power to fix the details in the enforcement of a law.
It does not enunciate any policy to be
EN BANC
[G.R. No. L-23825. December 24, 1965.]
EMMANUEL PELAEZ, petitioner, vs. THE AUDITOR
GENERAL, respondent.
Zulueta, Gonzales, Paculdo & Associates for petitioner.
Solicitor General for respondent.
SYLLABUS
1. ADMINISTRATIVE LAW; POWER OF PRESIDENT TO CREATE
MUNICIPALITIES. — 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." This 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.
2. ID.; ID.; NATURE OF POWER TO CREATE MUNICIPALITIES. — Whereas the
power to fix a 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.
3. ID.; ID.; ID.; REQUISITES FOR VALID DELEGATION OF POWER. — Although
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 that said law: (a) be
complete in itself, setting forth therein the policy to be executed, carried out or implemented
by the delegate; 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.
4. ID.; ID.; ID.; ID.; REQUIREMENTS OF DUE DELEGATION OF POWER NOT
MET BY SECTION 68 OF REVISED ADMINISTRATIVE CODE. — Section 68 of
theRevised Administrative Code, insofar as it grants to the President the power to create
municipalities, does not meet the well-settled requirements for a valid delegation of the
carried out or implemented by the President.
5. ID.; ID.; ID.; ID.; ID.; ABDICATION OF POWERS OF CONGRESS IN FAVOR
OF THE EXECUTIVE. — If the validity of said delegation of powers, made in Section 68 of
the Revised Administrative Code, 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 the Constitution.
6. ID.; ID.; ID.; NATURE OF POWERS DEALT WITH IN SECTION 68 OF
THE REVISED ADMINISTRATIVE CODE. — 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 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. Both cases involved grants 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 of the Revised Administrative Code. The creation of municipalities being
essentially and eminently legislative in character, the question whether or not "public
interest" demands the exercise of such power is not one of fact. It is purely a legislative
question (Carolina- Virginia Coastal Highway vs. Coastal Turnpike Authority, 74 S.E. 21.,
310-313, 315-318), or a political question (Udall vs. Severn, 79 p. 2d., 347-349).
7. ID.; ID., ID.; ID.; PROOF THAT ISSUANCE OF EXECUTIVE ORDERS IN
QUESTION ENTAILS EXERCISE OF PURELY LEGISLATIVE FUNCTIONS. — The fact
that Executive Orders Nos. 93 to 121, 124 and 126 to 129, creating thirty-three
municipalities, were issued after the legislative bills for the creation of the said
municipalities had failed to pass Congress, is the best proof that their issuance entails the
exercise of purely legislative functions.
8. ID.; ID.; ID.; POWER OF CONTROL OVER LOCAL GOVERNMENTS. — The
power of control under Section 10(a) of Article X of the Constitution 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, for instance, 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. If, on the other
hand, the President could create a municipality, he could, in effect, remove any of its
1
officials, by creating a new municipality and including therein the barrio in which the official
concerned resides, for his office would thereby become vacant (Section 2179, Revised
Administrative Code). Thus, by merely brandishing the power to create a new municipality,
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.
9. ID.; ID.; ID.; ID.; SECTION 68, REVISED ADMINISTRATIVE CODE,
REPEALED BY THE CONSTITUTION. — The power of control of the President over
executive departments, bureaus or offices under Section 10 (a) of Article X of the
Constitution implies no more than 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.
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 executive departments, bureaus or offices. Even if, therefore, it did not
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. (De los Santos vs. Mallare,
87 Phil., 289, 298-299.)
10. ID. ID.; ID.; MUNICIPAL OFFICIALS CONCERNED DULY REPRESENTED
IN PRESENT CASE. — It is contended that not all the proper parties have been impleaded
in the present case. Suffice it to say that the records do not show, and the parties do not
claim, that the officers of any of the municipalities concerned have been appointed or
elected and have 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 officers 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 municipalities involved in
this case, which involves a political, not proprietary functions, said local officials, if any, are
mere agents or representatives of the national government. Their interest in the case has
accordingly been duly represented. (Mangubat vs. Osmeña Jr., G.R. No. L-12837, April
30, 1959; City of Cebu vs. Judge Piccio, G.R. Nos. L-13012 & L-14876, December 31,
1960.)
11. ID.; ID.; ACTION NOT PREMATURE. — The present action cannot be said to
be premature simply because respondent Auditor General has not yet acted on any of the
executive orders in question and has not intimated how he would act in connection
therewith. It is a matter of common knowledge that the President has for many years issued
executive orders creating municipal corporations and that the same have been organized
and are 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 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.
DECISION
CONCEPCION, J p:
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.
Petitioner alleges that said executive orders are null and void, upon the ground
that said Section 68 has been impliedly repealed by Republic Act 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 subdivision — intervened in the case. Moreover, Attorneys Enrique M.
Fernando and Emma Quisumbing-Fernando were allowed to and did appear as amici
curiae.
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.
Pursuant to the first two (2) paragraphs of the same Section 3:
"All barrios existing at the time of the passage of this Act shall
come under the provisions hereof.
"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
2
 changed by the provincial board of the province, upon
recommendation of the council of the municipality or municipalities in
which the proposed barrio is situated. 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. 2370. 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,
sub-province, 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."
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 Binañgonan (36 Phil. 547), which, he
claims, has settled it. Such claim is untenable, for said case involved, notthe creation of a
new municipality, but a mere transfer of territory — from an already existing municipality
(Cardona) to another municipality (Binañgonan), 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
Binañgonan [34 Phil. 518, 519-520], — 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 of legislative 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."
Although 1 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 delegate 2 — 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. 2 Indeed, 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. 2 Hence, he could thereby arrogate upon himself the power, not only to make
3
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" qualifies, 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 well 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
referredexclusively 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 to promote 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 of
speculative securities. Both cases involved grants 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 whether or not "public interest"
demands the exercise of such power is not one of fact. It is "purely a legislative question"
(Carolina-Virginia Coastal Highway vs. Coastal Turnpike Authority, 74 S.E. 2d., 310-313,
315-318), or a political 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, 358-359); 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 meter 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
4
 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 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 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 veto, 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 more than 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 bureaus, 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 not 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,
5
 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 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 Binangonan, 34 Phil. 518; Municipality of
Cardona vs. Municipality of Binangonan, 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 least, already repealed in the
light of the Philippine Constitution and Republic Act 2370 (The Barrio Charter).
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 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 division 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."
6
 From such wording 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 of 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).
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 set-up
ordained therein no strict separation of powers was adhered to. Consequently, Section 68
was not constitutionally objectionable at the time of its enactment.
The advent of the Philippine Constitution in 1935 however altered the situation. For
not only was separation of power strictly ordained, except only in specific instances therein
provided, but the power of the Chief Executive over local governments suffered an explicit
reduction.
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).
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.
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.
I am impelled to conclude, therefore, that Section 10(1) of 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 vs. Mallare,
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
7
 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.
Makalintal and Regala, JJ., concur with the opinion of Justice J.P. Bengzon.
||| (Pelaez v. Auditor General, G.R. No. L-23825, [December 24, 1965], 122 PHIL 965-989)
EN BANC
[G.R. No. 152774. May 27, 2004.]
THE PROVINCE OF BATANGAS, represented by its Governor,
HERMILANDO I. MANDANAS, petitioner, vs. HON. ALBERTO G.
ROMULO, Executive Secretary and Chairman of the Oversight
Committee on Devolution; HON. EMILIA BONCODIN, Secretary,
Department of Budget and Management; HON. JOSE D. LINA, JR.,
Secretary, Department of the Interior and Local
Government, respondents.
DECISION
CALLEJO, SR., J p:
The Province of Batangas, represented by its Governor, Hermilando I. Mandanas, filed
the present petition for certiorari, prohibition and mandamus under Rule 65 of the Rules of
Court, as amended, to declare as unconstitutional and void certain provisos contained in the
General Appropriations Acts (GAA) of 1999, 2000 and 2001, insofar as they uniformly
earmarked for each corresponding year the amount of five billion pesos (P5,000,000,000.00)
of the Internal Revenue Allotment (IRA) for the Local Government Service Equalization Fund
(LGSEF) and imposed conditions for the release thereof.
Named as respondents are Executive Secretary Alberto G. Romulo, in his capacity as
Chairman of the Oversight Committee on Devolution, Secretary Emilia Boncodin of the
Department of Budget and Management (DBM) and Secretary Jose Lina of the Department of
the 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
8
 arising from the full and efficient implementation of devolved functions and
services of local government units pursuant to R.A. No. 7160, otherwise
known as the Local Government Code of 1991: PROVIDED, FURTHER,
That such amount shall be released to the local government units subject to
the implementing rules and regulations, including such mechanisms and
guidelines for the equitable allocations and distribution of said fund among
local government units subject to the guidelines that may be prescribed by
the Oversight Committee on Devolution as constituted pursuant to Book IV,
Title III, Section 533(b) of R.A. No. 7160. The Internal Revenue Allotment
shall be released directly by the Department of Budget and Management to
the Local Government Units concerned.
On July 28, 1999, the Oversight Committee (with then Executive Secretary Ronaldo B.
Zamora as Chairman) passed Resolution Nos. OCD-99-003, OCD-99-005 and OCD-99-006
entitled as follows:
OCD-99-005
RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR THE PhP5
BILLION CY 1999 LOCAL GOVERNMENT SERVICE EQUALIZATION
FUND (LGSEF) AND REQUESTING HIS EXCELLENCY PRESIDENT
JOSEPH EJERCITO ESTRADA TO APPROVE SAID ALLOCATION
SCHEME.
OCD-99-006
RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR THE PhP4.0
BILLION OF THE 1999 LOCAL GOVERNMENT SERVICE EQUALIZATION
FUND AND ITS CONCOMITANT GENERAL FRAMEWORK,
IMPLEMENTING GUIDELINES AND MECHANICS FOR ITS
IMPLEMENTATION AND RELEASE, AS PROMULGATED BY THE
OVERSIGHT COMMITTEE ON DEVOLUTION.
OCD-99-003
RESOLUTION REQUESTING HIS EXCELLENCY PRESIDENT JOSEPH
EJERCITO ESTRADA TO APPROVE THE REQUEST OF THE
OVERSIGHT COMMITTEE ON DEVOLUTION TO SET ASIDE TWENTY
PERCENT (20%) OF THE LOCAL GOVERNMENT SERVICE
EQUALIZATION FUND (LGSEF) FOR LOCAL AFFIRMATIVE ACTION
PROJECTS AND OTHER PRIORITY INITIATIVES FOR LGUs
INSTITUTIONAL AND CAPABILITY BUILDING IN ACCORDANCE WITH
THE IMPLEMENTING GUIDELINES AND MECHANICS AS
PROMULGATED BY THE COMMITTEE.
These OCD resolutions were approved by then President Estrada on October 6, 1999.
Under the allocation scheme adopted pursuant to Resolution No. OCD-99-005, the five
billion pesos LGSEF was to be allocated as follows: EDcICT
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
9
 may also access this fund directly or through their respective
municipality or city.
2. The proposed project/activity should be need-based, a local priority, with
high development impact and are congruent with the socio-cultural,
economic and development agenda of the Estrada Administration,
such as food security, poverty alleviation, electrification, and peace
and order, among others.
3. Eligible for funding under this fund are projects arising from, but not limited
to, the following areas of concern:
a. delivery of local health and sanitation services, hospital services
and other tertiary services;
b. delivery of social welfare services;
c. provision of socio-cultural services and facilities for youth and
community development;
d. provision of agricultural and on-site related research;
e. improvement of community-based forestry projects and other
local projects on environment and natural resources
protection and conservation;
f. improvement of tourism facilities and promotion of tourism;
g. peace and order and public safety;
h. construction, repair and maintenance of public works and
infrastructure, including public buildings and facilities for
public use, especially those destroyed or damaged by man-
made or natural calamities and disaster as well as facilities
for water supply, flood control and river dikes;
i. provision of local electrification facilities;
j. livelihood and food production services, facilities and equipment;
k. other projects that may be authorized by the OCD consistent with
the aforementioned objectives and guidelines;
4. Except on extremely meritorious cases, as may be determined by the
Oversight Committee on Devolution, this portion of the LGSEF shall
not be used in expenditures for personal costs or benefits under
existing laws applicable to governments. Generally, this fund shall
cover the following objects of expenditures for programs, projects
and activities arising from the implementation of devolved and
regular functions and services:
a. acquisition/procurement of supplies and materials critical to the
full and effective implementation of devolved programs,
projects and activities;
b. repair and/or improvement of facilities;
c. repair and/or upgrading of equipment;
d. acquisition of basic equipment;
e. construction of additional or new facilities;
f. counterpart contribution to joint arrangements or collective
projects among groups of municipalities, cities and/or
provinces related to devolution and delivery of basic
services.
5. To be eligible for funding, an LGU or group of LGU shall submit to the
Oversight Committee on Devolution through the Department of the
Interior and Local Governments, within the prescribed schedule and
timeframe, a Letter Request for Funding Support from the
Affirmative Action Program under the LGSEF, duly signed by the
concerned LGU(s) and endorsed by cooperators and/or
beneficiaries, as well as the duly signed Resolution of Endorsement
by the respective Sanggunian(s) of the LGUs concerned. The LGU-
proponent shall also be required to submit the Project Request (PR),
using OCD Project Request Form No. 99-02, that details the
following:
(a) general description or brief of the project;
(b) objectives and justifications for undertaking the project, which
should highlight the benefits to the locality and the expected
impact to the local program/project arising from the full and
efficient implementation of social services and facilities, at
the local levels;
(c) target outputs or key result areas;
(d) schedule of activities and details of requirements;
(e) total cost requirement of the project;
(f) proponent's counterpart funding share, if any, and identified
source(s) of counterpart funds for the full implementation of
the project;
10
 (g) requested amount of project cost to be covered by the LGSEF.
Further, under the guidelines formulated by the Oversight Committee as contained in
Attachment — Resolution No. OCD-99-003, the LGUs were required to identify the projects
eligible for funding under the one-billion-peso portion of the LGSEF and submit the project
proposals thereof and other documentary requirements to the DILG for appraisal. The project
proposals that passed the DILG's appraisal would then be submitted to the Oversight
Committee for review, evaluation and approval. Upon its approval, the Oversight Committee
would then serve notice to the DBM for the preparation of the Special Allotment Release Order
(SARO) and Notice of Cash Allocation (NCA) to effect the release of funds to the said LGUs.
The LGSEF in the GAA of 2000
Under Rep. Act No. 8760, otherwise known as the GAA of 2000, the amount of
P111,778,000,000 was allotted as the share of the LGUs in the internal revenue taxes. As in
the GAA of 1999, the GAA of 2000 contained a proviso earmarking five billion pesos of the IRA
for the LGSEF. This proviso, found in Item No. 1, Special Provisions, Title XXXVII — A. Internal
Revenue Allotment, was similarly worded as that contained in the GAA of 1999. CaSAcH
The Oversight Committee, in its Resolution No. OCD-2000-023 dated June 22, 2000,
adopted the following allocation scheme governing the five billion pesos LGSEF for 2000:
1. The PhP3.5 Billion of the CY 2000 LGSEF shall be allocated to and
shared by the four levels of LGUs, i.e., provinces, cities,
municipalities, and barangays, using the following percentage-
sharing formula agreed upon and jointly endorsed by the various
Leagues of LGUs:
For Provinces 26% or P910,000,000
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 as financial
assistance to the LAAPs of LGUs; P275,360,227 as financial assistance to cover the decrease
in the IRA of LGUs concerned due to reduction in land area; and P74,639,773 for the LGSEF
Capability-Building Fund.
The LGSEF in the GAA of 2001
In view of the failure of Congress to enact the general appropriations law for 2001, the
GAA of 2000 was deemed re-enacted, together with the IRA of the LGUs therein and the
proviso earmarking five billion pesos thereof for the LGSEF.
On January 9, 2002, the Oversight Committee adopted Resolution No. OCD-2002-001
allocating the five billion pesos LGSEF for 2001 as follows:
Modified Codal Formula P3.000 billion
Priority Projects 1.900 billion
Capability Building Fund .100 billion
——————
P5.000 billion
11
 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 P0.750 billion
Cities 25 0.750
Municipalities 35 1.050
Barangays 15 0.450
—– ——–
100 P3.000 billion
RESOLVED FURTHER, that the P1.9 B earmarked for priority
projects shall be distributed according to the following criteria:
1.0 For projects of the 4th, 5th and 6th class LGUs; or
2.0 Projects in consonance with the President's State of the Nation
Address (SONA)/summit commitments.
