2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
Basic Services and Facilities to Local Legislative Power
Basic Service and Facilities
56-Albon v. Fernando
[G.R. No. 148357, June 30, 2006]
Petitioner: ANIANO A. ALBON
Respondents: BAYANI F. FERNANDO, City Mayor of Marikina, ENGR ALFONSO ESPIRITO,
City Engineer of Marikina, ENGR. ANAKI MADERAL, Assistant City Engineer of Marikina,
and NATIVIDAD CABALQUINTO, City Treasurer of Marikina
FACTS:
In May 1999, the City of Marikina undertook a public works project to widen, clear
and repair the existing sidewalks of Marikina Greenheights Subdivision. It was
undertaken by the city government pursuant to Ordinance No. 59. Subsequently,
petitioner Albon filed a taxpayer’s suit for certiorari, prohibition, and injunction with
damages against respondents City Engineer Alfonso Espirito, Assistant City Engineer
Anaki Maderal and City Treasurer Natividad Cabalquinto. According to the
petitioner, it was unconstitutional and unlawful for respondents to use government
equipment and property, and to disburse public funds, of the City of Marikina for the
grading, widening, clearing, repair and maintenance of the existing sidewalks of
Marikina Greenheights Subdivision. He alleged that the sidewalks were private
property because Marikina Greenheights Subdivision was owned by V.V. Soliven, Inc.
Hence, the city government could not use public resources on them. In undertaking
the project, therefore, respondents allegedly violated the constitutional proscription
against the use of public funds for private purposesas well as Sections 335 and 336 of
RA 7160 and the Anti-Graft and Corrupt Practices Act. The trial court ruled in favor of
the respondents. Ordinance No. 59is a valid enactment. The court recognized the
inherent police power of the municipality and with this it is allowed to carry out the
contested works. The Court of Appeals sustained the decision of the trial court stating
that sidewalks of Marikina Greenheights Subdivision were public in nature and
ownership thereof belonged to the City of Marikina or the Republic of the Philippines
following the 1991White Plains Association decision. Thus, the improvement and
widening of the sidewalks pursuant to Ordinance No. 59 of 1993 was well within the
LGU’s powers.
ISSUE:
WON CA erred in upholding the validity of Ordinance No. 59
HELD:
Like all LGUs, the City of Marikina is empowered to enact ordinances for the purposes
set forth in the Local Government Code (RA 7160). It is expressly vested with police
powers delegated to LGUs under the general welfare clause of RA 7160. With this
power, LGUs may prescribe reasonable regulations to protect the lives, health, and
property of their constituents and maintain peace and order within their respective
territorial jurisdictions.
Cities and municipalities also have the power to exercise such powers and discharge
such functions and responsibilities as may be necessary, appropriate or incidental to
efficient and effective provisions of the basic services and facilities, including
infrastructure facilities intended primarily to service the needs of their residents and
which are financed by their own funds. These infrastructure facilities include municipal
or city roads and bridges and similar facilities.
There is no question about the public nature and use of the sidewalks in the Marikina
Greenheights Subdivision. One of the “whereas clauses” of PD 1216 (which amended
PD 957) declares that open spaces, roads, alleys and sidewalks in a residential
subdivision are for public use and beyond the commerce of man. In conjunction
herewith, PD 957, as amended by PD 1216, mandates subdivision owners to set aside
open spaces which shall be devoted exclusively for the use of the general public.
Thus, the trial and appellate courts were correct in upholding the validity of
Ordinance No. 59, s. 1993. It was enacted in the exercise of the City of Marikina’s
police powers to regulate the use of sidewalks. However, both the trial and appellate
courts erred when they invoked our 1991 decision in White Plains Association and
automatically applied it in this case.
The word “street,” in its correct and ordinary usage, includes not only the roadway
used for carriages and vehicular traffic generally but also the portion used for
pedestrian travel. The part of the street set aside for the use of pedestrians is known
as a sidewalk. Ownership of the sidewalks in a private subdivision belongs to the
subdivision owner/developer until it is either transferred to the government by way of
donation or acquired by the government through expropriation.
Section 335 of RA 7160 is clear and specific that no public money or property shall be
appropriated or applied for private purposes. This is in consonance with the
fundamental principle in local fiscal administration that local government funds and
monies shall be spent solely for public purposes.
In Pascual v. Secretary of Public Works, the Court laid down the test of validity of a
public expenditure: it is the essential character of the direct object of the expenditure
which must determine its validity and not the magnitude of the interests to be
affected nor the degree to which the general advantage of the community, and
thus the public welfare, may be ultimately benefited by their promotion. Incidental
advantage to the public or to the State resulting from the promotion of private
interests and the prosperity of private enterprises or business does not justify their aid
by the use of public money.
In Pascual, the validity of RA 920 (“An Act Appropriating Funds for Public Works”)
which appropriated P85,000 for the construction, repair, extension and improvement
of feeder roads within a privately-owned subdivision was questioned. The Court held
that where the land on which the projected feeder roads were to be constructed
belonged to a private person, an appropriation made by Congress for that purpose
was null and void.
Moreover, the implementing rules of PD 957, as amended by PD 1216, provide that it
is the registered owner or developer of a subdivision who has the responsibility for the
maintenance, repair and improvement of road lots and open spaces of the
subdivision prior to their donation to the concerned LGU. The owner or developer shall
be deemed relieved of the responsibility of maintaining the road lots and open space
only upon securing a certificate of completion and executing a deed of donation of
these road lots and open spaces to the LGU.
Therefore, the use of LGU funds for the widening and improvement of privately-owned
sidewalks is unlawful as it directly contravenes Section 335 of RA 7160. This conclusion
finds further support from the language of Section 17 of RA 7160 which mandates
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
LGUs to efficiently and effectively provide basic services and facilities. The law speaks
of infrastructure facilities intended primarily to service the needs of the residents of the
LGU and “which are funded out of municipal funds.” It particularly refers to “municipal
roads and bridges” and “similar facilities.”
Applying the rules of ejusdem generis, the phrase “similar facilities” refers to or
includes infrastructure facilities like sidewalks owned by the LGU. Thus, RA 7160
contemplates that only the construction, improvement, repair and maintenance of
infrastructure facilities owned by the LGU may be bankrolled with local government
funds.
Clearly, the question of ownership of the open spaces (including the sidewalks) in
Marikina Greenheights Subdivision is material to the determination of the validity of
the challenged appropriation and disbursement made by the City of Marikina.
Similarly significant is the character of the direct object of the expenditure, that is, the
sidewalks.
Whether V.V. Soliven, Inc. has retained ownership of the open spaces and sidewalks
or has already donated them to the City of Marikina, and whether the public has full
and unimpeded access to the roads and sidewalks of Marikina Greenheights
Subdivision, are factual matters. There is a need for the prior resolution of these issues
before the validity of the challenged appropriation and expenditure can be
determined.
57-Pimentel Jr. v. Executive Secretary
[G.R. No. 195770, July 17, 2012]
Petitioners: AQUILINO Q. PIMENTEL, JR., SERGIO TADEO and NELSON ALCANTARA
Respondents: EXECUTIVE SECRETARY PAQUITO N. OCHOA and SECRETARY CORAZON
JULIANO-SOLIMAN OF DSWD
FACTS:
In 2007, the DSWD embarked on a poverty reduction strategy with the poorest of the
poor as target beneficiaries. Dubbed "Ahon Pamilyang Pilipino," it was pre-pilot tested
in the municipalities of Sibagat and Esperanza in Agusan del Sur; the municipalities of
Lopez Jaena and Bonifacio in Misamis Occidental, the Caraga Region; and the cities
of Pasay and Caloocan upon the release of the amount of P50M under a Special
Allotment Release Order (SARO) issued by the Department of Budget and
Management. On July 16, 2008, the DSWD issued AO 16, series of 2008, setting the
implementing guidelines for the project renamed "Pantawid Pamilyang Pilipino
Program" (4Ps), also referred to as CCTP, which provides cash grants to extreme poor
households to allow the members of the families to meet certain human
development goals.” Eligible households selected from priority target areas are
granted health and education benefits for a total annual subsidy of P15k.AO 16 also
institutionalized a coordinated inter-agency network among DepEd, DOH, DILG, the
National Anti-Poverty Commission (NAPC) and LGUs. DSWD as the lead implementing
agency “oversees and coordinates the implementation, monitoring, and evaluation
of the program” while the LGU is responsible for the availability of health and
education supply, and providing technical assistance for the Program
implementation, among others. DSWD executed MOAs with each participating LGUs
to outline the obligation of both parties during the 5-year implementation period.
2
Congress then provided funding for the project as follows: P298K in 2008, P5 Billion
in 2009, P10 Billion in 2010,and P21 Billion in 2011.
ISSUE:
Whether or not the CCTOP budget allocation under the DSWD violates Article II, Sec.
25 and Article X, Sec. 3 of the 1987 Constitution in relation to Sec. 17 of the LGC of
1991 by providing for the recentralization of the National Government in the delivery
of basic services already devolved to the LGUs
HELD:
No.
The LGC does not imply a complete relinquishment of central government powers on
the matter of providing basic facilities and services. The national government is not
precluded from taking a direct hand in the formulation and implementation of
national development programs especially where it is implemented locally in
coordination with the LGUs concerned. The petitioners argued that the manner by
which CCTP is implemented is questionable. It is the LGU’s responsibility to deliver
social welfare, agriculture, and health care services. Giving DSWD full control over the
identification of beneficiaries and the manner by which services are to be delivered
or conditionalities are to be complied with would have enhanced its delivery of basic
services. This results in the "recentralization" of basic government functions”, which is
contrary to the precepts of local autonomy and the avowed policy of
decentralization.
The court ruled that Petitioners have failed to discharge the burden of proving
the invalidity of the provisions under the GAA of 2011. The Constitution declares it a
policy of the State to ensure the autonomy of local governments ( Sec 3, Sec 14 Art
10 1987 Constitution). To fully secure to the LGUs the genuine and meaningful
autonomy that would develop them into self-reliant communities, Section 17 LGC
vested upon the LGUs the duties and functions pertaining to the delivery of basic
services and facilities. However, par (c) of Sec 17 provides a categorical exception
of cases involving nationally-funded projects, facilities, programs and services.
Autonomy is either decentralization of administration or decentralization of power.
It is thus clear that the LGC does not imply a complete relinquishment of central
government powers on the matter of providing basic facilities and services. The
national government is not precluded from taking a direct hand in the formulation
and implementation of national development programs especially where it
is implemented locally in coordination with the LGUs concerned. In Ganzon v. CA -
while it is through a system of decentralization that the State shall promote a more
responsive and accountable local government structure, the concept of local
autonomy does not imply the conversion of local government units into "mini - states."
With local autonomy, the Constitution did nothing more than "to break up the
monopoly of the national government over the affairs of the local government" and,
thus, did not intend to sever "the relation of partnership and interdependence
between the central administration and local government units."
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
58-Civil Service Commission v. Dr. Agnes Quida Yu
[G.R. No. 189041, July 31, 2012]
Petitioner: CIVIL SERVICE COMMISSION
Respondent: DR. AGNES OUIDA P. YU
Doctrine: Personnel of national agencies or offices shall be absorbed by the LGUs to
which they belong or in whose areas they are assigned to the extent
that it is administratively viable as determined by the oversight committee. Provided,
that the rights accorded to such personnel pursuant to civil service law, rules and
regulations shall not be impaired.
FACTS:
A devolution program was implemented by the National Government pursuant to
R.A. No. 7160 devolving to the local government units the responsibility for the
provision of basic services and facilities. Prior to the devolution, the position of
Provincial Health Officer II of the DOH Regional Office No. IX in Zamboanga City was
held by by Dr. Fortunato Castillo as well as being the head of the Basilan Health
Hospital and Public Health Services. Dr. Agnes Ouida Yu, on the other hand is PHO I.
After the devolution, the Governor of Basilan, Governor Gerry Salapuddin,
refused to accept Dr. Castillo as the incumbent PHO II so she was retained by DOH
until her retirement in 1996. In 1994, Dr. Yu was appointed by the Governor as PHO II.
In 1998, by virtue of R.A. No. 8543, the Basilan Provincial Hospital was
converted to a tertiary hospital and the hospital positions previously devolved to the
LGU of Basilan were re-nationalizedand reverted to the DOH. The position of PHO II
was re-classified to Chief of Hospital II.
While Dr. Yu is among the reverted personnel, she was made to retain her
original item of PHO II and the Secretary of DOH appointed Dr. Domingo Dayrit to the
position of CHO II. Dr. Yu filed a letter of protest before the CSC.
The CSC issued a resolution granting the protest, revoking the appointment of Dr.
Dayrit and directing the DOH secretary to appoint Dr. Yu. On MR, the CSC reversed
its decision, contending that the PHO II position of Dr. Yu was newly-created and
therefore, she did not have a vested right to the CHO II position. The MR being
dismissed, she filed a petition of review to the CA to which the CA reversed and set
aside the resolution of the CSC.
The CSC now files this petition.
ISSUE:
WON acceptance of personnel devolved from the agencies is mandatory
HELD:
Yes. Devolution is an act by which the national government confers power
and authority bupon the various local government units to perform specific functions
and responsibilities. Section 17(i) of the LGC prescribes the manner of devolution.
Personnel of national agencies or offices shall be absorbed by the LGUs to
which they belong or in whose areas they are assigned to the extent
that it is administratively viable as determined by the oversight committee. Provided,
that the rights accorded to such personnel pursuant to civil service law, rules and
regulations shall not be impaired. Provided, further, that the regional directors who
are career executive service officers and other officers of similar rank in the said
regional offices who cannot be absorbed by the LGU shall be retained by the
National Government, without any diminution of rank, salary, or tenure.
3
59-League of Provinces of the Philippines v. DENR
[G.R. No. 175368, April 11, 2013]
Doctrine: The Local Government Code did not fully devolve the enforcement of the
small-scale mining law to the provincial government, as its enforcement is subject to
the supervision, control and review of the DENR, which is in charge, subject to law and
higher authority, of carrying out the State's constitutional mandate to control and
supervise the exploration, development, utilization of the country's natural
resources. The DENR Secretary has the power to review and, therefore, decide, in this
case, the issue on the validity of the issuance of the Small-Scale Mining Permits by the
Provincial Governor as recommended by the Provincial Mining Regulatory Board.
Petitioner: League of Provinces of the Philippines (LPP)
Respondents: Department of Environment and Natural Resources and DENR Sec.
Angelo T. Reyes
FACTS:
• 1996 - Golden Falcon Mineral Exploration Corporation (Golden Falcon) filed with
the DENR Mines and Geosciences Bureau Regional Office No. III (MGB R-III) an
Application for Financial and Technical Assistance Agreement (FTAA) covering
an area of 61,136 hectares situated in the Municipalities of San Miguel, San
Ildefonso, Norzagaray and San Jose del Monte, Bulacan. Denied for failure to
secure area clearances from the Forest Management Sector and Lands
Management Sector of the DENR. Filed an appeal and subseequent MR.
• 2004 - While Golden Falcon's appeal was pending, Eduardo D. Mercado,
Benedicto S. Cruz, Gerardo R. Cruz and Liberato Sembrano filed with the
Provincial Environment and Natural Resources Office (PENRO) of Bulacan their
respective Applications for Quarry Permit (AQP), which covered the same area
subject of Golden Falcon's Application for Financial and Technical Assistance
Agreement.
• MGB-Central Office issued an Order denying Golden Falcon's appeal and
affirming the MGB R-III's Order.
• Thereafter, Atlantic Mines and Trading Corporation (AMTC) filed with the PENRO
of Bulacan an Application for Exploration Permit (AEP) covering 5,281 hectares
of the area covered by Golden Falcon's Application.
• DENR-MGB Director Horacio C. Ramos, in response to MGB R-III Director Arnulfo
V Cabantog's memorandum query dated September 8, 2004, categorically
stated that the MGB-Central Office's Order became final on August 11, 2004,
fifteen (15) days after Golden Falcon received the said Order, per the
Certification dated October 8, 2004 issued by the Postmaster II of the Philippine
Postal Corporation of Cainta, Rizal.
• AMTC notified the PENRO of Bulacan and the MGB R-III Director, respectively,
that the subject AQP fell within its (AMTC's) existing valid and prior Application
for Exploration Permit, and the former area of Golden Falcon was open to mining
location only on August 11, 2004 per the Memorandum dated October 19, 2004
of the MGB Director, Central Office.
• Provincial Legal Officer Eugenio Resurreccion issued a legal opinion stating that
the Order dated July 16, 2004 of the MGB-Central Office was a mere
reaffirmation of the Order dated April 29, 1998 of the MGB R-III; hence, the Order
dated April 29, 1998 should be the reckoning period of the denial of the
application of Golden Falcon.
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
• Governor Josefina Dela Cruz, upon endorsement by MGB R-III Director regarding
aforesaid AQP that had apparently been converted to Applications for Small-
Scale Mining Permit, issued the corresponding Small-Scale Mining Permits in
favor of Eduardo D. Mercado, Benedicto S. Cruz, Gerardo R. Cruz and Lucila S.
Valdez
• Respondent DENR Secretary rendered a Decision in favor of AMTC. The DENR
Secretary agreed with MGB Director Horacio C. Ramos that the area was open
to mining location only on August 11, 2004, fifteen (15) days after the receipt by
Golden Falcon on July 27, 2004 of a copy of the MGB-Central Office's Order
dated July 16, 2004, which Order denied Golden Falcon's appeal. According
ISSUE: WON the act of DENR in cancelling the Small-scale Mining Permits amounts
usurpation of the devolved powers of all provinces and therefore void
HELD:
• No. The Court finds that the decision of the DENR Secretary was rendered
in accordance with the power of review granted to the DENR Secretary in
the resolution of disputes, which is provided for in Section 24 of R.A. No.
7076 and Section 22 of its Implementing Rules and Regulations.
• Hence, the decision of the DENR Secretary, declaring that the Application
for Exploration Permit of AMTC was valid and may be given due course,
and canceling the Small-Scale Mining Permits issued by the Provincial
Governor, emanated from the power of review granted to the DENR
Secretary under R.A. No. 7076 and its Implementing Rules and Regulations.
The DENR Secretary's power to review and, therefore, decide, in this case,
the issue on the validity of the issuance of the Small-Scale Mining Permits by
the Provincial Governor as recommended by the PMRB, is a quasi judicial
function.
• Section 17, RA 7160 clearly provides:
o (3) For a Province:
xxx xxx xxx
(iii)Pursuant to national policies and subject to supervision, control and review of the
DENR, enforcement of forestry laws limited to community-based forestry projects,
pollution control law, small-scale mining law, and other laws on the protection of the
environment; and mini-hydro electric projects for local purposes;
• R.A. No. 7076 (People's Small-Scale Mining Act of 1991) CHIEDS
o Sec. 24. Provincial/City Mining Regulatory Board. — There is
hereby created under the direct supervision and control of the
Secretary a provincial/city mining regulatory board, herein
called the Board, which shall be the implementing agency of the
Department, and shall exercise the following powers and
functions, subject to review by the Secretary:
xxx xxx xxxx
(c) Award contracts to small-scale miners;
• Administrative Code of 1987 provides that the DENR is, subject to law and
higher authority, in charge of carrying out the State's constitutional
mandate, under Section 2, Article XII of the Constitution, to control and
supervise the exploration, development, utilization and conservation of the
country's natural resources.
4
• Hence, the enforcement of small-scale mining law in the provinces is made
subject to the supervision, control and review of the DENR under the Local
Government Code of 1991, while the People's Small-Scale Mining Act of
1991 provides that the People's Small-Scale Mining Program is to be
implemented by the DENR Secretary in coordination with other concerned
local government agencies.
• It is noted that although AMTC filed a protest with the PMRB regarding its
superior and prior Application for Exploration Permit over the Applications
for Quarry Permit, which were converted to Small-Scale Mining Permits, the
PMRB did not resolve the same, but issued Resolution Nos. 05-08 to 05-11 on
August 8, 2005, resolving to submit to the Provincial Governor of Bulacan
the Applications for Small-Scale Mining Permits of Eduardo Mercado,
Benedicto Cruz, Lucila Valdez and Gerardo Cruz for the granting of the said
permits.
60-Republic, represented by the Department of Agriculture v. Daclan
[G.R. No. 197111, March 23, 2015]
Doctrine: Devolution cannot have any effect on the donations made by the Daclans
to the Republic. While the breeding station may have been transferred to the
Province of La Union by the Department of Agriculture as a consequence of
devolution, it remained as such, and continued to function as a breeding station; and
the purpose for which the donations were made remained and was carried out.
