EN BANC

[G.R. No. 118303. January 31, 1996]

SENATOR HEHERSON T. ALVAREZ, SENATOR JOSE D. LINA, JR., MR. NICASIO B. BAUTISTA, MR. JESUS P. GONZAGA,
MR. SOLOMON D. MAYLEM, LEONORA C. MEDINA, CASIANO S. ALIPON, petitioners, vs.HON. TEOFISTO T.
GUINGONA, JR., in his capacity as Executive Secretary, HON. RAFAEL ALUNAN, in his capacity as Secretary of Local
Government, HON. SALVADOR ENRIQUEZ, in his capacity as Secretary of Budget, THE COMMISSION ON AUDIT,
HON. JOSE MIRANDA, in his capacity as Municipal Mayor of Santiago and HON. CHARITO MANUBAY, HON.
VICTORINO MIRANDA, JR., HON. ARTEMIO ALVAREZ, HON. DANILO VERGARA, HON. PETER DE JESUS, HON.
NELIA NATIVIDAD, HON. CELSO CALEON and HON. ABEL MUSNGI, in their capacity as SANGGUNIANG BAYAN
MEMBERS, MR. RODRIGO L. SANTOS, in his capacity as Municipal Treasurer, and ATTY. ALFREDO S. DIRIGE, in his
capacity as Municipal Administrator, respondents.
DECISION
HERMOSISIMA, JR., J.:
Of main concern to the petitioners is whether Republic Act No. 7720, just recently passed by Congress and signed by the President into
law, is constitutionally infirm.
Indeed, in this Petition for Prohibition with prayer for Temporary Restraining Order and Preliminary Prohibitory Injunction, petitioners
assail the validity of Republic Act No. 7720, entitled, An Act Converting the Municipality of Santiago, Isabela into an Independent Component
City to be known as the City of Santiago, mainly because the Act allegedly did not originate exclusively in the House of Representatives as
mandated by Section 24, Article VI of the 1987 Constitution.
Also, petitioners claim that the Municipality of Santiago has not met the minimum average annual income required under Section 450 of
the Local Government Code of 1991 in order to be converted into a component city.
Undisputed is the following chronicle of the metamorphosis of House Bill No. 8817 into Republic Act No. 7720:
On April 18, 1993, HB No. 8817, entitled An Act Converting the Municipality of Santiago into an Independent Component City to be
known as the City of Santiago, was filed in the House of Representatives with Representative Antonio Abaya as principal author. Other sponsors
included Representatives Ciriaco Alfelor, Rodolfo Albano, Santiago Respicio and Faustino Dy. The bill was referred to the House Committee on
Local Government and the House Committee on Appropriations on May 5, 1993.
On May 19, 1993, June 1, 1993, November 28, 1993, and December 1, 1993, public hearings on HB No. 8817 were conducted by the
House Committee on Local Government. The committee submitted to the House a favorable report, with amendments, on December 9, 1993.
On December 13, 1993, HB No. 8817 was passed by the House of Representatives on Second Reading and was approved on Third
Reading on December 17, 1993. On January 28, 1994, HB No. 8817 was transmitted to the Senate.
Meanwhile, a counterpart of HB No. 8817, Senate Bill No. 1243, entitled, An Act Converting the Municipality of Santiago into an
Independent]Component City to be Known as the City of Santiago, was filed in the Senate. It was introduced by Senator Vicente Sotto III, as
principal sponsor, on May 19, 1993. This was just after the House of Representatives had conducted its first public hearing on HB No. 8817.
On February 23, 1994, or a little less than a month after HB No. 8817 was transmitted to the Senate, the Senate Committee on Local
Government conducted public hearings on SB No. 1243. On March 1, 1994, the said committee submitted Committee Report No. 378 on HB No.
8817, with the recommendation that it be approved without amendment, taking into consideration the reality that H.B. No. 8817 was on all fours
with SB No. 1243. Senator Heherson T. Alvarez, one of the herein petitioners, indicated his approval thereto by signing said report as member of
the Committee on Local Government.
On March 3, 1994, Committee Report No. 378 was passed by the Senate on Second Reading and was approved on Third Reading onMarch
14, 1994. On March 22, 1994, the House of Representatives, upon being apprised of the action of the Senate, approved the amendments proposed
by the Senate.
The enrolled bill, submitted to the President on April 12, 1994, was signed by the Chief Executive on May 5, 1994 as Republic Act No.
7720. When a plebiscite on the Act was held on July 13, 1994, a great majority of the registered voters of Santiago voted in favor of the
conversion ofSantiago into a city.
The question as to the validity of Republic Act No. 7720 hinges on the following twin issues: (I) Whether or not the Internal Revenue
Allotments (IRAs) are to be included in the computation of the average annual income of a municipality for purposes of its conversion into an
independent component city, and (II) Whether or not, considering that the Senate passed SB No. 1243, its own version of HB No. 8817, Republic
Act No. 7720 can be said to have originated in the House of Representatives.
I
The annual income of a local
government unit includes the IRAs
-----------------------------------------------------------
Petitioners claim that Santiago could not qualify into a component city because its average annual income for the last two (2) consecutive
years based on 1991 constant prices falls below the required annual income of Twenty Million Pesos (P20,000,000.00) for its conversion into a
city, petitioners having computed Santiagos average annual income in the following manner:
Total income (at 1991 constant prices) for 1991 P20,379,057.07
Total income (at 1991 constant prices) for 1992 P21,570,106.87
Total income for 1991 and 1992 P41,949,163.94
Minus:
IRAs for 1991 and 1992 P15,730,043.00
Total income for 1991 and 1992 P26,219,120.94
Average Annual Income P13,109,960.47
By dividing the total income of Santiago for calendar years 1991 and 1992, after deducting the IRAs, the average annual income arrived at
would only be P13,109,560.47 based on the 1991 constant prices. Thus, petitioners claim that Santiagos income is far below the aforesaid Twenty
Million Pesos average annual income requirement.
The certification issued by the Bureau of Local Government Finance of the Department of Finance, which indicates Santiagos average
annual income to be P20,974,581.97, is allegedly not accurate as the Internal Revenue Allotments were not excluded from the computation.
Petitioners asseverate that the IRAs are not actually income but transfers and! or budgetary aid from the national government and that they
fluctuate, increase or decrease, depending on factors like population, land and equal sharing.
In this regard, we hold that petitioners asseverations are untenable because Internal Revenue Allotments form part of the income of Local
Government Units.
It is true that for a municipality to be converted into a component city, it must, among others, have an average annual income of at least
Twenty Million Pesos for the last two (2) consecutive years based on 1991 constant prices. 1 Such income must be duly certified by the
Department of Finance.2
Resolution of the controversy regarding compliance by the Municipality of Santiago with the aforecited income requirement hinges on a
correlative and contextual explication of the meaning of internal revenue allotments (IRAs) vis-a-vis the notion of income of a local government
unit and the principles of local autonomy and decentralization underlying the institutionalization and intensified empowerment of the local
government system.
A Local Government Unit is a political subdivision of the State which is constituted by law and possessed of substantial control over its
own affairs.3 Remaining to be an intra sovereign subdivision of one sovereign nation, but not intended, however, to be an imperium in
imperio,4 the local government unit is autonomous in the sense that it is given more powers, authority, responsibilities and resources. 5 Power
which used to be highly centralized in Manila, is thereby deconcentrated, enabling especially the peripheral local government units to develop not
only at their own pace and discretion but also with their oWn resources and assets. 6
The practical side to development through a decentralized local government system certainly concerns the matter of financial resources.
With its broadened powers and increased responsibilities, a local government unit must now operate on a much wider scale. More extensive
operations, in turn, entail more expenses. Understandably, the vesting of duty, responsibility and accountability in every local government unit is
accompanied with a provision for reasonably adequate resources to discharge its powers and effectively carry out its functions. 7 Availment of
such resources is effectuated through the vesting in every local government unit of (1) the right to create and broaden its own source of revenue;
(2) the right to be allocated a just share in national taxes, such share being in the form of internal revenue allotments (IRAs); and (3) the right to
be given its equitable share in the proceeds of the utilization and development of the national wealth, if any, within its territorial boundaries. 8.
The funds generated from local taxes, IRAs and national wealth utilization proceeds accrue to the general fund of the local government and
are used to finance its operations subject to specified modes of spending the same as provided for in the Local Government Code and its
implementing rules and regulations. For instance, not less than twenty percent (20%) of the IRAs must be set aside for local development
projects.9 As such, for purposes of budget preparation, which budget should reflect the estimates of the income of the local government unit,
among others, the IRAs and the share in the national wealth utilization proceeds are considered items of income. This is as it should be, since
income is defined in the Local Government Code to be all revenues and receipts collected or received forming the gross accretions of funds of the
local government unit.10
The IRAs are items of income because they form part of the gross accretion of the funds of the local government unit. The IRAs regularly
and automatically accrue to the local treasury without need of any further action on the part of the local government unit.11 They thus constitute
income which the local government can invariably rely upon as the source of much needed funds.
For purposes of converting the Municipality of Santiago into a city, the Department of Finance certified, among others, that the
municipality had an average annual income of at least Twenty Million Pesos for the last two (2) consecutive years based on 1991 constant prices.
This, the Department of Finance did after including the IRAs in its computation of said average annual income.
Furthermore, Section 450 (c) of the Local Government Code provides that the average annual income shall include the income accruing to
the general fund, exclusive of special funds, transfers, and non-recurring income. To reiterate, IRAs are a regular, recurring item of income; nil is
there a basis, too, to classify the same as a special fund or transfer, since IRAs have a technical definition and meaning all its own as used in the
Local Government Code that unequivocally makes it distinct from special funds or transfers referred to when the Code speaks of funding support
from the national government, its instrumentalities and government-owned-or-controlled corporations.12
Thus, Department of Finance Order No. 359313 correctly encapsulizes the full import of the above disquisition when it defined ANNUAL
INCOME to be revenues and receipts realized by provinces, cities and municipalities from regular sources of the Local General Fund including
the internal revenue allotment and other shares provided for in Sections 284, 290 and 291 of the Code, but exclusive of non-recurring receipts,
such as other national aids, grants, financial assistance, loan proceeds, sales of fixed assets, and similar others (Italics ours).14 Such order,
constituting executive or contemporaneous construction of a statute by an administrative agency charged with the task of interpreting and
applying the same, is entitled to full respect and should be accorded great weight by the courts, unless such construction is clearly shown to be in
sharp conflict with the Constitution, the governing statute, or other laws. 15
II
In the enactment of RA No. 7720,
there was compliance with Section 24,
Article VI of the 1987 Constitution
-----------------------------------------------------------
Although a bill of local application like HB No. 8817 should, by constitutional prescription, 16 originate exclusively in the House of
Representatives, the claim of petitioners that Republic Act No. 7720 did not originate exclusively in the House of Representatives because a bill
of the same import, SB No. 1243, was passed in the Senate, is untenable because it cannot be denied that HB No. 8817 was filed in the House of
Representatives first before SB No. 1243 was filed in the Senate. Petitioners themselves cannot disavow their own admission that HB No. 8817
was filed on April 18, 1993 while SB No. 1243 was filed on May 19, 1993. The filing of HB No. 8817 was thus precursive not only of the said
Act in question but also of SB No. 1243. Thus, HB No. 8817, was the bill that initiated the legislative process that culminated in the enactment of
Republic Act No. 7720. No violation of Section 24, Article VI, of the 1987 Constitution is perceptible under the circumstances attending the
instant controversy.
Furthermore, petitioners themselves acknowledge that HB No. 8817 was already approved on Third Reading and duly transmitted to the
Senate when the Senate Committee on Local Government conducted its public hearing on HB No. 8817. HB No. 8817 was approved on the Third
Reading on December 17, 1993 and transmitted to the Senate on January 28, 1994; a little less than a month thereafter, or on February 23, 1994,
the Senate Committee on Local Government conducted public hearings on SB No. 1243. Clearly, the Senate held in abeyance any action on SB
No. 1243 until it received HB No. 8817, already approved on the Third Reading, from the House of Representatives. The filing in the Senate of a
substitute bill in anticipation of its receipt of the bill from the House, does not contravene the constitutional requirement that a bill of local
application should originate in the House of Representatives, for as long as the Senate does not act thereupon until it receives the House bill.
We have already addressed this issue in the case of Tolentino vs. Secretary of Finance.17 There, on the matter of the Expanded Value
Added Tax (EVAT) Law, which, as a revenue bill, is nonetheless constitutionally required to originate exclusively in the House of
Representatives, we explained:
x x x To begin with, it is not the law-but the revenue bill-which is required by the Constitution to originate exclusively in the House of
Representatives. It is important to emphasize this, because a bill originating in the House may undergo such extensive changes in the Senate that
the result may be a rewriting of the whole. x x x as a result of the Senate action, a distinct bill may be produced. To insist that a revenue statute-
and not only the bill which initiated the legislative process culminating in the enactment of the law-must substantially be the same as the House
bill would be to deny the Senates power not only to concur with amendments but also to propose amendments. It would be to violate the
coequality of legislative power of the two houses of Congress and in fact make the House superior to the Senate.
xxx xxx xxx
It is insisted, however, that S. No. 1630 was passed not in substitution of H. No. 11197 but of another Senate bill (S. No. 1129) earlier filed and
that what the Senate did was merely to take [H. No. 11197] into consideration in enacting S. No. 1630. There is really no difference between the
Senate preserving H. No. 11197 up to the enacting clause and then writing its own version following the enacting clause (which, it would seem
petitioners admit is an amendment by substitution), and, on the other hand, separately presenting a bill of its own on the same subject matter. In
either case the result are two bills on the same subject.
Indeed, what the Constitution simply means is that the initiative for filing revenue, tariff, or tax bills, bills authorizing an increase of the public
debt, private bills and bills of local application must come from the House of Representatives on the theory that, elected as they are from the
districts, the members of the House can be expected to be more sensitive to the local needs and problems. On the other hand, the senators, who
are elected at large, are expected to approach the same problems from the national perspective. Both views are thereby made to bear on the
enactment of such laws.
Nor does the Constitution prohibit the filing in the Senate of a substitute bill in anticipation of its receipt of the bill from the House, so long as
action by the Senate as a body is withheld pending receipt of the House bill. x x x18
III
Every law, including RA No. 7720,
has in its favor the presumption
of constitutionality
--------------------------------------------------------------------
It is a well-entrenched jurisprudential rule that on the side of every law lies the presumption of constitutionality.19 Consequently, for RA
No. 7720 to be nullified, it must be shown that there is a clear and unequivocal breach of the Constitution, not merely a doubtful and equivocal
one; in other words, the grounds for nullity must be clear and beyond reasonable doubt. 20 Those who petition this court to declare a law to be
unconstitutional must clearly and fully establish the basis that will justify such a declaration; otherwise, their petition must fail. Taking into
consideration the justification of our stand on the immediately preceding ground raised by petitioners to challenge the constitutionality of RA No.
7720, the Court stands on the holding that petitioners have failed to overcome the presumption. The dismissal of this petition is, therefore,
inevitable.
WHEREFORE, the instant petition is DISMISSED for lack of merit with costs against petitioners.
SO ORDERED.
Limbona vs Mangelin

G.R. No. 80391

February 28, 1989
Facts:
Limbona was elected Speaker of the Regional Assembly of Central Mindanao. On October 21, 1987, Congressman Matalam invited Limbona in
a consultation/dialogue with local government officials. Limbona accepted the invitation and informed the Assembly Members through the
Assembly Secretary that there shall be no session in November as his presence was needed in the House Committee hearing of Congress.
However, the Assembly held a meeting on November 2, 1987, and unseated Limbona from his position. Limbona prays for the session to be
declared null and void and that he still be declared Speaker of the Regional Assembly.
Pending the case, the SC also received a resolution from the Assembly expelling Limbonas membership.

Issues:
What is the extent of self-government given to the autonomous regions of Region XII?
Held:
Yes.
Autonomy is either decentralization of administration or decentralization of power.
Decentralization of Administration is the delegation by the central government ofadministrative powers to political subdivisions in order
to broaden the base of government power and, in the process, to make local governments more responsive and accountable and ensure their
development as self-reliant communities and make them more effective partners in the pursuit of national development and progress.
It also relieves the central government of the burden of managing local affairs and enables it to concentrate on national concerns. An autonomous
government under this category is under the supervision of the national government through the President. The President exercises
supervision but has no control over them and does so only to ensure local affairs are administered according to law.
Decentralization of Power, on the other hand, involves the abdication of power in favor of autonomous local governments. The autonomous
government is free to manage its affairs with minimum intervention from central authorities. An autonomous government enjoying autonomy
under this category is only subject to the organic act creating it and accepted principles on the effects & limits of autonomy.
PD 1618 mandates that the President shall have the power of general supervision and control over autonomous regions. Hence, courts of law
can assume jurisdiction. The courts can validly review the removal of Limbona as Speaker.
Where a law is capable of 2 interpretations, one in favor of centralized power inMalacaang and the other beneficial to local autonomy, the
scales must be weighed in favor of autonomy.
Under Sec. 31 of Region XII Sanggunian Rules, sessions shall not be suspended or adjourned except by direction of the Sangguniang
Pampook.
However, the November 2 and 5, 1987 sessions are declared invalid since at the time Limbona called the recess, it was not a settled matter
whether or not he could do so. Secondly, the invitation by the House of Representatives Committee on Muslim Affairs provides a plausible
reason for the intermission sought. Also, assuming that a valid recess could not be called, it does not appear that respondents called his attention
to his mistake. What appears is they opened the sessions themselves behind his back in an apparent act of mutiny. Under these circumstances,
equity is on his side. The recess was called on the ground of good faith
G.R. No. 93252 August 5, 1991
RODOLFO T. GANZON, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and LUIS T. SANTOS, respondents.
G.R. No. 93746 August 5,1991
MARY ANN RIVERA ARTIEDA, petitioner,
vs.
HON. LUIS SANTOS, in his capacity as Secretary of the Department of Local Government, NICANOR M. PATRICIO, in his capacity
as Chief, Legal Service of the Department of Local Government and SALVADOR CABALUNA JR., respondents.
G.R. No. 95245 August 5,1991
RODOLFO T. GANZON, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and LUIS T. SANTOS, in his capacity as the Secretary of the Department of Local
Government, respondents.
Nicolas P. Sonalan for petitioner in 93252.
Romeo A. Gerochi for petitioner in 93746.
Eugenio Original for petitioner in 95245.