RESOLVED FURTHER, that the remaining P100 million LGSEF
capability building fund shall be distributed in accordance with the
recommendation of the Leagues of Provinces, Cities, Municipalities and
Barangays, and approved by the OCD.
Upon receipt of a copy of the above resolution, Gov. Mandanas wrote to the individual
members of the Oversight Committee seeking the reconsideration of Resolution No. OCD-
2002-001. He also wrote to Pres. Macapagal-Arroyo urging her to disapprove said resolution
as it violates the Constitution and the Local Government Code of 1991.
On January 25, 2002, Pres. Macapagal-Arroyo approved Resolution No. OCD-2002-001.
The Petitioner's Case
The petitioner now comes to this Court assailing as unconstitutional and void the
provisos in the GAAs of 1999, 2000 and 2001, relating to the LGSEF. Similarly assailed are
the Oversight Committee's Resolutions Nos. OCD-99-003, OCD-99-005, OCD-99-006, OCD-
2000-023, 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.
Section 6, Article X of the Constitution is invoked as it mandates that the "just share"
of the LGUs shall be automatically released to them. Sections 18 and 286 of the Local
Government Code of 1991, which enjoin that the "just share" of the LGUs shall be
"automatically and directly" released to them "without need of further action" are, likewise, cited.
The petitioner posits that to subject the distribution and release of the five-billion-peso
portion of the IRA, classified as the LGSEF, to compliance by the LGUs with the implementing
rules and regulations, including the mechanisms and guidelines prescribed by the Oversight
Committee, contravenes the explicit directive of theConstitution that the LGUs' share in the
national taxes "shall be automatically released to them." The petitioner maintains that the use
of the word "shall" must be given a compulsory meaning.
To further buttress this argument, the petitioner contends that to vest the Oversight
Committee with the authority to determine the distribution and release of the LGSEF, which is
a part of the IRA of the LGUs, is an anathema to the principle of local autonomy as embodied
in the Constitution and the Local Government Code of 1991.The petitioner cites as an example
the experience in 2001 when the release of the LGSEF was long delayed because the
Oversight Committee was not able to convene that year and no guidelines were issued therefor.
Further, the possible disapproval by the Oversight Committee of the project proposals of the
LGUs would result in the diminution of the latter's share in the IRA. HCETDS
Another infringement alleged to be occasioned by the assailed OCD resolutions is the
improper amendment to Section 285 of the Local Government Code of 1991 on the percentage
sharing of the IRA among the LGUs. Said provision allocates the IRA as follows: Provinces —
23%; Cities — 23%; Municipalities — 34%; and Barangays — 20%. 8 This formula has been
improperly amended or modified, with respect to the five-billion-peso portion of the IRA allotted
for the LGSEF, by the assailed OCD resolutions as they invariably provided for a different
sharing scheme.
The modifications allegedly constitute an illegal amendment by the executive branch
of a substantive law. Moreover, the petitioner mentions that in the Letter dated December 5,
2001 of respondent Executive Secretary Romulo addressed to respondent Secretary
Boncodin, the former endorsed to the latter the release of funds to certain LGUs from the
LGSEF in accordance with the handwritten instructions of President Arroyo. Thus, the LGUs
are at a loss as to how a portion of the LGSEF is actually allocated. Further, there are still
portions of the LGSEF that, to date, have not been received by the petitioner; hence, resulting
in damage and injury to the petitioner.
The petitioner prays that the Court declare as unconstitutional and void the assailed
provisos relating to the LGSEF in the GAAs of 1999, 2000 and 2001 and the assailed OCD
resolutions (Resolutions Nos. OCD-99-003, OCD-99-005, OCD-99-006, OCD-2000-023, OCD-
2001-029 and OCD-2002-001) issued by the Oversight Committee pursuant thereto. The
petitioner, likewise, prays that the Court direct the respondents to rectify the unlawful and illegal
distribution and releases of the LGSEF for the aforementioned years and release the same in
accordance with the sharing formula under Section 285 of the Local Government Code of 1991.
Finally, the petitioner urges the Court to declare that the entire IRA should be released
automatically without further action by the LGUs as required by the Constitution and theLocal
Government Code of 1991.
12
 The Respondents' Arguments
The respondents, through the Office of the Solicitor General, urge the Court to dismiss
the petition on procedural and substantive grounds. On the latter, the respondents contend that
the assailed provisos in the GAAs of 1999, 2000 and 2001 and the assailed resolutions issued
by the Oversight Committee are not constitutionally infirm. The respondents advance the view
that Section 6, Article X of the Constitution does not specify that the "just share" of the LGUs
shall be determined solely by the Local Government Code of 1991. Moreover, the phrase "as
determined by law" in the same constitutional provision means that there exists no limitation
on the power of Congress to determine what is the "just share" of the LGUs in the national
taxes. In other words, Congress is the arbiter of what should be the "just share" of the LGUs in
the national taxes.
The respondents further theorize that Section 285 of the Local Government Code of
1991, which provides for the percentage sharing of the IRA among the LGUs, was not intended
to be a fixed determination of their "just share" in the national taxes. Congress may enact other
laws, including appropriations laws such as the GAAs of 1999, 2000 and 2001, providing for a
different sharing formula. Section 285 of the Local Government Code of 1991 was merely
intended to be the "default share" of the LGUs to do away with the need to determine annually
by law their "just share." However, the LGUs have no vested right in a permanent or fixed
percentage as Congress may increase or decrease the "just share" of the LGUs in accordance
with what it believes is appropriate for their operation. There is nothing in theConstitution which
prohibits Congress from making such determination through the appropriations laws. If the
provisions of a particular statute, the GAA in this case, are within the constitutional power of
the legislature to enact, they should be sustained whether the courts agree or not in the wisdom
of their enactment.
On procedural grounds, the respondents urge the Court to dismiss the petition outright
as the same is defective. The petition allegedly raises factual issues which should be properly
threshed out in the lower courts, not this Court, not being a trier of facts. Specifically, the
petitioner's allegation that there are portions of the LGSEF that it has not, to date, received,
thereby causing it (the petitioner) injury and damage, is subject to proof and must be
substantiated in the proper venue, i.e., the lower courts.
Further, according to the respondents, the petition has already been rendered moot
and academic as it no longer presents a justiciable controversy. The IRAs for the years
1999, 2000 and 2001, have already been released and the government is now operating under
the 2003 budget. In support of this, the respondents submitted certifications issued by officers
of the DBM attesting to the release of the allocation or shares of the petitioner in the LGSEF
for 1999, 2000 and 2001. There is, therefore, nothing more to prohibit.
Finally, the petitioner allegedly has no legal standing to bring the suit because it has
not suffered any injury. In fact, the petitioner's "just share" has even increased. Pursuant to
Section 285 of the Local Government Code of 1991, the share of the provinces is 23%. OCD
Nos. 99-005, 99-006 and 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 Ruling of the Court
Procedural Issues
Before resolving the petition on its merits, the Court shall first rule on the following
procedural issues raised by the respondents: (1) whether the petitioner has legal standing
or locus standi to file the present suit; (2) whether the petition involves factual questions that
are properly cognizable by the lower courts; and (3) whether the issue had been rendered moot
and academic.
The petitioner has locus standi
to maintain the present suit
The gist of the question of standing is whether a party has "alleged such a personal
stake in the outcome of the controversy as to assure that concrete adverseness which
sharpens the presentation of issues upon which the court so largely depends for illumination of
difficult constitutional questions." 9 Accordingly, it has been held that the interest of a party
assailing the constitutionality of a statute must be direct and personal. Such party must be able
to show, not only that the law or any government act is invalid, but also that he has sustained
or is in imminent danger of sustaining some direct injury as a result of its enforcement, and not
merely that he suffers thereby in some indefinite way. It must appear that the person
complaining has been or is about to be denied some right or privilege to which he is lawfully
entitled or that he is about to be subjected to some burdens or penalties by reason of the statute
or act complained of. 10
The Court holds that the petitioner possesses the requisite standing to maintain the
present suit. The petitioner, a local government unit, seeks relief in order to protect or vindicate
an interest of its own, and of the other LGUs. This interest pertains to the LGUs' share in the
national taxes or the IRA. The petitioner's constitutional claim is, in substance, that the assailed
provisos in the GAAs of 1999, 2000 and 2001, and the OCD resolutions contravene Section 6,
Article X of the Constitution, mandating the "automatic release" to the LGUs of their share in
the national taxes. Further, the injury that the petitioner claims to suffer is the diminution of its
share in the IRA, as provided under Section 285 of the Local Government Code of 1991,
occasioned by the implementation of the assailed measures. These allegations are sufficient
to grant the petitioner standing to question the validity of the assailed provisos in the GAAs of
1999, 2000 and 2001, and the OCD resolutions as the petitioner clearly has "a plain, direct and
adequate interest" in the manner and distribution of the IRA among the LGUs.
The petition involves a significant
legal issue
The crux of the instant controversy is whether the assailed provisos contained in the
GAAs of 1999, 2000 and 2001, and the OCD resolutions infringe theConstitution and the Local
13
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
3. The release of the LGSEF to the LGUs only upon their compliance with
the implementing rules and regulations, including the guidelines and
mechanisms, prescribed by the Oversight Committee.
Considering that these facts, which are necessary to resolve the legal question now
before this Court, are no longer in issue, the same need not be determined by a trial court. 11 In
any case, the rule on hierarchy of courts will not prevent this Court from assuming jurisdiction
over the petition. The said rule may be relaxed when the redress desired cannot be obtained
in the appropriate courts or where exceptional and compelling circumstances justify availment
of a remedy within and calling for the exercise of this Court's primary jurisdiction. 12
The crucial legal issue submitted for resolution of this Court entails the proper legal
interpretation of constitutional and statutory provisions. Moreover, the "transcendental
importance" of the case, as it necessarily involves the application of the constitutional principle
on local autonomy, cannot be gainsaid. The nature of the present controversy, therefore,
warrants the relaxation by this Court of procedural rules in order to resolve the case forthwith.
The substantive issue needs to be resolved
notwithstanding the supervening events
Granting arguendo that, as contended by the respondents, the resolution of the case
had already been overtaken by supervening events as the IRA, including the LGSEF, for
1999, 2000 and 2001, had already been released and the government is now operating under
a new appropriations law, still, there is compelling reason for this Court to resolve the
substantive issue raised by the instant petition. Supervening events, whether intended or
accidental, cannot prevent the Court from rendering a decision if there is a grave violation of
the Constitution. 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. aTIEcA
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
President's power over the LGUs to one of general supervision. 17 This provision has been
interpreted to exclude the power of control. The distinction between the two powers was
enunciated in Drilon v. Lim: 18
An officer in control lays down the rules in the doing of an act. If they
are not followed, he may, in his discretion, order the act undone or re-done
by his subordinate or he may even decide to do it himself. Supervision does
not cover such authority. The supervisor or superintendent merely sees to it
that the rules are followed, but he himself does not lay down such rules, nor
does he have the discretion to modify or replace them. If the rules are not
observed, he may order the work done or 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 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
14
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
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;
xxx xxx xxx
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.
Webster's Third New International Dictionary defines "automatic" as "involuntary either
wholly or to a major extent so that any activity of the will is largely negligible; of a reflex nature;
without volition; mechanical; like or suggestive of an automaton." Further, the word
"automatically" is defined as "in an automatic manner: without thought or conscious intention."
Being "automatic," thus, connotes something mechanical, spontaneous and perfunctory. As
such, the LGUs are not required to perform any act to receive the "just share" accruing to them
from the national coffers. As emphasized by the Local Government Code of 1991, the "just
share" of the LGUs shall be released to them "without need of further action." Construing
Section 286 of the LGC, we held in Pimentel, Jr. v. Aguirre, 22 viz:
the Section 4 of AO 372 cannot, however, be upheld. A basic feature of
local fiscal autonomy is the automatic release of the shares of LGUs in the
National internal revenue. This is mandated by no less than the Constitution.
The Local Government Code specifies further that the release shall be made
directly to the LGU concerned within five (5) days after every quarter of the
year and "shall not be subject to any lien or holdback that may be imposed
by the national government for whatever purpose." As a rule, the term
"SHALL" is a word of command that must be given a compulsory meaning.
The provision is, therefore, IMPERATIVE.
Section 4 of AO 372, however, orders the withholding, effective
January 1, 1998, of 10 percent of the LGUs' IRA "pending the assessment
and evaluation by the Development Budget Coordinating Committee of the
emerging fiscal situation" in the country. Such withholding clearly
contravenes the Constitution and the law. Although temporary, it is
equivalent to a holdback, which means "something held back or withheld,
often temporarily." Hence, the "temporary" nature of the retention by the
national government does not matter. Any retention is prohibited.
In sum, while Section 1 of AO 372 may be upheld as an advisory
effected in times of national crisis, Section 4 thereof has no color of validity
at all. The latter provision effectively encroaches on the fiscal autonomy of
local governments. Concededly, the President was well-intentioned in
issuing his Order to withhold the LGUs' IRA, but the rule of law requires that
even the best intentions must be carried out within the parameters of
the Constitution and the law. Verily, laudable purposes must be carried out
by legal methods. 23
The "just share" of the LGUs is incorporated as the IRA in the appropriations law or
GAA enacted by Congress annually. Under the assailed provisos in the GAAs of
1999, 2000 and 2001, a portion of the IRA in the amount of five billion pesos was earmarked
for the LGSEF, and these provisos imposed the condition that "such amount shall be released
to the local government units subject to the implementing rules and regulations, including such
mechanisms and guidelines for the equitable allocations and distribution of said fund among
local government units subject to the guidelines that may be prescribed by the Oversight
Committee on Devolution." Pursuant thereto, the Oversight Committee, through the assailed
OCD resolutions, apportioned the five billion pesos LGSEF such that:
For 1999
P2 billion — allocated according to Sec. 285 LGC
15
 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
Committee's prior approval. Further, with respect to the portion of the LGSEF allocated for
various projects of the LGUs (P1 billion for 1999; P1.5 billion for 2000 and P2 billion for 2001),
the Oversight Committee, through the assailed OCD resolutions, laid down guidelines and
mechanisms that the LGUs had to comply with before they could avail of funds from this portion
of the LGSEF. The guidelines required (a) the LGUs to identify the projects eligible for funding
based on the criteria laid down by the Oversight Committee; (b) the LGUs to submit their project
proposals to the DILG for appraisal; (c) the project proposals that passed the appraisal of the
DILG to be submitted to the Oversight Committee for review, evaluation and approval. It was
only upon approval thereof that the Oversight Committee would direct the DBM to release the
funds for the projects. TEDaAc
To the Court's mind, the entire process involving the distribution and release of the
LGSEF is constitutionally impermissible. The LGSEF is part of the IRA or "just share" of the
LGUs in the national taxes. To subject its distribution and release to the vagaries of the
implementing rules and regulations, including the guidelines and mechanisms unilaterally
prescribed by the Oversight Committee from time to time, as sanctioned by the assailed
provisos in the GAAs of 1999, 2000 and 2001 and the OCD resolutions, makes the
release not automatic, a flagrant violation of the constitutional and statutory mandate that the
"just share" of the LGUs "shall be automatically released to them." The LGUs are, thus, placed
at the mercy of the Oversight Committee.
Where the law, the Constitution in this case, is clear and unambiguous, it must be
taken to mean exactly what it says, and courts have no choice but to see to it that the mandate
is obeyed. 27 Moreover, as correctly posited by the petitioner, the use of the word "shall"
connotes a mandatory order. Its use in a statute denotes an imperative obligation and is
inconsistent with the idea of discretion. 28
Indeed, the Oversight Committee exercising discretion, even control, over the
distribution and release of a portion of the IRA, the LGSEF, is an anathema to and subversive
of the principle of local autonomy as embodied in the Constitution. Moreover, it finds no
statutory basis at all as the Oversight Committee was created merely to formulate the rules and
regulations for the efficient and effective implementation of the Local Government Code of
1991 to ensure "compliance with the principles of local autonomy as defined under
the Constitution." 29 In fact, its creation was placed under the title of "Transitory Provisions,"
signifying its ad hoccharacter. According to Senator Aquilino Q. Pimentel, the principal author
and sponsor of the bill that eventually became Rep. Act No. 7160, the Committee's work was
supposed to be done a year from the approval of the Code, or on October 10, 1992. 30 The
Oversight Committee's authority is undoubtedly limited to the implementation of the Local
Government Code of 1991, not to supplant or subvert the same. Neither can it exercise control
over the IRA, or even a portion thereof, of the LGUs.
