G.R. No.
L-52179 April 8, 1991 filed its answer and raised affirmative defenses such as lack of cause of action, non-suability of
MUNICIPALITY OF SAN FERNANDO, LA UNION, petitioner vs. HON. JUDGE
ROMEO N. FIRME, JUANA RIMANDO-BANIA, IAUREANO BANIA, JR., SOR
MARIETA BANIA, MONTANO BANIA, ORJA BANIA, AND LYDIA R. In the course of the proceedings, the respondent judge issued the following questioned orders,
BANIA, respondents.
MEDIALDEA, J.:
This is a petition for certiorari with prayer for the issuance of a writ of preliminary mandatory
injunction seeking the nullification or modification of the proceedings and the orders issued by
the respondent Judge Romeo N. Firme, in his capacity as the presiding judge of the Court of
First Instance of La Union, Second Judicial District, Branch IV, Bauang, La Union in Civil
Case No. 107-BG, entitled "Juana Rimando Bania, et al. vs. Macario Nieveras, et al." dated
November 4, 1975; July 13, 1976; August 23,1976; February 23, 1977; March 16, 1977; July
26, 1979; September 7, 1979; November 7, 1979 and December 3, 1979 and the decision dated
October 10, 1979 ordering defendants Municipality of San Fernando, La Union and Alfredo
Bislig to pay, jointly and severally, the plaintiffs for funeral expenses, actual damages
consisting of the loss of earning capacity of the deceased, attorney's fees and costs of suit and
dismissing the complaint against the Estate of Macario Nieveras and Bernardo Balagot.
The antecedent facts are as follows:
Petitioner Municipality of San Fernando, La Union is a municipal corporation existing under
and in accordance with the laws of the Republic of the Philippines. Respondent Honorable
Judge Romeo N. Firme is impleaded in his official capacity as the presiding judge of the Court
of First Instance of La Union, Branch IV, Bauang, La Union. While private respondents Juana
Rimando-Bania, Laureano Bania, Jr., Sor Marietta Bania, Montano Bania, Orja Bania
and Lydia R. Bania are heirs of the deceased Laureano Bania Sr. and plaintiffs in Civil Case
No. 107-Bg before the aforesaid court.
At about 7 o'clock in the morning of December 16, 1965, a collision occurred involving a
passenger jeepney driven by Bernardo Balagot and owned by the Estate of Macario Nieveras,
a gravel and sand truck driven by Jose Manandeg and owned by Tanquilino Velasquez and a
dump truck of the Municipality of San Fernando, La Union and driven by Alfredo Bislig. Due
to the impact, several passengers of the jeepney including Laureano Bania Sr. died as a result
of the injuries they sustained and four (4) others suffered varying degrees of physical injuries.
On December 11, 1966, the private respondents instituted a compliant for damages against the
Estate of Macario Nieveras and Bernardo Balagot, owner and driver, respectively, of the
passenger jeepney, which was docketed Civil Case No. 2183 in the Court of First Instance of
La Union, Branch I, San Fernando, La Union. However, the aforesaid defendants filed a Third
Party Complaint against the petitioner and the driver of a dump truck of petitioner.
Thereafter, the case was subsequently transferred to Branch IV, presided over by respondent
judge and was subsequently docketed as Civil Case No. 107-Bg. By virtue of a court order dated
May 7, 1975, the private respondents amended the complaint wherein the petitioner and its
regular employee, Alfredo Bislig were impleaded for the first time as defendants. Petitioner
the State, prescription of cause of action and the negligence of the owner and driver of the
passenger jeepney as the proximate cause of the collision.
to wit:
(1) Order dated November 4, 1975 dismissing the cross-claim against Bernardo
Balagot;
(2) Order dated July 13, 1976 admitting the Amended Answer of the Municipality of
San Fernando, La Union and Bislig and setting the hearing on the affirmative defenses
only with respect to the supposed lack of jurisdiction;
(3) Order dated August 23, 1976 deferring there resolution of the grounds for the
Motion to Dismiss until the trial;
(4) Order dated February 23, 1977 denying the motion for reconsideration of the order
of July 13, 1976 filed by the Municipality and Bislig for having been filed out of time;
(5) Order dated March 16, 1977 reiterating the denial of the motion for
reconsideration of the order of July 13, 1976;
(6) Order dated July 26, 1979 declaring the case deemed submitted for decision it
appearing that parties have not yet submitted their respective memoranda despite the
court's direction; and
(7) Order dated September 7, 1979 denying the petitioner's motion for reconsideration
and/or order to recall prosecution witnesses for cross examination.
On October 10, 1979 the trial court rendered a decision, the dispositive portion is hereunder
quoted as follows:
IN VIEW OF ALL OF (sic) THE FOREGOING, judgment is hereby rendered for the
plaintiffs, and defendants Municipality of San Fernando, La Union and Alfredo Bislig
are ordered to pay jointly and severally, plaintiffs Juana Rimando-Bania, Mrs.
Priscilla B. Surell, Laureano Bania Jr., Sor Marietta Bania, Mrs. Fe B. Soriano,
Montano Bania, Orja Bania and Lydia B. Bania the sums of P1,500.00 as funeral
expenses and P24,744.24 as the lost expected earnings of the late Laureano Bania
Sr., P30,000.00 as moral damages, and P2,500.00 as attorney's fees. Costs against
said defendants.
The Complaint is dismissed as to defendants Estate of Macario Nieveras and
Bernardo Balagot.
SO ORDERED. (Rollo, p. 30)
Petitioner filed a motion for reconsideration and for a new trial without prejudice to another
motion which was then pending. However, respondent judge issued another order dated
November 7, 1979 denying the motion for reconsideration of the order of September 7, 1979
for having been filed out of time.
Finally, the respondent judge issued an order dated December 3, 1979 providing that if
defendants municipality and Bislig further wish to pursue the matter disposed of in the order of
July 26, 1979, such should be elevated to a higher court in accordance with the Rules of Court.
Hence, this petition.
Petitioner maintains that the respondent judge committed grave abuse of discretion amounting
to excess of jurisdiction in issuing the aforesaid orders and in rendering a decision. Furthermore,
petitioner asserts that while appeal of the decision maybe available, the same is not the speedy
and adequate remedy in the ordinary course of law.
On the other hand, private respondents controvert the position of the petitioner and allege that
the petition is devoid of merit, utterly lacking the good faith which is indispensable in a petition
for certiorari and prohibition. (Rollo, p. 42.) In addition, the private respondents stress that
petitioner has not considered that every court, including respondent court, has the inherent
power to amend and control its process and orders so as to make them conformable to law and
justice. (Rollo, p. 43.)
The controversy boils down to the main issue of whether or not the respondent court committed
grave abuse of discretion when it deferred and failed to resolve the defense of non-suability of
the State amounting to lack of jurisdiction in a motion to dismiss.
In the case at bar, the respondent judge deferred the resolution of the defense of non-suability
of the State amounting to lack of jurisdiction until trial. However, said respondent judge failed
to resolve such defense, proceeded with the trial and thereafter rendered a decision against the
municipality and its driver.
The respondent judge did not commit grave abuse of discretion when in the exercise of its
judgment it arbitrarily failed to resolve the vital issue of non-suability of the State in the guise
of the municipality. However, said judge acted in excess of his jurisdiction when in his decision
dated October 10, 1979 he held the municipality liable for the quasi-delict committed by its
regular employee.
The doctrine of non-suability of the State is expressly provided for in Article XVI, Section 3 of
the Constitution, to wit: "the State may not be sued without its consent."
Stated in simple parlance, the general rule is that the State may not be sued except when it gives
consent to be sued. Consent takes the form of express or implied consent.
Express consent may be embodied in a general law or a special law. The standing consent of
the State to be sued in case of money claims involving liability arising from contracts is found
in Act No. 3083. A special law may be passed to enable a person to sue the government for an
alleged quasi-delict, as in Merritt v. Government of the Philippine Islands (34 Phil 311). (see
United States of America v. Guinto, G.R. No. 76607, February 26, 1990, 182 SCRA 644, 654.)
Consent is implied when the government enters into business contracts, thereby descending to
the level of the other contracting party, and also when the State files a complaint, thus opening
itself to a counterclaim. (Ibid)
Municipal corporations, for example, like provinces and cities, are agencies of the State when
they are engaged in governmental functions and therefore should enjoy the sovereign immunity
from suit. Nevertheless, they are subject to suit even in the performance of such functions
because their charter provided that they can sue and be sued. (Cruz, Philippine Political Law,
1987 Edition, p. 39)
A distinction should first be made between suability and liability. "Suability depends on the
consent of the state to be sued, liability on the applicable law and the established facts. The
circumstance that a state is suable does not necessarily mean that it is liable; on the other hand,
it can never be held liable if it does not first consent to be sued. Liability is not conceded by the
mere fact that the state has allowed itself to be sued. When the state does waive its sovereign
immunity, it is only giving the plaintiff the chance to prove, if it can, that the defendant is
liable." (United States of America vs. Guinto, supra, p. 659-660)
Anent the issue of whether or not the municipality is liable for the torts committed by its
employee, the test of liability of the municipality depends on whether or not the driver, acting
in behalf of the municipality, is performing governmental or proprietary functions. As
emphasized in the case of Torio vs. Fontanilla (G. R. No. L-29993, October 23, 1978. 85 SCRA
599, 606), the distinction of powers becomes important for purposes of determining the liability
of the municipality for the acts of its agents which result in an injury to third persons.
Another statement of the test is given in City of Kokomo vs. Loy, decided by the Supreme Court
of Indiana in 1916, thus:
Municipal corporations exist in a dual capacity, and their functions are twofold. In
one they exercise the right springing from sovereignty, and while in the performance
of the duties pertaining thereto, their acts are political and governmental. Their
officers and agents in such capacity, though elected or appointed by them, are
nevertheless public functionaries performing a public service, and as such they are
officers, agents, and servants of the state. In the other capacity the municipalities
exercise a private, proprietary or corporate right, arising from their existence as legal
persons and not as public agencies. Their officers and agents in the performance of
such functions act in behalf of the municipalities in their corporate or individual
capacity, and not for the state or sovereign power." (112 N.E., 994-995) (Ibid, pp.
605-606.)
It has already been remarked that municipal corporations are suable because their charters grant
them the competence to sue and be sued. Nevertheless, they are generally not liable for torts
committed by them in the discharge of governmental functions and can be held answerable only
if it can be shown that they were acting in a proprietary capacity. In permitting such entities to
be sued, the State merely gives the claimant the right to show that the defendant was not acting
in its governmental capacity when the injury was committed or that the case comes under the
exceptions recognized by law. Failing this, the claimant cannot recover. (Cruz, supra, p. 44.)
In the case at bar, the driver of the dump truck of the municipality insists that "he was on his
way to the Naguilian river to get a load of sand and gravel for the repair of San Fernando's
municipal streets." (Rollo, p. 29.)

In the absence of any evidence to the contrary, the regularity of the performance of official duty
is presumed pursuant to Section 3(m) of Rule 131 of the Revised Rules of Court. Hence, We
rule that the driver of the dump truck was performing duties or tasks pertaining to his office.

We already stressed in the case of Palafox, et. al. vs. Province of Ilocos Norte, the District
Engineer, and the Provincial Treasurer (102 Phil 1186) that "the construction or maintenance
of roads in which the truck and the driver worked at the time of the accident are admittedly
governmental activities."

After a careful examination of existing laws and jurisprudence, We arrive at the conclusion that
the municipality cannot be held liable for the torts committed by its regular employee, who was
then engaged in the discharge of governmental functions. Hence, the death of the passenger
tragic and deplorable though it may be imposed on the municipality no duty to pay monetary
compensation.

All premises considered, the Court is convinced that the respondent judge's dereliction in failing
to resolve the issue of non-suability did not amount to grave abuse of discretion. But said judge
exceeded his jurisdiction when it ruled on the issue of liability.

ACCORDINGLY, the petition is GRANTED and the decision of the respondent court is hereby
modified, absolving the petitioner municipality of any liability in favor of private respondents.

SO ORDERED.
G.R. No. 99425 March 3, 1997
ANTONIO C. RAMOS, ROSALINDA M. PEREZ, NORMA C. CASTILLO and
BALIUAG MARKET VENDORS ASSOCIATION, INC., petitioners, vs. COURT OF
APPEALS, HON. CAMILO O. MONTESA, JR., in his capacity as Presiding Judge of the
Regional Trial Court of Bulacan, Branch 19, and MUNICIPALITY OF
BALIUAG, respondents.
PANGANIBAN, J.:
Who has the legal authority to represent a municipality in law-suits? If an unauthorized lawyer
represents a municipality what is the effect of his participation in the proceedings?
Parenthetically, does a motion to withdraw the appearance of the unauthorized counsel have to
comply with Rule 15 of the Rules of Court regarding notice and hearing of motions?
These questions are answered by this Court in resolving this petition for review under Rule 45
of the Rules of Court of the Decision1 of public
respondent2 in CA-G.R. SP No. 23594 promulgated on March 15, 1991, which denied due
course to and dismissed the petition therein. Also assailed is the Resolution3 of public
respondent promulgated on May 9, 1991, which denied the motion for reconsideration for lack
of merit.
The Facts
The facts as found by public respondent are undisputed, to with: 4
On April 18, 1990, petitioners Antonio C. Ramos, Rosalinda M. Perez,
Norma C. Castillo, and the Baliuag Market Vendors Association, Inc. filed
a petition before the court a quo docketed as Civil Case No. 264-M-9 for
the Declaration of Nullity of Municipal Ordinances No. 91 (1976) and No.
7 (1990) and the contract of lease over a commercial arcade to be
constructed in the municipality of Baliuag, Bulacan.
On April 27, 1980, during the hearing on the petitioners' motion for the
issuance of preliminary injunction, was issued by the court a quo on May
9, 1990.
Meanwhile, on May 3, 1990, the provincial Fiscal and the Provincial
Attorney, Oliviano D. Regalado, filed an Answer in (sic) behalf of
respondent municipality.
At the pre-trial conference scheduled on May 28, 1990, Atty. Roberto B.
Romanillos appeared, manifesting that he was counsel for respondent
municipality. On the same date, and on June 15, 1990, respectively, Atty.
Romanillos filed a motion to dissolve injunction and a motion to admit an
Amended Answer with motion to dismiss.
On June 18, 1990, Provincial Attorney Oliviano D. Regalado appeared as
collaborating counsel of Atty. Romanillos. The Provincial Fiscal did not
appear. It was Atty. Romanillos who submitted the Reply to petitioners'
Opposition to respondents' motion to dissolve injunction. It was also Atty.
Romanillos who submitted a written formal offer of evidence on July 17,
1990 for respondent municipality.
During the hearing on August 10, 1990, petitioners questioned the
personality of Atty. Romanillos to appear as counsel of (sic) the respondent
municipality, which opposition was reiterated on August 15, 1990, and was
put in writing in petitioners' motion of August 20, 1990 to disqualify Atty.
Romanillos from appearing as counsel for respondent municipality and to
declare null and void the proceedings participated in and undertaken by
Atty. Romanillos.
Meanwhile, Atty. Romanillos and Atty. Regalado filed a joint motion dated
August 22, 1990 stating, among others, that Atty. Romanillos was
withdrawing as counsel for respondent municipality and that Atty.
Regalado, as his collaborating counsel for respondent municipality, is
adopting the entire proceedings participated in/undertaken by Atty.
Romanillos.
On September 19, 1990 respondent Judge issued the Order now being
assailed which, as already stated, denied petitioners' motion to disqualify
Atty. Romanillos as counsel for respondent municipality and to declare null
and void the proceeding participated in by Atty. Romanillos; and on the
other hand, granted Atty. Regalado's motion "to formally adopt the entire
proceedings including the formal offer of evidence". In support of his
foregoing action, respondent Judge reasoned:
"Petitioners" motion for the disqualification of Atty.
Romanillos as respondent municipality's counsel is
deemed moot and academic in view of his withdrawal
as counsel of said municipality pursuant to a joint
motion dated August 22, 1990, although he shall
remain as counsel on record of private respondent
Kristi Corporation. Atty. Oliviano Regalado under the
same joint motion moved for the adoption of the entire
proceedings conducted by collaborating counsel, Atty.
Romanillos.
It is noted that Atty. Romanillos initially entered his
appearance as collaborating counsel of the Provincial
Prosecutor and the Provincial Attorney when he filed a
motion to dissolve injunction under motion dated May
30, 1990 and since then despite his active participation
in the proceedings, the opposing counsel has never
questioned his appearance until after he made a formal
offer of evidence for the respondents. The
 acquiescence of petitioners' counsel of (sic) his 1) Under present laws and
appearance is tantamount to a waiver and petitioners jurisprudence, can a municipality
are, therefore, estopped to question the same. In all the be represented in a suit against it
pleadings made by Atty. Romanillos, it was clearly by a private counsel?
indicated that he was appearing as the collaborating
counsel of the Provincial Attorney Besides, petitioners' 2) If not, what is the status of the
counsel failed to submit their comment and/or proceedings undertaken by an
objection to the said joint motion of respondents' unauthorized private counsel;
counsel as directed by the Court within the
reglementary period. By virtue of these circumstances,
all the proceedings attended to and participated in by 3) Can the provincial attorney of a
said collaborating counsel is a fait accompli and the province act as counsel of a
Court finds no cogent justification to nullify the same." municipality in a suit;

Petitioner's motion for reconsideration of the foregoing Order was denied 4) Can the provincial attorney
by respondent Judge in his Order dated October 19, 1990, the second Order adopt with legal effect the
now being assailed. Respondent Judge reiterated the observations which he proceedings undertaken by an
made in the Order of September 19, 1990 that Atty. Romanillos, while unauthorized private counsel of
actively handling the said case was merely appearing as the collaborating (sic) a municipality;
counsel of both the Provincial Prosecutor and the Provincial Attorney of
Bulacan; that Atty. Romanillos' appearance was "never impugned by 5) May a court act on an alleged
petitioners" and was only questioned after his (Atty. Romanillos') motion which violates Sections 4
submission of the formal offer of evidence for respondent; and that and 5 of Rule 15 and section 26,
therefore, said court proceedings "is (sic) a fait accompli". Respondent Rule 128 of the Rules of Court.
Judge went on to say that the declaration of nullity of said proceedings and
the re-taking of the same evidence by the same parties is (sic) "apparently Petitioners contend that the assailed Decision which affirmed the Orders of the trial court is
an exercise in futility". He added that in the absence of untimely objection void for being violative of the following laws:6
by petitioners to Atty. Romanillos' appearance as the collaborating counsel,
petitioners are guilty of laches for having slept on (sic) their rights and are
estopped as their acquiescence may be considered as waiver of such right. VI-1 The respondent court
Furthermore, according to respondent Judge, assuming that the proceedings violated Section 1683 of the
had been "tainted with frailness to render the same legally objectionable", Revised Administrative Code;
the same as been "legally remedied" by its formal adoption upon motion of Section 3, paragraph 3 (a) of
the Provincial Attorney (sic), Atty. Regalado, who is not disqualified to Republic Act No. 2264, otherwise
appear as counsel for the municipality of Baliuag, for the reason that by known as the Local Autonomy
virtue of Section 19 of R.A. No. 5185 (The Decentralization Act of 1967), Act; and Section 35, Book IV,
the authority to act as legal officer/adviser for (sic) civil cases of the Title III, Chapter 12,
province of Bulacan, of which the municipality of Baliuag is a political Administrative Code of 1987
subdivision, has been transferred from the Provincial Fiscal (now (Executive Order No. 292) when it
Provincial Prosecutor) of Bulacan to the Provincial Attorney thereof. authorized Atty. Oliviano D.
Regalado, the Provincial Attorney
of Bulacan, to appear as counsel
As earlier stated, the Court of Appeals dismissed the petition and denied the motion for for respondent Municipality of
reconsideration. Hence this recourse. Baliuag.