SARMIENTO, J.:p
The petitioners take common issue on the power of the President (acting through the Secretary of Local Government), to suspend and/or remove
local officials.
The petitioners are the Mayor of Iloilo City (G.R. Nos. 93252 and 95245) and a member of the Sangguniang Panglunsod thereof (G.R. No.
93746), respectively.
The petitions of Mayor Ganzon originated from a series of administrative complaints, ten in number, filed against him by various city officials
sometime in 1988, on various charges, among them, abuse of authority, oppression, grave misconduct, disgraceful and immoral conduct,
intimidation, culpable violation of the Constitution, and arbitrary detention. 1 The personalities involved are Joceleehn Cabaluna, a clerk at the
city health office; Salvador Cabaluna, her husband; Dr. Felicidad Ortigoza, Assistant City Health Officer; Mansueto Malabor, Vice-Mayor;
Rolando Dabao, Dan Dalido, German Gonzales, Larry Ong, and Eduardo Pefia Redondo members of the Sangguniang Panglunsod; and Pancho
Erbite, a barangay tanod. The complaints against the Mayor are set forth in the opinion of the respondent Court of Appeals. 2 We quote:
xxx xxx xxx
In her verified complaint (Annex A), Mrs. Cabaluna, a clerk assigned to the City Health, Office of Iloilo City charged that
due to political reasons, having supported the rival candidate, Mrs. Rosa 0. Caram, the petitioner City Mayor, using as an
excuse the exigency of the service and the interest of the public, pulled her out from rightful office where her qualifications
are best suited and assigned her to a work that should be the function of a non-career service employee. To make matters
worse, a utility worker in the office of the Public Services, whose duties are alien to the complainant's duties and functions,
has been detailed to take her place. The petitioner's act are pure harassments aimed at luring her away from her permanent
position or force her to resign.
In the case of Dra. Felicidad Ortigoza, she claims that the petitioner handpicked her to perform task not befitting her
position as Assistant City Health Officer of Iloilo City; that her office was padlocked without any explanation or
justification; that her salary was withheld without cause since April 1, 1988; that when she filed her vacation leave, she was
given the run-around treatment in the approval of her leave in connivance with Dr. Rodolfo Villegas and that she was the
object of a well-engineered trumped-up charge in an administrative complaint filed by Dr. Rodolfo Villegas (Annex B).
On the other hand, Mansuelo Malabor is the duly elected Vice-Mayor of Iloilo City and complainants Rolando Dabao, Dan
Dalido, German Gonzales, Larry Ong and Eduardo Pefia Pedondo are members of the Sangguniang Panglunsod of the City
of Iloilo. Their complaint arose out from the case where Councilor Larry Ong, whose key to his office was
unceremoniously and without previous notice, taken by petitioner. Without an office, Councilor Ong had to hold office at
Plaza Libertad, The Vice-Mayor and the other complainants sympathized with him and decided to do the same. However,
the petitioner, together with its fully-armed security men, forcefully drove them away from Plaza Libertad. Councilor Ong
denounced the petitioner's actuations the following day in the radio station and decided to hold office at the Freedom
Grandstand at Iloilo City and there were so many people who gathered to witness the incident. However, before the group
could reach the area, the petitioner, together with his security men, led the firemen using a firetruck in dozing water to the
people and the bystanders.
Another administrative case was filed by Pancho Erbite, a barangay tanod, appointed by former mayor Rosa O. Caram. On
March 13, 1988, without the benefit of charges filed against him and no warrant of arrest was issued, Erbite was arrested
and detained at the City Jail of Iloilo City upon orders of petitioner. In jail, he was allegedly mauled by other detainees
thereby causing injuries He was released only the following day. 3
The Mayor thereafter answered 4 and the cases were shortly set for hearing. The opinion of the Court of Appeals also set forth the succeeding
events:
xxx xxx xxx
The initial hearing in the Cabaluna and Ortigoza cases were set for hearing on June 20-21, 1988 at the Regional Office of
the Department of Local Government in Iloilo City. Notices, through telegrams, were sent to the parties (Annex L) and the
parties received them, including the petitioner. The petitioner asked for a postponement before the scheduled date of
hearing and was represented by counsel, Atty. Samuel Castro. The hearing officers, Atty. Salvador Quebral and Atty.
Marino Bermudez had to come all the way from Manila for the two-day hearings but was actually held only on June
20,1988 in view of the inability and unpreparedness of petitioner's counsel.
The next hearings were re-set to July 25, 26, 27,1988 in the same venue-Iloilo City. Again, the petitioner attempted to
delay the proceedings and moved for a postponement under the excuse that he had just hired his counsel. Nonetheless, the
hearing officers denied the motion to postpone, in view of the fact that the parties were notified by telegrams of the
scheduled hearings (Annex M).
In the said hearings, petitioner's counsel cross-examined the complainants and their witnesses.
 Finding probable grounds and reasons, the respondent issued a preventive suspension order on August 11, 1988 to last until
October 11,1988 for a period of sixty (60) days.
Then the next investigation was set on September 21, 1988 and the petitioner again asked for a postponement to September
26,1988. On September 26, 1988, the complainants and petitioner were present, together with their respective counsel. The
petitioner sought for a postponement which was denied. In these hearings which were held in Mala the petitioner testified
in Adm. Case No. C-10298 and 10299.
The investigation was continued regarding the Malabor case and the complainants testified including their witnesses.
On October 10, 1988, petitioner's counsel, Atty. Original moved for a postponement of the October 24, 1988 hearing to
November 7 to 11, 1988 which was granted. However, the motion for change of venue as denied due to lack of funds. At
the hearing on November 7, 1988, the parties and counsel were present. Petitioner reiterated his motion to change venue
and moved for postponement anew. The counsel discussed a proposal to take the deposition of witnesses in Iloilo City so
the hearing was indefinitely postponed. However, the parties failed to come to terms and after the parties were notified of
the hearing, the investigation was set to December 13 to 15, 1988.
The petitioner sought for another postponement on the ground that his witnesses were sick or cannot attend the
investigation due to lack of transportation. The motion was denied and the petitioner was given up to December 14, 1988 to
present his evidence.
On December 14,1988, petitioner's counsel insisted on his motion for postponement and the hearing officers gave
petitioner up to December 15, 1988 to present his evidence. On December 15, 1988, the petitioner failed to present
evidence and the cases were considered submitted for resolution.
In the meantime, a prima facie evidence was found to exist in the arbitrary detention case filed by Pancho Erbite so the
respondent ordered the petitioner's second preventive suspension dated October 11, 1988 for another sixty (60) days. The
petitioner was able to obtain a restraining order and a writ of preliminary injunction in the Regional Trial Court, Branch 33
of Iloilo City. The second preventive suspension was not enforced. 5
Amidst the two successive suspensions, Mayor Ganzon instituted an action for prohibition against the respondent Secretary of Local Government
(now, Interior) in the Regional Trial Court, Iloilo City, where he succeeded in obtaining a writ of preliminary injunction. Presently, he instituted
CA-G.R. SP No. 16417, an action for prohibition, in the respondent Court of Appeals.
Meanwhile, on May 3, 1990, the respondent Secretary issued another order, preventively suspending Mayor Ganzon for another sixty days, the
third time in twenty months, and designating meantime Vice-Mayor Mansueto Malabor as acting mayor. Undaunted, Mayor Ganzon commenced
CA-G.R. SP No. 20736 of the Court of Appeals, a petition for prohibition, 6 (Malabor it is to be noted, is one of the complainants, and hence, he
is interested in seeing Mayor Ganzon ousted.)
On September 7, 1989, the Court of Appeals rendered judgment, dismissing CA-G.R. SP No. 16417. On July 5, 1990, it likewise promulgated a
decision, dismissing CA-G.R. SP No. 20736. In a Resolution dated January 24, 1990, it issued a Resolution certifying the petition of Mary Ann
Artieda, who had been similary charged by the respondent Secretary, to this Court.
On June 26,1990, we issued a Temporary Restraining Order, barring the respondent Secretary from implementing the suspension orders, and
restraining the enforcement of the Court of Appeals' two decisions.
In our Resolution of November 29, 1990, we consolidated all three cases. In our Resolutions of January 15, 1991, we gave due course thereto.
Mayor Ganzon claims as a preliminary (GR No. 93252), that the Department of Local Government in hearing the ten cases against him, had
denied him due process of law and that the respondent Secretary had been "biased, prejudicial and hostile" towards him 7 arising from his (Mayor
Ganzon's) alleged refusal to join the Laban ng Demokratikong Pilipino party 8 and the running political rivalry they maintained in the last
congressional and local elections;9 and his alleged refusal to operate a lottery in Iloilo City. 10 He also alleges that he requested the Secretary to
lift his suspension since it had come ninety days prior to an election (the barangay elections of November 14, 1988), 11notwithstanding which, the
latter proceeded with the hearing and meted out two more suspension orders of the aforementioned cases. 12 He likewise contends that he sought
to bring the cases to Iloilo City (they were held in Manila) in order to reduce the costs of proceeding, but the Secretary rejected his request. 13 He
states that he asked for postponement on "valid and justifiable" 14 grounds, among them, that he was suffering from a heart ailment which
required confinement; that his "vital" 15 witness was also hospitalized 16 but that the latter unduly denied his request. 17
Mayor Ganzon's primary argument (G.R. Nos. 93252 and 95245) is that the Secretary of Local Government is devoid, in any event, of any
authority to suspend and remove local officials, an argument reiterated by the petitioner Mary Ann Rivera Artieda (G.R. No. 93746).
As to Mayor Ganzon's charges of denial of due process, the records do not show very clearly in what manner the Mayor might have been
deprived of his rights by the respondent Secretary. His claims that he and Secretary Luis-Santos were (are) political rivals and that his
"persecution" was politically motivated are pure speculation and although the latter does not appear to have denied these contentions (as he,
Mayor Ganzon, claims), we can not take his word for it the way we would have under less political circumstances, considering furthermore that
"political feud" has often been a good excuse in contesting complaints.
The Mayor has failed furthermore to substantiate his say-so's that Secretary Santos had attempted to seduce him to join the administration party
and to operate a lottery in Iloilo City. Again, although the Secretary failed to rebut his allegations, we can not accept them, at face value, much
more, as judicial admissions as he would have us accept them 18 for the same reasons above-stated and furthermore, because his say so's were
never corroborated by independent testimonies. As a responsible public official, Secretary Santos, in pursuing an official function, is presumed to
be performing his duties regularly and in the absence of contrary evidence, no ill motive can be ascribed to him.
As to Mayor Ganzon's contention that he had requested the respondent Secretary to defer the hearing on account of the ninety-day ban prescribed
by Section 62 of Batas Blg. 337, the Court finds the question to be moot and academic since we have in fact restrained the Secretary from further
hearing the complaints against the petitioners. 19
As to his request, finally, for postponements, the Court is afraid that he has not given any compelling reason why we should overturn the Court of
Appeals, which found no convincing reason to overrule Secretary Santos in denying his requests. Besides, postponements are a matter of
discretion on the part of the hearing officer, and based on Mayor Ganzon's above story, we are not convinced that the Secretary has been guilty of
a grave abuse of discretion.
The Court can not say, under these circumstances, that Secretary Santos' actuations deprived Mayor Ganzon of due process of law.
We come to the core question: Whether or not the Secretary of Local Government, as the President's alter ego, can suspend and/or remove local
officials.
It is the petitioners' argument that the 1987 Constitution 20 no longer allows the President, as the 1935 and 1973 Constitutions did, to exercise the
power of suspension and/or removal over local officials. According to both petitioners, the Constitution is meant, first, to strengthen self-rule by
local government units and second, by deleting the phrase 21 as may be provided by law to strip the President of the power of control over local
governments. It is a view, so they contend, that finds support in the debates of the Constitutional Commission. The provision in question reads as
follows:
Sec. 4. The President of the Philippines shall exercise general supervision over local governments. Provinces with respect
to component cities and municipalities, and cities and municipalities with respect to component barangays shall ensure that
the acts of their component units are within the scope of their prescribed powers and functions. 22
It modifies a counterpart provision appearing in the 1935 Constitution, which we quote:
Sec. 10. The President shall have control of all the executive departments, bureaus, or offices, exercise general supervision
over all Local governments as may be provided by law, and take care that the laws be faithfully executed. 23
The petitioners submit that the deletion (of "as may be provided by law") is significant, as their argument goes, since: (1) the power of the
President is "provided by law" and (2) hence, no law may provide for it any longer.
It is to be noted that in meting out the suspensions under question, the Secretary of Local Government acted in consonance with the specific legal
provisions of Batas Blg. 337, the Local Government Code, we quote:
Sec. 62. Notice of Hearing. Within seven days after the complaint is filed, the Minister of local Government, or the
sanggunian concerned, as the case may be, shall require the respondent to submit his verified answer within seven days
from receipt of said complaint, and commence the hearing and investigation of the case within ten days after receipt of
such answer of the respondent. No investigation shall be held within ninety days immediately prior to an election, and no
preventive suspension shall be imposed with the said period. If preventive suspension has been imposed prior to the
aforesaid period, the preventive suspension shall be lifted. 24
Sec. 63. Preventive Suspension. (1) Preventive suspension may be imposed by the Minister of Local Government if the
respondent is a provincial or city official, by the provincial governor if the respondent is an elective municipal official, or
by the city or municipal mayor if the respondent is an elective barangay official.
(2) Preventive suspension may be imposed at any time after the issues are joined, when there is reasonable ground to
believe that the respondent has committed the act or acts complained of, when the evidence of culpability is strong, when
 the gravity of the offense so warrants, or when the continuance in office of the respondent could influence the witnesses or
pose a threat to the safety and integrity of the records and other evidence. In all cases, preventive suspension shall not
extend beyond sixty days after the start of said suspension.
(3) At the expiration of sixty days, the suspended official shall be deemed reinstated in office without prejudice to the
continuation of the proceedings against him until its termination. However ' if the delay in the proceedings of the case is
due to his fault, neglect or request, the time of the delay shall not be counted in computing the time of suspension. 25
The issue, as the Court understands it, consists of three questions: (1) Did the 1987 Constitution, in deleting the phrase "as may be provided by
law" intend to divest the President of the power to investigate, suspend, discipline, and/or remove local officials? (2) Has the Constitution
repealed Sections 62 and 63 of the Local Government Code? (3) What is the significance of the change in the constitutional language?
It is the considered opinion of the Court that notwithstanding the change in the constitutional language, the charter did not intend to divest the
legislature of its right or the President of her prerogative as conferred by existing legislation to provide administrative sanctions against local
officials. It is our opinion that the omission (of "as may be provided by law") signifies nothing more than to underscore local governments'
autonomy from congress and to break Congress' "control" over local government affairs. The Constitution did not, however, intend, for the sake
of local autonomy, to deprive the legislature of all authority over municipal corporations, in particular, concerning discipline.
Autonomy does not, after all, contemplate making mini-states out of local government units, as in the federal governments of the United States of
America (or Brazil or Germany), although Jefferson is said to have compared municipal corporations euphemistically to "small
republics." 26 Autonomy, in the constitutional sense, is subject to the guiding star, though not control, of the legislature, albeit the legislative
responsibility under the Constitution and as the "supervision clause" itself suggest-is to wean local government units from over-dependence on
the central government.
It is noteworthy that under the Charter, "local autonomy" is not instantly self-executing, but subject to, among other things, the passage of a local
government code, 27 a local tax law, 28 income distribution legislation, 29 and a national representation law, 30 and measures 31 designed to realize
autonomy at the local level. It is also noteworthy that in spite of autonomy, the Constitution places the local government under the general
supervision of the Executive. It is noteworthy finally, that the Charter allows Congress to include in the local government code provisions for
