EN BANC

[G.R. No. 111097. July 20, 1994.]

MAYOR PABLO P. MAGTAJAS & THE CITY OF CAGAYAN DE ORO, Petitioners, v. PRYCE
PROPERTIES CORPORATION, INC. & PHILIPPINE AMUSEMENT AND GAMING CORPORATION,
Respondents.

SYLLABUS

DAVIDE, JR., J., separate opinion: chanro b1es vi rt ual 1aw li bra ry

1. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; PRINCIPAL CAUSE OF ACTION IN CASE AT BAR ONE FOR
DECLARATORY RELIEF. 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 courts 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 Panlungsod 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 States national policy declared in P.D. No. 1869.
Accordingly, the Court of Appeals does not have jurisdiction over the nature of the action.

2. ID.; ID.; PROHIBITION; ESTABLISHED POLICY RELATIVE TO HIERARCHY OF COURTS NOT

OBSERVED IN FILING OF PETITION IN CASE AT BAR. Assuming arguendo that the case is one for
prohibition, then, under this Courts 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 v. Cuaresma (172 SCRA 415,
[1989]) and Defensor-Santiago v. Vasquez (217 SCRA 633 1993]).

3. STATUTORY CONSTRUCTION; PRESIDENTIAL DECREE NO. 1869 NOT REPEALED PRO TANTO BY
LOCAL GOVERNMENT CODE. The challenged ordinances were enacted pursuant to the Sangguniang
Panglungsods express powers conferred by Section 458paragraph (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 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 PAGCORS 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.

4. CONTRAVENTION OF LAW NOT NECESSARILY A CONTRAVENTION OF THE CONSTITUTION;

ORDINANCES IN CASE AT BAR RECONCILED WITH PRESIDENTIAL DECREE NO. 1869. 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.

DECISION

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 and objection
and so did the womens 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: chanrob 1es vi rtual 1aw lib rary

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: chanrob 1es vi rtua l 1aw lib rary
SECTION 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.

SECTION 2. That it shall be 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.

SECTION 3. PENALTIES. Any violation of such existing business permit as defined in the preceding
section shall suffer the following penalties, to wit: chanrob1es v irt ual 1aw l ibra ry

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.

SECTION 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: chanrob1e s

virtua l 1aw lib rary

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 regulated 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: chanrob 1es vi rtual 1aw lib rary

SECTION 1. The operation of gambling CASINO in the City of Cagayan de Oro is hereby prohibited.

SECTION 2. Any violation of this Ordinance shall be subject to the following penalties: chanrob1es v irt ual 1aw li bra ry

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.

SECTION 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 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 of Court. 3
They aver that the respondent Court of Appeals erred in holding that: chanrob 1es vi rtua l 1aw lib rary

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 the PAGCOR gambling casino
within the Citys 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." cra law virt ua1aw li bra ry

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, 195 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 Gambling 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. chan rob lesvi rtual lawlib rary

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: chanrob1es vi rt ual 1aw li bra ry

SECTION 16. General Welfare. Every local government unit shall exercise the powers expressly
granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental
for its efficient and effective governance, and those which are essential to the promotion of the
general welfare. Within their respective territorial jurisdictions, local government units shall ensure
and support, among other things, the preservation and enrichment of culture, promote health and
safety, enhance the right of the people to a balanced ecology, encourage and support the
development of appropriate and self-reliant scientific and technological capabilities, improve public
morals, enhance economic prosperity and social justice, promote full employment among their
residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants.

In addition, Section 458 of the said Code specifically declares that: chanrob1es vi rt ual 1aw li bra ry

SECTION 458. Powers, Duties, Functions and Compensation. (1) 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: chanro b1es vi rtua l 1aw lib ra ry

(1) Approve ordinances and pass resolutions necessary for an efficient and effective city government,
and in this connection, shall: chanrob1e s virtual 1aw l ibra ry

x x x

(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 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 business 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 and 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 all forms of gambling within 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. chanro bles vi rt ual lawli bra ry

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: chanrob 1es vi rtual 1aw lib rary

(f) All general and special laws, acts, city charters, decrees, executives 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: chan rob1es v irt ual 1aw l ibra ry
SECTION 5. Rules of Interpretation. In the interpretation of the provisions of this Code, the
following rules shall apply: chanrob1e s virtual 1aw lib rary

(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;

x x x

(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." c ralawnad

This is the opportune time to stress an important point.

The morality of gambling is not 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 no 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. chan roble svirtuallaw lib rary:re d

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 time of decisions 9 has held to be valid, an
ordinance must conform to the following substantive requirements: chanrob1es vi rt ual 1aw li bra ry

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 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 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. chan roble s law l ibra ry : red

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
the 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 petitioner are playing with words. While insisting that the decree has only been
"modified pro 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, it operates may now be not only prohibited by the local government unit; in
fact, the prohibition is not only discretionary by 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 on
choice but to prevent and suppress gambling, which in the petitioners view includes both legal and
illegal gambling. Under this connection, 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 price
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: chan rob 1es vi rtual 1aw lib rary

SECTION 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. chanrob les.co m.ph : virtual law lib rary

(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; Section 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 intentions. In Lichauco & Co. v. Apostol, 10 this Court explained: chanrob 1es vi rtua l 1aw

libra ry

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 of 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 in 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 authorize 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 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. cralawna d
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 corporation 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,
the corporation could not prevent it. We know of no 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, 12 which 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 in 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. chanrobles lawlib rary : re dnad

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 ordinance 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 the 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: cha nro b1es vi rtua l 1aw libra ry

I concur with the majority holding that the city ordinances in question cannot modify much less repeal
PAGCORs general authority to establish and maintain gambling casinos anywhere in the Philippines
under Presidential Decree No. 1869. cralawnad

In Basco v. Philippine Amusement and Gaming Corporation (PAGCOR), 197 SCRA 52, I stated in a
separate opinion that: jgc:chanroble s.com.p h

". . . 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
governments 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
no 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: chanrob 1es vi rtua l 1aw lib ra ry

While I concur in part with the majority, I wish, however, to express my views on certain aspects of
this case.

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 courts
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 Panlungsod 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 States 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 Courts 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 v.
Cuaresma (172 SCRA 415, [1989]) and Defensor-Santiago v. Vasquez (217 SCRA 633 1993]). In
Cuaresma, this Court stated: jgc:chanro bles. com.ph

"A last word. This courts 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 of
Batas Pambansa Bilang 129 on August 14, 1981, the latters 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 venue of appeals, and should also serve as
a general determinant of the appropriate forum for petitions for the extraordinary writs. A becoming
regard for that judicial hierarchy most certainly indicates that petitions for the issuance of
extraordinary writs against first level (inferior) courts should be filed with the Regional Trial Court,
and those against the latter, with the Court of Appeals. A direct invocation of the Supreme Courts
original jurisdiction to issue these writs should be allowed only when there are special and important
reasons therefore, 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 Courts time and attention which are
better devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding
of the Courts docket. 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 expansions for extraordinary writs which,
but for the expansion of the Appellate Courts corresponding jurisdiction, would have had to be filed
with it." (Citations omitted)

And in Vasquez, this Court said: jgc:chan robles. com.ph

"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 its 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." chan rob les law li bra ry : red

II.

The challenged ordinance are (a) Ordinance No. 3353 entitled, "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," and (b) Ordinance
No. 3375-93 entitled, "An Ordinance Prohibiting the Operation of Casino and Providing Penalty for
Violation Therefore." 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 formers 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 Panglungsods express powers
conferred by Section 458paragraph (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: jgc:chan roble s.com.p h

"SECTION 16. General Welfare. Every local government unit shall exercise the powers expressly
granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental
for its efficient and effective governance, and those which are essential to the promotion of the
general welfare. Within their respective territorial jurisdictions, local government units shall ensure
and support, among other things, the preservation and enrichment of culture, promote health and
safety, enhance the right of the people to a balanced ecology, encourage and support the
development of appropriate and self-reliant scientific and technological capabilities, improve public
morals, enhance economic prosperity and social justice, promote full employment amount their
residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants." cra law

virtua 1aw lib rary

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 PAGCORS general authority to establish and maintain gambling
casinos anywhere in the Philippines is concerned. chanro bles law l ibra ry

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.
 EN BANC
[ G.R. No. 138810, September 29, 2004 ]
BATANGAS CATV, INC., PETITIONER, VS. THE COURT OF
APPEALS, THE BATANGAS CITY SANGGUNIANG PANLUNGSOD
AND BATANGAS CITY MAYOR, RESPONDENTS.

DECISION

SANDOVAL-GUTIERREZ, J.:

In the late 1940s, John Walson, an appliance dealer in Pennsylvania, suffered a

decline in the sale of television (tv) sets because of poor reception of signals in his
community. Troubled, he built an antenna on top of a nearby mountain. Using
coaxial cable lines, he distributed the tv signals from the antenna to the homes of
his customers. Walsons innovative idea improved his sales and at the same time
gave birth to a new telecommunication system -- the Community Antenna
Television (CATV) or Cable Television.[1]

This technological breakthrough found its way in our shores and, like in its country
of origin, it spawned legal controversies, especially in the field of regulation. The
case at bar is just another occasion to clarify a shady area. Here, we are tasked to
resolve the inquiry -- may a local government unit (LGU) regulate the subscriber
rates charged by CATV operators within its territorial jurisdiction?

This is a petition for review on certiorari filed by Batangas CATV, Inc. (petitioner
herein) against the Sangguniang Panlungsod and the Mayor of Batangas City
(respondents herein) assailing the Court of Appeals (1) Decision[2] dated February
12, 1999 and (2) Resolution[3] dated May 26, 1999, in CA-G.R. CV No. 52361.[4]
The Appellate Court reversed and set aside the Judgment[5] dated October 29, 1995
of the Regional Trial Court (RTC), Branch 7, Batangas City in Civil Case No. 4254,[6]
holding that neither of the respondents has the power to fix the subscriber rates of
CATV operators, such being outside the scope of the LGUs power.

The antecedent facts are as follows:

On July 28, 1986, respondent Sangguniang Panlungsod enacted Resolution No.

210[7] granting petitioner a permit to construct, install, and operate a CATV system
in Batangas City. Section 8 of the Resolution provides that petitioner is authorized
to charge its subscribers the maximum rates specified therein, provided, however,
that any increase of rates shall be subject to the approval of the Sangguniang
Panlungsod.[8]

Sometime in November 1993, petitioner increased its subscriber rates from P88.00
to P180.00 per month. As a result, respondent Mayor wrote petitioner a letter[9]
threatening to cancel its permit unless it secures the approval of respondent
Sangguniang Panlungsod, pursuant to Resolution No. 210.

Petitioner then filed with the RTC, Branch 7, Batangas City, a petition for injunction
docketed as Civil Case No. 4254. It alleged that respondent Sangguniang
Panlungsod has no authority to regulate the subscriber rates charged by CATV
operators because under Executive Order No. 205, the National
Telecommunications Commission (NTC) has the sole authority to regulate the CATV
operation in the Philippines.

On October 29, 1995, the trial court decided in favor of petitioner, thus:
WHEREFORE, as prayed for, the defendants, their representatives, agents,
deputies or other persons acting on their behalf or under their instructions, are
hereby enjoined from canceling plaintiffs permit to operate a Cable
Antenna Television (CATV) system in the City of Batangas or its environs or
in any manner, from interfering with the authority and power of the
National Telecommunications Commission to grant franchises to operate
CATV systems to qualified applicants, and the right of plaintiff in fixing its
service rates which needs no prior approval of the Sangguniang
Panlungsod of Batangas City.

The counterclaim of the plaintiff is hereby dismissed. No pronouncement as to

costs.

IT IS SO ORDERED.[10]
The trial court held that the enactment of Resolution No. 210 by respondent
violates the States deregulation policy as set forth by then NTC Commissioner Jose
Luis A. Alcuaz in his Memorandum dated August 25, 1989. Also, it pointed out that
the sole agency of the government which can regulate CATV operation is the NTC,
and that the LGUs cannot exercise regulatory power over it without appropriate
legislation.

Unsatisfied, respondents elevated the case to the Court of Appeals, docketed as CA-
G.R. CV No. 52361.

On February 12, 1999, the Appellate Court reversed and set aside the trial courts
Decision, ratiocinating as follows:
Although the Certificate of Authority to operate a Cable Antenna
Television (CATV) System is granted by the National Telecommunications
Commission pursuant to Executive Order No. 205, this does not preclude
the Sangguniang Panlungsod from regulating the operation of the CATV
in their locality under the powers vested upon it by Batas Pambansa Bilang
337, otherwise known as the Local Government Code of 1983. Section 177
(now Section 457 paragraph 3 (ii) of Republic Act 7160) provides:
Section 177. Powers and Duties The Sangguniang Panlungsod shall:

a) Enact such ordinances as may be necessary to carry into effect and discharge
the responsibilities conferred upon it by law, and such as shall be necessary and
proper to provide for health and safety, comfort and convenience, maintain peace
and order, improve the morals, and promote the prosperity and general welfare of
the community and the inhabitants thereof, and the protection of property therein;

xxx

d) Regulate, fix the license fee for, and tax any business or profession being carried
on and exercised within the territorial jurisdiction of the city, except travel
agencies, tourist guides, tourist transports, hotels, resorts, de luxe restaurants, and
tourist inns of international standards which shall remain under the licensing and
regulatory power of the Ministry of Tourism which shall exercise such authority
without infringement on the taxing and regulatory powers of the city government;

Under cover of the General Welfare Clause as provided in this section, Local
Government Units can perform just about any power that will benefit their
constituencies. Thus, local government units can exercise powers that are: (1)
expressly granted; (2) necessarily implied from the power that is expressly
granted; (3) necessary, appropriate or incidental for its efficient and effective
governance; and (4) essential to the promotion of the general welfare of their
inhabitants. (Pimentel, The Local Government Code of 1991, p. 46)

Verily, the regulation of businesses in the locality is expressly provided in

the Local Government Code. The fixing of service rates is lawful under the
General Welfare Clause.

Resolution No. 210 granting appellee a permit to construct, install and operate a
community antenna television (CATV) system in Batangas City as quoted earlier in
this decision, authorized the grantee to impose charges which cannot be increased
except upon approval of the Sangguniang Bayan. It further provided that in case of
violation by the grantee of the terms and conditions/requirements specifically
provided therein, the City shall have the right to withdraw the franchise.
Appellee increased the service rates from EIGHTY EIGHT PESOS (P88.00) to ONE
HUNDRED EIGHTY PESOS (P180.00) (Records, p. 25) without the approval of
appellant. Such act breached Resolution No. 210 which gives appellant the
right to withdraw the permit granted to appellee.[11]
Petitioner filed a motion for reconsideration but was denied.[12]

Hence, the instant petition for review on certiorari anchored on the following
assignments of error:
I

THE COURT OF APPEALS ERRED IN HOLDING THAT THE GENERAL WELFARE

CLAUSE OF THE LOCAL GOVERNMENT CODE AUTHORIZES RESPONDENT
SANGGUNIANG PANLUNGSOD TO EXERCISE THE REGULATORY FUNCTION
SOLELY LODGED WITH THE NATIONAL TELECOMMUNICATIONS
COMMISSION UNDER EXECUTIVE ORDER NO. 205, INCLUDING THE
AUTHORITY TO FIX AND/OR APPROVE THE SERVICE RATES OF CATV
OPERATORS; AND

II

THE COURT OF APPEALS ERRED IN REVERSING THE DECISION APPEALED

FROM AND DISMISSING PETITIONERS COMPLAINT.[13]
Petitioner contends that while Republic Act No. 7160, the Local Government Code of
1991, extends to the LGUs the general power to perform any act that will benefit
their constituents, nonetheless, it does not authorize them to regulate the CATV
operation. Pursuant to E.O. No. 205, only the NTC has the authority to regulate the
CATV operation, including the fixing of subscriber rates.

Respondents counter that the Appellate Court did not commit any reversible error
in rendering the assailed Decision. First, Resolution No. 210 was enacted pursuant
to Section 177(c) and (d) of Batas Pambansa Bilang 337, the Local Government
Code of 1983, which authorizes LGUs to regulate businesses. The term
businesses necessarily includes the CATV industry. And second, Resolution No.
210 is in the nature of a contract between petitioner and respondents, it being a
grant to the former of a franchise to operate a CATV system. To hold that E.O. No.
205 amended its terms would violate the constitutional prohibition against
impairment of contracts.[14]

The petition is impressed with merit.

Earlier, we posed the question -- may a local government unit (LGU) regulate the
subscriber rates charged by CATV operators within its territorial jurisdiction? A
review of pertinent laws and jurisprudence yields a negative answer.

President Ferdinand E. Marcos was the first one to place the CATV industry under
the regulatory power of the national government.[15] On June 11, 1978, he issued
Presidential Decree (P.D.) No. 1512[16] establishing a monopoly of the industry
by granting Sining Makulay, Inc., an exclusive franchise to operate CATV system in
any place within the Philippines. Accordingly, it terminated all franchises,
permits or certificates for the operation of CATV system previously granted
by local governments or by any instrumentality or agency of the national
government.[17] Likewise, it prescribed the subscriber rates to be charged by
Sining Makulay, Inc. to its customers.[18]

On July 21, 1979, President Marcos issued Letter of Instruction (LOI) No. 894
vesting upon the Chairman of the Board of Communications direct supervision over
the operations of Sining Makulay, Inc. Three days after, he issued E.O. No. 546[19]
integrating the Board of Communications[20] and the Telecommunications Control
Bureau[21] to form a single entity to be known as the National Telecommunications
Commission. Two of its assigned functions are:
a. Issue Certificate of Public Convenience for the operation of
communications utilities and services, radio communications systems, wire or
wireless telephone or telegraph systems, radio and television broadcasting
system and other similar public utilities;

b. Establish, prescribe and regulate areas of operation of particular

operators of public service communications; and determine and prescribe
charges or rates pertinent to the operation of such public utility facilities
and services except in cases where charges or rates are established by
international bodies or associations of which the Philippines is a participating
member or by bodies recognized by the Philippine Government as the proper
arbiter of such charges or rates;
Although Sining Makulay Inc.s exclusive franchise had a life term of 25 years, it
was cut short by the advent of the 1986 Revolution. Upon President Corazon C.
Aquinos assumption of power, she issued E.O. No. 205[22] opening the CATV
industry to all citizens of the Philippines. It mandated the NTC to grant
Certificates of Authority to CATV operators and to issue the necessary
implementing rules and regulations.

On September 9, 1997, President Fidel V. Ramos issued E.O. No. 436[23]

prescribing policy guidelines to govern CATV operation in the Philippines. Cast in
more definitive terms, it restated the NTCs regulatory powers over CATV
operations, thus:
SECTION 2. The regulation and supervision of the cable television industry in
the Philippines shall remain vested solely with the National Telecommunications
Commission (NTC).

SECTION 3. Only persons, associations, partnerships, corporations or

cooperatives, granted a Provisional Authority or Certificate of Authority by
the Commission may install, operate and maintain a cable television system or
render cable television service within a service area.
Clearly, it has been more than two decades now since our national government,
through the NTC, assumed regulatory power over the CATV industry. Changes in
the political arena did not alter the trend. Instead, subsequent presidential
issuances further reinforced the NTCs power. Significantly, President Marcos and
President Aquino, in the exercise of their legislative power, issued P.D. No. 1512,
E.O. No. 546 and E.O. No. 205. Hence, they have the force and effect of statutes
or laws passed by Congress.[24] That the regulatory power stays with the NTC is
also clear from President Ramos E.O. No. 436 mandating that the regulation and
supervision of the CATV industry shall remain vested solely in the NTC. Blacks
Law Dictionary defines sole as without another or others.[25] The logical
conclusion, therefore, is that in light of the above laws and E.O. No. 436,
the NTC exercises regulatory power over CATV operators to the exclusion
of other bodies.

But, lest we be misunderstood, nothing herein should be interpreted as to strip

LGUs of their general power to prescribe regulations under the general welfare
clause of the Local Government Code. It must be emphasized that when E.O. No.
436 decrees that the regulatory power shall be vested solely in the NTC, it
pertains to the regulatory power over those matters which are peculiarly within
the NTCs competence, such as, the: (1) determination of rates, (2) issuance of
certificates of authority, (3) establishment of areas of operation, (4) examination
and assessment of the legal, technical and financial qualifications of applicant
operators, (5) granting of permits for the use of frequencies, (6) regulation of
ownership and operation, (7) adjudication of issues arising from its functions, and
(8) other similar matters.[26] Within these areas, the NTC reigns supreme as it
possesses the exclusive power to regulate -- a power comprising varied acts, such
as to fix, establish, or control; to adjust by rule, method or established mode; to
direct by rule or restriction; or to subject to governing principles or laws.[27]

Coincidentally, respondents justify their exercise of regulatory power over

petitioners CATV operation under the general welfare clause of the Local
Government Code of 1983. The Court of Appeals sustained their stance.

There is no dispute that respondent Sangguniang Panlungsod, like other local

legislative bodies, has been empowered to enact ordinances and approve
resolutions under the general welfare clause of B.P. Blg. 337, the Local Government
Code of 1983. That it continues to posses such power is clear under the new law,
R.A. No. 7160 (the Local Government Code of 1991). Section 16 thereof provides:
SECTION 16. General Welfare. Every local government unit shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as powers
necessary, appropriate, or incidental for its efficient and effective governance, and
those which are essential to the promotion of the general welfare. Within
their respective territorial jurisdictions, local government units shall ensure and
support, among others, 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 same Code specifically mandates:
SECTION 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, x x x:
The general welfare clause is the delegation in statutory form of the police
power of the State to LGUs.[28] Through this, LGUs may prescribe regulations to
protect the lives, health, and property of their constituents and maintain peace and
order within their respective territorial jurisdictions. Accordingly, we have upheld
enactments providing, for instance, the regulation of gambling,[29] the occupation of
rig drivers,[30] the installation and operation of pinball machines,[31] the
maintenance and operation of cockpits,[32] the exhumation and transfer of corpses
from public burial grounds,[33] and the operation of hotels, motels, and lodging
houses[34] as valid exercises by local legislatures of the police power under the
general welfare clause.

Like any other enterprise, CATV operation maybe regulated by LGUs under the
general welfare clause. This is primarily because the CATV system commits the
indiscretion of crossing public properties. (It uses public properties in order to
reach subscribers.) The physical realities of constructing CATV system the
use of public streets, rights of ways, the founding of structures, and the
parceling of large regions allow an LGU a certain degree of regulation
over CATV operators.[35] This is the same regulation that it exercises over all
private enterprises within its territory.
But, while we recognize the LGUs power under the general welfare clause, we
cannot sustain Resolution No. 210. We are convinced that respondents strayed
from the well recognized limits of its power. The flaws in Resolution No. 210 are:
(1) it violates the mandate of existing laws and (2) it violates the States
deregulation policy over the CATV industry.

I.

Resolution No. 210 is an enactment of an LGU acting only as agent of the national
legislature. Necessarily, its act must reflect and conform to the will of its
principal. To test its validity, we must apply the particular requisites of a valid
ordinance as laid down by the accepted principles governing municipal corporations.
[36]

Speaking for the Court in the leading case of United States vs. Abendan,[37] Justice
Moreland said: An ordinance enacted by virtue of the general welfare clause
is valid, unless it contravenes the fundamental law of the Philippine
Islands, or an Act of the Philippine Legislature, or unless it is against public
policy, or is unreasonable, oppressive, partial, discriminating, or in derogation of
common right. In De la Cruz vs. Paraz,[38] we laid the general rule that
ordinances passed by virtue of the implied power found in the general welfare
clause must be reasonable, consonant with the general powers and purposes of the
corporation, and not inconsistent with the laws or policy of the State.

The apparent defect in Resolution No. 210 is that it contravenes E.O. No. 205 and
E.O. No. 436 insofar as it permits respondent Sangguniang Panlungsod to usurp a
power exclusively vested in the NTC, i.e., the power to fix the subscriber rates
charged by CATV operators. As earlier discussed, the fixing of subscriber rates is
definitely one of the matters within the NTCs exclusive domain.

In this regard, it is appropriate to stress that where the state legislature has made
provision for the regulation of conduct, it has manifested its intention that the
subject matter shall be fully covered by the statute, and that a municipality, under
its general powers, cannot regulate the same conduct.[39] In Keller vs. State,[40] it
was held that: Where there is no express power in the charter of a
municipality authorizing it to adopt ordinances regulating certain matters
which are specifically covered by a general statute, a municipal ordinance,
insofar as it attempts to regulate the subject which is completely covered
by a general statute of the legislature, may be rendered invalid. x x
x Where the subject is of statewide concern, and the legislature has
appropriated the field and declared the rule, its declaration is binding
throughout the State. A reason advanced for this view is that such ordinances
are in excess of the powers granted to the municipal corporation.[41]
Since E.O. No. 205, a general law, mandates that the regulation of CATV operations
shall be exercised by the NTC, an LGU cannot enact an ordinance or approve a
resolution in violation of the said law.

It is a fundamental principle that municipal ordinances are inferior in status and

subordinate to the laws of the state. An ordinance in conflict with a state law of
general character and statewide application is universally held to be invalid.[42] The
principle is frequently expressed in the declaration that municipal authorities, under
a general grant of power, cannot adopt ordinances which infringe the spirit of a
state law or repugnant to the general policy of the state.[43] In every power to pass
ordinances given to a municipality, there is an implied restriction that the
ordinances shall be consistent with the general law.[44] In the language of Justice
Isagani Cruz (ret.), this Court, in Magtajas vs. Pryce Properties Corp., Inc.,[45] ruled
that:
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.
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, which 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.
Respondents have an ingenious retort against the above disquisition. Their theory
is that the regulatory power of the LGUs is granted by R.A. No. 7160 (the Local
Government Code of 1991), a handiwork of the national lawmaking authority. They
contend that R.A. No. 7160 repealed E.O. No. 205 (issued by President
Aquino). Respondents argument espouses a bad precedent. To say that LGUs
exercise the same regulatory power over matters which are peculiarly within the
NTCs competence is to promote a scenario of LGUs and the NTC locked in constant
clash over the appropriate regulatory measure on the same subject matter. LGUs
must recognize that technical matters concerning CATV operation are
within the exclusive regulatory power of the NTC.

At any rate, we find no basis to conclude that R.A. No. 7160 repealed E.O. No. 205,
either expressly or impliedly. It is noteworthy that R.A. No. 7160 repealing clause,
which painstakingly mentions the specific laws or the parts thereof which are
repealed, does not include E.O. No. 205, thus:
SECTION 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; Section 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.
Neither is there an indication that E.O. No. 205 was impliedly repealed by R.A. No.
7160. It is a settled rule that implied repeals are not lightly presumed in the
absence of a clear and unmistakable showing of such intentions. In Mecano vs.
Commission on Audit,[46] we ruled:
Repeal by implication proceeds on the premise that where a statute of later date
clearly reveals an intention on the part of the legislature to abrogate a prior act on
the subject, that intention must be given effect. Hence, before there can be a
repeal, there must be a clear showing on the part of the lawmaker that the intent in
enacting the new law was to abrogate the old one. The intention to repeal must be
clear and manifest; otherwise, at least, as a general rule, the later act is to be
construed as a continuation of, and not a substitute for, the first act and will
continue so far as the two acts are the same from the time of the first enactment.
As previously stated, E.O. No. 436 (issued by President Ramos) vests upon the NTC
the power to regulate the CATV operation in this country. So also Memorandum
Circular No. 8-9-95, the Implementing Rules and Regulations of R.A. No. 7925 (the
Public Telecommunications Policy Act of the Philippines). This shows that the
NTCs regulatory power over CATV operation is continuously recognized.

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 coordinate branches of the government.[47] On the assumption of a
conflict between E.O. No. 205 and R.A. No. 7160, the proper action is not to uphold
one and annul the other but to give effect to both by harmonizing them if
possible. This recourse finds application here. Thus, we hold that the NTC, under
E.O. No. 205, has exclusive jurisdiction over matters affecting CATV operation,
including specifically the fixing of subscriber rates, but nothing herein precludes
LGUs from exercising its general power, under R.A. No. 7160, to prescribe
regulations to promote the health, morals, peace, education, good order or safety
and general welfare of their constituents. In effect, both laws become equally
effective and mutually complementary.

The grant of regulatory power to the NTC is easily understandable. CATV system is
not a mere local concern. The complexities that characterize this new technology
demand that it be regulated by a specialized agency. This is particularly true in the
area of rate-fixing. Rate fixing involves a series of technical operations.[48]
Consequently, on the hands of the regulatory body lies the ample discretion in the
choice of such rational processes as might be appropriate to the solution of its
highly complicated and technical problems. Considering that the CATV industry is
so technical a field, we believe that the NTC, a specialized agency, is in a better
position than the LGU, to regulate it. Notably, in United States vs. Southwestern
Cable Co.,[49] the US Supreme Court affirmed the Federal Communications
Commissions (FCCs) jurisdiction over CATV operation. The Court held that the
FCCs authority over cable systems assures the preservation of the local broadcast
service and an equitable distribution of broadcast services among the various
regions of the country.

II.

Resolution No. 210 violated the States deregulation policy.

Deregulation is the reduction of government regulation of business to permit freer

markets and competition.[50] Oftentimes, the State, through its regulatory agencies,
carries out a policy of deregulation to attain certain objectives or to address certain
problems. In the field of telecommunications, it is recognized that many areas in
the Philippines are still unserved or underserved. Thus, to encourage private
sectors to venture in this field and be partners of the government in stimulating the
growth and development of telecommunications, the State promoted the policy of
deregulation.

In the United States, the country where CATV originated, the Congress observed,
when it adopted the Telecommunications Act of 1996, that there was a need to
provide a pro-competitive, deregulatory national policy framework designed to
accelerate rapidly private sector deployment of advanced telecommunications and
information technologies and services to all Americans by opening all
telecommunications markets to competition. The FCC has adopted regulations to
implement the requirements of the 1996 Act and the intent of the Congress.

Our country follows the same policy. The fifth Whereas Clause of E.O. No. 436
states:
WHEREAS, professionalism and self-regulation among existing operators, through
a nationally recognized cable television operators association, have enhanced the
growth of the cable television industry and must therefore be maintained
along with minimal reasonable government regulations;
This policy reaffirms the NTCs mandate set forth in the Memorandum dated August
25, 1989 of Commissioner Jose Luis A. Alcuaz, to wit:
In line with the purpose and objective of MC 4-08-88, Cable Television System or
Community Antenna Television (CATV) is made part of the broadcast media to
promote the orderly growth of the Cable Television Industry it being in its
developing stage. Being part of the Broadcast Media, the service rates of
CATV are likewise considered deregulated in accordance with MC 06-2-81
dated 25 February 1981, the implementing guidelines for the authorization
and operation of Radio and Television Broadcasting stations/systems.

Further, the Commission will issue Provisional Authority to existing CATV operators
to authorize their operations for a period of ninety (90) days until such time that
the Commission can issue the regular Certificate of Authority.
When the State declared a policy of deregulation, the LGUs are bound to follow. To
rule otherwise is to render the States policy ineffective. Being mere creatures of
the State, LGUs cannot defeat national policies through enactments of contrary
measures. Verily, in the case at bar, petitioner may increase its subscriber rates
without respondents approval.

At this juncture, it bears emphasizing that municipal corporations are bodies politic
and corporate, created not only as local units of local self-government, but as
governmental agencies of the state.[51] The legislature, by establishing a municipal
corporation, does not divest the State of any of its sovereignty; absolve itself from
its right and duty to administer the public affairs of the entire state; or divest itself
of any power over the inhabitants of the district which it possesses before the
charter was granted.[52]

Respondents likewise argue that E.O. No. 205 violates the constitutional prohibition
against impairment of contracts, Resolution No. 210 of Batangas City Sangguniang
Panlungsod being a grant of franchise to petitioner.

We are not convinced.

There is no law specifically authorizing the LGUs to grant franchises to operate

CATV system. Whatever authority the LGUs had before, the same had been
withdrawn when President Marcos issued P.D. No. 1512 terminating all
franchises, permits or certificates for the operation of CATV system
previously granted by local governments. Today, pursuant to Section 3 of
E.O. No. 436, only persons, associations, partnerships, corporations or
cooperatives granted a Provisional Authority or Certificate of Authority by
the NTC may install, operate and maintain a cable television system or
render cable television service within a service area. It is clear that in the
absence of constitutional or legislative authorization, municipalities have no power
to grant franchises.[53] Consequently, the protection of the constitutional provision
as to impairment of the obligation of a contract does not extend to privileges,
franchises and grants given by a municipality in excess of its powers, or ultra
vires.[54]

One last word. The devolution of powers to the LGUs, pursuant to the
Constitutional mandate of ensuring their autonomy, has bred jurisdictional tension
between said LGUs and the State. LGUs must be reminded that they merely form
part of the whole. Thus, when the Drafters of the 1987 Constitution enunciated the
policy of ensuring the autonomy of local governments,[55] it was never their
intention to create an imperium in imperio and install an intra-sovereign political
subdivision independent of a single sovereign state.

WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of

Appeals dated February 12, 1999 as well as its Resolution dated May 26, 1999 in
CA-G.R. CV No. 52461, are hereby REVERSED. The RTC Decision in Civil Case No.
4254 is AFFIRMED.

No pronouncement as to costs.

SO ORDERED.

Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Ynares-Santiago, Carpio, Austria-

Martinez, Corona, Carpio-Morales, Callejo, Sr., and Tinga, JJ., concur.
Azcuna, and Chico-Nazario, JJ., on leave.
 EN BANC

[G.R. No. 92299. April 19, 1991.]

REYNALDO R. SAN JUAN, Petitioner, v. CIVIL SERVICE COMMISSION, DEPARTMENT OF

BUDGET AND MANAGEMENT and CECILIA ALMAJOSE, Respondents.

Legal Services Division for Petitioner.

Sumulong, Sumulong, Paras & Abano Law Offices for Private Respondent.

SYLLABUS

1. STATUTORY CONSTRUCTION AND INTERPRETATION; WHERE THE LAW IS CAPABLE OF TWO

INTERPRETATIONS, ONE IN FAVOR OF CENTRALIZED POWER IN MALACAANG AND THE OTHER
BENEFICIAL TO LOCAL AUTONOMY, THE LATTER PREVAILS. Where a law is capable of two
interpretations, one in favor of centralized power in Malacaang and the other beneficial to local
autonomy, the scales must be weighed in favor of autonomy.

2. CONSTITUTIONAL LAW; LOCAL AUTONOMY; PRESIDENTIAL CONTROL DISTINGUISHED FROM

SUPERVISION. The 1935 Constitution had no specific article on local autonomy. However, in
distinguishing between presidential control and supervision "The President shall have control of all the
executive departments, bureaus, or offices, exercise general supervision over all local governments as
may be provided by law, and take care that the laws be faithfully executed." (Sec. 11, Article VII,
1935 Constitution) the Constitution clearly limited the executive power over local governments to
"general supervision . . . as may be provided by law." The President controls the executive
departments. He has no such power over local governments. He has only supervision and that
supervision is both general and circumscribed by statute. In Mondano v. Silvosa, (97 Phil. 143
[1955]),supervision goes no further than overseeing or the power or authority of an officer to see that
subordinate officers perform their duties. If the latter fail or neglect to fulfill them the former may take
such action or step as prescribed by law to make them perform their duties. (Ibid, pp. 147-148)
Control, on the other hand, means the power of an officer to alter or modify or nullify or set aside
what a subordinate had done in the performance of their duties and to substitute the judgment of the
former for that of the latter. It would follow then, according to the present Chief Justice, to go back to
the Hebron opinion, that the President had to abide by the then provisions of the Revised
Administrative Code on suspension and removal of municipal officials, there being no power of control
that he could rightfully exercise, the law clearly specifying the procedure by which such disciplinary
action would be taken.

3. ID.; ID.; INTERFERED WITH BY THE CIVIL SERVICE COMMISSION IN INTERPRETING THAT THE
POWER OF THE PROVINCIAL GOVERNOR IN RECOMMENDING APPOINTEES AS PURELY DIRECTORY.
When the Civil Service Commission interpreted the recommending power of the Provincial Governor as
purely directory, it went against the letter and spirit of the constitutional provisions on local
autonomy. If the DBM Secretary jealously hoards the entirety of budgetary powers and ignores the
right of local governments to develop self-reliance and resoluteness in the handling of their own funds,
the goal of meaningful local autonomy is frustrated and set back.

4. ID.; ID.; RIGHT RESERVING TO THE DEPARTMENT OF BUDGET AND MANAGEMENT TO FILL UP
VACANCIES; ULTRA VIRES. The right given by Local Budget Circular No. 31 which states: "Sec. 6.0
The DBM reserves the right to fill up any existing vacancy where none of the nominees of the local
chief executive meet the prescribed requirements." is ultra vires and is, accordingly, set aside. The
DBM may appoint only from the list of qualified recommendees nominated by the Governor. If none is
qualified, he must return the list of nominees to the Governor explaining why no one meets the legal
requirements and ask for new recommendees who have the necessary eligibilities and qualifications.

5. REMEDIAL LAW; SPECIAL CIVIL ACTION; CERTIORARI; GRAVE ABUSE OF DISCRETION; MANIFEST
BY REQUIRING THE PROVINCIAL GOVERNOR TO SUBMIT ANOTHER SET OF NOMINEES FOR THE
POSITION OF PROVINCIAL BUDGET OFFICER; CASE AT BAR. The public respondents grave abuse
of discretion is aggravated by the fact that Director Galvez required the Provincial Governor to submit
at least three other names of nominees better qualified than his earlier recommendation. It was a
meaningless exercise. The appointment of the private respondent was formalized before the Governor
was extended the courtesy of being informed that his nominee had been rejected. The complete
disregard of the local governments prerogative and the smug belief that the DBM has absolute
wisdom, authority, and discretion are manifest.

DECISION

GUTIERREZ, JR., J.:

In this petition for certiorari pursuant to Section 7, Article IX (A) of the present Constitution, the
petitioner Governor of the Province of Rizal, prays for the nullification of Resolution No. 89-868 of the
Civil Service Commission (CSC) dated November 21, 1989 and its Resolution No. 90-150 dated
February 9, 1990.

The dispositive portion of the questioned Resolution reads: jgc:chanrob les.c om.ph

"WHEREFORE, foregoing premises considered, the Commission resolved to dismiss, as it hereby

dismisses the appeal of Governor Reynaldo San Juan of Rizal. Accordingly, the approved appointment
of Ms. Cecilia Almajose as Provincial Budget Officer of Rizal, is upheld." (Rollo, p. 32)

The subsequent Resolution No. 90-150 reiterates CSCs position upholding the private respondents
appointment by denying the petitioners motion for reconsideration for lack of merit.

The antecedent facts of the case are as follows: chanrob1es vi rt ual 1aw li bra ry

On March 22, 1988, the position of Provincial Budget Officer (PBO) for the province of Rizal was left
vacant by its former holder, a certain Henedima del Rosario. chanrobles .com.p h : virt ual law li bra ry

In a letter dated April 18, 1988, the petitioner informed Director Reynaldo Abella of the Department of
Budget and Management (DBM) Region IV that Ms. Dalisay Santos assumed office as Acting PBO since
March 22, 1988 pursuant to a Memorandum issued by the petitioner who further requested Director
Abella to endorse the appointment of the said Ms. Dalisay Santos to the contested position of PBO of
Rizal. Ms. Dalisay Santos was then Municipal Budget Officer of Taytay, Rizal before she discharged the
functions of acting PBO.

In a Memorandum dated July 26, 1988 addressed to the DBM Secretary, then Director Abella of
Region IV recommended the appointment of the private respondent as PBO of Rizal on the basis of a
comparative study of all Municipal Budget Officers of the said province which included three nominees
of the petitioner. According to Abella, the private respondent was the most qualified since she was the
only Certified Public Accountant among the contenders.

On August 1, 1988, DBM Undersecretary Nazario S. Cabuquit, Jr. signed the appointment papers of
the private respondent as PBO of Rizal upon the aforestated recommendation of Abella. chanro bles vi rtua l lawli bra ry

In a letter dated August 3, 1988 addressed to Secretary Carague, the petitioner reiterated his request
for the appointment of Dalisay Santos to the contested position unaware of the earlier appointment
made by Undersecretary Cabuquit.

On August 31, 1988, DBM Regional Director Agripino G. Galvez wrote the petitioner that Dalisay
Santos and his other recommendees did not meet the minimum requirements under Local Budget
Circular No. 31 for the position of a local budget officer. Director Galvez whether or not through
oversight further required the petitioner to submit at least three other qualified nominees who are
qualified for the position of PBO of Rizal for evaluation and processing.

On November 2, 1988, the petitioner after having been informed of the private respondents
appointment wrote Secretary Carague protesting against the said appointment on the grounds that
Cabuquit as DBM Undersecretary is not legally authorized to appoint the PBO; that the private
respondent lacks the required three years work experience as provided in Local Budget Circular No.
31; and that under Executive Order No. 112, it is the Provincial Governor, not the Regional Director or
a Congressman, who has the power to recommend nominees for the position of PBO.

On January 9, 1989 respondent DBM, through its Director of the Bureau of Legal & Legislative Affairs
(BLLA) Virgilio A. Afurung, issued a Memorandum ruling that the petitioners letter-protest is not
meritorious considering that public respondent DBM validly exercised its prerogative in filling-up the
contested position since none of the petitioners nominees met the prescribed requirements. chanrobles law lib rary

On January 27, 1989, the petitioner moved for a reconsideration of the BLLA ruling.

On February 28, 1989, the DBM Secretary denied the petitioners motion for reconsideration.

On March 27, 1989, the petitioner wrote public respondent CSC protesting against the appointment of
the private respondent and reiterating his position regarding the matter.

Subsequently, public respondent CSC issued the questioned resolutions which prompted the petitioner
to submit before us the following assignment of errors: jgc:chan roble s.com.p h

"A. THE CSC ERRED IN UPHOLDING THE APPOINTMENT BY DBM ASSISTANT SECRETARY CABUQUIT
OF CECILIA ALMAJOSE AS PBO OF RIZAL.

B. THE CSC ERRED IN HOLDING THAT CECILIA ALMAJOSE POSSESSES ALL THE REQUIRED
QUALIFICATIONS.

C. THE CSC ERRED IN DECLARING THAT PETITIONERS NOMINEES ARE NOT QUALIFIED TO THE
SUBJECT POSITION.

D. THE CSC AND THE DBM GRAVELY ABUSED THEIR DISCRETION IN NOT ALLOWING PETITIONER TO
SUBMIT NEW NOMINEES WHO COULD MEET THE REQUIRED QUALIFICATIONS." (Petition, pp. 7-8,
Rollo, pp. 15-16)

All the assigned errors relate to the issue of whether or not the private respondent is lawfully entitled
to discharge the functions of PBO of Rizal pursuant to the appointment made by public respondent
DBMs Undersecretary upon the recommendation of then Director Abella of DBM Region IV.

The petitioners arguments rest on his contention that he has the sole right and privilege to
recommend the nominees to the position of PBO and that the appointee should come only from his
nominees. In support thereof, he invokes Section 1 of Executive Order No. 112 which provides that: jgc:chan roble s.com.p h

"SECTION 1. All budget officers of provinces, cities and municipalities shall be appointed henceforth by
the Minister of Budget and Management upon recommendation of the local chief executive concerned,
subject to civil service law, rules and regulations, and they shall be placed under the administrative
control and technical supervision of the Ministry of Budget and Management." cralaw vi rt ua1aw lib rary

The petitioner maintains that the appointment of the private respondent to the contested position was
made in derogation of the provision so that both the public respondents committed grave abuse of
discretion in upholding Almajoses appointment. cralawnad

There is no question that under Section 1 of Executive Order No. 112 the petitioners power to
recommend is subject to the qualifications prescribed by existing laws for the position of PBO.
Consequently, in the event that the recommendations made by the petitioner fall short of the required
standards, the appointing authority, the Minister (now Secretary) of public respondent DBM is
expected to reject the same.

In the event that the Governor recommends an unqualified person, is the Department Head free to
appoint anyone he fancies? This is the issue before us.

Before the promulgation of Executive Order No. 112 on December 24, 1986, Batas Pambansa Blg.
337, otherwise known as the Local Government Code vested upon the Governor, subject to civil
service rules and regulations, the power to appoint the PBO (Sec. 216, subparagraph (1), BP 337).
The Code further enumerated the qualifications for the position of PBO. Thus, Section 216,
subparagraph (2) of the same code states that: jgc:chanrob les.com. ph

"(2) No person shall be appointed provincial budget officer unless he is a citizen of the Philippines, of
good moral character, a holder of a degree preferably in law, commerce, public administration or any
related course from a recognized college or university, a first grade civil service eligibility or its
equivalent, and has acquired at least five years experience in budgeting or in any related field." cralaw virtua1aw li bra ry

The petitioner contends that since the appointing authority with respect to the Provincial Budget
Officer of Rizal was vested in him before, then, the real intent behind Executive Order No. 112 in
empowering him to recommend nominees to the position of Provincial Budget Officer is to make his
recommendation part and parcel of the appointment process. He states that the phrase "upon
recommendation of the local chief executive concerned" must be given mandatory application in
consonance with the state policy of local autonomy as guaranteed by the 1987 Constitution under Art.
II, Sec. 25 and Art. X, Sec. 2 thereof. He further argues that his power to recommend cannot validly
be defeated by a mere administrative issuance of public respondent DBM reserving to itself the right
to fill-up any existing vacancy in case the petitioners nominees do not meet the qualification
requirements as embodied in public respondent DBMs Local Budget Circular No. 31 dated February 9,
1988.

The questioned ruling is justified by the public respondent CSC as follows: chanrob les lawl ibra ry : red nad

"As required by said E.O. No. 112, the DBM Secretary may choose from among the recommendees of
the Provincial Governor who are thus qualified and eligible for appointment to the position of the PBO
of Rizal. Notwithstanding, the recommendation of the local chief executive is merely directory and not
a condition sine qua non to the exercise by the Secretary of DBM of his appointing prerogative. To rule
otherwise would in effect give the law or E.O. No. 112 a different interpretation or construction not
intended therein, taking into consideration that said officer has been nationalized and is directly under
the control and supervision of the DBM Secretary or through his duly authorized representative. It
cannot be gainsaid that said national officer has a similar role in the local government unit, only on
another area or concern, to that of a Commission on Audit resident auditor. Hence, to preserve and
maintain the independence of said officer from the local government unit, he must be primarily the
choice of the national appointing official, and the exercise thereof must not be unduly hampered or
interfered with, provided the appointee finally selected meets the requirements for the position in
accordance with prescribed Civil Service Law, Rules and Regulations. In other words, the appointing
official is not restricted or circumscribed to the list submitted or recommended by the local chief
executive in the final selection of an appointee for the position. He may consider other nominees for
the position vis a vis the nominees of the local chief executive." (CSC Resolution No. 89-868, p. 2;
Rollo, p. 31)

The issue before the Court is not limited to the validity of the appointment of one Provincial Budget
Officer. The tug of war between the Secretary of Budget and Management and the Governor of the
premier province of Rizal over a seemingly innocuous position involves the application of a most
important constitutional policy and principle, that of local autonomy. We have to obey the clear
mandate on local autonomy. Where a law is capable of two interpretations, one in favor of centralized
power in Malacaang and the other beneficial to local autonomy, the scales must be weighed in favor
of autonomy.