The Issues VI-2 The respondent court

violated Section 1683 of the
The issues raised by petitioners in their Memorandum are:5 Revised Administrative Code;
Section 3, paragraph 3 (a) of
Republic Act No. 2264, otherwise
known as the Local Autonomy
 Act; Section 35, Book IV, Title III,
Chapter 12, Executive Order No.
292, otherwise known as the
Administrative Code of 1987; and
Article 1352 of the New Civil
Code, when it denied the
petitioners' motion to declare the
proceedings undertaken or
participated in by said Atty.
Roberto B. Romanillos, as private
counsel of respondent
Municipality, null and void.
VI-3 The respondent court acted in
excess of its jurisdiction and in
grave abuse of discretion when it
acted and granted the respondent's
JOINT MOTION dated August
22, 1990 (annex "H") which, as a
rule, is a mere worthless piece of
paper which the respondent
judge/court has no authority to act
upon, considering that said motion
was filed in court in patent
violation of or without complying
with the mandatory requirements
provided for by Sections 4 and of
Rule 15 and Section 26 of Rule
138 of the Rules of Court.
Public respondent did not give due course to the petition "because it does not prima facie show
justifiable grounds for the issuance of certiorari."7 Public respondent adds that:8
Considering the foregoing jurisprudence, the logical conclusion is that the
Provincial Attorney of Bulacan has now the authority to represent the
municipality of Baliuag in its law suits.
It follows that respondent Judge was correct in ruling in the assailed Order
of October 19, 1990 that even assuming, arguendo, that the proceedings by
the court a quo which had been participated in by Atty. Romanillos are
legally objectionable, this was legally remedied by the formal adoption by
the provincial Attorney, Atty. Regalado, of the said proceedings,
considering that the provincial attorney is not disqualified from
representing the municipality of Baliuag in civil cases.
In the second place, the record discloses that Atty. Romanillos had
appeared as counsel for respondent municipality of Baliuag in collaboration
with the Provincial Prosecutor and the Provincial Attorney , as shown in
the motion to dissolve injunction dated may 28, 1990 which Atty.
Romanillos had filed for respondent municipality. Accordingly and
pursuant to the aforecited provisions of law, it cannot correctly be said that
respondent Judge had acted with grave abuse of discretion when he allowed
Atty. Romanillos to act as private counsel and Atty. Regalado, Provincial
Attorney of Bulacan, to appear as counsel for respondent Municipality of
Baliuag. Perforce, it also cannot be correctly said that respondent Judge
violated the aforecited provisions when he denied petitioners' motion to
declare null and void the proceedings undertaken by and participated in by
Atty. Romanillos as private counsel of the municipality of Baliuag.
At any rate, even granting, only for the sake of argument, that Atty.
Romanillos' appearance as counsel for the municipality could not be legally
authorized under the aforesaid provisions of law, the fact that Atty.
Regalado as Provincial Attorney of Baliuag had formally adopted the
proceedings participated in by Atty. Romanillos as counsel for the
municipality of Baliuag had served, as already stated, to cure such a defect.
Thirdly, We are likewise unable to see grave abuse of discretion in
respondent Judge's actuation in granting the joint motion filed by Atty.
Romanillos and Atty. Regalado for the withdrawal of the former as private
counsel of respondent municipality, and the adoption by the latter of the
proceedings participated in/undertaken by the former, including the formal
offer of evidence submitted by the former.
Public respondent likewise found that the "joint motion does not partake of the nature of an
adversarial motion which would have rendered non-compliance with Sections 4 and 5 of Rule
15 of the Rules of Court fatal to the motion."9 It is to be emphasized that petitioners "sought the
disqualification of Atty. Romanillos . . . (Thus,) what petitioners had sought to (be) achieve(d)
in their said motion was in fact what Atty. Romanillos had sought . . . in the joint motion dated
August 22, 1990."10
Respondent municipality submits that Section 19 of RA 5185
is not meant to prohibit or prevent the Provincial Attorney to act as legal
adviser and legal officer for municipalities and municipal districts because
such interpretations would be to say the least, absurd (sic). In this
jurisdiction, a province is composed of municipalities and municipal
districts, and therefore they are deemed included in the provisions of
Section 19 of Republic Act 5185. It is also impractical and contrary to the
spirit of the law to limit the sphere of authority of the Provincial Attorney
to the province only. 11
The different allegations boil down to three main issues: (1) Who is authorized to represent a
municipality in a civil suit against it? (2) What is the effect on the proceedings when a private
counsel represents a municipality? Elsewise stated, may be the proceedings be validated by a
provincial attorney's adoption of the actions made by a private counsel? (3) Does a motion of
withdrawal of such unauthorized appearance, and adoption of proceedings participated in by
such counsel have to comply with Sections 4 and 5 12 of Rule 15 of the Rules of Court?
 The Court's Ruling
We affirm the Decision and Resolution of public respondent.
First Issue: Who is Authorized to Represent
a Municipality in its Lawsuits?
In the recent case of Municipality of Pililla, Rizal vs. Court of Appeals, 13 this Court, through
Mr. Justice Florenz D. Regalado, set in clear-cut terms the answer to the question of who may
legally represent a municipality in a suit for or against it, thus: 14
. . . The matter of representation of a municipality by a private attorney has
been settled in Ramos vs. Court of Appeals, et al., 15 and reiterated
in Province of Cebu vs. Intermediate Appellate Court, et al., 16where we
ruled that private attorneys cannot represent a province or municipality in
lawsuits.
Section 1683 of the Revised Administrative Code provides:
Sec. 1683. Duty of fiscal to represent provinces and
provincial subdivisions in litigation. The provincial
fiscal shall represent the province and any municipality
or municipal district thereof in any court, except in
cases whereof (sic) original jurisdiction is vested in the
Supreme Court or in cases where the municipality or
municipal district in question is a party adverse to the
provincial government or to some other municipality
or municipal district in the same province. When the
interests of a provincial government and of any
political division thereof are opposed, the provincial
fiscal shall act on behalf of the province.
When the provincial fiscal is disqualified to serve any
municipality or other political subdivision of a
province a special attorney may be employed by its
council. 17
Under the above provision, complemented by Section 3, Republic Act No.
2264, the Local Autonomy Law, 18 only provincial fiscal and the municipal
attorney can represent a province or municipality in their lawsuits. The
provision is mandatory. The municipality's authority to employ a private
lawyer is expressly limited only to situations where the provincial fiscal is
disqualified to represent it.19
For the aforementioned exception to apply, the fact that the provincial fiscal
was disqualified to handle the municipality's case must appear on
record.20 In the instant case, there is nothing in the records to show that the
provincial fiscal is disqualified to act as counsel for the Municipality of
Pililla on appeal, hence the appearance of herein private counsel is without
authority of law.
The provincial fiscal's functions as legal officer and adviser for the civil cases of a province and
corollarily, of the municipalities thereof, were subsequently transferred to the provincial
attorney. 21
The foregoing provisions of law and jurisprudence show that only the provincial fiscal,
provincial attorney, and municipal attorney should represent a municipality in its lawsuits. Only
in exceptional instances may a private attorney be hired by a municipality to represent it in
lawsuits. These exceptions are enumerated in the case of Alinsug vs. RTC Br. 58, San Carlos
City, Negros Occidental, 22 to wit: 23
Indeed, it appears that the law allows a private counsel to be hired by a
municipality only when the municipality is an adverse party in a case
involving the provincial government or another municipality or city within
the province. This provision has its apparent origin in the ruling in De Guia
v. The Auditor General (44 SCRA 169, March 29, 1979) where the Court
held that the municipality's authority to employ a private attorney is
expressly limited only to situations where the provincial fiscal would be
disqualified to serve and represent it. With Sec. 1683 of the old
Administrative Code as legal basis, the Court therein cited Enriquez, Sr. v.
Gimenez [107 Phil 932 (1960)] which enumerated instances when the
provincial fiscal is disqualified to represent in court a particular
municipality; if and when original jurisdiction of case involving the
municipality is vested in the Supreme Court, when the municipality is a
party adverse to the provincial government or to some other municipality
in the same province, and when, in a case involving the municipality, he,
or his wife, or child, is pecuniarily involved, as heir legatee, creditor or
otherwise.
Thereafter, in Ramos vs. Court of Appeals (108 SCRA 728, October 30,
1981), the Court ruled that a municipality may not be represented by a
private law firm which had volunteered its services gratis, in collaboration
with the municipal attorney and the fiscal, as such representations was
violative of Sec. 1683 of the old Administrative Code. This strict coherence
to the letter of the law appears to have been dictated by the fact that "the
municipality should not be burdened with expenses of hiring a private
lawyer" and that the interests of the municipality would be best protected
if a government lawyer handles its litigations. (Emphasis supplied.)
None of the foregoing exceptions is present in this case. It may be said that Atty. Romanillos
appeared for respondent municipality inasmuch as he was already counsel of Kristi Corporation
which was sued with respondent municipality in this same case. The order of the trial court
dated September 19, 1990, stated that Atty. Romanillos "entered his appearance as collaborating
counsel of the provincial prosecutor and the provincial attorney." 24 This collaboration is
contrary to law and hence should not have been recognized as legal. It has already been ruled
in this wise:
 The fact that the municipal attorney and the fiscal are supposed to
collaborate with a private law firm does not legalize the latter's
representation of the municipality of Hagonoy in Civil Case No. 5095-M.
While a private prosecutor is allowed in criminal cases, an analogous
arrangement is not allowed in civil cases wherein a municipality is the
plaintiff. 25
As already stated, private lawyers may not represent municipalities on their own.
Neither may they do so even in collaboration with authorized government lawyers.
This is anchored on the principle that only accountable public officers may act for
and in behalf of public entities and that public funds should not be expanded to hire
private lawyers.
Petitioners cannot be held in estoppel for questioning the legality of the appearance of Atty.
Romanillos, notwithstanding that they questioned the witnesses of respondent municipality
during the hearing of its motion to dissolve the preliminary injunction. Municipality of Pililla,
Rizal vs. Court of Appeals 26 held that the legality of the representation of an unauthorized
counsel may be raised at any stage of the proceedings. This Court stated that: 27
The contention of Atty. Mendiola that private respondent cannot raise for
the first time on appeal his lack of authority to represent the municipality is
untenable. The legality of his representation can be questioned at any stage
of the proceedings. In the cases hereinbefore cited, the issue of lack of
authority of private counsel to represent a municipality was only raised for
the first time in the proceedings for the collection of attorney's fees for
services rendered in the particular case, after the first time in the
proceedings for the collection of attorney's fees for services rendered in the
particular case, after the decision in that case had become final and
executory and/or had been duly executed.
Elementary fairness dictates that parties unaware of the unauthorized representation should not
be held in estoppel just because they did not question on the spot the authority of the counsel
for the municipality. The rule on appearances of a lawyers is that
(u)ntil the contrary is clearly shown, an attorney is presumed to be acting
under authority of the litigant whom he purports to represent. (Azotes v.
Blanco, 78 Phil. 739) His authority to appear for and represent petitioner in
litigation, not having been questioned in the lower court, it will be
presumed on appeal that counsel was properly authorized to file the
complaint and appear for his client. (Republic v. Philippine Resources
Development Corporation, 102 Phil. 960)28
Second Issue: Effect on Proceedings by Adoption
of Unauthorized Representation
Would the adoption by Atty. Regalado of the proceedings participated in by Atty. Romanillos
validate such proceedings? We agree with public respondent that such adoption produces
validity. Public respondent stated the reasons 29 to which we agree:
Moreover, it does not appear that the adoption of proceedings participated
in or undertaken by Atty. Romanillos when he was private counsel for the
respondent municipality of Baliuag such as the proceedings on the
motion to dissolve the injunction, wherein petitioners had even cross-
examined the witnesses presented by Atty. Romanillos in support of said
motion and had even started to present their witnesses to sustain their
objection to the motion would have resulted in any substantial prejudice
to petitioners' interest. As Wee see it, to declare the said proceedings null
and void notwithstanding the formal adoption thereof by Atty. Regalado
as Provincial Attorney of Bulacan in court and to require trial anew to
cover the same subject matter, to hear the same witnesses and to admit the
same evidence adduced by the same parties cannot enhance the promotion
of justice.
This Court believes that conferring legitimacy to the appearance of Atty. Romanillos would not
cause substantial prejudice on petitioners. Requiring new trial on the mere legal technicality
that the municipality was not represented by a legally authorized counsel would not serve the
interest of justice. After all, this Court does not see any injustice committed against petitioners
by the adoptions of the work of private counsel nor any interest of justice being served by
requiring retrial of the case by the duly authorized legal representative of the town.
In sum, although a municipality may not hire a private lawyer to represent it in litigations, in
the interest of substantial justice however, we hold that a municipality may adopt the work
already performed in good faith by such private lawyer, which work is beneficial to it (1)
provided that no injustice it thereby heaped on the adverse party and (2) provided further that
no compensation in any guise is paid therefor by said municipality to the private lawyer. Unless
so expressly adopted, the private lawyers work cannot bind the municipality.
Third Issue: "Joint Motion" Need Not Comply with Rule 15
We also agree with the justification of public respondent than a motion to withdraw the
appearance of an unauthorized lawyer is a non-adversarial motion that need not comply with
Section 4 Rule 15 as to notice to the adverse party. The disqualification of Atty. Romanillos
was what petitioners were really praying for when they questioned his authority to appear for
the municipality. The disqualification was granted, thereby serving the relief prayed for by
petitioners. such being the case, no "notice directed to the parties concerned and served at least
3 days before the hearing thereof" 30 need be given petitioners, the questioned motion not being
contentious. Besides, what petitioners were questioning as to lack of authority was remedied by
the adoption of proceedings by an authorized counsel, Atty. Regalado. The action of the trial
court allowing the motion of respondent municipality effectively granted petitioners motion to
disqualify Atty. Romanillos. In People vs. Leviste, 31 we ruled that:
While it is true any motion that does not comply with the requirements of
Rule 15 should not be accepted for filing and, if filed, is not entitled to
judicial cognizance, this Court has likewise held that where a rigid
application of the rule will result in a manifest failure or miscarriage of
justice, technicalities may be disregarded in order to resolve the case.
Litigations should, as much as possible, be decided on the merits and not
on technicalities. As this Court held in Galvez vs. Court of Appeals, "an
 order of the court granting the motion to dismiss despite the absence of a
notice of hearing, or proof of service thereof, is merely an irregularity in
the proceedings . . . (which) cannot deprive a competent court of
jurisdiction over the case." (Citations omitted).

It should be remembered that rules of procedure are but tools designed to facilitate the
attainment of justice, such that when rigid application of the rules tend to frustrate rather than
promote substantial justice, this Court is empowered to suspend their operation. 32

WHEREFORE, premises considered, the Petition is DENIED and the assailed Decision and
Resolution are AFFIRMED. No costs.