That the automatic release of the IRA was precisely intended to guarantee and
promote local autonomy can be gleaned from the discussion below between Messrs. Jose N.
Nolledo and Regalado M. Maambong, then members of the 1986 Constitutional Commission,
to wit:
MR. MAAMBONG. Unfortunately, under Section 198 of the Local
Government Code, the existence of subprovinces is still acknowledged by
the law, but the statement of the Gentleman on this point will have to be
taken up probably by the Committee on Legislation. A second point, Mr.
Presiding Officer, is that under Article 2, Section 10 of the 1973 Constitution,
we have a provision which states:
The State shall guarantee and promote the autonomy of local
government units, especially the barrio, to insure their fullest
development as self-reliant communities.
This provision no longer appears in the present configuration; does
this mean that the concept of giving local autonomy to local governments is
no longer adopted as far as this Article is concerned?
MR. NOLLEDO. No. In the report of the Committee on Preamble,
National Territory, and Declaration of Principles, that concept is included and
widened upon the initiative of Commissioner Bennagen.
MR. MAAMBONG. Thank you for that.
With regard to Section 6, sources of revenue, the creation of sources
as provided by previous law was "subject to limitations as may be provided
by law," but now, we are using the term "subject to such guidelines as may
16
 be fixed by law." In Section 7, mention is made about the "unique, distinct
and exclusive charges and contributions," and in Section 8, we talk about
"exclusivity of local taxes and the share in the national wealth." Incidentally,
I was one of the authors of this provision, and I am very thankful. Does this
indicate local autonomy, or was the wording of the law changed to give more
autonomy to the local government units? 31
MR. NOLLEDO. Yes. In effect, those words indicate also
"decentralization" because local political units can collect taxes, fees and
charges subject merely to guidelines, as recommended by the league of
governors and city mayors, with whom I had a dialogue for almost two hours.
They told me that limitations may be questionable in the sense that Congress
may limit and in effect deny the right later on.
MR. MAAMBONG. Also, this provision on "automatic release of
national tax share" points to more local autonomy. Is this the intention?
MR. NOLLEDO. Yes, the Commissioner is perfectly right. 32
The concept of local autonomy was explained in Ganzon v. Court of Appeals 33 in this
wise:
As the Constitution itself declares, local autonomy 'means a more
responsive and accountable local government structure instituted through a
system of decentralization.' The Constitution, as we observed, does nothing
more than to break up the monopoly of the national government over the
affairs of local governments and as put by political adherents, to "liberate the
local governments from the imperialism of Manila." Autonomy, however, is
not meant to end the relation of partnership and interdependence between
the central administration and local government units, or otherwise, to usher
in a regime of federalism. The Charter has not taken such a radical step.
Local governments, under the Constitution, are subject to regulation,
however limited, and for no other purpose than precisely, albeit
paradoxically, to enhance self-government.
As we observed in one case, decentralization means devolution of
national administration — but not power — to the local levels. Thus:
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 [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
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:
Under existing law, local government units, in addition to having
administrative autonomy in the exercise of their functions, enjoy fiscal
autonomy as well. Fiscal autonomy means that local governments have the
power to create their own sources of revenue in addition to their equitable
share in the national taxes released by the national government, as well as
the power to allocate their resources in accordance with their own priorities.
It extends to the preparation of their budgets, and local officials in turn have
to work within the constraints thereof. They are not formulated at the national
level and imposed on local governments, whether they are relevant to local
needs and resources or not . . . 36
Further, a basic feature of local fiscal autonomy is the constitutionally
mandated automatic release of the shares of LGUs in the national internal revenue. 37
Following this ratiocination, the Court in Pimentel struck down as unconstitutional
Section 4 of Administrative Order (A.O.) No. 372 which ordered the withholding, effective
January 1, 1998, of ten percent of the LGUs' IRA "pending the assessment and evaluation by
the Development Budget Coordinating Committee of the emerging fiscal situation."
In like manner, the assailed provisos in the GAAs of 1999, 2000 and 2001, and the
OCD resolutions constitute a "withholding" of a portion of the IRA. They put on hold the
distribution and release of the five billion pesos LGSEF and subject the same to the
implementing rules and regulations, including the guidelines and mechanisms prescribed by
the Oversight Committee from time to time. Like Section 4 of A.O. 372, the assailed provisos
in the GAAs of 1999, 2000 and 2001 and the OCD resolutions effectively encroach on the fiscal
autonomy enjoyed by the LGUs and must be struck down. They cannot, therefore, be
upheld. ASDCaI
17
 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 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 theLocal 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
18
 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 the1935
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 presentConstitution, as earlier opined, has broadened the principle
of local autonomy. The 14 sections in Article X thereof markedly increased the powers of the
local governments in order to accomplish the goal of a more meaningful local autonomy.
Indeed, the value of local governments as institutions of democracy is measured by
the degree of autonomy that they enjoy. 48 As eloquently put by M. De Tocqueville, a
distinguished French political writer, "[l]ocal assemblies of citizens constitute the strength of
free nations. Township meetings are to liberty what primary schools are to science; they bring
it within the people's reach; they teach men how to use and enjoy it. A nation may establish a
system of free governments but without the spirit of municipal institutions, it cannot have the
spirit of liberty." 49
Our national officials should not only comply with the constitutional provisions on local
autonomy but should also appreciate the spirit and liberty upon which these provisions are
based. 50
WHEREFORE, the petition is GRANTED. The assailed provisos in the General
Appropriations Acts of 1999, 2000 and 2001, and the assailed OCD Resolutions, are declared
UNCONSTITUTIONAL.
SO ORDERED.
Vitug, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio,
Austria-Martinez, Corona, Carpio Morales, Azcuna and Tinga, JJ ., concur.
Davide, Jr., C .J . and Puno, J ., are on official leave.
EN BANC
[G.R. No. 154095. November 17, 2004.]
FRANCISCO C. ROSALES, JR., petitioner,vs.MIGUEL H.
MIJARES, respondent.
DECISION
CALLEJO, SR., J p:
Before us is a petition for review on certiorari of the Decision 1 of the Court of Appeals
(CA) in CA-G.R. SP No. 55904 affirming Resolution No. 991208 2 of the Civil Service
Commission (CSC) granting the appeal of the respondent herein from the Order dated
September 24, 1998 dismissing the respondent as Municipal Engineer of Catarman, Northern
Samar; and Resolution No. 992130 denying the motion for reconsideration thereof.
As culled by the appellate court from the records, the antecedents are as follows:
Being the duly-elected mayor of Catarman, Northern Samar, during
the 1998 local elections, Francisco C. Rosales, Jr. (or "petitioner") assumed
office on July 1, 1999. Shortly thereafter, petitioner summoned the
department heads for a conference, among whom was the municipal
engineer, Miguel H. Mijares (or "respondent").
During the meeting, petitioner told respondent to resign under pain
of abolition of his position. Not wishing to antagonize the mayor, respondent
informed him a week later that he was "open" to the possibility of being
transferred or detailed at the Provincial Engineering Office. Then and there,
petitioner instructed respondent to prepare his papers.
On August 3, 1998, petitioner indorsed respondent to the provincial
governor of Northern Samar for consideration for the position of Assistant
Provincial Engineer.
On August 12, 1998, petitioner wrote to respondent stating:
Your request to transfer to the Provincial Engineering Office,
Catarman, Northern Samar, is granted for a period of thirty (30) days
from receipt hereof, subject to the condition imposed by Civil Service
Law, rules and regulations.
Meanwhile, respondent continued reporting for work at the
Municipal Engineer's Office. However, the provincial governor did not act on
petitioner's endorsement.
19
 On September 24, 1998, petitioner again wrote to respondent, this
time informing him of his separation, viz:
The 30-day period given to you to transfer to the Provincial
Engineering Office has now elapsed and, in as much as you did not
seek an extension of your permit to transfer, you are considered
resigned from this government unit as of September 13, 1996,
pursuant to MC No. 38, S. 1993 of the Civil Service Commission.
In a letter dated October 2, 1998, respondent requested petitioner
to withdraw the above-quoted separation letter. He pointed out that since the
request for transfer to the Provincial Engineer's Office was not acted upon,
the same never became effective and, therefore, he did not cease to be an
employee of the municipal government.
In his reply letter dated October 15, 1998, petitioner explained that
respondent was not terminated and that his separation from the service was
by operation of law, i.e.,Civil Service Commission (or "CSC") Memorandum
Circular (or "MC") No. 38, S. 1993. In the same communication, petitioner
offered to reinstate respondent.
On November 12, 1998, respondent filed a complaint for illegal
termination against petitioner before the CSC. Treating the complaint as an
appeal, the Director of CSC Regional Office No. 8 instructed Victoria E.
Valeriano (or "Ms. Valeriano"),Head Civil Service Field Officer in Catarman,
to conduct a fact-finding investigation on respondent's case. Pursuant to the
directive, Ms. Valeriano asked petitioner to submit the original of
respondent's request for transfer. In a letter dated January 11, 1998,
petitioner informed Ms. Valeriano that respondent's request was merely
verbal.
In an order dated April 16, 1999, the CSC Office of Legal Affairs
required petitioner to comment on the appeal. Complying with the directive,
petitioner explained that respondent's separation was valid and legal under
CSC MC No. 38, S. 1993, since the latter's permit to transfer to the Provincial
Engineer's Office expired without his transfer being effected. In support of
his defense, petitioner appended his documentary evidence to his comment,
including the legal opinions of the CSC Regional Office and the Provincial
Prosecutor upholding the validity of his action.
On June 17, 1999, the CSC issued a resolution, the decretal portion
of which resolution (sic) reads:
WHEREFORE, the appeal of Miguel H. Mijares is hereby
granted. Accordingly, Mayor Francisco C. Rosales, Jr. is directed to
immediately reinstate Mijares to his former position of Municipal
Engineer and to cause the payment of all his salaries and other
benefits from the date of his unlawful separation from the service up
to his actual reinstatement. 3
The CSC held that the respondent did not freely and voluntarily seek permission from
the petitioner to transfer to another office and that based on the record, the supposed transfer
of the respondent to the Office of the Provincial Engineer was a shrewd machination or clever
ploy resorted to by the petitioner to oust the respondent from his position as Municipal Engineer;
hence, such transfer was illegal. The CSC cited the rulings of this Court in Sta. Maria
v. Lopez 4 and Divinagracia, Jr.v. Sto. Tomas. 5 The CSC also ruled that a request for
transfer, under CSC Memorandum Circular No. 98-38, must be in writing; and that even
assuming that a verbal request for transfer may be made, the petitioner failed to adduce any
proof that the respondent made such verbal request, as well as the date of the effectivity of the
transfer. The CSC cited its ruling in CSC Resolution No. 99-1616 dated July 20, 1999. The
CSC declared that the letter of the petitioner to the respondent dated August 12, 1998 was but
a detail of the respondent to the Office of the Provincial Engineer.
The petitioner's motion for a reconsideration of the resolution was denied by the CSC
per its Resolution No. 992130.
The petitioner, thereafter, filed a petition for review with the CA assailing the resolutions
of the CSC. On December 20, 2001, the CA rendered a decision dismissing the petition and
affirming the resolutions of the CSC. The appellate court affirmed in toto not only the finding of
the CSC, but also its rulings on the issues raised by the petitioner. The CA also held that:
Well-settled is the rule that in reviewing administrative decisions, the
findings of fact made therein must be respected as long as they are
supported by substantial evidence (Lo vs. Court of Appeals,321 SCRA
190).We see no cogent reason to depart from said principle.
It is also noteworthy that the ground relied upon to justify
respondent's removal, i.e., expiration of his permit to transfer, is purely
technical and, therefore, too flimsy to override the constitutional mandate
upholding an employee's right to security of tenure (Art. IX-B, Sec. 2, par.
3, 1987 Constitution). As held in Divinagracia, Jr.vs. Sto. Tomas (244 SCRA
595),"the guarantee of security of tenure is an important object of the civil
service system because it affords a faithful employee permanence of
employment, at least for the period prescribed by law, and frees the
employee from the fear of political and personal prejudicial reprisal." 6
The petitioner's motion for reconsideration of the decision was denied by the appellate
court.
The petitioner filed his petition for review on certiorari with this Court, contending that
the CA erred as follows:
I. IN UPHOLDING THE FINDINGS OF THE CIVIL SERVICE COMMISSION
WHICH IMPROPERLY INTERPRETED THE PROVISIONS OF
20
 PART II, ITEM 5(a)[4] OF CSC MC NO. 93-38 AND RULING THAT
PETITIONER ILLEGALLY TERMINATED RESPONDENT.
II. IN HOLDING THAT PETITIONER WAS AFFORDED DUE PROCESS.
III. IN DECIDING THE CASE IN FAVOR OF RESPONDENT DESPITE THE
EXISTENCE OF OVERWHELMING EVIDENCE TO THE
CONTRARY.
IV. IN ORDERING PETITIONER TO PAY THE COSTS. 7
The petition has no merit.
The petitioner faults the CSC and the appellate court for ruling in favor of the
respondent, contending that, as gleaned from the respondent's October 2, 1998 Letter, the
latter requested for a transfer and was not coerced nor forced to do so. The petitioner asserts
that no less than the respondent declared therein, as well as on the other documents on record,
that he requested to be transferred to the Office of the Provincial Engineer, and that he secured
photo copies of his service records and other documents from the municipality in support of his
written request for transfer, and himself submitted such request to the Office of the Governor.
The petitioner asserts that the October 28, 1998 Opinion of CSC Regional Office No. 8 and of
the Provincial Prosecutor dated November 12, 1998 frontally belie the findings of the CSC and
the appellate court. According to the petitioner, he should not be faulted by the CSC for applying
the letter and spirit of CSC Memorandum Circular No. 93-38.
The petitioner further alleges that the respondent did not even heave a whimper of
protest despite the receipt of the Letter dated September 24, 1998 informing him of his
separation. The respondent is thus estopped, the petitioner insists, from assailing the
termination of his service as Municipal Engineer of Catarman. The petitioner concedes that
factual findings of quasi-judicial bodies, such as the CSC, are conclusive if based on substantial
evidence. He, however, contends that, in this case, the CSC ignored and misunderstood the
evidence on record, thereby committing a grave injustice.
We do not agree with the petitioner. CSC Memorandum Circular No. 93-38 reads:
Transfer — is a movement from one position without break in service
involving the issuance of an appointment.
The transfer may be from one agency to another or from one
organizational unit to another in the same agency.
An employee who seeks transfer to another office shall first secure
permission from the head of the department or agency where he is employed
stating the effective date of the transfer. If the request to transfer of an
employee is not granted by the head of the agency where he is employed, it
shall be deemed approved after the lapse of 30 days from the date of notice
to the agency head.
If, for whatever reason, the employee fails to transfer on the
specified date, he shall be considered resigned and his reemployment in his
former office shall be at the discretion of his head. 8
The CSC interpreted its Memorandum as requiring a written and not merely a verbal
request for an employee to transfer to another office. Moreover, such request must be express
and unequivocal, and cannot be merely implied or ambiguous. The request by an employee to
transfer to another office must be such that he intended to surrender his permanent office. Also,
a transfer connotes an absolute relinquishment of an office in exchange for another office. Such
request must be voluntary on the part of the officer concerned and not vitiated by force,
coercion, or intimidation or even deceit. Indeed, in Sta. Maria v. Lopez, 9 we held that:
A transfer that results in promotion or demotion, advancement or
reduction or a transfer that aims to "lure the employee away from his
permanent position," cannot be done without the employee's consent. For
that would constitute removal from office. Indeed, no permanent transfer can
take place unless the officer or employee is first removed from the position
held, and then appointed to another position. 10
The Court also held that unconsented transfer is anathema to security of tenure. 11 A
transfer that aims by indirect method to terminate services or to force resignation constitutes
removal. 12 An employee cannot be transferred unless for causes provided for by law and after
due process. 13 Any attempt to breach the protective wall built around the employee's right to
security of tenure should be slain on sight. The right of employees to security of tenure should
never be sacrificed merely at the whims and pleasure of some unscrupulous and heartless
politicians. As we held in Nemenzo v. Sabillano: 14
There are altogether too many cases of this nature, wherein local
elective officials, upon assumption of office, wield their new-found power
indiscriminately by replacing employees with their own proteges, regardless
of the laws and regulations governing the civil service. Victory at the polls
should not be taken as authority for the commission of such illegal acts. 15
In this case, the petitioner, who perceived that the respondent was a well-known
supporter of the political party opposed to his candidacy, coerced the respondent into resigning
and even threatened to have his position as Municipal Engineer abolished. This was chronicled
by the respondent in his letter to the petitioner dated October 2, 1998:
Hon. Francisco C. Rosales, Jr.