The exercise by local governments of meaningful power has been a national goal since the turn of the
century. And yet, inspite of constitutional provisions and, as in this case, legislation mandating greater
autonomy for local officials, national officers cannot seem to let go of centralized powers. They deny or
water down what little grants of autonomy have so far been given to municipal corporations. chanrob les vi rtua lawlib rary chan roble s.com:cha nro bles.c om.ph

President McKinleys Instructions dated April 7, 1900 to the Second Philippine Commission ordered the
new Government "to devote their attention in the first instance to the establishment of municipal
governments in which natives of the Islands, both in the cities and rural communities, shall be
afforded the opportunity to manage their own local officers to the fullest extent of which they are
capable and subject to the least degree of supervision and control which a careful study of their
capacities and observation of the workings of native control show to be consistent with the
maintenance of law, order and loyalty." cra law virt ua1aw lib ra ry

In this initial organic act for the Philippines, the Commission which combined both executive and
legislative powers was directed to give top priority to making local autonomy effective.

The 1935 Constitution had no specific article on local autonomy. However, in distinguishing between
presidential control and supervision as follows: jgc:chan robles .com.p h

"The President shall have control of all the executive departments, bureaus, or offices, exercise
general supervision over all local governments as may be provided by law, and take care that the laws
be faithfully executed." (Sec. 11, Article VII, 1935 Constitution) chanroble s law lib ra ry

the Constitution clearly limited the executive power over local governments to "general supervision . .
. as may be provided by law." The President controls the executive departments. He has no such
power over local governments. He has only supervision and that supervision is both general and
circumscribed by statute.
In Tecson v. Salas, 34 SCRA 275, 282 (1970), this Court stated: jgc:chanrobles .com.p h

". . . Hebron v. Reyes, (104 Phil. 175 [1958]) with the then Justice, now Chief Justice, Concepcion as
the ponente, clarified matters. As was pointed out, the presidential competence is not even
supervision in general, but general supervision as may be provided by law. He could not thus go
beyond the applicable statutory provisions, which bind and fetter his discretion on the matter.
Moreover, as had been earlier ruled in an opinion penned by Justice Padilla in Mondano v. Silvosa, (97
Phil. 143 [1955]) referred to by the present Chief Justice in his opinion in the Hebron case,
supervision goes no further than `overseeing or the power or authority of an officer to see that
subordinate officers perform their duties. If the latter fail or neglect to fulfill them the former may take
such action or step as prescribed by law to make them perform their duties. (Ibid, pp. 147-148)
Control, on the other hand, means the power of an officer to alter or modify or nullify or set aside
what a subordinate had done in the performance of their duties and to substitute the judgment of the
former for that of the latter. It would follow then, according to the present Chief Justice, to go back to
the Hebron opinion, that the President had to abide by the then provisions of the Revised
Administrative Code on suspension and removal of municipal officials, there being no power of control
that he could rightfully exercise, the law clearly specifying the procedure by which such disciplinary
action would be taken." cral aw virt ua1aw lib ra ry

Pursuant to this principle under the 1935 Constitution, legislation implementing local autonomy was
enacted. In 1959, Republic Act No. 2264, "An Act Amending the Law Governing Local Governments by
Increasing Their Autonomy and Reorganizing Local Governments" was passed. It was followed in 1967
when Republic Act No. 5185, the Decentralization Law was enacted, giving "further autonomous
powers to local governments." cra law virt ua1aw lib ra ry

The provisions of the 1973 Constitution moved the country further, at least insofar as legal provisions
are concerned, towards greater autonomy. It provided under Article II as a basic principle of
government: jgc:chanrob les.co m.ph

"SEC. 10. The State shall guarantee and promote the autonomy of local government units, especially
the barangay to ensure their fullest development as self-reliant communities." chan robles.com : vi rtua l law lib ra ry

An entire article on Local Government was incorporated into the Constitution. It called for a local
government code defining more responsive and accountable local government structures. Any
creation, merger, abolition, or substantial boundary alteration cannot be done except in accordance
with the local government code and upon approval by a plebiscite. The power to create sources of
revenue and to levy taxes was specifically settled upon local governments.

The exercise of greater local autonomy is even more marked in the present Constitution.

Article II, Section 25 on State Policies provides: jgc:chanroble s.com.p h

"SEC. 25. The State shall ensure the autonomy of local governments." cralaw vi rt ua1aw lib rary

The 14 sections in Article X on Local Government not only reiterate earlier doctrines but give in
greater detail the provisions making local autonomy more meaningful. chan robles v irt ual lawl ibra ry

Thus, Sections 2 and 3 of Article X provide: jgc:chanrob les.c om.ph

"SEC. 2. The territorial and political subdivisions shall enjoy local autonomy.

SEC. 3. The Congress shall enact a local government code which shall provide for a more responsive
and accountable local government structure instituted through a system of decentralization with
effective mechanisms of recall, initiative, and referendum, allocate among the different local
government units their powers, responsibilities, and resources, and provide for the qualifications,
election, appointment and removal, term, salaries, powers and functions and duties of local officials,
and all other matters relating to the organization and operation of the local units." c ralaw vi rtua1aw l ibra ry

When the Civil Service Commission interpreted the recommending power of the Provincial Governor as
purely directory, it went against the letter and spirit of the constitutional provisions on local
autonomy. If the DBM Secretary jealously hoards the entirety of budgetary powers and ignores the
right of local governments to develop self-reliance and resoluteness in the handling of their own funds,
the goal of meaningful local autonomy is frustrated and set back.

The right given by Local Budget Circular No. 31 which states: jgc:chan robles. com.ph

"SEC. 6.0 The DBM reserves the right to fill up any existing vacancy where none of the nominees of
the local chief executive meet the prescribed requirements." cra law virt ua1aw li bra ry

is ultra vires and is, accordingly, set aside. The DBM may appoint only from the list of qualified
recommendees nominated by the Governor. If none is qualified, he must return the list of nominees to
the Governor explaining why no one meets the legal requirements and ask for new recommendees
who have the necessary eligibilities and qualifications.

The PBO is expected to synchronize his work with DBM. More important, however, is the proper
administration of fiscal affairs at the local level. Provincial and municipal budgets are prepared at the
local level and after completion are forwarded to the national officials for review. They are prepared by
the local officials who must work within the constraints of those budgets. They are not formulated in
the inner sanctums of an all-knowing DBM and unilaterally imposed on local governments whether or
not they are relevant to local needs and resources. It is for this reason that there should be a genuine
interplay, a balancing of viewpoints, and a harmonization of proposals from both the local and national
officials. It is for this reason that the nomination and appointment process involves a sharing of power
between the two levels of government.

It may not be amiss to give by way of analogy the procedure followed in the appointments of Justices
and Judges. Under Article VIII of the Constitution, nominations for judicial positions are made by the
Judicial and Bar Council. The President makes the appointments from the list of nominees submitted
to her by the Council. She cannot apply the DBM procedure, reject all the Council nominees, and
appoint another person whom she feels is better qualified. There can be no reservation of the right to
fill up a position with a person of the appointing powers personal choice.

The public respondents grave abuse of discretion is aggravated by the fact that Director Galvez
required the Provincial Governor to submit at least three other names of nominees better qualified
than his earlier recommendation. It was a meaningless exercise. The appointment of the private
respondent was formalized before the Governor was extended the courtesy of being informed that his
nominee had been rejected. The complete disregard of the local governments prerogative and the
smug belief that the DBM has absolute wisdom, authority, and discretion are manifest.

In his classic work "Philippine Political Law" Dean Vicente G. Sinco stated that the value of local
governments as institutions of democracy is measured by the degree of autonomy that they enjoy.
Citing Tocqueville, he stated that "local assemblies of citizens constitute the strength of free nations. .
. . A people may establish a system of free government but without the spirit of municipal institutions,
it cannot have the spirit of liberty." (Sinco, Philippine Political Law, Eleventh Edition, pp. 705-706).
chanroble s law lib ra ry : red

Our national officials should not only comply with the constitutional provisions on local autonomy but
should also appreciate the spirit of liberty upon which these provisions are based.

WHEREFORE, the petition is hereby GRANTED. The questioned resolutions of the Civil Service
Commission are SET ASIDE. The appointment of respondent Cecilia Almajose is nullified. The
Department of Budget and Management is ordered to appoint the Provincial Budget Officer of Rizal
from among qualified nominees submitted by the Provincial Governor.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento,
Grio-Aquino, Medialdea, Regalado and Davide, Jr., JJ., concur.
 EN BANC
[ G.R. No. 125350, December 03, 2002 ]
HON. RTC JUDGES MERCEDES G. DADOLE (EXECUTIVE JUDGE,
BRANCH 28), ULRIC R. CAETE (PRESIDING JUDGE, BRANCH
25), AGUSTINE R. VESTIL (PRESIDING JUDGE, BRANCH 56),
HON. MTC JUDGES TEMISTOCLES M. BOHOLST (PRESIDING
JUDGE, BRANCH 1), VICENTE C. FANILAG (JUDGE
DESIGNATE, BRANCH 2), AND WILFREDO A. DAGATAN
(PRESIDING JUDGE, BRANCH 3), ALL OF MANDAUE CITY,
PETITIONERS, VS. COMMISSION ON AUDIT, RESPONDENT.

CORONA, J.:

Before us is a petition for certiorari under Rule 64 to annul the decision[1] and
resolution[2], dated September 21, 1995 and May 28, 1996, respectively, of the
respondent Commission on Audit (COA) affirming the notices of the Mandaue City
Auditor which diminished the monthly additional allowances received by the
petitioner judges of the Regional Trial Court (RTC) and Municipal Trial Court (MTC)
stationed in Mandaue City.

The undisputed facts are as follows:

In 1986, the RTC and MTC judges of Mandaue City started receiving monthly
allowances of P1,260 each through the yearly appropriation ordinance enacted by
the Sangguniang Panlungsod of the said city. In 1991, Mandaue City increased the
amount to P1,500 for each judge.

On March 15, 1994, the Department of Budget and Management (DBM) issued the
disputed Local Budget Circular No. 55 (LBC 55) which provided that:
xxx xxx xxx

2.3.2. In the light of the authority granted to the local government units under the
Local Government Code to provide for additional allowances and other benefits to
national government officials and employees assigned in their locality, such
additional allowances in the form of honorarium at rates not exceeding P1,000.00 in
provinces and cities and P700.00 in municipalities may be granted subject to the
following conditions:
a) That the grant is not mandatory on the part of the LGUs;

b) That all contractual and statutory obligations of the LGU including the
implementation of R.A. 6758 shall have been fully provided in the budget;

c) That the budgetary requirements/limitations under Section 324 and 325 of R.A.
7160 should be satisfied and/or complied with; and

d) That the LGU has fully implemented the devolution of functions/personnel in

accordance with R.A. 7160.[3] (italics supplied)
xxx xxx xxx
The said circular likewise provided for its immediate effectivity without need of
publication:
5.0 EFFECTIVITY

This Circular shall take effect immediately.

Acting on the DBM directive, the Mandaue City Auditor issued notices of
disallowance to herein petitioners, namely, Honorable RTC Judges Mercedes G.
Dadole, Ulric R. Caete, Agustin R. Vestil, Honorable MTC Judges Temistocles M.
Boholst, Vicente C. Fanilag and Wilfredo A. Dagatan, in excess of the amount
authorized by LBC 55. Beginning October, 1994, the additional monthly allowances
of the petitioner judges were reduced to P1,000 each. They were also asked to
reimburse the amount they received in excess of P1,000 from April to September,
1994.

The petitioner judges filed with the Office of the City Auditor a protest against the
notices of disallowance. But the City Auditor treated the protest as a motion for
reconsideration and indorsed the same to the COA Regional Office No. 7. In turn,
the COA Regional Office referred the motion to the head office with a
recommendation that the same be denied.

On September 21, 1995, respondent COA rendered a decision denying petitioners

motion for reconsideration. The COA held that:

The issue to be resolved in the instant appeal is whether or not the City Ordinance
of Mandaue which provides a higher rate of allowances to the appellant judges may
prevail over that fixed by the DBM under Local Budget Circular No. 55 dated March
15, 1994.
xxx xxx xxx

Applying the foregoing doctrine, appropriation ordinance of local government units

is subject to the organizational, budgetary and compensation policies of budgetary
authorities (COA 5th Ind., dated March 17, 1994 re: Province of Antique; COA letter
dated May 17, 1994 re: Request of Hon. Renato Leviste, Cong. 1st Dist. Oriental
Mindoro). In this regard, attention is invited to Administrative Order No. 42 issued
on March 3, 1993 by the President of the Philippines clarifying the role of DBM in
the compensation and classification of local government positions under RA No.
7160 vis-avis the provisions of RA No. 6758 in view of the abolition of the JCLGPA.
Section 1 of said Administrative Order provides that:

Section 1. The Department of Budget and Management as the lead administrator

of RA No. 6758 shall, through its Compensation and Position Classification Bureau,
continue to have the following responsibilities in connection with the
implementation of the Local Government Code of 1991:

a) Provide guidelines on the classification of local government positions and on the

specific rates of pay therefore;

b) Provide criteria and guidelines for the grant of all allowances and
additional forms of compensation to local government employees; xxx.
(underscoring supplied)

To operationalize the aforecited presidential directive, DBM issued LBC No. 55,
dated March 15, 1994, whose effectivity clause provides that:

xxx xxx xxx

5.0 EFFECTIVITY

This Circular shall take effect immediately.

It is a well-settled rule that implementing rules and regulations promulgated by

administrative or executive officer in accordance with, and as authorized by law,
has the force and effect of law or partake the nature of a statute (Victorias Milling
Co., Inc., vs. Social Security Commission, 114 Phil. 555, cited in Agpalos Statutory
Construction, 2nd Ed. P. 16; Justice Cruzs Phil. Political Law, 1984 Ed., p. 103;
Espanol vs. Phil Veterans Administration, 137 SCRA 314; Antique Sawmills Inc. vs.
Tayco, 17 SCRA 316).

xxx xxx xxx

There being no statutory basis to grant additional allowance to judges in excess of

P1,000.00 chargeable against the local government units where they are stationed,
this Commission finds no substantial grounds or cogent reason to disturb the
decision of the City Auditor, Mandaue City, disallowing in audit the allowances in
question. Accordingly, the above-captioned appeal of the MTC and RTC Judges of
Mandaue City, insofar as the same is not covered by Circular Letter No. 91-7, is
hereby dismissed for lack of merit.

xxx xxx xxx[4]

On November 27, 1995, Executive Judge Mercedes Gozo-Dadole, for and in behalf
of the petitioner judges, filed a motion for reconsideration of the decision of the
COA. In a resolution dated May 28, 1996, the COA denied the motion.

Hence, this petition for certiorari by the petitioner judges, submitting the following
questions for resolution:

HAS THE CITY OF MANDAUE STATUTORY AND CONSTITUTIONAL BASIS TO

PROVIDE ADDITIONAL ALLOWANCES AND OTHER BENEFITS TO JUDGES
STATIONED IN AND ASSIGNED TO THE CITY?

II

CAN AN ADMINISTRATIVE CIRCULAR OR GUIDELINE SUCH AS LOCAL BUDGET

CIRCULAR NO. 55 RENDER INOPERATIVE THE POWER OF THE LEGISLATIVE BODY
OF A CITY BY SETTING A LIMIT TO THE EXTENT OF THE EXERCISE OF SUCH
POWER?

III

HAS THE COMMISSION ON AUDIT CORRECTLY INTERPRETED LOCAL BUDGET

CIRCULAR NO. 55 TO INCLUDE MEMBERS OF THE JUDICIARY IN FIXING THE
CEILING OF ADDITIONAL ALLOWANCES AND BENEFITS TO BE PROVIDED TO
JUDGES STATIONED IN AND ASSIGNED TO MANDAUE CITY BY THE CITY
GOVERNMENT AT P1,000.00 PER MONTH NOTWITHSTANDING THAT THEY HAVE
BEEN RECEIVING ALLOWANCES OF P1,500.00 MONTHLY FOR THE PAST FIVE
YEARS?

IV

IS LOCAL BUDGET CIRCULAR NO. 55 DATED MARCH 15, 1994 ISSUED BY THE
DEPARTMENT OF BUDGET AND MANAGEMENT VALID AND ENFORCEABLE
CONSIDERING THAT IT WAS NOT DULY PUBLISHED IN ACCODANCE WITH LAW?[5]
Petitioner judges argue that LBC 55 is void for infringing on the local autonomy of
Mandaue City by dictating a uniform amount that a local government unit can
disburse as additional allowances to judges stationed therein. They maintain that
said circular is not supported by any law and therefore goes beyond the supervisory
powers of the President. They further allege that said circular is void for lack of
publication.

On the other hand, the yearly appropriation ordinance providing for additional
allowances to judges is allowed by Section 458, par. (a)(1)[xi], of RA 7160,
otherwise known as the Local Government Code of 1991, which provides 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

(xi) When the finances of the city government allow, provide for additional
allowances and other benefits to judges, prosecutors, public elementary and high
school teachers, and other national government officials stationed in or assigned to
the city; (italics supplied)
Instead of filing a comment on behalf of respondent COA, the Solicitor General filed
a manifestation supporting the position of the petitioner judges. The Solicitor
General argues that (1) DBM only enjoys the power to review and determine
whether the disbursements of funds were made in accordance with the ordinance
passed by a local government unit while (2) the COA has no more than auditorial
visitation powers over local government units pursuant to Section 348 of RA 7160
which provides for the power to inspect at any time the financial accounts of local
government units.

Moreover, the Solicitor General opines that the DBM and the respondent are only
authorized under RA 7160 to promulgate a Budget Operations Manual for local
government units, to improve and systematize methods, techniques and
procedures employed in budget preparation, authorization, execution and
accountability pursuant to Section 354 of RA 7160. The Solicitor General points
out that LBC 55 was not exercised under any of the aforementioned provisions.

Respondent COA, on the other hand, insists that the constitutional and statutory
authority of a city government to provide allowances to judges stationed therein is
not absolute. Congress may set limitations on the exercise of autonomy. It is for
the President, through the DBM, to check whether these legislative limitations are
being followed by the local government units.

One such law imposing a limitation on a local government units autonomy is

Section 458, par. (a) (1) [xi], of RA 7160, which authorizes the disbursement of
additional allowances and other benefits to judges subject to the condition that the
finances of the city government should allow the same. Thus, DBM is merely
enforcing the condition of the law when it sets a uniform maximum amount for the
additional allowances that a city government can release to judges stationed
therein.

Assuming arguendo that LBC 55 is void, respondent COA maintains that the
provisions of the yearly approved ordinance granting additional allowances to
judges are still prohibited by the appropriation laws passed by Congress every year.
COA argues that Mandaue City gets the funds for the said additional allowances of
judges from the Internal Revenue Allotment (IRA). But the General Appropriations
Acts of 1994 and 1995 do not mention the disbursement of additional allowances to
judges as one of the allowable uses of the IRA. Hence, the provisions of said
ordinance granting additional allowances, taken from the IRA, to herein petitioner
judges are void for being contrary to law.

To resolve the instant petition, there are two issues that we must address: (1)
whether LBC 55 of the DBM is void for going beyond the supervisory powers of the
President and for not having been published and (2) whether the yearly
appropriation ordinance enacted by the City of Mandaue that provides for additional
allowances to judges contravenes the annual appropriation laws enacted by
Congress.

We rule in favor of the petitioner judges.

On the first issue, we declare LBC 55 to be null and void.

We recognize that, although our Constitution[6] guarantees autonomy to local

government units, the exercise of local autonomy remains subject to the power of
control by Congress and the power of supervision by the President. Section 4 of
Article X of the 1987 Philippine Constitution provides that:

Sec. 4. The President of the Philippines shall exercise general supervision over
local governments. x x x

In Pimentel vs. Aguirre[7], we defined the supervisory power of the President and
distinguished it from the power of control exercised by Congress. Thus:

This provision (Section 4 of Article X of the 1987 Philippine Constitution) has been
interpreted to exclude the power of control. In Mondano v. Silvosa,i[5] the Court
contrasted the President's power of supervision over local government officials with
that of his power of control over executive officials of the national government. It
was emphasized that the two terms -- supervision and control -- differed in
meaning and extent. The Court distinguished them as follows:
"x x x In administrative 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 or set aside what a
subordinate officer ha[s] done in the performance of his duties and to substitute the
judgment of the former for that of the latter."ii[6]
In Taule v. Santos,iii[7] we further stated that the Chief Executive wielded no more
authority than that of checking whether local governments or their officials were
performing their duties as provided by the fundamental law and by statutes. He
cannot interfere with local governments, so long as they act within the scope of
their authority. "Supervisory power, when contrasted with control, is the power of
mere oversight over an inferior body; it does not include any restraining authority
over such body,"iv[8] we said.

In a more recent case, Drilon v. Lim,v[9] the difference between control and
supervision was further delineated. Officers in control lay down the rules in the
performance or accomplishment of an act. If these rules are not followed, they
may, in their discretion, order the act undone or redone by their subordinates or
even decide to do it themselves. On the other hand, supervision does not cover
such authority. Supervising officials merely see to it that the rules are followed, but
they themselves do not lay down such rules, nor do they have the discretion to
modify or replace them. If the rules are not observed, they may order the work
done or redone, but only to conform to such rules. They may not prescribe their
own manner of execution of the act. They have no discretion on this matter except
to see to it that the rules are followed.

Under our present system of government, executive power is vested in the

President.vi[10] The members of the Cabinet and other executive officials are merely
alter egos. As such, they are subject to the power of control of the President, at
whose will and behest they can be removed from office; or their actions and
decisions changed, suspended or reversed.vii[11] In contrast, the heads of political
subdivisions are elected by the people. Their sovereign powers emanate from the
electorate, to whom they are directly accountable. By constitutional fiat, they are
subject to the Presidents supervision only, not control, so long as their acts are
exercised within the sphere of their legitimate powers. By the same token, the
President may not withhold or alter any authority or power given them by the
Constitution and the law.

Clearly then, the President can only interfere in the affairs and activities of a local
government unit if he or she finds that the latter has acted contrary to law. This is
the scope of the Presidents supervisory powers over local government units.
Hence, the President or any of his or her alter egos cannot interfere in local affairs
as long as the concerned local government unit acts within the parameters of the
law and the Constitution. Any directive therefore by the President or any of his or
her alter egos seeking to alter the wisdom of a law-conforming judgment on local
affairs of a local government unit is a patent nullity because it violates the principle
of local autonomy and separation of powers of the executive and legislative
departments in governing municipal corporations.

Does LBC 55 go beyond the law it seeks to implement? Yes.

LBC 55 provides that the additional monthly allowances to be given by a local

government unit should not exceed P1,000 in provinces and cities and P700 in
municipalities. Section 458, par. (a)(1)(xi), of RA 7160, the law that supposedly
serves as the legal basis of LBC 55, allows the grant of additional allowances to
judges when the finances of the city government allow. The said provision does
not authorize setting a definite maximum limit to the additional allowances granted
to judges. Thus, we need not belabor the point that the finances of a city
government may allow the grant of additional allowances higher than P1,000 if the
revenues of the said city government exceed its annual expenditures. Thus, to
illustrate, a city government with locally generated annual revenues of P40 million
and expenditures of P35 million can afford to grant additional allowances of more
than P1,000 each to, say, ten judges inasmuch as the finances of the city can afford
it.

Setting a uniform amount for the grant of additional allowances is an inappropriate

way of enforcing the criterion found in Section 458, par. (a)(1)(xi), of RA 7160. The
DBM over-stepped its power of supervision over local government units by imposing
a prohibition that did not correspond with the law it sought to implement. In other
words, the prohibitory nature of the circular had no legal basis.

Furthermore, LBC 55 is void on account of its lack of publication, in violation of our

ruling in Taada vs. Tuvera[8] where we held that:
xxx. Administrative rules and regulations must also be published if their purpose is
to enforce or implement existing law pursuant to a valid delegation.

Interpretative regulations and those merely internal in nature, that is, regulating
only the personnel of an administrative agency and the public, need not be
published. Neither is publication required of the so-called letters of instruction
issued by administrative superiors concerning the rules or guidelines to be followed
by their subordinates in the performance of their duties.
Respondent COA claims that publication is not required for LBC 55 inasmuch as it is
merely an interpretative regulation applicable to the personnel of an LGU. We
disagree. In De Jesus vs. Commission on Audit[9] where we dealt with the same
issue, this Court declared void, for lack of publication, a DBM circular that
disallowed payment of allowances and other additional compensation to
government officials and employees. In refuting respondent COAs argument that
said circular was merely an internal regulation, we ruled that:

On the need for publication of subject DBM-CCC No. 10, we rule in the affirmative.
Following the doctrine enunciated in Taada v. Tuvera, publication in the Official
Gazette or in a newspaper of general circulation in the Philippines is required since
DBM-CCC No. 10 is in the nature of an administrative circular the purpose of which
is to enforce or implement an existing law. Stated differently, to be effective and
enforceable, DBM-CCC No. 10 must go through the requisite publication in the
Official Gazette or in a newspaper of general circulation in the Philippines.

In the present case under scrutiny, it is decisively clear that DBM-CCC No. 10,
which completely disallows payment of allowances and other additional
compensation to government officials and employees, starting November 1, 1989,
is not a mere interpretative or internal regulation. It is something more than that.
And why not, when it tends to deprive government workers of their allowance and
additional compensation sorely needed to keep body and soul together. At the very
least, before the said circular under attack may be permitted to substantially reduce
their income, the government officials and employees concerned should be apprised
and alerted by the publication of subject circular in the Official Gazette or in a
newspaper of general circulation in the Philippines to the end that they be given
amplest opportunity to voice out whatever opposition they may have, and to
ventilate their stance on the matter. This approach is more in keeping with
democratic precepts and rudiments of fairness and transparency. (emphasis
supplied)

In Philippine International Trading Corporation vs. Commission on Audit[10], we

again declared the same circular as void, for lack of publication, despite the fact
that it was re-issued and then submitted for publication. Emphasizing the
importance of publication to the effectivity of a regulation, we therein held that:

It has come to our knowledge that DBM-CCC No. 10 has been re-issued in its
entirety and submitted for publication in the Official Gazette per letter to the
National Printing Office dated March 9, 1999. Would the subsequent publication
thereof cure the defect and retroact to the time that the above-mentioned items
were disallowed in audit?

The answer is in the negative, precisely for the reason that publication is required
as a condition precedent to the effectivity of a law to inform the public of the
contents of the law or rules and regulations before their rights and interests are
affected by the same. From the time the COA disallowed the expenses in audit up
to the filing of herein petition the subject circular remained in legal limbo due to its
non-publication. As was stated in Taada v. Tuvera, prior publication of laws
before they become effective cannot be dispensed with, for the reason that it would
deny the public knowledge of the laws that are supposed to govern it.[11]

We now resolve the second issue of whether the yearly appropriation ordinance
enacted by Mandaue City providing for fixed allowances for judges contravenes any
law and should therefore be struck down as null and void.

According to respondent COA, even if LBC 55 were void, the ordinances enacted by
Mandaue City granting additional allowances to the petitioner judges would still
(be) bereft of legal basis for want of a lawful source of funds considering that the
IRA cannot be used for such purposes. Respondent COA showed that Mandaue
Citys funds consisted of locally generated revenues and the IRA. From 1989 to
1995, Mandaue Citys yearly expenditures exceeded its locally generated revenues,
thus resulting in a deficit. During all those years, it was the IRA that enabled
Mandaue City to incur a surplus. Respondent avers that Mandaue City used its IRA
to pay for said additional allowances and this violated paragraph 2 of the Special
Provisions, page 1060, of RA 7845 (The General Appropriations Act of 1995)[12] and
paragraph 3 of the Special Provision, page 1225, of RA 7663 (The General
Appropriations Act of 1994)[13] which specifically identified the objects of
expenditure of the IRA. Nowhere in said provisions of the two budgetary laws does
it say that the IRA can be used for additional allowances of judges. Respondent
COA thus argues that the provisions in the ordinance providing for such
disbursement are against the law, considering that the grant of the subject
allowances is not within the specified use allowed by the aforesaid yearly
appropriations acts.

We disagree.

Respondent COA failed to prove that Mandaue City used the IRA to spend for the
additional allowances of the judges. There was no evidence submitted by COA
showing the breakdown of the expenses of the city government and the funds used
for said expenses. All the COA presented were the amounts expended, the locally
generated revenues, the deficit, the surplus and the IRA received each year. Aside
from these items, no data or figures were presented to show that Mandaue City
deducted the subject allowances from the IRA. In other words, just because
Mandaue Citys locally generated revenues were not enough to cover its
expenditures, this did not mean that the additional allowances of petitioner judges
were taken from the IRA and not from the citys own revenues.

Moreover, the DBM neither conducted a formal review nor ordered a disapproval of
Mandaue Citys appropriation ordinances, in accordance with the procedure outlined
by Sections 326 and 327 of RA 7160 which provide that:

Section 326. Review of Appropriation Ordinances of Provinces, Highly Urbanized

Cities, Independent Component Cities, and Municipalities within the Metropolitan
Manila Area. - The Department of Budget and Management shall review ordinances
authorizing the annual or supplemental appropriations of provinces, highly-
urbanized cities, independent component cities, and municipalities within the
Metropolitan Manila Area in accordance with the immediately succeeding Section.

Section 327. Review of Appropriation Ordinances of Component Cities and

Municipalities.- The sangguninang panlalawigan shall review the ordinance
authorizing annual or supplemental appropriations of component cities and
municipalities in the same manner and within the same period prescribed for the
review of other ordinances.

If within ninety (90) days from receipt of copies of such ordinance, the sangguniang
panlalawigan takes no action thereon, the same shall be deemed to have been
reviewed in accordance with law and shall continue to be in full force and effect.
(emphasis supplied)

Within 90 days from receipt of the copies of the appropriation ordinance, the DBM
should have taken positive action. Otherwise, such ordinance was deemed to have
been properly reviewed and deemed to have taken effect. Inasmuch as, in the
instant case, the DBM did not follow the appropriate procedure for reviewing the
subject ordinance of Mandaue City and allowed the 90-day period to lapse, it can no
longer question the legality of the provisions in the said ordinance granting
additional allowances to judges stationed in the said city.

WHEREFORE, the petition is hereby GRANTED, and the assailed decision and
resolution, dated September 21, 1995 and May 28, 1996, respectively, of the
Commission on Audit are hereby set aside.

No costs.

SO ORDERED.
 EN BANC
[ G.R. No. 143596, December 11, 2003 ]
JUDGE TOMAS C. LEYNES, PETITIONER, VS. THE
COMMISSION ON AUDIT (COA), HON. GREGORIA S. ONG,
DIRECTOR, COMMISSION ON AUDIT AND HON. SALVACION
DALISAY, PROVINCIAL AUDITOR, RESPONDENTS.

DECISION

CORONA, J.:

Before us is a petition for certiorari under Rule 65 in relation to Section 2, Rule 64

of the Rules of Court, seeking to reverse and set aside the decision[1] dated
September 14, 1999 of the Commission on Audit (COA), affirming the resolution of
COA Regional Director Gregoria S. Ong dated March 29, 1994 which in turn
affirmed the opinion dated October 19, 1993 of the Provincial Auditor of Oriental
Mindoro, Salvacion M. Dalisay. All three denied the grant of P1,600 monthly
allowance to petitioner Judge Tomas C. Leynes by the Municipality of Naujan,
Oriental Mindoro.

FACTUAL ANTECEDENTS

Petitioner Judge Tomas C. Leynes who, at present, is the presiding judge of the
Regional Trial Court of Calapan City, Oriental Mindoro, Branch 40 was formerly
assigned to the Municipality of Naujan, Oriental Mindoro as the sole presiding judge
of the Municipal Trial Court thereof. As such, his salary and representation and
transportation allowance (RATA) were drawn from the budget of the Supreme
Court. In addition, petitioner received a monthly allowance of P944 from the local
funds[2] of the Municipality of Naujan starting 1984. [3]

On March 15, 1993, the Sangguniang Bayan of Naujan, through Resolution No.
057, sought the opinion of the Provincial Auditor and the Provincial Budget Officer
regarding any budgetary limitation on the grant of a monthly allowance by the
municipality to petitioner judge. On May 7, 1993, the Sangguniang Bayan
unanimously approved Resolution No. 101 increasing petitioner judge's monthly
allowance from P944 to P1,600 (an increase of P656) starting May 1993.[4] By
virtue of said resolution, the municipal government (the Municipal Mayor and the
Sangguniang Bayan) approved a supplemental budget which was likewise approved
by the Sangguniang Panlalawigan and the Office of Provincial Budget and
Management of Oriental Mindoro. In 1994, the Municipal Government of Naujan
again provided for petitioner judge's P1,600 monthly allowance in its annual budget
which was again approved by the Sangguniang Panlalawigan and the Office of
Provincial Budget and Management of Oriental Mindoro.[5]

On February 17, 1994, Provincial Auditor Salvacion M. Dalisay sent a letter to the
Municipal Mayor and the Sangguniang Bayan of Naujan directing them to stop the
payment of the P1,600 monthly allowance or RATA to petitioner judge and to
require the immediate refund of the amounts previously paid to the latter. She
opined that the Municipality of Naujan could not grant RATA to petitioner judge in
addition to the RATA the latter was already receiving from the Supreme Court. Her
directive was based on the following:
Section 36, RA No. 7645, General Appropriations Act of 1993

Representation and Transportation Allowances. The following officials and those of

equivalent rank as may be determined by the Department of Budget and
Management (DBM) while in the actual performance of their respective functions
are hereby granted monthly commutable representation and transportation
allowances payable from the programmed appropriations provided for their
respective offices, not exceeding the rates indicated below . . .

National Compensation Circular No. 67 dated January 1, 1992, of the Department

of Budget and Management

Subject: Representation and Transportation Allowances of National Government

Officials and Employees

xxx xxx xxx

4. Funding Source: In all cases, commutable and reimbursable RATA shall be

paid from the amount appropriated for the purpose and other personal
services savings of the agency or project from where the officials and
employees covered under this Circular draw their salaries. No one shall be
allowed to collect RATA from more than one source.[6] (emphasis supplied)

Petitioner judge appealed to COA Regional Director Gregoria S. Ong who, however,
upheld the opinion of Provincial Auditor Dalisay and who added that Resolution No.
101, Series of 1993 of the Sangguniang Bayan of Naujan failed to comply with
Section 3 of Local Budget Circular No. 53 dated September 1, 1993 outlining the
conditions for the grant of allowances to judges and other national officials or
employees by the local government units (LGUs). Section 3 of the said budget
circular provides that:
Sec. 3 Allowances. LGUs may grant allowances/additional compensation to the
national government officials/employees assigned to their locality at rates
authorized by law, rules and regulations and subject to the following preconditions:

a. That the annual income or finances of the municipality, city or province as

certified by the Accountant concerned will allow the grant of the
allowances/additional compensation without exceeding the general
limitations for personal services under Section 325 of RA 7160;

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

the full requirement of RA 6758 have been satisfied and provided fully in the
budget as certified by the Budget Officer and COA representative in the LGU
concerned;

c. That the LGU has fully implemented the devolution of personnel/functions in

accordance with the provisions of RA 7160;

d. That the LGU has already created mandatory positions prescribed in RA

7160; and

e. That similar allowances/additional compensation are not granted by the

national government to the officials/employees assigned to the LGU.[7]

Petitioner judge appealed the unfavorable resolution of the Regional Director to the
Commission on Audit. In the meantime, a disallowance of the payment of the
P1,600 monthly allowance to petitioner was issued. Thus he received his P1,600
monthly allowance from the Municipality of Naujan only for the period May 1993 to
January 1994.

On September 14, 1999, the COA issued its decision affirming the resolution of
Regional Director Gregoria S. Ong:
The main issue . . . is whether or not the Municipality of Naujan, Oriental Mindoro
can validly provide RATA to its Municipal Judge, in addition to that provided by the
Supreme Court.

Generally, the grant of (RATA) [sic] to qualified national government officials and
employees pursuant to Section 36 of R.A. 7645 [General Appropriations Act of
1993] and NCC No. 67 dated 01 January 1992 is subject to the following conditions
to wit:

1. Payable from the programmed /appropriated amount and others from

personal services savings of the respective offices where the officials or
employees draw their salaries;
 2. Not exceeding the rates prescribed by the Annual General Appropriations
Act;

3. Officials /employees on detail with other offices or assigned to serve other

offices or agencies shall be paid from their parent agencies;

4. No one shall be allowed to collect RATA from more than one source.

On the other hand, the municipal government may provide additional allowances
and other benefits to judges and other national government officials or employees
assigned or stationed in the municipality, provided, that the finances of the
municipality allow the grant thereof pursuant to Section 447, Par. 1 (xi), R.A. 7160,
and provided further, that similar allowance/additional compensation are not
granted by the national government to the official/employee assigned to the local
government unit as provided under Section 3(e) of Local Budget Circular No. 53,
dated 01 September 1993.

The conflicting provisions of Section 447, Par. (1) (xi) of the Local Government
Code of 1991 and Section 36 of the General Appropriations Act of 1993 [RA 7645]
have been harmonized by the Local Budget Circular No. 53 dated 01 September
1993, issued by the Department of Budget and Management pursuant to its powers
under Section 25 and Section 327 of the Local Government Code. The said circular
must be adhered to by the local government units particularly Section 3 thereof
which provides the implementing guidelines of Section 447, Par. (1) (xi) of the
Local Government Code of 1991 in the grant of allowances to national government
officials/employees assigned or stationed in their respective local government units.

Consequently, the subject SB Resolution No. 101 dated 11 May 1993 of the
Sangguniang Bayan of Naujan, Oriental Mindoro, having failed to comply with the
inherent precondition as defined in Section 3 (e). . . is null and void. Furthermore,
the Honorable Judge Tomas C. Leynes, being a national government official is
prohibited to receive additional RATA from the local government fund pursuant to
Section 36 of the General Appropriations Act (R.A. 7645 for 1993) and National
Compensation Circular No. 67 dated 1 January 1992.[8] (emphasis ours)
ASSIGNMENTS OF ERROR

Petitioner judge filed a motion for reconsideration of the above decision but it was
denied by the Commission in a resolution dated May 30, 2000. Aggrieved,
petitioner filed the instant petition, raising the following assignments of error for
our consideration:

I
WHETHER OR NOT RESOLUTION NO. 1O1, SERIES OF 1993 OF NAUJAN, ORIENTAL
MINDORO, WHICH GRANTED ADDITIONAL ALLOWANCE TO THE MUNICIPAL TRIAL
JUDGE OF NAUJAN, ORIENTAL MINDORO AND INCREASING HIS CURRENT
REPRESENTATION AND TRAVELLING ALLOWANCE (RATA) TO AN AMOUNT
EQUIVALENT TO THAT RECEIVED MONTHLY BY SANGGUNIANG MEMBERS IN
PESOS: ONE THOUSAND SIX HUNDRED (P1,600.00) EFFECTIVE 1993, IS VALID.

II

WHETHER OR NOT THE POWER OF MUNICIPAL GOVERNMENTS TO GRANT

ADDITIONAL ALLOWANCES AND OTHER BENEFITS TO NATIONAL GOVERNMENT
EMPLOYEES STATIONED IN THEIR MUNICIPALITY IS VERY EXPLICIT AND
UNEQUIVOCAL UNDER THE LOCAL GOVERNMENT CODE OF 1991 PARTICULARLY
SECTION 447 IN RELATION TO SECTIONS 17 AND 22 THEREOF.

III

WHETHER OR NOT THE DEPARTMENT OF BUDGET AND MANAGEMENT (DBM) CAN,

BY THE ISSUANCE OF BUDGET CIRCULARS, RESTRICT A MUNICIPAL GOVERNMENT
FROM EXERCISING ITS GIVEN LEGISLATIVE POWERS OF PROVIDING ADDITIONAL
ALLOWANCES AND OTHER BENEFITS TO NATIONAL EMPLOYEES STATIONED OR
ASSIGNED TO THEIR MUNICIPALITY FOR AS LONG AS THEIR FINANCES SO ALLOW.

IV

WHETHER OR NOT THE LOCAL GOVERNMENT CODE OF 1991 PARTICULARLY

SECTION 447 (a) (1) (xi) WAS EXPRESSLY OR IMPLIEDLY REPEALED OR MODIFIED
BY REPUBLIC ACT 7645 AND THE GENERAL APPROPRIATIONS ACT OF 1993.

WHETHER OR NOT PETITIONER WAS ENTITLED TO RECEIVE THE ADDITIONAL

ALLOWANCES GRANTED TO HIM BY THE MUNICIPALITY OF NAUJAN, ORIENTAL
MINDORO BY VIRTUE OF ITS RESOLUTION NO. 101, SERIES OF 1993.

POSITION OF COA

Respondent Commission on Audit opposes the grant by the Municipality of Naujan

of the P1,600 monthly allowance to petitioner Judge Leynes for the reason that the
municipality could not grant RATA to judges in addition to the RATA already
received from the Supreme Court.[9] Respondent bases its contention on the
following:
 1. National Compensation Circular No. 67 (hereafter NCC No. 67) dated January
1, 1992 of the Department of Budget and Management (DBM) which provides
that (a) the RATA of national officials and employees shall be payable from
the programmed appropriations or personal services savings of the agency
where such officials or employees draw their salary and (b) no one shall be
allowed to collect RATA from more than one source;

2. the General Appropriations Act of 1993 (RA 7645) which provided that the
RATA of national officials shall be payable from the programmed
appropriations of their respective offices and

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

POSITION OF PETITIONER

Petitioner judge, on the other hand, asserts that the municipality is expressly and
unequivocally empowered by RA 7160 (the Local Government Code of 1991) to
enact appropriation ordinances granting allowances and other benefits to judges
stationed in its territory. Section 447(a)(1)(xi) of the Local Government Code of
1991 imposes only one condition, that is, "when the finances of the municipal
government allow." The Code does not impose any other restrictions in the
exercise of such power by the municipality. Petitioner also asserts that the DBM
cannot amend or modify a substantive law like the Local Government Code of 1991
through mere budget circulars. Petitioner emphasizes that budget circulars must
conform to, not modify or amend, the provisions of the law it seeks to
implement.[11]

HISTORY OF GRANT OF
ALLOWANCES TO JUDGES

The power of local government units (LGUs) to grant allowances to judges stationed
in their respective territories was originally provided by Letter of Instruction No.
1418 dated July 18, 1984 (hereafter LOI No. 1418):
Whereas, the State is cognizant of the need to maintain the independence of the
Judiciary;

Whereas, the budgetary allotment of the Judiciary constitutes only a small

percentage of the national budget;
Whereas, present economic conditions adversely affected the livelihood of the
members of the Judiciary;

Whereas, some local government units are ready, willing and able to pay additional
allowances to Judges of various courts within their respective territorial jurisdiction;

Now, therefore, I, Ferdinand E. Marcos, President of the Republic of the Philippines,

do hereby direct:

1. Section 3 of Letter of Implementation No. 96 is hereby amended to read as

follows:

"3. The allowances provided in this letter shall be borne exclusively by the
National Government. However, provincial, city and municipal governments
may pay additional allowances to the members and personnel of the
Judiciary assigned in their respective areas out of available local funds but
not to exceed P1,500.00; Provided, that in Metropolitan Manila, the city
and municipal governments therein may pay additional allowances not
exceeding P3,000.00. (emphasis ours)"[12]

On June 25, 1991, the DBM issued Circular No. 91-7 outlining the guidelines for the
continued receipt of allowances by judges from LGUs:
Consistent with the constitutional provision on the fiscal autonomy of the judiciary
and the policy of the National Government of allowing greater autonomy to local
government units, judges of the Judiciary are hereby allowed to continue to receive
allowances at the same rates which they have been receiving from the Local
Government Units as of June 30, 1989, subject to the following guidelines:

1. That the continuance of payment of subject allowance to the recipient judge

shall be entirely voluntary and non-compulsory on the part of the Local
Government Units;

2. That payment of the above shall always be subject to the availability of local
funds;

3. That it shall be made only in compliance with the policy of non-diminution of

compensation received by the recipient judge before the implementation of
the salary standardization;

4. That the subject allowance shall be given only to judges who were receiving
the same as of June 30, 1989 and shall be co-terminous with the incumbent
judges; and
 5. That the subject allowance shall automatically terminate upon transfer of a
judge from one local government unit to another local government unit.
(emphasis ours)

On October 10, 1991, Congress enacted RA 7160, otherwise known as the Local
Government Code of 1991.[13] The power of the LGUs to grant allowances and other
benefits to judges and other national officials stationed in their respective territories
was expressly provided in Sections 447(a)(1)(xi), 458(a)(1)(xi) and 468(a)(1)(xi)
of the Code.

On March 15, 1994, the DBM issued Local Budget Circular No. 55 (hereafter LBC
No. 55) setting out the maximum amount of allowances that LGUs may grant to
judges. For provinces and cities, the amount should not exceed P1,000 and for
municipalities, P700.

On December 3, 2002, we struck down the above circular in Dadole, et al. vs.
COA.[14] We ruled there that the Local Government Code of 1991 clearly provided
that LGUs could grant allowances to judges, subject only to the condition that the
finances of the LGUs allowed it. We held that "setting a uniform amount for the
grant of allowances (was) an inappropriate way of enforcing said criterion."
Accordingly, we declared that the DBM exceeded its power of supervision over LGUs
by imposing a prohibition that did not jibe with the Local Government Code of
1991.[15]

ESTABLISHED PRINCIPLES INVOLVED

From the foregoing history of the power of LGUs to grant allowances to judges, the
following principles should be noted:

1. the power of LGUs to grant allowances to judges has long been recognized
(since 1984 by virtue of LOI No. 1418) and, at present, it is expressly and
unequivocally provided in Sections 447, 458 and 468 of the Local
Government Code of 1991;

2. the issuance of DBM Circular No. 91-7 dated June 25, 1991 and LBC No. 55
dated March 15, 1994 indicates that the national government recognizes the
power of LGUs to grant such allowances to judges;

3. in Circular No. 91-7, the national government merely provides

the guidelines for the continued receipt of allowances by judges from LGUs
while in LBC No. 55, the national government merely tries to limit the
amount of allowances LGUs may grant to judges and
 4. in the recent case of Dadole, et al. vs. COA, the Court upheld the
constitutionally enshrined autonomy of LGUs to grant allowances to judges in
any amount deemed appropriate, depending on availability of funds, in
accordance with the Local Government Code of 1991.

OUR RULING

We rule in favor of petitioner judge. Respondent COA erred in opposing the grant
of the P1,600 monthly allowance by the Municipality of Naujan to petitioner Judge
Leynes.

DISCUSSION OF OUR RULING

Section 447(a)(1)(xi) of RA 7160, the Local Government Code of 1991, provides:

(a) The sangguniang bayan, as the legislative body of the municipality, shall
enact ordinances, approve resolutions and appropriate funds for the general welfare
of the municipality and its inhabitants . . ., and shall:

(1) Approve ordinances and pass resolutions necessary for an efficient and
effective municipal government, and in this connection shall:

xxx xxx xxx

(xi) When the finances of the municipal government allow, provide for
additional allowances and other benefits to judges, prosecutors, public
elementary and high school teachers, and other national government officials
stationed in or assigned to the municipality; (emphasis ours)

Respondent COA, however, contends that the above section has been repealed,
modified or amended by NCC No. 67 dated January 1, 1992, RA 7645 (the General
Appropriations Act of 1993) and LBC No. 53 dated September 1, 1993.[16]

It is elementary in statutory construction that an administrative circular cannot

supersede, abrogate, modify or nullify a statute. A statute is superior to an
administrative circular, thus the latter cannot repeal or amend it.[17] In the present
case, NCC No. 67, being a mere administrative circular, cannot repeal a substantive
law like RA 7160.