SO ORDERED.
G.R. No. L-24440 March 28, 1968
THE PROVINCE OF ZAMBOANGA DEL NORTE, plaintiff-appellee, vs. CITY OF
ZAMBOANGA, SECRETARY OF FINANCE and COMMISSIONER OF INTERNAL
REVENUE,defendants-appellants.
BENGZON, J.P., J.:
Prior to its incorporation as a chartered city, the Municipality of Zamboanga used to be
the provincial capital of the then Zamboanga Province. On October 12, 1936, Commonwealth
Act 39 was approved converting the Municipality of Zamboanga into Zamboanga City. Sec. 50
of the Act also provided that
Buildings and properties which the province shall abandon upon the transfer of
the capital to another place will be acquired and paid for by the City of Zamboanga
at a price to be fixed by the Auditor General.
The properties and buildings referred to consisted of 50 lots and some buildings
constructed thereon, located in the City of Zamboanga and covered individually by Torrens
certificates of title in the name of Zamboanga Province. As far as can be gleaned from the
records, 1 said properties were being utilized as follows
No. of Lots Use
1 ................................................ Capitol Site
3 ................................................ School Site
3 ................................................ Hospital Site
3 ................................................ Leprosarium
1 ................................................ Curuan School
1 ................................................ Trade School
2 ................................................ Burleigh School
2 ................................................ High School Playground
9 ................................................ Burleighs
1 ................................................ Hydro-Electric Site (Magay)
1 ................................................ San Roque
23 ................................................ vacant
It appears that in 1945, the capital of Zamboanga Province was transferred to
Dipolog. 2 Subsequently, or on June 16, 1948, Republic Act 286 was approved creating the
municipality of Molave and making it the capital of Zamboanga Province.
On May 26, 1949, the Appraisal Committee formed by the Auditor General, pursuant to
Commonwealth Act 39, fixed the value of the properties and buildings in question left by
Zamboanga Province in Zamboanga City at P1,294,244.00. 3
On June 6, 1952, Republic Act 711 was approved dividing the province of Zamboanga
into two (2): Zamboanga del Norte and Zamboanga del Sur. As to how the assets and obligations
of the old province were to be divided between the two new ones, Sec. 6 of that law provided:
Upon the approval of this Act, the funds, assets and other properties and the
obligations of the province of Zamboanga shall be divided equitably between the
Province of Zamboanga del Norte and the Province of Zamboanga del Sur by the
President of the Philippines, upon the recommendation of the Auditor General.
Pursuant thereto, the Auditor General, on January 11, 1955, apportioned the assets and
obligations of the defunct Province of Zamboanga as follows: 54.39% for Zamboanga del Norte
and 45.61% for Zamboanga del Sur. Zamboanga del Norte therefore became entitled to 54.39%
of P1,294,244.00, the total value of the lots and buildings in question, or P704,220.05 payable
by Zamboanga City.
On March 17, 1959, the Executive Secretary, by order of the President, issued a
ruling 4 holding that Zamboanga del Norte had a vested right as owner (should be co-owner pro-
indiviso) of the properties mentioned in Sec. 50 of Commonwealth Act 39, and is entitled to the
price thereof, payable by Zamboanga City. This ruling revoked the previous Cabinet Resolution
of July 13, 1951 conveying all the said 50 lots and buildings thereon to Zamboanga City for
P1.00, effective as of 1945, when the provincial capital of the then Zamboanga Province was
transferred to Dipolog.
The Secretary of Finance then authorized the Commissioner of Internal Revenue to deduct
an amount equal to 25% of the regular internal revenue allotment for the City of Zamboanga
for the quarter ending March 31, 1960, then for the quarter ending June 30, 1960, and again for
the first quarter of the fiscal year 1960-1961. The deductions, all aggregating P57,373.46, was
credited to the province of Zamboanga del Norte, in partial payment of the P764,220.05 due it.
However, on June 17, 1961, Republic Act 3039 was approved amending Sec. 50 of
Commonwealth Act 39 by providing that
All buildings, properties and assets belonging to the former province of
Zamboanga and located within the City of Zamboanga are hereby transferred, free of
charge, in favor of the said City of Zamboanga. (Stressed for emphasis).
Consequently, the Secretary of Finance, on July 12, 1961, ordered the Commissioner of
Internal Revenue to stop from effecting further payments to Zamboanga del Norte and to return
to Zamboanga City the sum of P57,373.46 taken from it out of the internal revenue allotment
of Zamboanga del Norte. Zamboanga City admits that since the enactment of Republic Act
3039, P43,030.11 of the P57,373.46 has already been returned to it.
This constrained plaintiff-appellee Zamboanga del Norte to file on March 5, 1962, a
complaint entitled "Declaratory Relief with Preliminary Mandatory Injunction" in the Court of
First Instance of Zamboanga del Norte against defendants-appellants Zamboanga City, the
Secretary of Finance and the Commissioner of Internal Revenue. It was prayed that: (a)
Republic Act 3039 be declared unconstitutional for depriving plaintiff province of property
without due process and just compensation; (b) Plaintiff's rights and obligations under said law
be declared; (c) The Secretary of Finance and the Internal Revenue Commissioner be enjoined
from reimbursing the sum of P57,373.46 to defendant City; and (d) The latter be ordered to
continue paying the balance of P704,220.05 in quarterly installments of 25% of its internal
revenue allotments.
On June 4, 1962, the lower court ordered the issuance of preliminary injunction as prayed
for. After defendants filed their respective answers, trial was held. On August 12, 1963,
judgment was rendered, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered declaring Republic Act No. 3039
unconstitutional insofar as it deprives plaintiff Zamboanga del Norte of its private
properties, consisting of 50 parcels of land and the improvements thereon under
certificates of title (Exhibits "A" to "A-49") in the name of the defunct province of
Zamboanga; ordering defendant City of Zamboanga to pay to the plaintiff the sum of
P704,220.05 payment thereof to be deducted from its regular quarterly internal
revenue allotment equivalent to 25% thereof every quarter until said amount shall
have been fully paid; ordering defendant Secretary of Finance to direct defendant
Commissioner of Internal Revenue to deduct 25% from the regular quarterly internal
revenue allotment for defendant City of Zamboanga and to remit the same to plaintiff
Zamboanga del Norte until said sum of P704,220.05 shall have been fully paid;
ordering plaintiff Zamboanga del Norte to execute through its proper officials the
corresponding public instrument deeding to defendant City of Zamboanga the 50
parcels of land and the improvements thereon under the certificates of title (Exhibits
"A" to "A-49") upon payment by the latter of the aforesaid sum of P704,220.05 in
full; dismissing the counterclaim of defendant City of Zamboanga; and declaring
permanent the preliminary mandatory injunction issued on June 8, 1962, pursuant to
the order of the Court dated June 4, 1962. No costs are assessed against the
defendants.
It is SO ORDERED.
Subsequently, but prior to the perfection of defendants' appeal, plaintiff province filed a
motion to reconsider praying that Zamboanga City be ordered instead to pay the P704,220.05 in
lump sum with 6% interest per annum. Over defendants' opposition, the lower court granted
plaintiff province's motion.
The defendants then brought the case before Us on appeal.
Brushing aside the procedural point concerning the property of declaratory relief filed in
the lower court on the assertion that the law had already been violated and that plaintiff sought
to give it coercive effect, since assuming the same to be true, the Rules anyway authorize the
conversion of the proceedings to an ordinary action, 5 We proceed to the more important and
principal question of the validity of Republic Act 3039.
The validity of the law ultimately depends on the nature of the 50 lots and buildings
thereon in question. For, the matter involved here is the extent of legislative control over the
properties of a municipal corporation, of which a province is one. The principle itself is simple:
If the property is owned by the municipality (meaning municipal corporation) in its public and
governmental capacity, the property is public and Congress has absolute control over it. But if
the property is owned in its private or proprietary capacity, then it is patrimonial and Congress
has no absolute control. The municipality cannot be deprived of it without due process and
payment of just compensation. 6
The capacity in which the property is held is, however, dependent on the use to which it
is intended and devoted. Now, which of two norms, i.e., that of the Civil Code or that obtaining
under the law of Municipal Corporations, must be used in classifying the properties in question?
The Civil Code classification is embodied in its Arts. 423 and 424 which
provide:1wph1.t
ART. 423. The property of provinces, cities, and municipalities is divided into
property for public use and patrimonial property.
ART. 424. Property for public use, in the provinces, cities, and municipalities,
consists of the provincial roads, city streets, municipal streets, the squares, fountains,
public waters, promenades, and public works for public service paid for by said
provinces, cities, or municipalities.
All other property possessed by any of them is patrimonial and shall be governed by
this Code, without prejudice to the provisions of special laws. (Stressed for
emphasis).
Applying the above cited norm, all the properties in question, except the two (2) lots used
as High School playgrounds, could be considered as patrimonial properties of the former
Zamboanga province. Even the capital site, the hospital and leprosarium sites, and the school
sites will be considered patrimonial for they are not for public use. They would fall under the
phrase "public works for public service" for it has been held that under the ejusdem generis rule,
such public works must be for free and indiscriminate use by anyone, just like the preceding
enumerated properties in the first paragraph of Art 424. 7 The playgrounds, however, would fit
into this category.
This was the norm applied by the lower court. And it cannot be said that its actuation was
without jurisprudential precedent for in Municipality of Catbalogan v. Director of Lands, 8 and
in Municipality of Tacloban v. Director of Lands, 9 it was held that the capitol site and the school
sites in municipalities constitute their patrimonial properties. This result is understandable
because, unlike in the classification regarding State properties, properties for public service in
the municipalities are not classified as public. Assuming then the Civil Code classification to
be the chosen norm, the lower court must be affirmed except with regard to the two (2) lots
used as playgrounds.
On the other hand, applying the norm obtaining under the principles constituting the law
of Municipal Corporations, all those of the 50 properties in question which are devoted to public
service are deemed public; the rest remain patrimonial. Under this norm, to be considered
public, it is enough that the property be held and, devoted for governmental purposes like local
administration, public education, public health, etc. 10
 Supporting jurisprudence are found in the following cases: (1) HINUNANGAN V. 5565 ...................................... 172-B ...................................... Burleigh
DIRECTOR OF LANDS, 11where it was stated that "... where the municipality has occupied
5570 ...................................... 171-A ...................................... Burleigh
lands distinctly for public purposes, such as for the municipal court house, the public school,
the public market, or other necessary municipal building, we will, in the absence of proof to the 5571 ...................................... 172-C ...................................... Burleigh
contrary, presume a grant from the States in favor of the municipality; but, as indicated by the 5572 ...................................... 174 ...................................... Burleigh
wording, that rule may be invoked only as to property which is used distinctly for public 5573 ...................................... 178 ...................................... Burleigh
purposes...." (2) VIUDA DE TANTOCO V. MUNICIPAL COUNCIL OF ILOILO 12 held that
municipal properties necessary for governmental purposes are public in nature. Thus, the auto 5585 ...................................... 171-B ...................................... Burleigh
trucks used by the municipality for street sprinkling, the police patrol automobile, police 5586 ...................................... 173 ...................................... Burleigh
stations and concrete structures with the corresponding lots used as markets were declared 5587 ...................................... 172-A ...................................... Burleigh
exempt from execution and attachment since they were not patrimonial properties. (3)
MUNICIPALITY OF BATANGAS VS. CANTOS 13 held squarely that a municipal lot which
had always been devoted to school purposes is one dedicated to public use and is not patrimonial We noticed that the eight Burleigh lots above described are adjoining each other and in
property of a municipality. turn are between the two lots wherein the Burleigh schools are built, as per records appearing
herein and in the Bureau of Lands. Hence, there is sufficient basis for holding that said eight
lots constitute the appurtenant grounds of the Burleigh schools, and partake of the nature of the
Following this classification, Republic Act 3039 is valid insofar as it affects the lots used same.
as capitol site, school sites and its grounds, hospital and leprosarium sites and the high school
playground sites a total of 24 lots since these were held by the former Zamboanga
province in its governmental capacity and therefore are subject to the absolute control of Regarding the several buildings existing on the lots above-mentioned, the records do not
Congress. Said lots considered as public property are the following: disclose whether they were constructed at the expense of the former Province of Zamboanga.
Considering however the fact that said buildings must have been erected even before 1936 when
Commonwealth Act 39 was enacted and the further fact that provinces then had no power to
TCT authorize construction of buildings such as those in the case at bar at their own expense, 14 it
Lot Number Use
Number can be assumed that said buildings were erected by the National Government, using national
2200 ...................................... 4-B ...................................... Capitol Site funds. Hence, Congress could very well dispose of said buildings in the same manner that it did
2816 ...................................... 149 ...................................... School Site with the lots in question.
3281 ...................................... 1224 ...................................... Hospital Site
But even assuming that provincial funds were used, still the buildings constitute mere
3282 ...................................... 1226 ...................................... Hospital Site accessories to the lands, which are public in nature, and so, they follow the nature of said lands,
3283 ...................................... 1225 ...................................... Hospital Site i.e., public. Moreover, said buildings, though located in the city, will not be for the exclusive
3748 ...................................... 434-A-1 ...................................... School Site use and benefit of city residents for they could be availed of also by the provincial residents.
The province then and its successors-in-interest are not really deprived of the benefits
5406 ...................................... 171 ...................................... School Site
thereof.
High School
5564 ...................................... 168 ......................................
Play-ground
But Republic Act 3039 cannot be applied to deprive Zamboanga del Norte of its share in
157 & the value of the rest of the 26 remaining lots which are patrimonial properties since they are not
5567 ...................................... ...................................... Trade School
158 being utilized for distinctly, governmental purposes. Said lots are:
High School
5583 ...................................... 167 ......................................
Play-ground
TCT Number Lot Number Use
Curuan
6181 ...................................... (O.C.T.) ...................................... 5577 ...................................... 177 ...................................... Mydro, Magay
School
13198 ...................................... 127-0 ...................................... San Roque
11942 ...................................... 926 ...................................... Leprosarium
5569 ...................................... 169 ...................................... Burleigh 15
11943 ...................................... 927 ...................................... Leprosarium
5558 ...................................... 175 ...................................... Vacant
11944 ...................................... 925 ...................................... Leprosarium
5559 ...................................... 188 ...................................... "
Burleigh
5557 ...................................... 170 ...................................... 5560 ...................................... 183 ...................................... "
School
Burleigh 5561 ...................................... 186 ...................................... "
5562 ...................................... 180 ......................................
School 5563 ...................................... 191 ...................................... "
 5566 ...................................... 176 ...................................... " Act 3039 in 1961 that the present controversy arose. Plaintiff brought suit in 1962. All the
foregoing, negative laches.
5568 ...................................... 179 ...................................... "
5574 ...................................... 196 ...................................... "
It results then that Zamboanga del Norte is still entitled to collect from the City of
5575 ...................................... 181-A ...................................... " Zamboanga the former's 54.39% share in the 26 properties which are patrimonial in nature, said
5576 ...................................... 181-B ...................................... " share to computed on the basis of the valuation of said 26 properties as contained in Resolution
5578 ...................................... 182 ...................................... " No. 7, dated March 26, 1949, of the Appraisal Committee formed by the Auditor General.
5579 ...................................... 197 ...................................... "
Plaintiff's share, however, cannot be paid in lump sum, except as to the P43,030.11 already
5580 ...................................... 195 ...................................... "
returned to defendant City. The return of said amount to defendant was without legal basis.
5581 ...................................... 159-B ...................................... " Republic Act 3039 took effect only on June 17, 1961 after a partial payment of P57,373.46 had
5582 ...................................... 194 ...................................... " already been made. Since the law did not provide for retroactivity, it could not have validly
5584 ...................................... 190 ...................................... " affected a completed act. Hence, the amount of P43,030.11 should be immediately returned by
defendant City to plaintiff province. The remaining balance, if any, in the amount of plaintiff's
5588 ...................................... 184 ...................................... " 54.39% share in the 26 lots should then be paid by defendant City in the same manner originally
5589 ...................................... 187 ...................................... " adopted by the Secretary of Finance and the Commissioner of Internal Revenue, and not in
5590 ...................................... 189 ...................................... " lump sum. Plaintiff's prayer, particularly pars. 5 and 6, read together with pars. 10 and 11 of the
first cause of action recited in the complaint 17clearly shows that the relief sought was merely
5591 ...................................... 192 ...................................... "
the continuance of the quarterly payments from the internal revenue allotments of defendant
5592 ...................................... 193 ...................................... " City. Art. 1169 of the Civil Code on reciprocal obligations invoked by plaintiff to justify lump
5593 ...................................... 185 ...................................... " sum payment is inapplicable since there has been so far in legal contemplation no complete
7379 ...................................... 4147 ...................................... " delivery of the lots in question. The titles to the registered lots are not yet in the name of
defendant Zamboanga City.

Moreover, the fact that these 26 lots are registered strengthens the proposition that they
are truly private in nature. On the other hand, that the 24 lots used for governmental purposes
are also registered is of no significance since registration cannot convert public property to
private. 16
We are more inclined to uphold this latter view. The controversy here is more along the
domains of the Law of Municipal Corporations State vs. Province than along that of Civil
Law. Moreover, this Court is not inclined to hold that municipal property held and devoted to
public service is in the same category as ordinary private property. The consequences are dire.
As ordinary private properties, they can be levied upon and attached. They can even be acquired
thru adverse possession all these to the detriment of the local community. Lastly, the
classification of properties other than those for public use in the municipalities as patrimonial
under Art. 424 of the Civil Code is "... without prejudice to the provisions of special laws."
For purpose of this article, the principles, obtaining under the Law of Municipal Corporations
can be considered as "special laws". Hence, the classification of municipal property devoted for
distinctly governmental purposes as public should prevail over the Civil Code classification in
this particular case.
WHEREFORE, the decision appealed from is hereby set aside and another judgment is
hereby entered as follows:.
(1) Defendant Zamboanga City is hereby ordered to return to plaintiff Zamboanga del
Norte in lump sum the amount of P43,030.11 which the former took back from the latter out of
the sum of P57,373.46 previously paid to the latter; and
(2) Defendants are hereby ordered to effect payments in favor of plaintiff of whatever
balance remains of plaintiff's 54.39% share in the 26 patrimonial properties, after deducting
therefrom the sum of P57,373.46, on the basis of Resolution No. 7 dated March 26, 1949 of the
Appraisal Committee formed by the Auditor General, by way of quarterly payments from the
allotments of defendant City, in the manner originally adopted by the Secretary of Finance and
the Commissioner of Internal Revenue. No costs. So ordered.