removal of local officials, which suggest that Congress may exercise removal powers, and as the existing Local Government Code has done,
delegate its exercise to the President. Thus:
Sec. 3. The Congress shall enact a local government code which shall provide for a more responsive and accountable local
government structure instituted through a system of decentralization with effective mechanisms of recall, initiative, and
referendum, allocate among the different local government units their powers, responsibilities and resources, and provide
for the qualifications, election, appointment and removal, term, salaries, powers and functions and duties of local officials,
and all other matters relating to the organization and operation of the local units. 32
As hereinabove indicated, the deletion of "as may be provided by law" was meant to stress, sub silencio, the objective of the framers to strengthen
local autonomy by severing congressional control of its affairs, as observed by the Court of Appeals, like the power of local legislation. 33 The
Constitution did nothing more, however, and insofar as existing legislation authorizes the President (through the Secretary of Local Government)
to proceed against local officials administratively, the Constitution contains no prohibition.
The petitioners are under the impression that the Constitution has left the President mere supervisory powers, which supposedly excludes the
power of investigation, and denied her control, which allegedly embraces disciplinary authority. It is a mistaken impression because legally,
"supervision" is not incompatible with disciplinary authority as this Court has held, 34 thus:
xxx xxx xxx
It is true that in the case of Mondano vs. Silvosa, 51 Off. Gaz., No. 6 p. 2884, this Court had occasion to discuss the scope
and extent of the power of supervision by the President over local government officials in contrast to the power of control
given to him over executive officials of our government wherein it was emphasized that the two terms, control and
supervision, are two different things which differ one from the other in meaning and extent. Thus in that case the Court has
made the following digression: "In administration law supervision means overseeing or the power or authority of an officer
to see that subordinate officers perform their duties. If the latter fail or neglect to fulfill them the former may take such
action or step as prescribed by law to make them perform their duties. Control, on the other hand, means the power of an
officer to alter or modify or nullify of set aside what a subordinate officer had done in the performance of his duties and to
substitute the judgment of the former for that of the latter." But from this pronouncement it cannot be reasonably inferred
that the power of supervision of the President over local government officials does not include the power of investigation
when in his opinion the good of the public service so requires, as postulated in Section 64(c) of the Revised Administrative
Code. ... 35
xxx xxx xxx
"Control" has been defined as "the power of an officer to alter or modify or nullify or set aside what a subordinate officer had done in the
performance of his duties and to substitute the judgment of the former for test of the latter." 36 "Supervision" on the other hand means "overseeing
or the power or authority of an officer to see that subordinate officers perform their duties. 37 As we held, 38 however, "investigating" is not
inconsistent with "overseeing", although it is a lesser power than "altering". The impression is apparently exacerbated by the Court's
pronouncements in at least three cases,Lacson v. Roque, 39 Hebron v. Reyes, 40 and Mondano v. Silvosa, 41 and possibly, a fourth one, Pelaez v.
Auditor General.42 In Lacson, this Court said that the President enjoyed no control powers but only supervision "as may be provided by law," 43 a
rule we reiterated in Hebron, and Mondano. In Pelaez, we stated that the President "may not . . . suspend an elective official of a regular
municipality or take any disciplinary action against him, except on appeal from a decision of the corresponding provincial board." 44 However,
neither Lacson nor Hebron nor Mondano categorically banned the Chief Executive from exercising acts of disciplinary authority because she did
not exercise control powers, but because no law allowed her to exercise disciplinary authority. Thus, according to Lacson:
The contention that the President has inherent power to remove or suspend municipal officers is without doubt not well
taken. Removal and suspension of public officers are always controlled by the particular law applicable and its proper
construction subject to constitutional limitations. 45
In Hebron we stated:
Accordingly, when the procedure for the suspension of an officer is specified by law, the same must be deemed mandatory
and adhered to strictly, in the absence of express or clear provision to the contrary-which does not et with respect to
municipal officers ... 46
In Mondano, the Court held:
... The Congress has expressly and specifically lodged the provincial supervision over municipal officials in the provincial
governor who is authorized to "receive and investigate complaints made under oath against municipal officers for neglect
of duty, oppression, corruption or other form of maladministration of office, and conviction by final judgment of any crime
involving moral turpitude." And if the charges are serious, "he shall submit written charges touching the matter to the
provincial board, furnishing a copy of such charges to the accused either personally or by registered mail, and he may in
such case suspend the officer (not being the municipal treasurer) pending action by the board, if in his opinion the charge
by one affecting the official integrity of the officer in question." Section 86 of the Revised Administration Code adds
nothing to the power of supervision to be exercised by the Department Head over the administration of ... municipalities ...
. If it be construed that it does and such additional power is the same authority as that vested in the Department Head by
section 79(c) of the Revised Administrative Code, then such additional power must be deemed to have been abrogated by
Section 110(l), Article VII of the Constitution. 47
xxx xxx xxx
In Pelaez, we stated that the President can not impose disciplinary measures on local officials except on appeal from the provincial board
pursuant to the Administrative Code. 48
Thus, in those case that this Court denied the President the power (to suspend/remove) it was not because we did not think that the President can
not exercise it on account of his limited power, but because the law lodged the power elsewhere. But in those cases ii which the law gave him the
power, the Court, as in Ganzon v. Kayanan, found little difficulty in sustaining him. 49
The Court does not believe that the petitioners can rightfully point to the debates of the Constitutional Commission to defeat the President's
powers. The Court believes that the deliberations are by themselves inconclusive, because although Commissioner Jose Nolledo would exclude
the power of removal from the President, 50Commissioner Blas Ople would not. 51
The Court is consequently reluctant to say that the new Constitution has repealed the Local Government Code, Batas Blg. 37. As we said,
"supervision" and "removal" are not incompatible terms and one may stand with the other notwithstanding the stronger expression of local
autonomy under the new Charter. We have indeed held that in spite of the approval of the Charter, Batas Blg. 337 is still in force and effect. 52
As the Constitution itself declares, local autonomy means "a more responsive and accountable local government structure instituted through a
system of decentralization." 53 The Constitution as we observed, does nothing more than to break up the monopoly of the national government
over the affairs of local governments and as put by political adherents, to "liberate the local governments from the imperialism of Manila."
Autonomy, however, is not meant to end the relation of partnership and inter-dependence between the central administration and local
government units, or otherwise, to user in a regime of federalism. The Charter has not taken such a radical step. Local governments, under the
Constitution, are subject to regulation, however limited, and for no other purpose than precisely, albeit paradoxically, to enhance self-
government.
As we observed in one case, 54 decentralization means devolution of national administration but not power to the local levels. Thus:
Now, autonomy is either decentralization of administration or decentralization of power. There is decentralization of
administration when the central government delegates administrative powers to political subdivisions in order to broaden
the base of government power and in the process to make local governments "more responsive and accountable," and
"ensure their fullest development as self-reliant communities and make them more effective partners in the pursuit of
national development and social progress." At the same time, it relieves the central government of the burden of managing
local affairs and enables it to concentrate on national concerns. The President exercises "general supervision" over them,
but only to "ensure that local affairs are administered according to law." He has no control over their acts in the sense that
he can substitute their judgments with his own.
Decentralization of power, on the other hand, involves an abdication of political power in the favor of local governments
units declared to be autonomous, In that case, the autonomous government is free to chart its own destiny and shape its
future with minimum intervention from central authorities. According to a constitutional author, decentralization of power
amounts to "self-immolation," since in that event, the autonomous government becomes accountable not to the central
authorities but to its constituency. 55
The successive sixty-day suspensions imposed on Mayor Rodolfo Ganzon is albeit another matter. What bothers the Court, and what indeed
looms very large, is the fact that since the Mayor is facing ten administrative charges, the Mayor is in fact facing the possibility of 600 days of
suspension, in the event that all ten cases yield prima faciefindings. The Court is not of course tolerating misfeasance in public office (assuming
that Mayor Ganzon is guilty of misfeasance) but it is certainly another question to make him serve 600 days of suspension, which is effectively,
to suspend him out of office. As we held: 56
2. Petitioner is a duly elected municipal mayor of Lianga, Surigao del Sur. His term of office does not expire until 1986.
Were it not for this information and the suspension decreed by the Sandiganbayan according to the Anti-Graft and Corrupt
Practices Act, he would have been all this while in the full discharge of his functions as such municipal mayor. He was
elected precisely to do so. As of October 26, 1983, he has been unable to. it is a basic assumption of the electoral process
implicit in the right of suffrage that the people are entitled to the services of elective officials of their choice. For
misfeasance or malfeasance, any of them could, of course, be proceeded against administratively or, as in this instance,
criminally. In either case, Ms culpability must be established. Moreover, if there be a criminal action, he is entitled to the
constitutional presumption of innocence. A preventive suspension may be justified. Its continuance, however, for an
unreasonable length of time raises a due process question. For even if thereafter he were acquitted, in the meanwhile his
right to hold office had been nullified. Clearly, there would be in such a case an injustice suffered by him. Nor is he the
only victim. There is injustice inflicted likewise on the people of Lianga They were deprived of the services of the man
they had elected to serve as mayor. In that sense, to paraphrase Justice Cardozo, the protracted continuance of this
preventive suspension had outrun the bounds of reason and resulted in sheer oppression. A denial of due process is thus
quite manifest. It is to avoid such an unconstitutional application that the order of suspension should be lifted. 57
The plain truth is that this Court has been ill at ease with suspensions, for the above reasons, 58 and so also, because it is out of the ordinary to
have a vacancy in local government. The sole objective of a suspension, as we have held, 59 is simply "to prevent the accused from hampering the
normal cause of the investigation with his influence and authority over possible witnesses" 60 or to keep him off "the records and other
evidence. 61
It is a means, and no more, to assist prosecutors in firming up a case, if any, against an erring local official. Under the Local Government Code, it
can not exceed sixty days, 62 which is to say that it need not be exactly sixty days long if a shorter period is otherwise sufficient, and which is also
to say that it ought to be lifted if prosecutors have achieved their purpose in a shorter span.
Suspension is not a penalty and is not unlike preventive imprisonment in which the accused is held to insure his presence at the trial. In both
cases, the accused (the respondent) enjoys a presumption of innocence unless and until found guilty.
Suspension finally is temporary and as the Local Government Code provides, it may be imposed for no more than sixty days. As we held, 63 a
longer suspension is unjust and unreasonable, and we might add, nothing less than tyranny.
As we observed earlier, imposing 600 days of suspension which is not a remote possibility Mayor Ganzon is to all intents and purposes, to make
him spend the rest of his term in inactivity. It is also to make, to all intents and purposes, his suspension permanent.
It is also, in fact, to mete out punishment in spite of the fact that the Mayor's guilt has not been proven. Worse, any absolution will be for naught
because needless to say, the length of his suspension would have, by the time he is reinstated, wiped out his tenure considerably.
The Court is not to be mistaken for obstructing the efforts of the respondent Secretary to see that justice is done in Iloilo City, yet it is hardly any
argument to inflict on Mayor Ganzon successive suspensions when apparently, the respondent Secretary has had sufficient time to gather the
necessary evidence to build a case against the Mayor without suspending him a day longer. What is intriguing is that the respondent Secretary has
been cracking down, so to speak, on the Mayor piecemeal apparently, to pin him down ten times the pain, when he, the respondent Secretary,
could have pursued a consolidated effort.
We reiterate that we are not precluding the President, through the Secretary of Interior from exercising a legal power, yet we are of the opinion
that the Secretary of Interior is exercising that power oppressively, and needless to say, with a grave abuse of discretion.
The Court is aware that only the third suspension is under questions, and that any talk of future suspensions is in fact premature. The fact remains,
however, that Mayor Ganzon has been made to serve a total of 120 days of suspension and the possibility of sixty days more is arguably around
the corner (which amounts to a violation of the Local Government Code which brings to light a pattern of suspensions intended to suspend the
Mayor the rest of his natural tenure. The Court is simply foreclosing what appears to us as a concerted effort of the State to perpetuate an
arbitrary act.
As we said, we can not tolerate such a state of affairs.
We are therefore allowing Mayor Rodolfo Ganzon to suffer the duration of his third suspension and lifting, for the purpose, the Temporary
Restraining Order earlier issued. Insofar as the seven remaining charges are concerned, we are urging the Department of Local Government, upon
the finality of this Decision, to undertake steps to expedite the same, subject to Mayor Ganzon's usual remedies of appeal, judicial or
administrative, or certiorari, if warranted, and meanwhile, we are precluding the Secretary from meting out further suspensions based on those
remaining complaints, notwithstanding findings of prima facie evidence.
In resume the Court is laying down the following rules:
1. Local autonomy, under the Constitution, involves a mere decentralization of administration, not of power, in which local officials remain
accountable to the central government in the manner the law may provide;
2. The new Constitution does not prescribe federalism;
3. The change in constitutional language (with respect to the supervision clause) was meant but to deny legislative control over local
governments; it did not exempt the latter from legislative regulations provided regulation is consistent with the fundamental premise of
autonomy;
4. Since local governments remain accountable to the national authority, the latter may, by law, and in the manner set forth therein, impose
disciplinary action against local officials;
5. "Supervision" and "investigation" are not inconsistent terms; "investigation" does not signify "control" (which the President does not have);
6. The petitioner, Mayor Rodolfo Ganzon. may serve the suspension so far ordered, but may no longer be suspended for the offenses he was
charged originally; provided:
a) that delays in the investigation of those charges "due to his fault, neglect or request, (the time of
the delay) shall not be counted in computing the time of suspension. [Supra, sec. 63(3)]
b) that if during, or after the expiration of, his preventive suspension, the petitioner commits another
or other crimes and abuses for which proper charges are filed against him by the aggrieved party or
parties, his previous suspension shall not be a bar to his being preventively suspended again, if
warranted under subpar. (2), Section 63 of the Local Government Code.
WHEREFORE, premises considered, the petitions are DISMISSED. The Temporary Restraining Order issued is LIFTED. The suspensions of the
petitioners are AFFIRMED, provided that the petitioner, Mayor Rodolfo Ganzon, may not be made to serve future suspensions on account of any
of the remaining administrative charges pending against him for acts committed prior to August 11, 1988. The Secretary of Interior is ORDERED
to consolidate all such administrative cases pending against Mayor Ganzon.
The sixty-day suspension against the petitioner, Mary Ann Rivera Artieda, is AFFIRMED. No costs.
SO ORDERED.
G.R. No. 111097 July 20, 1994
MAYOR PABLO P. MAGTAJAS & THE CITY OF CAGAYAN DE ORO, petitioners,
vs.
PRYCE PROPERTIES CORPORATION, INC. & PHILIPPINE AMUSEMENT AND GAMING CORPORATION,respondents.
Aquilino G. Pimentel, Jr. and Associates for petitioners.
R.R. Torralba & Associates for private respondent.