It is also an elementary principle in statutory construction that repeal of statutes by

implication is not favored, unless it is manifest that the legislature so intended. The
legislature is assumed to know the existing laws on the subject and cannot be
presumed to have enacted inconsistent or conflicting statutes.[18] Respondent COA
alleges that Section 36 of RA 7645 (the GAA of 1993) repealed Section 447(a)(l)(xi)
of RA 7160 (the LGC of 1991). A review of the two laws, however, shows that this
was not so. Section 36 of RA 7645 merely provided for the different rates of RATA
payable to national government officials or employees, depending on their position,
and stated that these amounts were payable from the programmed appropriations
of the parent agencies to which the concerned national officials or employees
belonged. Furthermore, there was no other provision in RA 7645 from which a
repeal of Section 447(a) (l)(xi) of RA 7160 could be implied. In the absence,
therefore, of any clear repeal of Section 447(a)(l)(xi) of RA 7160, we cannot
presume such intention on the part of the legislature.

Moreover, the presumption against implied repeal becomes stronger when, as in

this case, one law is special and the other is general.[19] The principle is expressed
in the maxim generalia specialibus non derogant, a general law does not nullify a
specific or special law. The reason for this is that the legislature, in passing a law of
special character, considers and makes special provisions for the particular
circumstances dealt with by the special law. This being so, the legislature, by
adopting a general law containing provisions repugnant to those of the special law
and without making any mention of its intention to amend or modify such special
law, cannot be deemed to have intended an amendment, repeal or modification of
the latter.[20]

In this case, RA 7160 (the LGC of 1991) is a special law[21] which exclusively deals
with local government units (LGUs), outlining their powers and functions in
consonance with the constitutionally mandated policy of local autonomy. RA 7645
(the GAA of 1993), on the other hand, was a general law[22] which outlined the
share in the national fund of all branches of the national government. RA 7645
therefore, being a general law, could not have, by mere implication, repealed RA
7160. Rather, RA 7160 should be taken as the exception to RA 7645 in the absence
of circumstances warranting a contrary conclusion.[23]

The controversy actually centers on the seemingly sweeping provision in NCC No.
67 which states that "no one shall be allowed to collect RATA from more than one
source." Does this mean that judges cannot receive allowances from LGUs in
addition to the RATA from the Supreme Court? For reasons that will hereinafter be
discussed, we answer in the negative.

The pertinent provisions of NCC No. 67 read:

3. Rules and Regulations:

 3.1.1 Payment of RATA, whether commutable or reimbursable, shall be in
accordance with the rates prescribed for each of the following officials
and employees and those of equivalent ranks, and the conditions
enumerated under the pertinent sections of the General Provisions of
the annual General Appropriations Act (GAA):

xxx xxx xxx

4.
5. Funding Source:

In all cases, commutable and reimbursable RATA shall be paid from the
amount appropriated for the purpose and other personal services savings of
the agency or project from where the officials and employees covered under
this Circular draw their salaries. No one shall be allowed to collect RATA from
more than one source. (emphasis ours)

In construing NCC No. 67, we apply the principle in statutory construction that force
and effect should not be narrowly given to isolated and disjoined clauses of the law
but to its spirit, broadly taking all its provisions together in one rational view.[24]
Because a statute is enacted as a whole and not in parts or sections, that is, one
part is as important as the others, the statute should be construed and given effect
as a whole. A provision or section which is unclear by itself may be clarified by
reading and construing it in relation to the whole statute.[25]

Taking NCC No. 67 as a whole then, what it seeks to prevent is the dual collection
of RATA by a national official from the budgets of "more than one national agency."
We emphasize that the other source referred to in the prohibition is another
national agency. This can be gleaned from the fact that the sentence "no one shall
be allowed to collect RATA from more than one source" (the controversial
prohibition) immediately follows the sentence that RATA shall be paid from the
budget of the national agency where the concerned national officials and employees
draw their salaries. The fact that the other source is another national agency is
supported by RA 7645 (the GAA of 1993) invoked by respondent COA itself and, in
fact, by all subsequent GAAs for that matter, because the GAAs all essentially
provide that (1) the RATA of national officials shall be payable from the budgets of
their respective national agencies and (2) those officials on detail with other
national agencies shall be paid their RATA only from the budget of their parent
national agency:
Section 36, RA 7645, General Appropriations Act of 1993:
Representation and Transportation Allowances. The following officials and those of
equivalent rank as may be determined by the Department of Budget and
Management (DBM) while in the actual performance of their respective functions
are hereby granted monthly commutable representation and transportation
allowances payable from the programmed appropriations provided for their
respective offices, not exceeding the rates indicated below, which shall apply to
each type of allowance:

xxx xxx xxx

Officials on detail with other offices, including officials of the Commission of Audit
assigned to serve other offices or agencies, shall be paid the allowance herein
authorized from the appropriations of their parent agencies. (emphasis ours)

Clearly therefore, the prohibition in NCC No. 67 is only against the dual or multiple
collection of RATA by a national official from the budgets of two or more national
agencies. Stated otherwise, when a national official is on detail with another
national agency, he should get his RATA only from his parent national agency and
not from the other national agency he is detailed to.

Since the other source referred in the controversial prohibition is another national
agency, said prohibition clearly does not apply to LGUs like the Municipality of
Naujan. National agency of course refers to the different offices, bureaus and
departments comprising the national government. The budgets of these
departments or offices are fixed annually by Congress in the General
Appropriations Act.[26] An LGU is obviously not a national agency. Its annual budget
is fixed by its own legislative council (Sangguniang Bayan, Panlungsod or
Panlalawigan), not by Congress. Without doubt, NCC No. 67 does not apply to
LGUs.

The prohibition in NCC No. 67 is in fact an administrative tool of the DBM to prevent
the much-abused practice of multiple allowances, thus standardizing the grant of
RATA by national agencies. Thus, the purpose clause of NCC No. 67 reads:

This Circular is being issued to ensure uniformity and consistency of actions on

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

By no stretch of the imagination can NCC No. 67 be construed as nullifying the

power of LGUs to grant allowances to judges under the Local Government Code of
1991. It was issued primarily to make the grant of RATA to national officials under
the national budget uniform. In other words, it applies only to the national funds
administered by the DBM, not the local funds of LGUs.
To rule against the power of LGUs to grant allowances to judges as what
respondent COA would like us to do will subvert the principle of local autonomy
zealously guaranteed by the Constitution.[27] The Local Government Code of 1991
was specially promulgated by Congress to ensure the autonomy of local
governments as mandated by the Constitution. By upholding, in the present case,
the power of LGUs to grant allowances to judges and leaving to their discretion the
amount of allowances they may want to grant, depending on the availability of local
funds, we ensure the genuine and meaningful local autonomy of LGUs.

We now discuss the next contention of respondent COA: that the resolution of the
Sangguniang Bayan of Naujan granting the P1,600 monthly allowance to petitioner
judge was null and void because it failed to comply with LBC No. 53 dated
September 1, 1993:

Sec. 3 Allowances. LGUs may grant allowances/additional compensation to the

national government officials/employees assigned to their locality at rates
authorized by law, rules and regulations and subject to the following preconditions:

a. That the annual income or finances of the municipality, city or province as

certified by the Accountant concerned will allow the grant of the
allowances/additional compensation without exceeding the general
limitations for personal services under Section 325 of RA 7160;

b. That the budgetary requirements under Section 324 of RA 7160 including the
full requirement of RA 6758 have been satisfied and provided fully in the
budget as certified by the Budget Officer and COA representative in the LGU
concerned;

c. That the LGU has fully implemented the devolution of personnel/functions in

accordance with the provisions of RA 7160;

d. That the LGU has already created mandatory positions prescribed in RA

7160.

e. That similar allowances/additional compensation are not granted by the

national government to the officials/employees assigned to the LGU.

Though LBC No. 53 of the DBM may be considered within the ambit of the
President's power of general supervision over LGUs,[28] we rule that Section 3,
paragraph (e) thereof is invalid. RA 7160, the Local Government Code of 1991,
clearly provides that provincial, city and municipal governments may grant
allowances to judges as long as their finances allow. Section 3, paragraph (e) of
LBC No. 53, by outrightly prohibiting LGUs from granting allowances to judges
whenever such allowances are (1) also granted by the national government or (2)
similar to the allowances granted by the national government, violates Section
447(a)(l)(xi) of the Local Government Code of 1991.[29] As already stated, a circular
must conform to the law it seeks to implement and should not modify or amend
it.[30]

Moreover, by prohibiting LGUs from granting allowances similar to the allowances

granted by the national government, Section 3 (e) of LBC No. 53 practically
prohibits LGUs from granting allowances to judges and, in effect, totally nullifies
their statutory power to do so. Being unduly restrictive therefore of the statutory
power of LGUs to grant allowances to judges and being violative of their autonomy
guaranteed by the Constitution, Section 3, paragraph (e) of LBC No. 53 is hereby
declared null and void.

Paragraphs (a) to (d) of said circular, however, are valid as they are in accordance
with Sections 324[31] and 325[32] of the Local Government Code of 1991; these
respectively provide for the budgetary requirements and general limitations on the
use of provincial, city and municipal funds. Paragraphs (a) to (d) are proper
guidelines for the condition provided in Sections 447, 458 and 468 of the Local
Government Code of 1991 that LGUs may grant allowances to judges if their funds
allow.[33]

Respondent COA also argues that Resolution No. 101 of the Sangguniang Bayan of
Naujan failed to comply with paragraphs (a) to (d) of LBC No. 53, thus it was null
and void.

The argument is misplaced.

Guidelines (a) to (d) were met when the Sangguniang Panlalawigan of Oriental
Mindoro approved Resolution No. 101 of the Sangguniang Bayan of Naujan granting
the P1,600 monthly allowance to petitioner judge as well as the corresponding
budgets of the municipality providing for the said monthly allowance to petitioner
judge. Under Section 327 of the Local Government Code of 1991, the Sangguniang
Panlalawigan was specifically tasked to review the appropriation ordinances of its
component municipalities to ensure compliance with Sections 324 and 325 of the
Code. Considering said duty of the Sangguniang Panlalawigan, we will assume, in
the absence of proof to the contrary, that the Sangguniang Panlalawigan of Oriental
Mindoro performed what the law required it to do, that is, review the resolution and
the corresponding budgets of the Municipality of Naujan to make sure that they
complied with Sections 324 and 325 of the Code.[34] We presume the regularity of
the Sangguniang Panlalawigan's official act.

Moreover, it is well-settled that an ordinance must be presumed valid in the

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

In sum, we hereby affirm the power of the Municipality of Naujan to grant the
questioned allowance to petitioner Judge Leynes in accordance with the
constitutionally mandated policy of local autonomy and the provisions of the Local
Government Code of 1991. We also sustain the validity of Resolution No. 101,
Series of 1993, of the Sangguniang Bayan of Naujan for being in accordance with
the law.

WHEREFORE, the petition is hereby GRANTED. The assailed decision dated

September 14, 1999 of the Commission of Audit is hereby SET ASIDE and Section
3, paragraph (e) of LBC No. 53 is hereby declared NULL and VOID.

No costs.

SO ORDERED.

Davide, Jr., C.J., Puno, Vitug, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-

Gutierrez, Carpio, Austria-Martinez, Carpio-Morales, Callejo, Sr., Azcuna, and Tinga,
JJ., concur.
321 Phil. 395

FIRST DIVISION
[ G.R. Nos. 120865-71, December 07, 1995 ]
LAGUNA LAKE DEVELOPMENT AUTHORITY, PETITIONER, VS. COURT
OF APPEALS; HON. JUDGE HERCULANO TECH, PRESIDING JUDGE,
BRANCH 70, REGIONAL TRIAL COURT OF BINANGONAN RIZAL;
FLEET DEVELOPMENT, INC. AND CARLITO ARROYO; THE
MUNICIPALITY OF BINANGONAN AND/OR MAYOR ISIDRO B. PACIS,
RESPONDENTS.

LAGUNA LAKE DEVELOPMENT AUTHORITY, PETITIONER, VS. COURT

OF APPEALS; HON. JUDGE AURELIO C. TRAMPE, PRESIDING JUDGE,
BRANCH 163, REGIONAL TRIAL COURT OF PASIG; MANILA MARINE
LIFE BUSINESS RESOURCES, INC. REPRESENTED BY, MR. TOBIAS
REYNALD M. TIANGCO; MUNICIPALITY OF TAGUIG, METRO MANILA
AND/OR MAYOR RICARDO D. PAPA, JR., RESPONDENTS.

LAGUNA LAKE DEVELOPMENT AUTHORITY, PETITIONER, VS. COURT

OF APPEALS; HON. JUDGE ALEJANDRO A. MARQUEZ, PRESIDING
JUDGE, BRANCH 79, REGIONAL TRIAL COURT OF MORONG, RIZAL;
GREENFIELD VENTURES INDUSTRIAL DEVELOPMENT
CORPORATION AND R. J. ORION DEVELOPMENT CORPORATION;
MUNICIPALITY OF JALA-JALA AND/OR MAYOR WALFREDO M. DE LA
VEGA, RESPONDENTS.

LAGUNA LAKE DEVELOPMENT AUTHORITY, PETITIONER, VS. COURT

OF APPEALS; HON. JUDGE MANUEL S. PADOLINA, PRESIDING JUDGE,
BRANCH 162, REGIONAL TRIAL COURT OF PASIG, METRO MANILA;
IRMA FISHING & TRADING CORP.; ARTM FISHING CORP.; BDR
CORPORATION, MIRT CORPORATION AND TRIM CORPORATION;
MUNICIPALITY OF BINANGONAN AND/OR MAYOR ISIDRO B. PACIS,
RESPONDENTS.

LAGUNA LAKE DEVELOPMENT AUTHORITY, PETITIONER, VS. COURT

OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE,
BRANCH 78, REGIONAL TRIAL COURT OF MORONG, RIZAL; BLUE
LAGOON FISHING CORP. AND ALCRIS CHICKEN GROWERS, INC.;
MUNICIPALITY OF JALA-JALA AND/OR MAYOR WALFREDO M. DE LA
VEGA, RESPONDENTS.

LAGUNA LAKE DEVELOPMENT AUTHORITY, PETITIONER, VS. COURT

OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE,
BRANCH 78, REGIONAL TRIAL COURT OF MORONG, RIZAL; AGP FISH
VENTURES, INC., REPRESENTED BY ITS PRESIDENT ALFONSO PUYAT;
MUNICIPALITY OF JALA-JALA AND/OR MAYOR WALFREDO M. DE LA
VEGA, RESPONDENTS.

LAGUNA LAKE DEVELOPMENT AUTHORITY, PETITIONER, VS. COURT

OF APPEALS; HON. JUDGE EUGENIO S. LABITORIA, PRESIDING
JUDGE, BRANCH 161, REGIONAL TRIAL COURT OF PASIG, METRO
MANILA; SEA MAR TRADING CO. INC.; EASTERN LAGOON FISHING
CORP.; MINAMAR FISHING CORP.; MUNICIPALITY OF BINANGONAN
AND/OR MAYOR ISIDRO B. PACIS, RESPONDENTS.

DECISION

HERMOSISIMA, JR., J.:

It is difficult for a man, scavenging on the garbage dump created by affluence and profligate
consumption and extravagance of the rich or fishing in the murky waters of the Pasig River and the
Laguna Lake or making a clearing in the forest so that he can produce food for his family, to
understand why protecting birds, fish, and trees is more important than protecting him and keeping
his family alive.

How do we strike a balance between environmental protection, on the one hand, and the individual
personal interests of people, on the other?

Towards environmental protection and ecology, navigational safety, and sustainable development,
Republic Act No. 4850 created the "Laguna Lake Development Authority." This Government
Agency is supposed to carry out and effectuate the aforesaid declared policy, so as to accelerate the
development and balanced growth of the Laguna Lake area and the surrounding provinces, cities and
towns, in the act clearly named, within the context of the national and regional plans and policies for
social and economic development.

Presidential Decree No. 813 of former President Ferdinand E. Marcos amended certain sections of
Republic Act No. 4850 because of the concern for the rapid expansion of Metropolitan Manila, the
suburbs and the lakeshore towns of Laguna de Bay, combined with current and prospective uses of
the lake for municipal-industrial water supply, irrigation, fisheries, and the like. Concern on the part
of the Government and the general public over: the environment impact of development on the
water quality and ecology of the lake and its related river systems; the inflow of polluted water from
the Pasig River, industrial, domestic and agricultural wastes from developed areas around the lake;
the increasing urbanization which induced the deterioration of the lake, since water quality studies
have shown that the lake will deteriorate further if steps are not taken to check the same; and the
floods in Metropolitan Manila area and the lakeshore towns which will influence the hydraulic
system of Laguna de Bay, since any scheme of controlling the floods will necessarily involve the
lake and its river systems, - likewise gave impetus to the creation of the Authority.

Section 1 of Republic Act No. 4850 was amended to read as follows:

"SECTION 1. Declaration of Policy. It is hereby declared to be the national policy

to promote, and accelerate the development and balanced growth of the Laguna
Lake area and the surrounding provinces, cities and towns hereinafter referred to
as the region, within the context of the national and regional plans and policies for
social and economic development and to carry out the development of the Laguna
Lake region 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."[1]

Special powers of the Authority, pertinent to the issues in this case, include:

"SEC 3. Section 4 of the same Act is hereby further amended by adding thereto
seven new paragraphs to be known as paragraphs (j), (k), (l), (m), (n), (o), and (p)
which shall read as follows:

xxx xxx xxx

`(j) The provisions of existing laws to the contrary notwithstanding, to engage in

fish production and other aqua-culture projects in Laguna de Bay and other bodies
of water within its jurisdiction and in pursuance thereof to conduct studies and
make experiments, whenever necessary, with the collaboration and assistance of
the Bureau of Fisheries and Aquatic Resources, with the end in view of improving
present techniques and practices. Provided, that until modified, altered or
amended by the procedure provided in the following sub-paragraph, the present
laws, rules and permits or authorizations remain in force;

(k) For the purpose of effectively regulating and monitoring activities in Laguna
de Bay, the Authority shall have exclusive jurisdiction to issue new permit for the
use of the lake waters for any projects or activities in or affecting the said lake
including navigation, construction, and operation of fishpens, fish enclosures, fish
corrals and the like, and to impose necessary safeguards for lake quality control
and management and to collect necessary fees for said activities and
projects: Provided, That the fees collected for fisheries may be shared between the
Authority and other government agencies and political sub-divisions in such
proportion as may be determined by the President of the Philippines upon
recommendation of the Authority's Board: Provided, further, That the Authority's
Board may determine new areas of fishery development or activities which it may
place under the supervision of the Bureau of Fisheries and Aquatic Resources
taking into account the overall development plans and programs for Laguna de
Bay and related bodies of water: Provided, finally, That the Authority shall subject
to the approval of the President of the Philippines promulgate such rules and
regulations which shall govern fisheries development activities in Laguna de Bay
which shall take into consideration among others the following: socio-economic
amelioration of bonafide resident fishermen whether individually or collectively in
the form of cooperatives, lakeshore town development, a master plan for fishpen
construction and operation, communal fishing ground for lake shore town
residents, and preference to lake shore town residents in hiring laborers for fishery
projects;

(l) To require the cities and municipalities embraced within the region to pass
appropriate zoning ordinances and other regulatory measures necessary to carry
out the objectives of the Authority and enforce the same with the assistance of the
Authority;

(m) The provisions of existing laws to the contrary notwithstanding, to exercise

water rights over public waters within the Laguna de Bay region whenever
necessary to carry out the Authority's projects;

(n) To act in coordination with existing governmental agencies in establishing

water quality standards for industrial, agricultural and municipal waste
discharges into the lake and to cooperate with said existing agencies of the
government of the Philippines in enforcing such standards, or to separately pursue
enforcement and penalty actions as provided for in Section 4 (d) and Section 39-
A of this Act: Provided, That in case of conflict on the appropriate water quality
standard to be enforced such conflict shall be resolved thru the NEDA Board;'" [2]
To more effectively perform the role of the Authority under Republic Act No. 4850, as though
Presidential Decree No. 813 were not thought to be completely effective, the Chief Executive, feeling
that the land and waters of the Laguna Lake Region are limited natural resources requiring judicious
management to their optimal utilization to insure renewability and to preserve the ecological balance,
the competing options for the use of such resources and conflicting jurisdictions over such uses
having created undue constraints on the institutional capabilities of the Authority in the light of the
limited powers vested in it by its charter, Executive Order No. 927 further defined and enlarged the
functions and powers of the Authority and named and enumerated the towns, cities and provinces
encompassed by the term "Laguna de Bay Region".

Also, pertinent to the issues in this case are the following provisions of Executive Order No. 927
which include in particular the sharing of fees:

"SEC 2. Water Rights Over Laguna de Bay and Other Bodies of Water within the
Lake Region: To effectively regulate and monitor activities in the Laguna de Bay
region, the Authority shall have exclusive jurisdiction to issue permit for the use of
all surface water for any projects or activities in or affecting the said region
including navigation, construction, and operation of fishpens, fish enclosures, fish
corrals and the like.

For the purpose of this Executive Order, the term `Laguna de Bay Region' shall
refer to the Provinces of Rizal and Laguna; the Cities of San Pablo, Pasay,
Caloocan, Quezon, Manila and Tagaytay; the towns of Tanauan, Sto. Tomas and
Malvar in Batangas Province; the towns of Silang and Carmona in Cavite
Province; the town of Lucban in Quezon Province; and the towns of Marikina,
Pasig, Taguig, Muntinlupa, and Pateros in Metro Manila.

SEC. 3. Collection of Fees. The Authority is hereby empowered to collect fees for
the use of the lake water and its tributaries for all beneficial purposes including
but not limited to fisheries, recreation, municipal, industrial, agricultural,
navigation, irrigation, and waste disposal purpose; Provided, that the rates of the
fees to be collected, and the sharing with other government agencies and political
subdivisions, if necessary, shall be subject to the approval of the President of the
Philippines upon recommendation of the Authority's Board, except fishpen fee,
which will be shared in the following manner: 20 percent of the fee shall go to the
lakeshore local governments, 5 percent shall go to the Project Development Fund
which shall he administered by a Council and the remaining 75 percent shall
constitute the share of LLDA. However, after the implementation within the three-
year period of the Laguna Lake Fishery Zoning and Management Plan, the sharing
will be modified as follows: 35 percent of the fishpen fee goes to the lakeshore
local governments, 5 percent goes to the Project Development Fund and the
remaining 60 percent shall be retained by LLDA; Provided, however, that the
share of LLDA shall form part of its corporate funds and shall not be remitted to
the National Treasury as an exception to the provisions of Presidential Decree No.
1234." (Underlining for emphasis)

It is important to note that Section 29 of Presidential Decree No. 813 defined the term "Laguna Lake"
in this manner:

"SECTION 41. Definition of Terms.

(11) Laguna Lake or Lake. Whenever Laguna Lake or lake is used in this Act, the
same shall refer to Laguna de Bay which is that area covered by the lake water
when it is at the average annual maximum lake level of elevation 12.50 meters, as
referred to a datum 10.00 meters below mean lower low water (M.L.L.W.). Lands
located at and below such elevation are public lands which form part of the bed of
said lake."

Then came Republic Act No. 7160, the Local Government Code of 1991. The municipalities in the
Laguna Lake Region interpreted the provisions of this law to mean that the newly passed law gave
municipal governments the exclusive jurisdiction to issue fishing privileges within their municipal
waters because R.A. 7160 provides:

"Sec. 149. Fishery Rentals, Fees and Charges. (a) Municipalities shall have the
exclusive authority to grant fishery privileges in the municipal waters and impose
rental fees or charges therefor in accordance with the provisions of this Section.

(b) The Sangguniang Bayan may:

(1) Grant fishing privileges to erect fish corrals, oyster, mussel or other aquatic
beds or bangus fry areas, within a definite zone of the municipal waters, as
determined by it; x x x.

(2) Grant privilege to gather, take or catch bangus fry, prawn fry or kawag-kawag
or fry of other species and fish from the municipal waters by nets, traps or other
fishing gears to marginal fishermen free from any rental fee, charges or any other
imposition whatsoever.
xxx xxx xxx

Sec. 447. Power, Duties, Functions and Compensation. xxx.

(1) xxx xxx xxx

(2) xxx xxx xxx

(XI) Subject to the provisions of Book II of this Code, grant exclusive privileges of
constructing fish corrals or fishpens, or the taking or catching of bangus fry,
prawn fry or kawag-kawag or fry of any species or fish within the municipal
waters.

xxx xxx xxx"

Municipal governments thereupon assumed the authority to issue fishing privileges and fishpen
permits. Big fishpen operators took advantage of the occasion to establish fishpens and fishcages to
the consternation of the Authority. Unregulated fishpens and fishcages, as of July, 1995, occupied
almost one-third of the entire lake water surface area, increasing the occupation drastically from
7,000 hectares in 1990 to almost 21,000 hectares in 1995. The Mayor's permit to construct fishpens
and fishcages were all undertaken in violation of the policies adopted by the Authority on fishpen
zoning and the Laguna Lake carrying capacity.

To be sure, the implementation by the lakeshore municipalities of separate independent policies in

the operation of fishpens and fishcages within their claimed territorial municipal waters in the lake
and their indiscriminate grant of fishpen permits have already saturated the lake area with fishpens,
thereby aggravating the current environmental problems and ecological stress of Laguna Lake.

In view of the foregoing circumstances, the Authority served notice to the general public that:

"In compliance with the instructions of His Excellency PRESIDENT FIDEL V.

RAMOS given on June 23, 1993 at Pila, Laguna, pursuant to Republic Act 4850 as
amended by Presidential Decree 813 and Executive Order 927 series of 1983 and
in line with the policies and programs of the Presidential Task Force on Illegal
Fishpens and Illegal Fishing, the general public is hereby notified that:

1. All fishpens, fishcages and other aqua-culture structures in the Laguna de

Bay Region, which were not registered or to which no application for
registration and/or permit has been filed with Laguna Lake Development
Authority as of March 31, 1993 are hereby declared outrightly as illegal.
 2. All fishpens, fishcages and other aqua-culture structures so declared as
illegal shall be subject to demolition which shall be undertaken by the
Presidential Task Force for Illegal Fishpen and Illegal Fishing.

3. Owners of fishpens, fishcages and other aqua-culture structures declared as

illegal shall, without prejudice to demolition of their structures be criminally
charged in accordance with Section 39A of Republic Act 4850 as amended
by P.D. 813 for violation of the same laws. Violations of these laws carries
a penalty of imprisonment of not exceeding 3 years or a fine not exceeding
Five Thousand Pesos or both at the discretion of the court.

All operators of fishpens, fishcages and other aqua-culture structures declared as

illegal in accordance with the foregoing Notice shall have one (1) month on or
before 27 October 1993 to show cause before the LLDA why their said fishpens,
fishcages and other aqua-culture structures should not be demolished/dismantled."

One month, thereafter, the Authority sent notices to the concerned owners of the illegally constructed
fishpens, fishcages and other aqua-culture structures advising them to dismantle their respective
structures within 10 days from receipt thereof, otherwise, demolition shall be effected.

Reacting thereto, the affected fishpen owners filed injunction cases against the Authority before
various regional trial courts, to wit: (a) Civil Case No. 759-B, for Prohibition, Injunction and
Damages, Regional Trial Court, Branch 70, Binangonan, Rizal, filed by Fleet Development, Inc. and
Carlito Arroyo; (b) Civil Case No. 64049, for Injunction, Regional Trial Court, Branch 162, Pasig,
filed by IRMA Fishing and Trading Corp., ARTM Fishing Corp., BDR Corp., MIRT Corp. and
TRIM Corp.; (c) Civil Case No. 566, for Declaratory Relief and Injunction, Regional Trial Court,
Branch 163, Pasig, filed by Manila Marine Life Business Resources, Inc. and Tobias Reynaldo M.
Tianco; (d) Civil Case No. 556-M, for Prohibition, Injunction and Damages, Regional Trial Court,
Branch 78, Morong, Rizal, filed by AGP Fishing Ventures, Inc.; (e) Civil Case No. 522-M, for
Prohibition, Injunction and Damages, Regional Trial Court, Branch 78, Morong, Rizal, filed by Blue
Lagoon and Alcris Chicken Growers, Inc.; (f) Civil Case No. 554, for Certiorari and Prohibition,
Regional Trial Court, Branch 79, Morong, Rizal, filed by Greenfields Ventures Industrial Corp. and
R.J. Orion Development Corp.; and (g) Civil Case No. 64124, for Injunction, Regional Trial Court,
Branch 15, Pasig, filed by SEA-MAR Trading Co., Inc. and Eastern Lagoon Fishing Corp. and
Minamar Fishing Corporation.

The Authority filed motions to dismiss the cases against it on jurisdictional grounds. The motions to
dismiss were invariably denied. Meanwhile, temporary restraining order/writs of preliminary
mandatory injunction were issued in Civil Cases Nos. 64124, 759 and 566 enjoining the Authority
from demolishing the fishpens and similar structures in question.

Hence, the herein petition for certiorari, prohibition and injunction, G.R. Nos. 120865-71, were filed
by the Authority with this court. Impleaded as parties-respondents are concerned regional trial courts
and respective private parties, and the municipalities and/or respective Mayors of Binangonan,
Taguig and Jala-jala, who issued permits for the construction and operation of fishpens in Laguna de
Bay. The Authority sought the following reliefs, viz.:

"(A) Nullification of the temporary restraining order/writs of preliminary

injunction issued in Civil Cases Nos. 64125, 759 and 566;

(B) Permanent prohibition against the regional trial courts from exercising
jurisdiction over cases involving the Authority which is a co-equal body;

(C) Judicial pronouncement that R.A. 7610 (Local Government Code of 1991) did
not repeal, alter or modify the provisions of R.A. 4850, as amended, empowering
the Authority to issue permits for fishpens, fishcages and other aqua-culture
structures in Laguna de Bay and that, the Authority the government agency vested
with exclusive authority to issue said permits."

By this Court's resolution of May 2, 1994, the Authority's consolidated petitions were referred to the
Court of Appeals.

In a Decision, dated June 29, 1995, the Court of Appeals dismissed the Authority's consolidated
petitions, the Court of Appeals holding that: (A) LLDA is not among those quasi-judicial agencies of
government whose decision or order are appealable only to the Court of Appeals; (B) the LLDA
charter does vest LLDA with quasi-judicial functions insofar as fishpens are concerned; (C) the
provisions of the LLDA charter insofar as fishing privileges in Laguna de Bay are concerned had
been repealed by the Local Government Code of 1991; (D) in view of the aforesaid repeal, the power
to grant permits devolved to and is now vested with their respective local government units
concerned.

Not satisfied with the Court of Appeals decision, the Authority has returned to this Court charging
the following errors:

"1. THE HONORABLE COURT OF APPEALS PROBABLY COMMITTED AN

ERROR WHEN IT RULED THAT THE LAGUNA LAKE DEVELOPMENT
AUTHORITY IS NOT A QUASI-JUDICIAL AGENCY.

2. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR

WHEN IT RULED THAT R.A. 4850 AS AMENDED BY P.D. 813 AND E.O. 927
SERIES OF 1983 HAS BEEN REPEALED BY REPUBLIC ACT 7160. THE SAID
RULING IS CONTRARY TO ESTABLISHED PRINCIPLES AND
JURISPRUDENCE OF STATUTORY CONSTRUCTION.
3. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR
WHEN IT RULED THAT THE POWER TO ISSUE FISHPEN PERMITS IN
LAGUNA DE BAY HAS BEEN DEVOLVED TO CONCERNED (LAKESHORE)
LOCAL GOVERNMENT UNITS."

We take a simplistic view of the controversy. Actually, the main and only issue posed is: Which
agency of the Government - the Laguna Lake Development Authority or the towns and
municipalities comprising the region - should exercise jurisdiction over the Laguna Lake and its
environs insofar as the issuance of permits for fishery privileges is concerned?

Section 4 (k) of the charter of the Laguna Lake Development Authority, Republic Act No. 4850, the
provisions of Presidential Decree No. 813, and Section 2 of Executive Order No. 927, cited above,
specifically provide that the Laguna Lake Development Authority shall have exclusive jurisdiction to
issue permits for the use of all surface water for any projects or activities in or affecting the said
region, including navigation, construction, and operation of fishpens, fish enclosures, fish corrals and
the like. On the other hand, Republic Act No. 7160, the Local Government Code of 1991, has
granted to the municipalities the exclusive authority to grant fishery privileges in municipal
waters. The Sangguniang Bayan may grant fishery privileges to erect fish corrals, oyster, mussels or
other aquatic beds or bangus fry area within a definite zone of the municipal waters.

We hold that the provisions of Republic Act No. 7160 do not necessarily repeal the aforementioned
laws creating the Laguna Lake Development Authority and granting the latter water rights authority
over Laguna de Bay and the lake region.

The Local Government Code of 1991 does not contain any express provision which categorically
expressly repeal the charter of the Authority. It has to be conceded that there was no intent on the
part of the legislature to repeal Republic Act No. 4850 and its amendments. The repeal of laws
should be made clear and expressed.

It has to be conceded that the charter of the Laguna Lake Development Authority constitutes a
special law. Republic Act No. 7160, the Local Government Code of 1991, is a general law. It is
basic in statutory construction that the enactment of a later legislation which is a general law cannot
be construed to have repealed a special law. It is a well-settled rule in this jurisdiction that "a special
statute, provided for a particular case or class of cases, is not repealed by a subsequent statute,
general in its terms, provisions and application, unless the intent to repeal or alter is manifest,
although the terms of the general law are broad enough to include the cases embraced in the special
law."[3]

Where there is a conflict between a general law and a special statute, the special statute should
prevail since it evinces the legislative intent more clearly than the general statute. The special law is
to be taken as an exception to the general law in the absence of special circumstances forcing a
contrary conclusion. This is because implied repeals are not favored and as much as possible, effect
must be given to all enactments of the legislature. A special law cannot be repealed, amended or
altered by a subsequent general law by mere implication.[4]
Thus, it has to be concluded that the charter of the Authority should prevail over the Local
Government Code of 1991.

Considering the reasons behind the establishment of the Authority, which are environmental
protection, navigational safety, and sustainable development, there is every indication that the
legislative intent is for the Authority to proceed with its mission.

We are on all fours with the manifestation of petitioner Laguna Lake Development Authority that
"Laguna de Bay, like any other single body of water has its own unique natural ecosystem. The 900
km lake surface water, the eight (8) major river tributaries and several other smaller rivers that drain
into the lake, the 2,920 km basin or watershed transcending the boundaries of Laguna and Rizal
provinces, greater portion of Metro Manila, parts of Cavite, Batangas, and Quezon provinces,
constitute one integrated delicate natural ecosystem that needs to be protected with uniform set of
policies; if we are to be serious in our aims of attaining sustainable development. This is an
exhaustible natural resource a very limited one which requires judicious management and optimal
utilization to ensure renewability and preserve its ecological integrity and balance."

"Managing the lake resources would mean the implementation of a national policy
geared towards the protection, conservation, balanced growth and sustainable
development of the region with due regard to the inter-generational use of its
resources by the inhabitants in this part of the earth. The authors of Republic Act
4850 have foreseen this need when they passed this LLDA law-the special law
designed to govern the management of our Laguna de Bay lake resources."

"Laguna de Bay therefore cannot be subjected to fragmented concepts of

management policies where lakeshore local government units exercise exclusive
dominion over specific portions of the lake water. The garbage thrown or sewage
discharged into the lake, abstraction of water therefrom or construction of fishpens
by enclosing its certain area, affect not only that specific portion but the entire 900
km of lake water. The implementation of a cohesive and integrated lake water
resource management policy, therefore, is necessary to conserve, protect and
sustainably develop Laguna de Bay."[5]

The power of the local government units to issue fishing privileges was clearly granted for revenue
purposes. This is evident from the fact that Section 149 of the New Local Government Code
empowering local governments to issue fishing permits is embodied in Chapter 2, Book II, of
Republic Act No. 7160 under the heading, "Specific Provisions On The Taxing And Other Revenue
Raising Power Of Local Government Units."

On the other hand, the power of the Authority to grant permits for fishpens, fishcages and other aqua-
culture structures is for the purpose of effectively regulating and monitoring activities in the Laguna
de Bay region (Section 2, Executive Order No. 927) and for lake quality control and management.[6] It
does partake of the nature of police power which is the most pervasive, the least limitable and the
most demanding of all State powers including the power of taxation. Accordingly, the charter of the
Authority which embodies a valid exercise of police power should prevail over the Local
Government Code of 1991 on matters affecting Laguna de Bay.

There should be no quarrel over permit fees for fishpens, fishcages and other aqua-culture structures
in the Laguna de Bay area. Section 3 of Executive Order No. 927 provides for the proper sharing of
fees collected.

In respect to the question as to whether the Authority is a quasi-judicial agency or not, it is our
holding that, considering the provisions of Section 4 of Republic Act No. 4850 and Section 4 of
Executive Order No. 927, series of 1983, and the ruling of this Court in Laguna Lake Development
Authority vs. Court of Appeals, 231 SCRA 304, 306, which we quote:

"xxx xxx xxx

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 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 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 of 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.

xxx xxx xxx

x x x. 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. 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."

there is no question that the Authority has express powers as a regulatory and quasi-judicial body in
respect to pollution cases with authority to issue a "cease and desist order" and on matters affecting
the construction of illegal fishpens, fishcages and other aqua-culture structures in Laguna de
Bay. The Authority's pretense, however, that it is co-equal to the Regional Trial Courts such that all
actions against it may only be instituted before the Court of Appeals cannot be sustained. On actions
necessitating the resolution of legal questions affecting the powers of the Authority as provided for in
its charter, the Regional Trial Courts have jurisdiction.

In view of the foregoing, this Court holds that Section 149 of Republic Act No. 7160, otherwise
known as the Local Government Code of 1991, has not repealed the provisions of the charter of the
Laguna Lake Development Authority, Republic Act No. 4850, as amended. Thus, the Authority has
the exclusive jurisdiction to issue permits for the enjoyment of fishery privileges in Laguna de Bay to
the exclusion of municipalities situated therein and the authority to exercise such powers as are by its
charter vested on it.

Removal from the Authority of the aforesaid licensing authority will render nugatory its avowed
purpose of protecting and developing the Laguna Lake Region. Otherwise stated, the abrogation of
this power would render useless its reason for being and will in effect denigrate, if not abolish, the
Laguna Lake Development Authority. This, the Local Government Code of 1991 had never intended
to do.

WHEREFORE, the petitions for prohibition, certiorari and injunction are hereby granted, insofar as
they relate to the authority of the Laguna Lake Development Authority to grant fishing privileges
within the Laguna Lake Region.

The restraining orders and/or writs of injunction issued by Judge Arturo Marave, RTC, Branch 78,
Morong, Rizal; Judge Herculano Tech, RTC, Branch 70, Binangonan, Rizal; and Judge Aurelio
Trampe, RTC, Branch 163, Pasig, Metro Manila, are hereby declared null and void and ordered set
aside for having been issued with grave abuse of discretion.

The Municipal Mayors of the Laguna Lake Region are hereby prohibited from issuing permits to
construct and operate fishpens, fishcages and other aqua-culture structures within the Laguna Lake
Region, their previous issuances being declared null and void. Thus, the fishing permits issued by
Mayors Isidro B. Pacis, Municipality of Binangonan; Ricardo D. Papa, Municipality of Taguig; and
Walfredo M. de la Vega, Municipality of Jala-jala, specifically, are likewise declared null and void
and ordered cancelled.

The fishpens, fishcages and other aqua-culture structures put up by operators by virtue of permits
issued by Municipal Mayors within the Laguna Lake Region, specifically, permits issued to Fleet
Development, Inc. and Carlito Arroyo; Manila Marine Life Business Resources, Inc., represented by,
Mr. Tobias Reynald M. Tiangco; Greenfield Ventures Industrial Development Corporation and R. J.
Orion Development Corporation; IRMA Fishing And Trading Corporation, ARTM Fishing
Corporation, BDR Corporation, Mirt Corporation and Trim Corporation; Blue Lagoon Fishing
Corporation and ALCRIS Chicken Growers, Inc.; AGP Fish Ventures, Inc., represented by its
President Alfonso Puyat; SEA MAR Trading Co., Inc., Eastern Lagoon Fishing Corporation, and
MINAMAR Fishing Corporation, are hereby declared illegal structures subject to demolition by the
Laguna Lake Development Authority.

SO ORDERED.
 EN BANC

[G.R. No. L-23825. December 24, 1965.]

EMMANUEL PELAEZ, Petitioner, v. THE AUDITOR GENERAL, Respondent.

Zulueta, Gonzales, Paculdo & Associates for Petitioner.

Solicitor General for Respondent.

SYLLABUS

1. ADMINISTRATIVE LAW; POWER OF PRESIDENT TO CREATE MUNICIPALITIES. Since January 1,

1960, when Republic Act No. 2370 became effective, barrios may "not be created or their boundaries
altered nor their names changed" except by Act of Congress or of the corresponding provincial board
"upon petition of a majority of the voters in the areas affected" and the "recommendation of the
council of the municipality or municipalities in which the proposed barrio is situated." This statutory
denial of the presidential authority to create a new barrio implies a negation of the bigger power to
create municipalities, each of which consists of several barrios.

2. ID.; ID.; NATURE OF POWER TO CREATE MUNICIPALITIES. Whereas the power to fix a common
boundary, in order to avoid or settle conflicts of jurisdiction between adjoining municipalities, may
partake of an administrative nature involving, as it does, the adoption of means and ways to carry
into effect the law creating said municipalities - the authority to create municipal corporations is
essentially legislative in nature.

3. ID.; ID.; ID.; REQUISITES FOR VALID DELEGATION OF POWER. Although Congress may
delegate to another branch of the Government the power to fill in the details in the execution,
enforcement or administration of a law, it is essential that said law: (a) be complete in itself, setting
forth therein the policy to be executed, carried out or implemented by the delegate; and (b) fix a
standard - the limits of which are sufficiently determinate or determinable to which the delegate must
conform in the performance of his functions.

4. ID.; ID.; ID.; ID.; REQUIREMENTS OF DUE DELEGATION OF POWER NOT MET BY SECTION 68 OF
REVISED ADMINISTRATIVE CODE. Section 68 of the Revised Administrative Code, insofar as it
grants to the President the power to create municipalities, does not meet the well-settled
requirements for a valid delegation of the power to fix the details in the enforcement of a law. It does
not enunciate any policy to be carried out or implemented by the President.

5. ID.; ID.; ID.; ID.; ID.; ABDICATION OF POWERS OF CONGRESS IN FAVOR OF THE EXECUTIVE.
If the validity of said delegation of powers, made in Section 68 of the Revised Administrative Code,
were upheld, there would no longer be any legal impediment to a statutory grant of authority to the
President to do anything which, in his opinion, may be required by public welfare or public interest.
Such grant of authority would be a virtual abdication of the powers of Congress in favor of the
Executive, and would bring about a total collapse of the democratic system established by the
Constitution.

6. ID.; ID.; ID.; NATURE OF POWERS DEALT WITH IN SECTION 68 OF THE REVISED
ADMINISTRATIVE CODE. It is true that in Calalang v. Williams (70 Phil., 726) and People v.
Rosenthal (68 Phil., 328), this Court had upheld "public welfare" and "public interest," respectively, as
sufficient standards, for a valid delegation of the authority to execute the law. But the doctrine laid
down in these cases must be construed in relation to the specific facts and issues involved therein,
outside of which they do not constitute precedents and have no binding effect. Both cases involved
grants to administrative officers of powers related to the exercise of their administrative functions,
calling for the determination of questions of fact. Such is not the nature of the powers dealt with in
Section 68 of the Revised Administrative Code. The creation of municipalities being essentially and
eminently legislative in character, the question whether or not "public interest" demands the exercise
of such power is not one of fact. It is purely a legislative question (Carolina- Virginia Coastal Highway
v. Coastal Turnpike Authority, 74 S.E. 21., 310-313, 315-318), or a political question (Udall v. Severn,
79 p. 2d., 347-349).

7. ID.; ID., ID.; ID.; PROOF THAT ISSUANCE OF EXECUTIVE ORDERS IN QUESTION ENTAILS
EXERCISE OF PURELY LEGISLATIVE FUNCTIONS. The fact that Executive Orders Nos. 93 to 121,
124 and 126 to 129, creating thirty-three municipalities, were issued after the legislative bills for the
creation of the said municipalities had failed to pass Congress, is the best proof that their issuance
entails the exercise of purely legislative functions.

8. ID.; ID.; ID.; POWER OF CONTROL OVER LOCAL GOVERNMENTS. The power of control under
Section 10(a) of Article X of the Constitution implies the right of the President to interfere in the
exercise of such discretion as may be vested by law in the officers of the executive departments,
bureaus or offices of the national government, as well as to act in lieu of such officers. This power is
denied by the Constitution to the Executive, insofar as local governments are concerned. With respect
to the latter, the fundamental law permits him to wield no more authority than that of checking
whether said local governments or the officers thereof perform their duties as provided by statutory
enactments. Hence, the President cannot interfere with local governments, so long as the same or its
officers act within the scope of their authority. He may not, for instance, suspend an elective official of
a regular municipality or take any disciplinary action against him, except on appeal from a decision of
the corresponding provincial board. If, on the other hand, the President could create a municipality, he
could, in effect, remove any of its officials, by creating a new municipality and including therein the
barrio in which the official concerned resides, for his office would thereby become vacant (Section
2179, Revised Administrative Code). Thus, by merely brandishing the power to create a new
municipality, without actually creating it, he could compel local officials to submit to his dictation,
thereby, in effect, exercising over them the power of control denied to him by the Constitution.
9. ID.; ID.; ID.; ID.; SECTION 68, REVISED ADMINISTRATIVE CODE, REPEALED BY THE
CONSTITUTION. The power of control of the President over executive departments, bureaus or
offices under Section 10 (a) of Article X of the Constitution implies no more than the authority to
assume directly the functions thereof or to interfere in the exercise of discretion by its officials.
Manifestly, such control does not include the authority either to abolish an executive department or
bureau, or to create a new one. As a consequence, the alleged power of the President to create
municipal corporations would necessarily connote the exercise by him of an authority even greater
than that of control which he has over the executive departments, bureaus or offices. Instead of giving
the President less power over local governments than that vested in him over the executive
departments, bureaus or offices, it reverses the process and does the exact opposite, by conferring
upon him more power over municipal corporations than that which he has over executive
departments, bureaus or offices. Even if, therefore, it did not entail an undue delegation of legislative
powers, as it certainly does, said Section 68, as part of the Revised Administrative Code, approved on
March 10, 1917, must be deemed repealed by the subsequent adoption of the Constitution in 1935,
which is utterly incompatible and inconsistent with said statutory enactment. (De los Santos v.
Mallare, 87 Phil., 289, 298-299.)

10. ID. ID.; ID.; MUNICIPAL OFFICIALS CONCERNED DULY REPRESENTED IN PRESENT CASE. It is
contented that not all the proper parties have been impleaded in the present case. Suffice it to say
that the records do not show, and the parties do not claim, that the officers of any of the
municipalities concerned have been appointed or elected and have assumed office. At any rate, the
Solicitor-General, who has appeared on behalf of respondent Auditor General, is the officer authorized
by law "to act and represent the Government of the Philippines, its officers and agents, in any official
investigation, proceeding or matter requiring the services of a lawyer" (Section 1661, Revised
Administrative Code), and, in connection with the creation of the municipalities involved in this case,
which involves a political, not proprietary functions, said local officials, if any, are mere agents or
representatives of the national government. Their interest in the case has accordingly been duly
represented. (Mangubat v. Osmea Jr., G.R. No. L-12837, April 30, 1959; City of Cebu v. Judge Piccio,
G.R. Nos. L-13012 & L-14876, December 31, 1960.)

