power of LGUs to grant allowances to judges as what

respondent COA would like us to do will subvert the principle of local autonomy
zealously guaranteed by the Constitution. [27] The Local Government Code of 1991
was specially promulgated by Congress to ensure the autonomy of local
governments as mandated by the Constitution. By upholding, in the present
case, the power of LGUs to grant allowances to judges and leaving to their
discretion the amount of allowances they may want to grant, depending on the
availability of local funds, we ensure the genuine and meaningful local autonomy
of LGUs.
We now discuss the next contention of respondent COA: that the resolution
of the Sangguniang Bayan of Naujan granting the P1,600 monthly allowance to
petitioner judge was null and void because it failed to comply with LBC No. 53
dated September 1, 1993:
Sec. 3 Allowances. LGUs may grant allowances/additional compensation to the
national government officials/employees assigned to their locality at rates
authorized by law, rules and regulations and subject to the following
preconditions:
a. That the annual income or finances of the municipality, city or
province as certified by the Accountant concerned will allow
the grant of the allowances/additional compensation
without exceeding the general limitations for personal
services under Section 325 of RA 7160;
b. That the budgetary requirements under Section 324 of RA 7160
including the full requirement of RA 6758 have been
satisfied and provided fully in the budget as certified by the
Budget Officer and COA representative in the LGU
concerned;
c. That the LGU has fully implemented the devolution of
personnel/functions in accordance with the provisions of RA
7160;
d. That the LGU has already created mandatory positions prescribed
in RA 7160.

Page 34
e. That similar allowances/additional compensation are not granted

by the national government to the officials/employees
assigned to the LGU.
Though LBC No. 53 of the DBM may be considered within the ambit of the
President's power of general supervision over LGUs,[28] we rule that Section 3,
paragraph (e) thereof is invalid. RA 7160, the Local Government Code of 1991,
clearly provides that provincial, city and municipal governments may grant
allowances to judges as long as their finances allow.Section 3, paragraph (e) of
LBC No. 53, by outrightly prohibiting LGUs from granting allowances to judges
whenever such allowances are (1) also granted by the national government or (2)
similar to the allowances granted by the national government, violates Section
447(a)(l)(xi) of the Local Government Code of 1991. [29] As already stated, a
circular must conform to the law it seeks to implement and should not modify or
amend it.[30]
Moreover, by prohibiting LGUs from granting allowances similar to the
allowances granted by the national government, Section 3 (e) of LBC No. 53
practically prohibits LGUs from granting allowances to judges and, in effect,
totally nullifies their statutory power to do so. Being unduly restrictive therefore
of the statutory power of LGUs to grant allowances to judges and
being violative of their autonomy guaranteed by the Constitution, Section 3,
paragraph (e) of LBC No. 53 is hereby declared null and void.
Paragraphs (a) to (d) of said circular, however, are valid as they are in
accordance with Sections 324[31] and 325[32] of the Local Government Code of
1991; these respectively provide for the budgetary requirements and general
limitations on the use of provincial, city and municipal funds. Paragraphs (a) to
(d) are proper guidelines for the condition provided in Sections 447, 458 and 468
of the Local Government Code of 1991 that LGUs may grant allowances to judges
if their funds allow.[33]
Respondent
COA
also
argues
that
Resolution
No.
101
of
the Sangguniang Bayan of Naujan failed to comply with paragraphs (a) to (d) of
LBC No. 53, thus it was null and void.
The argument is misplaced.
Guidelines (a) to (d) were met when the Sangguniang Panlalawigan of
Oriental Mindoro approved
Resolution
No.
101
of
the Sangguniang Bayan of Naujan granting the P1,600 monthly allowance to
petitioner judge as well as the corresponding budgets of the municipality
providing for the said monthly allowance to petitioner judge. Under Section 327
of the Local Government Code of 1991, the Sangguniang Panlalawigan was

specifically tasked to review the appropriation ordinances of its component
municipalities to ensure compliance with Sections 324 and 325 of the Code.
Considering said duty of the Sangguniang Panlalawigan, we will assume, in the
absence of proof to the contrary, that the Sangguniang Panlalawigan of
Oriental Mindoro performed what the law required it to do, that is, review the
resolution and the corresponding budgets of the Municipality of Naujan to make
sure that they complied with Sections 324 and 325 of the Code. [34] We presume
the regularity of the Sangguniang Panlalawigans official act.
BARA LIDASAN, petitioner,

vs.
COMMISSION ON ELECTIONS, respondent.
Moreover, it is well-settled that an ordinance must be presumed valid in the

absence of evidence showing that it is not in accordance with the law.
[35]
Respondent COA had the burden of proving that Resolution No. 101 of
the Sangguniang Bayan of Naujan did not comply with the condition provided in
Section 447 of the Code, the budgetary requirements and general limitations on
the use of municipal funds provided in Sections 324 and 325 of the Code and the
implementing guidelines issued by the DBM, i.e., paragraphs (a) to (d), Section 3
of LBC No. 53. Respondent COA also had the burden of showing that
the Sangguniang Panlalawigan of Oriental Mindoro erroneously approved said
resolution despite its non-compliance with the requirements of the law. It failed to
discharge such burden. On the contrary, we find that the resolution of
the Municipality of Naujan granting the P1,600 monthly allowance to petitioner
judge fully complied with the law. Thus, we uphold its validity.
The question initially presented to the Commission on Elections, 1 is this: Is

Republic Act 4790, which is entitled "An Act Creating the Municipality of Dianaton
in the Province of Lanao del Sur", but which includes barrios located in another
province Cotabato to be spared from attack planted upon the constitutional
mandate that "No bill which may be enacted into law shall embrace more than
one subject which shall be expressed in the title of the bill"? Comelec's answer is
in the affirmative. Offshoot is the present original petition for certiorari and
prohibition.
In sum, we hereby affirm the power of the Municipality of Naujan to grant the
questioned allowance to petitioner Judge Leynes in accordance with the
constitutionally mandated policy of local autonomy and the provisions of the
Local Government Code of 1991. We also sustain the validity of Resolution No.
101, Series of 1993, of the Sangguniang Bayan of Naujan for being in accordance
with the law.
WHEREFORE, the petition is hereby GRANTED. The assailed decision
dated September 14, 1999 of the Commission of Audit is hereby SET ASIDE and
Section 3, paragraph (e) of LBC No. 53 is hereby declared NULL and VOID.
No costs.
SO ORDERED.
Suntay for petitioner.

Barrios and Fule for respondent.
SANCHEZ, J.:
On June 18, 1966, the Chief Executive signed into law House Bill 1247, known as
Republic Act 4790, now in dispute. The body of the statute, reproduced in haec
verba, reads:
Sec. 1. Barrios Togaig, Madalum, Bayanga, Langkong, Sarakan, Kat-bo,
Digakapan, Magabo, Tabangao, Tiongko, Colodan, Kabamakawan,
Kapatagan, Bongabong, Aipang, Dagowan, Bakikis, Bungabung, Losain,
Matimos and Magolatung, in the Municipalities of Butig and Balabagan,
Province of Lanao del Sur, are separated from said municipalities and
constituted into a distinct and independent municipality of the same
province to be known as the Municipality of Dianaton, Province of Lanao
del Sur. The seat of government of the municipality shall be in Togaig.
Sec. 2. The first mayor, vice-mayor and councilors of the new municipality
shall be elected in the nineteen hundred sixty-seven general elections for
local officials.
Sec. 3. This Act shall take effect upon its approval.
G.R. No. L-28089
October 25, 1967

Page 35
It came to light later that barrios Togaig and Madalum just mentioned are within
the municipality of Buldon,Province of Cotabato, and that Bayanga, Langkong,
Sarakan, Kat-bo, Digakapan, Magabo, Tabangao, Tiongko, Colodan and
Kabamakawan are parts and parcel of another municipality, the municipality

of Parang, also in theProvince of Cotabato and not of Lanao del Sur.
Prompted by the coming elections, Comelec adopted its resolution of August 15,
1967, the pertinent portions of which are:
For purposes of establishment of precincts, registration of voters and for
other election purposes, the Commission RESOLVED that pursuant to RA
4790, the new municipality of Dianaton, Lanao del Sur shall comprise the
barrios of Kapatagan, Bongabong, Aipang, Dagowan, Bakikis, Bungabung,
Losain, Matimos, and Magolatung situated in the municipality of
Balabagan, Lanao del Sur, the barrios of Togaig and Madalum situated in
the municipality of Buldon, Cotabato, the barrios of Bayanga, Langkong,
Sarakan, Kat-bo, Digakapan, Magabo, Tabangao, Tiongko, Colodan and
Kabamakawan situated in the municipality of Parang, also of Cotabato.
Doubtless, as the statute stands, twelve barrios in two municipalities in the
province of Cotabato are transferred to the province of Lanao del Sur. This
brought about a change in the boundaries of the two provinces.
Apprised of this development, on September 7, 1967, the Office of the President,
through the Assistant Executive Secretary, recommended to Comelec that the
operation of the statute be suspended until "clarified by correcting legislation."
Comelec, by resolution of September 20, 1967, stood by its own interpretation,
declared that the statute "should be implemented unless declared
unconstitutional by the Supreme Court."
This triggered the present original action for certiorari and prohibition by Bara
Lidasan, a resident and taxpayer of the detached portion of Parang, Cotabato,
and a qualified voter for the 1967 elections. He prays that Republic Act 4790 be
declared unconstitutional; and that Comelec's resolutions of August 15, 1967 and
September 20, 1967 implementing the same for electoral purposes, be nullified.
1. Petitioner relies upon the constitutional requirement aforestated, that "[n]o bill
which may be enacted into law shall embrace more than one subject which shall
be expressed in the title of the bill."2
It may be well to state, right at the outset, that the constitutional provision
contains dual limitations upon legislative power. First. Congress is to refrain from

Page 36
conglomeration, under one statute, of heterogeneous subjects. Second. The title

of the bill is to be couched in a language sufficient to notify the legislators and
the public and those concerned of the import of the single subject thereof.
Of relevance here is the second directive. The subject of the statute must be
"expressed in the title" of the bill. This constitutional requirement "breathes the
spirit of command."3 Compliance is imperative, given the fact that the
Constitution does not exact of Congress the obligation to read during its
deliberations the entire text of the bill. In fact, in the case of House Bill 1247,
which became Republic Act 4790, only its title was read from its introduction to
its final approval in the House of Representatives 4 where the bill, being of local
application, originated.5
Of course, the Constitution does not require Congress to employ in the title of an
enactment, language of such precision as to mirror, fully index or catalogue all
the contents and the minute details therein. It suffices if the title should serve the
purpose of the constitutional demand that it inform the legislators, the persons
interested in the subject of the bill, and the public, of the nature, scope and
consequences of the proposed law and its operation. And this, to lead them to
inquire into the body of the bill, study and discuss the same, take appropriate
action thereon, and, thus, prevent surprise or fraud upon the legislators. 6
In our task of ascertaining whether or not the title of a statute conforms with the
constitutional requirement, the following, we believe, may be taken as guidelines:
The test of the sufficiency of a title is whether or not it is misleading; and,
which technical accuracy is not essential, and the subject need not be
stated in express terms where it is clearly inferable from the details set
forth, a title which is so uncertain that the average person reading it
would not be informed of the purpose of the enactment or put on inquiry
as to its contents, or which is misleading, either in referring to or
indicating one subject where another or different one is really embraced
in the act, or in omitting any expression or indication of the real subject or
scope of the act, is bad.
xxx
xxx
xxx
In determining sufficiency of particular title its substance rather than its

form should be considered, and the purpose of the constitutional
requirement, of giving notice to all persons interested, should be kept in

mind by the court.7
With the foregoing principles at hand, we take a hard look at the disputed
statute. The title "An Act Creating the Municipality of Dianaton, in the Province
of Lanao del Sur"8 projects the impression that solely the province of Lanao del
Sur is affected by the creation of Dianaton. Not the slightest intimation is there
that communities in the adjacent province of Cotabato are incorporated in this
new Lanao del Sur town. The phrase "in the Province of Lanao del Sur," read
without subtlety or contortion, makes the title misleading, deceptive. For, the
known fact is that the legislation has a two-pronged purpose combined in one
statute: (1) it creates the municipality of Dianaton purportedly from twenty-one
barrios in the towns of Butig and Balabagan, both in the province of Lanao del
Sur; and (2) it also dismembers two municipalities in Cotabato, a province
different from Lanao del Sur.
The baneful effect of the defective title here presented is not so difficult to
perceive. Such title did not inform the members of Congress as to the full impact
of the law; it did not apprise the people in the towns of Buldon and Parang in
Cotabato and in the province of Cotabato itself that part of their territory is being
taken away from their towns and province and added to the adjacent Province of
Lanao del Sur; it kept the public in the dark as to what towns and provinces were
actually affected by the bill. These are the pressures which heavily weigh against
the constitutionality of Republic Act 4790.
Respondent's stance is that the change in boundaries of the two provinces
resulting in "the substantial diminution of territorial limits" of Cotabato province
is "merely the incidental legal results of the definition of the boundary" of the
municipality of Dianaton and that, therefore, reference to the fact that portions in
Cotabato are taken away "need not be expressed in the title of the law." This
posture we must say but emphasizes the error of constitutional dimensions
in writing down the title of the bill. Transfer of a sizeable portion of territory from
one province to another of necessity involves reduction of area, population and
income of the first and the corresponding increase of those of the other. This is as
important as the creation of a municipality. And yet, the title did not reflect this
fact.
Respondent asks us to read Felwa vs. Salas, L-16511, October 29, 1966, as
controlling here. The Felwa case is not in focus. For there, the title of the Act
(Republic Act 4695) reads: "An Act Creating the Provinces of Benguet, Mountain
Province, Ifugao, and Kalinga-Apayao." That title was assailed as unconstitutional

Page 37
upon the averment that the provisions of the law (Section, 8 thereof) in reference
to the elective officials of the provinces thus created, were not set forth in the
title of the bill. We there ruled that this pretense is devoid of merit "for, surely, an
Act creating said provinces must be expected to provide for the officers who shall
run the affairs thereof" which is "manifestly germane to the subject" of the
legislation, as set forth in its title. The statute now before us stands altogether on
a different footing. The lumping together of barrios in adjacent but separate
provinces under one statute is neither a natural nor logical consequence of the
creation of the new municipality of Dianaton. A change of boundaries of the two
provinces may be made without necessarily creating a new municipality and vice
versa.
As we canvass the authorities on this point, our attention is drawn to Hume vs.
Village of Fruitport, 219 NW 648, 649. There, the statute in controversy bears the
title "An Act to Incorporate the Village of Fruitport, in the County of Muskegon."
The statute, however, in its section 1 reads: "The people of the state of Michigan
enact, that the following described territory in the counties of Muskegon and
Ottawa Michigan, to wit: . . . be, and the same is hereby constituted a village
corporate, by the name of the Village of Fruitport." This statute was challenged as
void by plaintiff, a resident of Ottawa county, in an action to restraint the Village
from exercising jurisdiction and control, including taxing his lands. Plaintiff based
his claim on Section 20, Article IV of the Michigan State Constitution, which reads:
"No law shall embrace more than one object, which shall be expressed in its
title." The Circuit Court decree voided the statute and defendant appealed. The
Supreme Court of Michigan voted to uphold the decree of nullity. The following,
said in Hume, may well apply to this case:
It may be that words, "An act to incorporate the village of Fruitport,"
would have been a sufficient title, and that the words, "in the county of
Muskegon" were unnecessary; but we do not agree with appellant that the
words last quoted may, for that reason, be disregarded as surplusage.
. . . Under the guise of discarding surplusage, a court cannot reject a part
of the title of an act for the purpose of saving the act. Schmalz vs. Woody,
56 N.J. Eq. 649, 39 A. 539.
A purpose of the provision of the Constitution is to "challenge the
attention of those affected by the act to its provisions." Savings Bank vs.
State of Michigan, 228 Mich. 316, 200 NW 262.
The title here is restrictive. It restricts the operation of the act of

Muskegon county. The act goes beyond the restriction. As was said in
Schmalz vs. Wooly, supra: "The title is erroneous in the worst degree, for
it is misleading."9
Similar statutes aimed at changing boundaries of political subdivisions, which
legislative purpose is not expressed in the title, were likewise declared
unconstitutional."10
We rule that Republic Act 4790 is null and void.
2. Suggestion was made that Republic Act 4790 may still be salvaged with
reference to the nine barrios in the municipalities of Butig and Balabagan in
Lanao del Sur, with the mere nullification of the portion thereof which took away
the twelve barrios in the municipalities of Buldon and Parang in the other
province of Cotabato. The reasoning advocated is that the limited title of the Act
still covers those barrios actually in the province of Lanao del Sur.
We are not unmindful of the rule, buttressed on reason and of long standing, that
where a portion of a statute is rendered unconstitutional and the remainder valid,
the parts will be separated, and the constitutional portion upheld. Black,
however, gives the exception to this rule, thus:
. . . But when the parts of the statute are so mutually dependent and
connected, as conditions, considerations, inducements, or compensations
for each other, as to warrant a belief that the legislature intended them as
a whole, and that if all could not be carried into effect, the legislature
would not pass the residue independently, then, if some parts are
unconstitutional, all the provisions which are thus dependent, conditional,
or connected, must fall with them,11
In substantially similar language, the same exception is recognized in the
jurisprudence of this Court, thus:
The general rule is that where part of a statute is void, as repugnant to
the Organic Law, while another part is valid, the valid portion if
separable from the invalid, may stand and be enforced. But in order to do
this, the valid portion must be so far independent of the invalid
portion that it is fair to presume that the Legislature would have enacted
it by itself if they had supposed that they could not constitutionally enact

Page 38
the other. . . Enough must remain to make a complete, intelligible, and

valid statute, which carries out the legislative intent. . . . The language
used in the invalid part of the statute can have no legal force or efficacy
for any purpose whatever, and what remains must express the legislative
will independently of the void part, since the court has no power to
legislate, . . . .12
Could we indulge in the assumption that Congress still intended, by the Act, to
create the restricted area of nine barrios in the towns of Butig and Balabagan in
Lanao del Sur into the town of Dianaton, if the twelve barrios in the towns of
Buldon and Parang, Cotabato were to be excluded therefrom? The answer must
be in the negative.
Municipal corporations perform twin functions. Firstly. They serve as an
instrumentality of the State in carrying out the functions of
government. Secondly. They act as an agency of the community in the
administration of local affairs. It is in the latter character that they are a separate
entity acting for their own purposes and not a subdivision of the State. 13
Consequently, several factors come to the fore in the consideration of whether a
group of barrios is capable of maintaining itself as an independent municipality.
Amongst these are population, territory, and income. It was apparently these
same factors which induced the writing out of House Bill 1247 creating the town
of Dianaton. Speaking of the original twenty-one barrios which comprise the new
municipality, the explanatory note to House Bill 1247, now Republic Act 4790,
reads:
The territory is now a progressive community; the aggregate population is
large; and the collective income is sufficient to maintain an independent
municipality.
This bill, if enacted into law, will enable the inhabitants concerned to
govern themselves and enjoy the blessings of municipal autonomy.
When the foregoing bill was presented in Congress, unquestionably, the totality
of the twenty-one barrios not nine barrios was in the mind of the proponent
thereof. That this is so, is plainly evident by the fact that the bill itself, thereafter
enacted into law, states that the seat of the government is in Togaig, which is a
barrio in the municipality of Buldon in Cotabato. And then the reduced area poses
a number of questions, thus: Could the observations as to progressive
community, large aggregate population, collective income sufficient to maintain

an independent municipality, still apply to a motley group of only nine barrios out
of the twenty-one? Is it fair to assume that the inhabitants of the said remaining
barrios would have agreed that they be formed into a municipality, what with the
consequent duties and liabilities of an independent municipal corporation? Could
they stand on their own feet with the income to be derived in their community?
How about the peace and order, sanitation, and other corporate obligations? This
Court may not supply the answer to any of these disturbing questions. And yet,
to remain deaf to these problems, or to answer them in the negative and still
cling to the rule on separability, we are afraid, is to impute to Congress an
undeclared will. With the known premise that Dianaton was created upon the
basic considerations of progressive community, large aggregate population and
sufficient income, we may not now say that Congress intended to create
Dianaton with only nine of the original twenty-one barrios, with a seat of
government still left to be conjectured. For, this unduly stretches judicial
interpretation of congressional intent beyond credibility point. To do so, indeed, is
to pass the line which circumscribes the judiciary and tread on legislative
premises. Paying due respect to the traditional separation of powers, we may not
now melt and recast Republic Act 4790 to read a Dianaton town of nine instead of
the originally intended twenty-one barrios. Really, if these nine barrios are to
constitute a town at all, it is the function of Congress, not of this Court, to spell
out that congressional will.
Republic Act 4790 is thus indivisible, and it is accordingly null and void in its
totality.14
3. There remains for consideration the issue raised by respondent, namely, that
petitioner has no substantial legal interest adversely affected by the
implementation of Republic Act 4790. Stated differently, respondent's pose is
that petitioner is not the real party in interest.
Here the validity of a statute is challenged on the ground that it violates the
constitutional requirement that the subject of the bill be expressed in its title.
Capacity to sue, therefore, hinges on whether petitioner's substantial rights or
interests are impaired by lack of notification in the title that the barrio in Parang,
Cotabato, where he is residing has been transferred to a different provincial
hegemony.
The right of every citizen, taxpayer and voter of a community affected by
legislation creating a town to ascertain that the law so created is not

Page 39
dismembering his place of residence "in accordance with the Constitution" is

recognized in this jurisdiction.15
Petitioner is a qualified voter. He expects to vote in the 1967 elections. His right
to vote in his own barrio before it was annexed to a new town is affected. He may
not want, as is the case here, to vote in a town different from his actual
residence. He may not desire to be considered a part of hitherto different
communities which are fanned into the new town; he may prefer to remain in the
place where he is and as it was constituted, and continue to enjoy the rights and
benefits he acquired therein. He may not even know the candidates of the new
town; he may express a lack of desire to vote for anyone of them; he may feel
that his vote should be cast for the officials in the town before dismemberment.
Since by constitutional direction the purpose of a bill must be shown in its title for
the benefit, amongst others, of the community affected thereby, 16 it stands to
reason to say that when the constitutional right to vote on the part of any citizen
of that community is affected, he may become a suitor to challenge the
constitutionality of the Act as passed by Congress.
For the reasons given, we vote to declare Republic Act 4790 null and void, and to
prohibit respondent Commission from implementing the same for electoral
purposes.
No costs allowed. So ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Castro
and Angeles, JJ., concur.
Separate Opinions
FERNANDO, J., dissenting:
With regret and with due recognition of the merit of the opinion of the Court, I
find myself unable to give my assent. Hence these few words to express my
stand.
Republic Act No. 4790 deals with one subject matter, the creation of the
municipality of Dianaton in the province of Lanao del Sur. The title makes evident
what is the subject matter of such an enactment. The mere fact that in the body
of such statute barrios found in two other municipalities of another province were
included does not of itself suffice for a finding of nullity by virtue of the
constitutional provision invoked. At the most, the statute to be free from the
insubstantial doubts about its validity must be construed as not including the
barrios, located not in the municipalities of Butig and Balabagan, Lanao del Sur,
but in Parang and Baldon, Cotabato.
The constitutional requirement is that no bill which may be enacted into law shall
embrace more than one subject which shall be expressed in the title of the
bill.1 This provision is similar to those found in the Constitution of many American
States. It is aimed against the evils, of the so-called omnibus bills, and log-rolling
legislation, and against surreptitious or unconsidered enactments.2 Where the
subject of a bill is limited to a particular matter, the members of the legislature
as well as the people should be informed of the subject of proposed legislative
measures. This constitutional provision thus precludes the insertion of riders in
legislation, a rider being a provision not germane to the subject matter of the bill.
It is not to be narrowly construed though as to cripple or impede proper
legislation. The construction must be reasonable and not technical. It is sufficient
if the title be comprehensive enough reasonably to include the general object
which the statute seeks to effect without expressing each and every end and
means necessary for the accomplishment of that object. Mere details need not be
set forth. The legislature is not required to make the title of the act a complete
index of its contents. The constitutional provision is satisfied if all parts of an act
which relates to its subject find expression in its title. 3
The first decision of this Court, after the establishment of the Commonwealth of
the Philippines, in 1938, construing a provision of this nature, Government v.
Hongkong & Shanghai Bank,4 held that the inclusion of Section 11 of Act No.
4007, the Reorganization Law, providing for the mode in which the total annual
expenses of the Bureau of Banking may be reimbursed through assessment
levied upon all banking institutions subject to inspection by the Bank
Commissioner was not violative of such a requirement in the Jones Law, the
previous organic act. Justice Laurel, however, vigorously dissented, his view
being that while the main subject of the act was reorganization, the provision
assailed did not deal with reorganization but with taxation. While the case
ofGovernment vs. Hongkong & Shanghai Bank was decided by a bare majority of
four justices against three, the present trend seems to be that the constitutional

Page 40
requirement is to be given the liberal test as indicated in the majority opinion

penned by Justice Abad Santos, and not the strict test as desired by the majority
headed by Justice Laurel.
Such a trend has been reflected in subsequent decisions beginning
with Sumulong v. Commission on Elections,5up to and including Felwa vs. Salas, a
1966 decision,6 the opinion coming from Justice Concepcion.
It is true of course that in Philconsa v. Gimenez,7 one of the grounds on which the
invalidity of Republic Act No. 3836 was predicated was the violation of the above
constitutional provision. This Retirement Act for senators and representatives was
entitled "AN ACT AMENDING SUB-SECTION (c), SECTION TWELVE OF
COMMONWEALTH ACT NUMBERED ONE HUNDRED EIGHTY-SIX, AS AMENDED BY
REPUBLIC ACT NUMBERED THIRTY HUNDRED NINETY-SIX." As we noted, the
paragraph in Republic Act No. 3836 deemed objectionable "refers to members of
Congress and to elective officers thereof who are not members of the
Government Service Insurance System. To provide retirement benefits, therefore,
for these officials, would relate to a subject matter which is not germane to
Commonwealth Act No. 186. In other words, this portion of the amendment ( re
retirement benefits for Members of Congress and appointive officers, such as the
Secretary and Sergeants-at-arms for each house) is not related in any manner to
the subject of Commonwealth Act No. 186 establishing the Government Service
Insurance System and which provides for both retirement and insurance benefits
to its members." Nonetheless our opinion was careful to note that there was no
abandonment of the principle of liberality. Thus: "we are not unmindful of the fact
that there has been a general disposition in all courts to construe the
constitutional provision with reference to the subject and title of the Act,
liberally."
It would follow therefore that the challenged legislation Republic Act No. 4790 is
not susceptible to the indictment that the constitutional requirement as to
legislation having only one subject which should be expressed in his title was not
met. The subject was the creation of the municipality of Dianaton. That was
embodied in the title.
It is in the light of the aforementioned judicial decisions of this Court, some of the
opinions coming from jurists illustrious for their mastery of constitutional law and
their acknowledged erudition, that, with all due respect, I find the citation
from Corpus Juris Secundum, unnecessary and far from persuasive. The State
decisions cited, I do not deem controlling, as the freedom of this Court to accept
or reject doctrines therein announced cannot be doubted.
Wherein does the weakness of the statute lie then? To repeat, several barrios of
two municipalities outside Lanao del Sur were included in the municipality of
Dianaton of that province. That itself would not have given rise to a constitutional
question considering the broad, well-high plenary powers possessed by Congress
to alter provincial and municipal boundaries. What justified resort to this Court
was the congressional failure to make explicit that such barrios in two
municipalities located in Cotabato would thereafter form part of the newly
created municipality of Dianaton, Lanao del Sur.
To avoid any doubt as to the validity of such statute, it must be construed as to
exclude from Dianaton all of such barrios mentioned in Republic Act No. 4790
found in municipalities outside Lanao del Sur. As thus interpreted, the statute can
meet the test of the most rigid scrutiny. Nor is this to do violence to the
legislative intent. What was created was a new municipality from barrios named
as found in Lanao del Sur. This construction assures precisely that.
This mode of interpreting Republic Act No. 4790 finds support in basic principles
underlying precedents, which if not precisely controlling, have a persuasive ring.
In Radiowealth v. Agregado,8 certain provisions of the Administrative Code were
interpreted and given a "construction which would be more in harmony with the
tenets of the fundamental law." In Sanchez v. Lyon Construction,9 this Court had a
similar ruling: "Article 302 of the Code of Commerce must be applied in
consonance with [the relevant] provisions of our Constitution." The above
principle gained acceptance at a much earlier period in our constitutional history.
Thus in a 1913 decision, In re Guaria:10 "In construing a statute enacted by the
Philippine Commission we deem it our duty not to give it a construction which
would be repugnant to an Act of Congress, if the language of the statute is fairly
susceptible of another construction not in conflict with the higher law. In doing
so, we think we should not hesitate to disregard contentions touching the
apparent intention of the legislator which would lead to the conclusion that the
Commission intended to enact a law in violation of the Act of Congress. However
specious the argument may be in favor of one of two possible constructions, it
must be disregarded if on examination it is found to rest on the contention that
the legislator designed an attempt to transcend the rightful limits of his
authority, and that his apparent intention was to enact an invalid law."
American Supreme Court decisions are equally explicit. The then Justice, later
Chief Justice, Stone, construed statutes "with an eye to possible constitutional
limitations so as to avoid doubts as to [their] validity."11 From the pen of the
articulate jurist, Frankfurter:12 "Accordingly, the phrase "lobbying activities" in the
resolution must be given the meaning that may fairly be attributed to it, having

Page 41
special regard for the principle of constitutional adjudication which makes it

decisive in the choice of fair alternatives that one construction may raise serious
constitutional questions avoided by another." His opinion in the Rumely case
continues with the above pronouncement of Stone and two other former Chief
Justices: "In the words of Mr. Chief Justice Taft, '(i)t is our duty in the
interpretation of federal statutes to reach conclusion which will avoid serious
doubt of their constitutionality', Richmond Screw Anchor Co. v. United States, 275
US 331, 346, 48 S. Ct. 194, 198, 72 L. ed. 303. . . . As phrased by Mr. Chief Justice
Hughes, "if a serious doubt of constitutionality is raised, it is a cardinal principle
that this Court will first ascertain whether a construction of the statute is fairly
possible by which the question may be avoided.' Crowell v. Benson, 285, 296, 76
L. ed. 598, and cases cited." The prevailing doctrine then as set forth by Justice
Clark in a 1963 decision,13 is that courts "have consistently sought an
interpretation which supports the constitutionality of legislation." Phrased
differently by Justice Douglas, the judiciary favors "that interpretation of
legislation which gives it the greater change of surviving the test of
constitutionality."14
It would follow then that both Philippine and American decisions unite in the view
that a legislative measure, in the language of Van Devanter "should not be given
a construction which will imperil its validity where it is reasonably open to
construction free from such peril."15 Republic Act No. 4790 as above construed
incurs no such risk and is free from the peril of nullity.
So I would view the matter, with all due acknowledgment of the practical
considerations clearly brought to light in the opinion of the Court.
G.R. No. 111097 July 20, 1994
MAYOR PABLO P. MAGTAJAS & THE CITY OF CAGAYAN DE ORO, petitioners,
vs.
PRYCE PROPERTIES CORPORATION, INC. & PHILIPPINE AMUSEMENT AND
GAMING CORPORATION,respondents.
Aquilino G. Pimentel, Jr. and Associates for petitioners.
R.R. Torralba & Associates for private respondent.
CRUZ, J.:
establishment or portion thereof, or allow the use thereof by others

for casino operation and other gambling activities.
There was instant opposition when PAGCOR announced the opening of a casino in
Cagayan de Oro City. Civic organizations angrily denounced the project. The
religious elements echoed the objection and so did the women's groups and the
youth. Demonstrations were led by the mayor and the city legislators. The media
trumpeted the protest, describing the casino as an affront to the welfare of the
city.
The trouble arose when in 1992, flush with its tremendous success in several
cities, PAGCOR decided to expand its operations to Cagayan de Oro City. To this
end, it leased a portion of a building belonging to Pryce Properties Corporation,
Inc., one of the herein private respondents, renovated and equipped the same,
and prepared to inaugurate its casino there during the Christmas season.
The reaction of the Sangguniang Panlungsod of Cagayan de Oro City was swift
and hostile. On December 7, 1992, it enacted Ordinance No. 3353 reading as
follows:
Sec. 3. PENALTIES. Any violation of such existing business

permit as defined in the preceding section shall suffer the following
penalties, to wit:
a) Suspension of the business permit
for sixty (60) days for the first offense
and a fine of P1,000.00/day
b) Suspension of the business permit
for Six (6) months for the second
offense, and a fine of P3,000.00/day
c) Permanent revocation of the
business permit and imprisonment of
One (1) year, for the third and
subsequent offenses.
ORDINANCE NO. 3353

AN ORDINANCE PROHIBITING THE ISSUANCE OF BUSINESS PERMIT
AND CANCELLING EXISTING BUSINESS PERMIT TO ANY
ESTABLISHMENT FOR THE USING AND ALLOWING TO BE USED ITS
PREMISES OR PORTION THEREOF FOR THE OPERATION OF CASINO.
BE IT ORDAINED by the Sangguniang Panlungsod of the City of
Cagayan de Oro, in session assembled that:
Sec. 1. That pursuant to the policy of the city banning the
operation of casino within its territorial jurisdiction, no business
permit shall be issued to any person, partnership or corporation for
the operation of casino within the city limits.
Sec. 2. That it shall be a violation of existing business permit by
any persons, partnership or corporation to use its business

Page 42
Sec. 4. This Ordinance shall take effect ten (10) days from
publication thereof.
Nor was this all. On January 4, 1993, it adopted a sterner Ordinance No. 3375-93
reading as follows:
ORDINANCE NO. 3375-93
AN ORDINANCE PROHIBITING THE OPERATION OF CASINO AND
PROVIDING PENALTY FOR VIOLATION THEREFOR.
WHEREAS, the City Council established a policy as early as 1990
against CASINO under its Resolution No. 2295;
WHEREAS, on October 14, 1992, the City Council passed another

Resolution No. 2673, reiterating its policy against the
establishment of CASINO;
WHEREAS, subsequently, thereafter, it likewise passed Ordinance
No. 3353, prohibiting the issuance of Business Permit and to cancel
existing Business Permit to any establishment for the using and
allowing to be used its premises or portion thereof for the
operation of CASINO;
WHEREAS, under Art. 3, section 458, No. (4), sub paragraph VI of
the Local Government Code of 1991 (Rep. Act 7160) and under Art.
99, No. (4), Paragraph VI of the implementing rules of the Local
Government Code, the City Council as the Legislative Body shall
enact measure to suppress any activity inimical to public morals
and general welfare of the people and/or regulate or prohibit such
activity pertaining to amusement or entertainment in order to
protect social and moral welfare of the community;
NOW THEREFORE,
BE IT ORDAINED by the City Council in session duly assembled
that:
Sec. 1. The operation of gambling CASINO in the City of Cagayan
de Oro is hereby prohibited.
Sec. 2. Any violation of this Ordinance shall be subject to the
following penalties:
a) Administrative fine of P5,000.00 shall be imposed against the
proprietor, partnership or corporation undertaking the operation,
conduct, maintenance of gambling CASINO in the City and closure
thereof;

Page 43
b) Imprisonment of not less than six (6) months nor more than one
(1) year or a fine in the amount of P5,000.00 or both at the
discretion of the court against the manager, supervisor, and/or any
person responsible in the establishment, conduct and maintenance
of gambling CASINO.
Sec. 3. This Ordinance shall take effect ten (10) days after its
publication in a local newspaper of general circulation.
Pryce assailed the ordinances before the Court of Appeals, where it was joined by
PAGCOR as intervenor and supplemental petitioner. Their challenge succeeded.
On March 31, 1993, the Court of Appeals declared the ordinances invalid and
issued the writ prayed for to prohibit their enforcement. 1 Reconsideration of this
decision was denied on July 13, 1993. 2
Cagayan de Oro City and its mayor are now before us in this petition for review
under Rule 45 of the Rules of Court. 3 They aver that the respondent Court of
Appeals erred in holding that:
1. Under existing laws, the Sangguniang Panlungsod of the City of
Cagayan de Oro does not have the power and authority to prohibit
the establishment and operation of a PAGCOR gambling casino
within the City's territorial limits.
2. The phrase "gambling and other prohibited games of chance"
found in Sec. 458, par. (a), sub-par. (1) (v) of R.A. 7160 could
only mean "illegal gambling."
3. The questioned Ordinances in effect annul P.D. 1869 and are
therefore invalid on that point.
4. The questioned Ordinances are discriminatory to casino and
partial to cockfighting and are therefore invalid on that point.
5. The questioned Ordinances are not reasonable, not consonant

with the general powers and purposes of the instrumentality
concerned and inconsistent with the laws or policy of the State.
6. It had no option but to follow the ruling in the case of Basco, et
al. v. PAGCOR, G.R. No. 91649, May 14, 1991, 197 SCRA 53 in
disposing of the issues presented in this present case.
PAGCOR is a corporation created directly by P.D. 1869 to help centralize and
regulate all games of chance, including casinos on land and sea within the
territorial jurisdiction of the Philippines. In Basco v. Philippine Amusements and
Gaming Corporation, 4 this Court sustained the constitutionality of the decree and
even cited the benefits of the entity to the national economy as the third highest
revenue-earner in the government, next only to the BIR and the Bureau of
Customs.
Cagayan de Oro City, like other local political subdivisions, is empowered to enact
ordinances for the purposes indicated in the Local Government Code. It is
expressly vested with the police power under what is known as the General
Welfare Clause now embodied in Section 16 as follows:
Sec. 16. General Welfare. Every local government unit shall
exercise the powers expressly granted, those necessarily implied
therefrom, as well as powers necessary, appropriate, or incidental
for its efficient and effective governance, and those which are
essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall
ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the
right of the people to a balanced ecology, encourage and support
the development of appropriate and self-reliant scientific and
technological capabilities, improve public morals, enhance
economic prosperity and social justice, promote full employment
among their residents, maintain peace and order, and preserve the
comfort and convenience of their inhabitants.