Besides, the deeds of donation did not specifically prohibit the subsequent transfer of
the donated lands by the donee Republic. Thus, as a general rule, rights and
obligations derived from contract are transmissible.
Petitioner: Republic of the Philippines as represented by Department of Agriculture
Respondents: Federico Daclan, Josefina Collado Teodoro Daclan and
Minviluz Daclan
FACTS:
• Sometime in May 1972, the Agoo Breeding Station was established by the
Department of Agriculture, through the Bureau of Animal Industry (BAI),
Region I, for the purpose of breeding cattle that would be distributed to the
intended beneficiaries pursuant to the livelihood program of the national
government. In support of the said project, the Daclans executed 4
documents denominated as Deed of Donation in favor of the Republic.
These parcels of land are located at Barrio Nazareno, Agoo, La Union. The
donation was subject to the conditions that these parcels of land 1) shall be
used solely for the establishment of a breeding station, and 2) shall not be
used for any other purpose, except with the previous consent of the donors
or their heirs. All in all, the donated parcels of land amounted to around 13
hectares.
• In 1991, the powers and functions of certain government agencies,
including those of the DA, were devolved to the local government units
pursuant to RA 7160.
• Sometime after the donations were made, the La Union Medical Center
(LUMC) was constructed on a 1.5-hectare portion of the 13-hectare
donated Property.
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
• In a September 4, 2003, the Daclans and other donors demanded the return
of their donated lands on the ground that the breeding station has ceased
operations and that the land has been abandoned.
• Pursuant to the automatic reversion clause in the deeds of donation, they
are entitled to a return of their donated parcels of land after the Bureau of
Animal Industry (BAI) ceased operating the breeding station.
• The Province alleged that the Daclans have no cause of action since the
breeding station was still existing — although this time it is being operated
by the Province. They presented the affidavits/testimonies of several
provincial officials to attest to their claim.
• CA - The donation insofar as the 1.5 hectare portion of the donated parcels
of land that is now being used by the La Union Medical Center for its
medical facility, hence no longer being used for the purpose for which the
donation was constituted, is hereby declared revoked. Accordingly,
possession and ownership of that particular portion of the donated parcels
of land shall revert to the donor/s or their heir/s.
ISSUE: WON the donated parcels of land should be returned
HELD:
• No. The preponderance of evidence points to the fact that the breeding station
remained operational even after its transfer from the Republic to the Province.
The activities of the BAI did not cease even after it was dissolved after the
government adopted the policy of devolution under the Local Government
Code of 1991; these activities were merely transferred to the Province.
• Thus, the witnesses for the Daclans and the Republic uniformly declared that the
breeding station remained operational even after the Local Government Code
of 1991 was put into effect. The testimonies of Regional Director Reinerio
Belarmino, Jr., Dr. Nida Gapuz, La Union Provincial Veterinarian, and Atty. Mauro
Cabading, La Union Provincial Assessor clearly attest to the claim of the
Republic/DA.
• The testimonies of the above public officers are credible. "In the absence of any
controverting evidence, the testimonies of public officers are given full faith and
credence, as they are presumed to have acted in the regular performance of
their official duties."
• Devolution refers to the act by which the national government confers power
and authority upon the various local government units to perform specific
functions and responsibilities.” It includes "the transfer to local government units
of the records, equipment, and other assets and personnel of national agencies
and offices corresponding to the devolved powers, functions and responsibilities.
• While the breeding station may have been transferred to the Province of La
Union by the Department of Agriculture as a consequence of devolution, it
remained as such, and continued to function as a breeding station; and the
purpose for which the donations were made remained and was carried out
• Lastly, the CA cannot validly order the return to the Daclans of the donated 1.5-
hectare portion where the LUMC is situated, because such portion was not
donated by them. They admitted that the 1.5-hectare portion where the LUMC
is constructed does not form part of the lands they donated to the government,
but belonged to other donors who are not parties to the instant case.
5
Generate and Apply Resources
61-City of Manila v. Colet
[G.R. No. 120051, December 10, 2014]
Doctrine: The Supreme Court struck down the City’s revenue ordinance imposing tax
on transportation contractors, etc. (1) Section 133 (j) of the LGC prevails over Section
143 (h) of the same Code. The omnibus grant of power to municipalities and cities
under Section 143 (h) of the LGC cannot overcome the specific
exception/exemption in Section 133 (j) of the same Code. (2) The construction
adopted by the Court gives effect to both Sections 133 (j) and 143 (h) of the LGC; (3)
Besides, in case of any doubt, any tax ordinance or revenue measure shall be
construed strictly against the LGU enacting it and liberally in favor of the taxpayer.
Petitioners: City of Manila, Hon. Alfredo S. Lim, as Mayor of the City of Manila, and
Anthony Y. Acevedo, City Treasurer
Respondents: Hon. Angel Valera Colet, as Presiding Judge, Regional Trial Court
of Manila (Br. 43), and Malaysian Airline System
(Guys, consolidation ‘to ng 10 cases, pero mag-focus na lang ako dun sa case ng
Malaysian Airline. Di ko na din masyadong sinama yung procedural aspect.)
FACTS:
• The Manila Revenue Code was enacted on June 22, 1993 by the City
Council of Manila and approved on June 29, 1993 by then Manila Mayor
Alfredo S. Lim. Section 21 (B) of said Code originally provided:
Section 21. Tax on Businesses Subject to the Excise, Value-Added or Percentage Taxes
Under the NIRC. — On any of the following businesses and articles of commerce
subject to the excise, value-added or percentage taxes under the National Internal
Revenue Code, hereinafter referred to as NIRC, as amended, a tax of three percent
(3%) per annum on the gross sales or receipts of the preceding calendar year is
hereby imposed:
xxx xxx xxx
B) On the gross receipts of keepers of garages, cars for rent or hire driven by the
lessee, transportation contractors, persons who transport passenger or freight for hire,
and common carriers by land, air or water, except owners of bancas and owners of
animal-drawn two-wheel vehicle.
• Shortly thereafter, Ordinance No. 7807 was enacted by the City Council
of Manila on September 27, 1993 and approved by Mayor Lim on
September 29, 1993, already amending several provisions of
the Manila Revenue Code.
Section 21. Tax on Business Subject to the Excise, Value-Added or Percentage Taxes
Under the NIRC. — On any of the following businesses and articles of commerce
subject to the excise, value-added or percentage taxes under the National Internal
Revenue Code hereinafter referred to as NIRC, as amended, a tax of FIFTY PERCENT
(50%) OF ONE PERCENT (1%) per annum on the gross sales or receipts of the preceding
calendar year is hereby imposed: xxx xxx xxx
• The City of Manila, through its City Treasurer, began imposing and
collecting the business tax under Section 21 (B) of the Manila Revenue
Code, as amended, beginning January 1994.
• The foregoing 10 cases were consolidated at different times and stages.
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
• Malaysian Airline System (MAS) is a foreign corporation organized and
existing under the laws of Malaysia. As MAS was renewing its business permit
for 1994, it was assessed by the City Treasurer of Manila on January 17, 1994
for the following taxes and fees:
o Mayor's permit and regulatory fees - P10,307.50
o Municipal license tax or business tax - 1,100,000.00
o Total = P1,110,307.50
• MAS, believing that it was exempt from the municipal license tax or business
tax, tendered, via Far East Bank and Trust Company (FEBTC) Check No.
06564 dated January 19, 1994, only the amount of P10,307.50 for the
mayor's permit and regulatory fees. The City Treasurer of Manila refused to
accept the check.
• RTC - Declared Section 21 (B) of Ordinance No. 7794, as amended
by Ordinance No. 7807, of the City of Manila as invalid or null and void.
• The other complaints were filed by: Maersk-Filipinas, Inc, Eastern Shipping
Lines, Inc, William Lines, Inc., Negros Navigation Co., Inc., Lorenzo Shipping
Corporation, Carlos A. Gothong Lines, Inc., Aboitiz Shipping Corporation,
Solid Shipping Lines Corporation, PNOC Shipping And Transport
Corporation, PNOC Shipping And Transport Corporation, Sulpicio Lines, Inc.,
Association Of International Shipping Lines, Inc., Dongnama Shipping Co.,
Ltd. And Kyowa Shipping Ltd.
• Contentions of the Petitioner
o The 1987 Constitution granted LGUs the power to create their
own sources of revenue and to levy taxes, fees, and charges
subject to the guidelines and limitations provided by Congress,
consistent with the policy of local autonomy. This grant was
reiterated in Section 129 of the LGC.
o Inasmuch as "transportation contractors, persons who transport
passenger or freight for hire, and common carriers by land, air or
water," are engaged in business subject to excise, value added,
or percentage tax under the NIRC as amended, then the City
of Manila could lawfully levy local business tax under Section 21
(B) of the Manila Revenue Code, as amended.
• Contentions of the Respondents
o The power of taxation, while inherent in the State in view of its
sovereign prerogatives, is not inherent in municipal corporations
or LGUs. LGUs may exercise the power only if and to the extent
that it is delegated to them. One of the common limitations on
the power to tax of LGUs is Section 133 (j) of the LGC. Section 133
(j) expressly states that the taxing powers of the LGUs shall not
extend to the transportation business. Section 133 (j) of the LGC is
a special provision, which prevails over Section 143 (h) of the
same Code, a general provision.
o In addition, although Section 21 (B) of the Manila Revenue Code,
as amended, imposed what was denominated as a "business
tax," in reality it was a percentage or sales tax.
ISSUE: WON Section 21 (B) of the Manila Revenue Code, as amended, was in
conformity with the Constitution and the laws and, therefore, valid.
6
HELD:
• No. Section 21 (B) of the Manila Revenue Code, as amended, was null and void
for being beyond the power of the City of Manila and its public officials to enact,
approve, and implement under the LGC. It is already well-settled that although
the power to tax is inherent in the State, the same is not true for the LGUs to whom
the power must be delegated by Congress and must be exercised within the
guidelines and limitations that Congress may provide.
Section 133. Common Limitations on the Taxing Powers of Local Government
Units. - Unless otherwise provided herein, the exercise of the taxing powers of
provinces, cities, municipalities, and barangays shall not extend to the levy of the
following:
xxx xxx xxx
(j) Taxes on the gross receipts of transportation contractors and persons engaged
in the transportation of passengers or freight by hire and common carriers by air,
land or water, except as provided in this Code;
SEC. 143. Tax on Business. — The municipality may impose taxes on the following
businesses:
xxx xxx xxx
(h) On any business, not otherwise specified in the preceding paragraphs, which
the sanggunian concerned may deem proper to tax: Provided, That on any
business subject to the excise, value-added or percentage tax under the NIRC, as
amended, the rate of tax shall not exceed two percent (2%) of gross sales or
receipts of the preceding calendar year. The sanggunian concerned may
prescribe a schedule of graduated tax rates but in no case to exceed the rates
prescribed herein
• Section 133 (j) of the LGC clearly and unambiguously proscribes LGUs from
imposing any tax on the gross receipts of transportation contractors,
persons engaged in the transportation of passengers or freight by hire, and
common carriers by air, land, or water.
• Section 133 (j) of the LGC prevails over Section 143 (h) of the same Code,
and Section 21 (B) of the Manila Revenue Code, as amended, was
manifestly in contravention of the former.
o The omnibus grant of power to municipalities and cities under
Section 143 (h) of the LGC cannot overcome the specific
exception/exemption in Section 133 (j) of the same Code. This is
in accord with the rule on statutory construction that specific
provisions must prevail over general ones.
• Despite the prohibition against LGUs imposing tax on the gross receipts of
transportation contractors, persons engaged in the transportation of
passengers or freight by hire, and common carriers by air, land, or water,
under Section 133 (j) of the LGC ,there are still other multiple businesses
subject to excise, value added, or percentage tax under the NIRC, which
the municipalities and cities can still tax pursuant to Section 143 (h) of
the LGC.
62-Lucena Demaala v. Commission on Audit
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
[G.R. No. 199752, February 17, 2015]
FACTS:
• The Provincial Board of Palawan enacted Provincial Ordinance No. 332-A
which imposed an additional levy on real property tax for the special
education fund at the rate of 0.5%.
Section 48- Additional Levy on Real Property Tax for Special Education Fund. There is
hereby levied an annual tax at the rate of one-half percent (1/2%) of the assessed
value property tax. The proceeds thereof shall exclusively accrue to the Special
Education Fund (SEF).
• In conformity with the provincial ordinance, the Municipality of Narra,
Palawan where Demaala (petitioner) is the Mayor, collected from owners
of real properties within its territory an annual tax as SEF at the rate of 0.5%
of the assessed value of the property subject to tax.
• However, on post-audit by the COA, Audit Team leader Nostratis issued an
Audit Observation Memorandum in which he noted the supposed
deficiencies in the SEF by the Municipality of Narra. He questioned the levy
of the SEF at the rate of 0.5% rather than 1% which the rate is stated in Sec.
235 of the Local Government Code:
Section 235. Additional Levy on Real Property for the Special Education Fund. - A
province or city, or a municipality within the Metropolitan Manila Area, may levy and
collect an annual tax of one percent (1%) on the assessed value of real property
which shall be in addition to the basic real property tax. The proceeds thereof shall
exclusively accrue to the Special Education Fund (SEF).
• COA Regional Cluster issued a Notice of Charge against the Municipality
of Narra and held the mayor and municipal treasurer and all SEF payors
liable for deficiency SEF collections.
• Muncipality of Narra filed an MR and stressed that the collection of the SEF
at the rate of 0.5% was merely in accordance with Ordinance No. 332-A.
However, its MR was denied.
• Thereafter, Municipality of Narra filed an appeal with the COA’s Legal and
Adjudication Office but the same was denied again.
• Hence, the LGU filed a petition for review with COA. COA ruled against
Demaala and held the former Palawan Vice Governor and other members
of the Provincial Board who enacted the Ordinance jointly and severally
liable for the deficiency SEF.
• Their MR denied, petitioners filed the petition for certiorari before the SC.
Petitioners’ contention:
The option given to LGUs under Sec. 235 LGC of the LGC (SEF) extends not only to the
matter whether to collect but also to the rate at which collection is to be made
COA’s contention:
The option given to LGUs under Sec. 235 LGC is limited to the matter of whether it shall
actually collect, and that the rate at which it shall collect (should it choose to do so)
is fixed by Sec. 235 which is at 1%
ISSUES:
1. Whether or not a local government unit may impose an additional levy on
real property for the Special Education Fund at the rate of less than 1% as
prescribed under Sec. 235 of the LGC?
7
2. Whether or not COA was correct in holding petitioners personally liable for
the deficiency?
HELD:
1. YES! Setting the rate of the additional levy for the Special Education Fund is
within the taxing power of the local government units – this is consistent with
the guiding constitutional principle of Local Autonomy.
The power to tax is an attribute of sovereignty. It is inherent in the state. Provinces,
cities, municipalities, and barangays are mere territorial and political subdivisions of
the state. They act only as part of the sovereign. Thus, they do not have the inherent
power to tax. Their power to tax must be prescribed by law. Consistent with the view
that the power to tax does not inhere in local government units, this court has held
that a reserved temperament must be adhered to in construing the extent of a local
government unit’s power to tax.
Article X, Sec. 5 of the 1987 Constitution is the basis of the taxing powers of the LGUs:
Section 5. Each local government unit shall have the power to create its own sources
of revenues and to levy taxes, fees and charges subject to such guidelines and
limitations as the Congress may provide, consistent with the basic policy of local
autonomy. Such taxes, fees, and charges shall accrue exclusively to the local
governments.
The taxing power granted by constitutional fiat to LGUs exists in the wider context to
“ensure the autonomy of local government units”. To add, any ambiguity must be
resolved in favor of local fiscal autonomy.
The taxing powers of the LGUs must be read in relation to their power to effect their
basic autonomy. Consistent with the 1987 Constitution’s declared preference, the
taxing powers of local government units must be resolved in favor of their local fiscal
autonomy. The important legal effect of Section 5, Art. X of the Constitution is that
henceforth, in interpreting statutory provision on municipal fiscal powers, doubts will
have to be resolved in favor of municipal corporations.
The operative phrase in Sec. 235 is “may levy and collect an annual tax of one
percent (1%)” has been interpreted by the Supreme Court in Buklod ng Magbubukid
vs E.M Ramos as mandatory but discretionary. The use of the word "may" in a statute
denotes that it is directory in nature and generally permissive only. Section 235’s grant
to municipalities in Metro Manila, to cities, and to provinces of the power to impose
an additional levy for the special education fund makes its collection OPTIONAL. It is
not mandatory that the levy be imposed and collected.
Therefore, petitioners were correct that the option given to LGUs extend not only to
the matter of whether to collect but also the rate at which collection is made –––
Insisting on uniformity would be a disservice to certain local government units and
would ultimately undermine the aims of local autonomy and decentralization.
Supreme Court ruled held that the specified rate (1%) of the Sec. 235 is a MAXIMUM
RATE, rather than an immutable edict. Accordingly, it was well within the power of the
Sangguniang Panlalawigan of Palawan to enact an ordinance providing for
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
additional levy on real property tax for the special education fund at the rate of 0.5%
rather than at 1%.
Therefore, COA committed grave abuse of discretion when it held that there was a
deficiency in the Municipality of Narra’s collection of additional levy for the special
education fund.
2. NO! Supreme Court ruled that COA committed grave abuse of discretion
when it held petitioner personally liable for the supposed deficiency.
Having established the propriety of imposing an additional levy for the special
education fund at the rate of 0.5%, it follows that there was nothing erroneous in the
Municipality of Narra’s having acted pursuant to Section 48 of the Ordinance. It could
thus not be faulted for collecting from owners of real properties located within its
territory an annual tax as special education fund at the rate of 0.5% of the assessed
value subject to tax of the property. Likewise, it follows that it was an error for
respondent to hold petitioner personally liable for the supposed deficiency in
collections.
Even if it was not proper for the Municipality of Narra to collect the 0.5% rate instead
of 1%, can petitioner still be held personally liable for the deficiency? ––– No, since the
mayor’s acts were done pursuant to an ordinance which, at the time of collection,
was yet to be invalidated.
It is basic that laws and local ordinances are "presumed to be valid unless and until
the courts declare the contrary in clear and unequivocal terms." Thus, the concerned
officials of the Municipality of Narra, Palawan must be deemed to have conducted
themselves in good faith and with regularity when they acted pursuant to Chapter 5,
Section 48 of Provincial Ordinance No. 332-A, Series of 1995, and collected the
additional levy for the special education fund at the rate of 0.5%. Accordingly, it was
improper for respondent to attribute personal liability to petitioner and to require her
to personally answer to the deficiency in special education fund collections.
63-Philippine Petroleum Corporation v. Municipality of Pililla, Rizal
[G.R. No. 90776, June 3, 1991]
FACTS:
• Philippine Petroleum Corporation (PPC for short) is a business enterprise
engaged in the manufacture of a petroleum product, with its refinery plant
situated at Malaya, Pililla, Rizal, conducting its business activities within the
territorial jurisdiction of the Municipality of Pililla, Rizal
• Under Section 142 of the National Internal Revenue Code of 1939,
manufactured oils and other fuels are subject to specific tax.
• Respondent Municipality of Pililla, Rizal, through Municipal Council
Resolution No. 25, S-1974 enacted Municipal Tax Ordinance No. 1, S-1974
otherwise known as “The Pililla Tax Code of 1974”. Sections 9 and 10 of the
said ordinance imposed a tax on business, except for those for which fixed
taxes are provided in the Local Tax Code on manufacturers, importers, or
producers of any article of commerce of whatever kind or nature, including
brewers, distillers, rectifiers, repackers, and compounders of liquors, distilled
8
spirits and/or wines in accordance with the schedule found in the Local Tax
Code, as well as mayor's permit sanitary inspection fee and storage permit
fee for flammable, combustible or explosive substances, while Section 139
of the disputed ordinance imposed surcharges and interests on unpaid
taxes, fees or charges
• P.D 436 was promulgated increasing the specific tax on lubricating oils,
• gasoline, bunker fuel oil, diesel fuel oil and other similar petroleum products
levied under
• Sections 142, 144 and 145 of the National Internal Revenue Code, as
amended, and
• granting provinces, cities and municipalities certain shares in the specific
tax on such products in lieu of local taxes imposed on petroleum products.