11. ID.; ID.; ACTION NOT PREMATURE. The present action cannot be said to be premature simply
because respondent Auditor General has not yet acted on any of the executive orders in question and
has not intimated how he would act in connection therewith. It is a matter of common knowledge that
the President has for many years issued executive orders creating municipal corporations and that the
same have been organized and are in actual operation, thus indicating, without peradventure of
doubt, that the expenditures incidental thereto have been sanctioned, approved or passed in audit by
the General Auditing Office and its officials. There is no reason to believe that respondent would adopt
a different policy as regards the new municipalities involved in this case, in the absence of an
allegation to such effect, and none has been made by him.

DECISION
 CONCEPCION, J.:

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

Petitioner alleges that said executive orders are null and void, upon the ground that said Section 68
has been impliedly repealed by Republic Act 2370 and constitutes an undue delegation of legislative
power. Respondent maintains the contrary view and avers that the present action is premature and
that not all proper parties referring to the officials of the new political subdivisions in question
have been impleaded. Subsequently, the mayors of several municipalities adversely affected by the
aforementioned executive orders because the latter have taken away from the former the barrios
composing the new political subdivision intervened in the case. Moreover, Attorneys Enrique M.
Fernando and Emma Quisumbing-Fernando were allowed to and did appear as amici curiae.

The third paragraph of Section 3 of Republic Act No. 2370, reads: jgc:chanrobles .com.p h

"Barrios shall not be created or their boundaries altered nor their names changed except under the
provisions of this Act or by Act of Congress.

Pursuant to the first two (2) paragraphs of the same Section 3: jgc:chanro bles.c om.ph

"All barrios existing at the time of the passage of this Act shall come under the provisions hereof.

"Upon petition of a majority of the voters in the areas affected, a new barrio may be created or the
name of an existing one may be changed by the provincial board of the province, upon
recommendation of the council of the municipality or municipalities in which the proposed barrio is
situated. The recommendation of the municipal council shall be embodied in a resolution approved by
at least two-thirds of the entire membership of the said council: Provided, however, That no new
barrio may be created if its population is less than five hundred persons." c ralaw virtua1aw l ibra ry

Hence, since January 1, 1960, when Republic Act No. 2370 became effective, barrios may "not be
created or their boundaries altered nor their names changed" except by Act of Congress or of the
corresponding provincial board "upon petition of a majority of the voters in the areas affected" and the
"recommendation of the council of the municipality or municipalities in which the proposed barrio is
situated." Petitioner argues, accordingly: "If the President, under this new law, cannot even create a
barrio, can he create a municipality which is composed of several barrios, since barrios are units of
municipalities?"

Respondent answers in the affirmative, upon the theory that a new municipality can be created
without creating new barrios, such as, by placing old barrios under the jurisdiction of the new
municipality. This theory overlooks, however, the main import of the petitioners argument, which is
that the statutory denial of the presidential authority to create a new barrio implies a negation of the
bigger power to create municipalities, each of which consists of several barrios. The cogency and force
of this argument is too obvious to be denied or even questioned. Founded upon logic and experience,
it cannot be offset except by a clear manifestation of the intent of Congress to the contrary, and no
such manifestation, subsequent to the passage of Republic Act No. 2370. has been brought to our
attention.

Moreover, section 68 of the Revised Administrative Code, upon which the disputed executive orders
are based, provides: jgc:chanrobles. com.ph

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

"Upon the changing of the limits of political divisions in pursuance of the foregoing authority, an
equitable distribution of the funds and obligations of the divisions thereby affected shall be made in
such manner as may be recommended by the (Insular Auditor) Auditor General and approved by the
(Governor-General) President of the Philippines." cralaw vi rtua1aw l ibra ry

Respondent alleges that the power of the President to create municipalities under this section does not
amount to an undue delegation of legislative power, relying upon Municipality of Cardona v.
Municipality of Binagonan (36 Phil. 547), which, he claims, has settled it. Such claim is untenable, for
said case involved, not the creation of a new municipality, but a mere transfer of territory from an
already existing municipality (Cardona) to another municipality (Binagonan), likewise, existing at the
time of and prior to said transfer (See Govt of the P.I. ex rel. Municipality of Cardona v. Municipality
of Binagonan [34 Phil. 518, 519-520], in consequence of the fixing and definition, pursuant to Act
No. 1748, of the common boundaries of two municipalities.
It is obvious, however, that, whereas the power to fix such common boundary, in order to avoid or
settle conflicts of jurisdiction between adjoining municipalities, may partake of an administrative
nature involving, as it does, the adoption of means and ways to carry into effect the law creating
said municipalities the authority to create municipal corporations is essentially legislative in nature.
In the language of other courts, it is "strictly a legislative function" (State ex rel. Higgins v. Aicklen,
119 S. 425, January 2, 1959) or "solely and exclusively the exercise of legislative power" (Udall v.
Severn, May 29, 1938, 79 P. 2d. 347-349). As the Supreme Court of Washington has put it (Territory
ex rel. Kelly v. Stewart, February 13, 1890, 23 Pac. 405, 409), "municipal corporations are purely the
creatures of statutes." cralaw vi rtua 1aw lib rary

Although 1 Congress may delegate to another branch of the government the power to fill in the details
in the execution, enforcement or administration of a law, it is essential, to forestall a violation of the
principle of separation of powers, that said law: (a) be complete in itself it must set forth therein
the policy to be executed, carried out or implemented by the delegate 2 and (b) fix a standard
the limits of which are sufficiently determinate or determinable to which the delegate must conform
in the performance of his functions. 2 Indeed, without a statutory declaration of policy, the delegate
would, in effect, make or formulate such policy, which is the essence of every law; and, without the
aforementioned standard, there would be no means to determine, with reasonable certainty, whether
the delegate has acted within or beyond the scope of his authority. 2 Hence, he could thereby
arrogate upon himself the power, not only to make the law, but, also and this is worse to
unmake it, by adopting measures inconsistent with the end sought to be attained by the Act of
Congress, thus nullifying the principle of separation of powers and the system of checks and balances,
and, consequently undermining the very foundation of our Republican system.

Section 68 of the Revised Administrative Code does not meet these well settled requirements for a
valid delegation of the power to fix the details in the enforcement of a law. It does not enunciate any
policy to be carried out or implemented by the President. Neither does it give a standard sufficiently
precise to avoid the evil effects above referred to. In this connection, we do not overlook the fact that,
under the last clause of the first sentence of Section 68, the President: jgc:chanroble s.com.p h

". . . may change the seat of the government within any subdivision to such place therein as the public
welfare may require." c ralaw virtua1aw l ibra ry

It is apparent, however, from the language of this clause, that the phrase "as the public welfare may
require" qualifies, not the clauses preceding the one just quoted, but only the place to which the seat
of the government may be transferred. This fact becomes more apparent when we consider that said
Section 68 was originally Section 1 of Act No. 1748, 3 which provided, that "whenever in the judgment
of the Governor-General the public welfare requires, he may, by executive order", effect the changes
enumerated therein (as well as in said Section 68), including the change of the seat of the
government "to such place . . . as the public interest requires." The opening statement of said Section
1 of Act No. 1748 which was not included in Section 68 of the Revised Administrative Code
governed the time at which, or the conditions under which, the powers therein conferred could be
exercised; whereas the last part of the first sentence of said section referred exclusively to the place
to which the seat of the government was to be transferred.

At any rate, the conclusion would be the same, insofar as the case at bar is concerned, even if we
assumed that the phrase "as the public welfare may require", in said Section 68, qualifies all other
clauses thereof. It is true that in Calalang v. William (70 Phil. 726) and People v. Rosenthal (68 Phil.
328), this Court had upheld "public welfare" and "public interest", respectively, as sufficient standards
for a valid delegation of the authority to execute the law. But, the doctrine laid down in these cases
as all judicial pronouncements must be construed in relation to the specific facts and issues
involved therein, outside of which they do not constitute precedents and have no binding effect. 4 The
law construed in the Calalang case conferred upon the Director of Public Works, with the approval of
the Secretary of Public Works and Communications, the power to issue rules and regulations to
promote safe transit upon national roads and streets. Upon the other hand, the Rosenthal case
referred to the authority of the Insular Treasurer, under Act No. 2581, to issue and cancel certificates
or permits for the sale of speculative securities. Both cases involved grants to administrative officers
of powers related to the exercise of their administrative functions, calling for the determination of
questions of fact.

Such is not the nature of the powers dealt with in section 68. As above indicated, the creation of
municipalities, is not an administrative function, but one which is essentially and eminently legislative
in character. The question whether or not "public interest" demands the exercise of such power is not
one of fact. It is "purely a legislative question" (Carolina-Virginia Coastal Highway v. Coastal Turnpike
Authority, 74 S.E. 2d., 310-313, 315-318), or a political question (Udall v. Severn, 79 P. 2d. 347-
349). As the Supreme Court of Wisconsin has aptly characterized it, "the question as to whether
incorporation is for the best interest of the community in any case is emphatically a question of public
policy and statecraft" (In re Village of North Milwaukee, 67 N. W. 1033, 1035-1037).

For this reason, courts of justice have annulled, as constituting undue delegation of legislative powers,
state laws granting the judicial department the power to determine whether certain territories should
be annexed to a particular municipality (Udall v. Severn, supra, 358-359); or vesting in a Commission
the right to determine the plan and frame of government of proposed villages and what functions shall
be exercised by the same, although the powers and functions of the village are specifically limited by
statute (In re Municipal Charters, 86 Atl. 307-308); or conferring upon courts the authority to declare
a given town or village incorporated, and designate its meter and bounds, upon petition of a majority
of the taxable inhabitants thereof, setting forth the area desired to be included in such village
(Territory ex rel Kelly v. Stewart, 23 Pac. 405-409); or authorizing the territory of a town, containing
a given area and population, to be incorporated as a town, on certain steps being taken by the
inhabitants thereof and on certain determination by a court and subsequent vote of the inhabitants in
favor thereof, insofar as the court is allowed to determine whether the lands embraced in the petition
"ought justly" to be included in the village, and whether the interest of the inhabitants will be
promoted by such incorporation, and to enlarge and diminish the boundaries of the proposed village
"as justice may require" (In re Villages of North Milwaukee, 67 N.W. 1035- 1037); or creating a
Municipal Board of Control which shall determine whether or not the laying out, construction or
operation of a toll road is in the "public interest" and whether the requirements of the law had been
complied with, in which case the Board shall enter an order creating a municipal corporation and fixing
the name of the same (Carolina-Virginia Coastal Highway v. Coastal Turnpike Authority, 74 S. E. 2d.
310).

Insofar as the validity of a delegation of power by Congress to the President is concerned, the case of
Schechter Poultry Corporation v. U. S. (79 L. ed. 1570) is quite relevant to the one at bar. The
Schechter case involved the constitutionality of Section 3 of the National Industrial Recovery Act
authorizing the President of the United States to approve "codes of fair competition" submitted to him
by one or more trade or industrial associations or corporations which "impose no inequitable
restrictions on admission to membership therein and are truly representative," provided that such
codes are not designed "to promote monopolies or to eliminate or oppress small enterprises and will
not operate to discriminate against them, and will tend to effectuate the policy" of said Act. The
Federal Supreme Court held: jgc:chanro bles. com.ph

"To summarize and conclude upon this point: Sec. 3 of the Recovery Act is without precedent. It
supplies no standards for any trade, industry or activity. It does not undertake to prescribe rules of
conduct to be applied to particular states of fact determined by appropriate administrative procedure.
Instead of prescribing rules of conduct, it authorizes the making of codes to prescribe them. For that
legislative undertaking, Sec. 3 sets up no standards, aside from the statement of the general aims of
rehabilitation, correction and expansion described in Sec. 1. In view of the scope of that broad
declaration, and of the nature of the few restrictions that are imposed, the discretion of the President
in approving or prescribing codes, and thus enacting laws for the government of trade and industry
throughout the country, is virtually unfettered. We think that the code-making authority thus
conferred is an unconstitutional delegation of legislative power." cra law virt ua1aw li bra ry

If the term "unfair competition" is so broad as to vest in the President a discretion that is "virtually
unfettered", and, consequently, tantamount to a delegation of legislative power, it is obvious that
"public welfare", which has even a broader connotation, leads to the same result. In fact, if the validity
of the delegation of powers made in Section 68 were upheld, there would no longer be any legal
impediment to a statutory grant of authority to the President to do anything which, in his opinion, may
be required by public welfare or public interest. Such grant of authority would be a virtual abdication
of the powers of Congress in favor of the Executive, and would bring about a total collapse of the
democratic system established by our Constitution, which it is the special duty and privilege of this
Court to uphold.

It may not be amiss to note that the executive orders in question were issued after the legislative bills
for the creation of the municipalities involved in this case had failed to pass Congress. A better proof
of the fact that the issuance of said executive orders entails the exercise of purely legislative functions
can hardly be given.

Again, Section 10 (1) of Article VII of our fundamental law ordains: jgc:chan robles. com.ph
"The President shall have control of all executive departments, bureaus or offices, exercise general
supervision over all local governments as may be provided by law, and take care that the laws be
faithfully executed."c ralaw virtua1aw l ibra ry

The power of control under this provision implies the right of the President to interfere in the exercise
of such discretion as may be vested by law in the officers of the executive departments, bureaus, or
offices of the national government, as well as to act in lieu of such officers. This power is denied by
the Constitution to the Executive, insofar as local governments are concerned. With respect to the
latter, the fundamental law permits him to wield no more authority than that of checking whether said
local governments or the officers thereof perform their duties as provided by statutory enactments.
Hence, the President cannot interfere with local governments, so long as the same or its officers act
within the scope of their authority. He may not enact an ordinance which the municipal council has
failed or refused to pass, even if it had thereby violated a duty imposed thereto by law, although he
may see to it that the corresponding provincial officials take appropriate disciplinary action therefor.
Neither may he veto, set aside or annul an ordinance passed by said council within the scope of its
jurisdiction, no matter how patently unwise it may be. He may not even suspend an elective official of
a regular municipality or take any disciplinary action against him, except on appeal from a decision of
the corresponding provincial board. 5

Upon the other hand, if the President could create a municipality, he could, in effect, remove any of its
officials, by creating a new municipality and including therein the barrio in which the official concerned
resides, for his office would thereby become vacant. 6 Thus, by merely brandishing the power to
create a new municipality (if he had it), without actually creating it, he could compel local officials to
submit to his dictation, thereby, in effect, exercising over them the power of control denied to him by
the Constitution.

Then, also, the power of control of the President over executive departments, bureaus or offices
implies no more than the authority to assume directly the functions thereof or to interfere in the
exercise of discretion by its officials. Manifestly, such control does not include the authority either to
abolish an executive department or bureaus, or to create a new one. As a consequence, the alleged
power of the President to create municipal corporations would necessarily connote the exercise by him
of an authority even greater than that of control which he has over the executive departments,
bureaus or offices. In other words, Section 68 of the Revised Administrative Code does not merely fail
to comply with the constitutional mandate above quoted. Instead of giving the President less power
over local governments than that vested in him over the executive departments, bureaus or offices, it
reverses the process and does the exact opposite, by conferring upon him more power over municipal
corporations than that which he has over said executive departments, bureaus or offices.

In short, even if it did not entail an undue delegation of legislative powers, as it certainly does, said
Section 68, as part of the Revised Administrative Code, approved on March 10, 1917, must be
deemed repealed by the subsequent adoption of the Constitution, in 1935, which is utterly
incompatible and inconsistent with said statutory enactment. 7
There are only two (2) other points left for consideration, namely, respondents claim (a) that "not all
the proper parties" referring to the officers of the newly created municipalities "have been
impleaded in this case", and (b) that "the present petition is premature." cralaw vi rtua 1aw lib rary

As regards the first point, suffice it to say that the records do not show, and the parties do not claim,
that the officers of any of said municipalities have been appointed or elected and assumed office. At
any rate, the Solicitor-General, who has appeared on behalf of respondent Auditor General, is the
officer authorized by law "to act and represent the Government of the Philippines, its offices and
agents, in any official investigation, proceeding or matter requiring the services of a lawyer" (Section
1661, Revised Administrative Code), and, in connection with the creation of the aforementioned
municipalities, which involves a political, not proprietary, function, said local officials, if any, are mere
agents or representatives of the national government. Their interest in the case at bar has,
accordingly, been, in effect, duly represented. 8

With respect to the second point, respondent alleges that he has not as yet acted on any of the
executive order in question and has not intimated how he would act in connection therewith. It is
however, a matter of common, public knowledge, subject to judicial cognizance, that the President
has, for many years, issued executive orders creating municipal corporations and that the same have
been organized and in actual operation, thus indicating, without peradventure of doubt, that the
expenditures incidental thereto have been sanctioned, approved or passed in audit by the General
Auditing Office and its officials. There is no reason to believe, therefore, that respondent would adopt
a different policy as regards the new municipalities involved in this case, in the absence of an
allegation to such effect, and none has been made by him.

WHEREFORE the Executive Orders in question are hereby declared null and void ab initio and the
respondent permanently restrained from passing in audit any expenditure of public funds in
implementation of said Executive Orders or any disbursement by the municipalities above referred to.
It is so ordered.

Bengzon, C.J., Bautista Angelo, Reyes, J.B.L., Barrera and Dizon, JJ., concur.

Zalvidar, J., took no part.

Separate Opinions

BENGZON, J.P., J., concurring and dissenting: chanrob 1es vi rtua l 1aw lib ra ry

A sign of progress in a developing nation is the rise of new municipalities. Fostering their rapid growth
has long been the aim pursued by all three branches of our Government.

So it was that the Governor-General during the time of the Jones Law was given authority by the
legislature (Act No. 1748) to act upon certain details with respect to said local governments, such as
fixing of boundaries, subdivisions and mergers. And the Supreme Court, within the framework of the
Jones Law, ruled in 1917 that the execution or implementation of such details, did not entail
abdication of legislative power (Government v. Municipality of Binangonan, 34 Phil. 518; Municipality
of Cardona v. Municipality of Binangonan, 36 Phil. 547). Subsequently, Act No. 1748s aforesaid
statutory authorization was embodied in Section 68 of the Revised Administrative Code. And Chief
Executives since then up to the present continued to avail of said provision, time and again invoking it
to issue executive orders providing for the creation of municipalities.

From September 4, 1964 to October 29, 1964 the President of the Philippines issued executive orders
to create thirty-three municipalities pursuant to Section 68 of the Revised Administrative Code. Public
funds thereby stood to be disbursed in implementation of said executive orders.

Suing as private citizen and taxpayer, Vice-President Emmanuel Pelaez filed in this Court a petition for
prohibition with preliminary injunction against the Auditor General. It seeks to restrain the respondent
or any person acting in his behalf, from passing in audit any expenditure of public funds in
implementation of the executive orders aforementioned.

Petitioner contends that the President has no power to create a municipality by executive order. It is
argued that Section 68 of the Revised Administrative Code of 1917, so far as it purports to grant any
such power, is invalid or, at least, already repealed in the light of the Philippine Constitution and
Republic Act 2370 (The Barrio Charter).

Section 68 is again reproduced hereunder for convenience: jgc:chanrob les.co m.ph

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

"Upon the changing of the limits of political divisions in pursuance of the foregoing authority, an
equitable distribution of the funds and obligations of the division thereby affected shall be made in
such manner as may be recommended by the [Insular Auditor] Auditor General and approved by the
[Governor-General] President of the Philippines." cralaw vi rtua1aw l ibra ry

From such wording I believe that power to create a municipality is included: to "separate any political
division other than a province, into such portions as may be required, merge any of such subdivisions
or portions with another, name any new subdivision so created." The issue, however, is whether the
Legislature can validly delegate to the Executive such power.

The power to create a municipality is legislative in character. American authorities have therefore
favored the view that it cannot be delegated; that what is delegable is not the power to create
municipalities but only the power to determine the existence of facts under which creation of a
municipality will result (37 Am. Jur. 628).

The test is said to lie in whether the statute allows any discretion on the delegate as to whether the
municipal corporation should be created. If so, there is an attempted delegation of legislative power
and the statute is invalid (Ibid). Now Section 68 no doubt gives the President such discretion, since it
says that the President "may by executive order" exercise the powers therein granted. Furthermore,
Section 5 of the same Code states: jgc:chanroble s.com.p h

"SEC. 5. Exercise of administrative discretion. The exercise of the permissive powers of all
executive or administrative officers and bodies is based upon discretion, and when such officer or body
is given authority to do any act but not required to do such act, the doing of the same shall be
dependent on a sound discretion to be exercised for the good of the service and benefit of the public,
whether so expressed in the statute giving the authority or not." cralaw virtua1aw li bra ry

Under the prevailing rule in the United States and Section 68 is of American origin the provision
in question would be an invalid attempt to delegate purely legislative powers, contrary to the principle
of separation of powers.

It is very pertinent that Section 68 should be considered with the stream of history in mind. A proper
knowledge of the past is the only adequate background for the present. Section 68 was adopted half a
century ago. Political change, two world wars, the recognition of our independence and rightful place
in the family of nations, have since taken place. In 1917 the Philippines had for its Organic Act the
Jones Law. And under the set-up ordained therein no strict separation of powers was adhered to.
Consequently, Section 68 was not constitutionally objectionable at the time of its enactment.

The advent of the Philippine Constitution in 1935 however altered the situation. For not only was
separation of power strictly ordained, except only in specific instances therein provided, but the power
of the Chief Executive over local governments suffered an explicit reduction.

Formerly, Section 21 of the Jones Law provided that the Governor-General "shall have general
supervision and control of all the departments and bureaus of the government in the Philippine
Islands." Now Section 10 (1), Article VII of the Philippine Constitution provides: "The President shall
have control of all the executive departments, bureaus, or offices, exercise general supervision over
all local governments as may be provided by law, and take care that the laws be faithfully executed." c ralaw

virtua 1aw lib rary

In short, the power of control over local governments had now been taken away from the Chief
Executive. Again, to fully understand the significance of this provision, one must trace its development
and growth.

As early as April 7, 1900 President McKinley of the United States, in his Instructions to the Second
Philippine Commission, laid down the policy that our municipal governments should be "subject to the
least degree of supervision and control" on the part of the national government. Said supervision and
control was to be confined within the "narrowest limits" or so much only as "may be necessary to
secure and enforce faithful and efficient administration by local officers." And the national government
"shall have no direct administration except of matters of purely general concern." (See Hebron v.
Reyes, L-9158, July 28, 1958.)

All this had one aim, to enable the Filipinos to acquire experience in the art of self-government, with
the end in view of later allowing them to assume complete management and control of the
administration of their local affairs. Such aim is the policy now embodied in Section 10(1), Article VII
of the Constitution (Rodriguez v. Montinola, 50 O. G., 4820).

It is the evident decree of the Constitution, therefore, that the President shall have no power of
control over local governments. Accordingly, Congress cannot by law grant him such power (Hebron v.
Reyes, supra). And any such power formerly granted under the Jones Law thereby-became
unavoidably inconsistent with the Philippine Constitution.

It remains to examine the relation of the power to create and the power to control local governments.
Said relationship has already been passed upon by this Court in Hebron v. Reyes, supra. In said case,
it was ruled that the power to control is an incident of the power to create or abolish municipalities.
Respondents view, therefore, that creating municipalities and controlling their local governments are
"two worlds apart", is untenable. And since, as stated, the power to control local governments can no
longer be conferred on or exercised by the President, it follows a fortiori that the power to create
them, all the more cannot be so conferred or exercised.

I am impelled to conclude, therefore, that Section 10(1) of Article VII of the Constitution has repealed
Section 68 of the Revised Administrative Code as far as the latter empowers the President to create
local governments. Repeal by the Constitution of prior statutes inconsistent with it has already been
sustained in De los Santos v. Mallare, 87 Phil. 289. And it was there held that such repeal differs from
a declaration of unconstitutionality of a posterior legislation, so much so that only a majority vote of
the Court is needed to sustain a finding of repeal.

Since the Constitution repealed Section 68 as far back as 1935, it is academic to ask whether Republic
Act 2370 likewise has provisions in conflict with Section 68 so as to repeal it. Suffice it to state, at any
rate, that statutory prohibition on the President from creating a barrio does not, in my opinion,
warrant the inference of statutory prohibition for creating a municipality. For although municipalities
consist of barrios, there is nothing in the statute that would preclude creation of new municipalities
out of pre-existing barrios.

It is not contrary to the logic of local autonomy to be able to create larger political units and unable to
create smaller ones. For as long ago observed in President McKinleys Instructions to the Second
Philippine Commission, greater autonomy is to be imparted to the smaller of the two political units.
The smaller the unit of local government, the lesser is the need for the national governments
intervention in its political affairs. Furthermore, for practical reasons, local autonomy cannot be given
from the top downwards. The national government, in such a case, could still exercise power over the
supposedly autonomous unit, e.g., municipalities, by exercising it over the smaller units that comprise
them, e.g., the barrios. A realistic program of decentralization therefore calls for autonomy from the
bottom upwards, so that it is not surprising for Congress to deny the national government some power
over barrios without denying it over municipalities. For this reason, I disagree with the majority view
that because the President could not create a barrio under Republic Act 2370, a fortiori he cannot
create a municipality.

It is my view, therefore, that the Constitution, and not Republic Act 2370, repealed Section 68 of the
Revised Administrative Codes provision giving the President authority to create local governments.
And for this reason I agree with the ruling in the majority opinion that the executive orders in question
are null and void.

In thus ruling, the Court is but sustaining the fulfillment of our historic desire to be free and
independent under a republican form of government, and exercising a function derived from the very
sovereignty that it upholds.

Makalintal and Regala, JJ., concur with the opinion of Justice J.P. Bengzon.
 EN BANC

[G.R. No. 93252. August 5, 1991.]

RODOLFO T. GANZON, Petitioner, v. THE HONORABLE COURT OF APPEALS, and LUIS T.

SANTOS, Respondents.

[G.R. No. 93746. August 5, 1991.]

MARY ANN RIVERA ARTIEDA, Petitioner, v. 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, v. 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.

SYLLABUS

1. CONSTITUTIONAL LAW; 1987 CONSTITUTION; LOCAL AUTONOMY, NATURE OF; LOCAL OFFICIALS
REMAIN ACCOUNTABLE TO CENTRAL GOVERNMENT. 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. Autonomy does not
contemplate making mini-states out of local government units. 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 suggests is to wean local
government units from overdependence 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, a local tax law, income distribution legislation, and a national
representation law, and measures designed to realize autonomy at the local level. It is also
noteworthy that in spite of autonomy, the Constitution places the local governments 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 suggests that Congress may
exercise removal powers, and as the existing Local Government Code has done, delegate its exercise
to the President.

2. ID.; ID.; ID.; NEW CONSTITUTION DOES NOT PRESCRIBE FEDERALISM. As the Constitution
itself declares, local autonomy means "a more responsive and accountable local government structure
instituted through a system of decentralization." The Constitution, as we observed, does nothing more
that to break up the monopoly of the national government over the affairs of local governments and
as put by political adherents, to "liberate the local governments from the imperialism of Manila."
Autonomy, however, is not meant to end the relation of partnership and interdependence between the
central administration and local government units, or otherwise, to usher in a regime of federalism.
The Charter has not taken such a radical step. Local governments, under the Constitution, are subject
to regulation, however limited, and for no other purpose than precisely, albeit paradoxically, to
enhance self-government.

3. ID.; ID.; ID.; CHANGED SUPERVISION CLAUSE DOES NOT EXEMPT LOCAL GOVERNMENTS FROM
LEGISLATIVE REGULATION. The 1987 Constitution provides in Art. X, Sec. 4 that" [T]he President
of the Philippines shall exercise general supervision over local governments." It modifies a counterpart
provision appearing in the 1935 Constitution, Art. VII, Sec. 10(1), stating that" [T]he President shall .
. . exercise general supervision over all local governments as may be provided by law." 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. The change
in constitutional language did not exempt local governments from legislative regulation provided
regulation is consistent with the fundamental premise of autonomy.

4. ID.; ID.; ID.; NATIONAL AUTHORITY CAN DISCIPLINE LOCAL OFFICIALS. 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. In the case at bar, the Secretary of
Local Government, the Presidents alter ego, in consonance with the specific legal provisions of Batas
Blg. 337, the existing Local Government Code, can suspend petitioner Mayor of Iloilo City (G.R. Nos.
93252 and 95245) and petitioner member of the Sangguniang Panglunsod (G.R. No. 93746).

5. ID.; ID.; ID.; ID.; "SUPERVISION" NOT INCOMPATIBLE WITH DISCIPLINARY AUTHORITY.
"Supervision" is not incompatible with disciplinary authority. As this Court held in Ganzon v. Cayanan,
104 Phil. 484, "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." cralaw virtua1aw l ibra ry
6. ID.; ID.; ID.; ID.; POWER TO SUSPEND LOCAL OFFICIALS MUST NOT BE EXERCISED
OPPRESSIVELY. While the respondent Secretary of Interior, as alter ego of the President, under the
existing Local Government Code, has the Power to suspend the petitioner Iloilo City Mayor, such
power cannot be exercised oppressively. Ten administrative cases have been successively filed against
the City Mayor. The Mayor has been made to serve a total of 120 days of suspension for the first two
cases and the respondent Secretary has issued another order preventively suspending the former for
another 60 days, the third time in twenty months. We are allowing the Mayor to suffer the duration of
his third suspension. Insofar as the seven remaining charges are concerned, we are urging the
Department of Local Government, upon finality of this decision, to undertake steps to expedite the
same, subject to the Mayors 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.

DECISION

SARMIENTO, J.:

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. chanrob lesvi rtua llawli bra ry

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 Pea 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: chanrob 1es vi rtual 1aw lib rary

x x x

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 O. 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 qualification are best suited and assigned her to e
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 complainants duties and
functions, has been detailed to take her place. The petitioners 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 duty elected Vice Mayor of Iloilo City and complainants
Rolando Dabao, Dan Dalido, German Gonzales, Larry Ong and Eduardo Pea Redondo 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 his fully-armed security men, forcefully drove them away from Plaza Libertad.
Councilor Ong denounced the petitioners 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 charge} 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 set for hearing. The opinion of the Court of
Appeals also set forth the succeeding events: chanro b1es vi rtua l 1aw lib ra ry

x x x

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 petitioners 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, petitioners 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 Manila, 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, petitioners counsel, Atty. Onginal 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 was 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. cralawna d

On December 14, 1988, petitioners 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 petitioners 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 (G.R. 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 Ganzons)
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 life his suspension since it
had come ninety days prior to an election (the barangay elections of November 14, 1988), 11
notwithstanding 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 Ganzons 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 Ganzons 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-sos 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-sos 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 Ganzons 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 Ganzons 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 Presidents
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 "as may be provided by law," 21 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: chanrob 1es vi rtual 1aw lib rary

SECTION 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: chanrob1es v irt ual 1aw li bra ry

SECTION 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. chan roble s law lib rary

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: chanrob1e s virtual 1aw l ibra ry

SECTION 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 within the said period. If preventive suspension has been imposed prior
to the aforesaid period, the preventive suspension shall be lifted. 24

SECTION 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 cralaw:red

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: c hanrob1es vi rt ual 1aw li bra ry

SECTION 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: chan rob1e s virtual 1aw lib rary

x x x

It is true that in the case of Mondano v. Silvosa, 51 Off. Gaz., No. 6 p. 2884, this Court had occasion
to discuss this 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

x x x

"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 Courts 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: chanrob1es vi rt ual 1aw li bra ry

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: chanro b1es vi rt ual 1aw li bra ry

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 exist with respect to municipal officers. . . . 46

In Mondano, the Court held: chanrob 1es vi rtua l 1aw lib ra ry

. . . 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 mal
administration 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 effecting 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(1), Article VII, of the Constitution." 47

x x x

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 in 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 Presidents 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, 50 Commissioner 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
interdependence between the central administration and local government units, or otherwise, to
usher in a regime of federalism. The Charter has not taken such a radical step. Local governments,
under the Constitution, are subject to regulation, however limited, and for no other purpose than
precisely, albeit paradoxically, to enhance self-government.

As we observed in one case, 54 decentralization means devolution of national administration but

not power to the local levels. Thus: cha nrob 1es vi rtua l 1aw lib rary

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
contituency. 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 facie findings. The Court is not of course tolerating misfeasance in
public office (assuming that Mayor Ganzon is guilty of misfeasance) but it is certainly another question
to make him serve 600 days of suspension, which is effectively, to suspend him out of office. As we
held: 56

2. Petitioner is a duly elected municipal mayor of Lianga, Surigao del Sur. His term of office does not
expire until 1986. Were it not for this information and the suspension decreed by the Sandiganbayan
according to the Anti-Graft and Corrupt Practices Act, he would have been all this while in the full
discharge of his functions as such municipal mayor. He was elected precisely to do so. As of October
26, 1983, he has been unable to. It is a basic assumption of the electoral process implicit in the right
of suffrage that the people are entitled to the services of elective officials of their choice. For
misfeasance or malfeasance, any of them could, of course, be proceeded against administratively or,
as in this instance, criminally. In either case, his 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 bonds 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. ch anro bles vi rtua l lawli bra ry

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 on
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 Mayors 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 sever pertaining
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 Ganzons 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 resum, the Court is laying down the following rules: chan rob1es v irt ual 1aw l ibra ry

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: chanrob1e s virtual 1aw lib rary

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 fled 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. c hanro blesvi rt uallawl ibra ry

The sixty-day suspension against the petitioner, Mary Ann Rivera Artieda, is AFFIRMED. No costs.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla,
Bidin, Grio-Aquino, Medialdea, Regalado and Davide, Jr., JJ., concur.
 EN BANC

[G.R. No. 112497. August 4, 1994.]

HON. FRANKLIN M. DRILON, in his capacity as SECRETARY OF JUSTICE, Petitioner, v.

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 ng Manila.

L.A. Maglaya for Petron Corporation.

DECISION

CRUZ, J.:

The principal issue in this case is the constitutionality of Section 187 of the Local Government Code
reading as follows: chanrob1e s virtual 1aw l ibra ry

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. chan robles lawlib rary : rednad

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
Secretarys 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 has indeed not been observed. chanroblesv irt ual|awlib rary

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, 4 even as the accused in a criminal action has the right
to question in his defense the co institutionality 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. chanro bles.c om:cra law:red

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 requipped majority may the Court
pronounce, in the discharge of the duty it cannot escape, that the challenged act must be struck
down. chan roble s.com : vi rtual law lib rary

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 is
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. chanroble svi rtual lawlib rary: red

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 is accordance with law,
that is, with the prescribed procedure for the enactment of tax ordinances and the grant of powers to
the city government under the Local Government Code. As we see it, that was an act not of control
but of mere supervision. chanro bles law lib rary : rednad

An officer in control lays down the rules in the doing of an act. It they are not followed, he may, in his
discretion, order the act undone or re-done by his subordinate or he may even decide to do it himself.
Supervision does not cover such authority. The supervisor or superintendent merely sees to it that the
rules are followed, but he himself does not lay down such rules, nor does he have the discretion to
modify or replace them. If the rules are not observed, he may order the work done or re-done but
only to conform to the prescribed rules. He may not prescribe his own manner for the doing of the act.
He has no judgment on this matter except to see to it that the rules are followed. In the opinion of the
Court, Secretary Drilon did precisely this, and no more nor less than this, and so performed an act not
of control but of mere supervision.

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. chanrobles vi rtua l lawlib ra ry
Significantly, a rule similar to Section 187 appeared in the Local Autonomy Act, which provided in its
Section 2 as follows: chanrob1es v irt ual 1aw l ibra ry

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 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 reimposed 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 wit, the inclusion
therein of certain ultra vires provisions and non-compliance with the prescribed procedure in its
enactment. These grounds affected the legality, not the wisdom or reasonableness of the tax
measure. chan robles law lib rary : re d

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. chanro bles. com.ph : vi rtua l law lib rary

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 his 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. c han robles. com.ph : vi rtua l law lib ra ry

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. chanrob lesvi rtualaw lib rary

SO ORDERED.

Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Quiason, Puno,
Vitug, Kapunan and Mendoza, JJ., concur.
 EN BANC

[G.R. No. 91649. May 14, 1991.]

ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, SOCRATES MARANAN AND LORENZO

SANCHEZ, Petitioners, v. PHILIPPINE AMUSEMENTS AND GAMING CORPORATION
(PAGCOR), Respondent.

H .B . Basco & Associates, for Petitioners.

Valmonte Law Offices collaborating counsel, for Petitioners.

Aquirre, Laborte and Capule for respondent PAGCOR.

SYLLABUS

1. STATUTORY CONSTRUCTION; PRESUMPTION OF VALIDITY OF STATUTE; MUST BE INDULGED IN

FAVOR OF ITS CONSTITUTIONALITY. As We enter upon the task of passing on the validity of an act
of a co-equal and coordinate branch of the government We need not be reminded of the time-honored
principle, deeply ingrained in our jurisprudence, that a statute is presumed to be valid. Every
presumption must be indulged in favor of its constitutionality. This is not to say that We approach Our
task with diffidence or timidity. Where it is clear that the legislature or the executive for that matter,
has over-stepped the limits of its authority under the constitution, We should not hesitate to wield the
axe and let it fall heavily, as fall it must, on the offending statute (Lozano v. Martinez, supra). In
Victoriano v. Elizalde Rope Workers Union, et al, 59 SCRA 54, the Court thru Mr. Justice Zaldivar
underscored the ." . . thoroughly established principle which must be followed in all cases where
questions of constitutionality as obtain in the instant cases are involved. All presumptions are indulged
in favor of constitutionality; one who attacks a statute alleging unconstitutionality must prove its
invalidity beyond a reasonable doubt; that a law may work hardship does not render it
unconstitutional; that if any reasonable basis may be conceived which supports the statute, it will be
upheld and the challenger must negate all possible basis; that the courts are not concerned with the
wisdom, justice, policy or expediency of a statute and that a liberal interpretation of the constitution in
favor of the constitutionality of legislation should be adopted." (Danner v. Hass, 194 N.W. 2nd 534,
539, Spurbeck v. Statton, 106 N.W. 2nd 660, 663; 59 SCRA 66; see also e.g. Salas v. Jarencio, 46
SCRA 734, 739 [1970]; Peralta v. Commission on Elections, 82 SCRA 30, 55 [1978]; and Heirs of
Ordona v. Reyes, 125 SCRA 220, 241-242 [1983] cited in Citizens Alliance for Consumer Protection v.
Energy Regulatory Board, 162 SCRA 521, 540). chanro blesvi rt uallawl ibra ry

2. ID.; IN NULLIFYING A LAW, IT MUST BE SHOWN THAT THERE IS A CLEAR AND UNEQUIVOCAL
BREACH OF THE CONSTITUTION. Every law has in its favor the presumption of constitutionality (Yu
Cong Eng v. Trinidad, 47 Phil. 387; Salas v. Jarencio, 48 SCRA 734; Peralta v. Comelec, 82 SCRA 30;
Abbas v. Comelec, 179 SCRA 287). Therefore, for PD 1869 to be nullified, it must be shown that there
is a clear and unequivocal breach of the Constitution, not merely a doubtful and equivocal one. In
other words, the grounds for nullity must be clear and beyond reasonable doubt. (Peralta v. Comelec,
supra) Those who petition this Court to declare a law, or parts thereof, unconstitutional must clearly
establish the basis for such a declaration. Otherwise, their petition must fail. Based on the grounds
raised by petitioners to challenge the constitutionality of P.D. 1869, the Court finds that petitioners
have failed to overcome the presumption. The dismissal of this petition is therefore, inevitable. But as
to whether P.D. 1869 remains a wise legislation considering the issues of "morality, monopoly, trend
to free enterprise, privatization as well as the state principles on social justice, role of youth and
educational values" being raised, is up for Congress to determine.

3. POLITICAL LAW; JUDICIAL DEPARTMENT; TECHNICALITIES OF PROCEDURE MAYBE BRUSHED

ASIDE FOR THE PROPER EXERCISE OF ITS POWERS. Considering however the importance to the
public of the case at bar, and in keeping with the Courts duty, under the 1987 Constitution, to
determine whether or not the other branches of government have kept themselves within the limits of
the Constitution and the laws and that they have not abused the discretion given to them, the Court
has brushed aside technicalities of procedure and has taken cognizance of this petition. (Kapatiran ng
mga Naglilingkod sa Pamahalaan ng Pilipinas Inc. v. Tan, 163 SCRA 371) "With particular regard to
the requirement of proper party as applied in the cases before us, We hold that the same is satisfied
by the petitioners and intervenors because each of them has sustained or is in danger of sustaining an
immediate injury as a result of the acts or measures complained of And even if, strictly speaking they
are not covered by the definition, it is still within the wide discretion of the Court to waive the
requirement and so remove the impediment to its addressing and resolving the serious constitutional
questions raised. "In the first Emergency Powers Cases, ordinary citizens and taxpayers were allowed
to question the constitutionality of several executive orders issued by President Quirino although they
were involving only an indirect and general interest shared in common with the public. The Court
dismissed the objection that they were not proper parties and ruled that the transcendental
importance to the public of these cases demands that they be settled promptly and definitely,
brushing aside, if we must technicalities of procedure. We have since then applied the exception in
many other cases." (Association of Small Landowners in the Philippines, Inc. v. Sec. of Agrarian
Reform, 175 SCRA 343).

4. ID.; ID.; NO POWER TO SETTLE POLICY ISSUES. Anent petitioners claim that PD 1869 is
contrary to the "avowed trend of the Cory Government away from monopolies and crony economy and
toward free enterprise and privatization" suffice it to state that this is not a ground for this Court to
nullify P.D. 1869. If, indeed, PD 1869 runs counter to the governments policies then it is for the
Executive Department to recommend to Congress its repeal or amendment. "The judiciary does not
settle policy issues. The Court can only declare what the law is and not what the law should be. Under
our system of government, policy issues are within the domain of the political branches of government
and of the people themselves as the repository of all state power." (Valmonte v. Belmonte, Jr., 170
SCRA 256.) cha nro bles law l ibra ry

5. ID.; CONCEPT OF POLICE POWER; CONSTRUED. The concept of police power is well-established
in this jurisdiction. It has been defined as the "state authority to enact legislation that may interfere
with personal liberty or property in order to promote the general welfare." (Edu v. Ericta, 35 SCRA
481, 487) As defined, it consists of (1) an imposition or restraint upon liberty or property, (2) in order
to foster the common good. It is not capable of an exact definition but has been, purposely, veiled in
general terms to underscore its all-comprehensive embrace. (Philippine Association of Service
Exporters, Inc. v. Drilon, 163 SCRA 386). Its scope, ever-expanding to meet the exigencies of the
times, even to anticipate the future where it could be done, provides enough room for an efficient and
flexible response to conditions and circumstances thus assuming the greatest benefits. (Edu v. Ericta,
supra). It finds no specific Constitutional grant for the plain reason that it does not owe its origin to
the charter. Along with the taxing power and eminent domain, it is inborn in the very fact of statehood
and sovereignty. It is a fundamental attribute of government that has enabled it to perform the most
vital functions of governance. Marshall, to whom the expression has been credited, refers to it
succinctly as the plenary power of the state "to govern its citizens." (Tribe, American Constitutional
Law, 323, 1978). The police power of the State is a power co-extensive with self-protection. and is
most aptly termed the "law of overwhelming necessity." (Rubi v. Provincial Board of Mindoro, 39 Phil.
660, 708) It is "the most essential, insistent, and illimitable of powers." (Smith Bell & Co. v. National,
40 Phil. 136) It is a dynamic force that enables the state to meet the exigencies of the winds of
change.

6. PHILIPPINE AMUSEMENT AND GAMING CORPORATION (P.D. NO. 1869); PURPOSE FOR ITS
CREATION. P.D. 1869 was enacted pursuant to the policy of the government to "regulate and
centralize thru an appropriate institution all games of chance authorized by existing franchise or
permitted by law" (1st whereas clause, PD 1869). As was subsequently proved, regulating and
centralizing gambling operations in one corporate entity the PAGCOR, was beneficial not just to the
Government but to society in general. It is a reliable source of much needed revenue for the cash
strapped Government. It provided funds for social impact projects and subjected gambling to "close
scrutiny, regulation, supervision and control of the Government" (4th Whereas Clause, PD 1869). With
the creation of PAGCOR and the direct intervention of the Government, the evil practices and
corruptions that go with gambling will be minimized if not totally eradicated. Public welfare, then, lies
at the bottom of the enactment of PD 1896.

7. ID.; DOES NOT CONSTITUTE A WAIVER OF THE RIGHT OF LOCAL GOVERNMENT TO IMPOSE TAXES
AND LOCAL FEES; REASONS THEREFOR. Petitioners contend that P.D. 1869 constitutes a waiver of
the right of the City of Manila to impose taxes and legal fees; that the exemption clause in P.D. 1869
is violative of the principle of local autonomy. They must be referring to Section 13 par. (2) of P.D.
1869 which exempts PAGCOR, as the franchise holder from paying any "tax of any kind or form,
income or otherwise, as well as fees, charges or levies of whatever nature, whether National or Local."
Their contention stated hereinabove is without merit for the following reasons: (a) The City of Manila,
being a mere Municipal corporation has no inherent right to impose taxes (Icard v. City of Baguio, 83
Phil. 870; City of Iloilo v. Villanueva, 105 Phil. 337; Santos v. Municipality of Caloocan, 7 SCRA 643).
Thus, "the Charter or statute must plainly show an intent to confer that power or the municipality
cannot assume it" (Medina v. City of Baguio, 12 SCRA 62). Its "power to tax" therefore must always
yield to a legislative act which is superior having been passed upon by the state itself which has the
"inherent power to tax" (b) The Charter of the City of Manila is subject to control by Congress. It
should be stressed that "municipal corporations are mere creatures of Congress" (Unson v. Lacson,
G.R. No. 7909, January 18, 1957) which has the power to "create and abolish municipal corporations"
due to its "general legislative powers" (Asuncion v. Yriantes, 28 Phil. 67; Merdanillo v. Orandia, 5
SCRA 541). Congress, therefore, has the power of control over Local governments (Hebron v. Reyes,
G.R. No. 9124, July 2, 1950). And if Congress can grant the City of Manila the power to tax certain
matters, it can also provide for exemptions or even take back the power. (c) The City of Manilas
power to impose license fees on gambling, has long been revoked. As early as 1975, the power of
local governments to regulate gambling thru the grant of "franchise, licenses or permits" was
withdrawn by P.D. No. 771 and was vested exclusively on the National Government. Therefore, only
the National Government has the power to issue "licenses or permits" for the operation of gambling.
Necessarily, the power to demand or collect license fees which is a consequence of the issuance of
"licenses or permits" is no longer vested in the City of Manila. (d) Local governments have no power to
tax instrumentalities of the National Government. PAGCOR is a government owned or controlled
corporation with an original charter, PD 1869. All of its shares of stocks are owned by the National
Government. In addition to its corporate powers (Sec. 3, Title II, PD 1869) it also exercises regulatory
powers. chanrob lesvi rtua llawlib ra ry:red

8. ID.; EXEMPT FROM LOCAL TAXES; REASONS THEREOF. PAGCOR has a dual role, to operate and
to regulate gambling casinos. The latter role is governmental, which places it in the category of an
agency or instrumentality of the Government. Being an instrumentality of the Government, PAGCOR
should be and actually is exempt from local taxes. Otherwise, its operation might be burdened,
impeded or subjected to control by a mere Local government. "The states have no power by taxation
or otherwise, to retard impede, burden or in any manner control the operation of constitutional laws
enacted by Congress to carry into execution the powers vested in the federal government." (MC
Culloch v. Marland, 4 Wheat 316, 4 L Ed. 579). This doctrine emanates from the "supremacy" of the
National Government over local governments. "Justice Holmes, speaking for the Supreme Court, made
reference to the entire absence of power on the part of the States to touch, in that way (taxation) at
least, the instrumentalities of the United States (Johnson v. Maryland, 254 US 51) and it can be
agreed that no state or political subdivision can regulate a federal instrumentality in such a way as to
prevent it from consummating its federal responsibilities, or even to seriously burden it in the
accomplishment of them." (Antieau, Modern Constitutional Law, Vol. 2, p. 140, Emphasis supplied)
Otherwise, mere creatures of the State can defeat National policies thru extermination of what local
authorities may perceive to be undesirable activates or enterprise using the power to tax as "a tool for
regulation" (U.S. v. Sanchez, 340 US 42). The power to tax which was called by Justice Marshall as
the "power to destroy" (Mc Culloch v. Maryland, supra) cannot be allowed to defeat an instrumentality
or creation of the very entity which has the inherent power to wield it.