Page 44
In addition, Section 458 of the said Code specifically declares that:

Sec. 458. Powers, Duties, Functions and Compensation. (a)
The Sangguniang Panlungsod, as the legislative body of the city,
shall enact ordinances, approve resolutions and appropriate funds
for the general welfare of the city and its inhabitants pursuant to
Section 16 of this Code and in the proper exercise of the corporate
powers of the city as provided for under Section 22 of this Code,
and shall:
(1) Approve ordinances and pass resolutions necessary for an
efficient and effective city government, and in this connection,
shall:
xxx xxx xxx
(v) Enact ordinances intended to
prevent, suppress and impose
appropriate penalties for habitual
drunkenness in public places,
vagrancy, mendicancy, prostitution,
establishment and maintenance of
houses of ill repute,gambling and
other prohibited games of chance,
fraudulent devices and ways to obtain
money or property, drug addiction,
maintenance of drug dens, drug
pushing, juvenile delinquency, the
printing, distribution or exhibition of
obscene or pornographic materials or
publications, and such other activities
inimical to the welfare and morals of
the inhabitants of the city;
This section also authorizes the local government units to regulate properties and
businesses within their territorial limits in the interest of the general welfare. 5
The petitioners argue that by virtue of these provisions, the Sangguniang

Panlungsod may prohibit the operation of casinos because they involve games of
chance, which are detrimental to the people. Gambling is not allowed by general
law and even by the Constitution itself. The legislative power conferred upon
local government units may be exercised over all kinds of gambling and not only
over "illegal gambling" as the respondents erroneously argue. Even if the
operation of casinos may have been permitted under P.D. 1869, the government
of Cagayan de Oro City has the authority to prohibit them within its territory
pursuant to the authority entrusted to it by the Local Government Code.
It is submitted that this interpretation is consonant with the policy of local
autonomy as mandated in Article II, Section 25, and Article X of the Constitution,
as well as various other provisions therein seeking to strengthen the character of
the nation. In giving the local government units the power to prevent or suppress
gambling and other social problems, the Local Government Code has recognized
the competence of such communities to determine and adopt the measures best
expected to promote the general welfare of their inhabitants in line with the
policies of the State.
The petitioners also stress that when the Code expressly authorized the local
government units to prevent and suppress gambling and other prohibited games
of chance, like craps, baccarat, blackjack and roulette, it meant allforms of
gambling without distinction. Ubi lex non distinguit, nec nos distinguere
debemos. 6 Otherwise, it would have expressly excluded from the scope of their
power casinos and other forms of gambling authorized by special law, as it could
have easily done. The fact that it did not do so simply means that the local
government units are permitted to prohibit all kinds of gambling within their
territories, including the operation of casinos.
The adoption of the Local Government Code, it is pointed out, had the effect of
modifying the charter of the PAGCOR. The Code is not only a later enactment
than P.D. 1869 and so is deemed to prevail in case of inconsistencies between
them. More than this, the powers of the PAGCOR under the decree are expressly
discontinued by the Code insofar as they do not conform to its philosophy and
provisions, pursuant to Par. (f) of its repealing clause reading as follows:

Page 45
(f) All general and special laws, acts, city charters, decrees,
executive orders, proclamations and administrative regulations, or
part or parts thereof which are inconsistent with any of the
provisions of this Code are hereby repealed or modified
accordingly.
It is also maintained that assuming there is doubt regarding the effect of the
Local Government Code on P.D. 1869, the doubt must be resolved in favor of the
petitioners, in accordance with the direction in the Code calling for its liberal
interpretation in favor of the local government units. Section 5 of the Code
specifically provides:
Sec. 5. Rules of Interpretation. In the interpretation of the
provisions of this Code, the following rules shall apply:
(a) Any provision on a power of a local government unit shall be
liberally interpreted in its favor, and in case of doubt, any question
thereon shall be resolved in favor of devolution of powers and of
the lower local government unit. Any fair and reasonable doubt as
to the existence of the power shall be interpreted in favor of the
local government unit concerned;
xxx xxx xxx
(c) The general welfare provisions in this Code shall be liberally
interpreted to give more powers to local government units in
accelerating economic development and upgrading the quality of
life for the people in the community; . . . (Emphasis supplied.)
Finally, the petitioners also attack gambling as intrinsically harmful and cite
various provisions of the Constitution and several decisions of this Court
expressive of the general and official disapprobation of the vice. They invoke the
State policies on the family and the proper upbringing of the youth and, as might
be expected, call attention to the old case of U.S. v. Salaveria, 7 which sustained
a municipal ordinance prohibiting the playing of panguingue. The petitioners
decry the immorality of gambling. They also impugn the wisdom of P.D. 1869
(which they describe as "a martial law instrument") in creating PAGCOR and
authorizing it to operate casinos "on land and sea within the territorial jurisdiction
of the Philippines."
2) It must not be unfair or oppressive.
This is the opportune time to stress an important point.
4) It must not prohibit but may regulate trade.
The morality of gambling is not a justiciable issue. Gambling is not illegal per se.
While it is generally considered inimical to the interests of the people, there is
nothing in the Constitution categorically proscribing or penalizing gambling or,
for that matter, even mentioning it at all. It is left to Congress to deal with the
activity as it sees fit. In the exercise of its own discretion, the legislature may
prohibit gambling altogether or allow it without limitation or it may prohibit some
forms of gambling and allow others for whatever reasons it may consider
sufficient. Thus, it has prohibited jueteng and monte but permits lotteries,
cockfighting and horse-racing. In making such choices, Congress has consulted
its own wisdom, which this Court has no authority to review, much less reverse.
Well has it been said that courts do not sit to resolve the merits of conflicting
theories. 8 That is the prerogative of the political departments. It is settled that
questions regarding the wisdom, morality, or practicibility of statutes are not
addressed to the judiciary but may be resolved only by the legislative and
executive departments, to which the function belongs in our scheme of
government. That function is exclusive. Whichever way these branches decide,
they are answerable only to their own conscience and the constituents who will
ultimately judge their acts, and not to the courts of justice.
5) It must be general and consistent with public policy.
The only question we can and shall resolve in this petition is the validity of
Ordinance No. 3355 and Ordinance No. 3375-93 as enacted by the Sangguniang
Panlungsod of Cagayan de Oro City. And we shall do so only by the criteria laid
down by law and not by our own convictions on the propriety of gambling.
The tests of a valid ordinance are well established. A long line of decisions 9 has
held that to be valid, an ordinance must conform to the following substantive
requirements:
1) It must not contravene the constitution or any statute.

Page 46
3) It must not be partial or discriminatory.
6) It must not be unreasonable.

We begin by observing that under Sec. 458 of the Local Government Code, local
government units are authorized to prevent or suppress, among others,
"gambling and other prohibited games of chance." Obviously, this provision
excludes games of chance which are not prohibited but are in fact permitted by
law. The petitioners are less than accurate in claiming that the Code could have
excluded such games of chance but did not. In fact it does. The language of the
section is clear and unmistakable. Under the rule of noscitur a sociis, a word or
phrase should be interpreted in relation to, or given the same meaning of, words
with which it is associated. Accordingly, we conclude that since the word
"gambling" is associated with "and other prohibited games of chance," the word
should be read as referring to only illegal gambling which, like
the other prohibited games of chance, must be prevented or suppressed.
We could stop here as this interpretation should settle the problem quite
conclusively. But we will not. The vigorous efforts of the petitioners on behalf of
the inhabitants of Cagayan de Oro City, and the earnestness of their advocacy,
deserve more than short shrift from this Court.
The apparent flaw in the ordinances in question is that they contravene P.D. 1869
and the public policy embodied therein insofar as they prevent PAGCOR from
exercising the power conferred on it to operate a casino in Cagayan de Oro City.
The petitioners have an ingenious answer to this misgiving. They deny that it is
the ordinances that have changed P.D. 1869 for an ordinance admittedly cannot
prevail against a statute. Their theory is that the change has been made by the
Local Government Code itself, which was also enacted by the national lawmaking
authority. In their view, the decree has been, not really repealed by the Code, but
merely "modified pro tanto" in the sense that PAGCOR cannot now operate a
casino over the objection of the local government unit concerned. This
modification of P.D. 1869 by the Local Government Code is permissible because
one law can change or repeal another law.
It seems to us that the petitioners are playing with words. While insisting that the
decree has only been "modifiedpro tanto," they are actually arguing that it is
already dead, repealed and useless for all intents and purposes because the
Code has shorn PAGCOR of all power to centralize and regulate casinos. Strictly
speaking, its operations may now be not only prohibited by the local government
unit; in fact, the prohibition is not only discretionary but mandated by Section
458 of the Code if the word "shall" as used therein is to be given its accepted
meaning. Local government units have now no choice but to prevent and
suppress gambling, which in the petitioners' view includes both legal and illegal
gambling. Under this construction, PAGCOR will have no more games of chance
to regulate or centralize as they must all be prohibited by the local government
units pursuant to the mandatory duty imposed upon them by the Code. In this
situation, PAGCOR cannot continue to exist except only as a toothless tiger or a
white elephant and will no longer be able to exercise its powers as a prime
source of government revenue through the operation of casinos.
It is noteworthy that the petitioners have cited only Par. (f) of the repealing
clause, conveniently discarding the rest of the provision which painstakingly
mentions the specific laws or the parts thereof which are repealed (or modified)
by the Code. Significantly, P.D. 1869 is not one of them. A reading of the entire
repealing clause, which is reproduced below, will disclose the omission:
Sec. 534. Repealing Clause. (a) Batas Pambansa Blg. 337,
otherwise known as the "Local Government Code," Executive Order
No. 112 (1987), and Executive Order No. 319 (1988) are hereby
repealed.
(b) Presidential Decree Nos. 684, 1191, 1508 and such other
decrees, orders, instructions, memoranda and issuances related to
or concerning the barangay are hereby repealed.

Page 47
(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939

regarding hospital fund; Section 3, a (3) and b (2) of Republic Act.
No. 5447 regarding the Special Education Fund; Presidential Decree
No. 144 as amended by Presidential Decree Nos. 559 and 1741;
Presidential Decree No. 231 as amended; Presidential Decree No.
436 as amended by Presidential Decree No. 558; and Presidential
Decree Nos. 381, 436, 464, 477, 526, 632, 752, and 1136 are
hereby repealed and rendered of no force and effect.
(d) Presidential Decree No. 1594 is hereby repealed insofar as it
governs locally-funded projects.
(e) The following provisions are hereby repealed or amended
insofar as they are inconsistent with the provisions of this Code:
Sections 2, 16, and 29 of Presidential Decree No. 704; Sections 12
of Presidential Decree No. 87, as amended; Sections 52, 53, 66, 67,
68, 69, 70, 71, 72, 73, and 74 of Presidential Decree No. 463, as
amended; and Section 16 of Presidential Decree No. 972, as
amended, and
(f) All general and special laws, acts, city charters, decrees,
executive orders, proclamations and administrative regulations, or
part or parts thereof which are inconsistent with any of the
provisions of this Code are hereby repealed or modified
accordingly.
Furthermore, it is a familiar rule that implied repeals are not lightly presumed in
the absence of a clear and unmistakable showing of such intention. In Lichauco &
Co. v. Apostol, 10 this Court explained:
The cases relating to the subject of repeal by implication all
proceed on the assumption that if the act of later date clearly
reveals an intention on the part of the lawmaking power to
abrogate the prior law, this intention must be given effect; but
there must always be a sufficient revelation of this intention, and it
has become an unbending rule of statutory construction that the
intention to repeal a former law will not be imputed to the

Legislature when it appears that the two statutes, or provisions,
with reference to which the question arises bear to each other the
relation of general to special.
There is no sufficient indication of an implied repeal of P.D. 1869. On the
contrary, as the private respondent points out, PAGCOR is mentioned as the
source of funding in two later enactments of Congress, to wit, R.A. 7309, creating
a Board of Claims under the Department of Justice for the benefit of victims of
unjust punishment or detention or of violent crimes, and R.A. 7648, providing for
measures for the solution of the power crisis. PAGCOR revenues are tapped by
these two statutes. This would show that the PAGCOR charter has not been
repealed by the Local Government Code but has in fact been improved as it were
to make the entity more responsive to the fiscal problems of the government.
It is a canon of legal hermeneutics that instead of pitting one statute against
another in an inevitably destructive confrontation, courts must exert every effort
to reconcile them, remembering that both laws deserve a becoming respect as
the handiwork of a coordinate branch of the government. On the assumption of a
conflict between P.D. 1869 and the Code, the proper action is not to uphold one
and annul the other but to give effect to both by harmonizing them if possible.
This is possible in the case before us. The proper resolution of the problem at
hand is to hold that under the Local Government Code, local government units
may (and indeed must) prevent and suppress all kinds of gambling within their
territories except only those allowed by statutes like P.D. 1869. The exception
reserved in such laws must be read into the Code, to make both the Code and
such laws equally effective and mutually complementary.
This approach would also affirm that there are indeed two kinds of gambling, to
wit, the illegal and those authorized by law. Legalized gambling is not a modern
concept; it is probably as old as illegal gambling, if not indeed more so. The
petitioners' suggestion that the Code authorizes them to prohibit all kinds of
gambling would erase the distinction between these two forms of gambling
without a clear indication that this is the will of the legislature. Plausibly,
following this theory, the City of Manila could, by mere ordinance, prohibit the
Philippine Charity Sweepstakes Office from conducting a lottery as authorized by

Page 48
R.A. 1169 and B.P. 42 or stop the races at the San Lazaro Hippodrome as
authorized by R.A. 309 and R.A. 983.
In light of all the above considerations, we see no way of arriving at the
conclusion urged on us by the petitioners that the ordinances in question are
valid. On the contrary, we find that the ordinances violate P.D. 1869, which has
the character and force of a statute, as well as the public policy expressed in the
decree allowing the playing of certain games of chance despite the prohibition of
gambling in general.
The rationale of the requirement that the ordinances should not contravene a
statute is obvious. Municipal governments are only agents of the national
government. Local councils exercise only delegated legislative powers conferred
on them by Congress as the national lawmaking body. The delegate cannot be
superior to the principal or exercise powers higher than those of the latter. It is a
heresy to suggest that the local government units can undo the acts of Congress,
from which they have derived their power in the first place, and negate by mere
ordinance the mandate of the statute.
Municipal corporations owe their origin to, and derive their powers
and rights wholly from the legislature. It breathes into them the
breath of life, without which they cannot exist. As it creates, so it
may destroy. As it may destroy, it may abridge and control. Unless
there is some constitutional limitation on the right, the legislature
might, by a single act, and if we can suppose it capable of so great
a folly and so great a wrong, sweep from existence all of the
municipal corporations in the State, and the corporation could not
prevent it. We know of no limitation on the right so far as to the
corporation themselves are concerned. They are, so to phrase it,
the mere tenants at will of the legislature. 11
This basic relationship between the national legislature and the local government
units has not been enfeebled by the new provisions in the Constitution
strengthening the policy of local autonomy. Without meaning to detract from that
policy, we here confirm that Congress retains control of the local government
units although in significantly reduced degree now than under our previous
Constitutions. The power to create still includes the power to destroy. The power
to grant still includes the power to withhold or recall. True, there are certain
notable innovations in the Constitution, like the direct conferment on the local
government units of the power to tax, 12which cannot now be withdrawn by mere
statute. By and large, however, the national legislature is still the principal of the
local government units, which cannot defy its will or modify or violate it.
The Court understands and admires the concern of the petitioners for the welfare
of their constituents and their apprehensions that the welfare of Cagayan de Oro
City will be endangered by the opening of the casino. We share the view that "the
hope of large or easy gain, obtained without special effort, turns the head of the
workman" 13 and that "habitual gambling is a cause of laziness and
ruin." 14 In People v. Gorostiza, 15 we declared: "The social scourge of gambling
must be stamped out. The laws against gambling must be enforced to the limit."
George Washington called gambling "the child of avarice, the brother of iniquity
and the father of mischief." Nevertheless, we must recognize the power of the
legislature to decide, in its own wisdom, to legalize certain forms of gambling, as
was done in P.D. 1869 and impliedly affirmed in the Local Government Code. That
decision can be revoked by this Court only if it contravenes the Constitution as
the touchstone of all official acts. We do not find such contravention here.
We hold that the power of PAGCOR to centralize and regulate all games of
chance, including casinos on land and sea within the territorial jurisdiction of the
Philippines, remains unimpaired. P.D. 1869 has not been modified by the Local
Government Code, which empowers the local government units to prevent or
suppress only those forms of gambling prohibited by law.
Casino gambling is authorized by P.D. 1869. This decree has the status of a
statute that cannot be amended or nullified by a mere ordinance. Hence, it was
not competent for the Sangguniang Panlungsod of Cagayan de Oro City to enact
Ordinance No. 3353 prohibiting the use of buildings for the operation of a casino
and Ordinance No. 3375-93 prohibiting the operation of casinos. For all their
praiseworthy motives, these ordinances are contrary to P.D. 1869 and the public
policy announced therein and are therefore ultra vires and void.

Page 49
WHEREFORE, the petition is DENIED and the challenged decision of the

respondent Court of Appeals is AFFIRMED, with costs against the petitioners. It is
so ordered.
Narvasa, C.J., Feliciano, Bidin, Regalado, Romero, Bellosillo, Melo,
Quiason, Puno, Vitug, Kapunan and Mendoza, JJ., concur.
Separate Opinions

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

Cagayan de Oro City by respondent PAGCOR, I wish to reiterate my view that
gambling in any form runs counter to the government's own efforts to reestablish and resurrect the Filipino moral character which is generally perceived
to be in a state of continuing erosion.
It is in the light of this alarming perspective that I call upon government to
carefully weigh the advantages and disadvantages of setting up more gambling
facilities in the country.
That the PAGCOR contributes greatly to the coffers of the government is not
enough reason for setting up more gambling casinos because, undoubtedly, this
will not help improve, but will cause a further deterioration in the Filipino moral
character.
It is worth remembering in this regard that, 1) what is legal is not always moral
and 2) the ends do not always justify the means.
As in Basco, I can easily visualize prostitution at par with gambling. And yet,
legalization of the former will not render it any less reprehensible even if
substantial revenue for the government can be realized from it. The same is true
of gambling.
In the present case, it is my considered view that the national government
(through PAGCOR) should re-examine and re-evaluate its decision of imposing the
gambling casino on the residents of Cagayan de Oro City; for it is abundantly
clear that public opinion in the city is very much against it, and again the
question must be seriously deliberated: will the prospects of revenue to be
realized from the casino outweigh the further destruction of the Filipino sense of
values?
I.
It must at once be noted that private respondent Pryce Properties Corporation
(PRYCE) directly filed with the Court of Appeals its so-called petition
for prohibition, thereby invoking the said court's original jurisdiction to issue writs
of prohibition under Section 9(1) of B.P. Blg. 129. As I see it, however, the
principal cause of action therein is one for declaratory relief: to declare null and
unconstitutional for, inter alia, having been enacted without or in excess of
jurisdiction, for impairing the obligation of contracts, and for being inconsistent
with public policy the challenged ordinances enacted by the Sangguniang
Panglungsod of the City of Cagayan de Oro. The intervention therein of public
respondent Philippine Amusement and Gaming Corporation (PAGCOR) further
underscores the "declaratory relief" nature of the action. PAGCOR assails the
ordinances for being contrary to the non-impairment and equal protection
clauses of the Constitution, violative of the Local Government Code, and against
the State's national policy declared in P.D. No. 1869. Accordingly, the Court of
Appeals does not have jurisdiction over the nature of the action. Even
assuming arguendo that the case is one for prohibition, then, under this Court's
established policy relative to the hierarchy of courts, the petition should have
been filed with the Regional Trial Court of Cagayan de Oro City. I find no special or
compelling reason why it was not filed with the said court. I do not wish to
entertain the thought that PRYCE doubted a favorable verdict therefrom, in which
case the filing of the petition with the Court of Appeals may have been impelled
by tactical considerations. A dismissal of the petition by the Court of Appeals
would have been in order pursuant to our decisions in People vs. Cuaresma (172
SCRA 415, [1989]) and Defensor-Santiago vs. Vasquez (217 SCRA 633 [1993]).
In Cuaresma, this Court stated:
A last word. This court's original jurisdiction to issue writs
of certiorari (as well as prohibition,mandamus, quo
warranto, habeas corpus and injunction) is not exclusive. It is
shared by this Court with Regional Trial Courts (formerly Courts of
First Instance), which may issue the writ, enforceable in any part of
DAVIDE, JR., J., concurring:

While I concur in part with the majority, I wish, however, to express my views on
certain aspects of this case.
Page 50
their respective regions. It is also shared by this court, and by the

Regional Trial Court, with the Court of Appeals (formerly,
Intermediate Appellate Court), although prior to the effectivity
ofBatas Pambansa Bilang 129 on August 14, 1981, the latter's
competence to issue the extraordinary writs was restricted by
those "in aid of its appellate jurisdiction." This concurrence of
jurisdiction is not, however, to be taken as according to parties
seeking any of the writs an absolute, unrestrained freedom of
choice of the court to which application therefor will be directed.
There is after all a hierarchy of courts. That hierarchy is
determinative of the revenue of appeals, and should also serve as
a general determinant of the appropriate forum for petitions for the
extraordinary writs. A becoming regard for that judicial hierarchy
most certainly indicates that petitions for the issuance of
extraordinary writs against first level ("inferior") courts should be
filed with the Regional Trial Court, and those against the latter,
with the Court of Appeals. A direct invocation of the Supreme
Court's original jurisdiction to issue these writs should be allowed
only when there are special and important reasons therefor, clearly
and specifically set out in the petition. This is established policy. It
is a policy that is necessary to prevent inordinate demands upon
the Court's time and attention which are better devoted to those
matters within its exclusive jurisdiction, and to prevent further
over-crowding of the Court's docket. Indeed, the removal of the
restriction of the jurisdiction of the Court of Appeals in this
regard, supra resulting from the deletion of the qualifying
phrase, "in aid of its appellate jurisdiction" was evidently
intended precisely to relieve this Court pro tanto of the burden of
dealing with applications for extraordinary writs which, but for the
expansion of the Appellate Court's corresponding jurisdiction,
would have had to be filed with it. (citations omitted)
And in Vasquez, this Court said:
One final observation. We discern in the proceedings in this case a
propensity on the part of petitioner, and, for that matter, the same

Page 51
may be said of a number of litigants who initiate recourses before

us, to disregard the hierarchy of courts in our judicial system by
seeking relief directly from this Court despite the fact that the
same is available in the lower courts in the exercise of their
original or concurrent jurisdiction, or is even mandated by law to
be sought therein. This practice must be stopped, not only because
of the imposition upon the previous time of this Court but also
because of the inevitable and resultant delay, intended or
otherwise, in the adjudication of the case which often has to be
remanded or referred to the lower court as the proper forum under
the rules of procedure, or as better equipped to resolve the issues
since this Court is not a trier of facts. We, therefore, reiterate the
judicial policy that this Court will not entertain direct resort to it
unless the redress desired cannot be obtained in the appropriate
courts or where exceptional and compelling circumstances justify
availment of a remedy within and calling for the exercise of our
primary jurisdiction.
II.
The challenged ordinances are (a) Ordinance No. 3353 entitled, "An Ordinance
Prohibiting the Issuance of Business Permit and Canceling Existing Business
Permit To Any Establishment for the Using and Allowing to be Used Its Premises
or Portion Thereof for the Operation of Casino," and (b) Ordinance No. 3375-93
entitled, "An Ordinance Prohibiting the Operation of Casino and Providing Penalty
for Violation Therefor." They were enacted to implement Resolution No. 2295
entitled, "Resolution Declaring As a Matter of Policy to Prohibit and/or Not to
Allow the Establishment of the Gambling Casino in the City of Cagayan de Oro,"
which was promulgated on 19 November 1990 nearly two years before PRYCE
and PAGCOR entered into a contract of lease under which the latter leased a
portion of the former's Pryce Plaza Hotel for the operation of a gambling casino
which resolution was vigorously reiterated in Resolution No. 2673 of 19 October
1992.
The challenged ordinances were enacted pursuant to the Sangguniang
Panglungsod's express powers conferred by Section 458, paragraph (a),
subparagraphs (1)-(v), (3)-(ii), and (4)-(i), (iv), and (vii), Local Government Code,
and pursuant to its implied power under Section 16 thereof (the general welfare
clause) which reads:
The issue that necessarily arises is whether in granting local governments (such
as the City of Cagayan de Oro) the above powers and functions, the Local
Government Code has, pro tanto, repealed P.D. No. 1869 insofar as PAGCOR's
general authority to establish and maintain gambling casinos anywhere in the
Philippines is concerned.
I join the majority in holding that the ordinances cannot repeal P.D. No. 1869.
III.
The nullification by the Court of Appeals of the challenged ordinances
as unconstitutional primarily because it is in contravention to P.D. No. 1869 is
unwarranted. A contravention of a law is not necessarily a contravention of the
constitution. In any case, the ordinances can still stand even if they be conceded
as offending P.D. No. 1869. They can be reconciled, which is not impossible to do.
So reconciled, the ordinances should be construed as not applying to PAGCOR.

Page 52
IV.
From the pleadings, it is obvious that the government and the people of Cagayan
de Oro City are, for obvious reasons, strongly against the opening of the
gambling casino in their city. Gambling, even if legalized, would be inimical to the
general welfare of the inhabitants of the City, or of any place for that matter. The
PAGCOR, as a government-owned corporation, must consider the valid concerns
of the people of the City of Cagayan de Oro and should not impose its will upon
them in an arbitrary, if not despotic, manner.
# Separate Opinions

I concur with the majority holding that the city ordinances in question cannot
modify much less repeal PAGCOR's general authority to establish and maintain
gambling casinos anywhere in the Philippines under Presidential Decree No.
1869.
In Basco v. Philippine Amusement and Gaming Corporation (PAGCOR), 197 SCRA
52, I stated in a separate opinion that:
. . . I agree with the decision insofar as it holds that the prohibition,
control, and regulation of the entire activity known as gambling
properly pertain to "state policy". It is, therefore, the political
departments of government, namely, the legislative and the
executive that should decide on what government should do in the
entire area of gambling, and assume full responsibility to the
people for such policy. (emphasis supplied)
However, despite the legality of the opening and operation of a casino in
Cagayan de Oro City by respondent PAGCOR, I wish to reiterate my view that
gambling in any form runs counter to the government's own efforts to reestablish and resurrect the Filipino moral character which is generally perceived
to be in a state of continuing erosion.
It is in the light of this alarming perspective that I call upon government to
carefully weigh the advantages and disadvantages of setting up more gambling
facilities in the country.
That the PAGCOR contributes greatly to the coffers of the government is not
enough reason for setting up more gambling casinos because, undoubtedly, this
will not help improve, but will cause a further deterioration in the Filipino moral
character.
It is worth remembering in this regard that, 1) what is legal is not always moral
and 2) the ends do not always justify the means.
As in Basco, I can easily visualize prostitution at par with gambling. And yet,
legalization of the former will not render it any less reprehensible even if
substantial revenue for the government can be realized from it. The same is true
of gambling.
In the present case, it is my considered view that the national government
(through PAGCOR) should re-examine and re-evaluate its decision of imposing the
gambling casino on the residents of Cagayan de Oro City; for it is abundantly
clear that public opinion in the city is very much against it, and again the
question must be seriously deliberated: will the prospects of revenue to be
realized from the casino outweigh the further destruction of the Filipino sense of
values?
DAVIDE, JR., J., concurring:
While I concur in part with the majority, I wish, however, to express my views on
certain aspects of this case.
I.

