CASE 1

G.R. No. 135962 March 27, 2000

METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner,
vs.
BEL-AIR VILLAGE ASSOCIATION, INC., respondent.

DIGESTS:
1. MMDA Vs. Bel-Air Village [328 SCRA 836; G.R. No. 135962; 27 Mar 2000]
Facts: Metropolitan Manila Development Authority (MMDA), petitioner herein, is a Government Agency tasked with the
delivery of basic services in Metro Manila. Bel-Air Village Association (BAVA), respondent herein, received a letter of request
from the petitioner to open Neptune Street of Bel-Air Village for the use of the public. The said opening of Neptune Street
will be for the safe and convenient movement of persons and to regulate the flow of traffic in Makati City. This was
pursuant to MMDA law or Republic Act No. 7924. On the same day, the respondent was appraised that the perimeter wall
separating the subdivision and Kalayaan Avenue would be demolished.

The respondent, to stop the opening of the said street and demolition of the wall, filed a preliminary injunction and a
temporary restraining order. Respondent claimed that the MMDA had no authority to do so and the lower court decided in
favor of the Respondent. Petitioner appealed the decision of the lower courts and claimed that it has the authority to open
Neptune Street to public traffic because it is an agent of the State that can practice police power in the delivery of basic
services in Metro Manila.

Issue: Whether or not the MMDA has the mandate to open Neptune Street to public traffic pursuant to its regulatory and
police powers.

Held: The Court held that the MMDA does not have the capacity to exercise police power. Police power is primarily lodged
in the National Legislature. However, police power may be delegated to government units. Petitioner herein is a
development authority and not a political government unit. Therefore, the MMDA cannot exercise police power because it
cannot be delegated to them. It is not a legislative unit of the government. Republic Act No. 7924 does not empower the
MMDA to enact ordinances, approve resolutions and appropriate funds for the general welfare of the inhabitants of Manila.
There is no syllable in the said act that grants MMDA police power.

It is an agency created for the purpose of laying down policies and coordinating with various national government
agencies, people’s organizations, non-governmental organizations and the private sector for the efficient and expeditious
delivery of basic services in the vast metropolitan area.

2. MMDA Vs. Bel-Air Village [328 SCRA 836; G.R. No. 135962; 27 Mar 2000]
FACTS:
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.

Actions Filed:
1. BAVA – applied for injunction; trial court issued temporary restraining order but after due hearing, trial court
denied the issuance of a preliminary injunction.
2. BAVA – appealed to CA which issued preliminary injunction and later ruled that 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.
MMDA – filed motion for reconsideration but was denied by CA; hence the current recourse.

ISSUES:
1. Has the MMDA the mandate to open Neptune Street to public traffic pursuant to its regulatory and police powers?
2. Is the passage of an ordinance a condition precedent before the MMDA may order the opening of subdivision roads to
public traffic?

HELD:
The MMDA is, as termed in the charter itself, "development authority." All its functions are administrative in nature.

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.

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.

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.

DISPOSITION
IN VIEW WHEREOF, the petition is denied. The Decision and Resolution of the Court of Appeals are affirmed.

1. MMDA vs. Bel-Air Village Association (G.R. No. 135962)

Facts:
On December 30, 1995, respondent received from petitioner a notice requesting the former to open its private road,
Neptune Street, to public vehicular traffic starting January 2, 1996. On the same day, respondent was apprised that the
perimeter separating the subdivision from Kalayaan Avenue would be demolished.

Respondent instituted a petition for injunction against petitioner, praying for the issuance of a TRO and preliminary
injunction enjoining the opening of Neptune Street and prohibiting the demolition of the perimeter wall. The trial court
denied issuance of a preliminary injunction. On appeal, the appellate court ruled that the MMDA has no authority to order
the opening of Neptune Street, and cause the demolition of its perimeter walls. It held that the authority is lodged in the
City Council of Makati by ordinance.

MMDA said it has the authority to open Neptune St. because it is an agent of the Government endowed with police power in
the delivery of basic services in Metro Manila. From the premise of police powers, it follow then that it need not for an
ordinance to be enacted first. Hence this petition.

Issue:
Does MMDA has the mandate to open Neptune Street to public traffic pursuant to its regulatory and police powers?