9. ID.; NOT A VIOLATION OF THE LOCAL AUTONOMY CLAUSE IN THE CONSTITUTION. The power of
local government to "impose taxes and fees" is always subject to "limitations" which Congress may
provide by law. Since PD 1869 remains an "operative" law until "amended, repealed or revoked" (Sec.
3, Art. XVIII, 1987 Constitution), its "exemption clause" remains as an exception to the exercise of the
power of local governments to impose taxes and fees. It cannot therefore be violative but rather is
consistent with the principle of local autonomy. Besides, the principle of local autonomy under the
1987 Constitution simply means "decentralization" (III Records of the 1987 Constitutional
Commission, pp. 436-436, as cited in Bernas, The Constitution of the Republic of the Philippines, Vol.
II, First Ed., 1988, p. 374). It does not make local governments sovereign within the state or an
"imperium in imperio." "Local Government has been described as a political subdivision of a nation or
state which is constituted by law and has substantial control of local affairs. In a unitary system of
government, such as the government under the Philippine Constitution, local governments can only be
an intra sovereign subdivision of one sovereign nation, it cannot be an imperium in imperio. Local
government in such a system can only mean a measure of decentralization of the function of
government. (Emphasis supplied) As to what state powers should be "decentralized" and what may be
delegated to local government units remains a matter of policy, which concerns wisdom. It is therefore
a political question. (Citizens Alliance for Consumer Protection v. Energy Regulatory Board, 162 SCRA
539). What is settled is that the matter of regulating, taxing or otherwise dealing with gambling is a
State concern and hence, it is the sole prerogative of the State to retain it or delegate it to local
governments.

10. ID.; NOT A VIOLATION OF EQUAL PROTECTION CLAUSE. Petitioners next contend that P.D.
1869 violates the equal protection clause of the Constitution, because "it legalized PAGCOR
conducted gambling, while most gambling are outlawed together with prostitution, drug trafficking and
other vices" We, likewise, find no valid ground to sustain this contention. The petitioners posture
ignores the well-accepted meaning of the clause "equal protection of the laws." The clause does not
preclude classification of individuals who may be accorded different treatment under the law as long
as the classification is not unreasonable or arbitrary (Itchong v. Hernandez, 101 Phil. 1155). A law
does not have to operate in equal force on all persons or things to be conformable to Article III,
Section 1 of the Constitution (DECS v. San Diego, G.R. No. 89572, December 21, 1989). The "equal
protection clause" does not prohibit the Legislature from establishing classes of individuals or objects
upon which different rules shall operate (Laurel v. Misa, 43 O.G. 2847). The Constitution does not
require situations which are different in fact or opinion to be treated in law as though they were the
same (Gomez v. Palomar, 25 SCRA 827). Just how P.D. 1869 in legalizing gambling conducted by
PAGCOR is violative of the equal protection is not clearly explained in the petition. The mere fact that
some gambling activities like cockfighting (P.D. 449) horse racing (R.A. 306 as amended by RA 983),
sweepstakes, lotteries and races (RA 1169 as amended by B.P. 42) are legalized under certain
conditions, while others are prohibited, does not render the applicable laws, P.D. 1869 for one,
unconstitutional. "If the law presumably hits the evil where it is most felt, it is not to be overthrown
because there are other instances to which it might have been applied." (Gomez v. Palomar, 25 SCRA
827) "The equal protection clause of the 14th Amendment does not mean that all occupations called
by the same name must be treated the same way; the state may do what it can to prevent which is
deemed as evil and stop short of those cases in which harm to the few concerned is not less than the
harm to the public that would insure if the rule laid down were made mathematically exact."
(Dominican Hotel v. Arizana, 249 US 2651)

11. ID.; PRESUMED VALID AND CONSTITUTIONAL. As this Court held in Citizens Alliance for
Consumer Protection v. Energy regulatory Board, 162 SCRA 521 "Presidential Decree No. 1956, as
amended by Executive Order No. 137 has, in any case, in its favor the presumption of validity and
constitutionality which petitioners Valmonte and the KMU have not overturned. Petitioners have not
undertaken to identity the provisions in the Constitution which they claim to have been violated by
that statute. This Court, however, is not compelled to speculate and to imagine how the assailed
legislation may possibly offend some provision of the Constitution. The Court notes, further, in this
respect that petitioners have in the main put in question the wisdom, justice and expediency of the
establishment of the OPSF, issues which are not properly addressed to this Court and which this Court
may not constitutionally pass upon. Those issues should be addressed rather to the political
departments of government: the President and the Congress." c hanroblesv irt uallawl ibra ry:red

PADILLA, J., concurring: cha nro b1es vi rtua l 1aw libra ry

1. POLITICAL LAW; LEGISLATIVE AND EXECUTIVE DEPARTMENT; VESTED WITH POWER TO DECIDE
STATE POLICY. J. Padilla concur in the result of the learned decision penned by my brother Mr.
Justice Paras. This means that I agree with the decision insofar as it holds that the prohibition, control,
and regulation of the entire activity known as gambling properly pertain to "state policy." It is,
therefore, the political departments of government, namely, the legislative and the executive that
should decide on what government should do in the entire area of gambling, and assume full
responsibility to the people for such policy. The courts, as the decision states, cannot inquire into the
wisdom, morality or expediency of policies adopted by the political departments of government in
areas which fall within their authority, except only when such policies pose a clear and present danger
to the life, liberty or property of the individual. This case does not involve such a factual situation.

2. ID.; LEGISLATIVE DEPARTMENT; MUST OUTLAW ALL FORMS OF GAMBLING, AS A FUNDAMENTAL

STATE OF POLICY; REASON THEREFOR. J. Padilla hasten to make of record that I do not subscribe
to gambling in any form. It demeans the human personality, destroys self-confidence and eviscerates
ones self-respect, which in the long run will corrode whatever is left of the Filipino moral character.
Gambling has wrecked and will continue to wreck families and homes; it is an antithesis to individual
reliance and reliability as well as personal industry which are the touchstones of real economic
progress and national development. Gambling is reprehensible whether maintained by government or
privatized. The revenues realized by the government out of "legalized" gambling will, in the long run,
be more than offset and negated by the irreparable damage to the peoples moral values. Also, the
moral standing of the government in its repeated avowals against "illegal gambling" is fatally flawed
and becomes untenable when it itself engages in the very activity it seeks to eradicate. One can go
through the Courts decision today and mentally replace the activity referred to therein as gambling,
which is legal only because it is authorized by law and run by the government, with the activity known
as prostitution. Would prostitution be any less reprehensible were it to be authorized by law,
franchised, and "regulated" by the government, in return for the substantial revenues it would yield
the government to carry out its laudable projects, such as infrastructure and social amelioration? The
question, I believe, answers itself. I submit that the sooner the legislative department outlaws all
forms of gambling, as a fundamental state policy, and the sooner the executive implements such
policy, the better it will be for the nation.
 DECISION

PARAS, J.:

A TV ad proudly announces: jgc:chan roble s.com.p h

"The new PAGCOR responding through responsible gaming." cralaw vi rt ua1aw lib rary

But the petitioners think otherwise, that is why, they filed the instant petition seeking to annul the
Philippine Amusement and Gaming Corporation (PAGCOR) Charter PD 1869, because it is allegedly
contrary to morals, public policy and order, and because

"A. It constitutes a waiver of a right prejudicial to a third person with a right recognized by law. It
waived the Manila City governments right to impose taxes and license fees, which is recognized by
law;

"B. For the same reason stated in the immediately preceding paragraph, the law has intruded into the
local governments right to impose local taxes and license fees. This, in contravention of the
constitutionally enshrined principle of local autonomy;

"C. It violates the equal protection clause of the constitution in that it legalizes PAGCOR conducted
gambling, while most other forms of gambling are outlawed, together with prostitution, drug
trafficking and other vices;

"D. It violates the avowed trend of the Cory government away from monopolistic and crony economy,
and toward free enterprise and privatization." (p. 2, Amended Petition; p. 7, Rollo)

In their Second Amended Petition, petitioners also claim that PD 1869 is contrary to the declared
national policy of the "new restored democracy" and the peoples will as expressed in the 1987
Constitution. The decree is said to have a "gambling objective" and therefore is contrary to Sections
11, 12 and 13 of Article II, Sec. 1 of Article VIII and Section 3 (2) of Article XIV, of the present
Constitution (p. 3, Second Amended Petition; p. 21, Rollo). chanrob lesvi rtua llawli bra ry

The procedural issue is whether petitioners, as taxpayers and practicing lawyers (petitioner Basco
being also the Chairman of the Committee on Laws of the City Council of Manila), can question and
seek the annulment of PD 1869 on the alleged grounds mentioned above.

The Philippine Amusements and Gaming Corporation (PAGCOR) was created by virtue of P.D. 1067-A
dated January 1, 1977 and was granted a franchise under P.D. 1067-B also dated January 1, 1977 "to
establish, operate and maintain gambling casinos on land or water within the territorial jurisdiction of
the Philippines." Its operation was originally conducted in the well known floating casino "Philippine
Tourist." The operation was considered a success for it proved to be a potential source of revenue to
fund infrastructure and socioeconomic projects, thus, P.D. 1399 was passed on June 2, 1978 for
PAGCOR to fully attain this objective.

Subsequently, on July 11, 1983, PAGCOR was created under P.D. 1869 to enable the Government to
regulate and centralize all games of chance authorized by existing franchise or permitted by law,
under the following declared policy

"Section 1. Declaration of Policy. It is hereby declared to be the policy of the State to centralize and
integrate all games of chance not heretofore authorized by existing franchises or permitted by law in
order to attain the following objectives: jgc:chanroble s.com. ph

"(a) To centralize and integrate the right and authority to operate and conduct games of chance into
one corporate entity to be controlled, administered and supervised by the Government.

"(b) To establish and operate clubs and casinos, for amusement and recreation, including sports
gaming pools, (basketball, football, lotteries, etc.) and such other forms of amusement and recreation
including games of chance, which may be allowed by law within the territorial jurisdiction of the
Philippines and which will: (1) generate sources of additional revenue to fund infrastructure and socio-
civic projects, such as flood control programs, beautification, sewerage and sewage projects, Tulungan
ng Bayan Centers, Nutritional Programs Population Control and such other essential public services;
(2) create recreation and integrated facilities which will expand and improve the countrys existing
tourist attractions; and (3) minimize, if not totally eradicate, all the evils, malpractices and corruptions
that are normally prevalent on the conduct and operation of gambling clubs and casinos without direct
government involvement." (Section 1, P.D. 1869)

To attain these objectives PAGCOR is given territorial jurisdiction all over the Philippines. Under its
Charters repealing clause, all laws, decrees, executive orders, rules and regulations, inconsistent
therewith, are accordingly repealed, amended or modified.

It is reported that PAGCOR is the third largest source of government revenue, next to the Bureau of
Internal Revenue and the Bureau of Customs. In 1989 alone, PAGCOR earned P3.43 Billion, and
directly remitted to the National Government a total of P2.5 Billion in form of franchise tax,
governments income share, the Presidents Social Fund and Host Cities share. In addition, PAGCOR
sponsored other socio-cultural and charitable projects on its own or in cooperation with various
governmental agencies, and other private associations and organizations. In its 3 1/2 years of
operation under the present administration, PAGCOR remitted to the government a total of P6.2
Billion. As of December 31, 1989, PAGCOR was employing 4,494 employees in its nine (9) casinos
nationwide, directly supporting the livelihood of Four Thousand Four Hundred Ninety-Four (4,494)
families.
chanrobles v irt ualawli bra ry chan rob les.com: chan roble s.com.p h

But the petitioners, are questioning the validity of P.D. No. 1869. They allege that the same is "null
and void" for being "contrary to morals, public policy and public order," monopolistic and tends toward
"crony economy", and is violative of the equal protection clause and local autonomy as well as for
running counter to the state policies enunciated in Sections 11 (Personal Dignity and Human Rights),
12 (Family) and 13 (Role of Youth) of Article II, Section 1 (Social Justice) of Article XIII and Section 2
(Educational Values) of Article XIV of the 1987 Constitution.

This challenge to P.D. No. 1869 deserves a searching and thorough scrutiny and the most deliberate
consideration by the Court, involving as it does the exercise of what has been described as "the
highest and most delicate function which belongs to the judicial department of the government."
(State v. Manuel, 20 N.C. 144; Lozano v. Martinez, 146 SCRA 323).

As We enter upon the task of passing on the validity of an act of a co-equal and coordinate branch of
the government We need not be reminded of the time-honored principle, deeply ingrained in our
jurisprudence, that a statute is presumed to be valid. Every presumption must be indulged in favor of
its constitutionality. This is not to say that We approach Our task with diffidence or timidity. Where it
is clear that the legislature or the executive for that matter, has over-stepped the limits of its
authority under the constitution, We should not hesitate to wield the axe and let it fall heavily, as fall
it must, on the offending statute (Lozano v. Martinez, supra).

In Victoriano v. Elizalde Rope Workers Union, et al, 59 SCRA 54, the Court thru Mr. Justice Zaldivar
underscored the

". . . thoroughly established principle which must be followed in all cases where questions of
constitutionality as obtain in the instant cases are involved. All presumptions are indulged in favor of
constitutionality; one who attacks a statute alleging unconstitutionality must prove its invalidity
beyond a reasonable doubt; that a law may work hardship does not render it unconstitutional; that if
any reasonable basis may be conceived which supports the statute, it will be upheld and the
challenger must negate all possible basis; that the courts are not concerned with the wisdom, justice,
policy or expediency of a statute and that a liberal interpretation of the constitution in favor of the
constitutionality of legislation should be adopted." (Danner v. Hass, 194 N.W. 2nd 534, 539, Spurbeck
v. Statton, 106 N.W. 2nd 660, 663; 59 SCRA 66; see also e.g. Salas v. Jarencio, 46 SCRA 734, 739
[1970]; Peralta v. Commission on Elections, 82 SCRA 30, 55 [1978]; and Heirs of Ordona v. Reyes,
125 SCRA 220, 241-242 [1983] cited in Citizens Alliance for Consumer Protection v. Energy
Regulatory Board, 162 SCRA 521, 540).

Of course, there is first, the procedural issue. The respondents are questioning the legal personality of
petitioners to file the instant petition.

Considering however the importance to the public of the case at bar, and in keeping with the Courts
duty, under the 1987 Constitution, to determine whether or not the other branches of government
have kept themselves within the limits of the Constitution and the laws and that they have not abused
the discretion given to them, the Court has brushed aside technicalities of procedure and has taken
cognizance of this petition. (Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas Inc. v. Tan,
163 SCRA 371) chanro blesvi rt ual|awlib rary
"With particular regard to the requirement of proper party as applied in the cases before us, We hold
that the same is satisfied by the petitioners and intervenors because each of them has sustained or is
in danger of sustaining an immediate injury as a result of the acts or measures complained of And
even if, strictly speaking they are not covered by the definition, it is still within the wide discretion of
the Court to waive the requirement and so remove the impediment to its addressing and resolving the
serious constitutional questions raised.

"In the first Emergency Powers Cases, ordinary citizens and taxpayers were allowed to question the
constitutionality of several executive orders issued by President Quirino although they were involving
only an indirect and general interest shared in common with the public. The Court dismissed the
objection that they were not proper parties and ruled that the transcendental importance to the public
of these cases demands that they be settled promptly and definitely, brushing aside, if we must
technicalities of procedure. We have since then applied the exception in many other cases."
(Association of Small Landowners in the Philippines, Inc. v. Sec. of Agrarian Reform, 175 SCRA 343).

Having disposed of the procedural issue, We will now discuss the substantive issues raised.

Gambling in all its forms, unless allowed by law, is generally prohibited. But the prohibition of
gambling does not mean that the Government cannot regulate it in the exercise of its police power.

The concept of police power is well-established in this jurisdiction. It has been defined as the "state
authority to enact legislation that may interfere with personal liberty or property in order to promote
the general welfare." (Edu v. Ericta, 35 SCRA 481, 487) As defined, it consists of (1) an imposition or
restraint upon liberty or property, (2) in order to foster the common good. It is not capable of an
exact definition but has been, purposely, veiled in general terms to underscore its all-comprehensive
embrace. (Philippine Association of Service Exporters, Inc. v. Drilon, 163 SCRA 386).

Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future where it
could be done, provides enough room for an efficient and flexible response to conditions and
circumstances thus assuming the greatest benefits. (Edu v. Ericta, supra).

It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the
charter. Along with the taxing power and eminent domain, it is inborn in the very fact of statehood
and sovereignty. It is a fundamental attribute of government that has enabled it to perform the most
vital functions of governance. Marshall, to whom the expression has been credited, refers to it
succinctly as the plenary power of the state "to govern its citizens." (Tribe, American Constitutional
Law, 323, 1978). The police power of the State is a power co-extensive with self-protection. and is
most aptly termed the "law of overwhelming necessity." (Rubi v. Provincial Board of Mindoro, 39 Phil.
660, 708) It is "the most essential, insistent, and illimitable of powers." (Smith Bell & Co. v. National,
40 Phil. 136) It is a dynamic force that enables the state to meet the exigencies of the winds of
change.
What was the reason behind the enactment of P.D. 1869?

P.D. 1869 was enacted pursuant to the policy of the government to "regulate and centralize thru an
appropriate institution all games of chance authorized by existing franchise or permitted by law" (1st
whereas clause, PD 1869). As was subsequently proved, regulating and centralizing gambling
operations in one corporate entity the PAGCOR, was beneficial not just to the Government but to
society in general. It is a reliable source of much needed revenue for the cash strapped Government.
It provided funds for social impact projects and subjected gambling to "close scrutiny, regulation,
supervision and control of the Government" (4th Whereas Clause, PD 1869). With the creation of
PAGCOR and the direct intervention of the Government, the evil practices and corruptions that go with
gambling will be minimized if not totally eradicated. Public welfare, then, lies at the bottom of the
enactment of PD 1896. chanrob les lawli bra ry : redna d

Petitioners contend that P.D. 1869 constitutes a waiver of the right of the City of Manila to impose
taxes and legal fees; that the exemption clause in P.D. 1869 is violative of the principle of local
autonomy. They must be referring to Section 13 par. (2) of P.D. 1869 which exempts PAGCOR, as the
franchise holder from paying any "tax of any kind or form, income or otherwise, as well as fees,
charges or levies of whatever nature, whether National or Local." cralaw vi rtua 1aw lib rary

"(2) Income and other taxes. (a) Franchise Holder: No tax of any kind or form, income or otherwise
as well as fees, charges or levies of whatever nature, whether National or Local, shall be assessed and
collected under this franchise from the Corporation; nor shall any form of tax or charge attach in any
way to the earnings of the Corporation, except a franchise tax of five (5%) percent of the gross
revenues or earnings derived by the Corporation from its operations under this franchise. Such tax
shall be due and payable quarterly to the National Government and shall be in lien of all kinds of
taxes, levies, fees or assessments of any kind, nature or description, levied, established or collected
by any municipal, provincial or national government authority" (Section 13 [2]).

Their contention stated hereinabove is without merit for the following reasons: chanrob1e s v irtua l 1aw lib ra ry

(a) The City of Manila, being a mere Municipal corporation has no inherent right to impose taxes
(Icard v. City of Baguio, 83 Phil. 870; City of Iloilo v. Villanueva, 105 Phil. 337; Santos v. Municipality
of Caloocan, 7 SCRA 643). Thus, "the Charter or statute must plainly show an intent to confer that
power or the municipality cannot assume it" (Medina v. City of Baguio, 12 SCRA 62). Its "power to
tax" therefore must always yield to a legislative act which is superior having been passed upon by the
state itself which has the "inherent power to tax" (Bernas, the Revised [1973] Philippine Constitution,
Vol. 1, 1983 ed. p. 445).

(b) The Charter of the City of Manila is subject to control by Congress. It should be stressed that
"municipal corporations are mere creatures of Congress" (Unson v. Lacson, G.R. No. 7909, January
18, 1957) which has the power to "create and abolish municipal corporations" due to its "general
legislative powers" (Asuncion v. Yriantes, 28 Phil. 67; Merdanillo v. Orandia, 5 SCRA 541). Congress,
therefore, has the power of control over Local governments (Hebron v. Reyes, G.R. No. 9124, July 2,
1950). And if Congress can grant the City of Manila the power to tax certain matters, it can also
provide for exemptions or even take back the power.

(c) The City of Manilas power to impose license fees on gambling, has long been revoked. As early as
1975, the power of local governments to regulate gambling thru the grant of "franchise, licenses or
permits" was withdrawn by P.D. No. 771 and was vested exclusively on the National Government,
thus:jgc:cha nro bles.c om.ph

"Section 1. Any provision of law to the contrary notwithstanding, the authority of chartered cities and
other local governments to issue license, permit or other form of franchise to operate, maintain and
establish horse and dog race tracks, jai-alai and other forms of gambling is hereby revoked.

"Section 2. Hereafter, all permits or franchises to operate, maintain and establish, horse and dog race
tracks, jai-alai and other forms of gambling shall be issued by the national government upon proper
application and verification of the qualification of the applicant. . . ." cra law virtua1aw li bra ry

Therefore, only the National Government has the power to issue "licenses or permits" for the
operation of gambling. Necessarily, the power to demand or collect license fees which is a
consequence of the issuance of "licenses or permits" is no longer vested in the City of Manila.

(d) Local governments have no power to tax instrumentalities of the National Government. PAGCOR is
a government owned or controlled corporation with an original charter, PD 1869. All of its shares of
stocks are owned by the National Government. In addition to its corporate powers (Sec. 3, Title II, PD
1869) it also exercises regulatory powers, thus: jgc:cha nro bles.c om.ph

"Sec. 9. Regulatory Power. The Corporation shall maintain a Registry of the affiliated entities, and
shall exercise all the powers, authority and the responsibilities vested in the Securities and Exchange
Commission over such affiliating entities mentioned under the preceding section, including, but not
limited to amendments of Articles of Incorporation and By-Laws, changes in corporate term, structure,
capitalization and other matters concerning the operation of the affiliated entities, the provisions of
the Corporation Code of the Philippines to the contrary notwithstanding, except only with respect to
original incorporation." chan roblesv irt ual|awlib rary

PAGCOR has a dual role, to operate and to regulate gambling casinos. The latter role is governmental,
which places it in the category of an agency or instrumentality of the Government. Being an
instrumentality of the Government, PAGCOR should be and actually is exempt from local taxes.
Otherwise, its operation might be burdened, impeded or subjected to control by a mere Local
government.

"The states have no power by taxation or otherwise, to retard impede, burden or in any manner
control the operation of constitutional laws enacted by Congress to carry into execution the powers
vested in the federal government." (MC Culloch v. Marland, 4 Wheat 316, 4 L Ed. 579)
This doctrine emanates from the "supremacy" of the National Government over local governments.

"Justice Holmes, speaking for the Supreme Court, made reference to the entire absence of power on
the part of the States to touch, in that way (taxation) at least, the instrumentalities of the United
States (Johnson v. Maryland, 254 US 51) and it can be agreed that no state or political subdivision can
regulate a federal instrumentality in such a way as to prevent it from consummating its federal
responsibilities, or even to seriously burden it in the accomplishment of them." (Antieau, Modern
Constitutional Law, Vol. 2, p. 140, Emphasis supplied)

Otherwise, mere creatures of the State can defeat National policies thru extermination of what local
authorities may perceive to be undesirable activates or enterprise using the power to tax as "a tool for
regulation" (U.S. v. Sanchez, 340 US 42).

The power to tax which was called by Justice Marshall as the "power to destroy" (Mc Culloch v.
Maryland, supra) cannot be allowed to defeat an instrumentality or creation of the very entity which
has the inherent power to wield it.

(e) Petitioners also argue that the Local Autonomy Clause of the Constitution will be violated by P.D.
1869. This is a pointless argument. Article X of the 1987 Constitution (on Local Autonomy)
provides: jgc:chanrobles. com.ph

"Sec. 5. Each local government unit shall have the power to create its own source of revenue and to
levy taxes, fees, and other charges subject to such guidelines and limitation as the congress may
provide, consistent with the basic policy on local autonomy. Such taxes, fees and charges shall accrue
exclusively to the local government." (Emphasis supplied).

The power of local government to "impose taxes and fees" is always subject to "limitations" which
Congress may provide by law. Since PD 1869 remains an "operative" law until "amended, repealed or
revoked" (Sec. 3, Art. XVIII, 1987 Constitution), its "exemption clause" remains as an exception to
the exercise of the power of local governments to impose taxes and fees. It cannot therefore be
violative but rather is consistent with the principle of local autonomy. chanroble svirtualawl ibra ry

Besides, the principle of local autonomy under the 1987 Constitution simply means "decentralization"
(III Records of the 1987 Constitutional Commission, pp. 436-436, as cited in Bernas, The Constitution
of the Republic of the Philippines, Vol. II, First Ed., 1988, p. 374). It does not make local governments
sovereign within the state or an "imperium in imperio." c ralaw virtua1aw l ibra ry

"Local Government has been described as a political subdivision of a nation or state which is
constituted by law and has substantial control of local affairs. In a unitary system of government, such
as the government under the Philippine Constitution, local governments can only be an intra sovereign
subdivision of one sovereign nation, it cannot be an imperium in imperio. Local government in such a
system can only mean a measure of decentralization of the function of government. (Emphasis
supplied)
As to what state powers should be "decentralized" and what may be delegated to local government
units remains a matter of policy, which concerns wisdom. It is therefore a political question. (Citizens
Alliance for Consumer Protection v. Energy Regulatory Board, 162 SCRA 539).

What is settled is that the matter of regulating, taxing or otherwise dealing with gambling is a State
concern and hence, it is the sole prerogative of the State to retain it or delegate it to local
governments.

"As gambling is usually an offense against the State, legislative grant or express charter power is
generally necessary to empower the local corporation to deal with the subject. . . . In the absence of
express grant of power to enact, ordinance provisions on this subject which are inconsistent with the
state laws are void." (Ligan v. Gadsden, Ala App. 107 So. 733 Ex-Parte Solomon, 9, Cals. 440, 27 PAC
757 following in re Ah You, 88 Cal. 99, 25 PAC 974, 22 Am St. Rep. 280, 11 LRA 480, as cited in Mc
Quinllan Vol. 3 ibid, p. 548, Emphasis supplied).

Petitioners next contend that P.D. 1869 violates the equal protection clause of the Constitution,
because "it legalized PAGCOR conducted gambling, while most gambling are outlawed together with
prostitution, drug trafficking and other vices" (p. 82, Rollo).

We, likewise, find no valid ground to sustain this contention. The petitioners posture ignores the well-
accepted meaning of the clause "equal protection of the laws." The clause does not preclude
classification of individuals who may be accorded different treatment under the law as long as the
classification is not unreasonable or arbitrary (Itchong v. Hernandez, 101 Phil. 1155). A law does not
have to operate in equal force on all persons or things to be conformable to Article III, Section 1 of
the Constitution (DECS v. San Diego, G.R. No. 89572, December 21, 1989).

The "equal protection clause" does not prohibit the Legislature from establishing classes of individuals
or objects upon which different rules shall operate (Laurel v. Misa, 43 O.G. 2847). The Constitution
does not require situations which are different in fact or opinion to be treated in law as though they
were the same (Gomez v. Palomar, 25 SCRA 827).

Just how P.D. 1869 in legalizing gambling conducted by PAGCOR is violative of the equal protection is
not clearly explained in the petition. The mere fact that some gambling activities like cockfighting
(P.D. 449) horse racing (R.A. 306 as amended by RA 983), sweepstakes, lotteries and races (RA 1169
as amended by B.P. 42) are legalized under certain conditions, while others are prohibited, does not
render the applicable laws, P.D. 1869 for one, unconstitutional.

"If the law presumably hits the evil where it is most felt, it is not to be overthrown because there are
other instances to which it might have been applied." (Gomez v. Palomar, 25 SCRA 827)

"The equal protection clause of the 14th Amendment does not mean that all occupations called by the
same name must be treated the same way; the state may do what it can to prevent which is deemed
as evil and stop short of those cases in which harm to the few concerned is not less than the harm to
the public that would insure if the rule laid down were made mathematically exact." (Dominican Hotel
v. Arizana, 249 US 2651)

Anent petitioners claim that PD 1869 is contrary to the "avowed trend of the Cory Government away
from monopolies and crony economy and toward free enterprise and privatization" suffice it to state
that this is not a ground for this Court to nullify P.D. 1869. If, indeed, PD 1869 runs counter to the
governments policies then it is for the Executive Department to recommend to Congress its repeal or
amendment. chanro bles law l ibra ry : red

"The judiciary does not settle policy issues. The Court can only declare what the law is and not what
the law should be. Under our system of government, policy issues are within the domain of the
political branches of government and of the people themselves as the repository of all state power."
(Valmonte v. Belmonte, Jr., 170 SCRA 256.)

On the issue of "monopoly," however, the Constitution provides that: jgc:chanro bles.c om.ph

"Sec. 19. The State shall regulate or prohibit monopolies when public interest so requires. No
combinations in restraint of trade or unfair competition shall be allowed." (Art. XII, National Economy
and Patrimony)

It should be noted that, as the provision is worded, monopolies are not necessarily prohibited by the
Constitution. The state must still decide whether public interest demands that monopolies be
regulated or prohibited. Again, this is a matter of policy for the Legislature to decide.

On petitioners allegation that P.D. 1869 violates Sections 11 (Personality Dignity) 12 (Family) and 13
(Role of Youth) of Article II; Section 13 (Social Justice) of Article XIII and Section 2 (Educational
Values) of Article XIV of the 1987 Constitution, suffice it to state also that these are merely
statements of principles and policies. As such, they are basically not self-executing, meaning a law
should be passed by Congress to clearly define and effectuate such principles. chan robles v irt ual lawl ibrary

"In general, therefore, the 1935 provisions were not intended to be self-executing principles ready for
enforcement through the Courts. They were rather directives addressed to the executive and the
legislature. If the executive and the legislature failed to heed the directives of the articles the available
remedy was not judicial or political. The electorate could express their displeasure with the failure of
the executive and the legislature through the language of the ballot." (Bernas, Vol. II, p. 2)

Every law has in its favor the presumption of constitutionality (Yu Cong Eng v. Trinidad, 47 Phil. 387;
Salas v. Jarencio, 48 SCRA 734; Peralta v. Comelec, 82 SCRA 30; Abbas v. Comelec, 179 SCRA 287).
Therefore, for PD 1869 to be nullified, it must be shown that there is a clear and unequivocal breach
of the Constitution, not merely a doubtful and equivocal one. In other words, the grounds for nullity
must be clear and beyond reasonable doubt. (Peralta v. Comelec, supra) Those who petition this Court
to declare a law, or parts thereof, unconstitutional must clearly establish the basis for such a
declaration. Otherwise, their petition must fail. Based on the grounds raised by petitioners to
challenge the constitutionality of P.D. 1869, the Court finds that petitioners have failed to overcome
the presumption. The dismissal of this petition is therefore, inevitable. But as to whether P.D. 1869
remains a wise legislation considering the issues of "morality, monopoly, trend to free enterprise,
privatization as well as the state principles on social justice, role of youth and educational values"
being raised, is up for Congress to determine. chanrobles vi rt ualawlib ra ry chan roble s.com:c han robles. com.ph

As this Court held in Citizens Alliance for Consumer Protection v. Energy regulatory Board, 162 SCRA
521

"Presidential Decree No. 1956, as amended by Executive Order No. 137 has, in any case, in its favor
the presumption of validity and constitutionality which petitioners Valmonte and the KMU have not
overturned. Petitioners have not undertaken to identity the provisions in the Constitution which they
claim to have been violated by that statute. This Court, however, is not compelled to speculate and to
imagine how the assailed legislation may possibly offend some provision of the Constitution. The Court
notes, further, in this respect that petitioners have in the main put in question the wisdom, justice and
expediency of the establishment of the OPSF, issues which are not properly addressed to this Court
and which this Court may not constitutionally pass upon. Those issues should be addressed rather to
the political departments of government: the President and the Congress." c ralaw virtua1aw l ibra ry

Parenthetically, We wish to state that gambling is generally immoral, and this is precisely so when the
gambling resorted to is excessive. This excessiveness necessarily depends not only on the financial
resources of the gambler and his family but also on his mental, social, and spiritual outlook-on life.
However, the mere fact that some persons may have lost their material fortunes, mental control,
physical health, or even their lives does not necessarily mean that the same are directly attributable
to gambling. Gambling may have been the antecedent, out certainly not necessarily the cause. For the
same consequences could have been preceded by an overdose of food, drink, exercise, work, and
even sex. c hanrobles. com : virtual law l ibra ry

WHEREFORE, the petition is DISMISSED for lack of merit.

SO ORDERED.

Fernan, C.J., Narvasa, Gutierrez, Jr., Cruz, Feliciano, Gancayco, Bidin, Sarmiento, Grio-Aquino,
Medialdea, Regalado and Davide, Jr., JJ., concur.

Melencio-Herrera, J., concurring in the result with Justice Padilla.

Separate Opinions

PADILLA, J., concurring: cha nro b1es vi rtua l 1aw libra ry

I concur in the result of the learned decision penned by my brother Mr. Justice Paras. This means that
I agree with the decision insofar as it holds that the prohibition, control, and regulation of the entire
activity known as gambling properly pertain to "state policy." It is, therefore, the political departments
of government, namely, the legislative and the executive that should decide on what government
should do in the entire area of gambling, and assume full responsibility to the people for such
policy.chan roblesv irtualawli bra ry

The courts, as the decision states, cannot inquire into the wisdom, morality or expediency of policies
adopted by the political departments of government in areas which fall within their authority, except
only when such policies pose a clear and present danger to the life, liberty or property of the
individual. This case does not involve such a factual situation.

However, I hasten to make of record that I do not subscribe to gambling in any form. It demeans the
human personality, destroys self-confidence and eviscerates ones self-respect, which in the long run
will corrode whatever is left of the Filipino moral character. Gambling has wrecked and will continue to
wreck families and homes; it is an antithesis to individual reliance and reliability as well as personal
industry which are the touchstones of real economic progress and national development.

Gambling is reprehensible whether maintained by government or privatized. The revenues realized by

the government out of "legalized" gambling will, in the long run, be more than offset and negated by
the irreparable damage to the peoples moral values.

Also, the moral standing of the government in its repeated avowals against "illegal gambling" is fatally
flawed and becomes untenable when it itself engages in the very activity it seeks to eradicate. chanrob les.com: cralaw: red

One can go through the Courts decision today and mentally replace the activity referred to therein as
gambling, which is legal only because it is authorized by law and run by the government, with the
activity known as prostitution. Would prostitution be any less reprehensible were it to be authorized by
law, franchised, and "regulated" by the government, in return for the substantial revenues it would
yield the government to carry out its laudable projects, such as infrastructure and social amelioration?
The question, I believe, answers itself. I submit that the sooner the legislative department outlaws all
forms of gambling, as a fundamental state policy, and the sooner the executive implements such
policy, the better it will be for the nation.
 THIRD DIVISION
[ G.R. No. 131359, May 05, 1999 ]
MANILA ELECTRIC COMPANY, PETITIONER VS. PROVINCE OF
LAGUNA AND BENITO R. BALAZO, IN HIS CAPACITY AS
PROVINCIAL TREASURER OF LAGUNA, RESPONDENTS.

DECISION

VITUG, J.:

On various dates, certain municipalities of the Province of Laguna including, Bian,

Sta Rosa, San Pedro, Luisiana, Calauan and Cabuyao, by virtue of existing laws
then in effect, issued resolutions through their respective municipal councils
granting franchise in favor of petitioner Manila Electric Company ("MERALCO") for
the supply of electric light, heat and power within their concerned areas. On 19
January 1983, MERALCO was likewise granted a franchise by the National
Electrification Administration to operate an electric light and power service in the
Municipality of Calamba, Laguna.

On 12 September 1991, Republic Act No. 7160, otherwise known as the "Local
Government Code of 1991," was enacted to take effect on 01 January 1992
enjoining local government units to create their own sources of revenue and to levy
taxes, fees and charges, subject to the limitations expressed therein, consistent
with the basic policy of local autonomy. Pursuant to the provisions of the Code,
respondent province enacted Laguna Provincial Ordinance No. 01-92, effective 01
January 1993, providing, in part, as follows:
"Sec. 2.09. Franchise Tax. - There is hereby imposed a tax on businesses enjoying
a franchise, at a rate of fifty percent (50%) of one percent (1%) of the gross
annual receipts, which shall include both cash sales and sales on account realized
during the preceding calendar year within this province, including the territorial
limits on any city located in the province"[1]

On the basis of the above ordinance, respondent Provincial Treasurer sent a

demand letter to MERALCO for the corresponding tax payment. Petitioner MERALCO
paid the tax, which then amounted to P19,520,628.42, under protest. A formal
claim for refund was thereafter sent by MERALCO to the Provincial Treasurer of
Laguna claiming that the franchise tax it had paid and continued to pay to the
National Government pursuant to P.D. 551 already included the franchise tax
imposed by the Provincial Tax Ordinance. MERALCO contended that the imposition
of a franchise tax under Section 2.09 of Laguna Provincial Ordinance No. 01-92,
insofar as it concerned MERALCO, contravened the provisions of Section 1 of P.D.
551 which read:

"Any provision of law or local ordinance to the contrary notwithstanding, the

franchise tax payable by all grantees of franchises to generate, distribute and sell
electric current for light, heat and power shall be two per cent (2%) of their gross
receipts received from the sale of electric current and from transactions incident to
the generation, distribution and sale of electric current.

"Such franchise tax shall be payable to the Commissioner of Internal Revenue or his
duly authorized representative on or before the twentieth day of the month
following the end of each calendar quarter or month, as may be provided in the
respective franchise or pertinent municipal regulation and shall, any provision of the
Local Tax Code or any other law to the contrary notwithstanding, be in lieu of all
taxes and assessments of whatever nature imposed by any national or local
authority on earnings, receipts, income and privilege of generation, distribution and
sale of electric current."

On 28 August 1995, the claim for refund of petitioner was denied in a letter signed
by Governor Jose D. Lina. In denying the claim, respondents relied on a more
recent law, i.e., Republic Act No. 7160 or the Local Government Code of 1991, than
the old decree invoked by petitioner.

On 14 February 1996, petitioner MERALCO filed with the Regional Trial Court of Sta
Cruz, Laguna, a complaint for refund, with a prayer for the issuance of a writ of
preliminary injunction and/or temporary restraining order, against the Province of
Laguna and also Benito R. Balazo in his capacity as the Provincial Treasurer of
Laguna. Aside from the amount of P19,520,628.42 for which petitioner MERALCO
had priority made a formal request for refund, petitioner thereafter likewise made
additional payments under protest on various dates totaling P27,669,566.91.

The trial court, in its assailed decision of 30 September 1997, dismissed the
complaint and concluded:

"WHEREFORE, IN THE LIGHT OF ALL THE FOREGOING CONSIDERATIONS,

JUDGMENT is hereby rendered in favor of the defendants and against the plaintiff,
by:

"1. Ordering the dismissal of the Complaint; and

"2. Declaring Laguna Provincial Tax Ordinance No. 01-92 as valid, binding,
reasonable and enforceable."[2]
In the instant petition, MERALCO assails the above ruling and brings up the
following issues; viz:

"1. Whether the imposition of a franchise tax under Section 2.09 of Laguna
Provincial Ordinance No. 01-92, insofar as petitioner is concerned, is violative
of the non-impairment clause of the Constitution and Section 1 of Presidential
Decree No. 551.

"2. Whether Republic Act. No. 7160, otherwise known as the Local Government
Code of 1991, has repealed, amended or modified Presidential Decree No. 551.

"3. Whether the doctrine of exhaustion of administrative remedies is applicable in

this case."[3]

The petition lacks merit.

Prefatorily, it might be well to recall that local governments do not have the
inherent power to tax[4] except to the extent that such power might be delegated
to them either by the basic law or by statute. Presently, under Article X of the 1987
Constitution, a general delegation of that power has been given in favor of local
government units. 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.

"x x x x x x x x x

"Sec. 5. Each local government shall have the power to create its own sources of
revenues and to levy taxes, fees, and charges subject to such guidelines and
limitations as the Congress may provide, consistent with the basic policy of local
autonomy. Such taxes, fees and charges shall accrue exclusively to the local
governments."

The 1987 Constitution has a counterpart provision in the 1973 Constitution which
did come out with a similar delegation of revenue making powers to local
governments.[5]

Under the regime of the 1935 Constitution no similar delegation of tax powers was
provided, and local government units instead derived their tax powers under a
limited statutory authority. Whereas, then, the delegation of tax powers granted at
that time by statute to local governments was confined and defined (outside of
which the power was deemed withheld), the present constitutional rule (starting
with the 1973 Constitution), however, would broadly confer such tax powers
subject only to specific exceptions that the law might prescribe.

Under the now prevailing Constitution, where there is neither a grant nor a
prohibition by statute, the tax power must be deemed to exist although Congress
may provide statutory limitations and guidelines. The basic rationale for the current
rule is to safeguard the viability and self-sufficiency of local government units by
directly granting them general and broad tax powers. Nevertheless, the
fundamental law did not intend the delegation to be absolute and unconditional; the
constitutional objective obviously is to ensure that, while the local government units
are being strengthened and made more autonomous,[6] the legislature must still see
to it that (a) the taxpayer will not be over-burdened or saddled with multiple and
unreasonable impositions; (b) each local government unit will have its fair share of
available resources; (c) the resources of the national government will not be unduly
disturbed; and (d) local taxation will be fair, uniform, and just.

The Local Government Code of 1991 has incorporated and adopted, by and large
the provisions of the now repealed Local Tax Code, which had been in effect since
01 July 1973, promulgated into law by Presidential Decree No. 231[7] pursuant to
the then provisions of Section 2, Article XI, of the 1973 Constitution. The 1991
Code explicitly authorizes provincial governments, notwithstanding "any exemption
granted by any law or other special law, x x x (to) impose a tax on businesses
enjoying a franchise. Section 137 thereof provides:

"Sec. 137. Franchise Tax - Notwithstanding any exemption granted by any law or
other special law, the province may impose a tax on businesses enjoying a
franchise, at a rate not exceeding fifty percent (50%) of one percent (1%) of the
gross annual receipts for the preceding calendar year based on the incoming
receipt, or realized, within its territorial jurisdiction. In the case of a newly started
business, the tax shall not exceed one-twentieth (1/20) of one percent (1%) of the
capital investment. In the succeeding calendar year, regardless of when the
business started to operate, the tax shall be based on the gross receipts for the
preceding calendar year, or any fraction thereof, as provided herein. (Underscoring
supplied for emphasis)"

Indicative of the legislative intent to carry out the Constitutional mandate of vesting
broad tax powers to local government units, the Local Government Code has
effectively withdrawn under Section 193 thereof, tax exemptions or incentives
theretofore enjoyed by certain entities. This law states:
"Section 193 Withdrawal of Tax Exemption Privileges - Unless otherwise provided in
this Code, tax exemptions or incentives granted to, or presently enjoyed by all
persons, whether natural or juridical, including government-owned or controlled
corporations, except local water districts, cooperatives duly registered under R.A.
No. 6938, non-stock and non-profit hospitals and educational institutions, are
hereby withdrawn upon the effectivity of this Code. (Underscoring supplied for
emphasis)

The Code, in addition, contains a general repealing clause in its Section 534; thus:

"Section 534. Repealing Clause. - x x x.

"(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. (Underscoring supplied for emphasis)"[8]

To exemplify, in Mactan Cebu International Airport Authority vs. Marcos,[9] the

Court upheld the withdrawal of the real estate tax exemption previously enjoyed by
Mactan Cebu International Airport Authority. The Court ratiocinated:

"x x x These policy considerations are consistent with the State policy to ensure
autonomy to local governments and the objective of the LGC that they enjoy
genuine and meaningful local autonomy to enable them to attain their fullest
development as self-reliant communities and make them effective partners in the
attainment of national goals. The power to tax is the most effective instrument to
raise needed revenues to finance and support myriad activities of local government
units for the delivery of basic service essential to the promotion of the general
welfare and the enhancement of peace, progress, and prosperity of the people. It
may also be relevant to recall that the original reasons for the withdrawal of tax
exemption privileges granted to government-owned and controlled corporations and
all other units of government were that such privilege resulted in serious tax base
erosion and distortions in the tax treatment of similarly situated enterprises, and
there was a need for these entities to share in the requirements of development,
fiscal or otherwise, by paying the taxes and other charges due from them."[10]

Petitioner in its complaint before the Regional Trial Court cited the ruling of this
Court in Province of Misamis Oriental vs. Cagayan Electric Power and Light
Company, Inc.;[11] thus:

"In an earlier case, the phrase `shall be in lieu of all taxes and at any time levied,
established by, or collected by any authority' found in the franchise of the Visayan
Electric Company was held to exempt the company from payment of the 5% tax on
corporate franchise provided in Section 259 of the Internal Revenue Code (Visayan
Electric Co. vs. David, 49 O.G. [No. 4] 1385)
"Similarly, we ruled that the provision: `shall be in lieu of all taxes of every name
and nature' in the franchise of the Manila Railroad (Subsection 12, Section 1, Act
No. 1510) exempts the Manila Railroad from payment of internal revenue tax for its
importations of coal and oil under Act No. 2432 and the Amendatory Acts of the
Philippine Legislature (Manila Railroad vs. Rafferty, 40 Phil. 224).

"The same phrase found in the franchise of the Philippine Railway Co. (Sec. 13, Act
No. 1497) justified the exemption of the Philippine Railway Company from payment
of the tax on its corporate franchise under Section 259 of the Internal Revenue
Code, as amended by R.A. No. 39 (Philippine Railway Co vs. Collector of Internal
Revenue, 91 Phil. 35).

"Those magic words, `shall be in lieu of all taxes' also excused the Cotabato Light
and Ice Plant Company from the payment of the tax imposed by Ordinance No. 7 of
the City of Cotabato (Cotabato Light and Power Co. vs. City of Cotabato, 32 SCRA
231).