Municipal Mayor
Catarman, Northern Samar
Dear Mayor Rosales:
21
 In answer to your letter of 24 September 1998 terminating my
services as Municipal Engineer of Catarman, effective September 13, 1998,
allegedly due to my failure to seek an extension of my permit to transfer to
[the] Provincial Engineering Office, please be reminded of the following facts
and events.
A few days after you assumed office as new Mayor of Catarman, or
on July 2, 1998, you called me to your office and told me to resign from my
position as Municipal Engineer because you did not like me to continue
serving under your administration, and if I did not resign, you would abolish
my position. You give (sic) me one week to think about your proposal. As a
permanent employee, I realized that your proposal was political harassment
because I did not support you during the last elections. 16
The petitioner denied the allegation in his letter to the respondent dated October 15,
1998 that the CSC correctly disbelieved the petitioner's bare denial. Before the petitioner was
elected Mayor of Catarman and assumed office, there was no reason for the respondent to
abandon his position as Municipal Engineer and seek a transfer to another office. The
respondent's ordeal commenced after the petitioner assumed office as Municipal Mayor and
coerced the respondent into resigning or transferring to another position.
The respondent, in his letter to the petitioner dated October 2, 1998, admitted that
during their second meeting on August 10, 1998, he suggested that he was "open" to a transfer
to the Provincial Engineering Office or, at least to be detailed thereat, in lieu of resignation, to
which the petitioner agreed; and that upon the petitioner's orders, the respondent accomplished
the requisite Form 212, secured copies of his service records, and submitted the same to the
Office of the Provincial Governor for a possible appointment as Assistant Provincial Engineer;
and that the petitioner endorsed and recommended the same to the Provincial Governor.
However, taking into consideration the entirety of the contents of the letter, and the facts and
circumstances which impelled the respondent to write the same, it cannot thereby be concluded
that the respondent had voluntarily and unequivocally decided to transfer to the Office of the
Provincial Engineer. In light of the demands and threats of the petitioner, the respondent had
only three options: to resign, to agree to transfer to another office, or to remain as Municipal
Engineer with the threat of the petitioner to have his position abolished hanging over his head.
Admittedly, rather than resign as demanded by the petitioner, the respondent opted to
make himself available for appointment by the Provincial Governor as Assistant Provincial
Engineer. However, the Form 212 submitted by the respondent to the Provincial Governor is
not the written request envisaged in CSC Memorandum Circular No. 93-38 for the following
reasons: (a) the respondent continued reporting and performing his duties as Municipal
Engineer of Catarman and receiving his salary as such; and (b) the respondent did not send
any written request to the petitioner for transfer to the Office of the Provincial Engineer.
Evidently, the respondent intended to request for permission to transfer to the position
of Assistant Provincial Engineer only after the Governor had agreed thereto. The respondent
did not want to risk unemployment by making a written request for transfer without first being
assured of his appointment by the Provincial Governor to the position of Assistant Provincial
Engineer; hence, he opted to wait for the Provincial Governor's approval for his appointment
before submitting a written request for transfer to the petitioner. As it were, the Governor failed
to act on the respondent's application.
In his obsession to do away with the respondent even before the Governor could act
on his papers, the petitioner wrote the respondent on August 12, 1998, informing the latter that
his request for transfer had been granted, knowing fully well that the respondent had not yet
made such a written request for transfer. The letter of the petitioner reads:
August 12, 1998
Miguel H. Mijares
Municipal Engineer
Catarman, Northern Samar
Sir:
Your request to transfer to the Provincial Engineering Office,
Catarman, Northern Samar, is granted for a period of thirty (30) days from
receipt hereof, subject to the condition imposed by Civil Service Law, Rules
and Regulations.
Very truly yours,
Sgd.
FRANCISCO C. ROSALES, JR.
Municipal Mayor 17
We agree with the ruling of the CSC that the letter of the petitioner to the respondent
is merely a detail of the latter for a period of thirty days to the Office of the Provincial Engineer:
As already stated in the Resolution now being sought to be
reconsidered, the purported "permit to transfer" dated August 12, 1998
issued by movant unmistakably refers to a personnel action other than a
transfer. The said "permit to transfer" states that "(y)our request to transfer
to the Provincial Engineering Office, Catarman, Northern Samar is granted
for a period of thirty (30) days from receipt hereof ..." This statement does
not contemplate a transfer as defined under the Civil Service Law and Rules.
Rather, such a personnel action is in reality a detail because Mijares is to be
temporarily moved for a period of 30 days from his employer, the Municipal
Government of Catarman, to the Provincial Engineering Office. 18
The deplorable machination resorted to by the petitioner to remove the respondent
from his position became more evident when, on September 24, 1998, he wrote the
respondent, thus:
September 24, 1998
22
 Engr. Miguel H. Mijares
Municipal Engineer
Catarman, Northern Samar
Engr. Mijares:
The 30-day period given to you to transfer to the Provincial
Engineering Office has now elapsed and in as much as you did not seek an
extension of your permit to transfer, you are considered resigned from this
government unit as of September 13, 1998, pursuant to MC No. 38 S 1993
of the Civil Service Commission.
FRANCISCO C. ROSALES, JR.
Municipal Mayor 19
By his September 24, 1998 letter to the respondent, the petitioner made it appear that
he had granted the respondent permission to transfer within thirty days, and that the respondent
failed to effect his transfer. This was done by the petitioner despite the absence of any letter
from the respondent requesting for such transfer. By his August 12, 1998 letter, the petitioner
merely detailed the respondent to the Office of the Provincial Engineer. It must be stressed that
the only legal effect of a detail of an employee, upon the lapse of the period of such detail, is
for that employee to return to his permanent station. Thus, the respondent retained his position
as Municipal Engineer despite his detail to the Office of the Provincial Engineer. acSECT
The petitioner capped his chicanery by considering the respondent resigned as of
September 13, 1998, or after the lapse of the period for detail of the respondent to the Office
of the Provincial Engineer.
We agree with the ruling of the appellate court, which affirmed that of the CSC, thus:
...[T]o sustain the argument advanced by [petitioner] would
be setting a dangerous precedent. This will lead to a situation where
any head of an agency or local government unit who, for whatever
reason, wants to terminate a subordinate from his employment
would simply inform the latter that his verbal request to transfer was
accepted and, thereafter, exclude his name from the payroll, as what
happened in the present case, although the employee never made
any such request. This was never the intention of the framers of said
rule as it would make a mockery of the employee's right to security
of tenure.
Besides, the alleged request for transfer was not freely and
voluntarily made by respondent, not to mention that petitioner's approval of
the request is ambiguous. Thus, the CSC found:
...the Commission has noted that the purported grant by
Mayor Rosales of permission to Mijares is utterly ambiguous. In his
letter dated August 12, 1998, Mayor Rosales stated that '(y)our
request to transfer to the Provincial Engineering Office, Catarman,
Northern Samar, is granted for a period of thirty (30) days from
receipt hereof, ...' This simply means that the supposed transfer of
Mijares to the Provincial Office was granted by his stay or service
thereat is good only for a period of 30 days.
The foregoing facts and circumstances duly supported by
the evidence on record convinces the Commission that Mijares did
not freely and voluntarily seek from Mayor Rosales permission to
transfer to another office. On the contrary, it is apparent that the
supposed transfer was a shrewd machination or clever ply (sic)
resorted to oust Mijares from his present position. This, the
Commission will never tolerate much less countenance, as this
would infringe the right to security of tenure of Mijares.
Well-settled is the rule that in reviewing administrative decisions, the
findings of fact made therein must be respected as long as they are
supported by substantial evidence (Lo vs. Court of Appeals,321 SCRA
190).We see no cogent reason to depart from said principle.
It is also noteworthy that the ground relied upon to justify
respondent's removal, i.e., expiration of his permit to transfer, is purely
technical and, therefore, too flimsy to override the constitutional mandate
upholding an employee's right to security of tenure (Art. IX-B, Sec. 2, par.
3, 1987 Constitution). As held in Divinagracia, Jr.vs. Sto. Tomas (244 SCRA
595),"the guarantee of security of tenure is an important object of the civil
service system because it affords a faithful employee permanence of
employment, at least for the period prescribed by law, and frees the
employee from the fear of political and personal prejudicial reprisal." 20
Likewise, barren of merit is the petitioner's contention that he was deprived of due
process because the CSC failed to consider the effect of the opinion of the Provincial
Prosecutor and the Regional Director of the CSC holding that the petitioner had complied with
CSC Memorandum Circular No. 93-38, as well as the other documents appended to his
comment. The CA correctly ruled that:
Finally, there is no merit in petitioner's insistence that he was denied
due process because the CSC did not consider the documentary evidence
attached to his comment. The CSC, in its resolution dated September 21,
1999, stated that "the Commission received [petitioner's comment] including
all its annexes on May 18, 1999" and "(a)fter a careful evaluation of the
same, the Commission found not a shred of evidence to show that
[respondent],indeed, requested for his transfer." (Italics supplied)
23
 Settled is the rule that the essence of due process is simply an
opportunity to be heard or, as applied to administrative proceedings, an
opportunity to explain one's side or an opportunity to seek reconsideration
of the action or ruling complained of. What the law prohibits is absolute
absence of the opportunity to be heard; hence, a party cannot feign denial
of due process where he had been afforded the opportunity to present his
side (Audion Electric Co.,Inc. vs. NLRC,308 SCRA 340). 21
The petitioner cannot find solace in the October 28, 1998 Opinion of Judith Chicano,
Regional Director of Region 8 of the CSC, and the November 12, 1998 letter-opinion of the
Provincial Prosecutor stating that the petitioner correctly applied CSC Memorandum Circular
No. 93-38. This is because: (a) the petitioner falsely represented to the Regional Director and
Provincial Prosecutor that the respondent had requested for a transfer to the Office of the
Provincial Engineer when, in truth and in fact, the respondent had not done so; (b) the Regional
Director and the Provincial Prosecutor were not even furnished with copies of the October 2,
1998 Letter of the respondent to the petitioner; and (c) the opinion of the CSC Regional Director
and Provincial Prosecutor were not conclusive on the CSC, as the latter could still reverse the
said opinion on appeal.
The records negate the contention of the petitioner that the respondent kept a stoic
silence even after receiving the September 24, 1998 letter informing him that he was deemed
resigned as of September 13, 1998. The fact of the matter is that the respondent appealed the
letter to the Regional Director of the CSC, Region 8, which the respondent took cognizance of
and acted upon via her endorsement of the letter to Ma. Victoria E. Valeriano, Head, Civil
Service Fiscal Officer for a fact-finding investigation. 22
On the contention of the petitioner that the appeal of the respondent to the CSC was
made beyond the period therefor under Section 49(a) of the CSC Revised Rules of Procedure,
the CSC correctly ruled that:
Movant claims that Mijares' appeal was filed way beyond the
reglementary period for filing appeals. He, thus, contends that the
Commission should not have given due course to said appeal.
The Commission need not delve much on the dates when Mijares
was separated from the service and when he assailed his separation. Suffice
it to state that the Commission found his appeal meritorious. This being the
case, procedural rules need not be strictly observed. This principle was
explained in the case of Mauna vs.CSC,232 SCRA 388, where the Supreme
Court ruled, to wit:
"Assuming for the sake of argument that the petitioner's
appeal was filed out of time, it is within the power of this Court to
temper rigid rules in favor of substantial justice. While it is desirable
that the Rules of Court be faithfully and even meticulously observed,
courts should not be so strict about procedural lapses that do not
really impair the proper administration of justice. If the rules are
intended to ensure the orderly conduct of litigation, it is because of
the higher objective they seek which is the protection of substantive
rights of the parties. As held by the Court in a number of cases:
'...Because there is no vested right in technicalities,
in meritorious cases, a liberal, not literal, interpretation of the
rules becomes imperative and technicalities should not be
resorted to in derogation of the intent and purpose of the
rules which is the proper and just determination of litigation.
Litigations, should as much as possible, be decided on their
merits and not on technicality. Dismissal of appeals purely
on technical grounds is frowned upon, and the rules of
procedure ought not to be applied in a very rigid, technical
sense, for they are adopted to help secure, not override,
substantial justice, and thereby defeat their very aims. As
has been the constant rulings of this Court, every party-
litigant should be afforded the amplest opportunity for the
proper and just disposition of his cause, free from the
constraints of technicalities ...'"
Besides, Mijares assailed his separation from the service and
asserted his right to his office within one (1) year from his separation. This
being so, the Commission correctly gave due course to his appeal (Isberto
vs. Raquiza,67 SCRA 116).And what is ironic is that it is only now that
movant raised the issue on timeliness of filing an appeal. Never did he assail
this matter in his comment. 23
The respondent never relented in his resistance to the petitioner's sustained effort to
oust him from his position. The records show that after receipt of the petitioner's September
24, 1998 letter, the respondent, thereafter, requested for its withdrawal in a reply-letter dated
October 2, 1998. 24 In his letter dated October 15, 1998, the petitioner informed the respondent
that he was forwarding the latter's personnel file to the CSC for its legal opinion on the
matter. 25 The petitioner, through counsel, sought the opinion of the CSC Regional Director on
October 20, 1998. 26 On October 28, 1998, the CSC Regional Director rendered her opinion
in favor of the petitioner. The respondent then wrote to the Regional Director on November 4,
1998, anent the September 24, 1998 letter of the petitioner. The Regional Director treated the
said letter of the respondent as an "appeal." In his comment on the appeal of the respondent,
the petitioner did not contest the timeliness of the said "appeal" and opted to delve into and
discuss the merits of the case.
It bears stressing that the case before the CSC involves the security of tenure of a
public officer sacrosanctly protected by the Constitution. Public interest requires a resolution of
the merits of the appeal instead of dismissing the same based on a strained and inordinate
application of Section 49(a) of the CSC Revised Rules of Procedure. 27
24
 On the last issue, we find that there is no factual basis for directing the petitioner to pay
the costs. DASEac
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The
decision of the appellate court is AFFIRMED. However, the award for costs is DELETED.
SO ORDERED.
Davide, Jr.,C .J .,Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez,
Carpio, Carpio Morales, Azcuna, Chico-Nazario and Garcia, JJ ., concur.
Puno, J ., is on official leave.
Austria-Martinez, J ., took no part. Concurred in CA Decision.
Corona and Tinga, JJ ., are on leave.
||| (Rosales, Jr. v. Mijares, G.R. No. 154095, [November 17, 2004], 485 PHIL 209-226)
THIRD DIVISION
[G.R. No. 139813. January 31, 2001.]
JOEL BITO-ONON, petitioner, vs. HON. JUDGE NELIA YAP
FERNANDEZ, R.T.C. Br. 50 — Puerto Princesa City and Palawan, and
ELEGIO QUEJANO, JR.,respondents.
Urbano, Palamos and Fabros Law Offices for petitioner.
Zoilo C. Cruzat for private respondent.
SYNOPSIS
Petitioner Joel Bito-Onon and private respondent Elegio Quejano, Jr. were
candidates for the position of Executive Vice-President in the August 23, 1997 election for
the Liga ng Barangay Provincial Chapter of the province of Palawan. Petitioner was
subsequently proclaimed the winning candidate. The post proclamation protest filed by
private respondent was decided against him by the Board of Election Supervisors (BES).
Hence, he filed a Petition for Review before the Regional Trial Court of Palawan and Puerto
Princesa City (RTC). Petitioner moved to dismiss the petition for lack of jurisdiction. He
contended that the Supplemental Guidelines for the 1997 Liga ng mga Barangay election
issued by the DILG on August 11, 1997 in its Memorandum Circular No. 97-193, providing
for review of decisions or resolutions of the BES by the regular courts of law is an ultra
vires act and is void for being issued without or in excess of jurisdiction, as its issuance is
not a mere act of supervision but rather an exercise of control over the Liga's internal
organization. The RTC denied petitioner's motion to dismiss holding that the aforesaid
circular was issued by the DILG Secretary pursuant to his rule-making power as provided
for under Section 7, Chapter II Book IV of the Administrative Code. Consequently, it ruled
that it had jurisdiction over private respondent's petition for review.