Defendants' claim that plaintiff and its predecessor-in-interest are "guilty of laches is
without merit. Under Commonwealth Act 39, Sec. 50, the cause of action in favor of the defunct
Zamboanga Province arose only in 1949 after the Auditor General fixed the value of the G.R. No. 141616 March 15, 2001
properties in question. While in 1951, the Cabinet resolved transfer said properties practically
for free to Zamboanga City, a reconsideration thereof was seasonably sought. In 1952, the old
CITY OF QUEZON, petitioner,
province was dissolved. As successor-in-interest to more than half of the properties involved,
vs.
Zamboanga del Norte was able to get a reconsideration of the Cabinet Resolution in 1959. In
LEXBER INCORPORATED, respondent.
fact, partial payments were effected subsequently and it was only after the passage of Republic
YNARES-SANTIAGO, J.:
Before us is a petition for review on certiorari assailing the October 18, 1999 decision of the
Court of Appeals in CA-G.R. CV No. 595411 which affirmed in toto the January 26, 1998
decision of the Regional Trial Court of Quezon City in Civil Case No. Q-94-19405.2
Briefly stated, the facts are as follows
On August 27, 1990, a Tri-Partite Memorandum of Agreement3 was drawn between petitioner
City of Quezon, represented by its then Mayor Brigido R. Simon, Jr., respondent Lexber, Inc.
and the then Municipality of Antipolo, whereby a 26,010 square meter parcel of land located in
Antipolo4 was to be used as a garbage dumping site by petitioner and other Metro Manila cities
or municipalities authorized by the latter, for a 5-year period commencing in January 1991 to
December 1995. Part of the agreement was that the landowner, represented by respondent
Lexber, shall be hired as the exclusive supplier of manpower, heavy equipment and engineering
services for the dumpsite and shall also have the right of first refusal for contracting such
services.
This led to the drawing of the first negotiated contract5 between petitioner, represented by
Mayor Simon, and respondent Lexber on September 10, 1990, whereby the latter was engaged
to construct the necessary infrastructure at the dumpsite, designated as the Quezon City Sanitary
Landfill, for the contract price of P4,381,069.00. Construction of said infrastructure was
completed by respondent Lexber on November 25, 1991, and the contract price agreed upon
was accordingly paid to it by petitioner.
Meanwhile, on November 8, 1990, a second negotiated contract6 was entered into by
respondent Lexber with petitioner, again represented by Mayor Simon, whereby it was agreed
that respondent Lexber shall provide maintenance services in the form of manpower, equipment
and engineering operations for the dumpsite for the contract price of P1,536,796.00 monthly. It
was further agreed that petitioner shall pay respondent Lexber a reduced fee of fifty percent
(50%) of the monthly contract price, or P768,493.00, in the event petitioner fails to dump the
agreed volume of 54,000 cubic meters of garbage for any given month. On December 11, 1991,
respondent was notified by petitioner, through the City Engineer, Alfredo Macapugay, Project
Manager, Rene Lazaro and Mayor Simon to commence maintenance and dumping operations
at the site starting on December 15, 1991.7
Respondent Lexber alleged that petitioner immediately commenced dumping garbage on the
landfill site continuously from December 1991 until May 1992. Thereafter, petitioner ceased to
dump garbage on the said site for reasons not made known to respondent Lexber. Consequently,
even while the dumpsite remained unused, respondent Lexber claimed it was entitled to
payment for its services as stipulated in the second negotiated contract.
On December 12, 1992, respondent's counsel sent a demand letter to petitioner demanding the
payment of at least 50% of its service fee under the said contract, in the total amount of
P9,989,174.00. In view of the idle state of the dumpsite for more than a year, respondent also
sought a clarification from petitioner regarding its intention on the dumpsite project,
considering the waste of equipment and manpower in the meantime, as well as its loss of
opportunity for the property.
Petitioner, this time acting through Mayor Ismael A. Mathay, Jr. who succeeded Mayor Simon
in the interim, denied any liability under the contract on the ground that the same was invalid
and unenforceable. According to Mayor Mathay, the subject contract was signed only by Mayor
Simon and had neither the approval nor ratification of the City Council, and it lacked the
required budget appropriation.1wphi1.nt
Thus, a complaint for Breach of Contract, Specific Performance or Rescission of Contract and
Damages was filed by respondent Lexber against petitioner on February 21, 1994 before the
Regional Trial Court of Quezon City. Respondent Lexber averred that because petitioner
stopped dumping garbage on the dumpsite after May 1992, Lexber's equipment and personnel
were idle to its damage and prejudice. Respondent prayed that petitioner be ordered to comply
with its obligations under the subject contract or, in the alternative, that the said contract be
rescinded and petitioner be ordered to pay damages.
On January 26, 1998, after trial on the merits, the lower court rendered judgment in favor of
respondent, the dispositive portion of which states:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the
plaintiff and against the defendant:
1. Ordering the defendant to pay the plaintiff the amount of SEVEN HUNDRED
SIXTY EIGHT THOUSAND FOUR HUNDRED NINETY THREE PESOS
(P768,493.00) per month starting December 15, 1991 until December 31, 1995 with
legal interest starting December 16, 1992, the date defendant received plaintiffs extra-
judicial demand, until defendant finally pays the entire amount;
2. Ordering defendant to pay costs of suit.
The claims for attorney's fees and other damages are hereby denied for lack of merit.
SO ORDERED.8
On appeal to the Court of Appeals, the said Judgment was affirmed in toto. With the denial of
its Motion for Reconsideration on January 26, 2000, petitioner now comes to this Court with
the instant petition arguing that the Court of Appeals gravely erred:
(a) When it refused to hold that the second Negotiated Contract of November 8, 1990
is null and void ab initio, notwithstanding that the execution thereof was in violation
of Secs. 85, 86 and 87 of the Auditing Code of the Philippines (PD 1445) and LOI
968.
(b) When it refused to categorically hold that the said Negotiated Contract of
November 8, 1990 required the prior approval of the City Council, notwithstanding
the fact that the said contract would require the expenditure of public funds in the
amount of P18,817,920.00 for one-year dumping operation, or the total amount of
P94,089,600.00 for five years, and that it is the City Council that is vested by the
Local Government Code (BP Blg. 337) with the power to appropriate city funds to
cover expenses of the City Government.
 (c) When it held that Petitioner started to dump garbage at the dumpsite and paid for
such service, despite the fact that Respondent's evidence proved otherwise;
furthermore, the Court of Appeals failed to cite any specific evidence to support said
conclusions of fact.
(d) When it held that the said Negotiated Contract of November 8, 1990 was ratified
by the Petitioner by the aforesaid initial dumping of garbage and payment of services,
overlooking the elementary doctrine that a void contract cannot be ratified.
(e) When it wrongly applied an Executive Order and administrative resolution as the
applicable law to govern the aforesaid contract, notwithstanding that the Auditing
Code of the Philippines (PD 1445) and the Local Government Code (BP 337) then
had not been repealed by any legislative enactment, nor could the said executive
issuances repeal them.
(f) When it held that the equities of the case should lean in favor of the respondent
and thus failed to apply the doctrine that Government is not estopped to question the
illegal acts of its officials.
(g) When it wrongly applied the lmus case, not the Osmena case, to the present case.9
Petitioner's remonstrations can be reduced to two (2) essential arguments:
First. That the second negotiated contract is null and void ab initio because its
execution was done in violation of existing laws, more particularly Sections 85, 86
and 87 of Presidential Decree No. 1445 (otherwise known as the Auditing Code of
the Philippines) and Section 177 (b) of Batas Pambansa Blg. 337 (also known as the
Local Government Code of 1983); and
Second. That the facts and evidence do not support the Court of Appeals, conclusion
that, notwithstanding the lack of appropriation, subsequent acts of the petitioner
constituted a ratification of the subject negotiated contract.
The issue of whether or not the subject negotiated contract is null and void ab initio will be
discussed first.
Petitioner insists that the subject contract failed to comply with the mandatory requirements of
Presidential Decree No. 1445, otherwise known as the Auditing Code of the Philippines.
Section 85 thereof provides:
Section 85. Appropriation before entering into contract. - (1) No contract involving
the expenditure of public funds shall be entered into unless there is an appropriation
therefor, the unexpected balance of which, free of other obligations, is sufficient to
cover the proposed expenditure; (2) Notwithstanding this provision, contracts for the
procurement of supplies and materials to be carried in stock may be entered into under
regulations of the Commission provided that when issued, the supplies and materials
shall be charged to the proper appropriation account. (Underscoring ours)
Section 86 of PD 1445 also provides as follows:
Section 86. Certificate showing appropriation to meet contract. - Except in a case of
a contract for personal service, for supplies for current consumption or to be carried
in stock not exceeding the estimated consumption for three months, or banking
transactions of government-owned or controlled banks, no contract involving the
expenditure of public funds by any government agency shall be entered into or
authorized unless the proper accounting official or the agency concerned shall have
certified to the officer entering into obligation that funds have been duly appropriated
for the purpose and that the amount necessary to cover the proposed contract for the
current fiscal year is available for expenditure on account thereof, subject to
verification by the auditor concerned. The certification signed by the proper
accounting official and the auditor who verified it, shall be attached to and become
an integral part of the proposed contract, and the sum so certified shall not thereafter
be available for expenditure for any other purpose until the obligation of the
government agency concerned under the contract is fully extinguished, (Underscoring
ours)
Petitioner stresses that failure to comply with the requirements underlined in Sections 85 and
86 of PD 1445 rendered the subject contract void, invoking Section 87 of PD 1445 which
provides:
Section 87. Void contract and liability of officer. - Any contract entered into contrary
to the requirements of the two immediately preceding sections shall be void, and the
officer or officers entering into the contract shall be liable to the government or other
contracting party for any consequent damage to the same extent as if the transaction
had been wholly between private parties.
Is a contract entered into by the city mayor involving the expenditure of public funds by the
local government without prior appropriation by the city council valid and binding? Petitioner
insists that the answer is in the negative, arguing that there is no escaping the stringent and
mandatory requirement of a prior appropriation, as well as a certification that funds are available
therefor.
If we are to limit our disquisition to the cited provisions of Presidential Decree No. 1445, or the
Auditing Code of the Philippines, in conjunction with Section 177 (b) of Batas Pambansa Blg.
337, or the Local Government Code of 1983, which empowered the Sangguniang Panlungsod
to "appropriate funds for expenses of the city government, and fix the salaries of its officers and
employees according to law," there would be no debate that prior appropriation by the city
council and a certification that funds are available therefor is indeed mandatorily required.
There is no denying that Sections 85 and 86 of P.D. 1445 (Auditing Code of the Philippines)
provide that contracts involving expenditure of public funds:
1) can be entered into only when there is an appropriation therefor; and
 2) must be certified by the proper accounting official/agency that funds have been
duly appropriated for the purpose, which certification shall be attached to and become
an integral part of the proposed contact.
However, the very same Presidential Decree No. 1445, which is the cornerstone of petitioner's
arguments, does not provide that the absence of an appropriation law ipso facto makes a
contract entered into by a local government unit null and void. Section 84 of the statute
specifically provides:
Revenue funds shall not be paid out of any public treasury or depository except in
pursuance of an appropriation law or other specific statutory authority. (Underscoring
ours)
Consequently, public funds may be disbursed not only pursuant to an appropriation law, but
also in pursuance of other specific statutory authority, i.e., Section 84 of PD 1445. Thus, when
a contract is entered into by a city mayor pursuant to specific statutory authority, the
law, i.e., PD 1445 allows the disbursement of funds from any public treasury or depository
therefor. It can thus be plainly seen that the law invoked by petitioner Quezon City itself
provides that an appropriation law is not the only authority upon which public funds shall be
disbursed.
Furthermore, then Mayor Brigido Simon, Jr. did not enter into the subject contract without legal
authority. The Local Government Code of 1983, or B.P. Blg. 337, which was then in force,
specifically and exclusively empowered the city mayor to "represent the city in its business
transactions, and sign all warrants drawn on the city treasury and all bonds, contracts and
obligations of the city."10 Such power granted to the city mayor by B.P. Blg. 337 was not
qualified nor restricted by any prior action or authority of the city council. We note that while
the subsequent Local Government Code of 1991,11 which took effect after the execution of the
subject contracts, provides that the mayor's representation must be "upon authority of the
sangguniang panlungsod or pursuant to law or ordinance,"12 there was no such qualification
under the old code.
We must differentiate the provisions of the old Local Government Code of 1983, B.P. Blg. 337,
which was then in force, from that of the Local Government Code of 1991, R.A. No.7160,
which now requires that the mayor's representation of the city in its business transactions must
be "upon authority of the sangguniang panlungsod or pursuant to law or ordinance" (Section
455 [vi]). No such prior authority was required under B.P. Blg. 337. This restriction, therefore,
cannot be imposed on the city mayor then since the two contracts were entered into before R.A.
No.7160 was even enacted.
Under B.P. Blg. 337, while the city mayor has no power to appropriate funds to support the
contracts, neither does said law prohibit him from entering into contracts unless and until funds
are appropriated therefor. In fact, it is his bounden duty to so represent the city in all its business
transactions. On the other hand, the city council must provide for the "depositing, leaving or
throwing of garbage"13 and to appropriate funds for such expenses.14{Section 177 [b]). It cannot
refuse to so provide and appropriate public funds for such services which are very vital to the
maintenance of cleanliness of the city and the good health of its inhabitants.
By entering into the two contracts, Mayor Simon did not usurp the city council's power to
provide for the proper disposal of garbage and to appropriate funds therefor. The execution of
contracts to address such a need is his statutory duty, just as it is the city council's duty to
provide for said services. There is no provision in B.P. Blg. 337, however, that prohibits the
city mayor from entering into contracts for the public welfare, unless and until there is prior
authority from the city council. This requirement was imposed much later by R.A. No. 7160,
long after the contracts had already been executed and implemented.
Even the very Charter of Quezon City,15 more particularly Section 9(f), Section 12(a) and
Section 12(m) thereof, simply provide that the mayor shall exercise general powers and duties,
such as signing "all warrants drawn on the city treasurer and all bonds, contracts, and obligations
of the city,"16 even as it grants the City Council the power, by ordinance or resolution, "to make
all appropriations for the expenses of the government of the city,"17 as well as "to prohibit the
throwing or depositing of offal, garbage, refuse, or other offensive matter in the same, and to
provide for its collection and disposition x x x."18
While the powers and duties of the Mayor and the City Council are clearly delineated, there is
nothing in the cited provisions, nor even in the statute itself, that requires "prior authorization
by the city council by proper enactment of an ordinance" before the City Mayor can enter into
contracts.
Private respondent Lexber, asserts that the subject contract was entered into by Mayor Simon
in behalf of the Quezon City government pursuant to specific statutory authority, more
particularly the provisions of Executive Order No. 392. In accordance with Article XVIII,
Section 8 of the 1987 Constitution, then President Corazon C. Aquino issued E.O. No. 392
constituting the Metropolitan Manila Authority (or MMA) to be composed of the heads of the
four (4) cities and thirteen (13) municipalities comprising the Metropolitan Manila area. The
said Executive Order empowered the MMA to "have jurisdiction over the delivery of basic
urban services requiring coordination" in the Metropolitan area, including "sanitation and waste
management."19
To fulfil this mandate, the MMA, through Resolution No. 17, Series of 1990, resolved that
pursuant to Section 2 of E.O. No. 392, the:
x x x LGUs remitting their contributions to the MMA within the prescribed period
shall be entitled to a financial assistance in all amount equivalent to 20% of their
remittances provided that the amount is used exclusively to augment the effective
delivery of basic urban services requiring coordination.
The Metropolitan Manila Council (or MMC) also issued Resolution No. 15, Series of 1991,
authorizing the Chairman of the MMC to enter into a memorandum of agreement or (MOA)
with any local chief executive in Metropolitan Manila for the purpose of managing garbage
collection and disposal, among other basic urban services. Taking their cue from Executive
Order No. 392 and the pertinent resolutions of the MMA and MMC, the then Mayors of Quezon
City and the Municipality of Antipolo entered into a tripartite MOA with respondent Lexber,
towards the establishment of the proposed Quezon City Landfill Disposal System.
It is true that the first negotiated contract between Mayor Simon, Jr. and respondent Lexber,
which provided for the necessary infrastructure of the dumpsite, was executed without prior
authority or appropriation by the city council. Nevertheless, recognizing the necessity, if not
the urgency, of the project, petitioner honored the said contract and paid respondent Lexber the
contract price of P4,381,069.00.20
Respondent Lexber avers that immediately following the completion of the project in December
1991, petitioner in fact availed of the facilities by delivering and dumping garbage at the site in
accordance with the stipulations in the second negotiated contract. And yet, after having spent
millions of public funds to build the necessary infrastructure, as well as for site development of
the sanitary landfill, petitioner, under the newly-installed administration of Mayor Ismael
Mathay, Jr., refused to honor the second negotiated contract by: (1) discontinuing the city's use
of the sanitary landfill; (2) refusing to pay respondent Lexber for services already rendered from
December of 1991 to May of 1992; and (3) denying any liability under the second negotiated
contract, on the grounds that the same was without prior authority of the city council, and that
it was neither approved nor ratified by the said body. Moreover, Mayor Mathay, Jr. refused to
pay its obligation to respondent Lexber since no provision therefor was made in the 1992/1993
annual city budget.
The trial court ruled that while there may not have been prior authority or appropriation to enter
into and implement the second negotiated contract, the project denominated as "Quezon City
Landfill Disposal System" was duly supported by a Certificate of Availability of Funds dated
April 4, 1991 signed by the Quezon City Auditor, Reynaldo P. Ventura, and Treasurer, Montano
L. Diaz, stating as follows:
Pursuant to the provisions of Section 86 of P.D. No. 1445, LOI 968 and Section 46
of P.D. No. 177, I hereby certify that funds have been duly appropriated and alloted
under Advice of Allotment No. 1 and 2 dated March 31, 1991 and in the total amount
of P2,620,169.00; P11,783,399.00 covering the contract entered into with Lexber,
Inc. with business address at 65 Panay Avenue, Quezon City said amount is available
for expenditure on account thereof.21
The existence of said document led the trial court to conclude thus:
However, a close examination of the Certificate of Availability of Funds dated
December 3, 1990 shows that the appropriated amounts of P1,700,000.00,
2,641,922.00, and P40,000.00 totaled P4,381,922.00 and not P4,341,922.00, which
amount is, in fact, P853.00 more than the contract price or Negotiated Contract dated
September 10, 1990. This only shows that as of April 4, 1991, there was sufficient
appropriation to cover at least for a period of three (3) months, in order to comply
with the provisions of Section 86 of PD 1445. Moreover, any payment made will
comply with the provision of Section 84 of PD 1445 which states that: "Revenue
funds shall not be paid out of any public treasury or depository except in pursuance
of an appropriation law or other specific statutory authority."
In any case, the defendant city can easily make available the necessary funds at the
beginning of the year in the general appropriation to cover the probable expenses
which it would have to incur, considering that pursuant to Resolution No, 72, Series
of 1990 of the Metropolitan Manila Authority, the Local Government Units are
entitled to a financial assistance in an amount equivalent to 20% of their remittances
provided that the amount is used exclusively to augment the effective delivery of
basic services requiring coordination. In fact, the amount of FIVE MILLION PESOS
(P5,000,000.00) has already been set aside in order to be available to augment
garbage collection and disposal in Quezon City.
It must be noted that the Negotiated Contract dated November 8, 1990 is not ipso
facto absolutely null and void. The subject thereof is perfectly within the authority of
the city government. It is pursuant to the Tripartite Agreement entered into between
the plaintiff, the defendant, and the Municipality of Antipolo. The plaintiff was given
the exclusive right to exercise acts stated in the two negotiated contracts, which are
entered into to further carry out and implement the provisions of the Tripartite
Agreement.22
The Court of Appeals affirmed the trial court's findings that the second negotiated contract was
executed by virtue of a specific statutory authority, or pursuant to law, holding that:
Executive Order No. 392 (constituting the Metropolitan Manila Authority, providing
for its powers and functions and for other purposes) and pertinent Resolution No. 72,
Series of 1990 of MMA, and Resolution No. 15, Series of 1991 of MMC, find
application and therefore should govern the subject transactions.
Worthy to stress at this point is the fact that pursuant to Sec. 1, E.O. 392, the then
Metropolitan Manila Authority was tasked, among others, with the delivery of basic
services in the Metropolitan Area, whose services include garbage collection and
disposal. To carry out this mandate and effectively deliver other basic urban services
requiring coordination of local government units, the Metropolitan Manila Authority
through its Resolution No.72, Series of 1990, granted financial assistance to all local
government units (LGUs) comprising Metropolitan Manila in an amount equivalent
to 20% of their remittances as provided under E.O. 392. Likewise, the Metropolitan
Manila Council, in its Resolution No. 15, Series of 1991, resolved to authorize the