CRUZ, J.:
There was instant opposition when PAGCOR announced the opening of a casino in Cagayan de Oro City. Civic organizations angrily denounced
the project. The religious elements echoed the objection and so did the women's groups and the youth. Demonstrations were led by the mayor and
the city legislators. The media trumpeted the protest, describing the casino as an affront to the welfare of the city.
The trouble arose when in 1992, flush with its tremendous success in several cities, PAGCOR decided to expand its operations to Cagayan de
Oro City. To this end, it leased a portion of a building belonging to Pryce Properties Corporation, Inc., one of the herein private respondents,
renovated and equipped the same, and prepared to inaugurate its casino there during the Christmas season.
The reaction of the Sangguniang Panlungsod of Cagayan de Oro City was swift and hostile. On December 7, 1992, it enacted Ordinance No.
3353 reading as follows:
ORDINANCE NO. 3353
AN ORDINANCE PROHIBITING THE ISSUANCE OF BUSINESS PERMIT AND CANCELLING EXISTING
BUSINESS PERMIT TO ANY ESTABLISHMENT FOR THE USING AND ALLOWING TO BE USED ITS
PREMISES OR PORTION THEREOF FOR THE OPERATION OF CASINO.
BE IT ORDAINED by the Sangguniang Panlungsod of the City of Cagayan de Oro, in session assembled that:
Sec. 1. That pursuant to the policy of the city banning the operation of casino within its territorial jurisdiction, no
business permit shall be issued to any person, partnership or corporation for the operation of casino within the city limits.
Sec. 2. That it shall be a violation of existing business permit by any persons, partnership or corporation to use its
business establishment or portion thereof, or allow the use thereof by others for casino operation and other gambling
activities.
Sec. 3. PENALTIES. Any violation of such existing business permit as defined in the preceding section shall suffer
the following penalties, to wit:
a) Suspension of the business permit for sixty (60) days for the first offense
and a fine of P1,000.00/day
b) Suspension of the business permit for Six (6) months for the second
offense, and a fine of P3,000.00/day
c) Permanent revocation of the business permit and imprisonment of One (1)
year, for the third and subsequent offenses.
Sec. 4. This Ordinance shall take effect ten (10) days from publication thereof.
Nor was this all. On January 4, 1993, it adopted a sterner Ordinance No. 3375-93 reading as follows:
ORDINANCE NO. 3375-93
AN ORDINANCE PROHIBITING THE OPERATION OF CASINO AND PROVIDING PENALTY FOR VIOLATION
THEREFOR.
WHEREAS, the City Council established a policy as early as 1990 against CASINO under its Resolution No. 2295;
WHEREAS, on October 14, 1992, the City Council passed another Resolution No. 2673, reiterating its policy against the
establishment of CASINO;
WHEREAS, subsequently, thereafter, it likewise passed Ordinance No. 3353, prohibiting the issuance of Business Permit
and to cancel existing Business Permit to any establishment for the using and allowing to be used its premises or portion
thereof for the operation of CASINO;
WHEREAS, under Art. 3, section 458, No. (4), sub paragraph VI of the Local Government Code of 1991 (Rep. Act 7160)
and under Art. 99, No. (4), Paragraph VI of the implementing rules of the Local Government Code, the City Council as the
Legislative Body shall enact measure to suppress any activity inimical to public morals and general welfare of the people
and/or regulate or prohibit such activity pertaining to amusement or entertainment in order to protect social and moral
welfare of the community;
NOW THEREFORE,
BE IT ORDAINED by the City Council in session duly assembled that:
Sec. 1. The operation of gambling CASINO in the City of Cagayan de Oro is hereby prohibited.
Sec. 2. Any violation of this Ordinance shall be subject to the following penalties:
a) Administrative fine of P5,000.00 shall be imposed against the proprietor, partnership or corporation undertaking the
operation, conduct, maintenance of gambling CASINO in the City and closure thereof;
b) Imprisonment of not less than six (6) months nor more than one (1) year or a fine in the amount of P5,000.00 or both at
the discretion of the court against the manager, supervisor, and/or any person responsible in the establishment, conduct and
maintenance of gambling CASINO.
Sec. 3. This Ordinance shall take effect ten (10) days after its publication in a local newspaper of general circulation.
Pryce assailed the ordinances before the Court of Appeals, where it was joined by PAGCOR as intervenor and supplemental petitioner. Their
challenge succeeded. On March 31, 1993, the Court of Appeals declared the ordinances invalid and issued the writ prayed for to prohibit their
enforcement. 1 Reconsideration of this decision was denied on July 13, 1993. 2
Cagayan de Oro City and its mayor are now before us in this petition for review under Rule 45 of the Rules of Court. 3 They aver that the
respondent Court of Appeals erred in holding that:
1. Under existing laws, the Sangguniang Panlungsod of the City of Cagayan de Oro does not have the power and authority
to prohibit the establishment and operation of a PAGCOR gambling casino within the City's territorial limits.
2. The phrase "gambling and other prohibited games of chance" found in Sec. 458, par. (a), sub-par. (1) (v) of R.A.
7160 could only mean "illegal gambling."
3. The questioned Ordinances in effect annul P.D. 1869 and are therefore invalid on that point.
4. The questioned Ordinances are discriminatory to casino and partial to cockfighting and are therefore invalid on that
point.
5. The questioned Ordinances are not reasonable, not consonant with the general powers and purposes of the
instrumentality concerned and inconsistent with the laws or policy of the State.
6. It had no option but to follow the ruling in the case of Basco, et al. v. PAGCOR, G.R. No. 91649, May 14, 1991, 197
SCRA 53 in disposing of the issues presented in this present case.
PAGCOR is a corporation created directly by P.D. 1869 to help centralize and regulate all games of chance, including casinos on land and sea
within the territorial jurisdiction of the Philippines. In Basco v. Philippine Amusements and Gaming Corporation, 4 this Court sustained the
constitutionality of the decree and even cited the benefits of the entity to the national economy as the third highest revenue-earner in the
government, next only to the BIR and the Bureau of Customs.
Cagayan de Oro City, like other local political subdivisions, is empowered to enact ordinances for the purposes indicated in the Local
Government Code. It is expressly vested with the police power under what is known as the General Welfare Clause now embodied in Section 16
as follows:
Sec. 16. General Welfare. Every local government unit shall exercise the powers expressly granted, those necessarily
implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and
those which are essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local
government units shall ensure and support, among other things, the preservation and enrichment of culture, promote health
and safety, enhance the right of the people to a balanced ecology, encourage and support the development of appropriate
and self-reliant scientific and technological capabilities, improve public morals, enhance economic prosperity and social
 justice, promote full employment among their residents, maintain peace and order, and preserve the comfort and
convenience of their inhabitants.
In addition, Section 458 of the said Code specifically declares that:
Sec. 458. Powers, Duties, Functions and Compensation. (a) The Sangguniang Panlungsod, as the legislative body of
the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the city and its
inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the city as provided
for under Section 22 of this Code, and shall:
(1) Approve ordinances and pass resolutions necessary for an efficient and effective city government, and in this
connection, shall:
xxx xxx xxx
(v) Enact ordinances intended to prevent, suppress and impose appropriate
penalties for habitual drunkenness in public places, vagrancy, mendicancy,
prostitution, establishment and maintenance of houses of ill
repute,gambling and other prohibited games of chance, fraudulent devices and
ways to obtain money or property, drug addiction, maintenance of drug dens,
drug pushing, juvenile delinquency, the printing, distribution or exhibition of
obscene or pornographic materials or publications, and such other activities
inimical to the welfare and morals of the inhabitants of the city;
This section also authorizes the local government units to regulate properties and businesses within their territorial limits in the interest of the
general welfare. 5
The petitioners argue that by virtue of these provisions, the Sangguniang Panlungsod may prohibit the operation of casinos because they involve
games of chance, which are detrimental to the people. Gambling is not allowed by general law and even by the Constitution itself. The legislative
power conferred upon local government units may be exercised over all kinds of gambling and not only over "illegal gambling" as the
respondents erroneously argue. Even if the operation of casinos may have been permitted under P.D. 1869, the government of Cagayan de Oro
City has the authority to prohibit them within its territory pursuant to the authority entrusted to it by the Local Government Code.
It is submitted that this interpretation is consonant with the policy of local autonomy as mandated in Article II, Section 25, and Article X of the
Constitution, as well as various other provisions therein seeking to strengthen the character of the nation. In giving the local government units the
power to prevent or suppress gambling and other social problems, the Local Government Code has recognized the competence of such
communities to determine and adopt the measures best expected to promote the general welfare of their inhabitants in line with the policies of the
State.
The petitioners also stress that when the Code expressly authorized the local government units to prevent and suppress gambling and other
prohibited games of chance, like craps, baccarat, blackjack and roulette, it meant allforms of gambling without distinction. Ubi lex non distinguit,
nec nos distinguere debemos. 6 Otherwise, it would have expressly excluded from the scope of their power casinos and other forms of gambling
authorized by special law, as it could have easily done. The fact that it did not do so simply means that the local government units are permitted
to prohibit all kinds of gambling within their territories, including the operation of casinos.
The adoption of the Local Government Code, it is pointed out, had the effect of modifying the charter of the PAGCOR. The Code is not only a
later enactment than P.D. 1869 and so is deemed to prevail in case of inconsistencies between them. More than this, the powers of the PAGCOR
under the decree are expressly discontinued by the Code insofar as they do not conform to its philosophy and provisions, pursuant to Par. (f) of its
repealing clause reading as follows:
(f) All general and special laws, acts, city charters, decrees, executive orders, proclamations and administrative regulations,
or part or parts thereof which are inconsistent with any of the provisions of this Code are hereby repealed or modified
accordingly.
It is also maintained that assuming there is doubt regarding the effect of the Local Government Code on P.D. 1869, the doubt must be resolved in
favor of the petitioners, in accordance with the direction in the Code calling for its liberal interpretation in favor of the local government units.
Section 5 of the Code specifically provides:
Sec. 5. Rules of Interpretation. In the interpretation of the provisions of this Code, the following rules shall apply:
(a) Any provision on a power of a local government unit shall be liberally interpreted in its favor, and in case of doubt, any
question thereon shall be resolved in favor of devolution of powers and of the lower local government unit. Any fair and
reasonable doubt as to the existence of the power shall be interpreted in favor of the local government unit concerned;
xxx xxx xxx
(c) The general welfare provisions in this Code shall be liberally interpreted to give more powers to local government
units in accelerating economic development and upgrading the quality of life for the people in the community; . . .
(Emphasis supplied.)
Finally, the petitioners also attack gambling as intrinsically harmful and cite various provisions of the Constitution and several decisions of this
Court expressive of the general and official disapprobation of the vice. They invoke the State policies on the family and the proper upbringing of
the youth and, as might be expected, call attention to the old case of U.S. v. Salaveria, 7 which sustained a municipal ordinance prohibiting the
playing of panguingue. The petitioners decry the immorality of gambling. They also impugn the wisdom of P.D. 1869 (which they describe as "a
martial law instrument") in creating PAGCOR and authorizing it to operate casinos "on land and sea within the territorial jurisdiction of the
Philippines."
This is the opportune time to stress an important point.
The morality of gambling is not a justiciable issue. Gambling is not illegal per se. While it is generally considered inimical to the interests of the
people, there is nothing in the Constitution categorically proscribing or penalizing gambling or, for that matter, even mentioning it at all. It is left
to Congress to deal with the activity as it sees fit. In the exercise of its own discretion, the legislature may prohibit gambling altogether or allow it
without limitation or it may prohibit some forms of gambling and allow others for whatever reasons it may consider sufficient. Thus, it has
prohibited jueteng and monte but permits lotteries, cockfighting and horse-racing. In making such choices, Congress has consulted its own
wisdom, which this Court has no authority to review, much less reverse. Well has it been said that courts do not sit to resolve the merits of
conflicting theories. 8 That is the prerogative of the political departments. It is settled that questions regarding the wisdom, morality, or
practicibility of statutes are not addressed to the judiciary but may be resolved only by the legislative and executive departments, to which the
function belongs in our scheme of government. That function is exclusive. Whichever way these branches decide, they are answerable only to
their own conscience and the constituents who will ultimately judge their acts, and not to the courts of justice.
The only question we can and shall resolve in this petition is the validity of Ordinance No. 3355 and Ordinance No. 3375-93 as enacted by the
Sangguniang Panlungsod of Cagayan de Oro City. And we shall do so only by the criteria laid down by law and not by our own convictions on
the propriety of gambling.
The tests of a valid ordinance are well established. A long line of decisions 9 has held that to be valid, an ordinance must conform to the following
substantive requirements:
1) It must not contravene the constitution or any statute.
2) It must not be unfair or oppressive.
3) It must not be partial or discriminatory.
4) It must not prohibit but may regulate trade.
5) It must be general and consistent with public policy.
6) It must not be unreasonable.
We begin by observing that under Sec. 458 of the Local Government Code, local government units are authorized to prevent or suppress, among
others, "gambling and other prohibited games of chance." Obviously, this provision excludes games of chance which are not prohibited but are in
fact permitted by law. The petitioners are less than accurate in claiming that the Code could have excluded such games of chance but did not. In
fact it does. The language of the section is clear and unmistakable. Under the rule of noscitur a sociis, a word or phrase should be interpreted in
relation to, or given the same meaning of, words with which it is associated. Accordingly, we conclude that since the word "gambling" is
associated with "and other prohibited games of chance," the word should be read as referring to only illegal gambling which, like
the other prohibited games of chance, must be prevented or suppressed.
We could stop here as this interpretation should settle the problem quite conclusively. But we will not. The vigorous efforts of the petitioners on
behalf of the inhabitants of Cagayan de Oro City, and the earnestness of their advocacy, deserve more than short shrift from this Court.
The apparent flaw in the ordinances in question is that they contravene P.D. 1869 and the public policy embodied therein insofar as they prevent
PAGCOR from exercising the power conferred on it to operate a casino in Cagayan de Oro City. The petitioners have an ingenious answer to this
misgiving. They deny that it is the ordinances that have changed P.D. 1869 for an ordinance admittedly cannot prevail against a statute. Their
theory is that the change has been made by the Local Government Code itself, which was also enacted by the national lawmaking authority. In
their view, the decree has been, not really repealed by the Code, but merely "modified pro tanto" in the sense that PAGCOR cannot now operate
a casino over the objection of the local government unit concerned. This modification of P.D. 1869 by the Local Government Code is permissible
because one law can change or repeal another law.
It seems to us that the petitioners are playing with words. While insisting that the decree has only been "modifiedpro tanto," they are actually
arguing that it is already dead, repealed and useless for all intents and purposes because the Code has shorn PAGCOR of all power to centralize
and regulate casinos. Strictly speaking, its operations may now be not only prohibited by the local government unit; in fact, the prohibition is not
only discretionary but mandated by Section 458 of the Code if the word "shall" as used therein is to be given its accepted meaning. Local
government units have now no choice but to prevent and suppress gambling, which in the petitioners' view includes both legal and illegal
gambling. Under this construction, PAGCOR will have no more games of chance to regulate or centralize as they must all be prohibited by the
local government units pursuant to the mandatory duty imposed upon them by the Code. In this situation, PAGCOR cannot continue to exist
except only as a toothless tiger or a white elephant and will no longer be able to exercise its powers as a prime source of government revenue
through the operation of casinos.
It is noteworthy that the petitioners have cited only Par. (f) of the repealing clause, conveniently discarding the rest of the provision which
painstakingly mentions the specific laws or the parts thereof which are repealed (or modified) by the Code. Significantly, P.D. 1869 is not one of
them. A reading of the entire repealing clause, which is reproduced below, will disclose the omission:
Sec. 534. Repealing Clause. (a) Batas Pambansa Blg. 337, otherwise known as the "Local Government Code,"
Executive Order No. 112 (1987), and Executive Order No. 319 (1988) are hereby repealed.
(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees, orders, instructions, memoranda and issuances related
to or concerning the barangay are hereby repealed.
(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding hospital fund; Section 3, a (3) and b (2) of
Republic Act. No. 5447 regarding the Special Education Fund; Presidential Decree No. 144 as amended by Presidential
Decree Nos. 559 and 1741; Presidential Decree No. 231 as amended; Presidential Decree No. 436 as amended by
Presidential Decree No. 558; and Presidential Decree Nos. 381, 436, 464, 477, 526, 632, 752, and 1136 are hereby repealed
and rendered of no force and effect.
(d) Presidential Decree No. 1594 is hereby repealed insofar as it governs locally-funded projects.
(e) The following provisions are hereby repealed or amended insofar as they are inconsistent with the provisions of this
Code: Sections 2, 16, and 29 of Presidential Decree No. 704; Sections 12 of Presidential Decree No. 87, as amended;
Sections 52, 53, 66, 67, 68, 69, 70, 71, 72, 73, and 74 of Presidential Decree No. 463, as amended; and Section 16 of
Presidential Decree No. 972, as amended, and
(f) All general and special laws, acts, city charters, decrees, executive orders, proclamations and administrative regulations,
or part or parts thereof which are inconsistent with any of the provisions of this Code are hereby repealed or modified
accordingly.
Furthermore, it is a familiar rule that implied repeals are not lightly presumed in the absence of a clear and unmistakable showing of such
intention. In Lichauco & Co. v. Apostol, 10 this Court explained:
The cases relating to the subject of repeal by implication all proceed on the assumption that if the act of later date clearly
reveals an intention on the part of the lawmaking power to abrogate the prior law, this intention must be given effect; but
there must always be a sufficient revelation of this intention, and it has become an unbending rule of statutory construction
that the intention to repeal a former law will not be imputed to the Legislature when it appears that the two statutes, or
provisions, with reference to which the question arises bear to each other the relation of general to special.
There is no sufficient indication of an implied repeal of P.D. 1869. On the contrary, as the private respondent points out, PAGCOR is mentioned
as the source of funding in two later enactments of Congress, to wit, R.A. 7309, creating a Board of Claims under the Department of Justice for
the benefit of victims of unjust punishment or detention or of violent crimes, and R.A. 7648, providing for measures for the solution of the power
crisis. PAGCOR revenues are tapped by these two statutes. This would show that the PAGCOR charter has not been repealed by the Local
Government Code but has in fact been improved as it were to make the entity more responsive to the fiscal problems of the government.
It is a canon of legal hermeneutics that instead of pitting one statute against another in an inevitably destructive confrontation, courts must exert
every effort to reconcile them, remembering that both laws deserve a becoming respect as the handiwork of a coordinate branch of the
government. On the assumption of a conflict between P.D. 1869 and the Code, the proper action is not to uphold one and annul the other but to
give effect to both by harmonizing them if possible. This is possible in the case before us. The proper resolution of the problem at hand is to hold
that under the Local Government Code, local government units may (and indeed must) prevent and suppress all kinds of gambling within their
territories except only those allowed by statutes like P.D. 1869. The exception reserved in such laws must be read into the Code, to make both the
Code and such laws equally effective and mutually complementary.
This approach would also affirm that there are indeed two kinds of gambling, to wit, the illegal and those authorized by law. Legalized gambling
is not a modern concept; it is probably as old as illegal gambling, if not indeed more so. The petitioners' suggestion that the Code authorizes them
to prohibit all kinds of gambling would erase the distinction between these two forms of gambling without a clear indication that this is the will of
the legislature. Plausibly, following this theory, the City of Manila could, by mere ordinance, prohibit the Philippine Charity Sweepstakes Office
from conducting a lottery as authorized by R.A. 1169 and B.P. 42 or stop the races at the San Lazaro Hippodrome as authorized by R.A. 309 and
R.A. 983.
In light of all the above considerations, we see no way of arriving at the conclusion urged on us by the petitioners that the ordinances in question
are valid. On the contrary, we find that the ordinances violate P.D. 1869, which has the character and force of a statute, as well as the public
policy expressed in the decree allowing the playing of certain games of chance despite the prohibition of gambling in general.
The rationale of the requirement that the ordinances should not contravene a statute is obvious. Municipal governments are only agents of the
national government. Local councils exercise only delegated legislative powers conferred on them by Congress as the national lawmaking body.
The delegate cannot be superior to the principal or exercise powers higher than those of the latter. It is a heresy to suggest that the local
government units can undo the acts of Congress, from which they have derived their power in the first place, and negate by mere ordinance the
mandate of the statute.
Municipal corporations owe their origin to, and derive their powers and rights wholly from the legislature. It breathes into
them the breath of life, without which they cannot exist. As it creates, so it may destroy. As it may destroy, it may abridge
and control. Unless there is some constitutional limitation on the right, the legislature might, by a single act, and if we can
suppose it capable of so great a folly and so great a wrong, sweep from existence all of the municipal corporations in the
State, and the corporation could not prevent it. We know of no limitation on the right so far as to the corporation
themselves are concerned. They are, so to phrase it, the mere tenants at will of the legislature. 11
This basic relationship between the national legislature and the local government units has not been enfeebled by the new provisions in the
Constitution strengthening the policy of local autonomy. Without meaning to detract from that policy, we here confirm that Congress retains
control of the local government units although in significantly reduced degree now than under our previous Constitutions. The power to create
still includes the power to destroy. The power to grant still includes the power to withhold or recall. True, there are certain notable innovations in
the Constitution, like the direct conferment on the local government units of the power to tax, 12which cannot now be withdrawn by mere statute.
By and large, however, the national legislature is still the principal of the local government units, which cannot defy its will or modify or violate
it.
The Court understands and admires the concern of the petitioners for the welfare of their constituents and their apprehensions that the welfare of
Cagayan de Oro City will be endangered by the opening of the casino. We share the view that "the hope of large or easy gain, obtained without
special effort, turns the head of the workman"13 and that "habitual gambling is a cause of laziness and ruin." 14 In People v. Gorostiza, 15 we
declared: "The social scourge of gambling must be stamped out. The laws against gambling must be enforced to the limit." George Washington
called gambling "the child of avarice, the brother of iniquity and the father of mischief." Nevertheless, we must recognize the power of the
legislature to decide, in its own wisdom, to legalize certain forms of gambling, as was done in P.D. 1869 and impliedly affirmed in the Local
Government Code. That decision can be revoked by this Court only if it contravenes the Constitution as the touchstone of all official acts. We do
not find such contravention here.
We hold that the power of PAGCOR to centralize and regulate all games of chance, including casinos on land and sea within the territorial
jurisdiction of the Philippines, remains unimpaired. P.D. 1869 has not been modified by the Local Government Code, which empowers the local
government units to prevent or suppress only those forms of gambling prohibited by law.
Casino gambling is authorized by P.D. 1869. This decree has the status of a statute that cannot be amended or nullified by a mere ordinance.
Hence, it was not competent for the Sangguniang Panlungsod of Cagayan de Oro City to enact Ordinance No. 3353 prohibiting the use of
buildings for the operation of a casino and Ordinance No. 3375-93 prohibiting the operation of casinos. For all their praiseworthy motives, these
ordinances are contrary to P.D. 1869 and the public policy announced therein and are therefore ultra vires and void.
WHEREFORE, the petition is DENIED and the challenged decision of the respondent Court of Appeals is AFFIRMED, with costs against the
petitioners. It is so ordered.
Narvasa, C.J., Feliciano, Bidin, Regalado, Romero, Bellosillo, Melo, Quiason, Puno, Vitug, Kapunan and Mendoza, JJ., concur.