• The questioned Municipal Tax Ordinance No. 1 was reviewed and
approved by the Provincial Treasurer of Rizal but was not implemented
and/or enforced by the Municipality of Pililla because of its having been
suspended
• The respondents then filed a complaint for the collection of business tax,
storage permit fees, mayor’s permit and sanitary inspection fees
• Trial court rendered a decision against the petitioner; PPC moved for
reconsideration of the decision, but this was denied
ISSUES:
1. Whether or not PPC whose oil products are subject to specific tax under the
NIRC, is still liable to pay tax on business unto the respondent Municipality
of Pililla, Rizal
2. Whether or not PPC whose oil products are subject to specific tax under the
NIRC, is still liable to pay the storage fee unto the respondent Municipality
of Pililla, Rizal
3. WON PPC whose oil products are subject to specific tax under the NIRC, is
still liable to pay the permit fees unto the respondent
4. WON the mayor has authority to waive payment of the mayor’s permit and
sanitary inspection fees
HELD:
1. YES, a tax on business is distinct from a tax on the article itself.
While Section 2 of P.D. 436 prohibits the imposition of local taxes on petroleum
products, said decree did not amend Sections 19 and 19 (a) of P.D. 231 as amended
by P.D. 426, wherein the municipality is granted the right to levy taxes on business of
manufacturers, importers, producers of any article of commerce of whatever kind or
nature.
The exercise by local governments of the power to tax is ordained by the present
Constitution. To allow the continuous effectivity of the prohibition set forth in PC No.
26-73 (1) would be tantamount to restricting their power to tax by mere administrative
issuances. Under Section 5, Article X of the 1987 Constitution, only guidelines and
limitations that may be established by Congress can define and limit such power of
local governments.
Thus: "Each local government unit shall have the power to create its own sources of
revenues and to levy taxes, fees, and charges subject to such guidelines and
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
limitations as the Congress may provide, consistent with the basic policy of local
autonomy . . .."
2. NO, Provincial Circular No. 6-77 enjoining all city and municipal treasurers
to refrain from collecting the so-called storage fee on flammable or
combustible materials imposed in the local tax ordinance of their
respective locality frees petitioner PPC from the payment of storage permit
fee.
The storage permit fee being imposed by Pililla’s tax ordinance is a fee for the
installation and keeping in storage of any flammable, combustible or explosive
substances. Inasmuch as said storage makes use of tanks owned not by the
municipality of Pililla, but by petitioner PPC, same is obviously not a charge for any
service rendered by the municipality as what is envisioned in Section 37 of the same
Code.
3. YES. Section 10 (z) (13) of Pililla’s Municipal Tax Ordinance No. 1 prescribing
a permit fee is a permit fee allowed under Section 36 of the amended
Code.
4. NO HE DOES NOT, it is the law-making body, and not an executive like the
mayor, who can make an exemption.
The trial court did not err in holding that “since the power to tax includes the power
to exempt thereof which is essentially a legislative prerogative, it follows that a
municipal mayor who is an executive officer may not unilaterally withdraw such an
expression of a policy thru the enactment of a tax.”
In the absence of a clear and express exemption from the payment of said fees, the
waiver cannot be recognized. Under Section 36 of the Code, a permit fee like the
mayor’s permit, shall be required before any individual or juridical entity shall engage
in any business or occupation under the provisions of the Code.
64-Estanislao v. Costales
[G.R. No. 96518, May 8, 1991]
FACTS:
• The validity of Ordinance No. 44 of Zamboanga City, imposing a P0.01 tax
per liter of softdrinks produced, manufactured, and/or bottled within the
territorial jurisdiction of the City of Zamboanga is the issue addressed by this
petition.
• Sanggunian sent a copy of the Ordinance to the then Minister of Finance
for his review pursuant to P.D. No. 231, otherwise known as the Local Tax
Code.
• The Minister of Finance through Deputy Minister Antonino P. Roman, Jr., sent
the letter addressed to the Sanggunian, suspending the effectivity of the
ordinance on the ground that it contravenes Section 19(a) of the Local Tax
Code.
• The City of Zamboanga appealed said decision before the RTC which
found that that the tax levied under said Ordinance is not among those that
the Sanggunian may impose under the Local Tax Code, but NONETHELESS,
9
it upheld its validity on the ground that the Minister of Finance did not take
appropriate action on the matter within the prescribed period of 120 days
after receipt of a copy thereof.
• Hence, this petition for review on certiorari filed by the incumbent Secretary
of Finance alleging that the trial court erred when it held that the failure of
the Minister of Finance to suspend the effectivity of Ordinance No. 44 within
120 days from receipt of a copy thereof rendered said Ordinance valid.
• Public respondent Zamboanga City, however, invokes the ruling of this
Court in Pepsi-Cola Bottling Company vs. Municipality of Tanauan, Leyte
whereby this Court upheld the validity of Municipal Ordinance No. 27
enacted by the Municipality of Tanauan, Leyte imposing a tax of P0.01 for
every gallon of softdrinks produced in the municipality
ISSUE:
Whether or not Ordinance No. 44 contravenes the Local Tax Code of 1974.
HELD: Yes!
Ordinance No. 44 of the respondent Zamboanga City imposes P0.01 per liter of
softdrinks produced, manufactured, and/or bottled within the territorial jurisdiction of
the City of Zamboanga. No doubt this Ordinance is ultra vires as it is not within the
authority of the City to impose said tax. The authority of the City is limited to the
imposition of a percentage tax on the gross sales or receipts of said product which,
being non-essential, shall be at the rate of not exceeding 2% of the gross sales or
receipts of the softdrinks for the preceding calendar year. The tax being imposed
under said Ordinance is based on the output or production and not on the gross sales
or receipts as authorized under the Local Tax Code.
Their invocation of the ruling in Pepsi-Cola vs. Tanuan Leyte cannot be merited
because the said case was decided by this Court on the basis of the provisions of the
Local Autonomy Act (Republic Act No. 2264, as amended, which took effect on June
19, 1959), particularly Section 2 thereof, which gives the cities or municipalities ample
taxing authority covering almost "everything, excepting those mentioned herein."
However, the Local Autonomy Act has been superseded by the Local Tax Code
insofar as the taxing authority in the provinces, cities or municipalities is concerned.
By express language of Section 64(a) of the Local Tax Code," all existing tax
ordinances of provinces, cities, municipalities and barrios shall be deemed ipso facto
nullified on June 30, 1974.” –– The applicable law, therefore, to the present case is the
Local Tax Code and not the Local Autonomy Act.
Ordinance No. 44 of public respondent Zamboanga City traverses the limitations set
by the Local Tax Code.
"SEC. 44. Review and suspension of tax ordinance. — Within fifteen days after its
approval, a certified true copy of a tax ordinance shall be furnished: The Secretary of
Finance by the provincial board or city council; the provincial treasurer, by the
municipal or barrio council; or the city treasurer by the barrio council in the city's
jurisdiction. If, within one hundred and twenty days after receipt of a copy thereof,
the Secretary of Finance or the provincial or city treasurer, as the case may be, takes
no action as authorized in this section, the tax ordinance shall remain in force.
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
The Secretary of Finance, the provincial treasurer, or the city treasurer, as the case
may be, shall review and have the authority to suspend the effectivity of any tax
ordinance within one hundred and twenty days after receipt of a copy thereof, if, in
his opinion, the tax or fee therein levied or imposed is unjust, excessive, oppressive,
confiscatory, or not among those that the particular local government may impose
in the exercise of its power in accordance with this Code; or when the tax ordinance
is, in whole or in part, contrary to declared national economic policy; or when the
ordinance is discriminatory in nature on the conduct of business or calling or in
restraint of trade.
When the Secretary of Finance, the provincial treasurer or city treasurer, as the case
may be, exercises this authority, the effectivity of such ordinance shall be suspended,
either in part or, if necessary, in toto. The local legislative body, within thirty days after
receipt of the notice of suspension, may either modify the tax ordinance to meet the
objections thereto or file an appeal with the proper court, otherwise, the tax
ordinance or the part or parts thereof declared suspended shall
be considered as revoked.
An appeal shall not stay the order of suspension nor does it authorize the local
legislative body to reimpose the same tax or fee levied under a suspended ordinance
until such time as the grounds for the suspension thereof shall have ceased to exist or
the appeal has been resolved in its favor. Any tax or fee paid pursuant to the
ordinance involved shall be considered as having been paid under protest.
In case the appeal is resolved in favor of the local government, the tax or fee that
would have been collected if there were no order of suspension shall immediately be
collected without interest and surcharge. In case the order of suspension is upheld,
the court shall forthwith order the refund of the tax or fee paid under protest to the
taxpayer."
Furthermore, there is no authority under Section 44 of the Local Tax Code for the
conclusion that since the Minister of Finance failed to act or otherwise suspend the
effectivity of the tax ordinance within 120 days from receipt of a copy thereof, said
Ordinance is valid and remains in force. All that is provided therein is that if the
Secretary of Finance "takes no action as authorized in the Section, the tax ordinance
shall remain in force."
Even if the Secretary of Finance failed to review or act on the Ordinance within the
prescribed period of 120 days it does not follow as a legal consequence thereof that
an otherwise invalid ordinance is thereby validated.
Much less can it be interpreted to mean that the Secretary of Finance can no longer
act by suspending and/or revoking an invalid ordinance even after the lapse of the
120-day period. All that the law says is that after said period the tax ordinance shall
remain in force. The prescribed period for review is only directory and the Secretary
of Finance may still review the ordinance and act accordingly even after the lapse
of the said period provided he acts within a reasonable time.
Consequently, even after the prescribed period has lapsed, should the Secretary of
Finance, upon review, find that the tax or fee levied or imposed is unjust, excessive,
10
oppressive, confiscatory, or not among those that the particular local government
may impose in the exercise of its power in accordance with this Code; or when the
tax ordinance, is in whole
or in part, contrary to the declared national economic policy; or when the ordinance
is discriminatory in nature on the conduct of business or calling or in restraint of trade,"
9 the Secretary of Finance may certainly suspend the effectivity of such ordinance
and revoke the same, without prejudice to the right to appeal to the courts within 30
days after receipt of the notice of suspension. The same rule should apply to the
provincial and city treasurers, as the case may be, under Section 44 of the Local Tax
Code.
65-Drilon v. Lim
[G.R. No. 112497, August 4, 1994]
Nachura Doctrine:
Sec. 187, R.A. 7160, which authorizes the Secretary of Justice to review the
constitutionality or legality of a tax ordinance — and, if warranted, to revoke it on
either or both grounds — is valid, and does not confer the power of control over local
government units in the Secretary of Justice, as even if the latter can set aside a tax
ordinance, he cannot substitute his own judgment for that of the local government
unit
Facts:
• Sec. of Justice had on appeal to him 4 oil companies and a taxpayer, to
be declared Ordinance No. 7794, otherwise known as the Manila Revenue
Code, null and void for non-compliance with the prescribed procedure in
the enactment of tax ordinances and for containing certain provisions
contrary to law and public policy.
• In a petition for certiorari filed by the City of Manila, the Regional Trial Court
of Manila revoked the Secretary's resolution and sustained the ordinance,
holding inter alia that the procedural requirements had been observed.
More importantly, it declared Section 187 of the Local Government Code
as unconstitutional because of its vesture in the Secretary of Justice of the
power of control over local governments in violation of the policy of local
autonomy mandated in the Constitution and of the specific provision
therein conferring on the President of the Philippines only the power of
supervision over local governments.
• RTC Judge stated that (1) Control - "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” (2) Supervision - the power of a superior officer to see to it that
lower officers perform their functions is accordance with law.
Issue: WON Sec. 187 of LGC is constitutional
Held:
• Section 187 authorizes the Secretary of Justice to review only the
constitutionality or legality of the tax ordinance and, if warranted, to revoke
it on either or both of these grounds. When he alters or modifies or sets aside
a tax ordinance, he is not also permitted to substitute his own judgment for
the judgment of the local government that enacted the measure.
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
• Secretary Drilon did set aside the Manila Revenue Code, but he did not
replace it with his own version of what the Code should be. He did not
pronounce the ordinance unwise or unreasonable as a basis for its
annulment. He did not say that in his judgment it was a bad law. What he
found only was that it was illegal. All he did in reviewing the said measure
was determine if the petitioners were performing their functions is
accordance with law, that is, with the prescribed procedure for the
enactment of tax ordinances and the grant of powers to the city
government under the Local Government Code. As we see it, that was an
act not of control but of mere supervision.
• An officer in control lays down the rules in the doing of an act. It 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 the doing of
the act. He has no judgment on this matter except to see to it that the rules
are followed. In the opinion of the Court, Secretary Drilon did precisely this,
and no more nor less than this, and so performed an act not of control but
of mere supervision
• That section allowed the Secretary of Finance to suspend the effectivity of
a tax ordinance if, in his opinion, the tax or fee levied was unjust, excessive,
oppressive or confiscatory.
• Determination of these flaws would involve the exercise of judgment or
discretion and not merely an examination of whether or not the
requirements or limitations of the law had been observed; hence, it would
smack of control rather than mere supervision. That power was never
questioned before this Court but, at any rate, the Secretary of Justice is not
given the same latitude under Section 187. All he is permitted to do is
ascertain the constitutionality or legality of the tax measure, without the
right to declare that, in his opinion, it is unjust, excessive, oppressive or
confiscatory. He has no discretion on this matter.
• In fact, Secretary Drilon set aside the Manila Revenue Code only on two
grounds, to wit, the inclusion therein of certain ultra vires provisions and non-
compliance with the prescribed procedure in its enactment. These grounds
affected the legality, not the wisdom or reasonableness of the tax measure.
66-Mactan Cebu International Airport Authority v. Marcos
[G.R. No. 120082, September 11, 1996]
Nachura Doctrine:
The City of Cebu, as a local government unit, has the power to collect real property
taxes from the Mactan Cebu International Airport Authority. There is no question that
under R.A. 6958, MCIAA is exempt from the payment of realty taxes imposed by the
National Government or any of its political subdivisions; nevertheless, since taxation is
the rule, the exemption may be withdrawn at the pleasure of the taxing authority. The
only exception to this rule is where the exemption was granted to private parties
based on material consideration of a mutual nature, which then becomes
contractual and is thus covered by the non-impairment clause of the Constitution.
11
Facts:
• The MCIAA was created by RA 6958 mandated to principally undertake the
economical, efficient and effective control, management and supervision
of the Mactan International Airport in the Province of Cebu and the Lahug
Airport in Cebu City, . . . and such other airports as may be established in
the Province of Cebu . . ."
• Petitioner MCIAA enjoyed the privilege of exemption from payment of
realty taxes in accordance with Section 14 of its Charter.
• On October 11, 1994, Office of the Treasurer of the City of Cebu,
demanded payment for realty taxes on several parcels of land belonging
to the petitioner, to which petitioner objected
• Respondent City refused to cancel and set aside petitioner's realty tax
account, insisting that the MCIAA is a government-controlled corporation
whose tax exemption privilege has been withdrawn by virtue of Sections
193 and 234 of the Local Government Code that took effect on January 1,
1992, which included the tax exemption grant to GOCCs. MCIAA paid tax
under protest.
• A petition for declaratory relief was filed by MCIAA to the RTC which was
dismissed.
Issue: (1) WON the RTC is right? /// (2) WON the City of Cebu has power to impose
tax upon MCIAA?
Held:
1. Although it is a GOCC, it is mandated to perform functions in the same category
as an instrumentality of Government. An instrumentality of Government is one
created to perform governmental functions primarily to promote certain aspects of
the economic life of the people. Hence, its tax exemption privilege under Section 14
of its Charter "cannot be considered withdrawn with the passage of the Local
Government Code of 1991 (hereinafter LGC) because Section 133 thereof specifically
states that the 'taxing powers of local government units shall not extend to the levy of
taxes or fees or charges of any kind on the national government, its agencies and
instrumentalities.'"
2. No. In Basco vs. Philippine Amusement and Gaming Corporation:
Local governments have no power to tax instrumentalities of the National
Government. PAGCOR is a government owned or controlled corporation with an
original charter, PD 1869. All of its shares of stock are owned by the National
Government. . . .
Being an instrumentality of the Government, PAGCOR should be and actually is
exempt from local taxes. Otherwise, its operation might be burdened, impeded or
subjected to control by a mere Local government.
This doctrine emanates from the "supremacy" of the National Government over local
governments.
• The power to tax is primarily vested in the Congress; however, in our
jurisdiction, it may be exercised by local legislative bodies under Sec.5, Art.
X, of the Constitution.
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
• Section 133 of the LGC prescribes the common limitations on the taxing
powers of local government units as follows: TAXES, FEES OR CHARGES OF
ANY KIND ON THE NATIONAL GOVERNMENT, ITS AGENCIES AND
INSTRUMENTALITIES, AND LOCAL GOVERNMENT UNITS.
• Thus, reading together Sections 133, 232, and 234 of the LGC, we conclude
that as a general rule, as laid down in Section 133, the taxing powers of
local government units cannot extend to the levy of, inter alia, "taxes, fees
and charges of any kind on the National Government, its agencies and
instrumentalities, and local government units"; however, pursuant to
Section 232, provinces, cities, and municipalities in the Metropolitan Manila
Area may impose the real property tax except on, inter alia, "real property
owned by the Republic of the Philippines or any of its political subdivisions
except when the beneficial use thereof has been granted, for consideration
or otherwise, to a taxable person," as provided in item (a) of the first
paragraph of Section 234.
• As to tax exemptions or incentives granted to or presently enjoyed by
natural or judicial persons, including government-owned and controlled
corporations, Section 193 of the LGC prescribes the general rule, viz., they
are withdrawn upon the effectivity of the LGC, except those granted to local
water districts, cooperatives duly registered under R.A. No. 6938, non-stock
and non-profit hospitals and educational institutions, and unless otherwise
provided in the LGC. The latter proviso could refer to Section 234 which
enumerates the properties exempt from real property tax. But the last
paragraph of Section 234 further qualifies the retention of the exemption
insofar as real property taxes are concerned by limiting the retention only
to those enumerated therein; all others not included in the enumeration lost
the privilege upon the effectivity of the LGC. Moreover, even as to real
property owned by the Republic of the Philippines or any of its political
subdivisions covered by item (a) of the first paragraph of Section 234, the
exemption is withdrawn if the beneficial use of such property has been
granted to a taxable person for consideration or otherwise.
• Since the last paragraph of Section 234 unequivocally withdrew, upon the
effectivity of the LGC, exemptions from payment of real property taxes
granted to natural or juridical persons, including government-owned or
controlled corporations, except as provided in the said section, and the
petitioner is, undoubtedly, a government- owned corporation, it necessarily
follows that its exemption from such tax granted it in Section 14 of its Charter,
R.A. No. 6958, has been withdrawn. Any claim to the contrary can only be
justified if the petitioner can seek refuge under any of the exceptions
provided in Section 234, but not under Section 133, as it now asserts, since,
as shown above, the said section is qualified by Sections 232 and 234.
• In short, the petitioner can no longer invoke the general rule in Section 133.
It must show that the parcels of land in question, which are real property,
are any one of those enumerated in Section 234, either by virtue of
ownership, character, or use of the property
• An "agency" of the Government refers to "any of the various units of the
Government, including a department, bureau, office, instrumentality, or
government- owned or controlled corporation, or a local government or a
distinct unit therein;" while an "instrumentality" refers to "any agency of the
National Government, not integrated within the department framework,
12
vested with special functions or jurisdiction by law, endowed with some if
not all corporate powers, administering special funds, and enjoying
operational autonomy, usually through a charter. This term includes
regulatory agencies, chartered institutions and government-owned and
controlled corporations."
• If Section 234(a) intended to extend the exception therein to the
withdrawal of the exemption from payment of real property taxes under
the last sentence of the said section to the agencies and instrumentalities
of the National Government mentioned in Section 133(o), then it should
have restated the wording of the latter. Yet, it did not.
• DENIED
67-Smart Communications v. Municipality of Malvar, Batangas
[G.R. No. 204429, February 18, 2014]
Facts:
• Smart constructed a telecommunications tower within the territorial
jurisdiction of the Municipality. The construction of the tower was for the
purpose of receiving and transmitting cellular communications within the
covered area.
• the Municipality passed Ordinance entitled "An Ordinance Regulating the
Establishment of Special Projects."
• Smart received from the Office of the Mayor of the Municipality an
assessment letter with a schedule of payment for the total amount of
P389,950.00 for Smart's telecommunications tower.
• Smart filed a protest which was denied by the municipality.
• Filing a case with the RTC, which held the assessment void being retroactive
assessment, but did not pass on the validity.
• On appeal, CTA dismissed stating lack of jurisdiction
Issue: WON the ordinance was valid
Held:
• the fees in Ordinance No. 18 are not taxes. Logically, the imposition does
not appear in the enumeration of taxes under Section 143 of the LGC.