Page 53
It must at once be noted that private respondent Pryce Properties Corporation

(PRYCE) directly filed with the Court of Appeals its so-called petition
for prohibition, thereby invoking the said court's original jurisdiction to issue writs
of prohibition under Section 9(1) of B.P. Blg. 129. As I see it, however, the
principal cause of action therein is one for declaratory relief: to declare null and
unconstitutional for, inter alia, having been enacted without or in excess of
jurisdiction, for impairing the obligation of contracts, and for being inconsistent
with public policy the challenged ordinances enacted by the Sangguniang
Panglungsod of the City of Cagayan de Oro. The intervention therein of public
respondent Philippine Amusement and Gaming Corporation (PAGCOR) further
underscores the "declaratory relief" nature of the action. PAGCOR assails the
ordinances for being contrary to the non-impairment and equal protection
clauses of the Constitution, violative of the Local Government Code, and against
the State's national policy declared in P.D. No. 1869. Accordingly, the Court of
Appeals does not have jurisdiction over the nature of the action. Even
assuming arguendo that the case is one for prohibition, then, under this Court's
established policy relative to the hierarchy of courts, the petition should have
been filed with the Regional Trial Court of Cagayan de Oro City. I find no special or
compelling reason why it was not filed with the said court. I do not wish to
entertain the thought that PRYCE doubted a favorable verdict therefrom, in which
case the filing of the petition with the Court of Appeals may have been impelled
by tactical considerations. A dismissal of the petition by the Court of Appeals
would have been in order pursuant to our decisions in People vs. Cuaresma (172
SCRA 415, [1989]) and Defensor-Santiago vs. Vasquez (217 SCRA 633 [1993]).
In Cuaresma, this Court stated:
A last word. This court's original jurisdiction to issue writs
of certiorari (as well as prohibition,mandamus, quo
warranto, habeas corpus and injunction) is not exclusive. It is
shared by this Court with Regional Trial Courts (formerly Courts of
First Instance), which may issue the writ, enforceable in any part of
their respective regions. It is also shared by this court, and by the
Regional Trial Court, with the Court of Appeals (formerly,
Intermediate Appellate Court), although prior to the effectivity
ofBatas Pambansa Bilang 129 on August 14, 1981, the latter's
competence to issue the extraordinary writs was restricted by
those "in aid of its appellate jurisdiction." This concurrence of

jurisdiction is not, however, to be taken as according to parties
seeking any of the writs an absolute, unrestrained freedom of
choice of the court to which application therefor will be directed.
There is after all a hierarchy of courts. That hierarchy is
determinative of the revenue of appeals, and should also serve as
a general determinant of the appropriate forum for petitions for the
extraordinary writs. A becoming regard for that judicial hierarchy
most certainly indicates that petitions for the issuance of
extraordinary writs against first level ("inferior") courts should be
filed with the Regional Trial Court, and those against the latter,
with the Court of Appeals. A direct invocation of the Supreme
Court's original jurisdiction to issue these writs should be allowed
only when there are special and important reasons therefor, clearly
and specifically set out in the petition. This is established policy. It
is a policy that is necessary to prevent inordinate demands upon
the Court's time and attention which are better devoted to those
matters within its exclusive jurisdiction, and to prevent further
over-crowding of the Court's docket. Indeed, the removal of the
restriction of the jurisdiction of the Court of Appeals in this
regard, supra resulting from the deletion of the qualifying
phrase, "in aid of its appellate jurisdiction" was evidently
intended precisely to relieve this Court pro tanto of the burden of
dealing with applications for extraordinary writs which, but for the
expansion of the Appellate Court's corresponding jurisdiction,
would have had to be filed with it. (citations omitted)
And in Vasquez, this Court said:
One final observation. We discern in the proceedings in this case a
propensity on the part of petitioner, and, for that matter, the same
may be said of a number of litigants who initiate recourses before
us, to disregard the hierarchy of courts in our judicial system by
seeking relief directly from this Court despite the fact that the
same is available in the lower courts in the exercise of their
original or concurrent jurisdiction, or is even mandated by law to

Page 54
be sought therein. This practice must be stopped, not only because

of the imposition upon the previous time of this Court but also
because of the inevitable and resultant delay, intended or
otherwise, in the adjudication of the case which often has to be
remanded or referred to the lower court as the proper forum under
the rules of procedure, or as better equipped to resolve the issues
since this Court is not a trier of facts. We, therefore, reiterate the
judicial policy that this Court will not entertain direct resort to it
unless the redress desired cannot be obtained in the appropriate
courts or where exceptional and compelling circumstances justify
availment of a remedy within and calling for the exercise of our
primary jurisdiction.
II.
The challenged ordinances are (a) Ordinance No. 3353 entitled, "An Ordinance
Prohibiting the Issuance of Business Permit and Canceling Existing Business
Permit To Any Establishment for the Using and Allowing to be Used Its Premises
or Portion Thereof for the Operation of Casino," and (b) Ordinance No. 3375-93
entitled, "An Ordinance Prohibiting the Operation of Casino and Providing Penalty
for Violation Therefor." They were enacted to implement Resolution No. 2295
entitled, "Resolution Declaring As a Matter of Policy to Prohibit and/or Not to
Allow the Establishment of the Gambling Casino in the City of Cagayan de Oro,"
which was promulgated on 19 November 1990 nearly two years before PRYCE
and PAGCOR entered into a contract of lease under which the latter leased a
portion of the former's Pryce Plaza Hotel for the operation of a gambling casino
which resolution was vigorously reiterated in Resolution No. 2673 of 19 October
1992.
The challenged ordinances were enacted pursuant to the Sangguniang
Panglungsod's express powers conferred by Section 458, paragraph (a),
subparagraphs (1)-(v), (3)-(ii), and (4)-(i), (iv), and (vii), Local Government Code,
and pursuant to its implied power under Section 16 thereof (the general welfare
clause) which reads:

The issue that necessarily arises is whether in granting local governments (such
as the City of Cagayan de Oro) the above powers and functions, the Local
Government Code has, pro tanto, repealed P.D. No. 1869 insofar as PAGCOR's
general authority to establish and maintain gambling casinos anywhere in the
Philippines is concerned.
I join the majority in holding that the ordinances cannot repeal P.D. No. 1869.
III.
The nullification by the Court of Appeals of the challenged ordinances
as unconstitutional primarily because it is in contravention to P.D. No. 1869 is
unwarranted. A contravention of a law is not necessarily a contravention of the
constitution. In any case, the ordinances can still stand even if they be conceded
as offending P.D. No. 1869. They can be reconciled, which is not impossible to do.
So reconciled, the ordinances should be construed as not applying to PAGCOR.
IV.
From the pleadings, it is obvious that the government and the people of Cagayan
de Oro City are, for obvious reasons, strongly against the opening of the

Page 55
gambling casino in their city. Gambling, even if legalized, would be inimical to the
general welfare of the inhabitants of the City, or of any place for that matter. The
PAGCOR, as a government-owned corporation, must consider the valid concerns
of the people of the City of Cagayan de Oro and should not impose its will upon
them in an arbitrary, if not despotic, manner.
G.R. No. 135962
March 27, 2000
METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner,

vs.
BEL-AIR VILLAGE ASSOCIATION, INC., respondent.
PUNO, J.:
Not infrequently, the government is tempted to take legal shortcuts solve urgent
problems of the people. But even when government is armed with the best of
intention, we cannot allow it to run roughshod over the rule of law. Again, we let
the hammer fall and fall hard on the illegal attempt of the MMDA to open for
public use a private road in a private subdivision. While we hold that the general
welfare should be promoted, we stress that it should not be achieved at the
expense of the rule of law.
Petitioner MMDA is a government agency tasked with the delivery of basic
services in Metro Manila. Respondent Bel-Air Village Association, Inc. (BAVA) is a
non-stock, non-profit corporation whose members are homeowners in Bel-Air
Village, a private subdivision in Makati City. Respondent BAVA is the registered
owner of Neptune Street, a road inside Bel-Air Village.
On December 30, 1995, respondent received from petitioner, through its
Chairman, a notice dated December 22, 1995 requesting respondent to open
Neptune Street to public vehicular traffic starting January 2, 1996. The notice
reads:
SUBJECT: NOTICE of the Opening of Neptune Street to Traffic.
Dear President Lindo,

Please be informed that pursuant to the mandate of the MMDA law or
Republic Act No. 7924 which requires the Authority to rationalize the use
of roads and/or thoroughfares for the safe and convenient movement of
persons, Neptune Street shall be opened to vehicular traffic effective
January 2, 1996.
In view whereof, the undersigned requests you to voluntarily open the
points of entry and exit on said street.
Thank you for your cooperation and whatever assistance that may be
extended by your association to the MMDA personnel who will be directing
traffic in the area.
Finally, we are furnishing you with a copy of the handwritten instruction of
the President on the matter.
On January 23, 1996, after due hearing, the trial court denied issuance of a
preliminary injunction. 2 Respondent questioned the denial before the Court of
Appeals in CA-G.R. SP No. 39549. The appellate court conducted an ocular
inspection of Neptune Street 3 and on February 13, 1996, it issued a writ of
preliminary injunction enjoining the implementation of the MMDA's proposed
action. 4
On January 28, 1997, the appellate court rendered a Decision on the merits of the
case finding that the MMDA has no authority to order the opening of Neptune
Street, a private subdivision road and cause the demolition of its perimeter walls.
It held that the authority is lodged in the City Council of Makati by ordinance. The
decision disposed of as follows:
WHEREFORE, the Petition is GRANTED; the challenged Order dated
January 23, 1995, in Civil Case No. 96-001, is SET ASIDE and the Writ of
Preliminary Injunction issued on February 13, 1996 is hereby made
permanent.
For want of sustainable substantiation, the Motion to Cite Roberto L. del
Rosario in contempt is denied. 5
Very truly yours,

PROSPERO I. ORETA
Chairman
SO ORDERED.
On the same day, respondent was apprised that the perimeter wall
separating the subdivision from the adjacent Kalayaan Avenue would be
demolished.
On January 2, 1996, respondent instituted against petitioner before the Regional
Trial Court, Branch 136, Makati City, Civil Case No. 96-001 for injunction.
Respondent prayed for the issuance of a temporary restraining order and
preliminary injunction enjoining the opening of Neptune Street and prohibiting
the demolition of the perimeter wall. The trial court issued a temporary
restraining order the following day.

Page 56
The Motion for Reconsideration of the decision was denied on September 28,
1998. Hence, this recourse.
Petitioner MMDA raises the following questions:
I
HAS THE METROPOLITAN MANILA DEVELOPMENT AUTHORITY (MMDA) THE
MANDATE TO OPEN NEPTUNE STREET TO PUBLIC TRAFFIC PURSUANT TO
ITS REGULATORY AND POLICE POWERS?
II
IS THE PASSAGE OF AN ORDINANCE A CONDITION PRECEDENT BEFORE
THE MMDA MAY ORDER THE OPENING OF SUBDIVISION ROADS TO PUBLIC
TRAFFIC?
III
IS RESPONDENT BEL-AIR VILLAGE ASSOCIATION, INC. ESTOPPED FROM
DENYING OR ASSAILING THE AUTHORITY OF THE MMDA TO OPEN THE
SUBJECT STREET?
IV
WAS RESPONDENT DEPRIVED OF DUE PROCESS DESPITE THE SEVERAL
MEETINGS HELD BETWEEN MMDA AND THE AFFECTED EEL-AIR RESIDENTS
AND BAVA OFFICERS?
V
HAS RESPONDENT COME TO COURT WITH UNCLEAN HANDS?7
Neptune Street is owned by respondent BAVA. It is a private road inside Bel-Air
Village, a private residential subdivision in the heart of the financial and
commercial district of Makati City. It runs parallel to Kalayaan Avenue, a national
road open to the general public. Dividing the two (2) streets is a concrete
perimeter wall approximately fifteen (15) feet high. The western end of Neptune
Street intersects Nicanor Garcia, formerly Reposo Street, a subdivision road open
to public vehicular traffic, while its eastern end intersects Makati Avenue, a
national road. Both ends of Neptune Street are guarded by iron gates.
Petitioner MMDA claims that it has the authority to open Neptune Street to public
traffic because it is an agent of the state endowed with police power in the
delivery of basic services in Metro Manila. One of these basic services is traffic
management which involves the regulation of the use of thoroughfares to insure
the safety, convenience and welfare of the general public. It is alleged that the

Page 57
police power of MMDA was affirmed by this Court in the consolidated cases
of Sangalang v. Intermediate Appellate Court. 8 From the premise that it has
police power, it is now urged that there is no need for the City of Makati to enact
an ordinance opening Neptune street to the public. 9
Police power is an inherent attribute of sovereignty. It has been defined as the
power vested by the Constitution in the legislature to make, ordain, and establish
all manner of wholesome and reasonable laws, statutes and ordinances, either
with penalties or without, not repugnant to the Constitution, as they shall judge
to be for the good and welfare of the commonwealth, and for the subjects of the
same. 10 The power is plenary and its scope is vast and pervasive, reaching and
justifying measures for public health, public safety, public morals, and the
general welfare. 11
It bears stressing that police power is lodged primarily in the National
Legislature. 12 It cannot be exercised by any group or body of individuals not
possessing legislative power. 13 The National Legislature, however, may
delegate this power to the President and administrative boards as well as the
lawmaking bodies of municipal corporations or local government units. 14 Once
delegated, the agents can exercise only such legislative powers as are conferred
on them by the national lawmaking body. 15
A local government is a "political subdivision of a nation or state which is
constituted by law and has substantial control of local affairs." 16The Local
Government Code of 1991 defines a local government unit as a "body politic and
corporate." 17 one endowed with powers as a political subdivision of the
National Government and as a corporate entity representing the inhabitants of its
territory. 18 Local government units are the provinces, cities, municipalities and
barangays. 19 They are also the territorial and political subdivisions of the state. 20
Our Congress delegated police power to the local government units in the Local
Government Code of 1991. This delegation is found in Section 16 of the same
Code, known as the general welfare clause, viz:
Sec. 16. General Welfare. Every local government unit shall exercise
the powers expressly granted, those necessarily implied therefrom, as
well as powers necessary, appropriate, or incidental for its efficient and

effective governance, and those which are essential to the promotion of
the general welfare. Within their respective territorial jurisdictions, local
government units shall ensure and support, among other things, the
preservation and enrichment of culture, promote health and safety,
enhance the right of the people to a balanced ecology, encourage and
support the development of appropriate and self-reliant scientific and
technological capabilities, improve public morals, enhance economic
prosperity and social justice, promote full employment among their
residents, maintain peace and order, and preserve the comfort and
convenience of their inhabitants. 21
Local government units exercise police power through their respective legislative
bodies. The legislative body of the provincial government is the sangguniang
panlalawigan, that of the city government is the sangguniang panlungsod, that of
the municipal government is the sangguniang bayan, and that of the barangay is
thesangguniang barangay. The Local Government Code of 1991 empowers
the sangguniang panlalawigan,sangguniang panlungsod and sangguniang
bayan to "enact ordinances, approve resolutions and appropriate funds for the
general welfare of the [province, city or municipality, as the case may be], and its
inhabitants pursuant to Section 16 of the Code and in the proper exercise of the
corporate powers of the [province, city municipality] provided under the Code . . .
" 22 The same Code gives the sangguniang barangay the power to "enact
ordinances as may be necessary to discharge the responsibilities conferred upon
it by law or ordinance and to promote the general welfare of the inhabitants
thereon." 23
Metropolitan or Metro Manila is a body composed of several local government
units i.e., twelve (12) cities and five (5) municipalities, namely, the cities of
Caloocan, Manila, Mandaluyong, Makati, Pasay, Pasig, Quezon, Muntinlupa, Las
Pinas, Marikina, Paranaque and Valenzuela, and the municipalities of Malabon,
Navotas, Pateros, San Juan and Taguig. With the passage of Republic Act (R. A.)
No. 7924 24 in 1995, Metropolitan Manila was declared as a "special development
and administrative region" and the Administration of "metro-wide" basic services
affecting the region placed under "a development authority" referred to as the
MMDA. 25

Page 58
"Metro-wide services" are those "services which have metro-wide impact and
transcend local political boundaries or entail huge expenditures such that it
would not be viable for said services to be provided by the individual local
government units comprising Metro Manila." 26 There are seven (7) basic metrowide services and the scope of these services cover the following: (1)
development planning; (2) transport and traffic management; (3) solid waste
disposal and management; (4) flood control and sewerage management; (5)
urban renewal, zoning and land use planning, and shelter services; (6) health and
sanitation, urban protection and pollution control; and (7) public safety. The basic
service of transport and traffic management includes the following:
(b) Transport and traffic management which include the
formulation, coordination, and monitoring of policies, standards, programs
and projects to rationalize the existing transport operations, infrastructure
requirements, the use of thoroughfares, and promotion of safe and
convenient movement of persons and goods; provision for the mass
transport system and the institution of a system to regulate road
users;administration and implementation of all traffic enforcement
operations, traffic engineering services and traffic education
programs, including the institution of a single ticketing system in
Metropolitan Manila;" 27
In the delivery of the seven (7) basic services, the MMDA has the following
powers and functions:
Sec. 5. Functions and powers of the Metro Manila Development Authority.
The MMDA shall:
(a) Formulate, coordinate and regulate the implementation of medium and
long-term plans and programs for the delivery of metro-wide services,
land use and physical development within Metropolitan Manila, consistent
with national development objectives and priorities;
(b) Prepare, coordinate and regulate the implementation of medium-term
investment programs for metro-wide services which shall indicate sources
and uses of funds for priority programs and projects, and which shall
include the packaging of projects and presentation to funding institutions;
(c) Undertake and manage on its own metro-wide programs and projects
for the delivery of specific services under its jurisdiction, subject to the
approval of the Council. For this purpose, MMDA can create appropriate
project management offices;
(d) Coordinate and monitor the implementation of such plans, programs
and projects in Metro Manila; identify bottlenecks and adopt solutions to
problems of implementation;
(e) The MMDA shall set the policies concerning traffic in Metro Manila, and
shall coordinate and regulate the implementation of all programs and
projects concerning traffic management, specifically pertaining to
enforcement, engineering and education. Upon request, it shall be
extended assistance and cooperation,including but not limited
to, assignment of personnel, by all other government agencies and offices
concerned;
(f) Install and administer a single ticketing system, fix, impose and collect
fines and penalties for all kinds of violations of traffic rules and
regulations, whether moving or non-moving in nature, and confiscate and
suspend or revoke drivers' licenses in the enforcement of such traffic laws
and regulations, the provisions of RA 4136 and PD 1605 to the contrary
notwithstanding. For this purpose, the Authority shall impose all traffic
laws and regulations in Metro Manila, through its traffic operation
center, and may deputize members of the PNP, traffic enforcers of local
government units, duly licensed security guards, or members of nongovernmental organizations to whom may be delegated certain
authority, subject to such conditions and requirements as the Authority
may impose; and
(g) Perform other related functions required to achieve the objectives of

the MMDA, including the undertaking of delivery of basic services to the
local government units, when deemed necessary subject to prior
coordination with and consent of the local government unit concerned.
The implementation of the MMDA's plans, programs and projects is undertaken
by the local government units, national government agencies, accredited
people's organizations, non-governmental organizations, and the private sector
as well as by the MMDA itself. For this purpose, the MMDA has the power to enter
into contracts, memoranda of agreement and other arrangements with these
bodies for the delivery of the required services Metro Manila. 28
The governing board of the MMDA is the Metro Manila Council. The Council is
composed of the mayors of the component 12 cities and 5 municipalities, the
president of the Metro Manila Vice-Mayors' League and the president of the Metro
Manila Councilors' League. 29 The Council is headed by Chairman who is
appointed by the President and vested with the rank of cabinet member. As the
policy-making body of the MMDA, the Metro Manila Council approves metro-wide
plans, programs and projects, and issues the necessary rules and regulations for
the implementation of said plans; it approves the annual budget of the MMDA
and promulgate the rules and regulations for the delivery of basic services,
collection of service and regulatory fees, fines and penalties. These functions are
particularly enumerated as follows:
Sec. 6. Functions of the Metro Manila Council.
(a) The Council shall be the policy-making body of the MMDA;
(b) It shall approve metro-wide plans, programs and projects and issue
rules and regulations deemed necessary by the MMDA to carry out the
purposes of this Act;
(c) It may increase the rate of allowances and per diems of the members
of the Council to be effective during the term of the succeeding Council. It
shall fix the compensation of the officers and personnel of the MMDA, and

Page 59
approve the annual budget thereof for submission to the Department of

Budget and Management (DBM);
(d) It shall promulgate rules and regulations and set policies and
standards for metro-wide application governing the delivery of basic
services, prescribe and collect service and regulatory fees, and impose
and collect fines and penalties.
Clearly, the scope of the MMDA's function is limited to the delivery of the seven
(7) basic services. One of these is transport and traffic management which
includes the formulation and monitoring of policies, standards and projects to
rationalize the existing transport operations, infrastructure requirements, the use
of thoroughfares and promotion of the safe movement of persons and goods. It
also covers the mass transport system and the institution of a system of road
regulation, the administration of all traffic enforcement operations, traffic
engineering services and traffic education programs, including the institution of a
single ticketing system in Metro Manila for traffic violations. Under the service,
the MMDA is expressly authorized "to set the policies concerning traffic" and
"coordinate and regulate the implementation of all traffic management
programs." In addition, the MMDA may "install and administer a single ticketing
system," fix, impose and collect fines and penalties for all traffic violations.
It will be noted that the powers of the MMDA are limited to the following acts:
formulation, coordination, regulation, implementation, preparation, management,
monitoring, setting of policies, installation of a system and administration. There
is no syllable in R.A. No. 7924 that grants the MMDA police power, let alone
legislative power. Even the Metro Manila Council has not been delegated any
legislative power. Unlike the legislative bodies of the local government units,
there is no provision in R.A. No. 7924 that empowers the MMDA or its Council to
"enact ordinances, approve resolutions appropriate funds for the general welfare"
of the inhabitants of Metro Manila. The MMDA is, as termed in the charter itself,
"development authority." 30 It is an agency created for the purpose of laying down
policies and coordinating with the various national government agencies,
people's organizations, non-governmental organizations and the private sector
for the efficient and expeditious delivery of basic services in the vast

Page 60
metropolitan area. All its functions are administrative in nature and these are
actually summed up in the charter itself, viz:
Sec. 2. Creation of the Metropolitan Manila Development Authority.
....
The MMDA shall perform planning, monitoring and coordinative functions,
and in the process exerciseregulatory and supervisory authority over the
delivery of metro-wide services within Metro Manila, without diminution of
the autonomy of the local government units concerning purely local
matters. 31
Petitioner cannot seek refuge in the cases of Sangalang v. Intermediate Appellate
Court 32 where we upheld a zoning ordinance issued by the Metro Manila
Commission (MMC), the predecessor of the MMDA, as an exercise of police power.
The first Sangalang decision was on the merits of the petition, 33 while the second
decision denied reconsideration of the first case and in addition discussed the
case of Yabut v. Court of Appeals. 34
Sangalang v. IAC involved five (5) consolidated petitions filed by respondent
BAVA and three residents of Bel-Air Village against other residents of the Village
and the Ayala Corporation, formerly the Makati Development Corporation, as the
developer of the subdivision. The petitioners sought to enforce certain restrictive
easements in the deeds of sale over their respective lots in the subdivision.
These were the prohibition on the setting up of commercial and advertising signs
on the lots, and the condition that the lots be used only for residential purposes.
Petitioners alleged that respondents, who were residents along Jupiter Street of
the subdivision, converted their residences into commercial establishments in
violation of the "deed restrictions," and that respondent Ayala Corporation
ushered in the full commercialization" of Jupiter Street by tearing down the
perimeter wall that separated the commercial from the residential section of the
village. 35
The petitions were dismissed based on Ordinance No. 81 of the Municipal Council
of Makati and Ordinance No. 81-01 of the Metro Manila Commission (MMC).
Municipal Ordinance No. 81 classified Bel-Air Village as a Class A Residential
Zone, with its boundary in the south extending to the center line of Jupiter Street.
The Municipal Ordinance was adopted by the MMC under the Comprehensive
Zoning Ordinance for the National Capital Region and promulgated as MMC
Ordinance No. 81-01. Bel-Air Village was indicated therein as bounded by Jupiter
Street and the block adjacent thereto was classified as a High Intensity
Commercial Zone. 36
We ruled that since both Ordinances recognized Jupiter Street as the boundary
between Bel-Air Village and the commercial district, Jupiter Street was not for the
exclusive benefit of Bel-Air residents. We also held that the perimeter wall on said
street was constructed not to separate the residential from the commercial
blocks but simply for security reasons, hence, in tearing down said wall, Ayala
Corporation did not violate the "deed restrictions" in the deeds of sale.
We upheld the ordinances, specifically MMC Ordinance No. 81-01, as a legitimate
exercise of police power. 37The power of the MMC and the Makati Municipal
Council to enact zoning ordinances for the general welfare prevailed over the
"deed restrictions".
In the second Sangalang/Yabut decision, we held that the opening of Jupiter
Street was warranted by the demands of the common good in terms of "traffic
decongestion and public convenience." Jupiter was opened by the Municipal
Mayor to alleviate traffic congestion along the public streets adjacent to the
Village. 38 The same reason was given for the opening to public vehicular traffic of
Orbit Street, a road inside the same village. The destruction of the gate in Orbit
Street was also made under the police power of the municipal government. The
gate, like the perimeter wall along Jupiter, was a public nuisance because it
hindered and impaired the use of property, hence, its summary abatement by the
mayor was proper and legal. 39
Contrary to petitioner's claim, the two Sangalang cases do not apply to the case
at bar. Firstly, both involved zoning ordinances passed by the municipal council
of Makati and the MMC. In the instant case, the basis for the proposed opening of
Neptune Street is contained in the notice of December 22, 1995 sent by
petitioner to respondent BAVA, through its president. The notice does not cite any
ordinance or law, either by the Sangguniang Panlungsod of Makati City or by the

Page 61
MMDA, as the legal basis for the proposed opening of Neptune Street. Petitioner
MMDA simply relied on its authority under its charter "to rationalize the use of
roads and/or thoroughfares for the safe and convenient movement of persons."
Rationalizing the use of roads and thoroughfares is one of the acts that fall within
the scope of transport and traffic management. By no stretch of the imagination,
however, can this be interpreted as an express or implied grant of ordinancemaking power, much less police power.
Secondly, the MMDA is not the same entity as the MMC in Sangalang. Although
the MMC is the forerunner of the present MMDA, an examination of Presidential
Decree (P. D.) No. 824, the charter of the MMC, shows that the latter possessed
greater powers which were not bestowed on the present MMDA.
Metropolitan Manila was first created in 1975 by Presidential Decree (P.D.) No.
824. It comprised the Greater Manila Area composed of the contiguous four (4)
cities of Manila, Quezon, Pasay and Caloocan, and the thirteen (13) municipalities
of Makati, Mandaluyong, San Juan, Las Pinas, Malabon, Navotas, Pasig, Pateros,
Paranaque, Marikina, Muntinlupa and Taguig in the province of Rizal, and
Valenzuela in the province of Bulacan. 40Metropolitan Manila was created as a
response to the finding that the rapid growth of population and the increase of
social and economic requirements in these areas demand a call for simultaneous
and unified development; that the public services rendered by the respective
local governments could be administered more efficiently and economically if
integrated under a system of central planning; and this coordination, "especially
in the maintenance of peace and order and the eradication of social and
economic ills that fanned the flames of rebellion and discontent [were] part of
reform measures under Martial Law essential to the safety and security of the
State." 41
Metropolitan Manila was established as a "public corporation" with the following
powers:
Sec. 1. Creation of the Metropolitan Manila. There is hereby created
a public corporation, to be known as the Metropolitan Manila, vested with
powers and attributes of a corporation including the power to make
contracts, sue and be sued, acquire, purchase, expropriate, hold, transfer
and dispose of property and such other powers as are necessary to carry
out its purposes. The Corporation shall be administered by a Commission
created under this Decree. 42
The administration of Metropolitan Manila was placed under the Metro Manila
Commission (MMC) vested with the following powers:
Sec. 4. Powers and Functions of the Commission. The Commission shall have
the following powers and functions:
1. To act as a central government to establish and administer programs
and provide services common to the area;
2. To levy and collect taxes and special assessments, borrow and expend
money and issue bonds, revenue certificates, and other obligations of
indebtedness. Existing tax measures should, however, continue to be
operative until otherwise modified or repealed by the Commission;
3. To charge and collect fees for the use of public service facilities;
4. To appropriate money for the operation of the metropolitan government
and review appropriations for the city and municipal units within its
jurisdiction with authority to disapprove the same if found to be not in
accordance with the established policies of the Commission, without
prejudice to any contractual obligation of the local government units
involved existing at the time of approval of this Decree;
5. To review, amend, revise or repeal all ordinances, resolutions and acts
of cities and municipalities within Metropolitan Manila;
6. To enact or approve ordinances, resolutions and to fix penalties for any
violation thereof which shall not exceed a fine of P10,000.00 or
imprisonment of six years or both such fine and imprisonment for a single
offense;

Page 62
7. To perform general administrative, executive and policy-making

functions;
8. To establish a fire control operation center, which shall direct the fire
services of the city and municipal governments in the metropolitan area;
9. To establish a garbage disposal operation center, which shall direct
garbage collection and disposal in the metropolitan area;
10. To establish and operate a transport and traffic center, which shall
direct traffic activities;
11. To coordinate and monitor governmental and private activities
pertaining to essential services such as transportation, flood control and
drainage, water supply and sewerage, social, health and environmental
services, housing, park development, and others;
12. To insure and monitor the undertaking of a comprehensive social,
economic and physical planning and development of the area;
13. To study the feasibility of increasing barangay participation in the
affairs of their respective local governments and to propose to the
President of the Philippines definite programs and policies for
implementation;
14. To submit within thirty (30) days after the close of each fiscal year an
annual report to the President of the Philippines and to submit a periodic
report whenever deemed necessary; and
15. To perform such other tasks as may be assigned or directed by the
President of the Philippines.
The MMC was the "central government" of Metro Manila for the purpose of
establishing and administering programs providing services common to the area.
As a "central government" it had the power to levy and collect taxes and special
assessments, the power to charge and collect fees; the power to appropriate
money for its operation, and at the same time, review appropriations for the city
and municipal units within its jurisdiction. It was bestowed the power to enact or
approve ordinances, resolutions and fix penalties for violation of such ordinances
and resolutions. It also had the power to review, amend, revise or repeal all
ordinances, resolutions and acts of any of the four (4) cities and thirteen (13)
municipalities comprising Metro Manila.
appointed by the President. The Sangguniang Bayan had the power to

recommend to the MMC the adoption of ordinances, resolutions or measures. It
was the MMC itself, however, that possessed legislative powers. All ordinances,
resolutions and measures recommended by the Sangguniang Bayan were subject
to the MMC's approval. Moreover, the power to impose taxes and other levies,
the power to appropriate money, and the power to pass ordinances or resolutions
with penal sanctions were vested exclusively in the MMC.
P.D. No. 824 further provided:

Sec. 9. Until otherwise provided, the governments of the four cities and
thirteen municipalities in the Metropolitan Manila shall continue to exist in
their present form except as may be inconsistent with this Decree. The
members of the existing city and municipal councils in Metropolitan
Manila shall, upon promulgation of this Decree, and until December 31,
1975, become members of the Sangguniang Bayan which is hereby
created for every city and municipality of Metropolitan Manila.
In addition, the Sangguniang Bayan shall be composed of as many
barangay captains as may be determined and chosen by the Commission,
and such number of representatives from other sectors of the society as
may be appointed by the President upon recommendation of the
Commission.
xxx
xxx
xxx
The Sangguniang Bayan may recommend to the Commission ordinances,

resolutions or such measures as it may adopt; Provided, that no such
ordinance, resolution or measure shall become effective, until after its
approval by the Commission; and Provided further, that the power to
impose taxes and other levies, the power to appropriate money and the
power to pass ordinances or resolutions with penal sanctions shall be
vested exclusively in the Commission.
The creation of the MMC also carried with it the creation of the Sangguniang
Bayan. This was composed of the members of the component city and municipal
councils, barangay captains chosen by the MMC and sectoral representatives

Page 63
Thus, Metropolitan Manila had a "central government," i.e., the MMC which fully
possessed legislative police powers. Whatever legislative powers the component
cities and municipalities had were all subject to review and approval by the MMC.
After President Corazon Aquino assumed power, there was a clamor to restore
the autonomy of the local government units in Metro Manila. Hence, Sections 1
and 2 of Article X of the 1987 Constitution provided:
Sec. 1. The territorial and political subdivisions of the Republic of the
Philippines are the provinces, cities, municipalities and barangays. There
shall be autonomous regions in Muslim Mindanao and the Cordilleras as
herein provided.
Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.
The Constitution, however, recognized the necessity of creating metropolitan
regions not only in the existing National Capital Region but also in potential
equivalents in the Visayas and Mindanao. 43 Section 11 of the same Article X thus
provided:
Sec. 11. The Congress may, by law, create special metropolitan political
subdivisions, subject to a plebiscite as set forth in Section 10 hereof. The
component cities and municipalities shall retain their basic autonomy and
shall be entitled to their own local executives and legislative assemblies.
The jurisdiction of the metropolitan authority that will thereby be created
shall be limited to basic services requiring coordination.
Constitution itself expressly provides that Congress may, by law, create "special
metropolitan political subdivisions" which shall be subject to approval by a
majority of the votes cast in a plebiscite in the political units directly affected; the
jurisdiction of this subdivision shall be limited to basic services requiring
coordination; and the cities and municipalities comprising this subdivision shall
retain their basic services requiring coordination; and the cities and
municipalities comprising this subdivision shall retain their basic autonomy and
their own local executive and legislative assemblies. 44 Pending enactment of this
law, the Transitory Provisions of the Constitution gave the President of the
Philippines the power to constitute the Metropolitan Authority, viz:
Under the 1987 Constitution, the local government units became primarily
responsible for the governance of their respective political subdivisions.
The MMA's jurisdiction was limited to addressing common problems involving
basic services that transcended local boundaries. It did not have legislative
power. Its power was merely to provide the local government units technical
assistance in the preparation of local development plans. Any semblance of
legislative power it had was confined to a "review [of] legislation proposed by the
local legislative assemblies to ensure consistency among local governments and
with the comprehensive development plan of Metro Manila," and to "advise the
local governments accordingly." 49
Sec. 8. Until otherwise provided by Congress, the President may constitute

the Metropolitan Authority to be composed of the heads of all local
government units comprising the Metropolitan Manila area. 45
When R.A. No. 7924 took effect, Metropolitan Manila became a "special
development and administrative region" and the MMDA a "special development
authority" whose functions were "without prejudice to the autonomy of the
affected local government units." The character of the MMDA was clearly defined
in the legislative debates enacting its charter.
In 1990, President Aquino issued Executive Order (E. O.) No. 392 and constituted
the Metropolitan Manila Authority (MMA). The powers and functions of the MMC
were devolved to the MMA. 46 It ought to be stressed, however, that not all
powers and functions of the MMC were passed to the MMA. The MMA's power was
limited to the "delivery of basic urban services requiring coordination in
Metropolitan Manila." 47 The MMA's governing body, the Metropolitan Manila
Council, although composed of the mayors of the component cities and
municipalities, was merely given power of: (1) formulation of policies on the
delivery of basic services requiring coordination and consolidation; and (2)
promulgation resolutions and other issuances, approval of a code of basic
services and the exercise of its rule-making power. 48
R.A. No. 7924 originated as House Bill No. 14170/11116 and was introduced by
several legislators led by Dante Tinga, Roilo Golez and Feliciano Belmonte. It was
presented to the House of Representatives by the Committee on Local
Governments chaired by Congressman Ciriaco R. Alfelor. The bill was a product of
Committee consultations with the local government units in the National Capital
Region (NCR), with former Chairmen of the MMC and MMA, 50 and career officials
of said agencies. When the bill was first taken up by the Committee on Local
Governments, the following debate took place:
THE CHAIRMAN [Hon. Ciriaco Alfelor]: Okay, Let me explain. This has been
debated a long time ago, you know. It's a special . . . we can create a
special metropolitan political subdivision.
Actually, there are only six (6) political subdivisions provided for in the
Constitution: barangay, municipality, city, province, and we have the
Autonomous Region of Mindanao and we have the Cordillera. So we have
6. Now. . . . .