"So was the exemption upheld in favor of the Carcar Electric and Ice Plant Company
when it was required to pay the corporate franchise tax under Section 259 of the
Internal Revenue Code as amended by R.A. No. 39 (Carcar Electric & Ice Plant vs.
Collector of Internal Revenue, 53 O.G. [No. 4] 1068). This Court pointed out that
such exemption is part of the inducement for the acceptance of the franchise and
the rendition of public service by the grantee."[12]

In the recent case of the City Government of San Pablo, etc., et al. vs. Hon.
Bienvenido V. Reyes, et al.,[13] the Court has held that the phrase in lieu of all
taxes "have to give way to the peremptory language of the Local Government
Code specifically providing for the withdrawal of such exemptions, privileges," and
that "upon the effectivity of the Local Government Code all exemptions except only
as provided therein can no longer be invoked by MERALCO to disclaim liability for
the local tax." In fine, the Court has viewed its previous rulings as laying
stress more on the legislative intent of the amendatory law - whether the
tax exemption privilege is to be withdrawn or not - rather than on whether
the law can withdraw, without violating the Constitution, the tax
exemption or not.

While the Court has, not too infrequently, referred to tax exemptions contained in
special franchises as being in the nature of contracts and a part of the inducement
for carrying on the franchise, these exemptions, nevertheless, are far from being
strictly contractual in nature. Contractual tax exemptions, in the real sense of
the term and where the non-impairment clause of the Constitution can
rightly be invoked, are those agreed to by the taxing authority in contracts,
such as those contained in government bonds or debentures, lawfully
entered into by them under enabling laws in which the government, acting
in its private capacity, sheds its cloak of authority and waives its
governmental immunity. Truly, tax exemptions of this kind may not be revoked
without impairing the obligations of contracts.[14] These contractual tax exemptions,
however, are not to be confused with tax exemptions granted under franchises. A
franchise partakes the nature of a grant which is beyond the purview of the non-
impairment clause of the Constitution.[15] Indeed, Article XII, Section 11, of the
1987 Constitution, like its precursor provisions in the 1935 and the 1973
Constitutions, is explicit that no franchise for the operation of a public utility shall
be granted except under the condition that such privilege shall be subject to
amendment, alteration or repeal by Congress as and when the common good so
requires.

WHEREFORE, the instant petition is hereby DISMISSED. No costs.

SO ORDERED.

Romero, Panganiban, Purisima, and Gonzaga-Reyes, JJ., concur.

 THIRD DIVISION

SMART COMMUNICATIONS, INC.,

G.R. No. 155491
Petitioner,

Present:

- versus -
YNARES-SANTIAGO, J.,

Chairperson,

AUSTRIA-MARTINEZ,

CHICO-NAZARIO,
THE CITY OF DAVAO, represented herein
by its Mayor HON. RODRIGO R. DUTERTE, NACHURA, and
and the SANGGUNIANG PANLUNGSOD
REYES, JJ.
OF DAVAO CITY,

Respondents.
Promulgated:

September 16, 2008

x------------------------------------------------------------------------------------x
 DECISION

NACHURA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court
filed by Smart Communications, Inc. (Smart) against the City of Davao, represented
by its Mayor, Hon. Rodrigo R. Duterte, and the Sangguniang Panlungsod of Davao
City, to annul the Decision1 dated July 19, 2002 of the Regional Trial Court (RTC)
and its Order2 dated September 26, 2002 in Sp. Civil Case No. 28,976-2002.
 The Facts

On February 18, 2002, Smart filed a special civil action for declaratory relief3
under Rule 63 of the Rules of Court, for the ascertainment of its rights and
obligations under the Tax Code of the City of Davao,4 particularly Section 1, Article
10 thereof, the pertinent portion of which reads:

Notwithstanding any exemption granted by any law or other special law, there is
hereby imposed a tax on businesses enjoying a franchise, at a rate of seventy-five percent
(75%) of one percent (1%) of the gross annual receipts for the preceding calendar year
based on the income or receipts realized within the territorial jurisdiction of Davao City.

Smart contends that its telecenter in Davao City is exempt from payment of
franchise tax to the City, on the following grounds: (a) the issuance of its franchise
under Republic Act (R.A.) No. 72945 subsequent to R.A. No. 7160 shows the clear
legislative intent to exempt it from the provisions of R.A. 7160;6 (b) Section 137 of
R.A. No. 7160 can only apply to exemptions already existing at the time of its
effectivity and not to future exemptions; (c) the power of the City of Davao to
impose a franchise tax is subject to statutory limitations such as the in lieu of all
taxes clause found in Section 9 of R.A. No. 7294; and (d) the imposition of franchise
tax by the City of Davao would amount to a violation of the constitutional provision
against impairment of contracts.7

On March 2, 2002, respondents filed their Answer8 in which they contested

the tax exemption claimed by Smart. They invoked the power granted by the
Constitution to local government units to create their own sources of revenue.9

On May 17, 2002, a pre-trial conference was held. Inasmuch as only legal
issues were involved in the case, the RTC issued an order requiring the parties to
submit their respective memoranda and, thereafter, the case would be deemed
submitted for resolution.10
 On July 19, 2002, the RTC rendered its Decision11 denying the petition. The
trial court noted that the ambiguity of the in lieu of all taxes provision in R.A. No.
7294, on whether it covers both national and local taxes, must be resolved against
the taxpayer.12 The RTC ratiocinated that tax exemptions are construed in
strictissimi juris against the taxpayer and liberally in favor of the taxing authority
and, thus, those who assert a tax exemption must justify it with words too plain to
be mistaken and too categorical not to be misinterpreted.13 On the issue of
violation of the non-impairment clause of the Constitution, the trial court cited
Mactan Cebu International Airport Authority v. Marcos,14 and declared that the
citys power to tax is based not merely on a valid delegation of legislative power but
on the direct authority granted to it by the fundamental law. It added that while
such power may be subject to restrictions or conditions imposed by Congress, any
such legislated limitation must be consistent with the basic policy of local
autonomy.15

Smart filed a motion for reconsideration which was denied by the trial court
in an Order16 dated September 26, 2002.

Thus, the instant case.

Smart assigns the following errors:

[a.] THE LOWER COURT ERRED IN NOT HOLDING THAT UNDER PETITIONERS
FRANCHISE (REPUBLIC ACT NO. 7294), WHICH CONTAINS THE IN LIEU OF ALL TAXES
CLAUSE, AND WHICH IS A SPECIAL LAW ENACTED SUBSEQUENT TO THE LOCAL
GOVERNMENT CODE, NO FRANCHISE TAX MAY BE IMPOSED ON PETITIONER BY
RESPONDENT CITY.

[b.] THE LOWER COURT ERRED IN HOLDING THAT PETITIONERS FRANCHISE IS

A GENERAL LAW AND DID NOT REPEAL RELEVANT PROVISIONS REGARDING FRANCHISE
TAX OF THE LOCAL GOVERNMENT CODE, WHICH ACCORDING TO THE COURT IS A SPECIAL
LAW.
 [c.] THE LOWER COURT ERRED IN NOT HOLDING THAT SECTION 137 OF THE
LOCAL GOVERNMENT CODE, WHICH, IN RELATION TO SECTION 151 THEREOF, ALLOWS
RESPONDENT CITY TO IMPOSE THE FRANCHISE TAX, AND SECTION 193 OF THE CODE,
WHICH PROVIDES FOR WITHDRAWAL OF TAX EXEMPTION PRIVILEGES, ARE NOT
APPLICABLE TO THIS CASE.

[d.] THE LOWER COURT ERRED IN NOT HOLDING THAT SECTIONS 137 AND
193 OF THE LOCAL GOVERNMENT CODE REFER ONLY TO EXEMPTIONS ALREADY EXISTING
AT THE TIME OF ITS ENACTMENT BUT NOT TO FUTURE EXEMPTIONS.

[e.] THE LOWER COURT ERRED IN APPLYING THE RULE OF STATUTORY

CONSTRUCTION THAT TAX EXEMPTIONS ARE CONSTRUED STRICTLY AGAINST THE
TAXPAYER.

[f.] THE LOWER COURT ERRED IN NOT HOLDING THAT PETITIONERS

FRANCHISE (REPUBLIC ACT NO. 7294) HAS BEEN AMENDED AND EXPANDED BY SECTION
23 OF REPUBLIC ACT NO. 7925, THE PUBLIC TELECOMMUNICATIONS POLICY ACT, TAKING
INTO ACCOUNT THE FRANCHISE OF GLOBE TELECOM, INC. (GLOBE) (REPUBLIC ACT NO.
7229), WHICH ARE SPECIAL PROVISIONS AND WERE ENACTED SUBSEQUENT TO THE
LOCAL GOVERNMENT CODE, THEREBY PROVIDING AN ADDITIONAL GROUND WHY NO
FRANCHISE TAX MAY BE IMPOSED ON PETITIONER BY RESPONDENT CITY.

[g.] THE LOWER COURT ERRED IN DISREGARDING THE RULING OF THE

DEPARTMENT OF FINANCE, THROUGH ITS BUREAU OF LOCAL GOVERNMENT FINANCE,
THAT PETITIONER IS EXEMPT FROM THE PAYMENT OF THE FRANCHISE TAX IMPOSABLE
BY LOCAL GOVERNMENT UNITS UNDER THE LOCAL GOVERNMENT CODE.

[h.] THE LOWER COURT ERRED IN NOT HOLDING THAT THE IMPOSITION OF
THE LOCAL FRANCHISE TAX ON PETITIONER WOULD VIOLATE THE CONSTITUTIONAL
PROHIBITION AGAINST IMPAIRMENT OF CONTRACTS.

[i.] THE LOWER COURT ERRED IN DENYING THE PETITION BELOW.17

 The Issue

In sum, the pivotal issue in this case is whether Smart is liable to pay the
franchise tax imposed by the City of Davao.

The Ruling of the Court

We rule in the affirmative.

I. Prospective Effect of R.A. No. 7160

On March 27, 1992, Smarts legislative franchise (R.A. No. 7294) took effect.
Section 9 thereof, quoted hereunder, is at the heart of the present controversy:

Section 9. Tax provisions. The grantee, its successors or assigns shall be liable to
pay the same taxes on their real estate buildings and personal property, exclusive of' this
 franchise, as other persons or corporations which are now or hereafter may be required
by law to pay. In addition thereto, the grantee, its successors or assigns shall pay a
franchise tax equivalent to three percent (3%) of all gross receipts of the business
transacted under this franchise by the grantee, its successors or assigns and the said
percentage shall be in lieu of all taxes on this franchise or earnings thereof: Provided,
That the grantee, its successors or assigns shall continue to be liable for income taxes
payable under Title II of the National Internal Revenue Code pursuant to Section 2 of
Executive Order No. 72 unless the latter enactment is amended or repealed, in which case
the amendment or repeal shall be applicable thereto.

The grantee shall file the return with and pay the tax due thereon to the
Commissioner of Internal Revenue or his duly authorized representative in accordance
with the National Internal Revenue Code and the return shall be subject to audit by the
Bureau of Internal Revenue. (Emphasis supplied.)

Smart alleges that the in lieu of all taxes clause in Section 9 of its franchise exempts
it from all taxes, both local and national, except the national franchise tax (now
VAT), income tax, and real property tax.18

On January 1, 1992, two months ahead of Smarts franchise, the Local

Government Code (R.A. No. 7160) took effect. Section 137, in relation to Section
151 of R.A. No. 7160, allowed the imposition of franchise tax by the local
government units; while Section 193 thereof provided for the withdrawal of tax
exemption privileges granted prior to the issuance of R.A. No. 7160 except for those
expressly mentioned therein, viz.:
 Section 137. Franchise Tax. Notwithstanding any exemption granted by any
law or other special law, the province may impose a tax on businesses enjoying a
franchise, at the rate not exceeding fifty percent (50%) of one percent (1%) of the gross
annual receipts for the preceding calendar year based on the incoming receipt, or
realized, within its territorial jurisdiction.

In the case of a newly started business, the tax shall not exceed one-twentieth
(1/20) of one percent (1%) of the capital investment. In the succeeding calendar year,
regardless of when the business started to operate, the tax shall be based on the gross
receipts for the preceding calendar year, or any fraction thereon, as provided herein.

Section 151. Scope of Taxing Powers. Except as otherwise provided in this

Code, the city may levy the taxes, fees, and charges which the province or municipality
may impose: Provided, however, That the taxes, fees and charges levied and collected by
highly urbanized and independent component cities shall accrue to them and distributed
in accordance with the provisions of this Code.

The rates of taxes that the city may levy may exceed the maximum rates
allowed for the province or municipality by not more than fifty percent (50%) except
the rates of professional and amusement taxes.

Section 193. Withdrawal of Tax Exemption Privileges. Unless otherwise

provided in this Code, tax exemptions or incentives granted to, or presently enjoyed by
all persons, whether natural or juridical, including government-owned or controlled
corporations, except local water districts, cooperatives duly registered under RA No.
6938, non-stock and non-profit hospitals and educational institutions, are hereby
withdrawn upon the effectivity of this Code. (Emphasis supplied.)

Smart argues that it is not covered by Section 137, in relation to Section 151
of R.A. No. 7160, because its franchise was granted after the effectivity of the said
law. We agree with Smarts contention on this matter. The withdrawal of tax
exemptions or incentives provided in R.A. No. 7160 can only affect those franchises
granted prior to the effectivity of the law. The intention of the legislature to remove
all tax exemptions or incentives granted prior to the said law is evident in the
language of Section 193 of R.A. No. 7160. No interpretation is necessary.

II. The in lieu of all taxes Clause in R.A. No. 7294

The in lieu of all taxes clause in Smarts franchise is put in issue before the
Court. In order to ascertain its meaning, consistent with fundamentals of statutory
construction, all the words in the statute must be considered. The grant of tax
exemption by R.A. No. 7294 is not to be interpreted from a consideration of a single
portion or of isolated words or clauses, but from a general view of the act as a
whole. Every part of the statute must be construed with reference to the
context.19

Smart is of the view that the only taxes it may be made to bear under its
franchise are the national franchise tax (now VAT), income tax, and real property
tax.20 It claims exemption from the local franchise tax because the in lieu of taxes
clause in its franchise does not distinguish between national and local taxes.21

We pay heed that R.A. No. 7294 is not definite in granting exemption to
Smart from local taxation. Section 9 of R.A. No. 7294 imposes on Smart a franchise
tax equivalent to three percent (3%) of all gross receipts of the business transacted
under the franchise and the said percentage shall be in lieu of all taxes on the
franchise or earnings thereof. R.A. No 7294 does not expressly provide what kind
of taxes Smart is exempted from. It is not clear whether the in lieu of all taxes
provision in the franchise of Smart would include exemption from local or national
taxation. What is clear is that Smart shall pay franchise tax equivalent to three
percent (3%) of all gross receipts of the business transacted under its franchise. But
whether the franchise tax exemption would include exemption from exactions by
both the local and the national government is not unequivocal.

The uncertainty in the in lieu of all taxes clause in R.A. No. 7294 on whether
Smart is exempted from both local and national franchise tax must be construed
strictly against Smart which claims the exemption. Smart has the burden of proving
that, aside from the imposed 3% franchise tax, Congress intended it to be exempt
from all kinds of franchise taxes whether local or national. However, Smart failed
in this regard.

Tax exemptions are never presumed and are strictly construed against the
taxpayer and liberally in favor of the taxing authority.22 They can only be given
force when the grant is clear and categorical.23 The surrender of the power to tax,
when claimed, must be clearly shown by a language that will admit of no
reasonable construction consistent with the reservation of the power. If the
intention of the legislature is open to doubt, then the intention of the legislature
must be resolved in favor of the State.24

In this case, the doubt must be resolved in favor of the City of Davao. The in
lieu of all taxes clause applies only to national internal revenue taxes and not to
local taxes. As appropriately pointed out in the separate opinion of Justice Antonio
T. Carpio in a similar case25 involving a demand for exemption from local franchise
taxes:

[T]he "in lieu of all taxes" clause in Smart's franchise refers only to taxes, other than
income tax, imposed under the National Internal Revenue Code. The "in lieu of all taxes"
clause does not apply to local taxes. The proviso in the first paragraph of Section 9 of
Smart's franchise states that the grantee shall "continue to be liable for income taxes
payable under Title II of the National Internal Revenue Code." Also, the second paragraph
of Section 9 speaks of tax returns filed and taxes paid to the "Commissioner of Internal
Revenue or his duly authorized representative in accordance with the National Internal
Revenue Code." Moreover, the same paragraph declares that the tax returns "shall be
subject to audit by the Bureau of Internal Revenue." Nothing is mentioned in Section 9
about local taxes. The clear intent is for the "in lieu of all taxes" clause to apply only to
taxes under the National Internal Revenue Code and not to local taxes. Even with respect
to national internal revenue taxes, the "in lieu of all taxes" clause does not apply to
income tax.

If Congress intended the "in lieu of all taxes" clause in Smart's franchise to also
apply to local taxes, Congress would have expressly mentioned the exemption from
municipal and provincial taxes. Congress could have used the language in Section 9(b) of
Clavecilla's old franchise, as follows:

x x x in lieu of any and all taxes of any kind, nature or description levied,
established or collected by any authority whatsoever, municipal,
provincial or national, from which the grantee is hereby expressly
exempted, x x x. (Emphasis supplied).

However, Congress did not expressly exempt Smart from local taxes. Congress used the
"in lieu of all taxes" clause only in reference to national internal revenue taxes. The only
interpretation, under the rule on strict construction of tax exemptions, is that the "in lieu
of all taxes" clause in Smart's franchise refers only to national and not to local taxes.
 It should be noted that the in lieu of all taxes clause in R.A. No. 7294 has
become functus officio with the abolition of the franchise tax on
telecommunications companies.26 As admitted by Smart in its pleadings, it is no
longer paying the 3% franchise tax mandated in its franchise. Currently, Smart
along with other telecommunications companies pays the uniform 10% value-
added tax.27

The VAT on sale of services of telephone franchise grantees is equivalent to

10% of gross receipts derived from the sale or exchange of services.28 R.A. No.
7716, as amended by the Expanded Value Added Tax Law (R.A. No. 8241), the
pertinent portion of which is hereunder quoted, amended Section 9 of R.A. No.
7294:

SEC. 102. Value-added tax on sale of services and use or lease of

properties. (a) Rate and base of tax. There shall be levied assessed and collected, a
 value-added tax equivalent to ten percent (10%) of gross receipts derived from the sale
or exchange of services, including the use or lease of properties.

The phrase sale or exchange of services means the performance of all kinds of
services in the Philippines for others for a fee, remuneration or consideration, including
those performed or rendered by construction and service contractors; stock, real estate,
commercial, customs and immigration brokers; lessors of property, whether personal or
real; warehousing services; lessors or distributors of cinematographic films; persons
engaged in milling, processing, manufacturing or repacking goods for others; proprietors,
operators or keepers of hotels, motels, rest houses, pension houses, inns, resorts;
proprietors or operators of restaurants, refreshment parlors, cafes and other eating
places, including clubs and caterers; dealers in securities; lending investors;
transportation contractors on their transport of goods or cargoes, including persons who
transport goods or cargoes for hire and other domestic common carriers by land, air, and
water relative to their transport of goods or cargoes; services of franchise grantees of
telephone and telegraph, radio and television broadcasting and all other franchise
grantees except those under Section 117 of this Code; services of banks, non-bank
financial intermediaries and finance companies; and non-life insurance companies
(except their crop insurances) including surety, fidelity, indemnity and bonding
companies; and similar services regardless of whether or not the performance thereof
calls for the exercise or use of the physical or mental faculties. x x x.29

R.A. No. 7716, specifically Section 20 thereof, expressly repealed the provisions of
all special laws relative to the rate of franchise taxes. It also repealed, amended, or
modified all other laws, orders, issuances, rules and regulations, or parts thereof
which are inconsistent with it.30 In effect, the in lieu of all taxes clause in R.A. No.
7294 was rendered ineffective by the advent of the VAT Law.31
 However, the franchise tax that the City of Davao may impose must comply with
Sections 137 and 151 of R.A. No. 7160. Thus, the local franchise tax that may be imposed by the
City must not exceed 50% of 1% of the gross annual receipts for the preceding calendar year
based on the income on receipts realized within the territorial jurisdiction of Davao.

III. Opinion of the Bureau of Local Government Finance (BLGF)

In support of its argument that the in lieu of all taxes clause is to be construed
as an exemption from local franchise taxes, Smart submits the opinion of the
Department of Finance, through the BLGF, dated August 13, 1998 and February 24,
1998, regarding the franchises of Smart and Globe, respectively.32 Smart presents
the same arguments as the Philippine Long Distance Telephone Company in the
previous cases already decided by this Court.33 As previously held by the Court,
the findings of the BLGF are not conclusive on the courts:

[T]he BLGF opined that 23 of R.A. No. 7925 amended the franchise of petitioner and in
effect restored its exemptions from local taxes. Petitioner contends that courts should
 not set aside conclusions reached by the BLGF because its function is precisely the study
of local tax problems and it has necessarily developed an expertise on the subject.

To be sure, the BLGF is not an administrative agency whose findings on questions

of fact are given weight and deference in the courts. The authorities cited by petitioner
pertain to the Court of Tax Appeals, a highly specialized court which performs judicial
functions as it was created for the review of tax cases. In contrast, the BLGF was created
merely to provide consultative services and technical assistance to local governments and
the general public on local taxation, real property assessment, and other related matters,
among others. The question raised by petitioner is a legal question, to wit, the
interpretation of 23 of R.A. No. 7925. There is, therefore, no basis for claiming expertise
for the BLGF that administrative agencies are said to possess in their respective fields.

Petitioner likewise argues that the BLGF enjoys the presumption of regularity in
the performance of its duty. It does enjoy this presumption, but this has nothing to do
with the question in this case. This case does not concern the regularity of performance
of the BLGF in the exercise of its duties, but the correctness of its interpretation of a
provision of law.34

IV. Tax Exclusion/Tax Exemption

Smart gives another perspective of the in lieu of all taxes clause in Section 9
of R.A. No. 7294 in order to avoid the payment of local franchise tax. It says that,
viewed from another angle, the in lieu of all taxes clause partakes of the nature of
a tax exclusion and not a tax exemption. A tax exemption means that the taxpayer
does not pay any tax at all. Smart pays VAT, income tax, and real property tax. Thus,
what it enjoys is more accurately a tax exclusion.35

However, as previously held by the Court, both in their nature and effect,
there is no essential difference between a tax exemption and a tax exclusion. An
exemption is an immunity or a privilege; it is the freedom from a charge or burden
to which others are subjected. An exclusion, on the other hand, is the removal of
otherwise taxable items from the reach of taxation, e.g., exclusions from gross
income and allowable deductions. An exclusion is, thus, also an immunity or
privilege which frees a taxpayer from a charge to which others are subjected.
Consequently, the rule that a tax exemption should be applied in strictissimi juris
against the taxpayer and liberally in favor of the government applies equally to tax
exclusions.36
V. Section 23 of R.A. No. 7925

To further its claim, Smart invokes Section 23 of the Public

Telecommunications Policy Act (R.A. No. 7925):

SECTION 23. Equality of Treatment in the Telecommunications Industry. Any

advantage, favor, privilege, exemption, or immunity granted under existing franchises,
or may hereafter be granted, shall ipso facto become part of previously granted
telecommunications franchise and shall be accorded immediately and unconditionally
to the grantees of such franchises: Provided, however, That the foregoing shall neither
apply to nor affect provisions of telecommunications franchises concerning territory
covered by the franchise, the life span of the franchise, or the type of service authorized
by the franchise. (Emphasis supplied.)

In sum, Smart wants us to interpret anew Section 23 of R.A. No. 7925, in

connection with the franchise of Globe (R.A. No. 7227),37 which was enacted on
March 19, 1992.

Allegedly, by virtue of Section 23 of R.A. No. 7925, otherwise known as the

most favored treatment clause or the equality clause, the provision in the franchise
of Globe exempting it from local taxes is automatically incorporated in the
franchise of Smart.38 Smart posits that, since the franchise of Globe contains a
provision exempting it from municipal or local franchise tax, this provision should
also benefit Smart by virtue of Section 23 of R.A. No. 7925. The provision in Globes
franchise invoked by Smart reads:

(b) The grantee shall further pay to the Treasurer of the Philippines each year after
the audit and approval of the accounts as prescribed in this Act, one and one-half per
centum of all gross receipts from business transacted under this franchise by the said
grantee in the Philippines, in lieu of any and all taxes of any kind, nature or description
levied, established or collected by any authority whatsoever, municipal, provincial or
national, from which the grantee is hereby expressly exempted, effective from the date
of the approval of Republic Act Numbered Sixteen hundred eighteen.39

We find no reason to disturb the previous pronouncements of this Court

regarding the interpretation of Section 23 of R.A. No. 7925. As aptly explained in
the en banc decision of this Court in Philippine Long Distance Telephone Company,
Inc. v. City of Davao,40 and recently in Digital Telecommunications Philippines, Inc.
(Digitel) v. Province of Pangasinan,41 Congress, in approving Section 23 of R.A. No.
7925, did not intend it to operate as a blanket tax exemption to all
telecommunications entities.42 The language of Section 23 of R.A. No. 7925 and
the proceedings of both Houses of Congress are bereft of anything that would
signify the grant of tax exemptions to all telecommunications entities, including
those whose exemptions had been withdrawn by R.A. No. 7160.43 The term
exemption in Section 23 of R.A. No. 7925 does not mean tax exemption. The term
refers to exemption from certain regulations and requirements imposed by the
National Telecommunications Commission.44

Furthermore, in the franchise of Globe (R.A. No. 7229), the legislature

incontrovertibly stated that it will be liable for one and one-half per centum of all
gross receipts from business transacted under the franchise, in lieu of any and all
taxes of any kind, nature, or description levied, established, or collected by any
authority whatsoever, municipal, provincial, or national, from which the grantee is
hereby expressly exempted.45 The grant of exemption from municipal, provincial,
or national is clear and categorical that aside from the franchise tax collected by
virtue of R.A. No. 7229, no other franchise tax may be collected from Globe
regardless of who the taxing power is. No such provision is found in the franchise
of Smart; the kind of tax from which it is exempted is not clearly specified.

As previously explained by the Court, the stance of Smart would lead to

absurd consequences.

The acceptance of petitioner's theory would result in absurd consequences. To

illustrate: In its franchise, Globe is required to pay a franchise tax of only one and one-
half percentum (1%) of all gross receipts from its transactions while Smart is required to
pay a tax of three percent (3%) on all gross receipts from business transacted. Petitioner's
theory would require that, to level the playing field, any "advantage, favor, privilege,
exemption, or immunity" granted to Globe must be extended to all telecommunications
companies, including Smart. If, later, Congress again grants a franchise to another
telecommunications company imposing, say, one percent (1%) franchise tax, then all
other telecommunications franchises will have to be adjusted to "level the playing field"
so to speak. This could not have been the intent of Congress in enacting 23 of Rep. Act
7925. Petitioner's theory will leave the Government with the burden of having to keep
track of all granted telecommunications franchises, lest some companies be treated
unequally. It is different if Congress enacts a law specifically granting uniform advantages,
favor, privilege, exemption, or immunity to all telecommunications entities.46
VI. Non-impairment Clause of the Constitution

Another argument of Smart is that the imposition of the local franchise tax
by the City of Davao would violate the constitutional prohibition against
impairment of contracts. The franchise, according to petitioner, is in the nature of
a contract between the government and Smart.47

However, we find that there is no violation of Article III, Section 10 of the

1987 Philippine Constitution. As previously discussed, the franchise of Smart does
not expressly provide for exemption from local taxes. Absent the express provision
on such exemption under the franchise, we are constrained to rule against it. The
in lieu of all taxes clause in Section 9 of R.A. No. 7294 leaves much room for
interpretation. Due to this ambiguity in the law, the doubt must be resolved against
the grant of tax exemption.
 Moreover, Smarts franchise was granted with the express condition that it is
subject to amendment, alteration, or repeal.48 As held in Tolentino v. Secretary of
Finance: 49

It is enough to say that the parties to a contract cannot, through the exercise of prophetic
discernment, fetter the exercise of the taxing power of the State. For not only are existing
laws read into contracts in order to fix obligations as between parties, but the reservation
of essential attributes of sovereign power is also read into contracts as a basic postulate
of the legal order. The policy of protecting contracts against impairment presupposes the
maintenance of a government which retains adequate authority to secure the peace and
good order of society.
 In truth, the Contract Clause has never been thought as a limitation on the
exercise of the States power of taxation save only where a tax exemption has been
granted for a valid consideration. x x x.

WHEREFORE, the instant petition is DENIED for lack of merit. Costs against
petitioner.

SO ORDERED.
SECOND DIVISION

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

x----------------------------------------------------------------------------x

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 of P10,204,916.17 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.50 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 2001.51 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 sheets52 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
2002.53 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.54 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.55
 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.56 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.57

On 5 May 2003, the Malabon RTC rendered its Decision dismissing Petrons
complaint and ordering the payment of the assessed amount.58 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.59 Petron also filed a motion for reconsideration of the order
of denial, but this was likewise denied.60

On 4 August 2003, this Court issued a TRO, enjoining the respondents from
closing Petrons Navotas bulk plant or otherwise interfering in its operations.61

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.62 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,63 Allied Thread Co. Inc.
v. City Mayor of Manila,64 and Iloilo Bottlers, Inc. v. City of Iloilo,65 as having
explained that an excise tax is a tax upon the performance, carrying on, or the
exercise of an activity.66 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,67 where the Court had noted, [a] tax on
business is distinct from a tax on the article itself.68
 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,69 tobacco products,70 mineral products71
automobiles,72 and such non-essential goods as jewelry, goods made of precious
metals, perfumes, and yachts and other vessels intended for pleasure or sports.73

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,,74 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
1939,75 as amended, or the NIRC of 197776 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.77 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.78 This definition was carried over into the
present NIRC of 1997.79 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.80

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 Medina vs. 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.81

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.82 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.83

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
Appeals84 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.85 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.86
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;87 those engaged in the export or
commerce of essential commodities;88 retailers;89 contractors and other
independent contractors;90 banks and financial institutions;91 and peddlers
engaged in the sale of any merchandise or article of commerce.92 This obviously
broad power is further supplemented by paragraph (h) of Section 143 which
authorizes the sanggunian to impose taxes on any other businesses not otherwise
specified under Section 143 which the sanggunian concerned may deem proper to
tax.93

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. Reyes94

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.95 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.96 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:97

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.98 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. 436.99 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,100 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.101
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.102 [T]he upswing and downswing of our economy materially depend on the
oscillation of oil.103 Fluctuations in the supply and price of oil products have a
dramatic effect on economic development and public welfare.104

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 is REVERSED 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.

EN BANC

[G.R. No. 133495. September 3, 1998]

BENJAMIN U. BORJA, JR., petitioner vs. COMMISSION ON ELECTIONS

and JOSE T. CAPCO, JR., respondents.

DECISION
MENDOZA, J.:

This case presents for determination the scope of the constitutional provision barring elective
officials, with the exception of barangay officials, from serving more than three consecutive terms.
In particular, the question is whether a vice-mayor who succeeds to the office of mayor by
operation of law and serves the remainder of the term is considered to have served a term in that
office for the purpose of the three-term limit.
Private respondent Jose T. Capco, Jr. was elected vice-mayor of Pateros on January 18, 1988
for a term ending June 30, 1992. On September 2, 1989, he became mayor, by operation of law,
upon the death of the incumbent, Cesar Borja. On May 11, 1992, he ran and was elected mayor for
a term of three years which ended on June 30, 1995. On May 8, 1995, he was reelected mayor for
another term of three years ending June 30, 1998.i
On March 27, 1998, private respondent Capco filed a certificate of candidacy for mayor of
Pateros relative to the May 11, 1998 elections. Petitioner Benjamin U. Borja, Jr., who was also a
candidate for mayor, sought Capcos disqualification on the theory that the latter would have
already served as mayor for three consecutive terms by June 30, 1998 and would therefore be
ineligible to serve for another term after that.
On April 30, 1998, the Second Division of the Commission on Elections ruled in favor of
petitioner and declared private respondent Capco disqualified from running for reelection as mayor
of Pateros.ii However, on motion of private respondent, the COMELEC en banc, voting 5-2,
reversed the decision and declared Capco eligible to run for mayor in the May 11, 1998 elections.iii
The majority stated in its decision:
In both the Constitution and the Local Government
Code, the three-term limitation refers to the term of
office for which the local official was elected. It made
no reference to succession to an office to which he was
not elected. In the case before the Commission,
respondent Capco was not elected to the position of
mayor in the January 18, 1988 local elections. He
succeeded to such office by operation of law and served
for the unexpired term of his predecessor.
Consequently, such succession into office is not
counted as one (1) term for purposes of the computation
of the three-term limitation under the Constitution and
the Local Government Code.
Accordingly, private respondent was voted for in the elections. He received 16,558 votes
against petitioners 7,773 votes and was proclaimed elected by the Municipal Board of Canvassers.
This is a petition for certiorari brought to set aside the resolution, dated May 7, 1998, of he
COMELEC and to seed a declaration that private respondent is disqualified to serve another term
as Mayor of Pateros, Metro Manila.
Petitioner contends that private respondent Capcos service as mayor from September 2, 1989
to June 30, 992 should be considered as service for full one term, and since he thereafter served
from 1992 to 1998 two more terms as mayor, he should be considered to have served three
consecutive terms within the contemplation of Art. X, 8 of the Constitution and 43(b) of the Local
Government Code. Petitioner stresses the fact that, upon the death of Mayor Cesar Borja on
September 2, 1989, private respondent became the mayor and thereafter served the remainder of
the term. Petitioner argues that it is irrelevant that private respondent became mayor by succession
because the purpose of the constitutional provision in limiting the number of terms elective local
officials may serve is to prevent a monopolization of political power.
This contention will not bear analysis. Article X, 8 of the Constitution provides:
SEC. 8. The term of office of elective local officials, except barangay officials, which shall be
determined by law, shall be three years and no such official shall serve for more than three consecutive
terms. Voluntary renunciation of the office for any length of time shall not be considered as an interruption
in the continuity of his service for the full term for which he was elected.
This provision is restated in 43(b) of the Local Government Code (R.A. No. 7160):
Sec. 43. Term of Office - . . .
(b) No local elective official shall serve for more than three (3) consecutive terms in the same position.
Voluntary renunciation of the office for any length of time shall not be considered as an interruption in
the continuity of service for the full term for which the elective official concerned was elected.
First, to prevent the establishment of political dynasties is not the only policy embodied in the
constitutional provision in question. The other policy is that of enhancing the freedom of choice
of the people. To consider, therefore, only stay in office regardless of how the official concerned
came to that office whether by election or by succession by operation of law would be to disregard
one of the purposes of the constitutional provision in question.
Thus, a consideration of the historical background of Art. X, 8 of the Constitution reveals that
the members of the Constitutional Commission were as much concerned with preserving the
freedom of choice of the people as they were with preventing the monopolization of political
power. Indeed, they rejected a proposal put forth by Commissioner Edmundo F. Garcia that after
serving three consecutive terms or nine years there should be no further reelection for local and
legislative officials. Instead, they adopted the alternative proposal of Commissioner Christian
Monsod that such officials be simply barred from running for the same position in the succeeding
election following the expiration of the third consecutive term.iv Monsod warned against
prescreening candidates [from] whom the people will choose as a result of the proposed absolute
disqualification, considering that the draft constitution provision recognizing peoples power.v
Commissioner Blas F. Ople, who supported the Monsod proposal, said:
The principle involved is really whether this Commission shall impose a temporary or a
perpetual disqualification on those who have served their terms in accordance with the limits on
consecutive service as decided by the Constitutional Commission. I would be very wary about this
Commission exercising a sort of omnipotent power in order to disqualify those who will already
have served their terms from perpetuating themselves in office. I think the Commission achieves
its purpose in establishing safeguards against the excessive accumulation of power as a result of
consecutive terms. We do put a cap on consecutive service in the case of the President, six years;
in the case of the Vice-President, unlimited; and in the case of the Senators, one reelection. In the
case of the Members of Congress, both from the legislative districts and from the party list and
sectoral representation, this is now under discussion and later on the policy concerning local
officials will be taken up by the Committee on Local Governments. The principle remains the
same. I think we want to prevent future situations where, as a result of continuous service and
frequent reelections, officials from the President down to the municipal mayor tend to develop a
proprietary interest in their position and to accumulate those powers and perquisites that permit
them to stay on indefinitely or to transfer these posts to members of their families in a subsequent
election. I think that is taken care of because we put a gap on the continuity or the unbroken service
of all of these officials. But where we now decide to put these prospective servants of the people
or politicians, if we want to use the coarser term, under a perpetual disqualification, I have a feeling
that we are taking away too much from the people, whereas we should be giving as much to the
people as we can in terms of their own freedom of choice.vi
Other commissioners went on record against perpetually disqualifying elective officials who
have served a certain number of terms as this would deny the right of the people to choose. As
Commissioner Yusup R. Abubakar asked, why should we arrogate unto ourselves the right to
decide what the people want?vii
Commisioner Felicitas S. Aquino spoke in the same vein when she called on her colleagues
to "allow the people to exercise their own sense of proportion and [rely] on their own strength to
curtail power when it overreaches itself.viii
Commissioner Teodoro C. Bacani stressed: Why should we not leave [perpetual
disqualification after serving a number of terms] to the premise accepted by practically everybody
here that our people are politically mature? Should we use this assumption only when it is
convenient for us, and not when it may also lead to a freedom of choice for the people and for
politicians who may aspire to serve them longer?ix
Two ideas thus emerge from a consideration of the proceedings of the Constitutional
Commission. The first is the notion of service of term, derived from the concern about the
accumulation of power as a result of a prolonged stay in office. The second is the idea of election,
derived from the concern that the right of the people to choose those whom they wish to govern
them be preserved.
It is likewise noteworthy that, in discussing term limits, the drafters of the Constitution did so
on the assumption that the officials concerned were serving by reason of reelection. This is clear
from the following exchange in the Constitutional Commission concerning term limits, now
embodied in Art. VI 4 and 7 of the Constitution, for members of Congress:
MR. GASCON. I would like to ask a question with regard to the issue after the second term. We will
allow the Senator to rest for a period of time before he can run again?
MR. DAVIDE. That is correct.
MR. GASCON. And the question that we left behind before if the Gentlemen will remember- was:
How long will that period of rest be? Will it be one election which is three years or one term
which is six years?
MR. DAVIDE. If the Gentlemen will remember, Commissioner Rodrigo expressed the view
that during the election following the expiration of the first 12 years, whether such
election will be on the third year or on the sixth year thereafter, this particular member of
the Senate can run. So it is not really a period of hibernation for six years. That was the
Committees stand.x
Indeed, a fundamental tenet of representative democracy is that the people should be allowed
to choose whom they please to govern them.xi To bar the election of a local official because he has
already served three terms, although the first as a result of succession by operation of law rather
than election, would therefore be to violate this principle.
 Second, not only historical examination but textual analysis as well supports the ruling of the
COMELEC that Art. X, 8 contemplates service by local officials for three consecutive terms as a
result of election. The first sentence speaks of the term of office of elective local officials and bars
such official[s] from serving for more than three consecutive terms. The second sentence, in
explaining when an elective local official may be deemed to have served his full term of office,
states that voluntary renunciation of the office for any length of time shall not be considered as an
interruption in the continuity of his service for the full term for which he was elected. The term
served must therefore be one for which [the official concerned] was elected. The purpose of this
provision is to prevent a circumvention of the limitation on the number of terms an elective official
may serve. Conversely, if he is not serving a term for which he was elected because he is simply
continuing the service of the official he succeeds, such official cannot be considered to have fully
served the term now withstanding his voluntary renunciation of office prior to its expiration.
Reference is made to Commissioner Bernas comment on Art. VI, 7, which similarly bars
members of the House of Representatives from serving for more than three terms. Commissioner
Bernas states that if one is elected Representative to serve the unexpired term of another, that
unexpired term, no matter how short, will be considered one term for the purpose of computing
the number of successive terms allowed.xii
This is actually based on the opinion expressed by Commissioner Davide in answer to a query
of Commissioner Suarez: For example, a special election is called for a Senator, and the Senator
newly elected would have to serve the unexpired portion of the term. Would that mean that serving
the unexpired portion of the term is already considered one term? So, half a term, which is actually
the correct statement, plus one term would disqualify the Senator concerned from running? Is that
the meaning of this provision on disqualification, Madam President? Commissioner Davide said:
Yes, because we speak of term and if there is a special election, he will serve only for the unexpired
portion of that particular term plus one more term for the Senator and two more terms for the
Members of the Lower House.xiii
There is a difference, however, between the case of a vice-mayor and that of a member of the
House of Representatives who succeeds another who dies, resigns, becomes incapacitated, or is
removed from office. The vice-mayor succeeds to the mayorship by operation of law. xiv On the
other hand, the Representative is elected to fill the vacancy.xv In a real sense, therefore, such
Representative serves a term for which he was elected. As the purpose of the constitutional
provision is to limit the right ot be elected and to serve in Congress, his service of the unexpired
term is rightly counted as his first term. Rather than refute what we believe to be the intendment
of Art. X, 8 with regard to elective local officials, the case of a Representative who succeeds
another confirms the theory.
Petitioner also cites Art. VII, 4 of the Constitution which provides for succession of the Vice-
President to the Presidency in case of vacancy in that office. After stating that The President shall
not be eligible for any reelection, this provision says that No person who has succeeded as
President and has served as such for more than four years shall be qualified for election to the same
office at any time. Petitioner contends that, by analogy, the vice-mayor should likewise be
considered to have served a full term as mayor if he succeeds to the latters office and serves for
the remainder of the term.
The framers of the Constitution included such a provision because, without it, the Vice-
President, who simply steps into the Presidency by succession would be qualified to run for
President even if he has occupied that office for more than four years. The absence of a similar
provision in Art. X, 8 on elective local officials throws in bold relief the difference between the
two cases. It underscores the constitutional intent to cover only the terms of office to which one
may have been elected for purpose of the three-term limit on local elective officials, disregarding
for this purpose service by automatic succession.
There is another reason why the Vice-President who succeeds to the Presidency and serves in
that office for more than four years is ineligible for election as President. The Vice-President is
elected primarily to succeed the President in the event of the latters death, permanent disability,
removal or resignation. While he may be appointed to the cabinet, his becoming so is entirely
dependent on the good graces of the President. In running for Vice-President, he may thus be said
to also seek the Presidency. For their part, the electors likewise choose as Vice-President the
candidate who they think can fill the Presidency in the event it becomes vacant. Hence, service in
the presidency for more than four years may rightly be considered as service for a full term.
This is not so in the case of the vice-mayor. Under the local Government Code, he is the
presiding officer of the sanggunian and he appoints all officials and employees of such local
assembly. He has distinct powers and functions, succession to mayorship in the event of vacancy
therein being only one of them.xvi It cannot be said of him, as much as of the Vice-President in the
event of a vacancy in the Presidency, that in running for vice-mayor, he also seeks the mayorship.
His assumption of the mayorship in the event of vacancy is more a matter of chance than of design.
Hence, his service in that office should not be counted in the application of any term limit.
To recapitulate, the term limit for elective local officials must be taken to refer to the right to
be elected as well as the right to serve in the same elective position. Consequently, it is not enough
that an individual has served three consecutive terms in an elective local office, he must also have
been elected to the same position for the same number of times before the disqualification can
apply. This point can be made clearer by considering the following cases or situations:
Case No. 1. Suppose A is a vice-mayor who becomes mayor by reason of the death of the incumbent.
Six months before the next election, he resigns and is twice elected thereafter. Can he run again for mayor
in the next election.
Yes, because although he has already first served as mayor by succession and subsequently resigned
from office before the full term expired, he has not actually served three full terms in all for the purpose of
applying the term limit. Under Art. X, 8, voluntary renunciation of the office is not considered as an
interruption in the continuity of his service for the full term only if the term is one for which he was elected.
Since A is only completing the service of the term for which the deceased and not he was elected. A cannot
be considered to have completed one term. His resignation constitutes an interruption of the full term.
Case No. 2. Suppose B is elected Mayor and, during his first term, he is twice suspended for
misconduct for a total of 1 year. If he is twice reelected after that, can he run for one more term in the next
election?
Yes, because he has served only two full terms successively.
In both cases, the mayor is entitled to run for reelection because the two conditions for the
application of the disqualification provisions have not concurred, namely, that the local official
concerned has been elected three consecutive times and that he has fully served three consecutive
terms. In the first case, even if the local official is considered to have served three full terms
notwithstanding his resignation before the end of the first term, the fact remains that he has not
been elected three times. In the second case, the local official has been elected three consecutive
times, but he has not fully served three consecutive terms.
Case No. 3. The case of vice-mayor C who becomes mayor by succession involves a total failure of
the two conditions to concur for the purpose of applying Art. X 8. Suppose he is twice elected after that
term, is he qualified to run again in the next election?
Yes, because he was not elected to the office of the mayor in the first term but simply found himself
thrust into it by operation of law. Neither had he served the full term because he only continued the service,
interrupted by the death , of the deceased mayor.
To consider C in the third case to have served the first term in full and therefore ineligible to
run a third time for reelection would be not only to falsify reality but also to unduly restrict the
right of the people to choose whom they wish to govern them. If the vice-mayor turns out to be a
bad mayor, the people can remedy the situation by simply not reelecting him for another term. But
if, on the other hand, he proves to be a good mayor, there will be no way the people can return him
to office (even if it is just the third time he is standing for reelection) if his service of the first term
is counted as one of the purpose of applying the term limit.
To consider C as eligible for reelection would be in accord with the understanding of the
Constitutional Commission that while the people should be protected from the evils that a
monopoly of political power may bring about, care should be taken that their freedom of choice is
not unduly curtailed.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.

EN BANC

[G.R. No. 135150. July 28, 1999]

ROMEO LONZANIDA, petitioner, vs. THE HONORABLE COMMISSION

ON ELECTION and EUFEMIO MULI, repondents.