Ruling:
According to SC, Police power is an inherent attribute of sovereignty. Police power is lodged primarily in the National
Legislature, which the latter can delegate to the President and administrative boards, LGU or other lawmaking bodies.

LGU is a political subdivision for local affairs. Which has a legislative body empowered to enact ordinances, approved
resolutions and appropriate funds for the general welfare of the province/city/municipality.

The MMDA is, as termed in the charter itself, "development authority." All its functions are administrative in nature.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

In sum, the MMDA has no power to enact ordinances for the welfare of the community. It is the LGUs, acting through their
respective legislative councils, that possess legislative power and police power.

The Sangguniang Panlungsod of Makati City did not pass any ordinance or resolution ordering the opening of Neptune
Street, hence, its proposed opening by the MMDA is illegal.

Wherefore, the petition is denied.

CASE 2
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.
DIGESTS:
1. Magtajas v. Pryce Properties Corp. (G.R. No. 111097)

Facts:
PAGCOR decided to expand its operations to Cagayan de Oro City. It leased a portion of a building belonging to Pryce
Properties Corporations, Inc., renovated & equipped the same, and prepared to inaugurate its casino during the Christmas
season.

Civil organizations angrily denounced the project. Petitioners opposed the casino’s opening and enacted Ordinance No.
3353, prohibiting the issuance of business permit and canceling existing business permit to the establishment for the
operation of the casino, and Ordinance No. 3375-93, prohibiting the operation of the casino and providing a penalty for its
violation.

Respondents assailed the validity of the ordinances on the ground that they both violated Presidential Decree No. 1869.
Petitioners contend that, pursuant to the Local Government Code, they have the police power authority to prohibit the
operation of casino for the general welfare.

Issue:
Whether or not Ordinace No. 3355 and Ordinance No. 3375-93 as enacted by the Sangguniang Panlunsod of Cagayan de Oro
City are valid.

Ruling:
No. 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.

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 tests of a valid ordinance are well established. A long line of decisions has held that to be valid, an ordinance must
conform to the following substantive requirements:
1) It must not contravene the constitution or any statute.
2) It must not be unfair or oppressive.
3) It must not be partial or discriminatory.
4) It must not prohibit but may regulate trade.
5) It must be general and consistent with public policy.
6) It must not be unreasonable.

The rationale of the requirement that the ordinances should not contravene a statute is obvious.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.
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.Hence, it was not competent for the Sangguniang Panlungsod of
Cagayan de Oro City to enact Ordinance No. 3353 prohibiting the use of buildings for the operation of a casino and
Ordinance No. 3375-93 prohibiting the operation of casinos. For all their praiseworthy motives, these ordinances are
contrary to P.D. 1869 and the public policy announced therein and are therefore ultra vires and void.

Wherefore, the petition is denied.

2. Magtajas v. Pryce Properties Corp., G.R. No. 111097, July 20, 1994

Facts:
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., renovated and equipped the same, and prepared to inaugurate its casino there during
the Christmas season.

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 contention of the petitioners is that it is violative of the Sangguniang Panlungsod of Cagayan de Oro City Ordinance
No. 3353 prohibiting the use of buildings for the operation of a casino and Ordinance No. 3375-93 prohibiting the
operation of casinos.

On the other hand, the respondents invoke P.D. 1869 which created PAGCOR to help centralize and regulate all games of
chance, including casinos on land and sea within the territorial jurisdiction of the Philippines.

The Court of Appeals ruled in favor of the respondents. Hence, the petition for review.

Issue: Whether or not the Ordinance No. 3353 and Ordinance No. 3375-93 are valid

Held: No. 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.

There is a requirement that the ordinances should not contravene a statute. 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.

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.

CASE 3
G.R. No. 91649 May 14, 1991
ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, SOCRATES MARANAN AND LORENZO SANCHEZ,petitioners,
vs.
PHILIPPINE AMUSEMENTS AND GAMING CORPORATION (PAGCOR), respondent.

1. Basco vs. PAGCOR (G.R. No. 91649) - Digest

Facts:
Petitioner is 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 it constitutes a waiver of a right prejudicial to a third
person with a right recognized by law. It waived the Manila Cit government’s right to impose taxes and license fees, which
is recognized by law. For the same reason, the law has intruded into the local government’s right to impose local taxes and
license fees. This is in contravention of the constitutionally enshrined principle of local autonomy.