Separate Opinions

PADILLA, J., concurring:

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

DAVIDE, JR., J., concurring:

While I concur in part with the majority, I wish, however, to express my views on certain aspects of this case.
I.
It must at once be noted that private respondent Pryce Properties Corporation (PRYCE) directly filed with the Court of Appeals its so-called
petition for prohibition, thereby invoking the said court's original jurisdiction to issue writs of prohibition under Section 9(1) of B.P. Blg. 129. As
I see it, however, the principal cause of action therein is one for declaratory relief: to declare null and unconstitutional for, inter alia, having
been enacted without or in excess of jurisdiction, for impairing the obligation of contracts, and for being inconsistent with public policy the
challenged ordinances enacted by the Sangguniang Panglungsod of the City of Cagayan de Oro. The intervention therein of public respondent
Philippine Amusement and Gaming Corporation (PAGCOR) further underscores the "declaratory relief" nature of the action. PAGCOR assails
the ordinances for being contrary to the non-impairment and equal protection clauses of the Constitution, violative of the Local Government
Code, and against the State's national policy declared in P.D. No. 1869. Accordingly, the Court of Appeals does not have jurisdiction over the
nature of the action. Even assuming arguendo that the case is one for prohibition, then, under this Court's established policy relative to the
hierarchy of courts, the petition should have been filed with the Regional Trial Court of Cagayan de Oro City. I find no special or compelling
reason why it was not filed with the said court. I do not wish to entertain the thought that PRYCE doubted a favorable verdict therefrom, in which
case the filing of the petition with the Court of Appeals may have been impelled by tactical considerations. A dismissal of the petition by the
Court of Appeals would have been in order pursuant to our decisions in People vs. Cuaresma (172 SCRA 415, [1989]) and Defensor-Santiago vs.
Vasquez (217 SCRA 633 [1993]). In Cuaresma, this Court stated:
A last word. This court's original jurisdiction to issue writs of certiorari (as well as prohibition,mandamus, quo
warranto, habeas corpus and injunction) is not exclusive. It is shared by this Court with Regional Trial Courts (formerly
Courts of First Instance), which may issue the writ, enforceable in any part of their respective regions. It is also shared by
this court, and by the Regional Trial Court, with the Court of Appeals (formerly, Intermediate Appellate Court), although
prior to the effectivity ofBatas Pambansa Bilang 129 on August 14, 1981, the latter's competence to issue the extraordinary
writs was restricted by those "in aid of its appellate jurisdiction." This concurrence of jurisdiction is not, however, to be
taken as according to parties seeking any of the writs an absolute, unrestrained freedom of choice of the court to which
application therefor will be directed. There is after all a hierarchy of courts. That hierarchy is determinative of the revenue
of appeals, and should also serve as a general determinant of the appropriate forum for petitions for the extraordinary writs.
A becoming regard for that judicial hierarchy most certainly indicates that petitions for the issuance of extraordinary writs
against first level ("inferior") courts should be filed with the Regional Trial Court, and those against the latter, with the
Court of Appeals. A direct invocation of the Supreme Court's original jurisdiction to issue these writs should be allowed
only when there are special and important reasons therefor, clearly and specifically set out in the petition. This is
established policy. It is a policy that is necessary to prevent inordinate demands upon the Court's time and attention which
are better devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of the Court's
docket. Indeed, the removal of the restriction of the jurisdiction of the Court of Appeals in this regard, supra resulting
from the deletion of the qualifying phrase, "in aid of its appellate jurisdiction" was evidently intended precisely to
relieve this Court pro tanto of the burden of dealing with applications for extraordinary writs which, but for the expansion
of the Appellate Court's corresponding jurisdiction, would have had to be filed with it. (citations omitted)
And in Vasquez, this Court said:
One final observation. We discern in the proceedings in this case a propensity on the part of petitioner, and, for that matter,
the same may be said of a number of litigants who initiate recourses before us, to disregard the hierarchy of courts in our
judicial system by seeking relief directly from this Court despite the fact that the same is available in the lower courts in the
exercise of their original or concurrent jurisdiction, or is even mandated by law to be sought therein. This practice must be
stopped, not only because of the imposition upon the previous time of this Court but also because of the inevitable and
resultant delay, intended or otherwise, in the adjudication of the case which often has to be remanded or referred to the
lower court as the proper forum under the rules of procedure, or as better equipped to resolve the issues since this Court is
not a trier of facts. We, therefore, reiterate the judicial policy that this Court will not entertain direct resort to it unless the
redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify
availment of a remedy within and calling for the exercise of our primary jurisdiction.
II.
The challenged ordinances are (a) Ordinance No. 3353 entitled, "An Ordinance Prohibiting the Issuance of Business Permit and Canceling
Existing Business Permit To Any Establishment for the Using and Allowing to be Used Its Premises or Portion Thereof for the Operation of
Casino," and (b) Ordinance No. 3375-93 entitled, "An Ordinance Prohibiting the Operation of Casino and Providing Penalty for Violation
Therefor." They were enacted to implement Resolution No. 2295 entitled, "Resolution Declaring As a Matter of Policy to Prohibit and/or Not to
Allow the Establishment of the Gambling Casino in the City of Cagayan de Oro," which was promulgated on 19 November 1990 nearly two
years before PRYCE and PAGCOR entered into a contract of lease under which the latter leased a portion of the former's Pryce Plaza Hotel for
the operation of a gambling casino which resolution was vigorously reiterated in Resolution No. 2673 of 19 October 1992.
The challenged ordinances were enacted pursuant to the Sangguniang Panglungsod's express powers conferred by Section 458, paragraph (a),
subparagraphs (1)-(v), (3)-(ii), and (4)-(i), (iv), and (vii), Local Government Code, and pursuant to its implied power under Section 16 thereof
(the general welfare clause) which reads:
Sec. 16. General Welfare. Every local government unit shall exercise the powers expressly granted, those necessarily
implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and
 those which are essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local
government units shall ensure and support, among other things, the preservation and enrichment of culture, promote health
and safety, enhance the right of the people to a balanced ecology, encourage and support the development of appropriate
and self-reliant scientific and technological capabilities, improve public morals, enhance economic prosperity and social
justice, promote full employment among their residents, maintain peace and order, and preserve the comfort and
convenience of their inhabitants.
The issue that necessarily arises is whether in granting local governments (such as the City of Cagayan de Oro) the above powers and functions,
the Local Government Code has, pro tanto, repealed P.D. No. 1869 insofar as PAGCOR's general authority to establish and maintain gambling
casinos anywhere in the Philippines is concerned.
I join the majority in holding that the ordinances cannot repeal P.D. No. 1869.
III.
The nullification by the Court of Appeals of the challenged ordinances as unconstitutional primarily because it is in contravention to P.D. No.
1869 is unwarranted. A contravention of a law is not necessarily a contravention of the constitution. In any case, the ordinances can still stand
even if they be conceded as offending P.D. No. 1869. They can be reconciled, which is not impossible to do. So reconciled, the ordinances should
be construed as not applying to PAGCOR.
IV.
From the pleadings, it is obvious that the government and the people of Cagayan de Oro City are, for obvious reasons, strongly against the
opening of the gambling casino in their city. Gambling, even if legalized, would be inimical to the general welfare of the inhabitants of the City,
or of any place for that matter. The PAGCOR, as a government-owned corporation, must consider the valid concerns of the people of the City of
Cagayan de Oro and should not impose its will upon them in an arbitrary, if not despotic, manner.

# Separate Opinions

PADILLA, J., concurring:

I concur with the majority holding that the city ordinances in question cannot modify much less repeal PAGCOR's general authority to establish
and maintain gambling casinos anywhere in the Philippines under Presidential Decree No. 1869.
In Basco v. Philippine Amusement and Gaming Corporation (PAGCOR), 197 SCRA 52, I stated in a separate opinion that:
. . . I agree with the decision insofar as it holds that the prohibition, control, and regulation of the entire activity known as
gambling properly pertain to "state policy". It is, therefore, the political departments of government, namely, the legislative
and the executive that should decide on what government should do in the entire area of gambling, and assume full
responsibility to the people for such policy. (emphasis supplied)
However, despite the legality of the opening and operation of a casino in Cagayan de Oro City by respondent PAGCOR, I wish to reiterate my
view that gambling in any form runs counter to the government's own efforts to re-establish and resurrect the Filipino moral character which is
generally perceived to be in a state of continuing erosion.
It is in the light of this alarming perspective that I call upon government to carefully weigh the advantages and disadvantages of setting up more
gambling facilities in the country.
That the PAGCOR contributes greatly to the coffers of the government is not enough reason for setting up more gambling casinos because,
undoubtedly, this will not help improve, but will cause a further deterioration in the Filipino moral character.
It is worth remembering in this regard that, 1) what is legal is not always moral and 2) the ends do not always justify the means.
As in Basco, I can easily visualize prostitution at par with gambling. And yet, legalization of the former will not render it any less reprehensible
even if substantial revenue for the government can be realized from it. The same is true of gambling.
In the present case, it is my considered view that the national government (through PAGCOR) should re-examine and re-evaluate its decision
of imposing the gambling casino on the residents of Cagayan de Oro City; for it is abundantly clear that public opinion in the city is very much
against it, and again the question must be seriously deliberated: will the prospects of revenue to be realized from the casino outweigh the further
destruction of the Filipino sense of values?
DAVIDE, JR., J., concurring:
While I concur in part with the majority, I wish, however, to express my views on certain aspects of this case.
I.
It must at once be noted that private respondent Pryce Properties Corporation (PRYCE) directly filed with the Court of Appeals its so-called
petition for prohibition, thereby invoking the said court's original jurisdiction to issue writs of prohibition under Section 9(1) of B.P. Blg. 129. As
I see it, however, the principal cause of action therein is one for declaratory relief: to declare null and unconstitutional for, inter alia, having
been enacted without or in excess of jurisdiction, for impairing the obligation of contracts, and for being inconsistent with public policy the
challenged ordinances enacted by the Sangguniang Panglungsod of the City of Cagayan de Oro. The intervention therein of public respondent
Philippine Amusement and Gaming Corporation (PAGCOR) further underscores the "declaratory relief" nature of the action. PAGCOR assails
the ordinances for being contrary to the non-impairment and equal protection clauses of the Constitution, violative of the Local Government
Code, and against the State's national policy declared in P.D. No. 1869. Accordingly, the Court of Appeals does not have jurisdiction over the
nature of the action. Even assuming arguendo that the case is one for prohibition, then, under this Court's established policy relative to the
hierarchy of courts, the petition should have been filed with the Regional Trial Court of Cagayan de Oro City. I find no special or compelling
reason why it was not filed with the said court. I do not wish to entertain the thought that PRYCE doubted a favorable verdict therefrom, in which
case the filing of the petition with the Court of Appeals may have been impelled by tactical considerations. A dismissal of the petition by the
Court of Appeals would have been in order pursuant to our decisions in People vs. Cuaresma (172 SCRA 415, [1989]) and Defensor-Santiago vs.
Vasquez (217 SCRA 633 [1993]). In Cuaresma, this Court stated:
A last word. This court's original jurisdiction to issue writs of certiorari (as well as prohibition,mandamus, quo
warranto, habeas corpus and injunction) is not exclusive. It is shared by this Court with Regional Trial Courts (formerly
Courts of First Instance), which may issue the writ, enforceable in any part of their respective regions. It is also shared by
this court, and by the Regional Trial Court, with the Court of Appeals (formerly, Intermediate Appellate Court), although
prior to the effectivity ofBatas Pambansa Bilang 129 on August 14, 1981, the latter's competence to issue the extraordinary
writs was restricted by those "in aid of its appellate jurisdiction." This concurrence of jurisdiction is not, however, to be
taken as according to parties seeking any of the writs an absolute, unrestrained freedom of choice of the court to which
application therefor will be directed. There is after all a hierarchy of courts. That hierarchy is determinative of the revenue
of appeals, and should also serve as a general determinant of the appropriate forum for petitions for the extraordinary writs.
A becoming regard for that judicial hierarchy most certainly indicates that petitions for the issuance of extraordinary writs
against first level ("inferior") courts should be filed with the Regional Trial Court, and those against the latter, with the
Court of Appeals. A direct invocation of the Supreme Court's original jurisdiction to issue these writs should be allowed
only when there are special and important reasons therefor, clearly and specifically set out in the petition. This is
established policy. It is a policy that is necessary to prevent inordinate demands upon the Court's time and attention which
are better devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of the Court's
docket. Indeed, the removal of the restriction of the jurisdiction of the Court of Appeals in this regard, supra resulting
from the deletion of the qualifying phrase, "in aid of its appellate jurisdiction" was evidently intended precisely to
relieve this Court pro tanto of the burden of dealing with applications for extraordinary writs which, but for the expansion
of the Appellate Court's corresponding jurisdiction, would have had to be filed with it. (citations omitted)
And in Vasquez, this Court said:
One final observation. We discern in the proceedings in this case a propensity on the part of petitioner, and, for that matter,
the same may be said of a number of litigants who initiate recourses before us, to disregard the hierarchy of courts in our
judicial system by seeking relief directly from this Court despite the fact that the same is available in the lower courts in the
exercise of their original or concurrent jurisdiction, or is even mandated by law to be sought therein. This practice must be
stopped, not only because of the imposition upon the previous time of this Court but also because of the inevitable and
resultant delay, intended or otherwise, in the adjudication of the case which often has to be remanded or referred to the
lower court as the proper forum under the rules of procedure, or as better equipped to resolve the issues since this Court is
not a trier of facts. We, therefore, reiterate the judicial policy that this Court will not entertain direct resort to it unless the
redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify
availment of a remedy within and calling for the exercise of our primary jurisdiction.
II.
The challenged ordinances are (a) Ordinance No. 3353 entitled, "An Ordinance Prohibiting the Issuance of Business Permit and Canceling
Existing Business Permit To Any Establishment for the Using and Allowing to be Used Its Premises or Portion Thereof for the Operation of
Casino," and (b) Ordinance No. 3375-93 entitled, "An Ordinance Prohibiting the Operation of Casino and Providing Penalty for Violation
Therefor." They were enacted to implement Resolution No. 2295 entitled, "Resolution Declaring As a Matter of Policy to Prohibit and/or Not to
Allow the Establishment of the Gambling Casino in the City of Cagayan de Oro," which was promulgated on 19 November 1990 nearly two
years before PRYCE and PAGCOR entered into a contract of lease under which the latter leased a portion of the former's Pryce Plaza Hotel for
the operation of a gambling casino which resolution was vigorously reiterated in Resolution No. 2673 of 19 October 1992.
The challenged ordinances were enacted pursuant to the Sangguniang Panglungsod's express powers conferred by Section 458, paragraph (a),
subparagraphs (1)-(v), (3)-(ii), and (4)-(i), (iv), and (vii), Local Government Code, and pursuant to its implied power under Section 16 thereof
(the general welfare clause) which reads:
Sec. 16. General Welfare. Every local government unit shall exercise the powers expressly granted, those necessarily
implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and
those which are essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local
government units shall ensure and support, among other things, the preservation and enrichment of culture, promote health
and safety, enhance the right of the people to a balanced ecology, encourage and support the development of appropriate
and self-reliant scientific and technological capabilities, improve public morals, enhance economic prosperity and social
justice, promote full employment among their residents, maintain peace and order, and preserve the comfort and
convenience of their inhabitants.
The issue that necessarily arises is whether in granting local governments (such as the City of Cagayan de Oro) the above powers and functions,
the Local Government Code has, pro tanto, repealed P.D. No. 1869 insofar as PAGCOR's general authority to establish and maintain gambling
casinos anywhere in the Philippines is concerned.
I join the majority in holding that the ordinances cannot repeal P.D. No. 1869.
III.
The nullification by the Court of Appeals of the challenged ordinances as unconstitutional primarily because it is in contravention to P.D. No.
1869 is unwarranted. A contravention of a law is not necessarily a contravention of the constitution. In any case, the ordinances can still stand
even if they be conceded as offending P.D. No. 1869. They can be reconciled, which is not impossible to do. So reconciled, the ordinances should
be construed as not applying to PAGCOR.
IV.
From the pleadings, it is obvious that the government and the people of Cagayan de Oro City are, for obvious reasons, strongly against the
opening of the gambling casino in their city. Gambling, even if legalized, would be inimical to the general welfare of the inhabitants of the City,
or of any place for that matter. The PAGCOR, as a government-owned corporation, must consider the valid concerns of the people of the City of
Cagayan de Oro and should not impose its will upon them in an arbitrary, if not despotic, manner.
G.R. No. 110120 March 16, 1994
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS, HON. MANUEL JN. SERAPIO, Presiding Judge RTC, Branch 127, Caloocan City, HON. MACARIO A.
ASISTIO, JR., City Mayor of Caloocan and/or THE CITY GOVERNMENT OF CALOOCAN,respondents.
Alberto N. Hidalgo and Ma. Teresa T. Oledan for petitioner.
The City Legal Officer & Chief, Law Department for Mayor Macario A. Asistio, Jr. and the City Government of Caloocan.