Page 64
HON. [Elias] LOPEZ: May I interrupt, Mr. Chairman. In the case of the
Autonomous Region, that is also specifically mandated by the
Constitution.
THE CHAIRMAN: That's correct. But it is considered to be a political
subdivision. What is the meaning of a political subdivision? Meaning to
say, that it has its own government, it has its own political personality, it
has the power to tax, and all governmental powers: police power and
everything. All right. Authority is different; because it does not have its
own government. It is only a council, it is an organization of political
subdivision, powers, "no, which is not imbued with any political power.
If you go over Section 6, where the powers and functions of the Metro
Manila Development Authority, it is purely coordinative. And it provides
here that the council is policy-making. All right.
Under the Constitution is a Metropolitan Authority with coordinative
power. Meaning to say, it coordinates all of the different basic services
which have to be delivered to the constituency. All right.
There is now a problem. Each local government unit is given its respective
. . . as a political subdivision. Kalookan has its powers, as provided for and
protected and guaranteed by the Constitution. All right, the exercise.
However, in the exercise of that power, it might be deleterious and
disadvantageous to other local government units. So, we are forming an
authority where all of these will be members and then set up a policy in
order that the basic services can be effectively coordinated. All right.
Of course, we cannot deny that the MMDA has to survive. We have to
provide some funds, resources. But it does not possess any political
power. We do not elect the Governor. We do not have the power to tax. As
a matter of fact, I was trying to intimate to the author that it must have
the power to sue and be sued because it coordinates. All right. It
coordinates practically all these basic services so that the flow and the
distribution of the basic services will be continuous. Like traffic, we cannot
deny that. It's before our eyes. Sewerage, flood control, water system,

Page 65
peace and order, we cannot deny these. It's right on our face. We have to
look for a solution. What would be the right solution? All right, we envision
that there should be a coordinating agency and it is called an authority. All
right, if you do not want to call it an authority, it's alright. We may call it a
council or maybe a management agency.
xxx
xxx
xxx
51
Clearly, the MMDA is not a political unit of government. The power delegated to
the MMDA is that given to the Metro Manila Council to promulgate administrative
rules and regulations in the implementation of the MMDA's functions. There is no
grant of authority to enact ordinances and regulations for the general welfare of
the inhabitants of the metropolis. This was explicitly stated in the last Committee
deliberations prior to the bill's presentation to Congress. Thus:
THE CHAIRMAN: Yeah, but we have to go over the suggested revision. I
think this was already approved before, but it was reconsidered in view of
the proposals, set-up, to make the MMDA stronger. Okay, so if there is no
objection to paragraph "f". . . And then next is paragraph "b," under
Section 6. "It shall approve metro-wide plans, programs and projects and
issue ordinances or resolutions deemed necessary by the MMDA to carry
out the purposes of this Act." Do you have the powers? Does the
MMDA... because that takes the form of a local government unit, a
political subdivision.
HON. [Feliciano] BELMONTE: Yes, I believe so, your Honor. When we say
that it has the policies, it's very clear that those policies must be followed.
Otherwise, what's the use of empowering it to come out with policies.
Now, the policies may be in the form of a resolution or it may be in the
form of a ordinance. The term "ordinance" in this case really gives it more
teeth, your honor. Otherwise, we are going to see a situation where you
have the power to adopt the policy but you cannot really make it stick as
in the case now, and I think here is Chairman Bunye. I think he will agree
that that is the case now. You've got the power to set a policy, the body
wants to follow your policy, then we say let's call it an ordinance and see
if they will not follow it.
THE CHAIRMAN: That's very nice. I like that. However, there is a

constitutional impediment.1wphi1 You are making this MMDA a political
subdivision. The creation of the MMDA would be subject to a plebiscite.
That is what I'm trying to avoid. I've been trying to avoid this kind of
predicament. Under the Constitution it states: if it is a political subdivision,
once it is created it has to be subject to a plebiscite. I'm trying to make
this as administrative. That's why we place the Chairman as a cabinet
rank.
HON. BELMONTE: All right, Mr. Chairman, okay, what you are saying there
is . . . . .
THE CHAIRMAN: In setting up ordinances, it is a political exercise, Believe
me.
HON. [Elias] LOPEZ: Mr. Chairman, it can be changed into issuances of
rules and regulations. That would be . . . it shall also be enforced.
HON. BELMONTE: Okay, I will . . . .
HON. LOPEZ: And you can also say that violation of such rule, you impose
a sanction. But you know, ordinance has a different legal connotation.
HON. BELMONTE: All right, I defer to that opinion, your Honor.
THE CHAIRMAN: So instead of ordinances, say rules and regulations.
HON. BELMONTE: Or resolutions. Actually, they are actually considering
resolutions now.
THE CHAIRMAN: Rules and resolutions.
HON. BELMONTE: Rules, regulations and resolutions.
Page 66
When the bill was forwarded to the Senate, several amendments were
made.1wphi1 These amendments, however, did not affect the nature of the
MMDA as originally conceived in the House of Representatives. 55
It is thus beyond doubt that the MMDA is not a local government unit or a public
corporation endowed with legislative power. It is not even a "special metropolitan
political subdivision" as contemplated in Section 11, Article X of the Constitution.
The creation of a "special metropolitan political subdivision" requires the approval
by a majority of the votes cast in a plebiscite in the political units directly
affected." 56 R. A. No. 7924 was not submitted to the inhabitants of Metro Manila
in a plebiscite. The Chairman of the MMDA is not an official elected by the people,
but appointed by the President with the rank and privileges of a cabinet member.
In fact, part of his function is to perform such other duties as may be assigned to
him by the President, 57 whereas in local government units, the President merely
exercises supervisory authority. This emphasizes the administrative character of
the MMDA.
Clearly then, the MMC under P.D. No. 824 is not the same entity as the MMDA
under R.A. No. 7924. Unlike the MMC, the MMDA has no power to enact
ordinances for the welfare of the community. It is the local government units,
acting through their respective legislative councils, that possess legislative power
and police power. In the case at bar, the Sangguniang Panlungsod of Makati City
did not pass any ordinance or resolution ordering the opening of Neptune Street,
hence, its proposed opening by petitioner MMDA is illegal and the respondent
Court of Appeals did not err in so ruling. We desist from ruling on the other issues
as they are unnecessary.
52
The draft of H. B. No. 14170/11116 was presented by the Committee to the

House of Representatives. The explanatory note to the bill stated that the
proposed MMDA is a "development authority" which is a "national agency, not a

political government unit." 53 The explanatory note was adopted as the
sponsorship speech of the Committee on Local Governments. No interpellations
or debates were made on the floor and no amendments introduced. The bill was
approved on second reading on the same day it was presented. 54
We stress that this decision does not make light of the MMDA's noble efforts to
solve the chaotic traffic condition in Metro Manila. Everyday, traffic jams and
traffic bottlenecks plague the metropolis. Even our once sprawling boulevards
and avenues are now crammed with cars while city streets are clogged with
motorists and pedestrians. Traffic has become a social malaise affecting our
people's productivity and the efficient delivery of goods and services in the
country. The MMDA was created to put some order in the metropolitan
transportation system but unfortunately the powers granted by its charter are
limited. Its good intentions cannot justify the opening for public use of a private
street in a private subdivision without any legal warrant. The promotion of the
general welfare is not antithetical to the preservation of the rule of
law.1wphi1.nt
Petitioner alleges that said executive orders are null and void, upon the ground
that said Section 68 has been impliedly repealed by Republic Act No. 2370 and
constitutes an undue delegation of legislative power. Respondent maintains the
contrary view and avers that the present action is premature and that not all
proper parties referring to the officials of the new political subdivisions in
question have been impleaded. Subsequently, the mayors of several
municipalities adversely affected by the aforementioned executive orders
because the latter have taken away from the former the barrios composing the
new political subdivisions intervened in the case. Moreover, Attorneys Enrique
M. Fernando and Emma Quisumbing-Fernando were allowed to and did appear
as amici curiae.
IN VIEW WHEREOF, the petition is denied. The Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 39549 are affirmed.
The third paragraph of Section 3 of Republic Act No. 2370, reads:

Barrios shall not be created or their boundaries altered nor their names
changed except under the provisions of this Act or by Act of Congress.
SO ORDERED.
G.R. No. L-23825
December 24, 1965
All barrios existing at the time of the passage of this Act shall come under
the provisions hereof.
EMMANUEL PELAEZ, petitioner,

vs.
THE AUDITOR GENERAL, respondent.
Zulueta, Gonzales, Paculdo and Associates for petitioner.
Office of the Solicitor General for respondent.
CONCEPCION, J.:
During the period from September 4 to October 29, 1964 the President of the
Philippines, purporting to act pursuant to Section 68 of the Revised
Administrative Code, issued Executive Orders Nos. 93 to 121, 124 and 126 to
129; creating thirty-three (33) municipalities enumerated in the margin. 1 Soon
after the date last mentioned, or on November 10, 1964 petitioner Emmanuel
Pelaez, as Vice President of the Philippines and as taxpayer, instituted the
present special civil action, for a writ of prohibition with preliminary injunction,
against the Auditor General, to restrain him, as well as his representatives and
agents, from passing in audit any expenditure of public funds in implementation
of said executive orders and/or any disbursement by said municipalities.

Pursuant to the first two (2) paragraphs of the same Section 3:
Page 67
Upon petition of a majority of the voters in the areas affected, a new

barrio may be created or the name of an existing one may be changed by
the provincial board of the province, upon recommendation of the council
of the municipality or municipalities in which the proposed barrio is
stipulated. The recommendation of the municipal council shall be
embodied in a resolution approved by at least two-thirds of the entire
membership of the said council: Provided, however, That no new barrio
may be created if its population is less than five hundred persons.
Hence, since January 1, 1960, when Republic Act No. 2370 became effective,
barrios may "not be created or their boundaries altered nor their names
changed" except by Act of Congress or of the corresponding provincial board
"upon petition of a majority of the voters in the areas affected" and the
"recommendation of the council of the municipality or municipalities in which the
proposed barrio is situated." Petitioner argues, accordingly: "If the President,
under this new law, cannot even create a barrio, can he create a municipality
which is composed of several barrios, since barrios are units of municipalities?"
Respondent answers in the affirmative, upon the theory that a new municipality
can be created without creating new barrios, such as, by placing old barrios
under the jurisdiction of the new municipality. This theory overlooks, however,
the main import of the petitioner's argument, which is that the statutory denial of
the presidential authority to create a new barrio implies a negation of the bigger
power to create municipalities, each of which consists of several barrios. The
cogency and force of this argument is too obvious to be denied or even
questioned. Founded upon logic and experience, it cannot be offset except by a
clear manifestation of the intent of Congress to the contrary, and no such
manifestation, subsequent to the passage of Republic Act No. 2379, has been
brought to our attention.
Moreover, section 68 of the Revised Administrative Code, upon which the
disputed executive orders are based, provides:
The (Governor-General) President of the Philippines may by executive
order define the boundary, or boundaries, of any province, subprovince,
municipality, [township] municipal district, or other political subdivision,
and increase or diminish the territory comprised therein, may divide any
province into one or more subprovinces, separate any political division
other than a province, into such portions as may be required, merge any
of such subdivisions or portions with another, name any new subdivision
so created, and may change the seat of government within any
subdivision to such place therein as the public welfare may require:
Provided, That the authorization of the (Philippine Legislature) Congress of
the Philippines shall first be obtained whenever the boundary of any
province or subprovince is to be defined or any province is to be divided
into one or more subprovinces. When action by the (Governor-General)
President of the Philippines in accordance herewith makes necessary a
change of the territory under the jurisdiction of any administrative officer
or any judicial officer, the (Governor-General) President of the Philippines,
with the recommendation and advice of the head of the Department
having executive control of such officer, shall redistrict the territory of the
several officers affected and assign such officers to the new districts so
formed.
Upon the changing of the limits of political divisions in pursuance of the
foregoing authority, an equitable distribution of the funds and obligations
of the divisions thereby affected shall be made in such manner as may be
recommended by the (Insular Auditor) Auditor General and approved by
the (Governor-General) President of the Philippines.

Page 68
Respondent alleges that the power of the President to create municipalities under
this section does not amount to an undue delegation of legislative power, relying
upon Municipality of Cardona vs. Municipality of Binagonan (36 Phil. 547),
which, he claims, has settled it. Such claim is untenable, for said case involved,
not the creation of a new municipality, but a mere transfer of territory from
an already existing municipality (Cardona) to another municipality
(Binagonan), likewise, existing at the time of and prior to said transfer (See
Gov't of the P.I. ex rel. Municipality of Cardona vs. Municipality, of Binagonan [34
Phil. 518, 519-5201) in consequence of the fixing and definition, pursuant to
Act No. 1748, of the common boundaries of two municipalities.
It is obvious, however, that, whereas the power to fix such common boundary, in
order to avoid or settle conflicts of jurisdiction between adjoining municipalities,
may partake of an administrative nature involving, as it does, the adoption of
means and ways to carry into effect the law creating said municipalities the
authority to create municipal corporations is essentially legislative in nature. In
the language of other courts, it is "strictly a legislative function" (State ex rel.
Higgins vs. Aicklen, 119 S. 425, January 2, 1959) or "solely and exclusively the
exercise oflegislative power" (Udall vs. Severn, May 29, 1938, 79 P. 2d 347-349).
As the Supreme Court of Washington has put it (Territory ex rel. Kelly vs. Stewart,
February 13, 1890, 23 Pac. 405, 409), "municipal corporations are purely the
creatures of statutes."
Although1a Congress may delegate to another branch of the Government the
power to fill in the details in the execution, enforcement or administration of a
law, it is essential, to forestall a violation of the principle of separation of powers,
that said law: (a) be complete in itself it must set forth therein the policy to be
executed, carried out or implemented by the delegate2 and (b) fix a standard
the limits of which are sufficiently determinate or determinable to which the
delegate must conform in the performance of his functions.2aIndeed, without a
statutory declaration of policy, the delegate would in effect, make or formulate
such policy, which is the essence of every law; and, without the aforementioned
standard, there would be no means to determine, with reasonable certainty,
whether the delegate has acted within or beyond the scope of his
authority.2b Hence, he could thereby arrogate upon himself the power, not only to
make the law, but, also and this is worse to unmake it, by adopting
measures inconsistent with the end sought to be attained by the Act of Congress,
thus nullifying the principle of separation of powers and the system of checks and
balances, and, consequently, undermining the very foundation of our Republican
system.
Section 68 of the Revised Administrative Code does not meet these well settled
requirements for a valid delegation of the power to fix the details in the
enforcement of a law. It does not enunciate any policy to be carried out or
implemented by the President. Neither does it give a standard sufficiently precise
to avoid the evil effects above referred to. In this connection, we do not overlook
the fact that, under the last clause of the first sentence of Section 68, the
President:
... may change the seat of the government within any subdivision to such
place therein as the public welfare may require.
It is apparent, however, from the language of this clause, that the phrase "as the
public welfare may require" qualified, not the clauses preceding the one just
quoted, but only the place to which the seat of the government may be
transferred. This fact becomes more apparent when we consider that said
Section 68 was originally Section 1 of Act No. 1748,3 which provided that,
"whenever in the judgment of the Governor-General the public welfare requires,
he may, by executive order," effect the changes enumerated therein (as in said
section 68), including the change of the seat of the government "to such place ...
as the public interest requires." The opening statement of said Section 1 of Act
No. 1748 which was not included in Section 68 of the Revised Administrative
Code governed the time at which, or the conditions under which, the powers
therein conferred could be exercised; whereas the last part of the first sentence
of said section referred exclusively to the place to which the seat of the
government was to be transferred.
At any rate, the conclusion would be the same, insofar as the case at bar is
concerned, even if we assumed that the phrase "as the public welfare may
require," in said Section 68, qualifies all other clauses thereof. It is true that
in Calalang vs. Williams (70 Phil. 726) and People vs. Rosenthal (68 Phil. 328),
this Court had upheld "public welfare" and "public interest," respectively, as
sufficient standards for a valid delegation of the authority to execute the law. But,
the doctrine laid down in these cases as all judicial pronouncements must
be construed in relation to the specific facts and issues involved therein, outside
of which they do not constitute precedents and have no binding effect. 4 The law
construed in the Calalang case conferred upon the Director of Public Works, with
the approval of the Secretary of Public Works and Communications, the power to
issue rules and regulations topromote safe transit upon national roads and
streets. Upon the other hand, the Rosenthal case referred to the authority of the
Insular Treasurer, under Act No. 2581, to issue and cancel certificates or permits
for the sale ofspeculative securities. Both cases involved grants

Page 69
to administrative officers of powers related to the exercise of their administrative

functions, calling for the determination of questions of fact.
Such is not the nature of the powers dealt with in section 68. As above indicated,
the creation of municipalities, is not an administrative function, but one which is
essentially and eminently legislative in character. The question of whether or not
"public interest" demands the exercise of such power is not one of fact. it is
"purely a legislativequestion "(Carolina-Virginia Coastal Highway vs. Coastal
Turnpike Authority, 74 S.E. 2d. 310-313, 315-318), or apolitical question (Udall vs.
Severn, 79 P. 2d. 347-349). As the Supreme Court of Wisconsin has aptly
characterized it, "the question as to whether incorporation is for the best
interest of the community in any case is emphatically a question of public policy
and statecraft" (In re Village of North Milwaukee, 67 N.W. 1033, 1035-1037).
For this reason, courts of justice have annulled, as constituting undue delegation
of legislative powers, state laws granting the judicial department, the power to
determine whether certain territories should be annexed to a particular
municipality (Udall vs. Severn, supra, 258-359); or vesting in a Commission the
right to determine the plan and frame of government of proposed villages and
what functions shall be exercised by the same, although the powers and
functions of the village are specifically limited by statute (In re Municipal
Charters, 86 Atl. 307-308); or conferring upon courts the authority to declare a
given town or village incorporated, and designate its metes and bounds, upon
petition of a majority of the taxable inhabitants thereof, setting forth the area
desired to be included in such village (Territory ex rel Kelly vs. Stewart, 23 Pac.
405-409); or authorizing the territory of a town, containing a given area and
population, to be incorporated as a town, on certain steps being taken by the
inhabitants thereof and on certain determination by a court and subsequent vote
of the inhabitants in favor thereof, insofar as the court is allowed to determine
whether the lands embraced in the petition "ought justly" to be included in the
village, and whether the interest of the inhabitants will be promoted by such
incorporation, and to enlarge and diminish the boundaries of the proposed village
"as justice may require" (In re Villages of North Milwaukee, 67 N.W. 1035-1037);
or creating a Municipal Board of Control which shall determine whether or not the
laying out, construction or operation of a toll road is in the "public interest" and
whether the requirements of the law had been complied with, in which case the
board shall enter an order creating a municipal corporation and fixing the name
of the same (Carolina-Virginia Coastal Highway vs. Coastal Turnpike Authority, 74
S.E. 2d. 310).
Insofar as the validity of a delegation of power by Congress to the President is

concerned, the case of Schechter Poultry Corporation vs. U.S. (79 L. Ed. 1570) is
quite relevant to the one at bar. The Schechter case involved the constitutionality
of Section 3 of the National Industrial Recovery Act authorizing the President of
the United States to approve "codes of fair competition" submitted to him by one
or more trade or industrial associations or corporations which "impose no
inequitable restrictions on admission to membership therein and are truly
representative," provided that such codes are not designed "to promote
monopolies or to eliminate or oppress small enterprises and will not operate to
discriminate against them, and will tend to effectuate the policy" of said Act. The
Federal Supreme Court held:
To summarize and conclude upon this point: Sec. 3 of the Recovery Act is
without precedent. It supplies no standards for any trade, industry or
activity. It does not undertake to prescribe rules of conduct to be applied
to particular states of fact determined by appropriate administrative
procedure. Instead of prescribing rules of conduct, it authorizes the
making of codes to prescribe them. For that legislative undertaking, Sec. 3
sets up no standards, aside from the statement of the general aims of
rehabilitation, correction and expansion described in Sec. 1. In view of the
scope of that broad declaration, and of the nature of the few restrictions
that are imposed, the discretion of the President in approving or
prescribing codes, and thus enacting laws for the government of trade
and industry throughout the country, is virtually unfettered. We think that
the code making authority thus conferred is an unconstitutional
delegation of legislative power.
If the term "unfair competition" is so broad as to vest in the President a discretion
that is "virtually unfettered." and, consequently, tantamount to a delegation of
legislative power, it is obvious that "public welfare," which has even a broader
connotation, leads to the same result. In fact, if the validity of the delegation of
powers made in Section 68 were upheld, there would no longer be any legal
impediment to a statutory grant of authority to the President to do anything
which, in his opinion, may be required by public welfare or public interest. Such
grant of authority would be a virtual abdication of the powers of Congress in
favor of the Executive, and would bring about a total collapse of the democratic
system established by our Constitution, which it is the special duty and privilege
of this Court to uphold.
It may not be amiss to note that the executive orders in question were issued
after the legislative bills for the creation of the municipalities involved in this

Page 70
case had failed to pass Congress. A better proof of the fact that the issuance of
said executive orders entails the exercise of purely legislative functions can
hardly be given.
Again, Section 10 (1) of Article VII of our fundamental law ordains:
The President shall have control of all the executive departments,
bureaus, or offices, exercise general supervision over all local
governments as may be provided by law, and take care that the laws be
faithfully executed.
The power of control under this provision implies the right of the President to
interfere in the exercise of such discretion as may be vested by law in the officers
of the executive departments, bureaus, or offices of the national government, as
well as to act in lieu of such officers. This power is denied by the Constitution to
the Executive, insofar as local governments are concerned. With respect to the
latter, the fundamental law permits him to wield no more authority than that of
checking whether said local governments or the officers thereof perform their
duties as provided by statutory enactments. Hence, the President cannot
interfere with local governments, so long as the same or its officers act Within
the scope of their authority. He may not enact an ordinance which the municipal
council has failed or refused to pass, even if it had thereby violated a duty
imposed thereto by law, although he may see to it that the corresponding
provincial officials take appropriate disciplinary action therefor. Neither may he
vote, set aside or annul an ordinance passed by said council within the scope of
its jurisdiction, no matter how patently unwise it may be. He may not even
suspend an elective official of a regular municipality or take any disciplinary
action against him, except on appeal from a decision of the corresponding
provincial board.5
Upon the other hand if the President could create a municipality, he could, in
effect, remove any of its officials, by creating a new municipality and including
therein the barrio in which the official concerned resides, for his office would
thereby become vacant.6 Thus, by merely brandishing the power to create a new
municipality (if he had it), without actually creating it, he could compel local
officials to submit to his dictation, thereby, in effect, exercising over them the
power of control denied to him by the Constitution.
Then, also, the power of control of the President over executive departments,
bureaus or offices implies no morethan the authority to assume directly the
functions thereof or to interfere in the exercise of discretion by its officials.

Manifestly, such control does not include the authority either to abolish an
executive department or bureau, or to create a new one. As a consequence, the
alleged power of the President to create municipal corporations would necessarily
connote the exercise by him of an authority even greater than that of control
which he has over the executive departments, bureaus or offices. In other words,
Section 68 of the Revised Administrative Code does not merely fail to comply
with the constitutional mandate above quoted. Instead of giving the President
less power over local governments than that vested in him over the executive
departments, bureaus or offices, it reverses the process and does the exact
opposite, by conferring upon him more power over municipal corporations than
that which he has over said executive departments, bureaus or offices.
In short, even if it did entail an undue delegation of legislative powers, as it
certainly does, said Section 68, as part of the Revised Administrative Code,
approved on March 10, 1917, must be deemed repealed by the subsequent
adoption of the Constitution, in 1935, which is utterly incompatible and
inconsistent with said statutory enactment.7
There are only two (2) other points left for consideration, namely, respondent's
claim (a) that "not all the proper parties" referring to the officers of the newly
created municipalities "have been impleaded in this case," and (b) that "the
present petition is premature."
As regards the first point, suffice it to say that the records do not show, and the
parties do not claim, that the officers of any of said municipalities have been
appointed or elected and assumed office. At any rate, the Solicitor General, who
has appeared on behalf of respondent Auditor General, is the officer authorized
by law "to act and represent the Government of the Philippines, its offices and
agents, in any official investigation, proceeding or matter requiring the services
of a lawyer" (Section 1661, Revised Administrative Code), and, in connection with
the creation of the aforementioned municipalities, which involves a political, not
proprietary, function, said local officials, if any, are mere agents or
representatives of the national government. Their interest in the case at bar has,
accordingly, been, in effect, duly represented.8
With respect to the second point, respondent alleges that he has not as yet acted
on any of the executive order & in question and has not intimated how he would
act in connection therewith. It is, however, a matter of common, public
knowledge, subject to judicial cognizance, that the President has, for many years,
issued executive orders creating municipal corporations and that the same have

Page 71
been organized and in actual operation, thus indicating, without peradventure of

doubt, that the expenditures incidental thereto have been sanctioned, approved
or passed in audit by the General Auditing Office and its officials. There is no
reason to believe, therefore, that respondent would adopt a different policy as
regards the new municipalities involved in this case, in the absence of an
allegation to such effect, and none has been made by him.
WHEREFORE, the Executive Orders in question are hereby declared null and
void ab initio and the respondent permanently restrained from passing in audit
any expenditure of public funds in implementation of said Executive Orders or
any disbursement by the municipalities above referred to. It is so ordered.
Bengzon, C.J., Bautista Angelo, Reyes, J.B.L., Barrera and Dizon, JJ., concur.
Zaldivar, J., took no part.
Separate Opinions
BENGZON, J.P., J., concurring and dissenting:
A sign of progress in a developing nation is the rise of new municipalities.
Fostering their rapid growth has long been the aim pursued by all three branches
of our Government.
So it was that the Governor-General during the time of the Jones Law was given
authority by the Legislature (Act No. 1748) to act upon certain details with
respect to said local governments, such as fixing of boundaries, subdivisions and
mergers. And the Supreme Court, within the framework of the Jones Law, ruled in
1917 that the execution or implementation of such details, did not entail
abdication of legislative power (Government vs. Municipality of Binagonan, 34
Phil. 518; Municipality of Cardona vs. Municipality of Binagonan, 36 Phil. 547).
Subsequently, Act No. 1748's aforesaid statutory authorization was embodied in
Section 68 of the Revised Administrative Code. And Chief Executives since then
up to the present continued to avail of said provision, time and again invoking it
to issue executive orders providing for the creation of municipalities.
From September 4, 1964 to October 29, 1964 the President of the Philippines
issued executive orders to create thirty-three municipalities pursuant to Section
68 of the Revised Administrative Code. Public funds thereby stood to be
disbursed in implementation of said executive orders.
Suing as private citizen and taxpayer, Vice President Emmanuel Pelaez filed in
this Court a petition for prohibition with preliminary injunction against the Auditor
General. It seeks to restrain the respondent or any person acting in his behalf,
from passing in audit any expenditure of public funds in implementation of the
executive orders aforementioned.
Petitioner contends that the President has no power to create a municipality by
executive order. It is argued that Section 68 of the Revised Administrative Code
of 1917, so far as it purports to grant any such power, is invalid or, at the least,
already repealed, in light of the Philippine Constitution and Republic Act 2370
(The Barrio Charter).
Upon the changing of the limits of political divisions in pursuance of the

foregoing authority, an equitable distribution of the funds and obligations
of the divisions thereby affected shall be made in such manner as may be
recommended by the [Insular Auditor] Auditor General and approved by
the [Governor-General] President of the Philippines.
From such working I believe that power to create a municipality is included: to
"separate any political division other than a province, into such portions as may
be required, merge any such subdivisions or portions with another, name any
new subdivision so created." The issue, however, is whether the legislature can
validly delegate to the Executive such power.
The power to create a municipality is legislative in character. American
authorities have therefore favored the view that it cannot be delegated; that
what is delegable is not the power to create municipalities but only the power to
determine the existence of facts under which creation of a municipality will result
(37 Am. Jur. 628).
Section 68 is again reproduced hereunder for convenience:

SEC. 68. General authority of [Governor-General) President of the
Philippines to fix boundaries and make new subdivisions. The
[Governor-General] President of the Philippines may by executive order
define the boundary, or boundaries, of any province, subprovince,
municipality, [township] municipal district, or other political subdivision,
and increase or diminish the territory comprised therein, may divide any
province into one or more subprovinces, separate any political division
other than a province, into such portions as may be required, merge any
of such subdivisions or portions with another, name any new subdivision
so created, and may change the seat of government within any
subdivision to such place therein as the public welfare may require:
Provided, That the authorization of the [Philippine Legislature] Congress of
the Philippines shall first be obtained whenever the boundary of any
province or subprovince is to be defined or any province is to be divided
into one or more subprovinces. When action by the [Governor-General]
President of the Philippines in accordance herewith makes necessary a
change of the territory under the jurisdiction of any administrative officer
or any judicial officer, the [Governor-General] President of the Philippines,
with the recommendation and advice of the head of the Department
having executive control of such officer, shall redistrict the territory of the
several officers to the new districts so formed.

Page 72
The test is said to lie in whether the statute allows any discretion on the delegate
as to whether the municipal corporation should be created. If so, there is an
attempted delegation of legislative power and the statute is invalid (Ibid.). Now
Section 68 no doubt gives the President such discretion, since it says that the
President "may by executive order" exercise the powers therein granted.
Furthermore, Section 5 of the same Code states:
SEC. 5. Exercise of administrative discretion The exercise of the
permissive powers of all executive or administrative officers and bodies is
based upon discretion, and when such officer or body is given authority to
do any act but not required to do such act, the doing of the same shall be
dependent on a sound discretion to be exercised for the good of the
service and benefit of the public, whether so expressed in the statute
giving the authority or not.
Under the prevailing rule in the United States and Section 68 is of American
origin the provision in question would be an invalid attempt to delegate purely
legislative powers, contrary to the principle of separation of powers.
It is very pertinent that Section 68 should be considered with the stream of
history in mind. A proper knowledge of the past is the only adequate background
for the present. Section 68 was adopted half a century ago. Political change, two
world wars, the recognition of our independence and rightful place in the family
of nations, have since taken place. In 1917 the Philippines had for its Organic Act
the Jones Law. And under the setup ordained therein no strict separation of
powers was adhered to. Consequently, Section 68 was not constitutionally
objectionable at the time of its enactment.
It is the evident decree of the Constitution, therefore, that the President shall
have no power of control over local governments. Accordingly, Congress cannot
by law grant him such power (Hebron v. Reyes, supra). And any such power
formerly granted under the Jones Law thereby became unavoidably inconsistent
with the Philippine Constitution.
The advent of the Philippine Constitution in 1935 however altered the situation.
For not only was separation of powers strictly ordained, except only in specific
instances therein provided, but the power of the Chief Executive over local
governments suffered an explicit reduction.
It remains to examine the relation of the power to create and the power to
control local governments. Said relationship has already been passed upon by
this Court in Hebron v. Reyes, supra. In said case, it was ruled that the power to
control is an incident of the power to create or abolish municipalities.
Respondent's view, therefore, that creating municipalities and controlling their
local governments are "two worlds apart," is untenable. And since as stated, the
power to control local governments can no longer be conferred on or exercised
by the President, it follows a fortiori that the power to create them, all the more
cannot be so conferred or exercised.
Formerly, Section 21 of the Jones Law provided that the Governor-General "shall
have general supervision and control of all the departments and bureaus of the
government in the Philippine Islands." Now Section 10 (1), Article VII of the
Philippine Constitution provides: "The President shall have control of all the
executive departments, bureaus, or offices, exercise general supervision over all
local governments as may be provided by law, and take care that the laws be
faithfully executed.
In short, the power of control over local governments had now been taken away
from the Chief Executive. Again, to fully understand the significance of this
provision, one must trace its development and growth.
As early as April 7, 1900 President McKinley of the United States, in his
Instructions to the Second Philippine Commission, laid down the policy that our
municipal governments should be "subject to the least degree of supervision and
control" on the part of the national government. Said supervision and control was
to be confined within the "narrowest limits" or so much only as "may be
necessary to secure and enforce faithful and efficient administration by local
officers." And the national government "shall have no direct administration
except of matters of purely general concern." (See Hebron v. Reyes, L-9158, July
28, 1958.)
All this had one aim, to enable the Filipinos to acquire experience in the art of
self-government, with the end in view of later allowing them to assume complete
management and control of the administration of their local affairs. Such aim is
the policy now embodied in Section 10 (1), Article VII of the Constitution
(Rodriguez v. Montinola, 50 O.G. 4820).