Issue:
Whether or not Presidential Decree No. 1869 is valid.

Ruling:
1. The City of Manila, being a mere Municipal corporation has no inherent right to impose taxes. Their charter or statute
must plainly show an intent to confer that power, otherwise the municipality cannot assume it. 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.”

The Charter of Manila is subject to control by Congress. It should be stressed that “municipal corporations are mere
creatures of Congress”, which has the power to “create and abolish municipal corporations” due to its “general legislative
powers”. Congress, therefore, has the power of control over the Local governments. 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.

2. The City of Manila’s power to impose license fees on gambling, has long been revoked by P.D. No. 771 and vested
exclusively on the National Government. Therefore, only the National Government has the power to issue “license or
permits” for the operation of gambling.

3. Local governments have no power to tax instrumentalities of the National Government. PAGCOR is government owned or
controlled corporation with an original charter, P.D. No. 1869. All of its shares of stocks are owned by the National
Government. 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.

4. Petitioners also argue that the Local Autonomy Clause of the Constitution will be violated by P.D. No. 1869.

Article 10, Section 5 of the 1987 Constitution:

“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.”

SC said this is a pointless argument. The power of the local government to “impose taxes and fees” is always subject to
“limitations” which Congress may provide by law. Besides, the principle of local autonomy under the 1987 Constitution
simply means “decentralization.” It does not make local governments sovereign within the state.

Wherefore, the petition is DISMISSED.

2. Basco v. PAGCOR, GR 91649, 14 May 1991)

FACTS:
PD 1869 is the charter which created the Philippine Amusement and Gaming Corporation. PAGCOR was created to enable
the government to regulate and centralize all games of chance authorized by existing franchise or permitted by law.
Section 13 par 2 of the decree exempts PAGCOR, franchise holder from paying any “tax of any kind or form, income or
otherwise… whether national or local”. According to the petitioners, this waived the Manila City government’s right to
impose taxes and license fees which is recognized by law.

ISSUE:
Whether or not the exemption clause of PD 1869 is violative of the principle of local autonomy?

RULING:
The city of Manila, being a municipal corporation has no inherent right to impose taxes. Its power to tax must always yield
to a legislative act which is superior having been passed upon by the state which has the inherent power of the state to tax.
The court added that since one of the roles of PAGCOR is to regulate gambling casinos, this “places it in the category of an
agency or instrumentality of the government…” PAGCOR should be and actually is exempted from local taxes, otherwise,
its operation might be burdened, impeded, or subjected to control by a mere local government.
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 government.

CASE 4
G.R. No. 93252 August 5, 1991
RODOLFO T. GANZON, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and LUIS T. SANTOS, respondents.

FACTS:
Ganzon, after having been issued three successive 60-day of suspension order by Secretary of Local Government, filed a
petition for prohibition with the CA to bar Secretary Santos from implementing the said orders. Ganzon was faced with 10
administrative complaints on various charges on abuse of authority and grave misconduct.

ISSUE:
Whether or not the Secretary of Local Government (as the alter ego of the President) has the authority to suspend and
remove local officials.

RULING:
The Constitution did nothing more, 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 Chief
Executive is not banned from exercising acts of disciplinary authority because she did not exercise control powers, but
because no law allowed her to exercise disciplinary authority.
In those case that this Court denied the President the power (to suspend/remove) it was not because that the President
cannot exercise it on account of his limited power, but because the law lodged the power elsewhere. But in those cases in
which the law gave him the power, the Court, as in Ganzon v. Kayanan, found little difficulty in sustaining him.

CASE 5
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.

FACTS:
In 1998, then President Estrada issued EO No. 48 establishing the “Program for Devolution Adjustment and Equalization”
to enhance the capabilities of LGUs in the discharge of the functions and services devolved to them through the LGC.
The Oversight Committee under Executive Secretary Ronaldo Zamora passed Resolutions No. OCD-99-005, OCD-99-006
and OCD-99-003 which were approved by Pres. Estrada on October 6, 1999. The guidelines formulated by the Oversight
Committee required the LGUs to identify the projects eligible for funding under the portion of LGSEF and submit the
project proposals and other requirements to the DILG for appraisal before the Committee serves notice to the DBM for
the subsequent release of the corresponding funds.
Hon. Herminaldo Mandanas, Governor of Batangas, petitioned to declare unconstitutional and void certain provisos
contained in the General Appropriations Acts (GAAs) of 1999, 2000, and 2001, insofar as they uniformly earmarked for
each corresponding year the amount of P5billion for the Internal Revenue Allotment (IRA) for the Local Government
Service Equalization Fund (LGSEF) & imposed conditions for the release thereof.