ROMERO, J.:
The clash between the responsibility of the City Government of Caloocan to dispose off the 350 tons of garbage it collects daily and the growing
concern and sensitivity to a pollution-free environment of the residents of Barangay Camarin, Tala Estate, Caloocan City where these tons of
garbage are dumped everyday is the hub of this controversy elevated by the protagonists to the Laguna Lake Development Authority (LLDA) for
adjudication.
The instant case stemmed from an earlier petition filed with this Court by Laguna Lake Development Authority (LLDA for short) docketed as
G.R.
No. 107542 against the City Government of Caloocan, et al. In the Resolution of November 10, 1992, this Court referred G.R. No. 107542 to the
Court of Appeals for appropriate disposition. Docketed therein as CA-G.R. SP
No. 29449, the Court of Appeals, in a decision 1 promulgated on January 29, 1993 ruled that the LLDA has no power and authority to issue a
cease and desist order enjoining the dumping of garbage in Barangay Camarin, Tala Estate, Caloocan City. The LLDA now seeks, in this petition,
a review of the decision of the Court of Appeals.
The facts, as disclosed in the records, are undisputed.
On March 8, 1991, the Task Force Camarin Dumpsite of Our Lady of Lourdes Parish, Barangay Camarin, Caloocan City, filed a letter-
complaint 2 with the Laguna Lake Development Authority seeking to stop the operation of the 8.6-hectare open garbage dumpsite in Tala Estate,
Barangay Camarin, Caloocan City due to its harmful effects on the health of the residents and the possibility of pollution of the water content of
the surrounding area.
On November 15, 1991, the LLDA conducted an on-site investigation, monitoring and test sampling of the leachate 3 that seeps from said
dumpsite to the nearby creek which is a tributary of the Marilao River. The LLDA Legal and Technical personnel found that the City
Government of Caloocan was maintaining an open dumpsite at the Camarin area without first securing an Environmental Compliance Certificate
(ECC) from the Environmental Management Bureau (EMB) of the Department of Environment and Natural Resources, as required under
Presidential Decree No. 1586, 4 and clearance from LLDA as required under Republic Act No. 4850, 5 as amended by Presidential Decree No. 813
and Executive Order No. 927, series of 1983. 6
After a public hearing conducted on December 4, 1991, the LLDA, acting on the complaint of Task Force Camarin Dumpsite, found that the
water collected from the leachate and the receiving streams could considerably affect the quality, in turn, of the receiving waters since it indicates
the presence of bacteria, other than coliform, which may have contaminated the sample during collection or handling. 7 On December 5, 1991, the
LLDA issued a Cease and Desist Order 8 ordering the City Government of Caloocan, Metropolitan Manila Authority, their contractors, and other
entities, to completely halt, stop and desist from dumping any form or kind of garbage and other waste matter at the Camarin dumpsite.
The dumping operation was forthwith stopped by the City Government of Caloocan. However, sometime in August 1992 the dumping operation
was resumed after a meeting held in July 1992 among the City Government of Caloocan, the representatives of Task Force Camarin Dumpsite
and LLDA at the Office of Environmental Management Bureau Director Rodrigo U. Fuentes failed to settle the problem.
After an investigation by its team of legal and technical personnel on August 14, 1992, the LLDA issued another order reiterating the December
5, 1991, order and issued an Alias Cease and Desist Order enjoining the City Government of Caloocan from continuing its dumping operations at
the Camarin area.
On September 25, 1992, the LLDA, with the assistance of the Philippine National Police, enforced its Alias Cease and Desist Order by
prohibiting the entry of all garbage dump trucks into the Tala Estate, Camarin area being utilized as a dumpsite.
Pending resolution of its motion for reconsideration earlier filed on September 17, 1992 with the LLDA, the City Government of Caloocan filed
with the Regional Trial Court of Caloocan City an action for the declaration of nullity of the cease and desist order with prayer for the issuance of
writ of injunction, docketed as Civil Case No. C-15598. In its complaint, the City Government of Caloocan sought to be declared as the sole
authority empowered to promote the health and safety and enhance the right of the people in Caloocan City to a balanced ecology within its
territorial jurisdiction. 9
On September 25, 1992, the Executive Judge of the Regional Trial Court of Caloocan City issued a temporary restraining order enjoining the
LLDA from enforcing its cease and desist order. Subsequently, the case was raffled to the Regional Trial Court, Branch 126 of Caloocan which,
at the time, was presided over by Judge Manuel Jn. Serapio of the Regional Trial Court, Branch 127, the pairing judge of the recently-retired
presiding judge.
The LLDA, for its part, filed on October 2, 1992 a motion to dismiss on the ground, among others, that under Republic Act No. 3931, as amended
by Presidential Decree No. 984, otherwise known as the Pollution Control Law, the cease and desist order issued by it which is the subject matter
of the complaint is reviewable both upon the law and the facts of the case by the Court of Appeals and not by the Regional Trial Court. 10
On October 12, 1992 Judge Manuel Jn. Serapio issued an order consolidating Civil Case No. C-15598 with Civil Case No. C-15580, an earlier
case filed by the Task Force Camarin Dumpsite entitled "Fr. John Moran, et al. vs. Hon. Macario Asistio." The LLDA, however, maintained
during the trial that the foregoing cases, being independent of each other, should have been treated separately.
On October 16, 1992, Judge Manuel Jn. Serapio, after hearing the motion to dismiss, issued in the consolidated cases an order 11 denying LLDA's
motion to dismiss and granting the issuance of a writ of preliminary injunction enjoining the LLDA, its agent and all persons acting for and on its
behalf, from enforcing or implementing its cease and desist order which prevents plaintiff City of Caloocan from dumping garbage at the
Camarin dumpsite during the pendency of this case and/or until further orders of the court.
On November 5, 1992, the LLDA filed a petition for certiorari, prohibition and injunction with prayer for restraining order with the Supreme
Court, docketed as G.R. No. 107542, seeking to nullify the aforesaid order dated October 16, 1992 issued by the Regional Trial Court, Branch
127 of Caloocan City denying its motion to dismiss.
The Court, acting on the petition, issued a Resolution 12 on November 10, 1992 referring the case to the Court of Appeals for proper disposition
and at the same time, without giving due course to the petition, required the respondents to comment on the petition and file the same with the
Court of Appeals within ten (10) days from notice. In the meantime, the Court issued a temporary restraining order, effective immediately and
continuing until further orders from it, ordering the respondents: (1) Judge Manuel Jn. Serapio, Presiding Judge, Regional Trial Court, Branch
127, Caloocan City to cease and desist from exercising jurisdiction over the case for declaration of nullity of the cease and desist order issued by
the Laguna Lake Development Authority (LLDA); and (2) City Mayor of Caloocan and/or the City Government of Caloocan to cease and desist
from dumping its garbage at the Tala Estate, Barangay Camarin, Caloocan City.
Respondents City Government of Caloocan and Mayor Macario A. Asistio, Jr. filed on November 12, 1992 a motion for reconsideration and/or to
quash/recall the temporary restraining order and an urgent motion for reconsideration alleging that ". . . in view of the calamitous situation that
would arise if the respondent city government fails to collect 350 tons of garbage daily for lack of dumpsite (i)t is therefore, imperative that the
issue be resolved with dispatch or with sufficient leeway to allow the respondents to find alternative solutions to this garbage problem."
On November 17, 1992, the Court issued a Resolution 13 directing the Court of Appeals to immediately set the case for hearing for the purpose of
determining whether or not the temporary restraining order issued by the Court should be lifted and what conditions, if any, may be required if it
is to be so lifted or whether the restraining order should be maintained or converted into a preliminary injunction.
The Court of Appeals set the case for hearing on November 27, 1992, at 10:00 in the morning at the Hearing Room, 3rd Floor, New Building,
Court of Appeals. 14 After the oral argument, a conference was set on December 8, 1992 at 10:00 o'clock in the morning where the Mayor of
Caloocan City, the General Manager of LLDA, the Secretary of DENR or his duly authorized representative and the Secretary of DILG or his
duly authorized representative were required to appear.
It was agreed at the conference that the LLDA had until December 15, 1992 to finish its study and review of respondent's technical plan with
respect to the dumping of its garbage and in the event of a rejection of respondent's technical plan or a failure of settlement, the parties will
submit within 10 days from notice their respective memoranda on the merits of the case, after which the petition shall be deemed submitted for
resolution.15 Notwithstanding such efforts, the parties failed to settle the dispute.
On April 30, 1993, the Court of Appeals promulgated its decision holding that: (1) the Regional Trial Court has no jurisdiction on appeal to try,
hear and decide the action for annulment of LLDA's cease and desist order, including the issuance of a temporary restraining order and
preliminary injunction in relation thereto, since appeal therefrom is within the exclusive and appellate jurisdiction of the Court of Appeals under
Section 9, par. (3), of Batas Pambansa Blg. 129; and (2) the Laguna Lake Development Authority has no power and authority to issue a cease and
desist order under its enabling law, Republic Act No. 4850, as amended by P.D. No. 813 and Executive Order
No. 927, series of 1983.
The Court of Appeals thus dismissed Civil Case No. 15598 and the preliminary injunction issued in the said case was set aside; the cease and
desist order of LLDA was likewise set aside and the temporary restraining order enjoining the City Mayor of Caloocan and/or the City
Government of Caloocan to cease and desist from dumping its garbage at the Tala Estate, Barangay Camarin, Caloocan City was lifted, subject,
however, to the condition that any future dumping of garbage in said area, shall be in conformity with the procedure and protective works
contained in the proposal attached to the records of this case and found on pages 152-160 of the Rollo, which was thereby adopted by reference
and made an integral part of the decision, until the corresponding restraining and/or injunctive relief is granted by the proper Court upon LLDA's
institution of the necessary legal proceedings.
Hence, the Laguna Lake Development Authority filed the instant petition for review on certiorari, now docketed as G.R. No. 110120, with prayer
that the temporary restraining order lifted by the Court of Appeals be re-issued until after final determination by this Court of the issue on the
proper interpretation of the powers and authority of the LLDA under its enabling law.
On July, 19, 1993, the Court issued a temporary restraining order 16 enjoining the City Mayor of Caloocan and/or the City Government of
Caloocan to cease and desist from dumping its garbage at the Tala Estate, Barangay Camarin, Caloocan City, effective as of this date and
containing until otherwise ordered by the Court.
It is significant to note that while both parties in this case agree on the need to protect the environment and to maintain the ecological balance of
the surrounding areas of the Camarin open dumpsite, the question as to which agency can lawfully exercise jurisdiction over the matter remains
highly open to question.
The City Government of Caloocan claims that it is within its power, as a local government unit, pursuant to the general welfare provision of the
Local Government Code, 17 to determine the effects of the operation of the dumpsite on the ecological balance and to see that such balance is
maintained. On the basis of said contention, it questioned, from the inception of the dispute before the Regional Trial Court of Caloocan City, the
power and authority of the LLDA to issue a cease and desist order enjoining the dumping of garbage in the Barangay Camarin over which the
City Government of Caloocan has territorial jurisdiction.
The Court of Appeals sustained the position of the City of Caloocan on the theory that Section 7 of Presidential Decree No. 984, otherwise known
as the Pollution Control law, authorizing the defunct National Pollution Control Commission to issue an ex-parte cease and desist order was not
incorporated in Presidential Decree No. 813 nor in Executive Order No. 927, series of
1983. The Court of Appeals ruled that under Section 4, par. (d), of Republic Act No. 4850, as amended, the LLDA is instead required "to institute
the necessary legal proceeding against any person who shall commence to implement or continue implementation of any project, plan or program
within the Laguna de Bay region without previous clearance from the Authority."
The LLDA now assails, in this partition for review, the abovementioned ruling of the Court of Appeals, contending that, as an administrative
agency which was granted regulatory and adjudicatory powers and functions by Republic Act No. 4850 and its amendatory laws, Presidential
Decree No. 813 and Executive Order No. 927, series of 1983, it is invested with the power and authority to issue a cease and desist order pursuant
to Section 4 par. (c), (d), (e), (f) and (g) of Executive Order No. 927 series of 1983 which provides, thus:
Sec. 4. Additional Powers and Functions. The authority shall have the following powers and functions:
xxx xxx xxx
(c) Issue orders or decisions to compel compliance with the provisions of this Executive Order and its implementing rules
and regulations only after proper notice and hearing.
(d) Make, alter or modify orders requiring the discontinuance of pollution specifying the conditions and the time within
which such discontinuance must be accomplished.
(e) Issue, renew, or deny permits, under such conditions as it may determine to be reasonable, for the prevention and
abatement of pollution, for the discharge of sewage, industrial waste, or for the installation or operation of sewage works
and industrial disposal system or parts thereof.
(f) After due notice and hearing, the Authority may also revoke, suspend or modify any permit issued under this Order
whenever the same is necessary to prevent or abate pollution.
(g) Deputize in writing or request assistance of appropriate government agencies or instrumentalities for the purpose of
enforcing this Executive Order and its implementing rules and regulations and the orders and decisions of the Authority.
The LLDA claims that the appellate court deliberately suppressed and totally disregarded the above provisions of Executive Order No. 927, series
of 1983, which granted administrative quasi-judicial functions to LLDA on pollution abatement cases.
In light of the relevant environmental protection laws cited which are applicable in this case, and the corresponding overlapping jurisdiction of
government agencies implementing these laws, the resolution of the issue of whether or not the LLDA has the authority and power to issue an
order which, in its nature and effect was injunctive, necessarily requires a determination of the threshold question: Does the Laguna Lake
Development Authority, under its Charter and its amendatory laws, have the authority to entertain the complaint against the dumping of garbage
in the open dumpsite in Barangay Camarin authorized by the City Government of Caloocan which is allegedly endangering the health, safety, and
welfare of the residents therein and the sanitation and quality of the water in the area brought about by exposure to pollution caused by such open
garbage dumpsite?
The matter of determining whether there is such pollution of the environment that requires control, if not prohibition, of the operation of a
business establishment is essentially addressed to the Environmental Management Bureau (EMB) of the DENR which, by virtue of Section 16 of
Executive Order No. 192, series of 1987, 18 has assumed the powers and functions of the defunct National Pollution Control Commission created
under Republic Act No. 3931. Under said Executive Order, a Pollution Adjudication Board (PAB) under the Office of the DENR Secretary now
assumes the powers and functions of the National Pollution Control Commission with respect to adjudication of pollution cases. 19
As a general rule, the adjudication of pollution cases generally pertains to the Pollution Adjudication Board (PAB), except in cases where the
special law provides for another forum. It must be recognized in this regard that the LLDA, as a specialized administrative agency, is specifically
mandated under Republic Act No. 4850 and its amendatory laws to carry out and make effective the declared national policy 20 of promoting and
accelerating the development and balanced growth of the Laguna Lake area and the surrounding provinces of Rizal and Laguna and the cities of
San Pablo, Manila, Pasay, Quezon and Caloocan 21 with due regard and adequate provisions for environmental management and control,
preservation of the quality of human life and ecological systems, and the prevention of undue ecological disturbances, deterioration and
pollution. Under such a broad grant and power and authority, the LLDA, by virtue of its special charter, obviously has the responsibility to
protect the inhabitants of the Laguna Lake region from the deleterious effects of pollutants emanating from the discharge of wastes from the
surrounding areas. In carrying out the aforementioned declared policy, the LLDA is mandated, among others, to pass upon and approve or
disapprove all plans, programs, and projects proposed by local government offices/agencies within the region, public corporations, and private
persons or enterprises where such plans, programs and/or projects are related to those of the LLDA for the development of the region. 22
In the instant case, when the complainant Task Force Camarin Dumpsite of Our Lady of Lourdes Parish, Barangay Camarin, Caloocan City, filed
its letter-complaint before the LLDA, the latter's jurisdiction under its charter was validly invoked by complainant on the basis of its allegation
that the open dumpsite project of the City Government of Caloocan in Barangay Camarin was undertaken without a clearance from the LLDA, as
required under Section 4, par. (d), of Republic Act. No. 4850, as amended by P.D. No. 813 and Executive Order No. 927. While there is also an
allegation that the said project was without an Environmental Compliance Certificate from the Environmental Management Bureau (EMB) of the
DENR, the primary jurisdiction of the LLDA over this case was recognized by the Environmental Management Bureau of the DENR when the
latter acted as intermediary at the meeting among the representatives of the City Government of Caloocan, Task Force Camarin Dumpsite and
LLDA sometime in July 1992 to discuss the possibility of
re-opening the open dumpsite.
Having thus resolved the threshold question, the inquiry then narrows down to the following issue: Does the LLDA have the power and authority
to issue a "cease and desist" order under Republic Act No. 4850 and its amendatory laws, on the basis of the facts presented in this case, enjoining
the dumping of garbage in Tala Estate, Barangay Camarin, Caloocan City.
The irresistible answer is in the affirmative.
The cease and desist order issued by the LLDA requiring the City Government of Caloocan to stop dumping its garbage in the Camarin open
dumpsite found by the LLDA to have been done in violation of Republic Act No. 4850, as amended, and other relevant environment
laws, 23 cannot be stamped as an unauthorized exercise by the LLDA of injunctive powers. By its express terms, Republic Act No. 4850, as
amended by P.D. No. 813 and Executive Order No. 927, series of 1983, authorizes the LLDA to "make, alter or modify order requiring the
discontinuance or pollution." 24(Emphasis supplied) Section 4, par. (d) explicitly authorizes the LLDA to make whatever order may be necessary
in the exercise of its jurisdiction.
To be sure, the LLDA was not expressly conferred the power "to issue and ex-parte cease and desist order" in a language, as suggested by the
City Government of Caloocan, similar to the express grant to the defunct National Pollution Control Commission under Section 7 of P.D. No. 984
which, admittedly was not reproduced in P.D. No. 813 and E.O. No. 927, series of 1983. However, it would be a mistake to draw therefrom the
conclusion that there is a denial of the power to issue the order in question when the power "to make, alter or modify orders requiring the
discontinuance of pollution" is expressly and clearly bestowed upon the LLDA by Executive Order No. 927, series of 1983.
Assuming arguendo that the authority to issue a "cease and desist order" were not expressly conferred by law, there is jurisprudence enough to
the effect that the rule granting such authority need not necessarily be express.25 While it is a fundamental rule that an administrative agency has
only such powers as are expressly granted to it by law, it is likewise a settled rule that an administrative agency has also such powers as are
necessarily implied in the exercise of its express powers. 26 In the exercise, therefore, of its express powers under its charter as a regulatory and
quasi-judicial body with respect to pollution cases in the Laguna Lake region, the authority of the LLDA to issue a "cease and desist order" is,
perforce, implied. Otherwise, it may well be reduced to a "toothless" paper agency.
In this connection, it must be noted that in Pollution Adjudication Board v. Court of Appeals, et al., 27 the Court ruled that the Pollution
Adjudication Board (PAB) has the power to issue an ex-parte cease and desist order when there is prima facie evidence of an establishment
exceeding the allowable standards set by the anti-pollution laws of the country. Theponente, Associate Justice Florentino P. Feliciano, declared:
Ex parte cease and desist orders are permitted by law and regulations in situations like that here presented precisely
because stopping the continuous discharge of pollutive and untreated effluents into the rivers and other inland waters of the
Philippines cannot be made to wait until protracted litigation over the ultimate correctness or propriety of such orders has
run its full course, including multiple and sequential appeals such as those which Solar has taken, which of course may take
several years. The relevant pollution control statute and implementing regulations were enacted and promulgated in the
exercise of that pervasive, sovereign power to protect the safety, health, and general welfare and comfort of the public, as
well as the protection of plant and animal life, commonly designated as the police power. It is a constitutional
commonplace that the ordinary requirements of procedural due process yield to the necessities of protecting vital public
interests like those here involved, through the exercise of police power. . . .
The immediate response to the demands of "the necessities of protecting vital public interests" gives vitality to the statement on ecology
embodied in the Declaration of Principles and State Policies or the 1987 Constitution. Article II, Section 16 which provides:
The State shall protect and advance the right of the people to a balanced and healthful ecology in accord with the rhythm
and harmony of nature.
As a constitutionally guaranteed right of every person, it carries the correlative duty of non-impairment. This is but in consonance with the
declared policy of the state "to protect and promote the right to health of the people and instill health consciousness among them." 28 It is to be
borne in mind that the Philippines is party to the Universal Declaration of Human Rights and the Alma Conference Declaration of 1978 which
recognize health as a fundamental human right. 29
The issuance, therefore, of the cease and desist order by the LLDA, as a practical matter of procedure under the circumstances of the case, is a
proper exercise of its power and authority under its charter and its amendatory laws. Had the cease and desist order issued by the LLDA been
complied with by the City Government of Caloocan as it did in the first instance, no further legal steps would have been necessary.
The charter of LLDA, Republic Act No. 4850, as amended, instead of conferring upon the LLDA the means of directly enforcing such orders, has
provided under its Section 4 (d) the power to institute "necessary legal proceeding against any person who shall commence to implement or
continue implementation of any project, plan or program within the Laguna de Bay region without previous clearance from the LLDA."
Clearly, said provision was designed to invest the LLDA with sufficiently broad powers in the regulation of all projects initiated in the Laguna
Lake region, whether by the government or the private sector, insofar as the implementation of these projects is concerned. It was meant to deal
with cases which might possibly arise where decisions or orders issued pursuant to the exercise of such broad powers may not be obeyed,
resulting in the thwarting of its laudabe objective. To meet such contingencies, then the writs of mandamus and injunction which are beyond the
power of the LLDA to issue, may be sought from the proper courts.
Insofar as the implementation of relevant anti-pollution laws in the Laguna Lake region and its surrounding provinces, cities and towns are
concerned, the Court will not dwell further on the related issues raised which are more appropriately addressed to an administrative agency with
the special knowledge and expertise of the LLDA.
WHEREFORE, the petition is GRANTED. The temporary restraining order issued by the Court on July 19, 1993 enjoining the City Mayor of
Caloocan and/or the City Government of Caloocan from dumping their garbage at the Tala Estate, Barangay Camarin, Caloocan City is hereby
made permanent.
SO ORDERED.
HON. FRANKLIN M. DRILON, in his capacity as SECRETARY OF JUSTICE, petitioner,
vs.
MAYOR ALFREDO S. LIM, VICE-MAYOR JOSE L. ATIENZA, CITY TREASURER ANTHONY ACEVEDO, SANGGUNIANG
PANGLUNSOD AND THE CITY OF MANILA, respondents.
The City Legal Officer for petitioner.
Angara, Abello, Concepcion, Regala & Cruz for Caltex (Phils.).
Joseph Lopez for Sangguniang Panglunsod of Manila.
L.A. Maglaya for Petron Corporation.