Chairman or the MMC to enter into memorandum of Agreement (MOA) with the
Local Chief Executives in Metro Manila for the purpose of, among other things, the
management of garbage collection and its disposal.
The foregoing authorities therefore fully clothed Mayor Brigido Simon, Jr. with the
authority to enter and sign the subject contract for and in behalf of the city government
even without express authority from the City Council.23
While it is true that the MMA has no legislative power, E.O. No. 392 specifically empowered
the MMA to "have jurisdiction over the delivery of basic urban services requiring
coordination," such as "sanitation and waste management."24 Said E.O. did not repeal pertinent
provisions of B.P. 337, but specifically exempts the MMA from the application of E.O.
39225 (Section 11 of E.O. 392). There is no conflict as well with the provisions of P.D. No.
1445 because Sec. 84 thereof also recognizes appropriation by "other statutory authority."
E.O. 392 and MMA Resolutions Nos. 72 and 15 allowed for direct coordination between the
MMA and the covered local government units to expedite the effective delivery of basic
services requiring coordination, such as collection and disposal of garbage. To this end, the
MMA Resolutions (series of 1990) granted financial assistance to all covered local government
units in an amount equivalent to 20% of their remittances to fund the delivery of said services,
pursuant to the provisions of Sec. 7 of E.O. No. 392:
"x x x city and municipal treasurers of the local government units comprising
Metropolitan Manila shall continue to collect all revenues and receipts accruing to
the Metropolitan Manila Commission and remit the same to the Authority; Provided
that such income collections as well as the share of the authority from the regular
sources of revenue in the General Fund of the city or municipality as local counterpart
for the integrated basic services and developmental projects shall be treated as a trust
fund in their account. Provided further that the remittance thereof shall be effected
within the first thirty (30) days following the end of each month. x x x"
There was, thus, no justifiable reason for petitioner not to allocate or appropriate funds at the
start of each fiscal year considering that a trust fund had been established to pay for "the
effective delivery of basic urban services requiring coordination," foremost of which is the
collection and disposal of garbage.
LOI No. 968, signed by then President Marcos on December l7, 1979, also provides in part that
"all contracts for capital projects and for supply of commodities and services, including
equipment, maintenance contracts, and other agreements requiring payment which are
chargeable to agency current operating on capital expenditure funds, shall be signed by agency
heads or other duly authorized official only when there are available funds. The chief accountant
of the contracting agency shall sign such contracts as witness and contracts without such witness
shall be considered as null and void."
However, this requirement does not apply to contracts executed by local chief executives since
the said LOI No. 968 was directed only to "Ministries and Heads/Chief Accountants of
Ministry, Bureau, Office, Agency of the National Government, including State Universities and
Colleges, and the Chairman, Commission on Audit." Quezon City, or any urbanized city for
that matter, cannot be considered a ministry, bureau, office or agency of the national
government; neither is the city mayor a minister or head of a ministry, bureau, office or agency
of the national government. Hence, the mayor of Quezon City is not covered by LOI No. 968.
The prevailing law in this particular instance is the Local Government Code of 1983 or B.P.
Blg. 337.
Therefore, we find no cogent reason to disturb the conclusions of the trial court as affirmed by
the Court of Appeals in this regard. It is clear that the second negotiated contract was entered
into by Mayor Brigido Simon, Jr. pursuant to law or specific statutory authority as required by
P. D. No. 1445.
There is also no merit in petitioner's claim that there was no appropriation therefor, for it is
evident that even as early as April 4, 1991, funds which were certified to as available had been
allocated for use in the first few months operation of the sanitary landfill. The problem arose
only because the new administration unjustifiably refused to abide by the stipulations in the
second negotiated contract. Hence, petitioner's arguments on this issue fail to convince this
Court that the second negotiated contract was null and void ab initio for lack of prior
appropriation or authority on the part of Mayor Brigido Simon, Jr.
It is of no moment that the certificate referred to by the trial court did not state "that the amount
necessary to cover the proposed contract for the current fiscal year is available for expenditure
on account thereof."20 The Certificate of Availability of Funds,27 though dated December 3,
1990, merely showed that funds for the Landfill Disposal System was available. Even if the
surplus amount was just sufficient to cover at least three (3) months of operations as of April 4,
1991, said monthly payments were not due yet as the infrastructure was still being completed.
The project was completed in December of 1991 and dumping was to commence only
thereafter. Thus, the funds to cover the 1992 fiscal year could have been made available and
appropriated therefor at the beginning of said year. That the Quezon City government later
refused to appropriate and approve payments to respondent Lexber under the contract despite
its use of the facilities for several months in 1992, is not respondent's fault, and being the
aggrieved party, it cannot be made to suffer the damage wrought by the petitioner's failure or
refusal to abide by the contract.
On the issue of subsequent ratification by petitioner, the Court of Appeals held:
Granting but without conceding that Mayor Brigido Simon, Jr. needs to secure prior
authorization from the City Council for the enforceability of the contracts entered into
in the name of the City government, which he failed to do according to the appellant,
We believe that such will not affect the enforceability of the contract because of the
subsequent ratification made by the City government. Thus, when appellant City
government, after the construction by the appellee of the dumpsite structure in
accordance with the contract plans and specifications, started to dump garbage
collected in the City and consequently paid the appellee for the services rendered,
such acts produce and constitute a ratification and approval of the negotiated contract
and necessarily should imply its waiver of the right to assail the contract's
enforceability.28
We are not dissuaded by petitioner's arguments that there can be no ratification due to the
absence of an explicit or tacit approval of the second negotiated contract. At the outset, the issue
raised by petitioner that the subject contract is null and void ab initio, and therefore not capable
of ratification, has been laid to rest by the inevitable conclusion that the said contract is valid
and binding. Consequently, ratification of the subject contract is not necessary.
Be that as it may, it cannot be denied that there was constructive ratification on the part of
petitioner. The records show that upon completion of the infrastructure and other facilities,
petitioner, albeit still under the administration of Mayor Brigido Simon, Jr., started to dump
garbage in the premises. In fact, on December 11, 1991, a Notice to Commence
Work,29 implementing the contract for the maintenance of the sanitary landfill, starting
December 15, 1991 to December 31, 1995, was issued by, said Mayor, as recommended by
Project Manager Rene R. Lazaro and City Engineer Alfredo Macapugay.
The records also reveal that petitioner issued Disbursement Vouchers30 of various amounts
covering the period between March 1, 1992 to April 30, 1992 for the services rendered by the
Mud Regal Group, Incorporated to haul garbage to the sanitary landfill. The said disbursement
vouchers were passed in audit and duly approved and paid by petitioner. These are facts and
circumstances on record which led the trial court, the appellate court, and this Court to affirm
the conclusion that petitioner had actually ratified the subject contract. 31
Also part of the evidence on record are receipts of various amounts paid by respondent Lexber
to Mud Regal Group, Inc. for the supply of earth moving equipment used by Lexber to maintain
the sanitary landfill covering the period from December 1991 to August 1992.32 There is also a
collection letter from Mud Regal Group, Inc. addressed to respondent Lexber for unpaid bills
covering the period from September to December 1992.33 While corresponding vouchers were
prepared by petitioner to pay respondent Lexber for work accomplished by the latter in the
maintenance of the sanitary landfill for the period spanning December 1991 to June
1992,34 these were never processed and approved for payment since action thereon was
overtaken by the change in leadership of the city government. By then, the new dispensation
had already discontinued using the sanitary landfill for reasons it did not make known to
respondent Lexber.
It is evident that petitioner dealt unfairly with respondent Lexber. By the mere pretext that the
subject contract was not approved nor ratified by the city council, petitioner refused to perform
its obligations under the subject contract. Verily, the same was entered into pursuant to law or
specific statutory authority, funds therefor were initially available and allocated, and petitioner
used the sanitary landfill for several months. The present leadership cannot unilaterally decide
to disregard the subject contract to the detriment of respondent Lexber.
The mere fact that petitioner later refused to continue dumping garbage on the sanitary landfill
does not necessarily prove that it did not benefit at the expense of respondent Lexber. Whether
or not garbage was actually dumped is of no moment, for respondent Lexber's undertaking was
to make available to petitioner the landfill site and to provide the manpower and machinery to
maintain the facility. Petitioner, by refusing to abide by its obligations as stipulated in the
subject negotiated contract, should be held liable to respondent Lexber in accordance with the
terms of the subject contract.
Petitioner's refusal to abide by its commitments gave rise to an untenable situation wherein
petitioner effectively denied the existence and validity of the subject contract even while
respondent Lexber was still bound by it. This situation is inconsistent with the principle that
obligations arising from contracts have the force of law between the contracting parties and
each party is bound to fulfill what has been expressly stipulated therein. 35 Only respondent
Lexber was bound by the contract while petitioner acted as if it were free therefrom.36 The Court
of Appeals held that:
Moreover, the contention of appellant, if sustained, will undeniably result in grave
injustice and inequity to appellate Lexber, Inc. The records will reveal that appellee
never solicited upon the City government to utilize its properties for a landfill site, as
appellee originally conceived of devoting its property to a more viable undertaking,
bamboo plantation in partnership with foreign firm. On the other hand, it was the City
government, then beset with serious garbage problem that enticed and convinced
Lexber, Inc. to offer its properties as a landfill site, with the assurance of the
opportunities contained in the tri-partite agreement. When appellee acceded to their
request, three contracts unilaterally prepared by the City government was presented
to him, the terms and conditions of which were all established and prescribed by
appellant, and appellee's mere participation in the contract's perfection was simply
the affixing of his signature therein.
Clearly, the equities of the case are with appellee Lexber, Inc. Even fair dealing alone
would have required the appellant to abide by its representations, which it did in the
inception, but was later dishonored by the new administration of Mayor Mathay, Jr.
Appellee faithfully performed its undertakings set forth in the contract, upon the
appellant's assurance that sufficient funds shall come from the city's statutory
contribution to the MMA. Had it not (sic) for the said assurance, Lexber, Inc. for sure,
would not have ventured into such costly business undertaking. No one in his right
frame of mind would have entered into such kind of contract and invest his fortune
unless assured of the availability of funds to compensate its financial investment.
As correctly pointed out by the court a quo, appellant having taken advantage of and
benefited from the appellee through the assailed negotiated contract shall not be
permitted to attack it on the ground that the contract did not bear the necessary
approval.37
Finally, we come to the issue raised by petitioner that the Court of Appeals gravely erred in
holding that the Imus case, not the Osmena case, is applicable to the instant controversy. We
note that the Court of Appeals did not discuss either case but merely adopted the exhaustive
discussion of the trial court on the matter. Before the court a quo, herein respondent Lexber
relied on the ruling of this Court in the case of Imus Electric Company v.
Municipality of Imus,38 wherein this Court ruled:
The defendants contend that the contract in question is null and void on the ground
that the former municipal council of Imus approved it without having the necessary
funds to pay for the value of the service to be rendered by the plaintiff for a period
often (10) years, which amounted to P24,300, and without the provincial treasurer's
previous certificate to the effect that said funds have been appropriated and were
available, in violation of the provisions of sections 606, 607 and 608 of the Regional
Administrative Code of 1917. The above-cited legal provisions read as follows:
SEC. 606. Appropriation antecedent to making of contract. - No contract
involving the expenditure of public funds shall be made until there is an
appropriation therefor, the unexpended balance of which, free of other
obligations, is sufficient to cover the proposed expenditure. This provision
shall not, however, be construed to prevent the purchasing and carrying of
supplies in stock, under the regulations of the Bureau of Audits, provided
that when issued such supplies shall be charged to the proper appropriation
account.
SEC. 607. Certificate showing appropriation to meet contract. - Except in
the case of a contract for personal service or for supplies to be carried in
stock, no contract involving an expenditure by the Insular Government of
three thousand pesos or more shall be entered into or authorized until the
Insular Auditor shall have certified to the officer entering into such
obligation that funds have been duly appropriated for such purpose and that
the amount necessary to cover the proposed contract is available for
expenditure on account thereof. When application is made to the Insular
Auditor for the certificate herein required, a copy of the proposed contract
 or agreement shall be submitted to him accompanied by a statement in
writing from, the officer making the application showing all obligations not
yet presented for audit which have been incurred against the appropriation
to which the contract in question would be chargeable; and such certificate,
when signed by the Auditor, shall be attached to and become a part of the
proposed contract, and the sum so certified shall not thereafter be available
for expenditure for any other purpose until the Government is discharged
from the contract in question.
Except in the case of a contract for supplies to be carried in stock, no
contract involving the expenditure by any province, municipality,
township, or settlement of two thousand pesos or more shall be entered into
or authorized until the treasurer of the political division concerned shall
have certified to the officer entering into such contract that funds have been
duly appropriated for such purpose and that the amount necessary to cover
the proposed contract is available for expenditure on account thereof. Such
certificate, when signed by the said treasurer, shall be attached to and
become a part of the proposed contract and the sum so certified shall not
thereafter be available for expenditure for any other purpose until the
contract in question is lawfully abrogated or discharged.
For the purpose of making the certificate hereinabove required ninety per
centum of the estimated revenues and receipts which should accrue during
the current fiscal year, but which are yet uncollected, shall be deemed to be
in the treasury of the particular branch of the Government against which
the obligation in question would create a charge.
SEC. 608, Void contract; Liability of officer. - A purported contract entered
into contract to the requirements of the next preceding section hereof shall
be wholly void, and the officer assuming to make such contract shall be
liable to the Government or other contracting party for any consequent
damage to the same extent as if the transaction had been wholly between
private parties. (Underscoring ours)
The defendants contend that the additional appropriation made by the then municipal
council was inadequate on the ground that it was the duty of the latter to appropriate
funds for the whole terms of the contract and that the contract in question falls within
the prohibition of section 608 because in reality there was no appropriation for the
sum of P24.300, nor did the provincial treasurer certify that such appropriation was
made and that the funds for the same were available. (Underscoring ours)
The inconsistency of the defendants' claim becomes obvious merely by taking into
consideration that the contract entered into by the parties was for the sale of electric
current at the rate of P4.50 monthly for, every lamp or light of 50 watts, or the sum
of P201.50 every month. Under this agreement, the municipality of Imus was not
found, nor is it bound, to pay the price of the electric current until the same has been
furnished and inasmuch as the period of one month was made the basis thereof, there
is no doubt but that neither is the said municipality obliged to pay for the current
except at the end of every month. It is true that the duration of the contract was fixed
at ten (10) years, a period which was accepted by the municipality on the ground that
only under the terms of the contract and the law, the municipality was not bound to
make advanced payments and, consequently, there was no reason for it to appropriate
funds for the said public service except for a period of one month or one year at most,
if it had sufficient funds, in order to comply with the provisions of section 2296 of the
Revised Administrative Code, which requires that municipalities should. at the
beginning of every year, make a general appropriation containing the probable
expenses which, they would have to incur. (Emphasis supplied)
Petitioner, on the other hand, argued that the above-quoted ruling is no longer applicable, citing
this Court's ruling in the more recent case of Osmea v. Commission on Audit,39 to wit:
The Auditing Code of the Philippines (P. D. 1445) further provides that no contract
involving the expenditure of public funds shall be entered into unless there is an
appropriation therefor and the proper accounting official of the agency concerned
shall have certified to the officer entering into the obligation that funds have been
duly appropriated for the purpose and the amount necessary to cover the proposed
contract for the current fiscal year is available for expenditure on account
thereof. Any contract entered into contrary to the foregoing requirements shall be
VOID.
Clearly then the contract entered into by the former Mayor Duterte was void from the
very beginning since the agreed cost for the project (P8,368,920.00) was way beyond
the appropriated amount (P5,419,180.00) as certified by the City Treasurer. Hence,
the contract was properly declared void, and unenforceable in COA's
2nd Indorsement, dated September 4, 1986. The COA declared and we agree, that:
The prohibition contained in Sec. 85 of PD 1445 (Government Auditing
Code) is explicit and mandatory. Fund availability is, as it has always been,
an indispensable prerequisite to the execution of any government contract
involving the expenditure of public funds by all government agencies at all
levels. Such contracts are not to be as final and binding unless a certification
as to the funds availability is issued (Letter of Instruction No. 767, s. 1978).
Antecedent advance appropriation is thus essential to government liability
on contracts. This contract being violative of the legal requirement
aforequoted, the same contravenes Sec. 85 of PD. 1445 and is null and void
by virtue of Sec. 87.
The trial court, which was affirmed by the Court of Appeals, concluded that:
The contention of defendant that the Imus case is no longer applicable in view of the
explicit provisions of PD 1445 is without merit. The prohibitions expressed in
Sections 85, 86, and 87 of PD 1445 are already embodied in the provision of Revised
Administrative Code, specifically Sections 606, 607 and 608, yet, the Supreme Court
treated the contract therein as valid and required the defendant municipality to comply
with its obligation despite the absence of prior approved appropriation at the time of
the execution of the contract. The reason is that the obligation is not payable until the
performance of the services contracted. That is the difference between the "Imus
case" and the "Osmena case."
 In the former, the obligation to be rendered is the furnishing or sale of electric current
which the defendant municipality is not bound to pay until the same has been
furnished.
While in the latter, the contract is for the construction of a modern abattoir. The
amount payable is already fixed at the time the contract was executed. Moreover,
what made the Supreme Court declare the contract entered therein as invalid is the
attainment of the finality of the findings of the Commission on Audit, which the
petitioner mayor previously invoked.
Thus, the Highest Tribunal said, and this Court quotes:
As a matter of fact, the City of Cebu relied on the above pronouncement
and interposed the same as its affirmative defense, so much so that
petitioner cannot now assert that it was void having been issued in excess
of COA 's jurisdiction. A party cannot invoke the jurisdiction of a court or
an administrative body to secure affirmative relief against his opponent and
after obtaining or failing to obtain such relief, repudiate or question that
same jurisdiction. It is not right for a party who has affirmed and invoked
the jurisdiction of a court in a particular matter to secure an affirmative
relief, to afterwards deny the same jurisdiction to escape a penalty.
Public bidding may have been dispensed with, not only because "time is of the essence" but in
recognition of the reality that offering property to be used as a dumpsite is not an attractive nor
lucrative option for property owners. This reality is all the more glaring in the current situation
where Metro Manila local government units are seemingly unable to cope with the disastrous
lack of garbage dumping sites. A major part of the problem is that no one wants to be the
dumping ground of someone else's garbage. This problem is compounded by recent events
where tragedy has befallen scavengers and residents in a Quezon City dumpsite that should
have been closed years ago. It would no longer be prophetic to say that had Quezon City used
the subject dumpsite and discontinued the use of the Payatas dumpsite way back in 1991,
tragedy therein would have been averted.
Finally, petitioner's refusal to honor the contract is not only contrary to law, but also grossly
unfair to respondent Lexber. It was petitioner that first offered and later persuaded respondent
Lexber to convert the latter's property into a sanitary landfill for petitioner's exclusive use.
While the property could have been used for other more lucrative and pleasant purposes,
petitioner convinced respondent Lexber by its assurances and stipulations in the contract. In
turn, respondent Lexber relied on petitioner to abide by their contract, only to be rebuffed after
petitioner had already taken initial advantage of the facilities. By virtue of the infrastructure
intended for the sanitary landfill that was erected thereon, respondent Lexber could not divert
its use to other purposes. It is but fair that respondent Lexber be compensated for the financial
losses it has incurred in accordance with the obligation of petitioner as stipulated in the second
negotiated contract.