Hence, this petition.
The Supreme Court ruled that Memorandum Circular No. 97-193 of the DILG
insofar as it authorizes the filing of a Petition for Review of the decision of the BES with the
regular courts in a post proclamation electoral protest is of doubtful constitutionality. It
agreed with petitioner that in authorizing the filing of the petition for review of the decision
of the BES with the regular courts, the DILG Secretary in effect amended and modified the
GUIDELINES promulgated by the National Liga Board and adopted by the LIGA which
provides that the decision of the BES shall be subject to review by the National Liga Board.
The amendment of the GUIDELINES is more than an exercise of the power of supervision
but is an exercise of the power of control, which the President does not have over the LIGA.
Although the DILG is given the power to prescribe rules, regulations and other issuances,
the Administrative Code limits its authority to merely "monitoring compliance" by local
government units of such issuances. The Court, therefore, ruled that the public respondent
judge committed grave abuse of discretion amounting to lack or excess of jurisdiction in
not dismissing the respondent's Petition for Review for failure to exhaust all administrative
remedies and for lack of jurisdiction.
Petition is granted.
SYLLABUS
1. CONSTITUTIONAL LAW; EXECUTIVE DEPARTMENT; PRESIDENT;
POWERS; POWER OF GENERAL SUPERVISION OVER LOCAL GOVERNMENT UNITS
IS DELEGATED TO THE DILG SECRETARY; POWER OF GENERAL SUPERVISION,
DEFINED; POWER OF CONTROL, DEFINED. — Memorandum Circular No. 97-193 was
issued by the DILG Secretary pursuant to power of general supervision of the President
over all local government units which was delegated to the DILG Secretary by virtue
of Administrative Order No. 267 dated February 18, 1992. The President's power of
general supervision over local government units is conferred upon him by the Constitution.
The power of supervision is defined as "the power of a superior officer to see to it that lower
officers perform their functions in accordance with law." This is distinguished from the
power of control or "the power of an officer to alter or modify or set aside what a subordinate
officer had done in the performance of his duties and to substitute the judgment of the
former for the later."
25
 2. ID.; ID.; ID.; ID.; POWER OF SUPERVISION DISTINGUISHED FROM POWER
OF CONTROL. — On many occasions in the past, this court has had the opportunity to
distinguish the power of supervision from the power of control. In Taule vs. Santos, we held
that the Chief Executive wielded no more authority than that of checking whether a local
government or the officers thereof perform their duties as provided by statutory
enactments. He cannot interfere with local governments provided that the same or its
officers act within the scope of their authority. Supervisory power, when contrasted with
control, is the power of mere oversight over an inferior body; it does not include any
restraining authority over such body. Officer in control lay down the rules in the doing of an
act. If they are not followed, it is discretionary on his part to order the act undone or re-
done by his subordinate or he may even decide to do it himself. Supervision does not cover
such authority. Supervising officers merely sees to it that the rules are followed, but he
himself does not lay down such rules, nor does he have the discretion to modify or replace
them. If the rules are not observed, he may order the work done or re-done to conform to
the prescribed rules. He cannot prescribe his own manner for the doing of the act.
3. POLITICAL LAW; LOCAL GOVERNMENT CODE; LIGA NG MGA BARANGAY;
EXPLAINED. — In Opinion No. 41, Series of 1995, the Department of Justice ruled that
the liga ng mga barangay is a government organization, being an association, federation,
league or union created by law or by authority of law, whose members are either appointed
or elected government officials. The Local Government Code defines the liga ng mga
barangay as an organization of all barangays for the primary purpose of determining the
representation of the liga in the sanggunians, and for ventilating, articulating and
crystallizing issues affecting barangay government administration and securing, through
proper and legal means solutions thereto. The liga shall have chapters at the municipal,
city, provincial and metropolitan political subdivision levels. The municipal and city chapters
of the liga shall be composed of the barangay representatives, of the municipal and city
barangays respectively. The duly elected presidents of the component municipal and city
chapters shall constitute the provincial chapter of the metropolitan political subdivision
chapter. The duly elected presidents of highly urbanized cities, provincial chapters, the
Metropolitan Manila chapter and metropolitan political subdivision chapters shall constitute
the National Liga ng mga Barangay. The liga at the municipal, city, provincial, metropolitan
political subdivision, and national levels directly elect a president, a vice-president and five
(5) members of the board of directors. The board shall appoint its secretary and treasurer
and create such other positions as it may deem necessary for the management of the
chapter. ADCSEa
4. ID.; ID.; ID.; MATTERS AFFECTING INTERNAL ORGANIZATION THEREOF
ARE GOVERNED BY THEIR RESPECTIVE CONSTITUTION AND BY-LAWS NOT
PROVIDED FOR IN LOCAL GOVERNMENT CODE. — The ligas are primarily governed
by the provisions of the Local Government Code. However, their respective constitution
and by-laws shall govern all other matters affecting the internal organization of the liga not
otherwise provided for in the Local Government Codeprovided that the Constitution and
by-laws shall be suppletory to the provisions of Book III, Title VI of the Local Government
Code and shall always conform to the provisions of the Constitution and existing laws.
5. ID.; ID.; ID.; DECISION OF BOARD OF ELECTION SUPERVISORS SUBJECT
TO REVIEW BY THE NATIONAL LIGA BOARD; PRESIDENT HAS NO POWER OF
CONTROL OVER THE LIGA; DILG'S POWER OF SUPERVISION OVER LOCAL
GOVERNMENT, LIMITATION. — We rule that Memorandum Circular No. 97-193 of the
DILG insofar as it authorizes the filing a Petition for Review of the decision of the BES with
the regular courts in a post proclamation electoral protest is of doubtful constitutionality.
We agree with both the petitioner and the Solicitor General that in authorizing the filing of
the petition for review of the decision of the BES with the regular courts, the DILG Secretary
in effect amended and modified the GUIDELINES promulgated by the National Liga Board
and adopted by the LIGA which provides that the decision of the BES shall be subject to
review by the National Liga Board. The amendment of the GUIDELINES is more than an
exercise of the power of supervision but is an exercise of the power of control, which the
President does not have over the LIGA. Although the DILG is given the power to prescribe
rules, regulations and other issuances, the Administrative Code limits its authority to merely
"monitoring compliance" by local government units of such issuances. To monitor means
"to watch, observe or check" and is compatible with the power of supervision of the DILG
Secretary over local governments, which is limited to checking whether the local
government unit concerned or the officers thereof, perform their duties as per statutory
enactments. Besides, any doubt as to the power of the DILG Secretary to interfere with
local affairs should be resolved in favor of the greater autonomy of the local government.
DECISION
GONZAGA-REYES, J p:
This Petition for Certiorari and Prohibition with prayer for the issuance of a
temporary restraining order and writ of injunction seeks the reversal of the Order of the
Regional Trial Court of Palawan and Puerto Princesa City, 1 Branch 50 in SPL. PROC.
NO. 1056 entitled "Elegio F. Quejano, Jr., petitioner vs. Joel Bito-Onon, et. al.,
respondents" which denied herein petitioner's motion to dismiss the Petition for Review of
the Resolution of the Board of Election Supervisors dated August 25, 1997 in case number
L-10-97 filed by herein private respondent with said court.
It appears from the records that the petitioner, Joel Bito-Onon is the duly elected
Barangay Chairman of Barangay Tacras, Narra, Palawan and is the Municipal Liga Chapter
President for the Municipality of Narra, Palawan. The private respondent, Elegio Quejano,
Jr. on the other hand, is the duly elected Barangay Chairman of Barangay Rizal,
Magsaysay, Palawan and is the Municipal Liga Chapter President for the Municipality of
Magsaysay, Palawan.; Both Onon and Quejano were candidates for the position of
Executive Vice-President in the August 23, 1997 election for the Liga ng Barangay
Provincial Chapter of the province of Palawan. Onon was proclaimed the winning candidate
26
in the said election prompting Quejano to file a post proclamation protest with the Board of
Election Supervisors (BES), which was decided against him on August 25, 1997.
Not satisfied with the decision of the BES, Quejano filed a Petition for Review of
the decision of the BES with the Regional Trial Court of Palawan and Puerto Princesa City
(RTC). On April 26, 1999, Onon filed a motion to dismiss the Petition for Review raising the
issue of jurisdiction. Onon claimed that the RTC had no jurisdiction to review the decisions
rendered by the BES in any post proclamation electoral protest in connection with the 1997
Liga ng mga Barangay election of officers and directors. In his motion to dismiss, Onon
claimed that the Supplemental Guidelines for the 1997 Liga ng mga Barangay election
issued by the DILG on August 11, 1997 in its Memorandum Circular No. 97-193, providing
for review of decisions or resolutions of the BES by the regular courts of law is an ultra
vires act and is void for being issued without or in excess of jurisdiction, as its issuance is
not a mere act of supervision but rather an exercise of control over the Liga's internal
organization.
On June 22, 1999, the RTC denied Onon's motion to dismiss. In its order, the RTC
ratiocinated that the Secretary of the Department of the Interior and Local Government 2 is
vested with the power "to establish and prescribe rules, regulations and other issuances
and implementing laws on the general supervision of local government units and the
promotion of local autonomy and monitor compliance thereof by said units." 3 The RTC
added that DILG Circular No. 97-193 was issued by the DILG Secretary pursuant to his
rule-making power as provided for under Section 7, Chapter II, Book IV of the
Administrative Code. 4 Consequently, the RTC ruled that it had jurisdiction over the petition
for review filed by Quejada. 5
Motion for reconsideration of the aforesaid Order was denied 6 prompting the
petitioner to file the present petition wherein the following issues are raised:
A. WHETHER OR NOT THE QUESTIONED PROVISION IN
MEMORANDUM CIRCULAR 97-193 WAS ISSUED BY THE DILG
SECRETARY IN EXCESS OF HIS AUTHORITY.
B. WHETHER OR NOT THE RESPONDENT JUDGE COMMITTED GRAVE
ABUSE OF DISCRETION IN ISSUING THE QUESTIONED
ORDERS. 7
In support of his petition, Onon argues that the "Supplemental Guidelines for the
1997 Synchronized Election of the Provincial and Metropolitan Chapters and for the
Election of the National Chapter of the Liga ng mga Barangay" contradicts the
"Implementing Rules and Guidelines for the 1997 General Elections of the Liga ng mga
Barangay Officers and Directors" and is therefore invalid. Onon alleges that the Liga ng
mga Barangay (LIGA) is not a local government unit considering that a local government
unit must have its own source of income, a certain number of population, and a specific
land area in order to exist or be created as such. Consequently, the DILG only has a limited
supervisory authority over the LIGA. Moreover, Onon argues that even if the DILG has
supervisory authority over the LIGA, the act of the DILG in issuing Memorandum Circular
No. 97-193 or the supplemental rules and guidelines for the conduct of the 1997 LIGA
elections had the effect of modifying, altering and nullifying the rules prescribed by the
National Liga Board. Onon posits that the issuance of said guidelines allowing an appeal
of the decision of the BES to the regular courts rather than to the National Liga Board is no
longer an exercise of supervision but an exercise of control. 8
In his comment to the petition, private respondent Quejano argues that the
Secretary of the DILG has competent authority to issue rules and regulations like
Memorandum Circular No. 97-193. The Secretary of DILG's rule-making power is conferred
by the Administrative Code. Considering that the Memorandum Circular was issued
pursuant to his rule making power, Quejano insists that the lower court did not commit any
reversible error when it denied Onon's motion to dismiss. 9
On the other hand, the public respondent represented herein by the Solicitor
General, filed a separate Manifestation and Motion in Lieu of Comment agreeing with the
position of petitioner Onon. The Solicitor General affirms Onon's claim that in issuing the
questioned Memorandum Circular, the Secretary of the DILG effectively amended the rules
and guidelines promulgated by National Liga Board. This act was no longer a mere act of
supervision but one of control. The Solicitor General submits that the RTC committed grave
abuse of discretion in not dismissing the petition for review of the BES decision filed before
it for failure of the petitioner to exhaust the rightful remedy which was to appeal to the
National Liga Board. 10
On October 27, 1999, this Court denied petitioner Onon's motion for the issuance
of restraining order for lack of merit.
After a careful review of the case, we sustain the position of the petitioner.
The resolution of the present controversy requires an examination of the
questioned provision of Memorandum Circular No. 97-193 and the Implementing Rules
and Guidelines for the 1997 General Elections of the Liga ng mga Barangay Officers and
Directors (GUIDELINES). The memorandum circular reads, insofar as pertinent, as
follows: aETAHD
"Any post-proclamation protest must be filed with the BES within
twenty-four (24) hours from the closing of the election. The BES shall decide
the same within forty-eight (48) hours from receipt thereof. The decision of
the BES shall be final and immediately executory without prejudice to the
filing of a Petition for Review with the regular courts of law." 11 (emphasis
supplied)
On the other hand, the GUIDELINES provides that the BES shall have the following
among its duties:
"To resolve any post-proclamation electoral protest which must be
submitted in writing to this Board within twenty-four (24) hours from the close
of election; provided said Board shall render its decision within forty-eight
(48) hours from receipt hereof; and provided further that the decision must
27
 be submitted to the National Liga Headquarters within twenty-four (24) hours
from the said decision. The decision of the Board of Election Supervisors in
this respect shall be subject to review by the National Liga Board the
decision of which shall be final and executory." 12 (emphasis supplied)
Memorandum Circular No. 97-193 was issued by the DILG Secretary pursuant to
the power of general supervision of the President over all local government units which
was delegated to the DILG Secretary by virtue of Administrative Order No. 267 dated
February 18, 1992. 13 The President's power of general supervision over local government
units is conferred upon him by the Constitution. 14 The power of supervision is defined as
"the power of a superior officer to see to it that lower officers perform their functions in
accordance with law." 15 This is distinguished from the power of control or "the power of
an officer to alter or modify or set aside what a subordinate officer had done in the
performance of his duties and to substitute the judgment of the former for the latter." 16
On many occasions in the past, this court has had the opportunity to distinguish
the power of supervision from the power of control. In Taule vs. Santos, 17 we held that
the Chief Executive wielded no more authority than that of checking whether a local
government or the officers thereof perform their duties as provided by statutory
enactments. He cannot interfere with local governments provided that the same or its
officers act within the scope of their authority. Supervisory power, when contrasted with
control, is the power of mere oversight over an inferior body; it does not include any
restraining authority over such body. 18 Officers in control lay down the rules in the doing
of an act. If they are not followed, it is discretionary on his part to order the act undone or
re-done by his subordinate or he may even decide to do it himself. Supervision does not
cover such authority. Supervising officers merely sees to it that the rules are followed, but
he himself does not lay down such rules, nor does he have the discretion to modify or
replace them. If the rules are not observed, he may order the work done or re-done to
conform to the prescribed rules. He cannot prescribe his own manner for the doing of the
act. 19
Does the President's power of general supervision extend to the liga ng mga
barangay, which is not a local government unit? 20
We rule in the affirmative. In Opinion No. 41, Series of 1995, the Department of
Justice ruled that the liga ng mga barangay is a government organization, being an
association, federation, league or union created by law or by authority of law, whose
members are either appointed or elected government officials. The Local Government
Code 21 defines the liga ng mga barangay as an organization of all barangays for the
primary purpose of determining the representation of the liga in the sanggunians, and for
ventilating, articulating and crystallizing issues affecting barangay government
administration and securing, through proper and legal means, solutions thereto. 22 The
liga shall have chapters at the municipal, city, provincial and metropolitan political
subdivision levels. The municipal and city chapters of the liga shall be composed of the
barangay representatives of the municipal and city barangays respectively. The duly
elected presidents of the component municipal and city chapters shall constitute the
provincial chapter or the metropolitan political subdivision chapter. The duly elected
presidents of highly urbanized cities, provincial chapters, the Metropolitan Manila chapter
and metropolitan political subdivision chapters shall constitute the National Liga ng mga
Barangay. 23
The liga at the municipal, city, provincial, metropolitan political subdivision, and
national levels directly elect a president, a vice-president and five (5) members of the board
of directors. The board shall appoint its secretary and treasurer and create such other
positions as it may deem necessary for the management of the chapter. 24
The ligas are primarily governed by the provisions of the Local Government
Code. 25 However, their respective constitution and by-laws shall govern all other matters
affecting the internal organization of the liga not otherwise provided for in the Local
Government Code provided that the constitution and by-laws shall be suppletory to the
provisions of Book III, Title VI of the Local Government Code and shall always conform to
the provisions of the Constitution and existing laws. 26
Having in mind the foregoing principles, we rule that Memorandum Circular No.