Page 73
I am compelled to conclude, therefore, that Section 10 (1), Article VII of the

Constitution has repealed Section 68 of the Revised Administrative Code as far as
the latter empowers the President to create local governments. Repeal by the
Constitution of prior statutes inconsistent with it has already been sustained
in De los Santos v. MaIlare, 87 Phil. 289. And it was there held that such repeal
differs from a declaration of unconstitutionality of a posterior legislation, so much
so that only a majority vote of the Court is needed to sustain a finding of repeal.
Since the Constitution repealed Section 68 as far back as 1935, it is academic to
ask whether Republic Act 2370 likewise has provisions in conflict with Section 68
so as to repeal it. Suffice it to state, at any rate, that statutory prohibition on the
President from creating a barrio does not, in my opinion, warrant the inference of
statutory prohibition for creating a municipality. For although municipalities
consist of barrios, there is nothing in the statute that would preclude creation of
new municipalities out of pre-existing barrios.
It is not contrary to the logic of local autonomy to be able to create larger
political units and unable to create smaller ones. For as long ago observed in
President McKinley's Instructions to the Second Philippine Commission, greater
autonomy is to be imparted to the smaller of the two political units. The smaller
the unit of local government, the lesser is the need for the national government's
intervention in its political affairs. Furthermore, for practical reasons, local
autonomy cannot be given from the top downwards. The national government, in
such a case, could still exercise power over the supposedly autonomous unit,
e.g., municipalities, by exercising it over the smaller units that comprise them,
e.g., the barrios. A realistic program of decentralization therefore calls for

autonomy from the bottom upwards, so that it is not surprising for Congress to
deny the national government some power over barrios without denying it over
municipalities. For this reason, I disagree with the majority view that because the
President could not create a barrio under Republic Act 2370, a fortiori he cannot
create a municipality.
It is my view, therefore, that the Constitution, and not Republic Act 2370,
repealed Section 68 of the Revised Administrative Code's provision giving the
President authority to create local governments. And for this reason I agree with
the ruling in the majority opinion that the executive orders in question are null
and void.
In thus ruling, the Court is but sustaining the fulfillment of our historic desire to
be free and independent under a republican form of government, and exercising
a function derived from the very sovereignty that it upholds. Executive orders
declared null and void.
[G.R. No. 152774. May 27, 2004]
THE
PROVINCE OF BATANGAS, represented by its Governor,

HERMILANDO I. MANDANAS, petitioner, vs. HON. ALBERTO G.
ROMULO, Executive Secretary and Chairman of the Oversight
Committee on Devolution; HON. EMILIA BONCODIN, Secretary,
Department of Budget and Management; HON. JOSE D. LINA, JR.,
Secretary,
Department
of
Interior
and
Local
Government, respondents.
DECISION
CALLEJO, SR., J.:

The Province of Batangas, represented by its Governor, Hermilando I.
Mandanas, filed the present petition for certiorari, prohibition and mandamus
under Rule 65 of the Rules of Court, as amended, to declare as unconstitutional
and void certain provisos contained in the General Appropriations Acts (GAA) of

Page 74
1999, 2000 and 2001, insofar as they uniformly earmarked for each
corresponding year the amount of five billion pesos (P5,000,000,000.00) of the
Internal Revenue Allotment (IRA) for the Local Government Service Equalization
Fund (LGSEF) and imposed conditions for the release thereof.
Named as respondents are Executive Secretary Alberto G. Romulo, in his
capacity as Chairman of the Oversight Committee on Devolution, Secretary
Emilia Boncodin of the Department of Budget and Management (DBM) and
Secretary Jose Lina of the Department of Interior and Local Government (DILG).
Background
On December 7, 1998, then President Joseph Ejercito Estrada issued
Executive Order (E.O.) No. 48 entitled ESTABLISHING A PROGRAM FOR
DEVOLUTION ADJUSTMENT AND EQUALIZATION. The program was established to
facilitate the process of enhancing the capacities of local government units
(LGUs) in the discharge of the functions and services devolved to them by the
National Government Agencies concerned pursuant to the Local Government
Code.[1] The Oversight Committee (referred to as the Devolution Committee in
E.O. No. 48) constituted under Section 533(b) of Republic Act No. 7160 (The Local
Government Code of 1991) has been tasked to formulate and issue the
appropriate rules and regulations necessary for its effective implementation.
[2]
Further, to address the funding shortfalls of functions and services devolved to
the LGUs and other funding requirements of the program, the Devolution
Adjustment and Equalization Fund was created. [3] For 1998, the DBM was directed
to set aside an amount to be determined by the Oversight Committee based on
the devolution status appraisal surveys undertaken by the DILG. [4] The initial fund
was to be sourced from the available savings of the national government for CY
1998.[5] For 1999 and the succeeding years, the corresponding amount required
to sustain the program was to be incorporated in the annual GAA. [6] The
Oversight Committee has been authorized to issue the implementing rules and
regulations governing the equitable allocation and distribution of said fund to the
LGUs.[7]
The LGSEF in the GAA of 1999
In Republic Act No. 8745, otherwise known as the GAA of 1999, the program
was renamed as the LOCAL GOVERNMENT SERVICE EQUALIZATION FUND
(LGSEF). Under said appropriations law, the amount of P96,780,000,000 was
allotted as the share of the LGUs in the internal revenue taxes. Item No. 1,
Special Provisions, Title XXXVI A. Internal Revenue Allotment of Rep. Act No. 8745
contained the following proviso:
... PROVIDED, That the amount of FIVE BILLION PESOS (P5,000,000,000) shall be
earmarked for the Local Government Service Equalization Fund for the funding
requirements of projects and activities arising from the full and efficient
implementation of devolved functions and services of local government units
pursuant to R.A. No. 7160, otherwise known as the Local Government Code of
1991: PROVIDED, FURTHER, That such amount shall be released to the local
government units subject to the implementing rules and regulations, including
such mechanisms and guidelines for the equitable allocations and distribution of
said fund among local government units subject to the guidelines that may be
prescribed by the Oversight Committee on Devolution as constituted pursuant to
Book IV, Title III, Section 533(b) of R.A. No. 7160. The Internal Revenue Allotment
shall be released directly by the Department of Budget and Management to the
Local Government Units concerned.
On July 28, 1999, the Oversight Committee (with then Executive Secretary
Ronaldo B. Zamora as Chairman) passed Resolution Nos. OCD-99-003, OCD-99005 and OCD-99-006 entitled as follows:
OCD-99-005
RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR THE PhP5
BILLION CY 1999 LOCAL GOVERNMENT SERVICE EQUALIZATION FUND
(LGSEF) AND REQUESTING HIS EXCELLENCY PRESIDENT JOSEPH
EJERCITO ESTRADA TO APPROVE SAID ALLOCATION SCHEME.
OCD-99-006
RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR THE PhP4.0
BILLION OF THE 1999 LOCAL GOVERNMENT SERVICE EQUALIZATION
FUND AND ITS CONCOMITANT GENERAL FRAMEWORK, IMPLEMENTING
GUIDELINES AND MECHANICS FOR ITS IMPLEMENTATION AND
RELEASE, AS PROMULGATED BY THE OVERSIGHT COMMITTEE ON
DEVOLUTION.

Page 75
OCD-99-003
RESOLUTION REQUESTING HIS EXCELLENCY PRESIDENT JOSEPH
EJERCITO ESTRADA TO APPROVE THE REQUEST OF THE OVERSIGHT
COMMITTEE ON DEVOLUTION TO SET ASIDE TWENTY PERCENT (20%)
OF THE LOCAL GOVERNMENT SERVICE EQUALIZATION FUND (LGSEF)
FOR LOCAL AFFIRMATIVE ACTION PROJECTS AND OTHER PRIORITY
INITIATIVES FOR LGUs INSTITUTIONAL AND CAPABILITY BUILDING IN
ACCORDANCE
WITH
THE
IMPLEMENTING
GUIDELINES
AND
MECHANICS AS PROMULGATED BY THE COMMITTEE.
These OCD resolutions were approved by then President Estrada on October
6, 1999.
Under the allocation scheme adopted pursuant to Resolution No. OCD-99005, the five billion pesos LGSEF was to be allocated as follows:
1. The PhP4 Billion of the LGSEF shall be allocated in accordance with
the allocation scheme and implementing guidelines and mechanics
promulgated and adopted by the OCD. To wit:
a. The first PhP2 Billion of the LGSEF shall be allocated in accordance
with the codal formula sharing scheme as prescribed under the
1991 Local Government Code;
b. The second PhP2 Billion of the LGSEF shall be allocated in accordance
with a modified 1992 cost of devolution fund (CODEF) sharing
scheme, as recommended by the respective leagues of provinces,
cities and municipalities to the OCD. The modified CODEF sharing
formula is as follows:
Province : 40%
Cities : 20%
Municipalities : 40%
This is applied to the P2 Billion after the approved amounts granted
to individual provinces, cities and municipalities as assistance to
cover decrease in 1999 IRA share due to reduction in land area have
been taken out.
2. The remaining PhP1 Billion of the LGSEF shall be earmarked to support
local affirmative action projects and other priority initiatives
submitted by LGUs to the Oversight Committee on Devolution for

approval in accordance with its prescribed guidelines as promulgated
and adopted by the OCD.
In Resolution No. OCD-99-003, the Oversight Committee set aside the one
billion pesos or 20% of the LGSEF to support Local Affirmative Action Projects
(LAAPs) of LGUs. This remaining amount was intended to respond to the urgent
need for additional funds assistance, otherwise not available within the
parameters of other existing fund sources. For LGUs to be eligible for funding
under the one-billion-peso portion of the LGSEF, the OCD promulgated the
following:
III. CRITERIA FOR ELIGIBILITY:
1. LGUs (province, city, municipality, or barangay), individually or by
group or multi-LGUs or leagues of LGUs, especially those belonging
to the 5th and 6th class, may access the fund to support any
projects or activities that satisfy any of the aforecited purposes. A
barangay may also access this fund directly or through their
respective municipality or city.
2. The proposed project/activity should be need-based, a local priority,
with high development impact and are congruent with the sociocultural, economic and development agenda of the Estrada
Administration, such as food security, poverty alleviation,
electrification, and peace and order, among others.
3. Eligible for funding under this fund are projects arising from, but not
limited to, the following areas of concern:
a. delivery of local health and sanitation services, hospital services
and other tertiary services;
b. delivery of social welfare services;
e. improvement of community-based forestry projects and other

local projects on environment and natural resources
protection and conservation;
f. improvement of tourism facilities and promotion of tourism;
g. peace and order and public safety;
h. construction, repair and maintenance of public works and
infrastructure, including public buildings and facilities for
public use, especially those destroyed or damaged by manmade or natural calamities and disaster as well as facilities
for water supply, flood control and river dikes;
i. provision of local electrification facilities;
j. livelihood and food production services, facilities and equipment;
k. other projects that may be authorized by the OCD consistent
with the aforementioned objectives and guidelines;
4. Except on extremely meritorious cases, as may be determined by the
Oversight Committee on Devolution, this portion of the LGSEF shall
not be used in expenditures for personal costs or benefits under
existing laws applicable to governments. Generally, this fund shall
cover the following objects of expenditures for programs, projects
and activities arising from the implementation of devolved and
regular functions and services:
a. acquisition/procurement of supplies and materials critical to the
full and effective implementation of devolved programs,
projects and activities;
b. repair and/or improvement of facilities;
c. provision of socio-cultural services and facilities for youth and

community development;
c. repair and/or upgrading of equipment;
d. provision of agricultural and on-site related research;
d. acquisition of basic equipment;

Page 76
e. construction of additional or new facilities;

f. counterpart contribution to joint arrangements or collective
projects among groups of municipalities, cities and/or
provinces related to devolution and delivery of basic
services.
5. To be eligible for funding, an LGU or group of LGU shall submit to the
Oversight Committee on Devolution through the Department of
Interior and Local Governments, within the prescribed schedule
and timeframe, a Letter Request for Funding Support from the
Affirmative Action Program under the LGSEF, duly signed by the
concerned LGU(s) and endorsed by cooperators and/or
beneficiaries, as well as the duly signed Resolution of Endorsement
by the respective Sanggunian(s) of the LGUs concerned. The LGUproponent shall also be required to submit the Project Request
(PR), using OCD Project Request Form No. 99-02, that details the
following:
(a) general description or brief of the project;
(b) objectives and justifications for undertaking the project, which
should highlight the benefits to the locality and the
expected impact to the local program/project arising from
the full and efficient implementation of social services and
facilities, at the local levels;
(c) target outputs or key result areas;
(d) schedule of activities and details of requirements;
(e) total cost requirement of the project;
(f) proponents counterpart funding share, if any, and identified
source(s) of counterpart funds for the full implementation of
the project;
(g) requested amount of project cost to be covered by the LGSEF.

Page 77
Further, under the guidelines formulated by the Oversight Committee as

contained in Attachment - Resolution No. OCD-99-003, the LGUs were required to
identify the projects eligible for funding under the one-billion-peso portion of the
LGSEF and submit the project proposals thereof and other documentary
requirements to the DILG for appraisal. The project proposals that passed the
DILGs appraisal would then be submitted to the Oversight Committee for review,
evaluation and approval. Upon its approval, the Oversight Committee would then
serve notice to the DBM for the preparation of the Special Allotment Release
Order (SARO) and Notice of Cash Allocation (NCA) to effect the release of funds to
the said LGUs.

Under Rep. Act No. 8760, otherwise known as the GAA of 2000, the amount
of P111,778,000,000 was allotted as the share of the LGUs in the internal
revenue taxes. As in the GAA of 1999, the GAA of 2000 contained a proviso
earmarking five billion pesos of the IRA for the LGSEF. This proviso, found in Item
No. 1, Special Provisions, Title XXXVII A. Internal Revenue Allotment, was similarly
worded as that contained in the GAA of 1999.
The Oversight Committee, in its Resolution No. OCD-2000-023 dated June 22,
2000, adopted the following allocation scheme governing the five billion pesos
LGSEF for 2000:
1. The PhP3.5 Billion of the CY 2000 LGSEF shall be allocated to and
shared by the four levels of LGUs, i.e., provinces, cities,
municipalities, and barangays, using the following percentagesharing formula agreed upon and jointly endorsed by the various
Leagues of LGUs:
For Provinces 26% or P 910,000,000
For Cities 23% or 805,000,000
For Municipalities 35% or 1,225,000,000
For Barangays 16% or 560,000,000
Provided that the respective Leagues representing the provinces,
cities, municipalities and barangays shall draw up and adopt the
horizontal distribution/sharing schemes among the member LGUs
whereby the Leagues concerned may opt to adopt direct financial
assistance or project-based arrangement, such that the LGSEF

allocation for individual LGU shall be released directly to the LGU
concerned;
Provided further that the individual LGSEF shares to LGUs are used
in accordance with the general purposes and guidelines
promulgated by the OCD for the implementation of the LGSEF at
the local levels pursuant to Res. No. OCD-99-006 dated October 7,
1999 and pursuant to the Leagues guidelines and mechanism as
approved by the OCD;
Provided further that each of the Leagues shall submit to the OCD
for its approval their respective allocation scheme, the list of LGUs
with the corresponding LGSEF shares and the corresponding
project categories if project-based;
Provided further that upon approval by the OCD, the lists of LGUs
shall be endorsed to the DBM as the basis for the preparation of
the corresponding NCAs, SAROs, and related budget/release
documents.
2. The remaining P1,500,000,000 of the CY 2000 LGSEF shall be
earmarked to support the following initiatives and local affirmative
action projects, to be endorsed to and approved by the Oversight
Committee on Devolution in accordance with the OCD
agreements, guidelines, procedures and documentary
requirements:
On July 5, 2000, then President Estrada issued a Memorandum authorizing
then Executive Secretary Zamora and the DBM to implement and release the 2.5
billion pesos LGSEF for 2000 in accordance with Resolution No. OCD-2000-023.
Thereafter, the Oversight Committee, now under the administration of
President Gloria Macapagal-Arroyo, promulgated Resolution No. OCD-2001-29
entitled ADOPTING RESOLUTION NO. OCD-2000-023 IN THE ALLOCATION,
IMPLEMENTATION AND RELEASE OF THE REMAINING P2.5 BILLION LGSEF FOR CY
2000. Under this resolution, the amount of one billion pesos of the LGSEF was to
be released in accordance with paragraph 1 of Resolution No. OCD-2000-23, to
complete the 3.5 billion pesos allocated to the LGUs, while the amount of 1.5
billion pesos was allocated for the LAAP. However, out of the latter
amount, P400,000,000 was to be allocated and released as follows: P50,000,000

Page 78
as financial assistance to the LAAPs of LGUs; P275,360,227 as financial

assistance to cover the decrease in the IRA of LGUs concerned due to reduction
in land area; and P74,639,773 for the LGSEF Capability-Building Fund.

In view of the failure of Congress to enact the general appropriations law for
2001, the GAA of 2000 was deemed re-enacted, together with the IRA of the
LGUs therein and the proviso earmarking five billion pesos thereof for the LGSEF.
On January 9, 2002, the Oversight Committee adopted Resolution No. OCD2002-001 allocating the five billion pesos LGSEF for 2001 as follows:
Modified Codal Formula P 3.000 billion
Priority Projects 1.900 billion
Capability Building Fund .100 billion
P 5.000 billion
RESOLVED FURTHER, that the P3.0 B of the CY 2001 LGSEF which is to be
allocated according to the modified codal formula shall be released to the four
levels of LGUs, i.e., provinces, cities, municipalities and barangays, as follows:
LGUs Percentage Amount
Provinces 25 P 0.750 billion
Cities 25 0.750
Municipalities 35 1.050
Barangays 15 0.450
100 P 3.000 billion
RESOLVED FURTHER, that the P1.9 B earmarked for priority projects shall be
distributed according to the following criteria:
1.0 For projects of the 4th, 5th and 6th class LGUs; or
2.0 Projects in consonance with the Presidents State of the Nation
Address (SONA)/summit commitments.
RESOLVED FURTHER, that the remaining P100 million LGSEF capability building
fund shall be distributed in accordance with the recommendation of the Leagues
of Provinces, Cities, Municipalities and Barangays, and approved by the OCD.
Upon receipt of a copy of the above resolution, Gov. Mandanas wrote to the
individual members of the Oversight Committee seeking the reconsideration of
Resolution No. OCD-2002-001. He also wrote to Pres. Macapagal-Arroyo urging
her to disapprove said resolution as it violates the Constitution and the Local
Government Code of 1991.
On January 25, 2002, Pres. Macapagal-Arroyo approved Resolution No. OCD2002-001.
The Petitioners Case
directive of the Constitution that the LGUs share in the national taxes shall be
automatically released to them. The petitioner maintains that the use of the word
shall must be given a compulsory meaning.
To further buttress this argument, the petitioner contends that to vest the
Oversight Committee with the authority to determine the distribution and release
of the LGSEF, which is a part of the IRA of the LGUs, is an anathema to the
principle of local autonomy as embodied in the Constitution and the Local
Government Code of 1991. The petitioner cites as an example the experience in
2001 when the release of the LGSEF was long delayed because the Oversight
Committee was not able to convene that year and no guidelines were issued
therefor. Further, the possible disapproval by the Oversight Committee of the
project proposals of the LGUs would result in the diminution of the latters share in
the IRA.
Another infringement alleged to be occasioned by the assailed OCD
resolutions is the improper amendment to Section 285 of the Local Government
Code of 1991 on the percentage sharing of the IRA among the LGUs. Said
provision allocates the IRA as follows: Provinces 23%; Cities 23%; Municipalities
34%; and Barangays 20%.[8] This formula has been improperly amended or
modified, with respect to the five-billion-peso portion of the IRA allotted for the
LGSEF, by the assailed OCD resolutions as they invariably provided for a different
sharing scheme.
The petitioner now comes to this Court assailing as unconstitutional and void
the provisos in the GAAs of 1999, 2000 and 2001, relating to the LGSEF. Similarly
assailed are the Oversight Committees Resolutions Nos. OCD-99-003, OCD-99005, OCD-99-006, OCD-2000-023, OCD-2001-029 and OCD-2002-001 issued
pursuant thereto. The petitioner submits that the assailed provisos in the GAAs
and the OCD resolutions, insofar as they earmarked the amount of five billion
pesos of the IRA of the LGUs for 1999, 2000 and 2001 for the LGSEF and imposed
conditions for the release thereof, violate the Constitution and the Local
Government Code of 1991.
The modifications allegedly constitute an illegal amendment by the

executive branch of a substantive law. Moreover, the petitioner mentions that in
the Letter dated December 5, 2001 of respondent Executive Secretary Romulo
addressed to respondent Secretary Boncodin, the former endorsed to the latter
the release of funds to certain LGUs from the LGSEF in accordance with the
handwritten instructions of President Arroyo. Thus, the LGUs are at a loss as to
how a portion of the LGSEF is actually allocated. Further, there are still portions of
the LGSEF that, to date, have not been received by the petitioner; hence,
resulting in damage and injury to the petitioner.
Section 6, Article X of the Constitution is invoked as it mandates that the just

share of the LGUs shall be automatically released to them. Sections 18 and 286
of the Local Government Code of 1991, which enjoin that the just share of the
LGUs shall be automatically and directly released to them without need of further
action are, likewise, cited.
The petitioner prays that the Court declare as unconstitutional and void the
assailed provisos relating to the LGSEF in the GAAs of 1999, 2000 and 2001 and
the assailed OCD resolutions (Resolutions Nos. OCD-99-003, OCD-99-005, OCD99-006, OCD-2000-023, OCD-2001-029 and OCD-2002-001) issued by the
Oversight Committee pursuant thereto. The petitioner, likewise, prays that the
Court direct the respondents to rectify the unlawful and illegal distribution and
releases of the LGSEF for the aforementioned years and release the same in
accordance with the sharing formula under Section 285 of the Local Government
Code of 1991. Finally, the petitioner urges the Court to declare that the entire IRA
The petitioner posits that to subject the distribution and release of the fivebillion-peso portion of the IRA, classified as the LGSEF, to compliance by the LGUs
with the implementing rules and regulations, including the mechanisms and
guidelines prescribed by the Oversight Committee, contravenes the explicit

Page 79
should be released automatically without further action by the LGUs as required

by the Constitution and the Local Government Code of 1991.
The Respondents Arguments
Further, according to the respondents, the petition has already been

rendered moot and academic as it no longer presents a justiciable
controversy. The IRAs for the years 1999, 2000 and 2001, have already been
released and the government is now operating under the 2003 budget. In support
of this, the respondents submitted certifications issued by officers of the DBM
attesting to the release of the allocation or shares of the petitioner in the LGSEF
for 1999, 2000 and 2001. There is, therefore, nothing more to prohibit.
The respondents, through the Office of the Solicitor General, urge the Court
to dismiss the petition on procedural and substantive grounds. On the latter, the
respondents contend that the assailed provisos in the GAAs of 1999, 2000 and
2001 and the assailed resolutions issued by the Oversight Committee are not
constitutionally infirm. The respondents advance the view that Section 6, Article
X of the Constitution does not specify that the just share of the LGUs shall be
determined solely by the Local Government Code of 1991. Moreover, the phrase
as determined by law in the same constitutional provision means that there
exists no limitation on the power of Congress to determine what is the just share
of the LGUs in the national taxes.In other words, Congress is the arbiter of what
should be the just share of the LGUs in the national taxes.
Finally, the petitioner allegedly has no legal standing to bring the suit
because it has not suffered any injury. In fact, the petitioners just share has even
increased. Pursuant to Section 285 of the Local Government Code of 1991, the
share of the provinces is 23%. OCD Nos. 99-005, 99-006 and 99-003 gave the
provinces 40% of P2 billion of the LGSEF. OCD Nos. 2000-023 and 2001-029
apportioned 26% of P3.5 billion to the provinces. On the other hand, OCD No.
2001-001 allocated 25% of P3 billion to the provinces. Thus, the petitioner has
not suffered any injury in the implementation of the assailed provisos in the GAAs
of 1999, 2000 and 2001 and the OCD resolutions.
The respondents further theorize that Section 285 of the Local Government
Code of 1991, which provides for the percentage sharing of the IRA among the
LGUs, was not intended to be a fixed determination of their just share in the
national taxes. Congress may enact other laws, including appropriations laws
such as the GAAs of 1999, 2000 and 2001, providing for a different sharing
formula. Section 285 of the Local Government Code of 1991 was merely intended
to be the default share of the LGUs to do away with the need to determine
annually by law their just share. However, the LGUs have no vested right in a
permanent or fixed percentage as Congress may increase or decrease the just
share of the LGUs in accordance with what it believes is appropriate for their
operation. There is nothing in the Constitution which prohibits Congress from
making such determination through the appropriations laws. If the provisions of a
particular statute, the GAA in this case, are within the constitutional power of the
legislature to enact, they should be sustained whether the courts agree or not in
the wisdom of their enactment.
The Ruling of the Court
On procedural grounds, the respondents urge the Court to dismiss the

petition outright as the same is defective. The petition allegedly raises factual
issues which should be properly threshed out in the lower courts, not this Court,
not being a trier of facts. Specifically, the petitioners allegation that there are
portions of the LGSEF that it has not, to date, received, thereby causing it (the
petitioner) injury and damage, is subject to proof and must be substantiated in
the proper venue, i.e., the lower courts.

Page 80
Procedural Issues
Before resolving the petition on its merits, the Court shall first rule on the
following procedural issues raised by the respondents: (1) whether the petitioner
has legal standing or locus standi to file the present suit; (2) whether the petition
involves factual questions that are properly cognizable by the lower courts; and
(3) whether the issue had been rendered moot and academic.
The petitioner has locus standi

to maintain the present suit
The gist of the question of standing is whether a party has alleged such a
personal stake in the outcome of the controversy as to assure that concrete
adverseness which sharpens the presentation of issues upon which the court so
largely depends for illumination of difficult constitutional questions. [9] Accordingly,
it has been held that the interest of a party assailing the constitutionality of a
statute must be direct and personal. Such party must be able to show, not only
that the law or any government act is invalid, but also that he has sustained or is
in imminent danger of sustaining some direct injury as a result of its
enforcement, and not merely that he suffers thereby in some indefinite way. It
must appear that the person complaining has been or is about to be denied some
right or privilege to which he is lawfully entitled or that he is about to be
subjected to some burdens or penalties by reason of the statute or act
complained of.[10]
The Court holds that the petitioner possesses the requisite standing to
maintain the present suit. The petitioner, a local government unit, seeks relief in
order to protect or vindicate an interest of its own, and of the other LGUs. This
interest pertains to the LGUs share in the national taxes or the IRA. The
petitioners constitutional claim is, in substance, that the assailed provisos in the
GAAs of 1999, 2000 and 2001, and the OCD resolutions contravene Section 6,
Article X of the Constitution, mandating the automatic release to the LGUs of
their share in the national taxes. Further, the injury that the petitioner claims to
suffer is the diminution of its share in the IRA, as provided under Section 285 of
the Local Government Code of 1991, occasioned by the implementation of the
assailed measures. These allegations are sufficient to grant the petitioner
standing to question the validity of the assailed provisos in the GAAs of 1999,
2000 and 2001, and the OCD resolutions as the petitioner clearly has a plain,
direct and adequate interest in the manner and distribution of the IRA among the
LGUs.
The petition involves a significant

legal issue
The crux of the instant controversy is whether the assailed provisos
contained in the GAAs of 1999, 2000 and 2001, and the OCD resolutions infringe
the Constitution and the Local Government Code of 1991. This is undoubtedly a
legal question. On the other hand, the following facts are not disputed:
1. The earmarking of five billion pesos of the IRA for the LGSEF in the
assailed provisos in the GAAs of 1999, 2000 and re-enacted budget
for 2001;
2. The promulgation of the assailed OCD resolutions providing for the
allocation schemes covering the said five billion pesos and the
implementing rules and regulations therefor; and

Page 81
3. The release of the LGSEF to the LGUs only upon their compliance with
the implementing rules and regulations, including the guidelines and
mechanisms, prescribed by the Oversight Committee.
Considering that these facts, which are necessary to resolve the legal
question now before this Court, are no longer in issue, the same need not be
determined by a trial court.[11] In any case, the rule on hierarchy of courts will not
prevent this Court from assuming jurisdiction over the petition. The said rule may
be relaxed when the redress desired cannot be obtained in the appropriate courts
or where exceptional and compelling circumstances justify availment of a remedy
within and calling for the exercise of this Courts primary jurisdiction. [12]
The crucial legal issue submitted for resolution of this Court entails the
proper legal interpretation of constitutional and statutory provisions. Moreover,
the transcendental importance of the case, as it necessarily involves the
application of the constitutional principle on local autonomy, cannot be
gainsaid. The nature of the present controversy, therefore, warrants the
relaxation by this Court of procedural rules in order to resolve the case forthwith.
The substantive issue needs to be resolved

notwithstanding the supervening events
Granting arguendo that, as contended by the respondents, the resolution of
the case had already been overtaken by supervening events as the IRA, including
the LGSEF, for 1999, 2000 and 2001, had already been released and the
government is now operating under a new appropriations law, still, there is
compelling reason for this Court to resolve the substantive issue raised by the
instant petition. Supervening events, whether intended or accidental, cannot
prevent the Court from rendering a decision if there is a grave violation of the
Constitution.[13] Even in cases where supervening events had made the cases
moot, the Court did not hesitate to resolve the legal or constitutional issues
raised to formulate controlling principles to guide the bench, bar and public. [14]
Another reason justifying the resolution by this Court of the substantive issue
now before it is the rule that courts will decide a question otherwise moot and
academic if it is capable of repetition, yet evading review. [15] For the GAAs in the
coming years may contain provisos similar to those now being sought to be
invalidated, and yet, the question may not be decided before another GAA is
enacted. It, thus, behooves this Court to make a categorical ruling on the
substantive issue now.
Substantive Issue
As earlier intimated, the resolution of the substantive legal issue in this case
calls for the application of a most important constitutional policy and principle,
that of local autonomy.[16] In Article II of the Constitution, the State has expressly
adopted as a policy that:
Section 25. The State shall ensure the autonomy of local governments.
An entire article (Article X) of the Constitution has been devoted to
guaranteeing and promoting the autonomy of LGUs. Section 2 thereof reiterates
the State policy in this wise:
Section 2. The territorial and political subdivisions shall enjoy local autonomy.
Consistent with the principle of local autonomy, the Constitution confines the
Presidents power over the LGUs to one of general supervision. [17] This provision
has been interpreted to exclude the power of control. The distinction between the
two powers was enunciated in Drilon v. Lim:[18]
An officer in control lays down the rules in the doing of an act. If they are not
followed, he may, in his discretion, order the act undone or re-done by his
subordinate or he may even decide to do it himself.Supervision does not cover
such authority. The supervisor or superintendent merely sees to it that the rules
are followed, but he himself does not lay down such rules, nor does he have the
discretion to modify or replace them. If the rules are not observed, he may order
the work done or re-done but only to conform to the prescribed rules. He may not
prescribe his own manner for doing the act. He has no judgment on this matter
except to see to it that the rules are followed.[19]
The Local Government Code of 1991[20] was enacted to flesh out the mandate
of the Constitution.[21] The State policy on local autonomy is amplified in Section 2
thereof:
Sec. 2. Declaration of Policy. (a) It is hereby declared the policy of the State that
the territorial and political subdivisions of the State shall enjoy genuine and
meaningful local autonomy to enable them to attain their fullest development as
self-reliant communities and make them more effective partners in the
attainment of national goals. Toward this end, the State shall provide for a more

Page 82
responsive and accountable local government structure instituted through a

system of decentralization whereby local government units shall be given more
powers, authority, responsibilities, and resources. The process of decentralization
shall proceed from the National Government to the local government units.
Guided by these precepts, the Court shall now determine whether the
assailed provisos in the GAAs of 1999, 2000 and 2001, earmarking for each
corresponding year the amount of five billion pesos of the IRA for the LGSEF and
the OCD resolutions promulgated pursuant thereto, transgress the Constitution
and the Local Government Code of 1991.
The assailed provisos in the GAAs of 1999, 2000

and 2001 and the OCD resolutions violate the
constitutional precept on local autonomy
Section 6, Article X of the Constitution reads:
Sec. 6. Local government units shall have a just share, as determined by law,
in the national taxes which shall be automatically released to them.
When parsed, it would be readily seen that this provision mandates that (1)
the LGUs shall have a just share in the national taxes; (2) the just share shall be
determined by law; and (3) the just share shall be automatically released to the
LGUs.
The Local Government Code of 1991, among its salient provisions,
underscores the automatic release of the LGUs just share in this wise:
Sec. 18. Power to Generate and Apply Resources. Local government units shall
have the power and authority to establish an organization that shall be
responsible for the efficient and effective implementation of their development
plans, program objectives and priorities; to create their own sources of revenue
and to levy taxes, fees, and charges which shall accrue exclusively for their use
and disposition and which shall be retained by them; to have a just share in
national taxes which shall be automatically and directly released to them without
need of further action;
...
Sec. 286. Automatic Release of Shares. (a) The share of each local government
unit shall be released, without need of any further action, directly to the
provincial, city, municipal or barangay treasurer, as the case may be, on a
quarterly basis within five (5) days after the end of each quarter, and which shall
not be subject to any lien or holdback that may be imposed by the national
government for whatever purpose.
(b) Nothing in this Chapter shall be understood to diminish the share of local
government units under existing laws.
Websters Third New International Dictionary defines automatic as involuntary
either wholly or to a major extent so that any activity of the will is largely
negligible; of a reflex nature; without volition; mechanical; like or suggestive of
an automaton. Further, the word automatically is defined as in an automatic
manner: without thought or conscious intention. Being automatic, thus, connotes
something mechanical, spontaneous and perfunctory. As such, the LGUs are not
required to perform any act to receive the just share accruing to them from the
national coffers. As emphasized by the Local Government Code of 1991, the just
share of the LGUs shall be released to them without need of further
action. Construing Section 286 of the LGC, we held in Pimentel, Jr. v. Aguirre,
[22]
viz:
Section 4 of AO 372 cannot, however, be upheld. A basic feature of local fiscal
autonomy is the automatic release of the shares of LGUs in the National internal
revenue. This is mandated by no less than the Constitution. The Local
Government Code specifies further that the release shall be made directly to the
LGU concerned within five (5) days after every quarter of the year and shall not
be subject to any lien or holdback that may be imposed by the national
government for whatever purpose. As a rule, the term SHALL is a word of
command that must be given a compulsory meaning. The provision is,
therefore,IMPERATIVE.
Section 4 of AO 372, however, orders the withholding, effective January 1, 1998,
of 10 percent of the LGUs IRA pending the assessment and evaluation by the
Development Budget Coordinating Committee of the emerging fiscal situation in
the country. Such withholding clearly contravenes the Constitution and the
law. Although temporary, it is equivalent to a holdback, which means something
held back or withheld, often temporarily. Hence, the temporary nature of the
retention by the national government does not matter. Any retention is
prohibited.