CRUZ, J.:
The principal issue in this case is the constitutionality of Section 187 of the Local Government Code reading as follows:
Procedure For Approval And Effectivity Of Tax Ordinances And Revenue Measures; Mandatory Public Hearings. The
procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this
Code: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof; Provided, further,
That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within
thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days
 from the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the
effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein: Provided, finally, That
within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice
acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction.
Pursuant thereto, the Secretary of Justice had, on appeal to him of four oil companies and a taxpayer, 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. 1
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. 2
The present petition would have us reverse that decision. The Secretary argues that the annulled Section 187 is constitutional and that the
procedural requirements for the enactment of tax ordinances as specified in the Local Government Code had indeed not been observed.
Parenthetically, this petition was originally dismissed by the Court for non-compliance with Circular 1-88, the Solicitor General having failed to
submit a certified true copy of the challenged decision. 3 However, on motion for reconsideration with the required certified true copy of the
decision attached, the petition was reinstated in view of the importance of the issues raised therein.
We stress at the outset that the lower court had jurisdiction to consider the constitutionality of Section 187, this authority being embraced in the
general definition of the judicial power to determine what are the valid and binding laws by the criterion of their conformity to the fundamental
law. Specifically, BP 129 vests in the regional trial courts jurisdiction over all civil cases in which the subject of the litigation is incapable of
pecuniary estimation, 4even as the accused in a criminal action has the right to question in his defense the constitutionality of a law he is charged
with violating and of the proceedings taken against him, particularly as they contravene the Bill of Rights. Moreover, Article X, Section 5(2), of
the Constitution vests in the Supreme Court appellate jurisdiction over final judgments and orders of lower courts in all cases in which the
constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction,
ordinance, or regulation is in question.
In the exercise of this jurisdiction, lower courts are advised to act with the utmost circumspection, bearing in mind the consequences of a
declaration of unconstitutionality upon the stability of laws, no less than on the doctrine of separation of powers. As the questioned act is usually
the handiwork of the legislative or the executive departments, or both, it will be prudent for such courts, if only out of a becoming modesty, to
defer to the higher judgment of this Court in the consideration of its validity, which is better determined after a thorough deliberation by a
collegiate body and with the concurrence of the majority of those who participated in its discussion. 5
It is also emphasized that every court, including this Court, is charged with the duty of a purposeful hesitation before declaring a law
unconstitutional, on the theory that the measure was first carefully studied by the executive and the legislative departments and determined by
them to be in accordance with the fundamental law before it was finally approved. To doubt is to sustain. The presumption of constitutionality
can be overcome only by the clearest showing that there was indeed an infraction of the Constitution, and only when such a conclusion is reached
by the required majority may the Court pronounce, in the discharge of the duty it cannot escape, that the challenged act must be struck down.
In the case before us, Judge Rodolfo C. Palattao declared Section 187 of the Local Government Code unconstitutional insofar as it empowered
the Secretary of Justice to review tax ordinances and, inferentially, to annul them. He cited the familiar distinction between control and
supervision, the first being "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," while the second is "the power of a superior officer to see to it that lower
officers perform their functions in accordance with law." 6 His conclusion was that the challenged section gave to the Secretary the power of
control and not of supervision only as vested by the Constitution in the President of the Philippines. This was, in his view, a violation not only of
Article X, specifically Section 4 thereof, 7 and of Section 5 on the taxing powers of local governments, 8 and the policy of local autonomy in
general.
We do not share that view. The lower court was rather hasty in invalidating the provision.
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. 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 in 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. If they are not followed, he may, in his discretion, order the act undone or re-done
by his subordinate or he may even decide to do it himself. Supervision does not cover such authority. The supervisor or superintendent merely
sees to it that the rules are followed, but he himself does not lay down such rules, nor does he have the discretion to modify or replace them. If the
rules are not observed, he may order the work done or re-done but only to conform to the prescribed rules. He may not prescribe his own manner
for 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.
The case of Taule v. Santos 9 cited in the decision has no application here because the jurisdiction claimed by the Secretary of Local Governments
over election contests in the Katipunan ng Mga Barangay was held to belong to the Commission on Elections by constitutional provision. The
conflict was over jurisdiction, not supervision or control.
Significantly, a rule similar to Section 187 appeared in the Local Autonomy Act, which provided in its Section 2 as follows:
A tax ordinance shall go into effect on the fifteenth day after its passage, unless the ordinance shall provide otherwise:
Provided, however, That the Secretary of Finance shall have authority to suspend the effectivity of any ordinance within
one hundred and twenty days after receipt by him of a copy thereof, if, in his opinion, the tax or fee therein levied or
imposed is unjust, excessive, oppressive, or confiscatory, or when it is contrary to declared national economy policy, and
when the said Secretary exercises this authority the effectivity of such ordinance shall be suspended, either in part or as a
whole, for a period of thirty days within which period the local legislative body may either modify the tax ordinance to
meet the objections thereto, or file an appeal with a court of competent jurisdiction; otherwise, the tax ordinance or the part
or parts thereof declared suspended, shall be considered as revoked. Thereafter, the local legislative body may not reimpose
the same tax or fee until such time as the grounds for the suspension thereof shall have ceased to exist.
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 with, 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.
The issue of non-compliance with the prescribed procedure in the enactment of the Manila Revenue Code is another matter.
In his resolution, Secretary Drilon declared that there were no written notices of public hearings on the proposed Manila Revenue Code that were
sent to interested parties as required by Art. 276(b) of the Implementing Rules of the Local Government Code nor were copies of the proposed
ordinance published in three successive issues of a newspaper of general circulation pursuant to Art. 276(a). No minutes were submitted to show
that the obligatory public hearings had been held. Neither were copies of the measure as approved posted in prominent places in the city in
accordance with Sec. 511(a) of the Local Government Code. Finally, the Manila Revenue Code was not translated into Pilipino or Tagalog and
disseminated among the people for their information and guidance, conformably to Sec. 59(b) of the Code.
Judge Palattao found otherwise. He declared that all the procedural requirements had been observed in the enactment of the Manila Revenue
Code and that the City of Manila had not been able to prove such compliance before the Secretary only because he had given it only five days
within which to gather and present to him all the evidence (consisting of 25 exhibits) later submitted to the trial court.
To get to the bottom of this question, the Court acceded to the motion of the respondents and called for the elevation to it of the said exhibits. We
have carefully examined every one of these exhibits and agree with the trial court that the procedural requirements have indeed been observed.
Notices of the public hearings were sent to interested parties as evidenced by Exhibits G-1 to 17. The minutes of the hearings are found in
Exhibits M, M-1, M-2, and M-3. Exhibits B and C show that the proposed ordinances were published in the Balita and the Manila Standard on
April 21 and 25, 1993, respectively, and the approved ordinance was published in the July 3, 4, 5, 1993 issues of the Manila Standard and in the
July 6, 1993 issue of Balita, as shown by Exhibits Q, Q-1, Q-2, and Q-3.
The only exceptions are the posting of the ordinance as approved but this omission does not affect its validity, considering that its publication in
three successive issues of a newspaper of general circulation will satisfy due process. It has also not been shown that the text of the ordinance has
been translated and disseminated, but this requirement applies to the approval of local development plans and public investment programs of the
local government unit and not to tax ordinances.
We make no ruling on the substantive provisions of the Manila Revenue Code as their validity has not been raised in issue in the present petition.
WHEREFORE, the judgment is hereby rendered REVERSING the challenged decision of the Regional Trial Court insofar as it declared Section
187 of the Local Government Code unconstitutional but AFFIRMING its finding that the procedural requirements in the enactment of the Manila
Revenue Code have been observed. No pronouncement as to costs.
SO ORDERED.
PETRON CORPORATION, G.R. No. 158881
Petitioner,
Present:

- versus - QUISUMBING, J.,

Chairperson,
CARPIO MORALES,
TINGA,
MAYOR TOBIAS M. TIANGCO, VELASCO, JR, and
and MUNICIPAL TREASURER BRION, JJ.
MANUEL T. ENRIQUEZ of the
MUNICIPALITY OF NAVOTAS,
METRO MANILA,
Respondents.
Promulgated:
April 16, 2008

DECISION

TINGA, J.:

The novel but important issue before us is whether a local government unit is empowered under the Local Government Code (the LGC) to
impose business taxes on persons or entities engaged in the sale of petroleum products.

I.

The present Petition for Review on Certiorari under Rule 45 filed by petitioner Petron Corporation (Petron) directly assails the Decision of the
Regional Trial Court (RTC) of Malabon, Branch 74, which dismissed petitioners complaint for cancellation of assessment made by the then
municipality (now City) of Navotas (Navotas) for deficiency taxes, and ordering the payment ofP10,204,916.17 pesos in business taxes to
Navotas. As the issues raised are pure questions of law, we need not dwell on the facts at length.

Petron maintains a depot or bulk plant at the Navotas Fishport Complex in Navotas. Through that depot, it has engaged in the selling of diesel
fuels to vessels used in commercial fishing in and around Manila Bay.[1] On 1 March 2002, Petron received a letter from the office of Navotas
Mayor, respondent Toby Tiangco, wherein the corporation was assessed taxes relative to the figures covering sale of diesel declared by your
Navotas Terminal from 1997 to 2001.[2] The stated total amount due was P6,259,087.62, a figure derived from the gross sales of the depot during
the years in question. The computation sheets[3] that were attached to the letter made reference to Ordinance 92-03, or the New Navotas Revenue
Code (Navotas Revenue Code), though such enactment was not cited in the letter itself.

Petron duly filed with Navotas a letter-protest to the notice of assessment pursuant to Section 195 of the Code. It argued that it was exempt from
local business taxes in view of Art. 232(h) of the Implementing Rules (IRR) of the Code, as well as a ruling of the Bureau of Local Government
Finance of the Department of Finance dated 31 July 1995, the latter stating that sales of petroleum fuels are not subject to local taxation. The
letter-protest was denied by the Navotas Municipal Treasurer, respondent Manuel T. Enriquez, in a letter dated 8 May 2002.[4] This was followed
by a letter from the Mayor dated 15 May 2002, captioned Final Demand to Pay, requiring that Petron pay the assessed amount within five (5)
days from receipt thereof, with a threat of closure of Petrons operations within Navotas should there be no payment. [5] Petron, through counsel,
replied to the Mayor by another letter posing objections to the threat of closure. The Mayor did not respond to this last letter.[6]

Thus, on 20 May 2002, Petron filed with the Malabon RTC a Complaint for Cancellation of Assessment for Deficiency Taxes with
Prayer for the Issuance of a Temporary Restraining Order (TRO) and/or Preliminary Injunction. The quested TRO was not issued by the Malabon
RTC upon manifestation of respondents that they would not proceed with the closure of Petrons Navotas bulk plant until after the RTC shall have
decided the case on the merits.[7] However, while the case was pending decision, respondents refused to issue a business permit to Petron, thus
prompting Petron to file a Supplemental Complaint with Prayer for Preliminary Mandatory Injunction against respondents.[8]

On 5 May 2003, the Malabon RTC rendered its Decision dismissing Petrons complaint and ordering the payment of the assessed
amount.[9] Eleven days later, Petron received a Closure Order from the Mayor, directing Petron to cease and desist from operating the bulk plant.
Petron sought a TRO from the Malabon RTC, but this was denied.[10] Petron also filed a motion for reconsideration of the order of denial, but this
was likewise denied.[11]

On 4 August 2003, this Court issued a TRO, enjoining the respondents from closing Petrons Navotas bulk plant or otherwise
interfering in its operations.[12]

II.

As earlier stated, Petron has opted to assail the RTC Decision directly before this Court since the matter at hand involves pure
questions of law, a characterization conceded by the RTC Decision itself. Particularly, the controversy hinges on the correct interpretation of
Section 133(h) of the LGC, and the applicability of Article 232 (h) of the IRR.

Section 133(h) of the LGC reads as follows:

Sec. 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
(h) Excise taxes on articles enumerated under the National Internal Revenue Code, as amended, and taxes, fees
or charges on petroleum products;
 Evidently, Section 133 prescribes the limitations on the capacity of local government units to exercise their taxing powers otherwise
granted to them under the LGC. Apparently, paragraph (h) of the Section mentions two kinds of taxes which cannot be imposed by local
government units, namely: excise taxes on articles enumerated under the National Internal Revenue Code [(NIRC)], as amended; and taxes, fees
or charges on petroleum products.

The power of a municipality to impose business taxes is provided for in Section 143 of the LGC. Under the provision, a municipality
is authorized to impose business taxes on a whole host of business activities. Suffice it to say, unless there is another provision of law which
states otherwise, Section 143, broad in scope as it is, would undoubtedly cover the business of selling diesel fuels, or any other petroleum product
for that matter.

Nonetheless, Article 232 of the IRR defines with more particularity the capacity of a municipality to impose taxes on businesses. The
enumeration that follows is generally a positive list of businesses which may be subjected to business taxes, and paragraph (h) of Article 232 does
allow the imposition of local business taxes [o]n any business not otherwise specified in the preceding paragraphs which the sanggunian
concerned may deem proper to tax, but subject to this important qualification, thus:

xxx provided further, that in line with existing national policy, any business engaged in the production,
manufacture, refining, distribution or sale of oil, gasoline and other petroleum products shall not be subject to any local tax
imposed on this article.

Notably, the Malabon RTC declared Art. 232(h) of the IRR void because the Code purportedly does not contain a provision prohibiting the
imposition of business taxes on petroleum products.[13] This submission warrants close examination as well.

With all the relevant provisions of law laid out, we address the core issues submitted by Petron, namely: first, is the challenged tax on sale of the
diesel fuels an excise tax on an article enumerated under the NIRC, thusly prohibited under Section 133(h) of the Code?; second, is the
challenged tax prohibited by Section 133(h) under the proviso, taxes, fees or charges on petroleum products? and; third, does Art. 232(h) of the
IRR similarly prohibit the imposition of the challenged tax?

III

As earlier observed, Section 133(h) provides two kinds of taxes which cannot be imposed by local government units: excise taxes on
articles enumerated under the NIRC, as amended; and taxes, fees or charges on petroleum products. There is no doubt that among the excise taxes
on articles enumerated under the NIRC are those levied on petroleum products, per Section 148 of the NIRC.

We first consider Petrons argument that the business taxes on its sale of diesel fuels partakes of an excise tax, which if true, could
invalidate the challenged tax solely on the basis of the phrase excise taxes on articles enumerated under the [NIRC]. To support this argument, it
cites Cordero v. Conda,[14] Allied Thread Co. Inc. v. City Mayor of Manila,[15] and Iloilo Bottlers, Inc. v. City of Iloilo,[16] as having explained that
an excise tax is a tax upon the performance, carrying on, or the exercise of an activity.[17] Respondents, on the other hand, argue that what the
provision prohibits is the imposition of excise taxes on petroleum products, but not the imposition of business taxes on the same. They
cite Philippine Petroleum Corporation v. Municipality of Pililia, [18]where the Court had noted, [a] tax on business is distinct from a tax on the
article itself.[19]

Petrons argument is fraught with far-reaching implications, for if it were sustained, it would mean that local government units are
barred from imposing business taxes on any of the articles subject to excise taxes under the NIRC. These would include alcohol
products, tobacco products,[21] mineral products[22] automobiles,[23] and such non-essential goods as jewelry, goods made of precious metals,
[20]

perfumes, and yachts and other vessels intended for pleasure or sports.[24]

Admittedly, the proffered definition of an excise tax as a tax upon the performance, carrying on, or exercise of some right, privilege,
activity, calling or occupation derives from the compendium American Jurisprudence, popularly referred to as Am Jur,,[25] and has been cited in
previous decisions of this Court, including those cited by Petron itself. Such a definition would not have been

inconsistent with previous incarnations of our Tax Code, such as the NIRC of 1939, [26] as amended, or the NIRC of 1977[27]because in those laws
the term excise tax was not used at all. In contrast, the nomenclature used in those prior laws in referring to taxes imposed on specific articles was
specific tax.[28] Yet beginning with the National Internal Revenue Code of 1986, as amended, the term excise taxes was used and defined as
applicable to goods manufactured or produced in the Philippines and to things imported.[29] This definition was carried over into the present NIRC
of 1997.[30] Further, these two latest codes categorize two different kinds of excise taxes: specific tax which is imposed and based on weight or
volume capacity or any other physical unit of measurement; and ad valorem tax which is imposed and based on the selling price or other
specified value of the goods. In other words, the meaning of excise tax has undergone a transformation, morphing from the Am Jur definition to
its current signification which is a tax on certain specified goods or articles.

The change in perspective brought forth by the use of the term excise tax in a different connotation was not lost on the departed author
Jose Nolledo as he accorded divergent treatments in his 1973 and 1994 commentaries on our tax laws. Writing in 1973, and essentially alluding
to the Am Jur definition of excise tax, Nolledo observed:

Are specific taxes, taxes on property or excise taxes

In the case of Meralco v. Trinidad ([G.R.] 16738, 1925) it was held that specific taxes are property taxes, a ruling
which seems to be erroneous. Specific taxes are truly excise taxes for the fact that the value of the property taxed is taken
into account will not change the nature of the tax. It is correct to say that specific taxes are taxes on the privilege to import,
manufacture and remove from storage certain articles specified by law.[31]

In contrast, after the tax code was amended to classify specific taxes as a subset of excise taxes, Nolledo, in his 1994 commentaries,
wrote:

1. Excise taxes, as used in the Tax Code, refers to taxes applicable to certain specified goods or articles
manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition and to things
imported into the Philippines. They are either specific or ad valorem.