97-193 of the DILG insofar as it authorizes the filing a Petition for Review of the decision
of the BES with the regular courts in a post proclamation electoral protest is of doubtful
constitutionality. We agree with both the petitioner and the Solicitor
General that in authorizing the filing of the petition for review of the decision of the
BES with the regular courts, the DILG Secretary in effect amended and modified the
GUIDELINES promulgated by the National Liga Board and adopted by the LIGA which
provides that the decision of the BES shall be subject to review by the National Liga Board.
The amendment of the GUIDELINES is more than an exercise of the power of supervision
but is an exercise of the power of control, which the President does not have over the LIGA.
Although the DILG is given the power to prescribe rules, regulations and other issuances,
the Administrative Code limits its authority to merely "monitoring compliance" by local
government units of such issuances. 27 To monitor means "to watch, observe or check"
and is compatible with the power of supervision of the DILG Secretary over local
governments, which is limited to checking whether the local government unit concerned or
the officers thereof perform their duties as per statutory enactments. 28 Besides, any doubt
as to the power of the DILG Secretary to interfere with local affairs should be resolved in
favor of the greater autonomy of the local government. 29
The public respondent judge therefore committed grave abuse of discretion
amounting to lack or excess of jurisdiction in not dismissing the respondent's Petition for
Review for failure to exhaust all administrative remedies and for lack of jurisdiction. TCacIE
WHEREFORE, the instant petition is hereby GRANTED. The Order of the Regional
Trial Court dated June 22, 1999 is REVERSED and SET ASIDE. The Petition for Review
filed by the private respondent docketed as SPL. PROC. NO. 1056 is DISMISSED.
SO ORDERED.
Melo, Vitug, Panganiban and Sandoval-Gutierrez, JJ., concur.
28
||| (Bito-Onon v. Fernandez, G.R. No. 139813, [January 31, 2001], 403 PHIL 693-705)
SECOND DIVISION
[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.
SYLLABUS
1. POLITICAL LAW; LAW ON PUBLIC CORPORATIONS; MUNICIPAL CORPORATION;
CITY OF MANILA ENDOWED WITH THE FACULTIES OF A MUNICIPAL CORPORATION.
— 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. cda
2. ID.; ID.; ID.; POWERS; GOVERNMENTAL AND MUNICIPAL POWERS; DISTINGUISHED.
— 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]).
3. ID.; ID.; ID.; ID.; THE PROPERTIES OF A MUNICIPAL CORPORATION MAY EITHER BE
FOR PUBLIC USE OR PATRIMONIAL. — 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]).
4. ID.; ID.; ID.; PROPRIETARY FUNCTIONS; A MUNICIPAL CORPORATION CAN BE HELD
LIABLE TO THIRD PERSONS EX CONTRACTU . — 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).
5. ID.; ID.; ID.; ID.; ID.; NORTH CEMETERY, A PATRIMONIAL PROPERTY OF THE CITY OF
MANILA; UNDER THE ADMINISTRATION OF THE HEALTH OFFICER. — 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., Sec. 319), the opening of graves, inches, 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.
6. CIVIL LAW; OBLIGATIONS AND CONTRACTS; OBLIGATIONS ARISING FROM
CONTRACTS HAVE THE FORCE OF LAW BETWEEN PARTIES; BREACH OF CONTRACT
ENTITLES THE OTHER PARTY TO DAMAGES. — 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 [1987]). 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]).
7. ID.; DAMAGES; RESPONDEAT SUPERIOR; CITY OF MANILA IS LIABLE FOR THE
TORTIOUS ACT OF ITS AGENTS; DURATION OF LEASE NOT AFFECTED BY
ADMINISTRATIVE ORDER ISSUED SUBSEQUENT TO THE EXECUTION OF THE
CONTRACT. — Under the doctrine of respondeat 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
29
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.
DECISION
PARAS, J p:
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. LibLex
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 the City of Manila;
Evangeline Suva of the City Health Office; Sergio Mallari, officer-in-charge
of the North Cemetery; and Joseph Hebmuth, 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. 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. 2-3; 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 the remains of the late Vivencio Sto. Domingo, Sr. and
30
 thereafter, to bury the same in the substitute lot to be chosen by the plaintiffs
pursuant to this decision. LLpr
"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.
"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)
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. LibLex
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
31
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). prLL
The Court further stressed:
"Municipal corporations are subject to be sued upon contracts and in tort. . .
. special or even ordinary occasions, but particularly on All Saints Day, in
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 the operation of this rule of law, and are liable accordingly, to civil
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., Sec.
319), the opening of graves, inches, 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
[1987]). 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]). Cdpr
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
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
32
 and factual basis. Under the aforementioned facts and
circumstances, the most that plaintiffs can 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 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). prLL
Under the doctrine of respondeat 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.
FIRST DIVISION
[G.R. No. 135962. March 27, 2000.]
METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner, vs.
BEL-AIR VILLAGE ASSOCIATION, INC., respondent.
The Solicitor General for petitioner.
R.V. Saguisag and J. Vicente G. Sison for respondent.
SYNOPSIS
Petitioner Metropolitan Manila Authority (MMDA) is a government agency tasked with
the delivery of basic services in Metro Manila, while respondent Bel-Air Village Association,
Inc. (BAVA) is the registered owner of Neptune Street, a road inside a private residential
subdivision, the Bel-Air Village. On December 30, 1995, the president of the respondent
received from the chairman of the petitioner a notice dated December 22, 1995 requesting the
respondent to open Neptune Street to public vehicular traffic starting January 2, 1996. On that
same day, the president of the respondent was apprised that the perimeter wall separating the
subdivision from the adjacent Kalayaan Avenue would be demolished. On January 2, 1996,
the respondent instituted an action for injunction against the petitioner before the Regional Trial
Court, Branch 136, Makati City. The trial court issued a temporary restraining order. However,
after due hearing, the court denied the issuance of a preliminary injunction. On appeal, the
Court of Appeals ruled that the MMDA has no authority to order the opening of Neptune Street
being a private subdivision road and to cause the demolition of its perimeter walls. It held that
the authority is lodged in the City Council of Makati by an ordinance.
In this petition, the Court ruled that 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 Panlunsod 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.
Moreover, 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.
SYLLABUS
1. POLITICAL LAW; STATE; INHERENT POWER; POLICE POWER; DEFINED. —
Police power is an inherent attribute of sovereignty. It has been defined as the power vested
by the Constitution in the legislature to make, ordain, and establish all manner of wholesome
and reasonable laws, statutes and ordinances, either with penalties or without, not repugnant
to the Constitution, as they shall judge to be for the good and welfare of the commonwealth,
and for the subjects of the same. The power is plenary and its scope is vast and pervasive,
reaching and justifying measures for public health, public safety, public morals, and the general
welfare.
2. ID.; ID.; ID.; ID.; LODGED PRIMARILY IN THE NATIONAL LEGISLATURE; CAN
BE DELEGATED TO THE PRESIDENT, ADMINISTRATIVE BOARDS AND LAWMAKING
BODIES OF LOCAL GOVERNMENT UNITS. — It bears stressing that police power is lodged
primarily in the National Legislature. It cannot be exercised by any group or body of individuals
not possessing legislative power. The National Legislature, however, may delegate this power
33
to the President and administrative boards as well as the lawmaking bodies of municipal
corporations or local government units. Once delegated, the agents can exercise only such
legislative powers as are conferred on them by the national lawmaking body.
3. ID.; LOCAL GOVERNMENT; DEFINED. — A local government is a "political
subdivision of a nation or state which is constituted by law and has substantial control of local
affairs." The Local Government Code of 1991 defines a local government unit as a "body politic
and corporate" — one endowed with powers as a political subdivision of the National
Government and as a corporate entity representing the inhabitants of its territory. Local
government units are the provinces, cities, municipalities and barangays. They are also the
territorial and political subdivisions of the state.
4. ID.; LOCAL GOVERNMENT CODE OF 1991; CONGRESS DELEGATED THE
POLICE POWER TO LOCAL GOVERNMENT UNITS. — 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."
5. ID.; LOCAL GOVERNMENT UNITS; EXERCISE POLICE POWER THROUGH
THEIR RESPECTIVE LEGISLATIVE BODIES. — 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 thesangguniang
panlungsod, that of the municipal government is the sangguniang bayan, and that of the
barangay is the sangguniang 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 . . . ." 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."
6. ID.; ADMINISTRATIVE LAW; ADMINISTRATIVE AGENCY; METROPOLITAN
MANILA DEVELOPMENT AUTHORITY; CREATED BY REPUBLIC ACT NO. 7924, TO
ADMINISTER BASIC SERVICES AFFECTING METRO MANILA. — 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 Piñas, Marikina, Parañaque and Valenzuela, and the municipalities
of Malabon, Navotas, Pateros, San Juan and Taguig. With the passage of Republic Act (R.A.)
No. 7924 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.
7. ID.; ID.; ID.; ID.; METRO-WIDE SERVICES; COVERAGE. — "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." There are seven (7) basic metro-
wide services and the scope of these services cover the following: (1) development planning;
(2) transport and traffic management; (3) solid waste disposal and management; (4) flood
control and sewerage management; (5) urban renewal, zoning and land use planning, and
shelter services; (6) health and sanitation, urban protection and pollution control; and (7) public
safety.
8. ID.; ID.; ID.; ID.; IMPLEMENTATION OF PLANS, PROGRAMS AND PROJECTS;
ELUCIDATED. — 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 cooperative arrangements with these bodies for the delivery of the
required services within Metro Manila.
9. ID.; ID.; ID.; ID.; METRO MANILA COUNCIL; APPROVES METRO-WIDE PLANS,
PROGRAMS AND PROJECTS, AND ISSUES THE NECESSARY RULES AND
REGULATIONS FOR ITS IMPLEMENTATION. — 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. The Council is headed by a 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 promulgates the rules and regulations for the delivery of
basic services, collection of service and regulatory fees, fines and penalties.
10. ID.; ID.; ID.; ID.; AUTHORIZED TO SET POLICIES CONCERNING TRANSPORT
AND TRAFFIC MANAGEMENT PROGRAMS. — 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
this service, the MMDA is expressly authorized "to set the policies concerning traffic" and
34
"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.
11. ID.; ID.; ID.; ID.; NOT GRANTED POLICE POWER; ALL FUNCTIONS ARE
ADMINISTRATIVE IN NATURE. — 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 and appropriate
funds for the general welfare" of the inhabitants of Metro Manila. The MMDA is, as termed in
the charter itself, a "development authority." It is an agency created for the purpose of laying
down policies and coordinating with the various national government agencies, people's
organizations, non-governmental organizations and the private sector for the efficient and
expeditious delivery of basic services in the vast metropolitan area.All its functions are
administrative in nature and these are actually summed up in the charter itself.
12. ID.; ID.; ID.; ID.; SANGALANG VS. INTERMEDIATE APPELLATE COURT; NOT
APPLICABLE IN CASE AT BAR. — 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 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 ordinance-making 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.
13. ID.; LOCAL GOVERNMENT UNITS; METROPOLITAN MANILA; CREATED AS A
RESPONSE TO RAPID GROWTH OF POPULATION AND INCREASE OF SOCIAL AND
ECONOMIC REQUIREMENTS. — 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 Piñas, Malabon, Navotas, Pasig,
Pateros, Parañaque, Marikina, Muntinlupa and Taguig in the province of Rizal, and Valenzuela
in the province of Bulacan. Metropolitan 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."
14. ID.; ADMINISTRATIVE LAW; ADMINISTRATIVE AGENCY; METRO MANILA
COUNCIL; CENTRAL GOVERNMENT OF METRO MANILA FOR THE PURPOSE OF
ESTABLISHING AND ADMINISTERING PROGRAMS PROVIDING SERVICES COMMON TO
THE AREA. — 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.
15. ID.; ID.; ID.; ID.; CREATION THEREOF IS COUPLED BY CREATION OF
SANGGUNIANG BAYAN. — 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 appointed by
the President. The Sangguniang Bayan had the power to recommend to the MMC the adoption
of ordinances, resolutions or measures.
16. ID.; ID.; ID.; ID.; POSSESSED LEGISLATIVE POWERS. — 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. Thus,
Metropolitan Manila had a "central government," i.e., the MMC which fully possessed legislative
and police powers. Whatever legislative powers the component cities and municipalities had
were all subject to review and approval by the MMC.
17. ID.; CONSTITUTIONAL LAW; 1987 CONSTITUTION; RESTORES AUTONOMY
OF LOCAL GOVERNMENT UNITS IN METRO MANILA. — 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: "Section
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. Section 2. The territorial and political subdivisions shall
enjoy local autonomy."
35
 18. ID.; ID.; ID.; RECOGNIZED THE NECESSITY OF CREATING METROPOLITAN
REGIONS. — 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. Section 11 of the same Article X thus provided: "Section 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." The 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 basic autonomy and their own local
executive and legislative assemblies.
19. ID.; ID.; ID.; TRANSITORY PROVISIONS; GAVE THE PRESIDENT OF THE
PHILIPPINES THE POWER TO CONSTITUTE THE METROPOLITAN AUTHORITY. —
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. "Section 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."
20. ID.; ADMINISTRATIVE LAW; ADMINISTRATIVE AGENCY; METROPOLITAN
MANILA AUTHORITY; LIMITED TO DELIVERY OF BASIC URBAN SERVICES REQUIRING
COORDINATION IN METROPOLITAN MANILA. — 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 developed to the MMA. 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." The MMA's governing body, the Metropolitan Manila Council, although composed of
the mayors of the component cities and municipalities, was merely given the power of: (1)
formulation of policies on the delivery of basic services requiring coordination and
consolidation; and (2) promulgation of resolutions and other issuances, approval of a code of
basic services and the exercise of its rule-making power. 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 "advice
the local governments accordingly."
21. ID.; ID.; ID.; METROPOLITAN MANILA DEVELOPMENT AUTHORITY; NOT A
POLITICAL UNIT OF GOVERNMENT. — 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. . . . 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. . . . 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." 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. When the bill was forwarded on the Senate, several amendments were made.
These amendments, however, did not affect the nature of the MMDA as originally conceived in
the House of Representatives.
22. ID.; ID.; ID.; ID.; NOT EVEN A SPECIAL METROPOLITAN POLITICAL
SUBDIVISION. — It is thus beyond doubt that the MMDA is not 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 theConstitution. The creation of a
"special metropolitan political subdivision" requires the approval by a majority of the votes cast
in a plebiscite in the political units directly affected. R. A. No. 7924 was not submitted to the
inhabitants of Metro Manila in a plebiscite. The Chairman of the MMDA is not an official elected
by the people, but appointed by the President with the rank and privileges of a cabinet member.
In fact, part of his function is to perform such other duties as may be assigned to him by the
president, whereas in local government units, the President merely exercises supervisory
authority. This emphasizes the administrative character of the MMDA.
23. ID.; ID.; ID.; ID.; NO POWER TO ENACT ORDINANCES FOR THE WELFARE OF
THE COMMUNITY; CASE AT BAR. — 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.
24. ID.; STATE; INHERENT POWERS; POLICE POWER; GOOD INTENTIONS
CANNOT JUSTIFY THE OPENING FOR PUBLIC USE OF PRIVATE STREET IN PRIVATE
SUBDIVISION WITHOUT ANY LEGAL WARRANT. — 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
36
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. cdrep
DECISION
PUNO, J p:
Not infrequently, the government is tempted to take legal shortcuts to 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. LLjur
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 beside 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.
"Very truly yours,
PROSPERO I. ORETA
Chairman" 1
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.
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
"No pronouncement as to costs.
"SO ORDERED." 6
The Motion for Reconsideration of the decision was denied on September 28, 1998.
Hence, this recourse.
Petitioner MMDA raises the following questions:
37
 "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
BEL-AIR RESIDENTS AND BAVA OFFICERS?