Page 83
In sum, while Section 1 of AO 372 may be upheld as an advisory effected in times

of national crisis, Section 4 thereof has no color of validity at all. The latter
provision effectively encroaches on the fiscal autonomy of local
governments. Concededly, the President was well-intentioned in issuing his Order
to withhold the LGUs IRA, but the rule of law requires that even the best
intentions must be carried out within the parameters of the Constitution and the
law. Verily, laudable purposes must be carried out by legal methods. [23]
The just share of the LGUs is incorporated as the IRA in the appropriations
law or GAA enacted by Congress annually. Under the assailed provisos in the
GAAs of 1999, 2000 and 2001, a portion of the IRA in the amount of five billion
pesos was earmarked for the LGSEF, and these provisos imposed the condition
that such amount shall be released to the local government units subject to the
implementing rules and regulations, including such mechanisms and guidelines
for the equitable allocations and distribution of said fund among local
government units subject to the guidelines that may be prescribed by the
Oversight Committee on Devolution. Pursuant thereto, the Oversight Committee,
through the assailed OCD resolutions, apportioned the five billion pesos LGSEF
such that:
For 1999
P2 billion - allocated according to Sec. 285 LGC
P2 billion - Modified Sharing Formula (Provinces 40%;
Cities 20%; Municipalities 40%)
P1 billion projects (LAAP) approved by OCD.[24]
For 2000
P3.5 billion Modified Sharing Formula (Provinces 26%;
Cities 23%; Municipalities 35%; Barangays 16%);
P1.5 billion projects (LAAP) approved by the OCD.[25]
For 2001
P3 billion Modified Sharing Formula (Provinces 25%;
Cities 25%; Municipalities 35%; Barangays 15%)
P1.9 billion priority projects
P100 million capability building fund.[26]
Significantly, the LGSEF could not be released to the LGUs without the
Oversight Committees prior approval. Further, with respect to the portion of the
LGSEF allocated for various projects of the LGUs (P1 billion for 1999; P1.5 billion
for 2000 and P2 billion for 2001), the Oversight Committee, through the assailed
OCD resolutions, laid down guidelines and mechanisms that the LGUs had to
comply with before they could avail of funds from this portion of the LGSEF. The
guidelines required (a) the LGUs to identify the projects eligible for funding based
on the criteria laid down by the Oversight Committee; (b) the LGUs to submit
their project proposals to the DILG for appraisal; (c) the project proposals that
passed the appraisal of the DILG to be submitted to the Oversight Committee for
review, evaluation and approval. It was only upon approval thereof that the
Oversight Committee would direct the DBM to release the funds for the projects.
To the Courts mind, the entire process involving the distribution and release
of the LGSEF is constitutionally impermissible. The LGSEF is part of the IRA or just
share of the LGUs in the national taxes. To subject its distribution and release to
the vagaries of the implementing rules and regulations, including the guidelines
and mechanisms unilaterally prescribed by the Oversight Committee from time to
time, as sanctioned by the assailed provisos in the GAAs of 1999, 2000 and 2001
and the OCD resolutions, makes the release not automatic, a flagrant violation of
the constitutional and statutory mandate that the just share of the LGUs shall be
automatically released to them. The LGUs are, thus, placed at the mercy of the
Oversight Committee.
authority is undoubtedly limited to the implementation of the Local Government

Code of 1991, not to supplant or subvert the same. Neither can it exercise control
over the IRA, or even a portion thereof, of the LGUs.
That the automatic release of the IRA was precisely intended to guarantee
and promote local autonomy can be gleaned from the discussion below between
Messrs. Jose N. Nolledo and Regalado M. Maambong, then members of the 1986
Constitutional Commission, to wit:
MR. MAAMBONG. Unfortunately, under Section 198 of the Local Government
Code, the existence of subprovinces is still acknowledged by the law, but the
statement of the Gentleman on this point will have to be taken up probably by
the Committee on Legislation. A second point, Mr. Presiding Officer, is that under
Article 2, Section 10 of the 1973 Constitution, we have a provision which states:
The State shall guarantee and promote the autonomy of local
government units, especially the barrio, to insure their fullest
development as self-reliant communities.
This provision no longer appears in the present configuration; does this
mean that the concept of giving local autonomy to local governments is
no longer adopted as far as this Article is concerned?
Where the law, the Constitution in this case, is clear and unambiguous, it
must be taken to mean exactly what it says, and courts have no choice but to
see to it that the mandate is obeyed. [27] Moreover, as correctly posited by the
petitioner, the use of the word shall connotes a mandatory order. Its use in a
statute denotes an imperative obligation and is inconsistent with the idea of
discretion.[28]
MR. NOLLEDO. No. In the report of the Committee on Preamble, National Territory,
and Declaration of Principles, that concept is included and widened upon the
initiative of Commissioner Bennagen.
Indeed, the Oversight Committee exercising discretion, even control, over

the distribution and release of a portion of the IRA, the LGSEF, is an anathema to
and subversive of the principle of local autonomy as embodied in the
Constitution. Moreover, it finds no statutory basis at all as the Oversight
Committee was created merely to formulate the rules and regulations for the
efficient and effective implementation of the Local Government Code of 1991 to
ensure compliance with the principles of local autonomy as defined under the
Constitution.[29] In fact, its creation was placed under the title of Transitory
Provisions, signifying its ad hoc character. According to Senator Aquilino Q.
Pimentel, the principal author and sponsor of the bill that eventually became Rep.
Act No. 7160, the Committees work was supposed to be done a year from the
approval of the Code, or on October 10, 1992.[30] The Oversight Committees
With regard to Section 6, sources of revenue, the creation of sources as provided

by previous law was subject to limitations as may be provided by law, but now,
we are using the term subject to such guidelines as may be fixed by law. In
Section 7, mention is made about the unique, distinct and exclusive charges and
contributions, and in Section 8, we talk about exclusivity of local taxes and the
share in the national wealth. Incidentally, I was one of the authors of this
provision, and I am very thankful. Does this indicate local autonomy, or was the
wording of the law changed to give more autonomy to the local government
units?[31]

Page 84
MR. MAAMBONG. Thank you for that.
MR. NOLLEDO. Yes. In effect, those words indicate also decentralization because
local political units can collect taxes, fees and charges subject merely to
guidelines, as recommended by the league of governors and city mayors, with
whom I had a dialogue for almost two hours. They told me that limitations may
be questionable in the sense that Congress may limit and in effect deny the right
later on.
MR. MAAMBONG. Also, this provision on automatic release of national tax share
points to more local autonomy. Is this the intention?
control over their acts in the sense that he can substitute their judgments with
his own.
Decentralization of power, on the other hand, involves an abdication of political
power in the [sic] favor of local governments [sic] units declared to be
autonomous. In that case, the autonomous government is free to chart its own
destiny and shape its future with minimum intervention from central
authorities. According to a constitutional author, decentralization of power
amounts to self-immolation, since in that event, the autonomous government
becomes accountable not to the central authorities but to its constituency. [34]
MR. NOLLEDO. Yes, the Commissioner is perfectly right.[32]

The concept of local autonomy was explained in Ganzon v. Court of
Appeals[33] in this wise:
Local autonomy includes both administrative and fiscal autonomy. The fairly
recent case of Pimentel v. Aguirre[35] is particularly instructive. The Court declared
therein that local fiscal autonomy includes the power of the LGUs to, inter alia,
allocate their resources in accordance with their own priorities:
As the Constitution itself declares, local autonomy means a more responsive and
accountable local government structure instituted through a system of
decentralization. The Constitution, as we observed, does nothing more than to
break up the monopoly of the national government over the affairs of local
governments and as put by political adherents, to liberate the local governments
from the imperialism of Manila. Autonomy, however, is not meant to end the
relation of partnership and interdependence between the central administration
and local government units, or otherwise, to usher in a regime of federalism. The
Charter has not taken such a radical step. Local governments, under the
Constitution, are subject to regulation, however limited, and for no other purpose
than precisely, albeit paradoxically, to enhance self-government.
Under existing law, local government units, in addition to having administrative

autonomy in the exercise of their functions, enjoy fiscal autonomy as well. Fiscal
autonomy means that local governments have the power to create their own
sources of revenue in addition to their equitable share in the national taxes
released by the national government, as well as the power to allocate their
resources in accordance with their own priorities. It extends to the preparation of
their budgets, and local officials in turn have to work within the constraints
thereof. They are not formulated at the national level and imposed on local
governments, whether they are relevant to local needs and resources or not ... [36]
As we observed in one case, decentralization means devolution of national

administration but not power to the local levels. Thus:
Now, autonomy is either decentralization of administration or decentralization of
power. There is decentralization of administration when the central government
delegates administrative powers to political subdivisions in order to broaden the
base of government power and in the process to make local governments more
responsive and accountable and ensure their fullest development as self-reliant
communities and make them more effective partners in the pursuit of national
development and social progress. At the same time, it relieves the central
government of the burden of managing local affairs and enables it to concentrate
on national concerns. The President exercises general supervision over them, but
only to ensure that local affairs are administered according to law. He has no

Page 85
Further, a basic feature of local fiscal autonomy is the constitutionally

mandated automatic release of the shares of LGUs in the national internal
revenue.[37]
Following this ratiocination, the Court in Pimentel struck down as
unconstitutional Section 4 of Administrative Order (A.O.) No. 372 which ordered
the withholding, effective January 1, 1998, of ten percent of the LGUs IRA
pending the assessment and evaluation by the Development Budget
Coordinating Committee of the emerging fiscal situation.
In like manner, the assailed provisos in the GAAs of 1999, 2000 and 2001,
and the OCD resolutions constitute a withholding of a portion of the IRA. They put
on hold the distribution and release of the five billion pesos LGSEF and subject
the same to the implementing rules and regulations, including the guidelines and
mechanisms prescribed by the Oversight Committee from time to time. Like
Section 4 of A.O. 372, the assailed provisos in the GAAs of 1999, 2000 and 2001
and the OCD resolutions effectively encroach on the fiscal autonomy enjoyed by
the LGUs and must be struck down. They cannot, therefore, be upheld.
The assailed provisos in the GAAs of 1999, 2000

and 2001 and the OCD resolutions cannot amend
Section 285 of the Local Government Code of 1991
Section 284[38] of the Local Government Code provides that, beginning the
third year of its effectivity, the LGUs share in the national internal revenue taxes
shall be 40%. This percentage is fixed and may not be reduced except in the
event the national government incurs an unmanageable public sector deficit" and
only upon compliance with stringent requirements set forth in the same section:
Sec. 284. ...
Provided, That in the event that the national government incurs an
unmanageable public sector deficit, the President of the Philippines is hereby
authorized, upon recommendation of Secretary of Finance, Secretary of Interior
and Local Government and Secretary of Budget and Management, and subject to
consultation with the presiding officers of both Houses of Congress and the
presidents of the liga, to make the necessary adjustments in the internal revenue
allotment of local government units but in no case shall the allotment be less
than thirty percent (30%) of the collection of the national internal revenue taxes
of the third fiscal year preceding the current fiscal year; Provided, further That in
the first year of the effectivity of this Code, the local government units shall, in
addition to the thirty percent (30%) internal revenue allotment which shall
include the cost of devolved functions for essential public services, be entitled to
receive the amount equivalent to the cost of devolved personnel services.
Thus, from the above provision, the only possible exception to the mandatory
automatic release of the LGUs IRA is if the national internal revenue collections
for the current fiscal year is less than 40 percent of the collections of the
preceding third fiscal year, in which case what should be automatically released
shall be a proportionate amount of the collections for the current fiscal year. The
adjustment may even be made on a quarterly basis depending on the actual
collections of national internal revenue taxes for the quarter of the current fiscal
year. In the instant case, however, there is no allegation that the national internal

Page 86
revenue tax collections for the fiscal years 1999, 2000 and 2001 have fallen
compared to the preceding three fiscal years.
Section 285 then specifies how the IRA shall be allocated among the LGUs:
Sec. 285. Allocation to Local Government Units. The share of local government
units in the internal revenue allotment shall be allocated in the following manner:
(a) Provinces Twenty-three (23%)
(b) Cities Twenty-three percent (23%);
(c) Municipalities Thirty-four (34%); and
(d) Barangays Twenty percent (20%).
However, this percentage sharing is not followed with respect to the five
billion pesos LGSEF as the assailed OCD resolutions, implementing the assailed
provisos in the GAAs of 1999, 2000 and 2001, provided for a different sharing
scheme. For example, for 1999, P2 billion of the LGSEF was allocated as follows:
Provinces 40%; Cities 20%; Municipalities 40%. [39] For 2000, P3.5 billion of the
LGSEF was allocated in this manner: Provinces 26%; Cities 23%; Municipalities
35%; Barangays 26%.[40] For 2001, P3 billion of the LGSEF was allocated, thus:
Provinces 25%; Cities 25%; Municipalities 35%; Barangays 15%. [41]
The respondents argue that this modification is allowed since the
Constitution does not specify that the just share of the LGUs shall only be
determined by the Local Government Code of 1991. That it is within the power of
Congress to enact other laws, including the GAAs, to increase or decrease the
just share of the LGUs. This contention is untenable. The Local Government Code
of 1991 is a substantive law. And while it is conceded that Congress may amend
any of the provisions therein, it may not do so through appropriations laws or
GAAs. Any amendment to the Local Government Code of 1991 should be done in
a separate law, not in the appropriations law, because Congress cannot include in
a general appropriation bill matters that should be more properly enacted in a
separate legislation.[42]
A general appropriations bill is a special type of legislation, whose content is
limited to specified sums of money dedicated to a specific purpose or a separate
fiscal unit.[43] Any provision therein which is intended to amend another law is
considered an inappropriate provision. The category of inappropriate provisions
includes unconstitutional provisions and provisions which are intended to amend
other laws, because clearly these kinds of laws have no place in an
appropriations bill.[44]
Increasing or decreasing the IRA of the LGUs or modifying their percentage

sharing therein, which are fixed in the Local Government Code of 1991, are
matters of general and substantive law. To permit Congress to undertake these
amendments through the GAAs, as the respondents contend, would be to give
Congress the unbridled authority to unduly infringe the fiscal autonomy of the
LGUs, and thus put the same in jeopardy every year. This, the Court cannot
sanction.
It is relevant to point out at this juncture that, unlike those of 1999, 2000 and
2001, the GAAs of 2002 and 2003 do not contain provisos similar to the herein
assailed provisos. In other words, the GAAs of 2002 and 2003 have not
earmarked any amount of the IRA for the LGSEF. Congress had perhaps seen fit to
discontinue the practice as it recognizes its infirmity.Nonetheless, as earlier
mentioned, this Court has deemed it necessary to make a definitive ruling on the
matter in order to prevent its recurrence in future appropriations laws and that
the principles enunciated herein would serve to guide the bench, bar and public.
Conclusion
In closing, it is well to note that the principle of local autonomy, while

concededly expounded in greater detail in the present Constitution, dates back to
the turn of the century when President William McKinley, in his Instructions to the
Second Philippine Commission dated April 7, 1900, ordered the new Government
to devote their attention in the first instance to the establishment of municipal
governments in which the natives of the Islands, both in the cities and in the rural
communities, shall be afforded the opportunity to manage their own affairs to the
fullest extent of which they are capable, and subject to the least degree of
supervision and control in which a careful study of their capacities and
observation of the workings of native control show to be consistent with the
maintenance of law, order and loyalty. [45] While the 1935 Constitution had no
specific article on local autonomy, nonetheless, it limited the executive power
over local governments to general supervision ... as may be provided by law.
[46]
Subsequently, the 1973 Constitution explicitly stated that [t]he State shall
guarantee and promote the autonomy of local government units, especially the
barangay to ensure their fullest development as self-reliant communities. [47] An
entire article on Local Government was incorporated therein. The present
Constitution, as earlier opined, has broadened the principle of local
autonomy. The 14 sections in Article X thereof markedly increased the powers of
the local governments in order to accomplish the goal of a more meaningful local
autonomy.
Indeed, the value of local governments as institutions of democracy is
measured by the degree of autonomy that they enjoy. [48] As eloquently put by M.
De Tocqueville, a distinguished French political writer, [l]ocal assemblies of
citizens constitute the strength of free nations. Township meetings are to liberty
what primary schools are to science; they bring it within the peoples reach; they
teach men how to use and enjoy it. A nation may establish a system of free
governments but without the spirit of municipal institutions, it cannot have the
spirit of liberty.[49]
Our national officials should not only comply with the constitutional
provisions on local autonomy but should also appreciate the spirit and liberty
upon which these provisions are based.[50]
WHEREFORE, the petition is GRANTED. The assailed provisos in the General
Appropriations Acts of 1999, 2000 and 2001, and the assailed OCD Resolutions,
are declared UNCONSTITUTIONAL.
SO ORDERED.
G.R. No. 92299

Page 87
April 19, 1991
REYNALDO R. SAN JUAN, petitioner,

vs.
CIVIL SERVICE COMMISSION, DEPARTMENT OF BUDGET AND
MANAGEMENT and CECILIA ALMAJOSE,respondents.
Legal Services Division for petitioner.
Sumulong, Sumulong, Paras & Abano Law Offices for private respondent.
GUTIERREZ, JR., J.:

In this petition for certiorari pursuant to Section 7, Article IX (A) of the present
Constitution, the petitioner Governor of the Province of Rizal, prays for the
nullification of Resolution No. 89-868 of the Civil Service Commission (CSC) dated
November 21, 1989 and its Resolution No. 90-150 dated February 9, 1990.
The dispositive portion of the questioned Resolution reads:
WHEREFORE, foregoing premises considered, the Commission resolved to
dismiss, as it hereby dismisses the appeal of Governor Reynaldo San Juan
of Rizal. Accordingly, the approved appointment of Ms. Cecilia Almajose as
Provincial Budget Officer of Rizal, is upheld. (Rollo, p. 32)
The subsequent Resolution No. 90-150 reiterates CSC's position upholding the
private respondent's appointment by denying the petitioner's motion for
reconsideration for lack of merit.
The antecedent facts of the case are as follows:
On March 22, 1988, the position of Provincial Budget Officer (PBO) for the
province of Rizal was left vacant by its former holder, a certain Henedima del
Rosario.
In a letter dated April 18, 1988, the petitioner informed Director Reynaldo Abella
of the Department of Budget and Management (DBM) Region IV that Ms. Dalisay
Santos assumed office as Acting PBO since March 22, 1988 pursuant to a
Memorandum issued by the petitioner who further requested Director Abella to

Page 88
endorse the appointment of the said Ms. Dalisay Santos to the contested position
of PBO of Rizal. Ms. Dalisay Santos was then Municipal Budget Officer of Taytay,
Rizal before she discharged the functions of acting PBO.
In a Memorandum dated July 26, 1988 addressed to the DBM Secretary, then
Director Abella of Region IV recommended the appointment of the private
respondent as PBO of Rizal on the basis of a comparative study of all Municipal
Budget Officers of the said province which included three nominees of the
petitioner. According to Abella, the private respondent was the most qualified
since she was the only Certified Public Accountant among the contenders.
On August 1, 1988, DBM Undersecretary Nazario S. Cabuquit, Jr. signed the
appointment papers of the private respondent as PBO of Rizal upon the
aforestated recommendation of Abella.
In a letter dated August 3, 1988 addressed to Secretary Carague, the petitioner
reiterated his request for the appointment of Dalisay Santos to the contested
position unaware of the earlier appointment made by Undersecretary Cabuquit.
On August 31, 1988, DBM Regional Director Agripino G. Galvez wrote the
petitioner that Dalisay Santos and his other recommendees did not meet the
minimum requirements under Local Budget Circular No. 31 for the position of a
local budget officer. Director Galvez whether or not through oversight further
required the petitioner to submit at least three other qualified nominees who are
qualified for the position of PBO of Rizal for evaluation and processing.
On November 2, 1988, the petitioner after having been informed of the private
respondent's appointment wrote Secretary Carague protesting against the said
appointment on the grounds that Cabuquit as DBM Undersecretary is not legally
authorized to appoint the PBO; that the private respondent lacks the required
three years work experience as provided in Local Budget Circular No. 31; and that
under Executive Order No. 112, it is the Provincial Governor, not the Regional
Director or a Congressman, who has the power to recommend nominees for the
position of PBO.
On January 9, 1989 respondent DBM, through its Director of the Bureau of Legal
& Legislative Affairs (BLLA) Virgilio A. Afurung, issued a Memorandum ruling that
the petitioner's letter-protest is not meritorious considering that public
respondent DBM validly exercised its prerogative in filling-up the contested
position since none of the petitioner's nominees met the prescribed

requirements.
On January 27, 1989, the petitioner moved for a reconsideration of the BLLA
ruling.
On February 28, 1989, the DBM Secretary denied the petitioner's motion for
reconsideration.
On March 27, 1989, the petitioner wrote public respondent CSC protesting
against the appointment of the private respondent and reiterating his position
regarding the matter.
Subsequently, public respondent CSC issued the questioned resolutions which
prompted the petitioner to submit before us the following assignment of errors:
A. THE CSC ERRED IN UPHOLDING THE APPOINTMENT BY DBM ASSISTANT
SECRETARY CABUQUIT OF CECILIA ALMAJOSE AS PBO OF RIZAL.
B. THE CSC ERRED IN HOLDING THAT CECILIA ALMA JOSE POSSESSES ALL
THE REQUIRED QUALIFICATIONS.
C. THE CSC ERRED IN DECLARING THAT PETITIONER'S NOMINEES ARE NOT
QUALIFIED TO THE SUBJECT POSITION.
D. THE CSC AND THE DBM GRAVELY ABUSED THEIR DISCRETION IN NOT
ALLOWING PETITIONER TO SUBMIT NEW NOMINEES WHO COULD MEET
THE REQUIRED QUALIFICATION (Petition, pp. 7-8,Rollo, pp. 15-16)
All the assigned errors relate to the issue of whether or not the private
respondent is lawfully entitled to discharge the functions of PBO of Rizal pursuant
to the appointment made by public respondent DBM's Undersecretary upon the
recommendation of then Director Abella of DBM Region IV.
The petitioner's arguments rest on his contention that he has the sole right and
privilege to recommend the nominees to the position of PBO and that the
appointee should come only from his nominees. In support thereof, he invokes
Section 1 of Executive Order No. 112 which provides that:

Page 89
Sec. 1. All budget officers of provinces, cities and municipalities shall be

appointed henceforth by the Minister of Budget and Management upon
recommendation of the local chief executive concerned, subject to civil
service law, rules and regulations, and they shall be placed under the
administrative control and technical supervision of the Ministry of Budget
and Management.
The petitioner maintains that the appointment of the private respondent to the
contested position was made in derogation of the provision so that both the
public respondents committed grave abuse of discretion in upholding Almajose's
appointment.
There is no question that under Section 1 of Executive Order No. 112 the
petitioner's power to recommend is subject to the qualifications prescribed by
existing laws for the position of PBO. Consequently, in the event that the
recommendations made by the petitioner fall short of the required standards, the
appointing authority, the Minister (now Secretary) of public respondent DBM is
expected to reject the same.
In the event that the Governor recommends an unqualified person, is the
Department Head free to appoint anyone he fancies ? This is the issue before us.
Before the promulgation of Executive Order No. 112 on December 24, 1986,
Batas Pambansa Blg. 337, otherwise known as the Local Government Code
vested upon the Governor, subject to civil service rules and regulations, the
power to appoint the PBO (Sec. 216, subparagraph (1), BP 337). The Code further
enumerated the qualifications for the position of PBO. Thus, Section 216,
subparagraph (2) of the same code states that:
(2) No person shall be appointed provincial budget officer unless he is a
citizen of the Philippines, of good moral character, a holder of a degree
preferably in law, commerce, public administration or any related course
from a recognized college or university, a first grade civil service eligibility
or its equivalent, and has acquired at least five years experience in
budgeting or in any related field.
The petitioner contends that since the appointing authority with respect to the
Provincial Budget Officer of Rizal was vested in him before, then, the real intent
behind Executive Order No. 112 in empowering him to recommend nominees to
the position of Provincial Budget Officer is to make his recommendation part and
parcel of the appointment process. He states that the phrase "upon

recommendation of the local chief executive concerned" must be given
mandatory application in consonance with the state policy of local autonomy as
guaranteed by the 1987 Constitution under Art. II, Sec. 25 and Art. X, Sec. 2
thereof. He further argues that his power to recommend cannot validly be
defeated by a mere administrative issuance of public respondent DBM reserving
to itself the right to fill-up any existing vacancy in case the petitioner's nominees
do not meet the qualification requirements as embodied in public respondent
DBM's Local Budget Circular No. 31 dated February 9, 1988.
on local autonomy. Where a law is capable of two interpretations, one in favor of

centralized power in Malacaang and the other beneficial to local autonomy, the
scales must be weighed in favor of autonomy.
The questioned ruling is justified by the public respondent CSC as follows:
President McKinley's Instructions dated April 7, 1900 to the Second Philippine

Commission ordered the new Government "to devote their attention in the first
instance to the establishment of municipal governments in which natives of the
Islands, both in the cities and rural communities, shall be afforded the
opportunity to manage their own local officers to the fullest extent of which they
are capable and subject to the least degree of supervision and control which a
careful study of their capacities and observation of the workings of native control
show to be consistent with the maintenance of law, order and loyalty.
As required by said E.O. No. 112, the DBM Secretary may choose from
among the recommendees of the Provincial Governor who are thus
qualified and eligible for appointment to the position of the PBO of Rizal.
Notwithstanding, the recommendation of the local chief executive is
merely directory and not a conditionsine qua non to the exercise by the
Secretary of DBM of his appointing prerogative. To rule otherwise would in
effect give the law or E.O. No. 112 a different interpretation or
construction not intended therein, taking into consideration that said
officer has been nationalized and is directly under the control and
supervision of the DBM Secretary or through his duly authorized
representative. It cannot be gainsaid that said national officer has a
similar role in the local government unit, only on another area or concern,
to that of a Commission on Audit resident auditor. Hence, to preserve and
maintain the independence of said officer from the local government unit,
he must be primarily the choice of the national appointing official, and the
exercise thereof must not be unduly hampered or interfered with,
provided the appointee finally selected meets the requirements for the
position in accordance with prescribed Civil Service Law, Rules and
Regulations. In other words, the appointing official is not restricted or
circumscribed to the list submitted or recommended by the local chief
executive in the final selection of an appointee for the position. He may
consider other nominees for the position vis a vis the nominees of the
local chief executive. (CSC Resolution No. 89-868, p. 2; Rollo, p. 31)
The issue before the Court is not limited to the validity of the appointment of one
Provincial Budget Officer. The tug of war between the Secretary of Budget and
Management and the Governor of the premier province of Rizal over a seemingly
innocuous position involves the application of a most important constitutional
policy and principle, that of local autonomy. We have to obey the clear mandate

Page 90
The exercise by local governments of meaningful power has been a national goal
since the turn of the century. And yet, inspite of constitutional provisions and, as
in this case, legislation mandating greater autonomy for local officials, national
officers cannot seem to let go of centralized powers. They deny or water down
what little grants of autonomy have so far been given to municipal corporations.
In this initial organic act for the Philippines, the Commission which combined
both executive and legislative powers was directed to give top priority to making
local autonomy effective.
The 1935 Constitution had no specific article on local autonomy. However, in
distinguishing between presidential control and supervision as follows:
The President shall have control of all the executive departments,
bureaus, or offices, exercise general supervision over all local
governments as may be provided by law, and take care that the laws be
faithfully executed. (Sec. 11, Article VII, 1935 Constitution)
the Constitution clearly limited the executive power over local governments to
"general supervision . . . as may be provided by law." The President controls the
executive departments. He has no such power over local governments. He has
only supervision and that supervision is both general and circumscribed by
statute.
In Tecson v. Salas, 34 SCRA 275, 282 (1970), this Court stated:
. . . Hebron v. Reyes, (104 Phil. 175 [1958]) with the then Justice, now
Chief Justice, Concepcion as theponente, clarified matters. As was pointed
out, the presidential competence is not even supervision in general, but
general supervision as may be provided by law. He could not thus go
beyond the applicable statutory provisions, which bind and fetter his
discretion on the matter. Moreover, as had been earlier ruled in an opinion
penned by Justice Padilla in Mondano V. Silvosa, (97 Phil. 143 [1955])
referred to by the present Chief Justice in his opinion in the Hebron case,
supervision goes no further than "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." (Ibid, pp. 147-148)
Control, on the other hand, "means the power of an officer to alter or
modify or nullify or set aside what a subordinate had done in the
performance of their duties and to substitute the judgment of the former
for that of the latter." It would follow then, according to the present Chief
Justice, to go back to the Hebron opinion, that the President had to abide
by the then provisions of the Revised Administrative Code on suspension
and removal of municipal officials, there being no power of control that he
could rightfully exercise, the law clearly specifying the procedure by which
such disciplinary action would be taken.
Pursuant to this principle under the 1935 Constitution, legislation implementing
local autonomy was enacted. In 1959, Republic Act No. 2264, "An Act Amending
the Law Governing Local Governments by Increasing Their Autonomy and
Reorganizing Local Governments" was passed. It was followed in 1967 when
Republic Act No. 5185, the Decentralization Law was enacted, giving "further
autonomous powers to local governments governments."
The provisions of the 1973 Constitution moved the country further, at least
insofar as legal provisions are concerned, towards greater autonomy. It provided
under Article II as a basic principle of government:
Sec. 10. The State shall guarantee and promote the autonomy of local
government units, especially the barangay to ensure their fullest
development as self-reliant communities.
An entire article on Local Government was incorporated into the Constitution. It
called for a local government code defining more responsive and accountable
local government structures. Any creation, merger, abolition, or substantial
boundary alteration cannot be done except in accordance with the local

Page 91
government code and upon approval by a plebiscite. The power to create sources
of revenue and to levy taxes was specifically settled upon local governments.
The exercise of greater local autonomy is even more marked in the present
Constitution.
Article II, Section 25 on State Policies provides:
Sec. 25. The State shall ensure the autonomy of local governments
The 14 sections in Article X on Local Government not only reiterate earlier
doctrines but give in greater detail the provisions making local autonomy more
meaningful. Thus, Sections 2 and 3 of Article X provide:
Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.
Sec. 3. The Congress shall enact a local government code which shall
provide for a more responsive and accountable local government
structure instituted through a system of decentralization with effective
mechanisms of recall, initiative, and referendum, allocate among the
different local government units their powers, responsibilities, and
resources, and provide for the qualifications, election, appointment and
removal, term, salaries, powers and functions and duties of local officials,
and all other matters relating to the organization and operation of the
local units.
When the Civil Service Commission interpreted the recommending power of the
Provincial Governor as purely directory, it went against the letter and spirit of the
constitutional provisions on local autonomy. If the DBM Secretary jealously hoards
the entirety of budgetary powers and ignores the right of local governments to
develop self-reliance and resoluteness in the handling of their own funds, the
goal of meaningful local autonomy is frustrated and set back.
The right given by Local Budget Circular No. 31 which states:
Sec. 6.0 The DBM reserves the right to fill up any existing vacancy
where none of the nominees of the local chief executive meet the
prescribed requirements.
is ultra vires and is, accordingly, set aside. The DBM may appoint only from the
list of qualified recommendees nominated by the Governor. If none is qualified,
he must return the list of nominees to the Governor explaining why no one meets
the legal requirements and ask for new recommendees who have the necessary
eligibilities and qualifications.
The PBO is expected to synchronize his work with DBM. More important, however,
is the proper administration of fiscal affairs at the local level. Provincial and
municipal budgets are prepared at the local level and after completion are
forwarded to the national officials for review. They are prepared by the local
officials who must work within the constraints of those budgets. They are not
formulated in the inner sanctums of an all-knowing DBM and unilaterally imposed
on local governments whether or not they are relevant to local needs and
resources. It is for this reason that there should be a genuine interplay, a
balancing of viewpoints, and a harmonization of proposals from both the local
and national officials. It is for this reason that the nomination and appointment
process involves a sharing of power between the two levels of government.
It may not be amiss to give by way of analogy the procedure followed in the
appointments of Justices and Judges.1wphi1 Under Article VIII of the
Constitution, nominations for judicial positions are made by the Judicial and Bar
Council. The President makes the appointments from the list of nominees
submitted to her by the Council. She cannot apply the DBM procedure, reject all
the Council nominees, and appoint another person whom she feels is better
qualified. There can be no reservation of the right to fill up a position with a
person of the appointing power's personal choice.
The public respondent's grave abuse of discretion is aggravated by the fact that
Director Galvez required the Provincial Governor to submit at least three other
names of nominees better qualified than his earlier recommendation. It was a
meaningless exercise. The appointment of the private respondent was formalized
before the Governor was extended the courtesy of being informed that his
nominee had been rejected. The complete disregard of the local government's
prerogative and the smug belief that the DBM has absolute wisdom, authority,
and discretion are manifest.
In his classic work "Philippine Political Law" Dean Vicente G. Sinco stated that the
value of local governments as institutions of democracy is measured by the
degree of autonomy that they enjoy. Citing Tocqueville, he stated that "local
assemblies of citizens constitute the strength of free nations. . . . A people may
establish a system of free government but without the spirit of municipal

Page 92
institutions, it cannot have the spirit of liberty." (Sinco, Philippine Political Law,
Eleventh Edition, pp. 705-706).
Our national officials should not only comply with the constitutional provisions on
local autonomy but should also appreciate the spirit of liberty upon which these
provisions are based.
WHEREFORE, the petition is hereby GRANTED. The questioned resolutions of the
Civil Service Commission are SET ASIDE. The appointment of respondent Cecilia
Almajose is nullified. The Department of Budget and Management is ordered to
appoint the Provincial Budget Officer of Rizal from among qualified nominees
submitted by the Provincial Governor.
SO ORDERED.
G.R. No. 102782 December 11, 1991
THE SOLICITOR GENERAL, RODOLFO A. MALAPIRA, STEPHEN A.
MONSANTO, DAN R. CALDERON, and GRANDY N. TRIESTE, petitioners
vs.
THE METROPOLITAN MANILA AUTHORITY and the MUNICIPALITY OF
MANDALUYONG, respondents.
CRUZ, J.:p
In Metropolitan Traffic Command, West Traffic District vs. Hon. Arsenio M.
Gonong, G.R. No. 91023, promulgated on July 13, 1990, 1 the Court held that the
confiscation of the license plates of motor vehicles for traffic violations was not
among the sanctions that could be imposed by the Metro Manila Commission
under PD 1605 and was permitted only under the conditions laid dowm by LOI 43
in the case of stalled vehicles obstructing the public streets. It was there also
observed that even the confiscation of driver's licenses for traffic violations was
not directly prescribed by the decree nor was it allowed by the decree to be
imposed by the Commission. No motion for reconsideration of that decision was

submitted. The judgment became final and executory on August 6, 1990, and it
was duly entered in the Book of Entries of Judgments on July 13, 1990.
Subsequently, the following developments transpired:
In a letter dated October 17, 1990, Rodolfo A. Malapira complained to the Court
that when he was stopped for an alleged traffic violation, his driver's license was
confiscated by Traffic Enforcer Angel de los Reyes in Quezon City.
On December 18,1990, the Caloocan-Manila Drivers and Operators Association
sent a letter to the Court asking who should enforce the decision in the abovementioned case, whether they could seek damages for confiscation of their
driver's licenses, and where they should file their complaints.
Another letter was received by the Court on February 14, 1991, from Stephen L.
Monsanto, complaining against the confiscation of his driver's license by Traffic
Enforcer A.D. Martinez for an alleged traffic violation in Mandaluyong.
Western Traffic District of the Philippine National Police, authorizing such sanction
under certain conditions.
Director General Cesar P. Nazareno of the Philippine National Police assured the
Court in his own Comment that his office had never authorized the removal of the
license plates of illegally parked vehicles and that he had in fact directed full
compliance with the above-mentioned decision in a memorandum, copy of which
he attached, entitled Removal of Motor Vehicle License Plates and dated February
28, 1991.
Pat. R.J. Tano-an, on the other hand, argued that the Gonong decision prohibited
only the removal of license plates and not the confiscation of driver's licenses.
On May 24, 1990, the Metropolitan Manila Authority issued Ordinance No. 11,
Series of 1991, authorizing itself "to detach the license plate/tow and impound
attended/ unattended/ abandoned motor vehicles illegally parked or obstructing
the flow of traffic in Metro Manila."
On July 2, 1991, the Court issued the following resolution:
This was followed by a letter-complaint filed on March 7, 1991, from Dan R.