Besides, neither the petitioner nor HFCCI questioned the ruling of COA WHEREFORE, in view of all the foregoing, the Decision of the Court of Appeals in CA-G.R.
declaring the invalidity of the abattoir contract, thereby resulting in its CV No. 59541 affirming the judgment of the Regional Trial Court of Quezon City, Branch 220
finality even before the civil case was instituted. Petitioner could have in Civil Case No. Q-94-19405 is hereby AFFIRMED in toto. The instant petition for review
brought the case to the Supreme Court on a petition for certiorari within is DENIED for lack of merit.
thirty days from receipt of a copy of the COA decision in the manner
provided by law and the Rules of Court. A decision of the Commission or
any of its Auditor not appealed within the period provided by law, shall be No costs.
final and executory.40
SO ORDERED.
Contrary to petitioner's arguments, the facts in the Osmea case are not parallel to the facts in
the instant case. While in the former the construction of an abattoir entailed the payment in full
of a fixed amount, the case at bar involved a contract for services still to be rendered which was
payable on a monthly basis, just as in the Imus case. In the latter case, the Supreme Court did
not declare the contract null and void ab initio for the reason that appropriation for the project
can be made subsequent to the execution of the contract. Consequently, the ruling in
the Imus case is germane to the instant case. Furthermore, the trial court noted that while herein
petitioner would attack the subject contract for being fatally defective, the Commission on
Audit did not declare the said contract as null and void, unlike in the Osmea case where the
questioned contract was declared invalid by the COA. Hence, the ruling in the Osmea case
finds no application in the instant controversy.