• even if the fees do not appear in Section 143 or any other provision in the
LGC, the Municipality is empowered to impose taxes, fees and charges, not
speci cally enumerated in the LGC or taxed under the Tax Code or other
applicable law. Section 186 of the LGC, granting local government units
wide latitude in imposing fees
• Ordinance No. 18 aims to regulate the "placing, stringing, attaching,
installing, repair and construction of all gas mains, electric, telegraph and
telephone wires, conduits, meters and other apparatus" within the
Municipality. The fees are not imposed to regulate the administrative,
technical, financial, or marketing operations of telecommunications
entities, such as Smart's; rather, to regulate the installation and maintenance
of physical structures — Smart's cell sites or telecommunications tower. The
regulation of the installation and maintenance of such physical structures is
an exercise of the police power of the Municipality. Clearly, the
Municipality does not encroach on NTC's regulatory powers.
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
• Settled is the rule that every law, in this case an ordinance, is presumed
valid. To strike down a law as unconstitutional, Smart has the burden to
prove a clear and unequivocal breach of the Constitution, which Smart
miserably failed to do.
68-City of Lapu-Lapu v. Philippine Economic Zone Authority (PEZA)
[G.R. No. 184203] and Province of Bataan v. PEZA
[G.R. No. 187583, November 26, 2014]
DOCTRINE: PEZA is exempt from real property taxes. First, PEZA is exempt from
payment of real estates taxes under Sec133(o) of the LGC because it is an
instrumentality of the national government. It is not integrated w/in the department
framework but it is an agency attached to the DTI, and although it is a body
corporate vested with some corporate powers, it is not a GOCC. Second, PEZA
assumed the non-profit character, including the tax-exempt status of EPZA. EPZA was
expressly declared exempt from real property taxes under its charter, PD 66. Third, real
properties under PEZA’s title are owned by the RP, and are, therefore, exempt under
Sec 234 of the LGC.
FACTS
● In the exercise of his legislative powers, President Ferdinand E. Marcos issued
PD 66 in 1972, declaring as government policy the establishment of export
processing zones in strategic locations in the Philippines. |
● The decree declared the EPZA non-profit in character. To maintain this non-
profit character, the EPZA was declared exempt from all taxes that may be
due to the Republic of the Philippines, its provinces, cities, municipalities,
and other government agencies and instrumentalities.
○ Specifically, Section 21 of PD 66 declared the EPZA exempt from
payment of real property taxes|||
● In 1995, the PEZA was created by virtue of RA 7916 or "the Special Economic
Zone Act of 1995" to operate, administer, manage, and develop economic
zones in the country.
● By virtue of the law, the export processing zone in Mariveles, Bataan
became the Bataan Economic Zone and the Mactan Export Processing
Zone the Mactan Economic Zone.
Facts of G.R. No. 184203
● In the letter dated March 25, 1998, the City of Lapu-Lapu, through the Office
of the Treasurer, demanded from the PEZA P32,912,350.08 in real property
taxes for the period from 1992 to 1998 on the PEZA's properties located in
the Mactan Economic Zone.
● The City reiterated its demand. It cited Sections 193 and 234 of the Local
Government Code of 1991 that withdrew the real property tax exemptions
previously granted to or presently enjoyed by all persons. The City pointed
out that no provision in the Special Economic Zone Act of 1995 specifically
exempted the PEZA from payment of real property taxes
● |||PEZA filed a petition for declaratory relief with the RTC Pasay City,
praying that the trial court declare it exempt from payment of real property
taxes. |||
● TRIAL COURT: the PEZA remained tax-exempt regardless of Section 24 of the
Special Economic Zone Act of 1995.
13
○ It ruled that Section 24, which taxes real property owned by
developers of economic zones, only applies to private
developers of economic zones, not to public developers like the
PEZA. The PEZA, therefore, is not liable for real property taxes on
the land it owns
○ Characterizing the PEZA as an agency of the National
Government, the trial court ruled that the City had no authority to
tax the PEZA under Sections 133 (o) and 234 (a) of the Local
Government Code of 1991
Facts of G.R. No. 187583
● After the City of Lapu-Lapu had demanded payment of real property taxes
from the PEZA, the Province of Bataan followed suit.
● In its letter dated May 29, 2003, the Province, through the Office of the
Provincial Treasurer, informed the PEZA that it would be sending a real
property tax billing to the PEZA.
● Arguing that the PEZA is a developer of economic zones, the Province
claimed that the PEZA is liable for real property taxes under Section 24 of
the Special Economic Zone Act of 1995.
ISSUE: Whether the PEZA is exempt from payment of real property taxes
HELD: YES, PEZ is exempt from payment of real property taxes
● Real property taxes are annual taxes levied on real property such as lands,
buildings, machinery, and other improvements not otherwise specifically
exempted under the Local Government Code.
○ Real property taxes are ad valorem,with the amount charged
based on a fixed proportion of the value of the property|
● The general rule is that real properties are subject to real property taxes. This
is true especially since the Local Government Code has withdrawn
exemptions from real property taxes of all persons, whether natural or
juridical
● The exceptions to the rule are provided in the Local Government Code.
Under Section 133 (o), local government units have no power to levy taxes
of any kind on the national government, its agencies and instrumentalities
and local government units
● For persons granted tax exemptions or incentives before the effectivity of
the Local Government Code, Section 193 withdrew these tax exemption
privileges. These persons consist of both natural and juridical persons,
including government-owned or controlled corporations
● As discussed, Section 234 withdrew all tax privileges with respect to real
property taxes. Nevertheless, local government units may grant tax
exemptions under such terms and conditions as they may deem necessary
● Persons may likewise be exempt from payment of real properties if their
charters, which were enacted or reenacted after the effectivity of the Local
Government Code, exempt them payment of real property taxes.
● PEZA is an instrumentality of the national government.
○ It is not integrated within the department framework but is an
agency attached to the Department of Trade and Industry
○ Although a body corporate vested with some corporate powers,
the PEZA is not a government-owned or controlled corporation
taxable for real property taxes.
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
➢ Being an instrumentality of the national government, the PEZA cannot be
taxed by local government units.
● ||The PEZA's predecessor, the EPZA, was declared non-profit in character
with all its revenues devoted for its development, improvement, and
maintenance. Consistent with this non-profit character, the EPZA was
explicitly declared exempt from real property taxes under its charter. |||
○ The Special Economic Zone Act of 1995, on the other hand, does
not specifically exempt the PEZA from payment of real property
taxes.
○ Nevertheless, we rule that the PEZA is exempt from real property
taxes by virtue of its charter. A provision in the Special Economic
Zone Act of 1995 explicitly exempting the PEZA is unnecessary.
The PEZA assumed the real property exemption of the EPZA under
Presidential Decree No. 66
Eminent Domain
69-Moday v. Court of Appeals
[G.R. No. 107916, February 20, 1997]
DOCTRINE: In Moday v. Court of Appeals, 243 SCRA 152, it was held that the
Sanggunian Panlalawigan cannot validly disapprove the resolution of the
municipality expropriating a parcel of land for the establishment of a government
center. The power of eminent domain is explicitly granted to the municipality under
the Local Government Code.
FACTS:
● Sangguniang Bayan of the Municipality of Bunawan in Agusan del Sur
passed Resolution No. 43-89, "Authorizing the Municipal Mayor to Initiate
the Petition for Expropriation of a One (1) Hectare Portion of Lot No. 6138-
Pls-4 Along the National Highway Owned by Percival Moday for the Site of
Bunawan Farmers Center and Other Government Sports Facilities."
● In due time, Resolution No. 43-89 was approved by then Municipal Mayor
Anuncio C. Bustillo and transmitted to the Sangguniang Panlalawigan for
its approval On September 11, 1989, the Sangguniang Panlalawigan
disapproved said Resolution and returned it with the comment that
"expropriation is unnecessary considering that there are still available lots in
Bunawan for the establishment of the government center."
● The Municipality of Bunawan, herein public respondent, subsequently filed
a Petition for Eminent Domain against petitioner Percival Moday before the
Regional Trial Court at Prosperidad, Agusan del Sur.
● The Municipality of Bunawan filed a Motion to Take or Enter Upon the
Possession of Subject Matter of This Case stating that it had already
deposited with the municipal treasurer the necessary amount in
accordance with Section 2, Rule 67 of the Revised Rules of Court and that
it would be in the government's best interest for public respondent to be
allowed to take possession of the property.
● Despite petitioners' opposition and after a hearing on the merits, the
Regional Trial Court granted respondent municipality's motion to take
possession of the land.
14
○ The lower court held that the Sangguniang Panlalawigan's failure
to declare the resolution invalid leaves it effective.
○ It added that the duty of the Sangguniang Panlalawigan is
merely to review the ordinances and resolutions passed by the
Sangguniang Bayan under Section 208 (1) of B.P. Blg. 337, old
Local Government Code and that the exercise of eminent
domain is not one of the two acts enumerated in Section 19
thereof requiring the approval of the Sangguniang
Panlalawigan.
● The Court of Appeals held that the public purpose for the expropriation is
clear from Resolution No. 43-89 and that since the Sangguniang
Panlalawigan of Agusan del Sur did not declare Resolution No. 43-89
invalid, expropriation of petitioners' property could proceed
● Meanwhile, the Municipality of Bunawan had erected three buildings on
the subject property: the Association of Barangay Councils (ABC) Hall, the
Municipal Motorpool, both wooden structures, and the Bunawan Municipal
Gymnasium, which is made of concrete.
● In this instant petition for review filed on November 23, 1992, petitioner seeks
the reversal of the decision and resolution of the Court of Appeals and a
declaration that Resolution No. 43-89 of the Municipality of Bunawan is null
and void.
● On December 8, 1993, the Court issued a temporary restraining order
enjoining and restraining public respondent Judge Evangeline Yuipco from
enforcing her July 2, 1991 Order and respondent municipality from using
and occupying all the buildings constructed and from further constructing
any building on the land subject of this petition. On a resolution, SC ordered
in contempt mayor Anuncio C. Bustillo
ISSUE: Whether a municipality may expropriate private property by virtue of a
municipal resolution which was disapproved by the Sangguniang Panlalawigan
HELD: YES, the Sanggunian Panlalawigan cannot validly disapprove the resolution of
the municipality expropriating a parcel of land for the establishment of a government
center. But there is no valid exercise of eminent domain in this case.
● Eminent domain, the power which the Municipality of Bunawan exercised
in the instant case, is a fundamental State power that is inseparable from
sovereignty. It is government's right to appropriate, in the nature of a
compulsory sale to the State, private property for public use or purpose.
Inherently possessed by the national legislature the power of eminent
domain may be validly delegated to local governments, other public
entities and public utilities. For the taking of private property by the
government to be valid, the taking must be for public use and there must
be just compensation
● The Municipality of Bunawan's power to exercise the right of eminent
domain is not disputed as it is expressly provided for in Batas Pambansa Blg.
337, the Local Government Code in force at the time expropriation
proceedings were initiated.
● What petitioners question is the lack of authority of the municipality to
exercise this right since the Sangguniang Panlalawigan disapproved
Resolution No. 43-89.||
● The Sangguniang Panlalawigan's disapproval of Municipal Resolution No.
43-89 is an infirm action which does not render said resolution null and void.
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
○ The law, as expressed in Section 153 of B.P. Blg. 337, grants the
Sangguniang Panlalawigan the power to declare a municipal
resolution invalid on the sole ground that it is beyond the power
of the Sangguniang Bayan or the Mayor to issue.
● Although pertaining to a similar provision of law but different factual milieu
then obtaining, the Court's pronouncements in Velazco v. Blas, where we
cited significant early jurisprudence, are applicable to the case at bar.
"The only ground upon which a provincial board may declare any municipal
resolution, ordinance, or order invalid is when such resolution, ordinance, or order is
'beyond the powers conferred upon the council or president making the same.'
Absolutely no other ground is recognized by the law. A strictly legal question is before
the provincial board in its consideration of a municipal resolution, ordinance, or order.
The provincial (board's) disapproval of any resolution, ordinance, or order must be
premised specifically upon the fact that such resolution, ordinance, or order is outside
the scope of the legal powers conferred by law. If a provincial board passes these
limits, it usurps the legislative functions of the municipal council or president. Such has
been the consistent course of executive authority."
● Thus, the Sangguniang Panlalawigan was without the authority to
disapprove Municipal Resolution No. 43-89 for the Municipality of Bunawan
clearly has the power to exercise the right of eminent domain and its
Sangguniang Bayan the capacity to promulgate said resolution, pursuant
to the earlier-quoted Section 9 of B.P. Blg. 337.
● Perforce; it follows that Resolution No. 43-89 is valid and binding and could
be used. as lawful authority to petition for the condemnation of petitioners'
property.
● The limitations on the power of eminent domain are that the use must be
public, compensation must be made and due process of law must be
observed. The Supreme Court, taking cognizance of such issues as the
adequacy of compensation, necessity of the taking and the public use
character or the purpose of the taking, has ruled that the necessity of
exercising eminent domain must be genuine and of a public
character.Government may not capriciously choose what private property
should be taken
○ After a careful study of the records of the case, however, we find
no evidentiary support for petitioners' allegations. The uncertified
photocopy of the sketch plan does not conclusively prove that
the municipality does own vacant land adjacent to petitioners'
property suited to the purpose of the expropriation.
70-Municipality of Parañaque v. V.M. Realty Corporation
[G.R. No. 127820, July 20, 1998]
DOCTRINE: However, in Municipality of Paranaque v. V. M. Realty Corporation, 292
SCRA 676, the Supreme Court said that there was lack of compliance with Sec. 19,
LGC, where the Municipal Mayor filed a complaint for the expropriation of two
parcels of land on the strength of a resolution passed by the Sanggunian Bayan,
because what is required by the law is an ordinance. There are basic differences
between an ordinance and a resolution, viz: an ordinance is a law while a resolution
is merely a declaration of sentiment or opinion of a lawmaking body on a specific
matter; a third reading is needed for an ordinance, not for a resolution unless decided
otherwise by a majority of the members of the Sanggunian.
15
FACTS:
● Pursuant to Sangguniang Bayan Resolution No. 93-95, Series of 1993, the
Municipality of Parañaque filed with the Regional Trial Court of Makati,
Branch 134, on September 20, 1993 a complaint for expropriation against
private respondent over two parcels of land with a combined area of
about 10,000 square meters located at Wakas, San Dionisio, Parañaque,
Metro Manila and covered by Torrens Certificate of Title No. 48700.
● Allegedly, the complaint was filed for the purpose of alleviating the living
conditions of the underprivileged by providing homes for the homeless
through a socialized housing project.
● In an Order dated February 4, 1994, the trial court authorized petitioner to
take possession of the subject property upon deposit with its clerk of court
of an amount equivalent to 15 percent of its fair market value based on its
current tax declaration.
● Private respondent filed its answer alleging in the main that the complaint
failed to state a cause of action because it was filed pursuant to a
resolution and not to an ordinance as required by the Local Government
Code.
● The trial court then nullified its February 4, 1994 order and dismissed the
case. On appeal, the Court of Appeals affirmed the trial court's resolution.
Hence, this petition.
ISSUE: WON a resolution duly approved by the municipal council has the same force
and effect of an ordinance and will not deprive an expropriation case of a valid
cause of action
HELD: NO, a resolution is different from an ordinance
● The power of eminent domain is lodged in the legislative branch of
government which may delegate the exercise thereof to local government
units, other public entities and public utilities.
○ A local government unit may therefore exercise the power to
expropriate private property only when authorized by Congress
and subject to the latter's control and restraints, imposed through
the law conferring the power or in other legislations
● A local government unit, like the Municipality of Parañaque, cannot
authorize an expropriation of private property through a mere resolution of
its lawmaking body.
● The Local Government Code expressly and clearly requires an ordinance
or a law for the purpose.
● A municipal ordinance is different from a resolution.
○ An ordinance is a law, but a resolution is merely a declaration of
the sentiment or opinion of a lawmaking body on a specific
matter.
● The fact that there is no cause of action is evident from the face of the
complaint for expropriation which was based on a mere resolution.
● The absence of an ordinance authorizing the same is equivalent to lack of
cause of action.
● On the other hand, the principle of res judicata does not bar subsequent
proceedings for the expropriation of the same property when all the legal
requirements for its valid exercise are complied with.
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
71-Spouses Antonio & Fe Yusay v. Court of Appeals
[G.R. No. 156684, April 6, 2011]
Doctrine: After the Sangguniang Panglungsod of Mandaluyong City adopted
Resolution 552, authorizing the City Mayor to take the necessary steps for the
expropriation of a parcel of land, the herein petitioners field a petition certiorari and
prohibition in the RTC, praying for the annulment of the resolution for being
unconstitutional, confiscatory, improper, and without force and effect. The petition
was denied. Certiorari and prohibition do not lie against the Sangguniang
Panglungsod, a legislative and policy-making body, merely expressing its sentiment
or opinion through a resolution, and not exercising judicial or extra-judicial functions.
Furthermore, as held in V.M. Realty Corporation, a resolution is not sufficient for the
purpose of initiating an expropriation proceeding; as of the, it was premature for
petitioners to mount the judicial challenge.
Petitioners: SPOUSES ANTONIO and FE YUSAY
Respondents: COURT OF APPEALS, CITY MAYOR and CITY COUNCIL OF
MANDALUYONG CITY
FACTS:
• The petitioners owned a parcel of land Barangay Mauway, Mandaluyong
City. Half of their land they used as their residence, and the rest they rented
out to nine other families.
• On October 2, 1997, the Sangguniang Panglungsod of Mandaluyong City
adopted Resolution No. 552, Series of 1997, to authorize then City Mayor
Benjamin S. Abalos, Sr. to take the necessary legal steps for the
expropriation of the land of the petitioners for the purpose of developing it
for low cost housing for the less privileged but deserving city inhabitants.
• The petitioners filed a petition for certiorari and prohibition in the RTC,
praying for the annulment of Resolution No. 552 due to its being
unconstitutional, confiscatory, improper, and without force and effect.
• The City countered that Resolution No. 552 was a mere authorization given
to the City Mayor to initiate the legal steps towards expropriation, which
included making a definite offer to purchase the property of the petitioners;
hence, the suit of the petitioners was premature.
• The RTC ruled in favor of the City and dismissed the petition for lack of merit,
opining that certiorari did not lie against a legislative act of the City
Government. However, the RTC, acting upon the petitioners’ motion for
reconsideration, set aside its decision and declared that Resolution No. 552
was null and void. It ruled that there was no due process in the passage of
Resolution No. and that the purpose for the expropriation was not for public
use.
• The CA concluded that the reversal of the decision by the RTC was not
justified because Resolution No. 552 deserved to be accorded the benefit
of the presumption of regularity and that notice to the petitioners of the
succeeding hearings conducted by the City was not a part of due process,
for it was enough that their views had been consulted.
ISSUE: WON the validity of Resolution No. 552 be assailed even before its
implementation.
16
HELD: NO
• Certiorari does not lie to assail the issuance of a resolution by the
Sanggunian Panglungsod.
• For certiorari to prosper, therefore, the petitioner must allege and establish
the concurrence of the following requisites, namely:
(a) The writ is directed against a tribunal, board, or officer exercising judicial or quasi-
judicial functions;
(b) Such tribunal, board, or officer has acted without or in excess of jurisdiction, or with
grave abuse of discretion amounting to lack or excess of jurisdiction; and
(c) There is no appeal or any plain, speedy, and adequate remedy in the ordinary
course of law.
• First requisite: Certiorari did not lie against the Sangguniang Panglungsod,
which was not a part of the Judiciary settling an actual controversy
involving legally demandable and enforceable rights when it adopted
Resolution No. 552, but a legislative and policy-making body declaring its
sentiment or opinion.
• To differentiate between a resolution and an ordinance, the first is upon a
specific matter of a temporary nature while the latter is a law that is
permanent in character. No rights can be conferred by and be inferred
from a resolution, which is nothing but an embodiment of what the
lawmaking body has to say in the light of attendant circumstances.
• Moreover, Republic Act No. 7160 (LGC) required the City to pass an
ordinance, not adopt a resolution, for the purpose of initiating an
expropriation proceeding: Section 19. Eminent Domain. – A local
government unit may, through its chief executive and acting pursuant to
an ordinance, exercise the power of eminent domain for public use, or
purpose, or welfare for the benefit of the poor and the landless, upon
payment of just compensation, pursuant to the provisions of the
Constitution and pertinent laws
• A resolution like Resolution No. 552 that merely expresses the sentiment of
the Sangguniang Panglungsod is not sufficient for the purpose of initiating
an expropriation proceeding.