Calderon, a lawyer, also for confiscation of his driver's license by Pat. R.J. Tano-an
of the Makati Police Force.
Still another complaint was received by the Court dated April 29, 1991, this time
from Grandy N. Trieste, another lawyer, who also protested the removal of his
front license plate by E. Ramos of the Metropolitan Manila Authority-Traffic
Operations Center and the confiscation of his driver's license by Pat. A.V.
Emmanuel of the Metropolitan Police Command-Western Police District.
Required to submit a Comment on the complaint against him, Allan D. Martinez
invoked Ordinance No. 7, Series of 1988, of Mandaluyong, authorizing the
confiscation of driver's licenses and the removal of license plates of motor
vehicles for traffic violations.
For his part, A.V. Emmanuel said he confiscated Trieste's driver's license pursuant
to a memorandum dated February 27, 1991, from the District Commander of the

Page 93
The attention ofthe Court has been called to the enactment by the
Metropolitan Manila Authority of Ordinance No. 11, Series of 1991,
providing inter alia that:
Section 2. Authority to Detach Plate/Tow and
Impound. The Metropolitan Manila Authority, thru the
Traffic Operatiom Center, is authorized to detach the
license plate/tow and impound
attended/unattended/abandoned motor vehicles
illegally parked or obstructing the flow of traffic in
Metro Manila.
The provision appears to be in conflict with the decision of the
Court in the case at bar (as reported in 187 SCRA 432), where it
was held that the license plates of motor vehicles may not be
detached except only under the conditions prescribed in LOI 43.
Additionally, the Court has received several complaints against the

confiscation by police authorities of driver's licenses for alleged
traffic violations, which sanction is, according to the said decision,
not among those that may be imposed under PD 1605.
To clarify these matters for the proper guidance of lawenforcement officers and motorists, the Court resolved to require
the Metropolitan Manila Authority and the Solicitor General to
submit, within ten (10) days from notice hereof, separate
COMMENTS on such sanctions in light of the said decision.
In its Comment, the Metropolitan Manila Authority defended the said ordinance
on the ground that it was adopted pursuant to the powers conferred upon it by
EO 392. It particularly cited Section 2 thereof vesting in the Council (its governing
body) the responsibility among others of:
1. Formulation of policies on the
delivery of basic services requiring
coordination or consolidation for the
Authority; and
2. Promulgation of resolutions and
other issuances of metropolitan wide
application, approval of a code of
basic services requiring coordination,
andexercise of its rule-making powers.
(Emphasis supplied)
The Authority argued that there was no conflict between the decision and the
ordinance because the latter was meant to supplement and not supplant the
latter. It stressed that the decision itself said that the confiscation of license
plates was invalid in the absence of a valid law or ordinance, which was why
Ordinance No. 11 was enacted. The Authority also pointed out that the ordinance
could not be attacked collaterally but only in a direct action challenging its
validity.

Page 94
For his part, the Solicitor General expressed the view that the ordinance was null
and void because it represented an invalid exercise of a delegated legislative
power. The flaw in the measure was that it violated existing law, specifically PD
1605, which does not permit, and so impliedly prohibits, the removal of license
plates and the confiscation of driver's licenses for traffic violations in Metropolitan
Manila. He made no mention, however, of the alleged impropriety of examining
the said ordinance in the absence of a formal challenge to its validity.
On October 24, 1991, the Office of the Solicitor General submitted a motion for
the early resolution of the questioned sanctions, to remove once and for all the
uncertainty of their vahdity. A similar motion was filed by the Metropolitan Manila
Authority, which reiterated its contention that the incidents in question should be
dismissed because there was no actual case or controversy before the Court.
The Metropolitan Manila Authority is correct in invoking the doctrine that the
validity of a law or act can be challenged only in a direct action and not
collaterally. That is indeed the settled principle. However, that rule is not
inflexible and may be relaxed by the Court under exceptional circumstances,
such as those in the present controversy.
The Solicitor General notes that the practices complained of have created a great
deal of confusion among motorists about the state of the law on the questioned
sanctions. More importantly, he maintains that these sanctions are illegal, being
violative of law and the Gonong decision, and should therefore be stopped. We
also note the disturbing report that one policeman who confiscated a driver's
license dismissed the Gonong decision as "wrong" and said the police would not
stop their "habit" unless they received orders "from the top." Regrettably, not one
of the complainants has filed a formal challenge to the ordinances, including
Monsanto and Trieste, who are lawyers and could have been more assertive of
their rights.
Given these considerations, the Court feels it must address the problem squarely
presented to it and decide it as categorically rather than dismiss the complaints
on the basis of the technical objection raised and thus, through its inaction, allow
them to fester.
The step we now take is not without legal authority or judicial precedent.
Unquestionably, the Court has the power to suspend procedural rules in the
exercise of its inherent power, as expressly recognized in the Constitution, to
promulgate rules concerning "pleading, practice and procedure in all courts." 2 In
proper cases, procedural rules may be relaxed or suspended in the interest of
substantial justice, which otherwise may be miscarried because of a rigid and
formalistic adherence to such rules.
The Court has taken this step in a number of such cases, notably Araneta vs.
Dinglasan, 3 where Justice Tuason justified the deviation on the ground that "the
transcendental importance to the public of these cases demands that they be
settled promptly and definitely, brushing aside, if we must, technicalities of
procedure."
We have made similar rulings in other cases, thus:
Be it remembered that rules of procedure are but mere tools
designed to facilitate the attainment ofjustice. Their strict and rigid
application, which would result in technicalities that tend to
frustrate rather than promote substantial justice, must always be
avoided. (Aznar III vs. Bernad, G.R. No. 81190, May 9, 1988, 161
SCRA 276.) Time and again, this Court has suspended its own rules
and excepted a particular case from their operation whenever the
higher interests of justice so require. In the instant petition, we
forego a lengthy disquisition of the proper procedure that should
have been taken by the parties involved and proceed directly to
the merits of the case. (Piczon vs. Court of Appeals, 190 SCRA 31).
Three of the cases were consolidated for argument and the other
two were argued separately on other dates. Inasmuch as all of
them present the same fundamental question which, in our view, is
decisive, they will be disposed of jointly. For the same reason we
will pass up the objection to the personality or sufficiency of
interest of the petitioners in case G.R. No. L-3054 and case G.R. No.
L-3056 and the question whether prohibition lies in cases G.R. Nos.
L-2044 and L2756. No practical benefit can be gained from a

Page 95
discussion of these procedural matters, since the decision in the

cases wherein the petitioners'cause of action or the propriety of
the procedure followed is not in dispute, will be controlling
authority on the others. Above all, the transcendental importance
to the public of these cases demands that they be settled promptly
and definitely, brushing aside, if we must, technicalities of
procedure. (Avelino vs. Cuenco, G.R. No. L-2821 cited in Araneta
vs. Dinglasan, 84 Phil. 368.)
Accordingly, the Court will consider the motion to resolve filed by the Solicitor
General a petition for prohibition against the enforcement of Ordinance No. 11,
Series of 1991, of the Metropohtan Manila Authority, and Ordinance No. 7, Series
of 1988, of the Municipality of Mandaluyong. Stephen A. Monsanto, Rodolfo A.
Malapira, Dan R. Calderon, and Grandy N. Trieste are considered co-petitioners
and the Metropolitan Manila Authority and the Municipality of Mandaluyong are
hereby impleaded as respondents. This petition is docketed as G.R. No. 102782.
The comments already submitted are duly noted and shall be taken into account
by the Court in the resolution of the substantive issues raised.
It is stressed that this action is not intended to disparage procedural rules, which
the Court has recognized often enough as necessary to the orderly administration
of justice. If we are relaxing them in this particular case, it is because of the
failure of the proper parties to file the appropriate proceeding against the acts
complained of, and the necessity of resolving, in the interest of the public, the
important substantive issues raised.
Now to the merits.
The Metro Manila Authority sustains Ordinance No. 11, Series of 1991, under the
specific authority conferred upon it by EO 392, while Ordinance No. 7, Series of
1988, is justified on the basis of the General Welfare Clause embodied in the
Local Government Code. 4 It is not disputed that both measures were enacted to
promote the comfort and convenience of the public and to alleviate the
worsening traffic problems in Metropolitan Manila due in large part to violations
of traffic rules.
The Court holds that there is a valid delegation of legislative power to promulgate
such measures, it appearing that the requisites of such delegation are present.
These requisites are. 1) the completeness of the statute making the delegation;
and 2) the presence of a sufficient standard. 5
Under the first requirement, the statute must leave the legislature complete in all
its terms and provisions such that all the delegate will have to do when the
statute reaches it is to implement it. What only can be delegated is not the
discretion to determine what the law shall be but the discretion to determine how
the law shall be enforced. This has been done in the case at bar.
As a second requirement, the enforcement may be effected only in accordance
with a sufficient standard, the function of which is to map out the boundaries of
the delegate's authority and thus "prevent the delegation from running riot." This
requirement has also been met. It is settled that the "convenience and welfare"
of the public, particularly the motorists and passengers in the case at bar, is an
acceptable sufficient standard to delimit the delegate's authority. 6
But the problem before us is not the validity of the delegation of legislative
power. The question we must resolve is the validity of the exercise of such
delegated power.
The measures in question are enactments of local governments acting only as
agents of the national legislature. Necessarily, the acts of these agents must
reflect and conform to the will of their principal. To test the validity of such acts in
the specific case now before us, we apply the particular requisites of a valid
ordinance as laid down by the accepted principles governing municipal
corporations.
According to Elliot, a municipal ordinance, to be valid: 1) must not contravene the
Constitution or any statute; 2) must not be unfair or oppressive; 3) must not be
partial or discriminatory; 4) must not prohibit but may regulate trade; 5) must not
be unreasonable; and 6) must be general and consistent with public policy. 7
A careful study of the Gonong decision will show that the measures under
consideration do not pass the first criterion because they do not conform to

Page 96
existing law. The pertinent law is PD 1605. PD 1605 does not allow either the
removal of license plates or the confiscation of driver's licenses for traffic
violations committed in Metropolitan Manila. There is nothing in the following
provisions of the decree authorizing the Metropolitan Manila Commission (and
now the Metropolitan Manila Authority) to impose such sanctions:
Section 1. The Metropolitan Manila Commission shall have the
power to impose fines and otherwise discipline drivers and
operators of motor vehicles for violations of traffic laws,
ordinances, rules and regulations in Metropolitan Manila in such
amounts and under such penalties as are herein prescribed. For
this purpose, the powers of the Land Transportation Commission
and the Board of Transportation under existing laws over such
violations and punishment thereof are hereby transferred to the
Metropolitan Manila Commission. When the proper penalty to be
imposed issuspension or revocation of driver's license or certificate
of public convenience, the Metropolitan Manila Commission or its
representatives shall suspend or revoke such license or certificate.
The suspended or revoked driver's license or the report of
suspension or revocation of the certificate of public convenience
shall be sent to the Land Transportation Commission or the Board
of Transportation, as the case may be, for their records update.
xxx xxx xxx
Section 3.` Violations of traffic laws, ordinances, rules and
regulations, committed within a twelve-month period, reckoned
from the date of birth of the licensee, shall subject the violator to
graduated fines as follows: P10.00 for the first offense, P20.00 for
the and offense, P50.00 for the third offense, a one-year
suspension of driver's license for the fourth offense, and
a revocation of the driver'slicense for the fifth offense: Provided,
That the Metropolitan Manila Commission may impose higher
penalties as it may deem proper for violations of its ordinances
prohibiting or regulating the use of certain public roads, streets
and thoroughfares in Metropolitan Manila.
xxx xxx xxx

Section 5. In case of traffic violations, the driver's license shall not
be confiscated but the erring driver shall be immediately issued a
traffic citation ticket prescribed by the Metropolitan Manila
Commission which shall state the violation committed, the amount
of fine imposed for the violation and an advice that he can make
payment to the city or municipal treasurer where the violation was
committed or to the Philippine National Bank or Philippine Veterans
Bank or their branches within seven days from the date of issuance
of the citation ticket.
If the offender fails to pay the fine imposed within the period
herein prescribed, the Metropolitan Manila Commission or the lawenforcement agency concerned shall endorse the case to the
proper fiscal for appropriate proceedings preparatory to the filing
of the case with the competent traffic court, city or municipal
court.
If at the time a driver renews his driver's license and records show
that he has an unpaid fine, his driver's license shall not be renewed
until he has paid the fine and corresponding surcharges.
xxx xxx xxx
Section 8. Insofar as the Metropolitan Manila area is concerned, all
laws, decrees, orders, ordinances, rules and regulations, or parts
thereof inconsistent herewith are hereby repealed or modified
accordingly. (Emphasis supplied).
In fact, the above provisions prohibit the imposition of such sanctions in
Metropolitan Manila. The Commission was allowed to "impose fines and otherwise
discipline" traffic violators only "in such amounts and under such penalties as are
herein prescribed," that is, by the decree itself. Nowhere is the removal of license
plates directly imposed by the decree or at least allowed by it to be imposed by
the Commission. Notably, Section 5 thereof expressly provides that "in case of

Page 97
traffic violations, the driver's license shall not be confiscated." These restrictions
are applicable to the Metropolitan Manila Authority and all other local political
subdivisions comprising Metropolitan Manila, including the Municipality of
Mandaluyong.
The requirement that the municipal enactment must not violate existing law
explains itself. Local political subdivisions are able to legislate only by virtue of a
valid delegation of legislative power from the national legislature (except only
that the power to create their own sources of revenue and to levy taxes is
conferred by the Constitution itself). 8 They are mere agents vested with what is
called the power of subordinate legislation. As delegates of the Congress, the
local government unit cannot contravene but must obey at all times the will of
their principal. In the case before us, the enactments in question, which are
merely local in origin, cannot prevail against the decree, which has the force and
effect of a statute.
The self-serving language of Section 2 of the challenged ordinance is worth
noting. Curiously, it is the measure itself, which was enacted by the Metropolitan
Manila Authority, that authorizes the Metropolitan Manila Authority to impose the
questioned sanction.
In Villacorta vs, Bemardo, 9 the Court nullified an ordinance enacted by the
Municipal Board of Dagupan City for being violative of the Land Registration Act.
The decision held in part:
In declaring the said ordinance null and void, the court a
quo declared:
From the above-recited requirements, there is no
showing that would justify the enactment of the
questioned ordinance. Section 1 of said ordinance
clearly conflicts with Section 44 of Act 496, because
the latter law does not require subdivision plans to
be submitted to the City Engineer before the same is
submitted for approval to and verification by the
General Land Registration Office or by the Director of
Lands as provided for in Section 58 of said Act.

Section 2 of the same ordinance also contravenes
the provisions of Section 44 of Act 496, the latter
being silent on a service fee of P0.03 per square
meter of every lot subject of such subdivision
application; Section 3 of the ordinance in question
also conflicts with Section 44 of Act 496, because
the latter law does not mention of a certification to
be made by the City Engineer before the Register of
Deeds allows registration of the subdivision plan;
and the last section of said ordinance impose a
penalty for its violation, which Section 44 of Act 496
does not impose. In other words, Ordinance 22 of the
City of Dagupan imposes upon a subdivision owner
additional conditions.
xxx xxx xxx
The Court takes note of the laudable purpose of the
ordinance in bringing to a halt the surreptitious
registration of lands belonging to the government.
But as already intimated above, the powers of the
board in enacting such a laudable ordinance cannot
be held valid when it shall impede the exercise of
rights granted in a general law and/or make a
general law subordinated to a local ordinance.
We affirm.
To sustain the ordinance would be to open the floodgates to other
ordinances amending and so violating national laws in the guise of
implementing them. Thus, ordinances could be passed imposing
additional requirements for the issuance of marriage licenses, to
prevent bigamy; the registration of vehicles, to minimize
carnapping; the execution of contracts, to forestall fraud; the
validation of parts, to deter imposture; the exercise of freedom of

Page 98
speech, to reduce disorder; and so on. The list is endless, but the
means, even if the end be valid, would be ultra vires.
The measures in question do not merely add to the requirement of PD 1605 but,
worse, impose sanctions the decree does not allow and in fact actually prohibits.
In so doing, the ordinances disregard and violate and in effect partially repeal the
law.
We here emphasize the ruling in the Gonong case that PD 1605 applies only to
the Metropolitan Manila area. It is an exception to the general authority conferred
by R.A. No. 413 on the Commissioner of Land Transportation to punish violations
of traffic rules elsewhere in the country with the sanction therein prescribed,
including those here questioned.
The Court agrees that the challenged ordinances were enacted with the best of
motives and shares the concern of the rest of the public for the effective
reduction of traffic problems in Metropolitan Manila through the imposition and
enforcement of more deterrent penalties upon traffic violators. At the same time,
it must also reiterate the public misgivings over the abuses that may attend the
enforcement of such sanction in eluding the illicit practices described in detail in
the Gonong decision. At any rate, the fact is that there is no statutory authority
for and indeed there is a statutory prohibition against the imposition of such
penalties in the Metropolitan Manila area. Hence, regardless of their merits, they
cannot be impose by the challenged enactments by virtue only of the delegated
legislative powers.
It is for Congress to determine, in the exercise of its own discretion, whether or
not to impose such sanctions, either directly through a statute or by simply
delegating authority to this effect to the local governments in Metropolitan
Manila. Without such action, PD 1605 remains effective and continues prohibit
the confiscation of license plates of motor vehicles (except under the conditions
prescribed in LOI 43) and of driver licenses as well for traffic violations in
Metropolitan Manila.
WHEREFORE, judgment is hereby rendered:
(1) declaring Ordinance No.11, Seriesof l991,of theMetropolitan Manila Authority

and Ordinance No. 7, Series of 1988 of the Municipality of Mandaluyong, NULL
and VOID; and
(2) enjoining all law enforcement authorities in Metropolitan Manila from
removing the license plates of motor vehicles (except when authorized under LOI
43) and confiscating driver licenses for traffic violations within the said area.
SO ORDERED.
[G.R. No. 110249. August 21, 1997]
ALFREDO TANO, BALDOMERO TANO, DANILO TANO, ROMUALDO TANO,
TEOCENES MIDELLO, ANGEL DE MESA, EULOGIO TREMOCHA,
FELIPE ONGONION, JR., ANDRES LINIJAN, ROBERT LIM, VIRGINIA
LIM, FELIMON DE MESA, GENEROSO ARAGON, TEODORICO ANDRE,
ROMULO DEL ROSARIO, CHOLITO ANDRE, ERICK MONTANO,
ANDRES OLIVA, VITTORIO SALVADOR, LEOPOLDO ARAGON,
RAFAEL RIBA, ALEJANDRO LEONILA, JOSE DAMACINTO, RAMIRO
MANAEG,
RUBEN
MARGATE,
ROBERTO
REYES,
DANILO
PANGARUTAN, NOE GOLPAN,ESTANISLAO ROMERO, NICANOR
DOMINGO, ROLDAN TABANG, PANGANIBAN, ADRIANO TABANG,
FREDDIE SACAMAY, MIGUEL TRIMOCHA, PACENCIO LABABIT, PABLO
H. OMPAD, CELESTINO A. ABANO, ALLAN ALMODAL, BILLY D.
BARTOLAY, ALBINO D. LIQUE, MELCHOR J. LAYSON, MELANI
AMANTE, CLARO E. YATOC, MERGELDO B. BALDEO, EDGAR M.
ALMASET A., JOSELITO MANAEG, LIBERATO ANDRADA, JR.,
ROBERTO BERRY, RONALD VILLANUEVA, EDUARDO VALMORIA,
WILDREDO MENDOZA, NAPOLEON BABANGA, ROBERTO TADEPA,
RUBEN ASINGUA, SILVERIO GABO, JERRY ROMERO, DAVID
PANGAGARUTAN, DANIEL PANGGARUTAN, ROMEO AGAWIN,
FERNANDO EQUIZ, DITO LEQUIZ, RONILO ODERABLE, BENEDICTO
TORRES, ROSITO A. VALDEZ, CRESENCIO A. SAYANG, NICOMEDES
S. ACOSTA, ERENEO A. SEGARINO, JR., WILDREDO A. RAUTO,
DIOSDADO A. ACOSTA, BONIFACIO G. SISMO, TACIO ALUBA,
DANIEL B. BATERZAL, ELISEO YBAEZ, DIOSDADO E. HANCHIC,

Page 99
EDDIE ESCALICAS, ELEAZAR B. BATERZAL, DOMINADOR HALICHIC,

ROOSEVELT RISMO-AN, ROBERT C. MERCADER, TIRSO ARESGADO,
DANIEL CHAVEZ, DANILO CHAVEZ, VICTOR VILLAROEL, ERNESTO
C. YABANEZ, ARMANDO T. SANTILLAN, RUDY S. SANTILLAN,
JODJEN
ILUSTRISIMO,
NESTOR
SALANGRON,
ALBERTO
SALANGRON, ROGER L. ROXAS, FRANCISCO T. ANTICANO, PASTOR
SALANGRON, BIENVENIDO SANTILLAN, GILBUENA LADDY, FIDEL
BENJAMIN JOVELITO BELGANO, HONEY PARIOL, ANTONIO
SALANGRON, NICASIO SALANGRON, & AIRLINE SHIPPERS
ASSOCIATION OF PALAWAN, petitioners, vs. GOV. SALVADOR P.
SOCRATES, MEMBERS OF SANGGUNIAN PANLALAWIGAN OF
PALAWAN, namely, VICE-GOVERNOR JOEL T. REYES, JOSE
D. ZABALA, ROSALINO R. ACOSTA, JOSELITO A. CADLAON, ANDRES
R. BAACO, NELSON P. PENEYRA, CIPRIANO C. BARROMA, CLARO E.
ORDINARIO, ERNESTO A. LLACUN, RODOLFO C. FLORDELIZA,
GILBERT S. BAACO, WINSTON G. ARZAGA, NAPOLEON F. ORDONEZ
and GIL P. ACOSTA, CITY MAYOR EDWARD HAGEDORN, MEMBERS
OF SANGGUNIANG PANLUNGSOD NG PUERTO PRINCESA, ALL
MEMBERS OF BANTAY DAGAT, MEMBERS OF PHILIPPINE NATIONAL
POLICE OF PALAWAN, PROVINCIAL AND CITY PROSECUTORS OF
PALAWAN and PUERTO PRINCESA CITY, and ALL JUDGES OF
PALAWAN,
REGIONAL,
MUNICIPAL
AND
METROPOLITAN, respondents.
DECISION
DAVIDE, JR., J.:
Petitioners caption their petition as one for Certiorari, Injunction With
Preliminary Mandatory Injunction,with Prayer for Temporary Restraining Order
and pray that this Court: (1) declare as unconstitutional: (a) Ordinance No. 15-92,
dated 15 December 1992, of the Sangguniang Panlungsod of Puerto Princesa; (b)
Office Order No. 23, Series of 1993, dated 22 January 1993, issued by Acting City
Mayor Amado L. Lucero of Puerto Princesa City; and (c) Resolution No. 33,
Ordinance No. 2, Series of 1993, dated 19 February 1993, of the Sangguniang
Panlalawigan of Palawan; (2) enjoin the enforcement thereof; and (3) restrain
respondents Provincial and City Prosecutors of Palawan and Puerto Princesa City
and Judges of Regional Trial Courts, Metropolitan Trial Courts [1] and Municipal
Circuit Trial Courts in Palawan from assuming jurisdiction over and hearing cases
concerning the violation of the Ordinances and of the Office Order.
More appropriately, the petition is, and shall be treated as, a special civil
action for certiorari and prohibition.
The following is petitioners summary of the factual antecedents giving rise to
the petition:
1. On December 15, 1992, the Sangguniang Panlungsod ng Puerto Princesa City
enacted Ordinance No. 15-92 which took effect on January 1, 1993 entitled: AN
ORDINANCE BANNING THE SHIPMENT OF ALL LIVE FISH AND LOBSTER OUTSIDE
PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY 1, 1998 AND
PROVIDING EXEMPTIONS, PENALTIES AND FOR OTHER PURPOSES THEREOF, the
full text of which reads as follows:
Section 1. Title of the Ordinance. - This Ordinance is entitled: AN ORDINANCE
BANNING THE SHIPMENT OF ALL LIVE FISH AND LOBSTER OUTSIDE PUERTO
PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY 1, 1998 AND PROVIDING
EXEMPTIONS, PENALTIES AND FOR OTHER PURPOSES THEREOF.
Section 2. Purpose, Scope and Coverage. - To effectively free our City Sea Waters
from Cyanide and other Obnoxious substance, and shall cover all persons and/or
entities operating within and outside the City of Puerto Princesa who is are [sic]
directly or indirectly in the business or shipment of live fish and lobster outside
the City.
Section 3. Definition of terms. - For purpose of this Ordinance the following are
hereby defined:
B. CATFISH - A kind of fish under the family of Plotosidae, better known as HITOHITO;
C. MUDFISH - A kind of fish under the family of Orphicaphalisae better known as
DALAG
D. ALL LIVE FISH - All alive, breathing not necessarily moving of all specie[s] use
for food and for aquarium purposes.
E. LIVE LOBSTER - Several relatively, large marine crustaceans of the genus
Homarus that are alive and breathing not necessarily moving.
Section 4. It shall be unlawful [for] any person or any business enterprise or
company to ship out from Puerto Princesa City to any point of destination either
via aircraft or seacraft of any live fish and lobster except SEA BASS, CATFISH,
MUDFISH, AND MILKFISH FRIES.
Section 5. Penalty Clause. - Any person/s and or business entity violating this
Ordinance shall be penalized with a fine of not more than P5,000.00 or
imprisonment of not more than twelve (12) months, cancellation of their permit
to do business in the City of Puerto Princesa or all of the herein stated penalties,
upon the discretion of the court.
Section 6. If the owner and/or operator of the establishment found vilating the
provisions of this ordinance is a corporation or a partnership, the penalty
prescribed in Section 5 hereof shall be imposed upon its president and/or General
Manager or Managing Partner and/or Manager, as the case maybe [sic].
Section 7. Any existing ordinance or any provision of any ordinance inconsistent
to [sic] this ordinance is deemed repealed.
Section 8. This Ordinance shall take effect on January 1, 1993.
A. SEA BASS - A kind of fish under the family of Centropomidae, better known as
APAHAP;
SO ORDAINED.
xxx

Page 100
2. To implement said city ordinance, then Acting City Mayor Amado L. Lucero
issued Office Order No. 23, Series of 1993 dated January 22, 1993 which reads as
follows:
In the interest of public service and for purposes of City Ordinance No. PD426-1474, otherwise known as AN ORDINANCE REQUIRING ANY PERSON ENGAGED OR
INTENDING TO ENGAGE IN ANY BUSINESS, TRADE, OCCUPATION, CALLING OR
PROFESSION OR HAVING IN HIS POSSESSION ANY OF THE ARTICLES FOR WHICH A
PERMIT IS REQUIRED TO BE HAD, TO OBTAIN FIRST A MAYORS PERMIT and City
Ordinance No. 15-92, AN ORDINANCE BANNING THE SHIPMENT OF ALL LIVE FISH
AND LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO
JANUARY 1, 1998, you are hereby authorized and directed to check or conduct
necessary inspections on cargoes containing live fish and lobster being shipped
out from the Puerto Princesa Airport, Puerto Princesa Wharf or at any port within
the jurisdiction of the City to any point of destinations [sic] either via aircraft or
seacraft.
The purpose of the inspection is to ascertain whether the shipper possessed the
required Mayors Permit issued by this Office and the shipment is covered by
invoice or clearance issued by the local office of the Bureau of Fisheries and
Aquatic Resources and as to compliance with all other existing rules and
regulations on the matter.
Any cargo containing live fish and lobster without the required documents as
stated herein must be held for proper disposition.
In the pursuit of this Order, you are hereby authorized to coordinate with the PAL
Manager, the PPA Manager, the local PNP Station and other offices concerned for
the needed support and cooperation.Further, that the usual courtesy and
diplomacy must be observed at all times in the conduct of the inspection.
Please be guided accordingly.
xxx

Page 101
3. On February 19, 1993, the Sangguniang Panlalawigan, Provincial Government

of Palawan enacted Resolution No. 33 entitled: A RESOLUTION PROHIBITING THE
CATCHING, GATHERING, POSSESSING, BUYING, SELLING AND SHIPMENT OF LIVE
MARINE CORAL DWELLING AQUATIC ORGANISMS, TO WIT:
FAMILY: SCARIDAE (MAMENG), EPINE PHELUS FASCIATUS(SUNO). CROMILEPTES
ALTIVELIS (PANTHER OR SENORITA), LOBSTER BELOW 200 GRAMS AND
SPAWNING, TRADACNA GIGAS (TAKLOBO), PINCTADA MARGARITEFERA(MOTHER
PEARL, OYSTERS, GIANT CLAMS AND OTHER SPECIES), PENAEUS
MONODON (TIGER PRAWN-BREEDER SIZE OR MOTHER), EPINEPHELUS
SUILLUS (LOBA OR GREEN GROUPER) AND FAMILY: BALISTIDAE (TROPICAL
AQUARIUM FISHES) FOR A PERIOD FIVE (5) YEARS IN AND COMING FROM
PALAWAN WATERS, the full text of which reads as follows:
WHEREAS, scientific and factual researches [sic] and studies disclose that only
five (5) percent of the corals of our province remain to be in excellent condition
as [a] habitat of marine coral dwelling aquatic organisms;
WHEREAS, it cannot be gainsaid that the destruction and devastation of the
corals of our province were principally due to illegal fishing activities like
dynamite fishing, sodium cyanide fishing, use of other obnoxious substances and
other related activities;
WHEREAS, there is an imperative and urgent need to protect and preserve the
existence of the remaining excellent corals and allow the devastated ones to
reinvigorate and regenerate themselves into vitality within the span of five (5)
years;
WHEREAS, Sec. 468, Par. 1, Sub-Par. VI of the [sic] R.A. 7160 otherwise known as
the Local Government Code of 1991 empowers the Sangguniang Panlalawigan to
protect the environment and impose appropriate penalties [upon] acts which
endanger the environment such as dynamite fishing and other forms of
destructive fishing, among others.
NOW, THEREFORE, on motion by Kagawad Nelson P. Peneyra and upon
unanimous decision of all the members present;
Be it resolved as it is hereby resolved, to approve Resolution No. 33, Series of

1993 of the Sangguniang Panlalawigan and to enact Ordinance No. 2 for the
purpose, to wit:
ORDINANCE NO. 2
Series of 1993
BE IT ORDAINED BY THE SANGGUNIANG PANLALAWIGAN IN SESSION
ASSEMBLED:
Section 1. TITLE - This Ordinance shall be known as an Ordinance Prohibiting the
catching, gathering, possessing, buying, selling and shipment of live marine coral
dwelling aquatic organisms, to wit: 1.Family: Scaridae (Mameng), 2. Epinephelus
Fasciatus (Suno), 3. Cromileptes altivelis (Panther or Senorita), lobster below 200
grams and spawning), 4. Tridacna Gigas (Taklobo), 5. Pinctada Margaretefera
(Mother Pearl, Oysters, Giant Clams and other species), 6. Penaeus Monodon
(Tiger Prawn-breeder size or mother), 7. Epinephelus Suillus (Loba or Green
Grouper) and 8. Family: Balistidae (Topical Aquarium Fishes) for a period of five
(5) years in and coming from Palawan Waters.
Section II. PRELIMINARY CONSIDERATIONS
1. Sec. 2-A (Rep. Act 7160). It is hereby declared, the policy of the state that the
territorial and political subdivisions of the State shall enjoy genuine and
meaningful local autonomy to enable them to attain their fullest development as
self reliant communities and make them more effective partners in the
attainment of national goals. Toward this end, the State shall provide for [a] more
responsive and accountable local government structure instituted through a
system of decentralization whereby local government units shall be given more
powers, authority, responsibilities and resources.
2. Sec. 5-A (R.A. 7160). Any provision on a power of [a] local Government Unit
shall be liberaly interpreted in its favor, and in case of doubt, any question
thereon shall be resolved in favor of devolution of powers and of the lower
government units. Any fair and reasonable doubts as to the existence of the
power shall be interpreted in favor of the Local Government Unit concerned.
3. Sec. 5-C (R.A. 7160). The general welfare provisions in this Code shall be
liberally interpreted to give more powers to local government units in
accelerating economic development and upgrading the quality of life for the
people in the community.
4. Sec. 16 (R.A. 7160). General Welfare. - Every local government unit shall
exercise the powers expressly granted, those necessarily implied therefrom, as
well as powers necessary, appropriate, or incidental for its efficient and effective
governance; and those which are essential to the promotion of the general
welfare.
Section III. DECLARATION OF POLICY. - It is hereby declared to be the policy of the
Province of Palawan to protect and conserve the marine resources of Palawan not
only for the greatest good of the majority of the present generation but with [the]
proper perspective and consideration of [sic] their prosperity, and to attain this
end, the Sangguniang Panlalawigan henceforth declares that is [sic] shall be
unlawful for any person or any business entity to engage in catching, gathering,
possessing, buying, selling and shipment of live marine coral dwelling aquatic
organisms as enumerated in Section 1 hereof in and coming out of Palawan
Waters for a period of five (5) years;
Section IV. PENALTY CLAUSE. - Any person and/or business entity violating this
Ordinance shall be penalized with a fine of not more than Five Thousand Pesos
(P5,000.00), Philippine Currency, and/or imprisonment of six (6) months to twelve
(12) months and confiscation and forfeiture of paraphernalias [sic] and
equipment in favor of the government at the discretion of the Court;
Section V. SEPARABILITY CLAUSE. - If for any reason, a Section or provision of this
Ordinance shall be held as unconditional [sic] or invalid, it shall not affect the
other provisions hereof.