ISSUE:
Whether the assailed provisos in the GAAs of 1999, 2000, and 2001, and the OCD resolutions infringe the Constitution
and the LGC of 1991.

HELD:
Yes.
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 effectively encroach on the fiscal autonomy enjoyed by LGUs and must be struck down.
According to Art. II, Sec.25 of the Constitution, “the State shall ensure the local autonomy of local governments“.
Consistent with the principle of local autonomy, theConstitution confines the President’s power over the LGUs to one
of general supervision, which has been interpreted to exclude the power of control. Drilon v. Lim distinguishes
supervision from control: control lays down the rules in the doing of an act – the officer has the discretion to order his
subordinate to do or redo the act, or decide to do it himself;supervision merely sees to it that the rules are followed but
has no authority to set down the rules or the discretion to modify/replace them.
The entire process involving the distribution & release of the LGSEF is constitutionally impermissible. The LGSEF is part of
the IRA or “just share” of the LGUs in the national taxes. Sec.6, Art.X of the Constitution mandates that the “just
share” shall beautomatically released to the LGUs. Since the release is automatic, the LGUs aren’t required to perform
any act to receive the “just share” – it shall be released to them “without need of further action“. To subject its
distribution & release to the vagaries of the implementing rules & regulations as sanctioned by the assailed provisos in
the GAAs of 1999-2001 and the OCD Resolutions would violate this constitutional mandate.
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% of the collections of the 3rd preceding fiscal year. The exception
does not apply in this case.
The Oversight Committee’s authority is limited to the implementation of the LGC of 1991 not to supplant or subvert the
same, and neither can it exercise control over the IRA of the LGUs.
Congress may amend any of the provisions of the LGC but only through a separate lawand not through appropriations
laws or GAAs. Congress cannot include in a general appropriations bill matters that should be more properly enacted
in a separate legislation.
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 – any provision therein which is intended to amend another law
is considered an “inappropriate provision“. Increasing/decreasing the IRA of LGUs fixed in the LGC of 1991 are matters
of general & substantive law. To permit the Congress to undertake these amendments through the GAAs would unduly
infringe the fiscal autonomy of the LGUs.
The value of LGUs as institutions of democracy is measured by the degree of autonomy they enjoy. Our national
officials should not only comply with the constitutional provisions in local autonomy but should also appreciate the spirit
and liberty upon which these provisions are based.

CASE 6
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.

Facts:
On July 13, 1990 the Court held in the case of Metropolitan Traffic Command, West Traffic District vs. Hon. Arsenio
M. Gonong, 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
down by LOI 43 in the case of stalled vehicles obstructing the public streets. Even the confiscation of driver’s licenses for
traffic violations was not directly prescribed or allowed by the decree. After no motion for reconsideration of the decision
was filed the judgment became final and executor.
Withstanding the Gonong decision still violations of the said decision transpired, wherein there were several
persons who sent complaint letters to the Court regarding the confiscation of driver’s licenses and removal of license plate
numbers.
On May 24, 1990 the MMA issued Ordinance No. 11, Series of 1991, authorizing itself “to detach 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 a resolution regarding the matter which stated that the Ordinance No. 11, Section
2 appears to be in conflict with the decision of the Court, and that the Court has received several complaints against the
enforcement of such ordinance.

Issue:
W/N Ordinance No. 11 Series of 1991 and Ordinance No. 7, Series of 1998 are valid in the exercise of such
delegated power to local government acting only as agents of the national legislature?

Held:
No, the Court rendered judgment: 1) declaring Ordinance No. 11, Series of 1991, of the MMA and Ordinance No. 7,
Series of 1998, 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 LOI43) and
confiscating driver’s licenses for traffic violations within the said area.
To test the validity of said acts the principles governing municipal corporations was applied, according to Elliot for
a municipal ordinance to be valid the following requisites should be complied: 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.
In the Gonong decision it was shown that the measures under consideration did not pass the first criterion because
it did not conform to existing law. 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 decree authorizing the
MMA to impose such sanctions. Thus Local political subdivisions are able to legislate only by virtue of a valid delegation
of legislative power from the national legislature (except only that the power to create their own sources of revenue and to
levy taxes is conferred by the Constitution itself). They are mere agents vested with what is called the power of
subordinate legislation. As delegates of the Congress, the local government unit cannot contravene but must obey at all
times the will of the principal. In the case at bar the enactments in question, which are merely local in origin, cannot
prevail against the decree, which has the force and effect of a statute.