• The power of eminent domain is lodged in the legislative branch of
government, which may delegate the exercise thereof to LGUs, other
public entities and public utilities.
• The following essential requisites must concur before an LGU can exercise
the power of eminent domain:
1. An ordinance is enacted by the local legislative council authorizing the local chief
executive, in behalf of the LGU, to exercise the power of eminent domain or pursue
expropriation proceedings over a particular private property.
2. The power of eminent domain is exercised for public use, purpose or welfare, or for
the benefit of the poor and the landless.
3. There is payment of just compensation, as required under Section 9 Article III of the
Constitution and other pertinent laws.
4. A valid and definite offer has been previously made to the owner of the property
sought to be expropriated, but said offer was not accepted.
• In the case at bar, the local chief executive sought to exercise the power of
eminent domain pursuant to a resolution of the municipal council. Thus, there
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
was no compliance with the first requisite that the mayor be authorized through
an ordinance. The terms "resolution" and "ordinance" are not synonymous.
• Moreover, the power of eminent domain necessarily involves a derogation of a
fundamental or private right of the people. Accordingly, the manifest change in
the legislative language – from "resolution" under BP 337 to "ordinance" under RA
7160 – demands a strict construction.
• Once the State decides to exercise its power of eminent domain, the power of
judicial review becomes limited in scope, and the courts will be left to determine
the appropriate amount of just compensation to be paid to the affected
landowners. Only when the landowners are not given their just compensation for
the taking of their property or when there has been no agreement on the
amount of just compensation may the remedy of prohibition become available.
• Here, however, the remedy of prohibition was not called for, considering that
only a resolution expressing the desire of the Sangguniang Panglungsod to
expropriate the petitioners’ property was issued. As of then, it was premature for
the petitioners to mount any judicial challenge, for the power of eminent domain
could be exercised by the City.
• WHEREFORE, we affirm the decision promulgated on October 18, 2002 in CA-
G.R. SP No. 70618.
72-Filstream International Inc. v. Court of Appeals
[284 SCRA 716]
Petitioners: FILSTREAM INTERNATIONAL INCORPORATED,
Respondents: COURT OF APPEALS, JUDGE FELIPE S. TONGCO and THE CITY OF MANILA
FACTS:
• Petitioner, Filstream International, Inc., is the registered owner of the properties
subject of this dispute.
• Petitioner filed an ejectment suit before the MTC against the occupants of the
abovementioned parcels of land on the grounds of termination of the lease
contract and non-payment of rentals. Judgment was rendered by the MTC in
favor of Filstream.
• During the pendency of the ejectment proceedings appealed by private
respondents, a complaint for Annulment of Deed of Exchange against petitioner
Filstream before the RTC. It was at this stage that respondent City of Manila came
into the picture when the city government approved Ordinance No. 78133
authorizing Mayor Alfredo S. Lim to initiate the acquisition by negotiation,
expropriation, purchase, or other legal means certain parcels of land registered
which formed part of the properties of petitioner then occupied by private
respondents.
• Subsequently, the City of Manila approved Ordinance No. 7855 declaring the
expropriation of certain parcels of land. The said properties were to be sold and
distributed to qualified tenants of the area pursuant to the Land Use
Development Program of the City of Manila.
• Respondent City of Manila filed a complaint for eminent domain before the RTC
of Manila, Branch 42, seeking to expropriate the aforecited parcels of land
owned by petitioner Filstream
• The trial court issued a Writ of Possession in favor of City of Manila. Petitioner
Filstream filed a motion to dismiss the complaint for eminent domain as well as a
motion to quash the writ of possession, on the ground that the petition does not
17
satisfy the requirements of public use and a mere clandestine maneuver to
circumvent the writ of execution issued by the RTC. the RTC of Manila, Branch
42, issued an order denying petitioner Filstream's motion to dismiss and the
motion to quash. On appeal, the CA dismissed the petition. An instant petition
for review on certiorari under Rule 45 assailed the dismissal of its petition by the
CA.
ISSUE: WON the City of Manila complied with the statutory conditions when it
expropriated the property in question.
HELD: NO
• Petitioner Filstream anchors its claim by virtue of its ownership over the properties
and the existence of a final and executory judgment against private
respondents ordering the latter's ejectment from the premises. Private
respondents' claim on the other hand hinges on an alleged supervening event
which has rendered the enforcement of petitioner's rights moot, that is, the
expropriation proceeding.
• There is no dispute as to the existence of a final and executory judgment in favor
of petitioner Filstream ordering the ejectment of private respondents from the
properties subject of this dispute. However, it must also be conceded that the
City of Manila has an undeniable right to exercise its power of eminent domain
within its jurisdiction. The right to expropriate private property for public use is
expressly granted to it under Section 19 of the 1991 Local Government Code.
• More specifically, the City of Manila has the power to expropriate private
property in the pursuit of its urban land reform and housing program as explicitly
laid out in the Revised Charter of the City of Manila (R.A. No. 409).
• Urban land reform has become a paramount task in view of the acute shortage
of decent housing in urban areas particularly in Metro Manila. Nevertheless,
despite the existence of a serious dilemma, local government units are not given
an unbridled authority when exercising their power of eminent domain in pursuit
of solutions to these problems. The basic rules still have to be followed, which are
as follows: "no person shall be deprived of life, liberty, or property without due
process of law, nor shall any person be denied the equal protection of the laws
(Art. 3, Sec. 1, 1987 Constitution); private property shall not be taken for public
use without just compensation (Art. 3, Section 9, 1987 Constitution)".
• The governing law that deals with the subject of expropriation for purposes of
urban land reform and housing is Republic Act No. 7279 (Urban Development
and Housing Act of 1992) and Sections 9 and 10. Private lands rank last in the
order of priority for purposes of socialized housing. In the same vein, expropriation
proceedings are to be resorted to only when the other modes of acquisition
have been exhausted.
• Petitioner Filstream's properties were expropriated and ordered condemned in
favor of the City of Manila sans any showing that resort to the acquisition of other
lands listed under Sec. 9 of RA 7279 have proved futile. Evidently, there was a
violation of petitioner Filstream's right to due process which must accordingly be
rectified.
• WHEREFORE, the petitions are hereby GRANTED.
Reclassification of Lands
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
73-Department of Agrarian Reform v. Saranggani Agricultural Co., Inc.
[G.R. No. 160554, January 24, 2007]
Doctrine: The Comprehensive Land Use Plans and accompanying ordinances of the
local Sanggunian as primary references in the application for reclassification of lands
in the city or municipality. While the DAR retains the responsibility for approving or
disapproving the applications for land use conversion filed by individual landowners
of their landholdings, the exercise of such authority should be confined to
compliance with the requirements and limitations under existing laws and regulations
such as the allowable percentage of agricultural area to be reclassified, ensuring
sufficient food production, areas non-negotiable for conversion and those falling
under environmentally critical areas or highly restricted for conversion under the law.
Definitely, the DAR’s power in such cases may not be exercised in such a manner as
to defeat the very purpose of the LGU concerned in reclassifying certain areas to
achieve social and economic benefits in pursuit of its mandate towards the general
welfare. Precisely, therefore, the DAR is required to use the comprehensive land use
plans and accompanying ordinances of the local Sanggunian as primary references
in evaluating applications for land use conversion filed by individual landowners.
Petitioner: DEPARTMENT OF AGRARIAN REFORM, as represented by its Secretary, RENE
C. VILLA,
Respondents: SARANGANI AGRICULTURAL CO., INC., ACIL CORPORATION, NICASIO
ALCANTARA and TOMAS ALCANTARA
FACTS:
• Respondents are the owners of the lands in question which have been
reclassified from agricultural into non-agricultural uses by virtue of a municipal
zoning ordinance, and are included in the comprehensive land use plan of the
Municipality of Alabel.
• The Province of Sarangani was created pursuant to Republic Act No. 7228 on
March 16, 1992. The Municipality of Alabel was made the capital of the new
province.
• Pursuant to Municipal Zoning Ordinance No. 08, Series of 1997, and to
accelerate the development and urbanization of Alabel, the Sangguniang
Bayan of Alabel passed Resolution No. 98-03 reclassifying lots that were located
within the built-up areas, based on the 1995-2005 Land Use Plan of the
municipality, from agricultural to non-agricultural uses.
• The Zoning Certification issued by the office of the Municipal Planning and
Development Council (MPDC) showed that respondents’ properties located at
Barangay Maribulan, Alabel were among those reclassified from agricultural
and pasture land to residential, commercial institutional, light industrial and open
space in the 1995-2005 land use plan of Alabel.
• On July 2, 1998, respondent Sarangani Agricultural Company, Inc. (SACI) filed an
application for land use conversion of the parcels of lands. It held documents
required under the Department of Agrarian Reform (DAR) Administrative Order
No. 7, Series of 1997.
• Meanwhile, on March 22, 1999, members of the Sarangani Agrarian Reform
Beneficiaries Association, Inc. (SARBAI) sent a letter-petition to the DAR Secretary
oppposing the application for land use conversion filed by SACI.
18
• On November 9, 2000, DAR Secretary Horacio R. Morales, Jr. denied SACI’s
application.
• Petitioner filed a Motion for Reconsideration of the above decision but the same
was denied by the Court of Appeals.
ISSUE: WON DAR should use the Comprehensive Land Use Plans and accompanying
ordinance of the local sanggunian as primary reference so as not to defeat the very
purpose of the LGU concerned in reclassifying certain areas to achieve social and
economic benefits in pursuance to its mandate towards the general welfare.
HELD: YES
• DAR Administrative Order No. 7, Series of 1997, or the Omnibus Rules and
Procedures Governing Conversion of Agricultural Lands to Non-agricultural Uses
prescribes the guidelines for land use conversion.
• Conversion may be allowed if at the time of the application, the lands are
reclassified as commercial, industrial, residential or other non-agricultural in the
new or revised town plans promulgated by the local government unit (LGU) and
approved by the Housing and Land Use Regulatory Board (HLURB) or by the
Sangguniang Panlalawigan (SP) after June 15, 1988, in accordance with Section
20 of R.A. No. 7160, as implemented by MC No. 54, and Executive Order No. 72,
Series of 199317 of the Office of the President.
• In connection with the afore-stated administrative order, Section 20 of Republic
Act No. 7160, otherwise known as the Local Government Code of 1991,
empowers the local government units to reclassify agricultural lands.
• Memorandum Circular No. 54 by President Ramos specified the scope and
limitations on the power of the cities and municipalities to reclassify agricultural
lands into other uses. It provided that all ordinances authorizing reclassification
of agricultural lands shall be subject to the review and approval of the province
in the case of component cities or municipalities, or by the HLURB for highly
urbanized or independent component cities.
• Executive Order No. 72, Series of 1993:
o SECTION 4. Use of the comprehensive land use plans and ordinances
as primary reference documents in land use conversions. - Pursuant to
RA 6657 and EO 129-A, actions on applications for land use
conversions on individual landholdings shall remain as the responsibility
of DAR, which shall utilize as its primary reference documents the
comprehensive land use plans and accompanying ordinance passed
upon and approved by the LGUs concerned, together with the
National Land Use Policy.
• Hence, with regard to agricultural lands that have been reclassified for non-
agricultural uses by the local government unit concerned, the CA is correct in
declaring that DAR should refer to the comprehensive land use plans and the
ordinances of the Sanggunian in assessing land use conversion applications.
• While the DAR retains the responsibility for approving or disapproving
applications for land use conversion filed by individual landowners on their
landholdings, the exercise of such authority should be confined to compliance
with the requirements and limitations under existing laws and regulations, such
as the allowable percentage of agricultural [area] to be reclassified, ensuring
sufficient food production, areas non-negotiable for conversion and those falling
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
under environmentally critical areas or highly restricted for conversion under the
NIPAS law.
• The conversion of agricultural lands into non-agricultural uses shall be strictly
regulated and may be allowed only when the conditions prescribed under R.A.
No. 6657 are present. DAR’s scope of authority in assessing land use conversion
applications is limited to examining whether the requirements prescribed by law
and existing rules and regulations have been complied with.
• In this case, because of the creation of the Province of Sarangani and in view of
its thrust to urbanize, particularly its provincial capital which is the Municipality of
Alabel, the local government has reclassified certain portions of its land area
from agricultural to non-agricultural.
• In accordance with E.O. No. 72, Series of 1993, and subject to the limitations
prescribed by law, DAR should utilize the comprehensive land use plans in
evaluating the land use conversion application of respondents whose lands
have already been reclassified by the local government for non--agricultural
uses.
• One such limitation that is present here is that a portion of respondents’ property
of 376.5424 hectares, a portion totaling 154.622 [or 154.1622] hectares which are
planted to bananas and coconuts, are covered by CARL’s ten-year deferment
scheme, which has expired on June 15, 1998. By law, these lands are subject to
redistribution to CARP beneficiaries upon the lapse of the ten-year period,
counted from the date of the effectivity of the CARL or R.A. No. 6657 on June
15, 1988, which was way before the creation of the Province of Sarangani and
the eventual reclassification of the agricultural lands into non-agricultural in the
Municipality of Alabel where respondents’ properties are located.
• In short, the creation of the new Province of Sarangani, and the reclassification
that was effected by the Municipality of Alabel did not operate to supersede
the applicable provisions of R.A. No. 6657.
74-Chamber of Real Estate and Builders Association, Inc. (CREBA) v. Secretary of
Agrarian Reform [G.R. No. 183409, June 18, 2010]
PETITIONER: CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC. (CREBA)
RESPONDENT: THE SECRETARY OF AGRARIAN REFORM
FACTS
● The Secretary of Agrarian Reform issued DAR AO No. 07-97,3 entitled
"Omnibus Rules and Procedures Governing Conversion of Agricultural
Lands to Non-Agricultural Uses," which consolidated all existing
implementing guidelines related to land use conversion. The aforesaid rules
embraced all private agricultural lands regardless of tenurial arrangement
and commodity produced, and all untitled agricultural lands and
agricultural lands reclassified by Local Government Units (LGUs) into non-
agricultural uses after 15 June 1988.
● Secretary of Agrarian Reform issued DAR AO No. 01-99,4 entitled "Revised
Rules and Regulations on the Conversion of Agricultural Lands to Non-
agricultural Uses," amending and updating the previous rules on land use
conversion. Its coverage includes the following agricultural lands, to wit: (1)
those to be converted to residential, commercial, industrial, institutional
and other non-agricultural purposes; (2) those to be devoted to another
19
type of agricultural activity such as livestock, poultry, and fishpond ─ the
effect of which is to exempt the land from the Comprehensive Agrarian
Reform Program (CARP) coverage; (3) those to be converted to non-
agricultural use other than that previously authorized; and (4) those
reclassified to residential, commercial, industrial, or other non-agricultural
uses on or after the effectivity of Republic Act No. 66575 on 15 June 1988
pursuant to Section 206 of Republic Act No. 71607 and other pertinent laws
and regulations, and are to be converted to such uses.
● On 28 February 2002, the Secretary of Agrarian Reform issued another
Administrative Order, i.e., DAR AO No. 01-02, entitled "2002 Comprehensive
Rules on Land Use Conversion," which further amended DAR AO No. 07-97
and DAR AO No. 01-99, and repealed all issuances inconsistent therewith.
The aforesaid DAR AO No. 01-02 covers all applications for conversion from
agricultural to non-agricultural uses or to another agricultural use.
● Secretary of Agrarian Reform amended certain provisions of DAR AO No.
01-02 by formulating DAR AO No. 05-07, particularly addressing land
conversion in time of exigencies and calamities.
● To address the unabated conversion of prime agricultural lands for real
estate development, the Secretary of Agrarian Reform further issued
Memorandum No. 88, which temporarily suspended the processing and
approval of all land use conversion applications.
● By reason thereof, petitioner claims that there is an actual slow down of
housing projects, which, in turn, aggravated the housing shortage,
unemployment and illegal squatting problems to the substantial prejudice
not only of the petitioner and its members but more so of the whole nation.
Hence, this petition.
ISSUES:
1. WON THE DAR SECRETARY ACTED IN EXCESS OF HIS JURISDICTION AND GRAVELY
ABUSED HIS DISCRETION BY ISSUING AND ENFORCING [DAR AO NO. 01-02, AS
AMENDED] WHICH SEEK TO REGULATE RECLASSIFIED LANDS.
As explained in Department of Justice Opinion No. 44, series of 1990, it is true that the
DAR’s express power over land use conversion provided for under Section 65 of
Republic Act No. 6657 is limited to cases in which agricultural lands already awarded
have, after five years, ceased to be economically feasible and sound for agricultural
purposes, or the locality has become urbanized and the land will have a greater
economic value for residential, commercial or industrial purposes. To suggest,
however, that these are the only instances that the DAR can require conversion
clearances would open a loophole in Republic Act No. 6657 which every landowner
may use to evade compliance with the agrarian reform program. It should logically
follow, therefore, from the said department’s express duty and function to execute
and enforce the said statute that any reclassification of a private land as a residential,
commercial or industrial property, on or after the effectivity of Republic Act No. 6657
on 15 June 1988 should first be cleared by the DAR.
Reclassification of lands does not suffice. Conversion and reclassification differ from
each other. Conversion is the act of changing the current use of a piece of
agricultural land into some other use as approved by the DAR while reclassification is
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr. 20

the act of specifying how agricultural lands shall be utilized for non-agricultural uses and enforcing DAR AO No. 01-02, as amended, subjecting to DAR’s jurisdiction for
such as residential, industrial, and commercial, as embodied in the land use plan, conversion lands which had already been reclassified as residential, commercial,
subject to the requirements and procedures for land use conversion. In view thereof, industrial or for other non-agricultural uses on or after 15 June 1988.
a mere reclassification of an agricultural land does not automatically allow a
landowner to change its use. He has to undergo the process of conversion before he 2. WHETHER [DAR AO NO. 01-02, AS AMENDED] VIOLATE[S] THE LOCAL AUTONOMY OF
is permitted to use the agricultural land for other purposes. LOCAL GOVERNMENT UNITS

It is clear from the aforesaid distinction between reclassification and conversion that Similarly, DAR AO No. 01-02, as amended, providing that the reclassification of
agricultural lands though reclassified to residential, commercial, industrial or other agricultural lands by LGUs shall be subject to the requirements of land use conversion
non-agricultural uses must still undergo the process of conversion before they can be procedure or that DAR’s approval or clearance must be secured to effect
used for the purpose to which they are intended. reclassification, did not violate the autonomy of the LGUs.

Nevertheless, emphasis must be given to the fact that DAR’s conversion authority can The provisions of law show that the power of the LGUs to reclassify agricultural lands
only be exercised after the effectivity of Republic Act No. 6657 on 15 June 1988. The is not absolute. The authority of the DAR to approve conversion of agricultural lands
said date served as the cut-off period for automatic reclassification or rezoning of covered by Republic Act No. 6657 to non-agricultural uses has been validly
agricultural lands that no longer require any DAR conversion clearance or authority. recognized by said Section 20 of Republic Act No. 7160 by explicitly providing therein
Thereafter, reclassification of agricultural lands is already subject to DAR’s conversion that, "nothing in this section shall be construed as repealing or modifying in any
authority. Reclassification alone will not suffice to use the agricultural lands for other manner the provisions of Republic Act No. 6657."
purposes. Conversion is needed to change the current use of reclassified agricultural
lands. 3. WHETHER [DAR AO NO. 01-02, AS AMENDED] VIOLATE[S] THE DUE PROCESS AND
EQUAL PROTECTION CLAUSE[S] OF THE CONSTITUTION.
It is of no moment whether the reclassification of agricultural lands to residential,
commercial, industrial or other non-agricultural uses was done by the LGUs or by way DAR AO No. 01-02, as amended, does not also violate the due process clause, as well
of Presidential Proclamations because either way they must still undergo conversion as the equal protection clause of the Constitution. Contrary to petitioner’s assertions,
process. It bears stressing that the act of reclassifying agricultural lands to non- the administrative and criminal penalties provided for under DAR AO No. 01-02, as
agricultural uses simply specifies how agricultural lands shall be utilized for non- amended, are imposed upon the illegal or premature conversion of lands within
agricultural uses and does not automatically convert agricultural lands to non- DAR’s jurisdiction, i.e., "lands not reclassified as residential, commercial, industrial or
agricultural uses or for other purposes. As explained in DAR Memorandum Circular No. for other non-agricultural uses before 15 June 1998."