DECISION
GONZAGA-REYES, J.:
 This petition for certiorari under Rule 65 of the Rules of Court seeks to set aside the
resolutions issued by the COMELEC First Division dated May 21, 1998 and by the COMELEC
En Banc dated August 11, 1998 in SPA 98-190 entitled, In the matter of the Petition to Disqualify
Mayoralty Candidate Romeo Lonzanida of San Antonio, Zambales. Eufemio Muli, petitioner, vs.
Romeo Lonzanida, respondent. The assailed resolutions declared herein petitioner Romeo
Lonzanida disqualified to run for Mayor in the municipality of San Antonio, Zambales in the May
1998 elections and that all votes cast in his favor shall not be counted and if he has been proclaimed
winner the said proclamation is declared null and void.
Petitioner Romeo Lonzanida was duly elected and served two consecutive terms as municipal
mayor of San Antonio, Zambales prior to the May 8, 1995 elections. In the May 1995 elections
Lonzanida ran for mayor of San Antonio, Zambales and was again proclaimed winner. He assumed
office and discharged the duties thereof. His proclamation in 1995 was however contested by his
then opponent Juan Alvez who filed an election protest before the Regional Trial Court of
Zambales, which in a decision dated January 9, 1997 declared a failure of elections. The court
ruled:
PREMISES CONSIDERED, this court hereby renders judgment declaring the results of the election
for the office of the mayor in San Antonio, Zambales last May 8, 1995 as null and void on the ground that
there was a failure of election.
Accordingly, the office of the mayor of the Municipality of San Antonio, Zambales is hereby declared
vacant.
Both parties appealed to the COMELEC. On November 13, 1997 the COMELEC resolved the
election protest filed by Alvez and after a revision and re-appreciation of the contested ballots
declared Alvez the duly elected mayor of San Antonio, Zambales by plurality of votes cast in his
favor totaling 1,720 votes as against 1,488 votes for Lonzanida. On February 27, 1998 the
COMELEC issued a writ of execution ordering Lonzanida to vacate the post, which obeyed, and
Alvez assumed office for the remainder of the term.
In the May 11, 1998 elections Lonzanida again filed his certificate of candidacy for mayor of
San Antonio. On April 21, 1998 his opponent Eufemio Muli timely filed a petition to disqualify
Lonzanida from running for mayor of San Antonio in the 1998 elections on the ground that he had
served three consecutive terms in the same post. On May 13, 1998, petitioner Lonzanida was
proclaimed winner. On May 21, 1998 the First Division of the COMELEC issued the questioned
resolution granting the petition for disqualification upon a finding that Lonzanida had served three
consecutive terms as mayor of San Antonio, Zambales and he is therefore disqualified to run for
the same post for the fourth time. The COMELEC found that Lonzanidas assumption of office by
virtue of his proclamation in May 1995, although he was later unseated before the expiration of
the term, should be counted as service for one full term in computing the three term limit under
the Constitution and the Local Government Code. The finding of the COMELEC First Division
was affirmed by the COMELEC En Banc in a resolution dated August 11, 1998.
Petitioner Lonzanida challenges the validity of the COMELEC resolutions finding him
disqualified to run for mayor of San Antonio Zambales in the 1998 elections. He maintains that he
was duly elected mayor for only two consecutive terms and that his assumption of office in 1995
cannot be counted as service of a term for the purpose of applying the three term limit for local
government officials, because he was not the duly elected mayor of San Antonio in the May 1995
elections as evidenced by the COMELEC decision dated November 13, 1997 in EAC no. 6-97
entitled Juan Alvez, Protestant-Appellee vs. Romeo Lonzanida, Protestee-Appellant, wherein the
COMELEC declared Juan Alvez as the duly elected mayor of San Antonio, Zambales. Petitioner
also argues that the COMELEC ceased to have jurisdiction over the petition for disqualification
after he was proclaimed winner in the 1998 mayoral elections; as the proper remedy is a petition
for quo warranto with the appropriate regional trial court under Rule 36 of the COMELEC Rules
of Procedure.
Private respondent Eufemio Muli filed comment to the petition asking this court to sustain the
questioned resolutions of the COMELEC and to uphold its jurisdiction over the petition for
disqualification. The private respondent states that the petition for disqualification was filed on
April 21, 1998 or before the May 1998 mayoral elections. Under section 6, RA 6646 and Rule 25
of the COMELEC Rules of Procedure petitions for disqualification filed with the COMELEC
before the elections and/or proclamation of the party sought to be disqualified may still be herd
and decided by the COMELEC after the election and proclamation of the said party without
distinction as to the alleged ground for disqualification, whether for acts constituting an election
offense or for ineligibility. Accordingly, it is argued that the resolutions of the COMELEC on the
merits of the petition for disqualification were issued within the commissions jurisdiction. As
regards the merits of the case, the private respondent maintains that the petitioners assumption of
office in 1995 should be considered as service of one full term because he discharged the duties of
mayor for almost three years until March 1, 1998 or barely a few months before the next mayoral
elections.
The Solicitor-General filed comment to the petition for the respondent COMELEC praying
for the dismissal of the petition. The Solicitor-General stressed that section 8, Art. X of the
Constitution and section 43 (b), Chapter I of the Local Government Code which bar a local
government official from serving more than three consecutive terms in the same position speaks
of service of a term and so the rule should be examined in this light. The public respondent
contends that petitioner Lonzanida discharged the rights and duties of mayor from 1995 to 1998
which should be counted as service of one full term, albeit he was later unseated, because he served
as mayor for the greater part of the term. The issue of whether or not Lonzanida served as a de jure
or de facto mayor for the 1995-1998 term is inconsequential in the application of the three term
limit because the prohibition speaks of service of a term which was intended by the framers of the
Constitution to foil any attempt to monopolize political power. It is likewise argued by the
respondent that a petition for quo warranto with the regional trial court is proper when the petition
for disqualification is filed after the elections and so the instant petition for disqualification which
was filed before the elections may be resolved by the COMELEC thereafter regardless of the
imputed basis of disqualification.
The petitioner filed Reply to the comment. It is maintained that the petitioner could not have
served a valid term from 1995 to 1998 although he assumed office as mayor for that period because
he was no t lawfully elected to the said office. Moreover, the petitioner was unseated before the
expiration of the term and so his service for the period cannot be considered as one full term. As
regards the issue of jurisdiction, the petitioner reiterated in his Reply that the COMELEC ceased
to have jurisdiction to hear the election protest after the petitioners proclamation.
The petition has merit.
Section 8, Art. X of the Constitution provides:
 Sec. 8. The term of office of elective local officials, except barangay officials, which shall be
determined by law shall be three years and no such officials shall serve for more than three consecutive
terms. Voluntary renunciation of the office for any length of time shall not be considered as an interruption
in the continuity of his service for the full term for which he was elected.
Section 43 of the Local Government Code (R.A. No. 7160) restates the same rule:
Sec. 43. Term of Office.
(b) No local elective official shall serve for more than three consecutive terms in the same
position. Voluntary renunciation of the office for any length of time shall not be considered as an
interruption in the continuity of service for the full term for which the elective official concerned
was elected.
The issue before us is whether petitioner Lonzanidas assumption of office as mayor of San
Antonio Zambales from May 1995 to March 1998 may be considered as service of one full term
for the purpose of applying the three-term limit for elective local government officials.
The records of the 1986 Constitutional Commission show that the three-term limit which is
now embodied in section 8, Art. X of the Constitution was initially proposed to be an absolute bar
to any elective local government official from running for the same position after serving three
consecutive terms. The said disqualification was primarily intended to forestall the accumulation
of massive political power by an elective local government official in a given locality in order to
perpetuate his tenure in office. The delegates also considered the need to broaden the choices of
the electorate of the candidates who will run for office, and to infuse new blood in the political
arena by disqualifying officials from running for the same office after a term of nine years. The
mayor was compared by some delegates to the President of the Republic as he is a powerful chief
executive of his political territory and is most likely to form a political dynasty. xvii The drafters
however, recognized and took note of the fact that some local government officials run for office
before they reach forty years of age; thus to perpetually bar them from running for the same office
after serving nine consecutive years may deprive the people of qualified candidates to choose from.
As finally voted upon, it was agreed that an elective local government official should be barred
from running for the same post after three consecutive terms. After a hiatus of at least one term,
he may again run for the same office.xviii
The scope of the constitutional provision barring elective officials with the exception of
barangay officials from serving more than three consecutive terms was discussed at length in the
case of Benjamin Borja, Jr., vs. COMELEC and Jose Capco, Jr.xix where the issue raised was
whether a vice-mayor who succeeds to the office of the mayor by operation of law upon the death
of the incumbent mayor and served the remainder of the term should be considered to have served
a term in that office for the purpose of computing the three term limit. This court pointed out that
from the discussions of the Constitutional Convention it is evident that the delegates proceeded
from the premise that the officials assumption of office is by reason of election. This Court stated:xx
Two ideas emerge from a consideration of the proceedings of the Constitutional Commission. The first
is the notion of service of term, derived from the concern about the accumulation of power as a result of a
prolonged stay in office. The second is the idea of election, derived from the concern that the right of the
people to choose those whom they wish to govern them be preserved.
It is likewise noteworthy that, in discussing term limits, the drafters of the Constitution did so on the
assumption that the officials concerned were serving by reason of election. This is clear from the following
exchange in the Constitutional Commission concerning term limits, now embodied in Art. VI sections 4
and 7 of the Constitution, for members of Congress:
MR. GASCON. I would like to ask a question with regard to the issue after the second term. We will
allow the Senator to rest for a period of time before he can run again?
MR. DAVIDE. That is correct.
MR. GASCON. And the question that we left behind before-if the Gentlemen will remember-was: How
long will that period of rest be? Will it be one election which is three years or one term which is
six years?
MR. DAVIDE. If the Gentlemen will remember, Commissioner Rodrigo expressed the view that during
the election following the expiration of the first 12 years, whether such election will be on the third
year or on the sixth year thereafter, his particular member of the Senate can run. So it is not really
a period of hibernation for six years. That was the Committees stand.
xxxx xxxx xxxx
Second, not only historical examination but textual analysis as well supports the ruling of the COMELEC
that Art X, section 8 contemplates service by local officials for three consecutive terms as a result of
election. The first sentence speaks of the term of office of elective local officials and bars such officials
from serving for more than three consecutive terms. The second sentence, in explaining when an elective
official may be deemed to have served his full term of office, states that voluntary renunciation of the office
for any length of time shall not be considered as an interruption in the continuity of his service for the full
term for which he was elected. The term served must therefore be one for which the the official concerned
was elected. The purpose of the provision is to prevent a circumvention of the limitation on the number of
terms an elective official may serve.
This Court held that two conditions for the application of the disqualification must concur: 1) that
the official concerned has been elected for three consecutive terms in the same local government
post and 2) that he has fully served three consecutive terms. It stated:
To recapitulate, the term limit for elective local officials must be taken to refer to the right to be elected
as well as the right to serve in the same elective position. Consequently, it is not enough that an individual
has served three consecutive terms in an elective local office, he must also have been elected to the same
position for the same number of times before the disqualification can apply.
It is not disputed that the petitioner was previously elected and served two consecutive terms
as mayor of San Antonio Zambales prior to the May 1995 mayoral elections. In the May 1995
elections he again ran for mayor of San Antonio, Zambales and was proclaimed winner. He
assumed office and discharged the rights and duties of mayor until March 1998 when he was
ordered to vacate the post by reason of the COMELEC decision dated November 13, 1997 on the
election protest against the petitioner which declared his opponent Juan Alvez, the duly elected
mayor of San Antonio. Alvez served the remaining portion of the 1995-1998 mayoral term.
The two requisites for the application of the three term rule are absent. First, the petitioner
cannot be considered as having been duly elected to the post in the May 1995 elections, and second,
the petitioner did not fully serve the 1995-1998 mayoral term by reason of involuntary
relinquishment of office. After a re-appreciation and revision of the contested ballots the
COMELEC itself declared by final judgment that petitioner Lonzanida lost in the May 1995
mayoral elections and his previous proclamation as winner was declared null and void. His
assumption of office as mayor cannot be deemed to have been by reason of a valid election but by
reason of a void proclamation. It has been repeatedly held by this court that a proclamation
subsequently declared void is no proclamation at allxxi and while a proclaimed candidate may
assume office on the strength of the proclamation of the Board of Canvassers he is only a
presumptive winner who assumes office subject to the final outcome of the election protest.xxii
Petitioner Lonzanida did not serve a term as mayor of San Antonio, Zambales from May 1995 to
March 1998 because he was not duly elected to the post; he merely assumed office as presumptive
winner, which presumption was later overturned by the COMELEC when it decided with finality
that Lonzanida lost in the May 1995 mayoral elections.
Second, the petitioner cannot be deemed to have served the May 1995 to 1998 term because
he was ordered to vacate his post before the expiration of the term. The respondents contention
that the petitioner should be deemed to have served one full term from May 1995-1998 because
he served the greater portion of that term has no legal basis to support it; it disregards the second
requisite for the application of the disqualification, i.e., that he has fully served three consecutive
terms. The second sentence of the constitutional provision under scrutiny states, Voluntary
renunciation of office for any length of time shall not be considered as an interruption in the
continuity of service for the full term for which he was elected. The clear intent of the framers of
the constitution to bar any attempt to circumvent the three-term limit by a voluntary renunciation
of office and at the same time respect the peoples choice and grant their elected official full service
of a term is evident in this provision. Voluntary renunciation of a term does not cancel the
renounced term in the computation of the three term limit; conversely, involuntary severance from
office for any length of time short of the full term porvided by law amounts to an interruption of
continuity of service. The petitioner vacated his post a few months before the next mayoral
elections, not by voluntary renunciation but in compliance with the legal process of writ of
execution issued by the COMELEC to that effect. Such involuntary severance from office is an
interruption of continuity of service and thus, the petitioner did not fully serve the 1995-1998
mayoral term.
In sum, the petitioner was not the duly elected mayor and that he did not hold office for the
full term; hence, his assumption of office from May 1995 to March 1998 cannot be counted as a
term for purposes of computing the three term limit. The Resolution of the COMELEC finding
him disqualified on this ground to run in the May 1998 mayoral elections should therefore be set
aside.
The respondents harp on the delay in resolving the election protest between petitioner and his
then opponent Alvez which took roughly about three years and resultantly extended the petitioners
incumbency in an office to which he was not lawfully elected. We note that such delay cannot be
imputed to the petitioner. There is no specific allegation nor proof that the delay was due to any
political maneuvering on his part to prolong his stay in office. Moreover, protestant Alvez, was
not without legal recourse to move for the early resolution of the election protest while it was
pending before the regional trial court or to file a motion for the execution of the regional trial
courts decision declaring the position of mayor vacant and ordering the vice-mayor to assume
office while the appeal was pending with the COMELEC. Such delay which is not here shown to
have been intentionally sought by the petitioner to prolong his stay in office cannot serve as basis
to bar his right to be elected and to serve his chosen local government post in the succeeding
mayoral election.
The petitioners contention that the COMELEC ceased to have jurisdiction over the petition
for disqualification after he was proclaimed winner is without merit. The instant petition for
disqualification was filed on April 21, 1998 or before the May 1998 elections and was resolved on
May 21, 1998 or after the petitioners proclamation. It was held in the case of Sunga vs. COMELEC
and Trinidadxxiii that the proclamation nor the assumption of office of a candidate against whom a
petition for disqualification is pending before the COMELEC does not divest the COMELEC of
jurisdiction to continue hearing the case and to resolve it on the merits.
Section 6 of RA 6646 specifically mandates that:
Sec. 6. Effects of disqualification Case.- any candidate who has been declared by final judgment to be
disqualified shall not be voted for, and the votes cast for him shall not be counted. If for any reason a
candidate is not declared by final judgment before an election to be disqualified and he is voted for and
receives the winning number of votes in such election, the court or commission shall continue with the trial
and hearing of the action, inquiry or protest and, upon motion of the complainant or any intervenor, may
during the pendency thereof order the suspension of the proclamation of such candidate whenever the
evidence of his guilt is strong.
This court held that the clear legislative intent is that the COMELEC should continue the trial
and hearing of the disqualification case to its conclusion i.e., until judgment is rendered. The
outright dismissal of the petition for disqualification filed before the election but which remained
unresolved after the proclamation of the candidate sought to be disqualified will unduly reward
the said candidate and may encourage him to employ delaying tactics to impede the resolution of
the petition until after he has been proclaimed.
The court stated:
Clearly, the legislative intent is that the COMELEC should continue the trial and hearing of the
disqualification case to its conclusion, i.e., until judgment is rendered thereon. The word shall signified that
this requirement of the law is mandatory, operating to impose a positive duty which must be enforced.
Theimplication is that the COMELEC is left with no discretion but to proceed with the disqualification case
even after the election. Thus, in providing for the outright dismissal of the disqualification case which
remains unresolved after the election, Silvestre vs. Duavit in effect disallows what R. A. No. 6646
imperatively requires. This amounts to a quasi-judicial legislation by the COMELEC which cannot be
countenanced and is invalid for having been issued beyond the scope of its authority. Interpretative rulings
of quasi-judicial bodies or administrative agencies must always be in perfect harmony with statutes and
should be for the sole purpose of carrying their general provisions into effect. By such interpretative or
administrative rulings, of course, the scope of the law itself cannot be limited. Indeed, a quasi-judicial body
or an administrative agency for that matter cannot amend an act of Congress. Hence, in case of a discrepancy
between the basic law and an interpretative or administrative ruling, the basic law prevails.
Besides, the deleterious effect of the Silvestre ruling is not difficult to forsee. A candidate guilty of
election offenses would be undeservedly rewarded, instead of punished, by the dismissal of
thedisqualification case against him simply because the investigating body was unable, for any reason
caused upon it, to determine before the election if the offenses were indeed committed by the candidate
sought to be disqualified. All that the erring aspirant would need to do is to employ delaying tactics so that
the disqualification case based on the commission of election offenses would not be decided before the
election. This scenario is productive of more fraud which certainly is not the main intent and purpose of the
law.
The fact that Trinidad was already proclaimed and had assumed the position of mayor did not divest
the COMELEC of authority and jurisdiction to continue the hearing and eventually decide the
disqualification case. In Aguam v. COMELEC this Court held-
Time and again this Court has given its imprimatur on the principle that COMELEC is with
 authority to annul any canvass and proclamation which was illegally made. The fact that a
candidate proclaimed has assumed office, we have said, is no bar to the exercise of such power.
It of course may not be availed of where there has been a valid proclamation. Since private
respondents petition before the COMELEC is precisely directed at the annulment of the canvass
and proclamation, we perceive that inquiry into this issue is within the area allocated by the
Constitution and law to COMELEC xxx Really, were a victim of a proclamation to be precluded
from challenging the validity thereof after that proclamation and the assumption of office
thereunder, baneful effects may easily supervene.
It must be emphasized that the purpose of a disqualification proceeding is to prevent the candidate
from running or, if elected. From serving, or to prosecute him for violation of the election laws. Obviously,
the fact that a candidate has been proclaimed elected does not signify that his disqualification is deemed
condoned and may no longer be the subject of a separate investigation.
ACCORDINGLY, the petition is granted. The assailed resolutions of the COMELEC
declaring petitioner Lonzanida disqualified to run for mayor in the 1998 mayoral elections are
hereby set aside.
SO ORDERED.

EN BANC

[G.R. No. 147927. February 4, 2002]

RAYMUNDO M. ADORMEO, petitioner, vs. COMMISSION ON ELECTIONS and RAMON

Y. TALAGA, JR., respondents.

DECISION

QUISUMBING, J.:

Before us is a petition for certiorari, with a prayer for a writ of preliminary injunction and/or
temporary restraining order, to nullify and set aside the resolution dated May 9, 2001 of public
respondent Commission on Elections in Comelec SPA No. 01-055, which granted the motion for
reconsideration and declared private respondent Ramon Y. Talaga, Jr., qualified to run for Mayor
in Lucena City for the May 14, 2001 election. Petitioner prays that votes cast in private
respondents favor should not be counted; and should it happen that private respondent had been
already proclaimed the winner, his proclamation should be declared null and void.

The uncontroverted facts are as follows:

Petitioner and private respondent were the only candidates who filed their certificates of
candidacy for mayor of Lucena City in the May 14, 2001 elections. Private respondent was then
the incumbent mayor.

Private respondent Talaga, Jr. was elected mayor in May 1992. He served the full term. Again,
he was re-elected in 1995-1998. In the election of 1998, he lost to Bernard G. Tagarao. In the
recall election of May 12, 2000, he again won and served the unexpired term of Tagarao until
June 30, 2001.

On March 2, 2001, petitioner filed with the Office of the Provincial Election Supervisor, Lucena
City a Petition to Deny Due Course to or Cancel Certificate of Candidacy and/or Disqualification
of Ramon Y. Talaga, Jr., on the ground that the latter was elected and had served as city mayor
for three (3) consecutive terms as follows: (1) in the election of May 1992, where he served the
full term; (2) in the election of May 1995, where he again served the full term; and, (3) in the
recall election of May 12, 2000, where he served only the unexpired term of Tagarao after
having lost to Tagarao in the 1998 election. Petitioner contended that Talagas candidacy as
Mayor constituted a violation of Section 8, Article X of the 1987 Constitution which provides:

Sec. 8. The term of office of elective local officials, except barangay officials, which shall be
determined by law, shall be three years and no such official shall serve for more than three
consecutive terms. Voluntary renunciation of the office for any length of time shall not be
considered as an interruption in the continuity of his service for the full term for which he was
elected.

On March 9, 2001, private respondent responded that he was not elected City Mayor for three (3)
consecutive terms but only for two (2) consecutive terms. He pointed to his defeat in the 1998
election by Tagarao. Because of his defeat the consecutiveness of his years as mayor was
interrupted, and thus his mayorship was not for three consecutive terms of three years each.
Respondent added that his service from May 12, 2001 until June 30, 2001 for 13 months and
eighteen (18) days was not a full term, in the contemplation of the law and the Constitution. He
cites Lonzanida vs. COMELEC, G.R. No. 135150, 311 SCRA 602, 611 (1999), as authority to
the effect that to apply disqualification under Section 8, Article X of the Constitution, two (2)
conditions must concur, to wit: (a) that the official concerned has been elected for three
consecutive terms in the same local government post, and (b) that he has fully served three (3)
consecutive terms.

On April 20, 2001, the COMELEC, through the First Division, found private respondent Ramon
Y. Talaga, Jr. disqualified for the position of city mayor on the ground that he had already served
three (3) consecutive terms, and his Certificate of Candidacy was ordered withdrawn and/or
cancelled.

On April 27, 2001, private respondent filed a motion for reconsideration reiterating that three (3)
consecutive terms means continuous service for nine (9) years and that the two (2) years service
from 1998 to 2000 by Tagarao who defeated him in the election of 1998 prevented him from
having three consecutive years of service. He added that Tagaraos tenure from 1998 to 2000
could not be considered as a continuation of his mayorship. He further alleged that the recall
election was not a regular election, but a separate special election specifically to remove
incompetent local officials.

On May 3, 2001, petitioner filed his Opposition to private respondents Motion for
Reconsideration stating therein that serving the unexpired term of office is considered as one (1)
term.xxiv Petitioner further contended that Article 8 of the Constitution speaks of term and does
not mention tenure. The fact that private respondent was not elected in the May 1998 election to
start a term that began on June 30, 1998 was of no moment, according to petitioner, and what
matters is that respondent was elected to an unexpired term in the recall election which should be
considered one full term from June 30, 1998 to June 30, 2001.

On May 9, 2001, the COMELEC en banc ruled in favor of private respondent Ramon Y. Talaga,
Jr.. It reversed the First Divisions ruling and held that 1) respondent was not elected for three (3)
consecutive terms because he did not win in the May 11, 1998 elections; 2) that he was installed
only as mayor by reason of his victory in the recall elections; 3) that his victory in the recall
elections was not considered a term of office and is not included in the 3-term disqualification
rule, and 4) that he did not fully serve the three (3) consecutive terms, and his loss in the May 11,
1998 elections is considered an interruption in the continuity of his service as Mayor of Lucena
City.

On May 19, 2001, after canvassing, private respondent was proclaimed as the duly elected
Mayor of Lucena City.

Petitioner is now before this Court, raising the sole issue:

WHETHER OR NOT PUBLIC RESPONDENT COMELEC ACTED WITH GRAVE ABUSE

OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT
ISSUED ITS RESOLUTION DATED MAY 9, 2001, DECLARING PRIVATE RESPONDENT
RAMON Y. TALAGA, JR., QUALIFIED TO RUN FOR MAYOR IN LUCENA CITY FOR
THE MAY 14, 2001 ELECTIONS.xxv

Stated differently, was private respondent disqualified to run for mayor of Lucena City in the
May 14, 2001 elections?xxvi This issue hinges on whether, as provided by the Constitution, he
had already served three consecutive terms in that office.

Petitioner contends that private respondent was disqualified to run for city mayor by reason of
the three-term rule because the unexpired portion of the term of office he served after winning a
recall election, covering the period May 12, 2000 to June 30, 2001 is considered a full term. He
posits that to interpret otherwise, private respondent would be serving four (4) consecutive terms
of 10 years, in violation of Section 8, Article X of 1987 Constitutionxxvii and Section 43 (b) of
R.A. 7160, known as the Local Government Code.

Section 43. Term of Office.

xxx

(b) No local elective official shall serve for more than three (3) consecutive terms in the same
position. Voluntary renunciation of the office for any length of time shall not be considered as an
interruption in the continuity of service for the full term for which the elective official concerned
was elected.

Private respondent, in turn, maintains that his service as city mayor of Lucena is not consecutive.
He lost his bid for a second re-election in 1998 and between June 30, 1998 to May 12, 2000,
during Tagaraos incumbency, he was a private citizen, thus he had not been mayor for 3
consecutive terms.

In its comment, the COMELEC restated its position that private respondent was not elected for
three (3) consecutive terms having lost his third bid in the May 11, 1998 elections, said defeat is
an interruption in the continuity of service as city mayor of Lucena.

The issue before us was already addressed in Borja, Jr. vs. COMELEC, 295 SCRA 157, 169
(1998), where we held,

To recapitulate, the term limit for elective local officials must be taken to refer to the right to be
elected as well as the right to serve in the same elective position. Consequently, it is not enough
that an individual has served three consecutive terms in an elective local office, he must also
have been elected to the same position for the same number of times before the disqualification
can apply. This point can be made clearer by considering the following case or situation:

xxx

Case No. 2. Suppose B is elected mayor and, during his first term, he is twice suspended for
misconduct for a total of 1 year. If he is twice reelected after that, can he run for one more term
in the next election?

Yes, because he has served only two full terms successively.

xxx

To consider C as eligible for reelection would be in accord with the understanding of the
Constitutional Commission that while the people should be protected from the evils that a
monopoly of political power may bring about, care should be taken that their freedom of choice
is not unduly curtailed.
Likewise, in the case of Lonzanida vs. COMELEC, 311 SCRA 602, 611 (1999), we said,

This Court held that the two conditions for the application of the disqualification must concur: a)
that the official concerned has been elected for three consecutive terms in the same local
government post and 2) that he has fully served three consecutive terms.

Accordingly, COMELECs ruling that private respondent was not elected for three (3)
consecutive terms should be upheld. For nearly two years he was a private citizen. The
continuity of his mayorship was disrupted by his defeat in the 1998 elections.

Patently untenable is petitioners contention that COMELEC in allowing respondent Talaga, Jr. to
run in the May 1998 election violates Article X, Section 8 of 1987 Constitution.xxviii To bolster
his case, respondent adverts to the comment of Fr. Joaquin Bernas, a Constitutional Commission
member, stating that in interpreting said provision that if one is elected representative to serve
the unexpired term of another, that unexpired, no matter how short, will be considered one term
for the purpose of computing the number of successive terms allowed.xxix

As pointed out by the COMELEC en banc, Fr. Bernas comment is pertinent only to members of
the House of Representatives. Unlike local government officials, there is no recall election
provided for members of Congress.xxx

Neither can respondents victory in the recall election be deemed a violation of Section 8, Article
X of the Constitution as voluntary renunciation for clearly it is not. In Lonzanida vs. COMELEC,
we said:

The second sentence of the constitutional provision under scrutiny states, Voluntary renunciation
of office for any length of time shall not be considered as an interruption in the continuity of
service for the full term for which he was elected. The clear intent of the framers of the
constitution to bar any attempt to circumvent the three-term limit by a voluntary renunciation of
office and at the same time respect the peoples choice and grant their elected official full service
of a term is evident in this provision. Voluntary renunciation of a term does not cancel the
renounced term in the computation of the three term limit; conversely, involuntary severance
from office for any length of time short of the full term provided by law amounts to an
interruption of continuity of service. The petitioner vacated his post a few months before the next
mayoral elections, not by voluntary renunciation but in compliance with the legal process of writ
of execution issued by the COMELEC to that effect. Such involuntary severance from office is
an interruption of continuity of service and thus, the petitioner did not fully serve the 1995-1998
mayoral term.xxxi

WHEREFORE, the instant petition is hereby DISMISSED. The resolution of public respondent
Commission on Elections dated May 9, 2001, in Comelec SPA No. 01-055 is AFFIRMED. Costs
against petitioner.

SO ORDERED.
 EN BANC

FRANCIS G. ONG, G.R. No. 163295 Petitioner,

Present:
PANGANIBAN, C.J.
PUNO,
QUISUMBING,
YNARES-SANTIAGO,
SANDOVAL-GUTIERREZ,
- versus - CARPIO
AUSTRIA-MARTINEZ,
CORONA,
CARPIO MORALES,
CALLEJO, SR.,
AZCUNA,
TINGA,
CHICO-NAZARIO, and
GARCIA, JJ.

JOSEPH STANLEY ALEGRE and Promulgated:

COMMISSION ON ELECTIONS,
Respondents. January 23, 2006
x---------------------x

ROMMEL G. ONG,
Petitioner,

- versus - G.R. No. 163354

JOSEPH STANLEY ALEGRE and

COMMISSION ON ELECTIONS,
Respondents.
x----------------------------------------x

DECISION

GARCIA, J.:

Before the Court are these two separate petitions under Rule 65 of the Rules of Court to nullify and set aside certain
issuances of the Commission on Elections (COMELEC) en banc.

The first, docketed as G.R. No. 163295, is a petition for certiorari with petitioner Francis G. Ong impugning the
COMELEC en banc resolution[1] dated May 7, 2004 in SPA Case No. 04-048, granting private respondent Joseph
Stanley Alegre's motion for reconsideration of the resolution dated March 31, 2004[2] of the COMELECs First
Division.

The second, G.R. No. 163354, is for certiorari, prohibition and mandamus, with application for injunctive relief, filed
by petitioner Rommel Ong, brother of Francis, seeking, among other things, to stop the COMELEC from enforcing
and implementing its aforesaid May 7, 2004 en banc resolution in SPA Case No. 04-048 pending the outcome of the
petition in G.R. No. 163295.
Per its en banc Resolution of June 1, 2004, the Court ordered the consolidation of these petitions.

The recourse stemmed from the following essential and undisputed factual backdrop:

Private respondent Joseph Stanley Alegre (Alegre) and petitioner Francis Ong (Francis) were candidates who filed
certificates of candidacy for mayor of San Vicente, Camarines Norte in the May 10, 2004 elections. Francis was then
the incumbent mayor.

On January 9, 2004, Alegre filed with the COMELEC Provincial Office a Petition to Disqualify, Deny Due Course and
Cancel Certificate of Candidacy[3] of Francis. Docketed as SPA Case No. 04-048, the petition to disqualify was
predicated on the three-consecutive term rule, Francis having, according to Alegre, ran in the May 1995, May 1998,
and May 2001 mayoralty elections and have assumed office as mayor and discharged the duties thereof for three
(3) consecutive full terms corresponding to those elections.

To digress a bit, the May 1998 elections saw both Alegre and Francis opposing each other for the office of
mayor of San Vicente, Camarines Norte, with the latter being subsequently proclaimed by COMELEC winner in that
contest. Alegre subsequently filed an election protest, docketed as Election Case No. 6850 before the Regional Trial
Court (RTC) at Daet, Camarines Norte. In it, the RTC declared Alegre as the duly elected mayor in that 1998
mayoralty contest,[4] albeit the decision came out only on July 4, 2001, when Francis had fully served the 1998-
2001 mayoralty term and was in fact already starting to serve the 2001-2004 term as mayor-elect of the
municipality of San Vicente.

Acting on Alegres petition to disqualify and to cancel Francis certificate of candidacy for the May 10, 2004 elections,
the First Division of the COMELEC rendered on March 31, 2004 a resolution[5] dismissing the said petition of Alegre,
rationalizing as follows:

We see the circumstances in the case now before us analogous to those

obtaining in the sample situations addressed by the Highest Court in the
Borja case. Herein, one of the requisites for the application of the three term
rule is not present. Francis Ong might have indeed fully served the mayoral
terms of 1995 to 1998; 1998 to 2001 and 2001 to 2004. The mayoral term
however, from 1998 to 2001 cannot be considered his because he was not duly
elected thereto. The [RTC] of Daet, Camarines Norte, Branch 41 has voided
his election for the 1998 term when it held, in its decision that Stanley Alegre
was the legally elected mayor in the 1998 mayoralty election in San Vicente,
Camarines Norte. This disposition had become final after the [COMELEC]
dismissed the appeal filed by Ong, the case having become moot and
academic.

xxx xxx xxx

On the basis of the words of the Highest Court pronounced in the Lonzanida
case and applicable in the case at bench, Ong could not be considered as
having served as mayor from 1998 to 2001 because he was not duly elected to
the post; he merely assumed office as a presumptive winner; which
presumption was later overturned when [the RTC] decided with finality that
 [he] lost in the May 1998 elections. (Words in bracket and emphasis in the
original).

Undaunted, Alegre filed a timely motion for reconsideration, contending, in the main, that there was a
misapplication of the three-term rule, as applied in the cited cases of Borja vs. Comelec and Lonzanida vs. Comelec,
infra.

On May 7, 2004, the COMELEC en banc issued, in SPA No. 04-048, a resolution[6] reversing the March 31, 2004
resolution of the COMELECs First Division and thereby (a) declaring Francis as disqualified to run for mayor of San
Vicente, Camarines Norte in the May 10, 2004; (b) ordering the deletion of Francis name from the official list of
candidates; and (c) directing the concerned board of election inspectors not to count the votes cast in his favor.

The following day, May 8, Francis received a fax machine copy of the aforecited May 7, 2004 resolution,
sending him posthaste to seek the assistance of his political party, the Nationalist Peoples Coalition, which
immediately nominated his older brother, Rommel Ong (Rommel), as substitute candidate. At about 5:05 p.m. of the
very same day - which is past the deadline for filing a certificate of candidacy, Rommel filed his own certificate of
candidacy for the position of mayor, as substitute candidate for his brother Francis.

The following undisputed events then transpired:

1. On May 9, 2004, or a day before the May 10 elections, Alegre filed a

Petition to Deny Due Course to or Cancel Certificate of Rommel Ong.

2. Atty. Evillo C. Pormento, counsel for the Ong brothers, addressed a

letter[7] to Provincial Election Supervisor (PES) of Camarines Norte Liza Z.
Cario and Acting Election Officer Emily G. Basilonia in which he appealed
that, owing to the COMELECs inaction on Alegre's petition to cancel Rommels
certificate of candidacy, the name Rommel Ong be included in the official
certified list of candidates for mayor of San Vicente, Camarines Norte. The
desired listing was granted by the PES Carino.

3. On May 10, 2004, Alegre wrote[8] to then COMELEC Commissioner

Virgilio Garcillano, Commissioner-in-Charge for Regions IV and V, seeking
clarification on the legality of the action thus taken by the PES Cario.
Responding, Commissioner Garcillano issued a Memorandum under date May
10, 2004[9] addressed to PES Liza D. Zabala-Cario, ordering her to implement
the resolution of the COMELEC en banc in SPA No. 04-048 promulgated on
May 7, 2004.[10] Said Memorandum partly stated:

The undersigned ADOPTS the recommendation of Atty. Alioden D.

Dalaig [Director IV, Law Department], which he quote your stand, "that
substitution is not proper if the certificate of the substituted candidacy is denied
due course. In the Resolution of the Commission En banc, the Certificate of
 candidacy of Francis Ong was denied due course," and elaborated further
that:

"x x x there is an existing policy of the Commission not

to include the name of a substitute candidate in the certified
list of candidates unless the substitution is approved by the
Commission.

In view, thereof, it is recommended that 1) the

substitute certificate of candidacy of Rommel Ong Gan Ong,
should be denied due course; and 2) the election officer be
directed to delete his name from the list of candidates."

The above position of the Commission was in line with the

pronouncement of Supreme Court in Miranda vs. Abaya (311 SCRA 617)
which states:

"There can no valid substitution where a candidate is

excluded not only by disqualification but also by denial and
cancellation of his certificate of candidacy."

In view thereof, you are hereby directed to faithfully implement the

said Resolution of the Commission En Banc in SPA No. 04-048 promulgated
on May 7, 2004. (Emphasis in the original; words in bracket added].

4. Owing to the aforementioned Garcillano Memorandum, it would

seem that the Chairman of the Municipal Board of Canvasser of San Vicente
issued an order enjoining all concerned not to canvass the votes cast for
Rommel, prompting the latter to file a protest with that Board.[11]

5. On May 11, 2004, the Municipal Board of Canvassers proclaimed

Alegre as the winning candidate for the mayoralty post in San Vicente,
Camarines Norte.[12]

On May 12, 2004, Francis filed before the Court a petition for certiorari, presently docketed as G.R. No.
163295. His brother Rommels petition in G.R. No. 163354 followed barely a week after.

In our en banc resolution dated June 1, 2004, G.R. No. 163295 and G.R. No. 163354 were consolidated.[13]
 Meanwhile, on June 4, 2004, the COMELEC issued an order dismissing private respondent Alegres Petition
to Deny Due Course to or Cancel Certificate of Candidacy of Rommel Ong, for being moot and academic.[14]

The issues for resolution of the Court are:

In G.R. No. 163295, whether the COMELEC acted with grave abuse of discretion amounting to lack or excess of
jurisdiction in issuing its en banc resolution dated May 7, 2004 declaring petitioner Francis as disqualified to run for
Mayor of San Vicente, Camarines Norte in the May 10, 2004 elections and consequently ordering the deletion of his
name from the official list of candidates so that any vote cast in his favor shall be considered stray.

In G.R. No. 163354, whether the COMELEC committed grave abuse of discretion when it denied due course to
Rommels certificate of candidacy in the same mayoralty election as substitute for his brother Francis.

A resolution of the issues thus formulated hinges on the question of whether or not petitioner Franciss assumption
of office as Mayor of San Vicente, Camarines Norte for the mayoralty term 1998 to 2001 should be considered as full
service for the purpose of the three-term limit rule.

Respondent COMELEC resolved the question in the affirmative. Petitioner Francis, on the other hand,
disagrees. He argues that, while he indeed assumed office and discharged the duties as Mayor of San Vicente for
three consecutive terms, his proclamation as mayor-elect in the May 1998 election was contested and eventually
nullified per the decision of the RTC of Daet, Camarines Norte dated July 4, 2001. Pressing the point, petitioner
argues, citing Lonzanida vs. Comelec[15], that a proclamation subsequently declared void is no proclamation at all
and one assuming office on the strength of a protested proclamation does so as a presumptive winner and subject
to the final outcome of the election protest.

The three-term limit rule for elective local officials is found in Section 8, Article X of the 1987 Constitution, which
provides:

Sec. 8. The term of office of elective local officials, except barangay officials,
which shall be determined by law, shall be three years and no such official
shall serve for more than three consecutive terms. Voluntary renunciation of
the office for any length of time shall not be considered as an interruption in
the continuity of his service for the full term for which he was elected.

Section 43 (b) of the Local Government Code restates the same rule as follows:

Sec. 43. Term of Office.

xxx xxx xxx

 (b) No local elective official shall serve for more than three consecutive years
in the same position. Voluntary renunciation of the office for any length of
time shall not be considered an interruption in the continuity of service for
the full term for which the elective official concerned was elected.

For the three-term limit for elective local government officials to apply, two conditions or requisites must concur, to
wit: (1) that the official concerned has been elected for three (3) consecutive terms in the same local government
post, and (2) that he has fully served three (3) consecutive terms.[16]

With the view we take of the case, the disqualifying requisites are present herein, thus effectively barring petitioner
Francis from running for mayor of San Vicente, Camarines Norte in the May 10, 2004 elections. There can be no
dispute about petitioner Francis Ong having been duly elected mayor of that municipality in the May 1995 and again
in the May 2001 elections and serving the July 1, 1995- June 30, 1998 and the July 1, 2001-June 30, 2004 terms in
full. The herein controversy revolves around the 1998-2001 mayoral term, albeit there can also be no quibbling that
Francis ran for mayor of the same municipality in the May 1998 elections and actually served the 1998-2001
mayoral term by virtue of a proclamation initially declaring him mayor-elect of the municipality of San Vicente. The
question that begs to be addressed, therefore, is whether or not Franciss assumption of office as Mayor of San Vicente, Camarines
Norte from July 1, 1998 to June 30, 2001, may be considered as one full term service in the context of the consecutive three-term
limit rule.

We hold that such assumption of office constitutes, for Francis, service for the full term, and should be counted as a
full term served in contemplation of the three-term limit prescribed by the constitutional and statutory provisions,
supra, barring local elective officials from being elected and serving for more than three consecutive term for the
same position.

It is true that the RTC-Daet, Camarines Norte ruled in Election Protest Case No. 6850,[17] that it was
Francis opponent (Alegre) who won in the 1998 mayoralty race and, therefore, was the legally elected
mayor of San Vicente. However, that disposition, it must be stressed, was without practical and legal use
and value, having been promulgated after the term of the contested office has expired. Petitioner
Francis contention that he was only a presumptive winner in the 1998 mayoralty derby as his
proclamation was under protest did not make him less than a duly elected mayor. His proclamation by
the Municipal Board of Canvassers of San Vicente as the duly elected mayor in the 1998 mayoralty
election coupled by his assumption of office and his continuous exercise of the functions thereof from
start to finish of the term, should legally be taken as service for a full term in contemplation of the
three-term rule.

The absurdity and the deleterious effect of a contrary view is not hard to discern. Such contrary view
would mean that Alegre would under the three-term rule - be considered as having served a term by
virtue of a veritably meaningless electoral protest ruling, when another actually served such term
pursuant to a proclamation made in due course after an election.
 Petitioner cites, but, to our mind, cannot seek refuge from the Courts ruling in, Lonzanida vs.
Comelec,[18] citing Borja vs. Comelec[19]. In Lonzanida, petitioner Lonzanida was elected and served for
two consecutive terms as mayor of San Antonio, Zambales prior to the May 8, 1995 elections. He then
ran again for the same position in the May 1995 elections, won and discharged his duties as Mayor.
However, his opponent contested his proclamation and filed an election protest before the RTC of
Zambales, which, in a decision dated January 9, 1997, ruled that there was a failure of elections and
declared the position vacant. The COMELEC affirmed this ruling and petitioner Lonzanida acceded to the
order to vacate the post. Lonzanida assumed the office and performed his duties up to March 1998 only.
Now, during the May 1998 elections, Lonzanida again ran for mayor of the same town. A petition to
disqualify, under the three-term rule, was filed and was eventually granted. There, the Court held that
Lonzanida cannot be considered as having been duly elected to the post in the May 1995 election, and
that he did not fully serve the 1995-1998 mayoralty term by reason of involuntary relinquishment of
office. As the Court pointedly observed, Lonzanida cannot be deemed to have served the May 1995 to
1998 term because he was ordered to vacate [and in fact vacated] his post before the expiration of the
term.

The difference between the case at bench and Lonzanida is at once apparent. For one, in
Lonzanida, the result of the mayoralty election was declared a nullity for the stated reason of failure of
election, and, as a consequence thereof, the proclamation of Lonzanida as mayor-elect was nullified,
followed by an order for him to vacate the office of mayor. For another, Lonzanida did not fully serve
the 1995-1998 mayoral term, there being an involuntary severance from office as a result of legal
processes. In fine, there was an effective interruption of the continuity of service.

On the other hand, the failure-of-election factor does not obtain in the present case. But more
importantly, here, there was actually no interruption or break in the continuity of Francis service
respecting the 1998-2001 term. Unlike Lonzanida, Francis was never unseated during the term in
question; he never ceased discharging his duties and responsibilities as mayor of San Vicente, Camarines
Norte for the entire period covering the 1998-2001 term.
 The ascription, therefore, of grave abuse of discretion on the part of the COMELEC en banc
when it disqualified Francis from running in the May 10, 2004 elections for the mayoralty post of San
Vicente and denying due course to his certificate of candidacy by force of the constitutional and
statutory provisions regarding the three-term limit rule for any local elective official cannot be
sustained. What the COMELEC en banc said in its May 7, 2004 assailed Resolution commends itself for
concurrence:

As correctly pointed out by Petitioner-Movant [Alegre]in applying the

ruling in the Borja and Lonzanida cases in the instant petition will be erroneous
because the factual milieu in those cases is different from the one obtaining here.
Explicitly, the three-term limit was not made applicable in the cases of Borja and
Lonzanida because there was an interruption in the continuity of service of the
three consecutive terms. Here, Respondent Ong would have served continuously
for three consecutive terms, from 1995 to 2004. His full term from 1998 to 2001
could not be simply discounted on the basis that he was not duly elected thereto
on account of void proclamation because it would have iniquitous effects
producing outright injustice and inequality as it rewards a legally disqualified and
repudiated loser with a crown of victory. (Word in bracket added; emphasis in the
original)

Given the foregoing consideration, the question of whether or not then

Commissioner Virgilio Garcillano overstepped his discretion when he issued
the May 10, 2004 Memorandum, ordering the implementation of aforesaid
May 7, 2004 COMELEC en banc resolution even before its finality[20] is now
of little moment and need not detain us any longer.

Just as unmeritorious as Francis petition in G.R. No. 163295 is Rommels

petition in G.R. No. 163354 in which he (Rommel) challenges the COMELEC's
act of not including his name as a substitute candidate in the official list of
candidates for the May 10, 2004 elections. As it were, existing COMELEC
policy[21] provides for the non-inclusion of the name of substitute candidates
in the certified list of candidates pending approval of the substitution.

Not to be overlooked is the Courts holding in Miranda vs. Abaya,[22] that a

candidate whose certificate of candidacy has been cancelled or not given
due course cannot be substituted by another belonging to the same political
party as that of the former, thus:

While there is no dispute as to whether or not a nominee of a registered or

accredited political party may substitute for a candidate of the same party who had
been disqualified for any cause, this does not include those cases where the
certificate of candidacy of the person to be substituted had been denied due course
and cancelled under Section 78 of the Code.

Expressio unius est exclusio alterius. While the law enumerated the
occasions where a candidate may be validly substituted, there is no mention of the
case where a candidate is excluded not only by disqualification but also by denial
and cancellation of his certificate of candidacy. Under the foregoing rule, there can
be no valid substitution for the latter case, much in the same way that a nuisance
candidate whose certificate of candidacy is denied due course and/or cancelled may
not be substituted. If the intent of the lawmakers were otherwise, they could have
so easily and conveniently included those persons whose certificates of candidacy
have been denied due course and/or cancelled under the provisions of Section 78
of the Code.

xxx xxx xxx

A person without a valid certificate of candidacy cannot be considered a

candidate in much the same way as any person who has not filed any certificate of
candidacy at all can not, by any stretch of the imagination, be a candidate at all.

xxx xxx xxx

After having considered the importance of a certificate of candidacy, it can

be readily understood why in Bautista [Bautista vs. Comelec, G.R. No. 133840,
November 13, 1998] we ruled that a person with a cancelled certificate is no
candidate at all. Applying this principle to the case at bar and considering that
Section 77 of the Code is clear and unequivocal that only an official candidate of a
registered or accredited party may be substituted, there demonstrably cannot be any
 possible substitution of a person whose certificate of candidacy has been cancelled
and denied due course.

In any event, with the hard reality that the May 10, 2004 elections were
already pass, Rommel Ongs petition in G.R. No. 163354 is already moot and
academic.

WHEREFORE, the instant petitions are DISMISSED and the assailed en

banc Resolution dated May 7, 2004 of the COMELEC, in SPA No. 04-048
AFFIRMED.

Costs against petitioners.

SO ORDERED.

EN BANC

ATTY. VENANCIO Q. RIVERA III and G.R. No. 167591

ATTY. NORMANDICK DE GUZMAN,

Petitioners,
 -versus-

COMELEC and MARINO BOKING

MORALES,

Respondents.

x---------------------------------------------x

ANTHONY D. DEE,

Petitioner,

G.R. No. 170577

Present:

PUNO, C.J.,

QUISUMBING,

YNARES-SANTIAGO,
-versus-
SANDOVAL-GUTIERREZ,

CARPIO,

*AUSTRIA-MARTINEZ,

*CORONA,
 CARPIO MORALES,

AZCUNA,

TINGA,

CHICO-NAZARIO,

GARCIA,

COMELEC and MARINO BOKING VELASCO, JR., and

MORALES,
**NACHURA, JJ.
Respondents.