CASE 7
G.R. No. 132988 July 19, 2000
AQUILINO Q. PIMENTEL JR., petitioner,
vs.
Hon. ALEXANDER AGUIRRE in his capacity as Executive Secretary, Hon. EMILIA BONCODIN in her capacity as Secretary
of the Department of Budget and Management, respondents.

FACTS of the Case:

On December, 1997, the President issued AO 372 (Adoption of Economy Measures in Government for FY 1998). The AO
provided that (a) 10% of the Internal Revenue allotment to LGUs is withheld. Further it (b) "directs" LGUs to reduce their
expenditures by 25 percent Subsequently, on December 10, 1998, President Estrada issued AO 43, amending Section 4 of
AO 372, by reducing to five percent (5%) the amount of internal revenue allotment (IRA) to be withheld from the LGUs.
Petitioner contends that by issuing AO 372, the President exercised the power of control over LGUs in contravention of
law. Moreover, withholding 10% of the IRA is in contravention of Sec 286 LGC and of Sec 6 Article X of the Constitution,
providing for the automatic release to each of these units its share in the national internal revenue.
The Solicitor General, on the other hand, argues that the aforesaid AO was purportedly in order to cope with the
nation’s economic difficulties brought about by the peso depreciation on that said period. Further, he claims that AO 372
was issued merely as an exercise of the President’s power of supervision over LGUs. It allegedly does not violate local fiscal
autonomy, because it merely directs local governments to identify measures that will reduce their total expenditures for
non-personal services by at least 25 percent. Likewise, the withholding of 10 percent of the LGUs’ IRA does not violate the
statutory prohibition on the imposition of any lien or holdback on their revenue shares, because such withholding is
"temporary in nature pending the assessment and evaluation by the Development Coordination Committee of the emerging
fiscal situation."

ISSUES:
1. WON Section 1 of AO 372, insofar as it "directs" LGUs to reduce their expenditures by 25 percent is a valid exercise of
the President's power of general supervision over local governments.
2. WON Section 4 of AO 372, which withholds 10 percent of their internal revenue allotments, are valid exercises of the
President's power of general supervision over local governments.

HELD:
1. YES. There are several requisites before the President may interfere in local fiscal matters: (1) an unmanaged
public sector deficit of the national government; (2) consultations with the presiding officers of the Senate and the House
of Representatives and the presidents of the various local leagues; and (3) the corresponding recommendation of the
secretaries of the Department of Finance, Interior and Local Government, and Budget and Management. Furthermore, any
adjustment in the allotment shall in no case be less than thirty percent (30%) of the collection of national internal revenue
taxes of the third fiscal year preceding the current one.
Petitioner points out that respondents failed to comply with the above requisites before the issuance and the
implementation of AO 372. At the very least, the respondents did not even try to show that the national government was
suffering from an unmanageable public sector deficit. Neither did they claim having conducted consultations with the
different leagues of local governments. Without these requisites, the President has no authority to adjust, much less to
reduce, unilaterally the LGU's internal revenue allotment.
Although the Supreme Court agrees with the Petitioner that the requisites were not complied with, it still holds that
the President’s directive in AO 372 is in conformity with law, and does constitute interference to local autonomy. There is
interference if Section 1 of AO 372 was couched in mandatory or binding language. While the wordings of Section 1 of AO
372 have a rather commanding tone, the provision is merely an advisory to prevail upon local executives to recognize the
need for fiscal restraint in a period of economic difficulty. Indeed, all concerned would do well to heed the President's call
to unity, solidarity and teamwork to help alleviate the crisis. It is understood, however, that no legal sanction may be
imposed upon LGUs and their officials who do not follow such advice.