Page 102
Section VI. REPEALING CLAUSE. - Any existing Ordinance or a provision of any

ordinance inconsistent herewith is deemed modified, amended or repealed.
Section VII. EFFECTIVITY. - This Ordinance shall take effect ten (10) days after its
publication.
SO ORDAINED.
xxx
4. The respondents implemented the said ordinances, Annexes A and C hereof
thereby depriving all the fishermen of the whole province of Palawan and the City
of Puerto Princesa of their only means of livelihood and the petitioners Airline
Shippers Association of Palawan and other marine merchants from performing
their lawful occupation and trade;
5. Petitioners Alfredo Tano, Baldomero Tano, Teocenes Midello, Angel de Mesa,
Eulogio Tremocha, and Felipe Ongonion, Jr. were even charged criminally under
criminal case no. 93-05-C in the 1st Municipal Circuit Trial Court of Cuyo-AgutayaMagsaysay, an original carbon copy of the criminal complaint dated April 12,
1993 is hereto attached as Annex D; while xerox copies are attached as Annex D
to the copies of the petition;
6. Petitioners Robert Lim and Virginia Lim, on the other hand, were charged by
the respondent PNP with the respondent City Prosecutor of Puerto Princesa City, a
xerox copy of the complaint is hereto attached as Annex E;
Without seeking redress from the concerned local government units,
prosecutors office and courts, petitioners directly invoked our original jurisdiction
by filing this petition on 4 June 1993. In sum, petitioners contend that:
First, the Ordinances deprived them of due process of law, their livelihood,
and unduly restricted them from the practice of their trade, in violation of Section
2, Article XII and Sections 2 and 7 of Article XIII of the 1987 Constitution.

Page 103
Second, Office Order No. 23 contained no regulation nor condition under

which the Mayors permit could be granted or denied; in other words, the Mayor
had the absolute authority to determine whether or not to issue permit.
Third, as Ordinance No. 2 of the Province of Palawan altogether prohibited
the catching, gathering, possession, buying, selling and shipping of live marine
coral dwelling organisms, without any distinction whether it was caught or
gathered through lawful fishing method, the Ordinance took away the right of
petitioners-fishermen to earn their livelihood in lawful ways; and insofar as
petitioners-members of Airline Shippers Association are concerned, they were
unduly prevented from pursuing their vocation and entering into contracts which
are proper, necessary, and essential to carry out their business endeavors to a
successful conclusion.
Finally, as Ordinance No. 2 of the Sangguniang Panlalawigan is null and void,
the criminal cases based thereon against petitioners Tano and the others have to
be dismissed.
In the Resolution of 15 June 1993 we required respondents to comment on
the petition, and furnished the Office of the Solicitor General with a copy thereof.
In their comment filed on 13 August 1993, public respondents Governor
Socrates and Members of the Sangguniang Panlalawigan of Palawan defended
the validity of Ordinance No.2, Series of 1993, as a valid exercise of the Provincial
Governments power under the general welfare clause (Section 16 of the Local
Government Code of 1991 [hereafter, LGC]), and its specific power to protect the
environment and impose appropriate penalties for acts which endanger the
environment, such as dynamite fishing and other forms of destructive fishing
under Section 447 (a) (1) (vi), Section 458 (a) (1) (vi), and Section 468 (a) (1) (vi),
of the LGC. They claimed that in the exercise of such powers, the Province of
Palawan had the right and responsibilty to insure that the remaining coral reefs,
where fish dwells [sic], within its territory remain healthy for the future
generation. The Ordinance, they further asserted, covered onlylive marine coral
dwelling aquatic organisms which were enumerated in the ordinance and
excluded other kinds of live marine aquatic organisms not dwelling in coral reefs;
besides the prohibition was for only five (5) years to protect and preserve the
pristine coral and allow those damaged to regenerate.
Aforementioned respondents likewise maintained that there was no violation
of due process and equal protection clauses of the Constitution. As to the former,
public hearings were conducted before the enactment of the Ordinance which,
undoubtedly, had a lawful purpose and employed reasonable means; while as to
the latter, a substantial distinction existed between a fisherman who catches live
fish with the intention of selling it live, and a fisherman who catches live fish with
no intention at all of selling it live, i.e., the former uses sodium cyanide while the
latter does not. Further, the Ordinance applied equally to all those belonging to
one class.
On 25 October 1993 petitioners filed an Urgent Plea for the Immediate
Issuance of a Temporary Restraining Order claiming that despite the pendency of
this case, Branch 50 of the Regional Trial Court of Palawan was bent on
proceeding with Criminal Case No. 11223 against petitioners Danilo Tano, Alfredo
Tano, Eulogio Tremocha, Romualdo Tano, Baldomero Tano, Andres Lemihan and
Angel de Mesa for violation of Ordinance No. 2 of the Sangguniang Panlalawigan
of Palawan. Acting on said plea, we issued on 11 November 1993 a temporary
restraining order directing Judge Angel Miclat of said court to cease and desist
from proceeding with the arraignment and pre-trial of Criminal Case No. 11223.
On 12 July 1994, we excused the Office of the Solicitor General from filing a
comment, considering that as claimed by said office in its Manifestation of 28
June 1994, respondents were already represented by counsel.
The rest of the respondents did not file any comment on the petition.
In the resolution of 15 September 1994, we resolved to consider the
comment on the petition as the Answer, gave due course to the petition and
required the parties to submit their respective memoranda. [2]
On 22 April 1997 we ordered impleaded as party respondents the
Department of Agriculture and the Bureau of Fisheries and Aquatic Resources and
required the Office of the Solicitor General to comment on their behalf. But in

Page 104
light of the latters motion of 9 July 1997 for an extension of time to file the
comment which would only result in further delay, we dispensed with said
comment.
After due deliberation on the pleadings filed, we resolved to dismiss this
petition for want of merit, on 22 July 1997, and assigned it to the ponente for the
writing of the opinion of the Court.
I
There are actually two sets of petitioners in this case. The first is composed
of Alfredo Tano, Baldomero Tano, Danilo Tano, Romualdo Tano, Teocenes Midello,
Angel de Mesa, Eulogio Tremocha, Felipe Ongonion, Jr., Andres Linijan, and
Felimon de Mesa, who were criminally charged with violating Sangguniang
Panlalawigan Resolution No. 33 and Ordinance No. 2, Series of 1993, of the
Province of Palawan, in Criminal Case No. 93-05-C of the 1 st Municipal Circuit Trial
Court (MCTC) of Palawan;[3] and Robert Lim and Virginia Lim who were charged
with violating City Ordinance No. 15-92 of Puerto Princesa City and Ordinance No.
2, Series of 1993, of the Province of Palawan before the Office of the City
Prosecutor of Puerto Princesa.[4] All of them, with the exception of Teocenes
Midello, Felipe Ongonion, Jr., Felimon de Mesa, Robert Lim and Virginia Lim, are
likewise the accused in Criminal Case No. 11223 for the violation of Ordinance
No. 2 of the Sangguniang Panlalawigan of Palawan, pending before Branch 50 of
the Regional Trial Court of Palawan.[5]
The second set of petitioners is composed of the rest of the petitioners
numbering seventy-seven (77), all of whom, except the Airline Shippers
Association of Palawan -- an alleged private association of several marine
merchants -- are natural persons who claim to be fishermen.
The primary interest of the first set of petitioners is, of course, to prevent the
prosecution, trial and determination of the criminal cases until the
constitutionality or legality of the Ordinances they allegedly violated shall have
been resolved. The second set of petitioners merely claim that they being
fishermen or marine merchants, they would be adversely affected by the
ordinances.
As to the first set of petitioners, this special civil for certiorari must fail on the
ground of prematurity amounting to a lack of cause of action. There is no
showing that the said petitioners, as the accused in the criminal cases, have filed
motions to quash the informations therein and that the same were denied. The
ground available for such motions is that the facts charged therein do not
constitute an offense because the ordinances in question are unconstitutional.
[6]
It cannot then be said that the lower courts acted without or in excess of
jurisdiction or with grave abuse of discretion to justify recourse to the
extraordinary remedy of certiorari or prohibition. It must further be stressed that
even if the petitioners did file motions to quash, the denial thereof would not
forthwith give rise to a cause of action under Rule 65 of the Rules of Court. The
general rule is that where a motion to quash is denied, the remedy therefrom is
notcertiorari, but for the party aggrieved thereby to go to trial without prejudice
to reiterating special defenses involved in said motion, and if, after trial on the
merits of adverse decision is rendered, to appeal therefrom in the manner
authorized by law.[7] And , even where in an exceptional circumstance such denial
may be the subject of a special civil action for certiorari, a motion for
reconsideration must have to be filed to allow the court concerned an opportunity
to correct its errors, unless such motion may be dispensed with because of
existing exceptional circumstances.[8] Finally, even if a motion for reconsideration
has been filed and denied, the remedy under Rule 65 is still unavailable absent
any showing of the grounds provided for in Section 1 thereof. [9] For obvious
reasons, the petition at bar does not, and could not have , alleged any of such
grounds.
As to the second set of petitioners, the instant petition is obviously one for
DECLARATORY RELIEF, i.e., for a declaration that the Ordinances in question are a
nullity ... for being unconstitutional.[10] As such, their petition must likewise fail, as
this Court is not possessed of original jurisdiction over petitions for declaratory
relief even if only questions of law are involved, [11] it being settled that the Court
merely exercises appellate jurisdiction over such petitions.[12]
II
Even granting arguendo that the first set of petitioners have a cause of
action ripe for the extraordinary writ of certiorari, there is here a clear disregard

Page 105
of the hierarchy of courts, and no special and important reason or exceptional or

compelling circumstance has been adduced why direct recourse to us should be
allowed. While we have concurrent jurisdiction with Regional Trial courts and with
the Court of Appeals to issue writs of certiorari, prohibition, mandamus, quo
warranto, habeas corpus and injunction, such concurrence gives petitioners no
unrestricted freedom of choice of court forum, so we held in People v. Cuaresma:
[13]
This concurrence of jurisdiction is not to be taken as according to parties seeking

any of the writs an absolute unrestrained freedom of choice of the court to which
application therefor will be directed. There is after all hierarchy of courts. That
hierarchy is determinative of the venue of appeals, and should also serve as a
general determinant of the appropriate forum for petitions for the extraordinary
writs. A becoming regard for that judicial hierarchy most certainly indicates that
petitions for the issuance of extraordinary writs against first level (inferior) courts
should be filed with the Regional Trial Court, and those against the latter, with the
Court of Appeals. A direct invocation of the Supreme Courts original jurisdiction
to issue these writs should be allowed only when there are special and important
reasons therefor, clearly and specifically set out in the petition. This is
established policy. It is a policy necessary to prevent inordinate demands upon
the Courts time and attention which are better devoted to those matters within
its exclusive jurisdiction, and to prevent further over-crowding of the Courts
docket.
The Court feels the need to reaffirm that policy at this time, and to enjoin strict
adherence thereto in the light of what it perceives to be a growing tendency on
the part of litigants and lawyers to have their applications for the so-called
extraordinary writs, and sometimes even their appeals, passed upon and
adjudicated directly and immediately by the highest tribunal of the land.
In Santiago v. Vasquez,[14] this Court forcefully expressed that the propensity
of litigants and lawyers to disregard the hierarchy of courts must be put to a halt,
not only because of the imposition upon the precious time of this Court, but also
because of the inevitable and resultant delay, intended or otherwise, in the
adjudication of the case which often has to be remanded or referred to the lower
court, the proper forum under the rules of procedure, or as better equipped to
resolve the issues since this Court is not a trier of facts. We reiterated the judicial
policy that this Court will not entertain direct resort to it unless the redress
desired cannot be obtained in the appropriate courts or where exceptional and
compelling circumstances justify availment of a remedy within and calling for the
exercise of [its] primary jurisdiction.
III
Notwithstanding the foregoing procedural obstacles against the first set of
petitioners, we opt to resolve this case on its merits considering that the lifetime
of the challenged Ordinances is about to end. Ordinance No. 15-92 of the City of
Puerto Princesa is effective only up to 1 January 1998, while Ordinance No. 2 of
the Province of Palawan, enacted on 19 February 1993, is effective for only five
(5) years. Besides, these Ordinances were undoubtedly enacted in the exercise of
powers under the new LGC relative to the protection and preservation of the
environment and are thus novel and of paramount importance. No further delay
then may be allowed in the resolution of the issues raised.
It is of course settled that laws (including ordinances enacted by local
government units) enjoy the presumption of constitutionality. [15] To overthrow this
presumption, there must be a clear and unequivocal breach of the Constitution,
not merely a doubtful or argumentative contradiction. In short, the conflict with
the Constitution must be shown beyond reasonable doubt. [16] Where doubt exists,
even if well founded, there can be no finding of unconstitutionality. To doubt is to
sustain.[17]
After a scrunity of the challenged Ordinances and the provisions of the
Constitution petitioners claim to have been violated, we find petitioners
contentions baseless and so hold that the former do not suffer from any infirmity,
both under the Constitution and applicable laws.
Petitioners specifically point to Section 2, Article XII and Sections 2 and 7,
Article XIII of the Constitution as having been transgressed by the Ordinances.
The pertinent portion of Section 2 of Article XII reads:

Page 106
SEC. 2. x x x
The State shall protect the nation's marine wealth in its archipelagic waters,
territorial sea, and exclusive economic zone, and reserve its use and enjoyment
exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources by
Filipino citizens, as well as cooperative fish farming, with priority to subsistence
fishermen and fishworkers in rivers, lakes, bays, and lagoons.
Sections 2 and 7 of Article XIII provide:
Sec. 2. The promotion of social justice shall include the commitment to create
economic opportunities based on freedom of initiative and self-reliance.
xxx
SEC. 7. The State shall protect the rights of subsistence fishermen, especially of
local communities, to the preferential use of the communal marine and fishing
resources, both inland and offshore. It shall provide support to such fishermen
through appropriate technology and research, adequate financial, production,
and marketing assistance, and other services. The State shall also protect,
develop, and conserve such resources. The protection shall extend to offshore
fishing grounds of subsistence fishermen against foreign intrusion. Fishworkers
shall receive a just share from their labor in the utilization of marine and fishing
resources.
There is absolutely no showing that any of the petitioners qualifies as a
subsistence or marginal fisherman. In their petition, petitioner Airline Shippers
Association of Palawan is described as a private association composed of Marine
Merchants; petitioners Robert Lim and Virginia Lim, as merchants; while the rest
of the petitioners claim to be fishermen, without any qualification, however, as to
their status.
Since the Constitution does not specifically provide a definition of the terms
subsistence or marginal fishermen,[18] they should be construed in their general
and ordinary sense. Amarginal fisherman is an individual engaged in fishing

whose margin of return or reward in his harvest of fish as measured by existing
price levels is barely sufficient to yield a profit or cover the cost of gathering the
fish,[19] while a subsistence fisherman is one whose catch yields but the
irreducible minimum for his livelihood.[20] Section 131(p) of the LGC (R.A. No.
7160) defines a marginal farmer or fisherman as an individual engaged in
subsistence farming or fishing which shall be limited to the sale, barter or
exchange of agricultural or marine products produced by himself and his
immediate family. It bears repeating that nothing in the record supports a finding
that any petitioner falls within these definitions.
Anent Section 7 of Article XIII, it speaks not only of the use of communal
marine and fishing resources, but of their protection, development, and
conservation. As hereafter shown, the ordinances in question are meant precisely
to protect and conserve our marine resources to the end that their enjoyment by
the people may be guaranteed not only for the present generation, but also for
the generations to come.
Besides, Section 2 of Article XII aims primarily not to bestow any right to
subsistence fishermen, but to lay stress on the duty of the State to protect the
nations marine wealth. What the provision merely recognizes is that the State
may allow, by law, cooperative fish farming, with priority to subsistence
fishermen and fishworkers in rivers, lakes, bays, and lagoons. Our survey of the
statute books reveals that the only provision of law which speaks of the
preferential right of marginal fishermen is Section 149 of the LGC of 1991 which
pertinently provides:
The so-called preferential right of subsistence or marginal fishermen to the

use of marine resources is not at all absolute. In accordance with the Regalian
Doctrine, marine resources belong to the State, and, pursuant to the first
paragraph of Section 2, Article XII of the Constitution, their exploration,
development and utilization ... shall be under the full control and supervision of
the State. Moreover, their mandated protection, development, and conservation
as necessarily recognized by the framers of the Constitution, imply certain
restrictions on whatever right of enjoyment there may be in favor of
anyone. Thus, as to the curtailment of the preferential treatment of marginal
fisherman, the following exchange between Commissioner Francisco Rodrigo and
Commissioner Jose F.S. Bengzon, Jr., took place at the plenary session of the
Constitutional Commission:
SEC. 149. Fishery Rentals, Fees and Charges. -- x x x
MR. RODRIGO:
(b) The sangguniang bayan may:

(1) Grant fishery privileges to erect fish corrals, oyster, mussels or other aquatic
beds or bangus fry areas, within a definite zone of the municipal waters, as
determined by it: Provided, however, That duly registered organizations and
cooperatives of marginal fishermen shall have preferential right to such fishery
privileges ....
Let us discuss the implementation of this because I would not raise the
hopes of our people, and afterwards fail in the implementation. How will
this be implemented? Will there be a licensing or giving of permits so
that government officials will know that one is really a marginal
fisherman? Or if policeman say that a person is not a marginal
fisherman, he can show his permit, to prove that indeed he is one.
MR. BENGZON:
In a Joint Administrative Order No. 3, dated 25 April 1996, the Secretary of the
Department of Agriculture and the Secretary of the Department of Interior and
Local Government prescribed the guidelines on the preferential treatment of
small fisherfolk relative to the fishery right mentioned in Section 149. This case,
however, does not involve such fishery right.

Page 107
Certainly, there will be some mode of licensing insofar as this is

concerned and this particular question could be tackled when we
discuss the Article on Local Governments -- whether we will leave to the
local governments or to Congress on how these things will be
implemented. But certainly, I think our Congressmen and our local

officials will not be bereft of ideas on how to implement this mandate.
xxx
generation, but also for those to come - generations which stand to inherit
nothing but parched earth incapable of sustaining life.
The right to a balanced and healthful ecology carries with it a correlative duty to
refrain from impairing the environment ...
MR. RODRIGO:
So, once one is licensed as a marginal fisherman, he can go anywhere in
the Philippines and fish in any fishing grounds.
MR. BENGZON:
Subject to whatever rules and regulations and local laws that may be
passed, may be existing or will be passed.[21] (underscoring supplied for
emphasis).
What must likewise be borne in mind is the state policy enshrined in the
Constitution regarding the duty of the State to protect and advance the right of
the people to a balanced and healthful ecology in accord with the rhythm and
harmony of nature.[22] On this score, in Oposa v. Factoran,[23] this Court declared:
While the right to balanced and healthful ecology is to be found under the
Declaration of Principles the State Policies and not under the Bill of Rights, it does
not follow that it is less important than any of the civil and political rights
enumerated in the latter. Such a right belongs to a different category of rights
altogether for it concerns nothing less than self-preservation and selfperpetuation - aptly and fittingly stressed by the petitioners - the advancement
of which may even be said to predate all governments and constitutions. As a
matter of fact, these basic rights need not even be written in the Constitution for
they are assumed to exist from the inception of humankind. If they are now
explicitly mentioned in the fundamental charter, it is because of the well-founded
fear of its framers that unless the rights to a balanced and healthful ecology and
to health are mandated as state policies by the Constitution itself, thereby
highlighting their continuing importance and imposing upon the state a solemn
obligation to preserve the first and protect and advance the second , the day
would not be too far when all else would be lost not only for the present

Page 108
The LGC provisions invoked by private respondents merely seek to give flesh
and blood to the right of the people to a balanced and healthful ecology. In fact,
the General Welfare Clause, expressly mentions this right:
SEC. 16. General Welfare.-- Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers
necessary, appropriate, or incidental for its efficient and effective governance,
and those which are essential to the promotion of the general welfare. Within
their respective territorial jurisdictions, local government units shall ensure and
support, among other things, the preservation and enrichment of culture,
promote health and safety, enhance the right of the people to a balanced
ecology, encourage and support the development of appropriate and self-reliant
scientific and technological capabilities, improve public morals, enhance
economic prosperity and social justice, promote full employment among their
residents, maintain peace and order, and preserve the comfort and convenience
of their inhabitants. (underscoring supplied).
Moreover, Section 5(c) of the LGC explicitly mandates that the general welfare
provisions of the LGC shall be liberally interpreted to give more powers to the
local government units in accelerating economic development and upgrading the
quality of life for the people of the community.
The LGC vests municipalities with the power to grant fishery privileges in
municipal waters and to impose rentals, fees or charges therefor; to penalize, by
appropriate ordinances, the use of explosives, noxious or poisonous substances,
electricity, muro-ami, and other deleterious methods of fishing; and to prosecute
any violation of the provisions of applicable fishery laws. [24] Further,
the sangguniang bayan, the sangguniang panlungsod and the sangguniang
panlalawigan are directed to enact ordinances for the general welfare of the
municipality and its inhabitants, which shall include, inter alia, ordinances that
[p]rotect the environment and impose appropriate penalties for acts which
destructive fishing ... and such other activities which result in pollution,
acceleration of eutrophication of rivers and lakes or of ecological imbalance. [25]
Finally, the centerpiece of LGC is the system of decentralization [26] as
expressly
mandated
by
the
Constitution. [27] Indispensable
thereto
is devolution and the LGC expressly provides that [a]ny provision on a power of a
local government unit shall be liberally interpreted in its favor, and in case of
doubt, any question thereon shall be resolved in favor of devolution of powers
and of the lower local government unit. Any fair and reasonable doubt as to the
existence of the power shall be interpreted in favor of the local government unit
concerned,[28]Devolution refers to the act by which the National Government
confers power and authority upon the various local government units to perform
specific functions and responsibilities.[29]
One of the devolved powers enumerated in the section of the LGC on
devolution is the enforcement of fishery laws in municipal waters including the
conservation of mangroves.[30] This necessarily includes enactment of ordinances
to effectively carry out such fishery laws within the municipal waters.
The term municipal waters, in turn, include not only streams, lakes, and tidal
waters within the municipality, not being the subject of private ownership and
not comprised within the national parks, public forest, timber lands, forest
reserves, or fishery reserves, but also marine waters included between two lines
drawn perpendicularly to the general coastline from points where the boundary
lines of the municipality or city touch the sea at low tide and a third line parallel
with the general coastline and fifteen kilometers from it. [31] Under P.D. No. 704,
the marine waters included in municipal waters is limited to three nautical miles
from the general coastline using the above perpendicular lines and a third
parallel line.
These fishery laws which local government units may enforce under Section
17(b), (2), (i) in municipal waters include: (1) P.D. No. 704; (2) P.D. No. 1015
which, inter alia, authorizes the establishment of a closed season in any
Philippine water if necessary for conservation or ecological purposes; (3) P.D. No.

Page 109
1219 which provides for the exploration, exploitation, utilization, and

conservation of coral resources; (4) R.A. No. 5474, as amended by B.P. Blg. 58,
which makes it unlawful for any person, association, or corporation to catch or
cause to be caught, sell, offer to sell, purchase, or have in possession any of the
fish specie called gobiidae or ipon during closed season; and (5) R.A. No. 6451
which prohibits and punishes electrofishing, as well as various issuances of the
BFAR.
To those specifically devolved insofar as the control and regulation of fishing
in municipal waters and the protection of its marine environment are concerned,
must be added the following:
1. Issuance of permits to construct fish cages within municipal waters;
2. Issuance of permits to gather aquarium fishes within municipal
waters;
3. Issuance of permits to gather kapis shells within municipal waters;
4. Issuance of permits
municipal waters;
to
gather/culture
shelled
mollusks
within
5. Issuance of licenses to establish seaweed farms within municipal

waters;
6. Issuance of licenses to establish culture pearls within municipal
waters;
7. Issuance of auxiliary invoice to transport fish and fishery products;
and
8. Establishment of closed season in municipal waters.
These functions are covered in the Memorandum of Agreement of 5 April 1994
between the Department of Agriculture and the Department of Interior and Local
Government.
In light then of the principles of decentralization and devolution enshrined in

the LGC and the powers granted to local government units under Section 16 (the
General Welfare Clause), and under Sections 149, 447 (a) (1) (vi), 458 (a) (1) (vi)
and 468 (a) (1) (vi), which unquestionably involve the exercise of police power,
the validity of the questioned Ordinances cannot be doubted.
Parenthetically, we wish to add that these Ordinances find full support under
R.A. No. 7611, otherwise known as the Strategic Environmental Plan (SEP) for
Palawan Act, approved on 19 July 1992. This statute adopts a comprehensive
framework for the sustainable development of Palawan compatible with
protecting and enhancing the natural resources and endangered environment of
the province, which shall serve to guide the local government of Palawan and the
government agencies concerned in the formulation and implementation of plans,
programs and projects affecting said province.[32]
At this time then, it would be appropriate to determine the relation between
the assailed Ordinances and the aforesaid powers of the Sangguniang
Panlungsod of the City of Puerto Princesa and the Sangguniang Panlalawigan of
the Province of Palawan to protect the environment. To begin, we ascertain the
purpose of the Ordinances as set forth in the statement of purposes or
declaration of policies quoted earlier.
It is clear to the Court that both Ordinances have two principal objectives or
purposes: (1) to establish a closed season for the species of fish or aquatic
animals covered therein for a period of five years, and (2) to protect the corals of
the marine waters of the City of Puerto Princesa and the Province of Palawan
from further destruction due to illegal fishing activities.
The accomplishment of the first objective is well within the devolved power
to enforce fishery laws in municipal waters, such as P.D. No. 1015, which allows
the establishment of closed seasons. The devolution of such power has been
expressly confirmed in the Memorandum of Agreement of 5 April 1994 between
the Department of Agriculture and the Department of Interior and Local
Government.

Page 110
The realization of the second objective falls within both the general welfare
clause of the LGC and the express mandate thereunder to cities and provinces to
protect the environment and impose appropriate penalties for acts which
endanger the environment.[33]
The destruction of the coral reefs results in serious, if not irreparable,
ecological imbalance, for coral reefs are among the natures life-support systems.
[34]
They collect, retain, and recycle nutrients for adjacent nearshore areas such
as mangroves, seagrass beds, and reef flats; provide food for marine plants and
animals; and serve as a protective shelter for aquatic organisms. [35] It is said that
[e]cologically, the reefs are to the oceans what forests are to continents: they are
shelter and breeding grounds for fish and plant species that will disappear
without them.[36]
The prohibition against catching live fish stems, in part, from the modern
phenomenon of live-fish trade which entails the catching of so-called exotic
tropical species of fish not only for aquarium use in the West, but also for the
market for live banquet fish [which] is virtually insatiable in ever more affluent
Asia.[37] These exotic species are coral-dwellers, and fishermen catch them by
diving in shallow water with corraline habitats and squirting sodium cyanide
poison at passing fish directly or onto coral crevices; once affected the fish are
immobilized [merely stunned] and then scooped by hand. [38] The diver then
surfaces and dumps his catch into a submerged net attached to the skiff . Twenty
minutes later, the fish can swim normally.Back on shore, they are placed in
holding pens, and within a few weeks, they expel the cyanide from their system
and are ready to be hauled. Then they are placed in saltwater tanks or packaged
in plastic bags filled with seawater for shipment by air freight to major markets
for live food fish.[39] While the fish are meant to survive, the opposite holds true
for their former home as [a]fter the fisherman squirts the cyanide, the first thing
to perish is the reef algae, on which fish feed. Days later, the living coral starts to
expire. Soon the reef loses its function as habitat for the fish, which eat both the
algae and invertebrates that cling to the coral. The reef becomes an underwater
graveyard, its skeletal remains brittle, bleached of all color and vulnerable to
erosion from the pounding of the waves. [40] It has been found that cyanide fishing
kills most hard and soft corals within three months of repeated application. [41]
The nexus then between the activities barred by Ordinance No. 15-92 of the
City of Puerto Princesa and the prohibited acts provided in Ordinance No. 2,
Series of 1993 of the Province of Palawan, on one hand, and the use of sodium
cyanide, on the other, is painfully obvious. In sum, the public purpose and
reasonableness of the Ordinances may not then be controverted.
As to Office Order No. 23, Series of 1993, issued by Acting City Mayor Amado
L. Lucero of the City of Puerto Princesa, we find nothing therein violative of any
constitutional or statutory provision. The Order refers to the implementation of
the challenged ordinance and is not the Mayors Permit.
The dissenting opinion of Mr. Justice Josue N. Bellosillo relies upon the lack of
authority on the part of the Sangguniang Panlungsod of Puerto Princesa to enact
Ordinance No. 15, Series of 1992, on the theory that the subject thereof is within
the jurisdiction and responsibility of the Bureau of Fisheries and Aquatic
Resources (BFAR) under P.D. No. 704, otherwise known as the Fisheries Decree of
1975; and that, in any event, the Ordinance is unenforceable for lack of approval
by the Secretary of the Department of Natural Resources (DNR), likewise in
accordance with P.D. No. 704.
The majority is unable to accommodate this view. The jurisdiction and
responsibility of the BFAR under P. D. no. 704, over the management,
conservation, development, protection, utilization and disposition of all fishery
and aquatic resources of the country is not all-encompassing. First, Section 4
thereof excludes from such jurisdiction and responsibility municipal waters, which
shall be under the municipal or city government concerned, except insofar as
fishpens and seaweed culture in municipal in municipal centers are concerned.
This section provides, however, that all municipal or city ordinances and
resolutions affecting fishing and fisheries and any disposition thereunder shall be
submitted to the Secretary of the Department of Natural Resources for
appropriate action and shall have full force and effect only upon his approval. [42]
Second, it must at once be pointed out that the BFAR is no longer under the
Department of Natural Resources (now Department of Environment and Natural
Resources). Executive Order No. 967 of 30 June 1984 transferred the BFAR from
the control and supervision of the Minister (formerly Secretary) of Natural

Page 111
Resources to the Ministry of Agriculture and Food (MAF) and converted it into a
mere staff agency thereof, integrating its functions with the regional offices of
the MAF.
In Executive Order No. 116 of 30 January 1987, which reorganized the MAF,
the BFAR was retained as an attached agency of the MAF. And under the
Administrative Code of 1987,[43]the BFAR is placed under the Title concerning the
Department of Agriculture.[44]
Therefore, it is incorrect to say that the challenged Ordinance of the City of
Puerto Princesa is invalid or unenforceable because it was not approved by the
Secretary of the DENR. If at all, the approval that should be sought would be that
of the Secretary of the Department of Agriculture (not DENR) of municipal
ordinances affecting fishing and fisheries in municipal waters has been dispensed
with in view of the following reasons:
(1) Section 534 (Repealing Clause) of the LGC expressly repeals or amends
Section 16 and 29 of P.D. No. 704 [45] insofar that they are inconsistent with the
provisions of the LGC.
(2) As discussed earlier, under the general welfare clause of the LGC, local
government units have the power, inter alia, to enact ordinances to enhance the
right of the people to a balanced ecology. It likewise specifically vests
municipalities with the power to grant fishery privileges in municipal waters, and
impose rentals, fees or charges therefor; to penalize, by appropriate ordinances,
the use of explosives, noxious or poisonous substances, electricity, muro-ami,
and other deleterious methods of fishing; and to prosecute other methods of
fishing; and to prosecute any violation of the provisions of applicable fishing laws.
[46]
Finally,
it
imposes
upon
the sangguniang
bayan, the sangguniang
panlungsod, and the sangguniang panlalawigan the duty to enact ordinances to
[p]rotect the environment and impose appropriate penalties for acts which
destructive fishing and such other activities which result in pollution, acceleration
of eutrophication of rivers and lakes or of ecological imbalance. [47]
In closing, we commend the Sangguniang Panlungsod of the City of Puerto

Princesa and Sangguniang Panlalawigan of the Province of Palawan for exercising
the requisite political will to enact urgently needed legislation to protect and
enhance the marine environment, thereby sharing in the herculean task of
arresting the tide of ecological destruction. We hope that other local government
units shall now be roused from their lethargy and adopt a more vigilant stand in
the battle against the decimation of our legacy to future generations. At this
time, the repercussions of any further delay in their response may prove
disastrous, if not, irreversible.

Page 112
WHEREFORE, the instant petition is DISMISSED for lack of merit and the
temporary restraining order issued on 11 November 1993 is LIFTED.
SO ORDERED.

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ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, SOCRATES MARANAN

AND LORENZO SANCHEZ vs. PHILIPPINE AMUSEMENTS AND GAMING

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

essential public services; (2) create recreation and integrated facilities

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

With particular regard to the requirement of proper party as applied in the

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

subdivision can regulate a federal instrumentality in such a way as to

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

the Philippine Constitution, local governments can only be an intra

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

It should be noted that, as the provision is worded, monopolies are not

Presidential Decree No. 1956, as amended by Executive Order No. 137

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

gambling, as a fundamental state policy, and the sooner the executive

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

cemetery y Subsequently, the same lot in question was rented out

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

6. Ordering defendants, to pay plaintiffs-appellants, jointly and

SO ORDERED. (Rollo, p. 40)

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

Petitioners alleged in their petition that the North Cemetery is exclusively

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

Noteworthy are the findings of the Court of Appeals as to the harrowing

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

to the city government for a period of forty-three

RODOLFO T. GANZON, petitioner,

The petitions of Mayor Ganzon originated from a series of administrative

G.R. No. 95245 August 5,1991

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

In her verified complaint (Annex A), Mrs. Cabaluna, a clerk

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

received them, including the petitioner. The petitioner asked for a

On October 10, 1988, petitioner's counsel, Atty. Original moved for

venue as denied due to lack of funds. At the hearing on November

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

twenty months, and designating meantime Vice-Mayor Mansueto Malabor as

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

request, the time of the delay shall not be counted in computing

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

of the Revised Administrative Code, then such additional power

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

administration and local government units, or otherwise, to user in a regime of

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

in local government. The sole objective of a suspension, as we have held, 59 is

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

1. Local autonomy, under the Constitution, involves a mere decentralization of

3. The change in constitutional language (with respect to the supervision clause)

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

Secretary of Interior is ORDERED to consolidate all such administrative cases

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

curtailment of the municipality's collection of market fees and market entrance

the Greater Balanga Development Corporation, is hereby

conducted, and such other pertinent information and date (sic) as

IN WITNESS WHEREOF, I hereunto have set my hand this 7th day

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

In case a person desires to conduct the same kind or line of

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

CAYEN CERVANCIA CABIGUEN, MLQU SCHOOL OF LAW

[G.R. No. 143596. December 11, 2003]

JUDGE TOMAS C. LEYNES, petitioner, vs. THE COMMISSION ON AUDIT