V as the general welfare clause, viz: LexLib
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 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." 16 The 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
"SECTION 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 the sangguniang 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
38
 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 Piñas, Marikina, Parañaque 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
"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 metro-wide services and the scope of these services
cover the following: (1) development planning; (2) transport and traffic management; (3) solid
waste disposal and management; (4) flood control and sewerage management; (5) urban
renewal, zoning and land use planning, and shelter services; (6) health and sanitation, urban
protection and pollution control; and (7) public safety. The basic service of transport and traffic
management includes the following:
"(b) Transport and traffic management which include the
formulation, coordination, and monitoring of policies, standards, programs
and projects to rationalize the existing transport operations, infrastructure
requirements, the use of thoroughfares, and promotion of safe and
convenient movement of persons and goods; provision for the mass
transport system and the institution of a system to regulate road users;
administration and implementation of all traffic enforcement operations,
traffic engineering services and traffic education programs, including the
institution of a single ticketing system in Metropolitan Manila;" 27
In the delivery of the seven (7) basic services, the MMDA has the following powers and
functions:
"SECTION 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 non-governmental
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
cooperative arrangements with these bodies for the delivery of the required services within
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 a Chairman who is appointed by the President and
39
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 promulgates 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: cdrep
"SECTION 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 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 this 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 and appropriate funds for the general
welfare" of the inhabitants of Metro Manila. The MMDA is, as termed in the charter itself, a
"development authority." 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 metropolitan area. All its functions are administrative in nature and
these are actually summed up in the charter itself, viz:
"SECTION 2. Creation of the Metropolitan Manila Development
Authority. — . . .
The MMDA shall perform planning, monitoring and coordinative
functions, and in the process exercise regulatory 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,
40
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. 81-0l, as a legitimate
exercise of police power. 37 The power of the MMC and the Makati Municipal Council to enact
zoning ordinances for the general welfare prevailed over the "deed restrictions." LibLex
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 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 ordinance-making 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 Piñas, Malabon, Navotas, Pasig, Pateros, Parañaque, Marikina, Muntinlupa and
Taguig in the province of Rizal, and Valenzuela in the province of Bulacan. 40 Metropolitan
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 names 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:
"SECTION 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:
"SECTION 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;
7. To perform general administrative, executive and policy-making
functions; cdtai
8. To establish a fire control operation center, which shall direct the
fire services of the city and municipal governments in the metropolitan area;
41
 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.
P.D. No. 824 further provided:
"SECTION 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 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.
Thus, Metropolitan Manila had a "central government," i.e., the MMC which fully
possessed legislative and police powers. Whatever legislative powers the component cities
and municipalities had were all subject to review and approval by the MMC.
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:
"SECTION 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.
"SECTION 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:
"SECTION 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
42
 legislative assemblies. The jurisdiction of the metropolitan authority that will
thereby be created shall be limited to basic services requiring coordination."
The 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 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:
"SECTION 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
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 the power of : (1) formulation of policies on the delivery of basic services
requiring coordination and consolidation; and (2) promulgation of resolutions and other
issuances, approval of a code of basic services and the exercise of its rule-making power.48
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
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.
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 . . .
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.llcd
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
43
 our eyes. Sewerage, flood control, water system, 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. 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." 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
When the bill was forwarded to the Senate, several amendments were made. 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
44
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.
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. Cdpr
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.
SO ORDERED. prcd
Davide, Jr., C.J., Kapunan, Pardo and Ynares-Santiago, JJ., concur.
||| (Metropolitan Manila Development Authority v. Bel-Air Village Association, Inc., G.R. No.
135962, [March 27, 2000], 385 PHIL 586-622)
PREMISES CONSIDERED, the Decision of the Intermediate Appellate Court is hereby
AFFIRMED.
SO ORDERED.
Padilla, Sarmiento and Regalado, JJ ., concur.
Melencio-Herrera , J ., is on leave.
||| (City of Manila v. Intermediate Appellate Court, G.R. No. 71159, [November 15, 1989], 259
PHIL 30-41)
SECOND DIVISION
[G.R. Nos. 60225-26. May 8, 1992.]
NATIONAL POWER CORPORATION, petitioner, vs. HONORABLE ZAIN
B. ANGAS, District Judge of the Court of First Instance of Lanao del
Sur, HADJI DALUMA KINIDAR, EBRA ALI and/or GASNARA ALI
(intervenors), MANGORSI CASAN, CASNANGAN BATUGAN,
PUNDAMARUG ATOCAL, PASAYOD PADO, DIMAAMPAO BAUTE,
CASNANGAN BAUTE, DIMAPORO SUBANG, TAMBILAWAN OTE,
MANISUN ATOCAL, MASACAL TOMIARA (In Civil Case No. 2277) and
LACSAMAN BATUGAN, and/or GUIMBA SHIPPING & DEVELOPMENT
CORPORATION, MAGANCONG DIGAYAN, MOCTARA LAMPACO,
LAMPACO PASANDALAN, DIMAPORO SUBANG, HADJI DALUMA
KINIDAR, DIMAAMPAO BAUTE, PANGONOTAN COSNA TAGOL,
SALACOP DIMACALING, HADJI SITTIE SOHRA LINANG BATARA,
BERTUDAN PIMPING and/or CADUROG PIMPING, BUTUAN TAGOL,
DISANGCOPAN MARABONG, and HADJI SALIC SAWA (In Civil Case
No. 2248), respondents.
Lucio C. Badelles for petitioner.
Dimnatang Saro for private respondents.
SYLLABUS
1. STATUTORY CONSTRUCTION; PRINCIPLE OF EJUSDEM GENERIS; DEFINED. —
Under the doctrine, ejusdem generis where general terms follow the designation of particular
things or classes of persons or subjects, the general term will be construed to comprehend
those things or persons of the same class or of the same nature as those specifically
enumerated (Crawford, Statutory Construction, p. 191; Go Tiaco vs. Union Ins. Society of
Camilan, 40 Phil. 40; Mutuc vs. COMELEC, 36 SCRA 228).
2. ID.; ID.; PURPOSE. — The purpose of the rule on ejusdem generis is to give effect to both
the particular and general words, by treating the particular words as indicating the class and
the general words as including all that is embraced in said class, although not specifically
named by the particular words. This is justified on the ground that if the lawmaking body
intended the general terms to be used in their unrestricted sense, it would have not made an
enumeration of particular subjects but would have used only general terms (2 Sutherland,
Statutory Construction, 3rd ed., pp. 395-400).
45
3. ID.; REPEAL OR AMENDMENT BY IMPLICATION; NOT FAVORED IF TWO LAWS CAN
BE FAIRLY RECONCILED; APPLICATION IN CASE AT BAR. — As for private respondents'
argument that Central Bank Circular No. 416 impliedly repealed or modified Art. 2209 of the
Civil Code, suffice it to state that repeals or even amendments by implication are not favored if
two laws can be fairly reconciled. The Courts are slow to hold that one statute has repealed
another by implication, and they will not make such an adjudication if they can refrain from
doing so, or if they can arrive at another result by any construction which is just and reasonable.
Besides, the courts will not enlarge the meaning of one act in order to decide that it repeals
another by implication, nor will they adopt an interpretation leading to an adjudication of repeal
by implication unless it is inevitable and a clear and explicit reason therefor can be adduced.
(82 C.J.S. 479-486). In this case, Central Bank Circular No. 416 and Art. 2209 of the Civil Code
contemplate different situations and apply to different transactions. In transactions involving
loan or forbearance of money, goods or credits, as well as judgments relating to such loan or
forbearance of money, goods or credits, the Central Bank circular applies. It is only in such
transactions or judgments where the Presidential Decree allowed the Monetary Board to dip its
fingers into. On the other hand, in cases requiring the payment of indemnities as damages, in
connection with any delay in the performance of an obligation other than those involving loan
or forbearance of money, goods or credits, Art. 2209 of the Civil Code applies. For the Court,
this is the most fair, reasonable, and logical interpretation of the two laws. We do not see any
conflict between Central Bank Circular No. 416 and Art. 2209 of the Civil Code or any reason
to hold that the former has repealed the latter by implication.
4. CIVIL LAW; LEGAL INTEREST ON JUDGMENT; APPLICATION UNDER CENTRAL BANK
CIRCULAR NO. 416. — Applying the said rule on statutory construction to Central Bank
Circular No. 416, the general term "judgments" can refer only to judgments in cases involving
loans or forbearance of any money, goods or credits. As significantly laid down by this Court in
the case of Reformina vs. Tomol, 139 SCRA 260: "The judgments spoken of and referred to
are judgments in litigations involving loans or forbearance of any money, goods or credits. Any
other kind of monetary judgment which has nothing to do with, nor involving loans or
forbearance of any money, goods or credits does not fall within the coverage of the said law
for it is not within the ambit of the authority granted to the Central Bank. The Monetary Board
may not tread on forbidden grounds. It cannot rewrite other laws. That function is vested solely
with the legislative authority. It is axiomatic in legal hermeneutics that statutes should be
construed as a whole and not as a series of disconnected articles and phrases. In the absence
of a clear contrary intention, words and phrases in statutes should not be interpreted in isolation
from one another. A word or phrase in a statute is always used in association with other words
or phrases and its meaning may thus be modified or restricted by the latter."
5. ID.; ID.; ID.; DISTINGUISHED FROM ARTICLE 2209 OF THE CIVIL CODE. — The Central
Bank circular applies only to loan or forbearance of money, goods or credits. This is evident
not only from said circular but also from Presidential Decree No. 116, which amended Act No.
2655, otherwise known as the Usury Law. On the other hand, Art. 2209 of the Civil Code applies
to transactions requiring the payment of indemnities as damages, in connection with any delay
in the performance of the obligation arising therefrom other than those covering loan or
forbearance of money, goods or credits.
6. ID.; LEGAL INTEREST FOR EXPROPRIATION CASES; RULE. — In the case at bar, the
transaction involved is clearly not a loan or forbearance of money, goods or credits but
expropriation of certain parcels of land for a public purpose, the payment of which is without
stipulation regarding interest, and the interest adjudged by the trial court is in the nature of
indemnity for damages. The legal interest required to be paid on the amount of just
compensation for the properties expropriated is manifestly in the form of indemnity for damages
for the delay in the payment thereof. Therefore, since the kind of interest involved in the joint
judgment of the lower court sought to be enforced in this case is interest by way of damages,
and not by way of earnings from loans, etc. Art. 2209 of the Civil Code shall apply.
DECISION
PARAS, J p:
The basic issue in this original action for certiorari and mandamus filed by the National Power
Corporation is whether or not, in the computation of the legal rate of interest on just
compensation for expropriated lands, the law applicable is Article 2209 of the Civil Code which
prescribes a 6% legal interest rate or Central Bank Circular No. 416 which fixed the legal
interest rate at 12% per annum. Pending consideration of this case on the merits, petitioner
seeks the issuance of a writ of preliminary injunction and/or restraining order to restrain or
enjoin the respondent judge of the lower court from enforcing the herein assailed orders and
from further acting or proceeding with Civil Case Nos. 2248 and 2277.
The following are the antecedents of the case:
On April 13, 1974 and December 3, 1974, petitioner National Power Corporation, a
government-owned and controlled corporation and the agency through which the government
undertakes the on-going infrastructure and development projects throughout the country, filed
two complaints for eminent domain against private respondents with the Court of First Instance
(now Regional Trial Court) of Lanao del Sur, docketed as Civil Case No. 2248 and Civil Case
No. 2277, respectively. The complaint which sought to expropriate certain specified lots
situated at Limogao, Saguiaran, Lanao del Sur was for the purpose of the development of
hydro-electric power and production of electricity as well as the erection to such subsidiary
works and constructions as may be necessarily connected therewith. llcd
Both cases were jointly tried upon agreement of the parties. After responsive pleadings were
filed and issues joined, a series of hearings before court-designated commissioners were held.
On June 15, 1979, a consolidated decision in Civil Cases Nos. 2248 and 2277 was rendered
by the lower court, declaring and confirming that the lots mentioned and described in the
complaints have entirely been lawfully condemned and expropriated by the petitioner, and
46
ordering the latter to pay the private respondents certain sums of money as just compensation
for their lands expropriated "with legal interest thereon . . . until fully paid."
Two consecutive motions for reconsideration of the said consolidated decision were filed by
the petitioner. The same were denied by the respondent court. Petitioner did not appeal the
aforesaid consolidated decision, which became final and executory.
Thus, on May 16, 1980, one of the private respondents (Sittie Sohra Batara) filed an ex-
parte motion for the execution of the June 15, 1979 decision, praying that petitioner be directed
to pay her the unpaid balance of P14,300.00 for the lands expropriated from her, including legal
interest which she computed at 6% per annum. The said motion was granted by the lower
court. Thereafter, the lower court directed the petitioner to deposit with its Clerk of Court the
sums of money as adjudged in the joint decision dated June 15, 1979. Petitioner complied with
said order and deposited the sums of money with interest computed at 6% per annum.
On February 10, 1981, one of the private respondents (Pangonatan Cosna Tagol), through
counsel, filed with the trial court an ex-parte motion in Civil Case No. 2248 praying, for the first
time, that the legal interest on the just compensation awarded to her by the court be computed
at 12% per annum as allegedly "authorized under and by virtue of Circular No. 416 of the
Central Bank issued pursuant to Presidential Decree No. 116 and in a decision of the Supreme
Court that legal interest allowed in the judgment of the courts, in the absence of express
contract, shall be computed at 12% per annum." (Brief for Respondents, p. 3)
On February 11, 1981, the lower court granted the said motion allowing 12% interest per
annum. (Annex L, Petition). Subsequently, the other private respondents filed motions also
praying that the legal interest on the just compensation awarded to them be computed at 12%
per annum, on the basis of which the lower court issued on March 10, 1981 and August 28,
1981 orders bearing similar import.
Petitioner moved for a reconsideration of the lower court's last order dated August 28, 1981,
alleging that the main decision had already become final and executory with its compliance of
depositing the sums of money as just compensation for the lands condemned, with legal
interest at 6% per annum; that the said main decision can no longer be modified or changed
by the lower court; and that Presidential Decree No. 116 is not applicable to this case because
it is Art. 2209 of the Civil Code which applies. cdrep
On January 25, 1982, the lower court denied petitioner's motion for reconsideration, stating that
the rate of interest at the time of the promulgation of the June 15, 1981 decision is that
prescribed by Central Bank Circular No. 416 issued pursuant to Presidential Decree No. 116,
which is 12% per annum, and that it did not modify or change but merely amplified its order of
August 28, 1981 in the determination of the legal interest.
Petitioner brings the case to Us for a determination of which legal interest is applicable to the
transaction in question.
Central Bank Circular No. 416 reads:
"By virtue of the authority granted to it under Section 1 of Act No. 2655, as
amended, otherwise known as the `Usury Law,' the Monetary Board, in its
Resolution No. 1622 dated July 29, 1974, has prescribed that the rate of
interest for the loan or forbearance of any money, goods or credits and the
rate allowed in judgments, in the absence of express contract as to such rate
of interest, shall be twelve per cent (12%) per annum."
It is clear from the foregoing provision that the Central Bank circular applies only to loan or
forbearance of money, goods or credits. This has already been settled in several cases decided
by this Court. Private respondents, however, take exception to the inclusion of the term
"judgments" in the said circular, claiming that such term refers to any judgment directing the
payment of legal interest, which term includes the questioned judgment of the lower court in
the case at bar.
Private respondents' contention is bereft of merit. The term "judgments" as used in Section 1
of the Usury Law, as well as in Central Bank Circular No. 416, should be interpreted to mean
only judgments involving loan or forbearance of money, goods or credits, following the principle
of ejusdem generis. Under this doctrine, where general terms follow the designation of
particular things or classes of persons or subjects, the general term will be construed to
comprehend those things or persons of the same class or of the same nature as those
specifically enumerated (Crawford, Statutory Construction, p. 191; Go Tiaco vs. Union Ins.
Society of Camilan, 40 Phil. 40; Mutuc vs. COMELEC, 36 SCRA 228).
The purpose of the rule on ejusdem generis is to give effect to both the particular and general
words, by treating the particular words as indicating the class and the general words as
including all that is embraced in said class, although not specifically named by the particular
words. This is justified on the ground that if the lawmaking body intended the general terms to
be used in their unrestricted sense, it would have not made an enumeration of particular
subjects but would have used only general terms (2 Sutherland, Statutory Construction, 3rd
ed., pp. 395-400). LLjur
Applying the said rule on statutory construction to Central Bank Circular No. 416, the general
term "judgments" can refer only to judgments in cases involving loans or forbearance of any
money, goods or credits. As significantly laid down by this Court in the case of Reformina vs.