2. NO. A basic feature of local fiscal autonomy is the automatic release of the shares of LGUs in the national internal revenue
as mandated by 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.
The use of the term "shall" shows that the provision is imperative. Therefore, Section 4 of AO 372, which orders
the withholding 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 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. Therefore, the President clearly overstepped the bounds of his lawful authority when he issued Section 4 of AO
372.
CASE 49
CASE 50
G.R. No. 147870 July 31, 2002
RAMIR R. PABLICO, petitioner,
vs.
ALEJANDRO A. VILLAPANDO, respondent.

Facts:
An administrative complaint was filed with the Sangguniang Panlalawigan of Palawan against then Mayor Alejandro
Villapando of San Vicente, Palawan for abuse of authority and culpable violation of the Constitution for entering into a
consultancy agreement with Orlando Tiape, a defeated mayoralty candidate. Complainants argue that this amounted to
appointment to a government position within the prohibited one-year period under Article IX-B, Sec. 6 of the 1987
Constitution.

In his answer, Villapando invoked Opinion No. 106, s. 1992, of the Department of Justice dated August 21, 1992, stating
that the appointment of a defeated candidate within one year from the election as a consultant does not constitute an
appointment to a government office or position as prohibited by the Constitution.

The Sangguniang Panlalawigan found respondent guilty and imposed on him the penalty of dismissal from service. The
Office of the President affirmed the decision. Vice-mayor Pablico took his oath as municipal mayor in place of Villapando.

The Court of Appeals declared the decisions of the SP and OP void, and ordered Pablico to vacate the office.

Issue:

May local legislative bodies and/or the Office of the President validly impose the penalty of dismissal from service on
erring elective local officials?

Held:

Section 60 of the Local Government Code of 1991 provides:

Section 60. Grounds for Disciplinary Actions. – An elective local official may be disciplined, suspended, or removed
from office on any of the following grounds:
xxx xxx
An elective local official may be removed from office on the grounds enumerated above by order of the proper court.
It is clear from the last paragraph of the aforecited provision that the penalty of dismissal from service upon an erring
elective local official may be decreed only by a court of law. Thus, in Salalima, et al. v. Guingona, et al., we held that “[t]he
Office of the President is without any power to remove elected officials, since such power is exclusively vested in the
proper courts as expressly provided for in the last paragraph of the aforequoted Section 60.”

Article 124 (b), Rule XIX of the Rules and Regulations Implementing the Local Government Code, however, adds that – “(b)
An elective local official may be removed from office on the grounds enumerated in paragraph (a) of this Article [The
grounds enumerated in Section 60, Local Government Code of 1991] by order of the proper court or the disciplining
authority whichever first acquires jurisdiction to the exclusion of the other.” The disciplining authority referred to
pertains to the Sangguniang Panlalawigan/Panlungsod/Bayan and the Office of the President.

As held in Salalima, this grant to the “disciplining authority” of the power to remove elective local officials is clearly
beyond the authority of the Oversight Committee that prepared the Rules and Regulations. No rule or regulation may alter,
amend, or contravene a provision of law, such as the Local Government Code. Implementing rules should conform, not
clash, with the law that they implement, for a regulation which operates to create a rule out of harmony with the statute is
a nullity. (Pablico vs. Villapando, G.R. No. 147870. July 31, 2002)

PABLICO VS VILLAPANDO [G.R. No. 147870, July 31, 2002]

The power to remove erring elective local officials from service is lodged exclusively with the courts. Hence, Art. 124(b) of
the IRR of the LGC, insofar as it vests power on the “disciplining authority” to remove from office erring elective local
officials, is void for being repugnant to the last paragraph of Sec. 60 of the LGC. The pertinent portion of Section 60 of the
Local Government Code of 1991 provides:

Section 60. Grounds for Disciplinary Actions. – An elective local official may be disciplined, suspended, or removed
from office on any of the following grounds:
x x x x x x x x x An elective local official may be removed from office on the grounds enumerated above by order of
the proper court.

It is clear from the last paragraph of the aforecited provision that the penalty of dismissal from service upon an erring
elective local official may be decreed only by a court of law. Thus, in Salalima, et al. v. Guingona, et al., we held that “*the
Office of the President is without any power to remove elected officials, since such power is exclusively vested in the
proper courts as expressly provided for in the last paragraph of the aforequoted Section 60.”

Verily, the clear legislative intent to make the subject power of removal a judicial prerogative is patent from the
deliberations in the Senate.