While the contracts were admittedly negotiated contracts, this fact was never raised by the
petitioner before the trial court, Court of Appeals, and in the instant petition. The question of
the validity of the said contracts never hinged on the fact that there was no public bidding. What
is on record is that it was Mayor Simon who initiated the negotiations to convince respondent
to allow the use of its property as a dumpsite.
[G.R. No. 131457. November 17, 1998]
HON. CARLOS O. FORTICH, PROVINCIAL GOVERNOR OF BUKIDNON, HON.
REY B. BAULA, MUNICIPAL MAYOR OF SUMILAO, BUKIDNON, NQSR
MANAGEMENT AND DEVELOPMENT CORPORATION, petitioners, vs.
HON. RENATO C. CORONA, DEPUTY EXECUTIVE SECRETARY, HON.
ERNESTO D. GARILAO, SECRETARY OF THE DEPARTMENT OF
AGRARIAN REFORM, respondents.
OPINION
MARTINEZ, J.:
This pertains to the two (2) separate motions for reconsideration filed by herein
respondents and the applicants for intervention, seeking a reversal of our April 24, 1998
Decision nullifying the so-called "win-win" Resolution dated November 7, 1997, issued by the
Office of the President in O.P. Case No. 96-C-6424, and denying the applicants' Motion For
Leave To Intervene.
Respondents' motion is based on the following grounds:
"I.
THE SO-CALLED WIN-WIN RESOLUTION DATED NOVEMBER 7, 1997 IS NOT A
VOID RESOLUTION AS IT SEEKS TO CORRECT AN ERRONEOUS RULING. THE
MARCH 29, 1996 DECISION OF THE OFFICE OF THE PRESIDENT COULD NOT AS
YET BECOME FINAL AND EXECUTORY AS TO BE BEYOND MODIFICATION.
"II.
THE PROPER REMEDY OF PETITIONERS IS A PETITION FOR REVIEW UNDER RULE
43 AND NOT A PETITION FOR CERTIORARI UNDER RULE 65 OF THE RULES OF
COURT.
"III.
THE FILING OF A MOTION FOR RECONSIDERATION IS A CONDITION SINE QUA
NON BEFORE A PETITION FOR CERTIORARI MAY BE FILED BECAUSE THE
QUESTIONED RESOLUTION IS NOT PATENTLY ILLEGAL.
"IV.
PETITIONERS ARE GUILTY OF FORUM-SHOPPING BECAUSE ULTIMATELY
PETITIONERS SEEK THE SAME RELIEF, WHICH IS TO RESTRAIN THE
DEPARTMENT OF AGRARIAN REFORM FROM PLACING THE SUBJECT 144-
HECTARE PROPERTY UNDER THE COMPREHENSIVE AGRARIAN REFORM LAW
(CARL)."[1]
For their part, the grounds relied upon by the applicants for intervention are as follows:
"I.
THE INTERVENORS POSSESS A RIGHT TO INTERVENE IN THESE PROCEEDINGS.
"II.
THE MODIFICATION BY THE OFFICE OF THE PRESIDENT (OP) OF ITS 29 MARCH
1996 DECISION, THROUGH THE 7 NOVEMBER 1997 'WIN-WIN' RESOLUTION, WAS
NOT ERRONEOUS BUT WAS A VALID EXERCISE OF ITS POWERS AND
PREROGATIVES.
"III.
THE 'WIN-WIN' RESOLUTION PROPERLY ADDRESSES THE SUBSTANTIAL ISSUES
RELATIVE TO THIS CASE."[2]
Both movants also ask that their respective motions be resolved by this Court en banc
since the issues they raise are, described by the respondents, "novel,"[3]or, as characterized by
the applicants for intervention, of "transcendental significance."[4] Most specifically, movants
are presenting the issue of whether or not the power of the local government units to reclassify
lands is subject to the approval of the Department of Agrarian Reform (DAR).
The instant motions are being opposed vehemently by herein petitioners.
The grounds raised here were extensively covered and resolved in our challenged
Decision. A minute resolution denying the instant motions with finality would have been
sufficient, considering that the same follows as a matter of course if warranted under the
circumstances as in other equally important cases. However, in view of the wide publicity and
media coverage that this case has generated, in addition to the demonstrations staged at the
perimeter of this Court, as well as the many letters coming from different sectors of society (the
religious and the NGOs) and even letters from abroad, we deem it necessary to write an
extended resolution to again reiterate the basis for our April 24, 1998 Decision, and hopefully
write finis to this controversy.
To support their request that their motions be referred to the Court en banc, the movants
cited the Resolutions of this Court dated February 9, 1993, in Bar Matter No. 209, which
enumerates the cases that may be resolved en banc, among which are the following:
"x x x x x x x x x
3. Cases raising novel questions of law;
xxxxxxxxx
8. Cases assigned to a division which in the opinion of at least three (3) members thereof merit
the attention of the Court en banc and are acceptable to a majority of the actual membership of
the Court en banc; and
x x x x x x x x x"
Regrettably, the issues presented before us by the movants are matters of no extraordinary
import to merit the attention of the Court en banc. Specifically, the issue of whether or not the
power of the local government units to reclassify lands is subject to the approval of the DAR is
no longer novel, this having been decided by this Court in the case of Province of Camarines
Sur, et al. vs. Court of Appeals[5] wherein we held that local government units need not obtain
the approval of the DAR to convert or reclassify lands from agricultural to non-agricultural
use. The dispositive portion of the Decision in the aforecited case states:
"WHEREFORE, the petition is GRANTED and the questioned decision of the Court of
Appeals is set aside insofar as it (a) nullifies the trial court's order allowing the Province of
Camarines Sur to take possession of private respondent's property; (b) orders the trial court to
suspend the expropriation proceedings; and (c) requires the Province of Camarines Sur to
obtain the approval of the Department of Agrarian Reform to convert or reclassify private
respondent's property from agricultural to non-agricultural use.
"x x x x x x x x x" (Emphasis supplied)
Moreover, the Decision sought to be reconsidered was arrived at by a unanimous vote of
all five (5) members of the Second Division of this Court.Stated otherwise, this Second Division
is of the opinion that the matters raised by movants are nothing new and do not deserve the
consideration of the Court en banc. Thus, the participation of the full Court in the resolution of
movants' motions for reconsideration would be inappropriate.
We shall now resolve the respondents' motion for reconsideration.
In our Decision in question, we struck down as void the act of the Office of the President
(OP) in reopening the case in O.P. Case No. 96-C-6424 through the issuance of the November
7, 1997 "win-win" Resolution which substantially modified its March 29, 1996 Decision
that had long become final and executory, being in gross disregard of the rules and basic legal
precept that accord finality to administrative determinations. It will be recalled that the March
29, 1996 OP Decision was declared by the same office as final and executory in its Order dated
June 23, 1997 after the respondents DAR's motion for reconsideration of the said decision was
denied in the same order for having been filed beyond the 15-day reglementary period.
In their instant motion, the respondents contend that the "win-win" Resolution of
November 7, 1997 "is not a void resolution as it seeks to correct an erroneous ruling,"
hence, "(t)he March 29, 1996 decision of the Office of the President could not as yet become
final and executory as to be beyond modification."[6]
 The respondents explained that the DAR's failure to file on time the motion for
reconsideration of the March 29, 1996 OP Decision was "excusable:"
"The manner of service of the copy of the March 29, 1996 decision also made it impossible
for DAR to file its motion for reconsideration on time. The copy was received by the
Records Section of the DAR, then referred to the Office of the Secretary and then to the
Bureau of Agrarian Legal Assistance. By the time it was forwarded to the litigation office
of the DAR, the period to file the motion for reconsideration had already lapsed. Instead
of resolving the motion for reconsideration on the merits in the interest of substantial justice,
the Office of the President denied the same for having been filed late."[7] (Emphasis supplied)
We cannot agree with the respondents' contention that the June 23, 1997 OP Order which
denied the DAR's motion for reconsideration of the March 29, 1996 OP Decision for having
been filed late was "an erroneous ruling" which had to be corrected by the November 7, 1997
"win-win" Resolution. The said denial of the DAR's motion for reconsideration was in
accordance with Section 7 of Administrative Order No. 18, dated February 12, 1987, which
mandates that "decisions/resolutions/orders of the Office of the President shall, except as
otherwise provided for by special laws, become final after the lapse of fifteen (15) days from
receipt of a copy thereof x x x, unless a motion for reconsideration thereof is filed within
such period."[8]
Contrary to the respondents' submission, the late filing by the DAR of its motion for
reconsideration of the March 29, 1996 OP Decision is not excusable.The respondents'
explanation that the DAR's office procedure after receiving the copy of the March 29, 1996 OP
Decision "made it impossible foe DAR to file its motion for reconsideration on time" since
the said decision had to be referred to the different departments of the DAR, cannot be
considered a valid justification. There is nothing wrong with referring the decision to the
departments concerned for the preparation of the motion for reconsideration, but in doing so,
the DAR must not disregard the reglementary period fixed by law, rule or regulation. In
other words, the DAR must develop a system of procedure that would enable it to comply with
the reglementary period for filing said motion. For, the rules relating to reglementary period
should not be made subservient to the internal office procedure of an administrative
body.Otherwise, the noble purpose of the rules prescribing a definite period for filing a
motion for reconsideration of a decision can easily be circumvented by the mere
expediency of claiming a long and arduous process of preparing the said motion involving
several departments of the administrative agency.
The respondents then faulted the Office of the President when they further stressed that
it should have resolved "the (DAR's) motion for reconsideration on the merits in the interest
of substantial justice," instead of simply denying the same for having been filed late,[9] adding
that "technicalities and procedural lapses" should be "subordinated to the established merits
of the case."[10]Respondents thus plead for a relaxation in the application of the rules by
overlooking procedural lapses committed by the DAR.
We are persuaded.
Procedural rules, we must stress, should be treated with utmost respect and due regard
since they are designed to facilitate the adjudication of cases to remedy the worsening problem
of delay in the resolution of rival claims and in the administration of justice. The requirement
is in pursuance to the bill of rights inscribed in the Constitution which guarantees that "all
persons shall have a right to the speedy disposition of their before all judicial, quasi-judicial
and administrative bodies,"[11] the adjudicatory bodies and the parties to a case are thus
enjoined to abide strictly by the rules.[12] While it is true that a litigation is not a game of
technicalities, it is equally true that every case must be prosecuted in accordance with the
prescribed procedure to ensure an orderly and speedy administration of justice.[13] There have
been some instances wherein this Court allowed a relaxation in the application of the rules, but
this flexibility was "never intended to forge a bastion for erring litigants to violate the rules with
impunity."[14] A liberal interpretation and application of the rules of procedure can be resorted
to only in proper cases and under justifiable causes and circumstances.
In the instant case, we cannot grant respondents the relief prayed for since they have not
shown a justifiable for a relaxation of the rules. As we have discussed earlier, the DAR/s late
filing of its motion for reconsideration of the March 29, 1996 OP Decision was not
justified. Hence, the final and executory character of the said OP Decision can no longer be
disturbed, much less substantially modified. Res judicata has set in and the adjudicated thing
or affair should forever be put to rest. It is in this sense that we, in our decision under
reconsideration, declared as void and of no binding effect the "win-win" Resolution of
November 7, 1997 which substantially modified the March 29, 1996 Decision, the said
resolution having been issued in excess of jurisdiction and in arrant violation of the fundamental
and time-honored principle of finality to administrative determinations.
The movants, however, complain that the case was decided by us on the basis of a
"technicality," and, this has been the rallying cry of some newspaper columnists who insists
that we resolve this case not on mere "technical" grounds.
We do not think so.
It must be emphasized that a decision/resolution/order of an administrative body, court or
tribunal which is declared void on the ground that the same was rendered without or in excess
of jurisdiction, or with grave abuse of discretion, is by no means a mere technicality of law
or procedure. It is elementary that jurisdiction of a body, court or tribunal is
an essential and mandatoryrequirement before it can act on a case or controversy. And even
if said body, court or tribunal has jurisdiction over a case, but has acted in excess of its
jurisdiction or with grave abuse of discretion, such act is still invalid. The decision nullifying
the questioned act is an adjudication on the merits.
In the instant case, several fatal violations of the law were committed, namely: (1) the
DAR filed its motion for reconsideration of the March 29, 1996 OP Decision way beyond
reglementary period; (2) after the said motion for reconsideration was denied for having been
filed late, the March 29, 1996 Decision was declared final and executory, but the DAR still
filed a secondmotion for reconsideration which is prohibited by the rules;[15] (3) despite this,
the second motion for reconsideration was entertained by herein respondent, then Deputy
Executive Secretary Renato C. Corona, and on the basis thereof, issued the "win-win"
Resolution dated November 7, 1997, substantially modifying the March 29, 1996 Decision
which had long become final and executory; and (4) the reopening of the same case through the
issuance of the November 7, 1997 "win-win" resolution was in flagrant infringement of the
doctrine of res judicata. These grave breaches of the law, rules and settled jurisprudence are
clearly substantial, not of technical nature.
It should be stressed that when the March 29, 1996 OP Decision was declared final and
executory, vested rights were acquired by the herein petitioners, namely, the province of
Bukidnon, the municipality of Sumilao, Bukidnon, and the NQSR Management and
Development Corporation, and all others who should be benefited by the said decision. Thus,
we repeat, the issue here is not a question of technicality but that of substance and merit. In the
words of the learned Justice Artemio V. Panganiban in the case of Videogram Regulatory
Board vs. Court of Appeals, et al.,[16] "(j)ust as a losing party has the right to file an appeal
within the prescribed period, the winning party also has the correlative right to enjoy the
finality of the resolution of his/her case."
Another matter which the movants bring to our attention is that when the DAR's Order
denying petitioners' application for conversion was first brought by petitioner Carlos O. Fortich
to the Office of the President, the appropriate administrative rules were not complied with. We
wish to point out that, apparently, movants had the opportunity to questions this alleged lapsed
in procedure but chose not to avail of the same. For the "win-win" Resolution itself never
mentioned this supposed procedural lapse as an issue. Here, the issue which has been brought
to the fore is the validity of the "win-win" Resolution of November 7, 1997, not that of any
other previous proceedings. The movants cannot now question the supposed procedural lapse
for the first time before us. it should have been raised and resolved at the first opportunity, that
is, at the administrative level.
The other grounds raised by respondents in their instant motion for reconsideration
concerning the propriety of petitioners' remedy, the absence of a motion for reconsideration of
the "win-win" Resolution before resorting to the present petition for certiorari, and forum
shopping have already been extensively dealt with in our challenged decision. We need not
further elaborate on these grounds except to state that the same lacks merit.
With respect to the motion for reconsideration filed by the applicants for intervention, we
likewise find the same unmeritorious. The issue of the applicants' right to intervene in this
proceedings should be laid to rest. The rule in this jurisdiction is that a party who wishes to
intervene must have a "certain right" or "legal interest" in the subject matter of the
litigation.[17] Such interest must be "actual, substantial, material, direct and immediate, and not
simply contingent and expectant."[18]
Here, the applicants for intervention categorically admitted that they were not tenants of
petitioner NQSR Management and Development Corporation, but were
merely seasonal farmworkers in a pineapple plantation on the subject land which was under
lease for ten (10) years to the Philippine Packing Corporation.[19] Respondent, then DAR
Secretary Ernesto Garilao, also admitted in his Order of June 7, 1995 that "the subject land is
neither tenanted nor validity covered for compulsory acquisition xxx."[20]
Under Section 4, Article XIII of the 1987 Constitution, the right to owndirectly or
collectively the land they till belongs to the farmers and regularfarmworkers who are landless,
and in the case of other farmworkers, the latter are entitled "to receive a just share of
the fruits" of the land. The pertinent portion of the aforecited constitutional provision
mandates:
"Sec. 4. The State shall, by law, undertake an agrarian reform program foundedon
the right of farmers and regular farmworkers, who are landless, to own directly or
collectively the lands they till or, in the case of other farmworkers, to receive a just share
of the fruits thereof. x x x" (Emphasis supplied)
Commenting on the above-quoted provision, the eminent constitutionalist, Fr. Joaquin G.
Bernas, S.J., one of the framers of the 1987 Constitution, declares that under the agrarian reform
program the equitable distribution of the land is a right given to
landless farmers and regular farmworkers to own the land they till, while
the other or seasonal farmworkers are only entitled to a just share of the fruits of the
land.[21] Being merely seasonal farmerworkers without a right to own, the applicants' motion
for intervention must necessarily fail as they have no legal or actual and substantial interest over
the subject land.
It is noteworthy that even the "win-win" Resolution of November 7, 1997 which the
herein respondents and the applicants for intervention seek to uphold did not recognize the latter
as proper parties to intervene in the case simply because the qualified farmer-beneficiaries
have yet to be meticulously determined as ordered in the said resolution. The dispositive
portion of the "win-win" Resolution reads:
"WHEREFORE, premises considered, the decision of the Office of the President, through
Executive Secretary Ruben Torres, dated March 29, 1996, is hereby MODIFIED as follows:
xxxxxxxxx
"(3) The Department of Agrarian Reform is hereby directed to carefully and meticulously
determine who among the claimants are qualified beneficiaries.
xxxxxxxxx
"We take note of the Memorandum in Intervention filed by 113 farmers on October 10,
1997 without ruling on the propriety or merits thereof since it is unnecessary to pass upon
it at this time.
"SO ORDERED."[22] (Emphasis supplied)
These are all that are necessary to dispose of the instant separate motions for
reconsideration considering that the crucial issue in the present petitioner for certiorari is
simply the validity of the "win-win" resolution.
But even if we tackle the other issues which the movants describe as "substantial,"
namely: (1) whether the subject land is considered a prime agricultural land with irrigation
facility; (2) whether the land has long been covered by a Notice of Compulsory Acquisition
(NCA); (3) whether the land is tenanted, and if not, whether the applicants for intervention are
qualified to become beneficiaries thereof; and (4) whether the Sangguniang Bayan of Sumilao
has the legal authority to reclassify the land into industrial/institutional use, to our mind, the
March 29, 1996 OP Decision has thoroughly and properly disposed of the aforementioned
issues. We quote the pertinent portions of the said Decision:
"After a careful evaluation of the petition vis-avis the grounds upon which the denial thereof by
Secretary Garilao was based, we find that the instant application for conversion by the
Municipality of Sumilao, Bukidnon is impressed with merit.To be sure, converting the land
in question from agricultural to agro-industrial would open great opportunities for
employment and bring real development in the area towards a sustained economic growth
of the municipality. On the other hand, distributing the land to would-be beneficiaries
(who are not even tenants, as there are none) does not guarantee such benefits.
"Nevertheless, on the issue that the land is considered a prime agricultural land with irrigation
facility it maybe appropriate to mention that, as claimed by petitioner, while it is true that
there is, indeed, an irrigation facility in the area, the same merely passes thru the property
(as a right of way) to provide water to the ricelands located on the lower portion
thereof. the land itself, subject of the instant petition, is not irrigated as the same was, for
several years, planted with pineapple by the Philippine-Packing Corporation.
"On the issue that the land has long been covered by a Notice of Compulsory Acquisition
(NCA) and that the existing policy on withdrawal or lifting on areas covered by NCA is
not applicable, suffice it to state that the said NCA was declared null and void by the
Department of Agrarian Reform Adjudication Board (DARAB) as early as March 1,
1992. Deciding in favor of NQSRMDC, the DARAB correctly pointed out that under
Section 8 R.A. No. 6657, the subject property could not validly be the subject of
compulsory acquisition until after the expiration of the lease contract with Del Monte
Philippines, a Multi-National Company, or until April 1994, and ordered the DAR
Regional Office and the land Bank of the Philippines, both in Butuan City, to desist from
pursuing any activity or activities covering petitioner's land.
"On this score, we take special notice of the fact that the Quisumbing family has already
contributed substantially to the land reform program of the government, as follows: 300
hectares of rice land in Nueva Ecija in the 70's and another 100 hectares in the nearby
Municipality of Impasugong, Bukidnon, ten (10) years ago, for which they have not
received 'just compensation' up to this time.
"Neither can the assertion that 'there is no clear and tangible compensation package
arrangements for the beneficiaries' hold water as, in the first place, there are no beneficiaries
to speak about, for the land is not tenanted as already stated.
"Nor can procedural lapses in the manner of identifying/reclassifying the subject property for
agro-industrial purposes be allowed to defeat the very purpose of the law granting autonomy
to local government units in the management of their local affairs. Stated more simply, the
language of Section 20 of R.A. No. 7160, supra, is clear and affords no room for any other
interpretation. By unequivocal legal mandate, it grants local government units autonomy
in their affairs including the power to convert portions of their agricultural lands and Office of the President - Mindanao; the Secretary of DILG; and Undersecretary of DECS
provide for the manner of their utilization and disposition to enable them to attain their Wilfredo D. Clemente.
fullest development as self-reliant communities. "In the same vein, the Natioal Irrigation Administration, Provincial Irrigation Office, Bagontaas
"WHEREFORE, in pursuant of the spirit and intent of the said legal mandateand in view Valencia, Bukidnon, thru Mr. Juluis S. Maquiling, Chief, Provincial Irrigation Office,
of the favorable recommendations of the various government agencies abovementioned, interposed NO OBJECTION to the proposed conversion x x x. Also, the Kisolom-San Vicente
the subject Order, dated November 14, 1994 of the Hon. Secretary, Department of Agrarian Irrigators Multi Purpose Cooperative, San Vicente, Sumilao, Bukidnon, interposed no
Reform, is hereby SET ASIDE and the instant application of NQSRMDC/BAIDA is hereby objection to the proposed conversion of the land in question 'as it will provide more
APPROVED."[23](Emphasis supplied) economic benefits to the community in terms of outside investments that will come and
It is axiomatic that factual findings of administrative agencies which have acquired employment opportunities that will be generated by the projects to be put up x x x.'
expertise in their field are binding and conclusive on the Court,[24]considering that the Office of "On the same score, it is represented that during the public consultation held at the Kisolan
the President is presumed to be most competent in matters falling within its domain. Elementary School on 18 March 1995 with Director Jose Macalindong of DAR Central Office
The interest of justice is invoked by movants. We are aware of that famous adage of the and DECS Undersecretary Clemente, the people of the affected barangay rallied behind
late President Ramon Magsaysay that "those who have less in life should have more in their respective officials in endorsing the project."[26] (Emphasis supplied)
law." Our affirmation of the finality of the March 29, 1996 OP Decision is precisely pro-poor In this regard, the petitioners gave this assurance: "The proposed project is petitioners'
considering that more of the impoverished of society will be benefited by the agro-economical way of helping insure food, shelter and lifetime security of the greater majority of Sumilao's
development of the disputed land which the province of Bukidnon and the municipality of 22,000 people. It is capable of employing thousands of residents, enabling them to earn good
Sumilao, Bukidnon intend to undertake. To our mind, the OP Decision of March 29, 1996 was income ranging about P40,000.00 to P50,000.00 for each."[27]
for the eventual benefit of the many, not just of the few. This is clearly shown from the We express our grave concern with the manner some sectors of society have been trying
development plan on the subject land as conceived by the petitioners. The said plan is supposed to influence this Court into resolving this case on the basis of considerations other than the
to have the following components as indicated in the OP Decision of March 29, 1996: applicable law, rules and settled jurisprudence and the evidence on record. We wish to
"1. The Development Academy of Mindanao which constitutes the following: Institute for emphasize that withstanding the previous adverse comments by some columnists in the print
Continuing Higher Education; Institute for Livelihood Science (Vocational and Technical media, the assailed Decision was arrived at in the pursuit of justice and the rule of law.
School); Institute for Agribusiness Research; Museum, Library, Cultural Center, and Mindanao Finally, for those who refuse to understand, no explanation is possible, but for those who
Sports Developments Complex which covers an area of 24 hectares; understand, no explanation is necessary.
"2. Bukidnon Agro-Industrial Park which consists of corn processing for corn oil, corn starch, WHEREFORE, the separate motions for reconsideration of the April 24, 1998 Decision
various corn products; rice processing for wine, rice-based snacks, exportable rice; cassava of this Court, filed by the respondents and the applicants for intervention, are
processing for starch, alcohol and food delicacies; processing plants, fruits and fruit products hereby DENIED with FINALITY.
such as juices; processing plants for vegetables processed and prepared for market; cold storage SO ORDERED.
and ice plant; cannery system; commercial stores; public market; and abattoir needing about 67
hectares;
"3. Forest development which includes open spaces and parks for recreation, horse-back riding,
memorial and mini-zoo estimated to cover 33 hectares; and
"4. Support facilities which comprise the construction of a 360-room hotel, restaurants,
dormitories and a housing covering an area of 20 hectares."[25]
Expressing full support for the proposed project, the Sangguniang Bayan of Sumilao,
Bukidnon, on March 4, 1993, enacted Ordinance No. 24 converting or re-classifying the subject
144-hectare land from agricultural to industrial/institutional use with a view of providing an
opportunity to attract investors who can inject new economic vitality, provide more jobs
and raise the income of its people. The said project was also supported by the Bukidnon
Provincial Board which, on the basis of a Joint Committee Report submitted by its Committee
on Laws, Committee on Agrarian Reform and Socio-Economic Committee, approved the said
ordinance on February 1, 1994, now docketed as Resolution No. 94-95.
Impressed with the proposed project, several government agencies and a private
cooperative, including the people of the affected barangay, recommended the same. Again, we
quote the pertinent portion of the OP Decision of March 29, 1996:
"The said NQSRMDC Proposal was, per Certification dated January 4, 1995, adopted by the
Department of Trade and Industry, Bukidnon Provincial Office, as one of its flagship
projects. The same was likewise favorably recommended by the Provincial Development
Council of Bukidnon; the municipal, provincial and regional office of the DAR; the Regional
Office (Region X) of the DENR (which issued an Environmental Compliance Certificate on
June 5, 1995); the Executive Director, signing 'By Authority of PAUL G. DOMINGUEZ,'
G.R. No. 165547 January 24, 2007 The Zoning Certification issued by the office of the Municipal Planning and Development
Council (MPDC) showed that respondents properties located at Barangay Maribulan, Alabel
DEPARTMENT OF AGRARIAN REFORM, as represented by its Secretary, RENE C. were among those reclassified from agricultural and pasture land to residential, commercial
VILLA, Petitioner, vs. SARANGANI AGRICULTURAL CO., INC., ACIL institutional, light industrial and open space in the 1995-2005 land use plan of Alabel. 5
CORPORATION, NICASIO ALCANTARA and TOMAS ALCANTARA, Respondents.
On July 2, 1998, respondent Sarangani Agricultural Company, Inc. (SACI) filed an application
DECISION for land use conversion of the following parcels of land with an aggregate area of 1,005
hectares:
AZCUNA, J.:
Registered Owner TCT No. Lot No. Area (Ha.) Area Applied
This is a petition for review1 by the Department of Agrarian Reform (DAR) seeking the reversal (Ha.)
of the Decision and Resolution, dated July 19, 2004 and September 24, 2004, respectively, of
the Court of Appeals in CA-G.R. SP No. 79899, entitled "Sarangani Agricultural Co, Inc., et SACI T-7207 1-C 52.4365 52.4365
al. v. Hon. Manuel Domingo, et al."
SACI T -48807 (T-4807) 2 181.3353 181.3353
Respondents are the owners of the lands in question which have been reclassified from
agricultural into non-agricultural uses by virtue of a municipal zoning ordinance, and are SAC I T -48808 (T-4808) 3 281.0874 281.0874
included in the comprehensive land use plan of the Municipality of Alabel.
SACI T -48809 (T-4809) 4 241.7880 241.7880
The antecedents are as follows:
SAC I T-48810 (T-4810) 5 40.6738 40.6738
The Province of Sarangani was created pursuant to Republic Act No. 7228 on March 16, 1992,
SACI T -48811 (T-4811) 6 137.0340 137.0340
composed of seven (7) municipalities, namely, Alabel, Glan, Maasin, Maitum, Malapatan,
Malungon and Kiamba which were segregated from the Province of South Cotabato. Under
said Act, the Municipality of Alabel was made the capital of the new province where the capitol SACI T-48812 (T-4812) 7 12.3265 12.3265
building and all other national and provincial offices shall be established. 2
Nicasio Alcantara T-(10885) T-44538 10 20.9149 20.9149
On February 14, 1997, the Sangguniang Bayan of Alabel passed Resolution No. 97-08 or
SACI T-9210 2 12.1425 12.1425
"Resolution Adopting and Endorsing the Ten-Year Municipal Comprehensive Development
Plan (MCDP 1995-2005) of the Municipality of Alabel and Its Land Use Development Plan
and Zoning Ordinance for Adoption and Approval of the Provincial Governor, Honorable Tomas Alcantara T-14359 (T-1185) 39 10.9390 10.9390
Priscilla L. Chiongbian, Thru The Honorable Sangguniang Panlalawigan of Sarangani
Province." Nicasio Alcantara Untitled 53 5.0672 5.0672