2. Nature of excise taxes. They are imposed directly on certain specified goods. (infra) They are, therefore, taxes
on property. (see Medinavs. City of Baguio, 91 Phil. 854.)

A tax is not excise where it does not subject directly the produce or goods to tax but indirectly as an incident to,
or in connection with, the business to be taxed.[32]

In their 2004 commentaries, De Leon and De Leon restate the Am Jur definition of excise tax, and observe that the term is
synonymous with privilege tax and [both terms] are often used interchangeably. [33] At the same time, they offer a caveat that [e]xcise tax, as
[defined by Am Jur], is not to be confused with excise tax imposed [by the NIRC] on certain specified articles manufactured or produced in, or
imported into, the Philippines, for domestic sale or consumption or for any other disposition. [34]

It is evident that Am Jur aside, the current definition of an excise tax is that of a tax levied on a specific article, rather than one upon
the performance, carrying on, or the exercise of an activity. This current definition was already in place when the Code was enacted in 1991, and
we can only presume that it was what the Congress had intended as it specified that local government units could not impose excise taxes on
articles enumerated under the [NIRC]. This prohibition must pertain to the same kind of excise taxes as imposed by the NIRC, and not those
previously defined excise taxes which were not integrated or denominated as such in our present tax law.
 It is quite apparent, therefore, that our current body of taxation law does not explicitly accommodate the traditional definition of excise
tax offered by Petron. In fact, absent any statutory adoption of the traditional definition, it may be said that starting in 1986 excise taxes in this
jurisdiction refer exclusively to specific or ad valorem taxes imposed under the NIRC. At the very least, it is this concept of excise tax which we
can reasonably assume that Congress had in mind and actually adopted when it crafted the Code. The palpable absurdity that ensues should the
alternative interpretation prevail all but strengthens this position.

Thus, Petrons argument concerning excise taxes is founded not on what the NIRC or the Code actually provides, but on a non-
statutory definition sourced from a legal paradigm that is no longer applicable in this jurisdiction. That such definition was referred to again in
our 1998 decision in Province of Bulacan v. Court of Appeals[35] is ultimately of little consequence, and so is Petrons reliance on such ruling. The
Court therein had correctly nullified, on the basis of Section 133(h) of the Code, a province-imposed tax of 10% of the fair market value in the
locality per cubic meter of ordinary stones, sand, gravel, earth and other quarry resources xxx extracted from public lands, because it noted that
under Section 151 of the NIRC, all nonmetallic minerals and quarry resources were assessed with excise taxes of two percent (2%) based on the
actual market value of the gross output thereof at the time of removal, in case of those locally extracted or produced.[36] Additionally, the Court
also observed that the case had emanated from an attempt to impose the said tax on quarry resources from private lands, despite the clear
language of the tax ordinance limiting the tax to such resources extracted from public lands. [37] On that score alone, the case could have been
correctly decided.

It is true that the Court had additionally reasoned in Province of Bulacan that [t]he tax imposed by the Province of Bulacan is an
excise tax, being a tax upon the performance, carrying on, or exercise of an activity. As earlier noted, such definition of excise tax however was
not explicitly carried over into the NIRC and was even superseded beginning with the 1986 amendments thereto. To insist on utilizing this
definition simply because it had been reiterated in Province of Bulacan, unnecessary as such reiteration may have been to the resolution of that
case, would have the unfortunate effect of infusing life into a concept that is diametrically inconsistent with the present state of the law.

We thus can assert with clear comfort that excise taxes, as imposed under the NIRC, do not pertain to the performance, carrying on, or
exercise of an activity, at least not to the extent of equating excise with business taxes.

IV.

We next consider whether the clause taxes, fees or charges on petroleum products in Section 133(h) precludes local government units from
imposing business taxes based on the sale of petroleum products.

The power of a municipality to impose business taxes derives from Section 143 of the Code that specifically enumerates several types of business
on which it may impose taxes, including manufacturers, wholesalers, distributors, dealers of any article of commerce of whatever nature;[38] those
engaged in the export or commerce of essential commodities;[39] retailers;[40] contractors and other independent contractors;[41] banks and financial
institutions;[42] and peddlers engaged in the sale of any merchandise or article of commerce. [43] This obviously broad power is further
supplemented by paragraph (h) of Section 143 which authorizes thesanggunian to impose taxes on any other businesses not otherwise specified
under Section 143 which the sanggunian concerned may deem proper to tax.[44]

This ability of local government units to impose business or other local taxes is ultimately rooted in the 1987 Constitution. Section 5, Article X
assures that [e]ach local government unit shall have the power to create its own sources of revenues and to levy taxes, fees and charges, though
the power is subject to such guidelines and limitations as the Congress may provide. There is no doubt that following the 1987 Constitution and
the Code, the fiscal autonomy of local government units has received greater affirmation than ever. Previous decisions that have been skeptical of
the viability, if not the wisdom of reposing fiscal autonomy to local government units have fallen by the wayside.

Respondents cite our declaration in City Government of San Pablo v. Reyes[45] that following the 1987 Constitution the rule thenceforth in
interpreting statutory provisions on municipal fiscal powers, doubts will have to be resolved in favor of municipal corporations.[46] Such policy is
also echoed in Section 5(a) of the Code, which states that [a]ny provision on a power of a local government unit shall be liberally interpreted in
its favor, and in case of doubt, any question thereon shall be resolved in favor of devolution of powers and of the lower local government unit.
But somewhat conversely, Section 5(b) then proceeds to assert that [i]n case of doubt, any tax ordinance or revenue measure shall be construed
strictly against the local government unit enacting it, and liberally in favor of the taxpayer. [47] And this latter qualification has to be respected as a
constitutionally authorized limitation which Congress has seen fit to provide. Evidently, local fiscal autonomy should not necessarily translate
into abject deference to the power of local government units to impose taxes.

Congress has the constitutional authority to impose limitations on the power to tax of local government units, and Section 133 of the Code is one
such limitation. Indeed, the provision is the explicit statutory impediment to the enjoyment of absolute taxing power by local government units,
not to mention the reality that such power is a delegated power. To cite one example, under Section 133(g), local government units are disallowed
from levying business taxes on business enterprises certified to by the Board of Investments as pioneer or non-pioneer for a period of six (6) and
(4) four years, respectively from the date of registration.

Section 133(h) states that local government units shall not extend to the levy of xxx taxes, fees or charges on petroleum products. Respondents
assert that the phrase taxes, fees or charges on petroleum products pertains to the imposition of direct or excise taxes on petroleum products, and
not business taxes. If the phrase actually pertains to excise taxes, then it would be an exercise in utter redundancy, since the preceding phrase
already prohibits the imposition of excise taxes on articles already subject to such taxes under the NIRC, such as petroleum products. There
would be no sense on the part of the legislature to twice emphasize in the same sentence that excise taxes on petroleum products are beyond the
pale of local government taxation.

It appears that this argument of respondents was fashioned on the basis of the pronouncement of the Court in Philippine Petroleum Corporation
v. Municipality of Pililla, thus:[48]

xxx [W]hile 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. A tax on business
is distinct from a tax on the article itself. Thus, if the imposition of tax on business of manufacturers, etc. in petroleum
products contravenes a declared national policy, it should have been expressly stated in P.D. No. 436.

The dicta that [a] tax on a business is distinct from a tax on the article itself might at first blush somehow lend support to respondents position,
yet that dicta has not since been reprised by this Court. It is likewise worth observing that Pililla did involve a tax ordinance that imposed
business taxes on an enterprise engaged in the manufacture and storage of petroleum products.

Significantly, the legal milieu governing Pililla is vastly different from that existing at bar, to the extent that the earlier case could not be
presently controlling.

At the time the taxes sought to be collected in Pililla were imposed, there was no national law in place similar to Section 133(h) of the Code that
barred local taxes, fees or charges on petroleum products. There were circulars to that effect issued by the Finance Department, yet the Court
could not validate such issuances since under the tax laws then in place no exemptions were given to
manufacturers, wholesalers, retailers, or dealers in petroleum products. [49] In fact, the Court tellingly observed that if the imposition of tax on
business of manufacturers, etc. in petroleum products contravenes a declared national policy, it should have been expressly stated in P.D. No.
436.[50] Such expression conspiciously missing in P.D. No. 436 is now found in Section 133(h).
In view of the difference in statutory paradigm between this case and Pililla, the latter case is severely diminished as applicable precedent at bar.
The Court then was correct in observing that a mere administrative circular could not prohibit a local tax that is not otherwise barred under a
national statute, yet in this case that conflict is not present since the Code explicitly prohibits the imposition of several classes of local taxes,
including those on petroleum products. The final and only straw Pililla provides that respondents can still grasp at is the bare statement that [a]
tax on a business is distinct from a tax on the article itself,[51] a sentence which could have been omitted from that decision without any effect.

We can concede that a tax on a business is distinct from a tax on the article itself, or for that matter, that a business tax is distinct from an excise
tax. However, such distinction is immaterial insofar as the latter part of Section 133(h) is concerned, for the phrase taxes, fees or charges on
petroleum products does not qualify the kind of taxes, fees or charges that could withstand the absolute prohibition imposed by the provision. It
would have been a different matter had Congress, in crafting Section 133(h), barred excise taxes or direct taxes, or any category of taxes only, for
then it would be understood that only such specified taxes on petroleum products could not be imposed under the prohibition. The absence of
such a qualification leads to the conclusion that all sorts of taxes on petroleum products, including business taxes, are prohibited by Section
133(h). Where the law does not distinguish, we should not distinguish.

The language of Section 133(h) makes plain that the prohibition with respect to petroleum products extends not only to excise taxes thereon, but
all taxes, fees and charges. The earlier reference in paragraph (h) to excise taxes comprehends a wider range of subjects of taxation: all articles
already covered by excise taxation under the NIRC, such as alcohol products, tobacco products, mineral products, automobiles, and such non-
essential goods as jewelry, goods made of precious metals, perfumes, and yachts and other vessels intended for pleasure or sports. In contrast, the
later reference to taxes, fees and charges pertains only to one class of articles of the many subjects of excise taxes, specifically, petroleum
products. While local government units are authorized to burden all such other class of goods with taxes, fees and charges, excepting excise taxes,
a specific prohibition is imposed barring the levying of any other type of taxes with respect to petroleum products.

V.

We no longer need to dwell on the arguments centering on Article 232 of the IRR. As earlier stated, the provision explicitly stipulates
that in line with existing national policy, any business engaged in the production, manufacture, refining, distribution or sale of oil, gasoline and
other petroleum products shall not be subject to any local tax imposed on this article [on business taxes]. The RTC went as far as to declare
Article 232 as invalid on the premise that the prohibition was not similarly warranted under the Code.

Assuming that the Code does not, in fact, prohibit the imposition of business taxes on petroleum products, we would agree that the IRR
could not impose such a prohibition. With our ruling that Section 133(h) does indeed prohibit the imposition of local business taxes on petroleum
products, however, the RTC declaration that Article 232 was invalid is, in turn, itself invalid. Even absent Article 232, local government units
cannot impose business taxes on petroleum products. If anything, Article 232 merely reiterates what the Code itself already provides, with the
additional explanation that such prohibition was in line with existing national policy.
VI.

We have said all that need be said for the resolution of this case, but there is one more line of argument raised by respondents that deserves a
remark. Respondents argue, assuming... that the Oversight Committee [that drafted the IRR] can legislate, that the existing national policy
referred to in Article 232 had been superseded by Republic Act No. 8180, or the Oil Deregulation Law. Boiled down to its essence, the argument
is that since the oil industry is presently deregulated the basis for exempting petroleum products from business taxes no longer exists.

Of course, the starting premise for this argument, that the IRR can establish a tax or an exemption, is false and has been flatly rejected by this
Court before.[52] The Code itself does not connect its prohibition on taxation of petroleum products with any existing or future national oil policy,
so the change in such national policy with the regime of oil deregulation is ultimately of no moment. Still, we can divine the reasoning behind
singling out petroleum products, among all other commodities, as beyond the power of local government units to levy local taxes.

Why the special concern over petroleum products? The answer is quite evident to all sentient persons. In this age where unfortunately dependence
on petroleum as fuel has yet no equally feasible alternative, the cost of petroleum products, though fully controlled by private enterprise, remains
an area of public concern. To be blunt about it, there is an inevitable link between the fluctuation of oil prices and the prices of every other
commodity. The reality, indeed, is oil is a political commodity. Such fact has received recognition from this Court. [O]il [is] a commodity whose
supply and price affect the ebb and flow of the lifeblood of the nation. Its shortage of supply or a slight, upward spiral in its price shakes our
economic foundation. Studies show that the areas most impacted by the movement of oil are food manufacture, land transport, trade, electricity
and water.[53] [T]he upswing and downswing of our economy materially depend on the oscillation of oil.[54] Fluctuations in the supply and price of
oil products have a dramatic effect on economic development and public welfare.[55]
It can be reasonably presumed that if municipalities, cities and provinces were authorized to impose business taxes on manufacturers and retailers
of petroleum products, the resulting losses to these enterprises would be passed on to the consumers, triggering the chain of increases that
normally accompany the increase in oil prices. No similarly massive trigger effect would ensue upon the imposition of business taxes on other
commodities, including those already subject to excise taxation under the NIRC.
It may very well be that the policy of deregulation, which was not yet in effect at the time of the enactment of the Local Government
Code, has changed the complexion of the issue, for unlike before, oil companies are free at will to increase oil prices, thus mitigating the similarly
arbitrary consequences that could develop if petroleum products were subject to local taxes. Still, it cannot be denied that subjecting petroleum
products to business taxes apart from the taxes already imposed by Congress in this age of deregulation would lead to the same result had they
been so taxed during the era of oil regulation the increase of oil prices. We do not discount the authority of Congress to enact measures that
facilitate the increase in oil prices; witness the Oil Deregulation Law and the most recent Expanded VAT Law. Yet these hard choices are
presumably made by Congress with the expectation that the negative effects of increased oil prices are offset by the other economic benefits
promised by those new laws (i.e., a more vibrant oil industry; increased government revenue).
The Court defers to the other branches of government in the formulation of oil policy, but when the choices are made through
legislation, the Court expects that the choices are deliberate, considering that the stakes are virtually all-in. Herein, respondents may be bolstered
by the constitutional and statutory policy favoring local fiscal autonomy, but it would be utter indolence to reflexively affirm such policy when
the inevitable effect is an increase in oil prices. Any prudent adjudication should fully ascertain the mandate of local government units to impose
taxes on petroleum products, and such mandate should be cast in so specific terms as to leave no dispute as to the legislative intendment to extend
such power in the name of local autonomy. What we have found instead, from the plain letter of the law is an explicit disinclination on the part of
the legislature to impart that particular taxing power to local government units.

While Section 133(h) does not generally bar the imposition of business taxes on articles burdened by excise taxes under the NIRC, it
specifically prohibits local government units from extending the levy of any kind of taxes, fees or charges on petroleum products. Accordingly,
the subject tax assessment is ultra vires and void.
WHEREFORE, the Petition is GRANTED. The Decision of the Regional Trial Court of Malabon City in Civil Case No. 3380-
MN isREVERSED and SET ASIDE and the subject assessment for
deficiency taxes on petitioner is ordered CANCELLED. The Temporary Restraining Order dated 4 August 2003 is hereby made PERMANENT.
No pronouncement as to costs.
SO ORDERED.

Luz Yamane vs BA Lepanto Condominium Corporation

In 1998, BA Lepanto Condominium Corporation (Lepanto) received a tax assessment in the amount of P1.6 million from Luz Yamane, the City
Treasurer of Makati, for business taxes. Lepanto protested the assessment as it averred that Lepanto, as a corporation, is not organized for profit;
that it merely exists for the maintenance of the condominium. Yamane denied the protest. Lepanto then appealed the denial to the RTC of Makati.
RTC Makati affirmed the decision of Yamane. Lepanto then filed a petition for review under Rule 42 with the Court of Appeals. The Court of
Appeals reversed the RTC.
Yamane now filed a petition for review under Rule 45 with the Supreme Court. Yamane avers that a.) Lepanto is liable for local taxation because
its act of maintaining the condominium is an activity for profit because the end result of such activity is the betterment of the market value of the
condominium which makes it easier to sell it; that Lepanto is earning profit from fees collected from condominium unit owners; and that b.)
Lepantos petition for review of the decision of the RTC to the CA is erroneous because when the RTC decided on the appeal brought to it by
Lepanto, the RTC was exercising its original jurisdiction and not its appellate jurisdiction; that as such, what Lepanto should have done is to file
an ordinary appeal under Rule 41.
ISSUE: Whether or not a RTC deciding an appeal from the decision of a city treasurer on tax protests is exercising original jurisdiction. Whether
or not a condominium corporation organized solely for the maintenance of a condominium is liable for local taxation.
HELD:
1. Yes. Although the LGC (Section 195) provides that the remedy of the taxpayer whose protest is denied by the local treasurer is to
appeal with the court of competent jurisdiction or in this case the RTC (considering the amount of tax liability is P1.6 million), such appeal
when decided by the RTC is still in the exercise of its original jurisdiction and not its appellate jurisdiction. This is because appellate jurisdiction
is defined as the authority of a court higher in rank to re-examine the final order or judgment of a lower court which tried the case now
elevated for judicial review. Here, the City Treasurer is not a lower court.
The Supreme Court however clarifies that this ruling is only applicable to similar cases before the passage of Republic Act 9282 (effective April
2004). Under RA 9282, the Court of Tax Appeals (CTA), not CA, exercises exclusive appellate jurisdiction to review on appeal decisions, orders
or resolutions of the Regional Trial Courts in local tax cases whether originally decided or resolved by them in the exercise of their original
or appellate jurisdiction.
2. No. Lepanto was not organized for profit. The fees it was collecting from the condominium unit owners redound to the owners themselves
because the fees collected are being used for the maintenance of the condo. Further, it appears that the assessment issued by Yamane did not state
the legal basis for the tax being imposed on Lepanto it merely states that Makati is authorized to collect business taxes under the Local
Government Code (LGC) but no other reference specific reference to specific laws were cited.