7, Series of 1994, reclassification of lands denotes their allocation into some specific
use and providing for the manner of their utilization and disposition or the act of 4. WHETHER MEMORANDUM NO. 88 IS A VALID EXERCISE OF POLICE POWER.
specifying how agricultural lands shall be utilized for non-agricultural uses such as
residential, industrial, or commercial, as embodied in the land use plan. For It bears emphasis that said Memorandum No. 88 was issued upon the instruction of
reclassified agricultural lands, therefore, to be used for the purpose to which they are the President in order to address the unabated conversion of prime agricultural lands
intended there is still a need to change the current use thereof through the process for real estate development because of the worsening rice shortage in the country
of conversion. The authority to do so is vested in the DAR, which is mandated to at that time. Such measure was made in order to ensure that there are enough
preserve and maintain agricultural lands with increased productivity. Thus, agricultural lands in which rice cultivation and production may be carried into. The
notwithstanding the reclassification of agricultural lands to non-agricultural uses, they issuance of said Memorandum No. 88 was made pursuant to the general welfare of
must still undergo conversion before they can be used for other purposes. the public, thus, it cannot be argued that it was made without any basis.

Any reclassification, therefore, of agricultural lands to residential, commercial, 75-Buklod ng Magbubukid sa Lupaing Ramos v. E.M. Ramos & Sons Inc.
industrial or other non-agricultural uses either by the LGUs or by way of Presidential [G.R. No. 131481, March 16, 2011]
Proclamations enacted on or after 15 June 1988 must undergo the process of DOCTRINE: A liberal interpretation of the zoning power of city and municipal boards
conversion, despite having undergone reclassification, before agricultural lands may and councils, as to include the power to reclassify the lands within the zones, would
be used for other purposes. be in accord with the legislative intent of the Local Autonomy Act of 1959.

Clearly from the foregoing, the Secretary of Agrarian Reform did not act without
jurisdiction or in excess of jurisdiction or with grave abuse of discretion amounting to
lack or excess of jurisdiction in (1) including lands not reclassified as residential,
commercial, industrial or other non-agricultural uses before 15 June 1988 in the
definition of agricultural lands under DAR AO No. 01-02, as amended, and; (2) issuing
FACTS:
● In 1971, the Municipal Council of Dasmarinas, acting pursuant to R.A. No.
2264, otherwise known as the "Local Autonomy Act", enacted Municipal
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
Ordinance No. 1, "An Ordinance Providing Subdivision Regulation and
Providing Penalties for Violation Thereof."
● E.M. Ramos and Sons, Inc., applied for an authority to convert and
development its 372-hectare property into a residential subdivision,
attaching to the application detailed development plans and
development proposals from Bancom Development Corporation and San
Miguel Corporation. Acting thereon the Municipal Council passed
Municipal Ordinance No. 29-A approving the application. Subsequently,
EMRASON paid the fees, dues and licenses needed to proceed with
property development.
● It appears, however, that the actual implementation of the subdivision
project suffered delay owing to the confluence of events. Among these was
the fact that the property in question was then mortgaged to, and the titles
thereto were in the possession of, the Overseas Bank of Manila, which
during the period material was under liquidation.
● Republic Act No. 6657, Comprehensive Agrarian Reform Law took effect,
ushering in a new process of land classification, acquisition and distribution.
● Municipal Mayor addressed a letter to EMRASON, stating in part, that the
Municipality has approved the development of the property into
residential, industrial, commercial and golf course project.
● Then came the Aquino government's plan to convert the tenanted
neighboring property of the National Development Company (NDC) into an
industrial estate to be managed through a joint venture scheme by NDC
and the Marubeni Corporation. Part of the overall conversion package
called for providing the tenant-farmers, opting to remain at the NDC
property, with three (3) hectares each. However, the size of the NDC
property turned out to be insufficient for both the demands of the proposed
industrial project as well as the government's commitment to the tenant-
farmers. To address this commitment, the Department of Agrarian Reform
(DAR) was thus tasked with acquiring additional lands from the nearby
areas. The DAR earmarked for this purpose the subject property of
EMRASON.
● Then DAR Secretary Leong sent out the first of four batches of notices of
acquisition, each of which drew protest from EMRASON who filed with the
DARAB separate petitions to nullify the first three sets of the above notices.
The Legal Division of DAR rendered a decision declaring as null and void all
the notices of acquisitions, observing that the property covered thereby is
exempt from CARP.
● Region IV DAR Regional Director motu propio elevated the case to the
Office of the Agrarian Reform Secretary. The herein respondent DAR
Secretary Ernesto Garilao issued an order affirming the notices of
acquisition.
● Its motion for reconsideration of the aforesaid order having been denied
by the, EMRASON appealed to the Office of the President which was
dismissed.
● From the denial of its Motion for Reconsideration by the OP, EMRASON filed
a Petition for Review with the Court of Appeals who issued a Temporary
Restraining Order which enjoined the implementation of the OP Decision
and Resolution. It issued a Resolution granting the prayer of EMRASON for
the issuance of a writ of preliminary injunction.
21
● At this juncture, the DAR had already prepared Certificates of Land
Ownership Award (CLOAs) to distribute the subject property to farmer-
beneficiaries. However, the writ of preliminary injunction issued by the CA
enjoined the release of the CLOAs. Buklod, on behalf of the alleged 300
farmer-beneficiaries of the subject property, filed a Manifestation and
Omnibus Motion
● CA ruled in favor of EMRASON and against BUKLOD stating that the land
was already converted or classified as residential by the Municipality prior
to CARL’s effectivity.
ISSUE: WON THE MUNICIPALITY WAS AUTHORIZED, UNDER THE LOCAL AUTONOMY ACT,
TO CLASSIFY AND/OR RECLASSIFY LANDS CONSIDERING THAT WHAT WAS CONFERRED
THEREUNDER WAS ONLY ZONING AUTHORITY, THUS, RENDER THE EXERCISE THEREOF BY
THE MUNICIPAL COUNCIL, ULTRA VIRES;
HELD:
Under the present Local Government Code, it is clear that the authority to reclassify
agricultural lands primarily resides in the sanggunian of the city or municipality.
Prior to the Local Government Code of 1991, the Local Autonomy Act of 1959 was
silent on the authority to reclassify agricultural lands. What the earlier statute expressly
granted to city and municipal boards and councils, under Section 3 thereof, was the
power to adopt zoning and subdivision ordinances and regulations.
By virtue of a zoning ordinance, the local legislature may arrange, prescribe, define,
and apportion the land within its political jurisdiction into specific uses based not only
on the present, but also on the future projection of needs. To limit zoning to the existing
character of the property and the structures thereon would completely negate the
power of the local legislature to plan land use in its city or municipality.
Moreover, according to the definition of reclassification, the specified non-
agricultural use of the land must be embodied in a land use plan, and the land use
plan is enacted through a zoning ordinance. Thus, zoning and planning ordinances
take precedence over reclassification. The reclassification of land use is dependent
on the zoning and land use plan, not the other way around.
It may, therefore, be reasonably presumed that when city and municipal boards and
councils approved an ordinance delineating an area or district in their cities or
municipalities as residential, commercial, or industrial zone, pursuant to the power
granted to them under Section 3 of the Local Autonomy Act of 1959, they were, at the
same time, reclassifying any agricultural lands within the zone for non-agri cultural
use; hence, ensuring the implementation of and compliance with their zoning
ordinances. The logic and practicality behind such a presumption is more evident
when considering the approval by local legislative bodies of subdivision ordinances
and regulations. The approval by city and municipal boards and councils of an
application for subdivision through an ordinance should already be understood to
include approval of the reclassification of the land, covered by said application, from
agricultural to the intended non-agricultural use. Otherwise, the approval of the
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr. 22

subdivision application would serve no practical effect; for as long as the property 76-Spouses Pilapil v. Court of Appeals
covered by the application remains classified as agricultural, it could not be [G.R. No. 97619, November 26, 1992]
subdivided and developed for non-agricultural use. PETITIONERS: SPOUSES SOCRATES PILAPIL and ROSARIO PILAPIL
RESPONDENTS: THE COURT OF APPEALS, REGIONAL TRIAL COURT OF CEBU, BRANCH 17,
A liberal interpretation of the zoning power of city and municipal boards and councils, and SPOUSES GORGONIO COLOMIDA and GLORIA COLOMIDA
as to include the power to accordingly reclassify the lands within the zones, would be
in accord with the avowed legislative intent behind the Local Autonomy Act of 1959, DOCTRINE: A municipality has the authority to prepare and adopt a land use map,
which was to increase the autonomy of local governments. promulgate a zoning ordinance, and close any municipal road.

SEC. 12. Rules for the interpretation of the Local Autonomy Act. - FACTS:

1. Implied power of a province, a city or municipality shall be liberally construed in
its favor. Any fair and reasonable doubt as to the existence of the power should be
interpreted in favor of the local government and it shall be presumed to exist.
2. The general welfare clause shall be liberally interpreted in case of doubt so as to
give more power to local governments in promoting the economic condition, social
welfare and material progress of the people in the community.
3. Vested rights existing at the time of the promulgation of this law arising out of a
contract between a province, city or municipality on one hand and a third party on
the other, should be governed by the original terms and provisions of the same, and
in no case would this act infringe existing rights.
Moreover, the regulation by local legislatures of land use in their respective territorial
jurisdiction through zoning and reclassification is an exercise of police power. The
Court recognized that police power need not always be expressly delegated. Police
power is inherent in the state but not in municipal corporations. Before a municipal
corporation may exercise such power, there must be a valid delegation of such
power by the legislature which is the repository of the inherent powers of the State.
Municipal governments exercise this power under the general welfare clause:
pursuant thereto they are clothed with authority to "enact such ordinances and issue
such regulations as may be necessary to carry out and discharge the responsibilities
conferred upon it by law, and such as shall be necessary and proper to provide for
the health, safety, comfort and convenience, maintain peace and order, improve
public morals, promote the prosperity and general welfare of the municipality and
the inhabitants thereof, and insure the protection of property therein." And under
Section 7 of BP 337, "every local government unit shall exercise the powers expressly
granted, those necessarily implied therefrom, as well as powers necessary and proper
for governance such as to promote health and safety, enhance prosperity, improve
morals, and maintain peace and order in the local government unit, and preserve
the comfort and convenience of the inhabitants therein."
● The petitioners-spouses own a 6,598 square meter 3 parcel of land situated
in Bahak, Poblacion, Liloan, Cebu. The said parcel corresponds to Lot No.
320 and Lot 323 5 and that portion covered by Plan Psu-07-005007, duly
approved by the Regional Director of Region VII of the Bureau of Lands. The
land formerly belonged to Marcelo Pilapil, the grandfather of petitioner
Socrates Pilapil.
● Private respondents (hereinafter, Colomidas), purchased from Esteria vda.
de Ceniza and the heirs of Leoncio Ceniza a parcel of land. Colomidas
"tried to improve the road of "camino vecinal", for the convenience of the
public," but the Pilapils harassed and threatened them with "bodily harm
from making said improvement." The Pilapils also threatened to fence off
the camino vecinal.
● Thus, the Colomidas filed against the Pilapils a petition for injunction and
damages with a prayer for a writ of preliminary mandatory and/or
prohibitory injunction. A restraining order was issued directing the Pilapils or
anyone acting in their behalf to cease and desist from preventing or
harassing them (Colomidas) from using the camino vecinal and/or fencing
off the same, and after hearing, a writ of preliminary injunction be issued
commanding the Pilapils to cease and desist from proceeding with the acts
complained of.
● On the other hand, the Pilapils filed against the Colomidas an action for
damages. Pilapils specifically deny therein the existence of a "camino
vecinal" on their property.
● Trial court rendered its decision in favor of the Colomidas. The Pilapils
appealed to the Court of Appeals. CA affirmed in toto the ruling of the trial
court. Their motion for the reconsideration of the above decision having
been denied by the Court of Appeals, the Pilapils filed the instant petition.
ISSUE: WON THE MUNICIPALITY OF LILAN HAS A CAMINO VECINAL IN SITIO BAHAK OF
BRGY. POBLACION, AND IF SO, WON THE SAME TRAVERSES THE PRPERTY BELONGING
TO THE PETITIONERS

Based on the preceding discussion, it cannot be said that the power to reclassify
agricultural land was first delegated to the city and municipal legislative bodies under
Section 26 of the Local Government Code of 1991. Said provision only articulates a
power of local legislatures, which, previously, had only been implied or inferred
Closure and Opening of Roads
HELD: YES
The above issue has been further obscured by the unnecessary quibbling on whether
or not the testimonies of Sesenando Longakit and Florentino Pepito should be
accorded full faith and credit. To this Court's mind, the issue of their credibility has
been rendered moot by the unrebutted evidence which shows that the Municipality
of Liloan, through its Sangguniang Bayan, had approved a zoning plan, otherwise
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
called an Urban Land Use Plan. This plan indicates the relative location of the camino
vecinal in sitio Bahak, 39 Poblacion, Liloan, Cebu.
It is beyond dispute that the establishment, closure or abandonment of the camino
vecinal is the sole prerogative of the Municipality of Liloan. No private party can
interfere with such a right. Thus, even if We are to agree with both the trial court and
public respondent that witnesses were telling the truth, the decision of the
Municipality of Liloan with respect to the said camino vecinal in sitio Bahak must
prevail.
The property of provinces, cities and municipalities is divided into property for public
use and patrimonial property. The first consists of the provincial roads, city streets,
municipal streets, squares, fountains, public waters, promenades, and public works
for public service paid for by the said provinces, cities or municipalities. They are
governed by the same principles as property of public dominion of the same
character. Under the applicable law in this case, Batas Pambansa Blg. 337 (The Local
Government Code), the Sangguniang Bayan, the legislative body of the municipality,
had the power to adopt zoning and subdivision ordinances or regulations subject to
the provisions of existing laws, and to provide for the construction, improvement,
repair and maintenance of municipal streets, avenues, alleys, sidewalks, bridges,
parks and other public places, regulate the use thereof and prohibit the construction
or placing of obstacles or encroachments on them
Sec. 10. Closure of roads. — A local government unit may likewise, through its head
acting pursuant to a resolution of its Sangguniang and in accordance with existing
law and the provisions of this Code, close any barangay, municipal, city or provincial
road, street, alley, park or square. No such way or place or any part thereof shall be
closed without indemnifying any person prejudiced thereby. A property thus
withdrawn from public use may be used or conveyed for any purpose for which other
real property belonging to the local unit concerned might be lawfully used or
conveyed.
A camino vecinal is a municipal road. It is also property for public use. Pursuant,
therefore, to the above powers of a local government unit, the Municipality of Liloan
had the unassailable authority to (a) prepare and adopt a land use map, (b)
promulgate a zoning ordinance which may consider, among other things, the
municipal roads to be constructed, maintained, improved or repaired and (c) close
any municipal road.
In the instant case, the Municipality of Liloan, through the Sangguniang Bayan,
approved the Urban Land Use Plan; this plan was duly signed by the Municipal Mayor.
By doing so, the said legislative body determined, among others, the location of the
camino vecinal in sitio Bahak.
As further declared by Engineer Jordan, this camino vecinal in sitio Bahak "passes the
side of the land of Socrates Pilapil. This is the proposed road leading to the national
highway." The Colomidas presented no rebuttal witness to show that by the approval
of the zoning map by the Sangguniang Bayan, they were effectively deprived of
access to the national highway from their property. Of course, they may argue that
the zoning map was prepared for and approved by the Sangguniang Bayan after
23
the filing of their petition in Civil Case No. R-20732. Be that as it may, this preparation
and approval, clearly a supervening event, was relied upon, introduced in evidence
without objection on the part of the Colomidas and evaluated by the trial court. In
short, the latter allowed the issue raised by the supervening event to be tried.
Such supervening fact, duly proved to be an official act of the Municipality of Liloan,
binds not only the Pilapils and the Colomidas, but also the general public. The solemn
declarations of old people like Sesenando Longakit and Florentino Pepito (the
witnesses) cannot overturn the decision of the Municipality of Liloan.
77-Bruno Cabrera v. Court of Appeals
[G.R. No. 78673, March 18, 1991]
Petitioner: Bruno S. Cabrera
Respondents: Court of Appeals and The Province of Catanduanes, Vicente M.
Alberto, Encarnacion Torres, Santiago Valderama, Jeremias Trinidad, Alfredo
Dayawon, Zacarias Tatad, Felixberto Camacho, Ruben Gonzales, Felix Rubio, Rene
Alcantara, Aristeo Arcilla, Pamfilo Dayawon, Remedios Bagadiong, Fredeswindo
Alcala, Elena S. Latorre, Baldomero Tolentino, Eulogia Alejandro, Angeles S. Vargas,
Isidro Reyes, Anselmo Peña and Catalina Vela
DOCTRINE: One whose property is not located on the closed section of the street
ordered closed by the Provincial Board of Catanduanes has no right to compensation
for the closure if he still has reasonable access to the general system of streets.
FACTS:
§ September 19, 1969 – The Provincial Board of Catanduanes adopted
Resolution No. 158.
o The resolution resolved to close the old road leading to the new
Capitol Building of the province to traffic effective October 31,
1969.
o It also resolved to give to the owners of the properties traversed
by the new road equal area as per survey by the Highway District
Engineer’s office from the old road adjacent to the respective
remaining portion of their properties.
§ Pursuant thereto, Deeds of Exchange were executed under which the
Province of Catanduanes conveyed to Remedios R. Bagadiong,
Fredeswindo F. Alcala, Elena S. Latorre, Baldomero Tolentino, Eulogia T.
Alejandro, Angeles S. Vargas, and Juan S. Reyes portions of the closed road
in exchange for their own respective properties, on which was subsequently
laid a new concrete road leading to the Capitol Building.
§ 1978- Part of the northern end of the old road fronting the Bruno Cabrera's
house was planted to vegetables in 1977 by Eulogia Alejandro. Anselmo
Peña, who had bought Angeles Vargas's share, also in the same part of the
road, converted it into a piggery farm.
§ December 29, 1978- Cabrera learned about the resolution and filed a
complaint for Restoration of Public Road and/or Abatement of Nuisance,
Annulment of Resolutions and Documents with Damages to the CFI of
Catanduanes.
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
o He alleged that the land fronting his house was a public road
owned by the Province of Catanduanes in its governmental
capacity and therefore beyond the commerce of man.
o He contended that Resolution No. 158 and the deeds of
exchange were invalid, as so too was the closure of the northern
portion of the said road.
§ The CFI sustained the authority of the provincial board to enact the
resolution. It also declared that the land was not a public road but a mere
passageway.
§ The Court of Appeals found that the road was a public road and not a trail
but just the same also upheld Resolution 158.
ISSUE: Whether or not there was no closure order issued but an authority to barter or
exchange?
HELD: NO. There was a closure order issued by virtue of Resolution 158.
Ø The Court cannot understand how the petitioner can seriously argue that
there is no order of closure when it is there in the resolution, in black and
white. Resolution 158 clearly says that it is "hereby resolved to close the old
road." The closure is as plain as day except that the petitioner, with the
blindness of those who will not see, refuses to acknowledge it. The Court has
little patience with such puerile arguments. They border dangerously on a
trifling with the administration of justice and can only prejudice the
pleader's cause.
Ø The authority of the provincial board to close that road and use or convey
it for other purposes is derived from the following provisions of Republic Act
No. 5185 in relation to Section 2246 of the Revised Administrative Code:
o R.A. No. 5185, Section 11 (II) (a): II. The following actions by
municipal officials or municipal councils, as provided for in the
pertinent sections of the Revised Administrative Code shall take
effect without the need of approval or direction from any official
of the national government: Provided, That such actions shall be
subject to approval or direction by the Provincial Board:
o (a) Authority to close thoroughfare under Section 2246; xxx xxx
xxx Section 2246. Authority to close thoroughfare. — With the prior
authorization of the Department Head, a municipal council may
close any municipal road, street, alley, park, or square; but no
such way or place aforesaid or any part thereof, shall be closed
without indemnifying any person prejudiced thereby.
o Property thus withdrawn from public servitude may be used or
conveyed for any purpose for which other real property
belonging to the municipality might be lawfully used or
conveyed.
Ø The lower court found the petitioner's allegation of injury and prejudice to
be without basis because he had "easy access anyway to the national
road, for in fact the vehicles used by the Court and the parties during the
ocular inspection easily passed and used it, reaching beyond plaintiff's
house." However, the Court of Appeals ruled that he "was prejudiced by
the closure of the road which formerly fronted his house. He and his family
24
were undoubtedly inconvenienced by the loss of access to their place of
residence for which we believe they should be compensated."