T-(41758) (T-
On January 30, 1998, pursuant to Municipal Zoning Ordinance No. 08, Series of 1997, and to ACIL Corporation 806 3.3115 3.3115
4150)
accelerate the development and urbanization of Alabel, the Sangguniang Bayan of Alabel
passed Resolution No. 98-03 reclassifying lots that were located within the built-up areas, based
on the 1995-2005 Land Use Plan of the municipality, from agricultural to non-agricultural uses.3 SACI Untitled 807 6.7871 6.7871

On March 2, 1998, the Sangguniang Panlalawigan of Sarangani approved Resolution No. 98-
018 or the "Resolution Adopting the Ten-Year Municipal Comprehensive Development Plan
(MCDP 1995-2205) and the Land Use Development Plan and Zoning Ordinance of the
Municipality of Alabel, Sarangani Per Resolution No. 97-08 and Municipal Ordinance No. 97-
08, S. of 1997 of the Sangguniang Bayan of Alabel." A portion of the area involving 376.5424
hectares, however, was covered by the Comprehensive Agrarian Reform Law (R.A. No. 6657)
commercial farms deferment scheme.4
Accompanying SACIs application for conversion were the documents required under the
Department of Agrarian Reform (DAR) Administrative Order No. 7, Series of 1997. 6
Subsequently, a Site Inspection Report was prepared by the Housing and Land Use Regulatory
Board (HLURB) Regional Office (Region XI) and was indorsed to DAR Secretary Horacio R.
Morales, Jr.
On March 16, 1999, the Provincial Agrarian Reform Council (PARC) and the Provincial Land
Use Technical Committee (PLUTC)7 conducted an inspection of the subject properties. In a
Memorandum dated July 9, 1999, the PLUTC recommended that SACIs application be made
subject to the following conditions: 1) presentation by SACI of its development plan; 2)
submission of the lacking documents; 3) re-survey and segregation of the property according
to use or project in coordination with the DAR Regional Office; and, 4) submission of the
resulting map indicating the technical description of the area per actual use/project attested by
the Regional Director.
Meanwhile, on March 22, 1999, members of the Sarangani Agrarian Reform Beneficiaries
Association, Inc. (SARBAI) sent a letter-petition to the DAR Secretary oppposing the
application for land use conversion filed by SACI. SARBAI alleged that its members were
merely forced to sign the waiver of rights, considering that the commercial farm deferment
period ended on June 15, 1998. Later, an "Urgent Petition for the Denial of Land Use
Conversion Application of Banana Commercial Farm of SACI" was filed by SARBAI and was
received by the PARC Secretariat on July 14, 1999.
In the March 30, 2000 deliberation of the PLUTC, the committee agreed to recommend the
disapproval of 158.0672 hectares that had been planted with bananas and coconuts. The
committee noted that said portion of the property was still viable for agriculture, irrigated, with
Notice of Coverage, and under protest or with opposition from SARBAI. It likewise
recommended that the decision as to the rest of the area applied for conversion shall be deferred
subject to the submission of the following within a period of thirty (30) days: 1) a five-year
comprehensive development plan; 2) a survey plan signed by the Regional Technical Director
of Land Management Service and noted by the DAR Regional Director (Region XI); 3) SACIs
proof of undertaking, which will contain the package of benefits it intends to give to the affected
farm workers except those working in the banana plantation; 4) the concurrence of all the
workers who would be affected by the proposed conversion, which concurrence should be noted
by the Municipal Agrarian Reform Office (MARO) and acknowledged by a notary public.
On its part, SACI contended that 1) its projects were aligned to address the current and
anticipated commercial and residential needs of Sarangani province, and the removal of any
portion of its property included in its comprehensive development plan will affect the viability
of the plan; 2) the banana plantations will be transformed into a socialized housing subdivision
which will be made available to the displaced workers and the other low income earners of
Alabel; 3) the company will construct and install power generation facilities in the entire area;
4) at the time the application for land use conversion was filed, no Notice of Coverage was ever
issued by DAR, and the subsequent issuance of such notice was highly irregular because the
same may be issued only after the final resolution of the application for land use conversion;
and 5) the previous Order of Deferment cannot be a legal barrier to the filing of an application
for land use conversion.
On November 9, 2000, DAR Secretary Horacio R. Morales, Jr. denied SACIs application for
land use conversion. The pertinent portion of the Order reads:
The proponent also submitted another DA certification stating that 12 parcels of land (Lot
Nos. 2, 3, 4, 5, 6, 7, 12, 807, 53, 10, 39 and 806) with an area of 816.7401 hectares, located at
Maribulan, Alabel, Sarangani are part of expansion for urbanizing areas. Though discussed on
several meetings, no decision was made on the application since the applicant was not able to
comply with the documentary requirements and clarify the issues raised by the Committee.
[I]n [the] 30 March 2000 Meeting of the PLUTC, the Committee deliberated again [on] the
subject application and agreed to recommend the disapproval of 158.0672 hectares area planted
to banana[s] and coconuts. The Committee noted that said portion of the property is still viable
for agriculture, irrigated, with Notice of Coverage and with protest or opposition from SARBAI.
The Committee also agreed to request the DAR to determine the metes and bounds of the area
planted to banana[s] and coconuts vis--vis areas devoted to other enterprises. Relative to the
rest of the area applied for conversion, the committee deferred its decision subject to the
submission of a 5-year comprehensive development plan, showing among others, the schedule
of development by phase, the specific lots involved and the corresponding proposed use.
The Committee acceded to the request of SACI and deferred its recommendation to deny
conversion of that portion of the property planted to banana[s] and coconut[s] pending
submission of a manifesto or SACIs proof of undertaking that it will compensate farm workers
affected by showing, among others, the schedule of development by phase, the specific lots
involved and the corresponding proposed use [of] the conversion, concurred by the
workers/oppositors, noted by the MARO and duly notarized. The Committee also requested
SACI to submit details of the pomelo farm in Malandag being offered as a replacement farm
for the relocation of the farm workers. SACI was given a 30-day period to submit these
documents.
SACI, however, failed to submit the oath of undertaking to pay disturbance compensation to
affected workers being required by the Committee and as provided under DAR Administrative
Order No. 01, Series of 1999. Instead, SACI submitted an undertaking executed by the affected
workers stating that they are amenable to the package of benefits offered by the company.
Nevertheless, those who executed the deed of undertaking did not represent the majority of the
farm workers. Out of the 95 regular banana workers only 45 and eight (8) supervisors including
four (4) workers who were not included in the workers master list of SACI executed a deed of
undertaking. As regards the 105-hectare pomelo farm, SACI failed to affirm whether they are
going to pursue their offer. Likewise, DAR Region XI reported that coverage of the same area
is on-going, and a different group of potential beneficiaries have already been identified.
Therefore, it could no longer be offered as a relocation site. Foregoing considered, the
Committee, during its 18 August 2000 Meeting, sustained its earlier recommendation to deny
the conversion of that portion of the property planted to bananas and coconuts.
With regard to the rest. of the area, the Committee deferred its decision subject to the delineation
by the SACI of the total area that they can develop within the allowed five-year period.
Likewise, the PLUTC is requesting the SACI to submit a revised five-year development plan
that will show the schedule of development by phase, by year, and the proposed use for each
parcel of land.
WHEREFORE, premises considered, it is hereby ordered that:
1. The application filed by the Sarangani Agricultural Company, Inc. (SACI),
represented by Cynthia Adao-Prat, involving parcels of land planted to banana[s] and
coconut[s] and with Notice of Coverage identified as TCT Nos. T-10885 (20.9149
ha.), T-14359 (10.9390 ha.), T-41718 (3.3115 ha.), OCT No. V-19574 or T-9210
 (12.1425 ha.), Lot 807 (6.7871 ha.) and portion of P-V-125 (95.00 ha.) and [an] area
covered by Lot 53 (5.0672 ha.) with an aggregate area of 154.622 [actually it is
154.1622] hectares is hereby DENIED. The Dar Regional Office of Region XI is
hereby instructed to determine the metes and bounds of the area subject for
distribution to the qualified FWBs.
2. The resolution of the application involving the rest of the area applied for
conversion is DEFERRED pending submission by the applicant of a revised five-year
development plan indicating the specific use of each parcel of land.
SO ORDERED.8
Petitioner filed a Motion for Reconsideration of the above decision but the same was denied by
the Court of Appeals in a Resolution, dated September 24, 2004.
Their Motion for Reconsideration of the above Order having been denied, respondents appealed
to the Office of the President (O.P. Case No. 02-1-47.4, alleging that the Secretary of Agrarian
Reform committed serious errors in 1) finding that a notice of coverage had been issued for the
banana area of the landholdings; 2) giving undue significance to the protest or opposition by
SARBAI; 3) requiring a deed of undertaking even after applicant-appellants written
commitment to pay whatever lawful obligation SACI may incur as a consequence of the
conversion; 4) holding that farms with commercial farm deferment cannot be applied for
conversion; 5) ruling that irrigated lands suitable for agriculture were disqualified for
conversion; and 6) ruling that applicant-appellant had not submitted a five-year development
plan.9
In a Decision dated June 30, 2003, the Office of the President through Presidential Assistant
Manuel C. Domingo dismissed the appeal and affirmed in toto the challenged DAR Orders.
Respondents motion for reconsideration was denied,10 so they filed with the Court of Appeals
a petition for review raising substantially the same issues.
On July 19, 2004, the Court of Appeals rendered a Decision granting the petition, the dispositive
portion of which reads:
WHEREFORE, premises considered, the present petition is hereby GIVEN DUE COURSE.
Consequently, the assailed Decision and Order dated June 30, 2003 and September 12, 2003,
respectively, of the Office of the President, as well as the Orders dated November 9, 2000 and
August 28, 2002 of the DAR Secretary are hereby REVERSED and SET ASIDE insofar as the
DAR directs the MARO of Alabel, Sarangani to proceed with the distribution of the banana and
coconut areas subject of the June 16, 1998 Notice of Coverage. The Secretary of the Department
of Agrarian Reform is hereby directed to issue a conversion order covering the aforesaid area
under the terms and conditions as provided in pertinent guidelines of the department. As to the
rest of the area applied for conversion, action on which has been deferred, the DAR Regional
Office (DAR Region No. XI) is hereby DIRECTED to expedite the processing and evaluation
of petitioners land use conversion application in accordance with the provisions of DAR AO
No.7, Series of 1997, and DAR AO No. 01-99 whenever the provisions of the latter issuance
are made applicable to those applications filed before its effectivity.
The DAR Secretary and all officers and employees acting on his behalf are hereby enjoined
from proceeding with the distribution of petitioners lands under compulsory acquisition
provided in Sec. 16 of R.A. No. 6657. Whatever actions already taken in pursuance of the June
16, 1998 Notice of Coverage under CARP are hereby nullified for DARs failure to observe
due process therein.
No pronouncement as to costs.
SO ORDERED.11
Hence, this petition alleging that the Court of Appeals erred:
I
WHEN IT RULED THAT THE JUNE 16, 1998 NOTICE OF COVERAGE WAS ILLEGAL
AS DAR ALLEGEDLY FAILED TO OBSERVE DUE PROCESS.
II
WHEN IT RULED THAT DAR SHOULD USE THE COMPREHENSIVE LAND USE
PLANS AND ACCOMPANYING ORDINANCE OF THE LOCAL SANGGUNIAN AS
PRIMARY REFERENCE SO AS NOT TO DEFEAT THE VERY PURPOSE OF THE
LOCAL GOVERNMENT UNIT (LGU) CONCERNED IN RECLASSIFYING CERTAIN
AREAS TO ACHIEVE SOCIAL AND ECONOMIC BENEFITS IN PURSUANCE TO ITS
MANDATE TOWARDS THE GENERAL WELFARE.
III
WHEN IT FAILED TO TAKE INTO CONSIDERATION THE BASIC PROVISIONS AND
PRINCIPLES OF LAW WITH SPECIAL ATTENTION TO THE REQUIREMENTS OR
PRECONDITIONS FOR LAND CLASSIFICATION/CONVERSION AND THE BASIC
MANDATE OF THE CARP.
With regard to the first issue on due process, this Court holds that, under the circumstances, a
notice of coverage is not an indispensable requirement before DAR can acquire the subject lots
or commercial farms, which are covered by a deferment period12 under the Comprehensive
Agrarian Reform Law (CARL) or R.A. No 6657 upon its effectivity on June 15, 1998. The
pertinent provision of the law states:
Sec. 11. Commercial Farming. Commercial farms, which are private agricultural lands
devoted to saltbeds, fruit farms, orchards, vegetables and cut-flower farms, cacao, coffee and
rubber plantations, shall be subject to immediate compulsory acquisition and distribution after
ten (10) years from the effectivity of this Act.13 In the case of new farms, the ten-year period
shall begin from the first year of commercial production and operation, as determined by the
DAR. During the ten-year period, the Government shall initiate steps necessary to acquire these
lands, upon payment of just compensation for the land and the improvements thereon,
preferably in favor of organized cooperatives or associations, which shall thereafter manage the
said lands for the workers-beneficiaries. (AS amended by R.A. 7881; Rules and regulations on
the acquisition, valuation compensation and distribution of deferred commercial farms DAR
AO No. 09, s. 1998)
DAR Administrative Order No.9, Series of 1998,14 on the Rules and Regulations on the
Acquisition, Valuation, Compensation and Distribution of Deferred Commercial Farms applies
to all commercial farms as defined under Section 11 of R.A. No. 6657: 15
SEC. 2. Statement of Policies. The acquisition, valuation, compensation, distribution,
operation and management of deferred commercial farms shall be governed by the following
policies:
(a) All commercial farms whose deferment expired as of June 15, 1998 shall be subject to
immediate acquisition and distribution under the Comprehensive Agrarian Reform Program
(CARP). Those whose deferments have yet to expire will be acquired and distributed only upon
expiration of their respective deferment period as originally determined by the Department of
Agrarian reform (DAR), or earlier if the DAR determines that the purpose for which it was
deferred no longer exists and revokes its deferment;
The process of acquisition of these commercial farms by DAR is specifically provided under
Article III, Section 9 of the above administrative order, to wit:
SEC. 9. Procedure for Acquisition.The acquisition of deferred commercial farms shall be
governed by the following procedures:
(a) Voluntary Offer to Sell/Compulsory Acquisition
1) The Order of Deferment previously issued over the landholding shall
serve, upon expiration of the deferment period of the subject commercial
farm, as the Notice of Coverage,[16] supported by the Compliance Work
Program and Summary of Exceptions (Form A) originally submitted with
the approved deferment application. However, for record purposes, the
landowner shall be served a Notice of Expiration of Deferment (Annex 2)
which shall contain a reminder of his right of retention, should he wish to
exercise the same;
2) In general, the procedure for acquisition shall follow DAR
Administrative Order No. 01, Series of 1998, as amended by DAR
Administrative Order No. 02, Series of 1996, entitled "Revised Rules and
Procedures governing the Acquisition of Agricultural Lands subject of
Voluntary offer to Sell and Compulsory Acquisition Pursuant to Republic
Act No. 6657," subject to certain modifications intended to expedite the
process as provided herein.
Clearly, it was unnecessary for petitioner to issue a notice of coverage to respondents
in order to place the properties in question under CARP coverage. Hence, the
contention by respondents that due process was not duly observed by petitioner must
fail. Accordingly, the denial of the application for conversion must be upheld.
As regards the second issue, DAR Administrative Order No. 7, Series of 1997, or
the Omnibus Rules and Procedures Governing Conversion of Agricultural
Lands to Non-agricultural Uses prescribes the guidelines for land use conversion:
VI. POLICIES AND GUIDELINES
A.
B. General Guidelines
b) Conversion may be allowed if at the time of the application, the lands are
reclassified as commercial, industrial, residential or other non-agricultural in the new
or revised town plans promulgated by the local government unit (LGU) and approved
by the Housing and Land Use Regulatory Board (HLURB) or by the Sangguniang
Panlalawigan (SP) after June 15, 1988, in accordance with Section 20 of R.A. No.
7160, as implemented by MC No. 54, and Executive Order No. 72, Series of 199317 of
the Office of the President.
In connection with the afore-stated administrative order, Section 20 of Republic Act
No. 7160, otherwise known as the Local Government Code of 1991, empowers the
local government units to reclassify agricultural lands:
Sec. 20. Reclassification of Lands. - (a) A city or municipality may, through an
ordinance passed by the Sanggunian after conducting public hearings for the purpose,
authorize the reclassification of agricultural lands and provide for the manner of their
utilization or disposition in the following cases: (1) when the land ceases to be
economically feasible and sound for agricultural purposes as determined by the
Department of Agriculture or (2) where the land shall have substantially greater
economic value for residential, commercial, or industrial purposes, as determined by
the Sanggunian concerned: Provided, That such reclassification shall be limited to
the following percentage of the total agricultural land area at the time of the passage
of the ordinance:
(1) For highly urbanized and independent component cities, FIFTEEN
PERCENT (15%);
(2) For component cities and first to third class municipalities, ten percent
(10%), and
(3) For fourth to sixth class municipalities, five percent (5%); Provided
further, That agricultural lands distributed to agrarian reform beneficiaries
pursuant to Republic Act No. 6657, otherwise known as "The
Comprehensive Agrarian Reform Law," shall not be affected by the said
reclassification and the conversion of such lands into other purposes shall
be governed by Section 65 of said Act.

(c) The local government units shall in conformity with existing laws, continue to
prepare their respective comprehensive land use plans enacted though zoning
ordinances which shall be the primary and dominant bases for the future use of land
resources: Provided, That the requirements for food production, human settlements,
and industrial expansion shall be taken into consideration in the preparation of such
plans xxx
(e) Nothing in this section shall be construed as repealing, amending or modifying
in any manner the provisions of R.A. No. 6657.18
Memorandum Circular No. 54 "Prescribing the Guidelines Governing Section 20 of R.A. No.
7160 Otherwise Known as the Local Government Code of 1991 Authorizing Cities and
Municipalities to Reclassify Agricultural Lands Into Non-Agricultural Uses" issued by
President Fidel V. Ramos on June 8, 1993 specified the scope and limitations on the power of
the cities and municipalities to reclassify agricultural lands into other uses. It provided that all
ordinances authorizing reclassification of agricultural lands shall be subject to the review and
approval of the province in the case of component cities or municipalities, or by the HLURB
for highly urbanized or independent component cities in accordance with Executive Order No.
72, Series of 1993, thus:
SECTION 4. Use of the comprehensive land use plans19 and ordinances as primary reference
documents in land use conversions. - Pursuant to RA 6657 and EO 129-A, actions on
applications for land use conversions on individual landholdings shall remain as the
responsibility of DAR, which shall utilize as its primary reference documents the
comprehensive land use plans and accompanying ordinance passed upon and approved by the
LGUs concerned, together with the National Land Use Policy.
Hence, with regard to agricultural lands that have been reclassified for non-agricultural uses by
the local government unit concerned, the CA is correct in declaring that DAR should refer to
the comprehensive land use plans and the ordinances of the Sanggunian in assessing land use
conversion applications, thus:
Construing Sec. 20 of the Local Government Code and the subsequent administrative issuances
implementing the same, we are of the opinion that while the DAR retains the responsibility for
approving or disapproving applications for land use conversion filed by individual landowners
on their landholdings, the exercise of such authority should be confined to compliance with the
requirements and limitations under existing laws and regulations, such as the allowable
percentage of agricultural [area] to be reclassified, ensuring sufficient food production, areas
non-negotiable for conversion and those falling under environmentally critical areas or highly
restricted for conversion under the NIPAS law. Definitely, the DARs power in such cases may
not be exercised in such a manner as to defeat the very purpose of the LGU concerned in
reclassifying certain areas to achieve social and economic benefits in pursuit of its mandate
towards the general welfare. Precisely, therefore, the DAR is required to use the comprehensive
land use plans and accompanying ordinances of the local Sanggunian as primary references in
evaluating applications for land use conversion filed by individual landowners. In this case,
petitioners have already complied with the standard requirements laid down under the
applicable rules and regulations of the DAR....20
The conversion of agricultural lands into non-agricultural uses shall be strictly regulated and
may be allowed only when the conditions prescribed under R.A. No. 6657 are present. 21 In this
regard, the Court agrees with the ratiocination of the CA that DARs scope of authority in
assessing land use conversion applications is limited to examining whether the requirements
prescribed by law and existing rules and regulations have been complied with. This holds true
in the present case where, because of the creation of the Province of Sarangani and in view of
its thrust to urbanize, particularly its provincial capital which is the Municipality of Alabel, the
local government has reclassified certain portions of its land area from agricultural to non-
agricultural. Thus, to reiterate, in accordance with E.O. No. 72, Series of 1993, and subject to
the limitations prescribed by law, DAR should utilize the comprehensive land use plans in
evaluating the land use conversion application of respondents whose lands have already been
reclassified by the local government for non-agricultural uses.
This is not to say, however, that every property of respondents which is included in the
comprehensive land use plan of the Municipality of Alabel shall be automatically granted non-
coverage. As mentioned earlier, said application is subject to the limitations and conditions
prescribed by law. One such limitation that is present here is that a portion of respondents
property of 376.5424 hectares, a portion totaling 154.622 [or 154.1622] hectares which are
planted to bananas and coconuts, are covered by CARLs ten-year deferment scheme, which
has expired on June 15, 1998. By law, these lands are subject to redistribution to CARP
beneficiaries upon the lapse of the ten-year period, counted from the date of the effectivity of
the CARL or R.A. No. 6657 on June 15, 1988, which was way before the creation of the
Province of Sarangani and the eventual reclassification of the agricultural lands into non-
agricultural in the Municipality of Alabel where respondents properties are located.
In short, the creation of the new Province of Sarangani, and the reclassification that was effected
by the Municipality of Alabel did not operate to supersede the applicable provisions of R.A.
No. 6657.
Moreover, Section 20 of the LGC of 1991 on the reclassification of lands explicitly states that
"[n]othing in this section shall be construed as repealing, amending or modifying in any manner
the provisions of R.A. No. 6657." Thus, where the law speaks in clear and categorical language,
there is no room for interpretation. There is only room for application. 22
In view of the foregoing, the Court deems it unnecessary to discuss the third issue presented in
the petition.
WHEREFORE, the petition is PARTLY GRANTED insofar as the issue on due process is
concerned. In connection with this, the denial by the Department of Agrarian Reform (DAR)
of respondents application for conversion with regard to the 154.622 [or 154.1622] hectares,
the deferment period of which has already expired, is AFFIRMED; and the Orders of the DAR
dated November 9, 2000 and August 28, 2002, directing the MARO of Alabel, Sarangani to
proceed with the distribution of the banana and coconut areas subject of the June 16, 1998
Notice of Coverage, are REINSTATED. The Decision and Resolution, dated July 19, 2004 and
September 24, 2004, respectively, of the Court of Appeals in CA-G.R. SP No. 79899, are hereby
MODIFIED accordingly.
No costs. SO ORDERED.