Tomol, 139 SCRA 260:
"The judgments spoken of and referred to are judgments in litigations
involving loans or forbearance of any money, goods or credits. Any other
kind of monetary judgment which has nothing to do with, nor involving loans
or forbearance of any money, goods or credits does not fall within the
coverage of the said law for it is not within the ambit of the authority granted
to the Central Bank. The Monetary Board may not tread on forbidden
grounds. It cannot rewrite other laws. That function is vested solely with the
legislative authority. It is axiomatic in legal hermeneutics that statutes should
47
 be construed as a whole and not as a series of disconnected articles and
phrases. In the absence of a clear contrary intention, words and phrases in
statutes should not be interpreted in isolation from one another. A word or
phrase in a statute is always used in association with other words or phrases
and its meaning may thus be modified or restricted by the latter."
Obviously, therefore, Art. 2209 of the Civil Code, and not Central Bank Circular No. 416, is the
law applicable to the case at bar. Said law reads:
"ARTICLE 2209. If the obligation consists in the payment of a sum of money,
and the debtor incurs a delay, the indemnity for damages, there being no
stipulation to the contrary, shall be the payment of the interest agreed upon,
and in the absence of stipulation, the legal interest, which is six percent per
annum."
The Central Bank circular applies only to loan or forbearance of money, goods or credits and
to judgments involving such loan or forbearance of money, goods or credits. This is evident not
only from said circular but also from Presidential Decree No. 116, which amended Act No.
2655, otherwise known as the Usury Law. On the other hand, Art. 2209 of the Civil Code applies
to transactions requiring the payment of indemnities as damages, in connection with any delay
in the performance of the obligation arising therefrom other than those covering loan or
forbearance of money, goods or credits.
In the case at bar, the transaction involved is clearly not a loan or forbearance of money, goods
or credits but expropriation of certain parcels of land for a public purpose, the payment of which
is without stipulation regarding interest, and the interest adjudged by the trial court is in the
nature of indemnity for damages. The legal interest required to be paid on the amount of just
compensation for the properties expropriated is manifestly in the form of indemnity for damages
for the delay in the payment thereof. Therefore, since the kind of interest involved in the joint
judgment of the lower court sought to be enforced in this case is interest by way of damages,
and not by way of earnings from loans, etc. Art. 2209 of the Civil Code shall apply. cdphil
As for private respondents' argument that Central Bank Circular No. 416 impliedly repealed or
modified Art. 2209 of the Civil Code, suffice it to state that repeals or even amendments by
implication are not favored if two laws can be fairly reconciled. The Courts are slow to hold that
one statute has repealed another by implication, and they will not make such an adjudication if
they can refrain from doing so, or if they can arrive at another result by any construction which
is just and reasonable. Besides, the courts will not enlarge the meaning of one act in order to
decide that it repeals another by implication, nor will they adopt an interpretation leading to an
adjudication of repeal by implication unless it is inevitable and a clear and explicit reason
therefor can be adduced. (82 C.J.S. 479-486). In this case, Central Bank Circular No. 416 and
Art. 2209 of the Civil Code contemplate different situations and apply to different transactions.
In transactions involving loan or forbearance of money, goods or credits, as well as judgments
relating to such loan or forbearance of money, goods or credits, the Central Bank circular
applies. It is only in such transactions or judgments where the Presidential Decree allowed the
Monetary Board to dip its fingers into. On the other hand, in cases requiring the payment of
indemnities as damages, in connection with any delay in the performance of an obligation other
than those involving loan or forbearance of money, goods or credits, Art. 2209 of the Civil Code
applies. For the Court, this is the most fair, reasonable, and logical interpretation of the two
laws. We do not see any conflict between Central Bank Circular No. 416 and Art. 2209 of the
Civil Code or any reason to hold that the former has repealed the latter by implication.
WHEREFORE, the petition is GRANTED. The Orders promulgated on February 11, 1981,
March 10, 1981, August 28, 1981 and January 25, 1982 (as to the recomputation of interest at
12% per annum) are ANNULLED and SET ASIDE. It is hereby declared that the computation
of legal interest at 6% per annum is the correct and valid legal interest allowed in payments of
just compensation for lands expropriated for public use to herein private respondents by the
Government through the National Power Corporation. The injunction heretofore granted is
hereby made permanent. No costs.
SO ORDERED.
Melencio-Herrera, Padilla, Regalado and Nocon, JJ ., concur.
||| (National Power Corp. v. Angas, G.R. Nos. 60225-26, [May 8, 1992], 284-A PHIL 39-48)
EN BANC
[G.R. Nos. L-49839-46. April 26, 1991.]
JOSE B.L. REYES and EDMUNDO A. REYES, petitioners, vs. PEDRO
ALMANZOR, VICENTE ABAD SANTOS, JOSE ROÑO, in their capacities
as appointed and Acting Members of the CENTRAL BOARD OF
ASSESSMENT APPEALS; TERESITA H. NOBLEJAS, ROMULO M. DEL
ROSARIO, RAUL C. FLORES, in their capacities as appointed and
Acting Members of the BOARD OF ASSESSMENT APPEALS of Manila;
and NICOLAS CATIIL, in his capacity as City Assessor of
Manila, respondents.
Barcelona, Perlas, Joven & Academia Law Offices for petitioners.
DECISION
48
PARAS, J p:
This is a petition for review on certiorari to reverse the June 10, 1977 decision of the Central
Board of Assessment Appeals 1 in CBAA Cases Nos. 72-79 entitled "J.B.L. Reyes, Edmundo
Reyes, et al. v. Board of Assessment Appeals of Manila and City Assessor of Manila" which
affirmed the March 29, 1976 decision of the Board of Tax Assessment Appeals 2 in BTAA
Cases Nos. 614, 614-A-J, 615, 615-A, B, E, "Jose Reyes, et al. v. City Assessor of Manila" and
"Edmundo Reyes and Milagros Reyes v. City Assessor of Manila" upholding the classification
and assessments made by the City Assessor of Manila.
The facts of the case are as follows:
Petitioners J.B.L. Reyes, Edmundo and Milagros Reyes are owners of parcels of land situated
in Tondo and Sta. Cruz Districts, City of Manila, which are leased and entirely occupied as
dwelling sites by tenants. Said tenants were paying monthly rentals not exceeding three
hundred pesos (P300.00) in July, 1971. On July 14, 1971, the National Legislature
enacted Republic Act No. 6359 prohibiting for one year from its effectivity, an increase in
monthly rentals of dwelling units or of lands on which another's dwelling is located, where such
rentals do not exceed three hundred pesos (P300.00) a month but allowing an increase in rent
by not more than 10% thereafter. The said Act also suspended paragraph (1) of Article 1673
of the Civil Code for two years from its effectivity thereby disallowing the ejectment of lessees
upon the expiration of the usual legal period of lease. On October 12, 1972, Presidential Decree
No. 20 amended R.A. No. 6359 by making absolute the prohibition to increase monthly rentals
below P300.00 and by indefinitely suspending the aforementioned provision of the Civil Code,
excepting leases with a definite period. Consequently, the Reyeses, petitioners herein, were
precluded from raising the rentals and from ejecting the tenants. In 1973, respondent City
Assessor of Manila re-classified and reassessed the value of the subject properties based on
the schedule of market values duly reviewed by the Secretary of Finance. The revision, as
expected, entailed an increase in the corresponding tax rates prompting petitioners to file a
Memorandum of Disagreement with the Board of Tax Assessment Appeals. They averred that
the reassessments made were "excessive, unwarranted, inequitable, confiscatory and
unconstitutional" considering that the taxes imposed upon them greatly exceeded the annual
income derived from their properties. They argued that the income approach should have been
used in determining the land values instead of the comparable sales approach which the City
Assessor adopted (Rollo, pp. 9-10-A). The Board of Tax Assessment Appeals, however,
considered the assessments valid, holding thus: cdll
"WHEREFORE, and considering that the appellants have failed to submit
concrete evidence which could overcome the presumptive regularity of the
classification and assessments appear to be in accordance with the base
schedule of market values and of the base schedule of building unit values,
as approved by the Secretary of Finance, the cases should be, as they are
hereby, upheld.
"SO ORDERED." (Decision of the Board of Tax Assessment Appeals, Rollo,
p. 22).
The Reyeses appealed to the Central Board of Assessment Appeals. They submitted, among
others, the summary of the yearly rentals to show the income derived from the properties.
Respondent City Assessor, on the other hand, submitted three (3) deeds of sale showing the
different market values of the real property situated in the same vicinity where the subject
properties of petitioners are located. To better appreciate the locational and physical features
of the land, the Board of Hearing Commissioners conducted an ocular inspection with the
presence of two representatives of the City Assessor prior to the hearing of the case. Neither
the owners nor their authorized representatives were present during the said ocular inspection
despite proper notices served them. It was found that certain parcels of land were below street
level and were affected by the tides (Rollo, pp. 24-25).
On June 10, 1977, the Central Board of Assessment Appeals rendered its decision, the
dispositive portion of which reads:
"WHEREFORE, the appealed decision insofar as the valuation and
assessment of the lots covered by Tax Declaration Nos. (5835) PD-5847,
(5839), (5831) PD-5844 and PD-3824 is affirmed.
"For the lots covered by Tax Declaration Nos. (1430) PD-1432, PD-1509,
146 and (1) PD-266, the appealed Decision is modified by allowing a 20%
reduction in their respective market values and applying therein the
assessment level of 30% to arrive at the corresponding assessed value.
"SO ORDERED." (Decision of the Central Board of Assessment Appeals,
Rollo, p. 27)
Petitioner's subsequent motion for reconsideration was denied, hence, this petition.
The Reyeses assigned the following error:
THE HONORABLE BOARD ERRED IN ADOPTING THE "COMPARABLE
SALES APPROACH" METHOD IN FIXING THE ASSESSED VALUE OF
APPELLANTS' PROPERTIES.
The petition is impressed with merit.
The crux of the controversy is in the method used in tax assessment of the properties in
question. Petitioners maintain that the "Income Approach" method would have been more
realistic for in disregarding the effect of the restrictions imposed by P.D. 20 on the market value
of the properties affected, respondent Assessor of the City of Manila unlawfully and unjustifiably
set increased new assessed values at levels so high and successive that the resulting annual
real estate taxes would admittedly exceed the sum total of the yearly rentals paid or payable
by the dweller tenants under P.D. 20. Hence, petitioners protested against the levels of the
values assigned to their properties as revised and increased on the ground that they were
arbitrarily excessive, unwarranted, inequitable, confiscatory and unconstitutional (Rollo, p. 10-
A).
49
On the other hand, while respondent Board of Tax Assessment Appeals admits in its decision
that the income approach is used in determining land values in some vicinities, it maintains that
when income is affected by some sort of price control, the same is rejected in the consideration
and study of land values as in the case of properties affected by the Rent Control Law for they
do not project the true market value in the open market (Rollo, p. 21). Thus, respondents opted
instead for the "Comparable Sales Approach" on the ground that the value estimate of the
properties predicated upon prices paid in actual, market transactions would be a uniform and
a more credible standards to use especially in case of mass appraisal of properties (Ibid.).
otherwise stated, public respondents would have this Court completely ignore the effects of the
restrictions of P.D. No. 20 on the market value of properties within its coverage. In any event,
it is unquestionable that both the "Comparable Sales Approach" and the "Income Approach"
are generally acceptable methods of appraisal for taxation purposes (The Law on Transfer and
Business Taxation by Hector S. De Leon, 1988 Edition). However, it is conceded that the
propriety of one as against the other would of course depend on several factors. Hence, as
early as 1923 in the case of Army & Navy Club, Manila v. Wenceslao Trinidad, G.R. No. 19297
(44 Phil. 383), it has been stressed that the assessors, in fixing the value of the property, have
to consider all the circumstances and elements of value and must exercise a prudent discretion
in reaching conclusions. LibLex
Under Art. VIII, Sec. 17 (1) of the 1973 Constitution, then enforced, the rule of taxation must
not only be uniform, but must also be equitable and progressive.
Uniformity has been defined as that principle by which all taxable articles or kinds of property
of the same class shall be taxed at the same rate (Churchill v. Concepcion, 34 Phil. 969 [1916]).
Notably in the 1935 Constitution, there was no mention of the equitable or progressive aspects
of taxation required in the 1973 Charter (Fernando "The Constitution of the Philippines", p. 221,
Second Edition). Thus, the need to examine closely and determine the specific mandate of the
Constitution.
Taxation is said to be equitable when its burden falls on those better able to pay. Taxation is
progressive when its rate goes up depending on the resources of the person affected (Ibid.).
The power to tax "is an attribute of sovereignty". In fact, it is the strongest of all the powers of
government. But for all its plenitude, the power to tax is not unconfined as there are restrictions.
Adversely effecting as it does property rights, both the due process and equal protection
clauses of the Constitution may properly be invoked to invalidate in appropriate cases a
revenue measure. If it were otherwise, there would be truth to the 1903 dictum of Chief Justice
Marshall that "the power to tax involves the power to destroy." The web or unreality spun from
Marshall's famous dictum was brushed away by one stroke of Mr. Justice Holmes' pen, thus:
"The power to tax is not the power to destroy while this Court sits." "So it is in the Philippines."
(Sison, Jr. v. Ancheta, 130 SCRA 655 [1984]; Obillos, Jr. v. Commissioner of Internal Revenue,
139 SCRA 439 [1985]).
In the same vein, the due process clause may be invoked where a taxing statute is so arbitrary
that it finds no support in the Constitution. An obvious example is where it can be shown to
amount to confiscation of property. That would be a clear abuse of power (Sison v.
Ancheta, supra). cdll
The taxing power has the authority to make a reasonable and natural classification for purposes
of taxation but the government's act must not be prompted by a spirit of hostility, or at the very
least discrimination that finds no support in reason. It suffices then that the laws operate equally
and uniformly on all persons under similar circumstances or that all persons must be treated in
the same manner, the conditions not being different both in the privileges conferred and the
liabilities imposed (Ibid., p. 662).
Finally under the Real Property Tax Code (P.D. 464 as amended), it is declared that the first
Fundamental Principle to guide the appraisal and assessment of real property for taxation
purposes is that the property must be "appraised at its current and fair market value."
By no stretch of the imagination can the market value of properties covered by P.D. No. 20 be
equated with the market value of properties not so covered. The former has naturally a much
lesser market value in view of the rental restrictions.
Ironically, in the case at bar, not even the factors determinant of the assessed value of subject
properties under the "comparable sales approach" were presented by the public respondents,
namely: (1) that the sale must represent a bonafide arm's length transaction between a willing
seller and a willing buyer and (2) the property must be comparable property (Rollo, p. 27).
Nothing can justify or support their view as it is of judicial notice that for properties covered
by P.D. 20 especially during the time in question, there were hardly any willing buyers. As a
general rule, there were no takers so that there can be no reasonable basis for the conclusion
that these properties were comparable with other residential properties not burdened by P.D.
20. Neither can the given circumstances be nonchalantly dismissed by public respondents as
imposed under distressed conditions clearly implying that the same were merely temporary in
character. At this point in time, the falsity of such premises cannot be more convincingly
demonstrated by the fact that the law has existed for around twenty (20) years with no end to
it in sight.
Verily, taxes are the lifeblood of the government and so should be collected without
unnecessary hindrance. However, such collection should be made in accordance with law as
any arbitrariness will negate the very reason for government itself. It is therefore necessary to
reconcile the apparently conflicting interests of the authorities and the taxpayers so that the
real purpose of taxations, which is the promotion of the common good, may be achieved
(Commissioner of Internal Revenue v. Algue, Inc., et al., 158 SCRA 9 [1988]). Consequently,
it stands to reason that petitioners who are burdened by the government by its Rental Freezing
Laws (then R.A. No. 6359 andP.D. 20) under the principle of social justice should not now be
penalized by the same government by the imposition of excessive taxes petitioners can ill afford
and eventually result in the forfeiture of their properties.
By the public respondents' own computation the assessment by income approach would
amount to only P10.00 per sq. meter at the time in question.
50
PREMISES CONSIDERED, (a) the petition is GRANTED; (b) the assailed decisions of public
respondents are REVERSED and SET ASIDE; and (c) the respondent Board of Assessment
Appeals of Manila and the City Assessor of Manila are ordered to make a new assessment by
the income approach method to guarantee a fairer and more realistic basis of computation
(Rollo, p. 71).
SO ORDERED.
Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Feliciano, Gancayco, Padilla,
Bidin, Sarmiento, Griño-Aquino, Medialdea, Regalado and Davide, Jr., JJ., concur.
||| (Reyes v. Almanzor, G.R. Nos. L-49839-46, [April 26, 1991], 273 PHIL 558-566)

51