Ø On this issue, the governing principle was laid down in Favis thus: . . . The
general rule is that one whose property does not abut on the closed section
of a street has no right to compensation for the closing or vacation of the
street, if he still has reasonable access to the general system of streets. The
circumstances in some cases may be such as to give a right to damages
to a property owner, even though his property does not abut on the closed
section. But to warrant recovery in any such case the property owner must
show that the situation is such that he has sustained special damages
differing in kind, and not merely in degree, from those sustained by the
public generally.
Ø Therefore, petition is without merit and Petitioner is not entitled to any
damages.
78-Favia v. City of Baguio
[29 SCRA 456]
Plaintiff-appellant: Antonio Favis
Defendants-appellees: The City of Baguio and The Shell Company of the Philippines,
Limited
DOCTRINE: The City Council has the authority to determine whether or not a certain
street is still necessary for public use.
FACTS:
§ April 30, 1957- Antonio Favis bought a parcel of land of about 1,000 square
meters — Lot 2-E-3-B-3-B-2 of the subdivision plan (LRC) Psd-2179 — from the
Assumption Convent, Inc. Said lot is bounded on the southwest by Lot 2-E-
3-B-3-B-1 (proposed road), owned by Assumption Convent, Inc. and part of
subdivision plan Psd-2179.
§ Simultaneous with the sale, Assumption donated to the City — "for road
purposes" — the lot indicated in its subdivision plan as the proposed road
— Lot 2-E-3-B-3-B-1 aforesaid. This donated road is used by Favis as his
means of egress and ingress from his residence to a public street called
Lapu-Lapu Street.
§ Lapu-Lapu Street is actually Lot 27 in the amendatory plan (Bcs- 56-Amd,
Residence Section "B") and is a portion of a big tract of land registered in
the name of the City, known as Baguio Market Subdivision, for all of which
the City holds Transfer Certificate of Title No. 2208. It branches out to various
parts of the market subdivision.
§ Lot 25 of the Baguio Market Subdivision is northernmost in said subdivision
and contains an area of approximately 400 square meters. Immediately
next to it, to the north, is the lot of Olmina Fernandez aforesaid. As far back
as June, 1947, the City, by virtue of Resolution No. 115, Series of 1947, of the
City Council of Baguio, leased this Lot 25 to Shell for a ten- year period
renewable for another ten years. Shell constructed thereon a service station
of about 335 square meters.
§ May 10, 1961 - The City Council of Baguio passed Resolution No. 132
authorizing the City thru its Mayor to lease to Shell two parcels of land
described as follows:
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
o "A parcel of land, known as Lot No. 25 of the Market Subdivision
and shown as 'Lot A' on Sketch Plan .. marked 'Exhibit A' and
made a part hereof, situated in the City of Baguio, containing an
area of 335 sq. m . . ."
o "Also a parcel of land containing an area of 100 sq. m. more or
less, marked as 'Lot B' on Sketch Plan . . ."
§ Lot 25 (Lot A), it is to be noted, is the same lot leased to Shell way back in
June, 1947 and the lease of Lot B is merely an addition thereto. This
additional area taken from Lapu-Lapu Street is five (5) meters wide and
twenty (20) meters long and abuts Lot 25.
§ About three weeks later, the City, thru its Mayor, entered into a formal
contract of lease with Shell.
§ Shell filed an application with the Office of the City Engineer of Baguio for
a building permit for the construction of a new and bigger gasoline station
on the leased premises.
o Said office, in a letter to the City Council thru the City Mayor
dated June 30, 1961, noted that the leased "lot 'B' which consists
of 100 square meters is exactly within the road right-of-way of
Lapu-Lapu Street," is for public use, and may not be leased.
§ July 5, 1961- Antonio C. Favis lodged a letter- protest against the additional
lease made in favor of Shell.
o He claimed that it would diminish the width of Lapu-Lapu Street
to five meters only; t
o hat it would destroy the symmetry of the said street thus making
it look very ugly; and
o that the City was bereft of authority to lease any portion of its
public streets in favor of anyone.
§ Apparently to obviate any and all objections to the lease of the additional
area to Shell, the City Council of Baguio, on July 19, 1961, passed Resolution
No. 215, amending Resolution No. 132, Series of 1961, by converting that
"portion of Lapu-Lapu Street lying southeast from Lot B of the sketch plan
prepared March 10, 1961 by Private Land Surveyor Perfecto B. Espiritu,
beginning at this portion's intersection with Dagohoy Street, into an alley
5.00 meters wide (4 m. now in actual use); declaring for this purpose, that
said Lot B shall not be a part of this alley."
§ Favis then commenced a suit for the annulment of the lease contract with
damages in the CFI of Baguio.
§ The CFI of Baguio uphold the two questioned resolution and dismissed the
complaint.
ISSUE: Whether or not the City Council does not have the power to close city streets
like Lapu-Lapu Street?
HELD: NO. The City Council does have the power to close city street.
Ø The main thrust of appellant's arguments is that the city council does not
have the power to close city streets like Lapu-Lapu Street. He asserts that
since municipal bodies have no inherent power to vacate or withdraw a
street from public use, there must be a specific grant by the legislative body
to the city or municipality concerned. Considering that "municipal
25
corporations in the Philippines are mere creatures of Congress; that, as
such, said corporations possessed, and may exercise, only such power as
Congress may deem fit to grant thereto," a reference to the organic act of
the City of Baguio appears to be in order.
Ø In subsection (L) of Section 2553 of the Revised Administrative Code (Baguio
Charter), the language of the grant of authority runs thus — "(L) To provide
for laying out, opening, extending, widening, straightening, closing up,
constructing, or regulating, in whole or in part, any public plaza, square,
street, sidewalk, trail, park, waterworks, or water mains, or any cemetery,
sewer, sewer connection or connections, either on, in, or upon public or
private property . . ."
Ø Undoubtedly, the City is explicitly empowered to close a city street.
Ø The Court may drive home the point by presenting here the converse of the
rule as set forth in Unson vs. Lacson, supra. There, as here, the municipal
board passed an ordinance (No. 3470) withdrawing the northern portion of
Callejon del Carmen from public use, declaring it patrimonial property of
the City of Manila and authorizing its lease to Genato Commercial
Corporation. Unson had a lot bordering Callejon del Carmen on which
several buildings stood. One of such buildings was known as "Commerce
Building." Prior to the construction of Genato's building on the leased
premises, Unson's lot had on its southern boundary two exits on Callejon del
Carmen which had to be closed upon the construction of said building.
Unson went to court alleging that the ordinance and the contract of lease
with Genato were illegal. The trial court upheld the city's authority to
withdraw such alley for public use and to convert it into patrimonial
property. But, on appeal, we held:
Ø "In this connection, respondents have been unable to cite any legal
provision specifically vesting in the City of Manila the power to close
Callejon del Carmen. Indeed, Section 18(x) of Republic Act No. 409 — upon
which appellees rely — authorizes the Municipal Board of Manila 'subject
to the provisions of existing laws, to provide for the laying out, construction
and improvement . . . of streets, avenues, alleys . . . and other public places,'
but it says nothing about the closing of any such places. The significance of
this silence becomes apparent when contrasted with Section 2246 of the
Revised Administrative Code, explicitly vesting in municipal councils of
regularly organized municipalities the power to close any municipal road,
street, alley, park or square, provided that persons prejudiced thereby are
duly indemnified, and that the previous approval of the Department Head
shall have been secured. The express grant of such power to the
aforementioned municipalities and the absence of said grant to the City of
Manila lead to no other conclusion than that the power was intended to
be withheld from the latter."
Ø So it is, that appellant may not challenge the city council's act of
withdrawing a strip of Lapu-Lapu Street at its dead end from public use and
converting the remainder thereof into an alley. These are acts well within
the ambit of the power to close a city street. The city council, it would seem
to us, is the authority competent to determine whether or not a certain
property is still necessary for public use.
Ø Such power to vacate a street or alley is discretionary. And the discretion
will not ordinarily be controlled or interfered with by the courts, absent a
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
plain case of abuse or fraud or collusion. Faithfulness to the public trust will
be presumed. So the fact that some private interests may be served
incidentally will not invalidate the vacation ordinance.
Local Legislative Power
79-Land Bank of the Philippines v. Cacayuran
[G.R. No. 191667, April 17, 2013]
Doctrine: A careful perusal of Section 444 (b) (1) (vi) of the LGC shows that while the
authorization of the municipal mayor need not be in the form of an ordinance, the
obligation which the said local executive is authorized to enter into must be made
pursuant to a law or ordinance. In the present case, while Mayor Eriguel’s
authorization to contract the Subject Loans were not contained – as it need not be
contained – in the form of an ordinance, the said loans and even the Redevelopment
Plan itself were not approved pursuant to any law or ordinance but through mere
resolutions.
While ordinances are laws and possess a general and permanent character,
resolutions are merely declarations of the sentiment or opinion of a lawmaking body
on a specific matter and are temporary in nature. As opposed to ordinances, “no
rights can be conferred by and be inferred from a resolution.”
Petitioners: Land Bank of the Philippines
Respondents: Eduardo M. Cacayuran
FACTS:
• From 2005 to 2006, the Municipality’s Sangguniang Bayan (SB) passed
certain resolutions to implement a multi-phased plan (Redevelopment
Plan) to redevelop the Agoo Public Plaza (Agoo Plaza) where the Imelda
Garden and Jose Rizal Monument were situated.
o To finance phase 1 of the said plan, the SB initially passed
Resolution No. 68-2005 authorizing then Mayor Eufranio Eriguel
(Mayor Eriguel) to obtain a loan from Land Bank and incidental
thereto, mortgage a lot situated at the southeastern portion of
the Agoo Plaza (Plaza Lot) as collateral.
o Thereafter, the SB passed Resolution No. 59-2006, approving the
construction of a commercial center on the Plaza Lot as part of
phase II of the Redevelopment Plan. Mayor Eriguel was again
authorized to obtain a loan from Land Bank to finance the
project.
• Unlike phase 1 of the Redevelopment Plan, the construction of the
commercial center of the Agoo Plaza was vehemently objected to by some
residents of the Municipality.
o Led by Cacayuran, they claimed that the conversion of the Agoo
Plaza into a commercial center, as funded by the proceeds from
the First and Second Loans (Subject Loans), were “highly irregular,
violative of law, and detrimental to public interests, and will result
to wanton desecration of the said historical and public park.
§ They also requested the members of the SB (Implicated
Officers) for copies of various documents related to the
Redevelopment Plan.
26
§ Unable to get any response, Cacayuran, invoking his
right as a taxpayer, filed a Complaint against the
Implicated Officers and Land Bank, assailing, among
others, the validity of the Subject Loans on the ground
that the Plaza Lot used as collateral thereof is property
of public dominion and therefore, beyond the
commerce of man.
• Land Bank claimed that it is not privy to the Implicated Officers’ acts of
destroying the Agoo Plaza.
• RTC ruled in favor of Cacayuran, declaring the nullity of the Subject Loans.
It found that the resolutions approving the said loans were passed in a
highly irregular manner and thus, ultra vires, as such, the Municipality is not
bound by the same.
• CA affirmed with modification: excluding Vice Mayor Eslao from any
personal liability arising from the Subject Loans.
ISSUE:
WON the Subject Resolutions were validly passed
HELD:
• Land Bank avers that the Subject Resolutions provided ample authority for
Mayor Eriguel to contract the Subject Loans. It posits that Section 444 (b) (1)
(vi) of the LGC merely requires that the municipal mayor be authorized by
the SB concerned and that such authorization need not be embodied in
an ordinance.
• A careful perusal of Section 444 (b) (1) (vi) of the LGC shows that while the
authorization of the municipal mayor need not be in the form of an
ordinance, the obligation which the said local executive is authorized to
enter into must be made pursuant to a law or ordinance.
• In the present case, while Mayor Eriguel’s authorization to contract the
Subject Loans were not contained – as it need not be contained – in the
form of an ordinance, the said loans and even the Redevelopment Plan
itself were not approved pursuant to any law or ordinance but through
mere resolutions.
o While ordinances are laws and possess a general and permanent
character, resolutions are merely declarations of the sentiment or
opinion of a lawmaking body on a specific matter and are
temporary in nature. As opposed to ordinances, “no rights can be
conferred by and be inferred from a resolution.”
o In this accord, it cannot be denied that the SB violated Section
444 (b) (1) (vi) of the LGC altogether.
• Noticeably, the passage of the Subject Resolutions was also tainted with
other irregularities, such as (1) the SB’s failure to submit the Subject
Resolutions to the Sangguniang Panlalawigan of La Union for its review
contrary to Section 56 of the LGC; and (2) the lack of publication and
posting in contravention of Section 59 of the LGC.
• In fine, Land Bank cannot rely on the Subject Resolutions as basis to validate
the Subject Loans.
80-Beluso v. Municipality of Panay (Capiz)
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
[G.R. No. 153974, August 7, 2006]
Doctrine: A municipal ordinance is different from a resolution. An ordinance is a law,
but a resolution is merely a declaration of the sentiment or opinion of a lawmaking
body on a specific matter. An ordinance possesses a general and permanent
character, but a resolution is temporary in nature. Additionally, the two are enacted
differently – a third reading is necessary for an ordinance, but not for a resolution,
unless decided otherwise by a majority of all the Sanggunian members.
If Congress intended to allow LGUs to exercise eminent domain through a mere
resolution, it would have simply adopted the language of the previous LGC. But
Congress did not. In a clear divergence from the previous LGC, Sec 19 of RA 7160
categorically requires that the local chief executive act pursuant to an ordinance.
Petitioners: M. Beluso, N. Beluso, P. Beluso, A. Beluso, R. Beluso, and A. Daniel,
subsituted by her heirs represented by T. Arrobang
Respondents: The Municipality of Panay (Capiz), represented by its Mayor V. Bermejo
FACTS:
• Petitioners are owners of parcels of land covered by Free Patents.
• The Sangguniang Bayan of the Municipality of Panay issued Resolution No. 95-
29 authorizing the municipal government through the mayor to initiate
expropriation proceedings. A petition for expropriation was thereafter filed
before the RTC.
• Petitioners filed a Motion to Dismiss alleging that the taking is not for public use
but only for the benefit of certain individuals, among others.
o RTC denied petitioner’s Motion to Dismiss and declared that the
expropriation in this case is for “public use” and the respondent has
the lawful right to take the property upon payment of just
compensation.
• On appeal, petitioners also filed a Motion to Admit Attached Memorandum and
the Memorandum itself where they argued that based on the Petition for
Expropriation filed by respondent, such expropriation was based only on a
resolution and not on an ordinance contrary to Sec. 19 of RA 7160.
o CA rendered its Decision dismissing the petition; held that the purpose
of the taking in this case constitutes “public use”
ISSUE:
WON respondent has lawful power to acquire any or all of the subject properties
through eminent domain, it being exercised by means of a mere resolution, and not
through an ordinance as required by law and applicable jurisprudence
HELD:
• Petitioners argue that: contrary to Sec. 19 of RA 7160 which provides that a
local government may exercise the power of eminent domain only by
“ordinance,” respondent’s expropriation in this case is based merely on a
“resolution”.
• Eminent domain, which is the power of a sovereign state to appropriate
private property to particular uses to promote public welfare, is essentially
lodged in the legislature. While such power may be validly delegated to
local government units (LGUs), other public entities and public utilities the
exercise of such power by the delegated entities is not absolute. In fact, the
27
scope of delegated legislative power is narrower than that of the
delegating authority and such entities may exercise the power to
expropriate private property only when authorized by Congress and
subject to its control and restraints imposed through the law conferring the
power of eminent domain. Thus, strictly speaking, the power of eminent
domain delegated to an LGU is in reality not eminent but “inferior” since it
must conform to the limits imposed by the delegation and thus partakes
only of a share in eminent domain. The national legislature is still the
principal of the LGUs and the latter cannot go against the principal’s will of
modify the same.
• Indeed, despite the existence of legislative grant in favor of local
governments, it is still the duty of the courts to determine whether the power
of eminent domain is being exercised in accordance with the delegating
law.
o Sec. 19 of RA 7160, which delegates to LGUs the power of
eminent domain; stating that several requisites must concur
before an LGU can exercise the power of eminent domain, to wit:
• An ordinance is enacted by the local legislative council
authorizing the local chief executive, in behalf of the
LGU, to exercise the power of eminent domain or
pursue expropriation proceedings over a particular
private property.
• The power of eminent domain is exercised for public
uses, purpose or welfare, or for the benefit of the poor
and the landless.
• There is payment of just compensation, as required
under Section 9, Article III of the Constitution, and other
pertinent laws.
• A valid and definite offer has been previously made to
the owner of the property sought to be expropriated,
but said offer was not accepted.
o The Court in no uncertain terms have pronounced that a LGU
cannot authorize an expropriation of private property through a
mere resolution of its lawmaking body. RA 7160 expressly requires
an ordinance for the purpose and a resolution that merely
expresses the sentiment of the municipal council will not suffice.
• A municipal ordinance is different from a resolution. An
ordinance is a law, but a resolution is merely a
declaration of the sentiment or opinion of a lawmaking
body on a specific matter. An ordinance possesses a
general and permanent character, but a resolution is
temporary in nature. Additionally, the two are enacted
differently – a third reading is necessary for an
ordinance, but not for a resolution, unless decided
otherwise by a majority of all the Sanggunian members.
If Congress intended to allow LGUs to exercise eminent domain through a mere
resolution, it would have simply adopted the language of the previous LGC. But
Congress did not. In a clear divergence from the previous LGC, Sec 19 of RA 7160
categorically requires that the local chief executive act pursuant to an ordinance.
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
• As respondent’s expropriation in this case was based merely on a
resolution, such expropriation is clearly defective.
81-Spouses Yusay v. Court of Appeals
[G.R. No. 156684, April 6, 2011]
Petitioners: SPOUSES ANTONIO and FE YUSAY
Respondents: COURT OF APPEALS, CITY MAYOR and CITY COUNCIL OF
MANDALUYONG CITY
FACTS:
• Petitioners owned a parcel of land in Brgy. Mauway, Mandaluyong City.
Half of their land they used as their residence, and the rest they rented out
to nine other families. Allegedly, the land was their only property and only
source of income.
• On October 2, 1997, the Sangguniang Panglungsod (SP) of Mandaluyong
adopted Resolution No. 552 authorizing then City Mayor Abalos to take
necessary legal steps for the expropriation of the land of the petitioners for
the purpose of developing it for low cost housing for the less privileged but
deserving city inhabitants.
• Petitioners became alarmed and filed a petition for certiorari and
prohibition in the RTC, praying for the annulment of the Resolution due to its
being unconstitutional, confiscatory, improper, and without force and
effect.
• RTC: ruled in favor of the City and dismissed the petition for lack of merit,
opining that certiorari did not lie against a legislative act of the City
Government because the special civil action was only available to assail
judicial or quasi-judicial acts; that the act of passing the resolution was not
a judicial, or quasi-judicial, or ministerial act; and that notwithstanding the
issuance, the City had yet to commit acts of encroachment, excess, or
usurpation.
• RTC, acting upon the petitioners’ MR set aside its decision and declared
that the Resolution was null and void, holding that the petition was not
premature because the passage of Resolution No. 552 would already pave
the way for the City to deprive the petitioners and their heirs of their only
property. The CA reversed the RTC and ruled that it was not justified
because Resolution No. 552 deserved to be accorded the benefit of the
presumption of regularity and validity absent any sufficient showing to the
contrary.
ISSUE: (1) W/N A MERE RESOLUTION OF SANGGUNIANG PANGLUNGSOD IS SUFFIECIENT
FOR THE PURPOSE OF INITIATING AN EXPROPRIATION PROCEEDING
(2) W/N AN ACTION FOR PROHIBITION WILL LIE AGAINST EXPROPRIATION
HELD: (1) NO.
• A resolution like Resolution No. 552 that merely expresses the sentiment of
the Sangguniang Panglungsod is not sufficient for the purpose of initiating
an expropriation proceeding. Indeed, in Municipality of Paraaque v. V.M.
Realty Corporation, the Court ruled so:
• The power of eminent domain is lodged in the legislative branch of
government, which may delegate the exercise thereof to LGUs, other
public entities and public utilities. An LGU may therefore exercise the power
to expropriate private property only when authorized by Congress and
subject to the latter’s control and restraints, imposed through the law
28
conferring the power or in other legislations. In this case, Section 19 of RA
7160, which delegates to LGUs the power of eminent domain, lays down
the parameters for its exercise, which among others provides that “a local
government unit may, through its chief executive and acting pursuant to
an ordinance, exercise the power of eminent domain for public use, or
purpose, or welfare for the benefit of the poor and the landless, upon
payment of just compensation, pursuant to the provisions of the
Constitution and pertinent laws...”