Promulgated:

May 9, 2007

x-----------------------------------------------------------------------------------------x

DECISION

SANDOVAL-GUTIERREZ, J.:
 For our resolution are two consolidated petitions for certiorari under Rule 65
of the 1997 Rules of Civil Procedure, as amended, assailing the Resolutions dated
March 14, 2005 and November 8, 2005 of the COMELEC En Banc.

G.R. No. 167591

ATTY. VENANCIO Q. RIVERA III and ATTY. NORMANDICK DE

GUZMAN v. COMELEC and MARINO BOKING MORALES

In the May 2004 Synchronized National and Local Elections, respondent

Marino Boking Morales ran as candidate for mayor of Mabalacat, Pampanga for the
term commencing July 1, 2004 to June 30, 2007. Prior thereto or on January 5,
2004, he filed his Certificate of Candidacy.
 On January 10, 2004, Attys. Venancio Q. Rivera and Normandick De Guzman,
petitioners, filed with the Second Division of the Commission on Elections
(COMELEC) a petition to cancel respondent Morales Certificate of Candidacy on the
ground that he was elected and had served three previous consecutive terms as
mayor of Mabalacat. They alleged that his candidacy violated Section 8, Article X
of the Constitution and Section 43 (b) of Republic Act (R.A.) No. 7160, also known
as the Local Government Code.

In his answer to the petition, respondent Morales admitted that he was

elected mayor of Mabalacat for the term commencing July 1, 1995 to June 30, 1998
(first term) and July 1, 2001 to June 30, 2004 (third term), but he served the second
term from July 1, 1998 to June 30, 2001 only as a caretaker of the office or as a de
facto officer because of the following reasons:

a. He was not validly elected for the second term 1998 to 2001
since his proclamation as mayor was declared void by the Regional
Trial Court (RTC), Branch 57, Angeles City in its Decision dated April 2,
2001 in Election Protest Case (EPC) No. 98-131. The Decision became
final and executory on August 6, 2001; and

b. He was preventively suspended by the Ombudsman in an

anti-graft case from January 16, 1999 to July 15, 1999.
 On May 6, 2004, the COMELEC Second Division rendered its Resolution
finding respondent Morales disqualified to run for the position of municipal mayor
on the ground that he had already served three (3) consecutive terms.
Accordingly, his Certificate of Candidacy was cancelled. On May 7, 2004, he filed
with the COMELEC En Banc a motion for reconsideration.

On March 14, 2005, the COMELEC En Banc issued a Resolution granting

respondent Morales motion for reconsideration and setting aside that of the
Second Division. The COMELEC En Banc held that since the Decision in EPC No. 98-
131 of the RTC, Branch 57, Angeles City declared respondent Morales proclamation
void, his discharge of the duties in the Office of the Mayor in Mabalacat is that of a
de facto officer or a de facto mayor. Therefore, his continuous service for three
consecutive terms has been severed.

Hence, this petition for certiorari.

G.R. No. 170577

ANTHONY DEE v. COMMISSION ON ELECTIONS and MARIO BOKING

MORALES
 On May 24, 2004, after respondent Morales was proclaimed the duly elected
mayor of Mabalacat for the term commencing July 1, 2004 to June 30, 2007,
petitioner Anthony Dee, also a candidate for mayor, filed with the RTC, Branch 61,
Angeles City a petition for quo warranto against the said respondent. Petitioner
alleged that respondent Morales, having served as mayor for three consecutive
terms, is ineligible to run for another term or fourth term. The case was docketed
as Civil Case No. 11503.

In his answer, respondent Morales raised the following defenses:

a. He was not validly elected for the term 1998 to 2001 since the
RTC, Branch 57, Angeles City declared in its Decision that his
proclamation as mayor of Mabalacat was void. Petitioner Dee was then
proclaimed the duly elected mayor; and

b. He was preventively suspended for six months by the

Ombudsman, during the same term in an anti-graft case, an interruption
in the continuity of his service as municipal mayor of Mabalacat.105
 In its Decision dated November 22, 2004, the RTC dismissed petitioner Dees
petition for quo warranto on the ground that respondent Morales did not serve the
three-term limit since he was not the duly elected mayor of Mabalacat, but
petitioner Dee in the May 1998 elections for the term 1998 to 2001, thus:

Respondent, Marino Morales, was not the duly elected mayor of Mabalacat,
Pampanga in the May 1998 elections for the term 1998 to 2001 because although he was
proclaimed as the elected mayor of Mabalacat, Pampanga by the Municipal Board of
Canvassers, had assumed office and discharged the duties of mayor, his close rival, the
herein petitioner, Anthony D. Dee, was declared the duly elected Mayor of Mabalacat,
Pampanga in the Decision promulgated on April 2, 2001 in Election Protest EPC No. 98-
131 filed by Anthony Dee against herein respondent, Marino Morales, and decided by
RTC, Br. 57, Angeles City. x x x.

Petitioner Dee interposed an appeal to the COMELEC First Division, alleging

that respondent Morales violated the three-term limit rule when he ran for re-
election (fourth time) as mayor in the 2004 elections. Consequently, his
proclamation as such should be set aside. In a Resolution dated July 29, 2005 the
COMELEC First Division issued a Resolution dismissing the appeal. It held that
respondent Morales cannot be deemed to have served as mayor of Mabalacat
during the term 1998 to 2001 because his proclamation was declared void by the
RTC, Branch 57 of Angeles City. He only served as a caretaker, thus, his service
during that term should not be counted.
 On August 12, 2005, petitioner Dee filed with the COMELEC En Banc a motion
for reconsideration. In a Resolution dated November 8, 2005, the COMELEC En
Banc affirmed the questioned Resolution of the Second Division.

Hence, petitioner Dees instant petition for certiorari.

Both cases may be decided based on the same facts and issues.

It is undisputed that respondent Morales was elected to the position of

mayor of Mabalacat for the following consecutive terms:

a) July 1, 1995 to June 30, 1998

b) July 1, 1998 to June 30, 2001

c) July 1, 2001 to June 30, 2004

d) July 1, 2004 to June 30, 2007

THE PRINCIPAL ISSUE.

 Respondent Morales argued and the Comelec held that the July 1, 2003 to
June 30, 2007 term is not his fourth because his second term, July 1, 1998 to June
30, 2001 to which he was elected and which he served, may not be counted since
his proclamation was declared void by the RTC, Branch 57 of Angeles City.

Respondent Morales is wrong. This Court, through Mr. Justice Cancio C.

Garcia, resolved the same issue in Ong v. Alegre106 with identical facts, thus:

To digress a bit, the May 1998 elections saw both Alegre and Francis opposing
each other for the office of mayor of San Vicente, Camarines Norte, with the latter being
subsequently proclaimed by the COMELEC winner in the contest. Alegre subsequently
filed an election protest, docketed as Election Case No. 6850 before the Regional Trial
Court (RTC) at Daet, Camarines Norte. In it, the RTC declared Alegre as the duly elected
mayor in that 1998 mayoralty contest, albeit the decision came out only on July 4, 2001,
when Francis had fully served the 1998-2001 mayoralty term and was in fact already
starting to serve the 2001-2004 term as mayor-elected for the municipality of San Vicente.

xxx

A resolution of the issues thus formulated hinges on the question of whether or

not petitioner Francis assumption of office as mayor of San Vicente, Camarines Norte for
the mayoralty term 1998 to 2001 should be considered as full service for the purpose of
the three-term limit rule.

Respondent COMELEC resolved the question in the affirmative. Petitioner

Francis, on the other hand, disagrees. He argues that, while he indeed assumed office and
discharged the duties as Mayor of San Vicente for three consecutive terms, his
proclamation as mayor-elected in the May 1998 election was contested and eventually
nullified per the Decision of the RTC of Daet, Camarines Norte dated July 4, 2001. Pressing
the point, petitioner argues, citing Lonzanida v. Comelec, that a proclamation
subsequently declared void is no proclamation at all and one assuming office on the
strength of a protested proclamation does so as a presumptive winner and subject to the
final outcome of the election protest.

xxx

For the three-term limit for elective local government officials to apply, two
conditions or requisites must concur, to wit: (1) that the official concerned has been
elected for three (3) consecutive terms in the same local government post, and (2) that
he has fully served three (3) consecutive terms.

With the view we take of the case, the disqualifying requisites are present herein,
thus effectively barring petitioner Francis from running for mayor of San Vicente,
Camarines Norte in the May 10, 2004 elections. There can be no dispute about petitioner
Francis Ong having been duly elected mayor of that municipality in the May 1995 and
again in the May 2001 elections and serving the July 1, 1995-June 30, 1998 and the July
1, 2001-June 30, 2004 terms in full. The herein controversy revolves around the 1998-
2001 mayoral term, albeit there can also be no quibbling that Francis ran for mayor of the
same municipality in the May 1998 elections and actually served the 1998-2001 mayoral
term by virtue of a proclamation initially declaring him mayor-elect of the municipality of
San Vicente. The question that begs to be addressed, therefore, is whether or not Francis
assumption of office as Mayor of San Vicente, Camarines Norte from July 1, 1998 to June
30, 2001, may be considered as one full term service in the context of the consecutive
three-term limit rule.

We hold that such assumption of office constitutes, for Francis, service for the full
term, and should be counted as a full term served in contemplation of the three-term
limit prescribed by the constitutional and statutory provisions, supra, barring local
elective officials from being elected and serving for more than three consecutive terms
for the same position.

It is true that the RTC-Daet, Camarines Norte ruled in Election Protest Case No.
6850, that it was Francis opponent (Alegre) who won in the 1998 mayoralty race and,
therefore, was the legally elected mayor of San Vicente. However, that disposition, it must
be stressed, was without practical and legal use and value, having been promulgated after
the term of the contested office has expired. Petitioner Francis contention that he was
only a presumptive winner in the 1998 mayoralty derby as his proclamation was under
protest did not make him less than a duly elected mayor. His proclamation by the
Municipal Board of Canvassers of San Vicente as the duly elected mayor in the 1998
mayoralty election coupled by his assumption of office and his continuous exercise of the
functions thereof from start to finish of the term, should legally be taken as service for a
full term in contemplation of the three-term rule.

The absurdity and the deleterious effect of a contrary view is not hard to discern.
Such contrary view would mean that Alegre would-under the three-term rule-be
 considered as having served a term by virtue of a veritably meaningless electoral protest
ruling, when another actually served such term pursuant to a proclamation made in due
course after an election.

Petitioner cites, but, to our mind, cannot seek refuge from the Courts ruling in
Lonzanida v. Comelec, citing Borja v. Comelec. In Lonzanida, petitioner Lonzanida was
elected and served for two consecutive terms as mayor of San Antonio, Zambales prior to
the May 8, 1995 elections. He then ran again for the same position in the May 1995
elections, won and discharged his duties as Mayor. However, his opponent contested his
proclamation and filed an election protest before the RTC of Zambales, which, in a
decision dated January 8, 1997, ruled that there was a failure of elections and declared
the position vacant. The COMELEC affirmed this ruling and petitioner Lonzanida acceded
to the order to vacate the post. Lonzanida assumed the office and performed his duties
up to March 1998 only. Now, during the May 1998 elections, Lonzanida again ran for
mayor of the same town. A petition to disqualify, under the three-term rule, was filed and
was eventually granted. There, the Court held that Lonzanida cannot be considered as
having been duly elected to the post in the May 1995 election, and that he did not fully
serve the 1995-1998 mayoralty term by reason of involuntary relinquishment of office.
As the Court pointedly observed, Lonzanida cannot be deemed to have served the May
1995 to 1998 term because he was ordered to vacate [and in fact vacated] his post before
the expiration of the term.

The difference between the case at bench and Lonzanida is at once apparent. For
one, in Lonzanida, the result of the mayoralty elections was declared a nullity for the
stated reason of failure of election, and, as a consequence thereof, the proclamation of
Lonzanida as mayor-elect was nullified, followed by an order for him to vacate the office
of the mayor. For another, Lonzanida did not fully serve the 1995-1998 mayoral term,
there being an involuntary severance from office as a result of legal processes. In fine,
there was an effective interruption of the continuity of service.

On the other hand, the failure-of-election factor does not obtain in the present
case. But more importantly, here, there was actually no interruption or break in the
continuity of Francis service respecting the 1998-2001 term. Unlike Lonzanida, Francis
was never unseated during the term in question; he never ceased discharging his duties
and responsibilities as mayor of San Vicente, Camarines Norte for the entire period
covering the 1998-2001 term.

It bears stressing that in Ong v. Alegre cited above, Francis Ong was elected
and assumed the duties of the mayor of San Vicente, Camarines Norte for three
consecutive terms. But his proclamation as mayor in the May 1998 election was
declared void by the RTC of Daet, Camarines Norte in its Decision dated July 4, 2001.
As ruled by this Court, his service for the term 1998 to 2001 is for the full term.
Clearly, the three-term limit rule applies to him. Indeed, there is no reason why this
ruling should not also apply to respondent Morales who is similarly situated.

Here, respondent Morales invoked not only Lonzanida v. COMELEC,107 but

also Borja, Jr. v. Commission on Elections108 which is likewise inapplicable. The
facts in Borja are:

Private respondent Jose T. Capco was elected vice-mayor of Pateros on January

18, 1998 for a term ending June 30, 1992. On September 2, 1989, he became mayor, by
operation of law, upon the death of the incumbent, Cesar Borja. On May 11, 1992, he
ran and was elected mayor for a term of three years which ended on June 30, 1995. On
May 8, 1995, he was reelected mayor for another term of three years ending June 30,
1998.

On March 27, 1998, private respondent Capco filed a certificate of candidacy for
mayor of Pateros relative to the May 11, 1998 elections, Petitioner Benjamin U. Borja, Jr.,
who was also a candidate for mayor, sought Capcos disqualification on the theory that
the latter would have already served as mayor for three consecutive terms by June 30,
1998 and would therefore be ineligible to serve for another term after that.

On April 30, 1998, the Second Division of the Commission on Elections ruled in
favor of petitioner and declared private respondent Capco disqualified from running for
 reelection as mayor of Pateros. However, on motion of private respondent, the COMELEC
en banc, voting 5-2, reversed the decision and declared Capco eligible to run for mayor in
the May 11, 1998 elections. x x x

This Court held that Capcos assumption of the office of mayor upon the
death of the incumbent may not be regarded as a term under Section 8, Article X
of the Constitution and Section 43 (b) of R.A. No. 7160 (the Local Government
Code). He held the position from September 2, 1989 to June 30, 1992, a period of
less than three years. Moreover, he was not elected to that position.

Similarly, in Adormeo v. COMELEC,109 this Court ruled that assumption of

the office of mayor in a recall election for the remaining term is not the term
contemplated under Section 8, Article X of the Constitution and Section 43 (b) of
R.A. No. 7160 (the Local Government Code). As the Court observed, there was a
break in the service of private respondent Ramon T. Talanga as mayor. He was a
private citizen for a time before running for mayor in the recall elections.

Here, respondent Morales was elected for the term July 1, 1998 to June 30,
2001. He assumed the position. He served as mayor until June 30, 2001. He was
mayor for the entire period notwithstanding the Decision of the RTC in the electoral
protest case filed by petitioner Dee ousting him (respondent) as mayor. To
reiterate, as held in Ong v. Alegre,110 such circumstance does not constitute an
interruption in serving the full term.

Section 8, Article X of the Constitution can not be more clear and explicit

The term of the office of elected local officials x x x, shall be three years and no
such official shall serve for more than three consecutive terms. x x x

Upon the other hand, Section 43 (b) of R.A. No. 7160 (the Local Government
Code) clearly provides:

No local official shall serve for more than three consecutive terms in the same
position. x x x

Respondent Morales is now serving his fourth term. He has been mayor of
Mabalacat continuously without any break since July 1, 1995. In just over a month,
by June 30, 2007, he will have been mayor of Mabalacat for twelve (12) continuous
years.

In Latasa v. Comelec,111 the Court explained the reason for the maximum
term limit, thus:

The framers of the Constitution, by including this exception, wanted to establish

some safeguards against the excessive accumulation of power as a result of consecutive
terms. As Commissioner Blas Ople stated during the deliberations:

x x x I think we want to prevent future situations where, as a

result of continuous service and frequent re-elections, officials from the
President down to the municipal mayor tend to develop a proprietary
interest in their positions and to accumulate these powers and
prerequisites that permit them to stay on indefinitely or to transfer these
posts to members of their families in a subsequent election. x x x

xxx

It is evident that in the abovementioned cases, there exists a rest period or a

break in the service of local elective official. In Lonzanida, petitioner therein was a private
citizen a few months before the next mayoral elections. Similarly, in Adormeo and
Socrates, the private respondents therein lived as private citizens for two years and
fifteen months respectively. Indeed, the law contemplates a rest period during which the
local elective official steps down from office and ceases to exercise power or authority
over the inhabitants of the territorial jurisdiction of a particular local government unit.
 This Court reiterates that the framers of the Constitution specifically included an
exception to the peoples freedom to choose those who will govern them in order to
avoid the evil of a single person accumulating excessive power over a particular
territorial jurisdiction as a result of a prolonged stay in the same office. To allow
petitioner Latasa to vie for the position of city mayor after having served for three
consecutive terms as municipal mayor would obviously defeat the very intent of the
framers when they wrote this exception. Should he be allowed another three consecutive
term as mayor of the City of Digos, petitioner would then be possibly holding office as
chief executive over the same territorial jurisdiction and inhabitants for a total of eighteen
consecutive years. This is the very scenario sought to be avoided by the Constitution, if
not abhorred by it.

This is the very situation in the instant case. Respondent Morales maintains
that he served his second term (1998 to 2001) only as a caretaker of the office or
as a de facto officer. Section 8, Article X of the Constitution is violated and its
purpose defeated when an official serves in the same position for three
consecutive terms. Whether as caretaker or de facto officer, he exercises the
powers and enjoys the prerequisites of the office which enables him to stay on
indefinitely.

Respondent Morales should be promptly ousted from the position of mayor

of Mabalacat.

G.R. No. 167591

 Having found respondent Morales ineligible, his Certificate of Candidacy
dated December 30, 2003 should be cancelled. The effect of the cancellation of a
Certificate of Candidacy is provided under Sections 6 and 7 of R.A. No. 6646, thus:

SECTION 6. Effect of Disqualification Case. Any candidate who has been declared
by final judgment to be disqualified shall not be voted for, and the votes cast for him
shall not be counted. If for any reason a candidate is not declared by final judgment
before an election to be disqualified and he is voted for and receives the winning number
of votes in such election, the Court or Commission shall continue with the trial and
hearing of the action, inquiry, or protest and, upon motion of the complainant or any
intervenor, may during the pendency thereof order the suspension of the proclamation
of such candidate whenever the evidence of guilt is strong.

SECTION 7. Petition to Deny Due Course To or Cancel a Certificate of Candidacy.

The procedure hereinabove provided shall apply to petitions to deny due course to or
cancel a certificate of candidacy as provided in Section 78 of Batas Pambansa Blg. 881.

in relation to Section 211 of the Omnibus Election Code, which provides:

SEC. 211. Rules for the appreciation of ballots. In the reading and appreciation of
ballots, every ballot shall be presumed to be valid unless there is clear and good reason
to justify its rejection. The board of election inspectors shall observe the following rules,
bearing in mind that the object of the election is to obtain the expression of the voters
will:

xxx
 19. Any vote in favor of a person who has not filed a certificate of candidacy or
in favor of a candidate for an office for which he did not present himself shall be
considered as a stray vote but it shall not invalidate the whole ballot.

xxx

In the light of the foregoing, respondent Morales can not be considered a

candidate in the May 2004 elections. Not being a candidate, the votes cast for him
SHOULD NOT BE COUNTED and must be considered stray votes.

G.R. No. 170577

Since respondent Morales is DISQUALIFIED from continuing to serve as

mayor of Mabalacat, the instant petition for quo warranto has become moot.

Going back to G.R. No. 167591, the question now is whether it is the vice-
mayor or petitioner Dee who shall serve for the remaining portion of the 2004 to
2007 term.
 In Labo v. Comelec,112 this Court has ruled that a second place candidate
cannot be proclaimed as a substitute winner, thus:

The rule, therefore, is: the ineligibility of a candidate receiving majority votes
does not entitle the eligible candidate receiving the next highest number of votes to be
declared elected. A minority or defeated candidate cannot be deemed elected to the
office.

xxx

It is therefore incorrect to argue that since a candidate has been disqualified, the
votes intended for the disqualified candidate should, in effect, be considered null and
void. This would amount to disenfranchising the electorate in whom sovereignty resides.
At the risk of being repetitious, the people of Baguio City opted to elect petitioner Labo
bona fide, without any intention to misapply their franchise, and in the honest belief that
Labo was then qualified to be the person to whom they would entrust the exercise of the
powers of the government. Unfortunately, petitioner Labo turned out to be disqualified
and cannot assume the office.

Whether or not the candidate whom the majority voted for can or cannot be
installed, under no circumstances can minority or defeated candidate be deemed elected
to the office. Surely, the 12,602 votes cast for petitioner Ortega is not a larger number
than the 27,471 votes cast for petitioner Labo (as certified by the Election Registrar of
Baguio City; rollo, p. 109; GR No. 105111).

xxx

As a consequence of petitioners ineligibility, a permanent vacancy in the

contested office has occurred. This should now be filled by the vice-mayor in accordance
with Section 44 of the Local Government Code, to wit:
 Sec. 44. Permanent vacancies in the Offices of the Governor, Vice-
Governor, Mayor and Vice-Mayor. (a) If a permanent vacancy occurs in
the office of the governor or mayor, the vice-governor or the vice-mayor
concerned shall become the governor or mayor. x x x

WHEREFORE, the petition in G.R. No. 167591 is GRANTED. Respondent

Morales Certificate of Candidacy dated December 30, 2003 is cancelled. In view of
the vacancy in the Office of the Mayor in Mabalacat, Pampanga, the vice-mayor
elect of the said municipality in the May 10, 2004 Synchronized National and Local
Elections is hereby declared mayor and shall serve as such for the remaining
duration of the term July 1, 2004 to June 30, 2007. The petition in G.R. No. 170577
is DISMISSED for being moot.

This Decision is immediately executory.

SO ORDERED.
 EN BANC

[G.R. No. 154512. November 12, 2002]

VICTORINO DENNIS M. SOCRATES, Mayor of Puerto Princesa City,

petitioner, vs. THE COMMISSION ON ELECTIONS, THE
PREPARATORY RECALL ASSEMBLY (PRA) of Puerto Princesa
City, PRA Interim Chairman Punong Bgy. MARK DAVID
HAGEDORN, PRA Interim Secretary Punong Bgy. BENJAMIN
JARILLA, PRA Chairman and Presiding Officer Punong Bgy.
EARL S. BUENVIAJE and PRA Secretary Punong Bgy. CARLOS
ABALLA, JR. respondents.

[G.R. No. 154683. November 12, 2002]

VICENTE S. SANDOVAL, JR., petitioner, vs. THE COMMISSION ON

ELECTIONS, respondent.

[G.R. Nos. 155083-84. November 12, 2002]

MA. FLORES P. ADOVO, MERCY E. GILO and BIENVENIDO OLLAVE,

SR., petitioners, vs. THE COMMISSION ON ELECTIONS, and
EDWARD S. HAGEDORN, respondents.
 DECISION
CARPIO, J.:

The Case

Before us are consolidated petitions for certiorari113 seeking the reversal of the
resolutions issued by the Commission on Elections (COMELEC for brevity) in relation to
the recall election for mayor of Puerto Princesa City, Palawan.

The Antecedents

On July 2, 2002, 312 out of 528 members of the then incumbent barangay officials of
the Puerto Princesa convened themselves into a Preparatory Recall Assembly (PRA for
brevity) at the Gymnasium of Barangay San Jose from 9:00 a.m. to 12:00 noon. The PRA
was convened to initiate the recall114 of Victorino Dennis M. Socrates (Socrates for brevity)
who assumed office as Puerto Princesas mayor on June 30, 2001. The members of the
PRA designated Mark David M. Hagedorn, president of the Association of Barangay
Captains, as interim chair of the PRA.
On the same date, the PRA passed Resolution No. 01-02 (Recall Resolution for
brevity) which declared its loss of confidence in Socrates and called for his recall. The
PRA requested the COMELEC to schedule the recall election for mayor within 30 days
from receipt of the Recall Resolution.
On July 16, 2002, Socrates filed with the COMELEC a petition, docketed as E.M. No.
02-010 (RC), to nullify and deny due course to the Recall Resolution.
On August 14, 2002, the COMELEC en banc115 promulgated a resolution dismissing
for lack of merit Socrates petition. The COMELEC gave due course to the Recall
Resolution and scheduled the recall election on September 7, 2002.
On August 21, 2002, the COMELEC en banc promulgated Resolution No. 5673
prescribing the calendar of activities and periods of certain prohibited acts in connection
with the recall election. The COMELEC fixed the campaign period from August 27, 2002
to September 5, 2002 or a period of 10 days.
On August 23, 2002, Edward M. Hagedorn (Hagedorn for brevity) filed his certificate
of candidacy for mayor in the recall election.
On August 17, 2002, Ma. Flores F. Adovo (Adovo for brevity) and Merly E. Gilo (Gilo
for brevity) filed a petition before the COMELEC, docketed as SPA No. 02-492, to
disqualify Hagedorn from running in the recall election and to cancel his certificate of
candidacy. On August 30, 2002, a certain Bienvenido Ollave, Sr. (Ollave for brevity) filed
a petition-in-intervention in SPA No. 02-492 also seeking to disqualify Hagedorn. On the
same date, a certain Genaro V. Manaay filed another petition, docketed as SPA No. 02-
539, against Hagedorn alleging substantially the same facts and involving the same
issues. The petitions were all anchored on the ground that Hagedorn is disqualified from
running for a fourth consecutive term, having been elected and having served as mayor
of the city for three (3) consecutive full terms immediately prior to the instant recall election
for the same post. Subsequently, SPA Nos. 02-492 and 02-539 were consolidated.
In a resolution promulgated on September 20, 2002, the COMELECs First Division 116
dismissed for lack of merit SPA Nos. 02-492 and 02-539. The COMELEC declared
Hagedorn qualified to run in the recall election. The COMELEC also reset the recall
election from September 7, 2002 to September 24, 2002.
On September 23, 2002, the COMELEC en banc promulgated a resolution denying
the motion for reconsideration of Adovo and Gilo. The COMELEC affirmed the resolution
declaring Hagedorn qualified to run in the recall election.
Hence, the instant consolidated petitions.
G.R. No. 154512
Petitioner Socrates seeks to nullify the COMELEC en banc resolution dated August
14, 2002 in E.M. No. 02-010 (RC) which gave due course to the Recall Resolution and
scheduled the recall election on September 7, 2002.
Socrates alleges that the COMELEC gravely abused its discretion in upholding the
Recall Resolution. Socrates cites the following circumstances as legal infirmities
attending the convening of the PRA and its issuance of the Recall Resolution: (1) not all
members of the PRA were notified of the meeting to adopt the resolution; (2) the proof of
service of notice was palpably and legally deficient; (3) the members of the PRA were
themselves seeking a new electoral mandate from their respective constituents; (4) the
adoption of the resolution was exercised with grave abuse of authority; and (5) the PRA
proceedings were conducted in a manner that violated his and the publics constitutional
right to information.
G.R. No. 154683
Petitioner Vicente S. Sandoval, Jr. seeks to annul COMELEC Resolution No. 5673
dated August 21, 2002 insofar as it fixed the recall election on September 7, 2002, giving
the candidates only a ten-day campaign period. He prayed that the COMELEC be
enjoined from holding the recall election on September 7, 2002 and that a new date be
fixed giving the candidates at least an additional 15 days to campaign.
In a resolution dated September 3, 2002, the Court en banc enjoined the COMELEC
from implementing Resolution No. 5673 insofar as it fixed the date of the recall election
on September 7, 2002. The Court directed the COMELEC to give the candidates an
additional fifteen 15 days from September 7, 2002 within which to campaign.
Accordingly, on September 9, 2002, the COMELEC en banc issued Resolution No.
5708 giving the candidates an additional 15 days from September 7, 2002 within which
to campaign. Thus, the COMELEC reset the recall election to September 24, 2002.
G.R. Nos. 155083-84
Petitioners Adovo, Gilo and Ollave assail the COMELECs resolutions dated
September 20, 2002 and September 23, 2002 in SPA Nos. 02-492 and 02-539 declaring
Hagedorn qualified to run for mayor in the recall election. They likewise prayed for the
issuance of a temporary restraining order to enjoin the proclamation of the winning
candidate in the recall election.
Petitioners argue that the COMELEC gravely abused its discretion in upholding
Hagedorns qualification to run for mayor in the recall election despite the constitutional
and statutory prohibitions against a fourth consecutive term for elective local officials.
In a resolution dated September 24, 2002, the Court ordered the COMELEC to desist
from proclaiming any winning candidate in the recall election until further orders from the
Court. Petitioners were required to post a P20,000 bond.
On September 27, 2002, Socrates filed a motion for leave to file an attached petition
for intervention seeking the same reliefs as those sought by Adovo, Gilo and Ollave.
In the meantime, Hagedorn garnered the highest number of votes in the recall
election with 20,238 votes. Rival candidates Socrates and Sandoval obtained 17,220
votes and 13,241 votes, respectively.
Hagedorn filed motions to lift the order restraining the COMELEC from proclaiming
the winning candidate and to allow him to assume office to give effect to the will of the
electorate.
On October 1, 2002, the Court granted Socrates motion for leave to file a petition for
intervention.

The Issues

The issues for resolution of the Court are:

1. In G.R. No. 154512, whether the COMELEC committed grave abuse of discretion in
giving due course to the Recall Resolution and scheduling the recall election for
 mayor of Puerto Princesa.
2. In G.R. Nos.155083-84, whether Hagedorn is qualified to run for mayor in the recall
election of Puerto Princesa on September 24, 2002.
In G.R. No. 154683, the issue of whether the COMELEC committed grave abuse of
discretion in fixing a campaign period of only 10 days has become moot. Our Resolution
of September 3, 2002 and COMELEC Resolution No. 5708 granted an additional 15 days
for the campaign period as prayed for by petitioner.

First Issue: Validity of the Recall Resolution.

Petitioner Socrates argues that the COMELEC committed grave abuse of discretion
in upholding the Recall Resolution despite the absence of notice to 130 PRA members
and the defective service of notice to other PRA members. The COMELEC, however,
found that
On various dates, in the month of June 2002, the proponents for the Recall of incumbent
City Mayor Victorino Dennis M. Socrates sent notices of the convening of the PRA to
the members thereof pursuant to Section 70 of the Local Government Code. Copies of
the said notice are in Volumes I and II entitled Notices to PRA. Likewise, Proof of
Service for each of the said notices were attached to the Petition and marked as Annex
G of Volumes II and III of the Petition.
Notices were likewise posted in conspicuous places particularly at the Barangay Hall.
Photos establishing the same were attached to the Petition and marked as Annex H.
The proponents likewise utilized the broadcast mass media in the dissemination of the
convening of the PRA.
Notices of the convening of the Puerto Princesa PRA were also sent to the following:
[a list of 25 names of provincial elective officials, print and broadcast media
practitioners, PNP officials, COMELEC city, regional and national officials, and DILG
officials].
xxx
The City Election Officer of Puerto Princesa City in her Certification dated 10 July 2002
certified that upon a thorough and careful verification of the signatures appearing in
PRA Resolution 01-02, x x x the majority of all members of the PRA concerned
approved said resolution. She likewise certified that not a single member/signatory of
the PRA complained or objected as to the veracity and authenticity of their signatures.
The Provincial Election Supervisor of Palawan, Atty. Urbano Arlando, in his
Indorsement dated 10 July 2002, stated, upon proper review, all documents submitted
are found in order.
The Acting Director IV, Region IV, in his study dated 30 July 2002 submitted the
following recommendations:
This Office, after evaluating the documents filed, finds the instant Petition
sufficient in form and substance. That the PRA was validly constituted and that
the majority of all members thereof approved Resolution No. 01-02 calling for
 the recall of Mayor Victorino Dennis M. Socrates.
xxx.
This Court is bound by the findings of fact of the COMELEC on matters within the
competence and expertise of the COMELEC, unless the findings are patently erroneous.
In Malonzo v. COMELEC,117 which also dealt with alleged defective service of notice to
PRA members, we ruled that
Needless to state, the issue of propriety of the notices sent to the PRA members is
factual in nature, and the determination of the same is therefore a function of the
COMELEC. In the absence of patent error, or serious inconsistencies in the findings,
the Court should not disturb the same. The factual findings of the COMELEC, based on
its own assessments and duly supported by gathered evidence, are conclusive upon
the court, more so, in the absence of a substantiated attack on the validity of the same.
In the instant case, we do not find any valid reason to hold that the COMELECs findings
of fact are patently erroneous.
Socrates also claims that the PRA members had no authority to adopt the Recall
Resolution on July 2, 2002 because a majority of PRA members were seeking a new
electoral mandate in the barangay elections scheduled on July 15, 2002. This argument
deserves scant consideration considering that when the PRA members adopted the
Recall Resolution their terms of office had not yet expired. They were all de jure
sangguniang barangay members with no legal disqualification to participate in the recall
assembly under Section 70 of the Local Government Code.
Socrates bewails that the manner private respondents conducted the PRA
proceedings violated his constitutional right to information on matters of public concern.
Socrates, however, admits receiving notice of the PRA meeting and of even sending his
representative and counsel who were present during the entire PRA proceedings.
Proponents of the recall election submitted to the COMELEC the Recall Resolution,
minutes of the PRA proceedings, the journal of the PRA assembly, attendance sheets,
notices sent to PRA members, and authenticated master list of barangay officials in
Puerto Princesa. Socrates had the right to examine and copy all these public records in
the official custody of the COMELEC. Socrates, however, does not claim that the
COMELEC denied him this right. There is no legal basis in Socrates claim that
respondents violated his constitutional right to information on matters of public concern.
Thus, we rule that the COMELEC did not commit grave abuse of discretion in
upholding the validity of the Recall Resolution and in scheduling the recall election on
September 24, 2002.

Second Issue: Hagedorns qualification to run for mayor

 in the recall election of September 24, 2002.

The three-term limit rule for elective local officials is found in Section 8, Article X of
the Constitution, which states:
Section 8. The term of office of elective local officials, except barangay officials, which
shall be determined by law, shall be three years and no such official shall serve for
more than three consecutive terms. Voluntary renunciation of the office for any length
of time shall not be considered as an interruption in the continuity of his service for the
full term for which he was elected.
This three-term limit rule is reiterated in Section 43 (b) of RA No. 7160, otherwise
known as the Local Government Code, which provides:
Section 43. Term of Office. (a) x x x
(b) No local elective official shall serve for more than three (3) consecutive terms in the
same position. Voluntary renunciation of the office for any length of time shall not be
considered as an interruption in the continuity of service for the full term for which the
elective official was elected.
These constitutional and statutory provisions have two parts. The first part provides
that an elective local official cannot serve for more than three consecutive terms. The
clear intent is that only consecutive terms count in determining the three-term limit rule.
The second part states that voluntary renunciation of office for any length of time does
not interrupt the continuity of service. The clear intent is that involuntary severance from
office for any length of time interrupts continuity of service and prevents the service
before and after the interruption from being joined together to form a continuous service
or consecutive terms.
After three consecutive terms, an elective local official cannot seek immediate
reelection for a fourth term. The prohibited election refers to the next regular election for
the same office following the end of the third consecutive term. Any subsequent
election, like a recall election, is no longer covered by the prohibition for two reasons.
First, a subsequent election like a recall election is no longer an immediate reelection
after three consecutive terms. Second, the intervening period constitutes an involuntary
interruption in the continuity of service.
When the framers of the Constitution debated on the term limit of elective local
officials, the question asked was whether there would be no further election after three
terms, or whether there would be no immediate reelection after three terms. This is clear
from the following deliberations of the Constitutional Commission:
THE PRESIDENT: The Acting Floor Leader is recognized.
MR. ROMULO:118 We are now ready to discuss the two issues, as indicated on the
blackboard, and these are Alternative No. I where there is no further election after a
 total of three terms and Alternative No. 2 where there is no immediate reelection
after three successive terms.119
The Journal of the Constitutional Commission reports the following manifestation on
the term of elective local officials:
MANIFESTATION OF MR. ROMULO
Upon resumption of session, Mr. Romulo manifested that the Body would proceed to
the consideration of two issues on the term of Representatives and local officials,
namely: 1) Alternative No. 1 (no further reelection after a total of three terms), and 2)
Alternative No. 2 (no immediate reelection after three successive terms).120
The framers of the Constitution used the same no immediate reelection question in voting
for the term limits of Senators121 and Representatives of the House.122
Clearly, what the Constitution prohibits is an immediate reelection for a fourth term
following three consecutive terms. The Constitution, however, does not prohibit a
subsequent reelection for a fourth term as long as the reelection is not immediately after
the end of the third consecutive term. A recall election mid-way in the term following the
third consecutive term is a subsequent election but not an immediate reelection after the
third term.
Neither does the Constitution prohibit one barred from seeking immediate reelection
to run in any other subsequent election involving the same term of office. What the
Constitution prohibits is a consecutive fourth term. The debates in the Constitutional
Commission evidently show that the prohibited election referred to by the framers of the
Constitution is the immediate reelection after the third term, not any other subsequent
election.
If the prohibition on elective local officials is applied to any election within the three-
year full term following the three-term limit, then Senators should also be prohibited from
running in any election within the six-year full term following their two-term limit. The
constitutional provision on the term limit of Senators is worded exactly like the term limit
of elective local officials, thus:
No Senator shall serve for more than two consecutive terms. Voluntary renunciation of
 the office for any length of time shall not be considered as an interruption in the
continuity of his service for the full term for which he was elected.123
In the debates on the term limit of Senators, the following exchange in the
Constitutional Convention is instructive:
GASCON:124 I would like to ask a question with regard to the issue after the second
term. We will allow the Senator to rest for a period of time before he can run again?
DAVIDE:125 That is correct.
GASCON: And the question that we left behind before - if the Gentleman will
remember - was: How long will that period of rest be? Will it be one election which is
three years or one term which is six years?
DAVIDE: If the Gentleman will remember, Commissioner Rodrigo expressed the
view that during the election following the expiration of the first 12 years, whether such
election will be on the third or on the sixth year thereafter, this particular member of the
Senate can run. So, it is not really a period of hibernation for six years. That was
the Committees stand.
GASCON: So, effectively, the period of rest would be three years at the
least.126 (Emphasis supplied)
The framers of the Constitution thus clarified that a Senator can run after only three
years127 following his completion of two terms. The framers expressly acknowledged that
the prohibited election refers only to the immediate reelection, and not to any
subsequent election, during the six-year period following the two term limit. The framers
of the Constitution did not intend the period of rest of an elective official who has reached
his term limit to be the full extent of the succeeding term.
In the case of Hagedorn, his candidacy in the recall election on September 24, 2002
is not an immediate reelection after his third consecutive term which ended on June 30,
2001. The immediate reelection that the Constitution barred Hagedorn from seeking
referred to the regular elections in 2001. Hagedorn did not seek reelection in the 2001
elections.
Hagedorn was elected for three consecutive terms in the 1992, 1995 and 1998
elections and served in full his three consecutive terms as mayor of Puerto Princesa.
Under the Constitution and the Local Government Code, Hagedorn could no longer run
for mayor in the 2001 elections. The Constitution and the Local Government Code
disqualified Hagedorn, who had reached the maximum three-term limit, from running for
a fourth consecutive term as mayor. Thus, Hagedorn did not run for mayor in the 2001
elections.128 Socrates ran and won as mayor of Puerto Princesa in the 2001 elections.
After Hagedorn ceased to be mayor on June 30, 2001, he became a private citizen until
the recall election of September 24, 2002 when he won by 3,018 votes over his closest
opponent, Socrates.
From June 30, 2001 until the recall election on September 24, 2002, the mayor of
Puerto Princesa was Socrates. During the same period, Hagedorn was simply a private
citizen. This period is clearly an interruption in the continuity of Hagedorns service as
mayor, not because of his voluntary renunciation, but because of a legal prohibition.
Hagedorns three consecutive terms ended on June 30, 2001. Hagedorns new recall term
from September 24, 2002 to June 30, 2004 is not a seamless continuation of his previous
three consecutive terms as mayor. One cannot stitch together Hagedorns previous three-
terms with his new recall term to make the recall term a fourth consecutive term because
factually it is not. An involuntary interruption occurred from June 30, 2001 to September
24, 2002 which broke the continuity or consecutive character of Hagedorns service as
mayor.
In Lonzanida v. Comelec,129 the Court had occasion to explain interruption of
continuity of service in this manner:
x x x The second sentence of the constitutional provision under scrutiny states,
Voluntary renunciation of office for any length of time shall not be considered as an
interruption in the continuity of service for the full term for which he was elected. The
clear intent of the framers of the constitution to bar any attempt to circumvent the three-
term limit by a voluntary renunciation of office and at the same time respect the peoples
choice and grant their elected official full service of a term is evident in this provision.
Voluntary renunciation of a term does not cancel the renounced term in the computation
of the three-term limit; conversely, involuntary severance from office for any length
of time short of the full term provided by law amounts to an interruption of
continuity of service. x x x. (Emphasis supplied)
In Hagedorns case, the nearly 15-month period he was out of office, although short of a
full term of three years, constituted an interruption in the continuity of his service as mayor.
The Constitution does not require the interruption or hiatus to be a full term of three years.
The clear intent is that interruption for any length of time, as long as the cause is
involuntary, is sufficient to break an elective local officials continuity of service.
In the recent case of Adormeo v. Comelec and Talaga,130 a unanimous Court
reiterated the rule that an interruption consisting of a portion of a term of office breaks the
continuity of service of an elective local official. In Adormeo, Ramon Y. Talaga, Jr. had
served two consecutive full terms as mayor of Lucena City. In his third bid for election as
mayor in 1998, Talaga lost to Bernard G. Tagarao. However, in the recall election of May
12, 2000, Talaga won and served the unexpired term of Tagarao from May 12, 2000 to
June 30, 2001. When Talaga ran again for mayor in the 2001 elections, Raymundo
Adormeo, the other candidate for mayor, petitioned for Talagas disqualification on the
ground that Talaga had already served three consecutive terms as mayor.
Thus, the issue in Adormeo was whether Talagas recall term was a continuation of
his previous two terms so that he was deemed to have already served three consecutive
terms as mayor. The Court ruled that Talaga was qualified to run in the 2001 elections,
stating that the period from June 30, 1998 to May 12, 2000 when Talaga was out of office
interrupted the continuity of his service as mayor. Talagas recall term as mayor was not
consecutive to his previous two terms because of this interruption, there having been a
break of almost two years during which time Tagarao was the mayor.
We held in Adormeo that the period an elective local official is out of office interrupts
the continuity of his service and prevents his recall term from being stitched together as
a seamless continuation of his previous two consecutive terms. In the instant case, we
likewise hold that the nearly 15 months Hagedorn was out of office interrupted his
continuity of service and prevents his recall term from being stitched together as a
seamless continuation of his previous three consecutive terms. The only difference
between Adormeo and the instant case is the time of the interruption. In Adormeo, the
interruption occurred after the first two consecutive terms. In the instant case, the
interruption happened after the first three consecutive terms. In both cases, the
respondents were seeking election for a fourth term.
In Adormeo, the recall term of Talaga began only from the date he assumed office
after winning the recall election. Talagas recall term did not retroact to include the tenure
in office of his predecessor. If Talagas recall term was made to so retroact, then he would
have been disqualified to run in the 2001 elections because he would already have served
three consecutive terms prior to the 2001 elections. One who wins and serves a recall
term does not serve the full term of his predecessor but only the unexpired term. The
period of time prior to the recall term, when another elective official holds office,
constitutes an interruption in continuity of service. Clearly, Adormeo established the
rule that the winner in the recall election cannot be charged or credited with the full
term of three years for purposes of counting the consecutiveness of an elective
officials terms in office.
 In the same manner, Hagedorns recall term does not retroact to include the tenure in
office of Socrates. Hagedorn can only be disqualified to run in the September 24, 2002
recall election if the recall term is made to retroact to June 30, 2001, for only then can the
recall term constitute a fourth consecutive term. But to consider Hagedorns recall term as
a full term of three years, retroacting to June 30, 2001, despite the fact that he won his
recall term only last September 24, 2002, is to ignore reality. This Court cannot declare
as consecutive or successive terms of office which historically and factually are not.
Worse, to make Hagedorns recall term retroact to June 30, 2001 creates a legal
fiction that unduly curtails the freedom of the people to choose their leaders through
popular elections. The concept of term limits is in derogation of the sovereign will of the
people to elect the leaders of their own choosing. Term limits must be construed strictly
to give the fullest possible effect to the sovereign will of the people. As this Court aptly
stated in Borja, Jr. v. Comelec:
Thus, a consideration of the historical background of Art. X, 8 of the Constitution reveals
that the members of the Constitutional Commission were as much concerned with
preserving the freedom of choice of the people as they were with preventing the
monopolization of political power. Indeed, they rejected a proposal put forth by
Commissioner Edmundo F. Garcia that after serving three consecutive terms or nine
years there should be no further reelection for local and legislative officials. Instead,
they adopted the alternative proposal of Commissioner Christian Monsod that
such officials be simply barred from running for the same position in the
succeeding election following the expiration of the third consecutive term.
Monsod warned against prescreening candidates [from] whom the people will choose
as a result of the proposed absolute disqualification, considering that the draft
constitution contained provisions recognizing people's power.131 (Emphasis supplied)
A necessary consequence of the interruption of continuity of service is the start of a
new term following the interruption. An official elected in recall election serves the
unexpired term of the recalled official. This unexpired term is in itself one term for
purposes of counting the three-term limit. This is clear from the following discussion in the
Constitutional Commission:
SUAREZ:132 For example, a special election is called for a Senator, and the Senator
newly elected would have to serve the unexpired portion of the term. Would that mean
that serving the unexpired portion of the term is already considered one term? So, half
a term, which is actually the correct statement, plus one term would disqualify the
Senator concerned from running? Is that the meaning of this provision on
disqualification, Madam President?
DAVIDE: Yes, because we speak of term, and if there is a special election, he will serve
only for the unexpired portion of that particular term plus one more term for the Senator
 and two more terms for the Members of the Lower House.133
Although the discussion referred to special elections for Senators and
Representatives of the House, the same principle applies to a recall election of local
officials. Otherwise, an elective local official who serves a recall term can serve for more
than nine consecutive years comprising of the recall term plus the regular three full terms.
A local official who serves a recall term should know that the recall term is in itself one
term although less than three years. This is the inherent limitation he takes by running
and winning in the recall election.
In summary, we hold that Hagedorn is qualified to run in the September 24, 2002
recall election for mayor of Puerto Princesa because:
1. Hagedorn is not running for immediate reelection following his three consecutive terms
as mayor which ended on June 30, 2001;
2. Hagedorns continuity of service as mayor was involuntarily interrupted from June 30,
2001 to September 24, 2002 during which time he was a private citizen;
3. Hagedorns recall term from September 24, 2002 to June 30, 2004 cannot be made to
retroact to June 30, 2001 to make a fourth consecutive term because factually the
recall term is not a fourth consecutive term; and
4. Term limits should be construed strictly to give the fullest possible effect to the right of
the electorate to choose their leaders.
WHEREFORE, the petitions in G.R. Nos. 154512, 154683 and 155083-84 are
DISMISSED. The temporary restraining order issued by this Court on September 24,
2002 enjoining the proclamation of the winning candidate for mayor of Puerto Princesa in
the recall election of September 24, 2002 is lifted. No costs.
SO ORDERED.