• Hence, the following essential requisites must concur before an LGU can
exercise the power of eminent domain:
a. An ordinance is enacted by the local legislative council authorizing the local chief
executive, in behalf of the LGU, to exercise the power of eminent domain or pursue
expropriation proceedings over a particular private property.
b. The power of eminent domain is exercised for public use, purpose or welfare, or for
the benefit of the poor and the landless.
c. There is payment of just compensation, as required under Section 9 Article III of the
Constitution and other pertinent laws.
d. A valid and definite offer has been previously made to the owner of the property
sought to be expropriated, but said offer was not accepted.
• In the case at bar, the local chief executive sought to exercise the power of
eminent domain pursuant to a resolution of the municipal council. Thus, there was
no compliance with the first requisite that the mayor be authorized through an
ordinance.
• A municipal ordinance is different from a resolution. An ordinance is a law, but a
resolution is merely a declaration of the sentiment or opinion of a lawmaking body
on a specific matter. An ordinance possesses a general and permanent
character, but a resolution is temporary in nature. Additionally, the two are
enacted differently -- a third reading is necessary for an ordinance, but not for a
resolution, unless decided otherwise by a majority of all the Sanggunian members.
(2) NO.
• The rule and relevant jurisprudence indicate that prohibition was not available to
the petitioners as a remedy against the adoption of Resolution No. 552, for the
Sangguniang Panglungsod, by such adoption, was not exercising judicial, quasi-
judicial or ministerial functions, but only expressing its collective sentiment or
opinion.
• Verily, there can be no prohibition against a procedure whereby the immediate
possession of the land under expropriation proceedings may be taken, provided
always that due provision is made to secure the prompt adjudication and payment
of just compensation to the owner. This bar against prohibition comes from the
nature of the power of eminent domain as necessitating the taking of private land
intended for public use, and the interest of the affected landowner is thus made
subordinate to the power of the State. Once the State decides to exercise its power
of eminent domain, the power of judicial review becomes limited in scope, and the
courts will be left to determine the appropriate amount of just compensation to be
paid to the affected landowners. Only when the landowners are not given their just
compensation for the taking of their property or when there has been no
agreement on the amount of just compensation may the remedy of prohibition
become available.
 2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr. 29

• Here, however, the remedy of prohibition was not called for, considering that only • In 1989, the spouses opened on the same lot The Learning Child Pre-school which
a resolution expressing the desire of the Sangguniang Panglungsod to expropriate initially consisted of nursery and kindergarten classes. In 1991, it was expanded
the petitioners property was issued. As of then, it was premature for the petitioners to include a grade school program, the School of the Holy Cross.
to mount any judicial challenge, for the power of eminent domain could be • The AAVA filed with the RTC of Makati an action for injunction against TLC and
exercised by the City only through the filing of a verified complaint in the proper the spouses Alfonso, alleging breach of contract by the defendant spouses of
court. Before the City as the expropriating authority filed such verified complaint, the Deed of Restrictions.
no expropriation proceeding could be said to exist. Until then, the petitioners as the • RTC of Makati – Rendered a Decision in favour of AAVA, emphasizing that the
owners could not also be deprived of their property under the power of eminent restrictions were in reality an easement which an owner of a real estate may
domain. validly impose under Article 688 of the Civil Code.
• TLC filed its Motion for Reconsideration alleging that with the passage of
82-The Learning Child, Inc. v. Ayala Alabang Village Association Muntinlupa Zoning Ordinance No. 91-39 which reclassified the subject property
[G.R. No. 134269, July 7, 2010] as “institutional,” there ceased to be legal basis for the RTC to uphold the Deed
Petitioners: THE LEARNING CHILD, INC. and SPS. FELIPE AND MARY ANNE ALFONSO of Restrictions. RTC agreed and set aside its earlier Decision. Citing Ortigas & Co.
Respondents: AYALA ALABANG VILLAGE ASSOCIATION, SPOUSES ERNESTO AND ALMA Limited Partnership v. Feati Bank & Trust Co., it decreed that while the non-
ARZAGA, MARIA LUISA QUISUMBING, ARTURO SENA, KSL CORPORATION, SLV impairment of contracts is constitutionally guaranteed, the rule is not absolute
MANAGEMENT CORPORATION and LAWPHIL, INC since it has to be reconciled with the legitimate exercise of police power by the
Deed of Metropolitan Muntinlupa Muntinlupa municipality.
Restrictions Manila Zoning Resolution No. 94- • Upon appeal by the AAVA to the CA, it set aside the Resolution of the RTC and
Commission Ordinance No. 179 reinstated the previous decision in favour of AAVA. It denied the MR filed by TLC
Ordinance No. 91-39 and spouses Alfonso.
81-01 • Zoning Ordinance Case – In the meantime, the Municipality of Muntinlupa
passed Resolution No. 94-179 correcting an alleged typo on Ordinance No. 91-
“USE AND Classified Ayala Reclassified the Corrected a
39, effectively placing Lot 25, Block 3, Phase V (herein subject lot) under the
OCCUPANCY – Alabang Village subject property typographical
“Institutional Zone.”
The property shall for zoning as “institutional” error in the
• HLURB – According to the Housing and Land Use Regulatory Board
be used purposes as a description of a
(HLURB), the Resolution was not a mere correction of a typo but an
exclusively for the low-density parcel of land
actual rezoning of the property into an institutional area and would
establishment and residential area, under the
require the conduct of public hearings.
maintenance thereby limiting heading
• Office of the President – The Office of the President set aside this
thereon of a the use of the “Institutional
conclusion of the HLURB and declared Resolution No. 94-179 as a valid
preparatory subject property Zone” in Appendix
corrective issuance. It further held that the Deed of Restrictions had
(nursery and to the B of Ordinance
lost its force and effect in view of the passage of Ordinance No. 91-39.
kindergarten) establishment or No. 91-39 ,
• CA – The CA upheld the validity of Resolution No. 94-179 but held that
school, which may operation of a adjusting the
the Office of the President erred; that Ordinance No. 91-39 did not
include such nursery and description “Lot
have the effect of nullifying the Deed of Restrictions inasmuch as there
installations as an kindergarten 25, Block 1, Phase
is no conflict between the two.
office for school school, which V, Ayala
administration, should not Alabang” to “Lot
• ISSUE: (1) WON the Muntinlupa Resolution No. 94-179 is valid
playground and exceed two 25, Block 3, Phase
(2) WON Muntinlupa Municipal Ordinance No. 91-39, as corrected by
garage for school classrooms. V, Ayala
Muntinlupa Resolution No. 91-179, has the effect of nullifying the provisions
vehicles.” Alabang”
of the Deed of Restrictions on the subject property
FACTS:
HELD: (1) YES.
• Sale of Lot 25, Block 3, Phase V, Ayala Alabang – Ayala Land Inc. (ALI) sold this
• Being a mere corrective issuance, it is not invalidated by the lack of notice
parcel of land to spouses Yuson. They then sold it to spouses Alfonso. A Deed of
and hearing as AAVA contends.
Restrictions was annotated on the TCT which expressly provides that, “the
• Both the Official Zoning Map of Muntinlupa and that of the Ayala Alabang
property shall be used exclusively for the establishment and maintenance
Village show that the subject lot is classified as “institutional.” The official
thereon of a preparatory (nursery and kindergarten) school.” ALI turned over the
zoning map is an indispensable and integral part of a zoning ordinance,
right and power to enforce the restrictions on the properties in the Ayala
without which said ordinance would be considered void.
Alabang Village to the association of homeowners, the AAVA.
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
• It is clear that there was a typo and the Court is merely affirming
the correction made by the same entity which committed the
error.
• The authority of the HLURB is subordinate to that of the Office of
the President and the acts of the former may be set aside by the
latter.
(2) NO, there is a way to harmonize the seemingly opposing provisions.
• TLC and spouses Alfonso contended that the reclassification of
properties is a valid exercise of the state’s police power, with
which contractual obligations should be reconciled. AAVA on
the other hand contends that Even where the exercise of police
power is valid, the same does not operate to automatically
negate all other legal relationships in existence since the better
policy is to reconcile the conflicting rights.
• The jurisprudence cited by TLC and the spouses Alfonso requires
a meticulous review. The SC found that a clarification of the
doctrines laid down in the aforestated cases of Co, Ortigas, and
Presley is in order.
i. Ortigas & Co. Limited Partnership v. Feati Bank & Trust
Co: The Court, in upholding the exercise of police
power attendant in the reclassification of the subject
property therein over the Deed of Restrictions over the
same property, took into consideration the prevailing
conditions in the area. “Resolution was passed in the
exercise of police power to safeguard or promote the
health, safety, peace, good order and general welfare
of the people in the locality.”
ii. Co v. Intermediate Appellate Court: The Court denied
the applicability of reclassification. “This is not to
suggest that a zoning ordinance cannot affect existing
legal relationships for it is settled that it can legally do
so, being an exercise of police power. As such, it is
superior to the impairment clauses. xxx The zoning
ordinance in question, while valid as a police measure,
was not intended to affect existing rights protected by
the impairment clause. It is always a wise policy to
reconcile apparently conflicting rights under the
Constitution and to preserve both instead of nullifying
one against the other.”
iii. Presley v. Bel-Air Village Association: The Court allowed
the operation of the Hot Pan de Sal Store despite the
Deed of Restrictions, but not without examining the
surrounding area like in Ortigas.
• The subject property, though declared as an institutional lot,
nevertheless lies within a residential subdivision and is surrounded
by residential lots. TLC’s student population had swelled to 350
students. The greater traffic will affect adjacent property owners’
enjoyment and use of their own properties. AAVA’s insistence on
the enforcement of the Deed of Restrictions is thus reasonable.
Also, the Municipality of Muntinlupa did not appear to have any
30
special justification for declaring the subject lot as an institutional
property. he municipality was not asserting any interest or zoning
purpose contrary to that of the subdivision developer in declaring
the subject property as institutional.
• It is therefore proper to reconcile the apparently conflicting rights
of the parties herein
• Ruling: TLC and the spouses Alfonso are ordered to CEASE AND DESIST from
the operation of the Learning Child School beyond nursery and
kindergarten. The current students will be allowed to finish their elementary
studies up to their graduation in Grade 7. Enrollment of new grade school
students will no longer be permitted.
83-Social Justice Society v. Atienza
[G.R. No. 156052, March 7, 2007]
Doctrine: The Local Government Code imposes upon the City Mayor the duly to
“enforce all laws and ordinances relative to the governance of the city”. As chief
executive of the city, he has the duty to enforce an ordinance as long as it has not
been repealed by the Sanggunian or annulled by the courts. He has no choice; it is
his ministerial duty to do so [Social Justice Society v. Mayor Atienza, G.R. No. 156052,
March 7, 2007].
Petitoners: Social Justice Society (SJS), Vladimir Alarique T. Cabigao, and Bonifacio S.
Tumbokon
Respondents: Hon. Jose L. Atienza, in his capacity as Mayor of the City of Manila
FACTS:
• The Sangguniang Panlungsod of Manila enacted Ordinance No. 8027.
Respondent mayor approved the ordinance which became effective
on December 28, 2001, after its publication. The said ordinance was
enacted pursuant to the police power delegated to local government
units, a principle described as the power inherent in a government to
enact laws, within constitutional limits, to promote the order, safety,
health, morals and general welfare of the society.
• Ordinance No. 8027 reclassified the area described therein from
industrial to commercial and directed the owners and operators of
businesses disallowed under Section 1 to cease and desist from
operating their businesses within six months from the date of effectivity
of the ordinance. Among the businesses situated in the area are the
socalled " Pandacan Terminals" of the oil companies Caltex
(Philippines), Inc., Petron Corporation and Pilipinas Shell Petroleum
Corporation.
• However, on June 26, 2002, the City of Manila and the Department
of Energy (DOE) entered into a memorandum of understanding (MOU)
with the oil companies in which they agreed that " the scaling down
of the Pandacan Terminals [was] the most viable and practicable
option." Under the MOU, the oil companies agreed (1) to scale down
the Pandacan Terminals which shall include, among others, the
immediate removal/decommissioning process of TWENTY EIGHT (28)
tanks starting with the LPG spheres and the commencing of works for
the creation of safety buffer and green zones surrounding the
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr.
Pandacan Terminals; (2) the OIL COMPANIES shall establish joint
operations and management, including the operation of common,
integrated and/or shared facilities, consistent with international and
domestic technical, safety, environmental and economic considerations
and standards. Consequently, the joint operations of the OIL
COMPANIES in the Pandacan Terminals shall be limited to the common
and integrated areas/facilities. A separate agreement covering the
commercial and operational terms and conditions of the joint
operations, shall be entered into by the OIL COMPANIES; (3) The
development and maintenance of the safety and green buffer zones
mentioned therein, which shall be taken from the properties of the
OIL COMPANIES and not from the surrounding communities, shall be
the sole responsibility of the OIL COMPANIES.
• The Sangguniang Panlungsod ratified the MOU in Resolution No. 97. In
the same resolution, the Sanggunian declared that the MOU was
effective only for a period of six months starting July 25, 2002. Thereafter,
on January 30, 2003, the Sanggunian adopted Resolution No. 13
extending the validity of Resolution No. 97 to April 30, 2003 and
authorizing Mayor Atienza to issue special business permits to the oil
companies. Resolution No. 13, s. 2003 also called for a reassessment
of the ordinance. Meanwhile, petitioners led this original action for
mandamus on December 4, 2002 praying that Mayor Atienza be
compelled to enforce Ordinance No. 8027 and order the immediate
removal of the terminals of the oil companies.
ISSUE: WON respondent has the mandatory legal duty to enforce Ordinance No.
8027 and order the removal of the Pandacan Terminals?
HELD:
• YES. The Local Government Code imposes upon respondent the duty,
as city mayor, to "enforce all laws and ordinances relative to the
governance of the city." One of these is Ordinance No. 8027. As the
chief executive of the city, he has the duty to enforce Ordinance No.
8027 as long as it has not been repealed by the Sanggunian or
annulled by the courts. He has no other choice. It is his ministerial duty
to do so. The objective of the ordinance is to protect the residents of
Manila from the catastrophic devastation that will surely occur in case
of a terrorist attack on the Pandacan Terminals. No reason exists why
such a protective measure should be delayed.
• When a mandamus proceeding concerns a public right and its object
is to compel a public duty, the people who are interested in the
execution of the laws are regarded as the real parties in interest and
they need not show any specific interest.
• Mandamus is an extraordinary writ that is employed to compel the
performance, when refused, of a ministerial duty that is already
imposed on the respondent and there is no other plain, speedy and
adequate remedy in the ordinary course of law. The petitioner should
have a well-defined, clear and certain legal right to the performance
of the act and it must be the clear and imperative duty of respondent
31
to do the act required to be done. 17 17 Mandamus will not issue to
enforce a right, or to compel compliance with a duty, which is
questionable or over which a substantial doubt exists. The principal
function of the writ of mandamus is to command and to expedite,
not to inquire and to adjudicate; thus, it is neither the office nor the
aim of the writ to secure a legal right but to implement that which
is already established. Unless the right to the relief sought is unclouded,
mandamus will not issue.
WHEREFORE, the petition is hereby GRANTED. Respondent Hon. Jose L. Atienza,
Jr., as mayor of the City of Manila, is directed to immediately enforce Ordinance
No. 8027.
84-Acaac v. Azcuna
[G.R. No. 187378, September 30, 2013]
Petitoners: Ramonito O. Acaac, Petal Foundation, Inc., Apolinario M. Elorde, Hector
Acaac, and Romeo Bulawin
Respondents: Melquiades D. Azcuna, Jr., in his capacity as Mayor, and Marietes B.
Bonalos, in her capacity as Municipal Engineer and Building Official-designate, both
of Lopez Jaena Municipality, Misamis Occidental
FACTS:
• Petitioner People's Eco-Tourism and Livelihood Foundation, Inc. (PETAL)
is a nongovernmental organization, founded by petitioner Ramonito O.
Acaac, which is engaged in the protection and conservation of
ecology, tourism, and livelihood projects within Misamis Occidental. In
line with its objectives, PETAL built some cottages made of indigenous
materials on Capayas Island in 1995 as well as a seminar cottage in
2001 which it rented out to the public and became the source of
livelihood of its beneficiaries, among whom are petitioners Hector
Acaac and Romeo Bulawin. On April 11 and May 20, 2002, however,
respondents Mayor Melquiades D. Azcuna, Jr. (Azcuna) and Building
Official Marietes B. Bonalos issued separate Notices of Illegal
Construction against PETAL for its failure to apply for a building permit
prior to the construction of its buildings in violation of Presidential
Decree No. 1096, otherwise known as the "National Building Code of
the Philippines," ordering it to stop all illegal building activities on
Capayas Island. When PETAL failed to comply with the requirements
for the issuance of a building permit, a Third and Final Notice of Illegal
Construction was issued by respondents against it on July 8, 2002, 9
but still the same remained unheeded. It was also on July 8, 2002 that
the Sangguniang Bayan of Lopez Jaena (SB) adopted Municipal
Ordinance No. 02, Series of 2002 10 (subject ordinance) which
prohibited, among others:
(a) the entry of any entity, association, corporation or organization inside the
sanctuaries; and
(b) the construction of any structures, permanent or temporary, on the premises,
except if authorized by the local government.
• On July 12, 2002, Azcuna approved the subject ordinance; hence, the
same was submitted to the Sangguniang Panlalawigan of Misamis
2L (2017 – 2018) - LAW ON PUBLIC CORPORATIONS Atty. Antonio Nachura Jr. 32

Occidental (SP), which in turn, conducted a joint hearing on the

matter. Thereafter, notices were posted at the designated areas, WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals are
including Capayas Island, declaring the premises as government hereby AFFIRMED.
property and prohibiting ingress and egress thereto. A Notice of
Voluntary Demolition was served upon PETAL directing it to remove the
structures it built on Capayas Island. Petitioners then filed an action
praying for the issuance of a TRO, injunction, and damages before the RTC
assailing the validity of the Ordinance. The RTC ruled in favor of petitioners
but the CA, upon appeal by the respondents, reversed the ruling of the
RTC, hence, this petition for review on certiorari.

ISSUE: WON the subject ordinance is valid and enforceable against petitioners?

HELD:
• YES. Section 56 of the LGC provides:
SEC. 56. Review of Component City and Municipal Ordinances or Resolutions by
the Sangguniang Panlalawigan. — (a) Within three (3) days after approval, the
secretary to the Sangguniang Panlungsod or Sangguniang Bayan shal forward
to the Sangguniang Panlalawigan for review, copies of approved ordinances
and the resolutions approving the local development plans and public
investment programs formulated by the local development councils.
(b) Within thirty (30) days after receipt of copies of such ordinances and
resolutions, the Sangguniang Panlalawigan shal examine the documents or
transmit them to the provincial attorney, or if there be none, to the provincial
prosecutor for prompt examination. The provincial attorney or provincial
prosecutor shall, within a period of ten (10) days from receipt of the documents,
inform the Sangguniang Panlalawigan in writing his comments or
recommendations, which may be considered by the Sangguniang Panlalawigan
in making its decision.
(c) If the Sangguniang Panlalawigan finds that such an ordinance or resolution
is beyond the power conferred upon the Sangguniang Panlungsod or
Sangguniang Bayan concerned, it shall declare such issuance or resolution
invalid in whole or in part. The Sangguniang Panlalawigan shall enter its action
in the minutes and shall advise the corresponding city or municipal authorities
of the action it has taken.
(d) If no action has been taken by the Sangguniang Panlalawigan within thirty
(30) days after submission of such an ordinance or resolution, the same shall be
presumed consistent with law and therefore valid.
• In this case, petitioners maintain that the subject ordinance cannot
be deemed approved through the mere passage of time considering
that the same is still pending with the Committee on Fisheries and
Aquatic Resources of the SP. 35 It, however, bears to note that more
than 30 days have already elapsed from the time the said ordinance
was submitted to the latter for review by the SB; 36 hence, it should
be deemed approved and valid pursuant to Section 56 (d) above.
• In any event, petitioners have not shown any valid title 44 to the
property in dispute to be entitled to its possession. Besides, the RTC's
order directing the removal of the structures built by petitioners on
Capayas Island without building permits was not appealed. As such,
the same should now be deemed as final and conclusive upon them.